Tuesday 30th of September 2008 – Year 5 starts, Running, Financial crisis
You went back to school on the 4th of September and this year you really like your teacher, Miss Simpson. Unlike Ms Nicola last year, she was such a horrible dragon of a woman. I didn’t like her either. On one occasion I witnessed how she spoke to you – when we went to talk to her about some children constantly picking on you – and I wasn’t impressed at how she reacted, not at all. She started asking you over and over ‘why didn’t you tell me?’ ‘Why didn’t you tell me?’ ‘You should have told me’ quite aggressively and you said you had told her, and you looked scared, unsurprisingly. I interrupted her and said ‘We’re telling you now so please do something about it’. I just wanted to tear her hairs out instead, but, well, the world doesn’t work that way does it? Eventually we went to talk to the headmaster about how nothing was being done – Mr. Brading. He’s really nice and he sorted everything out.
In karate you have the blue/white belt and you’re doing well, your chest is getting all strong and it looks like you’re going to be a strong fella – just need to keep on exercising! I started jogging and you have been coming with me after school, you on your bike and me jogging – very slowly. I’ve only gone about 5 times now but have noticed an improvement on my speed already. I just woke up one Saturday, you and J were sleeping, and I thought, “why don’t I go jogging?” I always thought it would be boring, but I enjoyed it, especially the feeling you get afterwards – all those feel good chemicals in my brain do feel good.
I’m also still doing samba and also started doing bateria lesson: so on Thursday I do 1 hour of dancing, then afterwards I do 1 hour of playing an instrument with the bateria. That also makes me feel very very good, I really enjoy it. It’s the simple things in life that make you happy!
While you were away at your father’s he taught you ‘Wish you were here’ (the intro anyway) on the guitar, so since you’ve been back you taught me it – I always wanted to learn it as Pink Floyd is one of my favourite bands, and that song is a great song. Last Saturday was your first day back at music school, so you showed Martin what you knew of that song and he taught you some more. So now we can play the whole intro, up to just before Roger Waters starts singing.
When we were in Brazil and met our cousin Laura, we saw her keyring collection and decided to start our own, it’s really big already:
I ended up cutting some of your fringe yesterday, your hair is so long!
Finally (I have to start working now) I can’t not mention the major financial crisis going on! When you read this I wonder if capitalism will still exist – hopefully it’ll have evolved into something more humane, we can only live in hope! This is from today’s Guardian:
The contagion from the Wall Street crisis spread throughout Europe yesterday with the governments of Iceland and Germany stepping in to rescue ailing banks, following the decision in Britain to nationalise Bradford & Bingley and the bail-out of the Belgian bank Fortis late on Sunday.
In the United States, at the eye of the financial storm, Citigroup agreed to buy Wachovia, the fourth largest American bank, in another deal brokered by officials in Washington. It joined the growing roll call of seemingly invulnerable banks that have either failed or been taken over as the credit crunch has intensified.
The widening turmoil was also on the agenda in France. President Nicolas Sarkozy summoned the heads of the nation’s leading banks and insurance groups to an emergency summit this morning aimed at preventing the crisis from gaining traction there, even as rumours began to circulate that Franco-Belgian bank Dexia might be the next to face trouble.
Economists were wary of predicting where the crunch might bite next. “In the near term, it will be the weak ones that will be picked off,” said Global Insight’s chief European economist, Howard Archer. “But obviously the more the turmoil and dislocation continues, the further this could spread. We live in vicious times.”
GermanyThe German government and other banks extended a €35bn (£28bn) lifeline to Hypo Real Estate, the second largest commercial property lender in the country and one of the country’s largest publicly quoted companies. The agreement represented the most serious impact of the crisis.
The finance ministry said the government would provide €26.6bn, with several unidentified banks making up the rest. The deal had been hammered out with the German central bank, the Bundesbank, and financial regulators. In a statement, they said the financing would secure the future of the firm.
A spokesman for the finance ministry said the decision to provide the credit came after “very, very intensive consultations over the weekend”.
HRE had written down substantial sums related to sub-prime mortgages at the beginning of the year, but otherwise had given little sign that it was facing difficulty in raising cash. There had been speculation in the German press over the weekend that the company could collapse.
BelgiumThe governments of Belgium, the Netherlands and Luxembourg reached agreement on an €11.2bn bail-out of Fortis on Sunday, in the hope of avoiding the scenes Britain witnessed as customers lined up to withdraw savings from Northern Rock.
Fortis is one of the largest retail banks across the three countries. Each government took a 49% stake in the Fortis subsidiaries in its country. As a part of the agreement, they demanded Fortis sell the stake in Dutch bank ABN Amro which it bought a year ago for €24bn, a deal that marked the beginning of the bank’s troubles. Filip Dierckx, who has been running Fortis for barely three days, yesterday admitted that it had overreached itself with “decisions which were not the best”.
Shares in Fortis continued to fall yesterday, down another 23%, despite the bail-out and underlining the fear in the markets. Like many other banks, Fortis has had to take large write-downs on the value of mortgage-backed securities.
IcelandThe government in Reykjavik seized control of Glitnir, one of Iceland’s biggest banks, stoking fears that the tiny nation might be facing financial disaster.
The Icelandic government bought a 75% stake in Glitnir for €600m. David Oddsson, governor of the Central Bank of Iceland, said he had been presented with a stark choice. “Without this intervention Glitnir would have ceased to exist within the next few weeks. It’s as simple as that.”
Iceland’s economy expanded rapidly in recent years, making Icelanders among the richest people in Europe, but critics argue that the wealth has been built on too much debt. The country has been likened to a “toxic hedge fund”. The Icelandic króna has lost 60% of its value against the dollar this year and hit new lows yesterday, making the situation only more difficult for the banks.
After emergency discussions with the Central Bank of Iceland, an offer was made late on Sunday and the bank’s board agreed to the deal yesterday morning.
In a statement, Glitnir said its funding position had deteriorated in a matter of days. Its largest shareholder, the investment firm Stodir, also filed for bankruptcy yesterday.
The rescue at least partly answers one question that has been hovering over Iceland; whether the banks had grown too large for the government to bail out if things went wrong.
United StatesTwo weeks ago Wachovia had been cast as a potential saviour of Morgan Stanley, the Wall Street investment bank, but in a sign of how quickly matters are shifting, the bank was yesterday sold to Citigroup at a knockdown price.
In this instance, US taxpayers are not footing any immediate bills but could end up paying a share of any losses from Wachovia’s ailing mortgage portfolio. Citigroup is paying $2.2bn in shares for the company and absorbing about $52bn in debt. Citigroup has not emerged unscathed. It has already taken more than $40bn in write-downs and other losses from mortgage-related investments but has the buffer of deposits from a large retail operation.
Investors were spooked again and shares in other smaller banks in the US plummeted as they speculated on which might be the next to falter.
It would seem that this all started when the US stopped investing in its own infrastructure (roads, houses, etc) and based its economy on consumerism, buying imported goods and lending money to anyone who wanted it…
According to ‘The Washington Post’:
A hundred years ago bankers such as JP Morgan and August Belmont invested European capital into US railroads and steel. The modern bankers, however, directed Asian capital into devices to enable Americans to take on more debt to buy more Asian products. Wall street’s narrow and short-termist outlook came to be shared by government which put tax cuts ahead of public commitment to infrastructure, research and education.
As a result, household consumption (i.e. shopping) has come to comprise more than 70% of the US economy!!!!!!!!!!!!
I’m sure you’ll be learning all about this at some point in your schooling. As this will change the world as we know it, hopefully for the best, in the long run. Short term there are lots of job losses on the horizon, they have started already.