Financial Telegraph predicts complete meltdown of US banking system

The Financial Telegraph had a rather alarming article yesterday. It's in Dutch, but François Cellier has provided a translation.

American 'Meltdown' is the Reason for the Money Injection by Fortis

Votron stays on after a wave of criticism

by our correspondent
June 28, 2008, 09:10 a.m.

BRUSSEL/AMSTERDAM (DFT) - Fortis expects a complete breakdown of the American financial markets within days or weeks. This explains, according to the bank insurer, the series of interventions on Thursday with the aim of strengthening themselves by € 8 billion. "We are ready at the last moment. The U.S. is doing much worse than we had thought,” said Fortis chairman Maurice Lippens, who insists that CEO Votron shall not be replaced. Fortis expects bankruptcies among the 6,000 U.S. banks that have low coverage. "But the same goes also for Citigroup and General Motors, and thereby starts a complete meltdown in the U.S.”

Fortis yesterday increased its capital by € 1.5 billion by means of emission of new shares. By the end of last year, the Belgian-Dutch group already had increased its capital by € 13 billion through issuing new stocks for the takeover of ABN Amro, for which they paid € 24 billion. Lippens based his concerns on talks with bankers. "Two months ago, we didn't know yet that the situation is so dire in the U.S. And the situation will further worsen. We need a thick cushion of funds to survive the next 18 months, when we bring in ABN Amro.”

Two weeks ago, the U.S. investment bank and adviser to Fortis Merrill Lynch reported that certainly € 6.2 billion in additional capital would be needed. The VEB yesterday demanded clarification of Fortis: CEO Jean-Paul Votron had explained by the end of April that Fortis, by acquiring ABN Amro, wouldn't need to raise its capital. Yet within one year, € 30 billion in market capitalization have been destroyed. According to Votron's latest admissions, the stock value has tumbled by 19.4%, although it recovered yesterday by 4.4% to € 10.65.

The massive unrest surrounding the bank insurer has registered particularly with our Southern neighbors in Belgium like a bomb. While in the Netherlands, the discussion is limited to the financial world, it has become the talk of the day in Belgium. Not only is the bank in Belgium omnipresent, but the tumbling of the stock has hit hard hundreds of thousands of Belgian small investors directly.

All Belgian newspapers opened yesterday with disaster headlines, giving wide coverage to the free fall of the bank insurer's stock. ’Fortis crashes,' 'Disaster day for Fortis,’ and ’Fortis loses 5.3 billion,' reported three leading newspapers on their respective front pages.

The panic surrounding the group is so great South of the border that the national oversight commission CFBA felt compelled to issue a statement of reassurance to the desperate savers. “The emergency measure by Fortis is no reason to run to the bank and withdraw your savings”, said a CFBA spokesman. “The bank complies with all legal requirements, it only has set for itself very ambitious goals.”

Maurice Lippens claimed that all major shareholders have offered their “unanimous support” yesterday evening.

Just as in the Netherlands, the accusations are directed primarily a the address of CEO Jean-Paul Votron, who seems to have badly miscalculated in the takeover of ABN Amro. However, whereas the man from Brussels is only being asked in the Netherlands to pay back his bonus of € 2.5 million, the Belgians ask for his removal.

"A person who makes such grave errors must bear the consequences and therefore resign,” so chairman Huybregts of the Flemish Federation of Investments and Investors. The tumbling of the stock is for him proof that the takeover of ABN Amro was far too expensive and poorly timed.

“The former shareholders of ABN Amro are now taking a bath in champagne”, stressed Huybrechts. "A person making such grave errors must step down." Fortis is a stock for ordinary people, and you cannot mistreat their trust so recklessly.”

Also the Belgian newspaper de Standaard (the Standard) has hard words for the CEO: "The credit crisis has affected all banks, but this is no excuse. Fortis has tumbled much worse," so the commentator. “Fortis has always denied that another capital increase was to come. These were therefore either lies or ignorance. Both are equally bad, and therefore Votron should do the honorable thing. He is the only one who has earned money in the whole operation.”

According to the Belgian media, Fortis had planned to announce on Thursday that the bonus of Votron would be removed, but at the last moment, this hasn't happened. Also, it is being strongly speculated who should be his successor, whereby primarily the name of Filip Dierckx is being suggested.

Votron himself doesn't want to hear anything about stepping down. "The shareholders stand by me, and also the board has fully supported these operations that were initiated by me," said the beleaguered CEO of Fortis.

He also rejects outright to pay back his meanwhile controversial bonus. "What I do with my money is my own business. The bonus is unrelated to ABN Amro, but was paid for the activities of 2007," so Votron. The CEO is however willing to receive some of his salary in Fortis stock options.

Votron can still fully count on the support by chairman Lippens, who denied that the bank made a mistake with the takeover of ABN Amro. “Votron remains our CEO. To intervene at this moment would be difficult, [not] to do so shows true leadership.”

I'm really not sure what to make of this. The Financial Telegraph is supposedly a reputable paper, equivalent to the Financial Times. But there's been little to no coverage of this story in English. Fortis has been much in the news this week, but not their predictions of a US banking collapse. The closest is this Reuters article, which is very mild in comparison.

I gotta say, the Bank of Serta is looking better and better all the time.

UPDATE: The original Dutch article is now 404, but you can still see it in Google's cache.

Peak Swag

Awhile back, USA Today had this article about how high prices were impacting the sports world. There was the usual traveling costs and all, but there was also this, about the promotional items they give away at minor league baseball games:

"Everything we do is oil-based. The giveaways at the ballpark are plastic and that's oil-based. Hats aren't, but I have to put them on a boat, airplane or truck. So there's some derivative of an oil byproduct in everything."

Actually, hats probably are oil-based, at least the kind they give away, which are synethic, not wool.

I thought about this while I was a recent professional conference. I swear, a lot of people go to these things just to get the swag. They aren't interested in the presentations or workshops, just in getting all the free promotional items they can. Mugs, pens, frisbees, calendars, rulers, calculators, magnets, cupholders, t-shirts, bumper stickers, etc. The vast majority of it made with petroleum.

I am trying to reduce the amount of stuff I own, so I did not pick up any of the swag. I admit I am still using the plastic Hewlett-Packard coaster I got at a previous convention, years ago. The HP logo has long worn off it, but I still use it. Other than that, I have probably never used any of the hundreds of items I've gotten as swag over the years. So why take any more?

My colleagues, however, picked up stuff for me. They were afraid I would "miss out." Nice of them to think of me. But, er, is anyone really going to wear a pin shaped like a traffic cone, with flashing LEDs?

They also complained that there was very little swag this year, compared to previous years. A reflection of the rising prices and sinking economy, perhaps?

If swag ends up a victim of peak oil, well, I won't miss it much. I realize it provides jobs for a lot of people, but what a waste.

And I bought gas today, which I don't do very often. Ever since Katrina, I fill up when the gas gauge shows half a tank...just in case. But I drive so little that I still don't buy gas very often. The bad side of that is that it makes the sticker shock worse. Gas was $4.25 gallon today. The last time I bought gas, it was under $4. Yikes.

When Dinosaurs Ruled the Earth

The museum gift shop features a colorful T-Rex sculpture

At the end of May, due to a combination of business and pleasure, I found myself in the midwest. I visited a friend in the Pittsburgh area, and we went to the Carnegie Museum of Natural History. I'm a sucker for natural history museums, especially if they have dinosaurs. And the Carnegie has a lot of dinosaurs. They've been renovating their dinosaur exhibit for years, and this year, it's finally re-opening. The T-Rex part was still under construction (it's supposed to open June 15), which was a disappointment. But the rest of the exhibit was open, and pretty cool.

The museum parking garage is right by the steamworks. (Yes, it's still working.)


This tableau of dinosaur predation was supposed to illustrate the evolutionary diversification of dinosaurs.


The heart of the dinosaur exhibit, as viewed from the third floor balcony:


There's an Apatosaurus, a Diplodicus, and an Allosaurus. There's also a Stegosaurus, and several other beasties.

A closeup of the Allosaurus, stalking the Apatosaurus.


There are also fossils from air...


Including a replica of the famous Archaeopteryx lithographica, the "first bird":


And seas:



One of the coolest displays was of the feathered dinosaurs from Liaoning, China:


Too bad the T-Rex section wasn't open yet. I'll just have to go back some day.

Only In It For The Gold

I hadn't come across this blog until "PhilR" posted this link at The Oil Drum today:

The Falsifiability Question

It's written by someone working in the climate science field. (He's apparently at tu, but I'll try not to hold it against him. ;-) It's a short and interesting piece about why AGW is not really a theory, and what evidence it would take to make him change his mind about it.

Unfortunately, I fear the average denialist just wouldn't understand it.

The Old Apple Tree

I've been meaning to photograph a neigborhood apple tree through the seasons. It might take me several years to do it, though. The time just seems to fly by. I noticed that the tree was budding and made a note to myself to photograph it soon. But by the time I finally did it, the buds were full-blown blossoms. I guess I'll have to try again next year.

The tree is a Cortland, a remnant of the apple farm that used to be here before they paved paradise and put up a parking lot.

Yes, people do pick and eat the apples, which are quite tasty, if a bit wormy (since nobody applies pesticides or otherwise tends the tree).

Here's the tree last fall:


Clearly, it's past "peak apples," as indicated by the fact that the low-hanging fruit has been picked, and by the clear evidence of high-tech production methods.

Gas Prices

I don't drive much. I put maybe five gallons in my gas tank every month, maybe every other month. I do remember that I used to be able to fill up my old mid-size Ford Taurus for the same amount of money that fills half the tank of my compact Toyota Corolla, but I just don't buy enough gas for it to be a big deal.

So it was a real shock when I got the bill for the gas I bought on my trip to Florida. I charged it, of course. Pay at the pump is the only way to go these days, and I refuse to use a debit card, which offers you a lot less protection from fraud and such than a credit card. It didn't seem like I was spending that much.

But then I got the bill. It's $350. Christ on a cracker! I know I drove to Florida, but still. That's a lot of dough. I feel sorry for people who have to drive a lot every day, and those who have a bigger car than a Corolla to feed.

The Big Apple

Grand Central Terminal
I went to NYC yesterday, to meet a friend who was coming from Pittsburgh. She's a fan of American Idol, I'm a fan of Monty Python, so we planned to see Clay Aiken as Brave Sir Robin in Monty Python's Spamalot.

I used to take the train to work in the city every day, but haven't been there for years. I was surprised at how crowded the train was on Saturday. I remember it as being pretty dead on Saturdays, especially that early (8am). Trains used to run every two hours, and mostly empty. But now the trains leave every hour, and are pretty full. Fuller than I remember the rush hour commuter trains being (though not as many people boarded along the way). Apparently, ridership has tripled as oil prices have risen. It's caused a bit of a problem, because so many of the newbie riders don't know how to read a train schedule, find the right track, or buy a ticket.

Parking is free at the station on Saturdays, and a lot of people take the train in for a day of shopping.

I met my friend at Grand Central, where we bought day passes that let you ride the subways and buses as much as you want. I think they were $7. We had originally hoped to tour Yankee Stadium before it's demolished. But the tour was sold out. Instead, we took the subway to Brooklyn to see the botanical garden there.

I saw some hybrid electric buses, though most were regular buses.


There were also a lot of pedicabs - bicycle taxis. A lot more than I remember, though not many people seemed to be using them.

The weather forecast for the day was awful. (One drawback with public transportation.) It was supposed to be very windy and rainy. But we lucked out. It was cloudy with occasional light rain, but nothing too bad. Cloudy days make for the best photography, so I didn't mind.

The Brooklyn Botanical Garden was gorgeous. I especially liked the Japanese garden.


All the trees were in bloom. Many different kinds of cherry blossoms, forests of magnolias in many sizes and colors. Here's a pink camellia:


Then it was time to head back to Manhattan for the play. We ate a quick Japanese bento lunch, then got in a truly immense line for Spamalot. I've been to a lot of Broadway plays, and some on the West End, too, and never been in a line like that. The only thing I can figure is that they only let people in through one door to force them to pass the counter where they were selling Clay Aiken merchandise. And a lot of people were stopping to look and buy, which is why the line was so slow.


The play was terrific. (I heard Clay didn't think it was funny when he first saw it. That boy ain't right.) We laughed so hard we cried. Particularly liked the "French taunting" scene.

After the play, we took a bus to the New York Public Library. My friend had just seen The Day After Tomorrow (a global warming disaster movie), and lot of the scenes were filmed at the library. Manhattan gets inundated with rising sea water, and some of the characters take refuse in the library. Chased up the stairs by a huge wave, of course.

One of the famous library lions:


It was a great day. We both had so much fun that we want to do it again. I'm under orders to keep my eyes peeled for other plays that might be interesting.

Florida Fantasies

I loved Florida. More than I expected to. People warned me that Sarasota was strip mall hell, and they were right...but as an American, I'm used to strip mall hell. It's much more convenient than, say, Providence, Rhode Island, or Boston, Massachusetts, or New York City. Plenty of stores and restaurants, all easy to find, easy to drive to, with lots of parking available.

I really felt at home in Florida, probably because I grew up in a touristy tropical seaside-type place. A place where people will be fishing from every bridge, unless it's specifically posted "no fishing." Except that Sarasota felt much less crowded than Hawai`i, which was really nice.

People were fishing everywhere. Old and young, male and female, black, white, Hispanic, Asian. Kids with their parents, little old lades in prim dresses and wheelchairs, groups of teens, old married couples. I haven't fished since leaving Hawai`i, but there's a universal bond among fishermen that I instantly recognized. (No, I didn't go fishing myself. I didn't have a license, and I didn't know what the rules were. But I was tempted!)

Signs of the real estate bust were everywhere. Literally. On every corner, there was a sign offering distressed homeowners help with their mortages. "I pay cash for homes!" "Walk away, save stress!"

Still...I really liked Florida. To the point that if sustainability weren't an issue, I'd be tempted to move there. As it is, though...I don't want to live somewhere that may be underwater in 20 years.

Someone at The Oil Drum asked me if my road trip left me more or less optimistic. Neither, really. It just reinforced my existing views.

There are a lot of things I like about public transportation; I've used it extensively in cities like New York, Boston, and San Francisco. I don't mind walking, either. (The ballpark ushers seemed astonished that I preferred the stairs to the elevator.)

And yet...there's no denying that cars are a hell of lot more convenient. When the weather is bad, when you have a lot of stuff to lug, when you're going off the beaten path or traveling at odd hours. Nothing beats a car. And a big, powerful car is much more comfortable and easy to drive than a small, fuel-efficient car - especially for long trips. (I'd kind of forgotten that, since I don't drive very much.) We'll pry people's cars from their cold, dead fingers, and I can't really blame them.

Driving across the country was kind of like watching Koyaanisqatsi: it left me both horrified at the way we're living, and awestruck at the sheer magnitude of our works. It's not sustainable. And yet, it's not going to go away overnight, either. We have too much invested in our current way of life. The collapse, when it comes, will be a catabolic one.

Infrastructure

Thought a lot about infrastructure on this trip. Truth to tell, it's something I think a lot about, anyway. ;-)

Maintaining infrastructure really is a never-ending battle. The Sunshine Skyway Bridge was undergoing some kind of construction. Someone said it was for corroded cables or something like that. Along I-95, two of the rest areas I stopped at had no restroom facilities due to infrastructure problems. One was undergoing repairs for a broken sewer pipe, one had no water due to a water main break.

I talked to one of the security guards at the rest area with the broken sewer pipe. He said it had actually been leaking for months, and no one did anything about it. Finally, it got so bad they were forced to fix it. Wonderful.

I paid no tolls on the way down. I went the long away around NYC and Philadelphia, to avoid congestion (not least because of the I-95 bridge failure near Philadelphia). But on the way back, I was anxious to get home, and I figured the bridge repairs would be done. I took the shortest route...which meant lots of tolls. Good thing I had an EZ-Pass, or I might have run out of money. They charge $5 to cross some bridges. Good gravy! I think I must have paid $30 in tolls. All those cars and trucks, paying all those tolls...and they're still having trouble funding maintenance.

I stayed in cheap hotels like Lodge of America and Quality Inn. Basically, all I was interested in was broadband Internet access and a reasonable standard of cleanliness. I was pretty happy with my digs, but I was reminded of what someone at The Oil Drum said: poverty is inefficient. In Florida, there were billboards everywhere reminding people to conserve water because there was a drought. Yet the toilet in my hotel room ran constantly, no matter what I did.

I got a room with a microwave and fridge. (I highly recommend it. You can save a lot of money on food that way.) When I first entered the room, the fridge door was not closed. The refrigerator was running, and dripping condensation on the rug, but the door would not close. A little investigation revealed that a rack meant for holding cans of soda or beer was preventing the door from closing. I'm not sure why; maybe it was actually meant for a different model of fridge. In any case, I removed the rack and solved the problem. And tried not to think about how long the fridge had been running with the door open before I got there. I was seriously tempted to throw the rack away so they couldn't put it back in when I checked out, but I was afraid they would charge me for it, so I left it on top of the fridge.

Florida is for the birds

One striking thing about Florida is the birds. I'm not sure what they are, but they're not the kind of birds you see in the northeast or in Hawai`i.

I think these are brown pelicans:



They are very common by the water, and very large. They seem to like to hang out by bridges (where they are often nailed by cars). I saw them flying around the Sunshine Skyway Bridge, which is quite high.

I really love that bridge, BTW. It's magnificent. I ended up driving over it and back twice, going to games at Knology Park and Bright House Field. I was kind of disappointed it wasn't all lit up at night, though I guess it's better for the environment that it isn't.

I was surprised there wasn't an escort area, for people who are too scared to drive across. IME, this type of bridge is the worst for those who are afraid of heights. The superstructure is all in the center; it doesn't "enclose" the bridge deck. And it's very high in the middle with a steep ascent and descent, almost like a roller coaster. (I imagine so ships can pass underneath.) I'd expect at least some people to completely freak out trying to drive over this bridge.

These photos were taken by the shore in Sarasota, in a little park by the water. Not sure what kind of birds they are. Egrets?





I even saw some wild peacocks. Yes, peacocks. I pulled into the parking lot of an office building to turn around. In back, there was a big drainage canal. I looked in, hoping to see an alligator. No gators, but there was a flock of peacocks.