Eeyores news and view

City abuse, what a bunch of idiots
City bylaws bring down pirate ship tree house September 20, 2008 - 11:30pm
VANCOUVER, British Columbia (AP) - The front yard of a house in a tony British Columbia neighborhood is a little less welcoming for pirates now.
Architect Andrew Dewberry and a crew of friends spent Saturday dismantling the pirate ship tree house he's had in his Vancouver yard for two years. He said he had no choice after a court ordered it to be removed for not complying with city bylaws.
Dewberry had to explain the situation to his sons Jack, 9, and Sam, 7, before the tree house came down. He said, "They've had a lot of joy with the tree fort."
Jack, who stood with a friend and watched the dismantling, said, "We wanted to sleep in it over the summer one time, but we didn't get around to it and now we can't."
In July, the judge in the case admired the workmanship of the ship, complete with plastic cannons, in a perch 6 1/2 feet up a large, leafy tree in front of the family's home. But the judge said its merits were irrelevant to whether the tree house violated city bylaws.
Dewberry said the tree house would be auctioned for the Boys and Girls Club of Vancouver. The benefit is set for Oct. 16.

http://wtop.com/?nid=456&sid=1482187




China milk scandal claims victim outside mainland September 21, 2008 - 11:36am

BEIJING (AP) - A Hong Kong toddler has developed a kidney stone after drinking Chinese milk _ the first reported victim outside the mainland affected by a widening scandal over a toxic chemical found in baby formula and other Chinese dairy products.
More than 6,200 infants have become sick and four babies have died in China after being fed baby formula laced with melamine, a banned industrial chemical.
No illnesses had been reported elsewhere until the Hong Kong government said late Saturday that a 3-year-old girl was diagnosed with a kidney stone after drinking milk produced by the Chinese dairy Yili that contained melamine.
The Hong Kong government also announced Sunday that tests found melamine in Chinese-made Nestle milk. The Dairy Farm milk was made by Nestle's division in the Chinese coastal city Qingdao, it said.
The Swiss food and drinks giant issued a statement Sunday saying that none of its China-made dairy products contained melamine.
"Nestle once again expresses confidence that none of its products in China is made from milk adulterated with melamine," the statement said. It did not specifically respond to the Hong Kong report of tainted Dairy Farm milk.
Nestle offices in Hong Kong and Geneva did not immediately respond to a message seeking comment. Calls after work hours to its Beijing office and Beijing hot line went unanswered.
Meanwhile, Singapore said Sunday melamine was detected in samples of White Rabbit-brand Creamy Candy. The popular Chinese milk candy was pulled from shelves in the Philippines last year after health officials there claimed it was tainted with formaldehyde.
Chinese candy maker Guan Sheng Yuan Co. denied the Philippine allegations, saying the candy tested was likely a counterfeit version and subsequent tests showed samples of the candy were formaldehyde-free.
Already on Friday, Singapore suspended the sale and import of all Chinese milk and dairy products including milk, ice-cream, yogurt, chocolate, biscuits and candy, as well as any other products containing milk from China as an ingredient.
Japan, Malaysia and Brunei have also recalled or banned Chinese-made dairy products.
Since the problem of tainted milk products became public knowledge less than two weeks ago, the crisis has spread to include almost all of China's biggest dairy companies.
A top official with the World Health Organization said Sunday that delays in releasing critical information about contaminated Chinese milk had hampered Beijing's ability to rapidly deal with the problem and warn consumers.
Shigeru Omi, the WHO's head of Western Pacific operations, told reporters at a press conference in Manila that "some people withheld the information for some time," but he did not give specifics.
The scandal began with complaints over milk powder by Sanlu Group Co. _ one of China's best-known and most respected brands. But it quickly became a much larger crisis as government tests found that one-fifth of the companies producing baby milk powder had melamine in their products.
A New Zealand stakeholder in Sanlu has said it was told before the start of the Beijing Olympics on Aug. 8 that there was a problem. The dairy farmers' group Fonterra, which owns 43 percent of Sanlu Group, told the New Zealand government, which informed Chinese officials.
The public was not told until Sept. 11 that the powder, used in baby formula and other products, was laced with melamine.
Melamine is used in making plastics and is high in nitrogen, which registers as protein in tests of milk. Though health experts believe ingesting minute amounts poses no danger, melamine can cause kidney stones, which can lead to kidney failure. Infants are particularly vulnerable.
Some of the farmers who sell milk to Chinese food companies are thought to have used melamine to disguise watered-down milk and fatten profit margins hurt by rising costs for feed, fuel and labor.
The parents of the Hong Kong girl diagnosed with a kidney stone took her for a precautionary checkup because she had been drinking Yili milk daily for the past 15 months. Yili Industrial Group Co. is one of 22 companies whose milk and dairy products were recalled after batches of their products were found to contain melamine.
The toddler was in good condition after receiving medical treatment and had been discharged from the hospital, the government said.
China's communist leadership has launched high-profile efforts to show it is on top of the crisis, with Premier Wen Jiabao appearing on state-run television Sunday to say dairy companies had to show more "social responsibility."
Wen was shown visiting a Beijing hospital where children were having health checks. He also stopped at a supermarket to look at dairy products.
"What we need to do now is to ensure that nothing like this happens in the future, not only in dairy products but in all food," Wen said.
Food and product safety scandals have been a feature of Chinese life. Only last year, the government promised to overhaul inspection procedures after exports of medicines, toys, pet food ingredients and other products killed and sickened people and pets in North and South America.
The chemical in the dangerous pet food was the same as in the milk scandal _ melamine.
Many of the largest companies whose products have been recalled, such as Yili Industrial Group Co. and Mengniu Dairy Group Co., did not have government inspections before the problem became public. The government scrapped that exemption this past week.
___
Associated Press reporter Min Lee in Hong Kong contributed to this report.

http://wtop.com/?nid=105&sid=1478415

Cash for Trash
By PAUL KRUGMAN
Published: September 21, 2008
Some skeptics are calling Henry Paulson’s $700 billion rescue plan for the U.S. financial system “cash for trash.” Others are calling the proposed legislation the Authorization for Use of Financial Force, after the Authorization for Use of Military Force, the infamous bill that gave the Bush administration the green light to invade Iraq.
http://www.nytimes.com/2008/09/22/opinion/22krugman.html?_r=1&th&emc=th&oref=slogin

12th bank failure of the year announced
Regulators close down Ameribank Inc., a West Virginia-based-bank with total assets of $115 million.
NEW YORK (CNNMoney.com) -- Ameribank Inc. was shut down on Friday by the Office of the Thrift Supervision, making it the 12th bank this year to go under.
The Northfork, West Virginia bank had total assets of $115 million and total deposits of $102 million, according to a statement on the Federal Deposit Insurance Corporation Web site.
The FDIC was named receiver and announced that it entered into purchase and assumption agreements with Pioneer Community Bank, Inc., Iaeger, West Virginia, and the Citizens Savings Bank, Martins Ferry, Ohio, to take over all of Ameribank's deposits.
Ameribank has five branches located in West Virginia and three branches located in Ohio. Branches in West Virginia will reopen on Monday and Ohio branches will reopen on Saturday.
All customer accounts were automatically transferred to the two new banks and the full amount of their deposits will automatically be insured, the FDIC said.
Customers of the banks can still access their money over the weekend by writing checks or using ATM or debit cards, according to the statement by the FDIC.
A year of bank failures
This year 12 banks have been forced to close their doors. In July IndyMac was closed down marking the largest collapse of an FDIC-insured institution since 1984. The Pasadena, Calif.-based bank failed because it backed risky home loans. With the special Alt-A home loan that IndyMac offered, a home buyer had to show little evidence of income and assets.
When IndyMac was shut down, it had assets of $32 billion and deposits of $19 billion. While the FDIC protected most of IndyMac customer's assets, some customers lost some of their deposits.
The FDIC insures the assets held by the 8,451 institutions with a total of $13.4 trillion.
First Published: September 19, 2008: 8:05 PM EDT
Will the rescue plan work?Bailout cost: higher than you think

GM Will Draw on Remaining $3.5 Billion in Credit Line
By Jeff Green and Alan Ohnsman
Sept. 20 (Bloomberg) -- General Motors Corp., burning through cash after three years of losses, will tap the remaining $3.5 billion of a revolving credit line as the crisis on Wall Street threatens to crimp companies' ability to borrow.
The balance of the $4.5 billion line will go to help cover restructuring costs, GM said in a statement late yesterday. The Detroit-based automaker said it also completed a $322 million debt-to-equity exchange.
``The disruption in the credit markets have been profound,'' said Pete Hastings, a fixed-income analyst at Morgan Keegan & Co. in Memphis, Tennessee. ``GM has its own set of sizable problems, but I think this was a liquidity play.''
Banks have tightened lending amid the worst housing market since the Great Depression, and this week's bankruptcy of Lehman Brothers Holdings Inc. and government takeover of American International Group Inc. may further curb access to credit.
GM Chief Executive Officer Rick Wagoner has orchestrated a plan to raise $4 billion to $7 billion by selling assets and adding debt to ensure it has enough liquidity to operate through the end of 2009. GM, the world's largest automaker, has lost $69.8 billion since the end of 2004, its last profitable year.
``GM felt it was a very prudent thing to have the cash on hand to borrow at very attractive rates,'' spokeswoman Julie Gibson said in an interview. ``The timing was right, given the obvious instability in the financial markets.''
Not Expected
``This is not something we expected they would need to do until next year,'' said Mirk Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids, Michigan, which oversees $22 billion in assets including Ford and GM debt.
GM has its own cash needs and its decision to use the credit line may add to the concern in the capital markets. ``It's not good either way,'' said Mikelic.
The automaker's shares rose $1.68, or 15 percent, to $13.08 yesterday in New York Stock Exchange composite trading. The credit-line action was announced after the close of regular trading. The shares have dropped 47 percent this year.
The credit line has been in place since July 2006. Funds being accessed may also be used to retire $750 million of debt coming due in October and for more than $1.2 billion of reorganization costs for bankrupt Delphi Corp., a former GM unit, the automaker said. Delphi disclosed GM's increased bailout costs Sept. 12.
`Mechanism Test'
GM's use of the first $1 billion from the credit line, announced Aug. 1, was a step to ``test the mechanism'' of that borrowing and help meet costs at a ``seasonal low point,'' Chief Financial Officer Ray Young told analysts on Aug. 13.
GM burned through $3.6 billion in the second quarter and said that at the end of June its supply of cash, marketable securities and other funds available fell to $21 billion from $23.9 billion at the end of the first quarter, and $23.6 billion a year earlier. The revolver wasn't included in those figures.
Steps by the U.S. government to shore up the financial system should prevent GM's mining of its revolver from becoming part of a flood of companies drawing down unused funds, Morgan Keegan's Hastings said.
``The prudent CFO or CEO may be tapping their lines of credit, especially if they know they are going to need liquidity in the short term and they're concerned about the market,'' Hastings said. The Federal Reserve's action ``may prompt people to wait and see now, because people certainly were on the verge of panic.''
Government Action
The U.S. government yesterday said it is taking steps to cleanse banks of troubled assets and halt an exodus of investors from money markets in the biggest expansion of federal power over the financial system since the Depression.
The government took over AIG, Fannie Mae and Freddie Mac in the past 13 days, a period when Lehman Brothers filed for bankruptcy and Americans pulled a record $89 billion from money- market funds.
The Bush administration sent to Congress today a $700 billion proposal granting broad power to the U.S. Treasury Department to acquire troubled assets now on the balance sheets of U.S.-based financial companies.
The legislation gives Treasury Secretary Henry Paulson authority to own as much as $700 billion in mortgage-related assets at one time. The bill would raise the nation's debt ceiling to $11.315 trillion from its current $10.615 limit.
Government Loans
GM, along with Ford Motor Co., Chrysler LLC and their suppliers, are also asking Congress to appropriate about $7 billion to back $25 billion in government loans to pay for the shift to build more fuel-efficient models.
It's possible many of the actions taken to gain funds from the market were initiated before the Fed action and new actions may abate, Hastings said.
Ford, the second-largest U.S. automaker, on Sept. 16 said it was assessing the impact of Lehman's failure on $1.13 billion of lending agreements it had with subsidiaries of the investment bank.
GMAC LLC, the money-losing home and auto lender partly owned by GM, renewed a credit facility with Citigroup Inc. yesterday, giving the company access to $13.8 billion, down from $21.4 billion that was available last year. GM sold 51 percent of GMAC to Cerberus Capital Management LP in November 2006.
International Lease Finance Corp., the airplane-leasing company owned by AIG, said Sept. 19 it is borrowing $6.5 billion in emergency funding, the maximum amount allowed under its three credit lines.
Seeking Cash
ILFC asked its lenders for the cash on Sept. 16, the day New York-based AIG agreed to give the government an 80 percent stake of itself in exchange for an $85 billion loan.
AIG's unit that makes home and auto loans, American General Finance Inc., said Sept. 19 in a separate filing that it borrowed $4.58 billion under its credit facilities, and said it too asked for the money on Sept. 16.
``Everyone is running to cash, hoarding it, and we're not out of the woods yet,'' Mikelic said. ``There's a little less pressure with the government stepping in. But the government needs to keep printing money, printing securities, even if there is negative yield.''
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajhGEXYAS06Y&refer=home


In a Single Week, America Sails into Uncharted Moral Territory

Monday, September 22, 2008 - Vol. 10, No. 226
Today's comment is by Jack Crooks, Currency Analyst and editor of World Currency Options and The Money Trader.
If you were lucky enough to make it through last week without any major losses, then I congratulate you.
Last week was a street fight in the markets, and I personally know plenty of traders who came out bloodied and bruised. Thanks to the active participation of central banks and the U.S. Treasury, it's now almost impossible to find your footing and stick to an investment strategy without being broadsided.
So instead of analyzing this unpredictable marketplace or trying to read Paulson's mind, we're going to review a week that will no doubt go down in history. In so doing, we'll develop a better understanding of the moral implications of the past week's events.
Week in Review: One for the History Books
If you have money on the line right now, then you know it's been a less-than-pleasant week of trading. We had one of the largest point losses in Dow history followed by a 200-point gain in the very next session. There have been more swings than you could find on the neighborhood playground. But there's also been a steady - if not growing - sense of worry.
At the heart of it all, there has been an equally steady stream of intervention hoping to relieve such concerns.
If you didn't have a chance to keep up with how things played out from day to day, let me do a quick and dirty recap:
Sunday: The Federal Reserve pumped a bunch of money into the system, increased how much it will provide in lending facilities and further liberalized the collateral it will accept in exchange for loans.
Monday: Lehman Brothers declared bankruptcy. Bank of America took control of Merrill Lynch. And AIG's fate hung in the balance.
Tuesday: The Federal Reserve denied the markets a much anticipated interest rate cut. Instead, it followed with a two-year, US$85 billion loan to bailout AIG.
Wednesday: The Treasury announced a finance program where it would auction off Treasuries, separate from what it already offers. The proceeds will go to the Federal Reserve to use for "initiatives."
Thursday: Central banks around the globe decided to join the party. They declared efforts to pump nearly US$250 billion into the global system to avert a financial train wreck.
Friday: We learned of a new initiative, spearheaded by Treasury Secretary Henry Paulson, to put together US$800 billion in a new-fangled institution and US$400 billion more at the FDIC. The money will be used to take crappy assets off troubled balance sheets and grease up money markets.
Sunday: We heard some of the nuts and bolts of Paulson's plan as he ran the talk-show circuit, and we waved goodbye to the Independent Investment Bank. That's right, Morgan Stanley and Goldman Sachs will play a pivotal role as "Bank Holding Companies" in Paulson's new plan.
Prior to this week, steps taken to stabilize the market were considered ineffective. By the looks of it, though, this week's actions tell me these guys don't want to fail in their efforts to restore order...again. But the condition of credit markets is far from cured.
Plus, there's another issue that the Fed and Treasury might have to wrestle with down the road...
Moral Hazard: Don't Worry, We're Too Big to Fail
"We cannot protect all risk in the market, and we should not do it at the risk of the taxpayer." - Richard Shelby, Alabama Senator
"Moral Hazard" is a pair of buzz words circling lunch tables, office cubicles and board rooms around the world. Why? Simply because the Fed and Treasury are taking matters into their own hands, trying to put an end to the losses wreaking havoc on the global financial system.
And in doing so, our government could be seen as endorsing the reckless lending that led us to this disaster in the first place.
However, what scares me most about these interventions is that some could create a humongous burden on the taxpayer.
The two-year US$85, billion loan from the Fed to AIG this week is an attempt to provide a controlled environment to deal with the pain, spare the financial system from the effects of extreme counterparty risk, protect the real economy and keep the bill off the taxpayer.
So what if the burden of this financial mess doesn't end up in the taxpayers' lap? Could there still be moral hazard?
Good question.
Because what kind of precedent are they setting? These are banks and institutions that took on toxic derivatives and securitized debt. They fattened up when times were good, but come crying for help now that the going has gotten tough. How many more will follow expecting the same treatment?
Perhaps this is the real issue.
JACK CROOKS, Editor of World Currency Options and The Money Trader
http://www.sovereignsociety.com/2008Archives2ndHalf/92208InaSingleWeekAmericaSailsintoUncha/tabid/4616/Default.aspx