Is the Reagan 'Counter-Revolution' Dead?, Gulf Investment Blues, A Financial Banana Republic, A Financial Potemkin Republic

Was the financial crash of the past three days one more nail in a deregulated system that had spun out of control?
The system was never actually 'deregulated'. It was allowed to be 'self-regulating', which meant that it was regulated by an incestuous group of CEOs who were often recycled as they corporate-hopped, essentially changing jobs whenever they failed in one place, moving to other leadership positions in other firms as they left behind wreckage.

Some twenty years ago, at the peak of Reagan's power, market 'guru' Ivan Boesky, soon to be arrested and convicted for securities fraud, went to speak at UC Berkeley, that one time bastion of Free Speech Movement, Mario Savio, Bettina Aptheker, among others. He is reported to have started his lecture by stating that: "You know, greed is good..." And hundreds of young MBA throats cheered their approval.
Soon after, "the Russian" was in jail, proving that at some point of the greed process diminishing marginal returns kick in (but all MBAs are not that big on Econ, not even Micro-econ). But the 'revolution' from the top continued, taking on gaudy and absurd features under George W Bush and the neocons who thought they could run a country as a corporation.

In the bad old days some banana republics used to be run as corporations, they were often run by corporations or their surrogates. (Whatever happened to that Ante-bellum plantation on wheels: the United Fruit Company?). What the Reagan counter-revolution and the Bush sequel have done is to convert the US financial sector into a banana republic, albeit a very powerful one with highly productive and hard-working people. A nation more in debt to the Chinese (the rightwing loves to call them Chicoms)and oil producers.
So far, McCain has not provided any sign that he will be any different if he wins. I am not sure he knows what he will do if he wins.

Mr. Bush is flying to Houston to check on the results of the latest natural disaster, Ike. He is heading away from the bigger disaster created by his own party. And the even bigger disaster created by his re-election in 2004.

In the Persian-American Gulf region, stock markets also declined sharply (the index declined 6.5% in Saudi Arabia, 7.4% in Qatar yesterday). The Saudi market also lost the equivalent of $27.3 billion of capitalization on Monday. State investment funds are already intevening to stem the bleeding.
Many of the Gulf 'sovereign' funds have sustained huge losses in international markets as well, especially the US market. Kuwaiti media report that the US investments arm of Kuwait Investment Authority (KIA), which invests for the state, had lost over $5 billion in investments in Merrill Lynch and Citigroup, and that was before the recent crash. That $5 billion loss has certainly increased greatly by now as a result of recent events and the huge decline in shares of these two financials. (I believe whoever is in charge of US investments for KIA should be looking for a new job, and soon). Only last November, the Abu Dhabi Investment Authority reached agreement to purchase $7.5 billion in Citigroup. It is not clear how much that is worth now, but it is easy to calculate- you do the math. They must have followed the exhortations of that other investment genius, Prince al-Waleed Bin Talal who called Citigroup's decline a 'mere hiccup' and that was when the share was over $40. Now, it is about $15.

It is not clear how much these funds have in AIG, possibly the next Potemkin corporation to topple, or how much they have (had) in Lehman Bros. AIG under Hank Greenberg was one firm being pushed for some time by Jim Cramer of CNBC, along with CountryWide under Angelo Mazzolo. He also pushed Wachovia when it was worth about $50+. That is what happens when you decide investment policy by looking into the eyes of CEO's and seeing through to their souls- especially if they are your pals.

"According to results of survey, in which over 4,500 people participated, 75% chose McCain while only 22% preferred Obama." Jerusalem Post, Sept 16. Damn, the old codger is more popular in Israel than in Arizona or Texas. More popular than even in Alaska. That's what happens when you get more Russians than 'other' ethnics.

The Seahawks are still as wussy as ever, as their falling apart at home against the 49ers last Sunday proved. Next time they face the St Louis Rams, again at Qwest Field. This is the bottom o the barrel for this season, and if they can't scrape it...well....
Cheers
Mohammed