Liechtenstein, and its citizens, have long been more than a little strange. All microstates are a little strange, being, like Liechtenstein the, polar political opposite of failed states.
Failed states are plagued by institutions too weak to prop up the flaccid rule of law, and thereby permitting “shadow institutions” (the black market, organized crime, official corruption, non-governmental bases of power) to garner such a mass of power and influence so as to tear apart the thin threads of justice and stability merely by the centrifugal force of their motion.
Microstates enjoy an artificially stable state by virtue of their globally envied institutions. Usually, these were created during formative times in global history. Often they were augmented by the highly centralized, even imperial rule in place when the borders were drawn. In Liechtenstein, Vaduz was lorded over by no feudal subject and therefore beholden only to the Emperor (making it the early 18th century, European equivalent of North Carolina for carpet bagging). When Napoleon dismantled the Holy Roman Empire, of which Liechtenstein had officially been member, the tiny Principality, unlike her peers, dissolved into a state with no fealty at all save to its local princes.
Come World War I and World War II, the entire country is basically a big safe deposit box for Europe.
Set the way forward machine to 2008-2009. Banking is getting clobbered. In other words, the institutions (primarily Swiss) of banking secrecy and investment acumen, which permitted a country which otherwise lacked the critical mass to be even remotely interesting, much less worth using as a safe haven, to hold it together, are under siege.
The only real question is: Will Liechtenstein be annexed by Switzerland, or Austria?
UK Seals Deal To End Liechtenstein Tax Havens [Times Online]
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Someday Poland will grow up and realize that issuing more debt, not selling assets, is what modern economies do during a fiscal crisis. Don’t worry though, Poland, we will still be around when you decide to join the cool kids debtors club.
Poland’s Cabinet approved a plan to sell stakes in state-owned companies including KGHM Polska Miedz SA and Grupa Lotos SA in an effort to finance its budget deficit after tax revenue slumped and public debt soared.
“The plan acknowledges the need to speed up privatization,” said Prime Minister Donald Tusk at a press conference in Warsaw today. The budget “requires a cash injection to cover basic spending.”
Comments like this one from a former Polish finance minister are why people like this are (were) finance ministers in Poland:
“It’s high time that Poland undertook real privatization,” said economist Miroslaw Gronicki, a former finance minister, by phone. “Any revenue from privatization means a reduction in debt, and as far as the budget is concerned it’s an extremely sensible move.”
Seriously, who talks like that anymore?
Polish Government Approves Asset Sales to Cover Swollen Deficit [Bloomberg]
Caught by one of our readers, this month’s version of “juxtapositional comedy” care of the Wall Street Journal:
In Today’s Paper [The Wall Street Journal]
That’s the most obvious interpretation of the news that Westchester Country ($116,916 median household income to a New York and United States average of $51,001 and $61,117 according to the 2000 census) agreed to build a slew of “affordable housing” in a settlement with the Department of Justice and HUD over Westchester’s supposed failure to enforce fair housing laws.
The Wall Street Journal is calling it a shot across the bow of other counties (they mean the wealthy ones though) and in particular jurisdictions growing fat (or just barely failing to starve) off government teats.
There’s no reason at all, when you think about it, that you shouldn’t be able to move into your new place in Scarsdale right after for filing for unemployment.
But Mr. Sims said the lawsuit had made clear that “there was a significant amount of racial segregation” in Westchester. He said studies showed that zip codes could increasingly serve as a predictor of life expectancy and illness. “It’s time to remove zip codes as a factor in the quality of life in America,” he said.
Indeed.
Wealthy Suburbs Accept Low-Income Homes [The Wall Street Journal]
As Dealbreaker readers will already been keenly aware, American automotive firms have been beset by difficult market conditions including too many customers, too few customers, high material prices, low material prices, insufficient resale value, excessive resale value.
You will be happy to know that the management team has been working overtime and come up with this solution.
GM, eBay to Test Online Car Sales [The Wall Street Journal]
There is this recursive sort of double-take one does on learning that a firm is on the verge of exhausting its legal reserve. First, that the firm needed a large legal reserve. Second that it was exhausted. Third, that “large” in this instance is $650 million. Whoosh!
Somewhere there is a fantastic punch line in there when the horrified looks are placated by a quick “Yeah, it’s State Street Bank.” Everyone goes back to drinking a middling California Chardonnay. That this would be soothing should be irritating.
State Street Corp. may deplete the $625 million set aside in 2007 to settle legal claims stemming from losses linked to subprime mortgages.
The reserve “may not be sufficient to address ongoing litigation” if the U.S. Securities and Exchange Commission sues State Street and seeks monetary penalties, the Boston-based custody bank said in a regulatory filing today. The SEC told State Street that it might be sued over disclosures about and management of fixed-income investments through 2007, the company said June 25.
“We’re not going to speculate as to the amount of any potential monetary penalty,” Carolyn Cichon, a spokeswoman for State Street, said in a telephone interview.
No reason, it seems, to be alarmed. Of course the reserve got spent. That’s what it is there for.
The company declined 99 cents to $52.87 at 11:06 a.m. in New York Stock Exchange composite trading. It has gained 34 percent this year, compared with the 25 percent rise for the Standard & Poor’s index of asset managers and custody banks.
That’s a modest decline, isn’t it. Lower administration costs now that $625 million no longer resides in the building?
State Street May Exhaust $625 Million Legal Reserve [Bloomberg]
New York Attorney General Andrew Cuomo is shocked, shocked to discover that misleading advertising is going on in here.
Sell too few cars? Get dropped. Sell too many? Get dropped. Turn around and start issuing misleading advertising
New York Attorney General Andrew Cuomo today told 40 auto dealers across the state to stop issuing misleading advertisements for the Federal Car Allowance Rebate System, known as “cash for clunkers.”
The government-funded clunkers program, which seeks to boost the economy, allows dealers to credit $3,500 or $4,500 for trade-ins that may be worth less. Dealers’ ads mislead consumers into believing that their trade-in vehicle qualifies for the program when it does not or that they are eligible for a several-thousand-dollar rebate, Cuomo said in a statement today.
Next thing you know they will want to eliminate introductory or teaser rate financing!
Cuomo Tells Dealers to Stop Deceptive Clunkers Ads [Bloomberg]
Don’t get us wrong. We know where our bread is buttered. But, that said, there seems to be a lot of piling on going on. For instance:
George Griffith of the trustee’s office said Dykstra signed a “real property questionnaire under penalty of perjury,” claiming insurance on the mansion did not expire until December. But the court filing says that on the very day Dykstra signed the document, July 14, the insurance was cancelled “for failure to pay.”
“Undoubtedly, the debtor had received prior notices that the insurance would be cancelled if the premium was not paid,” the filing said, calling Dykstra’s actions “dishonest.”
Perhaps we’re just being difficult, but it occurs to us that the policy “expiring” is not at all the same as the policy laboring under the constant risk of termination for non-payment. Of course, we only have CNBC doing translation for us here, so it is hard to tell, but when you are digging through the semantics in this kind of disclosure to try and force a Chapter 7 liquidation, you really are scraping the bottom of the barrel.
Sure, we suppose it is possible that what Lenny really penned on pain of perjury was more along the lines of “…and furthermore, there are absolutely no issues that might threaten, or cause outright, a lapse of insurance coverage at any time during the bankruptcy process….” That seems… thin.
Baseball Great Dykstra Could Face Liquidation [CNBC]
Amusingly, it wasn’t 6 months ago that Pequot managed to capture the much-coveted “probably won’t go under” award (technically the “Pulliamp-Strasburg Likely Survivors Amid Turmoil in the Industry” award) issued by the Wall Street Journal to the most middling hedge-fund. More amusingly, it only three months and change from there before Samberg had “…concluded that Pequot can no longer stay in business.”
In no time at all Pequot Capital Management became one of those “repeat offenders” here on Dealbreaker. You know the type: constantly tarnishing these pages with tales of woe, hints of scandal, long missives and tedious adéus of every kind.
But now, new news brought to the forefront by Pequot hastens my return to these pages- owing to my minor, but entertaining connection to the firm, I gravitate to writing projects that include it.* Address your hate mail accordingly.
Trades [by Pequot] linked to Google Inc., Cox Communications Inc., International Securities Holdings Inc., Premcor Inc. and dozens of other companies prompted surveillance units policing U.S. exchanges to make the referrals to the Securities and Exchange Commission, according to agency records obtained by Bloomberg News. Thirty-six reports flagged possible insider trading. Four indicated possible manipulation and four were labeled “other.”
“The numbers would indicate they had trading that closely preceded 36 material events” said Bradley Bennett, a partner at Baker Botts in Washington and a former SEC investigator who focused on insider-trading cases.
No surprise there. Neither, sadly, is the fact that notices on Pequot go back to 2005 or earlier.
I bet there is a press release on their website. Oh. Darn.
Pequot Trading in Google, Cox, Premcor Sparked Warnings to SEC [Bloomberg]
CNN is reporting that the Hillsborough County, Florida medical examiner has listed Cocaine as a contributing factor in the death of Billy Mays. Who knew?
The situation is fluid. (Embalming).
Autopsy: Cocaine a factor in Billy Mays’ death [CNN]
Related:
A California man was charged Thursday with bilking investors of $3.3 million while posing as an Oscar-winning designer of sound effects.
Investigators say Carrington used some of the proceeds of his crimes to buy a 2003 Lamborghini Murcielago, a 2005 Hummer H2 and a 2006 Mercedes SL500R, with a combined value of almost $500,000, the San Francisco Chronicle reported. Prosecutors are seeking forfeiture of the cars.
Man allegedly used fake Oscar in fraud [UPI.com]
Dodd Just As Entitled To Private, VIP American Dream Of Home Ownership As Towns, Damnit!
By Equity Private
The Senate Ethics Panel says so. So there. Ok, they had some other notes to add too, but no one is trying to take the Dream away. No one:
But in absolving Mr. Dodd, the chairman of the Senate Banking Committee, the Senate Select Committee on ethics said he should have shown better judgment in order to avoid the appearance of wrongdoing.
“Once you became aware that your loans were in fact being handled through a program with the name ‘V.I.P.’ that should have raised red flags for you,” the panel said in a letter to Mr. Dodd dated Friday.
You would think the panel, obviously having not seen Mr. Dodd’s wide collection of VIP emblazoned Hello Kitty coffee mugs, would realize that the reverse is true. If Doddie isn’t immediately granted complimentary admission into the rarest, most exclusive, super-premium, product/service category the vendor (any vendor) offers,
the Subcommittees on Western Hemisphere, Peace Corps, and Narcotics Affairs
get medieval on your ass.
Senate Ethics Panel Clears Dodd on Countrywide Loans [The Wall Street Journal]
