The Economist

"Grease my palm", The Economist, 11.29.2008, special report, 10.

The reason for the persistent corruption is not that the Russian people are genetically programmed to pay bribes, but that the state still sees them as its vassals rather than its masters. The job of Russian law enforcers is to protect the interests of the state, personified by their particular boss, against the people. This psychology is particularly developed among former (and not so former) KGB members who have gained huge political and economic power in the country since Mr. Putin came to office. Indeed, the top ranks in the Federal Security Service (FSB) describe themselves as the country's new nobility - a class of people personally loyal to the monarch and entitled to an estate with people to serve them.


"Plan C", The Economist, 11.29.2008, 73.

Still, helping banks recapitalise only partly mitigates deleveraging. Many large buyers of debt assets have simply disappeared, such as 'structured investment vehicles', or SIVs, that used short-term financing to buy up asset backed securities, often from banks seeking to free up capital. At one point they held up to $400b in assets. But, unable to roll over their funding, they have been either reabsorbed by banks or closed. In October one of the last big SIVs, Sigma Financing Corporation, with $27b in assets, collapsed. Its liquidation by creditors is thought to have contributed to the plunge in prices of asset-backed securities which has made it impossible for new securities backed by student, credit-card and car loans to be issued.

Securitisation is decades old, mundane and vital. Banks and other lenders routinely pool their student, car, small-business and credit-card loans, and residential and commercial mortgages into securities and sell them to investors, leaving room for them to make new loans. The deleveraging of banks may be inevitable and healthy, but the disappearance of the securitisation market is not. Without it, 'millions of Americans cannot find affordable financing for their basic credit needs,' Hank Paulson, the treasury secretary, said on November 25th.


"Singing the blues", The Economist, 11.29.2008, 75.

Humbled by a devastating, Lehmanesque run on its shares, Citi has become the latest, and largest, financial institution to need rescuing. The giant bail-out gives the bank breathing space. But it also leaves Citi in what a prominent financier calls a 'financial no-man's-land': still too leveraged for comfort and too cumbersome to manage effectively, yet far too big to fail.

Citi's off-balance-sheet exposures - $1.2t at the end of September

[how can off-balance-sheet be construed as anything but fraud?]