Financial Crisis

DAVE DAVIES' Nov. 24 column contains the now familiar refrain that the financial plans we produced last spring and in early November did both too much and too little. In the spring, we were accused of spending too much. In the fall, as we worked on solving a billion-dollar problem, we were accused of cutting too much and making too little in the way of transformational change. Let's look at the reality: The final FY09 budget increased spending by $96 million or 2.4 percent.

THESSALONIKI, Greece - Cheap potato fever is spreading in austerity-pummeled Greece. It started last month when a producer from the northern Nevrokopi area, fed up with selling to wholesalers at a loss, off-loaded 24 tons at cost prices directly to consumers in the town of Katerini. Now, he has been swamped by demand. Lefteris Kessopoulos said Thursday that he has been contacted by resident groups in Athens, the northern towns of Kavala and Larissa - even Pyrgos, 620 miles south of Nevrokopi.

WASHINGTON - Three years ago, a financial crisis triggered by bad mortgage investments spread from U.S. banks to Europe. Panicky financial markets tanked. Now fear is running in the opposite direction. Worries about toxic government debt held by European banks have hammered U.S. stocks. And they threaten to freeze credit on both sides of the Atlantic. And traders are wondering: Could Europe's government-debt crisis spread through the U.S. financial system? No one's sure because no one knows how much toxic debt European banks hold - or how much risk that debt poses to U.S. banks.

Unable to weather a financial crisis brought on by a reported $23,000 embezzling scheme, the Community Center, 28 N. State St., Newtown, will close its doors tomorrow. A statement issued by the center's board of directors at an emergency meeting Tuesday night said the alleged scheme, in which former treasurer Raymond F. Colliton is accused of writing 81 unauthorized checks between Nov. 30, 1987, and Aug. 12, 1989, had proved more crippling than members had anticipated. The board said that "the full magnitude of the loss and the impact on operations was not realized until just the past few weeks.

Greece's financial problems were back in the news Tuesday after a report that the country was trying to renegotiate a financial safety net. A Greek financial official denied the report, but the country's borrowing costs shot up and the value of the euro declined. Here are some questions and answers about the effect of Greece's problems. Why should Americans care about Greece's troubles? Greece is not the only European nation with budget problems. Portugal, Spain, Ireland, and maybe Italy are also struggling.

The restaurants are still packed, the upscale American designer Donna Karan has opened two sleek boutiques, and the aisles are crowded at the new Turkish-built hypermarket. If Russia is in the middle of a financial crisis, somebody forgot to tell a lot of Russians. Since spring, when Russia's stock market was beginning its record-breaking plunge and angry coal miners were blocking the Trans-Siberian Railroad to protest wage delays, many Russians have been oblivious to the looming crisis.

For a decade economists have debated whether Asia had discovered a new kind of capitalism that outstripped America's free market system. At the summit of Pacific and Asian leaders in Vancouver, that debate may finally have been laid to rest. The growing financial crisis in Asia has shattered the myth that "Asian values" fuel economic growth better than Western democratic values. America's economy is humming, while four key Asian nations just sought an international bailout on terms that will leave their economies more open and less "Asian.

The nation's financial crisis is claiming two more victims: Poor people who need legal help, and their attorneys. Programs that provide free legal representation to the indigent are partly funded through interest on accounts for real estate transactions, legal aid groups say. As the housing market collapsed this year and interest rates dropped, funds disappeared. The problem stretches nationwide, but this area has been hit particularly hard, say representatives of local and national legal aid organizations.

John Street says it's time for Sam Katz to stop bragging about the role he played as an adviser to the newly minted Rendell administration on how to dig the city out of its financial crisis in early 1992. In a lively exchange between the two mayoral candidates on KYW NewsRadio yesterday morning, Street said Katz had "no significant involvement either in the writing or the selling" of the five-year plans that Katz's firm, Public Financial Management, helped the city to develop. For Democrat Street, the story of the city's financial recovery is a tale with a happy ending, starring himself and Mayor Rendell.

Think of Chester County's budget as a house. Then imagine an elephant in the living room, about to go on a rampage. That elephant is Browning-Ferris Industries. Last week, Michael Dougherty, vice president of its eastern division, said he was tired of waiting for county officials to lower fees at the Lanchester Landfill and announced that he was ready to haul county trash to a cheaper dumping site across the state line. He would not say where. That could trigger a financial crisis for the Chester County Solid Waste Authority, owner of the landfill, and for the county itself, which guarantees the authority's debt.

For those who swear by "sell in May and go away," what mantra were they chanting after the collapse of Lehman Brothers in September 2008? "Sell after Lehman and never jump in again"? Those nervous days still seem so fresh to me. I fielded many calls from readers worried that once-fat retirement nest eggs in IRAs or 401(k) plans might never hatch. The Standard & Poor's 500 Index, which many use as a proxy for the whole U.S. equity market, fell 38 percent in 2008. For many working people who had diligently deferred salary to retirement savings vehicles, the swoon manifested itself in the decline in value of their accounts.

WASHINGTON - A surprise $2 billion trading loss by a division of JPMorgan Chase triggered calls Friday for tougher regulation of banks three years after their near-death experience in the financial crisis. Shares in the bank, the largest in the United States, lost 9.3 percent of their value and pulled other financial stocks lower for the day, as well. JPMorgan Chase & Co. said Thursday that it lost the money in a trading group designed to manage the risks that it takes with its own money.

Michael Masch, the financial guru backed by ex-Gov. Rendell who was sidelined as chief financial officer of the beleaguered Philadelphia School District earlier this year when the School Reform Commission overhauled its leadership structure, will leave his job in three weeks, officials said Thursday night. News of Masch's imminent departure was made public at a school budget meeting between district officials and community members at West Philadelphia High School, during a question-and-answer volley between a parent and SRC Chairman Pedro Ramos.

Two years after President Obama vowed to eliminate the danger of financial institutions becoming "too big to fail," the nation's largest banks are bigger than they were before the nation's credit markets seized up and required unprecedented bailouts by the government. Five banks — JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to central bankers at the Federal Reserve.

By Eric Posner and Glen Weyl In February, Mary Schapiro, chairwoman of the Securities and Exchange Commission, said the agency is looking for ways to rein in high-frequency traders, who use computer algorithms to buy and sell derivatives at lightning speed to make instantaneous profits. High-speed trading can waste resources and disrupt markets, so the commission is right to look into it. But this is only one issue at the edge of a bigger problem requiring significant government intervention.

"If you called it finely textured lean beef, would we be here?" - Kansas Gov. Sam Brownback, defending the meat product slammed as "pink slime" by critics. "The people who don't participate in this market are making it more expensive for those who do. " ?- Supreme Court Justice Ruth Bader Ginsburg, on what would happen if the so-called individual mandate is eliminated from the Affordable Care Act. "You could say that about buying a car. "? - Justice Antonin Scalia, in a retort to Ginsburg.

The Treasury Department has sold the last portion of $225 billion in mortgage-backed securities purchased primarily from Fannie Mae and Freddie Mac when the financial crisis was at its worst in 2008 and 2009. Sales of the securities for $250 billion last week netted the government $25 billion in interest, Treasury reported Monday. Some financial experts said the profit realized could be a sign that efforts to stabilize the mortgage market might not be as expensive as had been predicted in fall 2008.

Cheryl and Jim Friedman, retirees in St. Louis, had two-thirds of their retirement money in the stock market in 2008. When the financial crisis struck that fall and stocks lurched up and down with nauseating speed, Cheryl, a former accountant, pulled the money out. Fearing that the next crisis was always around the corner, they have kept most of the money out. It's parked in a money-market account earning a meager 0.1 percent per year. The Friedmans watched in agony as stock prices doubled over the last three years.

Back in the fat years, before so many of its heavy users went broke, the credit card industry down in Wilmington recruited a string of former FBI officials. Bankers wanted their anti-Mafia experience - to fight fraud and to sell more credit cards to law enforcement pros. Over breakfast at the Hotel du Pont one morning in the late 1990s, former FBI Deputy Director William J. Esposito and former New York boss investigator Jules Bonavolonta , newly hired by the former MBNA Corp.

WASHINGTON - A stock-market rally at the end of last year helped Americans rebuild more of the wealth they lost during the recession - a trend that carried over into 2012. The added wealth led households to borrow more for the first time since the 2008 financial crisis began, even as home values fell again. It is a notable shift that shows many consumers are finally feeling more confident about spending after years of paring debt. Household net worth increased 2.1 percent, to $58.5 trillion in the October-December quarter, the Federal Reserve said Thursday.