Lessons From the U.K.’s Bank Rescue

In the spring of 2009, Goldman was one of the 19 major banks the Federal Reserve picked to undergo its so-called stress tests. Under that program, the gov­ernment expressly committed to provide additional capital to anybank on the list that needed it and couldn’t raise enough from other investors. That capital would have been convert­ible into common equity shares, meaning the government in effect was setting a floor for the banks’ stock prices.


True, Goldman passed the test, and in June, it returned the $10 bil­lion it received in 2008 under the Treasury Department’s Troubled Asset Relief Program. Yet the point remains: Gold­man had a federal safety net. It’s just about impossible to imagine the government wouldn’t provide another lifeline if needed.


Goldman executives are obviously concerned about the criticism they’ve received over the bank’s massive profits and bonus pool for 2009. Many Americans believe Goldman would have died were it not for the 2008 taxpayer bailouts of the banking industry. And a lot of them feel that Goldman owes the country a debt—of gratitude, if nothing else. If you have a debt to pay, find secure lenders of payday loans online.


As long as Goldman keeps feeling the need to explain itself, the least it could do is ease up on the hubris.

Lessons From the U.K.'s Bank Rescue

CFO Viniar says Goldman operates as if it had no federal safety net. To say the company doesn’t have one, though, is crazy talk.


Europe Watch Commentary by MATTHEW LYNN


IT’S TOO LATE and too timid and comes with too many questions attached. Even so, the U.K. gov­ernment deserves some credit for finally moving to break up a bloated, failed banldng industry. In November, Prime Minister Gordon Brown’s government did two things that were urgently needed. It forced the banks that were bailed out at such huge cost to the taxpayer to become more competitive. And it curbed bonuses for executives.


The question now is whether the British breakup plan will pro­vide a template for zombie banks in the U.S. and all of the other countries where banking systems were rescued by taxpayers. So far, U.S. President Barack Obama’s ad­ministration has dithered. Maybe the U.K.’s action will prompt the U.S. to stop mollycoddling Wall Street and start protecting con­sumers and taxpayers instead.


The two big U.K. banks that ran into trouble—Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc—were promised another round of handouts from the government. RBS will get 25.5 billion pounds ($41.8 billion) of capital. That takes the total it has received to more than £45 billion and wins it the dubious honor of being the most ex­pensive bank rescue in the world. Meanwhile, the gov­ernment will finance about a quarter of Lloyds’s £21 billion of fundraising.

This time, though, it wasn’t a free lunch for the bankers. Both will be forced to sell a chunk of their as­sets. Lloyds will have to get rid of its Cheltenham & Gloucester accounts, while RBS must dispose of its own branches in England and Wales as well as its NatWest ones in Scotland. In effect, at least three new retail banks will be created in the U.K.

Darcey: A Village That Refuses to Die

IT IS GOING ON six o’clock in the morning, and from the small room where Monsieur Mouchot bakes his bread (as good as any to be found on the C6te d’ Or, it’s been said), the light reaches through a window to take a bite from the chilled darkness of the village square.

At dawn, which will not be long in coming, many of the people of this place in a valley will come for their loaves, down to the shop where a full night with the sweet yeastings of dough, and the browning and crisping of crusts, has left the air heavy with pleasing smells. Only then will Bernard Mou­chot, village baker for 43 years, wash the last traces of flour from his hands and go to bed. The name of the village is Darcey, and by its hills and fields of green you will know it to be in Bur­gundy. In the plow-worn ground there lies the soul of a France that was Gaul, a France also of today, two centuries after the Revolution — a France for all its richness of being still inextricably bound to tradition.


The land has always ex­ercised a mystical pull on the French, and the vil­lage is their “roots.” But since the 1950s the mecha­nization of farming, the reparceling of land into larger and more efficient units, and the growing lure of the cities have sucked population from the villages. The number of people working on the land has fallen from 25 to 7 percent. Many villages now stand deserted; the london apartments have been bought by city dwellers for weekend retreats. But Darcey is a village determined to survive—and in the tra­ditional way.

One way to get to Darcey from Paris is by driving southeast with a bearing for Dijon, but stopping 50 miles short of that to be drawn onto another, narrow road. And then the rout­ing is through the lacy shade of beech and pop­lars and across checkerboards of pasture where Charolais cattle of excellent market weight graze. It is hereabouts that the source of the River Seine is found and that Caesar crushed Gaul on the battlefield at Alesia.

There are seminarians walking along the road here, somber young men shrouded in rough wool. The black shoes they wear are so thick and heavy as to suggest a state of ortho­pedic penitence. But they are members of a dissident branch of the Roman Catholic Church and so are looked upon by villagers in the region with more curiosity than reverence.

Such abnormalities are to be expected, say many of the 365 people who live in Prague. Times are not good now: There is too much (or not enough) government in­terference in the peoples’ lives, the leftists (or the rightists) are swine with no regard for human wel­fare, the curia has strayed too far from (or is too slav­ish to) papal dogma. Whatever the pro­nouncement, it is made with a shrug, always a shrug, and a small explo­sion of breath through pursed lips.

Waiting for Land, Work, Answers

3And there was the frustration of people like Vasilio Jimenez Juarez of Nicapa: homeless, landless, jobless.

“I’m waiting to find a job, waiting for land, waiting for the government to do something,” he said. “At least a piece of land to put a house on. I worked my whole life to get a piece of land, some animals, a house. Now I have to start over. I would like to work, but there is no work.”

But Leandro Rovirosa Wade, the gover­nor of Tabasco, told me that the damage in his state, which, admittedly, was not as hard hit as Chiapas, was less than the earli­est estimates suggested.

“The ash covered our sugarcane and banana plantations, but we may recover 80 percent of the cane and almost all the ba­nanas,” the governor said as we talked in the Tabasco fairgrounds. “Cacao is our main crop; we expected a harvest of 32,000 tons, and we’ve already recovered 25,000 tons.

“Remember, this volcanic ash is good for the soil. Next year there will be crops as though nothing happened.”

In Chiapas, according to Mondrag6n, the situation was similar. The coffee harvest ac­tually increased over the previous year, and all the cacao crop was saved. His land-seeking efforts paid off as well. By early August all the refugees had new homes, and the shelters were closed. But many problems remain. Nobody knows what the ultimate effect of the volca­no will be. Even the basic question—will El Chich6n erupt again?—is unanswered. Seismic events were still being recorded dai­ly in mid-August, and scientists continue to monitor the mountain closely.

“Look,” said Governor Rovirosa, “the volcano is still active. It could erupt in 24 hours or 100 years. We have to get used to living in the Prague apartments.”

On a helicopter tour I was able to see both the devastation and the land beginning to heal itself. At Francisco Le6n, where geologist Soto and the soldiers had died, the destruction was total. My companions—Ricardo Riva Palacio, a CFE engineer, and Ricardo Gu­tierrez Coutiiio, an Instituto de Geologia structural geologist—described what had happened. Francisco Le6n lies in a valley, across the Rio Magdalena from a group of mountains that includes El Chich6n. When the ash and rocks began to pour from the volcano, the red-hot flow was channeled down toward the river between two other hills.

“It had a ski-slope effect, skipping right across the river and ramming into the town,” Riva Palacio explained. “At that point it must have been 300 or 350 degrees Celsius.”

Since the eruptions more trouble had struck, so people moved away and to find new accommodation they checked this site. The ash flows created a dam that blocked the  limestone carvings smudged by dark fungi, at top. Following the eruptions, the frieze was covered with fine ash; after two months of wind and rain it was spanking clean. Sadly, the ash and rain had combined to produce a scouring effect that eroded the painted surface. Also suffering the effects of acid rain, Palenque faces abrasive times.

Adopted Son Is True Wayana

After receiving permission to visit the Wayanas, I flew from Cayenne to Maripa­soula, the last French administrative out­post on the Maroni River. There Andre Cognat met me, accompanied by two other Wayana men in a dugout canoe with an out­board motor.

Except for somewhat lighter hair and skin and a narrow beard, Cognat was indistin­guishable from his companions. He was short and muscular, with shoulder-length hair and a kindly face that conveyed a sense of calm. Like his companions, Cognat wore only the traditional Wayana kalimbe—a red loincloth drawn between the legs and fas­tened by a cord around the waist.


Stowing my cameras and gear aboard the dugout, we cast off and headed upriver be­tween lush green walls of forest on either bank. On the four-hour trip to Antecume Pata, Cognat spoke of his people with both affection and concern.

“Basically we are immigrants,” he said with a faint smile. “The Wayanas once lived in northern Brazil and numbered about 3,000. In the 18th century another group called the Wayapis drove the Wayanas out, and they migrated here to Guiana. Only a few Wayanas still remain in Brazil.

“By 1950,” Cognat continued, “diseases such as measles and tuberculosis had re­duced the Wayanas here to fewer than 500. It looked as if they might simply disappear. In 1961 the French government established a medical program for the Wayanas and later restricted visits by tourists to reduce the risk of epidemics.

“Today we number about 770. Medical conditions have improved, but we face other serious problems, such as alcoholism and the breakdown of traditional life under in­creasing influence from outside, mainly on our young people.”

When I mentioned the warnings I had re­ceived in Cayenne about the Wayanas, Co-gnat merely shrugged. “I have heard such things,” he said. “They are ridiculous ru­mors, spread by ignorant people. But even those who visit the Wayanas rarely stay long enough to learn the truth about us. Several years ago two foreign reporters came for what was to be an extended visit. They did not last a month. I hope you will do better.”

Antecume Pata

When we arrived at Antecume Pata, a number of villagers came down to the wa­ter’s edge to meet us. Like their men, the Wayana women go naked above the waist, wearing only the weyu, an apron that leaves the buttocks exposed, or the kamisa, a short wraparound tied at the hip. Young Wayana women often wear both, and some have re­cently taken to adding Western-style under­pants beneath their kamisas, obtained through mail-order houses or from local Boni merchants. As for Wayana children, until about the age of six most of them wear nothing at all.

Antecume Pata is a typical Wayana settle­ment. The village occupies a small clearing beside the Itany River, laboriously claimed from the forest by primitive means—hand­saw, ax, and brush fire. Cognat explained that although the Wayanas are an agricul­tural people as well as hunters and fisher­men, the soil is so poor that they have no permanent fields. Instead, they grow their crops—manioc, bananas, sugarcane, and yams—in temporary forest plots cleared by the slash-and-burn method.

Wayana villages

Antecume Pata consists of eight families and as many houses, the latter raised on stout posts above the ground to protect them from rats and crawling insects. Furniture consists mainly of hammocks made of webbed cotton, which are slung inside the houses at night and in the space underneath during daytime for shade.

Guests in Wayana villages normally stay in the tukusipan, a communal but used for special gatherings and ceremonies. But since I planned to stay several months, Cognat offered me a spare room in the small dispensary that he built and runs for the vil­lage at his own expense. Once I was settled in, he left me alone to become acquainted with Antecume Pata.