And it’s another down day today. Surprise. Monday’s big rally, rising by 936.42- the biggest ever- almost got wiped out after yesterday’s drop of 76 points and today’s tenfold drop of 733.08 to 8,577.91. NASDAQ fell by 150.48 to settle at 1,628.33 and S&P also headed south by 9% to close at 907.84. Some facts: Monday’s rally is the biggest since the spring of 33 and last week’s more than 2000 point drop was the biggest since the summer of the same year. The volatility index, VIX, which basically reflects people’s fear of the market shoots up again to 69.25 after two days of hovering under 60.

People attribute the drop to two main things: hedge fund liquidation as well as the negative retails figured taken from the Fed’s Beige Book released earlier today. In this crisis, hedge funds are some of the biggest casualties and more of them are expected to go out of business in the coming days. As investors seek to get their money back, hedge fund managers scramble to take their positions out, in effect, creating an oversold market. Monday’s historic rise, people say, is still not the beginning of another bullish market. It was simply a bear rally.

With an oversold market, people saw the opportunity to buy again. Add to that the positive result that came out of the meeting of European leaders over the weekend- plans guaranteeing bank liquidity and interbank lending. People were also expecting a $250bn plan of the US government focusing on recapitalization and bank debt guarantees to be unveiled. Serving as the first tranche of TARP’s $700bn value, beneficiaries are: BofA, JP Morgan, Citi, Merill Lynch, Morgan Stanley, Goldman Sachs, State Street, Bank of New York Mellon and Wells Fargo.

Then there’s the report indicating that retail businesses have gone down in all 12 districts covered by the Fed report. Traders refer to the retail figures for September as a big killer of today’s market.

From the time I last blogged, Wall Street has witnessed a tremendous change. That time, just a week after Lehman’s bankruptcy, AIG’s government bailout and BoA’s acquisition of ML, things have gone worse and within the last 2 weeks alone, so much more have changed particularly in Europe, which is arguably bearing the brunt of this crisis heavier than the US. Here’s a quick list of what has been done by governments in and outside the US:

• $700bn bailout plan by the US
• Morgan Stanley and Goldman Sachs become bank-holding companies
• Mitsubishi UFJ’s $9bn capital injection in Morgan Stanley. $7.8bn for convertible preferred at $25.25 and $1.2bn non-convertible. Both yield 10% dividend
• Wells Fargo-Wachovia-Citi love triangle. WFC won. Citi decided stopped hoping getting the deal or part of it ($40bn worth of Wachovia’s deposits) but insists it will pursue legal charges for breach of contract.
• JPM saves WaMu for a $1.9bn deal acquiring branches and deposits. This gives JPM access to a huge deposit base.
• Days after LEH’s fall, Barclays acquires the bank’s North American operations including investment banking, fixed income and equities sales, trading and research operations. Nomura Holdings, Japan’s biggest brokerage buys both of the bank’s Asian and European businesses- in a span of 24 hours.
• Gordon Brown takes the lead in presenting a comprehensive plan to help solve the crisis. The plan involves £400bn- £250bn for guarantees, £150bn for liquidity, and £50bn for direct injection to its biggest banks- Lloyd’s TSB/HBOS, Royal Bank of Scotland and Barclays.
• Nationalization of Iceland’s three biggest banks: Landsbanki, Kaupthing, and Glitnir
• France’s €360bn- €320bn for bank guarantees, €40bn for bank equity stakes
• Germany presents €500bn- up to €400bn for bank guarantees and €100bn for additional support
• Spain then pledges €100bn for bank guarantees while Italy will be issuing €40bn worth of treasuries for temporary funding.
• And I’m sure there are more I missed.

After plans have been unveiled and days have passed, we are yet to see confidence come back to where it was before the financial crisis struck. Just a little over a year ago, the Dow hit its all-time high of 14,164. A year later, it hit its lowest in decades. It saw the biggest drop ever, even beating those that happened during the Great Depression. The guarantees are designed to thaw the frozen credit markets but there is still no guarantee that whatever banks receive from the government will be passed on for interbank lending. In tonight’s interview with Paulson, he dodged the question when asked how the government can guarantee that the money will be used for lending and not retiring the debts they are unable to meet due to liquidity problems.

While the plans so far unveiled do sound positive, a lot of people are still confused as to how these things would work. Specifically, there are still questions as to how the purchase of toxic assets will be done. The biggest issue, the pricing, remains unsolved. I believe that the Treasury’s shift from purchasing the assets to guaranteeing lending is partly a result of the urgency of things. Direct injections provide instant liquidity to banks, which is perhaps the biggest problem at the moment. However, the urgency to get rid of toxic assets remains intact and the Fed/Treasury would have to come up with a pricing mechanism as fast as they did with the bailout plan and the details of the first tranche involving $250bn.

Set aside the notion that this bailout creates the biggest hedge fund in the world or turns the US into a socialist state. It would be ideal if the government do not take stakes in these financial institutions, even as passive investors. Agreements have been reached and at the moment, what’s most important is for decisions to be made even when they’re not the most effective. Waiting a longer time would trigger far worse negative consequences in the markets. We don’t even know when “the most effective” solution would be reached. There will always be people who would play the devil’s advocate. I am against the principle that government’s intervene; I am for free markets and the invisible hand. But in dire circumstances like this, perhaps only the government has the power to do something about it. Because the very markets that I and many other rely on are just too weak and fearful to do anything.

The financial tsunami, as many so aptly describe how things are going at the moment, has found me more glued to TV than ever. I have been glued for weeks but since Sunday night, when Lehman Brothers reported to file for bankruptcy and Merrill Lynch announced selling itself to BofA, being a couch bed potato has never felt so gratifying. Having to follow the DJIA, NAS, S&P and hundreds others of stocks go up and down; grasp, learn and re-learn financial concepts; and focus on discussions and catch up with what is being said could only confirm that there is a big finance geek in me hiding (not quite secretly so) and waiting to come out. I have honestly found it challenging to completely follow the CNBC star troopers debunk the issues surrounding the financial meltdown that’s not only hitting Wall Street but also Main Street. I found inherent beauty in seeing the fluctuation/volatility in the markets, with the Dow plunging more than 500 points Monday, up 300 Tuesday, down Wednesday, up Thursday, and so far, Friday, up another 410 points. Include there the intra-day up and downs and you have a really exciting story. If the Dow finishes higher than 404 points today, then we’ll end up on the same level or higher than when Monday opened- as if nothing happened. How’s that for an exciting turn out of events? I would like to think that the Fed and Treasury have managed to deal with things quite well to reduce the fear and panic that is continuously killing Wall Street. Tuning in to CNBC for as long as I’m awake every day, I couldn’t help but also be impressed with the competence and expertise of people- Santelli, Liesman, Faber, Ratigan, Macke, Pisani, Bartiromo, Carusso-Herrera, Gasparino… Surprising are information that concern 30/40-to-1 bank leveraging, stock price drops of more than 50% to 90% in a short time span, record-breaking jump in volatility (.VIX), rumored demise of even the top two (and only survivors) of this crisis, government bailout and infusions of trillions of dollars, money market funds breaking the buck- I just can’t get enough. The TV serves as my wake-up call (I set it to turn itself on at around 930am), practically starting my day with financial news and while it doesn’t become a sleeping pill for me, heck no, it doesn’t take a rest until about 12 midnight, when the re-run of Fast Money, now my favorite show, ends. Re-runs… yes, sometimes I watch them again just to make sure I understand critical issues and points (yes, the challenge I mentioned earlier being that I don’t get things the first time around). I even download the video podcast. Not only is it a highly informative show, but there are personalities there who just crack me up. Ah finance… I just can’t get enough.

PS I should have paid more attention in my boring classes before.

This was an article written by Georgian president Saakashvili presumably as a response to yesterday’s column by Medvedev. Also from the FT.

Any doubts about why Russia invaded Georgia have now been erased. By illegally recog­nising the Georgian territories of Abkhazia and South Ossetia, Dmitry Medvedev, Russia’s president, made clear that Moscow’s goal is to redraw the map of Europe using force.

This war was never about South Ossetia or Georgia. Moscow is using its invasion, prepared over years, to rebuild its empire, seize greater control of Europe’s energy supplies and punish those who believed democracy could flourish on its borders. Europe has reason to worry. Thankfully, most of the international community has condemned the invasion and confirmed their unwavering support for Georgia’s territorial integrity and sovereignty.

Our first duty is to highlight Russia’s Orwellian tactics. Moscow says it invaded Georgia to protect its citizens in South Ossetia. Over the past five years it cynically laid the groundwork for this pretence, by illegally distributing passports in South Ossetia and Ab­khazia, “manufacturing” Russian citizens to protect. The cynicism of Russia’s concern for ethnic minorities can be expressed in one word: Chechnya.

This cynicism has become hypocritical and criminal. Since Russia’s invasion, its forces have been “cleansing” Georgian villages in both regions – including outside the conflict zone – using arson, rape and execution. Human rights groups have documented these actions. Moscow has flipped the Kosovo precedent on its head: where the west acted to prevent ethnic cleansing, in Georgia ethnic cleansing is being used by Russia to consolidate its military annexation.

Other Russian lies have also been debunked. The most egregious was Moscow’s absurd claim on the eve of the invasion that Georgia was committing genocide in South Ossetia, with 2,000 civilian deaths. A week later, Moscow admitted that only 133 people had died. These were overwhelmingly military casualties and came after the Russian invasion. But the genocide claim served its goal. In a media era hungry for content, the big lie still works.

Russia’s campaign to redraw the map of Europe is based on the propagation of misinformation. On Wednesday on this page, Mr Medvedev asserted that Georgia attacked South Ossetia. In fact, our forces entered the conflict zone after Russia rolled its tanks on to our soil, passing through the Roki tunnel into South Ossetia, Georgia. Mr Medvedev also claimed Russia had no designs on our territory. Why then did it bomb and occupy Georgian cities such as Gori? Why does it continue to occupy our strategic port of Poti?

Moscow also counts on historical amnesia. It hopes the west will forget ethnic cleansing in Abkhazia drove out more than three-quarters of the local population – ethnic Georgians, Greeks, Jews and others – leaving the minority Abkhaz in control. Russia also wants us to forget that South Ossetia was run not by its residents (almost half were Georgian before this month’s ethnic cleansing) but by Russian officials. When the war started, South Ossetia’s de facto prime minister, defence minister and security minister were ethnic Russians with no ties to the region.

The next step in Russia’s invasion script, of disinformation and annexation, is regime change. If Moscow can oust Georgia’s democratically elected government, it can then intimidate other democratic European governments. Where will this end? What we know about Russia, and especially the current regime, is not encouraging.

Last week Vaclav Havel, the former Czech president, put us on alert: “Russia does not really know where it begins and where it ends.” He noted that the Moscow regime is “a lot more sophisticated” than the Soviets under Leonid Brezhnev. He should know – he was on the front line the last time Russia invaded a European country.

Mr Medvedev is now making menacing statements about Ukraine and Moldova and is replicating its Georgia strategy in the Crimea by distributing Russian passports. The message is clear. Russia will do as it pleases.

I believe the most potent western response to Russia is to stay united and firm by providing immediate material and political support. If Moscow is trying to overthrow our government using its lethal tools, let us resist with democratic tools that have sustained more than 60 years of Euro-Atlantic peace. Backing Georgia with Europe’s political and financial institutions is a powerful response. Regrettably, this story is no longer about my small country, but the west’s ability to stand its ground to defend a principled approach to international security and keep the map of Europe intact.

The writer is president of Georgia

On Tuesday Russia recognised the independence of the territories of South Ossetia and Abkhazia. It was not a step taken lightly, or without full consideration of the consequences. But all possible outcomes had to be weighed against a sober understanding of the situation – the histories of the Abkhaz and Ossetian peoples, their freely expressed desire for independence, the tragic events of the past weeks and inter­national precedents for such a move.

Not all of the world’s nations have their own statehood. Many exist happily within boundaries shared with other nations. The Russian Federation is an example of largely harmonious coexistence by many dozens of nations and nationalities. But some nations find it impossible to live under the tutelage of another. Relations between nations living “under one roof” need to be handled with the utmost sensitivity.

After the collapse of communism, Russia reconciled itself to the “loss” of 14 former Soviet republics, which became states in their own right, even though some 25m Russians were left stranded in countries no longer their own. Some of those nations were un­able to treat their own minorities with the respect they deserved. Georgia immediately stripped its “autonomous regions” of Abkhazia and South Ossetia of their autonomy.

Can you imagine what it was like for the Abkhaz people to have their university in Sukhumi closed down by the Tbilisi government on the grounds that they allegedly had no proper language or history or culture and so did not need a university? The newly independent Georgia inflicted a vicious war on its minority nations, displacing thousands of people and sowing seeds of discontent that could only grow. These were tinderboxes, right on Russia’s doorstep, which Russian peacekeepers strove to keep from igniting.

But the west, ignoring the delicacy of the situation, unwittingly (or wittingly) fed the hopes of the South Ossetians and Abkhazians for freedom. They clasped to their bosom a Georgian president, Mikheil Saakashvili, whose first move was to crush the autonomy of another region, Adjaria, and made no secret of his intention to squash the Ossetians and Abkhazians.

Meanwhile, ignoring Russia’s warnings, western countries rushed to recognise Kosovo’s illegal declaration of independence from Serbia. We argued consistently that it would be impossible, after that, to tell the Abkhazians and Ossetians (and dozens of other groups around the world) that what was good for the Kosovo Albanians was not good for them. In international relations, you cannot have one rule for some and another rule for others.

Seeing the warning signs, we persistently tried to persuade the Georgians to sign an agreement on the non-use of force with the Ossetians and Abkhazians. Mr Saakashvili refused. On the night of August 7-8 we found out why.

Only a madman could have taken such a gamble. Did he believe Russia would stand idly by as he launched an all-out assault on the sleeping city of Tskhinvali, murdering hundreds of peaceful civilians, most of them Russian citizens? Did he believe Russia would stand by as his “peacekeeping” troops fired on Russian comrades with whom they were supposed to be preventing trouble in South Ossetia?

Russia had no option but to crush the attack to save lives. This was not a war of our choice. We have no designs on Georgian territory. Our troops entered Georgia to destroy bases from which the attack was launched and then left. We restored the peace but could not calm the fears and aspirations of the South Ossetian and Abkhazian peoples – not when Mr Saakashvili continued (with the complicity and encouragement of the US and some other Nato members) to talk of rearming his forces and reclaiming “Georgian territory”. The presidents of the two republics appealed to Russia to recognise their independence.

A heavy decision weighed on my shoulders. Taking into account the freely expressed views of the Ossetian and Abkhazian peoples, and based on the principles of the United Nations charter and other documents of international law, I signed a decree on the Russian Federation’s recognition of the independence of South Ossetia and Abkhazia. I sincerely hope that the Georgian people, to whom we feel historic friendship and sympathy, will one day have leaders they deserve, who care about their country and who develop mutually respectful relations with all the peoples in the Caucasus. Russia is ready to support the achievement of such a goal.

A friend posted a link as his status on facebook leading to an editorial written on the Wall Street journal by Georgian president Mikheil Saakashvili about the ongoing war against Russia. I thought it is something worth sharing.

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The War in Georgia Is a War for the West

As I write, Russia is waging war on my country.

On Friday, hundreds of Russian tanks crossed into Georgian territory, and Russian air force jets bombed Georgian airports, bases, ports and public markets. Many are dead, many more wounded. This invasion, which echoes Afghanistan in 1979 and the Prague Spring of 1968, threatens to undermine the stability of the international security system.

Why this war? This is the question my people are asking. This war is not of Georgia’s making, nor is it Georgia’s choice.

The Kremlin designed this war. Earlier this year, Russia tried to provoke Georgia by effectively annexing another of our separatist territories, Abkhazia. When we responded with restraint, Moscow brought the fight to South Ossetia.

Ostensibly, this war is about an unresolved separatist conflict. Yet in reality, it is a war about the independence and the future of Georgia. And above all, it is a war over the kind of Europe our children will live in. Let us be frank: This conflict is about the future of freedom in Europe.

No country of the former Soviet Union has made more progress toward consolidating democracy, eradicating corruption and building an independent foreign policy than Georgia. This is precisely what Russia seeks to crush.

This conflict is therefore about our common trans-Atlantic values of liberty and democracy. It is about the right of small nations to live freely and determine their own future. It is about the great power struggles for influence of the 20th century, versus the path of integration and unity defined by the European Union of the 21st. Georgia has made its choice.

When my government was swept into power by a peaceful revolution in 2004, we inherited a dysfunctional state plagued by two unresolved conflicts dating to the early 1990s. I pledged to reunify my country — not by the force of arms, but by making Georgia a pole of attraction. I wanted the people living in the conflict zones to share in the prosperous, democratic country that Georgia could — and has — become.

In a similar spirit, we sought friendly relations with Russia, which is and always will be Georgia’s neighbor. We sought deep ties built on mutual respect for each other’s independence and interests. While we heeded Russia’s interests, we also made it clear that our independence and sovereignty were not negotiable. As such, we felt we could freely pursue the sovereign choice of the Georgian nation — to seek deeper integration into European economic and security institutions.

We have worked hard to peacefully bring Abkhazia and South Ossetia back into the Georgian fold, on terms that would fully protect the rights and interests of the residents of these territories. For years, we have offered direct talks with the leaders of Abkhazia and South Ossetia, so that we could discuss our plan to grant them the broadest possible autonomy within the internationally recognized borders of Georgia.

But Russia, which effectively controls the separatists, responded to our efforts with a policy of outright annexation. While we appealed to residents of Abkhazia and South Ossetia with our vision of a common future, Moscow increasingly took control of the separatist regimes. The Kremlin even appointed Russian security officers to arm and administer the self-styled separatist governments.

Under any circumstances, Russia’s meddling in our domestic affairs would have constituted a gross violation of international norms. But its actions were made more egregious by the fact that Russia, since the 1990s, has been entrusted with the responsibility of peacekeeping and mediating in Abkhazia and South Ossetia. Rather than serve as honest broker, Russia became a direct party to the conflicts, and now an open aggressor.

As Europe expanded its security institutions to the Black Sea, my government appealed to the Western community of nations — particularly European governments and institutions — to play a leading role in resolving our separatist conflicts. The key to any resolution was to replace the outdated peacekeeping and negotiating structures created almost two decades ago, and dominated by Russia, with a genuine international effort.

But Europe kept its distance and, predictably, Russia escalated its provocations. Our friends in Europe counseled restraint, arguing that diplomacy would take its course. We followed their advice and took it one step further, by constantly proposing new ideas to resolve the conflicts. Just this past spring, we offered the separatist leaders sweeping autonomy, international guarantees and broad representation in our government.

Our offers of peace were rejected. Moscow sought war. In April, Russia began treating the Georgian regions of Abkhazia and South Ossetia as Russian provinces. Again, our friends in the West asked us to show restraint, and we did. But under the guise of peacekeeping, Russia sent paratroopers and heavy artillery into Abkhazia. Repeated provocations were designed to bring Georgia to the brink of war.

When this failed, the Kremlin turned its attention to South Ossetia, ordering its proxies there to escalate attacks on Georgian positions. My government answered with a unilateral cease-fire; the separatists began attacking civilians and Russian tanks pierced the Georgian border. We had no choice but to protect our civilians and restore our constitutional order. Moscow then used this as pretext for a full-scale military invasion of Georgia.

Over the past days, Russia has waged an all-out attack on Georgia. Its tanks have been pouring into South Ossetia. Its jets have bombed not only Georgian military bases, but also civilian and economic infrastructure, including demolishing the port of Poti on the Black Sea coast. Its Black Sea fleet is now massing on our shores and an attack is under way in Abkhazia.

What is at stake in this war?

Most obviously, the future of my country is at stake. The people of Georgia have spoken with a loud and clear voice: They see their future in Europe. Georgia is an ancient European nation, tied to Europe by culture, civilization and values. In January, three in four Georgians voted in a referendum to support membership in NATO. These aims are not negotiable; now, we are paying the price for our democratic ambitions.

Second, Russia’s future is at stake. Can a Russia that wages aggressive war on its neighbors be a partner for Europe? It is clear that Russia’s current leadership is bent on restoring a neocolonial form of control over the entire space once governed by Moscow.

If Georgia falls, this will also mean the fall of the West in the entire former Soviet Union and beyond. Leaders in neighboring states — whether in Ukraine, in other Caucasian states or in Central Asia — will have to consider whether the price of freedom and independence is indeed too high.

Mr. Saakashvili is president of Georgia.

I saw this report from my INQ email update by accident, because I usually don’t read what’s in it. I tried to remember who he is but no face I can recall. Apparently, he’s from the same batch and from the same school. SOM, ME, 2006.

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Ateneo teaching assistant found dead in schoolroom

Cops find signs victim killed himself

By Marlon Ramos
First Posted 03:29:00 07/01/2008

MANILA, Philippines – A teaching assistant of Ateneo de Manila University (AdMU) was found dead on the campus Monday in what the police said was a case of suicide.

The body of Jose Lorenzo Tan, 24, was discovered by a utility worker in a room at the Department of Philosophy at around 6 a.m., according to a report from the Quezon City Police District’s Criminal Investigation and Detection Unit (QCPD-CIDU).

AdMU watchmen told the police that Tan, a resident of Cubao, Quezon City, went inside the building at around 2 p.m. Sunday and told them he was working on an assignment. As a teaching assistant, Tan’s main task at the department was to conduct research.

The report said the victim, who was enrolled in AdMU’s Graduate School, could have died of suffocation following the discovery of burnt pieces of charcoal in his room.

QCPD-CIDU investigators said they found the room’s windows, door and other openings covered with plastic bags and cellophane, apparently to ensure that “the smoke coming from the charcoal would not escape.”

One of the policemen on the case said they found in Tan’s laptop several stories from the Internet about the harmful effects of charcoal smoke.

Probers said they were checking information that it was the victim’s third attempt to take his own life.

Relatives described Tan as “a loner but very intelligent.” Police added that Tan’s family also told them he was “obsessed” with philosophical readings that espoused suicide.

An official statement from AdMU said Tan, who graduated from the school in 2006 with a management engineering degree, “had been feeling depressed for some time and investigation showed that he took his own life. The family requests that their privacy be respected at this time.”

Sonia Araneta, head of the university’s Communication and Public Relations Office, declined to give more details on the incident.

Today in Vienna, Austria, Germany and Spain faced each other again for the European Championship. Looking back at some numbers and history, they odds were against Espana. During the penalty shootout between Italy and Spain, the latter had a horrible record. The day was June 22. On 3 different occasions, Spain lost in PKs. First, Jun 22 1988. In a World Cup match against Belgium, the Spaniards lost 5-4 during the quarterfinals. Second, on Jun 22 1996, they lost again on PK. Finally, in 2002, South Korea defeated Spain again, 5-3. It was also a quarterfinal match. I somehow expected for a 4th this year. But they surpassed that.

Looking at Spain’s success in the Euros, they managed to grab the trophy only once in the entire 48-year history of the competition (13th this year) whereas Germany had already won it 3 times. Hence, another challenge for the team. But after 2 hours of play, 1 unanswered goal from Fernando Torres, and 100% hard work, all I can say is, OLE OLE OLE OLE! Viva Espana! Spain have been crowned the new European champions. It was a good decision on my side to have woken up early (915am) and head for a British pub, taking an hour bus ride.

What I always loved about watching a match in a pub was the atmosphere of the crowd. Countless times did we all shout, Es-pan-ya! Es-pan-ya! Es-pan-ya! It truly didn’t suffice we had to cheer the classic, OLE, OLE, OLE OLE OLE OLE! The pub surely had more Spanish fans than the Germans did but both sides were eagerly waiting for our respective teams to score. But in the 32nd minute, Fernando Torres became Espana’s hero when he kicked the ball past keeper Lehman. That proved enough for the country to gain the victory. Honestly, I was hoping for a much more tensed game. 2-2 by the end of 90 or even ET then PK victory for Spain. That woulda been AWESOME.

Gotta love the day still. Sweet victory. Sweet experience. Sweet everything.

The victory is ours.