Global Correction

[LaoPo]

Yes, the industrials are pretty alarming because of their legacy fixed expenses (pensions), but pull up 20 year charts ofd those financials. They've all had multiple splits and are still up several hundred percent in that time period. They've got a lot of air in them IMO.

Of course the 20 year charts would look fine but I disagree with 'the air'... the financials would have.

My opinion is: they're starving...starving to death or survival.

Time will tell how many will fall from the cliffs.

LaoPo

[lannarebirth]

Yes, the industrials are pretty alarming because of their legacy fixed expenses (pensions), but pull up 20 year charts ofd those financials. They've all had multiple splits and are still up several hundred percent in that time period. They've got a lot of air in them IMO.

Of course the 20 year charts would look fine but I disagree with 'the air'... the financials would have.

My opinion is: they're starving...starving to death or survival.

Time will tell how many will fall from the cliffs.

LaoPo

I meant the prices were well inflated. I don't mean they're bouyant. Yeah, there will be casualties.

[lannarebirth]

Yes, the industrials are pretty alarming because of their legacy fixed expenses (pensions), but pull up 20 year charts ofd those financials. They've all had multiple splits and are still up several hundred percent in that time period. They've got a lot of air in them IMO.

Of course the 20 year charts would look fine but I disagree with 'the air'... the financials would have.

My opinion is: they're starving...starving to death or survival.

Time will tell how many will fall from the cliffs.

LaoPo

I meant the prices were well inflated. I don't mean they're bouyant. Yeah, there will be casualties.

For example, while Citibank is down about 67% off it's recent highs, it is still up over 1100% from where it was only 16 years ago.

[LaoPo]

For example, while Citibank is down about 67% off it's recent highs, it is still up over 1100% from where it was only 16 years ago.

I'm not sure if we're talking the same here.

Citigroup was around $ 3.20 in 1992 (16 years ago) and that's around +530% till todays share price of $ 17.24.

http://finance.google.com/finance?q=NYSE:C

LaoPo

[lannarebirth]

For example, while Citibank is down about 67% off it's recent highs, it is still up over 1100% from where it was only 16 years ago.

I'm not sure if we're talking the same here.

Citigroup was around $ 3.20 in 1992 (16 years ago) and that's around +530% till todays share price of $ 17.24.

http://finance.google.com/finance?q=NYSE:C

LaoPo

Same company. As you can see on the chart, the low was actually $1.54.

[lordofdelusion]

OIL OIL OIL A Manhattan project indeed! We need something big!!

http://news.yahoo.com/s/ap/20080628/ap_on_...Rrn0l6X5lIE1vAI

[glyph]

Speaking of oil...the Nation had an article that Saudi Arabia just discovred the largest known reserve of oil, and it will be pumping oil is about 6 months. The US has known reserves off of all 3 coasts and in Alaska, but it will take it 20 years to get the oil pumping. Who's zooming who?

[disgruntled]

Wow. Stocks are tanking again. Where have all the know-it-all analyists gone who were so positive saying buy buy buy gone? I wonder if they lost money? I've always worried about this but I didn't take my money out now I have lost some too! I really hope that the analysts who were so positive have suffered. The US government does not need to help the criminals who lie and steal to get ahead by bailing them out if things get worse. Let those who bought in (like me a little guy) suffer from their choices. The big brokerage houses and the venture capitalists etc need a good culling by this. They've been bailed out too many times throughout history. Luckily I don't really have any money in this game. Those who expected just wonderful winnings need to accept their amazing loses. Okay I'm mean but let the dying die.

Cheers to those who called this market and held out. There's a new world on the way!

[disgruntled]

Something about the oil in the US...

http://news.yahoo.com/edcartoons/bensargen...zSBnA37jWUDwLAF

[ray23]

Well it's already hit $142 a barrel. Anyone think the baht will go to 35?

"COMMERCE MINISTRY

Inflation estimate may be revised as oil, consumer prices escalate

By Petchanet Pratruangkrai

The Nat ion

Published on June 30, 2008

Decision to be made after reviewing headline figure for June

The Commerce Ministry is likely to revise upward its 2008 inflation projection from 5-5.5 per cent to 6.5-7.5 per cent due to escalating oil and consumer goods prices.

Permanent secretary Siripol Yodmuangcharoen said last week that the ministry would refer to the headline inflation rate for June in considering whether to revise the annual target.

The ministry will release June's inflation figures tomorrow.

The Bank of Thailand is also closely monitoring the inflation results to see if it needs to firm up its policy interest rate.

Inflation peaked at 7.6 per cent year on year last month, bringing inflation for the first five months up to 5.8 per cent.

"The ministry has targeted annual inflation as not exceeding 5.5 per cent, which assumes an average oil price of US$105 (Bt3,530) )per barrel. Inevitably, the oil price rising to $130-$140 per barrel, and expected to reach $170-$200 by year-end, will push inflation higher in the second half of the year," he said.

The ministry has set its inflation target based on two scenarios. If the average oil price is at $130 per barrel and the baht's value at Bt35 per US dollar, inflation for this year will be 6.5-7.5 per cent. But if the average oil price surges beyond $130 per barrel and the baht weakens past Bt35 per dollar, inflation could reach 7.5-8.5 per cent.

Meanwhile, Commerce Minister Mingkwan Sangsuwan has come up with the idea of setting up a "one-shop one-price" project to sell cheap consumer goods.

The project is expected to be introduced to the public next month.

A ministry source said the scheme was aimed at preventing inflation from heating up to double digits this year and also at giving some relief to consumers burdened with the rising cost of living.

The project's concept will imitate the Yen100 shops selling Japanese goods. The stores will sell consumer goods and garments at prices under Bt100. For instance, the price points could be at Bt39, Bt49 and Bt59.

Under the project, the Internal Trade Department will cooperate with various trade associations, including the Thai Wholesale and Retailing Association and garment manufacturers in Bangkok's Bobae wholesale market.

--> "

[disgruntled]

The lower the baht goes the more hel_l is going to break loose if makes imported oil more expensive. I don't see any advantage of a weak baht for the local population until there no work at that point then maybe people will accept anything. People need to come to terms with this new reality of cost and at that point psychologically we will be able to move on. In the meantime there will be a lot of anger and blame which is misdirected. This situation is horrible. The poorest peoples of the world are going to suffer and poor govenments are going to waste loads of capital trying to make them happy.

[ray23]

Although I understand where you are coming from, don't discount that many of us started down this trail two years ago. When the Thai baht just kept gaining value.

It is going to be what it is going to be and none of us had any control when the baht gained so much so quickly. Maybe just a bit to quickly for the reality.

I agree that this is goign to hurt poor people the worst, but how many do think actually gained in income compared to the increase in the baht.

Some gained but I doubt it was the poor people. The has been something to see, first we started with the R word recession, then the S word stagnation, now we are up to the D word depression.

But, there are people out there right now making fortunes and yes you are right the poor will pay the most for those profits.

Thi guy seems to think we are going to see 35 again, is he right heck who knows

"Thai Baht Set for Quarterly Loss Before June Inflation Report

By Shanthy Nambiar

June 30 (Bloomberg) -- Thailand's baht headed for its first quarterly loss since June 2005 on concern inflation may accelerate to a more than 10-year high in June, slowing economic growth and demand for the nation's assets.

The currency is the worst performer this month among Asia's 10 most-active currencies outside of Japan as oil reached an all-time high of $142.99 a barrel on June 27, fueling demand for dollars. Inflation may accelerate to 8.4 percent in June, according to the median of 17 economists in Bloomberg News survey. It will be released tomorrow by the Commerce Ministry.

``Inflation is now one of the biggest market focuses,'' said Tetsuo Yoshikoshi, a market analyst with Sumitomo Mitsui Banking Corp. in Singapore. ``Accelerating inflation matters. We expect the currency to remain on the back foot well into next year.''

The baht traded at 33.52 per dollar as of 10:30 a.m. in Bangkok, according to data compiled by Bloomberg, heading for a 6 percent loss in the quarter, the most since a 5 percent decline in the quarter ending June 2005. The currency may fall to 35 by the end of September and 34.50 by year-end, Yoshikoshi said.

Thailand's inflation accelerated to the fastest pace in almost a decade to 7.6 percent in May. Southeast Asia's second- largest economy imports almost all its fuel needs.

The government will gradually remove subsidies on gas used to fuel vehicles and industry, and for households, easing the cost to government, Finance Minister Surapong Suebwonglee said last week.

``Prices should reflect real costs but in a peak period like this, the government needs to maintain some subsidies to help consumers,'' he said. Subsidies for gas used by households will be removed in the ``long term,'' while prices will rise for industries within two months.

The Bank of Thailand next meets on monetary policy on July 16. The one-day bond repurchase rate has remained unchanged at 3.25 percent since August.

To contact the reporter for this story: Shanthy Nambiar in Bangkok at [email protected].

Last Updated: June 30, 2008 00:02 EDT "

[dotcom]

Yes & by intervening to support the baht the Thai government is sending a signal >>. They want a super strong baht. Heaven knows why.

[dotcom]

Uncle Joe Stalin should get out of the FX markets (IMHO) & let the free markets work.

[AFKAFSinLOS]

Yes & by intervening to support the baht the Thai government is sending a signal >>. They want a super strong baht. Heaven knows why.

I don't think it's really intervening to support the THB in an attempt to have a strong THB. This was the case in 1997, but not really now. I think it's more a case of doing what many governments do, and just gently smoothing volatility and speculation so that there are not rapid spikes/ drops which panic people. If you're interested you can check out BOT's various monetary policies on their website:

http://www.bot.or.th/ENGLISH/MONETARYPOLIC...taryPolicy.aspx

The following link in particular may be of interest

http://www.bot.or.th/English/MonetaryPolic...changeRate.aspx

Since July 1997, Thailand has adopted the managed-float exchange rate regime, which is also consistent with the inflation targeting regime that has been in place since 2000. Under the inflation targeting framework and the managed-float, the value of the baht is allowed to be determined by market forces, reflecting demand and supply for the baht in the foreign exchange market. Under the managed float, the Bank of Thailand (1) does not target a fixed level for the exchange rate, (2) stands ready to intervene in the case of excess volatility, particularly resulting from speculative capital flows, in a manner consistent with the Bank's inflation targeting framework.

In some instances, however, supply and demand may be at a disequilibrium, leading to excessive volatility in the value of the baht. The Bank of Thailand aims to ensure that the value of the baht is allowed to fluctuate under the following conditions; (1) the Bank of Thailand stands ready to intervene in the foreign exchange market such that volatility of the exchange rate is at a level that the economy can tolerate, (2) maintaining national competitiveness, as measured through the Nominal Effective Exchange Rate (NEER), which comprises currencies of important trading partners - and not just the US Dollar, and (3) any intervention does not go against economic fundamentals which would otherwise lead to further imbalances.

-----

BTW The problem with the free markets sometimes is that they are too free . If left unchecked, speculators can leverage many times. If there are insufficient checks and balances in place, you get people betting more than they can afford to lose "a la sub-prime". Most markets these days over-estimate and under-estimate trends, due in part to leveraging and some may say having markets which are too free...

Edited June 30, 2008 by AFKAFSinLOS

[VegasVic]

Naam, how is the financial colonic coming along?

SET down again to 782, and next support is not until 725-730

it will be time for your financial lesson very shortly

Well Bingo I have to give credit where credit is due and your call for the DOW to break down to the 11,300 neighborhood has come to pass, kudos on your prediction sir! Last year I predicted that the Shanghai exchange would lose 50% of its value before the Olympics and at the time I encountered a constant barrage of verbal abuse from a certain poster who was regularly pumping(or pimping) that market back then (now who could that be?), but that particular serial poster hasn't had the decency to admit I was correct as of yet, par for the course I guess. I any event the oil bubble is currently on the precipise of bursting and when it does the bottom will fall out of the gold market and gold will come down to the mid $600's or lower, just as I predicted last year as well. To all the Americans out there, have a safe and fesitve 4th of July weekend.

[lannarebirth]

Pretty good article I thought:

http://www.investorsinsight.com/blogs/john...tion-scare.aspx

[midas]

Naam, how is the financial colonic coming along?

SET down again to 782, and next support is not until 725-730

it will be time for your financial lesson very shortly

Well Bingo I have to give credit where credit is due and your call for the DOW to break down to the 11,300 neighborhood has come to pass, kudos on your prediction sir! Last year I predicted that the Shanghai exchange would lose 50% of its value before the Olympics and at the time I encountered a constant barrage of verbal abuse from a certain poster who was regularly pumping(or pimping) that market back then (now who could that be?), but that particular serial poster hasn't had the decency to admit I was correct as of yet, par for the course I guess. I any event the oil bubble is currently on the precipise of bursting and when it does the bottom will fall out of the gold market and gold will come down to the mid $600's or lower, just as I predicted last year as well. To all the Americans out there, have a safe and fesitve 4th of July weekend.

Totally disagree with you VegasVic ! There is no chance of this happening until at least

your warmongering Vice President has left office. He is probably right now putting

the final touches to an air raid on Iran ( actually to be carried out by Israel but with USA 's

full support ) and when that happens no one can predict the oil price or how long

the global chaos that will result from this stupid attack will have on everyone.

[lannarebirth]

BIS 78th Annual Report

78th Annual Report 2007/08: an overview

30 June 2008

http://www.bis.org/events/agm2008/ar2008o.htm

Chapter I: Introduction: the unsustainable has run its course

After a number of years of strong global growth, low inflation and stable financial markets, the situation deteriorated rapidly in the period under review. Most notable was the onset of turmoil in the US market for subprime mortgages, which rapidly affected many other financial markets and eventually called into question the adequacy of capital at a number of large US and European banks. At the same time, US growth slowed markedly, reflecting setbacks in the housing market, while global inflation rose significantly under the particular influence of higher commodity prices.

This sudden change in financial conditions was blamed by some on shortcomings in the extension of the long-standing originate-to-distribute model to new mortgage products in recent years. Others, however, noted that the sudden deterioration in both financial and macroeconomic conditions looked more like a typical “bust” after a credit “boom”. Indeed, several factors seem to support this second hypothesis: the previous rapid growth of global monetary and credit aggregates; an extended period of low real interest rates; the unusually high price of many assets (both financial and real); and the way in which spending patterns in different countries (the United States and China in particular) reflected their different stages of financial development (encouraging consumption and investment respectively).

While central banks in all the major financial centres took action to reliquefy financial markets, the setting of policy rates diverged markedly in light of domestic macroeconomic circumstances. Some central banks were more concerned about actual inflation and raised policy rates, whereas others focused on the disinflationary pressures likely to emerge as growth slowed, and lowered policy rates instead.

Chapter II: The global economy

The global economy has slowed since the second half of 2007 against the backdrop of the financial turmoil and a deepening US downturn. At the same time, global inflation has risen, led by rapid increases in prices of energy and key food items. The current consensus view is still that the global economy will slow only modestly further in 2008. Developments up to the first quarter have been broadly consistent with this view as growth in the euro area, Japan and major emerging market economies continued to be strong.

Unfolding developments at the core of the global financial system have, however, also created great uncertainty about future economic prospects. Banks in several advanced industrial economies have been tightening lending standards, and thus a generalised squeeze in the availability of credit remains a distinct possibility, with potentially more severe implications for demand than are reflected in consensus forecasts. These developments have been compounded by the recent rapid rise in oil prices and increased inflation expectations in a number of major economies.

The extent to which households with overstretched balance sheets in the United States and some other advanced industrial economies will have to retrench in the face of these negative shocks is hard to predict. While a substantial rise in US household saving could bring about a further sizeable reduction in the US current account deficit, it would do so at the price of weakening demand in the rest of the world. At the same time, inflation risks are greater than they have been for many years.

Chapter III: Emerging market economies

Growth in emerging market economies (EMEs) last year once again significantly exceeded that in the rest of the world. Foreign currency inflows were large, reflecting continued growth in current account surpluses and capital inflows in 2007. Nevertheless, the potential knock on effects of financial market turmoil in the major centres increased the risk of a slowdown in EMEs. At the same time, recent increases in headline inflation have caused inflation targets to be breached in many EMEs, reflecting the impact of steep increases in oil and food prices. As in the advanced industrial economies, these conflicting forces have created a major dilemma for monetary policy. Efforts to resist currency appreciation have introduced additional complications, having been associated with a sharp increase in foreign reserves and in credit growth in a number of EMEs.

Developments in the advanced industrial economies could also pose major challenges. First, a pronounced slowdown in the United States would hurt the EMEs which, although remarkably resilient so far, still depend significantly on external demand. Second, tighter conditions in global financial markets could constrain EMEs with large current account deficits, particularly those relying on more volatile portfolio financing. Countries heavily dependent on cross-border bank borrowing could also be especially vulnerable.

Chapter IV: Monetary policy in the advanced industrial economies

Monetary policy in the advanced industrial economies faced two conflicting challenges during the period under review. On the one hand, tensions in financial markets threatened to spill over into the real economy by way of tighter credit conditions and a loss in confidence. On the other hand, inflationary pressures that stemmed from rising commodity prices, together with high capacity utilisation and tight labour markets in many economies, threatened to feed into longer-term inflation expectations. Differences in the manifestation of these challenges across countries and regions can explain, at least in part, why central banks dealt with them in different ways. For example, the Federal Reserve reacted forcefully by cutting its policy rate from 5.25% to 2%, whereas the ECB and the Bank of Japan kept their policy rates unchanged.

Changes in interest rates were only one measure through which central banks responded to the dislocation in financial markets. Even before the turbulence led to any changes in policy targets, central banks in several countries had adjusted their operations in a number of extraordinary and unprecedented ways to keep reference rates near targets and to provide financing in markets where liquidity had evaporated. The various types of operations and the reasoning behind them are discussed in the final section of the chapter.

Chapter V: Foreign exchange markets

Foreign exchange market volatility picked up sharply in the latter half of 2007 and has remained at elevated levels since. This was associated with a faster rate of decline of the US dollar as well as a substantial appreciation of the euro, yen and Swiss franc. As carry trades became less attractive, expected growth differentials became more of a focal point for market sentiment than prevailing levels of interest rates. While exchange rate policies continued to shape the behaviour of some emerging market currencies, developments in commodity prices and specific trends in capital flows also exerted a considerable influence on exchange rates.

Notwithstanding some significant exchange rate movements and tensions in certain foreign exchange swap and cross-currency swap markets, foreign exchange spot markets generally continued to function smoothly throughout the period of higher volatility. From a longer-term perspective, there have been a number of notable developments that could potentially have a bearing on the resilience of foreign exchange markets. These include higher turnover, greater diversity in foreign exchange market activity and improvements in the risk management infrastructure. While generally positive, it is possible that the full implications of these developments for market dynamics at times of stress have not yet become apparent. It is important, therefore, to sustain the impetus for better risk management practices in foreign exchange markets going forward.

Chapter VI: Financial markets

During the period from June 2007 to mid-May 2008, concerns over losses on US subprime mortgage loans escalated into widespread financial stress. What initially appeared to be a contained problem quickly spread across other credit segments and broader financial markets to the point where sizeable parts of the financial system became largely dysfunctional. Surging demand for liquidity, coupled with growing concerns about counterparty risk, led to unprecedented pressures in major interbank markets, while bond yields in advanced industrial economies tumbled as investors sought safe havens amid fears that economic growth would weaken. Equity markets in advanced industrial countries were also weak, with financial shares selling off particularly sharply. A brighter spot was emerging financial markets, which in contrast to previous episodes of broad-based asset market weakness proved to be more resilient than those in the advanced industrial economies.

The financial market turmoil unfolded in six stages, starting in mid-June 2007: (i) a dramatic widening of spreads on subprime mortgage products following large-scale rating downgrades on mortgage-backed securities and the closure of a number of hedge funds with subprime exposure; (ii) the extension of the sell-off to a wide variety of credit and other markets from mid-July, including structured products more generally; (iii) the expansion of the turmoil into short-term credit and, particularly, interbank money markets from end-July; (iv) broader problems for the financial sector from mid-October, including for companies acting as financial guarantors; (v) increasingly dysfunctional markets, against the backdrop of a marked worsening of the US macroeconomic outlook from early 2008, accompanied by rising fears about systemic risks which caused spreads of even the highest-quality assets to move out to unusually wide levels; (vi) recovery, except in the interbank term market, in the wake of the Federal Reserve-facilitated takeover of a troubled US investment bank in March 2008.

Chapter VII: The financial sector in the advanced industrialised economies

Several years of growth and enhanced profitability for financial firms came to an abrupt halt during the period under review as strains stemming primarily from exposures to residential real estate spread throughout the financial system. What had started as a problem specific to the US subprime mortgage market became a source of outsize losses for financial firms worldwide on their holdings of related securities. Uncertainty about the size and distribution of losses was exacerbated by the complexity of the new structures used in the securitisation process. Retrenchment from risk-taking led to illiquidity, exposing weaknesses in the funding arrangements of many financial firms. Indeed, the situation was punctuated by the near failure of sizeable financial firms, prompting intervention by the public sector to avert potential systemic repercussions from a disorderly collapse.

With many financial institutions nursing weakened balance sheets, even as the macroeconomic environment continues to worsen, a turn in the credit cycle seems likely to imply persistent headwinds for economic activity. How the situation will evolve depends critically on the dynamic interactions between the financial sector and the macroeconomy. Reduced credit availability, due to efforts by the financial sector to preserve its capital base, could prolong the period of weak profitability by affecting aggregate spending, economic activity and asset quality. These effects could also be transmitted across borders if weakened banking systems tend to cut back on their international exposures. Beyond the cyclical implications, this period of intense stress also heralds some structural shifts. Financial firms are revisiting assumptions that supported a move towards a business model focused on origination and distribution of loans through securitisation. At the same time, policymakers are reviewing aspects of the prudential framework that failed to perform as intended.

Chapter VIII: Conclusion: the difficult task of damage control

In the aftermath of a long credit-driven boom, it would not be surprising to see turmoil in financial markets, slowing real growth and temporarily rising inflation. The crucial questions at the present juncture have to do with the severity of these individual trends as they now appear and how they might interact. While difficult to predict, their interaction does appear to point to a deeper and more protracted global downturn than the consensus view seems to expect. At the same time, inflationary forces, particularly in emerging market economies, could also prove unexpectedly strong and persistent. A major factor in inflation prospects everywhere is likely to be the behaviour of wages, but in some countries the effect of a depreciating exchange rate on domestic prices could also play an unwelcome role.

With inflation a clear and present threat, and with real policy rates in most countries very low by historical standards, a global bias towards monetary tightening would seem appropriate. That said, the circumstances of different countries, both actual and prospective, currently rule out a "one size fits all" response. Moreover, should the global economy slow sharply and inflationary pressures recede, the bias to tightening would evidently also be reduced.

In the current and prospective environment, it should nonetheless be borne in mind that the effectiveness of a lowering of policy rates might be significantly reduced in the aftermath of a credit-induced spending boom. In view of the potential negative side effects of such a policy, not least the risk of encouraging further financial imbalances and misallocations of real resources, complementary policies might be envisaged to avoid overburdening monetary easing. Expansionary fiscal policy could have some merit, but in many countries current debt levels mean there is little room for manoeuvre. Steps to recognise and deal with losses and debt overhang problems, in a timely and orderly way, and subject to conditionality, must then be a high priority.

Perhaps the principal conclusion to be drawn from today's policy challenges is that it would have been better to avoid the build-up of credit excesses in the first place. In future, this could be done through the establishment of a new macrofinancial stability framework, which would call for both monetary and macroprudential policies to "lean against the wind" of the credit cycle. Recognising that cycles can be attenuated but not eliminated, a number of preparatory steps are also suggested that would allow periods of financial turmoil or crisis to be more effectively managed.

Organisation, governance and activities

This chapter provides an overview of the internal organisation and governance of the Bank for International Settlements. It also reviews the activities of the Bank, and of the international groups it hosts, over the past financial year. These activities focus on promoting cooperation among central banks and other financial authorities, and on providing financial services to central bank customers.

Many of the Bank's activities were refocused in the second half of the year to deal with the financial market turmoil that emerged in August 2007. In addition to an acceleration and modification of committees' work plans, other notable responses to the turmoil were:

a special meeting of central bank Governors to discuss the underlying causes and potential economic consequences of the turmoil;

more frequent and detailed discussions among central bankers and financial market participants more broadly, facilitated by the BIS and the committees it hosts;

increased research devoted to the causes and policy implications of the turmoil;

publication of information on monetary policy frameworks to complement central banks' market operations, with a view to enhancing transparency and the understanding of central bank actions;

initiatives by the Basel Committee on Banking Supervision to help make the banking system more resilient to financial shocks; and

close cooperation with other organisations following the turmoil, in particular support for the Financial Stability Forum's working groups on enhancing market and institutional resilience.

Furthermore, the BIS took a number of measures in its banking and risk management activities to address the challenges that have emerged as a result of the financial turmoil.

The Bank's balance sheet grew to SDR 311 billion (USD 511 billion) at end-March 2008, representing a year-on-year increase of 15%. Some SDR 236 billion (USD 388 billion) of official foreign exchange reserves are deposited with the BIS, around 6% of the world's total. Net profits for the Bank's 78th financial year amounted to SDR 545 million (USD 847 million), compared with SDR 619 million (USD 920 million) in the preceding year.

[LaoPo]

GM touches near 54-year low

http://money.cnn.com/2008/06/30/news/compa...sion=2008063016

GM is down more than -85% since the turn of the century and one could buy the -once- Giant for a mere $ 6.3 Billion....

Anyone ?

It won't be long before the Russians, Chinese and Arabs, like Gadaffi, jump in, picking up the rest of the pieces, sorry, peanuts.

All three already bought themselves quite a piece of the cake in FORTIS, the Dutch-Belgian financial/insurer who bought a part of ABN AMRO earlier this year; now they're short of cash because they paid too much....

The Russian billionaire Suleiman Kerimov got a phone call a few days ago, late at night if he wanted to buy a(nother) piece of the cake for €400 million, or about $630 million; he did. He was a shareholder already. The same for Chinese Ping An Insurance Giant and Mr. Gadaffi.

Most unusual deals in the financial world. But, it happened already with Citigroup and I suppose the West has to adapt to their new shareholders.

LaoPo

[lannarebirth]

It is estimated that currently 62% of open interest in commodoties is held by cash index funds and hedge funds. Don't be surprised if a regulatory hammer is about to fall.

http://www.cftc.gov/stellent/groups/public...itybackgrou.pdf

The US Congress passed a bill extending the CFTC's powers the following day.

Edited July 1, 2008 by lannarebirth

[LaoPo]

It is estimated that currently 62% of open interest in commodoties is held by cash index funds and hedge funds. Don't be surprised if a regulatory hammer is about to fall.

http://www.cftc.gov/stellent/groups/public...itybackgrou.pdf

The US Congress passed a bill extending the CFTC's powers the following day.

Frightening.

LaoPo

[disgruntled]

I would guess the best place to be nowadays is where the oil is. Haliburton knew that and move its headquarters.

Americans have suffered with a weak dollar and now thailand may but this does not mean the US dollar is going to gain in strength. What would cause that? I'd say the US and Thailand are in for bad times.

Starbucks is closing 500 more stores. There's not much to say a stronger dollar is on the way from my view.

http://news.bbc.co.uk/2/hi/business/7484563.stm

[lannarebirth]

It is estimated that currently 62% of open interest in commodoties is held by cash index funds and hedge funds. Don't be surprised if a regulatory hammer is about to fall.

http://www.cftc.gov/stellent/groups/public...itybackgrou.pdf

The US Congress passed a bill extending the CFTC's powers the following day.

Frightening.

LaoPo

With more to follow:

UPDATE 1-US' Paulson to reveal more on Fed stability role

Mon Jun 30, 2008 7:15pm BST

By David Lawder

BERLIN, June 30 (Reuters) - U.S. Treasury Secretary Henry Paulson will reveal more details about his accelerated plans for the Federal Reserve to assume a larger regulatory role in maintaining financial system stability in a speech in London on Wednesday.

"I will be expanding on the role of the Fed as a macro stability regulator to look across the entire financial system, but will be emphasizing how this just has to be paired with market discipline," Paulson told reporters on Monday aboard his plane to Berlin after a day of meetings with leaders in Moscow.

"I'll be talking some more about moral hazard and will be talking about how all of this needs to come together with a rethink of the resolution process for institutions when there's government intervention," Paulson said.

Paulson's speech before the Chatham House think-tank in London comes as the Fed and the Securities and Exchange Commission are nearing a formal agreement to share information about investment banks and amid an intensifying debate on what additional regulation may be needed in the wake of a massive credit crisis.

The plan could lead to a permanent change to the Fed's relationship to Wall Street, giving the U.S. central bank permanent powers to step in and make emergency loans to investment banks if the greater stability of the financial system is threatened.

continued here:

http://uk.reuters.com/article/marketsNewsU...042761220080630

[LaoPo]

More to follow Lannarebirth ? I'm afraid so:

GM (General Motors) Bankruptcy `Not Impossible,' Merrill Analyst Says

By Adam Haigh and Jeff Green

July 2 (Bloomberg) -- General Motors Corp. was cut to ``underperform'' from ``buy'' by Merrill Lynch & Co., which said ``bankruptcy is not impossible'' for the largest U.S. automaker.

``The key change in our outlook is a much lower forecast for U.S. auto sales that is driving a higher cash burn necessitating a much larger capital raise than the market is currently anticipating,'' New York-based analyst John Murphy wrote in a note to clients today.

The downgrade follows GM's report yesterday that its June U.S. auto sales fell 18 percent. Bank of America Corp. said last week that the Detroit-based automaker may need additional funding of as much as $8 billion. JPMorgan Chase & Co. has estimated GM may need to raise $10 billion as early as this quarter.

GM fell 70 cents, or 6 percent, to $11.05 at 9:56 a.m. in New York Stock Exchange composite trading. The shares have declined 71 percent in the past 12 months, the biggest drop among the 30 companies in the Dow Jones Industrial Average.

Company spokeswoman Geri Lama didn't immediately respond to telephone calls or e-mails seeking comment.

The automaker said yesterday that it plans to cut North American production this quarter 12 percent to about 900,000 vehicles. Automakers book sales when a car or truck is built, so lost output reduces revenue. Strikes at GM's largest axle supplier and two of its own plants trimmed production in the region 27 percent last quarter.

Yesterday, GM reported an 18 percent decline in its U.S. sales for June, in line with the industry's drop. The U.S. is GM's biggest singles sales market.

Merrill Lynch also reduced its price estimate for the shares by 75 percent to $7.

Note:

yesterday, at a certain point during trading of GM-shares the share shot up 10% because GM outperformed Toyota in 'May' sales (which was a silly emotional reaction by investors) but closed just a little up. Today it's down again -7.5%; still trading.

Fact remains that GM is down -85% in market value since early 2000.

Toyota, in the same period is down -3.9%

Ford ? Down -84.99% in the same period since 2000.

It's shaky outside.

LaoPo

[lannarebirth]

Everyone knows how this will end Lao Po. Those Industrials have HUGE pension and medical obligations. They'll take'em right to the brink to cast off those retired workers that gave their working lives to these companies. The day they find a way to disencumber themselves from these legal and moral obligations will be the day the stocks begin their 1000% ascent.

[LaoPo]

Everyone knows how this will end Lao Po. Those Industrials have HUGE pension and medical obligations. They'll take'em right to the brink to cast off those retired workers that gave their working lives to these companies. The day they find a way to disencumber themselves from these legal and moral obligations will be the day the stocks begin their 1000% ascent.

Yes, sad enough. In fact the whole USA is broke. But it will be the blue collars who suffer, like always.

LaoPo

[cclub75]

Yes, sad enough. In fact the whole USA is broke. But it will be the blue collars who suffer, like always.

LaoPo

LaoPo I think you're ready for a cup of tea. I'll bring the cookies ! ;-)

It's now a daily festival of bad news.

The summer is going to be very interesting. And even more interesting will be to read and hear the -last- denials of the rozy brigade.

To paraphrase William S. Burroughs :" Denial is not a a kick. It is a way of life."

[teej]

The day they find a way to disencumber themselves from these legal and moral obligations will be the day the stocks begin their 1000% ascent.

By what mechanism would a company like GM be able to offload these obligations?

Would bankruptcy be an option? Who would be responsible for all of the pension and health obligations if GM filed for bankruptcy? The government?

[lannarebirth]

The day they find a way to disencumber themselves from these legal and moral obligations will be the day the stocks begin their 1000% ascent.

By what mechanism would a company like GM be able to offload these obligations?

Would bankruptcy be an option? Who would be responsible for all of the pension and health obligations if GM filed for bankruptcy? The government?

http://uspolitics.about.com/od/politicalco...us_pensions.htm