Financial Crisis

[midas]

After an hiatus here's an article about the possibility of civil unrest.

http://www.telegraph.co.uk/finance/comment...ly-ticking.html

I wonder, Abrak, whether the TV will really be enough to captivate the peeps?

Yes well this passage in particular reminds us this time it's not only about the theory of economics...............

" We are moving into Phase II of the Great Unwinding. It may be time to put away our texts of Keynes,

Friedman, and Fisher, so useful for Phase 1, and start studying what happened to society

when global unemployment went haywire in 1932. "

And even studying what happened in 1932 is in some respects only of limited value

as far as USA is concerned because this time around we are told even back in 2007

" The United States has 90 guns for every 100 citizens, making it the most heavily armed society in the world"

http://www.reuters.com/article/topNews/idUSL2834893820070828

And when they resort to knocking on doors in USA to collect their tax dollars that's when we should start to see

[flying]

It really doesn't take rocket science, te get the economy back on feet.

Well, somehow I don't think you have applied any thought to the incredibly complex web of vested interests,

I'm not going to give my opinion either, not interested. There was once a sentence: " If your good at something, never do it for free ".

Khor tort krup Mr Z ?

Are you not the person with many many topics all asking the same simple question?

You know the economical one about how to make a baht so you can move to LOS?

Better solve that question before moving on to solving a little world wide crisis.

Yes everyone *knows* but as 12D said implementation is another kettle of fish is it not?

Edited July 6, 2009 by flying

[AlexLah]

Here it is 12.

[flying]

The Great Lie of 2009

http://www.moneyandmarkets.com/the-great-lie-of-2009-5-34534

And just last week, the U.S. Comptroller of the Currency (OCC) issued its latest report showing that, despite all the talk of reducing risk and reforming the financial system, U.S. commercial banks still hold record amounts. The latest tally: $202 TRILLION in notional value derivatives. And even that pales in comparison to the global tally by the Bank of International Settlements, now at $592 trillion.

Bank of America has total credit risk in this sector to the tune 169 percent of its capital; Citibank, 216 percent; JPMorgan Chase, 323 percent; HSBC Bank USA, 475 percent; Goldman Sachs, a whopping 1,048 percent, or over TEN times its capital.

Edited July 7, 2009 by flying

[midas]

The latest tally: $202 TRILLION in notional value derivatives. And even that pales in comparison to the global tally by the Bank of International Settlements, now at $592 trillion

Amazing ! And maybe the esteemed scientist Dr Naam should now chastise Martin Weiss

for mentioning this figure as he did with me in Post #539 when he said I could be responsible for

" Hank Farang from Ratchaburi reads TV, sees the figure of 596trillion, takes your "what is to come" literally, shoots his family, all in-laws as well as out-laws and jumps into his septic tank because he assumes that his pension will be used in future to fight the bad derivatives. "

Edited July 7, 2009 by midas

[Naam]

who's afraid of the big bad wolf... ahmmm... i mean derivatives?

[midas]

The Great Lie of 2009

And when I read this

"Jefferson said that 'commerce between master and slave is barbarism.' All of the Founders were Greek scholars. They knew what made nations great and what pulled them down into ruins. And they knew that, above all else, how we treat ourselves, as individuals, customers, neighbors, traders and fellow citizens, matters more than just making a living. If we as a nation tolerate unfairness in our financial markets in the form of the current market for CDS and other complex derivatives, then how can we expect our financial institutions and markets to be safe and sound?"

I also thought the Founders would never have imagined seeing the President virtually ignoring the Constitution and riding roughshod over

the bondholders and other investors in Chrysler and GM the way he has?

[flying]

What gets me is things like this for instance.............

Posted: July 2, 2009

bankGoldman Sachs (GS) recently said that media reports that its employees would make huge sums based on the firm’s 2009 earnings were not true. It turns out that they probably are. In an article in The Wall Street Journal, the paper says Goldman “is on track to pay out as much as $20 billion this year, or about $700,000 per employee.”

http://247wallst.com/2009/07/02/confirmed-...ke-700000-each/

Then you remember the pic I just posted??

Do things seem seriously unbalanced?

I read all these things & I must admit I am constantly amazed.

One the one hand they have been quite slick in their deceptions & could only

have achieved these things through great control & power both in the Govt & the business world.

Then on the other hand it all comes off so blatantly corrupt. Yet they continue unhindered? I really feel like

somehow I missed out on some secret drink that makes this all seem normal.

Because it seems very abby-normal ( remember young Frankenstein? ) to me.

[BlackJack]

Millions of middle-class Americans are about to suffer the biggest wealth wipe out in history as a debt avalanche measured in the tens of trillions buries the economy…

The last time debt hit a peak this big was in 1933 – smack in the middle of the Great Depression.

Back then, total public and private debt was 300% of GDP. But just last year (in the third quarter, to be precise) total debt reached 387% of GDP and it has grown hugely since then.

seems like pouring petrol on the fire

no wonder people are moving into gold

[Naam]

I read all these things & I must admit I am constantly amazed.

why? aren't you used to "these things" by now?

[Naam]

Millions of middle-class Americans are about to suffer the biggest wealth wipe out in history as a debt avalanche measured in the tens of trillions buries the economy…

no wonder people are moving into gold

that's the reason why the gold price exploded by a staggering 0.00% year on year

[flying]

I read all these things & I must admit I am constantly amazed.

why? aren't you used to "these things" by now?

Well to tell you the truth I think I have hardened quite a bit since last year.

I tend to read & read....knowing that these things to some extent always existed as they do in all countries & governments. As it is corruption in its purest sense.

But still it is obvious this one has gone way too far & will cause many if not all some kind of hardship soon enough.

Makes me wonder....

As I see the powers to be...Or the ones we think are the powers to be.

(supposed good guys)

Are in reality not willing...or able? To actually put these guys down. That in itself is something I *wonder* about often.

The whole too big too fail statement.

These cancers really hold the strings to it all & for what ever reason cannot be dealt with it seems.

[BlackJack]

a Russian immigrant living in New Jersey was being held on federal charges of stealing top-secret computer trading codes from a major New York-based financial institution—that sources say is none other than Goldman Sachs.

NOW THIS IS FABULOUS NEWS- maybe the start of a long over due investigation into this nice jewish family business

as the government couldnt directly challenge GS as GS (read Wall Street) is largely in control of the US Governments financial sector #1 - it now seems possible that this computer code writer may in his defense testimony open the GS can of worms. - GS in its computer code has both inside company knowledge and wall street knowledge (read insider trading)

Finally someone may bring GS to their knees via the testimony or via the computer code being used against them - ha - its made my day

#1 In "The Wall Street White House" Andrew Cockburn lists recent hires from Wall Street...

* Robert Hormats, Vice Chairman of Goldman Sachs, is to be installed as Under Secretary of Economics, Business, and Agricultural Affairs.

* Jacob Lew, Chief Financial Officer of Citigroup Alternative Investments Group, as Deputy Secretary of State (Lew’s dept. lost $509 million in the Q1 2008)

* Michael Froman, Citigroup, Deputy National Security Adviser for International Economic Affairs. Froman was formerly Chief of Staff to Robert Rubin at Treasury, before following him to Citi.

* Froman’s deputy, David Lipton, ran Citi’s global country risk management effort.

* Lewis Alexander, Citigroup’s chief economist and now Counselor to Treasury Secretary Timothy Geithner

* Neal Wolin, President and COO, Hartford Insurance Company, Property and Casualty Group now Deputy Treasury Secretary (Hartford received $3.4 billion in TARP funds).

* Gary Gensler, Goldman Sachs partner, now Chairman of the Commodity Futures Trading Commission Note: It was Gensler who was a key proponent (as Clinton’s Assistant Secretary of Treasury) in pushing the Commodity Futures Modernization Act of 2000.

* Mark Patterson, Goldman Sach’s lobbyist, now Treasury Chief of Staff

* Linda Robertson, Enron lobbyist, Chief PR Federal Reserve

bring it on

[Naam]

These cancers really hold the strings to it all & for what ever reason cannot be dealt with it seems.

i concur! that neither we small fry nor anybody else is able to deal with these cancers is something we have to accept, adapt and try to make the best of it within our means. that goes primarily not for us but mainly for our loved ones for who's well-being we bear a certain responsibility.

[BlackJack]

Millions of middle-class Americans are about to suffer the biggest wealth wipe out in history as a debt avalanche measured in the tens of trillions buries the economy…

no wonder people are moving into gold

that's the reason why the gold price exploded by a staggering 0.00% year on year

??????

me thinks to much Romulan Ale

[ronz28]

As I understand it, the trillions of dollars of notional value of derivatives don't mean anything. Notional value is not an amount borrowed or owed. Derivatives are generally calculated daily using the notional value as only one of the elements of the calculation and settle up is daily, monthly or quarterly. Outstanding payables for settle-ups due to derivatives are generally minuscule in comparison to notional values.

Where derivatives gets sticky and open to fraud is unwinding them early and trying to assign a fair value to a derivative. Fair value estimates require you to estimate the potential settle-up cashflows over the life of the derivative that may run 30+ years. Everyone has his own valuation model to project cash flows over the future years that these derivatives may produce and the values must ultimately be negotiated. Fair values of derivatives can easily be estimated at just about whatever value you choose within a wide range based on the variety of valuation models for derivatives and your assumptions of future interest rates etc.

I believe it was said that AIG and the banks needed to keep those bankers on board at excessive salaries and bonuses because only they could unwind/terminate the derivatives that AIG wanted out of. They probably just gave away the farm since the US taxpayer was picking up the tab. Nevertheless it may have looked like a good deal because the settlement was far lower than the notional value of the derivatives.

The comparison of termination settlement value with the notional value has nothing to do with whether or not it was a reasonable price to pay for the settlement but with the focus on notional value, it makes the high paid banker look good to say settle-up a half a billion notional dollar derivative for $70 million when in fact it should have been settled for say $2 million. We just have to quit citing derivative notional values as potential debts ready to bring down the economy as that just gives those guys involved a bigger license to negotiate a settlement far higher than should be just because it is associated with a much higher notional value.

The primary focus should be on the fair value of the derivatives not the notional values when assessing the risk to a business or the economy. I wouldn't be surprised if the fair value of all the derivatives is less than one percent of the trillions of dollars of notional value.

[churchill]

California issuing IOU's the US printing $ - I think the $ is sinking.

Big Banks Don't Want California's IOUs

http://online.wsj.com/article/SB124692354575702881.html

[Naam]

As I understand it, the trillions of dollars of notional value of derivatives don't mean anything. Notional value is not an amount borrowed or owed. Derivatives are generally calculated daily using the notional value as only one of the elements of the calculation and settle up is daily, monthly or quarterly. Outstanding payables for settle-ups due to derivatives are generally minuscule in comparison to notional values.

sssshhhhh.....! are you trying to spoil the wet dreams of the doom&gloomers? do you want them to be aware that the rubber sheets they acquired weren't really needed? from a TV-member who joined that long ago (as you did) one expects more congeniality than what you show shame on you!

[teletiger]

More from GS.

“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said,"

So Goldman admit to writing a programme that could "manipulate markets in unfair ways". Who would have thought.

http://www.bloomberg.com/apps/news?pid=206...id=axYw_ykTBokE

Regards.

[midas]

As I understand it, the trillions of dollars of notional value of derivatives don't mean anything. Notional value is not an amount borrowed or owed. Derivatives are generally calculated daily using the notional value as only one of the elements of the calculation and settle up is daily, monthly or quarterly. Outstanding payables for settle-ups due to derivatives are generally minuscule in comparison to notional values.

sssshhhhh.....! are you trying to spoil the wet dreams of the doom&gloomers? do you want them to be aware that the rubber sheets they acquired weren't really needed? from a TV-member who joined that long ago (as you did) one expects more congeniality than what you show shame on you!

but the notional value becomes real value when either counterparty to the OTC derivative goes bankrupt ?

[teletiger]

Even the "notional" 1% (?) comes to nearly $6 trillion.

Regards.

[teletiger]

More gloom.

"FIAT MONEY IN DEATH THROES"

It comes with a wonderful description of fractional reserve banking.

"In vain have governments and their client banks tried, for hundreds of years, to graft this repulsive and degenerate bastard on the living organism of society. The result was always the same: the healthy organism rejected the unnatural implant in its own good time. "

http://www.financialsense.com/editorials/f.../2009/0706.html

Regards.

Edited July 7, 2009 by teletiger

[flying]

I believe it was said that AIG and the banks needed to keep those bankers on board at excessive salaries and bonuses because only they could unwind/terminate the derivatives that AIG wanted out of. They probably just gave away the farm since the US taxpayer was picking up the tab. Nevertheless it may have looked like a good deal because the settlement was far lower than the notional value of the derivatives.

Basically not much incentive to get the job done eh?

Employee will only lose their golden handcuff in the end if they work to cure it.

Banks will pay too much<sic> if they hire new & dive in.

Lets just slip the noose on the worthless bunch & hit the reset button

I have a feeling the prize is the same in the end regardless

Edited July 7, 2009 by flying

[flying]

http://www.vanityfair.com/politics/feature...09/08/aig200908

The Man Who Crashed the World

Almost a year after A.I.G.’s collapse, despite a tidal wave of outrage, there still has been no clear explanation of what toppled the insurance giant. The author decides to ask the people involved—the silent, shell-shocked traders of the A.I.G. Financial Products unit—and finds that the story may have a villain, whose reign of terror over 400 employees brought the company, the U.S. economy, and the global financial system to their knees.

[flying]

David Tice using D word on Bloomberg

Edited July 7, 2009 by flying

[12DrinkMore]

I guess by now most of us are looking at Bloomberg anyway, but

http://www.bloomberg.com/apps/news?pid=206...id=aTfv_xVi9efw

is a further indication of where China is heading with their trade and trading currency.

They are talking up the USD, as any move to talk it down would backfire on their reserves, and doubtless they want to continue trading with the West. But in Asia the move towards settling trade in the Yuan is logical, will reduce the currency risk of the manufactures and also reduce the overhead of having to pay the dam_n bankers commission for forex deals (GREAT!)

And I reckon the managed slow appreciation of the Yuan is EXACTLY the way to do it. It provides a steady platform as a basis for world trade, cuts out all the speculators, removes the necessity for currency hedging (again preventing the banks from earning on this). Imagine the chaos that would ensue if the Yuan was floated? It would be a huge disadvantage to China and a huge money maker for all the speculators. Might as well write a cheque for another trillion Dollars to GS&Co.

Floating currencies are a way out of a lack of fiscal discipline and provides speculators another roulette wheel to gamble on and screw the world's economy up further.

[BlackJack]

ref: Peter Schiff, who loudly warned of the October 2008 stock market crash and accompanying recession as far back as 2006.

In a recent on-camera interview with BNW Business News Wire, Schiff suggests that the looming prospect of a hyper-inflationary environment in the U.S. will severely debase the greenback over the next few years. And the global investment community will realize that gold represents the ultimate "store of value" as a safe haven replacement for a discredited U.S. dollar.

Hence, gold bullion and gold-related investments, such as gold equities, will prove to be the best way to shield one's money from the ravages of a protracted and severe inflationary environment, Schiff says.

"If you really want to grow your wealth, you should own gold in the mining sector," he adds, while also suggesting that gold equities (companies that are already in production) offer the greatest leverage to rising gold prices.

"With gold stocks, there's obviously a lot of leverage to higher gold prices. As millions or billions of people discover gold as a store of value and as a way to escape inflation, there's going to be tremendous demand and somebody's going to have to supply that demand. It's obviously going to have to be mined," he says. "So the companies that have gold and mine it are going to see profit margins explode."

[lannarebirth]

I guess by now most of us are looking at Bloomberg anyway, but

http://www.bloomberg.com/apps/news?pid=206...id=aTfv_xVi9efw

is a further indication of where China is heading with their trade and trading currency.

They are talking up the USD, as any move to talk it down would backfire on their reserves, and doubtless they want to continue trading with the West. But in Asia the move towards settling trade in the Yuan is logical, will reduce the currency risk of the manufactures and also reduce the overhead of having to pay the dam_n bankers commission for forex deals (GREAT!)

And I reckon the managed slow appreciation of the Yuan is EXACTLY the way to do it. It provides a steady platform as a basis for world trade, cuts out all the speculators, removes the necessity for currency hedging (again preventing the banks from earning on this). Imagine the chaos that would ensue if the Yuan was floated? It would be a huge disadvantage to China and a huge money maker for all the speculators. Might as well write a cheque for another trillion Dollars to GS&Co.

Floating currencies are a way out of a lack of fiscal discipline and provides speculators another roulette wheel to gamble on and screw the world's economy up further.

I could be wrong but I think China's stated concerns over it's foreign currency reserves are just political theater. They bought those bonds not because it suited the USA but because it suited China and they'll continue to buy them for the same reason IMO.

You know China's got a printing press too. You think they haven't been "quantitatively easing" their basket case state industries for years?

[12DrinkMore]

ref: Peter Schiff, who loudly warned of the October 2008 stock market crash and accompanying recession as far back as 2006.

Old Schiff has been very vocal over the last couple of years, and gold is something he persistently pushes. Here is a nice application to look at the gold price against the main currencies over the last two decades.

http://www.bullionvault.com/gold-price-chart.do

Are we now in a bubble or is this a permanent rise in the price of gold? Will it continue to rise? Will a prolonged recession cause gold owners to sell as they need the cash, or will more buyers come onto the market buying gold as a hedge against inflation/deflation? Although I doubt it, could governments confiscate gold and make it's possession illegal (the US has been there already)?

Gold is not a one-way bet and so far I have avoided it.

[AlexLah]

It all depends how you look at it. I do not think Gold will drop to 400 level anytime soon. Below the chart for last 5 years.

But that is in Dollar terms and a lot of it caused by depreciation of the Dollar value?

In THB the gain is a bit less for sure, the recent gains, in THB was about 12% since Sept/Oct last year and around 20% in USD if I remember correctly.

Gold is on a down trend and seems to be heading low 900 and perhaps a bit below this month, but then again with all of the markets controlled and manipulated by the too big to fail, what can you do?

Just open up another beer and enjoy the nice weather here in Thailand.