Financial Crisis

[jazzbo]

then what is the purpose of this thread?

Dr. Paul Krugman in The New York Times Op-Ed The Jobs Imperative 29 NOV 2009

But now that total financial collapse has been averted...Yes, the recession is probably over in a technical sense...

So, according to the Nobel Prize-winning economist the Financial Crisis is over -- and after 4919 replies and 87,209 views -- Moderator: Please close this topic.

[flying]

So, Jazzbo, please try and think about what you are posting. These guys are not interested in YOU, nor ME nor Abrak, nor Midas, nor Flying, nor Alex, nor Naam.

they are not? then what is the purpose of this thread?

Well speaking for myself only....It has been an education from the 1st post by 12D way back when.

One thing that seems quite clear is the vast majority of citizens & for the most part politicians on more than one continent had no idea how bad things were. Nor did the politicians in US congress even realize that many powers given long ago to sectors such as the FED had been so twisted & misused.

Fortunately most of these folks are elected & as such can be avoided to some degree in the future through the education of the voters.

After all this crisis has yet to begin in earnest. All that has been done so far is to kick the can further down the road

As for folks like azzbo forget it.....Those dogs wont hunt.....

Edited December 1, 2009 by flying

[jazzbo]

After all this crisis has yet to begin in earnest -- Earth Girls Are Easy and so are you guys... SPAZZBO -- did you think that one up all by yourself? Insult by JPG just like insult by emoticon -- very clever.

Whenever you guys try to humiliate or otherwise insult I watch this David Letterman clip where starting around 1:50 Alec Baldwin talks about his Fundamentalist wacko brother Stephen -- Late Show - When Alec Baldwin Met Sarah Palin

http://www.youtube.com/watch?v=eXoO8aeM5-Y&feature=fvw

... and then I just go review my well-diversified portfolio as part of the machinery.

[jazzbo]

After all this crisis has yet to begin in earnest. All that has been done so far is to kick the can further down the road.

Courtesy of Wikipedia and NIMH (National Institute of Mental Health):

Generalized anxiety disorder (GAD)

is an anxiety disorder that is characterized by excessive, uncontrollable and often irrational worry about everyday things that is disproportionate to the actual source of worry. This excessive worry often interferes with daily functioning, as individuals suffering GAD typically anticipate disaster, and are overly concerned about everyday matters such as health issues,

money

, death, family problems, friend problems or work difficulties...

BTW 'Jazzbo' (aka Azzbo, Spazzbo, and maybe soon Razzbo) was a name given to me 30+ years ago as a musician... why did I become a musician... Because, other than swimming, I was never that good at sports and as Robbie Robertson (of The Band and a Canadian) put it in The Last Waltz --

[Talking about getting a job playing with Ronnie Hawkins] He called me up, and I said, "Sure I'd like a job. What does it mean? What do I do?" And he said, "Well, son, you won't make much money, but you'll get more pussy than Frank Sinatra."

Edited December 1, 2009 by jazzbo

[12DrinkMore]

"Now this is not the end. It is not even the beginning of the end. but it is, perhaps, the end of the beginning"

Stand by for the next round.

http://www.telegraph.co.uk/finance/economi...dit-crisis.html

"We are in a very critical situation," said Chancellor Angela Merkel in her weekly radio address. "We are going to discuss with leaders of the financial institutions what can be done to head off a credit crunch."

I thought we had been through this. Well, practice makes perfect, I suppose, I wonder how many more times the banks will be holding us to ransom?

The move comes days after the Bundesbank revealed that German banks face a further €90bn (£82bn) of likely write-downs over the next year.

Leaders of the new coalition are to meet industrialists and bankers tomorrow to thrash out an emergency plan. The proposals include a €10bn scheme to purchase toxic securities from banks.

And so it goes on and on.

If the manufacturing industry was producing this amount of toxic waste, they would be heavily fined and forced to clean up the mess. But the banks continue to pollute the economy with their toxic crap only to have it purchased by the tax payers, allowing them to pay out more bonuses. Amazing.

Ol' Cyclops has set yet another record in this term of Labour.

British consumers repaid the highest amount of unsecured credit on record in October, reducing their debt at twice the rate economists had expected.

Consumer debt deflation continues, I wonder if the Season of Godwill is going to see more rubbish and unwanted presents feverishly bought at the last minute with a swipe of the plastic rectangle, or will the debt deflation continue?

And what has been the result of the QE and ZIRP?

"The underlying position looks weak," said Ross Walker, economist at Royal Bank of Scotland. "There's not much evidence that QE is boosting those real economy money and credit aggregates. If it is working, it's through financial sector channels rather than through households and non-financial companies."

BoE policymakers have argued that the policy of buying assets - mostly gilts - with newly created money is working well in that it has raised the price of those assets and brought down borrowing costs for large companies.

An all round resounding success, in that case.

I wonder how Churchill would have expressed the current state of affairs? It is a pity that the UK has not produced anybody of outstanding stature in the last two decades.

[flying]

follow up to Bernanke's article yesterday.

Nice of CNBC to release it to You Tube

[midas]

"Now this is not the end. It is not even the beginning of the end. but it is, perhaps, the end of the beginning"

Stand by for the next round.

interesting 12

And the soverign debt issue grows louder and louder

Morgan Stanley fears UK sovereign debt crisis in 2010

http://www.telegraph.co.uk/finance/economi...is-in-2010.html

The intrinsic unimportance of Dubai World and the important wider message it conveys

http://blogs.ft.com/maverecon/2009/11/the-...age-it-conveys/

[Naam]

I suspect that much of your (all) analysis is taken from others without attribution and I do not like plagiarism.

there... there... Jazzbo! now you are too hard. let the boys have some fun with their youtube clips and posting links to "blogspots" where any moron can claim the earth is flat and doomsday is just around the corner.

I beg your pardon but I thought that was the purpose of this thread ? Obviously not.........it was just to give you the opportunity to tell us about conversations you have with your dog

you thought wrong. the purpose of this thread was not and is not to spread the message that the earth is flat, although some participants try hard to do so.

[jazzbo]

The headline says, or better, screams: Morgan Stanley fears UK sovereign debt crisis in 2010

The article says: “In an extreme situation a fiscal crisis could lead to some domestic capital flight, severe pound weakness and a sell-off in UK government bonds.

Typical.

[hhgz]

"Dear all, Just returned from a meeting and would like to share with you some of the things discussed."

I'm sure your total input was: "wow", "really", "yeah, I totally agree with Alex Jones", and "can you talk slower I can't write that fast".

[Naam]

The headline says, or better, screams: Morgan Stanley fears UK sovereign debt crisis in 2010

The article says: “In an extreme situation a fiscal crisis could lead to some domestic capital flight, severe pound weakness and a sell-off in UK government bonds. Typical.

after counting all the "if, may, could, would, et al" the question remains "are this anals really getting fancy money for their work?"

[Abrak]

Morgan Stanley fears UK sovereign debt crisis in 2010

http://www.telegraph.co.uk/finance/economi...is-in-2010.html

You see Midas I dont really understand the underlying logic of the Morgan Stanley report. Admittedly that might be because I have been indoctrinated by Bernanke but here you go.

“In an extreme situation a fiscal crisis could lead to some domestic capital flight, severe pound weakness and a sell-off in UK government bonds. The Bank of England may feel forced to hike rates to shore up confidence in monetary policy and stabilize the currency, threatening the fragile economic recovery,” they said.

Ok I get the first bit, 13% fiscal deficits do lead to a certain crisis of confidence - which could lead to capital flight, pound weakness and a sell off in UK government bonds (and a spike in rates.)

Now given that the UK's external debts are in sterling, the second half doesnt make much sense to me. Let's say that GBP fell 30%, this should make GBP look a little more attractive, boost growth, reduce external debt to GDP, maybe even reduce the budget deficit. Capital flight should stop, interest rates come down (at least in real terms) currency stabilize etc.

Obviously you can raise rates as an alternative. But capital flight is not going to stop because of a 1.5% interest rate increase per annum. If the UK is going to be thought of as a bigger risk than BP then it might increase. Plus even if you maintain the interest rate to stabilize the currency, you will drive the economy into recession, worsen the fiscal deficit, increase your debt/GDP ratio. Imagine if you took your their argument reductio ad absurdum and increased rates to 20%, afterall the interest payments and bad debt there would be no GDP so where would the currency.

Now I do agree that if you do the opposite and simply keep interest rates low and allow the currency to depreciate you could get to the stage of levels of inflation that could mean that there is no gain in real GDP but at least you are helping the debt to GDP problem. If you simply remember Thailand in 1997 it had large (in those days external US$ borrowings). It chose to raise rates to prevent capital outflows stabilize speculation in the baht. All it did was reduce real GDP, increase bankruptcies and increase speculation that it would devalue. Now of course if it hadnt of raised rates it would likely of devalued much earlier, all the US$ borrowers would still have been bust but the pain would have been less. The devaluation obviously increases your debt/GDP (if a lot is in dollars) however it was better than trying to maintain your debt and reduce your GDP.

The UK at least doesnt have that problem, a devaluation of sterling by 30% would significantly increase growth prospects without increasing debt or creating substantial inflation.

If you look around the world there maybe half a dozen countries raising rates to stabilize their currencies, Latvia, Iceland, Ireland but they are doing it because of large external foreign borrowing. Everyone else is trying to keep up with China in depreciating theirs.

Obviously say the Euro is not very good at this but then again it is forecast to grow by 0.3% next year compared 0.9% for the UK and 1.5% for the US by the October IMF forecasts. BTW I dont agree with a 13% deficit and do readily admit you are not really growing at all with one.

Edited December 1, 2009 by Abrak

[Abrak]

The headline says, or better, screams: Morgan Stanley fears UK sovereign debt crisis in 2010

The article says: “In an extreme situation a fiscal crisis could lead to some domestic capital flight, severe pound weakness and a sell-off in UK government bonds. Typical.

after counting all the "if, may, could, would, et al" the question remains "are this anals really getting fancy money for their work?"

Actually Naam, as an investment analyst for many years, I can tell you the money is all in the headline.

Edited December 1, 2009 by Abrak

[midas]

You see Midas I dont really understand the underlying logic of the Morgan Stanley report. Admittedly that might be because I have been indoctrinated by Bernanke but here you go.

l am not lloking just at UK Abrak.

As Willem Buiter points out UK is just “ another “ to add to the growing list.

“From Dubai to Iceland, Ireland, Greece, Hungary, Italy, Portugal, Spain, Japan, France, the UK

and the USA, the sovereign debt burdens have been at current levels during peacetime

only on the way down from even higher public debt burdens incurred during wars. “

The debts just keep mounting and not a mention in sight about how this will be repaid.

Incidentally I see the Debt Clock for USA is now above 12 trillion but I didn’t hear anything about Congress

actually voting for USA to increase their debt limit ? Or doesn’t anyone care about such formalities any more ?

[AlexLah]

No worries Midas, as long as those countries can pay the interest on the debt they should be fine.

Just squeeze the tax payers a bit more, perhaps soon there will be a tax on farting.

[midas]

No worries Midas, as long as those countries can pay the interest on the debt they should be fine.

Just squeeze the tax payers a bit more, perhaps soon there will be a tax on farting.

and expect more of this

Violence flares at Greek marches

http://www.javno.com/en-world/violence-fla...-marches_282155

[Abrak]

l am not looking just at UK Abrak.

Well when my Grandpappy was alive, Britain could be truely proud of its ability to get people excited about a fiscal crisis and rising National public sector debt.

Them were the days, not just saving but rationing too.

http://www.ukpublicspending.co.uk/downchar...cent%20Of%20GDP

[jazzbo]

as an investment analyst for many years, I can tell you the money is all in the headline.

In other words, Sell on the rumor, Sell again on the news ... and never be concerned about quoting out of context when there is a point to be made... What a great stomping this TV must be for an investment analyst... sometimes I've seen even 3 readers at the same time. Kinda like the old saw about the contest with "First Prize: A week in Philadelphia; Second Prize: Two Weeks in Philadelphia".

[lannarebirth]

as an investment analyst for many years, I can tell you the money is all in the headline.

In other words, Sell on the rumor, Sell again on the news ... and never be concerned about quoting out of context when there is a point to be made... What a great stomping this TV must be for an investment analyst... sometimes I've seen even 3 readers at the same time. Kinda like the old saw about the contest with "First Prize: A week in Philadelphia; Second Prize: Two Weeks in Philadelphia".

And here I thought the money is all in giving the trading desk a headsup through the "Chinese Wall".

[lannarebirth]

l am not looking just at UK Abrak.

Well when my Grandpappy was alive, Britain could be truely proud of its ability to get people excited about a fiscal crisis and rising National public sector debt.

Them were the days, not just saving but rationing too.

http://www.ukpublicspending.co.uk/downchar...cent%20Of%20GDP

Yeah, we have a site like that too:

http://www.usgovernmentspending.com/debt_deficit_brief.php

[Abrak]

And here I thought the money is all in giving the trading desk a headsup through the "Chinese Wall".

Actually Lanna I havent been an investment analyst for many years too. And I analysed stocks not economies currencies etc and still do but I dont discuss them on internet forums. Its the 'strategists and economists' who do all that stuff anyways.

Anyway here are a couple of puzzles....this is the IMF list of foreign reserves.

http://www.imf.org/external/np/sta/ir/topic.htm

Two things seem very odd.

1. The country with the biggest increase in forex reserves and the biggest in absolute term appears to be the USA, up about US$60bn. It does help the dollar fall though.

2. Why are China's numbers so ridiculously low?

And here especially for those who want to audit the Fed is an extremely odd report from BIS (that I dont fully understand) but claims there was absolutely massive intervention by the Fed in the swap market to prevent dollar appreciation and solve liquidity problems for international countries during the crisis. Total swaps peaked at US$589bn in October - supposedly the UK and several other countries ran out of international reserves (if you had treated the swap as short term dollar funding.) And the UK was granted an unlimited funding requirement. Were all liabilities to non-banks treated as short term financing the estimated upper limit would have been US$6.5trn (yes trillion dollars).

http://www.bis.org/publ/work291.pdf?noframes=1

And it is from The Bank of International Settlements

[Naam]

The headline says, or better, screams: Morgan Stanley fears UK sovereign debt crisis in 2010

The article says: “In an extreme situation a fiscal crisis could lead to some domestic capital flight, severe pound weakness and a sell-off in UK government bonds. Typical.

after counting all the "if, may, could, would, et al" the question remains "are this anals really getting fancy money for their work?"

Actually Naam, as an investment analyst for many years, I can tell you the money is all in the headline.

in this specific case i assume the headline was not made by the anals but the Telegraph journalist.

[jazzbo]

Sure, Kuhn Naam -- but many readers, or should I say the few readers that actually are here, will just glance at the headline and not bother with the substance of the article whose URL is provided as the headline confirms their view that the sky is indeed falling... and The Telegraph (aka The ToryGraph ) as with many other papers of various political leanings knows that salacious headlines sell copies or generate clicks.

[AlexLah]

Jazzbo, are you familiar with the symptoms shown by gambling addicts (not you) or alcoholics?

Go here and have a read: http://www.321gold.com/editorials/hera/hera120209.html

[12DrinkMore]

Go here and have a read: http://www.321gold.com/editorials/hera/hera120209.html

Yes, the bastards are gambling and binging with OUR money.

Don't miss following the link in that article

http://www.321gold.com/fed/greenspan/1966.html

When did Greenspan loose the grip? Or what forced him to do it? It seems in 1966 he had an extremely clear understanding of banking, and even managed to express it. Since the mid 90's Greenspan became a master of obfuscation.

Edited December 2, 2009 by 12DrinkMore

[12DrinkMore]

Ron Paul.

I would vote for him.

http://www.independent.co.uk/news/world/am...lf-1832241.html

[jazzbo]

The proverbial madmen are central bankers, i.e., the US Federal Reserve, whose polices, inspired by Johannes Gutenberg, threaten to destroy the US dollar in the name of saving US banks from their own irresponsibility and greed...The notion that a central authority, even one equipped with sophisticated computer models, can successfully substitute a mathematically-based view from on high for the individual judgments of millions of businesses, entrepreneurs, and consumers across countless regions and industries is not merely the height of hubris but quite simply mad.

Interesting read. If this were PR China and Hera was in charge I am sure they would all be executed like Melamine milk guys. Gary North and now Hera (Mensa). Great.

[flying]

When did Greenspan loose the grip? Or what forced him to do it? It seems in 1966 he had an extremely clear understanding of banking, and even managed to express it. Since the mid 90's Greenspan became a master of obfuscation.

You should check out Ron Pauls book End The FED

Has some great perspective on Greenspan in a chapter titled

Conversations with Greenspan.

The whole book is great. Highly recommend

[flying]

Well not that I put all that much faith in Gallup but..........

It does confirm what I saw driving during Black Friday. Maybe stores were crowded in the AM when folks ran in to buy a few cheap deals to stretch their$$.

But later & that weekend stores were not busy.

I know the retailers read a lot into it as it tends to show the way for holiday shopping.

Gallup Economic Weekly: Thanksgiving Week Disappoints

PRINCETON, NJ -- Gallup's Thanksgiving week results tend to confirm fears of a weak holiday sales season as consumer spending was unchanged from the prior week, even though it included Friday and Saturday of the Black Friday weekend. At the same time, Gallup's Economic Confidence Index and its Job Creation Index were essentially unchanged from the prior week. A rather gloomy consumer mood and consumer spending -- trailing last year's financial crisis-depressed comparables by 25% -- may not be unexpected, but are surely a disappointing way to start the Christmas sales season for the nation's retailers.

Full article at link above.

[Abrak]

If you look at the US Government financial statement.

http://www.fms.treas.gov/fr/index.html

You will find they estimate that the net present value of future expenditures above future revenues at the end of 2008 (September) is US$43trn (yes trillion) that and their existing debt roughly equals global GDP.

As they say they do not GAAP account many liabilities like pensions etc because they do not have to pay them.