Financial Crisis

[Gambles]

We have seen the unrest in Greece on the tv news so let us see what happens to

overall " sentiment ' on the 2nd June.

Fighting words here ................

Spanish unions prepare demonstrations all over the country over recent 'austerity measures'

For its part, the UGT expressed its "utmost support" for the general strike of public employees on 2 June and announced that it will review a "proportionate response" to the welfare cuts announced by the Government, which represent a significant breach of trust by the Government.

The unions are preparing mobilizations in the streets to express their rejection of the government Adjustment Plan for the financial crisis.

http://www.barcelonareporter.com/index.php...er_recent_aust/

We've long believed that unrest will go global

The social aspects will start to impact on the economic and governments generally tend to respond by doing something stupid....

[Gambles]

Naam you not only joined the doom and gloom brigade but here you are actually reading and quoting Zerohedge !!

12 months ago they would have said it could never be done

as an old soldier i use military tactics Midas. pouring water on your mill might soften your stance vs. my [not so] humble self and sooner or later i hope you will accept my invitation to an exquisite bottle of wine in my home which we will consume having much fun, comparing the yields of our rice and vegetable fields while lighting cuban cigars with high denominations of fiat money. it goes without saying that at the end of this meeting i expect you (being the Commanding G&D Officer) to promote me from recruit to Private First Class of the G&D brigade. there is no free lunch bottle of wine!

as one of the G&D's armed resistance guerilla corps, Naam, let me welcome you to our broad church - although there probably are some fundamentalists in the movement who disapprove of my heretical views that an indebted currency collapse and a stock market plunge don't actually matter that much in the long run (unless you happen to hold the currencies or the stocks) because there will still be a global economy even if there is another major global war at the end of the tunnel

[midas]

I just spoke to my friend Theo in Athens and he says all politicians spout <deleted>

there you go - now I agree with you again!

I tried to get hold of Theo but I was told he was having an afternoon siesta.

Yes this unfortunately is part of the problem in Greece.

But all over USA they still have kind of the same problems - even without siestas

" The cost of public pensions has been systemically underestimated nationwide for more than two decades, say some analysts. By these estimates, state and local officials have promised $5 trillion worth of benefits while thinking they were committing taxpayers to roughly half that amount.

" In Yonkers, more than 100 retired police officers and firefighters are collecting pensions greater than their pay when they were working. One of the youngest, Hugo Tassone, retired at 44 with a base pay of about $74,000 a year. His pension is now $101,333 a year. "

http://www.nytimes.com/2010/05/21/business.../21pension.html

Edited May 23, 2010 by midas

[midas]

as one of the G&D's armed resistance guerilla corps, Naam, let me welcome you to our broad church - although there probably are some fundamentalists in the movement who disapprove of my heretical views that an indebted currency collapse and a stock market plunge don't actually matter that much in the long run (unless you happen to hold the currencies or the stocks) because there will still be a global economy even if there is another major global war at the end of the tunnel

Gambles

Funny you mentioned this but I am watching this event ( below ) carefully. Of course it may just be " huffing and puffing " and come to nothing

but I hope they dont do something stupid like using aggression to stop this convoy In this day and age it could be

something as insignificant as this that could spark things off.

I actually applaude this convoy - i think its great - and if i had a boat I would bloody join them

Gaza to receive largest international ship convoy to defy Israel's blockade

However, Israel has earlier this week announced that it will prevent the international ship convoy from reaching the territorial waters of the Gaza Strip, even by force.

http://english.people.com.cn/90001/90777/90854/6991585.html

Edited May 23, 2010 by midas

[flying]

Looks a little bigger than reported earlier...

Ailing Spanish Lender Gets a €550 Million Bailout

The Bank of Spain, the central bank, announced Saturday that it had taken over management of CajaSur, appointing a team of administrators and injecting about €550 million, or $691 million, from a special restructuring fund to keep the bank, based in Córdoba, in the southern Spanish region of Andalusia.

The central bank’s intervention followed the collapse of merger negotiations between CajaSur, which has been under the control of the Roman Catholic Church, and a larger savings bank, Unicaja, based in Malaga.

rest of article at link.....

Edited May 24, 2010 by flying

[sokal]

Looks a little bigger than reported earlier...

Ailing Spanish Lender Gets a €550 Million Bailout

The Bank of Spain, the central bank, announced Saturday that it had taken over management of CajaSur, appointing a team of administrators and injecting about €550 million, or $691 million, from a special restructuring fund to keep the bank, based in Córdoba, in the southern Spanish region of Andalusia.

The central bank’s intervention followed the collapse of merger negotiations between CajaSur, which has been under the control of the Roman Catholic Church, and a larger savings bank, Unicaja, based in Malaga.

rest of article at link.....

Are the share holders getting wiped out in a situation like this ?

[sokal]

Mark Hanson was on King World News again. A must listen.

[Abrak]

Well the BoT came out with first quarter GDP figures showing 12% YOY growth.

QOQ on growth was 3.8% (which is 15% growth on a SAAR basis.) They even raised 4Q numbers (remember the US usually revises down the previous quarter to make the current quarter look good.) 4Q growth QOQ SAAR was over 16%.

If you assume that really GDP is unchanged for the remaining 3Qs annual growth would be 8.2%. (Still even zero growth looks unlikely.)

[midas]

Well the BoT came out with first quarter GDP figures showing 12% YOY growth.

QOQ on growth was 3.8% (which is 15% growth on a SAAR basis.) They even raised 4Q numbers (remember the US usually revises down the previous quarter to make the current quarter look good.) 4Q growth QOQ SAAR was over 16%.

If you assume that really GDP is unchanged for the remaining 3Qs annual growth would be 8.2%. (Still even zero growth looks unlikely.)

Warning: If you are reading this then this warning is for you. Every word you read of this useless fine print is another second off your life. Don't you have other things to do? Is your life so empty that you honestly can't think of a better way to spend these moments? Or are you so impressed with authority that you give respect and credence to all that claim it?

[Abrak]

Well the BoT came out with first quarter GDP figures showing 12% YOY growth.

QOQ on growth was 3.8% (which is 15% growth on a SAAR basis.) They even raised 4Q numbers (remember the US usually revises down the previous quarter to make the current quarter look good.) 4Q growth QOQ SAAR was over 16%.

If you assume that really GDP is unchanged for the remaining 3Qs annual growth would be 8.2%. (Still even zero growth looks unlikely.)

Warning: If you are reading this then this warning is for you. Every word you read of this useless fine print is another second off your life. Don't you have other things to do? Is your life so empty that you honestly can't think of a better way to spend these moments? Or are you so impressed with authority that you give respect and credence to all that claim it?

Well to be honest I did ask Theo. His first question was 'Do you have umbrellas on the beach?'

Then he went into some rant about 'Government wants austerity. EU wants austerity. But we protest and get US$150m overdraft facility. Beats working. You protest in Thailand, you get shot. Are you from Germany?'

[sokal]

Well the BoT came out with first quarter GDP figures showing 12% YOY growth.

QOQ on growth was 3.8% (which is 15% growth on a SAAR basis.) They even raised 4Q numbers (remember the US usually revises down the previous quarter to make the current quarter look good.) 4Q growth QOQ SAAR was over 16%.

If you assume that really GDP is unchanged for the remaining 3Qs annual growth would be 8.2%. (Still even zero growth looks unlikely.)

Warning: If you are reading this then this warning is for you. Every word you read of this useless fine print is another second off your life. Don't you have other things to do? Is your life so empty that you honestly can't think of a better way to spend these moments? Or are you so impressed with authority that you give respect and credence to all that claim it?

Do you actually think that Thailand has the talent to cook the books like the US and the UK does ? As if its the only thing Thailand has to worry about right now. I believe the numbers just based on that.

[Gambles]

as one of the G&D's armed resistance guerilla corps, Naam, let me welcome you to our broad church - although there probably are some fundamentalists in the movement who disapprove of my heretical views that an indebted currency collapse and a stock market plunge don't actually matter that much in the long run (unless you happen to hold the currencies or the stocks) because there will still be a global economy even if there is another major global war at the end of the tunnel

Gambles

Funny you mentioned this but I am watching this event ( below ) carefully. Of course it may just be " huffing and puffing " and come to nothing

but I hope they dont do something stupid like using aggression to stop this convoy In this day and age it could be

something as insignificant as this that could spark things off.

I actually applaude this convoy - i think its great - and if i had a boat I would bloody join them

Gaza to receive largest international ship convoy to defy Israel's blockade

However, Israel has earlier this week announced that it will prevent the international ship convoy from reaching the territorial waters of the Gaza Strip, even by force.

http://english.people.com.cn/90001/90777/90854/6991585.html

Midas,

There are a billion bizarre powderkegs out there

e.g. N&S Korea battling the high seas to sink each other?

German politicians wanting to collateralise Greek sovereign territory?

Texas making semi-hollow threats to seccede the union?

Nobody told us there'd be days like these.....strange days indeed

[Gambles]

Dear all,

Please find below the latest update from MBMG International.

One of the men who predicted the credit crunch is now warning of a potentially 'vicious' debt crisis.

No not yours truly.

Not GMA's John Sheehan.

Not Scott Campbell or Martin Gray but in fact Nassim Taleb, who wrote the books "Black Swan" and "Fooled by Randomness" now believes, as do we, that the world debt problem in total, is worse now than it was at the height of the credit crunch.

Like us he thinks that the time has come to ditch equities and US Treasuries. Taleb is backing hard assets.

Taleb told Bloomberg that governments have failed to learn the lessons of the banking crisis and have allowed the debt problem to morph into a new and more 'vicious' sovereign form:

'I had detected fragility in the banking system and it is still there and we need to do something about it....We have had a couple of years since the meltdown and the risks have increased and taken a much more vicious form.'

Sharing our concerns about the Fed Governors who admit that policy is unproven and that basically policymakers are flying by the seat of their pants, he warns that theories not backed by empirical evidence, such as the pricing of assets and risk, and says the globalisation has made events and outcomes totally unpredictable and he shares our concerns about the extent to which the entire global economy has become more inter-connected.

Taleb brands the government bailouts of the financial system and the transfer of debt from the private to the public sector as 'a fast-track to increasing moral hazard' and like ourselves and critics such as Ron Paul, he is scathing about the profits made by the banks over the past year.

'Look at all of the money they made with our backing- it is like they spat in our faces....We have a lower tax base than two years ago because less people are in work than two years ago and are now depending on economic forecasting by governments. Obama is forecasting a deficit of $4-7 trillion depending on the parameters you use but a small glitch can mean the deficit for the next 10 years swells to $20 trillion.'

Greece was recently forecasting debt to GDP of 3%, which now stands at 14% and rising - deteriorations can take place very quickly -

'The same thing will happen to the US- typical government underestimating.'

It's good to have some company once again in the bear pit!

Enjoy your day!

Once again, very best regards,

MBMG International

Edited May 24, 2010 by Gambles

[ronz28]

Pervasive bid rigging by the too big to fail bankers and consultants also scammed governments out of billions in higher fees, kickbacks and most significantly lost investment income.

http://preview.bloomberg.com/news/2010-05-...e-meltdown.html

Banks say business as usual...government prosecutors just don't understand their business.

[midas]

Well the BoT came out with first quarter GDP figures showing 12% YOY growth.

QOQ on growth was 3.8% (which is 15% growth on a SAAR basis.) They even raised 4Q numbers (remember the US usually revises down the previous quarter to make the current quarter look good.) 4Q growth QOQ SAAR was over 16%.

If you assume that really GDP is unchanged for the remaining 3Qs annual growth would be 8.2%. (Still even zero growth looks unlikely.)

Warning: If you are reading this then this warning is for you. Every word you read of this useless fine print is another second off your life. Don't you have other things to do? Is your life so empty that you honestly can't think of a better way to spend these moments? Or are you so impressed with authority that you give respect and credence to all that claim it?

Do you actually think that Thailand has the talent to cook the books like the US and the UK does ? As if its the only thing Thailand has to worry about right now. I believe the numbers just based on that.

as Ronald Reagan said " trust but verify "......so who does the verifying ?

EVERY government has reason to tell lies

http://www.rfa.org/english/energy_watch/of...2009120910.html

Edited May 25, 2010 by midas

[12DrinkMore]

AUSTERITY Challenge, the latest play in the never ending Financial Crisis.

I guess the end will be reached when all assets have been confiscated, all toxic assets socialised and all the money transferred to Goldman Sachs & co.

Anyway stand by you US citizens for this piece of legislation to come into operation in January 2013.

http://brianbrawdy.com/law-deputizes-bankers/

“In the case of any withholdable payment (your money) to a foreign financial institution,” the new law states “the withholding agent (your bank) with respect to such payment shall deduct and withhold from such payment a tax equal to 30 percent of the amount of such payment.” You want to legally wire money overseas? Your bank subtracts 30% instantly, even if you have already paid your taxes on those dollars. You are assumed guilty of tax evasion without adjudication; no presumption of innocence here.

Now, should the banking institution fail to collect a 30% (tax) on the total amount you wire or otherwise transfer out of the country, they are held responsible and liable by Washington for the full amount. Additionally your bank is legally indemnified, protected from subtracting that amount from your account in error. If your bank makes a mistake and debits your account, it will be your responsibility to personally recollect your misappropriated funds from the government.

So the Germans are to blame for the European Crisis?

http://www.telegraph.co.uk/finance/comment...e-Far-Left.html

It was refreshing to read "The Euro Burns" by Michael Schlecht, Die Linke’s economic guru, arguing that the primary cause of Euroland’s crisis is "German wage-dumping". He shows from Eurostat data that German labour costs rose 7pc between 2000 and 2008, compared to 34pc in Ireland, 30pc in Spain, Portugal, and Italy, 28pc in Greece and Holland, and 20pc in France. Again, my loose translation.

So hang on here, just because the Germans kept a lid on inflationary wage increases and the PIGIS went flat out in an orgy of self congratulating wage increases reinforced by the positive feedback loop of rising property prices, and all cheaply financed by German low interest rates, why should the Germans be the bad men of Europe?

And a bit further down

"Had Britain not been able to create breathing space by devaluing the pound, the situation for England would perhaps be even graver than for Greece. No wonder nobody in Britain is even thinking about joining the euro," he said. Quite so.

Bit late in the day, but if the UK had joined the EUR and Brown had kept the deficit spending to the Euro-limits, then maybe the debt mountain would be a bit smaller.

[Abrak]

And a bit further down

"Had Britain not been able to create breathing space by devaluing the pound, the situation for England would perhaps be even graver than for Greece. No wonder nobody in Britain is even thinking about joining the euro," he said. Quite so.

Bit late in the day, but if the UK had joined the EUR and Brown had kept the deficit spending to the Euro-limits, then maybe the debt mountain would be a bit smaller.

Well given that every country that joined the Euro has exceeded the deficit spending allowed by the Euro-limits, it is pretty optimistic to assume that Brown would be the exception.

However I do think that the AUSTERITY challenge might create some of that economic unrest that you have been waiting for.

[midas]

And a bit further down

"Had Britain not been able to create breathing space by devaluing the pound, the situation for England would perhaps be even graver than for Greece. No wonder nobody in Britain is even thinking about joining the euro," he said. Quite so.

Bit late in the day, but if the UK had joined the EUR and Brown had kept the deficit spending to the Euro-limits, then maybe the debt mountain would be a bit smaller.

Well given that every country that joined the Euro has exceeded the deficit spending allowed by the Euro-limits, it is pretty optimistic to assume that Brown would be the exception.

However I do think that the AUSTERITY challenge might create some of that economic unrest that you have been waiting for.

hold the phone.....

Naam joins the doom and gloom brigade and then Abrak acknowledges the possibility of civil unrest and its such a romantic notion after all.

When i told Theo he said " αιματηρή εκπληκτικό "

As Gambles quoted " Nobody told us there'd be days like these.....strange days indeed "

Edited May 25, 2010 by midas

[Abrak]

hold the phone.....

Naam joins the doom and gloom brigade and then Abrak acknowledges the possibility of civil unrest and its such a romantic notion after all.

When i told Theo he said "αιματηρή εκπληκτικό"

As Gambles quoted " Nobody told us there'd be days like these.....strange days indeed "

Your right Midas.

But given the current debt/GDP problem I simply assumed that Governments would bailout the banks and then inflate away the problem.

Trying to deflate your way out of a debt problem is risky. More importantly the concept of the Euro countries trying to persuade countries to achieve austerity backed by huge lines of credit for not achieving it is absurd.

It is essentially inciting economic protest.

[12DrinkMore]

But don't worry, just sixteen days to go and the hoi palloi will be totally occupied with

http://www.fifa.com/worldcup/index.html

All the PIGS are there apart from Ireland.

[AlexLah]

Theo will soon scream: Είμαι πεινασμένος !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[midas]

Theo will soon scream: Είμαι πεινασμένος !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

yes and that is when we will feel so glad to be living in Thailand

[flying]

yes and that is when we will feel so glad to be living in Thailand

All can run but none can hide

Hopefully folks have taken the time to prep.

None can say they did not have time nor see it coming.

[12DrinkMore]

http://www.bloomberg.com/apps/news?pid=206...inUiI&pos=6

Almost half of President Barack Obama’s Cabinet came to Beijing for the annual Strategic and Economic Dialogue, led by Secretary of State Hillary Clinton and Treasury Secretary Timothy F. Geithner.

Blah blah blah blah.

No result. Does Geithner & Co really think that the Chinese will help the Yanks or Europeans out of this? Bullshit. Half of Obamah's cabinet have simply had an opportunity to have an expense paid jolly.

The Chinese hold all the cards and massive amounts of USD's, which can be used across the globe to purchase assets. The Great US of A has massive debts to pay. As indeed do the Euro-lot. In my book, if you owe money, then you dance to the tune of the lenders. Geithner, it's time to dance. But with sending half the Obamah's crowd, then maybe he is already. I wonder how many of the Chinese Cabinet attended?

Desperate Dan Geithner "please allow the Yuan to appreciate and give us a chance to compete with you guys".

"Well, maybe, we'll have to talk to our friends in North Korea first".

"Oh come on, just give me a break"

"Two-way trade discussions made some progress. The U.S. said that Chinese officials had agreed to modify rules on encouraging homegrown technology that U.S. companies have complained may shut them out of the government procurement market"

"Aah Thank you so much"

And for a bit of diversity

"Clinton said U.S.-China relations are back on a “positive” track after a frosty period earlier this year following U.S. arms sales to Taiwan and a meeting between Obama and the Dalai Lama, the exiled Tibetan spiritual leader"

Well done Hillary, nothing like searching desperately for some good news. Well worth the visit, heh? How's Monica doing these days?

[Abrak]

12Drinkmore,

The fundamental philosophy behind how Keynes believed in a fiat central currency or to an extent the 'Triffin Dilemma' is that ultimately the surplus countries will compromise themselves.

Imagine two countries. One being the US with the central reserve currency and the other being China who pegs its currency to the central reserve at an undervalued rate,

So the US has a deficit based on debt and the China has a surplus whose payment is made in fiat central bank currency. The more this happens, the more debt the US has and the more fiat currency China achieves. Undervaluing their currency against the US clearly undermines the US economy but it also destroys the gains you are making as their paper becomes increasingly worthless.

Now if the currency is inherently worthless who is subsidizing who? Ultimately loads of Chinese are simply working in return for Americans who do not work in return for worthless paper.

My point being that the Chinese do not hold all the cards. While they have all those US$, America which you regard as having substantial debt, you should realize that the US controls the printing press.

[12DrinkMore]

12Drinkmore,

The fundamental philosophy behind how Keynes believed in a fiat central currency or to an extent the 'Triffin Dilemma' is that ultimately the surplus countries will compromise themselves.

Imagine two countries. One being the US with the central reserve currency and the other being China who pegs its currency to the central reserve at an undervalued rate,

So the US has a deficit based on debt and the China has a surplus whose payment is made in fiat central bank currency. The more this happens, the more debt the US has and the more fiat currency China achieves. Undervaluing their currency against the US clearly undermines the US economy but it also destroys the gains you are making as their paper becomes increasingly worthless.

Now if the currency is inherently worthless who is subsidizing who? Ultimately loads of Chinese are simply working in return for Americans who do not work in return for worthless paper.

My point being that the Chinese do not hold all the cards. While they have all those US$, America which you regard as having substantial debt, you should realize that the US controls the printing press.

Hi Abrak,

Yep, but the Chinese can and are spending those currently appreciating USD's on global assets in Africa and Australia for example. And paying for oil etc.

And all those Chinese who have worked to produce goods have been paid and are presumably OK with their salaries. So they have been compensated at the local level. They can eat and buy stuff.

So I guess the deal hinges around how far the USD can be depreciated, and at the moment it is appreciating against Euro-currencies, so the Chinese can buy even more European assets, if that is what they want. But it appears to me that the US does not want to lose the USD hegemony of its reserve currency against the Euro. The rating agencies are working for them.

So at the moment the Chinese hold a load of appreciating USD's which they can spend on buying up even more foreign assets and securing their future, whilst the USA can threaten to devalue the USD by printing a load of paper. But surely even then, to devalue the currency and create some inflation, they would either have to physically print the paper and circulate it, or persuade the banks to to put more of the QE into the pockets of the US citizens?

[Abrak]

double post

Edited May 25, 2010 by Abrak

[Abrak]

Hi Abrak,

Yep, but the Chinese can and are spending those currently appreciating USD's on global assets in Africa and Australia for example. And paying for oil etc.

And all those Chinese who have worked to produce goods have been paid and are presumably OK with their salaries. So they have been compensated at the local level. They can eat and buy stuff.

So I guess the deal hinges around how far the USD can be depreciated, and at the moment it is appreciating against Euro-currencies, so the Chinese can buy even more European assets, if that is what they want. But it appears to me that the US does not want to lose the USD hegemony of its reserve currency against the Euro. The rating agencies are working for them.

So at the moment the Chinese hold a load of appreciating USD's which they can spend on buying up even more foreign assets and securing their future, whilst the USA can threaten to devalue the USD by printing a load of paper. But surely even then, to devalue the currency and create some inflation, they would either have to physically print the paper and circulate it, or persuade the banks to to put more of the QE into the pockets of the US citizens?

I am merely pointing out that it is a fair fight. The basic point of a reserve currency is that it will be overvalued because external countries wish to hold it as reserves (principally against import payments). So by definition as long as a reserve currency it will mean overvaluation an a current account deficit.

Actually China is a counter balance in terms of the US$. If you think about it say a US$1bn deficit by the US counterbalanced by a US$ surplus accepted in accumulated reserves by China would have no underlying effect on the currency globally. This is often forgotten when you consider that the US$ is very difficult to depreciate because the underlying deficit is counterbalanced by the underlying surplus (and resulting capital inflow) of its trade partners.

Ultimately though China has to realize the underlying equations of such a relationship which is to the extent they undervaluetheir currency and destroy the central reserve currency (aka UK), while they are stealing growth ultimately at the US$ expense, at some point the destruction must prove counter productive. (Even simpler put - if there are only two parties - one that basically produces everything and the other that doesnt produce anything at all but pays you with paper - you are essentially both fuc_ked.

[AlexLah]

Let's say there will be a global shortage of food in the coming months perhaps years due to drought and/or heavy rain or other reasons.

Suppose prices of basic food stuff will rise by 50% due to real shortage.

Will more Dollars be needed in the system?

[badge]

Incase Brits missed out on the now infamous US Debt Clock;

<div style="width: 250px; height: 210px; text-align: center;"><script src="http://www.debtbombshell.com/widget/embed.js" type="text/javascript"></script><a style="display: block; margin-top: 0px; font: 9px Arial, sans-serif; font-weight:bold; text-decoration: none;" href="http://www.debtbombshell.com/">UK National Debt Clock - DebtBombshell</a></div><br />