Financial Crisis

[flying]

China to buy up to $50 billion of first-ever IMF bonds

By John Letzing, MarketWatch

SAN FRANCISCO (MarketWatch) -- The Chinese government has agreed to purchase up to $50 billion worth of International Monetary Fund bonds, the first such notes in the fund's history, the IMF said Wednesday.

The global organization said the note purchase agreement "offers China a safe investment instrument," and is part of a broader plan to help the fund weather the economic downturn.

The IMF announced plans to issue bonds to member countries in June, as part of a plan to help bolster its resources. China expressed interest at that time in purchasing the notes.

Other countries reportedly interested in purchasing the IMF bonds include Russia and India.

The bonds would be denominated in Special Drawing Rights, a unit based on a basket of member-state's currencies and used by the IMF for accounting. Currently, one Special Drawing Right is worth roughly $1.56.

The IMF said in a statement that the Chinese purchase will help "boost the Fund's capacity to help its membership -- particularly the developing and emerging market countries -- weather the global financial crisis, and facilitate an early recovery of the global economy."

The purchase agreement was signed by IMF Managing Director Dominique Strauss-Kahn and People's Bank of China Deputy Gov. Yi Gang, the IMF said. China had originally said in June it was interested in buying the IMF bonds.

Chinese officials have previously held up the IMF as a possible source for a world reserve currency to supplement or replace the dominant role of the U.S. dollar.

http://www.marketwatch.com/story/china-to-...onds-2009-09-02

[Naam]

we lived in Sao Paulo (mid 80s) but in a home owned by the company. real estate (land) we bought many years later as we planned to retire in Brazil, not in S.P. but 85km north of Rio in the mountains 1000 m above sea level. after opting to retire in Thailand (2004) we sold our land in (2007). except for the fact that i still keep close contact with a bunch of brazilian friends i'm afraid i can't give you much advice as far as your travelling plans are concerned.

OK, thanks. If you would indulge me further; being based in Brazil 25yrs ago, were you in the Lumber or Commodities business in a previous life? As a career?

i am/was a physicist and mechanical engineer who built and ran industrial plants. as far as lumber is concerned i cut the odd tree in my garden once in a blue moon. in commodities i am since many years as i provide the money with which my wife buys the commodities we need (mainly food stuff) in various supermarkets.

[Naam]

Tick Tick Tick TICK.......................

"It Could Get Ugly Very Fast": Banking Crisis Grows, FDIC's Funds Shrink"

http://finance.yahoo.com/tech-ticker/artic...SKF,xlf,jpm,fas

personal message to your congressman might be a better route

[badge]

All replies and comments duly noted. Thanks.

[lannarebirth]

Tick Tick Tick TICK.......................

"It Could Get Ugly Very Fast": Banking Crisis Grows, FDIC's Funds Shrink"

http://finance.yahoo.com/tech-ticker/artic...SKF,xlf,jpm,fas

personal message to your congressman might be a better route

I think the governments thinking is to spread risks out as much as possible. They are very fearful of concentrated risks. As far as markets are concerned, there's technical analysis, fundamental analysis and a much overlooked third analytical method known as "thinking like a criminal". A year ago with markets plunging and major banks failing the government steps up FDIC insurance limits to $250,000 on October 5. If not extended that extra amount of deposit insurance is set to expire at the new year.

Speaking for myself I maxed out 2 such accounts with brokerage withdrawls. I locked in for a year then at 4.1% and I'm looking at a rollover of half that. Probably millions in the exact same position. They're looking at 2% or putting it in the market or bonds or real estate.

A pullback here for a few weeks would be just the thing for those who felt the may have missed the train. Higher highs near yearend and then down for the retest. Just musing.

[12DrinkMore]

China to buy up to $50 billion of first-ever IMF bonds

This should be read in conjunction with the issue by the IMF of 250,000,000,000 USD's worth of SDR's (we will need a new alphabet soon with all these acronyms).

http://www.imf.org/external/pubs/ft/survey.../POL082809A.htm

Now, you might ask, where did the IMF get its hands on 250 Billion Dollars worth of SDR's? Well, you've guessed it, they printed them at the stroke of a key. Wish I had a keyboard like that 2 5 0 0 0 0 0 0 0 0 0 0 <ENTER> WOW! Hey presto! Another huge chunk of banker created money hits the economy.

And where did they all go to, you might ask, well, the are dished out free of charge and even interest free unless SDRs are sold/bought over/above their allotment, (jeeze, you have to give it to the IMF, they are really generous with this stuff) to a whole bunch of countries according to their quota.

http://www.imf.org/external/np/sec/memdir/members.htm

Note that the US takes by far the lions share, a whopping 17%, so Geithner has a windfall of 35 Billion Dollars.

So what exactly is an SDR?

Well "It is not a currency, nor a claim on the IMF, but is potentially a claim on freely usable currencies of IMF members"

http://www.imf.org/external/np/exr/faq/sdrallocfaqs.htm

So where does the IMF stand on funding?

This year they are creating 280 Billion Dollars of SDR's bringing the total up to 318,000,000,000 of USD equivalent SDR's.

The is an unprecedented ramping up of the operation of the IMF, and possibly deserves some keen analysis to find out exactly what is going on. With "normal" currencies there is an element of solidness because the respective governments can tax the sheeple in that currency. But I don't quite understand why the IMF, since it can simply shunt out shed loads of SDR's,

1. needs to make borrowing agreements with the UK, Norway, Japan and Canada.

2. why the SDR indeed has any value whatsoever. The issuing of this great chunk of "money" has simply debased everybody else currencies and, through this process, transferred to the SDR that same amount of lost value.

3. I hope that China, by being the first country to actually "buy" into this for 50,000,000,000 USD, instead of just being given the SDR, is not being taken for a ride. This is a fairly big commitment, basically giving the IMF 50 Billion in return for well, not much really. What happens when the IMF dishes out this cash to bail out say the UK, and then China wants a few USDs back in exchange for it's SDR's?

Oh! DONG! Forget that last sentence. It has just struck me, the Chinese can exchange the SDR's for USD's, GBP's JPY's and EUR's indeed, possibly any other currency, provided, of course, that all the G20 Central Bankers agree to hold up the system. So what, in effect has taken place? Surely it means that the IMF has just created another wad of SDR's out thin air and received a bunch of Chinese owned greenbacks in exchange and through this further debasing the value of every other currency by that very same 50 Billion USDs. Looks very much like Quantitative Easing at the World level.

This all looks suspiciously like a New World Currency is being born before our eyes, or rather, behind our backs. And who is in charge? Yes, is those Masters of Disaster, the Central Bankers. And who do they have to answer to? I guess nobody at the World level.

Is this all under control?

[lannarebirth]

China to buy up to $50 billion of first-ever IMF bonds

This should be read in conjunction with the issue by the IMF of 250,000,000,000 USD's worth of SDR's (we will need a new alphabet soon with all these acronyms).

http://www.imf.org/external/pubs/ft/survey.../POL082809A.htm

Now, you might ask, where did the IMF get its hands on 250 Billion Dollars worth of SDR's? Well, you've guessed it, they printed them at the stroke of a key. Wish I had a keyboard like that 2 5 0 0 0 0 0 0 0 0 0 0 <ENTER> WOW! Hey presto! Another huge chunk of banker created money hits the economy.

And where did they all go to, you might ask, well, the are dished out free of charge and even interest free unless SDRs are sold/bought over/above their allotment, (jeeze, you have to give it to the IMF, they are really generous with this stuff) to a whole bunch of countries according to their quota.

http://www.imf.org/external/np/sec/memdir/members.htm

Note that the US takes by far the lions share, a whopping 17%, so Geithner has a windfall of 35 Billion Dollars.

So what exactly is an SDR?

Well "It is not a currency, nor a claim on the IMF, but is potentially a claim on freely usable currencies of IMF members"

http://www.imf.org/external/np/exr/faq/sdrallocfaqs.htm

So where does the IMF stand on funding?

This year they are creating 280 Billion Dollars of SDR's bringing the total up to 318,000,000,000 of USD equivalent SDR's.

The is an unprecedented ramping up of the operation of the IMF, and possibly deserves some keen analysis to find out exactly what is going on. With "normal" currencies there is an element of solidness because the respective governments can tax the sheeple in that currency. But I don't quite understand why the IMF, since it can simply shunt out shed loads of SDR's,

1. needs to make borrowing agreements with the UK, Norway, Japan and Canada.

2. why the SDR indeed has any value whatsoever. The issuing of this great chunk of "money" has simply debased everybody else currencies and, through this process, transferred to the SDR that same amount of lost value.

3. I hope that China, by being the first country to actually "buy" into this for 50,000,000,000 USD, instead of just being given the SDR, is not being taken for a ride. This is a fairly big commitment, basically giving the IMF 50 Billion in return for well, not much really. What happens when the IMF dishes out this cash to bail out say the UK, and then China wants a few USDs back in exchange for it's SDR's?

Oh! DONG! Forget that last sentence. It has just struck me, the Chinese can exchange the SDR's for USD's, GBP's JPY's and EUR's indeed, possibly any other currency, provided, of course, that all the G20 Central Bankers agree to hold up the system. So what, in effect has taken place? Surely it means that the IMF has just created another wad of SDR's out thin air and received a bunch of Chinese owned greenbacks in exchange and through this further debasing the value of every other currency by that very same 50 Billion USDs. Looks very much like Quantitative Easing at the World level.

This all looks suspiciously like a New World Currency is being born before our eyes, or rather, behind our backs. And who is in charge? Yes, is those Masters of Disaster, the Central Bankers. And who do they have to answer to? I guess nobody at the World level.

Is this all under control?

Nothing to worry about. If anything goes amiss the Intergalactic Monetary Fund will issue some new bonds to bail them out.

[BlackJack]

agree

as if they come clean with the bank mess then there would be a run on the banks

if this happens and all want their money back at once then they cant do it

as the banks have lent out your deposits 10,20 or even 100 times (no one knows)

SO the longer they prop it up the better chance that it may not fail

But sadly this will not be the case and many more banks will fail then other business failures will follow

There are plenty of people making money now and socking it away as they know its going to rain soon

more like a shyt storm

[12DrinkMore]

Further to my last rant on the IMF

Just discovered that China is using RMB's to pay for the SDR's.

http://www.imf.org/external/np/pp/eng/2009/090209.pdf

Which makes it a little more complex, as what will the IMF do with a bunch of RMB's?

[churchill]

Further to my last rant on the IMF

Just discovered that China is using RMB's to pay for the SDR's.

http://www.imf.org/external/np/pp/eng/2009/090209.pdf

Which makes it a little more complex, as what will the IMF do with a bunch of RMB's?

RMB"s to become part of sdr's?

[Naam]

Further to my last rant on the IMF

Just discovered that China is using RMB's to pay for the SDR's.

http://www.imf.org/external/np/pp/eng/2009/090209.pdf

Which makes it a little more complex, as what will the IMF do with a bunch of RMB's?

RMB"s to become part of sdr's?

= appropriate and justified!

[12DrinkMore]

A bit more on this IMF/SDR issue of 283,000,000,000 USD's.

I have failed to find any reference to it in the UK press.

BUT

http://www.telegraph.co.uk/finance/economi...us-culture.html

The extra $11bn (£6.8bn) promised by Britain for the International Monetary Fund is part of a wider increase from the European Union, which on Wednesday agreed to increase its contribution from about $100bn to $175bn.

But hang on here, as a result of the SDR issue, the quota supplied to the UK free of charge was 4.94% of the 283 Billion, so around 14 Billion USD's.

So the IMF dish out 14 Billion of fresh crispy money to Darling, for which there has been no public announcement, and he promptly hands 11 Billion back again. There is surely some big fiddle going on here.

[LaoPo]

Further to my last rant on the IMF

Just discovered that China is using RMB's to pay for the SDR's.

http://www.imf.org/external/np/pp/eng/2009/090209.pdf

Which makes it a little more complex, as what will the IMF do with a bunch of RMB's?

RMB"s to become part of sdr's?

It just started; September 2 , 2009....it's the beginning of a whole new world in currencies:

IMF Signs US$50 Billion Note Purchase Agreement with China

Press Release No.09/293

September 2, 2009

The Managing Director of the International Monetary Fund (IMF), Mr. Dominique Strauss-Kahn, and the Deputy Governor of the People’s Bank of China, Mr. Yi Gang, have signed an agreement under which the People’s Bank of China would purchase up to SDR 32 billion (around US$50 billion) in IMF notes.

http://www.imf.org/external/np/pp/eng/2009/090209.pdf

LaoPo

[midas]

This is a must see four and half minute interview with California Congressman Peter Stark ( D ).......about debt

A line that will now live forever, thanks to Congressman Stark: "The more debt we owe, the wealthier we are".

Things go rapidly downhill at the end..................disgraceful behaviour and the American people are paying the salaries of these people

[12DrinkMore]

Continuing the saga of the IMF....

http://ftalphaville.ft.com/blog/2009/03/09...sh-for-mankind/

Ted Truman, senior fellow at the Peterson Institute for International Economics, argued much the same thing in the FT last Thursday. His recommendation though was to issue fresh SDRs to a value of some $250bn, which he said would also be possible with an 85 per cent majority vote of the IMF membership, but more importantly be legislatively doable for the US — as the US Treasury secretary can vote for an SDR allocation of up to $250bn only.

So that is where the 250 Billion figure came from. The US is pulling the strings of the IMF, well nothing new there, the IMF is based in Washington. I wonder how long the delay is before he can vote for another 250 billion?

The world has just had a helicopter drop of free cash dumped on it. The US received 42 Billion, the UK 12.5 Billion and Thailand 1.25 Billion; plus the next much smaller drop in a few days. And nobody has reported it.

[flying]

Tick Tick Tick TICK.......................

"It Could Get Ugly Very Fast": Banking Crisis Grows, FDIC's Funds Shrink"

http://finance.yahoo.com/tech-ticker/artic...SKF,xlf,jpm,fas

personal message to your congressman might be a better route

jokes aside I actually do write mine a few times. Then I saw he was a total nut. Cap & Trade he voted yes. Glad that is now stalled.

But a good example of most congress critters is of the great State of Kalifornia Peter Stark that midas pointed to.

Is it any wonder 57% of citizens want to vote the whole lot out?

Edited September 3, 2009 by flying

[flying]

This all looks suspiciously like a New World Currency is being born before our eyes, or rather, behind our backs. And who is in charge? Yes, is those Masters of Disaster, the Central Bankers. And who do they have to answer to? I guess nobody at the World level.

Is this all under control?

Ding Ding Ding we have a winner

Well at least I was thinking the same thing.

This is so far out of control I can only imagine what Oct will be like.

Edit: PS I just saw this too....

http://www.marketwatch.com/story/hong-kong...d=rss&rss=1

I think they are being smart & spreading out the possibilities

Edited September 3, 2009 by flying

[flying]

Long but Interesting spin

full article here

http://thefundamentalview.blogspot.com/200...default_03.html

Back to Reuters. Some of the State Owned Enterprises that stated their potential intentions to default were Air China. China Eastern and Cosco. Mainly in part because they took major derivatives losses over the past year but also, concerns are arising that the derivatives that they were sold by these foreign institutions are garbage, underwater and may never see the light of day. So why continue to pay for them? So the concern in the financial world is that holders of these losing products may just walk away, not unlike a home owner with a $600,000 mortgage on a home valued at $475,000 deciding to just hand in their keys. However, read on...this has nothing to do with morgtgage backed products. This time, the concern may be over Oil.

Here is the looming problem. These products are worth billions. One report that a good friend of mine did showed that if Goldman Sachs for example were to take this one up the rear, they could stand to lose 15 billion dollars. (This number is by no means confirmed)

An important history lesson is needed here. “Potential default” was the concern that sparked and prompted the most recent economic crisis. These intricately weaved products along with highly speculative CDOs and CDSs began to fall apart when the bubble that was in large part significantly contributed to and created by the financial institutions that were packaging this junk started to fall apart.

Imagine the impact for a brief moment if you will, on the impact to the financial landscape if China were to say “we are walking away” from those products. I would imagine that China, being the biggest purchaser of US debt, could surely collapse the US institutions that were at one point deemed too big to fail if they decide to go ahead with this plan.

This is why I don’t take tonight’s news that China purchased 50 billion dollars of IMF bonds lightly. In fact, I take it very seriously. This is why I take the buzz on the floor over the past two days very seriously as well as I do the incredible spike in Gold today. Most importantly, I do not take lightly the recent 25% correction we have seen in the Chinese Stock Market. Can all these events be interconnected some how? Is the Chinese stock collapse giving us a hint?

Edited September 3, 2009 by flying

[sokal]

This is a must see four and half minute interview with California Congressman Peter Stark ( D ).......about debt

A line that will now live forever, thanks to Congressman Stark: "The more debt we owe, the wealthier we are".

Things go rapidly downhill at the end..................disgraceful behaviour and the American people are paying the salaries of these people

haha,That is a good video, I had to watch it twice.

[sokal]

Long but Interesting spin

full article here

http://thefundamentalview.blogspot.com/200...default_03.html

Back to Reuters. Some of the State Owned Enterprises that stated their potential intentions to default were Air China. China Eastern and Cosco. Mainly in part because they took major derivatives losses over the past year but also, concerns are arising that the derivatives that they were sold by these foreign institutions are garbage, underwater and may never see the light of day. So why continue to pay for them? So the concern in the financial world is that holders of these losing products may just walk away, not unlike a home owner with a $600,000 mortgage on a home valued at $475,000 deciding to just hand in their keys. However, read on...this has nothing to do with morgtgage backed products. This time, the concern may be over Oil.

Here is the looming problem. These products are worth billions. One report that a good friend of mine did showed that if Goldman Sachs for example were to take this one up the rear, they could stand to lose 15 billion dollars. (This number is by no means confirmed)

An important history lesson is needed here. “Potential default” was the concern that sparked and prompted the most recent economic crisis. These intricately weaved products along with highly speculative CDOs and CDSs began to fall apart when the bubble that was in large part significantly contributed to and created by the financial institutions that were packaging this junk started to fall apart.

Imagine the impact for a brief moment if you will, on the impact to the financial landscape if China were to say “we are walking away” from those products. I would imagine that China, being the biggest purchaser of US debt, could surely collapse the US institutions that were at one point deemed too big to fail if they decide to go ahead with this plan.

This is why I don’t take tonight’s news that China purchased 50 billion dollars of IMF bonds lightly. In fact, I take it very seriously. This is why I take the buzz on the floor over the past two days very seriously as well as I do the incredible spike in Gold today. Most importantly, I do not take lightly the recent 25% correction we have seen in the Chinese Stock Market. Can all these events be interconnected some how? Is the Chinese stock collapse giving us a hint?

Good articles, now the big question, is gold exspensive right now ????

[flying]

Good articles, now the big question, is gold expensive right now ????

Good Question

Silver & Gold

But it always amazes me that those things are always deemed to be too expensive to most no matter what the price. I know many rely totally on charts of the past but it seems few ever look at current events or look ahead. It's all good & I guess it depends on if they are paper metal traders or physical holders

Back in Oct last year folks said $735 for gold was crazy...

Are you crazy? They said just wait for the 650 or better yet the 400 range as it was just around the bend.

Folks really need to Do their own due diligence & decide for themselves.

DYODD Folks should decide what their own premise is.

[Chaimai]

That's it. we can all relax and 12D can sit back with a large cold bottle of Chang

Darling predicts economic recovery

http://uk.news.yahoo.com/21/20090903/tuk-d...ry-6323e80.html

[sokal]

Good articles, now the big question, is gold expensive right now ????

Good Question

Silver & Gold

But it always amazes me that those things are always deemed to be too expensive to most no matter what the price. I know many rely totally on charts of the past but it seems few ever look at current events or look ahead. It's all good & I guess it depends on if they are paper metal traders or physical holders

Back in Oct last year folks said $735 for gold was crazy...

Are you crazy? They said just wait for the 650 or better yet the 400 range as it was just around the bend.

Folks really need to Do their own due diligence & decide for themselves.

DYODD Folks should decide what their own premise is.

I walked into a bank here in Canada and bought 6 ounces and stuck it in my pocket.(in April) I could tell one of the clerks thought I was crazy.

I will only get gun shy when the price is close to its inflation adjusted high of $2500. I am still a buyer.

[12DrinkMore]

That's it. we can all relax and 12D can sit back with a large cold bottle of Chang

Darling predicts economic recovery

http://uk.news.yahoo.com/21/20090903/tuk-d...ry-6323e80.html

http://www.independent.co.uk/news/uk/home-...on-1781465.html

Britain will be 'last advanced economy to exit recession'

The OECD said that the UK would not see any growth in its economy until 2010, at least six months after most of her competitors. The OECD forecast a further shrinkage of 0.25 per cent in the UK's GDP this autumn, and stagnation for the rest of the year.

I'd better reload the fridge, it's going to be a long haul for the UK.

[Naam]

I walked into a bank here in Canada and bought 6 ounces and stuck it in my pocket.(in April) I could tell one of the clerks thought I was crazy.

I will only get gun shy when the price is close to its inflation adjusted high of $2500. I am still a buyer.

and you pay for your living expenses with what money? do you work or was there a big inheritance?

[sokal]

I walked into a bank here in Canada and bought 6 ounces and stuck it in my pocket.(in April) I could tell one of the clerks thought I was crazy.

I will only get gun shy when the price is close to its inflation adjusted high of $2500. I am still a buyer.

and you pay for your living expenses with what money? do you work or was there a big inheritance?

I save my money. I am not talking to my family and I don't plan to so I have no inheritance.

[midas]

12 you will like this one

China's national flag to go up in White House on Sept 20

The national flag of the People's Republic of China (PRC) will be hoisted at the South Lawn of the White House in Washington on September 20, media reported Sunday.

Chinese associations in the United States had applied to hold a ceremony in front of the US President’s residence to celebrate the 60th anniversary of the founding of PRC.

http://www.freerepublic.com/focus/f-news/2328363/posts

[flying]

China's national flag to go up in White House on Sept 20

That was because of the stale cookie Prez Zobama recently got in the mail....

Edited September 4, 2009 by flying

[Naam]

I walked into a bank here in Canada and bought 6 ounces and stuck it in my pocket.(in April) I could tell one of the clerks thought I was crazy.

I will only get gun shy when the price is close to its inflation adjusted high of $2500. I am still a buyer.

and you pay for your living expenses with what money? do you work or was there a big inheritance?

I save my money. I am not talking to my family and I don't plan to so I have no inheritance.

to save money you need a source to make money. so you work?

[midas]

Joe Stiglitz describes the current financial crisis

Sept. 4 (Bloomberg) -- The U.S. economy faces a “significant chance” of contracting again after emerging from its worst recession since the 1930s, Nobel Prize-winning economist Joseph Stiglitz said.

“It’s not clear that the U.S. is recovering in a sustainable way,” Stiglitz, a Columbia University professor, told reporters yesterday in New York.

http://jessescrossroadscafe.blogspot.com/