Financial Crisis

[Abrak]

http://www.scribd.com/doc/24470953/Sprott-December

Is it the same?

Well basically, yes, in that the numbers come from table B.100 from the December 10th Fed Reserve Z.1 flow of funds release which is one of the quoted sources.

Obviously, your report claims that the household sector is a 'catch all' for those numbers that dont fit into any category. Could well be right - they say that the definition is in the FRB Guide to FOF accounts (this runs to two volumes, 2000 pages, available at the very reasonable price of US$20!!!). So they are possibly the only people on the planet to have read it.

Still rather than implying this US$500bn is perhaps 'phantom QE' or 'Ponzi' it is easier to look at things this way...

(1) After a financial crisis banks tend to widen their spreads, lowering deposit rates/raising lending rates, which encourages people to disintermediate towards direct issuance. Central Banks also depress the very short end of the yield curve.

(2) If you look at household holdings of USTs they have over doubled to US$810bn this year. However, if you add UST holdings to deposits, deposits have only grown by 4.4% at the 9m stage. A much lower rate than over the past 5 years.

[Naam]

Some people "need kiliin' ". I'd start with the politicians and then move to the bankers, but that's just me.

we could act in parallel ways and simultaneously. have you ever read Clausewitz? even now after more than a century a literature must for officers in dozens of armies. adding General Guderian's credo "klotzen, nicht kleckern!" would add to the odds of success.

No I have not read his books on war making, but I gather he feels that wars are a natural extension of political policy. That very idea is repugnant to me, but I haven't seem anything in my 52 years that says it's a false notion.

Well, I had to translate the good Generals remarks. Something like "slog away, do not make a mess", from the free translator. Something like "make it big" from another site. If he's for making iot big and not leaving amess, than I can endorse those remarks.

General Guderian's words have nothing to do with making any mess (au contraire!) and quite difficult to translate although it's only three simple german words. "make it big" comes close. the actual meaning "use all [big calibres] you got, don't pussyfoot!"

General Clausewitz is a different story!

quote: "Clausewitz integrates politics and social and economic issues as some of the most important factors in deciding the outcomes of a war. It is one of the most important treatises on strategy ever written, and is prescribed at various military academies to this day."

http://en.wikipedia.org/wiki/On_War

[jcon]

^^^^^^^Herr Naam, did you just post a link to a Wikipedia article?!?!?!?!?! Nooooooooooooooo!!!!!!! (Youtube is right around the corner.... )

[Naam]

^^^^^^^Herr Naam, did you just post a link to a Wikipedia article?!?!?!?!?! Nooooooooooooooo!!!!!!! (Youtube is right around the corner.... )

i hang my head in shame. used Wicked Pets only because i am sure that Yooh-Toob has no clips with Clausewitz or Guderian

but perhaps Alex will prove me wrong?

[AlexLah]

As I said before, I respect the elderly people..........

[midas]

p.s. there is no such thing in a civilised country[/color] like "handing over your keys" and run away from debt.

looks like China is another uncivilised country

It could be pretty apocalyptic if this " trend " becomes international

http://ow.ly/QMvv

Chinese firm says won't pay Goldman on options losses

The State Assets Supervision and Administration Commission said it would back state-owned companies in any legal action against the foreign banks that sold them oil derivatives, which resulted in losses when oil prices dived late last year. [iD:nPEK14474]

Edited December 30, 2009 by midas

[Naam]

As I said before, I respect the elderly people..........

= food and drinks free in my house Alex. no joke, i mean it (of course one day only )!

[Naam]

p.s. there is no such thing in a civilised country[/color] like "handing over your keys" andrun away from debt.

looks like China is another uncivilised country Chinese firm says won't pay Goldman on options losses

they send the options keys back to Goldman Sucks?

[AlexLah]

As I said before, I respect the elderly people..........

= food and drinks free in my house Alex. no joke, i mean it (of course one day only )!

Invitation accepted

I will bring some home grown (organic) crisp and very tasty veggies.

[midas]

p.s. there is no such thing in a civilised country[/color] like "handing over your keys" andrun away from debt.

looks like China is another uncivilised country Chinese firm says won't pay Goldman on options losses

they send the options keys back to Goldman Sucks?

yes DISCUSTING !

[midas]

As I said before, I respect the elderly people..........

= food and drinks free in my house Alex. no joke, i mean it (of course one day only )!

Invitation accepted

I will bring some home grown (organic) crisp and very tasty veggies.

its no wonder you need information about using letters Alex if you smoke that

[Naam]

As I said before, I respect the elderly people..........

= food and drinks free in my house Alex. no joke, i mean it (of course one day only )!

Invitation accepted I will bring some home grown (organic) crisp and very tasty veggies.

my dogs will not like that!

[midas]

looks like 2010 will be like 2009

GMAC Said to Discuss U.S. Aid Package of $3 Billion or More

GMAC Inc., the home and auto lender that counts the U.S. government as the largest stakeholder, is discussing with the Obama administration a third bailout of $3 billion to $4 billion, said a person familiar with the matter.

The size of the assistance is under negotiation, the person said on condition of anonymity because the talks are private. I bet they blo*dy are

http://www.bloomberg.com/apps/news?pid=206...sSyTs&pos=4

[midas]

If these paycuts happen across the board ( proposed so far in Las Vegas, California, Hawaii, Massachusetts ), I can’ t see much hope for those housing markets ?

“ Las vegas is considering back-to-back 8 percent salary rollbacks and freezes for all employees, including firefighters, although a union official declined to comment today on the union’s positions on these wage proposals. ”

http://www.lvrj.com/news/breaking_news/Cit...s-80240962.html

[12DrinkMore]

Here's an analysis of the UK economy and where it is heading.

http://cynicuseconomicus.blogspot.com/2009...re-does-uk.html

I am now seriously contemplating moving the last few GBPs I have away and into other pastures. The UK banks are just a headache to deal with and do not pay any interest on the subsiding Squib. They also seem to be increasing the nuisance level of this "money laundering" bullshit. I have one bank with a balance of less than 1,000 Quid, no transaction in or out for several years, and yet they have blocked the account, which I want to close, until I provide some "proof of address". What a bunch of tossers.

Maybe all the free money that the Labour party is dishing out to the banks is more than enough, and they don't really want savers anymore, who, I suppose, are basically just a pain in the arse.

But on a more cheerful note, we have just one day left before twenty ten arrives. The widespread riots, civil unrest and other such forecasts did not occur. Abrak has so far been accurate with his "opium of the masses" theory, give 'em the TV, ample and cheap fast foods, booze, fags and drugs and the Hoi Polloi will vegetate to an early coronary on the sofa, supported by socialist policies and handouts, rather than rise up in arms and fight for the right to work for a living.

What will the next twelve months bring?

But I'll take this early opportunity to wish all who read this a safe transit into twenty ten and a prosperous New Year. We are not out of the crisis by any means and I wonder just how much longer this thread will keep going? Already 5,000 posts and 90,000 views, never expected that would follow from my original rant. And thanks to the many posters here who have provided interesting information and also given, at least me, more than a few laughs in this dam_n crisis.

[flying]

If these paycuts happen across the board ( proposed so far in Las Vegas, California, Hawaii, Massachusetts ), I can’ t see much hope for those housing markets ?

“ Las vegas is considering back-to-back 8 percent salary rollbacks and freezes for all employees, including firefighters, although a union official declined to comment today on the union’s positions on these wage proposals. ”

http://www.lvrj.com/news/breaking_news/Cit...s-80240962.html

This is in fact what I have a big problem with in this whole *crisis*

I see it here as depicted in your post. I am seeing services being cut as the 1st line of defense.

Basically it is how it has gone from the start. The working/middle class gets raped.

Through this whole deal from the start those that lost were they. This crisis caused or engineered has not hurt those who

were most responsible & if it did they were immediately helped? By unbridled creation of more debt/fiat/TARP

They in turn are constantly reported to not be helping at all but in fact making it worse by not lending etc. But instead continue to throw the dice at the crap table.

When the sh!t trickles down it is the payers of that help that are again on the short end of the stick.

What should be happening is the shrinking of debt & government but instead they start by cutting services.

Aside from the pay cuts etc. They have been doing things here like furlough teachers to the tune of roughly 35 Fridays.

That means the children have lost an awful lots of school time this year. Also means parents strapped already had to come up with babysitters etc to care for their kids on what was a working day for them. Not to mention the loss of education time for the kids.

Down to other little things like closing public waste sites & limiting time folks can even dispose of their refuse. Stupid things like this. Still all the while the govt offices bulge with useless public servants that help none.

Instead they will cut fire fighters/police etc. Makes me wonder if they are blind or again engineering another crisis/State of emergency so they can take their next step.

Everyone expects cuts, higher tax etc... We knew that as soon as they mentioned TARP but we would expect to see some cuts & job losses at the fat end of the stick as well. We do not see such...Here at least nor do we read much about it elsewhere at the top. Instead we see more & more bonuses to the undeserving by the pay czar with the same old lies....If we dont give them $$$ we will lose them.......Hello??? We should lose them permanently & bury them 8' deep instead of 6' because we know deep down their good guys

[flying]

But on a more cheerful note, we have just one day left before twenty ten arrives. The widespread riots, civil unrest and other such forecasts did not occur. Abrak has so far been accurate with his "opium of the masses" theory, give 'em the TV, ample and cheap fast foods, booze, fags and drugs and the Hoi Polloi will vegetate to an early coronary on the sofa, supported by socialist policies and handouts, rather than rise up in arms and fight for the right to work for a living.

What will the next twelve months bring?

But I'll take this early opportunity to wish all who read this a safe transit into twenty ten and a prosperous New Year. We are not out of the crisis by any means and I wonder just how much longer this thread will keep going? Already 5,000 posts and 90,000 views, never expected that would follow from my original rant. And thanks to the many posters here who have provided interesting information and also given, at least me, more than a few laughs in this dam_n crisis.

I never thought it would be unrest...yet

But do not see any way it will not come. Unless the age old method of a major war distracts.

We are still in the early stages & while many still have all the trappings you mentioned above the elastic is stretched thin.

I always thought it would be 2011-2012 that it snaps. They have/had arrows in their quiver & will probably stretch unemployment benefits yet again but....That elastic can stretch only so far.

As for the next 12 months....???

Happy New Year to you too 12D & all. I have learned a lot from your original post too

[midas]

But on a more cheerful note, we have just one day left before twenty ten arrives. The widespread riots, civil unrest and other such forecasts did not occur. Abrak has so far been accurate with his "opium of the masses" theory, give 'em the TV, ample and cheap fast foods, booze, fags and drugs and the Hoi Polloi will vegetate to an early coronary on the sofa, supported by socialist policies and handouts, rather than rise up in arms and fight for the right to work for a living.

.

I never thought it would be unrest...yet

But do not see any way it will not come.

Yes Abrak appears to be right “ so far ”……

But in this very thought provoking ( and IMO very well written ) piece from Jim Kunstler

( with his 2010 predictions ), he does make a valid point about the vast differences between the Depression and now

Forecast 2010

“ One wild card is how angry the American people might get. Unlike the 1930s, we are no longer a nation who call each other "Mister" and "Ma'am," where even the down-and-out wear neckties and speak a discernible variant of regular English, where hoboes say "thank you," and where, in short, there is something like a common culture of shared values. We're a nation of thugs and louts with flames tattooed on our necks, who call each other "motherfuc_ker" and are skilled only in playing video games based on mass murder. The masses of Roosevelt's time were coming off decades of programmed, regimented work, where people showed up in well-run factories and schools and pretty much behaved themselves. In my view, that's one of the reasons that the US didn't explode in political violence during the Great Depression of the 1930s - the discipline and fortitude of the citizenry. The sheer weight of demoralization now is so titanic that it is very hard to imagine the people of the USA pulling together for anything beyond the most superficial ceremonies - placing teddy bears on a crash site. And forget about discipline and fortitude in a nation of ADD victims and self-esteem seekers. I believe we will see the outbreak of civil disturbance at many levels in 2010. “

http://kunstler.com/blog/2009/12/forecast-2010.html#more

Anyway Happy New Year everyone and lets hope we can meet all the challenges that are thrown at us in 2010

[AlexLah]

As I said before, I respect the elderly people..........

= food and drinks free in my house Alex. no joke, i mean it (of course one day only )!

Invitation accepted I will bring some home grown (organic) crisp and very tasty veggies.

my dogs will not like that!

No worries about your dogs Naam.

I will bring this as well........you have two dogs right?

Should be OK, one at the time....

[Abrak]

This idea of civil unrest is such a romantic notion.

The fact is that the great unwashed sit in front of their TVs, eating their TV dinners and watching E Entertainment - a Channel devoted to the lives of the rich and famous (or simply the rich who they make famous). The groan as the fabulous person climbs into their G5 because it is so 1990s - what with the newer G550 having 7 windows instead of the G5's 6 (the new G650, yet to make its E Entertainment debut, has 8.)

I mean in a country close to civil unrest would the private jet (PJs doesnt stand for pyjamas anymore) industry launch a TV ad campaign called 'No Plane, No gain' - www.noplanenogain.org. (This is not a joke.)

From the site...

FACT:their capitals their bold

Business aviation contributes $150 billion to U.S. economic output, and employs more than 1.2 million people.

(And no.... business aviation doesnt include flying business class on a commercial flight - God forbid it - as they say 'you will be all too familiar with the limitations of commercial airline service.')

Anyways that FACT sounds a bit dodgy doesnt it? So they kindly produce a report showing what a great FACT it is. And what a disaster the economy would be without PJs. Economic losses from lower aviation fuel sales, job losses in the refining industry. Aluminium production facilities closing down. There are the economic benefits from the time saving that a PJ allows you including cost savings for hotel rooms. (Surely less hotel rooms is a cost to the economy?) PJs contribute US$7bn each to real estate and education each year.

Still it is good see that some people are listening. JP Morgan has just ordered US$150m of new planes.

[AlexLah]

150 Million is just peanuts Abrak. Trillions are the new Millions.

[midas]

This idea of civil unrest is such a romantic notion.

The fact is that the great unwashed sit in front of their TVs, eating their TV dinners and watching E Entertainment - a Channel devoted to the lives of the rich and famous (or simply the rich who they make famous).

I will let flying respond to your comment because he is living in USA and can judge the mood

of the people better than us here in Thailand.

But your comment suggests people can be pushed around without any limit before they

reach a " breaking point " and that is even more romantic notion

And its not the private jet community that i would be looking at - its the millions

on food stamps and those living in the ghettos of major cities ( with guns ) that need to be for ever pacified.

I mean doesn't it depend on how bad things could get in US ? e.g. how hard Americans are squeezed for taxes

simultaneously with having their salaries slashed. I am not sure they are mentally prepared for a lowering of living standards

Edited December 31, 2009 by midas

[churchill]

With Greece Teetering, the Worst May Not Be Over for Europe

Day by day, fears are growing that Greece or another weak country may default on its sovereign debt obligations, forcing the richer countries in Europe to ride to the rescue or risk having one or more of its most vulnerable members leave the 16-nation euro zone.

Many European economists discount such a fracture as a remote possibility. But that doesn’t mean Europe has safely emerged from crisis.

Instead, it faces a longer-term challenge to restore the fiscal credibility of at least half the countries that use the euro. The true test for the world’s largest common currency zone, analysts say, will be whether it can withstand the economic, political and social strains once the European Central Bank begins to raise interest rates in response to economic improvements in Germany, France and other Northern European countries.

At that point, the laggards on the union’s fringe — Portugal, Ireland, Italy, Greece and Spain (the so-called Piigs) — will face even tougher choices to cope with what looks like several more years of stagnant economies, high unemployment and gaping budget deficits.

“If inflation picks up in France and Germany, the smaller economies will be left behind in stagnation and deflation,” said Jordi Galí, a Spanish economist recognized for his work on business cycles who heads the Center for Research in International Economics in Barcelona. “Such an asymmetric recovery is pretty likely, and if the E.C.B. raises rates, it could get very ugly.”

continued at http://www.nytimes.com/2009/12/31/business...tml?_r=1&hp

[12DrinkMore]

Now here is an interesting development in that mainstay of the UK economy, the GREAT UK HOUSE PRICE, which is the source of the GREAT UK WEALTH.

http://business.timesonline.co.uk/tol/busi...icle6969876.ece

Mortgage lenders will be barred from seizing a borrower’s property without a court order after the closure of a legal loophole, to be announced tomorrow.

In a crackdown that will be hailed as a victory for thousands of homeowners struggling to meet their monthly repayments and as a further blow to banks, the Government will publish plans to close the loophole that left homeowners who had missed two repayments vulnerable to immediate repossession.

Somehow I cannot see a a continued surge in the house prices. The banks will surely be now even more selective about how much and to whom they lend. Money will get tighter and the banks will have more costs as delinquent debtors stop paying and have to be forced out after a court case. I believe this is a good move and puts the responsibility of checking the buyer's ability to pay back to the bankers, where it belongs.

Just wait until the UK is forced to increase interest rates.

[Stumbo]

This is an interesting article for those that think Obama is cleaning up US politics. How it it relevant, because it is the US that affects everywhere, and none of the things that caused the current mess have changed in any way shape or form, in fact it appears that it has just gotten much worse:

Obamas' Big Sell Out

[Chaimai]

Somehow I cannot see a a continued surge in the house prices. The banks will surely be now even more selective about how much and to whom they lend. Money will get tighter and the banks will have more costs as delinquent debtors stop paying and have to be forced out after a court case. I believe this is a good move and puts the responsibility of checking the buyer's ability to pay back to the bankers, where it belongs.

Just wait until the UK is forced to increase interest rates.

I know you like these Reuters reports:-

HOUSE PRICE RECOVERY

One reason homebuyers are finding it easier to get funds is that mortgage defaults have been far lower than banks had feared. Not only is unemployment rising more slowly than expected but house prices have stage a remarkable recovery from their early 2009 lows.

Figures from the country's biggest building society, the Nationwide, showed house prices ended 2009 nearly 6 percent higher than they started it.

However, the monthly rise of 0.4 percent was the smallest since April and Martin Gahbauer, Nationwide's chief economist, said the outlook for 2010 remained uncertain.

"House price increases towards the end of the year moderated in comparison to those seen in the summer," he said, pointing to a slowdown in the three-month on three-month rate of growth, considered a smoother indicator of the near-term price trend.

At 162,103 pounds the value of the average property remains 12.2 percent below its cyclical peak in October 2007 but has rebounded by 8.9 percent since February.

The Bank survey noted that there had been some increase in maximum loan to value ratios for mortgages in the fourth quarter of 2009. This was expected to continue into the new year but at a much slower pace.

The general view is that the net decrease in values of circa 10% over the last couple of years feels about right.

I don't have stats for repossessions but the numbers are not 'large' for mainstream lenders. Anyone lending at a loan to value of 80% or under to a creditworthy borrower is unlikely to have a problem.

The Nationwide forecast a 'flat' year for growth (or decline). No doubt the Halifax will shortly come out with a forecast for a 3% fall and RICS will predict growth of 3%. All of which leaves the Nationwide looking like a sensible forecast.

Interest rate predictions (from the sensible sources) seem to suggest that UK rates will rise to 2% by the end of 2010 and stay there.

Unemployment is now predicted to peak at under 3m rather than over it.

Credit remains tight with the FSA causing as much nervousness for lenders than credit risk per se.

(I have a lady waiting to sell a £500k property (likely to realise £470k min within 3/4 months - good property, right price, right area, active market at that level with known demand) who wants to buy a £250k apartment that she has fallen in love with. She needs to borrow £175k. She is more than happy to erode her equity with interest costs etc and also lower the asking price if necessary. She understands exactly what she wants to do.

No mortgage lender wants to lend to her. Not quite true, there is one lender who will do it but wants to charge a 3.5% fee, interest of almost 6% and apply an early repayment charge of 3% for 2 years.

Anybody identify a risk here for anyone other than the client ?????? A big fat ZERO risk for a lender).

I have also seen evidence of a slight softening by bank with commercial lending.

All the above suggests that 2010 will see a further step forward in the recover process. I am speaking from a UK perspective (where 12D originally focussed his venom) and international factors may well continue to impact.

[flying]

Chase and Citibank to Drop Out of FDIC Coverage Program

Title seems a misnomer....When reading the bank links it is not clear how this all works.

Is Chase participating in the FDIC's Transaction Account Guarantee Program?

Beginning January 1, 2010, JPMorgan Chase Bank, N.A. will no longer participate in the FDIC's Transaction Account Guarantee Program. As a result, after December 31, 2009, funds held in non-interest bearing transaction accounts* and IOLTA, IOLA and IOTA accounts will no longer be guaranteed in full under the Transaction Account Guarantee Program. However, these accounts will be insured up to $250,000 per depositor under the FDIC's general deposit rules.

*Including certain checking with interest (NOW) accounts.

In addition, most interest bearing checking accounts are also covered.3

Edited December 31, 2009 by flying

[sokal]

Chase and Citibank to Drop Out of FDIC Coverage Program

Title seems a misnomer....When reading the bank links it is not clear how this all works.

Is Chase participating in the FDIC's Transaction Account Guarantee Program?

Beginning January 1, 2010, JPMorgan Chase Bank, N.A. will no longer participate in the FDIC's Transaction Account Guarantee Program. As a result, after December 31, 2009, funds held in non-interest bearing transaction accounts* and IOLTA, IOLA and IOTA accounts will no longer be guaranteed in full under the Transaction Account Guarantee Program. However, these accounts will be insured up to $250,000 per depositor under the FDIC's general deposit rules.

*Including certain checking with interest (NOW) accounts.

In addition, most interest bearing checking accounts are also covered.3

money market funds got bailed out last year so I don't really know what all of this means.

[Naam]

This is an interesting article for those that think Obama is cleaning up US politics. How it it relevant, because it is the US that affects everywhere, and none of the things that caused the current mess have changed in any way shape or form, in fact it appears that it has just gotten much worse:

Obamas' Big Sell Out

of course it's all Obama's fault. that was clear from the beginning. a republican president would have been hailed for his heroic efforts to save the ongoing crisis. but american voters decided to give ample ammunition to the losers that they can keep on saying "da n-word in da White House did done do it!"*

*for what it's worth. that the thinking of my good republican redneck friends who live in "The Greatest Nation on Earth™".

[Chaimai]

As it is still THAT time of year, see if you can pick this one up:-

Title is: Bank Aid - Do They Loan This Christmas

See if you can avoid joining in the chorus.

Happy New Year.