Financial Crisis

[flying]

welcome to the gloom&doom club Paul. watch out! the sky might be falling any day on you.

Thanks Naam

I've been sceptical since 1999, downright cynical since 2001, miserable since 2004 and just plain resigned for the lst 5 years.....

Then again my pal Herr Naam has his indoor pool in an air conditioned room

resigned is good as you say but no reason to be caught with your pants at your ankles.

Edit: Opps I just noticed your name is Gambles ....carry on

Edited February 16, 2010 by flying

[Naam]

Germany growls as Greece balks at immolation

Germany's Bundestag has drafted an opinion deeming aid to Greece illegal. State bodies may not purchase the debt of another state, in whatever guise.

Full Article at Link Above

the article is pure refined bullshit. correct is that some members of the Bundestag were asked whether paragraph 122 of the Lisbon Treaty may be considered which (in extreme cases) allows EU states to assist financially another EU-member. paragraph 125 of the Treaty prohibits this expressis verbis.

any body want me to quote these two paragraphs or provide links? hel_l no! i am not doing your homework. as before, you may in future rely on the lopsided information and plain stinking lies of journàsslists and blogspot writers.

[Naam]

welcome to the gloom&doom club Paul. watch out! the sky might be falling any day on you.

Thanks Naam

I've been sceptical since 1999, downright cynical since 2001, miserable since 2004 and just plain resigned for the lst 5 years.....

Then again my pal Herr Naam has his indoor pool in an air conditioned room

because Herr Naam is skeptical about too much sun, heat or unheated pool water in the months november till february

[Naam]

ok, ok! you have asked in a nice and polite way. therefore:

BERLIN, Feb 15 (Reuters) - The European Union could refer to an article in the Lisbon Treaty to provide assistance to Greece, a German opposition lawmaker said on Monday.

Gerhard Schick, finance policy expert for the Greens party, told Reuters he had asked legal experts attached to the German Bundestag lower house of parliament for an opinion on whether Article 122 of the Lisbon Treaty would be valid for Greece.

The article says that EU members states that are "seriously threatened with severe difficulties caused by natural disasters or exceptional circumstances beyond its control" can be granted financial assistance "under certain conditions".

Schick said that the Bundestag's legal consultants were of the view Article 122 might be applicable to Greece.

"I asked for the parliament's expert opinion on Article 122 and it seems clear that it could possibly be applied," Schick said. Until now the German government has referred only to Article 125 which appeared to rule out assistance, he added.

"My main demand is that both articles are taken into account," Schick said. "I think it's important that people are aware of both articles in the discussion on Greece."

There has been opposition to aid for Greece from members of Chancellor Angela Merkel's coalition with several senior politicians expressing scepticism.

Athens has struggled to convince investors it is tackling its debt crisis and markets are nervous about a default.

European Union leaders discussed the thorny issue last week and offered words of support but failed to outline concrete steps, further unsettling markets. Euro zone finance ministers are expected to discuss Greece again on Monday and Tuesday.

Merkel's coalition partners, the pro-business Free Democrats (FDP), are especially resistant to helping Greece. Schick's Greens and the FDP have long been arch rivals in Germany.

[flying]

ok, ok! you have asked in a nice and polite way. therefore:

Do you still have a finger on the pulse of Germany?

Meaning if you still have many family & friends there?

Just curious as I know we do in fact get bits & pieces of news liberally sprinkled

with opinion of the reporters.

So to that end I wondered what is the word from the regular folks there?

How do the people feel about all this? Do they feel some what robbed by this?

Or are they of the mind it is for the greater good & the Eu must stand or fall together?

Or do the folks there feel their own wealth is being wasted to prop others that have spent theirs foolishly?

Just curious what the folks in Germany really feel about it all.

If you have any insight

Thanks

Edited February 16, 2010 by flying

[sokal]

Germany growls as Greece balks at immolation

Germany's Bundestag has drafted an opinion deeming aid to Greece illegal. State bodies may not purchase the debt of another state, in whatever guise.

Full Article at Link Above

the article is pure refined bullshit. correct is that some members of the Bundestag were asked whether paragraph 122 of the Lisbon Treaty may be considered which (in extreme cases) allows EU states to assist financially another EU-member. paragraph 125 of the Treaty prohibits this expressis verbis.

any body want me to quote these two paragraphs or provide links? hel_l no! i am not doing your homework. as before, you may in future rely on the lopsided information and plain stinking lies of journàsslists and blogspot writers.

[FOFOA: The PIIGS combined gold hoard is 3,233.8 tonnes, more than three times that of China. And their combined population is only 133 million. So the PIIGS actually have about the same amount of gold per capita as the US. And they have 34 times as much gold per citizen as China. In fact, Greece alone has 14 times as much gold per capita as China. China has 0.7 tonnes per million citizens. Greece has 10 tonnes per million and the PIIGS as a whole have 24 tonnes per million!]

COMEX being in the US and the LBMA being in London leaves the ECB and the BIS with "the nuclear option" if things ever get desperate enough to use it. This nuclear option is A) for the BIS to begin operation of a public "physical only" market for gold to be used by the really giant participants, primarily sovereign entities and billionaires, and for the ECB to use the price discovered by the BIS in its quarterly reserve asset "marked to market" adjustments. Just imagine how Greece could deal with its problems if its gold were valued at $55,000 usd per ounce. In terms of current exchange rates that would raise Greece's liquid assets to 50% of its public debt. In other words, instead of being a "sub-prime" borrower, Greece would instantly become a PRIME borrower.

[Abrak]

Just imagine how Greece could deal with its problems if its gold were valued at $55,000 usd per ounce. In terms of current exchange rates that would raise Greece's liquid assets to 50% of its public debt. In other words, instead of being a "sub-prime" borrower, Greece would instantly become a PRIME borrower.

True and much the same argument could be made about Greece if Kalamata Olives are valued at USD$5,000 per ounce. If both happen at the same time, there is even the very small possibility that Greece wont need to borrow at all.

Even if they did need to borrow, the could always borrow of Italy which has suddenly become a net creditor nation.

[Naam]

Just imagine how Greece could deal with its problems if its gold were valued at $55,000 usd per ounce. In terms of current exchange rates that would raise Greece's liquid assets to 50% of its public debt. In other words, instead of being a "sub-prime" borrower, Greece would instantly become a PRIME borrower.

True and much the same argument could be made about Greece if Kalamata Olives are valued at USD$5,000 per ounce. If both happen at the same time, there is even the very small possibility that Greece wont need to borrow at all.

Even if they did need to borrow, the could always borrow of Italy which has suddenly become a net creditor nation.

what about this ugly "feta"-thing which the Greeks call "cheese"? wouldn't it benefit Greece if it was valued @ 25,000 dollars/ounce?

[lannarebirth]

Just imagine how Greece could deal with its problems if its gold were valued at $55,000 usd per ounce. In terms of current exchange rates that would raise Greece's liquid assets to 50% of its public debt. In other words, instead of being a "sub-prime" borrower, Greece would instantly become a PRIME borrower.

True and much the same argument could be made about Greece if Kalamata Olives are valued at USD$5,000 per ounce. If both happen at the same time, there is even the very small possibility that Greece wont need to borrow at all.

Even if they did need to borrow, the could always borrow of Italy which has suddenly become a net creditor nation.

what about this ugly "feta"-thing which the Greeks call "cheese"? wouldn't it benefit Greece if it was valued @ 25,000 dollars/ounce?

And another international consulting firm is born. Love the "outside the box" thinking.

Actually it sounds a little bit like some of the mark to fantasy accouting rules coming out of FASB.

Edited February 16, 2010 by lannarebirth

[Naam]

ok, ok! you have asked in a nice and polite way. therefore:

1. Do you still have a finger on the pulse of Germany?

2. Meaning if you still have many family & friends there?

3. Just curious what the folks in Germany really feel about it all.

1. you bet your sweet butt! watching german TV, reading german newspapers and participating in a financial forum since many years. >50% of my holdings are presently in Germany and other european countries.

2. brother and nephews (running businesses financed by my wife) as well as friends galore, the latter visiting me quite often.

3. the sheeple have no idea and no opinion, others (who can afford it) are contemplating to escape the german taxman.

[Abrak]

Just imagine how Greece could deal with its problems if its gold were valued at $55,000 usd per ounce. In terms of current exchange rates that would raise Greece's liquid assets to 50% of its public debt. In other words, instead of being a "sub-prime" borrower, Greece would instantly become a PRIME borrower.

True and much the same argument could be made about Greece if Kalamata Olives are valued at USD$5,000 per ounce. If both happen at the same time, there is even the very small possibility that Greece wont need to borrow at all.

Even if they did need to borrow, the could always borrow of Italy which has suddenly become a net creditor nation.

what about this ugly "feta"-thing which the Greeks call "cheese"? wouldn't it benefit Greece if it was valued @ 25,000 dollars/ounce?

Yes well.... the reality would be a nightmare.

You would take your girl to dinner. (She is in a foul mood because (what with the price of gold) you refused to buy her that 'cute' pair of ear rings which now cost the same as a Mercedes Sport.)

When it comes to ordering she says 'Well I am not hungry....I will just have a Greek salad with extra cheese'.

The waiter, having checked your car to see if it would be adequate collateral.... smiles and says... 'excellent choice Madam, what about dessert? If you are not hungry you could consider ordering a small European country like Latvia...'

[churchill]

Only speculation but ..

What Is Hedge Fund King John Paulson Doing in Greece?

"News of Paulson’s fund taking large positions against Greek debt has barely risen above rumor in the English-language press, despite this article in a Greek daily, which says that Paulson is “orchestrating the pressure on Greek government bonds and the Euro,” and reports that Paulson has a team of 20-30 traders focused on Greece."

continued ..http://blogs.alternet.org/speakeasy/2010/02/15/what-is-hedge-fund-king-john-paulson-doing-in-greece/

[GingerLing]

Seriously, humanity has become a heard of cows, mindlessly consuming and multiplying for corporations/government to farm.

Not just recently either

Here is a interesting clip if you have 16 minutes to spare.

It is kind of interesting to see what anarchists on LSD can come up with, some interesting points but it is not that simple.

Your right damm it, we should all abandom the farm and become hunter, gathers. Let utter kaos rule, the law of the jungle...."Imagine," Tyler said, "stalking elk past department store windows and stinking racks of beautiful rotting dresses and tuxedos on hangers; you'll wear leather clothes that will last you the rest of your life, and you'll climb the wrist-thick kudzu vines that wrap the Sears Tower. Jack and the beanstalk, you'll climb up through the dripping forest canopy and the air will be so clean you'll see tiny figures pounding corn and laying strips of venison to dry in the empty car pool lane of an abandoned superhighway stretching eight-lanes-wide and August-hot for a thousand miles." ~Chuck Palahniuk, Fight Club, Chapter 16

Waza, the first rule of fight club is ...

[Gambles]

welcome to the gloom&doom club Paul. watch out! the sky might be falling any day on you.

Thanks Naam

I've been sceptical since 1999, downright cynical since 2001, miserable since 2004 and just plain resigned for the lst 5 years.....

Then again my pal Herr Naam has his indoor pool in an air conditioned room

because Herr Naam is skeptical about too much sun, heat or unheated pool water in the months november till february

better safe.......

[Gambles]

Only speculation but ..

What Is Hedge Fund King John Paulson Doing in Greece?

"News of Paulson's fund taking large positions against Greek debt has barely risen above rumor in the English-language press, despite this article in a Greek daily, which says that Paulson is "orchestrating the pressure on Greek government bonds and the Euro," and reports that Paulson has a team of 20-30 traders focused on Greece."

continued ..http://blogs.alternet.org/speakeasy/2010/02/15/what-is-hedge-fund-king-john-paulson-doing-in-greece/

and remember Paulson is an avid gold convert these days.....

[flying]

3. the sheeple have no idea and no opinion, others (who can afford it) are contemplating to escape the german taxman.

Well...........I guess it is somewhat comforting to know it is business as usual in other countries too.

[flying]

History repeats....Well in Athens this time

Bomb explodes outside JP Morgan Athens, none hurt

[sokal]

Just imagine how Greece could deal with its problems if its gold were valued at $55,000 usd per ounce. In terms of current exchange rates that would raise Greece's liquid assets to 50% of its public debt. In other words, instead of being a "sub-prime" borrower, Greece would instantly become a PRIME borrower.

True and much the same argument could be made about Greece if Kalamata Olives are valued at USD$5,000 per ounce. If both happen at the same time, there is even the very small possibility that Greece wont need to borrow at all.

Even if they did need to borrow, the could always borrow of Italy which has suddenly become a net creditor nation.

Your forgetting that the reason this would be the nuclear option is because it would completely and totally <deleted> the USD to hel_l . Its anyones guess what the price of gold would be if we woke up one morning with the USD worth nothing.

[Abrak]

Your forgetting that the reason this would be the nuclear option is because it would completely and totally <deleted> the USD to hel_l . Its anyones guess what the price of gold would be if we woke up one morning with the USD worth nothing.

Well the only problem with your nuclear option where the dollar becomes near worthless and gold is US$55,000 an ounce, is that it wont help the Greeks. The exchange rate would presumably be euro1:USD100 and their little pile of gold still negligible against debts (not even enough to pay one year's interest) as unfortunately their debts are in euro.

[sokal]

Your forgetting that the reason this would be the nuclear option is because it would completely and totally <deleted> the USD to hel_l . Its anyones guess what the price of gold would be if we woke up one morning with the USD worth nothing.

Well the only problem with your nuclear option where the dollar becomes near worthless and gold is US$55,000 an ounce, is that it wont help the Greeks. The exchange rate would presumably be euro1:USD100 and their little pile of gold still negligible against debts (not even enough to pay one year's interest) as unfortunately their debts are in euro.

In any event like this, the value of any fiat currency will be negligible. It would not be like the Asian financial crisis where everything still could fall back on the USD. The only thing to fall back on will be gold and Greece has a fair amount of it. The PIIGS have enough gold that they can play hardball with the rest of the world as far as I am concerned.

[flying]

Actually Gold hit an all time high in Euro terms today

[Naam]

Actually Gold hit an all time high in Euro terms today

in terms = yes, adjusted for inflation and EUR return = no.

Edited February 17, 2010 by Naam

[flying]

Actually Gold hit an all time high in Euro terms today

in terms = yes, adjusted for inflation and EUR return = no.

All in due time...It will get there & then you

will be thanking Mrs. Naam for her foresight

[flying]

Foreigners cut Treasury stakes; rates could rise

WASHINGTON (AP) -- A record drop in foreign holdings of U.S. Treasury bills in December sent a reminder that the government might have to pay higher interest rates on its debt to continue to attract investors.

China reduced its stake and lost the position it's held for more than a year as the largest foreign holder of Treasury debt. Japan retook the top spot as it boosted its Treasury holdings.

The Treasury Department said foreign holdings of U.S. Treasury bills fell by a record $53 billion in December. That topped the previous record drop of $44.5 billion in April 2009

Full Article At Link Above

[Gambles]

Foreigners cut Treasury stakes; rates could rise

WASHINGTON (AP) -- A record drop in foreign holdings of U.S. Treasury bills in December sent a reminder that the government might have to pay higher interest rates on its debt to continue to attract investors.

China reduced its stake and lost the position it's held for more than a year as the largest foreign holder of Treasury debt. Japan retook the top spot as it boosted its Treasury holdings.

The Treasury Department said foreign holdings of U.S. Treasury bills fell by a record $53 billion in December. That topped the previous record drop of $44.5 billion in April 2009

Full Article At Link Above

But as deflation looms that will spike interest in T-Bills - the Fed will use every lever to boost T-Bill demand. This game is far from over and the Fed still hold a good hand of cards - not as good as China's maybe and that's the key question.

Either way risk appetites will evaporate which is why I recently wrote this piece for The Nation (PM me if you want an invitation to the talk)

Keeping up with The Alfred Winslow “Jones”

The formation of The Federal Reserve System unwittingly created a moral hazard. It gave a sense of security that changed attitudes to risk leading to the Great Depression. In the Depression’s aftermath the pendulum swung the other way. In this period of deflation, unemployment, geo-political risk, government defaults, asset price collapses and huge uncertainty, risk became a pre-occupation and legislation like the US Banking Act of 1933 and arrangements such as the Bretton Woods Agreements of 1944 created frameworks designed to restore stability and reduce risk.

The Banking Act of 1933, commonly known as the Glass–Steagall Act, introduced reforms designed to limit speculative excess (and the pervasive influence of The House of Morgan). Bretton Woods defined financial relations, including exchange rates, among the leading nations. This was the first freely negotiated monetary system governing monetary relations between independent nations.

Alfred Jones closely observed these developments. Born in Australia, Jones grew up in America and joined the U.S. diplomatic corps, spending much of the 1930s in Berlin. Jones subsequently switched careers, joining Fortune’s editorial staff.

Writing articles about investment trends inspired Jones to try managing money. Raising $100,000 from friends and family (including $40,000 of his own money) his idea was to short overvalued stocks to minimize the market risk of holding stock positions. In other words Jones basically invested his capital in stocks that he expected to go up and short sold (borrowed) stocks that he expected to fall, with the intention of settling at a profit once the price fell. Jones had two main aims

1) To increase the potential returns from investment by exploiting two profit centres (falling and rising stocks)

2) To be able to deliver consistent results in all conditions, irrespective of the direction of the market.

This concept had been first postulated prior to the war but Jones became the first well-known high-profile exponent. Jones also introduced leverage, performance fees a partnership structure (to share risk). Consequently Jones is recognised as the father of hedge funds.

Jones achieved a genuine hedge with reduced risk and volatility as the core objective.

When Fortune Journalist Carol Loomis published an article highlighting her erstwhile colleague’s success in outperforming the very best mutual funds by high double-digits, copycats inevitably started springing up. By 1968, there were 140 hedge funds in operation. By this time the Great Depression and the privations that lasted until after WWII were a distant memory.

The favoured investment style by this time was allocation to the Kidder-Peabody Nifty-Fifty growth stocks as investors with short memories preferred riskier strategies based on long-term leverage.

Even within the hedge fund space, Jones’ ideas faded into the background. By the 1980s the first global macro managers such as George Soros and Julian Robertson became household names. The modern hedge fund industry gave birth to an ever-increasing array of exotic strategies, including currency and commodity trading, arbitrage and the widespread use of derivatives such as futures, options and swaps as the industry’s assets swelled to over $1 trillion.

In terms of both the range of investment strategies/assets and the scale of hedge funds, the industry had become unrecognisable from the original $100,000 Alfred Jones invested into his long short fund half a century earlier. More importantly so had the risk profile and by 2002 leading hedge fund manager Mario Gabelli wrote:

"Today, if asked to define a hedge fund, I suspect most folks would characterize it as a highly speculative vehicle for unwitting fat cats and careless financial institutions to lose their shirts."

Hedge funds no longer hedged. They speculated. By 2007 speculators’ wheels were falling off as exotic credit funds, such as Bear Sterns High Grade Structured Credit, started to fail. During 2008 investors in the most speculative strategies found that either they were losing money or their ability to redeem their investment was suspended (in some cases both). Gradually the long/short funds that had been operating quietly in the background for 60 years started to attract attention once more and the lessons Alfred Jones taught in the years after the Great Depression slowly came back into vogue.

Whether you run a central bank, an entire economy, an investment fund or your own portfolio, it always has been and will be important to understand, identify and quantify risk. Below we show the returns of a diversified global long/short equity fund (New Zealand Asset Management’s Global Fund) to highlight the returns that can be added by identifying and reducing the risk of a transaction (in this case equity investing). An increasing awareness of market risk emphasises the attractiveness of absolute returns – something that NZAM Asia’s MD, Philip Crotty is expected to highlight when he visits Bangkok on the 26^th of this month to share his views on how he outperperformed the market.

Edited February 17, 2010 by Gambles

[churchill]

Only speculation but ..

What Is Hedge Fund King John Paulson Doing in Greece?

"News of Paulson's fund taking large positions against Greek debt has barely risen above rumor in the English-language press, despite this article in a Greek daily, which says that Paulson is "orchestrating the pressure on Greek government bonds and the Euro," and reports that Paulson has a team of 20-30 traders focused on Greece."

continued ..http://blogs.alternet.org/speakeasy/2010/02/15/what-is-hedge-fund-king-john-paulson-doing-in-greece/

and remember Paulson is an avid gold convert these days.....

add Soros

[churchill]

Foreigners cut Treasury stakes; rates could rise

WASHINGTON (AP) -- A record drop in foreign holdings of U.S. Treasury bills in December sent a reminder that the government might have to pay higher interest rates on its debt to continue to attract investors.

China reduced its stake and lost the position it's held for more than a year as the largest foreign holder of Treasury debt. Japan retook the top spot as it boosted its Treasury holdings.

The Treasury Department said foreign holdings of U.S. Treasury bills fell by a record $53 billion in December. That topped the previous record drop of $44.5 billion in April 2009

Full Article At Link Above

So China will be increasingly diversifying , supporting Commodities , Gold and probably emerging markets .

Edited February 17, 2010 by churchill

[churchill]

Dubai , Greece , Portugal , Spain , Italy , UK then Japan ?

Will the US be the final domino

Japan’s Yields May Rise on ‘Next Greece’ Concern, Mizuho Says

http://www.businessweek.com/news/2010-02-1...izuho-says.html

[Naam]

Dubai , Greece , Portugal , Spain , Italy , UK then Japan ?

Will the US be the final domino

Japan’s Yields May Rise on ‘Next Greece’ Concern, Mizuho Says

http://www.businessweek.com/news/2010-02-1...izuho-says.html

from 1.33% to 1.34% for the 10year bond? goodness gracious!

[churchill]

Foreigners cut Treasury stakes; rates could rise

WASHINGTON (AP) -- A record drop in foreign holdings of U.S. Treasury bills in December sent a reminder that the government might have to pay higher interest rates on its debt to continue to attract investors.

China reduced its stake and lost the position it's held for more than a year as the largest foreign holder of Treasury debt. Japan retook the top spot as it boosted its Treasury holdings.

The Treasury Department said foreign holdings of U.S. Treasury bills fell by a record $53 billion in December. That topped the previous record drop of $44.5 billion in April 2009

Full Article At Link Above

So China will be increasingly diversifying , supporting Commodities , Gold and probably emerging markets .

From http://www.minyanville.com/businessmarkets...6/2010/id/26858

"Americans are way too jingoistic about their financial markets. We tend to think the world is run out of Washington, DC, and the most important person there, in addition to being the Person of the Year, is whomever we install and subsequently deify as chairman of the Federal Reserve.

Balderdash, which sounds suitably dismissive even though I'd be hard-pressed to tell you or anyone else exactly what “balderdash” is. The marginal supply of investable funds in the world today is China’s $2.4 trillion stash of foreign reserves. Where they invest those funds, for how long they peg the yuan at its present rate near 6.83 per dollar, and their own internal credit policies are the dog; everyone else right now is the tail, and what a wonderful view that is. "

"There is an old Scottish proverb, “He who pays the piper picks the tune.” China is paying all of the world’s pipers, and the tune now is tighter credit conditions. Come to think of it, maybe we should update the Wall Street adage, “Don’t fight the Fed,” to “Don’t fight the Peoples’ Bank of China."