Financial Crisis

[churchill]

IMF and EU suspend talks with Hungary

http://uk.finance.yahoo.com/news/imf-and-eu-suspend-talks-with-hungary-reuters_molt-66d55e11b69d.html?x=0&utm_source=twitterfeed&utm_medium=twitter

[12DrinkMore]

Who owns the US debt?

http://www.mint.com/blog/trends/who-owns-the-u-s-debt-07152010/?display=wide

Must admit that I don't quite understand this.

Add in the "Fed and intragovernmental holdings" to the "State and local governments" and some 6,000,000,000,000 (6 trillion, jeeze can I have a tiny bit please?) of US government debt is owed by the government to itself. (As the governments debts are incurred in the name of the tax payer logically the government assets also belong to the tax payer. (bring on the revolution, when the tax payers merely take back their own property...))

Now, I realise that Ben has been helping out Tim down the road with his problems, and the FED has taken on a chunk of the debt. I can understand where that comes from. But what is all this other debt owned by the various government departments? Owed by who to whom and who pays the interest to whom?

Time for another beer, as this is far too confusing at this time of night. Maybe tomorrow it will all be clear.

[Bizz]

As a very important source of strength and security, cherish public credit. One method of preserving it is, to use it as sparingly as possible; avoiding occasions of expense by cultivating peace, but remembering also that timely disbursements to prepare for danger frequently prevent much greater disbursements to repel it; avoiding likewise the accumulation of debt, not only by shunning occasions of expense, but by vigorous exertions in time of peace to discharge the debts, which unavoidable wars may have occasioned, not ungenerously throwing upon posterity the burthen, which we ourselves ought to bear."

Jim Rogers advises buying silver which I did over the last 10 years now have 17kgs mostly in antique ornaments. not scrap. now the bond market more bubbles.

buy a farm wife has 111 rai now thanks to me, buy sugar lowest in 36 years don't even use it but probably good for brewing moonshine.

buy gold at $1230 och not my cup of tea.

stocks only 1% of Americans now invest in stocks,once bitten twice shy.

I'm getting confused

[Abrak]

buy sugar lowest in 36 years don't even use it but probably good for brewing moonshine.

<deleted>

stocks only 1% of Americans now invest in stocks,once bitten twice shy.

Total <deleted>

I'm getting confused

[midas]

buy sugar lowest in 36 years don't even use it but probably good for brewing moonshine.

<deleted>

stocks only 1% of Americans now invest in stocks,once bitten twice shy.

Total <deleted>

I'm getting confused

It might be " Total <deleted> " today Monday.......but it might

not be " Total <deleted> " on Friday

The Retail Investor Jumps Ship

" Even before the so-called ‘flash crash’ on May 6, 2010, the retail investor was, at best, risk adverse when it came to the stock market. Burnt badly in 2008 when individuals lost as much as $20 trillion of their net worth, retail investors continued to withdraw money from stocks in 2009, despite a 69% rally in the stock market. By the third week in May, the retail crowd sold almost $30 billion in stock funds and is once again on the sidelines. "

http://afewdollarsmore.com/2010/06/04/the-retail-investor-jumps-ship/

[AlexLah]

Who owns the US debt?

http://www.mint.com/blog/trends/who-owns-the-u-s-debt-07152010/?display=wide

Must admit that I don't quite understand this.

Add in the "Fed and intragovernmental holdings" to the "State and local governments" and some 6,000,000,000,000 (6 trillion, jeeze can I have a tiny bit please?) of US government debt is owed by the government to itself. (As the governments debts are incurred in the name of the tax payer logically the government assets also belong to the tax payer. (bring on the revolution, when the tax payers merely take back their own property...))

Now, I realise that Ben has been helping out Tim down the road with his problems, and the FED has taken on a chunk of the debt. I can understand where that comes from. But what is all this other debt owned by the various government departments? Owed by who to whom and who pays the interest to whom?

Time for another beer, as this is far too confusing at this time of night. Maybe tomorrow it will all be clear.

When that part is clear 12, I will try to make you even more confused........muhaaaa haaaaaa haaaaaaaa!

[Abrak]

buy sugar lowest in 36 years don't even use it but probably good for brewing moonshine.

<deleted>

stocks only 1% of Americans now invest in stocks,once bitten twice shy.

Total <deleted>

I'm getting confused

It might be " Total <deleted> " today Monday.......but it might

not be " Total <deleted> " on Friday

The Retail Investor Jumps Ship

" Even before the so-called ‘flash crash’ on May 6, 2010, the retail investor was, at best, risk adverse when it came to the stock market. Burnt badly in 2008 when individuals lost as much as $20 trillion of their net worth, retail investors continued to withdraw money from stocks in 2009, despite a 69% rally in the stock market. By the third week in May, the retail crowd sold almost $30 billion in stock funds and is once again on the sidelines. "

http://afewdollarsmore.com/2010/06/04/the-retail-investor-jumps-ship/

Well the figure is at least 50% if you include mutual funds and pension funds.

But you are absolutely right. Retail investors will continue to fall until the market bottoms and they will all come back and pile in at the top. It really is amazing that if an asset goes up enough long enough people convince themselves it is bound to go up further.

[12DrinkMore]

Here's a discussion of government spending, what is money and the inflation/deflation question.

http://www.hoisingtonmgt.com/pdf/HIM2010Q2NP.pdf

Substantial scientific research from both U.S. and foreign countries indicates that the government expenditure multiplier is considerably less than one and quite possibly close to zero. This means that if an economy starts with real GDP of $14.3 trillion (i.e. the level for 2009), and it is shocked by a surge in deficit spending, such as has been the case in the U.S., GDP will grow, but the economy will then eventually return to essentially where it began. However, the deficit spending shock leaves the economy in a more precarious overall condition because the same sized economy must now support a higher level of debt.

Forget the stimuli, they were a load of <deleted>, we are now worse off; more debt and higher taxes. Good Job, Well Done, Our Mighty Leaderz!

I suppose this guy is the epitome of raw capitalism

http://www.telegraph.co.uk/foodanddrink/foodanddrinknews/7897075/British-financier-Anthony-Ward-behind-658m-cocoa-trade.html

A British financier is behind a £658 million cocoa trade which single-handedly moved the global cocoa market.

He now holds the industry to ransom and can set a higher price, which will eventually filter down to the purchases of Joe Public, who has to pay more, essentially Ward is imposing his own Chocolate Tax. So what greater benefit to the world has his purchase of 241,000 tons of beans given us? Absolutely <deleted> all, rather he has made everybody else a little bit poorer. But that is life.

I hope that the industries that rely on the cocoa beans all gather together and force the price down by refusing to buy at the higher prices. But then Ward would shout, "Hey! That's not fair". But then, is it fair what Ward has done? A question without a simple answer.

[midas]

Oh dear ! now we really know there is a Financial Crisis

July 19--The Biltmore Hotel, which in its 84-year history has housed kings and queens, movie stars, wounded veterans from World War II and even an occasional gangster or two, is having trouble paying its bills.

Its revenues are off by nearly 25 percent, its operating profits are down by more than 50 percent, and it hasn't paid rent to its landlord -- the city of Coral Gables -- since April 2009. Its rent tab: $2.3 million and growing.

http://dailyme.com/story/2010071900000068/biltmore-coral-gables-wrangle-23-million.html

[SiamRose]

So what greater benefit to the world has his purchase of 241,000 tons of beans given us? Absolutely <deleted> all, rather he has made everybody else a little bit poorer.

A higher cocoa price is good for cocoa farmers. And for the wholesalers and traders who own the other 93% of cocoa beans out there.

[12DrinkMore]

So what greater benefit to the world has his purchase of 241,000 tons of beans given us? Absolutely <deleted> all, rather he has made everybody else a little bit poorer.

A higher cocoa price is good for cocoa farmers. And for the wholesalers and traders who own the other 93% of cocoa beans out there.

The farmers have already been paid. Although anybody holding the beans will make a bit more, the end result is that through his action the vast majority of the chocolate consumers are worse off by paying Ward's Chocolate Tax. The wealth has been moved out of the pockets of the many into the pockets of the already rich few, which is the point I was making.

[BlackJack]

Quadrillion Dollar Debt

[Naam]

So what greater benefit to the world has his purchase of 241,000 tons of beans given us? Absolutely <deleted> all, rather he has made everybody else a little bit poorer.

A higher cocoa price is good for cocoa farmers. And for the wholesalers and traders who own the other 93% of cocoa beans out there.

The farmers have already been paid. Although anybody holding the beans will make a bit more, the end result is that through his action the vast majority of the chocolate consumers are worse off by paying Ward's Chocolate Tax. The wealth has been moved out of the pockets of the many into the pockets of the already rich few, which is the point I was making.

what's new about that?

[12DrinkMore]

what's new about that?

Absolutely nothing.

I thought it interesting that in this case it is possible to see the direct link between a speculator's action and the effect on the pocket of Joe Public and to question the benefit to society in allowing this man to take a monopoly on the cocoa beans in Europe. Obviously there is none, which takes the discussion a bit further, is it OK to allow this sort of speculation to exist or not? In Ward's case, with net assets of 30,000,000 Quid he has managed to leverage up by 20 times, maybe through other investors or taking out credit lines in order to gain a stranglehold on the market.

I realise that this goes on all over. Otherwise there would not be the multi-billion Dollar profits of the likes of GS, who don't produce anything tangible except numbers in bank accounts. But there the picture is much more obscure and the link to the extra cost to Joe is much harder to follow. But I expect it is there just the same. In the end the "profits" that GS generate have, in some way, cost us all something.

[midas]

To give you an idea to what extent American banks are on thin ice, read this artice :-

Banks Can't Hold Back Highend Mortgage Foreclosures For Long

US banks nationwide are deliberately withholding from the market upper tier properties listed at $300,000 or higher. There are probably two important reasons why banks are pursuing this strategy.

First, they are concerned that placing these more expensive homes on the market will severely weaken an already thin upper tier market.Even more crucial is that selling substantial numbers of expensive homes at discounts of 50% or more would compel the lenders to take substantial losses which have been avoided by keeping them off the market.

To give you an example, one repossessed home in the upper income suburb of Glencoe was purchased in January 2004 for $850,000. Though not listed for sale yet, its opening bid price is $2,819,000. This suggests that the foreclosed owner had refinanced the property to the tune of $2.8 million. If the holder of the first lien put a home like this on the market, it could be forced to swallow a loss approaching $2 million or perhaps even more.

Will this bank strategy keep the market for homes over $300,000 from imploding? Not a chance.

Fannie Mae now requires an average down payment of 30% for securitized loans which it purchases or guarantees. According to Fitch Ratings, mortgage delinquencies for prime jumbo mortgages soared to 10.3% in May as underwater owners walked away in droves. That spells serious trouble for the five states which account for 2/3 of all outstanding jumbo loans - California, Florida, New Jersey, Virginia and New York. The problem goes well beyond these states, however. Housing markets throughout the United States for $300,000+ homes are in for rough sailing and prices are extremely likely to be headed for a real plunge.

FULL ARTICLE HERE : http://www.businessinsider.com/banks-cant-hold-back-highend-mortgage-repos-for-long-2010-7#ixzz0uECuSA1S

Edited July 20, 2010 by midas

[12DrinkMore]

This guy was blind-sided by Fred the Shred. "Risk Officer"

Gordon Dickson learned something during his transformation from Bank of Scotland Plc risk officer and sterling millionaire to “Pete the Pirate,” an eyepatch- wearing children’s entertainer -- don’t invest in banks. The 62-year-old Glaswegian, also known as “Mr. Giggles,” lost a million pounds ($1.52 million) when the bank shares he’d bought over three decades collapsed during the financial crisis

Dickson accepts that as a risk officer he should have spread his investments across more sectors.

‘Terribly Sad’

“A lot of it was my own fault, having so much trust and faith in the organization and not realizing life had moved on,”

But who does the UK government want to flog this dead horse to? Oh jeeze

In return for taxpayer support, Britons “would have the chance to buy shares in the state-owned banks at a discounted price,” the Conservatives said in February. “Special offers would encourage younger people and those on modest incomes.”

Are they insane or simply utterly mad? All the folks in those two groups are living from day to day.

http://www.bloomberg.com/news/2010-07-19/-pete-the-pirate-tells-fellow-britons-to-steer-clear-of-banker-shipmates.html

[badge]

http://www.marketoracle.co.uk/Article21281.html

China Has A Painful Surprise For The Global Economy

[midas]

http://www.marketoracle.co.uk/Article21281.html

China Has A Painful Surprise For The Global Economy

I like what Hugh Hendry said this week :-

" His latest obsession is China. He likens the country to Starbucks: good at growing quickly but not so good at creating wealth.

“The idea is that things would happen today that are commonly thought of as impossible, most notably a significant reversal of China,” Mr. Hendry said.

Maps cover the walls of his office. On one, blue magnetic pins plot his recent trip through China. He filmed himself there in front of huge, empty office buildings and giant new bridges in the middle of nowhere — signs, he said, of a credit bubble.

Along with his fund co-manager Espen Baardsen, a former goalie for the Tottenham Hotspur soccer team, Mr. Hendry is devising ways to bet on a spectacular deterioration of China’s economy. He declined to divulge any details. "

[Naam]

http://www.marketoracle.co.uk/Article21281.html

China Has A Painful Surprise For The Global Economy

Prechter+marketoracle =

[midas]

http://www.marketoracle.co.uk/Article21281.html

China Has A Painful Surprise For The Global Economy

Prechter+marketoracle =

Yes but isn't more important to consider the " message " and not just who

the messenger is ?

Jim Chanos says the same, Michiho Kishi says the same,Professor Michael Pettis at Peking University says the same,

Hugh Hendry says the same.

[12DrinkMore]

And they continue to set the expectations of the hoi palloi.

http://www.independent.co.uk/news/business/news/economy-set-for-triple-whammy-admits-bank-chief-2032213.html

Mr Dale agreed that he would not be surprised if unemployment went higher in the next few months. For the next "three, four, five years, demand in the economy will be "incredibly anaemic" relative to previous recoveries.

Mr Dale stressed the "huge" monetary stimulus the Bank was continuing to administer to the economy, with the bank rate at 0.5 per cent, a 300-year low, and the injection of £200bn directly into the economy via the Bank's "quantitative easing" programme. The impact of a lower bank rate, especially on those with tracker mortgages, has meant a substantial bonus in lower mortgage payments every month.

But Mr Dale added: "Since the spring of 2006 inflation has been above target for 41 out of 50 months and for two years it has averaged over 3 per cent. Now, we can come up with all sorts of clever and real reasons to explain our view but at some point people will say 'inflation just seems higher than it used to be' and that is a very substantial risk."

[lannarebirth]

OK, you can ignore the video except for the first ten seconds. Can anyone give me a name for theis Bloomberg babe?

http://www.bloomberg.com/video/61551604/

[jcon]

OK, you can ignore the video except for the first ten seconds. Can anyone give me a name for theis Bloomberg babe?

http://www.bloomberg...video/61551604/

Ah lanna you old dog, you!

I think that would be Ms. Betty Liu.....

My personal fav is Ms. Melissa Theuraiu, not a Bloomberg anchor but I used to see her on a French channel I got in Hong Kong. GF was not happy, my excuse was that I was brushing up on my French

Hey this could be a good distraction from the topic at hand for awhile!!!

Vive la difference! (except when it comes to the American anchors.... ugh)

[Naam]

OK, you can ignore the video except for the first ten seconds. Can anyone give me a name for theis Bloomberg babe?

http://www.bloomberg...video/61551604/

Ah lanna you old dog, you!

I think that would be Ms. Betty Liu.....

My personal fav is Ms. Melissa Theuraiu, not a Bloomberg anchor but I used to see her on a French channel I got in Hong Kong. GF was not happy, my excuse was that I was brushing up on my French

Hey this could be a good distraction from the topic at hand for awhile!!!

Vive la difference! (except when it comes to the American anchors.... ugh)

Betty is very attractive... until she turns her head and shows her profile. but then 'de gustibus non est disputandum'.

[badge]

http://www.marketora...ticle21281.html

China Has A Painful Surprise For The Global Economy

Prechter+marketoracle =

Prechter has produced some interesting work, but the linked article has nothing to do with him??

I agree marketoracle.com is the British version of zerohedge.com however the linked article was infact emailed to me and authored by a Scandinavian chap, I just googled it for a link and found it copied on marketoracle.com.

[badge]

The hottest CNBC reader is the Aussie stand-in bird they have in Europe, cant recall her name. Im sure Patricia Szarvas would be good fun after a stein or two of ale.

[lannarebirth]

OK, you can ignore the video except for the first ten seconds. Can anyone give me a name for theis Bloomberg babe?

http://www.bloomberg...video/61551604/

Ah lanna you old dog, you!

I think that would be Ms. Betty Liu.....

My personal fav is Ms. Melissa Theuraiu, not a Bloomberg anchor but I used to see her on a French channel I got in Hong Kong. GF was not happy, my excuse was that I was brushing up on my French

Hey this could be a good distraction from the topic at hand for awhile!!!

Vive la difference! (except when it comes to the American anchors.... ugh)

Betty is very attractive... until she turns her head and shows her profile. but then 'de gustibus non est disputandum'.

Well, I've only got about 10 seconds invested in this love affair so far and profile views are in short supply. I confess I was doing a little 3 D extrapolation from a 2 D image, but we know the camera can lie. Spoilsport.

[BlackJack]

well i had a very good financial week (except that my tenant left because 2 girls from Soi Cowboy set him up and he left town with his tail between his legs (beginner)) and so the drinks are on me

[midas]

" The European stress test today was a very very sad buffoonery to witness. Firstly the worst case scenario is a 3% GDP contraction and a 20% equity market sell-off. Let's be frank if GDP contracted in Europe by 3% stocks would fall a bit more than 20%. More importantly, as 20% correction would leave the market clear by 33% above the lows of 2009. You would think the worst case scenario would be at least to revisit these lows. So basically the worst case scenario is not really credible as a "worst" case. Secondly the test focused strictly on the mark-to-market holdings of sovereign bonds. That is like sizing up an iceberg using only the tip. Spanish banks for example are ridden with housing inventories that are marked at the 2006/2007 highs, and all that is happily excluded from the test, as well as accrual accounting books "

[Abrak]

" The European stress test today was a very very sad buffoonery to witness. Firstly the worst case scenario is a 3% GDP contraction and a 20% equity market sell-off. Let's be frank if GDP contracted in Europe by 3% stocks would fall a bit more than 20%. More importantly, as 20% correction would leave the market clear by 33% above the lows of 2009. You would think the worst case scenario would be at least to revisit these lows. So basically the worst case scenario is not really credible as a "worst" case. Secondly the test focused strictly on the mark-to-market holdings of sovereign bonds. That is like sizing up an iceberg using only the tip. Spanish banks for example are ridden with housing inventories that are marked at the 2006/2007 highs, and all that is happily excluded from the test, as well as accrual accounting books "

Yes those stress tests were incredibly dodgy. The concentration on sovereign loans was totally ridiculous as sovereign default would be accompanied by massive domestic default. I believe they assumed unemployment at 9% worse case when Spain is at 20%. And if you write down Spanish sovereign debt by 3% it isnt even a plausible outcome.

Actually I dont really think you can do a stress test on the European banks on the basis, that if you assume things start going pear shaped then everything is so interlinked that all the banks go bust. You can make a number of alternative scenarios but assuming a 3% write down of Spanish debt simply isnt one. It is either going to be zero or a much larger figure.

Personally I think you can only make a stress test based on the Euro holding together with default by Greece. The Euro holding together with exit by Germany which I see as the least cost option in terms of the Euro if it was demantelled. I think that the Euro can survive quite probably with a restructuring of public sector debt in Greece as opposed to a total collapse of the private sector. But the stress test in general were just weird. They really simply highlighted how you couldnt do one.