Financial Crisis

[Abrak]

An anonymous tip-off regarding Spanish GDP

http://ftalphaville.ft.com/blog/2010/09/30/356201/an-anonymous-tip-off-regarding-spanish-gdp/

While there might be an essence of truth in that article, I would have thought the main reasons why the economy only declined 3.1% is that the budget deficit increased from 3% to 11.4% of GDP and they got a 3% boost by a reduction in their external trade deficit.

[Abrak]

Looks like things are going to get interesting between China and the US.....

http://www.telegraph.co.uk/news/worldnews/asia/china/8033855/China-claims-US-yuan-legislation-is-illegal.html

Meanwhile there are some signs that it has already appreciated its currency through inflation....

http://www.telegraph.co.uk/news/worldnews/asia/china/5316145/America-threatens-trade-war-with-China.html

Noone knows quite what is going on in China. But here is a summary of a classic 98 page report by the US Labor department in 2006 (the BLS). Their findings.

109m factory workers in China underestimates the actual total

There are 57m factory workers in G7 combined

There 200m surplus agricultural workers, 500m workers are likely to move to the Cities and unemployment by some estimates in 25%.

Average wage is US$0.57 per hour. 45 hours a week and US$104 per month.

Other newly industrialised Asian economy salaries are 10x that (comment Bt36,900 a month in 2006)

Brazil and mexico are 4 times.

http://www.manufacturingnews.com/news/06/0502/art1.html

If you dont know who the BLS (no it isnt a short form of bullshit) they are the guys that tell people what the monthly unemployment numbers are in the US every month.

But even at the time, there were these reports.....

http://www.businessweek.com/magazine/content/06_13/b3977049.htm

Actually the numbers are fairly comparable as Chinese workers live on site and get overtime (1.5x) and work more like 55 hours a week. Thai factory workers salaries usually start at around 365 days x minimum wage so in 2010 about US$180 per month.

Meanwhile back in China in 2010....

http://economictimes.indiatimes.com/news/international-business/Basic-factory-salary-in-China-leaves-workers-hurting-/articleshow/6113539.cms

So wages are now around 2000 CNY month or Bt9,900. At Foxconn they doubled salaries but they didnt really. What they did was reduce working hours because workers who live on site were working 30 days a month 14 hours a day to double their basic salary which many ended up finding very stressful.

The reason that China has a labour shortage is that the country has the most appalling demographics. The total labour force is forecast to peak in 2015. They have very few young (the ones who move from the countryside) entering the workforce and a massive ageing workforce so that factory workers often support their parents. If you consider that the total population is forecast to increase at least another 5% after the working population declines until the whole population declines in 2035, there is a lot of funding to do.

[teletiger]

Another bloody rag that hasn't read "The world according to Naam".

"In real terms, relative to gold, stocks have gone nowhere."

http://online.barrons.com/article/SB50001424052970204485204575522280439957038.html?mod=BOL_hpp_dc

Regards.

[flying]

An anonymous tip-off regarding Spanish GDP

http://ftalphaville.ft.com/blog/2010/09/30/356201/an-anonymous-tip-off-regarding-spanish-gdp/

Wow look at the old Unemployment rates of 08 on that first chart

US for example at 4.7% less than half of the claimed 9.6% or so today....

Which we know is probably half of the true rate now.

[Naam]

Another bloody rag that hasn't read "The world according to Naam".

"In real terms, relative to gold, stocks have gone nowhere."

http://online.barrons.com/article/SB50001424052970204485204575522280439957038.html?mod=BOL_hpp_dc

Regards.

that's the reason why Naam, except once in a blue moon, does not buy any stocks.

[Abrak]

An anonymous tip-off regarding Spanish GDP

http://ftalphaville.ft.com/blog/2010/09/30/356201/an-anonymous-tip-off-regarding-spanish-gdp/

Wow look at the old Unemployment rates of 08 on that first chart

US for example at 4.7% less than half of the claimed 9.6% or so today....

Which we know is probably half of the true rate now.

You are reading the table wrong. What it is saying for each country is how as a percent of the workforce unemployment increased from end 2008 to end 2009. So for the US it went from say 5.3 - +4.7% - to 10%. The spanish management to create 10% unemployment.

Now to show you a real lie about the Spanish economy.

http://www.scribd.com/doc/33695195/Non-Performing-Loans-Europe-June-2010-PriceWaterhouseCoopers

Now out of 16 countries in Europe, the country with the lowest rise in NPLs in 2009 is Spain where NPLs rose 28% in 2009. UKraine came top with 2500%. Remember the country had a spectacular property boom with prices rising 300% relative to GDP in ten years, mortgage lending increasing 10 fold, loans to property developers and construction increasing 20 fold. 61% of total loans are property related 25% development and construction, 35% mortgages. 14% of homes are vacant, which is more than the number of renters. And now they plan to deflate away their fiscal deficit.

NPLs amongst mortgages cannot 2.6% as reported (March 2010). It is possible that only 2.6% of households are currently not making interest payments because they are based on floating euribor rates. But normal people know that loans actually only perform if they get repaid, it is only bankers and bank analysts who pretend differently and their accountants). And if prices were to fall properly, say 50%, borrowers will simply walk away from their loans. Actually the banks do know this which is why they are offering 109% mortgages but that is just going to make things worst.

Rather unusually valuations are based on the price of offers for sales.

Still nothing can possibly approach Allied Irish, estimated to cost the tax payer US$60bn, which is 28% of their assets, 30% of GDP and US$30,000 for every member of the work force. That must certainly be the biggest bank bailout in real per capita basis in financial history. If you steal US$30,000 from one person you go to jail, if you steal US$30,000 from everyone in the workforce it seems fine. As the Chairman, who lent himself US$120m, pissed it all away and never repaid it, said 'it is not illegal and is not against Irish bank regulations'.

[lannarebirth]

I couldn't think of much more to do with $USD's.

Spending them ? That was always the end game for me anyway.

I did the hard money thing in the 90s and I always thought it was easy money but I was lucky and I suspect it got that name for a reason. Be interesting to hear what it's like now. Well choke dee you deserve the reward for taking the risk.

edit-format

At <30% LtoV (all 1st position) it's not that great a risk. A little more involvement than I'd like, but about 20ish%PA isbetter than a CD.

Edited October 1, 2010 by lannarebirth

[AlexLah]

No Inflation, it's just prices going up......

Commodity Price % Increases

Year over Year

Agricultural Raw Materials 24%

Industrial Inputs Index 25%

Metals Price Index 26%

Coffee 45%

Barley 32%

Oranges 35%

Beef 23%

Pork 68%

Salmon 30%

Sugar 24%

Wool 20%

Cotton 40%

Palm Oil 26%

Hides 25%

Rubber 62%

Iron Ore 103%

[Abrak]

On this subject of inflation. I earlier mentioned how the 'recovery' in corporate earnings in the US pointed to some inflation. Someone else pointed out to me that earnings in emerging markets have more than recovered and are actually 25% above their peaks before the crisis. In Thailand earnings are 43% ahead of their pre-crisis levels. All this indicates quite a lot of inflation on the basis that in virtually every country the public sector has grown far faster than the private sector relative to GDP.

[flying]

You are reading the table wrong. What it is saying for each country is how as a percent of the workforce unemployment increased from end 2008 to end 2009. So for the US it went from say 5.3 - +4.7% - to 10%. The spanish management to create 10% unemployment.

ooops my bad. Thanks for the clarification

[Abrak]

You are reading the table wrong. What it is saying for each country is how as a percent of the workforce unemployment increased from end 2008 to end 2009. So for the US it went from say 5.3 - +4.7% - to 10%. The spanish management to create 10% unemployment.

ooops my bad. Thanks for the clarification

I wasnt being deliberately obnoxious. The table is very interesting. Particularly Japan. Japan unemployment has never reached over 6% in the last 20 years. You might feel this a good social out come. It is partly due to demographics. The reality is though that it is has caused the deflationary spiral because ROE is so low because culturally they wont cut costs, interest rates do not compete will capital.

In the US rates after they have refinanced equity returns, investment and interest rates will eventually start to rise either because equities valuations will make refinancing unviable or because interest rates and inflation expectations have risen. This is assuming no price deflation or the introduction of nominal negative interest rates. A key assumption in my model is that nominal interest rates do not fall below zero and more importantly that there is not negative inflation going forward over a 10 year period in aggregate (more likely than negative nominal interest rates.) But as I see things, while real growth can be assumed at zero over a ten year period, all the indications are that inflation will be zero or above. Interest rates are manipulated but if maintained in a positive inflation scenario indicating negative real rates, must lead to asset appreciation or investment.

As I see things (and I dont use TIPS as a determinator of inflation either in real or an expectations basis because I think the index understates real inflation). Real interest rates are even in the medium term below zero. If you take as a bottom line null hypothesis that their will be zero real growth, zero-1.5% risk free 10 year rates as a minimum interest rate and zero inflation as your starting point over the next 10 years, then there are positive outcomes.

Negative outcomes occur if there is less than zero real growth by a margin say over 2% p.a. over 10 years or inflation averaging about 10% over 10 years or more and 10 year rates rising above 10% nominal.

Negative outcomes would also arise in a zero inflation environment with rising nominal interest rates, whereby there is a very significant rise in real interest rates. Essentially though, most things are positive if we can assume that deflation of prices has been avoided.

[cloudhopper]

Outstanding interview IMO

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/9/29_Ben_Davies.html

[flying]

The Trade and Tax Doomsday Clocks

[cloudhopper]

All except Naam must read -

http://www.zerohedge.com/article/guest-post-no-way-out

[AlexLah]

I remember Naam, ridiculing me when I mentioned a long time ago this crap would end up in a war. and guess what?

(I mentioned economic and currency war).

Just read the headlines...

[teletiger]

Unemployment (US) figures for September just out.

"This is based on Gallup's mid-September measurements"

"However, Gallup's monitoring of job market conditions suggests that there was a sharp increase in the unemployment rate during the last couple of weeks of September."

So.....erm, these most recent figures are erm....crap. It would seem so. Yes.

The BLS have caught the "China syndrome". Clap. No, no, stop applauding ...oh dear.

Some good news....the PPT are awake. Futures fell 90 pts. on the news and were back to flat 10 seconds later.

Regards.

[flying]

Unemployment (US) figures for September just out.

"This is based on Gallup's mid-September measurements"

"However, Gallup's monitoring of job market conditions suggests that there was a sharp increase in the unemployment rate during the last couple of weeks of September."

So.....erm, these most recent figures are erm....crap. It would seem so. Yes.

The BLS have caught the "China syndrome". Clap. No, no, stop applauding ...oh dear.

Some good news....the PPT are awake. Futures fell 90 pts. on the news and were back to flat 10 seconds later.

Regards.

Well the sharp increase is probably all the temp workers getting laid off. The Govt. hired about 3/4 million to do the Census if I recall correctly. Which of course also gave the employment numbers an illusion/bump in the other direction originally.

Edited October 8, 2010 by flying

[Naam]

I remember Naam, ridiculing me when I mentioned a long time ago this crap would end up in a war. and guess what?

(I mentioned economic and currency war).

Just read the headlines...

when i was ridiculing you there was no talk of economic or currency war. besides,

"headlines of journ@sslists" =

[churchill]

Jon Stewart On The Humor In The High Frequency Signing Scandal

http://www.zerohedge.com/article/jon-stewart-humor-high-frequency-signing-scandal

[AlexLah]

I remember Naam, ridiculing me when I mentioned a long time ago this crap would end up in a war. and guess what?

(I mentioned economic and currency war).

Just read the headlines...

when i was ridiculing you there was no talk of economic or currency war. besides,

"headlines of journ@sslists" =

I mentioned it in the "Other" forum dear Naam.

As I said before, you might have a bit of a problem with your memory. No problem this seem to happen while we grow old....

Cheers all,

A

[Naam]

I mentioned it in the "Other" forum dear Naam. As I said before, you might have a bit of a problem with your memory. No problem this seem to happen while we grow old.... Cheers all, A

there is no way that anybody can recall your apocalyptic and utterly ridiculous forecasts during the relevant phase of the thread "financial crisis". never any tangible contents but repeatedly mentioning of "old" when you have nothing to say Alex.

not that it bothers me. i have never been bothered by unrefined rubbish some frustrated poor boy throws at me.

[BlackJack]

what this forum needs is for the USA to start QE11

as its running out of steam and its degenerated into slaggin each other off

Bring on QE11

[AlexLah]

Part two here: http://ampedstatus.com/inside-the-global-banking-intelligence-complex-bcci-operations

[siamamerican]

The Trade and Tax Doomsday Clocks

Come on - you are smarter than this!!! If the market repeated 1929's performance after hitting its bottom, I will have much more money than I do today.

What the chart fails to show is the 450% increase the preceding 5 years. It also curiously omits the 50% increase the next year. A doomers wet dream but again no substance.

Do you just spend all your time looking for irrelevant information? Do you realize earning for emerging nations are 25% percent higher than pre-crisis. There are positives and they are easy to find. Hey, I realize we have debt and unemployment issues. Can't you look at the bright side occasionally. You love the dramatic.

[flying]

Come on - you are smarter than this!!!

Jai yen yen your going to bust an artery.

[jazzbo]

Can't you look at the bright side occasionally? No, he can't ... short the Universe.

[midas]

Do you just spend all your time looking for irrelevant information? Do you realize earning for emerging nations are 25% percent higher than pre-crisis. There are positives and they are easy to find. Hey, I realize we have debt and unemployment issues. Can't you look at the bright side occasionally. You love the dramatic.

is that all ?

http://banksterreport.blogspot.com/2010/10/massive-foreclosure-fraud-continues-and.html

[flying]

is that all ?

http://banksterreport.blogspot.com/2010/10/massive-foreclosure-fraud-continues-and.html

That first section on JPM really shows what a tangled web it is.

The second section states the same as I always do about Paulson et al.. To this day I do not believe I have ever seen anything more blatantly criminal than his bait & switch.

[midas]

is that all ?

http://banksterreport.blogspot.com/2010/10/massive-foreclosure-fraud-continues-and.html

That first section on JPM really shows what a tangled web it is.

The second section states the same as I always do about Paulson et al.. To this day I do not believe I have ever seen anything more blatantly criminal than his bait & switch.

Have you read this then ?

Its not a good sign when " salt of the earth " people who used

to do eveything by the book are also saying now " &lt;removed&gt; it " - and joing the ranks of Paulson et al.

http://www.zerohedge.com/article/gonzalo-lira-coming-middle-class-anarchy

[jazzbo]

The second section states the same as I always do about Paulson et al. Remember the old 'When E.F. Hutton talks, people listen...' ... maybe they've been listening to your statements.