Financial Crisis

[Naam]

3. there is no legal way to kick Greece out. the only possibility is that Greece decides on her own to leave the €UR-zone.

But can they even do that, legally?

good op ed - http://www.handelsblatt.com/politik/international/there-is-a-life-after-death/4169472.html

yes they can. i also agree that there is life after death. but in case Greece pulls out of the €UR the implications for the population will be horrible for years to come. and you have seen what is already now going on in Greece based merely on announcements concerning reduction of benefits.

[RedFxTrade]

Allied Irish = the same fraudulent bàstards like Anglo Irish!

Bloomberg, May 11, 2011

Allied Irish Banks Plc (ALBK) offered to buy back about $3.7 billion of subordinated debt at a discount of as much as 90 percent as the government seeks to share the costs of bailing out its banks.

The Dublin-based lender said bondholders who refuse to take up the offer may be paid just 1 cent for every $1,000 of debt held, according to a statement today. Ireland's Finance Minister Michael Noonan said the terms of the so-called liquidity management exercise are "the minimum acceptable."

http://www.bloomberg...n-of-bonds.html

"Geithner "forced" the Irish to not haircut bondholders" = my àrse!

Sub Bonds are the same as Junior bonds, in other words, "Sub" to Senior. There has been no senior bond cuts. I see a couple of obscure hedge funds taking a hit on Allied debt, but do not see RBS,lloyds, SC, BNP, German Banks, US banks, etc etc taking any senior bond cuts. The 90% is a large haircut, but small compared to the bigger picture. How about BNP Paribas 95 Billion of Sovereign debt exposure? Its a soveregn debt problem now, and that runs into tens of billions. How about the Swiss Banks with about 50 Billion Euros of exposure to Greece and Greek banks? Will they take a haircut on that?

You are talking about a small Irish bank and a couple of sub bond holder taking a large haircut on a small amount. Its nothing. The markets didn't even move when this was announced. The problem is that the banking systems in all countries have liabilties that are much larger that the GDP of the countries involved. The Irish banks liabilities are 11 times Irish GDP, the UK is not far behind. And in their foolishness government decided to guarantee it all. It has never worked, only in the short term. When you combine the Sovereign exposure and the subsequent banking exposure to Sov Debt, and then the exposure between banks themselves, then we are talking a different animal. No senior bond holders have taken a hit. Sub bonds yes, on one Irish bank for a small amount. The truth is that EU officials, the FED, the BoE are resisting haircuts. Trichet himself has said it is out of the question. The

[RedFxTrade]

3. there is no legal way to kick Greece out. the only possibility is that Greece decides on her own to leave the €UR-zone.

But can they even do that, legally?

good op ed - http://www.handelsbl...th/4169472.html

yes they can. i also agree that there is life after death. but in case Greece pulls out of the €UR the implications for the population will be horrible for years to come. and you have seen what is already now going on in Greece based merely on announcements concerning reduction of benefits.

Iceland would say different. The quickest way for Greece to recover is to default. At the moment the mal-investment is holding up valuable resources and capital that could be used for more productive uses. Historically countries that have defaulted have recovered much more quickly than countries went down this road. Read the ironically titled This Time Is Different

Throughout history, rich and poor countries alike have been lending, borrowing, crashing--and recovering--their way through an extraordinary range of financial crises. Each time, the experts have chimed, "this time is different"--claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters. With this breakthrough study, leading economists Carmen Reinhart and Kenneth Rogoff definitively prove them wrong. Covering sixty-six countries across five continents, This Time Is Different presents a comprehensive look at the varieties of financial crises, and guides us through eight astonishing centuries of government defaults, banking panics, and inflationary spikes--from medieval currency debasements to today's subprime catastrophe. Carmen Reinhart and Kenneth Rogoff, leading economists whose work has been influential in the policy debate concerning the current financial crisis, provocatively argue that financial combustions are universal rites of passage for emerging and established market nations. The authors draw important lessons from history to show us how much--or how little--we have learned.

Using clear, sharp analysis and comprehensive data, Reinhart and Rogoff document that financial fallouts occur in clusters and strike with surprisingly consistent frequency, duration, and ferocity. They examine the patterns of currency crashes, high and hyperinflation, and government defaults on international and domestic debts--as well as the cycles in housing and equity prices, capital flows, unemployment, and government revenues around these crises. While countries do weather their financial storms, Reinhart and Rogoff prove that short memories make it all too easy for crises to recur.

An important book that will affect policy discussions for a long time to come, This Time Is Different exposes centuries of financial missteps.

[RedFxTrade]

I couldn't have said it better myself...funny speech of opposition in EU parliament

[Naam]

Sub Bonds are the same as Junior bonds, in other words, "Sub" to Senior.

i enjoy reading your postings "Red" even though i don't agree with some of your opinions. however, i hate when somebody tries to "lecture" by telling me "two plus two equals four".

for the record, the official and legal diction in any bond description is always "subordinated" or perhaps "deeply subordinated" and never "junior" inspite of the fact that "senior" is used too.

[RedFxTrade]

Sub Bonds are the same as Junior bonds, in other words, "Sub" to Senior.

i enjoy reading your postings "Red" even though i don't agree with some of your opinions. however, i hate when somebody tries to "lecture" by telling me "two plus two equals four".

for the record, the official and legal diction in any bond description is always "subordinated" or perhaps "deeply subordinated" and never "junior" inspite of the fact that "senior" is used too.

, Didn't mean to come across as a pontifical so and so. I was on this board on and off over a few years and remember your goodself Naam. I Couldn't remember my password, so signed in with twitter. We are living in interesting times to say the least. No one has a monopoly on the future,but sure if everyone agrees we would have no market place, or markets. So disagreement is good.

Cheers.

[Naam]

peace!

participants like you, who voice their opinions without moaning, complaining or pointing to conspiracies lurking around every corner, are hard to find. moreover, i like worthy opponents with whom i can cross swords or heavy sabres.

[flying]

Short term solution ?

Pensioners should be so lucky

Treasury to tap pensions to help fund government

Edited May 17, 2011 by flying

[midas]

Short term solution ?

Pensioners should be so lucky

Treasury to tap pensions to help fund government

well the pensioners can kiss that goodbye

Little Timmy doesnt care because he will be retired on some Carribean island when this happens in the future

[cloudhopper]

This sounds deflationary...

http://globaleconomicanalysis.blogspot.com/2011/05/chinas-real-estate-developers-struggle.html

[Naam]

This sounds deflationary...

http://globaleconomicanalysis.blogspot.com/2011/05/chinas-real-estate-developers-struggle.html

i wish that was the case. but whenever a bunch of renowned gurus keep on predicting the downfall of <insert country, asset or whatever> based on assumptions without presenting tangible evidence i am getting suspicious and doubt their gospel (based on experience). that applies especially to China which is now for three years the target of raving and ranting inspite of the positive facts which can be easily verified.

it somehow reminds me of this old story:

according to all laws of aerodynamics and aeronautics it is impossible for the bumble bee to fly. however, as the bumble bee never studied these sciences it keeps on flying and sucking happily nectar from blossoms.

[12DrinkMore]

1. a restructuring without haircut on nominal debt (to save the involved banks), extended maturities and perhaps lower nominal coupons could do the trick (in theory).

Not unless the magician running the trick can completely turn the mentality of the Greeks into Germans or indeed Swiss .....

Otherwise the entire debt could be written off, the economy reset, and still, inside of a decade the buggers would be up against the wall looking for handouts with yet another wrecked economy. That's what they do best.

3. there is no legal way to kick Greece out. the only possibility is that Greece decides on her own to leave the €UR-zone.

It is now universally recognised that only through deception, lies and Goldman Sachs were they able to meet the requirements of entry into the Euro. They should be kicked out on the basis of fraud.

[12DrinkMore]

Back to the UK,

Merv the Blind Inflation Maniac has written to schoolboy Georgie

http://www.bankofengland.co.uk/monetarypolicy/pdf/cpiletter110517.pdf

And in return Georgie has penned an erudite response

http://www.hm-treasury.gov.uk/d/chx_letter_170511.pdf

Don't bother reading them, although I am sure some handwriting expert could extract some interesting data from Merv's semi-literate scrawl. My amateur analysis is that if he takes so little care over his handwriting then his care for the economy should also be called into question.

As usual it is the same old &lt;deleted&gt;, "although the CPI at 4.5% is running at more than twice the target, we confidently expect that in the next two years it will return to a more subdued level". Yeah, right. We've been fed this lot for two years now and still we need another two years. Tomorrow never comes at the Bank of England, it's always two years down the line.

[midas]

I dont subscribe to the Financial Times online so i cant read the content but there is this headline

in today's edition - it could be interesting to know the content :-

"Hidden" debt raises Spain bond fears

[midas]

I dont subscribe to the Financial Times online so i cant read the content but there is this headline

in today's edition - it could be interesting to know the content :-

"Hidden" debt raises Spain bond fears

only this byeline

" Spain May Have Billions Euros of ‘Hidden’ Public Debt, FT SaysBloombergSpain’s regional and local administrations have “hidden” debt, not included in the official accounts, amounting to about 26.4 billion euros ($37 billion), according to research by Freemarket Corporate …‘Hidden’ debt raises Spain bond fears Financial Timesall 3 news articles "

[RedFxTrade]

I dont subscribe to the Financial Times online so i cant read the content but there is this headline

in today's edition - it could be interesting to know the content :-

"Hidden" debt raises Spain bond fears

I just cut it for you...FT subscription is so good by the way. I was skeptical at first. But so much good information on it. Trumps the wall street journal IMHO.

The rapid growth of “hidden” public debt in Spain is likely to be revealed by incoming regional and local administrations to be elected on Sunday, damaging Spain’s credibility in the bond markets, according to a report.

“It is clear that in some or even many regional governments the official accounts do not reflect the truth,” says the research by Freemarket Corporate Intelligence, a consulting firm run by Lorenzo Bernaldo de Quirós, an economist critical of Spain’s devolved system of government.

“It also seems clear that the new administrations, if there is a change of the party in power, are not going to take on the inherited debt without clarifying the details,” the report says – an echo of complaints about prior fiscal mismanagement made by the present government of the Spanish region of Catalonia.

Latest data from the Bank of Spain, calculated in accordance with European Union guidelines, show that the country’s 17 autonomous regions have nearly doubled their public debt to more than €115bn ($160bn) since 2008, while municipal and provincial debt has risen to €35bn. Central government debt stands at €488bn.

But the Freemarket report recalls that public companies owned by local and regional governments are also heavily indebted, and that the figures of many of these groups do not have to be included in EU calculations.

“In fact there are about 5,200 regional and local entities with indebtedness that is not included in the official accounts, amounting to some €26.4bn,” it says.

Another popular method of hiding public debt during the fiscal and financial crisis of the past three years has been to leave bills unpaid. Pharmaceutical companies and other suppliers to hospitals, for which the regions are responsible, are, for example, owed €4.2bn for accounts overdue, says Mr Bernaldo de Quirós.

The report notes that the risk premium for the regions, as measured by the interest rate spread over benchmark German Bunds, is double that of the Spanish state, suggesting the markets have little faith in their ability to pay and will be reluctant to refinance them in the months ahead.

Spanish Socialists, who govern at the national level, are expected to lose ground across the country in Sunday’s elections. Opinion polls forecast they will lose the central region of Castilla La Mancha and cities such as Seville to the rightwing Popular party. Catalan nationalists are expected to oust the Socialists in Barcelona.

Sovereign bond market investors accept that Spain has done a better job at controlling its central government debt and its deficits than eurozone bail-out candidates Greece and Portugal. But they have become increasingly anxious in recent months about the failure of regions such as Catalonia to comply with deficit targets.

Madhur Jha, economist at HSBC, said in a report on Spain published on Monday that revelations of larger than expected deficits by incoming regional governments would be worrying. “This would raise serious jitters about Spain’s fiscal austerity programme,” said the HSBC report.

[Naam]

Greece

It is now universally recognised that only through deception, lies and Goldman Sachs were they able to meet the requirements of entry into the Euro. They should be kicked out on the basis of fraud.

a justified step but as i mentioned already... not possible.

[midas]

I dont subscribe to the Financial Times online so i cant read the content but there is this headline

in today's edition - it could be interesting to know the content :-

"Hidden" debt raises Spain bond fears

I just cut it for you...FT subscription is so good by the way. I was skeptical at first. But so much good information on it. Trumps the wall street journal IMHO.

The rapid growth of “hidden” public debt in Spain is likely to be revealed by incoming regional and local administrations to be elected on Sunday, damaging Spain’s credibility in the bond markets, according to a report.

“It is clear that in some or even many regional governments the official accounts do not reflect the truth,” says the research by Freemarket Corporate Intelligence, a consulting firm run by Lorenzo Bernaldo de Quirós, an economist critical of Spain’s devolved system of government.

“It also seems clear that the new administrations, if there is a change of the party in power, are not going to take on the inherited debt without clarifying the details,” the report says – an echo of complaints about prior fiscal mismanagement made by the present government of the Spanish region of Catalonia.

Latest data from the Bank of Spain, calculated in accordance with European Union guidelines, show that the country’s 17 autonomous regions have nearly doubled their public debt to more than €115bn ($160bn) since 2008, while municipal and provincial debt has risen to €35bn. Central government debt stands at €488bn.

But the Freemarket report recalls that public companies owned by local and regional governments are also heavily indebted, and that the figures of many of these groups do not have to be included in EU calculations.

“In fact there are about 5,200 regional and local entities with indebtedness that is not included in the official accounts, amounting to some €26.4bn,” it says.

Another popular method of hiding public debt during the fiscal and financial crisis of the past three years has been to leave bills unpaid. Pharmaceutical companies and other suppliers to hospitals, for which the regions are responsible, are, for example, owed €4.2bn for accounts overdue, says Mr Bernaldo de Quirós.

The report notes that the risk premium for the regions, as measured by the interest rate spread over benchmark German Bunds, is double that of the Spanish state, suggesting the markets have little faith in their ability to pay and will be reluctant to refinance them in the months ahead.

Spanish Socialists, who govern at the national level, are expected to lose ground across the country in Sunday’s elections. Opinion polls forecast they will lose the central region of Castilla La Mancha and cities such as Seville to the rightwing Popular party. Catalan nationalists are expected to oust the Socialists in Barcelona.

Sovereign bond market investors accept that Spain has done a better job at controlling its central government debt and its deficits than eurozone bail-out candidates Greece and Portugal. But they have become increasingly anxious in recent months about the failure of regions such as Catalonia to comply with deficit targets.

Madhur Jha, economist at HSBC, said in a report on Spain published on Monday that revelations of larger than expected deficits by incoming regional governments would be worrying. “This would raise serious jitters about Spain’s fiscal austerity programme,” said the HSBC report.

oh thanks very much RedFx :jap:

This kind of statement makes me chuckle " bond market investors accept that Spain has done a better job at controlling its central government debt " when no one ( other than the " insiders " )has a clue as to what is really going on behind the scenes regarding any of these debt issues anywhere in the world

[teletiger]

I have always been intrigued by the "contrarian trade". First you need to find "the view" and then trade against it.

Someone who seems always to be wrong in his/her assumptions. Hmmm Jim Cramer is the obvious patsy. Hmm....someone closer to home.

Take Herr Naam as an example. Hurrumphh, (I'm paraphrasing here ) "Gold over $1000". "Hahahha". "Even I'll buy it at $1050, hahahha".

Even the golden eyed Mrs Naam took the the other side of the trade on that call.

Now we have the chance that Greece could be kicked out of the EU.(Euro) (for whatever reason?)

"Not possible", says our target view.

Alas, I fear the best we can hope for is that Herr Naam will inform us (pretty please) of when his lovely wife starts piling OUT of Euros.

Kindest regards.

[Naam]

1. Now we have the chance that Greece could be kicked out of the EU.(Euro) (for whatever reason?)

"Not possible", says our target view.

2. Alas, I fear the best we can hope for is that Herr Naam will inform us (pretty please) of when his lovely wife starts piling OUT of Euros.

1. actually it's not me who says that Greece cannot be kicked out of the €U zone. i am merely stating a fact based on the charta of the European Union which canNOT be changed except by unanimous vote and that applies to a zillion paragraphs of its content. may i assume i don't have to explain/define the expression "unanimous" to a native English speaker?

moreover, the charta does not provide the possibility that any member state can be "kicked out". it is however possible that a member leaves the union on its own accord.

2. my lovely wife does not hold any €URos as investment except perhaps for a couple of thousands which she uses when she travels to Europe.

next!

[RedFxTrade]

Excellent Jim Rogers interview on BBC Hardtalk, interviewed by who appears to be the "Paxman Junior" for those from the UK....Rogers HardTalk

It is good though to see an interviewer asking good questions and being defiant, although he does take the populist view in some cases, especially regarding speculators.They cover a lot of stuff in this interview on Asia, China, Commodities, the decline of the West. Well worth a watch.

[Naam]

Jim Rogers interview on BBC Hardtalk

"not available in your area"

[RedFxTrade]

Jim Rogers interview on BBC Hardtalk

"not available in your area"

Ahh dam_n, Sorry. Should have thought, BBC and that, license fee and all.

Quick summary. China will have many problems along the way, but is the place to be.

He is;

Short emerging market stocks at the moment, India for example.

Owns the Euro.

Short Nasdaq type stocks

Shorts are hedges against commodity corrections.

Oil price will go beyond everyones expectations even his.

The world is running out of farmers, average age is 57 for farmers in the US, the group with the highest suicides in the UK is farmers. Food inventories are historic lows. Its a serious problem facing the world.

Politicians will make it worse by taxing companies and trying to quell speculation meaning their will be even less investment where it is needed. Cure for higher prices is higher prices.

The Uk and the the US are bankrupt. US will inflate. Even if the US raised everyones taxes to 90%, they still could not pay the debt. They will inflate as they always have done in the past.

Bernanke is a clown, and does not understand currencies.

Civil unrest coming everywhere.

[churchill]

Short clip on his Blog http://jimrogers-investments.blogspot.com/

[Naam]

Churchill is my saviour! :jap:

[jcon]

You don't need oil to fuel a warp drive, duh.

Perhaps Jim's bow-tie is so tight that it's not allowing lateral thinking such as the above.

Engage.

[Naam]

Jim Rogers' maths seems to be a wee bit flawed

known crude reserves are drawn down 6% per annum

based on the assumption that present crude consumption (86mm b/day) will increase by 1.5% p.a. (according to EIA) a total of ~600bb barrels would be used througout the period Rogers mentioned. that's approximately the equivalent of the known crude reserves of Venezuela and Saudi Arabia.

[jcon]

Jim Rogers' maths seems to be a wee bit flawed

known crude reserves are drawn down 6% per annum

based on the assumption that present crude consumption (86mm b/day) will increase by 1.5% p.a. (according to EIA) a total of ~600bb barrels would be used througout the period Rogers mentioned. that's approximately the equivalent of the known crude reserves of Venezuela and Saudi Arabia.

Oh come on, Naam - don't let something so inconsequential as ''real math'' get in the way of hyperbole and ''fake math.''

The playbook is ''use fake math to make a point then when confronted with real math say, ''well yeah but that doesn't matter because it's going to happen anyway (and throw in a ''so in a way, you just proved my point'' for a real fake-logic home-run).''''

This goes for statistics, logic, reality, or anything else a politician/banker/used-car salesman might want play with

[RedFxTrade]

You don't need oil to fuel a warp drive, duh.

Perhaps Jim's bow-tie is so tight that it's not allowing lateral thinking such as the above.

Engage.

I have got Jims vote at the up and coming 2012 election Jcon, so I m going to defend him here ...

Rogers is worth listening to. I have narrowed my following down to about a dozen analysts. It is always worth gathering as many opinions from different side and to gauge it against your own research. Rogers has been pretty much on the mark...

He retired after the commodity bull run in 1982.

1988...Predicts Japanese stock market crash.

1990's Starts buying China

1997 Buys commodities.

2000 Sells USD.

2006 Shorts Citi bank at $55, shorted Fannie and Freddie shorts all the investment banks, shorts housing, shorted GM covered in Oct 2008

2006. Long JPY before everything crashed against it, been long CHF. Owns water companies

2008, Bought airlines

2009, Short T-Bond but covered it, but shorting again

2010 Long Euro at the bottom. Bought USD March 2010 before the rally.

2011 Short Nasdaq (OMX is a Nasdaq, )

Certainly cannot be ignored.

[Naam]

Jim Rogers' maths seems to be a wee bit flawed

known crude reserves are drawn down 6% per annum

based on the assumption that present crude consumption (86mm b/day) will increase by 1.5% p.a. (according to EIA) a total of ~600bb barrels would be used througout the period Rogers mentioned. that's approximately the equivalent of the known crude reserves of Venezuela and Saudi Arabia.

Oh come on, Naam - don't let something so inconsequential as ''real math'' get in the way of hyperbole and ''fake math.''

The playbook is ''use fake math to make a point then when confronted with real math say, ''well yeah but that doesn't matter because it's going to happen anyway (and throw in a ''so in a way, you just proved my point'' for a real fake-logic home-run).''''

This goes for statistics, logic, reality, or anything else a politician/banker/used-car salesman might want play with

guilty as charged Your Honour. but i can't help it and therefore ask for a light sentence. there's a part in my brains which acts independently and starts computing whenever a factor is mentioned which does not tally with the results provided when used with some stored factors. a number of people (and that includes Mrs Naam) hate it when i spoil an interesting story with stupid facts.

mea culpa! :jap: