Financial Crisis

[midas]

The only intrinsic value in Treasuries and other government issued toilet-paper is a promise. A promise to return devalued toilet-paper in the future. And that is only valid for sovereign debt in its own currency, the Greeks have no chance of ever repaying their promise to pay, ever. Non whatsoever. Even with toilet paper.

Or the ability of the borrower to make periodic payments that are only miniscule compared to the size of the debt that it's hardly worth relying on it. Remember the mortgages in Japan that were so huge that the next generation inherited them.

Edited August 5, 2011 by midas

[midas]

The only intrinsic value in Treasuries and other government issued toilet-paper is a promise. A promise to return devalued toilet-paper in the future.

This is basically how I call it too but would add the future promise is made on the backs of citizens labor which they hope to tax.

So I stand by my original statement regarding theirs has not real value only the promise of it. Which is pretty shaky these days.

and the big unknown could be not only the future " value " of such labour but whether the opportunities for such labour will even exist ?

[cloudhopper]

there's no alternative such as a "backed" currency Flying because not enough "underlying" of anything of value exists.

The possibility exists however that should there be a currency failure and PM "backing" of some sort is demanded to regain faith in the succeeding fiat currency the underlying could be greatly revalued upward. I read the argument the other day that back when gold peaked in '80 there was more gold than money in circulation to buy it all with at that price but at today's price all the gold could be purchased with only 1/6th of the money now in circulation. Anyway it's an additional possibility for the gold bugs to draw for the inside straight...

[12DrinkMore]

This is basically how I call it too but would add the future promise is made on the backs of citizens labor which they hope to tax.

So I stand by my original statement regarding theirs has not real value only the promise of it. Which is pretty shaky these days.

I'm not so sure that the future promise is made on the backs of the workers paying tax.

That would give it some value.

The Bernank, Merv and the ECB are currently financing the bond market with toilet paper, aka QE. I don't expect this will change going into the future. How can it?

The stock market casino has taken a little stumble today, around 4% off in Asia wonder how the western lot will fair?

The west has been living way way way above its earnings for the last decade, mostly on the backs of the Asians who actually produce stuff.

Time for a major change, and its going to hit very very hard.

The Aussies are currently leading the pack, and the rest of Asia is right behind. Asia is the future for the next few decades. I hope they will not allow the western banks to come in and fuc_k it up. Asia is economically run by the Chinese, who, unlike the west, have long memories and long term plans. 1997 will not be repeated, IMO.

They have learnt their lesson. The west seems doomed to repeat the same mistakes over and over.

Edited August 5, 2011 by 12DrinkMore

[12DrinkMore]

Save the dam_n debtors, I would say dam_n the dam_n debtors.

http://www.telegraph...nkruptcies.html

The Government has released figures showing that insolvencies are plateauing at about 30,000 a quarter, thanks to the record amount of time that Bank Rate has remained at 0.5pc. "Low interest rates have given households an extended lifeline," said Louise Brittain, an insolvency partner at Deloitte.

All this means is that the politicians are kicking the can down the road.

All the savers trying to set something aside for retirement are losing money every single day through inflation, so in 10, 20 or 30 years they will also be standing with cap in hand.

"I tried to save, but nothing left, giss a penny guv!".

And across the Atlantic, here comes this bottomless pit of debt, cap in hand.

http://www.telegraph...ry-for-5bn.html

Fannie Mae, the mortgage company contriolled by the US government, is to ask the Treasury for $5.1bn after reporting that its second-quarter loss had widened. Fannie Mae, the mortgage company contriolled by the US government, is to ask the Treasury for $5.1bn after reporting that its second-quarter loss had widened.

"Giss a penny, guv!"

That seems to be all we hear nowadays from Europe and the US.

[swisstouristpattaya]

how much lost during these last 10 days: 10%??? everyday I loose a fortune.

this is my bank report. By chance they have "stop/loss" in their computer, and once the economy will go up, maybe next week, you will see all these zombies(included me) buying like crazy!

"start/buy"

[BEENTHEREDONETHAT]

Perhaps someone can enlighten me as to why all the currencies have taken a big drop when the stock market has nosedived?

[cloudhopper]

Mohammed El-Erian just crapped in his diapers -

http://money.cnn.com/2011/08/05/news/economy/downgrade_rumors/index.htm?iref=BN1&hpt=hp_t1

[flying]

This is basically how I call it too but would add the future promise is made on the backs of citizens labor which they hope to tax.

So I stand by my original statement regarding theirs has not real value only the promise of it. Which is pretty shaky these days.

I'm not so sure that the future promise is made on the backs of the workers paying tax.

That would give it some value.

Agreed but also as Midas pointed out it is only their hollow promise.

Whether jobs exist or citizens agree to it is another matter.

[Naam]

Perhaps someone can enlighten me as to why all the currencies have taken a big drop when the stock market has nosedived?

all currencies can't drop vs. each other. there are always individual winners and losers. high yield currencies such as AUD, NZD, ZAR, etc. suffer most in a down market scenario, mainly because of risk aversion and margin calls as these currencies are used for carry trades.

[cloudhopper]

Perhaps someone can enlighten me as to why all the currencies have taken a big drop when the stock market has nosedived?

all currencies can't drop vs. each other. there are always individual winners and losers. high yield currencies such as AUD, NZD, ZAR, etc. suffer most in a down market scenario, mainly because of risk aversion and margin calls as these currencies are used for carry trades.

They could all drop against gold though! Even the Swiss could decide to double their money supply overnight if they wanted to. Who knows how politicians will respond to what increasingly appears to be a global currency war...

[BEENTHEREDONETHAT]

Perhaps someone can enlighten me as to why all the currencies have taken a big drop when the stock market has nosedived?

all currencies can't drop vs. each other. there are always individual winners and losers. high yield currencies such as AUD, NZD, ZAR, etc. suffer most in a down market scenario, mainly because of risk aversion and margin calls as these currencies are used for carry trades.

Thanks for that Naam, after a little googling I think I understand it. Without your input I would not have known what to google.

[Naam]

1. They could all drop against gold though!

2.Even the Swiss could decide to double their money supply overnight if they wanted to.

3. Who knows how politicians will respond to what increasingly appears to be a global currency war...

1. they could also drop against rice, potatoes, crude oil, dried prunes, shrink heads... it all depends what "investors" deem precious. see "tulip craze".

2. and gain what?

3. the current currency war is an invention of @nals. it always existed but with different intensities. exporters want a weak, importers want a strong currency. but both demand are demands for a sword with two cutting edges.

[BlackJack]

I just love 2011

all the new terms

TARP 1 and 2

QE1 and 2

GFC 1 and 2?

Monday looks interesting

[midas]

1. They could all drop against gold though!

2.Even the Swiss could decide to double their money supply overnight if they wanted to.

3. Who knows how politicians will respond to what increasingly appears to be a global currency war...

1. they could also drop against rice, potatoes, crude oil, dried prunes, shrink heads... it all depends what "investors" deem precious. see "tulip craze".

2. and gain what?

3. the current currency war is an invention of @nals. it always existed but with different intensities. exporters want a weak, importers want a strong currency. but both demand are demands for a sword with two cutting edges.

This is where bitcoins will shine like a star only joking

[ronz28]

To me, the S&P downgrade is just bearish hype that may upset the public short term, but few if any investment managers will liquidate any holdings in US Treasuries over it. When one NRSRO moves out of step with a downgrade, the portfolio managers will not like it, but their investment policies are usually not that rigid so that a lone downgrade would cause US debt instruments to be dumped. PMs will continue to hang their hat on any one of the top three NRSROs that supports their position. What else is there in the volume they need?

Polls show that most Americans disapprove of Speaker of the House Boehner and his Tea Party block who prevented restoring the tax rates that Bush succeeded in lowering while he wasted trillions on the Bush wars. Budgets can't be balanced on the backs of the poor and middle class while the wealthy pay no taxes in some cases or 17% effective tax rates due to the loop holes they designed in the tax laws. S&P pointed out a political problem, that voters need to fix, but I don't think it warranted a downgrade.

The US doesn't default on its debt, it just inflates its currency and repays the debt with Monopoly money. So long term interest rates should start going up on everything to reflect inflation, but not until the current fear in the markets abates.

[craigt3365]

To me, the S&P downgrade is just bearish hype that may upset the public short term, but few if any investment managers will liquidate any holdings in US Treasuries over it. When one NRSRO moves out of step with a downgrade, the portfolio managers will not like it, but their investment policies are usually not that rigid so that a lone downgrade would cause US debt instruments to be dumped. PMs will continue to hang their hat on any one of the top three NRSROs that supports their position. What else is there in the volume they need?

Polls show that most Americans disapprove of Speaker of the House Boehner and his Tea Party block who prevented restoring the tax rates that Bush succeeded in lowering while he wasted trillions on the Bush wars. Budgets can't be balanced on the backs of the poor and middle class while the wealthy pay no taxes in some cases or 17% effective tax rates due to the loop holes they designed in the tax laws. S&P pointed out a political problem, that voters need to fix, but I don't think it warranted a downgrade.

The US doesn't default on its debt, it just inflates its currency and repays the debt with Monopoly money. So long term interest rates should start going up on everything to reflect inflation, but not until the current fear in the markets abates.

Wasn't S&P the company who had AAA ratings for several companies who went bankrupt, or into receivership, back in 2008? And what about that 2T mistake they made? Maybe not materially relevant, but that's a big mistake.

It's interesting, the talking heads on CNN say it's possible...just possible...that this downgrade will LOWER the interest rate. Due to all the uncertainty in Europe. And as a fact, rates have dropped as investors flee to safety in US treasuries. Crazy world.

This is an interesting read, and Monday will be interesting!!!!!

http://www.nakedcapitalism.com/2011/08/will-sp-downgrade-be-another-y2k-scare.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

[BlackJack]

new term

mini GFC

USA economy week

debt high

unemployment high

retail spending lowest in 2 years

and the cherry on the ice cream is "An Analysis of the President's Budget Proposal For Fiscal Year 2012," total debt held by the public will increase from ~ $10.4 trillion in 2011 to ~ $20.8 trillion in 2021.

so folks its all smoke and mirrors

[Naam]

total debt held by the public will increase from ~ $10.4 trillion in 2011 to ~ $20.8 trillion in 2021...

which will strengthen the Dollar and make it the paramount universal top notch sought after AAA² currency by 2021

[midas]

maybe this is why Obama had such little interest in border protection...............

to make it easier for Americans who want to abscond South

Illegal immigration: Mexicans choosing to stay at home

Interest in leaving Mexico to immigrate to the United States is the lowest it's been since 1950, according to recent research from Princeton University.

"No one wants to hear it, but the flow (of illegal traffic) has already stopped," said Douglas S. Massey, co-director of the Mexican Migration Project at Princeton, an extensive, long-term survey in Mexican emigration hubs. "For the first time in 60 years, the net traffic has gone to zero and is probably a little bit negative."

http://www.deseretnews.com/article/700150925/Illegal-immigration-Mexicans-choosing-to-stay-at-home.html

[cloudhopper]

Another bubble about to pop - http://www.benzinga.com/general/topics/11/08/1822316/the-ultimate-problem-with-a-higher-ed-bubble

[flying]

unemployment high

retail spending lowest in 2 years

What is funny is how the talking heads on the news here in the USA can speak those two thing & then ask each other why do you think the spending is so low? Do you think folks are waiting for lower prices to come? Do you think they are saving for a perceived storm?

Duh.............. Perhaps Gertrude, they are broke due to the lack of employment Living off meager savings & watching it shrink probably does not make folks want to spend spend spend....Unlike our government

Edited August 7, 2011 by flying

[midas]

unemployment high

retail spending lowest in 2 years

What is funny is how the talking heads on the news here in the USA can speak those two thing & then ask each other why do you think the spending is so low? Do you think folks are waiting for lower prices to come? Do you think they are saving for a perceived storm?

Duh.............. Perhaps Gertrude, they are broke due to the lack of employment Living off meager savings & watching it shrink probably does not make folks want to spend spend spend....Unlike our government

and in some places they are going to have emptier stomachs........... and that is not a good state of affairs:(

9 States That Are Slashing Unemployment Benefits

Free soup and coffee might be the only handouts

http://www.businessinsider.com/nine-states-that-are-slashing-unemployment-benefits-2011-8

Edited August 7, 2011 by midas

[lovetotravel]

maybe this is why Obama had such little interest in border protection...............

to make it easier for Americans who want to abscond South

Illegal immigration: Mexicans choosing to stay at home

Interest in leaving Mexico to immigrate to the United States is the lowest it's been since 1950, according to recent research from Princeton University.

"No one wants to hear it, but the flow (of illegal traffic) has already stopped," said Douglas S. Massey, co-director of the Mexican Migration Project at Princeton, an extensive, long-term survey in Mexican emigration hubs. "For the first time in 60 years, the net traffic has gone to zero and is probably a little bit negative."

http://www.deseretne...ay-at-home.html

Pretty easy to figure out why. Construction is bust, which is where many worked, and even the others can't find jobs. So, no reason to risk a trip up North. No jobs.

[BEENTHEREDONETHAT]

Another bubble about to pop - http://www.benzinga....igher-ed-bubble

I imagine it is just a matter of time before we see all the students leaving to go to countries that they can afford to get an education in. Then chances are they will like it there and have more opportunity there and stay.

[12DrinkMore]

Two conversations I've had in the last two days....

Firstly with a German lady who stated very earnestly, "Well, we voted for the Euro and the European community, so we will work towards it and make it succeed".

And then yesterday with a young Portuguese couple, who smiled, "If the Germans want to work and pay for us, then that's good!"

And really, I am not joking, these exchanges took place.

Afterwards I couldn't help but burst out laughing, the whole political dream of a united and equally hardworking Europe, under one government, one tax regime, one currency is just unreal. It is impossible. It will never happen.

I wonder if I will meet a Greek tomorrow? I know EXACTLY what he will say!

[midas]

Two conversations I've had in the last two days....

Firstly with a German lady who stated very earnestly, "Well, we voted for the Euro and the European community, so we will work towards it and make it succeed".

And then yesterday with a young Portuguese couple, who smiled, "If the Germans want to work and pay for us, then that's good!"

And really, I am not joking, these exchanges took place.

Afterwards I couldn't help but burst out laughing, the whole political dream of a united and equally hardworking Europe, under one government, one tax regime, one currency is just unreal. It is impossible. It will never happen.

I wonder if I will meet a Greek tomorrow? I know EXACTLY what he will say!

ha ha

well i laughed at this headline " G7 Preparing Statement To Support Dollar, EU, In Fact Everything That Would Otherwise Collapse Tomorrow, Before Asia Open "

My god they must have very deep pockets

Edited August 8, 2011 by midas

[midas]

Two conversations I've had in the last two days....

Firstly with a German lady who stated very earnestly, "Well, we voted for the Euro and the European community, so we will work towards it and make it succeed".

And then yesterday with a young Portuguese couple, who smiled, "If the Germans want to work and pay for us, then that's good!"

And really, I am not joking, these exchanges took place.

Afterwards I couldn't help but burst out laughing, the whole political dream of a united and equally hardworking Europe, under one government, one tax regime, one currency is just unreal. It is impossible. It will never happen.

I wonder if I will meet a Greek tomorrow? I know EXACTLY what he will say!

ha ha

well i laughed at this headline " G7 Preparing Statement To Support Dollar, EU, In Fact Everything That Would Otherwise Collapse Tomorrow, Before Asia Open "

My god they must have very deep pockets

" In Fact Everything That Would Otherwise Collapse Tomorrow "

including these ..... another freaking bank bailout ahhhhhhhhhhhhhhhhhhhhh !

it must be ground hog day

France and Italy stand by to bail out biggest banks as euro crisis worsens

Fears are growing this weekend that two of Europe’s largest banks may require a bailout, having been hugely damaged by the worsening crisis across the eurozone.

In France, President Nicolas Sarkozy is having to confront the possibility that the country’s second-biggest bank, Societe Generale -commonly known as SocGen - is on the brink of disaster after huge losses over loans made to Greece.

The chilling possibility of the largest bank in Italy, UniCredit Banca, suffering a similar collapse if a bailout is not implemented comes as Silvio Berlusconi already faces an increasingly dangerous national economic situation.

http://www.dailymail.co.uk/news/article-2023302/France-Italy-stand-bail-biggest-banks-euro-crisis-worsens.html

[midas]

another freaking bank bailout ahhhhhhhhhhhhhhhhhhhhh !

Now on both sides of the Atlantic

Here Comes TARP 2: Bank Of America Implodes, At $6.87, BAC CDS Up 20% To 260 bps As Bankruptcy Contemplated

The biggest irony: it is AIG which risks taking down the financial system for the second time after its lawsuit against BAC filed last night kills Bank of America.

[flying]

France and Italy stand by to bail out biggest banks as euro crisis worsens

I thought I read that France is between a rock & a hard place regarding Italy as France holds much of Italy's debt.

If true this is resembling dominoes falling. Much the same as Bailout/TARP, QE1,QE2 & coming to a Reality in your area soon QE3

Edited August 8, 2011 by flying