Financial Crisis

[Naam]

paying a government to look after your money ! proof the world has gone bonkers !

or "anti-bankers".

[manarak]

I am trying to interpret this into something that makes sense.

Most of the buyers of these papers are banks.

Banks have the possibility to put money on their central bank account.

Why on earth would they buy papers with negative yields when their central bank account yields zero?

[midas]

I am trying to interpret this into something that makes sense.

Most of the buyers of these papers are banks.

Banks have the possibility to put money on their central bank account.

Why on earth would they buy papers with negative yields when their central bank account yields zero?

good point !

i found this....

Euro Area Bond Yields Rise Ahead of Auctions – While Germany Gets Paid For Borrowing Money

" In short, an investor 'going to cash' for safety reasons must consider that his cash will be deposited in a banking system the survival of which is at the moment in doubt. In short, an investor 'going to cash' for safety reasons must consider that his cash will be deposited in a banking system the survival of which is at the moment in doubt. Given the opacity of bank balance sheets and the high degree of interconnectedness of the financial system, it is also difficult to know how the bankruptcy of one or more large banks would redound on the remaining banks. Some of this opacity has been removed by the EBA's 'stress tests', but this has only made it all the more obvious how dire the situation actually is.

One solution is to buy the short term debt of the debtor considered to be the safest in the euro area and continually roll it over until the crisis situation has passed. Another solution is to buy gold and take possession by holding it in an allocated account or in one's own storage facilities. Both paths seem to be pursued by investors at this time, but it should be noted that not all institutional investors are allowed to buy gold by dint of their investment statutes. "

http://www.acting-man.com/?p=12915

Edited January 10, 2012 by midas

[Naam]

I am trying to interpret this into something that makes sense.

Most of the buyers of these papers are banks.

Banks have the possibility to put money on their central bank account.

Why on earth would they buy papers with negative yields when their central bank account yields zero?

no they are not. banks can deposit directly with the Bundesbank or ECB and that at positive rates.

[Naam]

One solution is to buy the short term debt of the debtor considered to be the safest in the euro area and continually roll it over until the crisis situation has passed.

that's exactly what happened.

[lovetotravel]

Yes they did and the smart money is that he still has about FIVE YEARS to earn it!

he will be lucky if he has 5 weeks at this rate....

Russian warships dock at Syria's port of Tartus

http://www.chinadail...nt_14400339.htm

and on the economic front.......

" "World's Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade", "China, Russia Drop Dollar In Bilateral Trade", "China And Iran To Bypass Dollar, Plan Oil Barter System","

Russia's the fly in the ointment with regards to Syria. They're backing the current government, and potentially for good reasons:

http://www.guardian....il-war-dagestan

As for China's currency trade, do some research on the volumes.. Miniscule and will be so for years. Growing, but a long way to go with a lot of issues to resolve. More tinfoilhat.com.

[lannarebirth]

not exactly a positive development!

Germany paid a negative return to investors at a debt auction for the first time on Monday, highlighting the status of Europe's biggest economy as a safe haven in the current debt crisis. The Bundesbank, which handles German federal debt auctions, sold 3.9 billion ($5 billion) of six-month Treasury bills at an average yield - the return earned by the investor - of minus 0.0122%.

Negative yields effectively mean that investors are willing to pay the German government to take their money, rather than more normally earn a return.

Unlike most longer-dated bonds, treasury bills do not pay interest by way of a coupon but are usually issued at a discount price and then redeemed at par. That means investors pay slightly below the par value and receive the full face value back six months later, pocketing the difference as interest.

But this time, investors paid more than they would receive when the bills mature - the weighted average price was 100.00616 to receive 100 in six months' time.

There was strong demand for the issue, with investors submitting a total 7.08 billion in bids for the 4 billion in bonds on offer.

I score that as one for the deflation theory camp.

[manarak]

I am trying to interpret this into something that makes sense.

Most of the buyers of these papers are banks.

Banks have the possibility to put money on their central bank account.

Why on earth would they buy papers with negative yields when their central bank account yields zero?

no they are not. banks can deposit directly with the Bundesbank or ECB and that at positive rates.

Here is the list of accredited bidders:

http://www.bundesban..._mitglieder.pdf

all are banks.

So... why do they bid negative yields if they can get at least zero on their Bundesbank account?

actually they get 0.12% right now:

http://www.bundesbank.de/info/info_zinssaetze.php

Do they fear that the Bundesbank will lower the interest rates below zero within 6 months?

Edited January 10, 2012 by manarak

[Naam]

Here is the list of accredited bidders

accredited bidders do not bid necessarily for themselves. big companies with surplus cash to be "secure" in these uncertain times use accredited bidders to bid/buy on their behalf.

[manarak]

accredited bidders do not bid necessarily for themselves. big companies with surplus cash to be "secure" in these uncertain times use accredited bidders to bid/buy on their behalf.

Any way I put it, the signal seems to be very bearish for the EUR.

I'm currently still in AUD, but I got a feeling that the USD will rise in the next months.

I'll probably keep the AUD for interest, at least until one week before their next rate cut and buy a USD/CHF forward.

[Naam]

Any way I put it, the signal seems to be very bearish for the EUR

i'm not bullish for the EUR but as long as i can get double or nearly double digit yields combined with a reasonable risk i keep holding on to ~20% EURos portfolio value.

worthwhile to check:

Provincia de Buenos Aires €UR - XS0234088994

Provincia de Buenos Aires USD - XS0290125391

Petroleos de Venezuela USD - US716558AC52

[midas]

Greek Crisis Dries Up Drug Supply as Even Aspirin Can’t Be Found

http://www.bloomberg.com/news/2012-01-10/greek-crisis-has-pharmacists-pleading-for-aspirin-as-drug-supply-dries-up.html

[midas]

Yesterday I bumped into a person I met here in Thailand only last year who is a government employee in Europe. He left Thailand to go back to work just last May ( 2010 ) after spending ONE YEAR here on full pay vacation. He arrived back in Thailand just last Sunday ( 8 months later ) and will spend six weeks here. He plans to come back for another four weeks in July.

Is it any wonder Europe is going broke ? he is planning on retiring here in 20 years time but I didn't have the heart to

tell him to what extent that is a pipedream

Europe’s $39 Trillion Pension Time Bomb Explodes in 2012; Simple Proposal to Fix the Problem

http://globaleconomi...-time-bomb.html

Edited January 12, 2012 by midas

[Wrong Turn]

I just want to say that I'm glad that this thread is continuing. We are living in unique times. And because of that, this thread will continue for quite some time.

[lovetotravel]

Yesterday I bumped into a person I met here in Thailand only last year who is a government employee in Europe. He left Thailand to go back to work just last May ( 2010 ) after spending ONE YEAR here on full pay vacation. He arrived back in Thailand just last Sunday ( 8 months later ) and will spend six weeks here. He plans to come back for another four weeks in July.

Is it any wonder Europe is going broke ? he is planning on retiring here in 20 years time but I didn't have the heart to

tell him to what extent that is a pipedream

Europe’s $39 Trillion Pension Time Bomb Explodes in 2012; Simple Proposal to Fix the Problem

http://globaleconomi...-time-bomb.html

This is a big problem. I have a friend who is a pharmacist with the government in the US. Great guy, great friend. He's planning to retire at 47 with full pension and health care benefits for him and his wife. Everything is covered under their health care plan. I mean everything. He's planning on getting close to 100k/year during retirement. Cost of living increases planned. I should have gone into the government!

[midas]

Yesterday I bumped into a person I met here in Thailand only last year who is a government employee in Europe. He left Thailand to go back to work just last May ( 2010 ) after spending ONE YEAR here on full pay vacation. He arrived back in Thailand just last Sunday ( 8 months later ) and will spend six weeks here. He plans to come back for another four weeks in July.

Is it any wonder Europe is going broke ? he is planning on retiring here in 20 years time but I didn't have the heart to

tell him to what extent that is a pipedream

Europe’s $39 Trillion Pension Time Bomb Explodes in 2012; Simple Proposal to Fix the Problem

http://globaleconomi...-time-bomb.html

This is a big problem. I have a friend who is a pharmacist with the government in the US. Great guy, great friend. He's planning to retire at 47 with full pension and health care benefits for him and his wife. Everything is covered under their health care plan. I mean everything. He's planning on getting close to 100k/year during retirement. Cost of living increases planned. I should have gone into the government!

well I can't see how these standards can be sustained even in the medium term particularly in Europe ? Public servants enjoying huge salaries and ridiculously generous holiday periods while it seems things are just going from bad to worse in Greece.

Children 'dumped in streets by Greek parents who can't afford to look after them any more'

" Children are being abandoned on Greece's streets by their poverty-stricken families who cannot afford to look after them any more.Youngsters are being dumped by their parents who are struggling to make ends meet in what is fast becoming the most tragic human consequence of the Euro crisis."

http://www.dailymail...fford-them.html

Edited January 12, 2012 by midas

[midas]

not exactly a positive development!

Germany paid a negative return to investors at a debt auction for the first time on Monday, highlighting the status of Europe's biggest economy as a safe haven in the current debt crisis. The Bundesbank, which handles German federal debt auctions, sold 3.9 billion ($5 billion) of six-month Treasury bills at an average yield - the return earned by the investor - of minus 0.0122%.

Negative yields effectively mean that investors are willing to pay the German government to take their money, rather than more normally earn a return.

Unlike most longer-dated bonds, treasury bills do not pay interest by way of a coupon but are usually issued at a discount price and then redeemed at par. That means investors pay slightly below the par value and receive the full face value back six months later, pocketing the difference as interest.

But this time, investors paid more than they would receive when the bills mature - the weighted average price was 100.00616 to receive 100 in six months' time.

There was strong demand for the issue, with investors submitting a total 7.08 billion in bids for the 4 billion in bonds on offer.

I score that as one for the deflation theory camp.

Retail Investors Shun Speculation and Stuff Money under the Mattress; Is this a Contrary Indicator?

http://globaleconomicanalysis.blogspot.com/2012/01/retail-investors-shun-speculation-and.html

[midas]

anyone who thinks these people will be re-employed any time soon is delusional

Spain jobless figure hit 'astronomical' 5.4 mn

http://www.google.com/hostednews/afp/article/ALeqM5jr9lbXieX3IF8kuCy7nlpSWeLbBQ?docId=CNG.01fb6dc327a6394109c54439d2e4ab6c.901

[Naam]

i am patiently waiting for Midas to read Dyler Turd's zerohedge.com concerning the ban selling sovereign bonds. surely a gloom&doom scenario?

[midas]

i am patiently waiting for Midas to read Dyler Turd's zerohedge.com concerning the ban selling sovereign bonds. surely a gloom&doom scenario?

aha !! so you do read zerohedge after all !

Actually i didn't read that but i did read this one ( not that i pay much attention to what Krugman says )

Tyler Durden and Paul Krugman agree! – The EU is toast!

" But consider the end game for this. What's the value of a Euro if Spain, Italy, Ireland and Portugal were no longer part of the monetary union?

That price starts at EURUSD 1.6000."

http://www.zerohedge...%80%93-eu-toast

Edited January 15, 2012 by midas

[ronz28]

Harry Dent says we will have a replay of the 2008 financial crisis soon because of the time bomb of the demographic decline of the big spenders http://www.businessinsider.com/another-frightening-demographic-headwind-is-the-decline-of-peak-spenders-2012-1?utm_source=TOPinBusiness&utm_medium=twitter&utm_campaign=Feed%3A+TheMoneyGame+%28The+Money+Game%29 another reason to zig zag in and out of investments and shorts.

[Naam]

i am patiently waiting for Midas to read Dyler Turd's zerohedge.com concerning the ban selling sovereign bonds. surely a gloom&doom scenario?

aha !! so you do read zerohedge after all !

Actually i didn't read that but i did read this one ( not that i pay much attention to what Krugman says )

Tyler Durden and Paul Krugman agree! – The EU is toast!

" But consider the end game for this. What's the value of a Euro if Spain, Italy, Ireland and Portugal were no longer part of the monetary union?

That price starts at EURUSD 1.6000."

http://www.zerohedge...%80%93-eu-toast

no i don't Midas. the "turd"hedge was quoted in another financial forum in context with its copying, pasting from the Financial Times which (in best anglo-anti-EU manner) misinterpreted a German move by fully 180 degrees and generated my rebuttal.

on a sidenote... a lot of "gurus" as well as doom&gloomers do not possess the ability/knowledge to differentiate between the EU and the EUR and neither are obviously those (like you) who just parrot the misinterpretation without thinking.

the result is rubbish such as "The EU is toast!"

[midas]

i am patiently waiting for Midas to read Dyler Turd's zerohedge.com concerning the ban selling sovereign bonds. surely a gloom&doom scenario?

aha !! so you do read zerohedge after all !

Actually i didn't read that but i did read this one ( not that i pay much attention to what Krugman says )

Tyler Durden and Paul Krugman agree! – The EU is toast!

" But consider the end game for this. What's the value of a Euro if Spain, Italy, Ireland and Portugal were no longer part of the monetary union?

That price starts at EURUSD 1.6000."

http://www.zerohedge...%80%93-eu-toast

no i don't Midas. the "turd"hedge was quoted in another financial forum in context with its copying, pasting from the Financial Times which (in best anglo-anti-EU manner) misinterpreted a German move by fully 180 degrees and generated my rebuttal.

on a sidenote... a lot of "gurus" as well as doom&gloomers do not possess the ability/knowledge to differentiate between the EU and the EUR and neither are obviously those (like you) who just parrot the misinterpretation without thinking.

the result is rubbish such as "The EU is toast!"

but at the end of the day there is not a shred of evidence that your assessment or indeed that of the criminals

who perpetuate this charade will be any more accurate than that of the " gurus "

Edited January 16, 2012 by midas

[Naam]

i am patiently waiting for Midas to read Dyler Turd's zerohedge.com concerning the ban selling sovereign bonds. surely a gloom&doom scenario?

aha !! so you do read zerohedge after all !

Actually i didn't read that but i did read this one ( not that i pay much attention to what Krugman says )

Tyler Durden and Paul Krugman agree! – The EU is toast!

" But consider the end game for this. What's the value of a Euro if Spain, Italy, Ireland and Portugal were no longer part of the monetary union?

That price starts at EURUSD 1.6000."

http://www.zerohedge...%80%93-eu-toast

no i don't Midas. the "turd"hedge was quoted in another financial forum in context with its copying, pasting from the Financial Times which (in best anglo-anti-EU manner) misinterpreted a German move by fully 180 degrees and generated my rebuttal.

on a sidenote... a lot of "gurus" as well as doom&gloomers do not possess the ability/knowledge to differentiate between the EU and the EUR and neither are obviously those (like you) who just parrot the misinterpretation without thinking.

the result is rubbish such as "The EU is toast!"

but at the end of the day there is not a shred of evidence that your assessment or indeed that of the criminals who perpetuate this charade will be any more accurate than that of the " gurus "

i did not assess anything but stated a fact, namely "€UR does NOT equal EU" or if you want it short and mathematically expressed "€<>EU". period!

[Naam]

food for thoughts looking at the performance of a famous gloom&doomer who

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Barron's Round Table - predictions for 2011

http://online.barrons.com/article/SB50001424052748704430004577159862359943148.html

Marc Faber's Picks

Investment Ticker 1/7/11 Price 12/30/2011 Change

ENERGY

Chevron CVX $91.19 106.40 16.7%

ExxonMobil XOM 75.59 84.76 12.1%

Occidental Petroleum OXY 96.19 93.70 -2.6%

Chesapeake Energy CHK 26.95 22.29 -17.3%

SouthGobi Resources SGQ.Canada C$13.50 C$ 6.00 -55.6%

SWISS INSURANCE STOCKS

Zurich Financial ZURN.Switzerland 248.80CHF 212.50 CHF -14.6%

Swiss Life SLHN.Switzerland 142.70 86.40 -39.5%

Swiss Re SREN.Switzerland 52.60 47.87 -9.0%

GOLD

Newmont Mining NEM $56.89 60.0 1 5.5%

Buy: Barrick Gold ABX 49.10 45.25 -7.8%

Sell: Barrick Gold options* 4.15

ASIAN STOCKS

Chang Mai Ram Medical** CMR.Thailand 46.00baht 50.00 baht 8.7%

AEON Thana Sinsap AEONTS.Thailand 32.50 28.50 -12.3%

MCOT MCOT.Thailand 29.00 26.75 -7.8%

Ascott Residence Trust A68U.Singapore S$ 1.24 S$ 0.99 -20.2%

JAPANESE STOCKS

Nomura Holdings NMR $6.52 $ 2.98 -54.3%

NTT DoCoMo DCM 17.11 18.35 7.2%

Mizuho Financial MFG 3.88 2.68 -30.9%

Mitsubishi UFJ Financial MTU 5.31 4.19 -21.1%

OTHER

Market Vectors Gulf States Index MES $ 24.13 $ 19.56 -18.9%

Oslo Bors OSLO.Norway 77.00NOK 59.00 NOK -23.4%

*July 2011 50 calls were trading at $4.15 on 1/7/11 and the stock traded at $50.25 on call expiration date.

**Removed pick in June; stock was up 41.3% through 6/6/11.

assuming that an investor had followed Faber's "picks" last year, allocated an equal amount ($100k) to each position, did not bother to follow the markets and looked at his portfolio at the end of the year it would look like this (currency fluctuations not taken into consideration):

5 positions initial investment $ 500,000 / profit generated $ 25,100 / value $ 525,100

15 positions initial investment $ 1,500,000 / loss generated $ 502,950 / value $ 997,050

portfolio value $ 1,522,150 / loss generated $ 477,850 = -23.89%

"uncanny predictions" indeed!

Edited January 16, 2012 by Naam

[churchill]

Did Marc Faber recommend buy and hold ? I expect he traded ....

FYI . .

The Barron's Roundtable sees trouble in Europe, but bargains in the U.S. and emerging markets. Marc Faber and Oscar Schafer share their 2012 investment picks.

http://online.barron...abs_article%3D0

but I expect they will change their minds as world events and Merkosy & Co bumble along

Edited January 16, 2012 by churchill

[12DrinkMore]

Unbelievable.

I am, hmm, we are all, now three years older since I started this thread.

And as far as I can tell, absolutely NOTHING has been solved. In fact, the whole thing has gotten even BIGGER with even more insoluble problems oozing out of the Eurozone mess.

The bankers are still getting their well-deserved bonuses, the banks are surviving only by the action of the central banks in giving them free money, the politicians are kicking the can down the road and spouting bullshit about "growth" heading our way at some point in the future. Well, tell that to the jobless.

The is no fuc_king way that the west can GROW its way out of this, no way at all. None of the western economies weighed down by debt and net import trading imbalances are in any shape to grow. The very best they can hope for is bumping along the bottom, helped out by a bit of statistic fiddling in order to keep the gdp deflator at a low enough level to result in 0.0001 % "growth".

So when is the first Leader going to come clean and tell the peeps that this is the best they can offer? A declining standard of living with no end in sight. It ain't gonna get any better, folks.

So here's that Utterly Inspiring Man Herman Van Who?

EC president Herman Van Rompuy says European leaders must urgently put in place an anti-recession strategy to refocus on growth and jobs creation and avoid a fresh liquidity crisis.

http://www.telegraph...risis-Live.html

Well, he's the leader of the leaders. A Belgian man, whose country couldn't get a parliament together for how long? Don't beat about the bush Herman, get on and do your overpaid job, and make some bloody decisions.

Before this degenerates into one of my rants, I'll turn the focus across the Channel to the UK, where things aren't looking rosy.

http://www.telegraph...until-2016.html

Growth under or around 1pc for years to come will force the Bank of England to keep the base rate at 0.5pc, cut to that level in March 2009, for another four years, the Centre for Economics and Business Research (CEBR) predicts.

The think tank believes the UK economy shrank in the last three months of 2011 and is still contracting in the current quarter, marking a recession.

It has slashed its expectations of the UK's growth for 2012 from the already paltry 0.7pc it forecast in October to a 0.4pc fall. A still more painful contraction of 1.1pc looms if developments in the eurozone take a sharp turn for the worse, the think tank warned.

Separate forecasts from the Ernst and Young ITEM Club agreed that the UK is likely already in a recession, blaming the "paralysed" recovery on political uncertainty in the eurozone. Meanwhile the Chartered Institute of Personnel and Development said unemployment – currently over 2.6m – will not fall below 2.5m until 2016 at the earliest.

Yeah, well after the little adrenaline rush of the Olympic Games, where I will be glued to the screen for the main event, the women's beach volleyball contest (and please don't tell me it's not happening), the only prospect in sight is the schoolboy nerd, "Osborne", who is putting his chips down on China. Well, surely he is in the right part of the globe, but whether the Chinese will play along with his desires to so that

Britain will become a global hub for trading Chinese currency as businesses cash in on the “huge opportunities” for dealing with China, the Chancellor announces today.

http://www.telegraph...ortunities.html

"Yah, booh sucks to that", do I hear the Chinese saying?

If anybody is going to make money out of the RMB it will be the Chinese, and not that bunch of parasites in the "City". The Chinese will surely make the decisions.

Edited January 16, 2012 by 12DrinkMore

[AlexLah]

It's all about asking the right questions......

[ronz28]

NASA's recent video on producing clean powerful low cost energy from Low Energy Nuclear Reactions that should save cost throughout the economy.

http://technologygateway.nasa.gov/media/CC/lenr/lenr.html

So, when can I buy it from Home Depot?

[ronz28]

Only $500 for a 10 KW home unit.

http://www.e-catworld.com/2012/01/rossi-first-e-cats-will-now-cost-50-per-kw/

One million units production run already started.

I bet this has a lot of utility and energy companies sweating it.

Edited January 16, 2012 by ronz28