Financial Crisis

[churchill]

Spain 2, 5 and 10-year bond yields all above 7%.

UK GDP -0.7% (expected -0.2%)

Troika arrives, further cuts, new restructuring may be needed

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_24/07/2012_453643

Confidence Continues To Collapse In Germany

http://www.businessinsider.com/german-ifo-business-climate-2012-7

Yet the Euro rises

Markets can be rigged for so long ... and PM's seems to be twitching .....

[lannarebirth]

Spain 2, 5 and 10-year bond yields all above 7%.

UK GDP -0.7% (expected -0.2%)

Troika arrives, further cuts, new restructuring may be needed

http://www.ekathimer.../07/2012_453643

Confidence Continues To Collapse In Germany

http://www.businessi...-climate-2012-7

Yet the Euro rises

Markets can be rigged for so long ... and PM's seems to be twitching .....

I would think a 2 year sovereign bond from a major economic power in Europe would look pretty sweet to someone at > 7%. If I lived there and transacted my affairs in Euros I'd give it a hard look.

[churchill]

Spain 2, 5 and 10-year bond yields all above 7%.

UK GDP -0.7% (expected -0.2%)

Troika arrives, further cuts, new restructuring may be needed

http://www.ekathimer.../07/2012_453643

Confidence Continues To Collapse In Germany

http://www.businessi...-climate-2012-7

Yet the Euro rises

Markets can be rigged for so long ... and PM's seems to be twitching .....

I would think a 2 year sovereign bond from a major economic power in Europe would look pretty sweet to someone at > 7%. If I lived there and transacted my affairs in Euros I'd give it a hard look.

OK if you don't mind holding peseta's

ECB rescue fund talk lifts euro, shares

http://finance.yahoo.com/news/ecb-rescue-fund-talk-lifts-080315848.html

[churchill]

Cologne-based financial strategist Philip Vorndran says inflation is the only way out of the European debt crisis. But that would not only shrink debt, it would also slash people's savings.

http://www.dw.de/dw/article/0,,16122203,00.html

[Naam]

Some investment institutions are constrained to only invest in AAA financial instruments, so the removal of AAA status from a sovereign entity should push interest rates up.

Now since German Bunds have been pushing into negative territory you might say they don't bloody care. Same with the US. Keep an eye out though for whether all the 3 main rating agencies apply a downgrade. There is more than 3 BTW. The risk on the senior sovereigns is whether at some point the bond vigilantes do a bolt (as in Usain)

restrictions to invest in AAA only were dropped as long ago as World War 1, but restrictions not to invest in debt below investment grade (S&P, Fitch BBB- / Moody's Baa3) do still apply for specific financial institutions.

there is however a long way (10 rating steps) from AAA to below investment grade (BB+ respectively Ba1).

[churchill]

Some investment institutions are constrained to only invest in AAA financial instruments, so the removal of AAA status from a sovereign entity should push interest rates up.

Now since German Bunds have been pushing into negative territory you might say they don't bloody care. Same with the US. Keep an eye out though for whether all the 3 main rating agencies apply a downgrade. There is more than 3 BTW. The risk on the senior sovereigns is whether at some point the bond vigilantes do a bolt (as in Usain)

restrictions to invest in AAA only were dropped as long ago as World War 1, but restrictions not to invest in debt below investment grade (S&P, Fitch BBB- / Moody's Baa3) do still apply for specific financial institutions.

there is however a long way (10 rating steps) from AAA to below investment grade (BB+ respectively Ba1).

What is the difference to AAA assets and Tier 1 assets ... and as most AAA assets seem to be being downgraded as Gold seems to be going to be upgraded to tier 1 ... will this not have a positive effect on the demand for gold ...?

Everyone seems to want to devalue .. but against what .. Devaluing against gold adversely impacts nobody. Its not industrial.

Edited July 25, 2012 by churchill

[Naam]

What is the difference to AAA assets and Tier 1 assets ... and as most AAA assets seem to be being downgraded as Gold seems to be going to be upgraded to tier 1 ... will this not have a positive effect on the demand for gold ...?

Everyone seems to want to devalue .. but against what .. Devaluing against gold adversely impacts nobody. Its not industrial.

i have some bad news for you Churchill should Gold be "upgraded" to Tier1 status. T1 is booked in the balance sheet as "own capital" but payment of agreed coupons, dividends, profit share is subordinated to any other liabilities except share dividends with which they rank 'pari passu'. each T1 asset (which is actually debt because it is borrowed) has its own description stating all kind of variables going so far that a T1 asset's nominal value can be reduced under certain prevailing circumstances and payment of liabilities can be stopped if there is no balance sheet profit.

i hold a few T1 assets. not because they are rated AAA but because they yield fancy high percentages because of what i mentioned above.

for an easier understanding an example which is self-explanatory:

Lloyds TSB has issued a LT2 (Lower Tier2) asset which yields even today 11% (eleven percent). an LT2 is considered safer than a T1 because the arrears of any deferred interest/liability payment has to be paid as soon as the corporation is profitable again and the value of a T2 must be paid back except when a corporation is closed down due to bankruptcy. this opposed to a T1 where any deferred liability is "gone with the wind", the asset is a perpetual, id est no maturity.

i'm not familiar with any rumour "Gold > T1 asset" (should such a rumour exist) but being partly in this investment niche i'd be very much interested in any available details.

p.s. i'm not interested in details supplied by "mineweb, world gold council, Dyler Turd, yewtoob revelations, blockshpot-xyz, GATA and similar sensational lukewarm fart sources".

[churchill]

Regulatory Capital Rules:

Standardized Approach for Risk-Weighted Assets; Market Discipline and Disclosure Requirements FIL-27-2012

June 18, 2012

http://www.fdic.gov/...2/fil12027.html

Edited July 25, 2012 by churchill

[Naam]

standardised approach for...

Churchill,

i consider my time too valuable to read FDIC novels which are totally irrelevant for any international investor. if you have something specific concerning "T1 and Gold" (applicable globally) let me know. as mentioned already, i am interested.

[ajarnpot]

What is the difference to AAA assets and Tier 1 assets ... and as most AAA assets seem to be being downgraded as Gold seems to be going to be upgraded to tier 1 ... will this not have a positive effect on the demand for gold ...?

Everyone seems to want to devalue .. but against what .. Devaluing against gold adversely impacts nobody. Its not industrial.

i have some bad news for you Churchill should Gold be "upgraded" to Tier1 status. T1 is booked in the balance sheet as "own capital" but payment of agreed coupons, dividends, profit share is subordinated to any other liabilities except share dividends with which they rank 'pari passu'. each T1 asset (which is actually debt because it is borrowed) has its own description stating all kind of variables going so far that a T1 asset's nominal value can be reduced under certain prevailing circumstances and payment of liabilities can be stopped if there is no balance sheet profit.

i hold a few T1 assets. not because they are rated AAA but because they yield fancy high percentages because of what i mentioned above.

for an easier understanding an example which is self-explanatory:

Lloyds TSB has issued a LT2 (Lower Tier2) asset which yields even today 11% (eleven percent). an LT2 is considered safer than a T1 because the arrears of any deferred interest/liability payment has to be paid as soon as the corporation is profitable again and the value of a T2 must be paid back except when a corporation is closed down due to bankruptcy. this opposed to a T1 where any deferred liability is "gone with the wind", the asset is a perpetual, id est no maturity.

i'm not familiar with any rumour "Gold > T1 asset" (should such a rumour exist) but being partly in this investment niche i'd be very much interested in any available details.

p.s. i'm not interested in details supplied by "mineweb, world gold council, Dyler Turd, yewtoob revelations, blockshpot-xyz, GATA and similar sensational lukewarm fart sources".

I think he is only interested in wikipedia as source,

[Naam]

What is the difference to AAA assets and Tier 1 assets ... and as most AAA assets seem to be being downgraded as Gold seems to be going to be upgraded to tier 1 ... will this not have a positive effect on the demand for gold ...?

Everyone seems to want to devalue .. but against what .. Devaluing against gold adversely impacts nobody. Its not industrial.

i have some bad news for you Churchill should Gold be "upgraded" to Tier1 status. T1 is booked in the balance sheet as "own capital" but payment of agreed coupons, dividends, profit share is subordinated to any other liabilities except share dividends with which they rank 'pari passu'. each T1 asset (which is actually debt because it is borrowed) has its own description stating all kind of variables going so far that a T1 asset's nominal value can be reduced under certain prevailing circumstances and payment of liabilities can be stopped if there is no balance sheet profit.

i hold a few T1 assets. not because they are rated AAA but because they yield fancy high percentages because of what i mentioned above.

for an easier understanding an example which is self-explanatory:

Lloyds TSB has issued a LT2 (Lower Tier2) asset which yields even today 11% (eleven percent). an LT2 is considered safer than a T1 because the arrears of any deferred interest/liability payment has to be paid as soon as the corporation is profitable again and the value of a T2 must be paid back except when a corporation is closed down due to bankruptcy. this opposed to a T1 where any deferred liability is "gone with the wind", the asset is a perpetual, id est no maturity.

i'm not familiar with any rumour "Gold > T1 asset" (should such a rumour exist) but being partly in this investment niche i'd be very much interested in any available details.

p.s. i'm not interested in details supplied by "mineweb, world gold council, Dyler Turd, yewtoob revelations, blockshpot-xyz, GATA and similar sensational lukewarm fart sources".

I think he is only interested in wikipedia as source,

definitely not in information from an ajarn who smokes pot

[ajarnpot]

meant to be potty as in crazy, but missed out end of it. But do see your point, very firmly against, but glad to see you appreciate a good source of info. it seem a lot of Germans are using any old info without even bothering to reference it. Glad you are a bit more discerning

http://www.guardian.co.uk/world/2011/mar/01/german-defence-minister-resigns-plagiarism

[Naam]

I think he is only interested in wikipedia as source,

don't think or talk about financial things you have no idea of. i wouldn't dare adding a comment or recommend how ajarns smoke pot or go potty

[yoshiwara]

I believe the reference to a link between gold and Tier 1 assets is the Basel proposal for banks to hold gold in their vaults as a recognised asset. The reason being that gold is a liquid asset and easily valued. During the height of the 2008-2009 crisis some assets proved to be illiquid. Didn't stop gold going down though.

Edited July 26, 2012 by yoshiwara

[churchill]

I believe the reference to a link between gold and Tier 1 assets is the Basel proposal for banks to hold gold in their vaults as a recognised asset. The reason being that gold is a liquid asset and easily valued. During the height of the 2008-2009 crisis some assets proved to be illiquid. Didn't stop gold going down though.

Perhaps there is a link between central banks buying rather than selling .....

Being a Tier 1 asset may put gold further back on the queue of assets to be sold ..

6 months to go .. so central banks may want to increase rather than decrease reserves whilst prices are soooooo cheap

[Naam]

I believe the reference to a link between gold and Tier 1 assets is the Basel proposal for banks to hold gold in their vaults as a recognised asset. The reason being that gold is a liquid asset and easily valued. During the height of the 2008-2009 crisis some assets proved to be illiquid. Didn't stop gold going down though.

Perhaps there is a link between central banks buying rather than selling .....

Being a Tier 1 asset may put gold further back on the queue of assets to be sold ..

6 months to go .. so central banks may want to increase rather than decrease reserves whilst prices are soooooo cheap

goodness gracious Churchill! your poor feet... one shot after the other.

central banks have nothing to do with Basel I-III.

[churchill]

I believe the reference to a link between gold and Tier 1 assets is the Basel proposal for banks to hold gold in their vaults as a recognised asset. The reason being that gold is a liquid asset and easily valued. During the height of the 2008-2009 crisis some assets proved to be illiquid. Didn't stop gold going down though.

Perhaps there is a link between central banks buying rather than selling .....

Being a Tier 1 asset may put gold further back on the queue of assets to be sold ..

6 months to go .. so central banks may want to increase rather than decrease reserves whilst prices are soooooo cheap

goodness gracious Churchill! your poor feet... one shot after the other.

central banks have nothing to do with Basel I-III.

Where did I mention Basel 1-111 ???/? reading glasses Naam ...

but ...

'The federal bank regulatory agencies (the agencies) have jointly issued the attached Notice of Proposed Rulemaking (proposed rule) that would revise the measurement of risk-weighted assets by implementing changes made by the Basel Committee on Banking Supervision (BCBS) to international regulatory capital standards and by implementing aspects of the Dodd-Frank Act.'

Edited July 26, 2012 by churchill

[Naam]

I believe the reference to a link between gold and Tier 1 assets is the Basel proposal for banks to hold gold in their vaults as a recognised asset. The reason being that gold is a liquid asset and easily valued. During the height of the 2008-2009 crisis some assets proved to be illiquid. Didn't stop gold going down though.

Perhaps there is a link between central banks buying rather than selling .....

Being a Tier 1 asset may put gold further back on the queue of assets to be sold ..

6 months to go .. so central banks may want to increase rather than decrease reserves whilst prices are soooooo cheap

goodness gracious Churchill! your poor feet... one shot after the other.

central banks have nothing to do with Basel I-III.

Where did I mention Basel 1-111 ???/? reading glasses Naam ...

Yoshiwara mentioned Basel and you quoted him.

anyway, mentioning central banks in context or connection with Tier 1 assets and implying CBs hold T1s is already an unforgiveable crime. CBs are involved in the various Basel agreements concerning supervision and regulatory measures of domestic banks.

we have an expert on board, namely TV-member "Fletchsmile", who could explain the details much better.

[churchill]

'Yoshiwara mentioned Basel and you quoted him.' you just quoted him as well ... so it's all your fault !!!!

'we have an expert on board, namely TV-member "Fletchsmile", who could explain the details much better. '

looking forward to it as you seem to be getting very muddled

[yoshiwara]

I believe the reference to a link between gold and Tier 1 assets is the Basel proposal for banks to hold gold in their vaults as a recognised asset. The reason being that gold is a liquid asset and easily valued. During the height of the 2008-2009 crisis some assets proved to be illiquid. Didn't stop gold going down though.

Perhaps there is a link between central banks buying rather than selling .....

Being a Tier 1 asset may put gold further back on the queue of assets to be sold ..

6 months to go .. so central banks may want to increase rather than decrease reserves whilst prices are soooooo cheap

I think the bank reference is for local rather then central banks to hold gold as a recognisable asset.

Actually if gold is a very liquid asset in a crunch financial environment, then it may be first in the queue to be sold if cash needs to be raised.

[Naam]

let me tell you a secret Churchill. from now on you can bullshit yourself or whoever is willing to be bullshitted by you.

one year drumming "CBs are buying" while Gold was nosediving was ridiculous. i suggest as new tune "Basel agreements require Central Banks to replace worthless fiat money with Gold to increase their T1 capital" interspersed with "TA TAAAAA... according to well informed sources the Central Bank of Nauru increased its Gold holdings massively by buying 39 one-ounce Maple Leaves!"

[churchill]

I believe the reference to a link between gold and Tier 1 assets is the Basel proposal for banks to hold gold in their vaults as a recognised asset. The reason being that gold is a liquid asset and easily valued. During the height of the 2008-2009 crisis some assets proved to be illiquid. Didn't stop gold going down though.

Perhaps there is a link between central banks buying rather than selling .....

Being a Tier 1 asset may put gold further back on the queue of assets to be sold ..

6 months to go .. so central banks may want to increase rather than decrease reserves whilst prices are soooooo cheap

I think the bank reference is for local rather then central banks to hold gold as a recognisable asset.

Actually if gold is a very liquid asset in a crunch financial environment, then it may be first in the queue to be sold if cash needs to be raised.

'I think the bank reference is for local rather then central banks to hold gold as a recognisable asset.'

Yes perhaps .. but ..

I would say for local ......as well as central banks ......

so

I think it is encouraging more banks to hold ( not sell ) gold as an asset rather than not ?

so

higher prices ....

'Actually if gold is a very liquid asset in a crunch financial environment, then it may be first in the queue to be sold if cash needs to be raised'

Anything can be sold ......but ..Key words 'May be ' .....Maybe not

Edited July 26, 2012 by churchill

[churchill]

let me tell you a secret Churchill. from now on you can bullshit yourself or whoever is willing to be bullshitted by you.

one year drumming "CBs are buying" while Gold was nosediving was ridiculous. i suggest as new tune "Basel agreements require Central Banks to replace worthless fiat money with Gold to increase their T1 capital" interspersed with "TA TAAAAA... according to well informed sources the Central Bank of Nauru increased its Gold holdings massively by buying 39 one-ounce Maple Leaves!"

one can tell when Naam is on the wrong end of a debate when his knickers get in a twist ....

Are european banks selling .. one would expect Greece to sell some gold to pay wages ...Why aren't they ? There is plenty of evidence that CB's are buying rather than selling ... but of course Naam is on a different planet ...

.. I posted a link that you asked for and then said that you didn't have time to read it ... " but I am interested '

[Naam]

CONSPIRACY! MARKET MANIPULATION!

ECB Chief Draghi mentions "protecting the euro zone from collapse"... US stock futures up, Dollar down 1%, Gold up 1%, all within a few minutes

[churchill]

Politicians have bu..ered off and told Draghi not to call them til September ...

So balls in his court ...

[Naam]

note to myself: no more discussions with amateurs who lack the absolute minimum basics of investing but are well versed hitting the <enter> key which (they think) will make their postings look more important. but that does not mean i will refrain from pointing out any rubbish they present which might confuse people who look for unbiased information

[yoshiwara]

I think it is encouraging more banks to hold ( not sell ) gold as an asset rather than not ?

I don't know whether the recognition is an encouragement to hold more gold or just a legitimation of what they do anyway.

What is clear however is that the price of gold appears far more influenced by the direction of the Euro then any speculated increased demand by CBs.

[mccw]

"The chance of Greece leaving the euro in the next year has raised to 90 per cent from the previous 50 per cent says Americas Citigroup.

Greece will drop out of the eurozone and reinstate the drachma in the next 12-18 months, according to a report published on Thursday.

Citi economists had previously put the chances of a Greek exit at 50 to 75 per cent.

To keep Greece afloat the European Union and IMF provided 110bn euro of bailout loans in May 2010. The money would help the government pay its creditors. After that a second, 130 bln euro bailout was agreed earlier this year.

Economists calculate that Greece may need a third rescue package worth up to 50 billion. Greece started a major austerity drive involving drastic spending cuts, tax rises, and labour market and pension reforms. The majority of Greece's private creditors agreed to write off more than half of the debts owed to them by Athens.

According to estimates Greece owes French banks 41.4 bln euro, German banks 15.9 bln euro, UK banks 9.4 bln euro and US banks 6.2 bln euro.

Citi report also said Italy and Spain may take a formal bailout from the European Union and IMF an addition to the banking aid Madrid has already asked for.

"Over the next few years, the euro area end-game is likely to be a mix of EMU exit (Greece), a significant amount of sovereign debt and bank debt restructuring (Portugal, Ireland and, eventually, perhaps Italy, Spain and Cyprus) with only limited fiscal burden-sharing, Citigroup said in the report.

Citi writes that Greece's exit from the euro could trigger further sovereign downgrades in the single-currency bloc.

It expects at least a one-notch downgrade by at least one major agency for Austria, Belgium, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain.

Citi also sees both the US and Japan to have their ratings cut by one-notch over the next two to three years.

It said it believed Britain may also lose its triple-A rating over the same period due to economic weakness and fiscal slippage."

(From the RT app, so no link but it is the story in full).

[Naam]

"The chance of Greece leaving the euro in the next year has raised to 90 per cent from the previous 50 per cent says Americas Citigroup.

a fair evaluation. gurus are expecting jan1,2013 to be "d-day". what has changed in the meantime is the perception "Greece leaving €U but staying in the EU = global catastrophy!"

nobody can explain why, till recently, the perception existed that the exit of a clearly bankrupt country, who's GDP is officially (faked) a mere 2.2% of the EU's GDP could cause a global catastrophy. the risk perception of investors seems to be factored in and that includes an additional default on its recently restructured and "haircutted" debt.

[churchill]

La BCE prépare une action concertée avec les Etats-Le Monde

http://www.investir.fr/devises-forex/infos-et-analyses/la-bce-prepare-une-action-concertee-avec-les-etats-le-monde-446566.php