Financial Crisis

[flying]

rolling over debt means issuing new debt to redeem the old one.

Like the folks who use a credit card to pay off another credit card

They should call it increasing circle debt

[midas]

What a bunch of schizophrenics these people are that are fuelling this stock market rally !

We already established the lies and deceit now regarding

some very shady rules on accounting standards but now the investors have woken up this morning

and decided the banking crisis hasn't really gone away

after all-something which many of us on this forum had in the back of our minds

all through this very fabricated rally which has gone on for seven weeks.

Now they are confessing we could see the March lows retested.

They have now also realised the earnings are going to be disappointing

and this should be more relevant than just a feel good factor after Obama

made a speech - duh !

So yet again some amateur small time investors are going to get squashed like flies.

who is "we" and "they"?

The same " they " that Alex referred to in posting #1594

and same " we " that 12 referred to in posting post #1610 and Post #1612

[cloudhopper]

By rolled over do you mean defaulted on or inflated away?

rolling over debt means issuing new debt to redeem the old one. conveniently, in most cases more new debt is issued than is necessary to redeem the old one thus building up a mountain of debt. default comes when debt service is unsustainable. dozens of countries defaulted, some of them two and three times in only a couple of decades.

hardly any country can afford to monetise its external debt because it is in a foreign currency. the only country which would be able to do so is the Greatest Nation on Earth™. the U.S. has no debt except denominated in US-Dollars. that applies of course only to the sovereign debtor and not to corporates.

Yes I really knew what rolling over meant but the point I was trying to make was that IMO the troubled CBs have reached the limit of their ability to find buyers for their ever increasing amounts of debt at decreasing rates and are now resorting to essentially buying their own debt via "printing". If CBs refuse to allow interest rates to rise, which naturally they are loathe to do in the face of a bad economy, the inevitable result will be default or inflation.

[Naam]

Yes I really knew what rolling over meant but the point I was trying to make was that IMO the troubled CBs have reached the limit of their ability to find buyers for their ever increasing amounts of debt at decreasing rates and are now resorting to essentially buying their own debt via "printing". If CBs refuse to allow interest rates to rise, which naturally they are loathe to do in the face of a bad economy, the inevitable result will be default or inflation.

there's no need for CBs to raise basic rates as the market determines the actual rates. if governments cannot refinance because investors refuse to accept low rates they [the governments] are in dire straits. but printing money to buy own debt works only in rare cases (like the U.S.) and for a short time where external debt is in home currency; but is inflationary too. if other countries print local currency to service external forex debt the effect of devaluation and inflation is seen much faster. we are about to face that situation, that's the reason why i don't believe in any deflation fairy tales.

by the way, in most cases the central banks are not the issuers respectively debtors of debt paper. normally the countries are and it is quite common that countries take a temporary loan from their own central bank which has to dig into the reserves. all of that is of course purely academic and has no effect on any of us.

[Naam]

i found an interesting flow-chart (sort of... kinda) which predicts exactly how the financial crisis will develop when the 17th wave [out of 31] rolls over 19 Bollinger bands and causes a break-out. the lower right corner contains forecast data how Thai Baht will fare vs. US-Dollar, Sterling and the €uro. if one takes a close look one can also derive future visa regulations for retiring expats in Thailand. i'm sure the chart will fascinate our resident prophet as it confirms all his prophecies

[AlexLah]

Very clear and interesting chart Naam, thanks for that.......

[BEENTHEREDONETHAT]

Thanks Naam that really cleared it up for me. Certainly is more definitive than many of the post in this thread. :D

[AlexLah]

Special pre weekend bonus gift.

All in line with previous chart.......

[12DrinkMore]

You sort of make my point. The standared of livingmay rise here, but only based on the story, which can create the reality, if the money starts flowing in. Let's get that Asia Bubble started. The sooner the better.

Ah, well how about the idea that the money is already here?

Thirty years ago Asia was not part of the equation and the Western economies were chugging along by supplying the demand out of their own production. Then they discovered that the manufacturing costs could be reduced by exporting the manufacturing base out to "cheap labour" Asia.

Hmm, now Asia has the manufacturing facilities and a huge population keen to own the goodies. There is still a major factor holding back the flood gates, and this is the extremely wealthy ruling classes, who do not want to see the playing field leveled. They still want to be able to afford to have 20 servants running around and looking after them for a pittance. A bit similar maybe to the Victorian age.

But now demand from the West has reduced and maybe they will see the benefit of allowing the general population to afford to buy the produce?

This does not need an Asian bubble to develop. Just the realisation that if the West is not going to keep the factories running, then maybe it is a good idea to develop the Asian markets instead.

To take this a massive step forward. What would happen if the average wage was doubled in Thailand? Suddenly there would be a massive increase in domestic demand for cars, housing etc. And this would not necessarily result in rampant inflation, as the reduced exports would be absorbed in the home market.

[teletiger]

Special pre weekend bonus gift.

All in line with previous chart.......

Is that a wave B, or 2 wave C's?

Regards.

[lannarebirth]

Special pre weekend bonus gift.

All in line with previous chart.......

Is that a wave B, or 2 wave C's?

Regards.

If that's supposed to symbolize the Baht chart, it's in the wrong thread.

http://www.asiachart.com/thai.html

[AlexLah]

You guys are missing the point completely.

Clicker the click picture.

[midas]

Alex, maybe now we will see more " alleged suicides "

Maybe the public will get an insight into how far reaching

corruption, fraud, lies and deceit have permeated through government and

banking institutionsin this crisis. This article contains some of the most damning statements about

this financial crisis I have read so far. Will we ever see the likes of

Hank Paulson or Ben Bernanke being prosecuted?

The New York attorney-general has laid bare the US Government’s desperate attempts to prop up the financial system late last year, which went as far as misleading stock markets about the financial health of one of Wall Street’s biggest banks.

The attorney-general also published 44 pages of testimony in which Mr Lewis claimed that Mr Paulson and Ben Bernanke, the Chairman of the Federal Reserve, encouraged him to keep mounting losses in Merrill secret from shareholders.

http://business.timesonline.co.uk/tol/busi...icle6157611.ece

[midas]

As a follow on from the previous post can someone please tell me who we are

meant to trust now - who can we trust ? I dont think you can read about such blatant

corruption than this and then to cap it all - the tax payer has to foot the bill....

sickening

" The Securities and Exchange Commission, which protects shareholders' interests,

was excluded from talks about the troubled $50 billion (?34 billion) deal."

[AlexLah]

Barry barry funny, I was about to post the same article.

So as a reaction we need something more pleasant to look at. ;-)

[cloudhopper]

apart from Japan no deflationary signs anywhere.

Here's a sign for you - also check out Spain

CH, i never believed the blatant lies and tricks most governments use since decades when it concerns inflation and/or deflation.

Well unfortunately I'm afraid my knowledge of how both government and industry manipulate the stats has only come far more recently. That said, there appears to be increasing anecdotal evidence emerging all over the world, even here in LOS. Check out:

http://www.nytimes.com/2009/04/21/business...tml?_r=3&hp

Governments everywhere are terrified by the prospects of a deflationary spiral which is why they are inflating like mad. As yet to no avail however as credit contraction outpaces fiat creation and monetary velocity continues to decline.

[12DrinkMore]

http://www.telegraph.co.uk/finance/finance...ears-in-it.html

"To preserve [the people's] independence, we must not let our rulers load us with perpetual debt. We must make our selection between economy and liberty, or profusion and servitude."....Thomas Jefferson.

So how can we stop this?

I am fed up with hearing the word "debt". Just look at the immense figure of debt that our elected leaders are dumping on us. And we have no choice, none whatsoever.

In his final Budget speech in 2007 – a spectacular example of what The Economist labels his "moralising drivel" – Mr Brown told us that Government borrowing would be £30 billion in 2009, and then £28 billion, £26 billion and £24 billion; a total of £108 billion in the four years from 2009 to 12.

But check out the latest forecasts from Darling

On Wednesday, Mr Darling adjusted those numbers to £175 billion, £173 billion, £140 billion and £118 billion

No end to the mass of debt being piled up on us and the future generations, higher and higher.

I have been searching for some promising news to indicate real "green shoots", and not mouthwash "green shoots". But sorry, nothing to be found.

http://www.telegraph.co.uk/finance/finance...isis-looms.html

A clutch of political and labour leaders in Germany have raised the spectre of civil unrest after the country's leading institutes forecast a 6pc contraction of gross domestic product this year, a slump reminiscent of 1931 and bad enough to drive unemployment to 4.7m by 2010.

And a chilling forecast for more bank losses, which have a nasty habit of turning into tax payer losses. During the time that the banks were announcing huge profits, I didn't see much of that cash ending up in my bank account. But as soon as the losses come along, we all have to chip in.

quote...

It takes longer for damage to surface with Europe's traditional bank loans, which buckle later in the cycle as defaults rise. The ferocity of Europe's recession leaves no doubt that losses will be huge this time.

.../quote

[12DrinkMore]

Governments everywhere are terrified by the prospects of a deflationary spiral which is why they are inflating like mad. As yet to no avail however as credit contraction outpaces fiat creation and monetary velocity continues to decline.

A healthy dose of deflation is EXACTLY what I need. With interest rates down to zero, a period of 2-3% deflation will still preserve the value of my savings. It will also help pensioners, the unemployables and those on low incomes.

After a solid 8 years or so of cheap debt driven consumer demand, we are in the backlash of an over-indebted society. The governments should stop trying to go against this tidal wave and allow the markets to sort themselves out. At some point the consumers will have paid off the debts down to a comfortable level and start consuming again, hopefully at a level within their means.

Everybody I know realises that too much debt is a bad thing, and that saving money and living within your income is a good thing. When are we going to see down to earth, decent leaders prepared to stand up and say it to the public? I am certain that this would strike an accord, as the population knows it to be true. But all we get is the bullshit policies aimed at increasing debt to keep the circus going just a little bit longer. Nobody believes this anymore and so there is a lack of trust.

[midas]

There’s A SECOND SHOE that’s quietly starting to drop in the commercial real estate sector…

one that could deal a fatal blow to some of the largest banks like Goldman Sachs , Bank of America ,

Morgan Stanley.................

The Looming Crisis in Commercial Real Estate

The credit crunch has thus far focused on the residential mortgage mess. But with $1.3 trillion in loans to shopping centers and other commercial properties coming due between now and 2013, another time bomb is ticking. In a report scheduled for release on Wednesday, Deutsche Bank estimates that at least half the loans — and two-thirds of those packaged and resold as securities — will not qualify for refinancing. As a result, many borrowers will likely default, leading to losses on securitized mortgages of $50 billion or more and losses of at least $200 billion on commercial real estate loans overall, according to Deutsche analyst Richard Parkus, who authored the report. "People are only now beginning to realize there is a looming crisis,"

http://www.time.com/time/business/article/...1893125,00.html

Edited April 24, 2009 by midas

[midas]

AND THEN........................... THE THIRD SHOE WHICH IS ABOUT TO DROP...

Things must be getting better because Wall Street has gone up - hah

The Looming Credit Card Crisis

On the surface, JPMorgan Chase’s first quarter 2009 earnings look auspicious, reversing the red ink of the last few quarters and exceeding what was expected by investors ( so more suckers would fall for the lies and deceit ). But a simple read-through of the press release paints a different picture.

Today the disastrously managed credit card business threatens to be a major impediment in the economic recovery because the only way the banks can extricate themselves from the mess they have created is literally to shut down the industry

http://www.cnbc.com/id/30262845

Now what will that do for the World's biggest economy that relies on consumerism to keep its economy going................

Things are getting better huh ?

Edited April 24, 2009 by midas

[samuibeachcomber]

AND ALL THESE "GOOD NEWS" Q1 banking profits are what? Did n't the powers that be give the green light for accounting practises that allowed banks/companies to post what ever they wanted too,presumably because no one could quantify the toxic assets/losses.

They just could n't let go could they and are continuing the lies and scams.

[midas]

For anyone interested here is a link showing a copy of the letter dated April 23rd 2009

from the New York Attorney General exposing the invisible hand of Henry Paulson, the U.S. Treasury and Ben Bernanke

in the Merrill Lynch deal. Already a group of New York attorney's have said both of these guys

are guilty of committing fraud based on what is in this letter

The Chairman of the Federal Reserve possibly facing charges of fraud ................

i just want to put all my money under the mattress

http://zerohedge.blogspot.com/2009/04/cuom...ulsons-and.html

[flying]

AND ALL THESE "GOOD NEWS" Q1 banking profits are what? Did n't the powers that be give the green light for accounting practises that allowed banks/companies to post what ever they wanted too,presumably because no one could quantify the toxic assets/losses.

They just could n't let go could they and are continuing the lies and scams.

Yes but somehow I think the general public is getting smarter.

I don't think these lil games are going un-noticed anymore.

We will see............

[midas]

AND ALL THESE "GOOD NEWS" Q1 banking profits are what? Did n't the powers that be give the green light for accounting practises that allowed banks/companies to post what ever they wanted too,presumably because no one could quantify the toxic assets/losses.

They just could n't let go could they and are continuing the lies and scams.

Yes but somehow I think the general public is getting smarter.

I don't think these lil games are going un-noticed anymore.

We will see............

Alex ..... I like this comment made on the website I posted in #1642

Since conspiracy theories are fun:

Anybody think that maybe the investment banks were asked to deliberately keep a bid under this market in exchange for favorable treatment by the government? Just between you and me you know...

Edited April 24, 2009 by midas

[AlexLah]

Grrrrrrrrrrrrrrrrrrrr.....

I think it is about time to bring out the famous

For those that we missed or are somehow still alive we could consider one of two other available options as pictured below.

And then we have the personal loans, the next wave of exotic mortgages, and who knows what other crazy stuff is on the way.

I think I am gonna watch Mad Max again, there might be some usefull survival tips in there......

Edited April 24, 2009 by AlexLah

[Naam]

apart from Japan no deflationary signs anywhere.

Here's a sign for you - also check out Spain

CH, i never believed the blatant lies and tricks most governments use since decades when it concerns inflation and/or deflation.

Well unfortunately I'm afraid my knowledge of how both government and industry manipulate the stats has only come far more recently. That said, there appears to be increasing anecdotal evidence emerging all over the world, even here in LOS. Check out:

http://www.nytimes.com/2009/04/21/business...tml?_r=3&hp

Governments everywhere are terrified by the prospects of a deflationary spiral which is why they are inflating like mad. As yet to no avail however as credit contraction outpaces fiat creation and monetary velocity continues to decline.

whatever it might be, deflation is not at all my concern but inflation is. the value of immobile property we own is totally irrelevant as we have no intentions to sell. i don't work and can't therefore lose a job. if the car prices are lower when our cars have to be replaced i won't mind, etc., etc., etc.

[khunjake]

2 days ago I logged into my Citi card accounts which I have 3 of and guess what, all 3 lines were cut down completely. Only about $300 of available credit down from $60000 total. I have an account there for years at reasonable interest rates and now this. It is almost laughable actually.

[samuibeachcomber]

2 days ago I logged into my Citi card accounts which I have 3 of and guess what, all 3 lines were cut down completely. Only about $300 of available credit down from $60000 total. I have an account there for years at reasonable interest rates and now this. It is almost laughable actually.

So without notification they just reduced the amout you could borrow.That amount of reduction does n't make sense as they are reducing the amount of money they can make.Maybe you have n't used the facility for a long time,or always pay back on time.

[khunjake]

Nope, always on time, never late. Have had primary account for 14 years. Other 2 are more recent but still never late. Banks are cutting lines across the board to mitigate default risk. Even prime borrowers are getting slashed as "prime" means nothing any more.

2 days ago I logged into my Citi card accounts which I have 3 of and guess what, all 3 lines were cut down completely. Only about $300 of available credit down from $60000 total. I have an account there for years at reasonable interest rates and now this. It is almost laughable actually.

So without notification they just reduced the amout you could borrow.That amount of reduction does n't make sense as they are reducing the amount of money they can make.Maybe you have n't used the facility for a long time,or always pay back on time.

[samuibeachcomber]

But if they keep doing that to everybody how they going to make any money?iI've got cards coming up for renewal soon but with only modest limits.Always like enough credit to buy an airfare back to base,if they reduce to the level that yours have i'll have to swim home.