Is The Us$ Destined To Collapse?

[britmaveric]

^I know quite a bit about euro banks and BS they are covering up.

Edited October 13, 2009 by britmaveric

[flying]

both of you just qualified for the diploma "...possesses a wealth of no idea about european banks"

Just the facts maam

DSB account holders withdrew some 600 million euros in recent weeks, DNB president Nout Wellink was quoted as saying by Dutch news agency ANP -- about a sixth of all the savings still with the bank.

[badge]

Interesting piece on Inflation, or lack thereof

http://www.gold-eagle.com/gold_digest_01/w...rton041801.html

[sokal]

^won't matter when european banks start tumbling like dominos.

have a look....

Cute graphic above, eh? There is plenty of this in the public preview. When considering the staggering level of derivatives employed by JPM, it is frightening to even consider the fact that #ffff99;">the quality of JPM's derivative exposure is even worse than Bear Stearns and Lehman‘s derivative portfolio just prior to their fall. Total net derivative exposure rated below BBB and below for JP Morgan currently stands at 35.4% while the same stood at 17.0% for Bear Stearns (February 2008) and 9.2% for Lehman (May 2008). We all know what happened to Bear Stearns and Lehman Brothers, don't we??? I warned all about Bear Stearns (Is this the Breaking of the Bear?: On Sunday, 27 January 2008) and Lehman ("Is Lehman really a lemming in disguise?": On February 20th, 2008) months before their collapse by taking a close, unbiased look at their balance sheet. Both of these companies were rated investment grade at the time, just like "you know who". Now, I am not saying JPM is about to collapse, since it is one of the anointed ones chosen by the government and guaranteed not to fail - unlike Bear Stearns and Lehman Brothers, and it is (after all) investment grade rated. Who would you put your faith in, the big ratings agencies or your favorite blogger? Then again, if it acts like a duck, walks like a duck, and quacks like a duck, is it a chicken??? I'll leave the rest up for my readers to decide.

This public preview is the culmination of several investigative posts that I have made that have led me to look more closely into the big money center banks. It all started with a hunch that JPM wasn't marking their WaMu portfolio acquisition accurately to market prices (see Is JP Morgan Taking Realistic Marks on its WaMu Portfolio Purchase? Doubtful! ), which would very well have rendered them insolvent - particularly if that was the practice for the balance of their portfolio as well (see Re: JP Morgan, when I say insolvent, I really mean insolvent). I then posted the following series, which eventually led to me finally breaking down and performing a full forensic analysis of JP Morgan, instead of piece-mealing it with anecdotal analysis.

Edited October 14, 2009 by sokal

[lannarebirth]

^^

It will be interesting to see if when/if $USD makes new lows if it will trigger some derivatives kept off some balance sheet. It will be more interesting if some US chartered financial institutions are the beneficiaries and it will be still more interesting if the US government has to bail out the payor to make good the bet from US treasury.

[badge]

DXY has support at 75.6, 74.5 and 74

Well I still have DXY supp at 75.6(pretty much where it is right now), then 74.5 and 74.

EURUSD has res at .4905 and .5015, and USDCHF supp at .0120 and .0050

[badge]

Notional derivative amounts are'nt particularly relevant.

[Abrak]

I then posted the following series, which eventually led to me finally breaking down and performing a full forensic analysis of JP Morgan, instead of piece-mealing it with anecdotal analysis.

And what sort of number did you come up with - are we talking US$10bn bailout or US$100bn or even more?

[loverboy44]

I personally think that the biggest risk for the US $ to collapse is if it will stay the world currency or not.

If not, which is in talk especially in the arab world because their oil gets cheaper and chaeper because of the $ rate, it will collapse.

[Abrak]

I personally think that the biggest risk for the US $ to collapse is if it will stay the world currency or not.

If not, which is in talk especially in the arab world because their oil gets cheaper and chaeper because of the $ rate, it will collapse.

I am not sure I get this argument. I mean if the dollar collapses the price of oil would go up so oil doesnt necessarily get cheaper and cheaper in real terms.

So surely the destruction of the dollar is inflationary rather than deflationary.

[loverboy44]

If the US$ is not the world currency any more and is replaced by a the EUR for example, there will be to much $ outside that is not needed any more.

They are talking about a basket of currencies including EUR, Yen, Yuan and gold to replace the US $.

[Abrak]

If the US$ is not the world currency any more and is replaced by a the EUR for example, there will be to much $ outside that is not needed any more.

They are talking about a basket of currencies including EUR, Yen, Yuan and gold to replace the US $.

I mean to me they are being counter productive. A declining dollar will push people to alternatives - say gold - whose real value has appreciated. I would have thought the same applies to oil in that it will appreciate in real terms while the dollar is thought to be depreciating in real terms as an alternative currency. If you introduce a hard currency dont you destroy the commodity cycle?

[Naam]

have a look....

This public preview is the culmination of several investigative posts that I have made...

you have made nothing my friend but copying and pasting from "seekingalpha". copying was clear to me after reading two of "your" sentences with a diction you do not master and which did not contain any spelling mistakes. let me tell you that this kind of faking is of extremely poor taste.

here's the source:

http://seekingalpha.com/instablog/100114-r...-into-jp-morgan

[Naam]

both of you just qualified for the diploma "...possesses a wealth of no idea about european banks"

Just the facts maam

DSB account holders withdrew some 600 million euros in recent weeks, DNB president Nout Wellink was quoted as saying by Dutch news agency ANP -- about a sixth of all the savings still with the bank.

€ 600mm= peanuts and that applies to the € 80-100mm left too

[cloudhopper]

If the US$ is not the world currency any more and is replaced by a the EUR for example, there will be to much $ outside that is not needed any more.

They are talking about a basket of currencies including EUR, Yen, Yuan and gold to replace the US $.

Any currency basket that replaces the USD will likely contain a greater percentage of USD than any other component, and no component of currencies not freely traded.

[Naam]

If the US$ is not the world currency any more and is replaced by a the EUR for example, there will be to much $ outside that is not needed any more. They are talking about a basket of currencies including EUR, Yen, Yuan and gold to replace the US $.

Any currency basket that replaces the USD will likely contain a greater percentage of USD than any other component, and no component of currencies not freely traded.

the talk was "replacing" the USD with a basket that does not contain USD. but talk is cheap and especially cheap if the talk is so secret that it is published in virtually all media worldwide.

[flying]

DSB account holders withdrew some 600 million euros in recent weeks, DNB president Nout Wellink was quoted as saying by Dutch news agency ANP -- about a sixth of all the savings still with the bank.

€ 600mm= peanuts and that applies to the € 80-100mm left too

if 600 million Euros is about a sixth of all the savings still in the bank I would guess there are 3B left peanuts? In any case mai ben rai

We will revisit this in a year.

[sokal]

I then posted the following series, which eventually led to me finally breaking down and performing a full forensic analysis of JP Morgan, instead of piece-mealing it with anecdotal analysis.

And what sort of number did you come up with - are we talking US$10bn bailout or US$100bn or even more?

The full article is here click on the links at the bottom of the article

[sokal]

If the US$ is not the world currency any more and is replaced by a the EUR for example, there will be to much $ outside that is not needed any more.

They are talking about a basket of currencies including EUR, Yen, Yuan and gold to replace the US $.

hence an inflationary collapse.

[sokal]

have a look....

This public preview is the culmination of several investigative posts that I have made...

you have made nothing my friend but copying and pasting from "seekingalpha". copying was clear to me after reading two of "your" sentences with a diction you do not master and which did not contain any spelling mistakes. let me tell you that this kind of faking is of extremely poor taste.

here's the source:

http://seekingalpha.com/instablog/100114-r...-into-jp-morgan

I assumed people would know that I did not write the article, that is why I wrote " have a look " at the top of the page. Also, I got it from Zerohedge, not that dopey "seeking alpha" site.

Edited October 14, 2009 by sokal

[Naam]

DSB account holders withdrew some 600 million euros in recent weeks, DNB president Nout Wellink was quoted as saying by Dutch news agency ANP -- about a sixth of all the savings still with the bank.

€ 600mm= peanuts and that applies to the € 80-100mm left too

if 600 million Euros is about a sixth of all the savings still in the bank I would guess there are 3B left peanuts? In any case mai ben rai We will revisit this in a year.

"about a sixth in the bank" is ambigous as it could refer to what is left or what was taken out. but whatever... i claim that Europe's banks are not more negatively exposed than the banks in the Greatest Nation on Earth™. i agree there will be a "second crisis wave" and i expect it for Q1 2010, which will hit both areas but by far not as severe as the one we saw.

in my [not so] humble view it will have no impact on any potential economic recovery which is not based anymore on which banks are on solid footing and which banks are shaky but based on a number of other factors. the only thing clear is that sooner or later the bill to pay will be presented to the taxpayer, or by inflation for all to participate, or by a mixture of both. the good news is that whatever will hit (you more than me) that it won't be a tsunami without time to prepare. the process will be a very slow one and there will be ample time to position yourself.

[flying]

"about a sixth in the bank" is ambigous as it could refer to what is left or what was taken out. but whatever... i claim that Europe's banks are not more negatively exposed than the banks in the Greatest Nation on Earth™. i agree there will be a "second crisis wave" and i expect it for Q1 2010, which will hit both areas but by far not as severe as the one we saw.

in my [not so] humble view it will have no impact on any potential economic recovery which is not based anymore on which banks are on solid footing and which banks are shaky but based on a number of other factors. the only thing clear is that sooner or later the bill to pay will be presented to the taxpayer, or by inflation for all to participate, or by a mixture of both. the good news is that whatever will hit (you more than me) that it won't be a tsunami without time to prepare. the process will be a very slow one and there will be ample time to position yourself.

I agree it is ambiguous but, since it was placed where it was...ie: after the 600 million euros removed statement....I assume it meant that 600m was 1/6th the total. But no matter in the bigger pic.

I think the opposite of you & think the 2nd wave will easily be as bad if not worse. I also fail to see how it will not impact economic recovery.

Things like what happened yesterday.....

http://online.wsj.com/article/SB1255465556...=googlenews_wsj

http://www.forbes.com/feeds/afx/2009/10/14/afx6998392.html

• OCTOBER 14, 2009
  

ECB Soaks Up $250 Billion as Loan Levels Lag

Shows that the banks are still not lending. This will not help & will hinder growth.

As for the bill going to the taxpayers...Yes of course they can try but you cannot suck blood from a stone. Tax revenues have already gone off a cliff here & we are just getting started. You cannot tax what is not created by jobs/production etc.

As for time to prepare...I have said it before but, we have already been given a year. Many have wasted it.

All of the above is just my opinion based on what my eyes & ears tell me. I am neither bull nor bear just a simple realist.

Edited October 14, 2009 by flying

[Naam]

As for the bill going to the taxpayers...Yes of course they can try but you cannot suck blood from a stone. Tax revenues have already gone off a cliff here & we are just getting started. You cannot tax what is not created by jobs/production etc.

go to Europe Flying, pick any of the industrialised states and then start pitying their citizens. go to Germany, talk to people what indirect and exorbitant taxes (hidden as "costs") the Tchermanns pay on top of fancy income taxes and you will weep with them Tchermanns and share your gold with them because you can't bear their misery

p.s. did you know we have a value added tax of 19% on ALL goods and services (only a few with a 50% exemption) and talk is to increase it to 21 or even 23%?

[flying]

p.s. did you know we have a value added tax of 19% on ALL goods and services (only a few with a 50% exemption) and talk is to increase it to 21 or even 23%?

Hence your living where you are

Same will occur elsewhere when taxation beats those with means into exit.

I have no doubt that if they wish to turn Amerika into a poverty stricken nation they have the means. But it will always be the middle & lower classes that suffer. The rest will leave or find one of the hundred ways to skin the cat.

[Naam]

p.s. did you know we have a value added tax of 19% on ALL goods and services (only a few with a 50% exemption) and talk is to increase it to 21 or even 23%?

Hence your living where you are

Same will occur elsewhere when taxation beats those with means into exit. I have no doubt that if they wish to turn Amerika into a poverty stricken nation they have the means. But it will always be the middle & lower classes that suffer. The rest will leave or find one of the hundred ways to skin the cat.

my taxes in Germany (assuming that i'd be stupid enough and declare each and every penny of income) would amount to more than double the dough i spend in Thailand for an extremely comfortable lifestyle. the "saved" taxes on this year's capital gains are covering 11 years of "Thai expenditure". look at the size of the two flags!

[sokal]

Notional derivative amounts are'nt particularly relevant.

How do you prove that ?

The reason Lehman caused so much turmoil was because its derivative book went down.

[cloudhopper]

Lifted the following from the Naked Capitalist blog-

There is one more ingredient necessary in order to become the world’s largest reserve currency, in addition to deep, liquid, and convertible markets: becoming the world’s largest debtor.

People forget that this is what it means to be a reserve currency: other nations accumulate your assets on a net basis to hold as reserves, meaning that they are your creditors.

So the next “reserve king” — whoever that may be, and God help them — will by definition be the world’s largest debtor, in terms of the foreign account. The Yuan cannot play this role. Same thing for any oil exporter, or any exporter. These nations are confusing “creditor” with “debtor”, and “net reserve accumulator” with “net reserve issuer”. You cannot be both.

On the other hand, there is no reason, with floating exchange rates, for any nation to be a net reserve issuer. In that case, everyone would run a balance of trade. No currency needs to be held in reserve by anyone else, as we have forex markets that can exchange currencies and equalize trade.

Moreover, in order for the foreign sector to “dump” dollar assets, the U.S. would need to run a trade surplus. A foreign holder can certainly sell an asset to another foreign holder, but that is irrelevant, as the foreign sector as a whole cannot “dump” even $1 of an asset, unless we are the buyer, which means that we run a current account surplus for that dollar 1 vis-a-vis the rest of the world.

So any talk of “replacing” the dollar requires that either the U.S. runs a massive surplus to “buy back” the dollar assets of the foreign sector, or that some other country comes along and runs deficits so much larger than ours, that their cumulative foreign account debt dwarfs that of the U.S., at which point that currency will be the #1 held by foreign nations as reserves. No way that is going to happen with the Euro.

Finally, the U.S., as a currency issuer with no foreign-denominated obligations cannot go insolvent. The only thing it can do is disappoint those who expect more government services than our productivity will allow. Social Security, Medicare, etc — these are all pay-go programs. There is no “trust fund”, or “savings” at a national level. It is impossible, at the national level, to “save” for the future anymore than it is possible to send goods back into the past. Each generation consumes what it produces, and each year’s output is consumed that year:

There is no hole in the ground that we are piling medical services for retirees into, to be dug up later. There is no safety box in the sky that we are shoving food into, in order to “save” to be able to feed the poor of the future. Food not eaten in 2009 is not available in 2019. Medical Services not delivered in 2009 cannot be transported to 2019. And in 2019, it will be the congress of 2019 that decides how much to spend on medicare or social security, or any other government program; They are not bound by the decisions of our Congress, and they are certainly not bound by the wishes of the congress in LBJs era.

[sokal]

Lifted the following from the Naked Capitalist blog-

There is one more ingredient necessary in order to become the world’s largest reserve currency, in addition to deep, liquid, and convertible markets: becoming the world’s largest debtor.

People forget that this is what it means to be a reserve currency: other nations accumulate your assets on a net basis to hold as reserves, meaning that they are your creditors.

So the next “reserve king” — whoever that may be, and God help them — will by definition be the world’s largest debtor, in terms of the foreign account. The Yuan cannot play this role. Same thing for any oil exporter, or any exporter. These nations are confusing “creditor” with “debtor”, and “net reserve accumulator” with “net reserve issuer”. You cannot be both.

On the other hand, there is no reason, with floating exchange rates, for any nation to be a net reserve issuer. In that case, everyone would run a balance of trade. No currency needs to be held in reserve by anyone else, as we have forex markets that can exchange currencies and equalize trade.

Moreover, in order for the foreign sector to “dump” dollar assets, the U.S. would need to run a trade surplus. A foreign holder can certainly sell an asset to another foreign holder, but that is irrelevant, as the foreign sector as a whole cannot “dump” even $1 of an asset, unless we are the buyer, which means that we run a current account surplus for that dollar 1 vis-a-vis the rest of the world.

So any talk of “replacing” the dollar requires that either the U.S. runs a massive surplus to “buy back” the dollar assets of the foreign sector, or that some other country comes along and runs deficits so much larger than ours, that their cumulative foreign account debt dwarfs that of the U.S., at which point that currency will be the #1 held by foreign nations as reserves. No way that is going to happen with the Euro.

Finally, the U.S., as a currency issuer with no foreign-denominated obligations cannot go insolvent. The only thing it can do is disappoint those who expect more government services than our productivity will allow. Social Security, Medicare, etc — these are all pay-go programs. There is no “trust fund”, or “savings” at a national level. It is impossible, at the national level, to “save” for the future anymore than it is possible to send goods back into the past. Each generation consumes what it produces, and each year’s output is consumed that year:

There is no hole in the ground that we are piling medical services for retirees into, to be dug up later. There is no safety box in the sky that we are shoving food into, in order to “save” to be able to feed the poor of the future. Food not eaten in 2009 is not available in 2019. Medical Services not delivered in 2009 cannot be transported to 2019. And in 2019, it will be the congress of 2019 that decides how much to spend on medicare or social security, or any other government program; They are not bound by the decisions of our Congress, and they are certainly not bound by the wishes of the congress in LBJs era.

That is the dumbest thing I have ever read. The only reason the US dollar was the reserve currency was because it was backed and convertable in GOLD.

The only reason the US has 8000 tons of GOLD is because when the US was a creditor and export nation (with reserve currency status), they demanded that all exports be paid in GOLD.

[flying]

Finally, the U.S., as a currency issuer with no foreign-denominated obligations cannot go insolvent. The only thing it can do is disappoint those who expect more government services than our productivity will allow. Social Security, Medicare, etc — these are all pay-go programs. There is no "trust fund", or "savings" at a national level. It is impossible, at the national level, to "save" for the future anymore than it is possible to send goods back into the past. Each generation consumes what it produces, and each year's output is consumed that year:

There is no hole in the ground that we are piling medical services for retirees into, to be dug up later. There is no safety box in the sky that we are shoving food into, in order to "save" to be able to feed the poor of the future. Food not eaten in 2009 is not available in 2019. Medical Services not delivered in 2009 cannot be transported to 2019. And in 2019, it will be the congress of 2019 that decides how much to spend on medicare or social security, or any other government program; They are not bound by the decisions of our Congress, and they are certainly not bound by the wishes of the congress in LBJs era.

This is the logical conclusion I see.... Although when I mention it to other they always get mad & say no way!

[badge]

Notional derivative amounts are'nt particularly relevant.

How do you prove that ?

The reason Lehman caused so much turmoil was because its derivative book went down.

I dont have the inclination to explain, and have no need to prove it.

Its difficult to know quite how simplistic your being with your second statement.