Why bad news for the ruble could spell disaster for the dollar

[impulse]

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Some "too big to fail" bankster somewhere is sitting on a $$ trillion of derivative products based on the exchange rate of the ruble. And some other tbtf bankster has written a credit default swap covering the guy who is sitting on those derivative products. And a 3rd tbtf bankster has written insurance guaranteeing that the credit default swaps will be made good if it all goes into the toilet. And they all took home their zillion dollar bonuses this week, just before Christmas.

I wouldn't be surprised if the price of pork bellies was enough to tip over the house of cards, much less the ruble. And it has nothing to do with fundamentals.

While I know that you made this post "tongue in cheek" it sadly does bear resemblance to the absolute insanity that occurs on Wall Street every day

Other than taking a little liberty with the number of zeroes, it's exactly what's happening every day.

[SiSePuede419]

"it sadly does bear resemblance to the absolute insanity that occurs on Wall Street every day"

Correct.

The best way to loot the U.S. Treasury--legally, is to buy a bank, sell derivatives, wait for the shit to hit the fan, then get in line for your "too big to fail" handout...

[Chicog]

Meanwhile Putin is asking the oligarchs to put back some of the Russian peoples money help out. I wonder if he'll be dipping into his own Cayman nest egg?

http://blogs.ft.com/the-world/2014/12/putin-treats-russias-oligarchs-to-a-free-supper/

Edited December 23, 2014 by Chicog

[thailiketoo]

"it sadly does bear resemblance to the absolute insanity that occurs on Wall Street every day"

Correct.

The best way to loot the U.S. Treasury--legally, is to buy a bank, sell derivatives, wait for the shit to hit the fan, then get in line for your "too big to fail" handout...

Ah, another bad US banks thread. I didn't know that. Should I mention the UK banks now or later? Shall we start a discussion of good and bad derivatives (do you know what a derivative is)?

Or is your post somehow connected with the Ruble?

Basically I think the thread should be split. A. The people who can't say anything good about the USA and B. The people who can't say anything good about Russia having their own slogging match.

The rest of us could talk about does the crash of the Ruble have anything to do with the value of the dollar in terms of gold or oil or pounds or Baht or however you want to measure it.

[F430murci]

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Let's keep in mind that the entire Chinese economy is so opaque that nobody knows what is going on. They could be bankrupt right now, and it would take a decade for anybody to figure it out.

Very true, and the real estate bubble begining to burst in China is just the first shoe to drop, the shadow banking system could begin to unravel if this real estate crisis in China were to worsen and of course there is always the possibility of a large scale uprising by the Chinese people as the economy continues to slow down and layoffs continue to mount

This is so true. Closed banking system that permits artificially manipited currency to keep exports attractive, government run and censored banks and even GDP and CPI no one can be sure of.

Someone built all of those empty mega cities for one purpose, to lee GDP artificially inflated. If they are empty, someone is no paying the construction loans or bills.

China reports what it wants. Before you say it, US does not because due diligence investor concerns. US may have changed the method of CPI calculation under an economic substitution principle (raise price of fillet and consumers will by Ribeye), anyone with a calculator can still calculate costs of fillet or goods removed from the CPI basket. GDP on the other hand, China can report whatever it wants it is just about impossible to verify on a global scale.

-------

Chinas Premier Li Keqiang isnt the sort of man to blush in public. But yesterday, when he went in front of Chinas national legislature and targeted 7.5% growth in gross domestic product for 2014, he should have. The problem isn't the number -- most economists agree that 7.5% is a manageable if difficult goal. Rather, the issue is that Li Keqiang himself doesnt believe in the accuracy of Chinese GDP statistics.

. . .

According to a Mar. 15, 2007, declassified U.S. diplomatic cable (released by Wikileaks) recounting the dinner, a smiling Li declared that Chinese GDP figures were man-made and therefore unreliable -- for reference only."

http://www.bloombergview.com/articles/2014-03-05/china-s-li-doesn-t-believe-his-own-numbers

[F430murci]

"it sadly does bear resemblance to the absolute insanity that occurs on Wall Street every day"

Correct.

The best way to loot the U.S. Treasury--legally, is to buy a bank, sell derivatives, wait for the shit to hit the fan, then get in line for your "too big to fail" handout...

Ah, another bad US banks thread. I didn't know that. Should I mention the UK banks now or later? Shall we start a discussion of good and bad derivatives (do you know what a derivative is)?

Or is your post somehow connected with the Ruble?

Basically I think the thread should be split. A. The people who can't say anything good about the USA and B. The people who can't say anything good about Russia having their own slogging match.

The rest of us could talk about does the crash of the Ruble have anything to do with the value of the dollar in terms of gold or oil or pounds or Baht or however you want to measure it.

US banks are currently fine, not perfect, but very far away from failure.

Russian banks, however, are about to start dropping like flies. Russian reserves don't have the money to get Russian bank reserves to bail out their banks and does anyone know how deep the hole is once the failures and defaults start.

--------

Russias Central Bank Acts to Save Trust Bank, a Failing Lender, With More Rescues Expected

The Central Bank of Russia (CBR) said that a plan to loan Trust bank an amount of up to 30bn roubles (£343m) had been approved, while analysts warned that Russias banking sector had become particularly vulnerable.

. . .

Russia is facing a full-blown economic crisis, a former finance minister has warned, as the country is forced to take emergency financial measures.

http://www.telegraph.co.uk/finance/economics/11307775/Russia-starts-bailing-out-banks-as-economy-faces-full-blown-economic-crisis.html

[pmugghc]

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Let's keep in mind that the entire Chinese economy is so opaque that nobody knows what is going on. They could be bankrupt right now, and it would take a decade for anybody to figure it out.

Very true, and the real estate bubble begining to burst in China is just the first shoe to drop, the shadow banking system could begin to unravel if this real estate crisis in China were to worsen and of course there is always the possibility of a large scale uprising by the Chinese people as the economy continues to slow down and layoffs continue to mount

Won't happen in my opinion. I thought it might happen in '89 while I worked in HK. Didn't happen then, much less likely now.

[impulse]

US banks are currently fine, not perfect, but very far away from failure.

I hope you're right, but we don't know what kind of toxic assets they have in their portfolio, too complex for their auditors to evaluate.

[Berkshire]

Meanwhile Putin is asking the oligarchs to put back some of the Russian peoples money help out. I wonder if he'll be dipping into his own Cayman nest egg?

http://blogs.ft.com/the-world/2014/12/putin-treats-russias-oligarchs-to-a-free-supper/

Putin can certainly give some back. I heard he's actually the richest man in the world....unofficially, of course.

[thailiketoo]

US banks are currently fine, not perfect, but very far away from failure.

I hope you're right, but we don't know what kind of toxic assets they have in their portfolio, too complex for their auditors to evaluate.

Perhaps you don't know but everyone else does. So really you should not say we because we do know. Better to say in your case I don't know. For example read the report below and then you will know about one bank.

http://www.citigroup.com/citi/investor/quarterly/2014/annual-report/

Edited December 24, 2014 by thailiketoo

[craigt3365]

The US economy seems to be doing pretty good. Who knows what the next quarter will be though....

http://money.cnn.com/2014/12/23/news/economy/us-gdp-economy-5-percent-growth/index.html

All of that helps explain why hiring has increased dramatically this year. Employers added 321,000 jobs in November, making 2014 the strongest year for job growth since 1999.

[NeverSure]

WASHINGTON Tue Dec 23, 2014 2:43pm EST

(Reuters) - "The U.S. economy grew at a 5.0 percent clip in the third quarter, its quickest pace in 11 years and the strongest sign yet that growth has decisively shifted into higher gear.

Some of the strength appears to have been sustained, with other data on Tuesday showing consumer spending rising solidly in November, offsetting surprisingly weak durable goods orders.

The reports further set the U.S. economy apart from the rest of the world, where growth is sputtering or activity shrinking.

"Our economy is firing on most cylinders, whereas the global economy is essentially in dire need of a spark," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester Pennsylvania."

Emphasis mine. LINK

[NeverSure]

Oh yeah. The topic is about disaster for the dollar. Yawn.

[mania]

The US economy seems to be doing pretty good. Who knows what the next quarter will be though....

http://money.cnn.com/2014/12/23/news/economy/us-gdp-economy-5-percent-growth/index.html

All of that helps explain why hiring has increased dramatically this year. Employers added 321,000 jobs in November, making 2014 the strongest year for job growth since 1999.

You know it is always nice to hear something positive & while I do not think as the title of this thread suggests it is disaster on the whole one cannot claim to be doing great either.

At least the article you linked is somewhat open with numbers. Again this is based against GDP as so often it is & that GDP includes government spending what they do not have. So to count that as a positive is a bit misleading.

Even the article you linked shows a bit of it here

"Consumer spending north of 3% is pretty darn good these days," said Greenhaus.

"Defense spending was also a huge driver in the third quarter, surging 16%."

Contrast those two numbers....... Now note that is just defense spending not all of government spending

So it is safe to say the greater part of what your seeing is in fact again government spending what they do

not have so ultimately is that income or expense? Who later gets the bill?

Lastly while I see no real recovery yet I will say I do when I see the FED Reserve start to raise interest rate above the 0-0.25% it is at now. If the US were really dealing with rising economic activity interest rates would rise as consumers and investors bid for credit. Instead there are no longer enough buyers of Treasury Bonds which are created in equal amount of $$$ debt created out of thin air. So for years now the FED Reserve has been buying its own IOU's with more IOU's. That is fact.

So I tend to feel we are seeing manipulation more than true recovery. I do though hope it gets to a true recovery soon as the creation of ever more IOU's is just kicking the enlarging can down the road for our grandchildren & theirs to inherit.

Edited December 24, 2014 by Scott

[impulse]

US banks are currently fine, not perfect, but very far away from failure.

I hope you're right, but we don't know what kind of toxic assets they have in their portfolio, too complex for their auditors to evaluate.

Perhaps you don't know but everyone else does. So really you should not say we because we do know. Better to say in your case I don't know. For example read the report below and then you will know about one bank.

http://www.citigroup.com/citi/investor/quarterly/2014/annual-report/

Pull up Enron's Annual Report for the year before they disappeared. And Tyco's. And every bank's 2006 Annual report.

We have no clue what's hiding in your linked annual report. You can claim you do. But hundreds of Economists would disagree with you. (In fairness, hundreds would agree with you. But that just indicates that it's so obscure that even they can't agree)

I think that's a pretty good definition of "We don't know" Some of us may think we do. But that's just hubris.

Edited December 24, 2014 by impulse

[thailiketoo]

US banks are currently fine, not perfect, but very far away from failure.

I hope you're right, but we don't know what kind of toxic assets they have in their portfolio, too complex for their auditors to evaluate.

Perhaps you don't know but everyone else does. So really you should not say we because we do know. Better to say in your case I don't know. For example read the report below and then you will know about one bank.

http://www.citigroup.com/citi/investor/quarterly/2014/annual-report/

Pull up Enron's Annual Report for the year before they disappeared. And Tyco's. And every bank's 2006 Annual report.

We have no clue what's hiding in your linked annual report. You can claim you do. But hundreds of Economists would disagree with you. (In fairness, hundreds would agree with you. But that just indicates that it's so obscure that even they can't agree)

I think that's a pretty good definition of "We don't know" Some of us may think we do. But that's just hubris.

Dodd–Frank Wall Street Reform and Consumer Protection Act

Passed as a response to the Great Recession, it brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression. It made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation's financial services industry.

http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act

Edited December 24, 2014 by thailiketoo

[F430murci]

US banks are currently fine, not perfect, but very far away from failure.

I hope you're right, but we don't know what kind of toxic assets they have in their portfolio, too complex for their auditors to evaluate.

Nah.

[impulse]

US banks are currently fine, not perfect, but very far away from failure.

I hope you're right, but we don't know what kind of toxic assets they have in their portfolio, too complex for their auditors to evaluate.

Nah.

Yeah, you're probably right.

Nothing to see here, folks.

[F430murci]

US banks are currently fine, not perfect, but very far away from failure.

I hope you're right, but we don't know what kind of toxic assets they have in their portfolio, too complex for their auditors to evaluate.

Perhaps you don't know but everyone else does. So really you should not say we because we do know. Better to say in your case I don't know. For example read the report below and then you will know about one bank.

http://www.citigroup.com/citi/investor/quarterly/2014/annual-report/

Pull up Enron's Annual Report for the year before they disappeared. And Tyco's. And every bank's 2006 Annual report.

We have no clue what's hiding in your linked annual report. You can claim you do. But hundreds of Economists would disagree with you. (In fairness, hundreds would agree with you. But that just indicates that it's so obscure that even they can't agree)

I think that's a pretty good definition of "We don't know" Some of us may think we do. But that's just hubris.

Enron's mark to market accounting and use if special purpose enties as methods of hiding losses are old news. A lot has been learned and a lot of new regulations have been put in place in the 5 years. Enron had a huge ERISA breach of fiduciary duties. Must have been learned and changed.

I have worked on the inside with Federal Reserve, FDIC and SEC on banking issues, TARP, reclassification of debt, stress testing and etc. since the CMO crisis hit. I have complete and utter confidence in the system. This stuff is being monitored very, very closely and there are many smart people out there that can fully evaluate holding and potentially toxic assets.

Guess what, its going to be okay. That said, anyone with any industry knowledge kne CMOs and credit swaps were serious problems in long before 2008.

[mania]

This stuff is being monitored very, very closely and there are many smart people out there that can fully evaluate holding and potentially toxic assets.

.......

anyone with any industry knowledge knew CMOs and credit swaps were serious problems in long before 2008.

See the problem there?

[thailiketoo]

This stuff is being monitored very, very closely and there are many smart people out there that can fully evaluate holding and potentially toxic assets.

.......

anyone with any industry knowledge knew CMOs and credit swaps were serious problems in long before 2008.

See the problem there?

Ya I do. It has nothing to do with the topic

Why bad news for the ruble could spell disaster for the dollar

[F430murci]

This stuff is being monitored very, very closely and there are many smart people out there that can fully evaluate holding and potentially toxic assets.

.......

anyone with any industry knowledge knew CMOs and credit swaps were serious problems in long before 2008.

See the problem there?

The problem I see is you remove the post to which I responded completely removing all context of what I said.

Regarding CMOs, i responded to an insinuation that no one saw it coming in 2006. CMOs were set in motion long before 2006 and most knew there were problems brewing as early as late 2004.

My monitored statement, which you removed parts out of, referred to a statement in a post (that you also removed) that no one can recognize toxic assets on banks balance sheets because no one could ID toxic assets with Enron in 2001 being cited in support.

Perhaps this is why some of you guys are so lost. You only half arrssee read this financial stuff, mix concepts and completely ignore facts that don't fit with your agenda.

Perhaps don't remove key parts of my posts and what I responded to when needed for contact if trying to make a valid point.

Edited December 24, 2014 by F430murci

[zzdocxx]

Don't hold your breath.

[Scott]

An off-topic post has been removed. The discussion is moving a little too far from the original topic and posters are not being very gracious toward one another in their responses.

[mania]

<deleted> as I just saw Scotts post

But as Scott said getting OT & many cannot seem to respond with any form/degree of polite discussion so will drop it here

Edited December 24, 2014 by mania

[harryfrompattaya]

Maybe the writer want the USA to aid the Ruble

Le Roy and I say screw the Ruble and fools that support it

[harryfrompattaya]

This is the same idiot that wrote "American is Stretched to Breaking Point, Watch the Markets."

He says US GDP of 17 tr + EU GDP of 18 tr equals 30 tr. Huh??? 17 + 18 = 30. He cannot even add and we are supposed to take him seriously on financial matters.

He says Russia's foreign reserve of $415 bn can absorb . . . Russia foreign reserve is down to about $ 370 bn of which about $ 160 bn is NOT liquid. That leaves about $210 bn liquid to deal with crisis and losses of $40 bn for every $10 per barrel decrease in oil price below a $100 a barrel.

Russia will likely have to spend another $ 70 bn in very short term to try and further prop up Ruble. This would leave about $ 140 bn in liquid foreign reserve by the first of the year with losses to the federal bydget of somewhere between $100 to $160 bn due to decrease in oil price alone. He now has bigger problems paying debt due to currency losses

He says Ruble devalued due to attack on the Ruble. Russian already had inflation and recession prior to sanctiins. Putin devalued Ruble to try and offset decrease in oil price because he does not have enough liquid reserves to make up the deficiencies federal budget. He effectively threw Russia into hyperinflation to try and avoid default. No one att

He is just a Russian lover

[Asiantravel]

Make No Mistake, the Oil Slump Is Going to Hurt the US Too

If you only paid attention to the mainstream media, you’d be forgiven for thinking that the US is going to get away from the collapse in oil prices scot free. According to popular belief, America is even going to be a net winner from cheaper oil prices, because they will act like a tax cut for US consumers. Or so we are told.

In reality, though, many of the jobs the US energy boom has created in the last few years are now at risk, and their loss could drag the economy into a recession.

http://www.caseyresearch.com/articles/make-no-mistake-the-oil-slump-is-going-to-hurt-the-us-too

[SiSePuede419]

"In reality, though, many of the jobs the US energy boom has created in the last few years are now at risk"

1. Tax cuts for Factories who bring jobs back to America, tax penalties for Factories who ship jobs overseas (whoops! Republicans voted AGAINST that in Oct 2010)

2. Get energy from CURRENT sunlight, not ANCIENT sunlight= jobs for solar panel & wind genie factories ( whoops! Mobil/ Exon and Petroleum Institute HATES this idea, because no money for DIRTY Carbon based idiots)

3. Upgrade the grid, highways, high-speed trains, electric charging stations ( whoops! Republicans hate this because it would create jobs and make tbe Black Man in the White House look good---can't have that, can they?)

Two words: We're Screwed.

[Pakboong]

This is the same idiot that wrote "American is Stretched to Breaking Point, Watch the Markets."

He says US GDP of 17 tr + EU GDP of 18 tr equals 30 tr. Huh??? 17 + 18 = 30. He cannot even add and we are supposed to take him seriously on financial matters.

He says Russia's foreign reserve of $415 bn can absorb . . . Russia foreign reserve is down to about $ 370 bn of which about $ 160 bn is NOT liquid. That leaves about $210 bn liquid to deal with crisis and losses of $40 bn for every $10 per barrel decrease in oil price below a $100 a barrel.

Russia will likely have to spend another $ 70 bn in very short term to try and further prop up Ruble. This would leave about $ 140 bn in liquid foreign reserve by the first of the year with losses to the federal bydget of somewhere between $100 to $160 bn due to decrease in oil price alone. He now has bigger problems paying debt due to currency losses

He says Ruble devalued due to attack on the Ruble. Russian already had inflation and recession prior to sanctiins. Putin devalued Ruble to try and offset decrease in oil price because he does not have enough liquid reserves to make up the deficiencies federal budget. He effectively threw Russia into hyperinflation to try and avoid default. No one att

He is just a Russian lover

The Russian Central Bank is a privately owned operation the same as the US Federal Reserve. Putin gets to appoint the Chairman and that is pretty much it. I am surprised that he has not nationalized this bank and I do expect it to happen in the near future.

Edited December 25, 2014 by Pakboong