"Full Fledged Panic" - World Economic Crisis Moving to a New Stage UPDATE:Euphoric Stocks Bubble While Wages Plummet [Archive]

C. Flower

02-08-2011, 09:31 PM

The Eurozone crisis is unstoppable, with Italy, Spain and Cyprus all falling towards the unready arms of the IMF/EU this week.

The US is attempting to dig itself out, by making nearly 2 trillion in cuts (with unemployment already at 10%).

The price of gold breaking records day on day, as people look for a safe refuge for funds. Euros are being sold and dollars bought, as the dollar is seen as the best of a bad lot.

Ireland's government is insisting on pouring the last of our NTMA funds into bankrupt banks, to ready them for fire sale.
Funds are still draining out of Irish banks.

Apart from one man, a poster here, DO'F, who is on a bread and water fast to try to raise awareness, is anyone in Ireland grasping the seriousness of the situation ?

Italy back under intense focus; bank shares slide; emergency meetings scheduled (sound familiar?)
New record highs in CHF, Gold; Treasury yields tumble
S&P 500 ends 2.6% lower; now lower for 2011
US Senate passes debt-ceiling plan 76-24
US personal income rises 0.1%, spending falls 0.2%, first spending decline in nearly 2 years
Fitch: US debt deal commensurate with AAA rating
Italy blames Euro zone crisis, US for market pressures on Italian debt
US 10-yr note yield falls 14 bp to 2.615%
Gold ends at record $1656

http://www.forexlive.com/blog/2011/08/02/forexlive-us-wrap-a-full-fledged-panic/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+forexlive-rss+%28Forex+News+by+ForexLive.com%29

TotalMayhem

02-08-2011, 10:03 PM

Don't forget the Swiss Franc. The only partially gold-backed currency in the world was almost on par with the Euro today. Great investment bet, huge blow for the Swiss export economy.

C. Flower

02-08-2011, 10:04 PM

Don't forget the Swiss Franc. The only partially gold-backed currency in the world was almost on par with the Euro today.

I've long thought that the Swiss are over-loaned - but why is the world not liking them today ?

TotalMayhem

02-08-2011, 10:13 PM

but why is the world not liking them today ?

What do you mean? When the Euro was introduced, 1 Euro bought you like CHF 1.62, now it's almost par (CHF 1.08). Investors like the Swiss very much, or shall we say, their currency.

And it's even worse regarding the US Dollar, in 2001, 1 US Dollar bought you CHF 1.82, today it's only CHF 0.76.

C. Flower

02-08-2011, 10:17 PM

What do you mean? When the Euro was introduced, 1 Euro bought you like CHF 1.62, now it's almost par (CHF 1.08). Investors like the Swiss very much, or shall we say, their currency.

Beg your pardon: distracted. I don't think it's going to last forever.
Switzerland doesn't operate in a different universe.

TotalMayhem

02-08-2011, 10:23 PM

Switzerland doesn't operate in a different universe.

As long as their currency is backed by gold (i.e intrinsic value) and not just the printing press, they certainly do operate in a different universe.

C. Flower

02-08-2011, 10:28 PM

As long as their currency is backed by gold, i.e intrinsic value, they certainly do operate in a different universe.

No one operates in a separate universe - as you say- they want to trade with people.

TotalMayhem

02-08-2011, 10:43 PM

No one operates in a separate universe - as you say- they want to trade with people.

And that is exactly their woe, Swiss exports have become too expensive for the rest of the world. And it's not just affecting the wristwatches, which have always been too expensive for the regular mortals anyway. ;)

C. Flower

02-08-2011, 10:46 PM

And that is exactly their woe, Swiss exports have become too expensive for the rest of the world. And it's not just affecting the wristwatches, which have always been too expensive for the regular mortals anyway. ;)

Italy appears to be close to default. Spain not far behind.

TotalMayhem

02-08-2011, 11:00 PM

Italy appears to be close to default. Spain not far behind.

Too bad... :(

Apjp

02-08-2011, 11:07 PM

Don't forget the Swiss Franc. The only partially gold-backed currency in the world was almost on par with the Euro today. Great investment bet, huge blow for the Swiss export economy.

That depends. Many say swiss exports arent made to be cheap. Im thinking watches, luxury chocs etc

Sent from my GT-I5500 using Tapatalk

TotalMayhem

02-08-2011, 11:13 PM

While many may think of watches, cheese, chocolate and cuckoo clocks, that's not what makes the Swiss export industry tick. Think pharmaceutical, machinery and arms exports.

Fing Fers

02-08-2011, 11:19 PM

Cant wait, the whole lot has to go bang, only then will we see decent folk out working for our interests. Untill then they'll keep kicking the can down the road, how many corners have we turned now?

TotalMayhem

02-08-2011, 11:53 PM

Cant wait, the whole lot has to go bang, only then will we see decent folk out working for our interests.

Your lips to God's ear.

C. Flower

03-08-2011, 07:07 AM

Thanks for the contributions, but I feel the need to bury this thread and start again. The OP is not up to the requirements of the day.

C. Flower

03-08-2011, 10:13 AM

Opened it again, warts and all.

Judas

03-08-2011, 10:25 AM

Thanks for the contributions, but I feel the need to bury this thread and start again. The OP is not up to the requirements of the day.

We are on the verge of catastrope I think, or if not I think it is being postponed for a matter of just months or even weeks.
The sheeple won't know whats hit them until it really does hit the fan. Slowly reality is dawning, but the spectre of whats about to happen is probably greater than anyone can envisage.
Watch the Dollar go the way of BOI shares, and the Euro following not long after. No idea of what will replace it, but I've bought silver recently with a few quid I have put aside.

Captain Con O'Sullivan

03-08-2011, 10:35 AM

Financially we went through the Looking Glass some time ago. Hermann Rompuoy is apparently astonished at the markets ignoral of 'the fundamentals' whereas of course the markets see nothing but fundamentals which is why certain sections of the markets, hedgefund currency and bond speculators, are driving Italy and Spain to default territory.

Why haven't Rompuoy, Merkel and Sarkozy banned short selling in the markets? The only good thing about all this is that this form of out of control and unregulated capitalism will destroy itself in the end because thats the logical end point- like a herd of stampeding cattle that will continue to run until it starts dying from exhaustion or runs right off a cliff with those at the front unable to halt because of the impetus of those behind.

I've no doubt that some sort of de facto 'command economy' rather ironically will be arranged out of all this as a sort of pan European or pan Global NAMA. Mainly because the wealthy can't carry their money around with them so they need those long numbers attached to bank account numbers to be operational otherwise they sink immediately to the level of those who don't even have bank account numbers.

And that would be unnatural. One can starve behind the gates of closed communities just as easily as in front of them.

This gold bubble that has arisen is quite interesting. You can't carry it around with you because its too heavy if you have a lot of it. You can't eat it. It only has a value if you can convert it into a currency. If the system fails currency is useless.

If the system fails then there's not much point in waving a piece of paper that entitles you to half a gold bar- because the bank where the gold bar is kept won't be open. If you do carry gold around with you and it has a value in a system that has failed a lot of formerly wealthy people will just have their gold taken off them at a conversion rate of one small piece of lead for all your gold.

I'm convinced that the system won't be allowed to fail because the system is all there is between the rich and the rest of us.

If the system won't be allowed to fail then the gold price at the moment is another enormous bubble.

Judas

03-08-2011, 10:53 AM

yehbut_nobut

03-08-2011, 10:56 AM

Move to Cloughjordan, and join this (http://www.cloughjordancommunityfarm.ie/index.html) !

www.cloughjordancommunityfarm.ie

DCon

03-08-2011, 11:04 AM

What do you mean? When the Euro was introduced, 1 Euro bought you like CHF 1.62, now it's almost par (CHF 1.08). Investors like the Swiss very much, or shall we say, their currency.

And it's even worse regarding the US Dollar, in 2001, 1 US Dollar bought you CHF 1.82, today it's only CHF 0.76.

Back up over 1.10 after the Swiss national bank intervened a little today with announcements and interest rate directions.

thet are too scared to intervene directly as they lost billions earlier this year trying to help the currency

Considers swiss franc to be massively overvalued at present
Current strength of swiss franc is threatening development of the economy
Current strength of swiss franc increasing the downside risks to price stability in Switzerland
Narrowing target range for 3-month libor from 0.00-0.75% to 0.00-0.25%
Aiming for a 3-month libor as close to zero as possible
Will very significantly increase the supply of liquidity to the swiss franc money market over the next few days
Intends to expand banks’ sight deposits at the SNB from currently around CHF 30 bln to CHF 80 bln
Will no longer renew repos and SNB bills that fall due and will repurchase outstanding SNB bills
Since SNB’s last quarterly monetary policy assessment, the global economic outlook has worsened
At the same time the appreciation of the swiss franc has accelerated sharply during last few weeks
Consequently, the outlook for the swiss economy has deteriorated substantially
Keeping a close watch on developments on the foreign exchange market
Will take further measures against the strength of the swiss franc if necessary

http://www.forexlive.com/blog/2011/08/03/snb-to-take-measures-against-strong-swiss-franc/

DCon

03-08-2011, 02:29 PM

Back up over 1.10 after the Swiss national bank intervened a little today with announcements and interest rate directions.

thet are too scared to intervene directly as they lost billions earlier this year trying to help the currency

http://www.forexlive.com/blog/2011/08/03/snb-to-take-measures-against-strong-swiss-franc/

Respite over..

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/draghi/snb.jpg

http://www.zerohedge.com/news/swiss-national-bank-intervention-epic-fail-2

TotalMayhem

03-08-2011, 09:19 PM

Back up over 1.10 after the Swiss national bank intervened a little today with announcements and interest rate directions.

The frame in which the Swiss can intervene is very narrow, mind you, they still have to redeem a certain percentage of their currency in gold, which saw a massive hike on the market today, almost $1,670 today, compared to $1,625 yesterday.

Dr. FIVE

03-08-2011, 09:58 PM

Brian Lucy posted this earlier worth a read. Only 3 pages

http://www.econ.berkeley.edu/~eichengr/can_euro_area_7-23-11.pdf

Can the Euro Area Hit the Rewind Button?

With benefit of hindsight, it is easy to conclude that Europe’s leap to monetary union was a mistake. Creating a single currency without also creating a single bank regulator, an emergency lender, and a credible set of fiscal rules gave Europe a common monetary house without a foundation. Europe acquired shiny coins and elegant banknotes but not the other elements of a workable monetary union. The need for these other elements may have been understood, but the national governments participating in the monetary union refused to cede sovereignty over their banking, financial and fiscal policies. Now they are paying the price.

yehbut_nobut

03-08-2011, 11:47 PM

Debt-laden Italy is likely to default, but Spain might just avoid it, according to the British think-tank, the Centre for Economics and Business Research.

With the countries weighed down by debt, the think tank modelled "good" and "bad" economic scenarios for both.

It found that Italy will not avoid default unless it sees an unlikely big jump in economic growth....
"Even if the cost of borrowing goes back down to 4%, the growth rate is so anaemic that we see the debt-GDP ratio remaining at 123% in 2018," said Doug McWilliams, the CEBR's chief executive.

The conditions in Spain are better because its debt is much lower. Even under the "bad" scenario, Madrid's debt ratio would climb to no higher than 75% of national output.

"Fingers crossed but there is a real chance that Spain may avoid default and debt restructuring, unless it gets dragged down by contagion," Mr McWilliams said.

"Realistically, Italy is bound to default, but Spain may just get away without having to do so," he said.

http://www.bbc.co.uk/news/business-14396557

Now Here's Who Gets Smashed If Italy Goes Kaboom –
(http://www.businessinsider.com/whose-heads-will-roll-if-italy-goes-bust-2011-8?op=1#ixzz1U0PTaPNo)

Greek banks hold $700 million in Italian debt
Source: NY Times, Reuters

Portuguese banks own $5.2 billion in Italian debt
Source: NY Times, Reuters

Belgian banks hold $25.8 billion in Italian debt
Source: NY Times, Reuters

American banks hold $36.7 billion in Italian debt
Source: NY Times, Reuters

Japanese banks hold $40.6 billion in Italian debt
Source: NY Times, Reuters

Dutch banks own $45.3 billion in Italian debt
Source: NY Times, Reuters

Irish Banks hold $46 billion in Italian debt
Source: NY Times, Reuters

Spanish banks own $47 billion in Italian debt
Source: NY Times, Reuters

British banks own $77 billion in Italian debt
Source: NY Times, Reuters

German banks own $190 billion in Italian debt
Source: NY Times, Reuters

French banks own $511 billion in Italian debt
That's 20% of France's GDP and more than two times as much as Greece owes everyone.
Source: NY Times, Reuters

We're bad, but France - Gulp!

Sidewinder

04-08-2011, 12:07 AM

Brian Lucy posted this earlier worth a read. Only 3 pages

http://www.econ.berkeley.edu/~eichengr/can_euro_area_7-23-11.pdf

Can the Euro Area Hit the Rewind Button?

This was all drearily obvious and predictable...

The politicians and all their little helpers just can't stop their instinctive reaction. In times of crisis, find a way to meddle, interfere, Something Must Be Done....there's empires to build and jobs under political control to be created, get with the program, there is no alternative...blah blah blah.

It was always the case when the euro was created in such a half-assed way that they were just itching for the first major crisis in order to ram through the other half of the project, which they knew they would never get past the electorates in any other fashion.

It's the fundamental dishonesty of the Eurotrons going all the way back to Maastricht that turned me from agnostic to hostile on the entire deal. If it requires deceit lies manipulation and cover-up to advance its agenda then it can't be good.

unspecific

04-08-2011, 12:54 AM

Has anyone read this guy? Great graph and explanations.

http://yanisvaroufakis.eu/2011/08/04/why-italy-why-spain-and-why-the-efsfs-size-does-not-matter/

It looks like Italy is the tipping point alright. That post above showing such French exposure, and Belgian/Dutch means that the eurozone... won't be able to survive an Italian bailout.

Will the solution be a referendum in October handing fiscal powers to a new EU treasury+creating ECB eurobonds? Is there any other solution?

Perhaps a continuation of the pattern would be a World Financial Stability Fund..!

Count Bobulescu

04-08-2011, 03:09 AM

http://www.bbc.co.uk/news/business-14396557

Now Here's Who Gets Smashed If Italy Goes Kaboom –
(http://www.businessinsider.com/whose-heads-will-roll-if-italy-goes-bust-2011-8?op=1#ixzz1U0PTaPNo)

We're bad, but France - Gulp!

Using the information provided, by my calculation, Ireland would seem to be THE MOST EXPOSED country to Italian debt relative to GDP and size of tax bases. France is on the hook for about 11 times the amount Ireland is, but has a population about 14 times the size of Ireland. The least exposed countries are the ones that come before Ireland in the table. All have larger populations. Portugal with nearly three times the population only has only one ninth of the exposure, so they are 25-27 times better off than Ireland. USA with 70 times the population of Ireland is on the hook for less. And, unlike in other countries, where the taxpayer does not own the banks to anything like the same degree, The Irish taxpayer owns……….

I’ve noted before, that in my view Business Insider is not a reliable source of quality information. They are the Sun/NOTW of biz info. If they were any good they’d have given the simple analysis I just did. They are an aggregator just like HuffPo.

C. Flower

04-08-2011, 04:11 AM

This was all drearily obvious and predictable...

The politicians and all their little helpers just can't stop their instinctive reaction. In times of crisis, find a way to meddle, interfere, Something Must Be Done....there's empires to build and jobs under political control to be created, get with the program, there is no alternative...blah blah blah.

It was always the case when the euro was created in such a half-assed way that they were just itching for the first major crisis in order to ram through the other half of the project, which they knew they would never get past the electorates in any other fashion.

It's the fundamental dishonesty of the Eurotrons going all the way back to Maastricht that turned me from agnostic to hostile on the entire deal. If it requires deceit lies manipulation and cover-up to advance its agenda then it can't be good.

Yes, the thin end of the wedge has got progressively thicker.

I think the EFSF was a spoof, originally, like the Irish Bank Guarantee and the participants didn't expect to actually have to pay up. I said so at the time. Yanis V.'s article also says as much. Like the Irish Guarantee, if implemented the EFSF would wipe the participants out. Yanis V. wants a Eurobond and I hear Philip Lane saying European debt was "manageable" if shared around Europe. He seems to live in a bubble and have no notion of politics and he cost to peoples' lives. The German working and middle classes took a hit on their living standards 10 years ago. They will not be happy to pay off other peoples' debt. An economic union of Europe, without an equal social and political union, would be a disaster, liable to fracture. Given that the EU project was one entered into by separate capitalist states, all wanting to benefit themselves at others expense and to jointly knock back the rights and benefits gained post war by social democracy and trade unionism, that isn't going to happen. Yanis' eurobond just seems to be a bigger, better, Guarantee, that doesn't anwer the problem of the debt.

The US debt is now becoming a real problem, with China getting very jumpy about the potential for the collapse of the dollar. Other countries, who have healthier economies so far, are now panicking about hot money seeking a refuge in their currency, driving it up and making their exports unaffordable. The indebted, bankrupt countries are trying to restore value to their economies by cutting social spending and wage cutting, driving up the rate of exploitation of people working. This is simply not working, but making indebtedness worse.

It is a situation with a risk of war in it, downstream. The alternative is simply to stop playing the profit game and to make stuff for use, in planned economies with fair trade agreements.

Captain Con O'Sullivan

04-08-2011, 05:44 AM

If Ireland's banks are exposed to Italian debt alone at 48billion then I wonder what exposure Irish banks carrying in the other large and medium sized economies.

Also it occurs to me that this is a heavy clue that Irish banks have been trading way beyond their rational or permitted liquidity ratios.

If this sort of debt held by Irish banks is replicated around Europe then by definition the banks have obviously and historically been trading way beyond their capability to absorb losses.

barrym

04-08-2011, 09:14 AM

The German working and middle classes took a hit on their living standards 10 years ago. They will not be happy to pay off other peoples' debt. An economic union of Europe, without an equal social and political union, would be a disaster, liable to fracture. Given that the EU project was one entered into by separate capitalist states, all wanting to benefit themselves at others expense and to jointly knock back the rights and benefits gained post war by social democracy and trade unionism, that isn't going to happen.

+100 That is the real crux, Germany, i.e. German pols, i.e. Merkel, won't allow what they call a resource transfer model for the €, where their money gets used by wasters like us. This is very different to the Germans supporting the ECB, where they insist on inflation control as the only policy. Any common currency/monetary union that would require the well off to support the less well off is not on the German agenda.

Meanwhile the pundits (or at least that arch capitalist that morning ireland uses) push on with their 'fiscal common market' agenda - thus ensuring, in the short term, a German based guarantee for their betting. The only change they see possible is what is called the "N€uro" the Northern members (I assume not including us) split off from the others. This is even better for the spivs - only the rich and famous in the market, rampant capitalism for all.....

The US debt is now becoming a real problem, with China getting very jumpy about the potential for the collapse of the dollar. Other countries, who have healthier economies so far, are now panicking about hot money seeking a refuge in their currency, driving it up and making their exports unaffordable. The indebted, bankrupt countries are trying to restore value to their economies by cutting social spending and wage cutting, driving up the rate of exploitation of people working. This is simply not working, but making indebtedness worse.

Yes, part of the wider issues, rampant free market gambling by dealers ensures that everyone's economy is under pressure.

I'm reading "Prosperity without growth" by Tim Jackson, a little bit 'knitted' and maybe a little bit naive, but a source of really interesting data about the consequences of the headlong pursuit of growth as the only objective of the present economic policies. I don't suppose it is required reading in the Dept of Finance or the ECB, and certainly not in the City of London.

Video here -
‪Tim Jackson's economic reality check‬&rlm; - YouTube

I am more than ever glad that I won't be around for the inevitable war(s) that will be the outcome of the the present mess, viz Putin's latest diatribe against US monetary policy, but I worry terribly about the future of my children and grandchildren.

C. Flower

04-08-2011, 09:46 AM

Currency is based on trust. People have trusted the Dollar & the Euro as a form of payment. But maybe the Dollar has been trusted 14 Trillion times too many worldwide. The Euro is worth whatever it is worth minus the debts of the PIIGS and others. It's the old DM and a few Francs thrown in.

My guess is that the Dollar will collapse taking a few other currencies with them and the Euro will be devalued significantly but won't disappear.

Some currency will survive to take the place of the dollar as you mentioned, but it will buy you a lot less precious metal than the dollar does at the moment. Those with money are converting to gold and will purchase the new preferred reserve currency when it emerges in due course.

Interesting times:)

A heard someone yesterday estimate that gold would be 5,000 dollars an ounce, if correctly priced against the currency, if it were to revert to the gold standard.

In theory, the US holds a lot of gold.

Of course, India, the fastest growing economy and population, is full of the stuff. Everyone who has a spare cent buys it as jewelry.

I doubt if Ireland has had much since the rivers were panned back in the days of Tara.

A reversion to gold backed currencies would mean increased, not reduced, global imbalances, and a horrible contraction of economies.

The US has dominant military power, and is the reserve currency, able to print dollars at will, but the Chinese sent a message to the US two days ago wanting to talk very seriously about dollar devaluation (given that their profits/savings are substantially in dollars).

A Chinese ratings agency downgraded the dollar the day before yesterday.

When the big bond repayments fall due in September, it's hard to see that they can all be paid.

TotalMayhem

04-08-2011, 10:17 AM

I doubt if Ireland has had much since the rivers were panned back in the days of Tara.

You're wrong here, plenty gold in Monaghan (http://www.examiner.ie/business/kfmhidgbojau/). ;)

Everyone who has a spare cent buys it as jewelry.

Jewelry is a rather stupid investment, bullion or coins make much more sense. Silver and gold CombiBars are quite popular these days.

http://i.imgur.com/V6suQ.jpg

C. Flower

04-08-2011, 10:37 AM

You're wrong here, plenty gold in Monaghan (http://www.examiner.ie/business/kfmhidgbojau/). ;)

Jewelry is a rather stupid investment, bullion or coins make much more sense. Silver and gold CombiBars are quite popular these days.

Not when people have been buying and hoarding for generations.

For national holdings, there is a list here of who has what. I don't know how reliable it is.

http://en.wikipedia.org/wiki/Gold_reserve

But it in not, in any case, a solution to the crisis. It is inconceivable to think of a capitalist world economy in which currencies are tied to gold. That collapsed back in the 1970s at Bretton Woods. The can has been being kicked, one way or another, down the road and has landed "where we are".

TotalMayhem

04-08-2011, 10:46 AM

For national holdings, there is a list here of who has what. I don't know how reliable it is.

We'll never know how much of this is actually "paper gold" or certificates. The LBMA is running a nice "fractional reserve" Ponzi scheme, making gold from thin air to keep the gold price artificially low. I hear, they had some trouble with deliveries of real gold lately. :D

DCon

04-08-2011, 11:02 AM

We'll never know how much of this is actually "paper gold" or certificates. The LBMA is running a nice "fractional reserve" Ponzi scheme, making gold from thin air to keep the gold price artificially low. I hear, they had some trouble with deliveries of real gold lately. :D

There are rumours of a Gold margin hike tomorrow.

Should be good for $20 - $40 decrease in price if true

There’s a bit of buzz about that tomorrow may see a hike in the Gold margin requirements. If true, this is likely to see some reasonable size liquidations, and put a dampener on the recent rush into the metal on safe haven demand.

http://www.forexlive.com/blog/2011/08/04/gold-margin-hike-rumour/

Apjp

04-08-2011, 11:34 AM

A heard someone yesterday estimate that gold would be 5,000 dollars an ounce, if correctly priced against the currency, if it were to revert to the gold standard.

In theory, the US holds a lot of gold.

Of course, India, the fastest growing economy and population, is full of the stuff. Everyone who has a spare cent buys it as jewelry.

I doubt if Ireland has had much since the rivers were panned back in the days of Tara.

A reversion to gold backed currencies would mean increased, not reduced, global imbalances, and a horrible contraction of economies.

The US has dominant military power, and is the reserve currency, able to print dollars at will, but the Chinese sent a message to the US two days ago wanting to talk very seriously about dollar devaluation (given that their profits/savings are substantially in dollars).

A Chinese ratings agency downgraded the dollar the day before yesterday.

When the big bond repayments fall due in September, it's hard to see that they can all be paid.

No country in the world has nearly as much mineral wealth as ireland via silver, zinc and some harder to reach gold. As we also have an underground saudi arabia you can see why the bankers contrived our economic collapse after the lesser collapse of 2000.

Sent from my GT-I5500 using Tapatalk

Captain Con O'Sullivan

04-08-2011, 11:50 AM

True. Irish leprechauns with their little baskets of gold are the new masters of the universe.

C. Flower

04-08-2011, 11:51 AM

DCon and TM - would you explain "paper gold" and "the gold margin" for the uninitiated (me) ?

DCon

04-08-2011, 11:57 AM

DCon and TM - would you explain "paper gold" and "the gold margin" for the uninitiated (me) ?

Paper Gold is trading on Gold derivatives (essentially trading on the gold price without any gold changing hands).

This type of trading is typically done on margin so you are allowed buy/sell 10/20/50 times the value of cash you have in your account.

If the margin increases, you either need to boost the cash in your account or close some of your trades so typically a margin increase will see a lot of open trades closed.

bolshevik

04-08-2011, 12:03 PM

C. Flower

04-08-2011, 12:09 PM

TotalMayhem

04-08-2011, 12:11 PM

TM - would you explain "paper gold"

Plain and simple:

What is "Paper Gold"?

The term paper gold means you have a piece of paper acting as a substitute for the physical gold. With paper gold, you don't own the gold; you own a promise to receive physical gold. In plain English, it means you are a creditor of the corporation issuing the paper gold certificate, thus subject to counterparty risks. Owning the physical gold has no counterparty risk and is fully under your control.

Here's an in depth analysis as to how the scheme works:

LBMA Operates a Fractional Reserve Gold System (http://www.gata.org/node/8247)

And these folks do play hard ball:

You Don't Mess With The LBMA - Assassination Attempt On Silver Market Manipulation Whistleblower? (http://www.zerohedge.com/article/you-dont-mess-lbma-assasination-attempt-silver-market-manipulation-whistleblower)

C. Flower

04-08-2011, 12:14 PM

Plain and simple:

Here's an in depth analysis as to how the scheme works:

LBMA Operates a Fractional Reserve Gold System (http://www.gata.org/node/8247)

And these folks do play hard ball:

You Don't Mess With The LBMA - Assassination Attempt On Silver Market Manipulation Whistleblower? (http://www.zerohedge.com/article/you-dont-mess-lbma-assasination-attempt-silver-market-manipulation-whistleblower)

Thanks. So they may be "selling" you gold they don't own ?
If no-one minds, I'll move these posts across to the "Goldwatch" thread.

TotalMayhem

04-08-2011, 12:21 PM

Thanks. So they may be "selling" you gold they don't own ?

No, they don't sell you gold at all, only a piece of paper that you may redeem for real gold* or trade.

I estimate that as much as 50,000 tonnes of gold has been sold that does not exist. That is equivalent to all the gold reserves in the world that are yet to be mined, or put another way, 25 years of gold production. That is the grand-daddy of all short positions! The fractional reserve operation of the LBMA is likely to be the next Madoff scandal, except multiplied by 100…a 5 trillion dollar fraud as opposed to a 50 billion dollar fraud.

says Adrian Douglas: LBMA OTC Market – “Alchemists” Turn Paper into Gold (http://www.zerohedge.com/article/exposing-london-bullion-market-association)

* And who would want to store a large amount of gold rather unsecured at home? I remember a case being reported not too long ago at ZH that the LBMA couldn't make good on the promise of a large delivery not too long ago, quite embarrassing.

DCon

04-08-2011, 12:23 PM

Is this like the kind of trading that saw a NY trader have to accept delivery of a few hundred tonnes of sugar last year, when caught holding the "promise to buy" or is it a Paddy Powers game with no link to any actual gold ?

It can be both.

Paddy Power or Delta index offer spread betting. I assume they have derivatives backing the spread betting participants but the person trading/betting has no involvement other than the price.

Spread betting and CFD's are not allowed in the States so Silver and Gold there is traded with Options, Futures, ETF's (exchange traded funds) and was formerly traded on the FX Market. The FX Market trading was recently closed for Gold and Silver over there though.

C. Flower

04-08-2011, 01:03 PM

It can be both.

Paddy Power or Delta index offer spread betting. I assume they have derivatives backing the spread betting participants but the person trading/betting has no involvement other than the price.

Spread betting and CFD's are not allowed in the States so Silver and Gold there is traded with Options, Futures, ETF's (exchange traded funds) and was formerly traded on the FX Market. The FX Market trading was recently closed for Gold and Silver over there though.

I'm still not 100% clear, but I am taking it that "trading on the margins" does mean that you can be forced to take delivery, and there is a real connection with actual gold ? I am asking this because bolshevik suggested that these trades were just "betting on price" and not a purchase / contract to buy goods.

I think it is important to be clear about this, as otherwise the idea can come about that the market is some kind of bingo hall, totally irrational.
This is not the case: it trades in real things, and supply and demand are the main determinants of price (generating periodic price bubbles and collapses). Underlying that is the real value, or not, of the thing traded.

I'm also assuming that "spread betting" is a fake product - it is just like betting on a snail race. It gives you no rights over the winning or losing snail :)

TotalMayhem

04-08-2011, 01:08 PM

You'd be tarred, feathered and run out of town on a rail if you try that in a bingo hall!!! :D

DCon

04-08-2011, 01:17 PM

I'm still not 100% clear, but I am taking it that "trading on the margins" does mean that you can be forced to take delivery, and there is a real connection with actual gold ? I am asking this because bolshevik suggested that these trades were just "betting on price" and not a purchase / contract to buy goods.

I think it is important to be clear about this, as otherwise the idea can come about that the market is some kind of bingo hall, totally irrational.
This is not the case: it trades in real things, and supply and demand are the main determinants of price (generating periodic price bubbles and collapses). Underlying that is the real value, or not, of the thing traded.

I'm also assuming that "spread betting" is a fake product - it is just like betting on a snail race. It gives you no rights over the winning or losing snail :)

The big ETF's (SLV and GLD) are reportedly backed by physical gold and silver holdings but this is doubted in some quarters. SLV and GLD can be traded like stocks.

Trading Options gives one the Option (but does not compel one) to buy the underlying good. Most Options trading is just dome on the price though and the physical does not change hands.

Spread betting is just speculating on the price change.

It is largely speculated that the explosion in Gold and Silver derivatives is keeping the price of the physical metals artificially low. A lot of folk have the opinion that if you cannot touch it you don't own it.

Apjp

04-08-2011, 02:00 PM

True. Irish leprechauns with their little baskets of gold are the new masters of the universe.

Thats eerily accurate concerning the gung hos in charge of robbing monaghans gold..

Sent from my GT-I5500 using Tapatalk

Apjp

04-08-2011, 02:11 PM

The big ETF's (SLV and GLD) are reportedly backed by physical gold and silver holdings but this is doubted in some quarters. SLV and GLD can be traded like stocks.

Trading Options gives one the Option (but does not compel one) to buy the underlying good. Most Options trading is just dome on the price though and the physical does not change hands.

Spread betting is just speculating on the price change.

It is largely speculated that the explosion in Gold and Silver derivatives is keeping the price of the physical metals artificially low. A lot of folk have the opinion that if you cannot touch it you don't own it.

Cass I studied this as well and I might do a masters in finance in dit if I can afford it later on. Dcon describes it perfectly except you can also buy and sell the right to buy(the option) as well as hedging against it(price securitisation) or at an equal risk, buy a very expensive cds which insures against default which youd be relying on the american taxpayer for. Once you get round the jargon its very simple.

Sent from my GT-I5500 using Tapatalk

TotalMayhem

04-08-2011, 03:14 PM

There are rumours of a Gold margin hike tomorrow.

Should be good for $20 - $40 decrease in price if true

Up another tenner today: $1,679.50 (+ $10.25)

TotalMayhem

04-08-2011, 03:17 PM

And the Swiss "market intervention" yesterday didn't do much good either, the Euro is down to CHF 1.08 again.

DCon

04-08-2011, 03:20 PM

The Bank of New York are now charging institutional customers a fee to lodge cash..

If you are a large institution with cash on deposit at Bank of New York, you are going to be charged a fee to keep your money on the sidelines…

http://www.forexlive.com/blog/2011/08/04/bony-goes-to-negative-rates/

Anglo/Irish Permanent should offer to take it for no fee and give the cash to failed developers. What could go wrong?

PaddyJoe

04-08-2011, 03:24 PM

French stock exchange now halted for 'technical reasons'

C. Flower

04-08-2011, 04:03 PM

French stock exchange now halted for 'technical reasons'

Italian banks and stock market also stopped today.

Judas

04-08-2011, 04:17 PM

Let's see what tomorrow brings

http://www.breakingnews.ie/business/market-plunge-wipes-50bn-off-ftse-515391.html

C. Flower

04-08-2011, 04:19 PM

Let's see what tomorrow brings

http://www.breakingnews.ie/business/market-plunge-wipes-50bn-off-ftse-515391.html

Global stock markets suffered again today with nearly £50bn (€57bn) being wiped from the value of London’s FTSE 100 Index.

The collapse in shares prices comes as investors panic that America could slide back into recession and Italy and Spain may need bailouts.

The FTSE 100 Index fell 191.4 points, or 3.4%, to 5393.1, losing £49.8bn from its value.

There has been a similar bloodbath on markets across the globe as the Dow Jones Industrial Average in the US, the CAC 40 in France and the DAX in Germany all plunged.

The Dow Jones in the US was down nearly 3% in early trading with Germany's Dax closing 3.4% lower and the French Cac closing nearly 4% lower.

Fears about the global economy intensified today after European Commission President Jose Manuel Barroso warned that the sovereign debt crisis is spreading and issued a rallying call to European leaders to give their “full backing” to the eurozone.

Read more: http://www.breakingnews.ie/business/market-plunge-wipes-50bn-off-ftse-515391.html#ixzz1U4sYraTk

Trans. Would they please come back from holiday and show some interest.

TotalMayhem

04-08-2011, 04:32 PM

SPIEGEL ONLINE has gone into panic mode as well :D

http://i.imgur.com/Wpjtk.jpg

TotalMayhem

04-08-2011, 07:59 PM

It seems the Dow Jones (http://www.google.com/finance?client=ob&q=INDEXDJX:DJI) is taking the biggest hammering of them all today... down 512.76 (-4.31%) .

Edo

04-08-2011, 08:18 PM

even gold is down 1% today! - oil has taken a battering too.

Yep the herd is full stampede mood today - tho if you're asking me what is so different today than,say, 2 weeks or 1 month ago - I'd be hard pushed to tell you.

- like the 24 news channel and the instant immediacy of news ,often without any degree of context at all - the automation of stock exchanges,the handing over to computer programmes and algorthymns of the vast majority of transactions, the instant transmission of bits of information, and the concentration on short-term numbers has a lot to answer for - a lot of this selling off was triggered by minute movements of shares,FX, bonds and commodity prices going below a certain number and then snowballing.................

its no way to run a railroad I'll tell ya

On the brighter side of things I caught the biggest salmon of my life - a 23lb fish on the Barrow this evening - and because I was fishing for perch - and taking salmon from the Barrow is currently forbidden - I gave a her a pat - and let her back into the river (I must be the only law-abiding gobsh^te in the country!) to continue her travels up to somewhere up country around Cactus Flowers neck of the woods where she will hopefully spawn in the autumn.................

TotalMayhem

04-08-2011, 08:23 PM

even gold is down 1% today!

No way! + $10.25 (+0,61%)

Edo

04-08-2011, 08:29 PM

No way! + $10.25 (+0,61%)

ahem - maybe Im reading it wrong - but a minus is a minus?

http://www.kitco.com/charts/livegoldnewyork.html

http://goldprice.org/

C. Flower

04-08-2011, 08:31 PM

homer

04-08-2011, 08:41 PM

Congrats EDO on your 23 lb salmon - great catch, especially if you were only set up for perch

TotalMayhem

04-08-2011, 08:42 PM

ahem - maybe Im reading it wrong - but a minus is a minus?

http://www.kitco.com/charts/livegoldnewyork.html

http://goldprice.org/

LBMA (http://www.lbma.org.uk/pages/index.cfm?page_id=46&title=current_statistics) closed at $1,679.50

Edo

04-08-2011, 08:47 PM

Congrats EDO on your 23 lb salmon - great catch, especially if you were only set up for perch

cheers homer

Yeah - 15lb mainline - 6lb leader and a medium yellow Tazmanian devil - took me 50 minutes to finally wear her out - she ran and ran and ran - dragged me about 400 metres up and down the riverbank - well worth it in the end tho - pity the camera was at home!

Edo

04-08-2011, 08:55 PM

LBMA (http://www.lbma.org.uk/pages/index.cfm?page_id=46&title=current_statistics) closed at $1,679.50

fair enough TM - its carnage in the states at the moment - your username is quite apt! - the msnbc guys will be hitting the liqour hard after the market closes tonight I'll bet.

Rumours of an Italian default are floating around - hard to believe at the moment

In a way what is really happening is that the markets are adjusting to reality again - that this economic crisis is not over for the majority of the citizens in the west - the markets, particularly in the states "recovered" their pre 2007 prices way too fast for my liking - maybe betting that economic recovery was coming before it had begun - betting on a future that hasn't materialised yet -betting on a future that was going to be exactly the same as the previous boom - it wont be - it took the bones of 30 years for the NYSE to recover after the Great Depression - this correction was way overdue.

In a way we are reliving that again - the equity losses of the Wall street crash of 1929 had been clawed back by May 1930 - but it was the ramifications in the banking sector - banks going bust in domino style from one continent to another -that caused the great depression and by 1932 had seen wall street drift back down gradually as opposed to the abseiling of 1929.

TotalMayhem

04-08-2011, 08:59 PM

DCon posted this last night:

There are rumours of a Gold margin hike tomorrow.

Should be good for $20 - $40 decrease in price if true

This could be the explanation, however, the Gold price seems to have recovered from today's low in NY (when the LBMA was closed already):

High: 1683.30
Low: 1639.30

Closed at: 1647.30

Let's see how it goes tomorrow then.

C. Flower

05-08-2011, 12:29 AM

I read this two days ago, and lost track of it. Global manufacturing has fallen back to 2009 levels.
http://www.zerohedge.com/news/global-manufacturing-collapses-worst-levels-mid-2009-markets-shrug-it

Apjp

05-08-2011, 12:45 AM

C. Flower

05-08-2011, 12:53 AM

Ah Well

05-08-2011, 01:09 AM

http://www.thesun.co.uk/sol/homepage/news/3733375/Spooky-face-appears-in-clouds.html What do others see in the photo and video? Its a video with 80k hits since monday of a man's face apparently in the clouds. I see a man in the gallows. I'd imagine a few spooked out people will reach for the bible after reading and watching this. It's the most inexplicable thing ive ever seen, Its up there historically with the da vinci predictions of helicopters and cars, and nostradamus predicting the rise of Hitler.

Viewers questioned whether the formation was a message from God.

:rolleyes:

But this one ...

One said: "For real, i don't believe in god or anything, but it sure looks like him."

http://www.google.ie/url?source=imglanding&ct=img&q=http://wineberserkers.com/images/smilies/rofl.gif&sa=X&ei=oEI7TtbnNsW4hAfq_7CxAg&ved=0CAUQ8wc&usg=AFQjCNHbX-90PCkFx9ZydTzkYltQU2FWkQ

Griska

05-08-2011, 01:11 AM

Viewers questioned whether the formation was a message from God.

:rolleyes:

But this one ...

One said: "For real, i don't believe in god or anything, but it sure looks like him."

http://www.google.ie/url?source=imglanding&ct=img&q=http://wineberserkers.com/images/smilies/rofl.gif&sa=X&ei=oEI7TtbnNsW4hAfq_7CxAg&ved=0CAUQ8wc&usg=AFQjCNHbX-90PCkFx9ZydTzkYltQU2FWkQ

Oh, that is beautiful:D

Apjp

05-08-2011, 01:25 AM

‪Israelis Chant: "Mubarak, Assad, Bibi Netanyahu"‬&rlm; - YouTube http://www.bloomberg.com/news/2011-08-05/japan-stocks-plunge-most-since-march-amid-global-equities-rout.html Serious blog round up of the weeks news tomorrow night..

Apjp

05-08-2011, 01:26 AM

You didn't say it was Canada...

Does it matter? It doesn't look doctored to me. As far as I am concerned it's the closest thing to God anyone will see-doesnt mean it isn't spooky.

TotalMayhem

05-08-2011, 05:42 AM

It seems the "carnage" has reached the Asian and Australian stock markets this morning.

TotalMayhem

05-08-2011, 06:18 AM

High: 1683.30
Low: 1639.30

Closed at: 1647.30

Let's see how it goes tomorrow then.

Whatever the impact of the rumoured margin hike on the gold price, it sure is on the way up again, $1,662 this morning.

DCon

05-08-2011, 06:51 AM

Whatever the impact of the rumoured margin hike on the gold price, it sure is on the way up again, $1,662 this morning.

need to get this quick

IRISH scientists have struck gold in a deep-sea discovery that could yield a multi-million-euro mining boost.

The Irish-led team made the discovery 3km down on the Atlantic ocean floor by identifying a field of volcanic vents spewing up rare metals from the earth's core.

Backed by the National Geographic Society, they discovered the new volcanic vent field in the mid-Atlantic between the Azores and Iceland.

While it is in international waters, Ireland's role in identifying and mapping the area will yield a key share in the available rare metal resources, including copper, gold, zinc and sulphides.

However, the capability of exploiting the rare metals will be some years away as technology is still being developed to cope with the enormous pressures at such sea depths.

http://www.independent.ie/national-news/gold-rush-under-the-ocean-for-irish-team-2840579.html

TotalMayhem

05-08-2011, 07:02 AM

It seems the IMF got their hands on this Island just right in time :D

DCon

05-08-2011, 07:05 AM

Italian banks down by about 10% at the open.

Deutsche Bank down 4%

Interesting day ahead

C. Flower

05-08-2011, 07:06 AM

The Nikkei and S. Korean markets have fallen by nearly 4%.

The impact of the earthquake on the world economy is only being mentioned in passing, but in itself is serious.

Japan and China are calling for talks...

http://bit.ly/neqMDU

C. Flower

05-08-2011, 07:11 AM

FTSE plunging even further. 3.22% down.

http://twitter.com/jsphctrl

Looks like intervention in EURCHF, USDCHF

RT @MargaretEWard: RT @randomirishnews: China, Japan urge global talks on EU/US economic crisis http://viigo.im/6NAo

http://english.yonhapnews.co.kr/news/2011/08/05/0200000000AEN20110805006000320.HTML

FTSE opened 2.5% down on yesterday.

TotalMayhem

05-08-2011, 07:13 AM

Interesting day ahead

http://i.imgur.com/KHzPs.jpg

C. Flower

05-08-2011, 07:14 AM

Are we STILL pouring our last NTMA funds into overcapitalising Irish banks "for sale" ?

Can anyone see a queue of buyers ?

TotalMayhem

05-08-2011, 07:18 AM

Live view (http://www.boerse-frankfurt.de/EN/index.aspx?pageid=168) from the trading floor in Frankfurt. :D

C. Flower

05-08-2011, 07:19 AM

Guy on RTE wants the ECB to act as central bank - doesn't say where it would get the cash from... It's not as though the UK and US don't have a problem.

barrym

05-08-2011, 07:28 AM

Paper Gold is trading on Gold derivatives (essentially trading on the gold price without any gold changing hands).
This type of trading is typically done on margin so you are allowed buy/sell 10/20/50 times the value of cash you have in your account.
If the margin increases, you either need to boost the cash in your account or close some of your trades so typically a margin increase will see a lot of open trades closed.

Thanks for the explanation, would I be right in thinking this is also known as speculation?? As I understand it one bets on the movement of gold pricing, opening and closing "trades" (a bit of a misnomer? since nothing is traded, i.e. bought and sold).

The reality is that 'the other side' i.e. those making the offers, are also trading the other way....

Not much related to the present crisis, except that this sort of activity is the cause of it.

I hear some guru yesterday suggest that the reason all this is happening in August is that many of the spivs are on holliers so a very much reduced number of trades results in bigger swings in the market. Would I be right in thinking this can be described as market manipulation??

B

barrym

05-08-2011, 07:41 AM

This is not the case: it trades in real things, and supply and demand are the main determinants of price (generating periodic price bubbles and collapses). Underlying that is the real value, or not, of the thing traded.

Aha, not true, theoretically yes, in reality no. The traders here bet on both sides of the deal and make their 'profit' on the minute differences between them. There is (normally) no real transfer of physical asssets if you have made an offer to buy and and offer to sell on the same asset....unless you forget one side of one deal and months later a fella turns up at yur office with a load of cow manure you bought..... serves ye right. :D

There used to be real trading on the floor of the Chicago board of trade, for example, where hog bellies and the like were bought and sold. There still is this sort of trading but the vast majority of what is happening now is done in darkened rooms on screens. These guys couldn't even point out Portugal on a a map, as I heard it described, but they trade Portuguese bonds....

C. Flower

05-08-2011, 07:41 AM

Thanks for the explanation, would I be right in thinking this is also known as speculation?? As I understand it one bets on the movement of gold pricing, opening and closing "trades" (a bit of a misnomer? since nothing is traded, i.e. bought and sold).

The reality is that 'the other side' i.e. those making the offers, are also trading the other way....

Not much related to the present crisis, except that this sort of activity is the cause of it.

I hear some guru yesterday suggest that the reason all this is happening in August is that many of the spivs are on holliers so a very much reduced number of trades results in bigger swings in the market. Would I be right in thinking this can be described as market manipulation??

B

Barry, I don't think this is being caused by behaviour of traders. It is true about the big swings, but at this stage I guess everyone is back off their desks and the market this morning still plummeted.

There are big problems of profitability, long term (over many decades) in the US and Europe, as production expands to outpace demand, and costs, including energy costs, have risen.

Attempts to maintain profits by dropping interest rates close to zero have created massive bubbles.

The reflex of the system now is to try to restore the average rate of profit by slashing living standards of workers, and by getting control of markets and natural resources through war or economic dominance. So there is a deflationary spiral.

Boom and slump has been a feature of capitalism from its beginning, but the global economy now is much bigger, more interconnected, and faster moving now, so the crash is bigger and faster too.

barrym

05-08-2011, 07:46 AM

[QUOTE=Edo;169150 (I must be the only law-abiding gobsh^te in the country!) [/QUOTE]

I sincerely hope not and a hearty thank you on behalf of those in this world who consider the continuation of species more important than the price of gold..... Good on ye.....

barrym

05-08-2011, 08:12 AM

Barry, I don't think this is being caused by behaviour of traders. It is true about the big swings, but at this stage I guess everyone is back off their desks and the market this morning still plummeted.

There are big problems of profitability, long term (over many decades) in the US and Europe, as production expands to outpace demand, and costs, including energy costs, have risen.

Attempts to maintain profits by dropping interest rates close to zero have created massive bubbles.

The reflex of the system now is to try to restore the average rate of profit by slashing living standards of workers, and by getting control of markets and natural resources through war or economic dominance. So there is a deflationary spiral.

Boom and slump has been a feature of capitalism from its beginning, but the global economy now is much bigger, more interconnected, and faster moving now, so the crash is bigger and faster too.

I would agree in principle with your analysis of the overall economics and it does account for the changes in the pricing of certain shares, those of companies who make things likely to be affected by the fact their customers are out of work, in the worst cases.

However, what we are seeing is also caused by traders hedging their bets. The figures we see and hear by the minute on the many instant news outlets are fed by the 'market screens' i.e. the price offers of the dealers, these in turn are created by fellas in back rooms watching their screens and moving their prices according to what they see and hear. If you've ever been on the trading floor of Wall St it is full of guys rushing about with terminals in their hands feeding back the offer prices from the dealers screens to their back rooms. Similarly in the trading rooms of banks and hedge funds, except that here they are also betting on future 'movements' based on their computer algorithms. You hear shouts of 'good level' all the time, meaning a number has reached a bet level so they sell, or buy depending on the bet.....

On the side of all this some shares in real companies are bought and sold, but even that trading is based on speculation of the possible effect of the general movement on their prospects.

It used to be based on reality, actual buying and selling related to what people made and bought as needed, not any more......

C. Flower

05-08-2011, 08:17 AM

I would agree in principle with your analysis of the overall economics and it does account for the changes in the pricing of certain shares, those of companies who make things likely to affected by the fact their customers are out of work, in the worst cases.

However, what we are seeing is also caused by traders hedging their bets. The figures we see and hear by the minute on the many instant news outlets are fed by the 'market screens' i.e. the price offers of the dealers, these in turn are created by fellas in back rooms watching their screens and moving their prices according to what they see and hear. If you've ever been on the trading floor of Wall St it is full of guys rushing about with terminals in their hands feeding back the offer prices from the dealers screens to their back rooms. Similarly in the trading rooms of banks and hedge funds, except that here they are also betting on future 'movements' based on their computer algorithms. You hear shouts of 'good level' all the time, meaning a number has reached a bet level so they sell, or buy depending on the bet.....

On the side of all this some shares in real companies are bought and sold, but even that trading is based on speculation of the possible effect of the general movement on their prospects.

It used to be based on reality, not any more......

Deep down, is reality, but I concede the relationship can be very elastic.

Food is an example. Last year wheat went up, not because there was a shortage, but because there was a bubble, as it became a fashionable "safe place" to put cash. But overall, supply and demand affects price.

But a world "rolling crash" on the scale we are seeing over the last couple of years, is a symptom of the underlying conditions.

Manufacturing is down across the world, and that in itself makes traders aware that there will be lower growth, less ability to pay - now there will be less investment and more redundancies - a vicious spiral.

Captain Con O'Sullivan

05-08-2011, 08:30 AM

Barry is right I think in that a mysterious and well fed black swan flies from market to market and its name is 'market sentiment'.

'Market sentiment' is called 'market abuse' when it is a deliberately fed rumour in order to affect a share price so that gambles can be cashed in.

We also have this weird semi-religious theory that market traders and dealers in investment bank dealing rooms are 'talented'. They are even referred to as the talent in the same way as Miriam O'Callaghan would be viewed by RTE as 'talent'.

That is very much a mirage as market dealers (and Miriam O'Callaghan) are just front-of-house blondes working to a template.

I recall the crash on October 87 when there was a camera crew doing some documentary filming at one of the big investment house dealing rooms and it was almost funny watching these young 20 and 30 year old 'talents' staring at the red taking over their screens and watching computer systems selling automatically in a market downward spiral- it showed that they were (a) not talented because they didn't or couldn't comprehend a rapidly falling market and (b) that they were not in control. The curtain was drawn back and there wasn't even a Wizard of Oz in control.

The only difference between then and now is that there is a certain actor in the market based around LLCs and LLPs whose best interests are served by destruction. They are the arms dealers of the financial warzones. It matters not to them whether a corollary of their shorting of currencies or indexes causes people to lose jobs and livelihoods.

Perhaps a better analogy would be as a wild west town where outlaws are actually encouraged by the town council to ride in every now and then and shoot everything up as it is activity that makes a town rather than peace for development.

Sooner or later they are going to shoot up the town council as well.

C. Flower

05-08-2011, 08:39 AM

China and Japan call for global cooperation -
http://www.reuters.com/article/2011/08/05/us-eurozone-idUSTRE7712HB20110805?feedType=RSS&feedName=topNews

Everyone guarantee everything ?

There is far too much paper out there not backed by anything of real value.

DCon

05-08-2011, 08:51 AM

have a read of this piece. The author is speculating that the Fed is behind this downturn, to force investors to buy US bonds

All of this led me to recall the first item I ever saw published by "Tyler Durden". Published on the day after Christmas in 2009, Tyler speculated on the source for U.S. government funding in 2010. A link to the entire post is below but here is a c&p of his main thesis:

"What options does this leave for the administration? Very few, and all of them are ugly. As we stated earlier on, the options for the Fed are threefold:

1) Announce a new iteration of Quantitative Easing. This will be met with major disapproval across all voting classes (at least those whose residential zip codes do not start with 10xxx or 068xx), creating major headaches for Obama and the democrats which are already struggling with collapsing polls.
2) Prepare for a major increase in interest rates. While on the surface this would be very welcome for a Fed that keeps hinting that deflation is the biggest concern for the economy, Bernanke's complete lack of preparation from a monetary standpoint (we are surprised the Fed's $200 million reverse repos have not made the late night comedy circuit yet) to a forced interest rate increase, would likely result in runaway inflation almost overnight. The result would be a huge blow to a still deteriorating economy.
3) Engineer a stock market collapse. Recently investors have, rightfully, realized there is no more risk in equities, not because the assets backing the stockholder equity are actually creating greater cash flow (as we demonstrated recently, that is not the case), but simply because taxpayers have involuntarily become safekeepers for the entire stock market, due to Bernanke's forced intervention in bond and equity markets. Yet the President's Working Group is fully aware that when the time comes to hitting the "reverse" button, it will do so. Will the resultant rush into safe assets be sufficient to generate the needed endogenous demand for Treasuries is unknown. It will likely be correlated to the size of the equity market drop.
If the Fed decides on option three, we fully believe a 30% drop (or greater) in equities is very probable as the new supply/demand regime in fixed income becomes apparent. We hope mainstream media takes the ideas presented here and processes them for broader consumption as indeed the Fed is caught in a very fragile dilemma, and the sooner its hand is pushed, the less disastrous the final outcome for investors. Then again, as Eric Sprott has been pointing out for quite some time, it could very well be that the US economy has become merely one huge Ponzi, and as such, its expansion or reduction on the margin is uncontrollable. We very well may have passed into the stage where blind growth is the only alternative to a complete collapse. We hope that is not the case.

I'll leave you tonight to draw your own conclusions. However, it does seem a bit coincidental that, just when treasury issuance begins anew at record levels, the world is suddenly, once again rushing toward the "safety" of U.S. government bonds. Oh, and remember, in the markets, there are no coincidences.

http://www.tfmetalsreport.com/blog/1917/it-has-be-said-so-ill-say-it

homer

05-08-2011, 09:15 AM

cap'n Conn

LLCs LLPs - what are these pls

TotalMayhem

05-08-2011, 09:33 AM

cap'n Conn

LLCs LLPs - what are these pls

LLP = Limited liability partnership
LLC = Limited liability company

Captain Con O'Sullivan

05-08-2011, 09:37 AM

Sorry homer- Limited Liability Companies and Limited Liability Partnerships- they are the most common corporate structure used by hedgefunders. Much of the time they describe a group of people as a corporate entity which is registered invariably in some tax haven like the Caymans.

It has become quite the thing for wealth funds managing wealthy families' money to register themselves as LLC's or LLP's.

One of the biggest hedgefund companies with an office in London (I say this very carefully) because they always try to imply they are British and big contributors to the UK economy when in fact they contribute nothing more than PRSI and income tax on their administration people salaries while the actual partners are invariably managed to have very little exposure to UK income tax were front and centre a couple of years ago in a Commons Committee hearing on short-selling and hedgefund activities. They love to point to the vast sums of money in play in their hedgefunds and allow people to assume that is all UK based activity and producing vast sums in tax income for the UK but nothing could be further from the truth.

They are the first to warn of moving operations overseas should any kind of tax appear on their activities and what politicians are (apparently) too stupid to check is that their funds are already registered for tax overseas in a haven.

Fugee

05-08-2011, 09:59 AM

There is a ECB announcement at 11 this morning?

Dr. FIVE

05-08-2011, 10:51 AM

http://28.media.tumblr.com/bLjlTcuJUlj7x84vKq87zxWto1_400.jpg

DCon

05-08-2011, 11:07 AM

There is a ECB announcement at 11 this morning?

Not that I can see.

Merkel and sarko are having an "emergency" phone call to decide what is the best thing to do.

C. Flower

05-08-2011, 11:08 AM

There is a ECB announcement at 11 this morning?

On RTE live streamed now.

ECB Said to Buy Bonds of Portugal, Ireland for Second Day to Counter Drop - Bloomberg bloom.bg/n65CMe via @BloombergNews

RTE had Varadker on as government spokesman on the economic crisis...

Noonan in his caravan ?

Fugee

05-08-2011, 11:09 AM

Not that I can see.

Merkel and sarko are having an "emergency" phone call to decide what is the best thing to do.

Ollie Rehn is giving the conference now. Apparently he is talking nonsenses, clearly there is a breakdown at the highest level in Europe, as what was planned to be announced was pulled.

TotalMayhem

05-08-2011, 11:13 AM

The Italian stock market is flying it... lotsa bailout money coming the banks way?

Fugee

05-08-2011, 11:13 AM

The Italian stock market is flying it... lotsa bailout money coming the banks way?

ECB are prob in buying.

DCon

05-08-2011, 11:50 AM

Rehn has come out with a classic

"Markets have not reacted as expected or hoped for to the July 21st Agreement"

http://www.dailyfx.com/real_time_news

TotalMayhem

05-08-2011, 11:53 AM

Rehn has come out with a classic

"Markets have not reacted as expected or hoped for to the July 21st Agreement"

http://i.imgur.com/wcSv9.gif

Is this EU Commissioner speak for, "Twas all for de birds"?

DCon

05-08-2011, 11:56 AM

Zerohedge on teh likely outcome for Italy and Spain

As both Italian and Spanish bond spreads continue slowly creeping wider toward the half a century territory, we are reminded once again that once both countries pass 450 bps, LCH will automatically hike collateral triggers for both countries, in essence initiating another waterfall effect whereby less cash is released upon repo, requiring more bonds to be pledged, which in turn means other assets have to be sold off to make up for the shortfall, which in turn leads to a sell off of the underlying financial institution (recall that banks in Europe buy their nation's sovereign debt and immediately pledge it back via various repo mechanisms) and so on. What this practically means is that the bond vigilantes now have a far more achievable task in terms of endgoals when it comes to punishing the offending debt, in this case Italy and Spain. Expect a prompt move to this appropriate level as debt holders start panicking what an extra margin demand will mean for them, and in turn try to lock up cash at current repo levels.

http://www.zerohedge.com/news/italy-and-spain-spreads-approaching-incremental-lch-margin-collateralization-trigger

PaddyJoe

05-08-2011, 09:17 PM

Some strong rumors around that S & P are going to downgrade the US tonight:eek:

Frankie Lee

05-08-2011, 09:27 PM

C. Flower

05-08-2011, 09:35 PM

Guest post by Hawkeye on Golem's blog
http://golemxiv-credo.blogspot.com/2011/08/guest-post-by-hawkeye-banks-victims-or.html

Good to be able to read stuff like that which tears right through all the bullsh1t unlike the mainstream media propaganda.

By "credit liberalisation", does he mean low interest rates ? Weak collateral ?

Interest rates were dropped to zero in the States because the economy was tanking.

I don't go along with looking for bad bankers and bad traders as the problem. The problem is surely in the way the system works itself ?

It only works when there is growth, as money is constantly invested and constantly required profit is made. So growth has to be driven at all costs - but then you get a bubble.

Fing Fers

05-08-2011, 09:42 PM

Rehn has come out with a classic

http://www.dailyfx.com/real_time_news

This is a load of horse****, whats next, Barroso lets a stinking fart so FTSE 100 drops down 6. bull %?

Surely world stock markets can go up / down without effecting the local joe on the street? Idiot EU heads cant be that stupid.

This is all makey up stuff to me, cause a problem create a solution. Fiscal Union here we come, the Germans finally win the war.

C. Flower

05-08-2011, 10:10 PM

This is a load of horse****, whats next, Barroso lets a stinking fart so FTSE 100 drops down 6. bull %?

Surely world stock markets can go up / down without effecting the local joe on the street? Idiot EU heads cant be that stupid.

This is all makey up stuff to me, cause a problem create a solution. Fiscal Union here we come, the Germans finally win the war.

There has never been a fiscal union that I know of, in which the centre collects without distributing as well. Unless you count the Roman Empire.

The Germans don't see why they should give their hard earned savings away to the PIIGS.

PaddyJoe

05-08-2011, 11:33 PM

So it looks like S&P are going to back down:

A senior administration official confirms to Business Insider (http://www.businessinsider.com/blackboard/business-insider) that S&P gave notice to the White House that it intended to downgrade the US AAA rating today. The official confirmed that the White House pushed back hard, claiming that S&P's analysis was off by "trillions," adding that S&P is "reconsidering."
The news was first reported by CNBC (http://www.businessinsider.com/blackboard/nbc), ABC (http://blogs.abcnews.com/politicalpunch/2011/08/govt-official-us-expecting-sp-downgrade.html), CNN (http://twitter.com/vplus/statuses/99613285095178240), and POLITICO (http://www.twitter.com/morningmoneyben) earlier this evening.

Read more: http://www.businessinsider.com/sp-aaa-rating-us-2011-8#ixzz1UCU9Bshf

Frankie Lee

05-08-2011, 11:58 PM

By "credit liberalisation", does he mean low interest rates ? Weak collateral ?

Interest rates were dropped to zero in the States because the economy was tanking.

I don't go along with looking for bad bankers and bad traders as the problem. The problem is surely in the way the system works itself ?

I don't know really, I presume both would come under the heading of credit liberalisation. Is the system not set up for and by bad bankers and traders though?

PaddyJoe

06-08-2011, 12:34 AM

Bingo. S&P have downgraded the US to AA+. It's had an AAA since 1917:eek::cool:
http://ftalphaville.ft.com/blog/2011/08/06/645176/sp-downgrades-the-usaaa-reuters/

Holly

06-08-2011, 01:33 AM

This is the first time the USA has been downgraded in the history of American rating agencies.
Unlike the Europeans, expect the United States to tell Standard and Poor's they are talking rot.

Count Bobulescu

06-08-2011, 05:31 AM

Not to appear to wave the US flag, or to suggest that the US does not have serious problems, it clearly does, but commentators on Bloomberg Friday night, from Dr. Death, econ Nouriel Roubini, to various Wall St. types were uniformly dismissive of the S&P downgrade on the grounds that, in order to arrive at the downgrade, (which it had been signaling for weeks), S&P abandoned it’s traditional methods of evaluation, to score some political/market advantage in response to European calls for alternatives to the big three US rating agencies.

Commentators suggested the upshot will be, that if S&P adheres to the standards it applied to the US, it will be forced, (for it’s own credibility sake), to further downgrade several European economies, (France, in particular). I would be unable to debate the details of that proposition with my shadow.

Since the 2008 financial collapse, many have asked why anyone pays any respect to any of the rating agencies? They showed themselves to be whores. They gave AAA ratings to junk, simply because they were paid to. And now they ask us to believe them again. Once bitten twice shy.

bolshevik

07-08-2011, 08:26 AM

Is the system not set up for and by bad bankers and traders though?

Well the problem is that this presupposes that if only the "good" bankers and traders were running things then everything would be fine rather than understanding that it is inherent
to the capitalist system of profit maximisation that these "excesses" will periodically occur.

An indication of this is that as recently as 5 years ago the bankers and traders who are now being labelled "bad" were the shining examples of the success and dynanism of capitalism for virtually the entire spectrum of bourgeois political and economic opinion.

Sent from my GT-I9100 using Tapatalk

C. Flower

07-08-2011, 09:56 AM

Well the problem is that this presupposes that if only the "good" bankers and traders were running things then everything would be fine rather than understanding that it is inherent
to the capitalist system of profit maximisation that these "excesses" will periodically occur.

An indication of this is that as recently as 5 years ago the bankers and traders who are now being labelled "bad" were the shining examples of the success and dynanism of capitalism for virtually the entire spectrum of bourgeois political and economic opinion.

Sent from my GT-I9100 using Tapatalk

Yes, but the other side of it is, as Lenin pointed out in "Imperialism, the Highest Form of Capitalism" that the finance sector is and always will be corrupt as money, power, expertise and opportunity inevitably converge in large scale scamming :D

bolshevik

07-08-2011, 11:50 AM

Yes, but the other side of it is, as Lenin pointed out in "Imperialism, the Highest Form of Capitalism" that the finance sector is and always will be corrupt as money, power, expertise and opportunity inevitably converge in large scale scamming :D

It is true that finance capital is particularly corrupt but what Marx describes in Capital as the manufacturing bourgeoisie's despotism in the work place and scramble for short-term competitive advantage, is hardly an ideal to look to as an alternative. And anyway the dominance of finance capital is a natural development due to the internal workings of capitalism.

C. Flower

07-08-2011, 01:17 PM

[QUOTE=bolshevik;169952]It is true that finance capital is particularly corrupt but what Marx describes in Capital as the manufacturing bourgeoisie's despotism in the work place and scramble for short-term competitive advantage, is hardly an ideal to look to as an alternative.

Did anyone suggest that it was ?

And anyway the dominance of finance capital is a natural development due to the internal workings of capitalism.

It is indeed: this being the main point of "Imperialism". If we ever finish tackling "Capital" here, I would love to move on to it.

bolshevik

07-08-2011, 03:30 PM

[quote]Did anyone suggest that it was ?

Well I think it is a potential coming from the "its all the fault of the bad bankers" line of reasoning - which isn't to say that anyone is necessarily arguing it explicitly

PaddyJoe

07-08-2011, 04:08 PM

Tel Aviv stock exchange closes 7% down after being halted earlier in the day. Next up Asian markets tonight.

C. Flower

07-08-2011, 04:11 PM

[quote=C. Flower;169974]

Well I think it is a potential coming from the "its all the fault of the bad bankers" line of reasoning - which isn't to say that anyone is necessarily arguing it explicitly

Yes, I agreed with that - but there is also the point to be taken on board that the idea of a cleaned-up capitalism is an illusion. The system is inherently corrupt, as well as inherently disfunctional in other ways.

Over and over again in the pro-democracy mass-movements, the issue of corruption comes up as something that has outraged people and motivated them to come out onto the streets. There was a a belief there that democracy could in some way sort corruption out. But a system that enriches a tiny few at the expense of many is one in which the few make the laws, are the friends and cronies of those who operate and flout them, are the beneficiaries of innumerable loop-holes and scams, who use bribery and back-scratching to obtain inflated contracts, who fill the banks with toxic derivatives the mirror image of the three card trick, and so on, and so on.
They have power, money and influence, and the law, if they deign to acknowledge it, can be bought, lobbied, delayed and parked indefinitely in the loading bay of the ODCE, or whereever.

C. Flower

07-08-2011, 04:12 PM

Tel Aviv stock exchange closes 7% down after being halted earlier in the day. Next up Asian markets tonight.

7%. Surprised there was anyone there to operate it. Nearly everyone seems to be out on the streets :D

TotalMayhem

07-08-2011, 04:40 PM

S&P threatens to downgrade the US even further. Junk?

C. Flower

07-08-2011, 10:02 PM

Saudi Arabia up, Abu Dhabi 2.53 down. Israel down 6.5% - but mass protest going on.

C. Flower

07-08-2011, 10:06 PM

Swiss Franc up 0.36%. Gold at 1697.70.

US Fed: Banks holding US treasuries will not have to recap. to compensate for downgrade.

Washington borrows 40 cent for every dollar it spends.

C. Flower

07-08-2011, 11:18 PM

RT @xtophercook: It continues RT @fivethirtyeight: Dow futures point to 272-point loss (about 2.5%) at market open bloom.bg/ccg3B3 #gfc2

Perhaps they didn't understand the ECB presser either.

C. Flower

08-08-2011, 12:22 AM

Japanese stocks open sharply lower after S&P downgrades U.S.; Nikkei Average down 1.6% http://on.mktw.net/n2HjlA

http://read.bi/p5Go2aIn light of global turbulence, G7 Finance Ministers have come together and promised an injection of liquidity around the world.
The effect?
The selling has already abated. After being down by over 2.7% at one point, US futures are off less than 2%.

Read more: http://www.businessinsider.com/g7-liquidity-2011-8#ixzz1UOO0Wj1B

The full G7 statement

The following is a reformatted version of a statement released via e-mail today by finance ministers and central bankers from the Group of Seven industrial nations.

“In the face of renewed strains on financial markets, we, the Finance Ministers and Central Bank Governors of the G-7, affirm our commitment to take all necessary measures to support financial stability and growth in a spirit of close cooperation and confidence.

“We are committed to addressing the tensions stemming from the current challenges on our fiscal deficits, debt and growth, and welcome the decisive actions taken in the US and Europe. The US has adopted reforms that will deliver substantial deficit reduction over the medium term. In Europe, the Euro area Summit decided on July 21 a comprehensive package to tackle the situation in Greece and other countries facing financial tensions, notably through the flexibilisation of the EFSF. We are now focused on the quick and full implementation of the agreements achieved. We welcome the statement of France and Germany to that effect. We also welcome the statement of the Governing Council of the ECB.

“We are committed to taking coordinated action where needed, to ensuring liquidity, and to supporting financial market functioning, financial stability and economic growth.

“These actions, together with continuing fiscal discipline efforts will enable long-term fiscal sustainability. No change in fundamentals warrants the recent financial tensions faced by Spain and Italy. We welcome the additional policy measures announced by Italy and Spain to strengthen fiscal discipline and underpin the recovery in economic activity and job creation. The Euro Area Leaders have stated clearly that the involvement of the private sector in Greece is an extraordinary measure due to unique circumstances that will not be applied to any other member states of the euro area.

“We reaffirmed our shared interest in a strong and stable international financial system, and our support for market- determined exchange rates. Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We will consult closely in regard to actions in exchange markets and will cooperate as appropriate.

“We will remain in close contact throughout the coming weeks and cooperate as appropriate, ready to take action to ensure stability and liquidity in financial markets.”

C. Flower

08-08-2011, 06:57 AM

More falls overnight in Asia, with S. Korea, which sells a lot of exported goods into the US, down 7% at one stage. The dollar and euro both fell against gold, and the euro, after EU leaders showed signs of life over the weekend, strengthened against the dollar.

C. Flower

08-08-2011, 07:05 PM

Watched a very lacklustre, schoolmasterish speech from Obama, in which he played blame the Repubicans. The Dow index fell equally before and after the speech.

A day of blood letting - over a trillion gone from the price of stocks in a couple of days. Same as the entire cost of the Iraq war.

http://www.bbc.co.uk/news/business-14451687

Market falls - the DOW, FTSE, DAX and CAC, averaging around 5%...

http://www.bbc.co.uk/news/business/market_data/overview/default.stm

C. Flower

10-08-2011, 02:45 PM

Markets are jolting down again by 2 -3 -4 % across the world.

http://www.breakingnews.ie/business/stock-markets-fall-again-as-volatility-continues-516060.html

TotalMayhem

10-08-2011, 03:29 PM

Markets are jolting down again by 2 -3 -4 % across the world.

Société Générale is taking a real nose dive today, down more than 20%

Apjp

10-08-2011, 05:28 PM

Did anyone hear gerald slende(cant spell his last name) just tell anton savage what his trends club predicted ages ago 'by xmas, the revolution will be global'. Theyve started the direct democracy.org movement citing switzerland and its associated high standard of living. Have to say I think everyone on the left would approve of real democracy. New thread anyone please?

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C. Flower

10-08-2011, 05:56 PM

Société Générale is taking a real nose dive today, down more than 20%

Markets being hit generally by rumours of an imminent downgrade of France.

Could they not just downgrade capitalism, and have done with it ?

morticia

10-08-2011, 06:44 PM

Apparently the French AND the 3 ratings agencies have come out and officially denied the downgrade....what does that mean; another 3 weeks??

TotalMayhem

10-08-2011, 07:06 PM

what does that mean; another 3 weeks??

Make that Friday.

Sidewinder

10-08-2011, 07:30 PM

Make that Friday.

The lapse in time between each crisis and it's supposed "solution" seems to be shortening rapidly alright.

I think the LEAP 2020 crowd predicted that would be the way of things some years back. I don't think any of us expected it would take nearly 5 bloody years for the process to play out though.

TotalMayhem

10-08-2011, 07:36 PM

As Odysseus would tell you, between Scylla and Charybdis you don't have the luxury of thinking "weeks ahead", you're too worried whether your sorry @r$e will survive the next two minutes.

Dr. FIVE

10-08-2011, 08:12 PM

la fondamentaux sont sound!

Count Bobulescu

11-08-2011, 04:39 AM

Best analogy I heard today. Federal Reserve is now out of bullets to shoot at the still standing target of a weak economy, so they have had to resort to the last option available, throwing the gun.

Count Bobulescu

11-08-2011, 05:35 AM

I posted the following at #119 up thread after the US downgrade.

Commentators suggested the upshot will be, that if S&P adheres to the standards it applied to the US, it will be forced, (for it’s own credibility sake), to further downgrade several European economies, (France, in particular).

Count Bobulescu

11-08-2011, 06:58 AM

Hardly worthy of a thread , so I thought I’d drop it here.
Minnesota Senator Al Franken (D) is a former Saturday Nite Live (SNL) comedian who in his first two years as a Senator is striking a decidedly un-comedic tone. Among other things, he originated a bill to regulate the rating agencies that the Obama admin opposed.

Guy is a dark horse, one to watch. One of his closest friends is Norm Ornstein, who is one of the most astute watchers of Congress for the last forty years.

http://www.nationaljournal.com/this-is-not-funny-20110810

C. Flower

11-08-2011, 08:28 AM

Best analogy I heard today. Federal Reserve is now out of bullets to shoot at the still standing target of a weak economy, so they have had to resort to the last option available, throwing the gun.

Holy moses. What is the gun, in this analogy ?

TotalMayhem

11-08-2011, 08:42 AM

Holy moses. What is the gun, in this analogy ?

Considering their efficiency in the previous shootings, I'd say it's probably a peashooter. :D

C. Flower

11-08-2011, 12:38 PM

Reuters reports some credit lines drying up from the East to French banks.

Rumours about Soc Gen continue, along with discussion that European banks are leveraged 40-50 times (Jim Grant on Squawk).

morticia

11-08-2011, 07:06 PM

Reuters reports some credit lines drying up from the East to French banks.

Rumours about Soc Gen continue, along with discussion that European banks are leveraged 40-50 times (Jim Grant on Squawk).

Which ones?? I doubt ours are, nobody's been lending them ANYTHING for the last 3 years (nor have they been lending anyone anything very much for the last 3 years either).

This could get real amusing if the rest of the EU banking system is outed as being in an Anglo like state.....Cowen could do his grand tour of Europe lecturing everyone on how to fix their problems....;):D:eek:

C. Flower

11-08-2011, 07:14 PM

Which ones?? I doubt ours are, nobody's been lending them ANYTHING for the last 3 years (nor have they been lending anyone anything very much for the last 3 years either).

This could get real amusing if the rest of the EU banking system is outed as being in an Anglo like state.....Cowen could do his grand tour of Europe lecturing everyone on how to fix their problems....;):D:eek:

There are trillions in toxic assets in the European banks. There was a huge increase in lending in the last ten years that simply wasn't backed by an equivalent growth in production and sales. It is all masquerading as something obscure and unrecognisable in funds of this or that kind or in overpriced property.

morticia

11-08-2011, 07:19 PM

There are trillions in toxic assets in the European banks. There was a huge increase in lending in the last ten years that simply wasn't backed by an equivalent growth in production and sales. It is all masquerading as something obscure and unrecognisable in funds of this or that kind or in overpriced property.

yurp. And I think we were the only ones to be comprehensively outed. This won't remain true for too much longer, methinks.

they'll be trying to contact St Lendahand via medium/ouija board shortly, for guidance on meltdown management.

Frankly, I can't actually believe that either the Spanish or UK banks are much better than ours... their property booms were lesser in extent only by a few degrees. The Brits have printed their way out of trouble and we'll probably never know the true extent of it. The Spanish closets are about to explode with the excess of skeletons being stuffed in there, methinks. As for the carpets, they're about a foot lower than the ceilings, there are so many sweepings....

DCon

11-08-2011, 09:21 PM

they'll be trying to contact St Lendahand via medium/ouija board shortly, for guidance on meltdown management.

EAMA

European Asset Management Agency

Kevin Cardiff as CEO, Seanie Fitz as CFO, Brian Cowen running the audit department, Sean Quinn running the Risk department and Rody Molloy in charge of compliance

Count Bobulescu

12-08-2011, 05:46 AM

Holy moses. What is the gun, in this analogy ? Yesterday 02:58 AM

Considering their efficiency in the previous shootings, I'd say it's probably a peashooter.
The analogy is: from an old western movie, gunslinger unloads his six shooter, and the target wearing a bullet proof vest is still standing. Gunslinger then frustrated and out of bullets chooses the last and least effective option, throwing the gun at the target.

Give me back John Wayne and Maureen O’Hara when people knew right from wrong, or something.

Captain Con O'Sullivan

12-08-2011, 08:19 AM

EAMA

European Asset Management Agency

Kevin Cardiff as CEO, Seanie Fitz as CFO, Brian Cowen running the audit department, Sean Quinn running the Risk department and Rody Molloy in charge of compliance

Something similar is happening in the UK with what are referred to as 'toxic contracts' for IT projects in the civil service being shifted to a ringfenced agency- in the UK certain civil servants and private contractors have contrived a situation where the taxpayer is committed to paying obscene amounts of money for management systems which are not fit for purpose.

Essentially the Brits are proposing a kind of NAMA for such toxic contracts- the end result I suspect being an ability to shift the costs off the balance sheet in order to massage that balance sheet to look better.

'Off balance-sheet accounting' is essentially a government created black market where stuff they don't like can be dumped and picked over for some other public/private con.

The unsuspecting British public have absolutely no idea of the debt hole that Britain is in because of this style of maneouver by successive British Governments in the same way that the average German taxpayer has no idea that a number of German banks have 'NAMA'd massive liabilities off-shore and are essentially massaging their balance sheets in Germany to make it look like they are profitable.

Somewhere along the line someone thought it was a good idea to let accountants use their imagination. This, quite clearly, was never a good idea.

C. Flower

12-08-2011, 11:09 AM

Very interesting : the extreme volatility of the market is a sign of extreme sickness -
and credit derivatives traders "nursing significant losses"

http://www.ifre.com/derivatives-dealers-nurse-hefty-losses-on-market-turmoil/1518524.article

TotalMayhem

12-08-2011, 11:30 AM

More whistling in the dark... France, Italy, Spain and Belgium have banned the short-selling of financial stocks.

Captain Con O'Sullivan

12-08-2011, 11:35 AM

Funny how they keep banning short-selling and then lifting the ban isn't it?;)

morticia

12-08-2011, 08:01 PM

Funny how they keep banning short-selling and then lifting the ban isn't it?;)

Closing the stable door long after the horse has legged it.....

C. Flower

14-08-2011, 09:40 AM

Long term lending to European banks reported to be drying up.

The Eurobond, if it can be pulled together, politically and legally, is the last shot. It's very hard to envisage how such a thing could be delivered under emergency conditions, in a short space of time. When the private finance system is under threat though, all normal rules and processes have been suspended in the past.

There is also the problem of funding such a bond. If France is downgraded, it will barely be able to fund itself, and there is no way that Germany and the Netherlands could carry the weight of backing it.

Printing and hyperstagflation ahead ?

Apjp

14-08-2011, 11:45 AM

Long term lending to European banks reported to be drying up.

The Eurobond, if it can be pulled together, politically and legally, is the last shot. It's very hard to envisage how such a thing could be delivered under emergency conditions, in a short space of time. When the private finance system is under threat though, all normal rules and processes have been suspended in the past.

There is also the problem of funding such a bond. If France is downgraded, it will barely be able to fund itself, and there is no way that Germany and the Netherlands could pick up the whole bill.

Printing and hyperstagflation ahead ?

Not for germanys naziphobes. Break up most likely now id hazard

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C. Flower

17-08-2011, 09:02 AM

More drops of 1% + in all the main markets opening this morning.

C. Flower

17-08-2011, 03:49 PM

The Swiss government is giving a press conference - the Swiss Franc is over-valued, they say.

SCHNEIDER-AMMANN SAYS GOVT TO USE SF2 BLN TO SUPPORT ECONOMY

morticia

17-08-2011, 09:21 PM

...

Printing and hyperstagflation ahead ?

Yep. The ECB will have to buy an awful lot of bonds if countries are going to have to bail out their banks, yet again.

Snafu, fubar....

C. Flower

18-08-2011, 02:00 PM

Another day of carnage.

RT @WSJ: The Dow is down sharply, dropping 342 points, or 3%, at the start of trading; the Nasdaq is down 4%

wsj.com/markets #gfc2

Dax down 5%, CAC 5%, FTSE 3%

Italian and French banks in trouble - Soc Gen has apparently threatened twitters for "provoking a run on the bank".

PaddyJoe

18-08-2011, 02:06 PM

US 10Y Treasuries 1.989% yield

Dr. FIVE

18-08-2011, 03:47 PM

Good Golemesq post from Paul Mason

http://www.bbc.co.uk/news/business-14579710

Count Bobulescu

18-08-2011, 04:59 PM

Matt Taibbi has a great piece in Rolling Stone about deliberate screw ups at the SEC designed to favor Wall St. recently revealed to Congress by an SEC whistleblower. (Once a whistleblower has been granted Federal protection, they are prohibited from talking to the press).

http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817?print=true

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

TotalMayhem

18-08-2011, 05:03 PM

Sweet... the absence of the rule of law.

Captain Con O'Sullivan

18-08-2011, 05:29 PM

But ...but...but they wear suits and ties! They can't be criminals!

Aye.

jinnyjoe

18-08-2011, 06:47 PM

Richard Koo talking about the double dip in Japan late 90's early noughties and what did and didn't work for Japan. Very good article

http://www.channel4.com/news/articles/business_money/nomuraaposs+richard+koo+warns+of+uk+doubledip/3454442.html

morticia

18-08-2011, 08:53 PM

Meanwhile.... someone on my grapevine who is quite well informed is wondering if there is More to This Crash than Meets The Eye....

nothing like a good destabilising Euro crisis to stop a) the Germans from ending up in charge of Europe or b) increasing the value of one's T bill holdings or c) actually precipitate further EU integration owing to undemocratic panic measures

Ya takes your pick...... qui bono??

C. Flower

18-08-2011, 08:59 PM

morticia

18-08-2011, 09:04 PM

I think it's far more a case of some groups of people being in the position to capitalise on a crisis.

Anyone knowledgable and cash-rich can make a killing in a crash.

London's hedgie community, peut etre??

And most of 'em probably went to school with their current Glorious Leader.....current glorious Eurosceptic leader, I should say.....

What a co-incidence?

Captain Con O'Sullivan

19-08-2011, 08:01 AM

The hedgies are definitely involved as you can see from the panicky banning and periodic unbanning of short-selling in the markets. They are nipping at the sovereign debt market like sharks.

I had to laugh at reports yesterday that Washington has gathered up its skirts, raised its eyebrows and innocently queried whether some US banks are illegally propping up European markets.

Thats exactly what Washington did with the US Emergency Reserve loan window- lent shedloads to European banks. You'll recall thats why Geithner kyboshed the idea that Ireland could get a renegotiated loan deal- because there was US bank money involved in the deal.

The Eagle speaks with heap forked tongue.

C. Flower

23-08-2011, 01:45 PM

RT @GavanNolan: Bank of America CDS getting hammered at 435bp, +64. Even wider than in the depths of the 2008-2009 crisis....

Buddha

23-08-2011, 01:48 PM

...

What's that in English Cactus, please?

C. Flower

23-08-2011, 01:50 PM

What's that in English Cactus, please?

The cost of insuring against losses has skyrocketed.

Buddha

23-08-2011, 01:56 PM

The cost of insuring against losses has skyrocketed.

Thanks CF. See on Sky Eurozone zero growth for August. We're fecked, well and truly.

C. Flower

23-08-2011, 02:19 PM

Thanks CF. See on Sky Eurozone zero growth for August. We're fecked, well and truly.

To the best of my memory, wasn't our economy going to default if it didn't grow by 3-4% per annum? And that was before the full extent of the black hole was known.

jinnyjoe

23-08-2011, 02:26 PM

To the best of my memory, wasn't our economy going to default if it didn't grow by 3-4% per annum? And that was before the full extent of the black hole was known.

Yes C I definitely remember those figures being quoted and thinking at the time are they out of their minds, we'll be lucky if the economy doesn't shrink by the same amount instead. Well, let's see what happens? V Interesting times we're living in no doubt about it :eek:

this was Davy's prediction for 2011 :rolleyes:

http://www.davy.ie/content/pubarticles/dotiecr20090929.pdf

Buddha

23-08-2011, 03:46 PM

To the best of my memory, wasn't our economy going to default if it didn't grow by 3-4% per annum? And that was before the full extent of the black hole was known.

Now they'll really hammer the corrupt thieving bastards, sorry, I meant the sick and the poor. So sorry. I forgot myself for a moment. It's the tablas.

Captain Con O'Sullivan

23-08-2011, 05:55 PM

That did make me laugh when Cowen referred to growth figures ... in a way if there was growth of a fairly splendid variety we could technically overtake billions in debt and the Americans make hopeful mutterings from time to time about growing their deficit away but they'd need growth figures like China's for a decade or two before that could happen. And that ain't gonna happen.

Not unless we have first contact with an alien federation with a hankering for Big Macs and two Hummers each.

morticia

23-08-2011, 08:45 PM

To the best of my memory, wasn't our economy going to default if it didn't grow by 3-4% per annum? And that was before the full extent of the black hole was known.

Technically, yes, but that's prior to the introduction of "fudgeonomics" once the Italians and Spanish threatened to join the bailout party.

Morticia's rule of peaceful international finance; if everyone's insolvent, it's probably more polite in the long run if everyone stops mentioning this issue (while a central bank or three surreptitiously prints away the problem).

Chillax, lads, they've spent 22+18bn on "heavily indebted country bonds" in the ECB in the last 2 weeks alone.

Now, that money is going to governments and not banks directly. That could be construed as good news.

Long may it continue! The Force is with us.... (and Enda keeps rolling sixes).

bolshevik

25-08-2011, 12:22 PM

The Telegraph warns of a new market crash - possibly within weeks

www.telegraph.co.uk/finance/financialcrisis/8721151/Market-crash-could-hit-within-weeks-warn-bankers.html (http://www.telegraph.co.uk/finance/financialcrisis/8721151/Market-crash-could-hit-within-weeks-warn-bankers.html)

C. Flower

25-08-2011, 07:57 PM

Sarkozy Discussed Expanding IMF Credit Lines With China’s Hu. Why pretend IMF matters: China is the Warren Buffett of the broke EUrozone

via twitter.

Dr. FIVE

03-09-2011, 04:34 PM

Following on from Golem's BoA speculation (http://golemxiv-credo.blogspot.com/2011/08/why-did-shares-in-european-banks-and.html) John Ward is saying

http://hat4uk.wordpress.com/2011/09/03/crash-2-why-bank-of-america-looks-a-prime-candidate-for-failure/

The Board of the bank has erroneously suggested that it will shed 10,000 jobs in an effort to save money: last night, Reuters confirmed that the real figure is 30,000. And lurking in the background behind all this, Wikileaks continues to claim that BoA has been doing criminally bad stuff….although for some reason, has shut up rather than put up about it of late. Most of it – for example, misrepresenting the quality of mortgages it sold on to AIG – may well be already out there anyway. (It looks like the US Government will sue most of the big banks on this topic before too long.)

The Mortgage Bankers Association says one in eight US mortgage loans were 30 days or longer overdue the last time they looked – which was in Q2, up from Q1. The new payroll data suggest that the Q3 figure might be nearer one in seven. That’s about 7.4 million households. Being the biggest lender, BoA is the most exposed. There is no shortage of tooth-suckers and sharks who will have spotted this.

The bottom line is that the odds are stacked heavily against Bank of America. We have Labor Day on Monday, but then after that, business gets back to reality big-time. Whether the bank has days or weeks remains anyone’s guess, if only because the levels of reporting required by the Banks are still – like their deleveraging progress – disgracefully poor. But I doubt very much if its demise depends on European meltdown: its problems are home-grown, and they will be more than enough to sink it.

C. Flower

03-09-2011, 10:03 PM

Why Warren Buffet thinks he can't lose from his 5 billion stake in BoA.

http://www.zerohedge.com/contributed/prepare-be-forgiven-ye-mortgage-sinners

morticia

04-09-2011, 07:56 PM

Why Warren Buffet thinks he can't lose from his 5 billion stake in BoA.

http://www.zerohedge.com/contributed/prepare-be-forgiven-ye-mortgage-sinners

Very interesting. So there's an American pundit finishing his article with the "we all partied" line that St Lenny was so fond of.

Well, there's some point to it, but since the banksters partied hardest, I'd personally love it someone could punish them a little more than Joe and Josephine Soap.

Unfortunately, it all seems to come down to the fact that we all need bank accounts, and no-one can figure out (or wants to figure out) what we can do to separate the casino investment banking from J&J Soap's local branch, so they all have to be bailed at vast expense

Teddy Roosevelt and the original Messrs Glass and Steagall are probably revolving in their graves.

tbh, it is as simple as developing a global consensus and global financial regs where tax havens are not recognised, along with abolishing non-dom status. Possibly just for financial workers.

Without that, the banks simply move their most profitable ops to the laxest possible jurisdiction, and we all suffer.

C. Flower

10-09-2011, 01:54 PM

Do not fear - a late Friday night meeting of the G7, after markets have plummeted like a stone after Juergen Stark's resignation from the ECB, and with widespread rumours of a Greek default this weekend, is just what we need to calm our nerves.

This is what they said:

MARSEILLE, France (MNI) – The Group of Seven finance ministers and
central bank governors issued the following statement late Friday night
after meeting here:

“We met at a time of new challenges to global economic recovery,
with significant challenges to growth, fiscal deficits and sovereign
debt, stemming from past accumulated imbalances. This is reflected in
heightened tensions in financial markets. There are now clear signs of a
slowdown in global growth.

We are committed to a strong and coordinated international response
to these challenges. We are taking strong actions to maintain financial
stability, restore confidence and support growth. In the US, President
Obama has put forward a significant package to strengthen growth and
employment through public investments, tax incentives, and targeted jobs
measures, combined with fiscal reforms designed to restore fiscal
sustainability over the medium term.

Euro area countries are implementing the decisions taken on July 21
to address financial tensions, notably through the flexibilisation of
the EFSF, reaffirming their inflexible determination to honor fully
their own individual sovereign signatures and their commitments to
sustainable fiscal conditions and structural reforms. Japan is
implementing substantial fiscal measures for reconstruction from the
earthquake while ensuring the commitment to medium-term fiscal
consolidation.

Concerns over the pace and future of the recovery underscore the
need for a concerted effort at a global level in support of strong,
sustainable and balanced growth. We must all set out and implement
ambitious and growth-friendly fiscal consolidation plans rooted within
credible fiscal frameworks. Fiscal policy faces a delicate balancing
act. Given the still fragile nature of the recovery, we must tread the
difficult path of achieving fiscal adjustment plans while supporting
economic activity, taking into account different national circumstances.

Monetary policies will maintain price stability and continue to
support economic recovery. Central Banks stand ready to provide
liquidity to banks as required. We will take all necessary actions to
ensure the resilience of banking systems and financial markets. In this
context we reaffirm our commitment to implement fully Basel III.

We reaffirmed our shared interest in a strong and stable
international financial system, and our support for market-determined
exchange rates. Excess volatility and disorderly movements in exchange
rates have adverse implications for economic and financial stability.

We will consult closely in regard to actions in exchange markets
and will cooperate as appropriate. We look forward to working with our
colleagues in the G20 and the IMF in the coming weeks to rebalance
demand and strengthen global growth. As previously agreed, structural
reforms will make an important contribution in this regard.”

–Paris newsroom, 331-42-71-55-40; bwolfson@marketnews.com

C. Flower

10-09-2011, 01:55 PM

PaddyJoe

10-09-2011, 04:02 PM

Meanwhile, I'm reading from Greek tweeters that taxi drivers have blocked the roads and prevented riot police from getting to a demonstration.

http://news247.gr/ellada/eidiseis/article1363250.ece/ALTERNATES/w620/klouves.jpg
The Greek PM is to give a speech in Thessaloniki at a big annual trade fair. It seems the speech has been moved to the port area so he can leave by sea if the situation gets nasty:)

TotalMayhem

10-09-2011, 04:54 PM

According to Der Spiegel (http://www.spiegel.de/politik/ausland/0,1518,785545,00.html), German FinMin Schaeuble expects Greek default.

C. Flower

10-09-2011, 05:29 PM

According to Der Spiegel (http://www.spiegel.de/politik/ausland/0,1518,785545,00.html), German FinMin Schaeuble expects Greek default.

Which is another way of saying that the Greeks are resisting.

morticia

10-09-2011, 08:21 PM

Monday could be....interesting....

DCon

10-09-2011, 09:07 PM

Monday could be....interesting....

yes it could

France's top banks are bracing themselves for a likely credit rating downgrade from Moody's, sources close to the situation said on Saturday, further complicating their efforts to assure investors they are riding out the tensions in funding markets.

http://uk.reuters.com/article/2011/09/10/uk-frenchbanks-idUKTRE78927620110910

Apjp

10-09-2011, 10:26 PM

yes it could

http://uk.reuters.com/article/2011/09/10/uk-frenchbanks-idUKTRE78927620110910

Looks like the running dogs have run out of rabbits to chase. Perhaps its time the Red Bucks herded together??

barrym

13-09-2011, 07:49 PM

morticia

14-09-2011, 08:41 PM

Oh, Angela and Co will blubber on about keeping the Euro and all that but they have blinked and the market knows it. Inda is whistling away in the dark that we are the troika's good boys, we're doing what we were told, as if that counted for anything.

Well, they did cut our rates again today... throw a dog a bone...

barrym

19-09-2011, 05:52 PM

Well, they did cut our rates again today... throw a dog a bone...

Quite, but note the context - we get a reduction, but we don't get to burn the Anglo bond bookies - the last gasp insistence of Trichet..... I know that Noonan is famous for the obscurity of his pronouncements but his guff on this one exceeds his best. It was so bad I thought he was talking Polish.....

In the end we are being given photo and sound opportunities to say we are getting reductions, in return for toeing the line. It is made out in such a way that we argued for all this stuff and got our way.. nothing could be further from the truth.

B

barrym

20-09-2011, 07:29 AM

Ok, I know he has form for changing his coat but here is the latest McWilliams take....

"A few years ago, we were the poster boy for deregulation, low taxes and free capital movements. Our politicians went around Europe advising the rest of the continent to copy Ireland. Just be like us and it’ll all be grand, they said.

Having fallen so sharply, we are again the poster boy, but this time for austerity. Our politicians are now advising the rest of Europe to be like us. If you – Greece, Portugal, Spain and Italy – can just do austerity like Ireland, it’ll all be fine, they say. Sound familiar? The problem with austerity is that it has never worked anywhere in the world without either being preceded, or followed, by a massive devaluation or massive credit injection. Our ‘successful’ period of austerity from 1987 to 1990 was preceded by a devaluation in 1987 and followed by another one in 1992, and all the while interest rates fell dramatically.

Likewise, Reagan and Thatcher’s massive fiscal contractions of the early 1980swere accompanied by the most rapid injection of credit either economy had seen since the 1920s, leading to a bubble and two housing busts in the late 1980s.

Without a massive injection of credit or a massive devaluation, austerity can’t work. It will lead to long-term, higher levels of unemployment and emigration. This is what is happening in Ireland right now."

Would anyone disagree?? If so why?

We are craven wimps, tugging the forelock in response to Frankfurts requirements.

morticia

20-09-2011, 08:48 PM

Without a massive injection of credit or a massive devaluation, austerity can’t work. It will lead to long-term, higher levels of unemployment and emigration. This is what is happening in Ireland right now."

Would anyone disagree?? If so why?

We are craven wimps, tugging the forelock in response to Frankfurts requirements.

I'd agree, but I think that the Euro is going to undergo either a massive involuntary devaluation (in which case, we get what we need without annoying anyone), or a breakup, which won't be blamed on us,now, unless we do anything really stupid.

The problem with the doom economists is that, while they are technically and financially correct, they are ignoring political realities that, while nonsensical, are strongly felt and which it would be unwise to ignore.

Frankly, the big boys are now in such merde that they'll have to print and devalue the Euro itself, sooner rather than later. They also need austerity to work somewhere, which means we are now benefitting from favourable creative accounting, with more to come (rate drops are just the beginning).

Finally, oil is both so essential and so expensive, we quit the Euro at our peril. However, we have several aces up the sleeve, including agri-food and the fact that Germany, the UK and US really CAN'T afford to let us go down.

Oh, and if we look like we're quitting despite them, say good bye to the FDI and 500K direct and indirect jobs. Not good. The other PIGS have less export dependent economies and are much less globalised... their strategy should maybe be different....default would hurt less.

My advice to the powers that be, though, would be to walk quietly with a big stick, and seize all concessions possible, on the back of other people's disasters.

For example, if the Greeks go down and the French banks implode, expect the ECB to ride to the rescue. Then, we should go..."same terms please, that's not fair; take some of the debt originating from our banks off us... thanks!"

C. Flower

21-09-2011, 04:53 PM

Moodys downgraded Bank of America today two notches from AA2 to BAA1.

There is a general admission that many banks are bust need recapitalisation.

The IMF is suggesting major bank recaps, but does not seem to be wondering in too realistic a way where the cash will come from, and how much of a deflationary effect it will have, taking it out of the active economy.

http://www.marketwatch.com/story/moodys-downgrades-bank-of-america-debt-2011-09-21-1241330?link=MW_latest_news

PaddyJoe

21-09-2011, 05:54 PM

And S&P downgrades 15 Italian banks this evening.......:rolleyes:

concernedparent

21-09-2011, 06:24 PM

Well if austerity is a successful policy things should be improving not degenerating.

Or am I the only one that is having difficulties managing a budget on less money and more bills.:confused:

morticia

21-09-2011, 09:36 PM

And S&P downgrades 15 Italian banks this evening.......:rolleyes:

The sh!t is not far from the industrial turbo sized fan, folks, overalls on!

Apjp

22-09-2011, 12:14 AM

Well, it wasn't Monday but Tuesday that is/was/will be/may be interesting. Moves afoot to allow an 'ordered' defult by Greece.` I will say I told ye so.....if anyone cares to go back through my posts (fairly safe bet that no one will) you'll find I predicted a default. Despite all the guff from Angela, Sarko, G7 Gx and everybody else, it was never possible for an underdeveloped country like Greece to pay. Now the question is who's next?

Oh, Angela and Co will blubber on about keeping the Euro and all that but they have blinked and the market knows it. Inda is whistling away in the dark that we are the troika's good boys, we're doing what we were told, as if that counted for anything.

All bets are now off, all sovereigns are now in play.

Note also that the blame in Greece is being placed at the door of a corrupt civil service; would you all feel that ours is squeaky clean?? Maybe not altogether corrupt, more like incompetent, starting with the bank guarantee.

Well You and I are both in France. What I have seen with civil servants here so far has made me wish I was back in DIT with sanity intact-not to mention how technologically retarded My university here is(University of Burgundy). So that takes incompetence to a whole new low. I also would be careful about labeling Greece underdeveloped as an Irish man. We are technologically superior to a lot of europe-but we are backward in many other ways. No society is perfect tho.

Apjp

22-09-2011, 12:19 AM

I'd agree, but I think that the Euro is going to undergo either a massive involuntary devaluation (in which case, we get what we need without annoying anyone), or a breakup, which won't be blamed on us,now, unless we do anything really stupid.

The problem with the doom economists is that, while they are technically and financially correct, they are ignoring political realities that, while nonsensical, are strongly felt and which it would be unwise to ignore.

Frankly, the big boys are now in such merde that they'll have to print and devalue the Euro itself, sooner rather than later. They also need austerity to work somewhere, which means we are now benefitting from favourable creative accounting, with more to come (rate drops are just the beginning).

Finally, oil is both so essential and so expensive, we quit the Euro at our peril. However, we have several aces up the sleeve, including agri-food and the fact that Germany, the UK and US really CAN'T afford to let us go down.

Oh, and if we look like we're quitting despite them, say good bye to the FDI and 500K direct and indirect jobs. Not good. The other PIGS have less export dependent economies and are much less globalised... their strategy should maybe be different....default would hurt less.

My advice to the powers that be, though, would be to walk quietly with a big stick, and seize all concessions possible, on the back of other people's disasters.

For example, if the Greeks go down and the French banks implode, expect the ECB to ride to the rescue. Then, we should go..."same terms please, that's not fair; take some of the debt originating from our banks off us... thanks!"

unbelievable. you'd beggar your neighbours to feed yourself. FDI does not account for 500k jobs. not even when knock on effects are included. its 100 directly, 200 max overall.

Apjp

22-09-2011, 12:24 AM

VB and Yanis made a great point recently. Irish banks cannot go any more bust. We have a lot less to lose in many ways compared to the French and germans from a major default, which is becoming probable in my view. I dont believe many people back home would want more hardship for other countries and at the same time think that somehow a small 'globalised' economy will benefit. This whole take advantage of all the other slip ups is nonsense if it damages our best friends in any way shape or form-the other periphery nations who need us as much as we need them.

concernedparent

22-09-2011, 09:44 AM

Well I know that what I am about to say is me on my hobby horse yet again.

Many, not all, of our problems stem from the inability of politicians on a Europe wide scale to 'TAKE DECISIONS'.

The tin can has been kicked down the road for so long that Europe has reached the cliff edge.

What was needed at the start was controlled bank closures with some amalgamations. The current policy of the EU is to chuck money into a bottomless pit. Its just disappearing. Its not filling the hole because no one has thought to put a foundation in the bottom.

The system of public service in all countries is too slow to respond to emergencies like this. Decisions are based on reports submitted by committees following a long process of consultation. The EU is worse than most based on its size and inefficient way of working.

The contagion is spreading and no one country is immune or will be immune to its effects and the unfortunate thing is that countries like Germany and France will always look to their own interests first. They have elections to fight remember. The Irish ruling body just wants to be at the party regardless of the consequences to their own.

It also strikes me that really none of the ruling elite have any idea how to handle the current problems. The image of headless chickens, dressed in Armani, springs to mind.

TotalMayhem

22-09-2011, 11:06 AM

Many, not all, of our problems stem from the inability of politicians on a Europe wide scale to 'TAKE DECISIONS'.

It's not their job to take decisions, they have to follow orders.

C. Flower

22-09-2011, 11:23 AM

Jose Vinals of the IMF on the latest Global Financial Stability Report. He says that there is a problem in some economies (EU, US for example) that should be addressed by cuts and a problem in the growing economies of bubbles and overheating. But all the IMF is interested in is financial stability. Same with the ECB. They accept no responsibility for the welfare of people, only the economic system. But everyone knows that in Greece, the more they are cutting, the sicker their economy is getting. So what is happening is a squeezing out of the last few drops of blood, but they don't give a damn that the patient will be dead at the end of the operation.

IMF warns of increase in financial instability - YouTube

Captain Con O'Sullivan

22-09-2011, 11:32 AM

C. Flower

22-09-2011, 01:02 PM

I wonder would this chap be quite so keen to accept a question from the floor along the lines of 'How much have the breaches of regulatory ceilings by private banks contributed to the international economic instability?'

He'd be out the door like a rat up a drainpipe.

These guys are all insiders - either from the private sector or higher civil servants. Stiglitz, at the World Bank, was an anomaly.

C. Flower

22-09-2011, 01:08 PM

Markets collapsing in the US and Europe - two bad IMF global reports plus a dirty report from the Fed...

http://www.breakingnews.ie/business/world-markets-slump-on-fed-warning-521575.html

World contraction is acting like reflux on Ireland - exports down 12% in July according to the CSO. Ironically, up to that point, FF's "export your way out of it" strategy looked as though it might possibly work - but only with blatant disregard to the real state of the world economy.

DCon

22-09-2011, 01:12 PM

C. Flower

22-09-2011, 01:17 PM

Maybe Kevin Cardiff needs to expand his economic models

He's expanded his salary, substantially, since 2008.

DCon

22-09-2011, 01:21 PM

He's expanded his salary, substantially, since 2008.

Happy man, no doubt. And a half salary for life thrown in when he does not need to bother turning up and pretending to work..

Who cares about the country?

concernedparent

22-09-2011, 04:10 PM

Well for as long as they remain in their ivory towers with a plentiful supply of income to keep them in the style to which they have become accustomed, us plebs can go to hell.

C. Flower

22-09-2011, 06:05 PM

"World markets will remain jittery for the foreseeable future."

http://www.ifre.com/derivatives-credit-vol-remains-high-as-us-outperforms-europe/1607710.article

Just as in the Great Depression of the 30s, the US is sucking in liquidity from weaker, more fragmented, Europe.

ang

22-09-2011, 06:15 PM

RESET & STIMULATE ECONOMY. PRESS THE BUTTON NOW !!!!!!!!!

http://graceevan.org/files/Adult%20Classes/Bloodworth/bw%20009%20red%20button.jpg

DCon

22-09-2011, 06:48 PM

Our overlords are speeding up the recapitalisation of more busted banks.

From the FT

European officials look set to speed up plans to recapitalise the 16 banks that came close to failing last summer’s pan-EU stress tests as part of a co-ordinated effort to reassure the markets about the strength of the 27-nation bloc’s banking sector.

A senior French official said the 16 banks regarded to be close to the threshold would now have to seek new funds immediately. Although there has been widespread speculation that French banks are seeking more capital, none is on the list. Other European officials said discussions were still under way.

The list includes Germany’s HSH Nordbank and Banco Popolare of Italy.

[QUOTE
The other 14 banks on the list are: Espirito Santo and Banco Português of Portugal; Piraeus Bank and Hellenic Postbank of Greece; Banco Popular Espanol, Bankinter, Caixa Galicia, BFA-Bankia, Banco Cívica, Caixa Ontinyent, Banco De Sabadell of Spain; Nova Ljubljanska Banka of Slovenia; Cyprus’s Marfin Popular Bank and Norddeutsche Landesbank of Germany.[/QUOTE]

http://www.ft.com/intl/cms/s/0/49d6240e-e527-11e0-bdb8-00144feabdc0.html#axzz1YhzA8lTD

C. Flower

22-09-2011, 06:50 PM

All of this is of course to guarantee the profits of investors. Shareholders and the customers of banks don't figure.

Except any fool could tell them that without customers / depositors, the whole house of cards comes down.

DCon

22-09-2011, 06:59 PM

No French banks on the list so they must all be fine, right?

I wonder why a French bank called me today trying to get my company to place a large deposit with them for 3 months. They were willing to pay a large premium for this.

Never heard from them before today so something is up..

morticia

22-09-2011, 08:00 PM

The other 14 banks on the list are: Espirito Santo and Banco Português of Portugal; Piraeus Bank and Hellenic Postbank of Greece; Banco Popular Espanol, Bankinter, Caixa Galicia, BFA-Bankia, Banco Cívica, Caixa Ontinyent, Banco De Sabadell of Spain; Nova Ljubljanska Banka of Slovenia; Cyprus’s Marfin Popular Bank and Norddeutsche Landesbank of Germany.

Well, the good news is.....drumroll....none of ours are on that hit list.... for once. And the economy grew 1.1% 2nd 1/4 (GNP).

Whatever happens, we have made sure we won't get blamed for it, at least not first in the firing line anyway.

Time the rest of Europe fessed up to its bankster issues. We got scapegoated, but it wasn't just us.

C. Flower

22-09-2011, 08:21 PM

Well, the good news is.....drumroll....none of ours are on that hit list.... for once. And the economy grew 1.1% 2nd 1/4 (GNP).

Whatever happens, we have made sure we won't get blamed for it, at least not first in the firing line anyway.

Time the rest of Europe fessed up to its bankster issues. We got scapegoated, but it wasn't just us.

We aren't on that list because we don't have any banks.

morticia

22-09-2011, 08:26 PM

We aren't on that list because we don't have any banks.

Oh, I know. but ask yourself this; when they are all making catastrophic losses, is this a bad thing??? ;):D

PaddyJoe

23-09-2011, 12:36 AM

Heading into Friday and Asian stock markets are continuing downwards. Just as well it's a holiday in Japan.

Asian stocks have fallen on Friday, following a major sell-off in European and US markets.
The drop was triggered by warnings from the International Monetary Fund and World Bank about the strength of the global economy.
South Korea main Kospi index lost 3.6%, while Australia's Asx shed 0.8%. Japan's Nikkei index is closed for a holiday.

http://www.bbc.co.uk/news/business-15030191?utm_source=twitterfeed&utm_medium=twitter

rebellin

23-09-2011, 01:21 AM

PaddyJoe

23-09-2011, 01:30 AM

"A RAGING PANIC," is the phrase used by the Daily Telegraph's Assistant Editor Jeremy Warner to describe what's going on in the financial world. The IMF report may have contributed to that panic with their report yesterday, but so be it--it was necessary. The banks "need squillions" and governments have to "act", even though that's "unpalatable." He doesn't explain further what he means by "act". Maybe he doesn't know.
I think Lagarde spelled it out a few days ago. European banks need capital and they need it now. The problem of course is that they won't get it from private sources. Time to stuff more public money into the banks across Europe....
I've got a feeling that French and German taxpayers will be a lot less amenable to bailing out their zombie banks than the Irish were;)

Sam Lord

23-09-2011, 02:13 AM

The other 14 banks on the list are: Espirito Santo and Banco Português of Portugal ....

The Holy Spirit Bank ...:)

I will offer up something to it.

Skrimshander

23-09-2011, 02:48 AM

i ve just seen a report on cbs that 1 in 5 families with children in america is suffering hunger

C. Flower

23-09-2011, 08:14 AM

I think Lagarde spelled it out a few days ago. European banks need capital and they need it now. The problem of course is that they won't get it from private sources. Time to stuff more public money into the banks across Europe....
I've got a feeling that French and German taxpayers will be a lot less amenable to bailing out their zombie banks than the Irish were;)

The Fed very quietly put 400 billion "liquidity" into European banks last week and virtually nothing was said about it.

DCon's story about banks trying to "buy" deposits made my hair stand on end.
I presume the ECB itself is also heading into trouble so I don't think Ireland can consider itself "safe."

In the Great Depression, most European countries defaulted, and it took them many years to pay off the default. Capital was sucked into the US, which at that stage had plenty of gold to back a reserve currency.

Russia today has said that only the US dollar can play that role. I'm glad it has the confidence. The US economy is not in any kind of condition to carry the rest of the world. Also, a report came out yesterday saying the Chinese property bubble (much worse than ours) is about to burst.

Stock up with porridge and batten down the hatches.

barrym

23-09-2011, 11:48 AM

I despair, there is much talk on here of actions to rectify.... there won't be any, until German political/economic sentiment changes from the viewpoint that those who are profligate, including the US, rectify their economies. When that happens, and it will not be achieved by the US sending a former staffer of Goldmann to lecture the EU, then the Germans (and the Chinese and others) will release monies to provide capital support for bank lending, withthe result, controlled by the money releasers, of expansion where they want it. Anyone like to argue that the absolute basis of the capitalistic system is that those with the money tell the others what to do??

TotalMayhem

23-09-2011, 11:58 AM

the US sending a former staffer of Goldmann to lecture the EU

Ah now, TurboTax Timmy was never in the employ of Goldman Sachs. Not even the Giant Vampire Squid would sink that low. ;)

C. Flower

23-09-2011, 12:56 PM

Ah now, TurboTax Timmy was never in the employ of Goldman Sachs. Not even the Giant Vampire Squid would sink that low. ;)

A solid State Department intel type background, I thought ?

TotalMayhem

23-09-2011, 06:07 PM

A solid State Department intel type background, I thought ?

Timmy started his career (http://en.wikipedia.org/wiki/Timothy_Geithner#Early_career) in Kissinger's investment shop, then Treasury, State Dept., Treasury again, CFR, NY Fed Boss.

C. Flower

23-09-2011, 06:09 PM

concernedparent

23-09-2011, 08:44 PM

Did you have a look at his da's career?

His da was the boss of Obama's ma.

What a coincidence.

Who was it that said there is no such thing as coincidence

C. Flower

24-09-2011, 09:28 AM

A round up of some of the week's damage - Soros says that the US is now in the second dip of Depression, and Michael Moore supports the Wall Street Occupation.

http://www.thisismoney.co.uk/money/news/article-2041254/Wall-Street-protest-hots-George-Soros-warns-US-recession.html?ito=feeds-newsxml

barrym

24-09-2011, 10:02 PM

Timmy started his career (http://en.wikipedia.org/wiki/Timothy_Geithner#Early_career) in Kissinger's investment shop, then Treasury, State Dept., Treasury again, CFR, NY Fed Boss.

Ok, so that is (like Devs official cv) the official story but wasn't he in the NY Fed during Lehman time?? I've a recollection he was mentioned in Inside Job as having other connections.....

Anyway, stop ignoring the elephant in the room, my OP was about 'rectifying' The lads and lass are in DC as we write trying to sort out another kick of the can down the road. Does anyone think that by Tokyo opening we'll have a 'solution'

C. Flower

24-09-2011, 10:22 PM

Ok, so that is (like Devs official cv) the official story but wasn't he in the NY Fed during Lehman time?? I've a recollection he was mentioned in Inside Job as having other connections.....

Anyway, stop ignoring the elephant in the room, my OP was about 'rectifying' The lads and lass are in DC as we write trying to sort out another kick of the can down the road. Does anyone think that by Tokyo opening we'll have a 'solution'

I see no reason to believe that there is a solution that any of the powers that be would accept was a solution.

Nothing new from the IMF today.

http://www.imf.org/external/np/sec/pr/2011/pr11348.htm

PaddyJoe

24-09-2011, 10:44 PM

I'm wondering how kosher this Telegraph piece is?

First, Europe’s banks would have to be recapitalised with many tens of billions of euros to reassure markets that a Greek or Portuguese default would not precipitate a systemic financial crisis. The recapitalisation plan would go much further than the €2.5bn (£2.2bn) required by regulators following the European bank stress tests in July and crucially would include the under-pressure French lenders.
The second leg of the plan is to bolster the EFSF. Economists have estimated it would need about Eu2 trillion of firepower to meet Italy and Spain’s financing needs in the event that the two countries were shut out of the markets. Officials are working on a way to leverage the EFSF through the European Central Bank to reach the target.
The complex deal would see the EFSF provide a loss-bearing “equity” tranche of any bail-out fund and the ECB the rest in protected “debt”. If the EFSF bore the first 20pc of any loss, the fund’s warchest would effectively be bolstered to Eu2 trillion. If the EFSF bore the first 40pc of any loss, the fund would be able to deploy Eu1 trillion.
Using leverage in this way would allow governments substantially to increase the resources available to the EFSF without having to go back to national parliaments for approval, which in a number of eurozone countries would prove highly problematic.

As quid pro quo for an enhanced bail-out, the Germans are understood to be demanding a managed default by Greece but for the country to remain within the eurozone. Under the plan, private sector creditors would bear a loss of as much as 50pc – more than double the 21pc proposal currently on the table. A new bail-out programme would then be devised for Greece.Maybe they've been listening to Morticia....print, print, print:)
http://www.telegraph.co.uk/finance/financialcrisis/8786665/Multi-trillion-plan-to-save-the-eurozone-being-prepared.html

Count Bobulescu

24-09-2011, 10:44 PM

Just watched the BBC “World Debate” from the IMF HQ in DC. Doesn't appear to be online yet. Panelists were Goolsbee, Lagarde, Rehn, and El-Erian. Depressing! Rehn was out to lunch, Goolsbee was on a tea-break, Lagarde was trying to stay relevant, and El-Erian made the most sense by saying bandages are not the solution.

C. Flower

24-09-2011, 10:50 PM

I'm wondering how kosher this Telegraph piece is?
Maybe they've been listening to Morticia....print, print, print:)
http://www.telegraph.co.uk/finance/financialcrisis/8786665/Multi-trillion-plan-to-save-the-eurozone-being-prepared.html

Been listening to Varoufakis and Geithner, too, with the leveraging.

More debt to solve the debt problem.

Count Bobulescu

24-09-2011, 11:51 PM

Don’t look to China for help.
http://www.washingtonpost.com/world/slowdown-debt-worries-in-china-adds-to-global-anxiety/2011/09/23/gIQA3NMGqK_story.html?hpid=z2

C. Flower

26-09-2011, 09:11 AM

A very good translation of the G20s Friday statement here -

http://www.bbc.co.uk/news/business-15037289

After all the bailouts have failed, individual states will more and more turn on their own resources (including currencies) and then there will be trade war, and increasing danger of war.

I think we have to do better than that.

The G20's communiqué today is a masterpiece of avoiding the specifics. I am not sure at what point it became obligatory to conduct economics in the language of Asquith-era diplomacy, but the problem with doing so is this - while things like the balance of power in Europe are necessarily intangible, the solvency of banks can be measured on a spreadsheet.

Let's decipher what they mean:

"In Europe, euro area countries have taken major actions to ensure the sustainability of public finances, and are implementing the decisions taken by euro area Leaders on 21 July 2011. Specifically, the euro area will have implemented by the time of our next meeting the necessary actions to increase the flexibility of the EFSF and to maximise its impact in order to address contagion."

Translation: we have bailed out Ireland, Portugal and Greece (twice) and Italy is being kept alive with short-term loans in return for an austerity package nobody believes will work. The EFSF will be used to save French and German banks, not Greece.

"The US has put forward a significant package to strengthen growth and employment through public investments, tax incentives and targeted job measures, combined with fiscal reforms designed to restore fiscal sustainability over the medium term."

"Put forward" to be stamped on by the GOP majority in the House.

..."We reiterate that excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability."

If anybody else feels like doing a Swiss and pegging their currency, feel free, it's in the zeitgeist and nobody can stop you.

... "We commit to take all necessary actions to preserve the stability of banking systems and financial markets as required. We will ensure that banks are adequately capitalised and have sufficient access to funding to deal with current risks and that they fully implement Basel III along the agreed timelines."

The troubled EU banks are going to be part nationalised and there will be another round of short-selling bans as the mini-credit crunch to come unfolds.

Now what they did not say. At Pittsburgh you may remember the G20 promised to co-ordinate macro-economic policies, to maintain fiscal stimulus and withdraw it together in an orderly way, and for central banks to remain expansionary for as long as necessary:

"We pledge today to sustain our strong policy response until a durable recovery is secured. We will act to ensure that when growth returns, jobs do too. We will avoid any premature withdrawal of stimulus. At the same time, we will prepare our exit strategies and, when the time is right, withdraw our extraordinary policy support in a cooperative and coordinated way, maintaining our commitment to fiscal responsibility." (Pittsburgh leaders' statement)

This is what did not happen. Fiscal expansion turned to fiscal crisis all across southern Europe; the ECB raised interest rates in the face of depression gathering at its periphery. The US legislature used a technical vote to cause a fiscal crisis, removing the country's AAA rating and convincing markets that no further fiscal expansion is possible. Then, far from maintaining a united front, Europe's leaders have bickered and fought over how or whether to save Greece.

The issue, all along the line, is economic orthodoxy. The world's leaders chose to split the difference between the anti-Depression policies of nationalisation, breaking up the banks, running huge fiscal deficits and printing money - with a half hearted version of each of these measures. In Pittsburgh they cleverly issued the famous one line paragraph:

"It worked."

Now you would have to revisit that, adding, "for about 18 months". And now it had better work again for long enough to avoid chaos, otherwise, as Robert Zoellick points out today, we are headed for national, not trans-national, solutions.

My experiences in Greece this week convince me that populations will not long stand for chaos, misery and psychological torture inflicted by news media delivering constant bipolar messages of despair and hope.

Switzerland, Japan and effectively the United States are already carrying out nation-centric currency policies; ditto Brazil - and China is a perennial currency manipulator. Once we're done manipulating currencies the next phase is trade war.

To see whether any of this was predictable, see my LSE lecture in January -

concernedparent

26-09-2011, 10:03 AM

At the end of the day, national politics will always win out over the global situation because the politicians are ultimately facing their electorates.

I don't believe that Merkel and Co really give two damns about the smaller peripheral countries, that their primary concern is the effect of a shattered Euro on their financial systems. Much of the mess that we face at the moment is as a result the marked reluctance of politicians to take charge and make the necessary decisions. I believe that the compliance of our governing elite into hammering the population of this Ireland led the 'great and the good' of Europe to seriously think that this and this alone would protect themselves from any potential fallout. It was their financial systems that lent the money to facilitate the Celtic boom, but like any true politician worth their salt, felt that the consequences of their decisions could be palmed off onto some other hapless victim