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|Wednesday, June 3rd, 2009|
Facebook saved me from LJ. I am better when measured in one liners anyway.
|Friday, January 2nd, 2009|
|Sunday, November 16th, 2008|
This is the number one in all our analyses. US dollar last wish is to save US Corp. Without US Corp. it will be out of existence. Please check two previous charts why it is so important now. US dollar last favor to the new world - is to go down now, next week. Stronger dollar is a Deflation Monster, killing the US Economy and taking down world economy with it. Those with higher Debt are in the worst shape in deflation: real money repayed back are Increasing in value! US Corp is the Victim here. Inflation is the only way out. There is a chance to save US Corp. - it will never be an Empire again and it does not need to be any more. With new energy it could come back leaner, wiser and stronger eventually. Action is needed this weekend to help the dollar go down. Coordinated Cut which could be announced and Intervention in the Forex in Yen and US Dollar. Agreement could be cut and China could agree to manageable debasing of USD: everything is ready. US Dollar is at the Double Top, one definite action and it will break down. With weaker dollar we will have tectonic shift in Inflation expectations. With near zero short rates managed by FED and falling dollar long term rates in the form of Treasury Yield will go Up. Banks will be able to function and earn on their lending. With rising assets prices, fear will subside and greed will return back with changing perception of lost performance, all money on the sidelines will chase it again. Weak dollar - Lending recover - Velocity is Up - Inflation - Rising assets prices - Less redemptions - Less margin calls - No fire sells - Back to fundamentals - Debt is going down in real terms - Liabilities of US Corp to subjects are going down in real terms - Derivatives on the End of the world outcome are becoming worthless and could be isolated - Export is Up supporting economy with struggling consumer - Tax returns are up with inflation - Housing will bottom at lower level in nominal value (do not ask me about real value). Survival.
So where is out bottleneck for all those trillions and worthless money - as usual: Gold, Silver, Commodities. First time in this game for 7 years our interests aligned: FED should even Buy some Gold to push it up to 1000 to show that Inflation and not Deflation is coming. Will we get at least something of what we are talking here about: charts are telling that everything is ready, players have made their moves and we can see their footprints, tons of money will be made as usual by those in the know, but it is the only chance to save the world from lost decade Japan style.
|Saturday, November 8th, 2008|
The disconnect at work today that makes it difficult to envision a life without inflation is almost entirely grounded in a failure to see that credit expansion, by necessity, must have two sides; a credit production mechanism, and a debt acceptance recipient. We have as much of the former as the world has ever seen, but none of the latter.http://www.minyanville.com/articles/index.php?a=19881
|Thursday, November 6th, 2008|
|I want to come back as bond market - then I can intimidate everybody
As President-elect Obama's soaring rhetoric meets soaring deficits, I know which will win out. After the stunning incompetence of the Bush era, we can hope that the incoming administration will be as disciplined and skillful in governing as it has been in campaigning. However, the current euphoria reminds me of that surrounding the equally clever and fresh faced Clinton in 1993, who quickly discovered that while a President may propose, the bond market disposes. The Treasury has over $500bn of bonds to place before December to meet the funding needs of the various bail-out packages, and over $1trn more in 2009 and probably for several years thereafter. The question is: who are the buyers, particularly with yields at a 30 year low? Foreign central banks have been key purchasers of Treasuries in recent years, as they recycled their trade surpluses driven by record merchandise exports and commodity prices; that global liquidity engine is now sputtering. I expect Chinese GDP growth in 2009 to be sub 5%, and the collapse in key indicators of forward activity from shipping (Baltic Freight Index down 90% from high) to petrochemical feed stocks (ethylene, benzene, naphtha etc all at 5 year lows on slumping plastics demand in Asia) and slumping demand for copper and iron ore, all indicate that industrial activity in the country is simply in free fall.
That $2trn in Chinese foreign exchange reserves should give limited cause for comfort, given the stretched and opaque balance sheets of the private sector; as we discovered in Russia (with almost $600bn in August, now down to $400bn), impressive sovereign reserves get used up fast in a deleveraging panic that demands huge state bailouts. Those reserves will be needed at home in coming months to offset what will feel like an economic slump by recent Chinese standards. http://deadcatsbouncing.blogspot.com/2008/11/obama-needs-to-worry-about-china-not.html
|Wednesday, November 5th, 2008|
Just to think that Obama was probably 35 - 1 against just 2 years ago. Wow! What a country. "All the other countries arr run by little girls" as far as I am concerned.Опубликовано с мобильного портала m.lj.ru
|Sunday, November 2nd, 2008|
|Someone please find a hole in this argument, please......
The Credit Crisis Endgame
* by Paul Amery
* October 31, 2008
It looks increasingly likely that the endgame in the credit crisis will be a bloody standoff between investors and governments. Their battlefield will be the market for government bonds, where countries all around the world finance their deficits.
To see how this is likely to come about, it helps to revisit the various stages of the credit crunch. It began in 2007 with the drying-up of liquidity in esoteric, structured-finance securities, linked to riskier types of mortgages. From there it spread to more mainstream mortgage bonds, structured finance in general, and other types of debt issued by financial institutions. By early summer 2008 the crisis was affecting many non-financial corporate names, who found difficulties refinancing loans. By the end of the summer the crisis had spread to sovereign names – a whole host of governments found themselves in trouble. So far the most acute problems have arisen in countries with high current account deficits – Ukraine, Hungary – and in Iceland, where financial sector problems threaten to overwhelm state finances.
But just as tingling and numbness in the extremities of the body can give advance warning of a heart attack, the way credit market problems have developed – from specialist subsectors to ever more mainstream areas - is giving us clear warning that the crisis may be heading for the very centre of the global finance system, the major economies’ bond markets.
Any textbook on finance and investing will introduce early on the concept of a risk-free rate of return, and then use it as the basis for many financial ratios and analyses. For the risk-free rate, analysts have traditionally used the yield on a short-maturity government bond. The excess returns on other financial instruments are then interpreted as risk premia over the government bond (which is considered free of default risk). Historically this led to a comfortable stratification of debt securities, with higher-risk, lower-rated bonds layered on top of other, safer ones. Built on a bottom stratum of AAA-rated US treasuries, yield spreads increased steadily through each layer, to reach the riskiest, junk issues on top.
The idea of a stable layering of risk premia, based on credit agency ratings, has been thrown into disarray over the last year, as the ratings themselves proved to be completely unreliable. Yet in recent months something disturbing has started to go wrong with the groundrock itself – the major government bond markets. The tectonic plates underlying the whole superstructure of debt have started to shift.
On the surface nothing remarkable is happening – the 30 year US Treasury bond yield recently hit an all-time low of 3.88%, as investors sought a safe haven during equity market turbulence. Yet while nominal bond yields have declined, the credit risk component of US Treasuries has been on an increasing trend since last year. According to data provided by CMA DataVision, the credit specialists, the 10-year credit default swap spread – a form of insurance contract against issuer default – has risen steadily - from 1.6 basis points (0.016%) in July 2007, to 16 basis points in March 2008, to 30 basis points in September, to over 40 basis points on October 27 – see the chart below for the spread history so far this year. In other words the cost of insuring against a US government default has risen by 25 times in little over a year. Similar trends have been evident in the UK and German government bond markets.
This has perplexed, and even amused, some market observers. How, they ask, could a private sector contract against default be expected to pay out in the case of a US government default – which would be the equivalent of a nuclear explosion in the financial markets? So what’s the point of buying such a contract?
Moreover, how could the US government ever renege on its debts? After all, it supplies the world’s reserve currency, and the Federal Reserve Chairman reminded us a few years ago of the US authorities’ ability to print money in unlimited quantities. Any “default” would at least be through the time-tested mechanism of inflation and currency devaluation, according to this view.
On the other hand a longer-term examination of debt markets reminds us that, throughout human history, regular default is the rule than the exception. And while sovereign defaults on external, foreign-currency debt are most common, Carmen Reinhart and Kenneth Rogoff demonstrated in a paper released earlier this year that defaults on domestic debt have happened far more often than might have been expected, particularly in times of severe economic duress.
In both the US and UK, budget deficits are poised to explode, for a number of reasons. The recession is hitting tax revenues, while government entitlement programmes should soar in cost. Then there is the steadily increasing bill for the wars being fought in Iraq and Afghanistan. But the really big impact is coming from the rescue packages being thrown at the financial sector. Morgan Stanley recently estimated that the 2009 fiscal deficit in the US would reach 12.5%, over double the previous record of 6%, set in 1983. Under the Bush administration, the US national debt has risen from $5.7 trillion, to over $10 trillion currently. The terms of the recently-passed bailout legislation increased the statutory debt ceiling to over $11.3 trillion.
When measured as a percentage of GDP, the US national debt is expected to pass 70% next year, which, though much higher than recent years, is still short of the record 122% registered in 1946, at the end of the Second World War. Some observers point to this comparison as an argument for the sustainability of the current position.
Yet others argue that government debt must be seen in the context of, and as part of, the overall debt burden on the economy. With the US private debt to GDP ratio at levels never seen before – close to 300%, according to Steve Keen, the Australian economist – the question is surely whether the whole debt pyramid can avoid crashing down via a violent and uncontrollable chain of defaults, dragging the government bond market down with it. If this seems far-fetched, it helps to remember that the Latin root of the word credit comes from credere – to believe, but also to trust. For large sections of the private sector bond market, it is precisely that trust which has disappeared over the last year and a half. To suggest that such “credit revulsion”, to use an old term, might spread to governments’ debt obligations is surely not beyond the realms of possibility
Signs of strain in the US Treasury market are already there, despite the current low yields. Recent auctions have shown poor bid-to-cover ratios, and long tails (the difference between the average accepted yield, and highest yield), both signs of shallow demand. Delivery failures in the secondary market have also hit record levels, a sign of poor liquidity. Market observers should keep a close eye on the progress of future auctions, particularly as the issuance schedule picks up.
How can investors take cover if concerns over government solvency spread? For the early part of any credit-related decline in bond prices, there are obvious hedges, such as credit default swaps, short Treasury bond futures positions and inverse Treasury ETFs. But ultimately a US debt default would have cataclysmic consequences for the financial economy, bankrupting the entire system. So the ultimate safe haven is in the precious metals, which would rapidly regain monetary status in such a scenario.http://www.prudentbear.com/index.php/commentary/guestcommentary?art_id=10146
|Friday, October 24th, 2008|
|Thursday, October 23rd, 2008|
|On the margins of a scandal
Nat Rothschild still owes me dinner in Moscow.....
The 40-year-old Russian and Nat met five years ago through Roman Abramovich, the owner of Chelsea Football Club, who is also a business associate of the Rothschilds. They became friends almost instantly. Deripaska's English was poor at the time but he worked assiduously at it and is now fluent.
Soon after they met, Rothschild and Deripaska were talking big deals. And the focus of their attention was Russia and the East. Nat and his father formed JNR, a company dedicated to finding investments behind what had once been the Iron Curtain. Deripaska, if not a partner in every deal, was rarely far away. In 2004 he and Nat went on a jaunt to Israel in Deripaska's private jet. A few months later they were in Tajikstan, then Pskov in northern Russia.http://www.thisislondon.co.uk/standard/article-23576973-details/The+%C2%A35+billion+reason+Rothschild+knifed+his+friend+George+in+the+back/article.do
|Monday, October 13th, 2008|
All Turkish immigration forms and regulations are in Turkish, english and russian. Looks to me that russian is paying for turkish construction services with russian wives. Now, that's barter.Опубликовано с мобильного портала m.lj.ru
|Sunday, October 12th, 2008|
|Inf vs. Def
Ok, I give up. I dont know.
Deflation - credit shrinking, overcapacity in everything (except energy maybe), assets prices shrinking, etc - thus cash is king.
Inflation - FED and the rest of 'em succeed and print their way out of it? Then, we should go lever ourselvesup to the hilt while (if) we can and buy gazillion houses or something.
Which brings me back to overcapacity of houses and "somethings".
Guns, ammo and whisky perchaps?
|Saturday, October 11th, 2008|
|Thursday, October 2nd, 2008|
|Wednesday, October 1st, 2008|
the Paulson bailout plan is a government bailout of the previously failed government bailout which was a bailout of the previously failed government bailout etc… Each bailout had its own unintended consequences which the next bailout tried to address. Greenspan bailed out the economy after the stock market bubble popped with 1% interest rates which sowed the seeds for thecredit bubble. In order to bail us out, Bernanke slashed interest rates to 2% and a dramatic rise in commodity prices ensued. When that bailout didn’t work, he instituted a bailout of the investment banks with the initiation of the TSLF and PDCF credit facilities for investment banks. That slowed down the deleveraging process as it gave the investment banks a false sense of security. I highlight Dick Fuld’s comments soon after it began where he said it takes the liquidity issue off the table. The lack of dramatic deleveraging brought us to last week’s panic in GS and MS, a failed LEH and a shotgun wedding for MER which led us to the Paulson bailout. The unintended consequence of this bailout will be a much lower US$ and selloff in the US bond market which will leave us with higher interest rates and higher mortgage rates throw’s the intentions of the Paulson plan out the window. Who will bailout this bailout”?http://www.nakedcapitalism.com/2008/10/marc-faber-disses-bailout-plan-likes.html
|Tuesday, September 30th, 2008|
|11 pct! now this is scary
In the FX mkt this is what is worth talking about today...
From my fwd desk from 7:30 am this morning.
Just a quick update for you here. It's as bad as its ever been. Today
our Forwards Market in the Interbank Market is essentially
Non-Existent. If anything is getting done, it's only in the
shorter-dates under 3 months and even still, the bid/ask spreads are
on the grounds of 30-50bps. At this point, market has been calling for
coordinated cuts but the transition mechanism is absent and cuts would
be effectively useless. The main issue has been and still is USD
funding, particularly from European Banks, and Confidence/Trust in the
Interbank Market. Overnight Libor at 6.88% tells the authorities
market isn't working but on top of that, the ECB did an O/N USD
Auction where rates went through at 11%. In the Fwds mkt, USD Implied
O/N against EUR has traded up to 42% this morning (+15 Fwd Pts). Hard
to imagine anybody can sleep well with these signs of a
non-functioning market. 1-mth Libor at 3.93% and 3-Month Libor at
4.05% pale in comparison to where they are actually trading in the
market and where Banks can effectively borrow dollars.
|Monday, September 29th, 2008|
|While we are at it
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works".
John Stuart Mill