Thursday, 4 September 2008


PALOOKAVILLE stardate whatever+26

pickardthepainter : (whistling) i wus feelin inseekyourrr, ya mite not lurv me anymourrr.....
allus wanted ta be ferry man!!!

laverne : it woz lennon wot wrote it yo divot!

spider : yo! crooner dude! do yo fink da banks is bust?

from bloomberg
Mark Gilbert
Fed, ECB Must Unplug Markets From Life Support: Mark Gilbert

``The collateral that we take must also be traded in the market because only then is it priced accurately,'' Weber said. ``We certainly won't tolerate the creation of collateral for central banks only, without the intention of trading them.''

Almost Alchemy

You will struggle, though, to find anyone who doesn't believe that is exactly what banks have done, bundling together risky consumer loans into asset-backed securities specifically to pledge them to the ECB rather than trade them on the market.

``We estimate at least 20 percent of all eligible collateral fails that test and a disproportionate amount of such non- tradable collateral is currently being pledged for liquidity operations at the ECB,'' Meyrick Chapman, a strategist at UBS in London, wrote in a research note this week.

ECB council member Yves Mersh said on Aug. 23 that ``at the margins, there can still be cases where you see dangers of gaming the system.'' The central bank has agreed that the rules need a ``certain amount'' of refinement, he said.

Those changes may include bigger discounts between what the face value of a security is and how much can be borrowed against it, a demand for higher credit ratings on collateral, and perhaps limits on the geographical origin of the assets.

Such tweaks are more like methadone than the cold turkey that the financial markets need, though they are at least a start. If banking, though, is at heart a confidence trick -- which is what the events of the past 12 months suggest -- then maybe the smartest way for the central banks to restore that confidence is to show renewed faith in the financial community's ability to stand on its own by withdrawing their support.

(Mark Gilbert is a Bloomberg News columnist. The opinions expressed are his own.)

peterthe painter : alla italics an bolds an colors is mine man!

mo fro bloomberg -

U.S. Must Buy Assets to Prevent `Financial Tsunami,' Gross Says

....A process of ``delevering,'' where banks are shrinking and cutting off lending, is sapping demand for loans, bonds, stocks and commodities, driving down prices of assets of even ``impeccable quality,'' Gross said. The decline may continue until the government steps in as a buyer, he said.

``Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami,'' Gross of Newport Beach, California-based Pacific Investment Management Co. said in commentary posted on the firm's Web site today. ``If we are to prevent a continuing asset and debt liquidation of near historic proportions, we will require policies that open up the balance sheet of the U.S. Treasury.''......

painterwhatever : this a real innerestin piece, yo should go there now an read the lot.

spider : so paintercroonerdude, whaddaya they or is they aint bust man?

painterman : it don look good man, i guess some as is an some as aint but how many of each is not yet cleh. roub sez 2 trillion bucks gon up in smoke an only a quarter o that been owned up to.... on toppa at - as asset prices fall banksus capital shrink some mo!

bill gross : "...Assets are still being liquidated but there is an increasing reluctance on the part of the private market to risk any more of its own capital. Liquidity is drying up; risk appetites are anorexic; asset prices, despite a temporarily resurgent stock market, are mainly going down; now even oil and commodity prices are drowning. There may be a Jim Cramer bull market somewhere, but it’s primarily a mirage unless and until we get the entrance of new balance sheets, and a new source of liquidity willing to support asset prices."....

ninja : I don’t like Bill Gross at all....

....."Haha. With spreads blowing out, Billy has to be feeling some serious pain right now. What if he was wrong and the government doesn’t make his positions whole? What if they bail out Fannie and Freddie but give all investors one hell of a haircut?

Maybe his “investment secrets” were nothing more than, “hang out with the right crowd and make sure they’ve got your back” and “if all else fails, get the taxpayer to bail you out of your underwater positions.”

Well, Billy has a big bet on. The big bet could result in a big FAIL."

roub : "It is by now clear that the shopped-out, saving-less and debt-burdened US consumer is on the ropes and that there will be a significant and persistent contraction of real consumption for the next few quarters. About a dozen separate negative headwinds – to be described in detail in this note - are now hitting the US consumer while the positive effects on consumption of the tax rebates are already fading away.

spider : so lets see ifn i got this right... tax payers gon get stiffed to save the asses o the financial s but itz ok cos we all gon get stuffed if they all clapse? what mish say?

mish : Leverage Continues To Unwind...

..."Across the board, leverage continues to unwind. This is supportive of the idea that speculators played a bigger role in commodity prices than some have presumed. From a fundamental standpoint, the global economy is slowing at a rapid pace. Even China is rapidly slowing as noted in China's Manufacturing Contracts for Second Month.

Some attribute the China slowdown to shutting of factories ahead of the Olympics. I disagree. If a 2-3 week slowdown was all there was to the China slowdown story then the Chinese stock market would not have collapsed in half and China would not be announcing a stimulus package.

When it comes to hedge funds, I think the major shakeout is still coming. And as with Ospraie, those wanting out are going to find it easier said than done. Eventually illiquidity and leverage come back to haunt every time.".....

real interest rates are high

..."That overcapacity in conjunction with rising unemployment means that profits are going to be very difficult to come by. Indeed, there is no point to borrow money if expected returns are negative. Currently one cannot count on positive returns from the stock market, the corporate bond market, carry trades, housing, restaurants, nail salons, or even gold, silver, energy, and other commodities. Leverage is being forced out of the system at every turn.

Of course there are some Pollyannas who always think a massive recovery is just around the corners. However, banks are not acting as if a recovery is coming soon, nor is the treasury market, nor is the corporate bond market, nor are credit default swaps and various risk spreads.

Indeed the corporate bond market is acting as if it's Dead Banks Walking. And dead banks walking in my opinion is a continuation of the deflationary period we are in."

tim : The Financials Will Do the Rest

pickardthequaker : to be continued.......

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Yo! Spider dude, How come we gotta keep sayin this stuff about this is not advice blah blah?

spider :Painter dude thats so's the suckers out there won't go do nothin stupid and say we told em it was ok. Then they gon come get yo with some smart ass lawyer an sue yo skinny ass off!

pickard : No way man! Aint nobody dumb enuff to listen to some freakin artist view on investin they hard earned bucks?

spider : Way man, Sooo way! Them suckers'l listen to any kind o s**t if they think they can get a edge.
Just look at the way they piled inta real estate, CDO's SIV's, CDS's and whatever.

Shoot! What you say Halfcat?
It's cool! What the f**k kind a lawyer gonna sue a dog or a rat?
I'm a mouse! you mutt.
Chill guys, cool it, the suckers watchin an all.

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