SLOW BOAT FROM CHINA

yo!..woe the luck...innit!

Susan Loesser : ...""I'd like to get you on a slow boat to China" was a well-known phrase among poker players, referring to a person who lost steadily and handsomely. My father turned it into a romantic song, placing the title in the mainstream of catch-phrases in 1947. visit site

mish : ..."If nobody is buying your trucks, you don't need to rent a vessel to carry that shiny new 18-wheeler to its new owner. Hence the Baltic Dry Index, which tracks the cost of shipping goods and commodities, fell below 1,000 this week for the first time in six years.

Put another way, it is now almost 90 percent cheaper to ship goods over the oceans than it was at the beginning of the year. And because the huge vessels known as capesize ships can't currently charge much more than their daily operating cost of about $6,000 per day, their captains have slowed down to economize on fuel and save money, to about 8.68 knots from 10.33 knots in July, according to data compiled by Bloomberg.

It isn't just the oceans that are emptying. Air freight traffic dropped 7.7 percent in September, according to the latest figures from the International Air Transport Association. That's the steepest decline since the trade group began compiling the data in January 2003." mish

cappinpetey : oh...an iss..."

ambrose : ..."In Eastern Europe, the brief respite following Hungary's $25bn rescue package from the IMF was already giving way to fresh angst. Romania was forced to deny persistent rumours that it was seeking an emergency loan from the fund.

The country's prime minister, Calin Popescu Tariceanu, may have inadvertently fuelled fears when he told local TV that the global economy was sinking like the Titanic. "On the lower levels, people are in water up to their necks, while on the upper floors the music still plays on, just as it did in the film. And those people listening to the people listening to the music, not knowing that the Titanic has hit an iceberg, that's us here in Romania. That's just what we're like," he said.

dexansamclem : ..."The idea, of course, was that traveling by boat to China was about as long and slow a trip as one could imagine. Loesser moved the phrase from the poker table to a more romantic setting. The song was very popular in its time (and has been revived and sung from time to time over the years by such notables as Kay Kyser, Bing Crosby, Jimmy Buffett, and Frank Sinatra, among others). The phrase then moved into general parlance to mean anything that takes a lonnnnnnng time." visit site

pokerpetey : yeah...lak a bear market...innit!

SLOW BOAT TO JAPAN

yo!..turnin japanese but wiyout a dosh...innit!

paintybollox : back from Firenze nah...an it all still crap!

lamont : ..."Before the Government adopts full-blown Keynesian policies, it should examine their effect on Japan after the bursting of its “property bubble”. Between 1991 and 1998, Japan spent 100 trillion yen on new railway lines and other public works. Little good did it do. Its economy stagnated. Since 1991, Japan’s government debt as a proportion of GDP rose from 64 per cent of GDP in 1991 to 171 per cent this year. Japan is in a debt trap it can’t escape.

Gordon Brown’s policies would take Britain down the Japanese route — with one important difference. Japan runs large trade surpluses and can fund its borrowing from domestic savers. The British Government depends on international capital markets to finance its borrowing. Deficits and excessive borrowing may not have mattered when the world was awash with money. That has changed. Confidence is all.

Today’s bust was inevitable. But recovery will follow. The economy adjusts. Prices fall, buyers come back into the market, confidence slowly returns. It is mistaken government action that turns recessions into depressions .

Adding higher government borrowing to private sector borrowing does not improve the performance of the economy. If consumption has grown too fast, increasing government spending is the equivalent of driving through a red light.

Gordon Brown is like a gambler on a losing streak, doubling up by spending. More huge tax increases lie ahead. Because he has already exhausted the scope for stealth taxes, his policies mean we could see VAT raised to 20 per cent or the basic rate of income tax heading back towards 30p. One thing we can be sure of: it will be horrible. But once the consequences of Gordon Brown’s fiscal management are plain, it will take a generation before the voters trust Labour again. Times

FLORENCE, ITALY

yo! bon voyage...innit! see yo inna week or so dudes...

PUSH ME PULL YOU

yo!..all the fun of the fair...innit!

petey : ...the lever has come off the one armed bandit money machine
at the VEGUS FED an now none of the buttons are workin...

zooneh : ...f**kin candyfloss...innit!

beulah : lookyhear atta bollox...

Insight: Shattered illusions of liquidity

..."The substantial build-up of foreign reserves in central banks of emerging markets and developing countries has puzzled economists. As identified by David Roche, of research boutique Independent Strategy, and others, the large build up of central bank reserves is really a liquidity creation scheme that relies on the dollar’s favoured position in trade and as a reserve currency.

Deterioration in the US economy and the issue of more government debt to support the financial sector may increase pressure on the US sovereign rating and the dollar. US government support for financial institutions is approaching 6 per cent of GDP compared to less than 4 per cent at the time of the Savings and Loans crisis. This may set off a further phase in the global de-leveraging as large losses on dollar investments slow down the international credit creation system.

Gillian Tett of the FT coined the phrase “candy floss money”. Financial technology spun available “real” money into an exaggerated bubble that, like its fairground equivalent, collapses ultimately. The emerging market reserves system is another dimension of this candy floss money.

The perceived abundance of liquidity was, in reality, merely an illusion created by high levels of debt and leverage as well as the structure of global capital flows. As the financial system de-leverages, it is becoming clear, unsurprisingly, that available capital is more limited than previously estimated.

In recent years, money was cheap and other assets were expensive. As each of the global economy’s credit creation engines breaks down and systemic leverage reduces, money becomes scarce and expensive triggering adjustments in asset prices in a reversal of the process.

Mark Twain once advised: “Don’t part with your illusions. When they are gone you may still exist, but you have ceased to live”. In the current financial crisis, many illusions have been shattered. The quantum of available capital and the munificent resources of central banks and sovereign wealth funds may be another of the accepted ”facts” that may be revealed to be an illusion." FT

Fed offers $540bn to prop up money funds

..."The Fed move highlights the extent to which policymakers are concerned about US money markets, even as conditions have improved, with interbank rates dropping. Policymakers are also worried that moves to prop up US banks may have undermined money funds, which compete with bank savings accounts. FT


market ticker : ..."Horsecrap.

Bernanke is doing what Paulson tried and failed at in the "free" (coerced by arm-twisting by Paulson) market through executive fiat, and he is printing money to fund it. Exactly how much money he is printing (as opposed to lending) depends on the precise amount of overpayment that is being induced through these so-called "loans", but that it is happening is not open to question.

Why has this become necessary?

Ben and Hank produced a dislocation in this section of the marketplace by favoring other debt instruments with federal guarantees, thereby forcing money out of these instruments.

This in turn created major problems for money market funds who buy this paper as a routine matter of course in that when they needed to redeem deposits they suddenly found no buyers for the securities, as those people had fled to other instruments that Ben had guaranteed payment on!

As each new facility is rolled out by Ben and Hank a new area of debt becomes backstopped by the government in some fashion, thereby forcing money out of other instruments and causing those instruments to become distressed!

We are rapidly reaching the point where only The Fed and Treasury are providing any lending at all!...read the whole article

petey : Beware below, Bedlam above,
Halls of mirrors and tunnels of love.

Sensory shrapnel, bullets of bliss,
Hands that hold, lips that kiss.
Generate spells, create confusion,
Expectation, cruel illusion.

Money in slot, hand on lever,
Chills the soul, causes fever!

V SIGN FOR THE POOR

yo!..pension politix issue...innit!

PALOOKAVILLE FINANCIAL stardate capitulation day+32

...Admiral Brown is onna bridge o a dorkship TURNERPRIZE...struttin arahn pretendin ta be a great dictator...practicin salutes an stuff...

...all around him the economy lies in ruins...frozen by the withdrawal o the great credit binge of the labour years...

...he hopes to put the leverage handle back onna broken money machine an restart a BOOM wotz BUST...

...he wants first time buyers ta bailout a property market by buyin houses before they become fair value again...

THE GRAPES OF WRATH

liam : "I'm staggered – there is no other word for it – at the way Gordon Brown is strutting around the world like a pumped-up super-hero.

Does he have no shame? I know he's the Prime Minister; I'm meant to show due respect. But I'm still forced to ask myself – what planet is this man on?

I don't deny there is merit in the UK bail-out scheme. Some of us have argued for months that only "direct capitalisation" of the banks would even begin to break this crisis. Brown's plan is certainly better that the "made in America" version involving the state buying-up Wall Street's bad assets, without insisting on equity ownership. US Treasury Secretary Hank Paulson dubbed his rescue package a "bazooka". A smaller armament would have been more apt – a peashooter, perhaps?

None of this remotely justifies Brown's triumphant tone. For one thing, the global financial system remains in very deep waters. The British economy is also a mess – with the blundering errors Brown made as Chancellor coming back to haunt us all." Sunday Telegraph

irwin : ..."Politics may make strange bedfellows, but economic crises make even stranger ones. Gordon Brown, a free trader, now finds that Nicolas Sarkozy, an arch-protectionist, has virtues he had not previously noticed. It seems that they are united by three things. First, they believe, or at least are pretending that they believe, that the current ills originated in the United States. You might remember: these are the same United States whose entrepreneurship Chancellor Brown lauded to all who would listen, before becoming prime minister and slipping easily into the anti-American mode that now dominates his public and private discourse.

Second, Brown and Sarkozy, along with their EU partners, believe that now is the time to put the former hegemon in its place. America, they believe, is paralysed by the lame-duck status of its president. It will, they reason, be forced to go along with any European proposals for what is variously called a “new financial architecture” and a “new world order”. The joy on the faces of EU leaders as they gather for their conferences can be seen in news photos. Never mind that the banking systems of their countries are on the verge of collapse, or that they are headed for a recession deeper and longer than the one the United States will suffer. Now is their chance to do things that the Americans might not like, but can’t stop.

Third, Brown, Sarkozy & Co have always done what President Ronald Reagan accused his own bureaucracy of doing: “If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidise it.” Brown, long famous for profligate spending and mindless regulations, now proposes to subsidise homebuying by first-time buyers so that they can catch the falling knife that is the house-price market. And his new-found friends in the EU have never hesitated to increase their tax-funded budgets, and draft regulations at such a rate that even the lobbying firms in Brussels cannot follow all the action....

........For Brown, such a Bretton Woods II would put him in the role played by John Maynard Keynes in 1944, when his biographer Robert Skidelsky reports Keynes “was the Churchill of this [financial] world, and no one could have taken his place”.

That wouldn’t be the first time, and won’t be the last time, the prime minister has likened his role in coping with the financial crisis to Churchill’s role in coping with Hitler." Sunday Times

WEATHER FORECAST

john waples : "Anyone still holding on to hopes that the financial problems have been solved and that we will not have problems in the wider economy is living in cloud cuckoo land. Over the past year we have seen an excess of debt being blown out of the banking system and the same will now happen in the real economy.

Every day I am hearing first hand from small and medium-sized businesses that are getting bullied by banks. As a result, the corporate casualty list, which so far has been contained, is going to grow rapidly. All companies that I speak to have put capital-spending programmes on hold for the next 12 months, staff numbers are being cut and profit forecasts that looked attainable only six months ago are being trimmed back.

From the collapse of Northern Rock to the part nationalisation of HBOS and Royal Bank of Scotland, it took more than a year to recognise the depth of the problems in the financial system. It may take the same length of time for the British economy to sort itself out. The stock market has already priced in a lot of this pain and has singled out those highly indebted companies that are going to struggle to survive. But so far there has been a lag between the rapid fall in UK equities and the corporate news that will inevitably follow.

It is going to be a very demanding time for company bosses, who will have to make tough decisions. Britain will pull through and the government appears keen to prime the system, but anyone who is delaying taking action should think again. This is the time that British business has to show its mettle and, if it does, it will come out the other side in much better shape.

As a newspaper we will endeavour to identify success stories. But I have had too many conversations with too many senior industrialists and other businessmen to ignore the shake-out that is coming." Sunday Times

THE PENSIONS OF THE PUBLIC SECTOR PAID FOR BY THE POOR

petey : jobs is bein lost wot will never be got back by those who will pay the real, lasting, price of browns hubris...while he an his govt. pals bask in the warmth o their Guaranteed, cast iron, index linked and unbelievably generous PUBLIC PAID PENSIONS...

...brown has robbed private pension funds of £5 billion+ per year since deciding that the poor should be hoodwinked into financing the state...while MP's voted themselves better pensions and higher pay!

1998 buget : "However, the most controversial shock and the biggest regular revenue raiser concerned abolition of the tax clawbacks available to pension funds - known as gross funds which receive dividends tax free. When companies pay out dividends they deduct what is called advance corporation tax. The amount is credited to them when they pay ordinary tax and at the same time the gross fund investors claim the ACT levy from Inland Revenue. The loss of this will amount to �4-billion in a full year rising to an estimated �5.4-billion. Brown claimed this loss would be bearable without cutting pension benefits because - thanks to rising markets - most funds had a substantial surplus over their liabilities.

However, the pension industry calls the abolition (which will pare about 0.75% a year off pensions) robbery and short term expediency for raiding people's long term savings. Companies reckon the "top up" required for in-house pension schemes will largely wipe out the cut in corporation tax while the local authorities claim that it will force them to put up property rates sharply." Business Times

peteypension : nah jus compound it up every year since 2008...money taken from our savings to pay for their pensions!

THE DAY AFTER TOMORROW

Y0! f*ckin freezin...innit!

PALOOKAVILLE FINANCIAL stardate capitulation day+31

...Admiral Brown has won the battle of the media...

...he has arranged for our money to be given to the BANKERS so that they can sit on it and feel warmer...

...evvabody happy innit!..bollox!

...itz bankers 10 - taxpayers 0... inna contest ta see who guz BONUS or BUST...

...they think itz all ovva...

........MASSIVE TEMPERATURE DROP..!...

FINANCIAL WINTER : ECONOMIES FREEZE OVER

mish : ..."

• US leading indicators have biggest weekly plunge in 37 years.
• US leading indicators are at 33-year low.
• US Consumer sentiment drops most on record to 57.5 from 70.3, the biggest decline since monthly records began in 1978.
• US big-ticket purchase sentiment slumped to 58.9, the lowest level ever, from 75.
• Canada Consumer Confidence Drops to 26-Year Low.
• German investor expectations slumped to minus 63 from minus 41.1 in September.
• French manufacturing confidence slumped in September to the lowest in 15 years.

edmond : " Britain faces deflation for first time since 1960

Britain will slump into deflation next year for the first time in half a century, experts have warned.

For the first time since 1960, the cost of living will start to shrink next year, in a worrying parallel of the Japanese "disease" of the 1990s, according to new research.

The news comes amid growing speculation that the Bank of England will soon be forced to cut borrowing costs to 2pc or below, taking them to their lowest level since it was founded in 1694.
Telegraph

700 BILLION BONUS BAILOUT

guardian : Wall Street banks in $70bn staff payout

"Pay and bonus deals equivalent to 10% of US government bail-out package"

FANTASY ISLAND

simon : ..."As we reported on Friday, Mr Brown has promised to maintain his spending pledges on capital projects and public services. This is despite the fact that the economic prospects predicted at the time these pledges were made are now fantasy. Growth is non-existent, tax revenues are tumbling, borrowing is ballooning, yet Mr Brown thinks it is business as usual.

I have quoted Jim Callaghan before and, for Mr Brown's edification if no one else's, I do so again: you can't spend your way out of a recession.

Mr Brown thinks he knows better. Having also borrowed money to bail out the banks - and who is to say that will work, or that more banks might not need assistance? - the total borrowing this year is predicted to be £90 billion- £100 billion.

Given how wildly inaccurate most earlier predictions have been, we can assume that is a conservative estimate. Mr Brown has learned nothing. The debt will take generations to pay off. I hope our grandchildren will be grateful for this unwarranted imposition on them...."Telegraph

IT IS NOW..!

...bond market fat lady still waitin ta sing

petey : winter draws on!..

THE BEAR OF THE BASKERVILLES

yo!...some days...the bear will eat you...some days you'll eat the bear...

PALOOKAVILLE FINANCIAL stardate capitulation day+28

...a most awful thing has happened!..it would appear that after a lovely bull market
from 1982 -2000...

...a nasty, capital destroying, bear market... has crept up on us...

...while we were watching some of the worst tv ever...

petey : spider been onna web lookin at some very gloomy stuff...

spider : yo! boss...cop fo dis...

thomas : "My most optimistic forecast is it will last another 4-5 years from now, or about 12 years if we count year 2000 as the starting point. If we use the commodity super-cycle by Jim Rogers, which usually runs opposite to the general equity market and lasts until 2020 as Jim predicts, it will be also a 2 decade bear market for equities, consistent with both the 1970s and the 1930s. When will the S&P 500 be back to last October's peak? At least 24 years from 2000, or 2024. A few chart technicians today think the Dow can drop all the way to 1,000, back to the 1982 level. Even that is possible, but I think it might bottom at one of the lower Fibonacci levels between 14,000 and 1,000. Which one of them is yet to be seen in future years but my guess is around 4-5,000. seeking alpha

michael panzner :..."Not to beat a dead horse, but on Tuesday, (in "Give 'Em Enough Hope...") and last week (in "Bear Market Rallies"), I noted that it is not uncommon to see eye-popping rallies in bear markets.

Even so, I do think there is something very interesting about the dates of most of the entries in a chart accompanying an article in today's Wall Street Journal about yesterday's big rally, entitled "Dow Takes Giant Leap as Bailouts Snap Gloom."

market ticker : ..."Do not believe for a second that a single thing done by these folks is going to help Main Street - or you. It will not, just as it has not. Oil and food price ramps, mortgage spreads, the stock market and the economy after jawboning repeatedly with "the economy is fundamentally strong" (instead of warning people that we were headed into a recession and might want to prepare for that!) and more.

"Main Street" will continue to get the most unpleasant of surprises if the course of action in Washington, most particularly the actions undertaken by The Fed and Treasury, is not reversed now.

How bad can it get? Read this article from Bloomberg:

"Oct. 14 (Bloomberg) -- Iceland's benchmark stock index plunged 77 percent, the biggest decline on record, as trading resumed after a three-day suspension and the nationalization of the country's largest banks."

Think it can't happen here? The price of every imported good tripling overnight as the currency crashes by 2/3rds instantly?

That is what happened to Iceland - literally overnight.

If we don't force transparency of all financial institution balance sheet and capital positions, this may be coming to a stock market - and grocery market - near you.

Hope and pray it does not, and vote all politicians who voted for this crazy bailout bill out of office come November 4th.

I love this nation Ben and Hank - are you willing to kill it so your banker buddies don't have to confess?"

watson : i say holmes old chap...bit over the top don't you think??

holmes : my dear watson...I recommend you read the complete articles...

...over a cup of Earl Grey anna slice o lemming!

WIRE RALLY

yo!...night atta opera...innit..!

PALOOKAVILLE FINANCIAL stardate capitulation day+26

...alla kings orses an alla kings men have joined forces ta put
humpty dumpty back together wi vinega an brahn paper...

...shocks an scares is rocketin on relief that itz all ovva...

newsnight : it all gon be cool nah man...fat lady sung innit!...
...lez kick ass on who dunnit...

watson : i say holmes old boy...time fo a spot a bubbly wot?

holmes : everything may not be as it seems...

watson : wot fo yo such a sad sakka sh*t shamus?

holmes : elementary! watson old boy...elementary...

watson : an?

holmes : house prices still fallin dude!...stiffs still skint, in debt an scared...
...truth still not out there...trust still gon walkabout...

tim knight : "...As for equities in general - - I said very plainly I was looking for a rise "between 1050 and 1100" on the S&P. At this rate, we'll be there tomorrow! (Although I really doubt "this rate" will continue; today was, after all, a relief rally with huge, pent-up demand). In any event, the opportunity to get really bearish again won't require a lot of patience.

market ticker : "...The resistance to forced truth-telling is maddening folks. It has been going on now for over a year, and until it stops, I just don't see the market normalizing. I know the counter-argument - "everyone is broke" - but if that's the truth, then let's get on with it, because we're only delaying the inevitable. You can't make the broke un-broke, you see. If we need to set up some state-sponsored banks (to do it FAST) and then spin them off in IPOs, letting the existing system die, then so be it.

Perhaps such a time would be a good opportunity to include The Fed in this sort of forced replacement, since they are and were complicit in the original destruction and have been part of the liars charade! After all, what Congress giveth via legislation, it can taketh away, no?

In any event don't get complacent; I see nothing here right now that suggests the "crisis is over", but the mouth-breathers in the media are of course cheering the market's rally.

Good for them.

We'll see how long it lasts.

Check Libor, the TED spread and the IRX tomorrow when our bond market is open for trading. You should get a decent idea of what's what at that point."

from financial armageddon ...

grantham : ..."The terrible thing -- after all this pain -- is that the U.S. equity market is not even cheap. You would imagine that, given the amount of panic, that it would be. But it started from such a high level in 2000 that it still has not yet worked its way down to trend, although it is getting close. But the really bad news is that great bubbles in history always overcorrected. So although the fair value of the S&P today may be about 1025, typically bubbles overcorrect by quite a bit, possibly by 20%. That is very discouraging.

barrons : What about equities outside the U.S.?

grantham : Things are getting cheaper. We score the EAFE [the Europe, Australasia and Far East Index] as absolutely cheap, and it's offering a 7% real annual return over seven years. Emerging-market equities are a bit cheaper, and we see a 9.5% annual real return over the same period.

The problem, though, is that we have so much downside momentum, so many financial problems and so many interlocking relationships, that it is hard to imagine this crisis subsiding because stock prices are digging in their heels and approaching fair value. financial armageddon

fortune : "...Investors have been reluctant to admit that this cycle, unlike 1998's credit crisis, is imbedded in the real economy," Merrill Lynch investment strategist Rich Bernstein wrote last week. "The government can come up with any number of refinancing and liquidity plans, but households are likely to increasingly default on mortgages and other debts if cash flow is not stabilized via employment."

The employment picture is deteriorating rapidly. The United States has lost 760,000 jobs in the past nine months, according to the Bureau of Labor Statistics, while weekly initial jobless claims have hit a recent 478,000 from the low 300,000 range in early 2007.

Those are numbers that go hand-in-hand with recessions, noted Northern Trust economist Asha Bangalore. "Projections of weak economic growth," she added, "suggest that a higher level of jobless claims in the months ahead is nearly certain..."

...."But outside the booming financial sector, job growth was soft and wages were stagnant. The median U.S. family's income was actually a shade lower in 2007 than it was at the end of the high-tech boom of the 1990s, according to census bureau data.

"Since 2000, a lot of economic growth has been illusory," said Len Blum, a managing director at investment bank Westwood Capital. "Now that the asset bubbles have been popped, you start to realize we really didn't make that much progress in our economy."

Indeed, consumer outlays are now falling, as households try to work off their debts. Along with the surge in mortgage delinquencies that precipitated the financial crisis, the spending slowdown is also taking a toll on employment..."cnn

fat lady : i've never been so insulted in all my life...

groucho : ...the night is young yet!

beulah : what abaht a sanity clause?

petey : evva boddy know...they aint no sanity clause..!

ONCE-UPON-A-TIME INNA 'VEST

yo!...let there be light..!...innit!

PALOOKAVILLE FINANCIAL stardate capitilation day+24

...western banks are under attack from the forces of deflation...they shares is sinkin fast as...
...no f*cker wants em...

...smoke an mirrors was used to create an ilussion o BOOM an nah itz BUST...

...alla kings orses an alla kings men atta meetin...tryin ta put humpty dumpty...
...back together agin..

...trouble is...trust gone walkabaht...an itz alla cos o lies an stuff...

...banks bin lyin...govment bin lyin...

market ticker : ..."The short version of The Genesis Plan is:

1. Everyone must expose their balance sheet; all Level 2 and 3 assets must be declared and all models disclosed in full immediately and every quarter hereafter.
2. The CDS monster must be caged by forcing it onto an exchange where O/I and margin supervision can be maintained. This is already in process and must be completed.
3. Leverage must be returned to no more than 12:1 across the system - no exceptions.

liam : ..."Wholesale money markets won’t start operating freely again until all banks are forced – by law if necessary – to declare the entire extent of their exposure to sub-prime, default swaps and any other loss-making position.

Such “full disclosure” will hurt some banks very badly. Chief executives will be sacked, reputations crushed, and more institutions will fail. But, with the Government standing ready with finance to prevent systemic meltdown, such “creative destruction” must happen – with stronger banks taking over the weak. That’s how capitalism works. The system needs to be purged. And until it is, it’s a myth to think the inter-bank market will work...." sunday times

TELL THE TRUTH ABOUT NATIONAL DEBT

liam : Let’s call time on spiralling national debt

..."All these multibillion dollar bail-outs are pushing Western governments closer to bankruptcy. Iceland shows it can happen. OK, Iceland is small and its authorities have been particularly remiss, but it’s an advanced nation — not a tinpot banana republic. A rubicon has been crossed.

Credit default swaps on the sovereign debt of some Western nations have shot up. The markets don’t yet think the likes of Italy and Spain will go bust, but the chances are growing they could.

So dire is America’s fiscal health that even technology can’t cope. Last week, the digital clock in New York’s Time Square, which shows the US national debt, symbolically ran out of digits. It was first installed in 1989, when the country’s debt was $2.7 trillion – a 13-figure number. Now the total is $10.3 trillion, the display is simply too small.

As this column has previously argued, we need such a clock in Britain. Some moneybags short-seller should give something back, sponsoring one in London’s Piccadilly Circus. The Government certainly won’t fund it.

The Treasury claims our national debt is around £550bn. That number – how can I put this delicately? – is total nonsense.

Our politicians and civil servants have made an invidious art form of burying off-balance-sheet liabilities. I’m thinking, in particular, of the private finance initiative, quasi-private debts held by the likes of Network Rail and – above all – our enormous public sector pension bill.

The UK’s true national debt – even before last week’s multibillion pound package – exceeds £1,300bn (some £50,000 per household). Every penny will have to be re-paid from future taxation. That’s before we spend any more...." sunday times

neil young : nuthin is perfec in Gods perfec plan...jus lookin a shadows ta see...

petey : shine a light onnit...tell a truth... for once!

Bagpipe Music

yo!...tin hats innit!...

worra week!..crap!!!... wannit!

PALOOKAVILLE SPORT stardate capitulation day+23

Louis MacNeice : "Their knickers are made of crepe-de-chine, their shoes are made of python,

...Their halls are lined with tiger rugs and their walls with heads of bison...

...the story so far...trust in banks, financials has evaporated...

...panic has set in...an markets have tanked and now...

EVERY DAY IS WHACKDAY...

...is everybody happy?...no we're f*ckin not!

simon : ..."Let there be no doubt about the extent of Gordon Brown’s culpability for the crisis. As Chancellor, he raised huge sums and borrowed yet more in order to build a client state of tame Labour voters on the public payroll – whether as employees or claimants. He pushed Britain to live way beyond its means not merely in this way, but by putting excessive amounts of money into circulation that banks could lend on with cavalier irresponsibility. He then failed properly to regulate those banks...

The debt mountain he created has yet to wreak its full horror on society. He spent so wildly that when things went wrong – not that he ever managed to predict that they would – we were desperately short of funds to make repairs. As a result, taxes will have to go up, and public services may have to endure damaging cuts. Finally, when the time came to clear up the mess, he dithered and brooded while the stock market went into free fall and banks went to the wall."
...telegraph

louis : ..."It's no go the Government grants, it's no go the elections...

...Sit on your arse for fifty years and hang your hat on a pension...

A MAN WITH A PLAN

market ticker : The Genesis Plan ..."While there were a few signs of credit market stress easing (a bit) today, (friday) there were also more anecdotes of things getting much worse. I see nothing to suggest that short-term lending has returned to normal, and until I do, I remain on high alert for the sort of disruptive events that can impact your life in very undesirable ways.

Yes, the market bounced hard today. Twice. Artificial? Maybe. Inside knowledge? More probably. Will whatever the "crackberry network" was buzzing about work? Likely not for more than a few days, but with the market this jittery, it doesn't matter - when the VIX is this high anything that makes people jump causes this sort of reaction - in either direction.

Get on it folks - plaster the media and your elected officials with the fact that we now have hard evidence that this path forward will not only work on a technical basis, but if it is adopted it will clear the credit markets almost immediately, which is the key element of this mess that must be resolved." market ticker

louis : ..."It's no go the merry-go-round, it's no go the rickshaw...

...All we want is a limousine and a ticket for the peepshow...

POETRY OF THE 1930's

john authers : ..."A deeper irony is that there may not have been any need to update the book. Stock market conditions look ever more like the 1930s.

The noughties are much more similar to the 1930s than commonly thought. In morning trading on Friday, the S&P 500’s fall for the decade was almost identical to its fall for the decade on the same date in 1938. The pattern of the two decades is freakishly similar, with a big sell-off followed by a prolonged rally and then a fresh bear market. The key difference is that the sell-off in this decade before the “fools’ rally” began was far less severe than in the 1930s.

This, we can now see, was because cheap credit had inflated a new bubble.

This is what followers of Graham had argued. They said the market during the twin lows of the WorldCom crisis in 2002 and the invasion of Iraq in 2003 was still not cheap. Dividend yields, for example, were still barely half their level of the mid-1990s, before the tech bubble took hold.

But the similarities between the market tops in 1929 and 2000 are compelling. Both saw wildly overvalued stock markets and economies that were still in decent shape.

Measures based on cash, such as dividend yield or cash flow multiples, show that the market is now much cheaper than it was during the false bottom of 2002-03, even if overall indices are still higher.

We are not, therefore, in a new 1929. Our position is more similar to that of the late 1930s. That is not so encouraging: in the decade after October 10 1938, the S&P gained 5 per cent.

But at least we have a clear historical comparison, and a clear guide for how to proceed. Providing you are not using borrowed money, and you can afford to wait a matter of years for Mr Market to thrash out his problems, then Security Analysis is all you need.

Do not try to work out how long the market will take to recover or when it will hit bottom – that task is impossible. Use basic balance sheet methods to work out how much a stock is worth and how much it would be worth if the worst came to the worst. If that calculation leaves you with a margin of safety, then buy it. Don’t let the hand of history gripping your shoulder stop you." FT

paintypension : yo!...right on ...innit!...

...oh yeh!...read a disclaimer at top...none o this is advice...an don blame me if ya f**k up ya pension...

louis : ...The glass is falling hour by hour, the glass will fall for ever...

...But if you break the bloody glass...you won't hold up the weather..."

"Bagpipe Music" by Louis MacNeice 1935

peterthepainter : good..innit!

THE RED SPECKALED SCREEN

yo!...elementary...innit..!

PALOOKAVILLE FINANCIAL stardate capitulation day+22

...sherlock holmes is puffin on is pipe an watson oilin a old shot gun...inna drawrin room...

watson : WTF..?...birdbrain!

holmes : elementary my dear watson...there was no money...it was all an illusion...fueled by credit conjured outa nowhere by a leverage machine anna bunch a cunnin bastards...

watson : yo mean a bankers dude?

holmes : no jus a bankers man...politix anna developers anna media an alla suckers wot believed inna dream...

watson : i say!...wots ta be done?.. holmes old boy?

holmes : elementary my dear watson!...we gotta make a banks own up an
TELL THE TRUTH...

market ticker : "They(the credit markets) remain frozen because the root cause of the problem is that banks and other financial firms have been lying for more than a year, each quarter claiming to have "kitchen sinked" their losses only to report more the next quarter, and in some cases have gone on national TV to proclaim they're "well-capitalized" only days or weeks before they collapse!

The first question anyone asks when someone wishes to borrow money is whether or not they will get paid back. If the lender does not believe they will be able to be paid back then that loan will not be made, no matter how much money someone has available to them.

It really is that simple folks and yet this fundamental principle has been willfully and intentionally ignored for more than a year.

THE UNDERGASM

beulah : yo! painty shugga...why is alla em screens red?

painty : honey...thats cos a whole wurl is shittin itsen ovva a complete seizure o a financial system...

beulah : yeh..but it not gon fect us nah is it?

sadsakkapaintysh*t : nah...yo goo back a sleep honey it all be ovva by a time yo wakes up...innit!

zooneh : yo! dude...i don think it be ovva fo a while man...

saddy : i knows it man...but i aint gotta heart fo ta tella a troof...

so...nah we see wot come o buckin a market...instead o takin a likkle hit o recession
nah anna gen...we create a permanent boom onna nevva nevva an massage a markets to a point o undergasm...a whole wash day...shot ta hell...

...a illusion lost...anna crisis convulsin a suckers...a f**kin whiplash o tension explodes...
an causes iss sunami o debt...ta puke up all ovva a table cloth...

TRUST = CONFIDENCE...LOSS OF TRUST = DISASTER...

barry : "...The thing roiling markets today is not the lack of confidence; It is capital, or more accurately, the lack thereof. Thanks to a series of very poor trades—excessively leveraged and absurdly risky to boot—banks are now dramatically undercapitalized.

As we have seen in just about every historical financial crisis, the shortage of capital is the underlying cause of monetary mayhem. Too much debt, too little equity, makes any financial system cease to function." the big picture

nouriel : ..."The crisis was caused by the largest leveraged asset bubble and credit bubble in the history of humanity where excessive leveraging and bubbles were not limited to housing in the US but also to housing in many other countries and excessive borrowing by financial institutions and some segments of the corporate sector and of the public sector in many and different economies: an housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, a hedge funds bubble are all now bursting at once in the biggest real sector and financial sector deleveraging since the Great Depression...." over at mish's

DON LOOK DAHN

yo!...strange days!...innit...!

PALOOKAVILLE FINANCIAL stardate capitulation day+19

...while dorktrekkin inna long episode o
DORKTREK : LOST IN SPACE...the crew from the loft in
down town palookaville had fallen thru a back o a cornflakes box
inna breakfas nook an become trapped inna 'flation nebula...

...a de-leveraging black hole has been suckin alla life outa
the galaxy an 'vestments bin shrinkin...

...identified as a NIAGARA drainhole...the sucker goin dahn is a bank near you!

...alla kings horses an alla kings men...beamed in...a mothership o dosh ta plug a sucker up...

...trouble is...fat lady inna wings..innit!
...an noboddy don know wether she don sung yet or no...


...CUBES an SPHERES...bin seen inna vicinity...an y'all know wot at means...


RESISTANCE IS FUTILE...

pjc :Profit illusion

..."Profits for the surviving companies will be squeezed by the recession and the taxes and public spending cuts needed to pay for the bank bailouts. As profits fall the idea that stocks are cheap on a price-to-earnings multiple will be seen for the illusion that it represents, and stocks will fall further...

...But how low will stocks go and how long will they stay there. It could be a steeper fall than I thought at the end of September and the recovery take much longer. This is not a normal cyclical recession in which stocks will bounce back. It is a once in a generation global financial crisis and will take very much longer to put right...." PJ Cooper

nick : Back in June 2008 I wrote a piece for VOXEU predicting a mild recession in 2009. Over the last few weeks the situation has become far worse, and I believe even these pessimistic predictions were too optimistic. I now believe Europe and the US will sink into a severe recession next year, with GDP contracting by 3% in 2009 and unemployment rising by about 3 million in both Europe and the US. This would be the worst recession since 1974/75. In fact the current situations has so many parallels with the Great Depression of 1929-1932, when GDP fell by about 50% in the US and by about 25% in Europe, that even my updated predictions could again be over optimistic....

nick : ..."But after these earlier shocks volatility spiked and then quickly fell back. For example, after 9/11 implied volatility dropped back to baseline levels within 2 months. In comparison the current levels of implied volatility have been building since August 2007 and are likely to remain stubbornly high.

But even these more moderate surges in uncertainty after these earlier shocks had very destructive effects. The average impact of the sixteen shocks I examined in prior research was to cut GDP by up to 2% in the following six-months. The current shock is both larger than these on average and also appears to be more persistent. If these earlier temporary spikes in uncertainty led to a 2% drop in GDP the impact of the current persistent spike in uncertainty is likely to be far worse...." voxeu

peteypainty : how was it fo yo zoon?

zooneh : yo mean...how is it fo us?..boss..

chart from alphatrends hat tip - financial armageddon

ALL THE KINGS HORSES

AND ALLA KINGS MEN...

yo!...humpty dumpty...innit..!

PALOOKAVILLE FINANCIAL stardate capitulation day+19

...dorkfleet starships...TITANIC AND BRITANIC have been blown out of the water...
by panic selling...caused by the realisation that they was BUST

...the sinkin o a good ship...LEHMAN...was wot caused it ta go pear shape...big time...
suckers all saw emsel abaht ta be whacked by a FEDS anna govt...

bloomberg : ``The big concern is that we're going into recession,'' said de Graaf, a senior managing director at ISI Group Inc. in New York. ``The first part is the unwind of the previous boom, the second is the recession that follows. We're in the camp that we're only halfway through this.''

INCLUDE ME OUT

halfcat : doooommed.!...we're allll dooomed...

zooneh : why is any one surprised?

beulah : at painty bastard aint as stoopid as ah thinked...

spider : wassup?..innit...plenty o flies arahnd.!...wot wiyall iss sh*t an stuff...

laverne : ahm sittin onna fortune...innit..?

THE GRAPES O WRATH

jeff : “Cause and effect run from the economy to the stock market, never the reverse. In 1929, the economy was headed for trouble,” wrote Galbraith.

As now, too few understood this. Many who foresaw disaster kept quiet. There was a conspiracy of silence. “The foolish thus [had] the field to themselves.”

In the 1920s, says Galbraith, America’s economy had been weakened by “bad distribution of income... bad corporate structure... bad banking structure... dubious state of the foreign balance... and poor state of economic intelligence”. Who can say with certainty that today it is different? Who now wants to defend the promoters of a one-way bet on property? Any takers?

For those hoping that the stock market’s recent “correction” will be followed by a swift recovery, Galbraith puts a wealth warning on suckers’ rallies. “The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximise the suffering.”

It’s worth remembering that a full recovery in the stock market took more than 20 years. During that time, in July 1932 the Dow Jones index was 89pc below its top. In Britain, the reaction was less severe: the market merely halved." Telegraph

market ticker : "...Market participants must be able to know that when they engage in a transaction it will be transparent, handled fairly, and their rights will be protected.

Our politicians must stop demanding the impossible - that home prices "levitate." House prices cannot be maintained at more than 3x incomes - it simply can't be done. We must encourage home prices to contract to sustainable, affordable levels quickly and efficiently.

Mortgages must return to 30 year fixed notes, 20% down, no more than 36% DTI. No government-linked paper in any GSE may issue outside these guidelines. We must reliquify the mortgage market, and this is the only way to do it - by writing only sustainable mortgages...."

petey : humpty dumpty sat onna wall...humpty dumpty had a great fall...

EMERGENCY COME DANCING

yo!...BAILOUT UK...innit..!

...latest from PALOOKAVILLE FINANCIAL stardate capitulation day+18

...HMS BRITANNIC out of Lombard St. has run aground only days after her sister ship USS TITANIC out of Wall St...had to be bailed out to the tune o loads a money...!

...itz take yo pardners please fo a DANCE MACABRE...o a VAMPIRES...innit..!

painty : to be continued...we hope!

THREE COLOURS RED

STOCKS AN COMMODITIES
TREASURIES AN DOLLAR

petey : itta ill wind...innit!

...disclaimer at side...innit!

MONDAY MORNIN COMIN DOWN

yo!...itta fan annit..!

PALOOKAVILLE FINANCIAL stardate capitulation day+17

...another quiet weekend here in palookaville...with the whole world unravellin arahn us...here we sit like burks inna wilderness...

fo get at more banks is sinkin...fo get at stok markets a plummetin...

EUROZONE BREAK-UP SNEAKIN ONTA A RADAR

liam : " Now, with Europe under systemic pressure, eurozone politicians are heavily exposed to the drawbacks of the single currency. I’ve argued before this credit crunch could, ultimately, test monetary union to destruction – and am sticking to that view." Telegraph

Every country for itself as European unity collapses in an attack of jitters

STATESIDE bin takin alla stick...til nah...innit

FOR WHOM THE BELL TOLLS

yo!...anvil inna air innit..!

y'all seen at TOM AN JERRY toon where the ANVIL is catapulted inta a air by a dog or summat
an tom run arahn tryin ta void a nevitable...inna end he jus dig a grave an wait fo a thang ta land on he head..!

PALOOKAVILLE FINANCIAL stardate capitulation day+14

...all quiet here in palookaville this mornin...alla folks is onna net...tryin ta move they savins ta sumplace safe!

beulah : yo lazy painty bastard!...how come yo settin ere doin nowt..wiyalla wurl runnin rahnd shahtin..DON PANIC..?...an movin a dosh out a bust bastards inta guaranteed sh*t..?

'cat : cool it buely babe! yo ol man...tryin ta woikit aht..fo why it all appnin an how ta stop a sucker goin dahn...

zooneh : cop fo dis...dude ovva at bloomberg sayin in his own opinion...

johnathon : ..."Why would a smart guy like Hank Paulson -- the former boss of Goldman Sachs -- advance such a dumb, shady plan? Let us count the reasons:

No. 1: It delays our national reckoning until after the presidential election.

Paulson first floated a bailout Sept. 18, at the very hour when shares of Goldman Sachs Group Inc. and Morgan Stanley looked like they might go into a death spiral. It's not so much a bailout, as it is a timeout. He had to follow up with something, anything, to stop the freefall from resuming. It didn't have to make sense.

So it doesn't. The plan is about creating the illusion of stronger financial institutions, not strengthening them.

The banks know this. Otherwise, they would have stopped charging each other near-record rates for three-month loans by now. The reason they haven't is because they're still afraid their customers -- other banks -- might go broke.

No. 2: The reckoning will be worse than you can imagine.

If Paulson were serious about recapitalizing rickety U.S. banks, he would infuse them with hundreds of billions of dollars of fresh government money, in exchange for ownership stakes. And if he wanted to create market liquidity for all those troubled assets on their books, he would be ordering banks to disclose everything there is to know about them, so Mr. Market could figure out their present value.

He can't let that happen. Not now. If everyone could see how much the toxic waste is worth, the writedowns would be so huge that many banks would have to be declared insolvent.

Better to let the next administration deal with the clean- up. The trouble is, the longer the government waits to address the banks' lack of capital, the worse it gets, barring a miracle.

No. 3: He's helping his friends.

Is there any doubt? Let's see.

As of yesterday, Morgan Stanley Chief Executive John Mack owned 2.75 million shares of his company's stock, valued at about $67 million. If Mack can get Morgan Stanley to trade reams of sketchy paper for billions of dollars of our Treasury's cash, without diluting any of his stake in the company, who benefits?

Paulson would have us believe it's you.

No. 4: There's an excellent chance the Congress will pass it. Leave someone else to figure out the costs another day." (my emphasis) bloomberg

petey : so!...it aint ma babe...no no noooo...it aint me babe...it aint me you're lookin forrr...babe!

INSIDE THE 'FLATION NEBULA

yo!...'flation gon be DE...innit..!

PALOOKAVILLE FINANCIAL stardate capitulation day+14

...the united flakes dorkship TURNERPRIZE is lost in space...having gone to the rescue of the dorkship TITANIC out of WALL ST... holed below the waterline by a runaway credit binge ...toxic sh*t spilling out inta space...solidifyin an blockin alla trade inna financial universe...

...both ships are now entangled in a DE-LEVERAGING BLACK HOLE which is suckin alla banks an financial institutions inta a negative zone...

...Admiral Paulie an cappin brush, o the titanic, are swirlin arahnd wiya loada houshold names an famous brands at as gon downa plughole inta negative space...

brushie : noboddy seen the sucker comin...

paulie : they aint no plan...

peteypickard : the tractor beam is broke anna titanic sucker gon go dahn...

zooneh : it be DEflation boss...prices a assets shrinkin atta evva faster rate...

spook : itz 'flation jim!..but not as we know it...

scotty : economy worse an at!...itz dead jim!

halfcat : wot fo i got be gilligan?..ah wants ta be Rick...

petey : shuddup 'cat yo gon be wot ah say innit!

beulah : wages gon be worth mo dosh...anna kin buy a place fo BEADS...

laverne : yo klutz!...wages gon havta fall innit... workin stiffs gon lose ay jobs man...

paulie : yo! we fix congress man...it all gone be fiiinnnee!

THE END OF MORAL HAZARD

aht ere in space no one kin hear a screams...currencies changin colour alla time... shocks an scares lakka yoyo...banks wotz bust...

edmund : "The world we are set to live in in the coming years will be deflationary. In fact, it already is - house prices are deflating at the fastest rate since the 1930s. As banks stop lending and the amount of cash in the system dries up, so too does demand - in other words a key propellant for economic growth - and soon enough we find ourselves facing a recession and potentially deflation.

If you are looking for proof, look no further than the mass of complex statistics produced by the Bank of England on money. I am no monetarist, but Milton Freidman was without doubt right that inflation is always and everywhere a monetary phenomenon. And the amount of money sloshing around in the system is starting to drop dramatically. These figures - an economic early warning system if ever there was one - are flashing red...." Telegraph


previously on 'FLATION NEBULA

A SHIP OF THE LINE

yo!...mutiny onna BAILOUT...innit!

PALOOKAVILLE SPORT stardate capitulation day+13

the story so far...

united flakes dorkship TITANIC, out of Wall St. has run aground on a creditburgh and is holed below the water line...toxic sh*t has spread across the financial world and has solidified...

captain brush has ordered the crew ta SAVE THE SUCKER...but the crew have mutinied...

...they have refused a direct order from the bailer in chief and now Admiral Paulson has convened a court marshal with threats of a good floggin wiya cat-o-nine tails..

keel haulin has been ruled out...for now...

captinbrush : this sucker could go dahn...

paulie : America expects every man ta do is dooty...

market ticker :

jeff : "Predictably, the refuseniks have been pilloried as ill-informed nihilists. They have been lambasted for failing to understand the consequences of their actions. They are, according to the Big Bail-out Brigade, condemning the rest of us to be buried alive in the rubble of a disintegrating banking system.

Try a different take. Yes, the West’s financial infrastructure is in severe distress. Yes, more banks are going to crumble. Yes, there will be a recession. But allocating $700bn (it would almost certainly turn out to be more) to a clean-up programme for toxic assets, in effect socialising the poison of private greed, has no merit other than to delay the inevitable. No amount of federal cash can rewind the X-rated horror video.

There is a conspiracy of bankers and politicians whose self-interest is masquerading as sophisticated policy. They want us to believe that they have the keys to salvation. I have not seen a scrap of evidence to confirm this." Telegraph

mish : "The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday.

Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20th that it can't be sold to the Treasury.

Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure that can happen.

Senator, please scrap the Paulson proposal in entirety and try something that might work, that is constitutional, and does not put taxpayer money at risk.

US citizens should not spending $700 Billion to bail out foreign investors. The actions of Treasury Secretary Paulson go far beyond disgusting, to outright betrayal of US citizens.

I ask that you take a clear stand against this un-American bill by not only voting against it, but to Filibuster the bill until it is given up for dead. I cannot and will not vote for any legislator who votes for this bill, or even allows it to be brought up for vote." mish

previously on a ship of the line...