PALOOKAVILLEFINANCIAL ...capitulation day postponed...
...here in...
...palookaville...
...all bets are hedged...
...as we await the resumption of normal service...
...a V shaped recovery has been achieved in the financial markets...
...and the puppet masters have made loads-a-money...
IT TAKES ONE TO TANGO
...the states within the Eurodisunion...
...are locked in a dance of death...
...those that sell and those that buy...
...those who sell will not buy and those who buy must borrow to do so...
...those who lend fear they will not be repaid...
...the price of borrowing must rise for those who buy...
...those who sell...will not lend...
...round and round we go...
...until the music stops...
...when all must find a seat at the table...
...or fall to the floor...
...and must then sit out the game...
...in the corner...with the dunce's hat...
WE TWO KINGS
...Chi Na and Berlin...
...are kings of the castle...
...all the rest are dirty rascals...
STANDS WITH A BOWL
...our great leader...
...is asking for more...
...more time to rule...
...more money to spend...
...he can't get enough from all us palookas...
...so he stands with a bowl...
...begging for more money...
...so that he can pay the interest...
...on the money he has borrowed...
...mr bumble the beedle...
...wants to give him to the undertaker...
...who will bury him for good...
FATAL ATTRACTION
...but he just keeps emerging from the dead...
...consumate zombie that he is...
...the people of palookaville...
...will vote for death...
...so long as somebody else will pay for it...
BAGPIPE MUSIC
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. 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 head of bison.
John MacDonald found a corpse, put it under the sofa, Waited till it came to life and hit it with a poker, Sold its eyes for souvenirs, sold its blood for whiskey, Kept its bones for dumbbells to use when he was fifty.
It's no go the Yogi-man, it's no go Blavatsky, All we want is a bank balance and a bit of skirt in a taxi.
Annie MacDougall went to milk, caught her foot in the heather, Woke to hear a dance record playing of Old Vienna. It's no go your maidenheads, it's no go your culture, All we want is a Dunlop tire and the devil mend the puncture.
The Laird o' Phelps spent Hogmanay declaring he was sober, Counted his feet to prove the fact and found he had one foot over. Mrs. Carmichael had her fifth, looked at the job with repulsion, Said to the midwife "Take it away; I'm through with overproduction."
It's no go the gossip column, it's no go the Ceilidh, All we want is a mother's help and a sugar-stick for the baby.
Willie Murray cut his thumb, couldn't count the damage, Took the hide of an Ayrshire cow and used it for a bandage. His brother caught three hundred cran when the seas were lavish, Threw the bleeders back in the sea and went upon the parish.
It's no go the Herring Board, it's no go the Bible, All we want is a packet of fags when our hands are idle.
It's no go the picture palace, it's no go the stadium, It's no go the country cot with a pot of pink geraniums, 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.
It's no go my honey love, it's no go my poppet; Work your hands from day to day, the winds will blow the profit. The glass is falling hour by hour, the glass will fall forever, But if you break the bloody glass you won't hold up the weather. Louis Macneice
Humorous as it may be with regards to Class and social mores, flirtations with theosophy etc., one is brought up with a start... the realization that this was written in 1937 and, the more specific social unrest in Spain and Germany... the fall of the glass is unstoppable!
bloomberg...Sept. 3 (Bloomberg) -- China’s stocks rose for a third day, driving the Shanghai Composite Index to its biggest gain in six months, on speculation regulators will adopt measures to boost the nation’s equities following declines in the past month...
...The government may take measures to stabilize the market before the 60th anniversary of the founding of the People’s Republic of China on Oct. 1, the start of a weeklong holiday.
“They want everything to be stable and in harmony,” said Francis Lun, general manager of Fulbright Securities Ltd., in an interview with Bloomberg Television today. “They will approve more stock market funds and allow them to buy into the market.”...
...here in...
...palookagrad...
...all things are possible...
...but...
...most things are fixed...
...in theory...
...the gamblers bets should be winning all the time...
..."Paul Krugman: The "Nipponisation" of the world economy with a bunch of "Argentinafications" playing a role in the acute crisis. But even after those are over, we have the Nipponisation of the world economy. And that's really something.
Will Hutton: What was the heart of the Japanese problem? What was at the heart of their 17 years of going nowhere?
PK: Well, my guess is that it was that the balance-sheet problems took a very long time to resolve. And it is difficult to get enough demand in an economy where you have really very adverse demography ...
WH: So, which countries look closest to being Nipponised - combining balance-sheet problems and ageing populations?
PK: Well, the US doesn't have the same combination. But in Europe, Germany and Italy look comparable. France is better and Europe as a whole is considerably better.
WH: Germany matches Japan to an uncanny degree. You talk about the Nipponisation of the world economy: I'm not so sure. But I would talk about the Nipponisation of Europe via a German economy at its centre in the grip of the same problem - and that starts to be a global problem.
PK: Germany has huge inadequacy of domestic demand. Their economic recovery in the first seven years of this decade rested on the emergence of gigantic current account surplus.
How is it possible that Germany, which did not have a house price bubble, is having a steeper GDP fall than anyone else in the major economies?
The answer is that they depended upon exporting to the bubble regions of Europe, so they actually got side-swiped by the loss of those exports worse than the bubble regions themselves got hit.
It's Germany on a global scale that is the concern. We worry about the drag on world demand from the global savings coming out of east Asia and the Middle East, but within Europe there's a European savings glut which is coming out of Germany. And it's much bigger relative to the size of the economy.
WH: And on top there is an unique and unaddressed huge potential banking crisis. The Germans pride themselves on their three-legged banking system, but it is incredibly interlinked. The IMF warns that Germany could have to take at least $500bn of writedowns, which its banks have not begun to recognise. German banks hold a trillion dollars - maybe more - of maturing collateralised debt obligations that can only be refinanced by crystallising the losses. We've had RBS and you've had Citigroup. Germany's GDP will fall 6% this year - before the banking crisis has hit it....
...PK: That the cause is primarily financial. Certainly, Lehman and all of that alerted us all. And it did trigger an immediate drop in demand. But the housing bust was going to happen regardless.
The fall in business investment is at least to a large degree a response to excess capacity, which is the result of falling consumer demand and the housing bust. So we don't know.
WH: I think we know more than that. The links between bank capital, loan losses, credit availability and economic activity and asset prices have never been clearer. That was why there was a threat of Depression.
PK: Clearly, re-establishing stability in the financial markets is a necessary condition for recovery. But we're not sure it's sufficient.
WH: That's very scary.
PK: Well, that is part of the reason why I am so depressed.
WH: In one of your lecture charts you seemed to be suggesting that we're 12 months into what you think could be a 36-month period of downturn, albeit at a slower rate.
PK: Easily.
WH: It's quite shocking that you think it will be that severe.
petey : Im shocked that you're shocked...Will
PK: If we measure the 2001 US recession by when the labour market finally started to turn around, it was a 30-month recession. It was really 30 months in before you started to see the unemployment rate come down."
..."The March signs of revival turned out to be little more than a technical inventory correction, with no change in the underlying trend. The world economy is still contracting, though perhaps not quite as fast as at the start of the year.
As an analysis by economists Barry Eichengreen and Kevin O’Rourke* shows, global industrial output is still on the same trajectory as it was during 1930.
The only question is whether we can avoid 1931 and 1932.
The answer is yes, but on conditions that seem increasingly implausible if we extrapolate current policies. We can avoid calamity if monetary and fiscal policies remain supportive throughout the duration of this crisis, if we fix the banking system and if we impose regulations to constrain a resurgent financial sector. We also have to be lucky to avoid another round of market turbulence in the near future.
In other words ... the answer may well be no. Central banks and governments therefore risk moving too swiftly out of a recession-mode strategy. When Axel Weber, president of the Bundesbank, publicly talks at this time about how to communicate a rise in interest rates, it tells me that the danger of a premature exit, at least in Europe, is clear and present....
...So at this point, I see the chances as roughly even between a global slump and a return to quasi-stagnation. What is so galling about this scenario is that it is avoidable. The central banks took the right decisions. But the political reaction has been near-catastrophic almost everywhere.
Instead of solving the problems to generate a recovery, the political strategies have consisted of waiting for a recovery to solve the problem. The Europeans are relying on the Americans to generate growth. The Americans are relying on the Chinese, who in turn are waiting for the rest of the world.
Even if the US were to generate some growth, as is likely after this summer, it would not benefit global exporters; China may be one of the fastest growing economies in the world, but it is only about half as large as the eurozone in dollar terms. And as Brad Setser** has pointed out in his blog, there is absolutely no evidence that China contributes to a global recovery. While Chinese investments are up by more than 30 per cent from last year alone, imports are down 25 per cent. All this hype about decoupling and China pulling the world out of recession is baloney. The data tell us that China’s exports and imports are both falling, and that imports are falling faster.
As everybody expects the others to move first, nobody ends up moving. In the meantime, the problems grow worse. US house prices, which are down by a little over 30 per cent from their peak, still have some way to fall. Until the US housing market hits rock bottom, perhaps sometime in 2010, there is no chance of a recovery in the securitisation market, without which there may not be sufficient credit growth....
...The only potentially good news in the past three months has been the receding threat of a currency crisis in central and eastern Europe. But I am not even sure that this is for real. The persistent refusal by eurozone policymakers to concede fast-track euro accession for central and eastern member states could yet prove destabilising.
Last week, the ECB had to provide €3bn in euro liquidity to Sweden’s Riksbank, in the absence of which Sweden may have experienced its second banking meltdown in less than two decades. The inevitable collapse of Latvia will have ripple effects on the Baltic region and may cause panic among investors in other central and east European countries.
This is why last week’s news about the withering green shoots is so important.
It tells us that the non-strategy of waiting until things get better is not working.
The March signs of life reinforced complacency.
Optimism will get us out of this crisis only if it is founded in reality.
..."Neil Mackinnon, chief economist at ECU Group, said Washington believes European states are "free riding" on American stimulus, expecting the US to pull them out of crisis yet again.
Europe's industrial output continued to slide in April and was down 22pc from a year earlier, suggesting that talk of a "V-shaped" rebound is premature. At best, the pace of decline has slowed. Production fell 23pc in Germany and 24pc in Italy.
The ECB expects the eurozone economy to contract by 4.6pc this year and a further 0.3pc next year, with no recovery until mid-2010.
Structural rigidities of the region raise risks that it will remain trapped in slump well after the rest of the world has turned the corner, as it did after the dotcom bust.
This time Europe faces the extra head-winds of a strong euro, over-valued against the 45-odd countries such as China that are linked to the dollar. This currency effect is slowly "hollowing out" Europe's industrial core...."
...the clever b*stards that run the financial world...
...have bust the banks...
...in turn...
...the banks have bust the sovereign states...
...the sovereign debts...
...have spooked the bond market...
WELCOME TO THE END OF THE WORLD
...apparently...
...it all started with property speculation...
...caused by bubble money...
...when the bubble burst...
...many, many, many...
...suckers got taken out...
...the politix...
...were busy with their expences claims...
...and their business interests...
...they are either responsible for the current mess...
...or incompetent...
...that is...
...guilty...
...or...
...stupid...
KEEP THEM RATES A RISING
..."Yields on 10-year Treasury bonds have risen relentlessly since March when the Fed first announced its plan to buy $300bn (£188bn) of US government debt directly, a move that briefly forced rates down to nearly 2.5pc, a level thought to be the Fed's implicit target.
Yields have jumped to 3.69pc – after spiking as high as 3.74pc on Wednesday – pushing up the standard 30-year mortgage loan to 5.08pc and lifting the borrowing cost for corporations...."
..."The simple truth is laid out in page 33 of the Global Financial Stability Report , published today in Washington: "if banks were to bring forward to today loss provisions for the next two years, before expected earnings, US and European banks in aggregate would have tangible equity close to zero."In other words, the entire global banking system would be bankrupt - kaput - if its institutions immediately wrote off all the toxic assets still sitting in their vaults without any government assistance...." Telegraph...
..."So we keep the system going. Now, where are we today?
We are at the Great Deleveraging.
We are seeing massive losses and destruction of assets, on a scale that is unprecedented. There was massive destruction of assets during the Great Depression, which caused a lot of problems, and we are seeing the same thing today. We are watching trillions simply being poofed (another technical economics term — which will drive my poor Chinese translator crazy!). We are watching people pay down their credit lines, which is one way of saying the supply of money and credit is shrinking.
This is not just in the US, but all over the world. Because when you start adding European cash-to-credit, and Japanese cash-to-credit, and Indonesian and Chinese cash-to-credit, it becomes multiple tens of trillions, and we are watching a goodly portion of that credit be vaporized. So we — individuals and businesses — are trying to find that $2 trillion in real cash and get some of it to pay down our debts. We are reducing that massive leveraged money supply down to some smaller number. We are hitting the Blue Screen of Death. We don’t know what it is going to reset to, but we have permanently seared the psyche of the American consumer, and it is going to get reset to some lower number, about which I will speculate in a minute.
Now to give you some idea of how important credit was in our recent period of economic growth — and I keep using this slide, but it is an important slide because it shows you what would have happened in the economy without mortgage equity withdrawals. The red lines are what GDP would have been without MEWs. Notice that in 2001 and 2002 we would have had negative GDP for two years, that’s 24 months. It would have been as long as or longer than the current recession. Not quite as deep, because we had the Bush stimulus and Bush tax cuts at the time. The Bush tax cuts were very important in keeping the economy rolling over in 2001 and 2002.
But notice that the recovery for the next four years would have been under 1%. We would have had under 1% GDP for four years running, without mortgage equity withdrawals, without people being able to spend more. That doesn’t even count the leverage we increased on our auto loans, on credit cards — you saw the two charts that Louie [Gave] and Martin [Barnes] used yesterday about the growth of credit, and we are now seeing it in reverse. Do you think George Bush would have stood even a small chance of being reelected without mortgage equity withdrawals?
GREEN SHOOTS
..."The force that through the green fuse drives the flower Drives my green age; that blasts the roots of trees Is my destroyer...." dylan thomas
...IT IS NOW
..."In other words, if you thought the immense amounts of taxpayer cash funnelled into the system over the past couple of years was enough to bring us back to good health, think again.
It is an extremely worrying verdict, particularly coming at a time when many had been assuming that green shoots were starting to sprout and the recession was coming to an end.
But it underlines one simple but undeniable truth:
that this recession is different.
It is the consequence not of a simple one-nation housing crash or a consumer slowdown but a catastrophic collapse of the financial system. And with that system still in a wreck normal service will simply not be resumed without more costly bail-outs - or else we must accept the consequence that money will be far more expensive to borrow in the future, and that economic growth will be far less in the future." Telegraph...edmond conway blog...
petey : it were me wot done the italics an stuff...
lex : ..."Anyway, what might trigger a rise in inflation? That is the biggest stumbling block for worry-worts. The unwinding of the credit boom of the past 10 years will require higher savings, weak consumption and low investment, probably well into the next decade. That ensures demand will remain weak, and with it inflation too...."FT
The announcement by the monetary authorities in the UK that a policy of quantatitive easing (QE) would be implemented was greeted with euphoria by the gilt market.
BUT ALSO
EXPORT IMANUFACTUREI MANUFACTURE IEXPORT
...here in palookaville we have always been told...
...our economy is f**ked bescause we have too small...
...a manufacturing base...
...we do not export enough...
...but look around the world and what do you see...
...if only people did not talk the economy down...
...if only we could stop the short sellers...
WELL
IF ONLY THE POLITIX WOULD STOP FIDDLING
...like taking power from the BOE and giving it to the FSA...
...like robbing the pension funds...
...like robbing the savers...
...scrapping PEPs...
...increasing tax complexity...
...creating a client state...
...busting the economy...
...increasing the national debt...
...busting final salary pension schemes...
...while MPs have voted themselves...
...bigger salaries and better pension entitlements...
NB chart is uk based and funds reflect the effect of currency movements
charts from equitable life are used as an illustration of sector performance comparisons only and not as a commentary on their investment performance. no opinionis offered here either for or against equitable life as a pension company...
...they just happen to have these charts... ...which i find very helpful... ...when comparing sector fund performance...
...here in palookaville all the talk is about the local outlaw...
...his band of merry men and women...
...with guaranteed, index linked pensions...
...who are stealing the pensions from the poor...
this robbin band
...STEALS FROM THE POOR...
...GIVES TO THE RICH BANKERS...
...AND THOSE WORKING FOR THE STATE...
...meanwhile...
...the serfs here in palookaville are all watching the football...
...or phoning in their votes for some reality tv idiot...
...they do not know about how they have been robbed...
...they have been told that...
...the boarded up stores are part of some american problem...
Retirement plans of millions of Britons at risk after Bank of England 'prints money'
The retirement plans of millions of Britons have been put at risk after the Bank of England's controversial plan to create money tore an unprecedented hole in pension schemes.
..."The Bank was accused of hammering the final nail into the coffin for Britain’s final salary pension schemes, which have seen their deficits climb in recent years, partly as a result of Gordon Brown’s decision as Chancellor to levy a £6 billion tax raid on pension funds’ dividends.
Some 2.5 million workers are currently signed up for these schemes which provide retirees with a guaranteed annual income when they reach the appropriate age.
Having enjoyed a small surplus only a year ago, these funds have also been hit by the fall in the stock market over the past year.
However, the effect of the Bank’s scheme has been to increase the deficit between what is in the funds and what is needed to pay out future pensioners by an almost instant £100 billion. Although some expect the deficits to fall in the years ahead as the economy improves, insiders warned that this could be the final straw that persuades companies to shut down these schemes altogether and turn instead to far less generous defined contribution plans.
However, experts warned that even these more parsimonious schemes, which 8 million workers are subscribed to, will suffer as a direct result of the Bank’s actions. The amount these people receive from their pension depends not only on the size of pot they amass over their working life but on the rate of the so-called annuity which provides them an annual income from the moment of retirement...."sunday telegraph
painty : now watch the companies with these pension deficits... ...see their share prices come under even more pressure...
There is a house in many a town They call the Rising Debt And it's been the ruin of many a poor boy And God I know I'm it
My mother was a tailor She sewed my new bluejeans My father was a gamblin' man Down in New Orleans
Now the only thing a gambler needs Is a mortgage and trunk And the only time he's satisfied Is when he's on a drunk
------ organ solo ------
Oh mother tell your children Not to do what I have done Spend your lives in sin and misery In the House of the Rising Debt
Well, I got one foot on the platform The other foot on the train I'm goin' back to Rentin a room To wear that ball and chain
Well, there is a house in New Orleans They call the Settin Sun And it's been the ruin of many a poor boy And God I know I'm one
EVERY PICTURE TELLS A STORY
NB chart is uk based and funds reflect the effect of currency movements
charts from equitable life are used as an illustration of sector performance comparisons only and not as a commentary on their investment performance. no opinionis offered here either for or against equitable life as a pension company...
...they just happen to have these charts... ...which i find very helpful... ...when comparing sector fund performance...