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!
...and the politix danced around the fires of the burning banks...
...all the talk is of the new bull market...
...the great recovery...
...how it was all just a panic...
...well maybe they are right
and we can sleep easy in our beds
and all the young unemployed can play football
travel, crochet, see a movie...
NEGATIVE FOR NEGATIVE'S SAKE
...baltic dry is down again...
...but only 40%...
...ships lie idle all over the world...
...but only 12%...
...house prices have stabilised...
...honest!..
...not...
...cars sales have risen...
...from the ashes...
...on free money incentives...
...in japan...
...they are spending like there's no tomorrow...
...in china inventories are up...
...flats are empty...
...but inventory is up...
SHORT FOR SHORT'S SAKE
...come on sh*t for brains...
...pile in now...
...this is the biggest free ride the politix will ever provide...
...capitulation day?...
...moral hazard...
...what a twat!..
halfcat : don y'all mind petey non...he jus a shadder o his ol sell...
petey : oh yeah...an this...
Professor Tim Congdon from International Monetary Research said US bank loans have fallen at an annual pace of almost 14pc in the three months to August (from $7,147bn to $6,886bn).
"There has been nothing like this in the USA since the 1930s," he said. "The rapid destruction of money balances is madness."
petey : ...disclaimer...an obviously...this aint no advice...etc. etc.
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 gangreene shoots of zirp forced ungrowth...
...have stolen our hearts away...
AFTER THE NEXT UNLECTION
..."It really is 1979 all over again – and perhaps even worse. I don't know whether that is something David Cameron is relishing or dreading, but I hope he knows what he's in for....
...we have not dealt with the massive overhang of debt racked up by individuals and governments over the past decade or so. In the 1930s, the flipside of mass bankruptcy, bank failures and record unemployment was that in a relatively short time private debt levels dropped back down to manageable levels. This time, we have avoided the bankruptcy; the consequence is that we still need to repay the debt.
And, as I wrote last week, the slow reinvigoration of the financial sector is down to the Faustian pact it made with the Government: the public sector has assumed its enormous debts, on the proviso that the banks will operate on a shorter leash. Even amid signs of recovery, those banks remain nervy, paranoid institutions, unwilling to take even mild risks.
In the immediate future, they will remain zombie banks.
Barring another disaster of some sort (which should not be ruled out), the Bank of England will at some point in the next year start raising interest rates. All those households which have only survived because of near-zero borrowing costs will hit a massive financial wall.
They are zombie households.
Then there is the Government. As George Osborne pointed out in his speech to the Association of British Insurers this week, the biggest challenge in the coming decade is how to bring down the national debt. Britain has three options: default on the debt (fatal for our long-term prospects), inflate it away (near fatal, but feasible) or pay it back through a long period of austerity.
The latter course is by no means easy. The Tories insist it can be done through spending cuts, but they will almost certainly also have to raise taxes to get the books back in order. Don't be surprised if VAT is higher than 17.5 per cent before long.
This week, London has been crippled by Tube strikes that presage the next few years, which will be peppered with clashes between heavily unionised public-sector workers and a government with no choice but to bring down costs...."
..."Unveiling mixed results, which saw Homebase return to sales growth for the first time since 2005, Mr Duddy said he will "continue to plan cautiously" for the year ahead.
"I don't think we're strong proponents of green shoots at this early stage of the year," said Terry Duddy, chief executive of Home Retail, which owns Argos and Homebase. "The first quarter was helped by increases in disposable income because of lower interest rates, and it was not offset by unemployment. That could easily change," he said, citing forecasts of unemployment rising to 3 million by the end of the year...."
..."Not that it will feel that good, because unemployment and company failures will continue to rise. And the big worry is that the British patient, after a feeble recovery, could suffer a relapse.
If the upturn we are seeing now is in large part because of restocking, there will be a spike in orders which will inevitably fall back again. How far they fall back depends largely on the strength of consumer demand.
And there the picture is still pretty gloomy.
Consumers remain shackled by heavy debts, battered by the housing slump, fearful of unemployment and hampered by banks still reluctant to lend.
Public spending provides no alternative, since the massive burden of government borrowing is about to force severe cutbacks.
The industrial production figures show some signs of the hoped-for rebalancing of the economy away from its dependence on the indebted (zombie)consumer.
But without a big easing of credit or a strong rebound in export demand, the recovery is likely to be anaemic, if it is sustained at all."
..."The fall in Chinese exports and imports accelerated in May, dashing hopes that a collapse in the country’s external trade flows had bottomed out and pointing to the continued weakness in global demand......
....“The global economic situation has hit a bottom but it will still take time to recover. I expect it to take one to three years,” said Hu Yifan, chief economist (global) at CITIC Securities in Hong Kong.
“A technical rebound [in exports] may happen in November but a demand-driven rebound will not come in the short term.”
Beijing has announced a Rmb4,000 ($586bn) stimulus plan after its exports-powered economy was hit hard by weak global demand.
The stimulus packages have spurred investment in government-supported sectors such as transport infrastructure, the power grid and housing, as reflected in a 38.7 per cent rise in fixed asset investment in May from a year earlier.
This marked a larger increase than in April, when FAI rose 33.9 per cent. For the first five months of this year, investments increased 32.9 per cent from the same period in 2008, compared with 30.5 per cent in the first four months of the year and against an estimate of 31 per cent.
“Fixed asset investment in China continues to increase on the back of state-directed projects ... This will help keep the economy growing but there are increasing concerns about the amount of lending that has been required to fund the projects,” said Alaistair Chan, economist at Moody’s Economy.com."...
..."Now both groups are out on market patrol, trampling green shoots back into the dust. Every $1 rise in the price of oil costs global consumers $82m more a day. Meanwhile UK 10-year gilts on Thursday hit a seven-month high of 3.98 per cent, while US Treasuries sold for 3.99 per cent at auction, their highest since August.
Further rises would lynch the recovery. Then, as market strategist Ed Yardeni puts it, the vigilantes can go back home and do what they like best: nestle up with bonds...."
..."The Treasury bond sell-off is now putting pressures on other markets in the economy. We should worry most about housing where borrowing rates are rising notwithstanding the Federal Reserve purchase programme. Indeed, according to data released on Thursday, already 12pc of US households are facing difficulties meeting their mortgage payments.
Housing is still central to the stabilisation and eventual recovery of the US and global economies. Any further decline in house prices will erode the collateral many Americans borrowed against, dampen their already-fragile consumption appetite, and increase the headwinds facing a banking system that is finally regaining its footing. The US can ill-afford a further sell-off in US bonds at this stage in the economy's rehabilitation process. Yet there is no easy way for policymakers to address this challenge.
As an illustration, consider the dilemma facing the Federal Reserve. Should the central bank step up its purchases of both Treasuries and mortgages in order to stabilise interest rates, but at the risk of adding to the distortions in these markets; or should it refrain from intervening further and risk a return of widespread economic and financial disruptions?
I suspect that, when push comes to shove, policymakers will opt for greater purchases of mortgages and Treasuries – not because they really want to, but because the alternative is viewed as worse.
Believe it or not, there is a silver lining in all this. As they contemplate this difficult situation, they can draw some comfort from one thing: with the anchoring of the short-term policy rate near 0pc, the steepening of the yield curve is generating significant profits for banks.
Remember, banking is fundamentally about mobilising cheap deposits (at the short end of the curve) and, supported by deposit insurance and central bank liquidity windows, lending at the longer-end of the yield curve. Come to think of it, the smartest trade for investors today is to find a bank that, unencumbered by legacy issues, is able to take advantage of an enormously attractive environment for old-style banking."
...I wonder about the banks, the shadow banks, and the men that run them...
...has it all been deliberate?...
...surely not...
...who would benefit...?
..." For a long time, this column has warned that the bond-market vigilantes would ultimately rebel against the Western world's profligate borrowing and spending – not least the ill-judged, cowardly and ultimate grotesque "bail-out" packages for well-connected banks that should anyway be allowed to fail...."
...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...."
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...