...In the deserts of Sudan... ...And the markets of Japan From Milan to Yucatan Every woman, every man
Hit me with your credit stick. Hit me! Hit me! Je t'adore, ich liebe dich, Hit me! hit me! hit me! Hit me with your credit stick. Hit me slowly, hit me quick. Hit me! Hit me! Hit me!
In the wilds of Borneo And the banks of Bordeaux Eskimo, Arapaho Move their money to and fro....
..."Small wonder, though, that this minor tremor has sent such shock waves around the wider capital markets. The fear is that threatened default in this tiny desert kingdom is just a harginger of things to come for government debt markets as a whole. According to new estimates by Moody’s, the credit rating agency, the total stock of sovereign debt worldwide will have risen by nearly 50 per cent between 2007 and 2010 to $15.3 trillion. The great bulk of this increase comes not from irrelevant little states like Dubai, but from the big advanced economies – America, Europe, and Japan"....
..."Fears that figures suggesting an economic recovery may have been a false dawn were intensified yesterday when Japan’s Prime Minister sounded an official alarm that the country risked falling into a “double-dip” recession.
With the bedrock of Japan’s export industry ravaged by both a recent plunge back into deflation and the soaring yen, Yukio Hatoyama said that “measures are required so that the economy will not fall into a double-dip recession”.
His comments are expected to spark alarm as other governments have quietly begun to acknowledge the possibility that the worst may not be over"....
...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.
..."But Mr King’s differences with the Treasury and Financial Services Authority over the future of the UK’s tripartite system of financial regulation are of greater importance. In testimony this week, Mr King revealed the extent to which regulators in one of the world’s great financial centres have yet to agree on the lessons to be learnt from the banking crisis. Mr King’s claim that he has not even been consulted on the government’s forthcoming white paper on reform of financial regulation, which is likely to give the FSA a share in responsibility for financial stability, certainly does little to boost confidence that the Bank will swing into line in support of the UK’s proposed new regulatory framework...."
...“All we can do at present, before a bank is deemed by the FSA to have failed, is to write our Finanicial Stability Report and give speeches. These are important things. But in the end I don’t believe that people change their behaviour simply because we publish reports. Now, that’s fine by me. I’m very happy with that position if you want us just to publish reports. I’m very content with that. But I do want it to be absolutely crystal clear that you in parliament understand the Bank of England can do no more than publish reports and make speeches.
“If you’re content with that, that’s fine by me. What you can’t do is turn around afterwards and say ‘You have the statutory responsibility, why didn’t you do something?’ when there is nothing we can actually do. “So all I’m saying is just align carefully powers and responsibilities. But believe me I’ve got more than enough work on my plate at present. I’m not looking for a whole lot more.” king
"The feud between the Bank of England and the Treasury intensified on Wednesday as Mervyn King said he had not been consulted on the contents of the Government's imminent White Paper on financial services."
LEST WE FORGET
...it was Brown wot took away powers from the BOE...
..."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...
Published: April 16 2009 21:57 | Last updated: April 16 2009 21:57
While economists worry about “zombie” banks holding back lending, vampire pension plans may soon be stalking a company near you. The underfunding of America’s corporate defined benefit pensions poses a daunting challenge, threatening not only their 40m beneficiaries but the entire US economy.
Recently enacted funding rules require underfunded pension plans, and that’s most of the big ones, to suck needed cash from salaries and jobs just when suffering companies need scarce resources to survive. Under 2006 legislation, companies that have underfunded pensions must put extra funds into their pension plan to close the gap within seven years. After precipitous drops in assets, most plans now have serious funding gaps....more...
...the last great movement of the old century has died...
...debtism and all of it's proponents are discredited...
...the academy has looked in vain for it's return...
...but...
...the boomists are just a bunch of art clowns and have no substance...
SINIFICANTITRANSENDENT
...the momentum is with the depressionists...
...they see the future as different from the past...
...where there was credit...
...there is debt...
...where there was growth...
...there is contraction...
...where there was inflation...
...deflation...
LET THERE BE SOLVENCY
...in the beginning there was trade...
...then there was finance...
...then there was leverage...
...then there was debt...
...then there was darkness...
DEBTRUNNER
...household debt has reached the nexus phase...
...but...
...incept dates have failed to retire the nexus debts...
...a new bread of financial police have been created to default the debtors...
...this is not called bankruptcy...
...this is called financial murder...
The plight facing Britain is uncannily similar to the 1930s, since prices of many assets —from shares to house prices — are falling at record rates, but the value of the debt against which they are held remains unchanged.
This “debt deflation” is among the most painful of all economic phenomena, since it means the amount families owe increases each year even if they borrow no more.
LET THERE BE LIGHT
...the banks have sought to keep us in the dark...
...they are lying about their exposure to toxic assets...
...the boomists are feeding them ever bigger gobbits of our money...
...what we get in return is...
...the mushroom treatment...
..."keep em in the dark and cover em in sh*t"
...meanwhile they continue to pay themselves huge bonuses...
...with our money...
BOOM BOOMBROWN
...the king of the boomists...
...is trying to create a zombie state...
...you start with a client state...
...where everyone is on the payroll...
...then you bankrupt the country...
...then you reflate the bust banks and property bubble...
...then you tax everything that moves or breathes...
