Tuesday, December 15, 2009

Sovereign Misery Index

One important reason why i like gold long term regardless of the US$ direction ( especially when you take a look at the "off balance sheet chart" )........

Einer der Hauptgründe die leider noch auf lange Zeit unabhängig von der Entwicklung des US$ für Gold sprechen ( gilt erst Recht wenn man sich den "Off Balance Sheet Chart" und die damit verbundene Aussage genauer ansieht ) .....

Anothery misery index - Moody's

FT Alphaville

Moody’s has compiled a 1970s-style ‘Misery’ index. But instead of showing inflation and unemployment rates, it shows the fiscal deficit and the unemployment rate.
Theme 1 Aaa countries will probably not have the luxury of waiting for the recovery to be secured before announcing credible fiscal consolidation plans.

Theme 4 Most governments cannot afford another financial crisis. Attempting to ring-fence balance sheets from contingent liabilities will keep policy makers busy.

Theme 5 Very large public debt and low economic vitality will prompt unprecedented questions about how governments can discharge their obligations without changing the rules of the game.

One way of looking at this is to realize that governments are more willing to default on social obligations – such as changing the retirement age – than on financial obligations

Theme 10 Debt hang-hover will test social and political cohesiveness.

In several countries – including some highly advanced ones like Iceland or Ireland, but also Latvia or Hungary, as well as in some much poorer countries like Jamaica – a great sacrifice is required from the respective populations. Cohesive and/or very enduring societies like the Baltic countries, Iceland or Ireland have accepted sacrifices (salary cuts, public spending cuts, etc.) that would have seemed unimaginable a few years ago and continue to seem hardly replicable in comparable societies.
Moodys Sovereign

At least some "Enron-esque characteristics" are difficult to deny......

Böswillig könnte bzw. müßte man sagen das "Enron-esque characteristics" nicht zu leugnen sind....

larger/vergrößerte Version

Credit's Golden Age? WSJ


We all can thank the regulators, accounting stunt experts, central banksters & the politicans that after trillions of worldwide banking bailouts the banks are now "well capitalized"( proven by yesterdays news like $38 Billion Tax Break Granted to Citigroup to Help Improve the TARP Results & Fannie Freddie May Need Another $400 Billion Taxpayer Assistance & ECB Said to Start Consulting Banks, Investors on Collateral .... No kidding, they are STARTING NOW ! , etc > compare this kind of number with the haggling about the pay for the climate bill.). & strong "regulation" ( Banks Said to Get More Time to Implement Stricter Capital Rules ( Update MEA CULPA! ): & Solving Everything but the Problem ) without loopholes is on the way ..... ;-)

Immerhin sind die Banken ja nachdem weltweit Billionen für die Bankenbailouts geflossen sind jetzt "well capitalized" ( wie gestrige Nachrichten wie $38 Billion Tax Break Granted to Citigroup to Help Improve the TARP Results & Fannie Freddie May Need Another $400 Billion Taxpayer Assistance & ECB Said to Start Consulting Banks, Investors on Collateral .... beruhigend zu wissen das bereits JETZT damit angefangen wird...usw. eindrucksvoll belegen > Richtig gute Laune bekommt man dann wenn man sieht wie verbissen um die Verteilung der Lasten zur Klimarettung verhandelt wird..... Da droht der Gipfel wegen einiger weniger Mrd zu scheitern..... ) & die Schlupflöcher durch die gewohnt "strenge" Regulierung ( z.B. Banks Said to Get More Time to Implement Stricter Capital Rules (Update:MEA CULPA! ) & Solving Everything but the Problem ) geschlossen .. ;-)

There has been a lot of bubble talk ( see Gold: A Contrarian's Dilemma ) when it comes to recent performance of gold. The following chart from Todd Harrison / Minyanville via Pragmatic Capitalist puts things into perspective.....

Gerade in letzter Zeit ist im Angesicht der Outperfmance von Gold immer öfter der Begriff "Bubble" ( siehe Gold: A Contrarian's Dilemma ) gefallen. Da kommt der nachfolgende Chart von Tod Harrison via Pragmatic Capitalist gerade rechtzeitig.....

larger/vergrößerte Version

`There’s no bubble in gold,’ CIBC says Ft Alphaville

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Blogger jmf said...

Gold Humor via Colbert ;-)

3:17 AM  
Blogger jmf said...

The World’s Riskiest Sovereign Debt (Update) Alea

The World’s Safest Sovereign Debt (Update) Alea

3:27 AM  
Blogger jmf said...

No kidding....

Person of the Year 2009 : Ben Bernanke

If one considers that earlier choices were Putin & George W. Bush etc.....

TIME's Person of the Year 1927 - 2008

4:36 AM  
Blogger jmf said...

WL negative.......

Another downgrade for Greece – S&P cuts to BBB+ Ft Alphaville

9:58 AM  
Blogger jmf said...

Just like the off balance sheet liabilities from the sovereigns the pension deficits are also another big big problem


At the same time, the Morris Township, N.J., conglomerate faces a big jump in pension expenses, hitting an estimated $850 million in 2010, up from $120 million this year

Hey, but no worry ... Wall Street Finest will back out this "minor" contribution..... Clearly no costs of doing business.... ;-)

Excluding pension costs, Honeywell said it expects to make an adjusted profit next year of $3 to $3.20 a share, up 1% to 8%. Analysts polled by FactSet Research forecast 2010 earnings of $2.52 a share, on average.

8:16 PM  
Blogger jmf said...

More on Honeywell & pension underfundings via ZH

10:18 PM  
Blogger jmf said...

Five Lessons for Next Time Banks Come Begging: Jonathan Weil

Lesson No. 3: Then again, repaying TARP doesn’t necessarily mean a bank’s capital is strong. Citigroup, for example, finished the third quarter with $140.5 billion of common equity, or 7.4 percent of assets. Most of that was of low quality. For starters, $40.6 billion consisted of intangible assets, such as goodwill leftover from past acquisition sprees.

Deferred-tax assets represented $38 billion, much of which exist only because the Internal Revenue Service granted Citigroup an exemption from its normal rules. Profitable companies can use such assets to reduce future tax bills. However, they’re of little help as a capital cushion at failing companies when it comes to absorbing losses. In addition, Citigroup said its loans were worth $9.1 billion less than what its balance sheet showed as of Sept. 30. Citigroup also has said it will record a $7.8 billion charge to equity next quarter to adopt new accounting rules aimed at bringing off-the-books assets onto its balance sheet.

Add it all up, and that was the bulk of Citigroup’s common equity. So even after the planned stock sales, the company still may need more capital.

12:15 AM  
Blogger jmf said...

Using inflation to erode the US public debt VOX EU

In a recent paper, we examine the role of inflation in reducing the Federal government’s debt burden. We conclude that an inflation of 6% over four years could reduce the debt/GDP ratio by a significant 20%.

4:57 AM  
Blogger jmf said...

Firms Still Sick on Pensions

As a result, the total pension deficit for calendar-year companies probably has narrowed only slightly in recent months, to $270 billion, from $298 billion at the start of the year, estimates Mr. Zion. By law, companies have to make contributions toward closing those deficits over a seven-year period. Barring a new bull market, investors should count on plenty of that cash coming out of companies' pockets.

10:17 PM  
Blogger jmf said...

Government Debt Of G20 As % Of GDP / Chart

4:41 AM  
Blogger jmf said...

Speaking of Ponzi.....

SS Trust Fund - 2009 Full Year Results - Ugh! Bruce Krasting

12:45 AM  
Blogger jmf said...

Upcoming Government Funding Crises: Japan Edition

8:24 AM  
Blogger jmf said...

Sovereign default risks loom George Magnus

There are five reasons why public sector de-leveraging may be particularly difficult in the next few years, and why, therefore, default risks loom large.

First, sovereign debt service costs are set to soar, overshadowing those for programmes, such as environmental protection and some social services, and, unlike past successful fiscal adjustments, no country can lower interest rates as a palliative. Perversely, the contrary may be the case.

Second, OECD governments have experienced a threefold increase in their structural deficits, about a quarter of which is attributable to the drop in tax revenues, some of which may be permanent, for example, where they are related to financial services and housing.

Third, a weak economic growth environment augurs poorly for effective fiscal adjustment, as will be evident as the bungee jump nature of economic recovery becomes clearer.

Fourth, the financial crisis and the recession are the immediate cyclical reasons for the disarray in public finance, but these pale next to the structural costs of age-related public spending, which are starting to rise relentlessly.

Fifth, high levels of capital mobility complicate debt management. Credit rating agencies have been quick to downgrade and opine about several sovereigns. The significance of their actions lies in the fact that most central banks, and some sovereign wealth funds, cannot hold securities rated below AA. Most ‘long-only’ asset managers have such restrictions too.

1:00 AM  
Blogger jmf said...

The sovereign debt premium
FT Alphaville

a one percentage point increase in bond yields will increase the interest cost for the US by $25bn annually.

You can see the problem in the below chart.

Interest on US debt is currently at a record low, but if interest on new debt was to return to the 30-year average of 7.25 per cent (that green line), interest costs on maturing debt that’s rolled over would increase by $117bn annually, by Jenkins’ numbers. Current interest costs are about $400bn.

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