immobilienblasen

Herding, Risk Appetite & Complacency Somewhat "Elevated".......

2011-02-16T04:59:00.000-08:00

Just in time after the fastest 100 percent run of the S&P 500 ever....From a risk/reward standpoint this should at least raise some eyebrows......Especially when you add things like "Rally Intensity", margin pressure, geopolitical "instability", "poor" balance sheet quality, Korean bank runs, "Covenant Lite Flashback 2007, "surreal" trading records, a not so pleasant "Misery Index" ( Unemployment & CPI ), persistant "Buy The Dip" Mentality & an überbullish Biriny into the mix....The term "razor-thin margin of error" is probably not an overstatement..... And i havn´t even mentioned the "almost forgotten" ( sovereign ) debt crises.... I assume the markets will at the latest be "tested" when there are hints that "QE 3.0" will be temporarily off the table......Just as a reminder...QE 2.0 "Run Rate " right now : $3.3 billion per day ($2.3 million every minute) & movements in the Fed’s balance sheet in the last 14 months have had an 86% correlation with the S&P 500 ( David Rosenberg ).... The "Run Rate" number is taken from the latest must read Kyle Bass / Hayman Capital Management investor letter

All das fast auf den Tag genau nach einer Verdopplung des S&P 500....Nebenbei bemerkt im kürzesten jemals gemessenen Zeitraum.....Unter Chance/Risikogesichtspunkten haben die Ergebnisse historisch gesehen eher selten eine "stressfreie" Zeit signalisiert....Wenn man weitere Eckpunkte wie z.B. "Rally Intensität", Margendruck, geopolitische Instabilität, Koreanische "Bank Runs", ultralockere Finanzierungsbedingungen, euphorische Analysten, "surreal" anmutende Handelsergebnisse, einen wenig erfreulichen "Misery Index" ( Arbeitslosigkeit & Konsumentenpreisinflation ), extrem hartnäckige "Buy The Dip" Mentalität & "fragwürdige" Bilanzierungsmethoden zum Gesamtbild hinzufügt, dürfte klar sein, das "das Eis nicht gerade dicker geworden ist"......Das "fast vergessene" Thema (Staats)Schuldenkrise will ich nur am Rande erwähnen...... Die "Widerstandsfähigkeit" dürfte allerspätestens ( dann aber "ernsthaft" ) getestet werden, wenn es erste Signale gibt, das "QE 3.0" zumindest für ein kurzes Zeitfenster nicht auf der Tagesordnung steht.....Man muss sich immer wieder aufs Neue vergegenwärtigen das alleine die FED/Bernanke seit Monaten (und noch bis Juni) im Schnitt umgerechnet tagtäglich $3.3 Mrd ($2.3 Millionen jede Minute ) in die Märkte pumpt & lt. David Rosenberg sich der S&P 500 in den letzten 14 Monaten mit einer Korrelation von satten 86% analog zur Bilanzsumme der US Notenbank entwickelt hat....In diesem Zusammenhang komme ich nicht darum hin auf den wirklich lesenswerten Kyle Bass / Haymann Capital Management Investorenbrief zu verweisen.....Danach dürfte selbst die rosaroteste Brille zumindest einen kleinen Spliss davon getragen haben.....

Net Overweight Equities via FAZ

Raging bulls FT Alphaville

And the overwhelming theme of the latest BofA Merrill Lynch fund managers survey is…

Complacency.

From record equity and commodity overweights…

Asset allocation is straightforward and extreme: equity surges to a record O/W of 67%; commodities also at record O/W of 28%; bond allocation tumbles to -66%, lowest since April’06 and close to a record low.

The February FMS is one of the most bullish in years. Institutions have record equity and commodity overweights, very low cash levels and the strongest risk appetite since Jan‘06.

The FMS Risk Appetite Index rose to its highest level (47) since Jan‘06. Hedge fund net exposure rose to 39%, highest since July’07. Cash balances fell from 3.7% to 3.5%, triggering our FMS cash trading rule equity sell signal

Net Overweight Cash via FAZ

Fondsmanager sind rekordoptimistisch FAZ

Fondsmanager sind äußerst optimistisch. Noch nie hatten so viele von ihnen Aktien in ihren Depots übergewichtet, seit die Frage bei der Umfrage von BofA Merrill Lynch im April des Jahres 2001 zum ersten Mal gestellt wurde.

67 Prozent von ihnen haben Aktien in ihren Depots, so das Ergebnis der Februarausgabe der einmal monatlich stattfindenden Umfrage von BofA Merrill Lynch unter 188 Fondsmanagern weltweit. Das ist der höchste Stand, seit die Frage im April des Jahres 2001 in dieser Form zum ersten Mal gestellt wurde.

Noch im Januar hatte dieser Anteil lediglich 55 Prozent betragen und im Dezember des vergangenen Jahres sogar nur 40 Prozent.
Währen der „Aktienoptimismus“ immer extremer wird, werden die Anleihen immer unbeliebter. 66 Prozent der Fondsmanager haben sie untergewichtet, nach 54 Prozent im Januar und 47 Prozent im Dezember. Die Differenz zwischen jenen, die Aktien über- und Anleihen untergewichtet haben, ist so groß wie noch nie zuvor im Rahmen der Befragung.

Merrill Finds That Money Manager Confidence In Stocks At All Time Record High ZH

Couldn´t resist ( Page 17 )....... ;-)

Kann mir diesen Hinweis ( Seite 17 ) einfach nicht verkneifen..... ;-)

GOLD VALUATION :

FMS respondents remain firmly outside of the GOLD fan club with panellists seeing the metal as overvalued for much of the past 3 years.

February’s reading of net 31% overvalued is little changed from a record reading of a net 33% last month.
Not quite the definition of "ALL IN"..... Reassuring to see that at least since 2008 it seems almost nobody of the so called "Smart Money" has read the Special Gold Report "In Gold We Trust"....

Nicht gerade die Definition von "ALL IN"....... Beruhigend zu sehen das seit 2008 anscheinend immer noch sehr wenige der Fondsmanager einen Blick in den Special Gold Report "In Gold We Trust" geworfen haben....

Sentiment & Herding UPDATE via David Rosenberg ( see Blogroll )

The latest investment surveys show 52% bulls and a mere 13% bears. We heard anecdotally that at the ISI conference, the widespread majority believed new highs were coming for equity valuations, bonds were the most detested asset class, and that inflation was going to rip.

One person who attended told us that he had never before been to an event when the consensus was so one-sided, and that says a lot when you consider all the tech conferences being held in 1999 and 2000.

Reading a Bloomberg news story this morning, we were reminded that you have to go back 40 years to see the last time the U.S. stock market surged as much as it has in the past six months with such little volatility and opportunities to buy on dips along the way. In other words, this is not a normal market by any means,having been a virtual straight line up ever since Mr. Bernanke announced QE2 in late August.

And the same institution that conducted the survey above also just published a report concluding that the Shiller cyclically-adjusted P/E ratio is a relic and not to be relied upon as a valuation tool — perhaps because it is now suggesting that the market is 30% more expensive relative to historical norms.

How Not To Restore Credibility..... "BOE´s Adam Posen Edition"

2011-01-21T07:38:00.000-08:00

The fact that he is also an American economist & has co-written a book on inflation targeting with Fed Chairman Ben S. Bernanke might explain at least in part his quote...... ;-)

Man muss zu seiner "Verteidigung" erwähnen das er laut Wikipedia ebenfalls ein amerikanischer Ökonom ist. Da verwundert es wenig das er zusammen mit Bernanke Co-Autor eines Werkes zum Thema Inflation ist.... Dies relativiert zumindest ein wenig den fast satirisch anmutenden Charakter seines Zitates....;-)

"CPI, excluding currency, commodities and VAT impact, is low"

The quote came in response after CPI once more "slightly" missed the 2 percent target....... Sometimes it´s better to stay just silent.....

Diese Aussage kam nachdem im Dezember die Konumentenpreisinflation in UK mal wieder "knapp" das angestrebte Ziel von 2% verfehlt hat........ Ähnlich wie bei etlichen "Offiziellen" scheint das Sprichwort "Reden ist Silber, Schweigen ist Gold" nicht sonderlich viele Anhänger zu haben....

Record-breaking, forecast-busting UK inflation FT Alphaville

Highest yy rate for CPI food and non-alcoholic beverages since May 2009
Highest yy rate for CPI housing, utilities component since Aug 2009
Highest yy rate for CPI goods component since April 2010
Highest yy rate for CPI services component since Aug 2010 -
Highest yy rate for CPI fuels and lubricants component since July 2010

Posen is almost as funny as ECB´s Smaghi with his "joke" "€ More Stable Than Deutsche Mark" ..... But in comparison with Bernanke & Greenspan even they seem "reasonable".... ;-)

Finde trotzdem das im Fach "Realsatire" die EZB dank Bini Smaghi mit der Behauptung das der "€ stabiler als die DM ist" noch immer knapp den zweiten Platz hinter den unangefochtenen Spitzenreitern Bernanke & Greenspan einnimmt.....

Now take a look at real rates ( base rates minus CPI ) in the UK......

Der nachfolgende Chart zeigt den "realen Zinssatz" in UK verglichen mit dem Letzins und ich empfehle jedem drigend den treffenden Kommentar (!) der FT Deutschland zu diesem Thema zu lesen.....

UPDATE: The Real 10-Year Rates Chart confirms the "vigilance" of the the BOE ....

UPDATE: Der Chart der realen 10 Jahresrenditen bestätigt welch "Sonderstellung" die BOE einnimmt....

This in combination with the next chart showing the printing that the BOE has done so far & the remarks from the end of September doesn´t make Posen´s quote less "cynical".......

Das im Zusammenhang mit dem nächsten Chart, der zeigt das selbst die Fed in Relation zur BOE "zurückhaltend" agiert, sowie den Aussagen Ende September lassen das Zitat nicht gerade weniger "zynisch" erscheinen.....

H/ T RBS via FT Alphaville

Posen Makes BOE ‘Prosecution’ Case for More Stimulus September 29, Bloomberg

Bank of England policy maker Adam Posen made the strongest call yet for the bank to restart its asset-purchase program.

“Additional monetary stimulus at this point should begin in the form of additional QE as the Bank of England pursued by purchasing gilts in 2009-2010,” he said. “In case such QE were to prove insufficiently effective,” Posen said he would “still want preparation ahead of a Plan B of large-scale non-gilt asset purchases” in close coordination with the Treasury.

Posen, 43, an American citizen, joined the central bank from the Washington-based Peterson Institute for International Economics. A co-writer of a book on inflation targeting with Fed Chairman Ben S. Bernanke, he also published a study of the Japanese financial crisis and was a researcher at the Bundesbank and European Central Bank.

Wouldn´t surprise me if down the road even politicians will be more popular than members of the BOE & when the term "central banksters" will gain more and more traction....

Ich persönlich wäre nicht überrascht wenn zumindest in UK die Notenbänker in absehbarer Zeit noch unbeliebter als Politiker unterwegs sind.....

UPDATE:

Searching for BoE credibility on inflation FT Alphaville

From Deutsche Bank, the number of news stories that match three topical words:

SCHADENFREUDE........ ;-)

A Crisis of Faith in Britain’s Central Banker NYT

A central banker need not be loved, but at the least he should command respect — and in Britain these days Mervyn King cannot count on either.

The pre-emptive UK rate hike FT Akphaville

…over the last 6 years (ie 2005Q1 to 2010 Q4), real GDP growth has undershot the MPC’s forecast made a year earlier in 22 quarters and overshot in just 2 quarters. Conversely, inflation has overshot the MPC’s forecast in 20 quarters and undershot in just 4 quarters.

Excellent Interactive Map via The Economist : "US Equivalents: Which Countries Match The GDP And Population Of America´s States"

2011-01-15T06:48:00.000-08:00

I think in the context of the ongoing & worsening budget crises the chart provides a good perspective when sooner or later the MUNI topic will dominate headlines... At the latest when they need another reason to justify "QE 3.0".... ;-)

Denke die Übersicht ist besonders hilfreich wenn es wohl eher früher als später um den desaströsen Zustand der öffentlichen Haushalte in den einzelnen Bundesstaaten und Gemeinden geht ( Stichwort MUNIcipal bonds ).... Würde mich nicht überraschen wenn zukünftig die Begriffe "QE 3.0 & MUNIS" in demselben Zusammenhang genannt werden.....

US equivalents......Which countries match the GDP and population of America's states?

IT HAS long been true that California on its own would rank as one of the biggest economies of the world. These days, it would rank eighth, falling between Italy and Brazil on a nominal exchange-rate basis. But how do other American states compare with other countries? Taking the nearest equivalent country from 2009 data reveals some surprises. Who would have thought that, despite years of auto-industry hardship, the economy of Michigan is still the same size as Taiwan's?

The Daily Chart via The Economist has much more to offer... Check it out....

Empfehle jedem regelmäßig dem Daily Chart via The Economist einen Besuch abzustatten... Lohnt sich.....

I think the example of Illinois ( equivalent of Turkey ) & the clip with Meredith Whitney makes it cristal clear that this won´t be a minor issue down the road....

Wer noch Zweifel daran hat das der Begriff "MUNIS" in absehbarer Zeit auch in der deutschen Presse häufiger zu hören sein wird sollte sich das Beispiel Illinois ( lt. interactiver Karte auf "Augenhöhe" mit der Türkei ) vor Augen führen und das Video von Meredith Whitney ansehen... .....

Illinois Governor Wants to Borrow $15 Billion to "Balance" the Budget; Illinois Total Unfunded Liabilities Exceed $200 Billion Already Mish

Illinois Seeks To Issue $8.75 Billion Bond To Pay Overdue Bills As Muni Issuance Market On Verge Of Shutdown

To put Whitney comments into perspective i suggest to read the more balanced rebuttal from Self-Evident & Whitney Municipal-Bond Apocalypse Is Short on Default Specifics via Blommberg.... Personally i think it´s only a matter a time until a "Black Swan" arrives in the MUNI complex..... Like in Europe ( Greece & Ireland ) it will be interesting to see how the politicians will be able or willing to "balance" the pain among voters via austerity, tax hikes, cuts in entitlements etc. & bondholders via haircuts.... Either way this won´t be GDP & market positive.....

Für alle die Whitneys Aussagen für übetrieben halten bietet sich die kritische "Gegenschrift" von Self- Evident & Whitney Municipal-Bond Apocalypse Is Short on Default Specifics via Bloomberg an..... Ich persönlich bin der Meinung das es einzig und alleine eine Frage des Zeitpunkts ist, wann ( und nicht ob ) auch der MUNI Markt Besuch vom "Black Swan" bekommt..... Ähnlich wie in Europa ( Griechenland & Irland ) wird es sehr interessant zu sehen sein inwieweit die Politiker Willens & in der Lage sind die notwendigen Einschnitte zwischen den Wählern ( Kürzungen, Steuererhöhungen, drastische Einschnitte in Pensionsplänen usw )und Anleihebesitzern "auszubalancieren".... Keine der möglichen Lösungen dürfte "marktpositive" Wirkung entfallten.... In Realtime ist dies in Irland & Griechenland zu beobachten....

State Budgets: Year Ahead Looms As Toughest Yet HuPo

If 2011 is hinting at a national recovery, there is little sign of it in statehouses across the country.

States that already have raided their reserve funds, relied on borrowing or accounting gimmicks, and imposed deep cuts on schools, parks and public transit systems no longer can protect key services in the face of another round of multibillion dollar deficits.

Are Mom-n-Pop Investors Freaked Out By Munis? Flow Data Says Yes. MarketBeat WSJ

For the week ended Wednesday, investors pulled more than $4 billion from muni funds, extending the outflow streak to ten consecutive weeks. The $4 billion pullout also represents the largest week of outflows during the run

Maybe it´s time to reread the Special Gold Report "In Gold We Trust" from Erste Group..... ;-)

Kann nicht schaden sich demnächst den Special Gold Report "In Gold We Trust" der Ersten Bank mal wieder vorzunehmen..... ;-)

UPDATE:

NYT Reports States Looking For Ways To File Bankruptcy, Muni Bondholders To Be GMed NYT via ZH

Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state’s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.

American states' pension funds The Economist

Space, time and public pension black holes FT Alphaville

Muni mayhem, charted FT Alphaville

Yes, Investors are Still Dumping Munis. WSJ MarketBeat

The big loser in today’s data is the Municipal fund space which lost -$5.7 bln. This takes total outflows for January 2011 up to -$10.26 bln which is the greatest outflow since our data starts in 2007. Note that even at the height of the Lehman crisis outflows peaked at -$8.36 bln in October 2008.

Moody’s Credit Ratings of States to Factor in Unfunded Pensions NYT

Interaktive Karte US Staaten im Überblick Der Spiegel

US-Bundesstaaten stehen vor der Pleite Der Spiegel

More from the NYT on why QE3.1 - the Muni Edition is just around the corner

The NYT reports that "President Obama is proposing to ride to the rescue of states that have borrowed billions of dollars from the federal government to continue paying unemployment benefits during the economic downturn. His plan would give the states a two-year breather before automatic tax increases would hit employers, and before states would have to start paying interest on the loans."

Michigan, for instance, owes the federal government $3.7 billion it borrowed to pay unemployment benefits. Under current law the state would be forced to pay $117 million in interest to the federal government this fall, and the federal tax on employers would automatically step up each year to repay the debt.

The South China Mall, White Elephants & Beijing University.......

2011-01-12T09:58:00.000-08:00

I have blogged about this mall in April 2007 and even i´m surprised that things have indeed deteriorated further....

Ich habe bereits im April 2007 über besagtes Einkaufszentrum gebloggt und es sieht so aus als wenn sich die Lage seit Eröffnung nicht gerade verbessert hat....

Most "comical " aspect is that, according to Paul Allen from Bloomberg News, the new owner of this "white elephant" is now the Beijing University .... ?!?!? Surprising that even the Bloomberg reporter shrugs this probably most interesting circumstance of.....

Die Frage muß erlaubt sein warum ausgerechnet die Universität in Peking jetzt Eigentümer ( lt. Paul Allen von Bloomberg News ) geworden ist..... ?!?!? Mindestens genauso überraschend ist, wie fast selbstverständlich der Bloomberg Reporter die wohl mit Abstand interessanteste Tatsache erwähnt, das Universitäten zumindest zum Teil massiv in Immobilien "machen".......

It seems the spin regarding the housing market ( see China "Bubble" ( Bursting ) Update & Newest Spin "Excluding Tier 1 Cities Everything Is Fine......" ) cannot be asserted when it comes to malls.... ;-)

Es sieht damit ganz so aus als wenn die fast verzweifelt klingende Aussage das Abseits der großen Metropolen der Wohnimmobilienmarkt noch "günstig" ist ( siehe China "Bubble" ( Bursting ) Update & Newest Spin "Excluding Tier 1 Cities Everything Is Fine......" ) für Einkausfzentren nicht behauptet werden kann...;-)

But one has to admit that th South China Mall is somewhat "special" and won´t win any awards for their "superb" market research....

Man muß fairerweise zugestehen das die South China Mall wohl keine Preise für besonders gute Marktforschung und Planung gewinnen wird.....

Over the last few years, hundreds of malls have popped up around China, which now claims seven of the world's 20 largest. Two of those, Oriental Plaza in Foshan and Grandview Mall in Guangzhou, are within 50 miles of South China Mall.

It will be fun to see if the ghost town par excellence ORDOS ( see Central Planning & Ghost Towns In China..... & Ordos, China: A Modern Ghost Town ) will face a similar destiny....

Es wird interessant zu sehen sein wie sich die Geisterstadt schlechthin ORDOS ( siehe Central Planning & Ghost Towns In China..... & Ordos, China: A Modern Ghost Town ) in den nächsten Jahren entwickelt.....

Food Prices Hit Record High......

2011-01-05T08:18:00.000-08:00

One can only hope that the very critical price of Rice ( see Chart & Rice Market Monitor ) will stay well below the last "riot" highs from 2008..... UPDATE: Jim Rogers Rotates From Gold To Rice, Sets Foundation For Next Bubble ZH

Man kann nur hoffen das der alles entscheidende Preis für Reis ( siehe Chart & Rice Market Monitor ) weiterhin deutlich unter dem letzten (Unruhe)Hoch aus dem Jahr 2008 bleiben wird....UPDATE: Jim Rogers Rotates From Gold To Rice, Sets Foundation For Next Bubble ZH

WSJ The index doesn't measure domestic retail prices, which can be affected by a wide range of factors, including government subsidies. Instead, the index tracks export prices and can still serve as a barometer of what consumers may pay.

Food prices hit a record high last month, surpassing the levels seen during the 2007-08 crisis, the UN’s Food and Agricultural Organisation said on Wednesday.

The Rome-based organisation said the increase did not constitute a crisis. But Abdolreza Abbassian, senior economist at the FAO, acknowledged that the situation was “alarming”. He added: “It will be foolish to assume this is the peak.”

The jump will increase fears about the repetition of the crisis of 2007-2008. However, poor countries have not so far seen the wave of food riots that rocked countries such as Haiti and Bangladesh two years ago, when prices of agricultural commodities jumped.

The increase in food costs will also hit developed economies, with companies from McDonald's to Kraft raising retail prices.

Higher food prices are also boosting overall inflation, which is above the preferred targets of central banks in Europe.

Compare the food CPI problems of the ECB, BOE & FED with the rest of the world.....

Der Rest der Welt kann über die Nahrungsmittelpreisprobleme der EZB, BOE & Fed wohl nur gequält lächeln.....

Please note that the chart above covers only the first 6 Month in 2010....Looking at the monthy price table it should be clear that the real spike happenend since July.....

Der obige Chart wird noch weniger appetitlich wenn man bedenkt das lediglich der Zeitraum bis einschließlich Juni 2010 berücksichtigt ist....Ein Blick auf den Food Price Index zeigt leider das der Löwenanteil des Anstieges im 2. Halbjahr vollzogen worden ist....

H/T FT Alphaville

Probably not an understatement that at least a "small" part of the increase is related to the wisdom of the central banksters around the world..... I´m very sceptical that without "QE" & with "credible" central bankers ( and politicians ) we would face similar headlines.....UPDATE: Speaking of "credible" people Ben Bernanke and the Price of Oil.....Wouldn´t surprise me if way too many on Wall Street & in the numerous "ivory towers" around the world are calling develompents like this "collataral damage"....

Denke es ist keine Untertreibung zu sagen das zumindest ein "kleiner" Anteil des Preisanstieges der geballten Weisheit der weltweiten Notenbänker geschuldet ist..... Ich kann mir nur sehr schwer vorstellen das wir ohne "QE" und mit "glaubwürdigen und vertrauenserweckenden" handelnden Personen ähnliche Schlagzeilen zu verkraften hätten...UPDATE: Da wir gerade von Glaubwüdigkeit gesprochen haben Ben Bernanke and the Price of Oil...Würde mich ebenfalls stark wundern wenn an Wall Street & in den leider reichlich vorhandenen "Elfenbeintürmen" eine solche Entwicklung nicht als "Kollataralschaden" bezeichnet wird.....

UPDATE:

Just in time comes the follwoing chart via FT Germany showing the correleation from REAL US rates ( rhs inverted ) & the commodity complex...... And the FED is not alone.....

Passender hätte der folgende Chart der FT Deutschland nicht sein können.....Mit Ausnahme des fehlenden "QE" Hinweises hätte ich den dazugehörigen Bericht nicht besser formulieren können .... Zu allem übel muß man leider feststellen das die FED in Ihrer Politik nicht allein auf weiter Flur steht.....

Real rates in the Euro area & UK....

Realzinsen unter Aufsicht der EZB und der BOE.......

H/T FT Deutschland

Back with then original Story..... Weiter mit dem Eröffnungslink.....

The FAO said its food price index, a basket tracking the wholesale cost of commodities such as wheat, corn, rice, oilseeds, dairy products, sugar and meats, jumped last month of 214.7 points – up almost 4.2 per cent from November.

The FAO is drawing comfort from relatively stable prices for rice, one of the two most important cereals for global food security, which remains far below its record high. Rice is the staple of 3bn people in Asia and Africa.

The FAO food index is at its highest since the measure was first calculated in 1990. During the 2007-08 food crisis, the index reached a peak of 213.5 in June 2008
However, the cost of the other critical staple, wheat, is now rising fast on the back of poor harvests.

“This is a high prices situation,” said Mr Abbassian, although he pointed to the fact the costs of cereals – and particularly rice – were below the peaks set in 2007-08.
“Rice and wheat are, from a global food security perspective, the critical agricultural commodities, not sugar, oilseeds or meat,” he said.

The increasing costs of sugar, whose price recently hit a 30-year high, oilseeds and meat are the main reason behind the rise in the FAO food index

The rise of commodity prices makes it likely that the global food import bill will hit a record high in 2011,after topping $1,000bn last year for only the second time. In November, the FAO raised its 2010 forecast to $1,026bn, up almost 15 per cent from 2009 and within a whisker of a record high of $1,031bn set in 2008 during the food crisis.

At least the "food import bill" will provide incentives to withstand or slow down the "competitive devaluation trend".....UPDATE: Asia Fights Inflation With Stronger Currencies

Wenn man überhaupt etwas positives an der Situation erkennen will dann vielleicht das die bedrohlich steigenden Nahrungsmittelpreise den bisher vorherrschenden "Währungskrieg" mit der klaren Tendenz die eigene Währung künstlich niedrig zu halten, wenn auch nicht aufhalten, so doch zumindest verlangsamen könnte.....UPDATE: Asia Fights Inflation With Stronger Currencies

Agricultural commodities prices have surged following a series of crop failures caused by bad weather. The situation was aggravated when top producers such as Russia and Ukraine imposed export restrictions, prompting importers in the Middle East and North Africa to hoard supplies.

I think it´s a safe bet that around the world subsidies & government involvement ( food stamps, price controls, ban on exports etc ) will not "deflate".....

One uselful "involvement" would be to start with the derivatives complex... ;-)

Sicherlich wird weltweit das Thema Subventionen & "Regierungseinmischungen" ( Essensmarken, Preiskontrollen, Exportbeschränkungen usw. ) in den nächsten Jahren häufiger die Schlageilen dominieren....

Eine der wenigen produktiven "Einmischungen" wäre, wenn man sich dem Thema "Derivate & Terminbörsen" mal etwas genauer widmen würde... ;-)

UPDATE:

Food production is down, hunger is up and prices are rising / INFOGRAPHIC The Globe And Mail

U.N. Data Notes Sharp Rise in World Food Prices NYT

Needless to say that the NYT & GAM make no reference when it comes to the relation of prices & "sound money" .... ;-)

Überflüssig festzustellen, das es auch die NYT & GAM versäumen zumindest in einem Nebensatz die nicht unwesentliche Korrelation von Preisen und "verantwortungsvoller Geldpolitik" zu erwähnen.... ;-)

Immerhin wunderschön zu sehen das eine Firma wie Monsanto, die bei diesen Nahrungsmittelpreisen eigentlich durch die Decke gehen müßten, noch immer 50% vom Hoch notiert.....Um meine SCHADENFREUDE zu verstehen, muß man sich zwingend Monsanto - mit Gift und Genen ansehen.... Meiner Meinung nach die beste und wichtigste Doku der letzten Jahre über eine Firma die wahrscheinlich über noch bessere Lobbyisten verfügt(te) als alle Banken der Wall Street zusammen ..... ;-)

More UPDATES :

Youths riot in Algeria over high food prices Associated Press

Riots over rising food prices and chronic unemployment spiraled out from Algeria's capital on Thursday, with youths torching government buildings and shouting "Bring us Sugar

Wednesday's violence started after evening Muslim prayers. It came after price hikes for milk, sugar and flour in recent days, and amid simmering frustration that Algeria's abundant gas-and-oil resources have not translated into broader prosperity.

Food Riots Commence As The Fed's Loose Money Policy Leads To First Violence Of 2011 Zero Hedge

Mann bei Protest gegen teures Essen erschossen Die Welt

Big Picture Agriculture / Lester Brown via Reformed Broker

In the United States, which harvested 416 million tons of grain in 2009, 119 million tons went to ethanol distilleries to produce fuel for cars. That's enough to feed 350 million people for a year.... The combined effect of these three growing demands is stunning: a doubling in the annual growth in world grain consumption from an average of 21 million tons per year in 1990-2005 to 41 million tons per year in 2005-2010. Most of this huge jump is attributable to the orgy of investment in ethanol distilleries in the United States in 2006-2008.

Bond Vigilanties

The reasons behind the ugly scenes in Tunisia are down to a combination of political and economic factors, but at least part of the discontent stems from rising food and energy prices

The problem these countries face is that food and energy prices are a much bigger percentage of an emerging consumer's shopping basket than for a developed consumer's basket. Food and energy therefore carry a much higher weight in domestic consumer price indices within emerging markets, which is something I discussed last year when going over some of the risks to the emerging market story

To an extent, higher food and energy prices are a result of expansionary economic policy in the US combined with a reluctance of emerging market countries (particularly China) to allow their currencies to appreciate versus the US dollar. Would it not be ironic if the very policies that US authorities have pursued to return the US economy to growth then proceed to be the cause of global economic weakness?

Food Stamp Usage Hits New High Of 43.2 Million ZH

It´s safe to say that without similar programs in the G7 countries we would see similar "riots" like in Algeria etc.....

Man muß kein Prophet sein, um zu erkennen das in den G7 Ländern ohne ähnliche Programme längst "ziviler Ungehorsam" wie momentan in Algerien, und demnächst wohl noch deutlich mehr Ländern, zu sehen sein würden....

The food price vulnerability index Citi via FT Alphaville / Tilt

The index has been created by Citigroup and its based on the idea that a country’s central banks are more likely to have to respond to a food price shock if:

1) the consumer price index is sensitive to changes in good prices.

2) growth is strong — the chances of contagion from food prices to core CPI are strongest when demand pressures are in any case robust.

3) Relatively loose monetary policy– on the grounds
that a country already behind-the-curve might have some nasty catching-up to do if a food price shock leads to a surge in inflationary pressures overall.

And China ticks all those boxes.

Back with a vengeance Economist

Russia Imposes Inflation-Driven Price Controls: Will Use Price Caps On "Socially Important" Commodities

Russia has just announced it would proceed with price caps on a variety of foodstuffs, from buckwheat, to potatoes, assorted fruits and vegetables and all other commodities it deems "socially important" accoding to Russian newspaper gazeta.ru.

Interactive Map Of Recent Food Riots And Price Hikes ZH

John Hussman Is Stating The Obvious......

2010-12-06T00:08:00.000-08:00

I´ve promised to come back after QE 3.0 has started.... Well, it looks like Bernanke started at least the "campain" to hint QE 3.0..... Initially my comment that the break would take only a few weeks should sound ironic... With Bernanke in charge i should have known better...;-) Thank god he is 100 PERCENT! ( no typo ) certain ( his "brilliant" track record ,see Youtube : Bernanke in Denial, should insprice confidence.... ) he could stave off ( core LOL ) cpi inflation when and if it came to that... Probably no coincidence that the topic asset price inflation aka bubbles & the US$ didn´t made it into the interview .... ;-) ( Quote Mish : That was not really an "interview" on 60 minutes, it was an infomercial for Bernanke ) On the topic Bernanke & QE 2.0 i urge you to read the latest comment from Hugh Hendry, Jeremy Grantham & Mish.

Habe ja angekündigt spätestens nachdem QE 3.0 gestartet worden ist wieder etwas regelmäßiger zu bloggen.... Nach diesem Wochenende kann man sagen das Bernanke zumindest die Kampagne für QE 3.0 gestartet hat..... Eigentlich war mein Hinweis, das die Bloggerpause wahrscheinlich nur einige Wochen dauern wird, ironisch gemeint....Mit einem wie Bernanke an den Schalthebeln hätte ich es besser wissen müssen.... ;-) Nur gut das sich Bernanke zu 100 PPROZENT! sicher ist ( leider kein Übersetzungsfehler.... Nach Ansicht von Youtube : Bernanke in Denial sind Aussagen wie diese bestenfalls als bedenklich, bin halt ein höflicher Zeitgenosse, zu bezeichnen ) auf den eh schon massiv geschönten ( hedonisch, Kernrate, usw ) Warenpreiskorb auswirken .... Sicher kein Zufall das die Frage nach der Vermögenspreisinflation sprich BLASE sowie der US$ es nicht in das Interview, das Mish richtig als INFOMERCIAL für Bernanke bezeichnet, geschafft hat.... ;-) In diesem Zusammenhang empfehle ich einen Blick in den den letzten Kommentar von Hugh Hendry , Jeremy Grantham & Mishz u werfen...

John Hussman

It doesn't take much thought to recognize that, like Bernanke's actions, the actions of the ECB are ultimately likely to represent not monetary policy but fiscal policy.
When you buy the debt of countries that have a high likelihood of defaulting on this debt, or will avoid default only by the creation of currency that could have been issued to finance fiscal expenditures, it follows that you are engaging in fiscal policy without the authorization of elected governments.

We are allowing 99% of the world to accept budget cuts and austerity in order to defend bondholders from taking losses or having to accept debt restructuring. When bondholders lend money to a financial company or to a country, at a spread over the yield available safe debt, they are explicitly accepting the risk that the bet will not work out, and that they may lose money in the event of a restructuring.
When government policy at every level focuses on making bondholders whole, then government policy at every level focuses equivalently on protecting the inefficient and dangerous misallocation of capital.

Almost a miracle that so far the populist backlash & the social unrests against the "war on taypayers" are still minor... I fear that this will change rather sooner than later...... UPDATE: Video: Fire bombs, Stones Fly in Greek Riots; All Flights to/from Athens Cancelled

The daily headlines about trillions in black holes & the people in charge should be at least enough to give the Special Gold Report "In Gold We Trust" - Erste Group a shot..... In contrast to Hendry & Grantham i still think GOLD is not a bad long term hedge against the wisdom of the "Central Banksters" & politicians... ;-)

Bin überrascht das es bisher in Sachen Populismus und vereinztelten ( zu 99% glimpflich verlaufenden ) Demos vorwiegend in Südeuropa ( UPDATE: Video: Fire bombs, Stones Fly in Greek Riots; All Flights to/from Athens Cancelled bisher kein größerer Gegenwind für ständig wiederkehrende Rettungsaktionen einzig und allein zu Lasten der Steuerzahler gibt... Dank des bisher eingeschlagenen Weges befürchte ich allerdings das sich das demnächst ändern wird....Spätestens dann dürfte speziell Europa und der € irreparablen Schaden davon getragen haben....

Die inzwischen zur Gewohnheit gewordenen tagtäglichen ( und noch vor 12 Monaten für unmöglich gehaltenen) Schlagzeilen über gigantische Summen sowie die Historie der handelnden Personen sollten ausreichen zumindest mal einen Blick in den Special Gold Report "In Gold We Trust" der Ersten Group zu werfen... Obwohl ich damit anderer Meinung als Hendry & Grantham bin, denke ich das GOLD langfristig nicht die schlechteste Absicherung gegen die geballten Wesiheiten der weltweiten ( aber inbesonders der angelsächsich geprägten ) "Central Bankster" sowie der momentan handelnden Politiker ist....;-)

Without a good dose of humor the daily spin is almost impossible to withstand... So enjoy an almost instant classic.....

Da dies alles mit einer gehörige Portion Humor wesentlich leichter zu ertragen ist lege ich allen dringend den nachfolgenden Clip ans Herz....Dürfte bereits jetzt ( 4 Wochen nach Veröffentlichung ) als Klassiker durchgehen....

Update:

Did Bernanke Pull a Fast One Last Night? The Mess That Greenspan Made

Guest Post: Bernanke Is 100% Sure Jim Quinn of The Burning Platform via ZH

Lies, Half-Truths, and 100% Hubris on 60 Minutes Mish

Money Printing and 100% Confidence – Day 4 Pento & Baum via Tim

Helicopter Ben gets in a spin The Economist

The Daily Show With Jon Stewart

Mon - Thurs 11p / 10c

The Big Bank Theory

http://www.thedailyshow.com/

Daily Show Full Episodes

Political Humor

The Daily Show on Facebook

Jeremy Grantham "Night of the Living Fed’

2010-10-26T23:28:00.000-07:00

After this post i will continue with my temporary "time out"...Image was just too spot on to pass and is topping even the "They Won´t Stay Dead" version".....

Werde nun meine wohlverdiente Pause fortsetzen....Konnte bei dieser wohl treffensten Illustration seit langem einfach nicht wiederstehen.....Toppt sogar noch die "They Won´t Stay Dead" Version...

Grantham October

Unlike Grantham i think this is a not a bad long term hedge against the wisdom of the "Central Banksters"... ;-)

Selbst wenn einer wie Grantham es etwas anders sieht denke ich das dies langfristig nicht die schlechteste Absicherung gegen die geballten Wesiheiten der weltweiten ( aber inbesonders der angelsächsich geprägten ) "Central Bankster" ist....;-)

I´m Taking Another Break......

2010-10-02T05:10:00.000-07:00

In the meantime make sure you give one of the best free avaiblable photo blog News Stories In Photographs a shot... You won´t be disapointed.....Take the Oktoberfest (40 photos total) as an example... I´ll be back when QE 3.0 has started... So the break won´t last longer than a few weeks ...;-) UPDATE: QE wars, Japan edition

Werde mal wieder eine Pause einlegen und mich wieder melden wenn QE 3.0 gestartet worden ist... Bei dem Tempo das die Notenbänker weltweit vorlegen dürfte die Pause also kaum weniger als ein paar Wochen betragen.... ;-) UPDATE: QE wars, Japan edition In der Zwischenzeit komme ich nicht daraum herum euch einen der besten Fotoblogs News Stories In Photographs ans Herz zu legen.... Nicht nur die Fotoserie zum Oktoberfest (40 photos total) ist mehr als gut gelungen...

Human landscapes in SW Florida (26 photos total)

A couple weeks ago, I was listening to a story by NPR's Planet Money team about "Toxie" a toxic asset they had purchased to follow and help tell the story of the recent financial meltdown. One of the mortgages in Toxie was on a home bought for investment in Bradenton, Florida, and the team took a look at housing in the area. Many homes there are empty and have been for years. Huge developments sit partially completed among densely built up neighborhoods and swampland. A guest stated that there were "enough housing lots in Charlotte County to last for more than 100 years". Boom and bust residential development has drastically affected parts of southwest Florida for decades now, and I spent some time (with the help of Google Earth), looking around the area. With permission from the fine folks at Google, here are a few glimpses at development in southwest Florida. (26 photos total)

section of a partially built residential project with only two houses in place, near Fort Myers, Florida. Map. (© Google)

A partially-developed community near Charlotte harbor, north of Fort Myers, Florida

Probably a "quiet" neighborhood......Click here to see the rest of some stunning images.....

Immerhin dürfte es in diesen Fällen nicht gerade häufig zu Nachbarschaftsstreitigkeiten kommen.....Bitte hier klicken um die restlichen zum Teil atemberaubenden Aufnahmen zu sehen.....

Quotes Albert Edwards, Bill Buckler, Alan Greenspan,William Buiter, Mr Mantega ( Brazil’s Finance Minister ), Ben Davies & Ambrose Evans-Pritchard

2010-09-20T21:51:00.000-07:00

Cannot believe that i´m quoting Greenspan without making the usual jokes about his "wisdom"......... ;-)

Fast unheimlich das man mal ohne Häme Greenspan zitieren kann...... ;-)

Albert Edwards via ZH

Central bankers, by pursuing policies that allowed the middle classes to borrow against rising asset prices, kept them consuming despite the stagnation of their incomes and hence disguised the effect of government policies that allowed the rich to acquire virtually all of the gains in GDP growth.

And in the process of “robbing” the middle classes and now still attempting to keep asset prices artificially high, they are also robbing our children of the ability to buy a house at an affordable price. Yet central bankers still see QE as key to maintaining the illusion of prosperity and stoking consumer spending

Bill Buckler via ZH

"Ninety-seven percent of all existing Treasury debt has been created since August 15, 1971! Ninety-three percent of it has been created since Mr Volcker “saved” the paper Dollar in late 1979! Please note that the gain in Treasuries and the loss in the US Dollar almost exactly cancel out.

Please note also that even the biggest gain in these paper markets fades into insignificance against Gold’s rise."And here is the answer all the "gold bugs" have been waiting for: "The paper money “price” of Gold will last as long as the attempt to make paper money “work” lasts. In the end, Gold will no longer have a “price” because it has reverted to its role as MONEY. Whenever and wherever that happens, that nation can return to the production of wealth - rather than “money”."

Alan Greenspan via The Reformed Broker

Mr. Greenspan replied that he’d thought a lot about gold prices over the years and decided the supply and demand explanations treating gold like other commodities “simply don’t pan out,” as Mr. Malpass characterized Mr. Greenspan. “He’d concluded that gold is simply different,” Mr. Malpass wrote. At one point Mr. Greenspan spoke of how, during World War II, the Allies going into North Africa found gold was insisted on in the payment of bribes. Said the former Fed chairman: “If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it.”

William Buiter via FT Alphaville

…even the fiscally best-positioned G7 countries, Germany and Canada, face major fiscal challenges. Germany would not be able to join the Euro Area today if it were not a member already, because it fails to meet the deficit criterion (no more than 3% of GDP) and the debt criterion (no more than 60% of GDP) – in the case of the public debt to GDP ratio, by a significant and growing margin. Indeed, the aggregate Euro Area fails both criteria by wide margins, and of the 16 individual member states, only Luxembourg and Finland qualify on both criteria…

With QE 2.0 now finally on the table & spreading "competitive devaluations" ( timing wasn´t bad... see Update)around the globe i think you should give the Ludwig von Mises reference via John Hussman a second look....

Da ja nun auch endlich offiziell QE 2.0 angekündigt worden ist und weltweit ein finaler Abwertungswettlauf ( Timing hätte schlechter sein können...siehe Update )in Sachen Währungen um sich greift ( und dabei rasant an Fahrt gewinnt ) kann es nicht schaden noch einmal einen Blick auf das Ludwig von Mises Zitat via John Hussman zu werfen....

UPDATE:

Ambrose Evans-Pritchard Telegraph

States accounting for two-thirds of the global economy are either holding down their exchange rates by direct intervention or steering currencies lower in an attempt to shift problems on to somebody else, each with their own plausible justification. Nothing like this has been seen since the 1930s.

Brazil’s finance minister Mr Mantega via FT Alphaville

Mr Mantega, Brazil’s finance minister, declared earlier this month that the Brazilian real was caught up in ‘a silent war’ in currency markets, as nations compete to speed up their economic recoveries by putting their exporters at an advantage…

Ben Davies Ft Alphaville

Within a single week 25 nations have deliberately slashed the values of their currencies. Nothing quite comparable with this has ever happened before in the history of the world. This world monetary earthquake will carry many lessons.

Got GOLD ? ;-)

Junk Bond Covenants Less Strigend Than Their Previous Junk Deals.....

2010-09-20T01:41:00.000-07:00

Let´s be generous and call this kind of datapoint "frothy"...... ;-) Make sure you take a closer look at the stunning example provided in the update at the end of the post........

Höflich formuliert dürften Daten wie diese als "überschäument" durchgehen.... ;-) Verweise in diesem Zusammenhang ausdrücklich auf das Beispile das ich am Ende des Postings im Update verewigt habe.....

Bond Markets Get Riskier WSJ

One of the worrisome developments is occurring in the junk-bond market, where companies are taking advantage of strong demand to sell bonds that have fewer protections for investors than similar bonds sold by the companies in years past.

Some have watered down covenants, which are supposed to protect investors if a company is sold and prevent companies from loading on too much other debt or paying out their cash, which would cause a drop in value of the bonds or make it less likely the bonds they hold would get paid off.

Fifty-seven percent of junk-bond issuers had less-stringent covenants than their previous junk deals, according to an analysis for The Wall Street Journal by Covenant Review which analyzed 58 junk bonds issued in 2010 by companies that previously had issued debt. Just one deal had stronger covenants for investors. Some 41% of the deals had the same covenants.

"It reflects a weakening in covenant protections even below those existing at the peak of the market, in 2006 and 2007," Alexander Dill said in a May report from Moody's.

Junk bond prices hit pre-crisis levels FT

Strong investor demand for junk bonds has pushed the average price on such corporate debt to its highest level since June 2007, when companies could borrow with ease at the height of the credit boom.

The Bank of America Merrill Lynch index used by many investors to track the junk bond market – bonds sold by companies with credit ratings below investment grade – rose last week above 100 for the first time since the start of the credit crunch.

Dealogic, the data provider, said junk bonds sold to US investors so far in 2010 reached $168bn (€129bn) last week. This is more than was marketed in the whole of 2009, when the $164bn total set a record.

Mr Fridson said the average spread was 625 basis points over US Treasuries, still far above the level of June 2007, when spreads reached lows of close to 250bp.

In general i agree with the following statement and especially the headline "desperately seeking income" .... But signs of some kind of "serious excess" are clearly growing on a daily basis.....

Trotz allem kann man zumindest den Run in Sachen Unternehmesanleihen mehr als nachvollziehen.... Denke besonders die Überschrift "Einkommen verzweifelt gesucht" trifft den Nagel auf den Kopf..... Die Warnhinweise für eine gewisse "Sorglosigkeit" wachsen tagtäglich.....

Desperately seeking income FT Alphaville

...because corporate credit represents an attractive middle ground between equities and government bonds for income hungry investors

One can, of course, question the wisdom of piling into junk but given the paucity of alternatives it is understandable.

Things could really be getting "interesting" if the composition shifts away from the "refinancing" aka "extend & pretend" part..... I´m also sceptical that the markets have finally realised that this is "Not Your Father´s Recovery" & the deleveraging cycle is still in the first inning ( see Clevelend Fed "One Measure Of Corporate Leverage Recently Reached A New Historical High" ) .....

Denke das spätetstens wenn eine Verschiebung weg vom Refinanzierungs bzw "Extend & Pretend" Segment zu beobachten ist, die ganze Angelegenheit recht schnell mehr als "ungemütlich" zu werden droht....Bin mir zudem ziemlich sicher das der Markt noch immer nicht realisiert hat das die bisherige Erholung historisch gesehen nicht gerade "eindrucksvoll ausgefallen ist und das entgegen der täglichen Meldungen slebst bei den Firmen die "Entschuldungsphase" noch nicht wirklich aus dem Startblock gekommen ist ( siehe Clevelend Fed "One Measure Of Corporate Leverage Recently Reached A New Historical High" )....

Junk windfall Moody´s via FT Alphaville

Wouldn´t surprise me if the topic I Want My Buyback Back.... will be again on the agenda within 12-24 months....

Würde mich nicht wundern wenn das Thema I Want My Buyback Back.... binnen absehbarer Zeit erneut zu zweifelhaften Ruhm kommen wird.....

UPDATE:

NYT DealBook

THIS summer, executives from the New York-based private equity firm SK Capital traveled to Houston to celebrate the first anniversary of their acquisition of a nylon manufacturing business. Soon they will have a bigger reason to uncork the Champagne.

The nylon manufacturer has announced plans to issue about $1 billion in debt, of which $922 million will be used to pay a dividend to SK. For SK, which paid $50 million in cash for the business, that is an astonishing almost 18-fold return in a little more than a year.

Better Late Than Never.... AngloGold Ashanti De-Hedging Edition.....

2010-09-15T01:30:00.000-07:00

At least we now know why GOLD has spiked yesterday to a new high...... Stunning that John Paulson as the largest shareholder with a 12.1 percent stake and one of the biggest GOLD investors out there didn´t pressure the management to eliminate the hedges way earlier..... Maybe management should have (re)read the Special Gold Report "In Gold We Trust" - Erste Group (!) ....;-) Looking at the chart & as a contrarian i think it´s safe to say that at least one tiny factor driving GOLD will have almost no effect from 2011 on.....On the other hand i don´t know anybody investing in GOLD because of "de-hedging"....

Damit hätten wir auch den Grund warum GOLD ausgerechnet gestern einen gewaltigen Satz gemacht hat.....Das ausgerechnet John Paulson als einer der weltweit größten Goldinvestoren mit 12,1% größter Einzelaktionör ist, und nicht massiv auf das Managment eingewirkt hat bereits in den vergangenen Jahren die zum Teil lächerlichen Hedgingpositionen wesentlich schneller zu eliminieren, würde mir als Investor in einem der Paulson Fonds mehr als übel aufstossen....... CEO & CFO hätten beizeiten mal wieder einen Blick in den Special Gold Report "In Gold We Trust" - Erste Group (!) werfen sollen... ;-) Mit Blick auf den nächsten Chart dürfte ziemlich klar werden das ab 2011 ein wenn auch winziger Treiber für den Goldpreis wegfallen dürfte....Auf der anderen Seite ist mir kein einziger GOLDinvestor bekannt der ausgerechnet wegen des Themas "De-Hedging" bullish gewesen ist.... ;-)

H/T FT Alphaville

Anglogold Ld

During 2009, AngloGold Ashanti continued to execute its strategy to reduce its outstanding gold hedging position, which resulted in its decision to acceleratethe settlement of certain outstanding gold hedging positions. These accelerated settlements, together with the normal scheduled deliveries and maturities of other gold derivatives positions during 2009 and the first half of 2010, reduced the total committed ounces from 5.99 million ounces as at 31 December 2008 to 3.22 million ounces as at 30 June 2010 and to 2.72 million ounces as at 14 September 2010.

AngloGold Ashanti estimates that its current residual hedging position would likely result in it realising an effective discount to the gold spot price of approximately 6-11% until 2014 and an effective discount of less than 1% in 2015 if the hedge book were not restructured, assuming an annual production of 5.0 million ounces and a spot price of between US$950 and US$1,450 per ounce.

AngloGold Ashanti intends to effectively eliminate all its remaining gold hedging position by early 2011

Due to the low committed prices under its current hedge contracts (at an average price of less than US$450 per ounce) relative to the current market price, the elimination of AngloGold Ashanti's hedging arrangements will require a significant capital commitment.

As at 30 June 2010, the negative marked-to-market value of all hedge transactions making up AngloGold Ashanti's hedge position was approximately US$2.41 billion.

Special Gold Report "In Gold We Trust" - Erste Group Topic De-hedging

At the end of 2009 the hedged position of gold miners amounted to almost 8mn ounces (i.e.close to 250 tonnes). Barrick Gold reduced its hedge book dramatically. The Canadian market leader has cut its hedged positions by 5.3mn ounces (165 tonnes). In order to fund this strategy, the company increased its capital by USD 4bn and also issued USD 1bn worth of bonds. Barrick’s hedged positions had seen a high of more than 20mn ounces.
AngloGold and Ashanti account for the majority (i.e. close to 45%) of the existing positions.
We expect dehedging demand to gradually decrease and believe that in the long run the gold industry may shift towards hedging again so as to ensure that major projects can be planned with a certain level of accuracy.

Judging from the daily headlines on this topic i think down the road even this horrible timing will be viewed much more favourably.....

Wenn man allerdings die tagtäglichen Meldungen zu diesem Thema betrachtet, bestehen gute Chancen das selbst dieses üble Timing zukünftig "wohlwollend" in der Betrachtung wegkommen wird.....

Interesting Irish National Debt Stats......

2010-09-14T03:26:00.000-07:00

Stunning....If you want to put a positive spin on it one can argue that there is a lot of room for improvement for the Irish to boost their share.... Of course only if the ECB is willing to slow down their ongoing buying "frenzy" ;-) For more charts click here

Positiv formuliert bleibt da für die Irischen Mitbürger, Banken und Versicherungen noch viel Luft nach oben.....Natürlich nur für den Fall das sich die EZB in den nächsten Jahren mit Ihren Käufen zurückhält....;-) Für mehr Charts in Sachen Irland und Staatsverschuldung bitte hier klicken....

Irish government debt needs you Barclays Capital’s Laurent Fransolet via FT Alphaville

In common with a number of other countries, one of the problems Ireland has faced is the limited domestic investor base for its debt. There is only limited data on who owns the Irish debt. On the domestic side, the Irish central bank has detailed data on holders… Only 15% of the debt is held domestically (the lowest proportion in the euro area), and domestic buyers have not stepped up their purchases recently, in contrast to a number of other euro area countries (eg, Spain, Portugal).

…Irish domestic banks own just €8.5bn of the debt, compared with balance sheets of about €700bn

Similarly, insurance companies and pension funds hold just €3-4bn of Irish government bonds, compared with total fixed income assets of €66bn. These low domestic holdings probably reflect the fact that for a long time, Irish debt was scarce and low yielding, and thus shunned by domestic investors. We think it also shows that in a way, there is potential for more domestic buying, even if these changes in investment policies can take time.

To have an idea of who owns this external debt, we utilise a number of sources. First, we take into account the ECB Securities Markets Programme buying (SMP): in total, about €61bn of Greek, Irish and Portuguese securities have been bought by the ECB. We believe the majority was Greek debt, with the rest slightly skewed in favour of Irish debt (say 15bn to 20bn).
Overall, we assume 30% of the ECB SMP buying has been in Irish debt (€18bn – the SMP likely makes the ECB the biggest single debt holder of Ireland, Portugal and Greece).

Read the last paragraph twice & ( even if i have to repeat myself over and over again ) the Joke Of The Day From ECB´s Smaghi "€ More Stable Than Deutsche Mark" is getting even more "funny".... ;-)

Lasst den letzten Absatz in aller Ruhe nocheinmal Revue passieren und (ich wiederhole mich da gerne) der Witz des Tages von Smaghi das der "€ stabiler als die DM ist" nur noch witziger... ;-)

Importantly… Ireland built up a lot of cash deposits in 2008, which it could run down more than €10bn if market access remains limited/too expensive. With monthly cash deficits of about €1.5bn, limited bills redemptions (€2.75bn in Q1 11) and no bond redemption until November 2011 (€4.4bn), Ireland is not under severe pressure to issue large amounts for meeting cash needs. As such, the NTMA confirmed on 9 September that Ireland was fully funded until next June, which is our assessment as well, if Ireland decided to run down its cash balances entirely (although we suspect it will want to keep some cash buffer to hand).

Put the € 18 billion ECB number since March 2010 into perspective with the monthly cash deficit of only € 1.5 billion.... All this in the name of "tightening the unrealistic high spreads vs BUNDS"...... Spin at its best....UPDATE: Irish banks' ECB loans rise to 95.1 bln euros

Die ganze Sache wird dadurch nicht weniger witzig wenn man die geschätzten 18 Mrd € die die EZB seit März 2010 aufgekauft hat ins Verhätltnis zu dem monatlichen Cash Defizit von 1,5 Mrd € setzt..... Und all das läuft noch immer unter dem Motto "die unrealistischen hohen Renditeaufschläge vs den BUNDS mit dem Marktbild der EU / Politiker / EZB in Einklang zu bringen "..... Mir würden da haufenweise treffendere Begriffe einfallen.... UPDATE: Irish banks' ECB loans rise to 95.1 bln euros

Got GOLD ? ;-)

How Not To Restore Confidence "Stress Test Edition"......

2010-09-06T22:23:00.000-07:00

The main goal from "stress testing" the banks was to provide at least some confidence....There is now a good chance that this "PR Stunt" could backfire faster than even i predicted .....I´m not surprised that the rules for transparency were not "rigoros".... No wonder Only 35% Of Survey Participants Expect The Stess Test To Be Credible.... ...

Wenn man bedenkt das die einzige Aufgabe des Stress Test gewesen ist zumindest ein Mindestmaß an Vertrauen wiederherzustellen muß man so langsam befürchten das selbst dieses Mindestziel in Rekordzeit verfehlt wird..... Ich persönlich wundere mich nicht das die "Transparenzanforderungen" in Sachen Stress Test nicht "brutalst möglich" angesetzt worden sind......Kein Wunder das bereits bei Durchführung lediglich 35% der Befragten dem Stress Test "Glaubwürdigkeit" zugestanden haben....

Europe's Bank Stress Tests Minimized Debt Risk WSJ

Europe's recent "stress tests" of the strength of major banks understated some lenders' holdings of potentially risky government debt, a Wall Street Journal analysis shows.

As part of the tests, 91 of Europe's largest banks were required to reveal how much government debt from European countries they held on their balance sheets. Regulators said the figures showed banks' total holdings of that debt as of March 31.
An examination of the banks' disclosures indicates that some banks didn't provide as comprehensive a picture of their government-debt holdings as regulators claimed.
Some banks excluded certain bonds, and many reduced the sums to account for "short" positions they held—facts that neither regulators nor most banks disclosed when the test results were published in late July.

Because of the limited nature of most banks' disclosures, it is impossible to gauge the number of banks that excluded portions of their sovereign portfolios from their disclosures, or the overall effect of that practice.

But the exposure to government debt of at least some banks, such as Barclays PLC and Crédit Agricole SA, was reduced by a significant amount, according to industry officials and financial filings made by the banks. Adding to the haziness, the stress tests' reported sovereign-debt levels differed, sometimes widely, from other international tallies and from some banks' own financial statements.

The stress tests' upbeat results—only seven banks flunked, and were deemed short of just €3.5 billion ($4.51 billion) of capital—initially soothed markets. But fears have flared up again as heavily indebted countries like Ireland and Greece continue to struggle. Among other warning signs, the costs of insuring many bank and government bonds against default in countries such as Portugal, Ireland, Greece and Italy have jumped above their pre-stress-test levels.

The banks based their stress-test disclosures on a template provided by CEBS. The template asked for banks to disclose their "gross" and "net" exposures to sovereign risk in each E.U. country. Most banks' disclosures didn't define "gross" and "net" beyond saying that the latter were "net of collateral held and hedges."

But some banks' figures didn't represent their total holdings. Barclays, for example, excluded some government bonds it was holding for trading purposes. The rationale, according to Barclays officials, was that the bonds were directly related to transactions the big U.K. bank was performing for corporate or government clients, and that the holdings vary widely from day to day. Barclays didn't disclose that it wasn't listing its full holdings.

Excluding the bonds reduced Barclays' portfolio of Italian sovereign debt—which the bank said was £787 million ($1.22 billion)—by about £4.7 billion, Barclays officials said. The bank's holdings of Spanish government bonds, listed at £4.4 billion, shrank by about £1.6 billion.

The Barclays officials said they believe other big European banks also excluded significant slices of their trading portfolios from stress-test disclosures.

In its midyear results last month, Barclays reported its sovereign-bond portfolios based on a broader definition than the stress tests used. As a result, Barclays' reported holdings of debt issued by the Italian, Spanish and Irish governments swelled.

BIS data from March 31 indicates that French banks were holding about €20 billion of Greek sovereign debt and €35 billion of Spanish sovereign debt. In the stress tests, four French banks, which represent nearly 80% of the assets in France's banking system, reported holding a total of €11.6 billion of Greek government debt and €6.6 billion of Spanish debt.

Keep in mind that the even the most adverse scenario of the Stress Test didn´t include any hair cut on sovereign debt....Too bad that only 6 weeks later the market is already pricing in a restructuring of Greek Debt ( Greek Debt Crisis – Apocalypse Later )

Man sollte villeicht nocheinmal gesondert darauf hinweisen das selbst im schlimmsten anzunehmen Fall der "Strees Test" keinerlei Abschlag bei Staatsanleihen vorsieht....Dumm nur, das bereits 6 Woche nach Durchführung der Markt bereits zum Teil massive Abschläge eingepreist hat ( siehe Greek Debt Crisis – Apocalypse Later )

EU Rehn: Other 14 EMU Members To Cover Slovakia Greece Loans

The other 14 Eurozone countries will cover Slovakia's share of the E110 billion loan package to Greece after the country refused to participate, European Commissioner for Economic and Monetary Affairs, Olli Rehn said on Tuesday.

Slovakia originally agreed to participate in the E110 billion aid package for debt-laden Greece, but a new Slovak government decided to withdraw that commitment

Domino #2, Ireland, Set To Topple? ZH

The Irish-Bund spread is going nuts on reports that the ECB is bidding up sovereign debt once again, together with a WSJ report that the Stress Test was, as everyone with half a brain knew all too well, a blatant lie, and sovereign debt was misrepresented. Earlier, a report in the FT Deutschland suggested that the bailout of Anglo Irish alone, (not to mention AIB and Irish Nationwide) would be sufficient to threaten the country's solvency. Things domestically are no better, after a poll in the Sunday Independent found that 74% of respondents believed the country would default, and preceded earlier news that Irish consumer confidence plunged from 66.2 to 61.4.

Mmm, European yield stew FT Alphaville

Those bond markets and Irish debt Superb Video

Greek Deals Hidden From EU Probed as 400% Yield Gap Shows Doubt Bloomberg

Sept. 8 (Bloomberg) -- Four months after the 110 billion- euro ($140 billion) bailout for Greece, the nation still hasn’t disclosed the full details of secret financial transactions it used to conceal debt.

“We have not seen the real documents,” Walter Radermacher, head of the European Union’s statistics agency Eurostat, said in a Sept. 2 interview in his Luxembourg office. Eurostat first requested the contracts in February.

Beware of Greeks Bearing Bonds Michael Lewis / Vanity Fair

As Wall Street hangs on the question “Will Greece default?,” the author heads for riot-stricken Athens, and for the mysterious Vatopaidi monastery, which brought down the last government, laying bare the country’s economic insanity. But beyond a $1.2 trillion debt (roughly a quarter-million dollars for each working adult), there is a more frightening deficit. After systematically looting their own treasury, in a breathtaking binge of tax evasion, bribery, and creative accounting spurred on by Goldman Sachs, Greeks are sure of one thing: they can’t trust their fellow Greeks.

CEBS says the stress tests were JUST FINE FT Alphaville

Surprise, surprise....

Welch Überraschung....

Got GOLD ? ;-)

Bank Run "Kabul Edition"......

2010-09-06T06:20:00.000-07:00

Should be no surprise that the name KARZAI is popping up again..... Some folks have learned quite a lot from us ( US & Europe ) when it comes to the play the "Bailout / Moral Hazard Game"...If this wouldn´t be so depressing one could almost "congratulate" the "fraudsters" for recognizing that this bank is definitely TBTF.... :-(

Das hier erneut der Name KARZAI auftaucht dürfte wohl nur noch die Bundesregierung überraschen..... ;-) Bei dem seit Jahren anhaltendem "Anschauungsunterricht" ( besondern in den USA & Europe ) wenig verwunderlich das praktisch weltweit das Thema "Bailout / Moral Hazard" ständig kopiert und wie in diesem Fall besonders "brilliant" gespielt wird...:-( Selten das eine an sich so kleine Bank ohne Zweifel der Kategorie "Too Big To Fail" zuzuordnen ist....

Afghans Move to Bail Out Kabul Bank WSJ

KABUL—Afghanistan's government inched closer to bailing out the country's largest bank, setting aside hundreds of millions of dollars that could be used to keep Kabul Bank solvent, officials said.

The move Sunday came as depositors continued to pull their money from the lender, mobbing branches in Kabul and other parts of the country. In the capital, police and soldiers were ordered to guard Kabul Bank branches and razor wire was strung outside the main branch to keep crowds in check.

Averting the failure of Afghanistan's largest bank, an institution with ties to President Hamid Karzai's administration, has become a priority for U.S. and Afghan officials concerned by the political and economic crisis that could result.

There were conflicting accounts of how much money the Afghan government was preparing to divert to Kabul Bank from its roughly $4.8 billion in foreign-exchange reserves. A central-bank official said the bailout would likely be in the $200 million range; a finance ministry official put the figure "closer to double that."

The central-bank official said several options were being discussed to recover the funds that are likely to be pumped into Kabul Bank. One option is forcing major shareholders who bought their stakes with loans from the bank to either repay what they borrowed or hand over their shares.

Another option is confiscating properties or businesses bought or built by bank insiders with loans from the lender.

Major shareholders include brothers of President Karzai and First Vice President Muhammad Fahim, U.S. and Afghan officials say. The "politics are delicate," the central-bank official said.

Finance Minister Omar Zakhilwal said the Afghan government Saturday transferred $100 million dollars to Kabul Bank to cover salaries for about 250,000 soldiers, police and teachers, who are paid through accounts at the lender.

Kabul Bank's woes became public late Tuesday, when word leaked that Afghanistan's central bank had forced out the lender's chairman and chief executive—its two biggest shareholders—amid allegations that they made hundreds of millions of dollars in sometimes-clandestine loans to themselves and Afghan government insiders.

U.S. and Afghan officials also say the bank used one of Afghanistan's traditional hawala money-transfer outfits to move hundreds of millions of dollars out of the country in an apparent attempt to avoid detection, though it isn't clear what the money was then used for.

On Wednesday and Thursday, depositors withdrew almost $180 million, more than a third of the $500 million the bank had on hand before the crisis.

It isn't clear if Kabul Bank's assets—mostly loans and property—are easily recoverable.

When bankers are more dangerous than warlords Felix Salmon

Speaking Wednesday from his villa in Dubai, which was paid for by Kabul Bank, Mahmoud Karzai, the president’s brother, said cash withdrawals from the bank were a “little bit more than usual” but did not threaten to cause a meltdown. A full-scale run on Kabul Bank, he added, “would be a major disaster.”

Yes, the president’s brother is a part owner of the bank, and he’s living in Dubai, in a villa paid for by the bank — which, incidentally, handles the payroll for Afghan soldiers and schoolteachers — and really, what could possibly go wrong?

Bill Black: “Control Fraud” Crushes Kabul NC

Kabul Bank has been revealed to be a “control fraud.” Control frauds occur when those that control a seemingly legitimate entity use it as a “weapon” to defraud. Control frauds cause greater financial losses than all other forms of property crime – combined. Control frauds can also cause immense damage to a nation because they are run by financial elites that curry favor from political elites. The result is that they are often able to loot “their” banks for years with impunity

The CIA tells us that Afghanistan raised roughly $1 billion in revenues last year and expended $3.3 billion. The shortfall, of course, was funded by us (the West, principally the U.S.). Indeed, that understates the case because Afghanistan raised the $1 billion in revenues primarily through customs duties and the U.S. and other Western nations indirectly or directly funded most of those customs duties.

We know certain facts. Afghanistan has no deposit insurance system. Its government has no financial responsibility for bailing out Kabul Bank’s depositors. Nevertheless, Afghanistan’s government has announced it will bail out the depositors. The funds to bail out the depositors will come – indirectly, but surely – largely from the United States Treasury

Karzai Family Political Ties Shielded Bank in Afghanistan NYT

In early 2009, as President Hamid Karzai scanned the landscape for potential partners to run in his re-election bid, he was approached from an unusual corner: a bank.

After the deal, Kabul Bank poured millions into Mr. Karzai’s re-election campaign, Afghan officials said. Mahmoud Karzai and Haseen Fahim, drawing on Kabul Bank’s resources, were able to enrich their families aided by tens of millions of dollars in loans.

“The brothers orchestrated the political deal to serve their business interests,” said a prominent Afghan businessman in Kabul who, like virtually everyone interviewed for this article, spoke only on condition of anonymity. “Fahim became vice president, and the bank financed Karzai’s re-election.

“In Kabul, politics is all about money,” he said. “It’s the same thing.”

FT Alphaville

Afghanistan’s central bank has stepped in to take control of the troubled Kabulbank, its governor said on Tuesday, after suspected irregularities raised concerns over the country’s top private financial institution.

Central Bank Governor Abdul Qadir Fitrat told Reuters investigations had also been started into the dealings of the bank’s top two directors and shareholders, who were told to resign, and a brother of Afghanistan’s First Vice President, Mohammad Qasim Fahim.

Greek Debt Crisis – Apocalypse Later

2010-09-02T23:28:00.000-07:00

Almost "shocking" to see a rationale market response.... ;-)

Fast "unheimlich" mal eine rationale Marktreaktion zu sehen... ;-)

Greek Debt Crisis – Apocalypse Later CFR

The difference between Greek and German government bond yields can be used to estimate the market’s view of the likelihood of a Greek default. The chart above shows these probabilities over different time frames on three different dates. On April 30th, no European plan was yet in place to address the ballooning Greek debt, and default was considered a real possibility in the short term. On May 11th, just after the European Stabilization Mechanism (ESM) was announced, markets sharply cut their view on the odds of default across all time horizons. However, the market’s analysis of the ESM has become much more nuanced since then. On September 1st, the market’s view of the probability of default within two years was lower than before the ESM was announced, but higher over longer time frames.

Greece will happily borrow from the ESM to avoid having to close its primary deficit (that is, excluding interest payments) too rapidly. Yet if Greece is successful in eliminating its primary deficit, its temptation to default will actually grow, as it can wipe out huge amounts of accumulated debt without any longer needing the financial markets to fund current expenditures. If faced with the choice between paying Greek debts and letting Greece default, its northern neighbors may, once their banks are on more solid footing, find it more attractive simply to let Greece default. This is the story line that the markets are now pricing into government bond spreads

Greece Default Risk Is ‘Substantial,’ Pimco’s Bosomworth Says

“Greece is insolvent,” Bosomworth, Munich-based head of portfolio management at Pimco, which oversees the world’s largest bond fund, said in a telephone interview today. “I see it as being quite a substantial risk that Greece eventually defaults or restructures.”

In a best-case scenario, Greece’s government debt will swell to 150 percent of gross domestic product, Bosomworth said.

“Debt servicing as a share of government revenue will increase substantially, particularly if current yield levels do not decline,” Bosomworth said.

Greece Sees €4 Billion (2%) In Deposit Outflows In July ZH

Outflow troubles continue for the time bomb in Europe's periphery, Greece, whose second default is approaching. The central bank has just reported that in July household and business deposits declined from €216.5 billion to €212.3 billion: so much for the ECB's presence inspiring confidence. So €4 billion a month in deposits taken out, and applying a fractional reserve multiplier, means Greek banks lost another €40 billion in monetary supply in July alone. Deflation + Austerity = Kaboom.

National Bank of Greece Greek debt warning FT Alphaville

The most denied cash call of recent times has finally happened. Late on Tuesday night National Bank of Greece announced a €2.8bn ‘Comprehensive Capital Strengthening Plan

NBG says the equity issue and disposal will ‘create an additional, sizeable capital buffer to face the macro-economic situation in Greece in the short-to-medium term’.

But what does that mean? Could it be that NBG is raising the money to cover a Greek government bond haircut? Very possibly.

GREECE: SOUNDING VERY LEHMAN-ISH Prag Cap

If you recall the early stages of the financial crisis there was one glaring trend from the various bank CEO’s and CFO’s – they just couldn’t wait to get on TV with their slogan:

“We are well capitalized.”

Of course, that turned out to be a lie as it’s now clear that most banks in the USA were woefully undercapitalized. Today, Greece’s finance minister is out with similar comments:

“Restructuring is not going to happen. There are much broader implications for the eurozone should Greece have to restructure its debt. People fail to see the costs to both Greece and the eurozone of a restructuring: the cost to its citizens, the cost to its access to markets. If Greece restructures, why on earth would people invest in other peripheral economies? It would be a fundamental break to the unity of the eurozone.”

In other words, “we are well capitalized”.

As i have said from the beginning, the entire bailout stunt wasn´t to help the Greek..... Combine this with the latest "Unlimited & Extended" action from the EU, ECB & the Joke Of The Day From ECB´s Smaghi "€ More Stable Than Deutsche Mark" is getting even more "funny".... ;-) Judging from recent IMF attempts to desperately broaden their "safety net" it´s almost certain that Greece won´t be alone......In this context headlines like IMF Sees G7 Net Debt At 200% Of GDP By 2030; 441% By 2050 should further boost confidence...."Pray & Delay" seems to be the top priority around the globe... The long term bull case for GOLD isn´t getting weaker on a daily basis....

Wie bereits seit Anfang der Krise gesagt ging es weniger um das Wohlergehen der betroffenen Griechen..... Wenn man zudem noch die letzten unlimitierten und zeitlich unbegrenzten weiteren Rettungsmaßnahmen der EU & ECB mitberücksichtigt wird der Witz des Tages von Smaghi das der "€ stabiler als die DM ist" nur noch witziger... ;-) Die neuesten Verrenkungen des IMF um das "Sicherheitsnetz" fast um jeden Preis zu erweitern können nur dahingehed gedeutet werden das wir in naher Zukunft etliche "Griechenländer" sehen werden...In diesem Zusammenhang sollte nachfolgende Meldung IMF Sees G7 Net Debt At 200% Of GDP By 2030; 441% By 2050 eine Erklärung geben warum sich die langfristigen Perspektive für GOLD tagtäglich trotz stark gestiegenem Kurs nicht gerade verschlechtern....

You Know You Are In Trouble When Supersizing A Backup Rescue Facility By Half A Trillion $ Isn´t Enough 4 Month After The Introduction....IMF Version

2010-08-30T22:16:00.000-07:00

In April i wrote at the beginning of the Greece / € Crisis

No wonder the IMF has just SuperzisedTheir "Backup Rescue Facility" By Half A Trillion ( no typo ) for "Contribution To Global Financial Stability"......

Im April im Angesicht der Griechenland und € Krise schrieb ich
Kein Wunder das "vorsorglich" der IMF die Mittel zur "Stabilisierung" der Sorgenkinder mal eben still und heimlich auf 500 Mrd $ verzehnfacht hat ( kein Tipfehler )....
Fast forward to August...... I´m not sure how credible the 1 trillion $ number is but the fact that the IMF is implementing / modifying another credit facility on top of all the existing ones does at least raise eyebrows..... Looks like even "Shock & Awe" isn´t able to stop the flooding.....

Hat ja immerhin einige Monate gereicht...... Ich habe keine Ahnung wie "belastbar" die genannte Summe von 1 Billion $ für die neuen "Rettungsschirme ist....Wenn man aber bedenkt das bereits wenige Monate nach dem letzten Programm bereits wieder Bedarf an neuen Rettungsschirmen besteht muß man befürchten das besonders im Hinblick auf die Zukunft diese Summe nicht zu hoch gegriffen ist....Schon erstaunlich das selbst diese "aberwitzigen Summen" anscheinend nicht mehr ausreichen zumindest mittelfristig die ständig größer werdenden Problemzonen zu überdecken.....

IMF Changes, Expands Crisis-Prevention Credit Lines Bloomberg

Talks are ongoing with member countries to raise the IMF lending capacity to $1 trillion as part of G-20 discussions.

John Lipsky, IMF first deputy managing director, told reporters on a conference call today that the institution has enough money to fund the new credit lines. At the same time, he said he is confident that member countries will continue to demonstrate a commitment for the IMF to have the resources to make the new credit lines “credible and usable.”

IMF Eliminates Borrowing Cap On Rescue Facility In Anticipation Of Europe Crisis 2.0; US Prepares To Print Fresh Trillions In "Rescue" Linen ZH

today the IMF announced it "expanded and enhanced its lending tools to help contain the occurrence of financial crises." As a result, the IMF has as of today extended the duration of its existing Flexible Credit Line (FCL) to two years, concurrently removing the borrowing cap on this facility, which previously stood at 1000 percent of a member’s IMF quota, in essence making the FCL a limitless credit facility, to be used to rescue whomever, at the sole discretion of the IMF's overlords.
Additionally, as the FCL has some make believe acceptance criteria (and with countries such as Poland, Columbia, and Mexico having had access to it, these must certainly be sky high), the IMF is introducing a brand new credit facility, the Precautionary Credit Line (PCL), which will be geared for members with "sound policies [which just happen to need an unlimited source of rescue funding] who nevertheless may not meet the FCL’s high qualification requirements." In other words everyone.
Lastly, for those lazy readers who always scroll to the very bottom looking for a video clip summarizing all previously said, you are in luck. Here is the IMF's Reza Moghadam condescending, and blatantly lying to all who care, as to what the purpose of tonight's "Crisis Prevention Toolkit" expansion is.

IMF Expands Loan Options to Developing Countries WSJ

WASHINGTON—The International Monetary Fund said Monday it would broaden the kinds of loans it offers to encourage a large swath of developing countries to get financial help before they are engulfed in crisis.

Under a new "precautionary credit line," the IMF said it would lend a substantial amount of money to countries whose policies it generally endorses, before those nations run into trouble. The loan would operate like a line of credit, so a country wouldn't have to use the money, and rack up interest charges, unless it needed the financing.

The program would offer loans of as much as five times a country's quota, meaning its financial stake in the IMF, with the possibility of doubling that after a year. Indonesia, for instance, has a $3.1 billion quota, so it could be eligible for a credit line of up to $31 billion. ....

The IMF is working on yet another new loan, the "global stabilization mechanism," which would be available for groups of countries, as a way to overcome the stigma of borrowing from the IMF. The IMF is even considering approving countries for such loans without them having to apply for the money.

Among issues still being debated is whether to simply allow existing credit lines to be more broadly deployed or come up with a new facility that would provide short-term liquidity, he said.

The IMF devises a new way to lend to vulnerable countries before they suffer from financial crises Economist

IMF Sees G7 Net Debt At 200% Of GDP By 2030; 441% By 2050 ZH

Got GOLD ? ;-)

Quotes Edward Hugh, John Hussman & Andy Xie

2010-08-23T01:53:00.000-07:00

I´m taking a quick break from my "Time-Out".... With "QE 2.0 & 3.0" just around the corner & the € crises off the front pages i think the links are not "unimportant".......

Verabscheide mich nach diesen Posting wieder in die angekündigte "Auszeit".... Im Zusammenhang mit der bevorstehenden "QE Version 2.0, 3.0 usw...." sowie der "fast vergessenen" € Krise erscheinen mir die kompletten Links besonders lesenwert....

Edward Hugh

Spain’s debt for 2010 according to the EDP is expected to reach around 77% of GDP (EU Commission spring forecast), and while we feel it is still possible to agree with the IMF when they say that that “Spain’s (public) debt ratio is low compared with many other countries in Europe”, it is only possible to do so if we do not forget that if we add in the 6% that is held by the Social Security Fund, the 7% that has built up in Accounts Payable and the 5% owed by Spains Public Corporations, we end up with a total of something like 95% debt to GDP, which is, of course, above the average. And this is not to even begin to count all those impending pension liabilities.

John Hussman

My impression is that Ben Bernanke has little sense of the damage he is about to provoke. A central banker who talks about throwing money from helicopters is not only arrogant but foolish.
Nearly a century ago, the great economist Ludwig von Mises observed that massive central bank easing is invariably a form of cowardice that attempts to avoid the need to restructure debt or correct fiscal deficits, avoiding wiser but more difficult choices by instead destroying the value of the currency.

Andy Xie

When the Fed or the European Central Bank tries to stimulate, they are actually stimulating the global economy as a whole. Water, no matter where it comes from, flows downwards. Stimulus, similarly, flows to where costs are low and banking systems are healthy.
If you believe this logic, the actions of the Fed and the ECB fuel inflation and asset bubbles in emerging economies rather than stimulate growth at home.

Lots of damage has already been done...... Regarding "healthy" banking systems China has nothing to worry about... ;-)

Denke das wir bereits heute mehr als genügend Auswirkungen dieser Erkenntnis sehen können.....Immerhin hat China in Sachen "gesunden" Bankensystem nichts zu befürchten.... ;-)

YouTube Classics....

2010-08-07T01:22:00.000-07:00

I´m taking a break.... In the meantime a few of my favourites... Enjoy ;-)

Nehme mir ne Auszeit..... Bis dahin einige meiner Favoriten.....Viel Spaß ;-)

China "Bubble" ( Bursting ) Update & Newest Spin "Excluding Tier 1 Cities Everything Is Fine......"

2010-08-05T00:19:00.000-07:00

Not only the cracks regarding the Three Gorges Dam are getting more and more obvious on a daily basis...... You can read my earlier takes on China here

Nicht nur der Drei Schluchten Damm zeigt erste Risse...... Mehr von mir zum Thema China gibt es hier

Andy Xie via NC

How many flats in China are sitting empty? The media recently floated a story — denied by power companies — that 64.5 million urban electricity meters registered zero consumption over a recent, six-month period. That led to a theory that China has enough empty apartments to house 200 million people….

What especially distinguishes China’s property bubble…is an unprecedented amount of living space. This huge stock of empty flats equals the nation’s quantity bubble.

Although the government doesn’t publish vacancy data, I think the vacancy rate for the nation’s private, commercial housing stock is between 25% and 30%. That’s at least double what’s required in a normal market. The gap between what’s needed and what’s available can be viewed as speculative inventory. The value of this inventory held by speculators is probably around 15% of GDP.
It’s being kept on ice, just as copper and other commodities are hoarded in anticipation of rising prices…

Looking at the clip & the TIME photo gallery Ordos, China: A Modern Ghost Town the very high number looks less "hyperbolic"....

Wenn man sich den Clip & die Photoserie von TIME Ordos, China: A Modern Ghost Town ansieht erscheint die extrem hohe Zahl weniger "übertrieben"....

China Tests Said to Check Risk of Cash Crunch Among Developers Bloomberg

China’s stress tests of banks will assess the risk that a possible slump in property prices may strain developers’ finances and cause homebuyers to default, a person with knowledge of the matter said.

The banking regulator told lenders to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively

Banks were also told to stress test loans to industries including steel, cement, construction materials and home appliances that are related to housing, the person said

Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent.

I´ll bet that every (big) bank will pass.....;-) I have to repeat myself Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... & that despite almost $60 billion in recent capital increases from the big banks the term "Drop in the bucket" fits perfectly....

Bin mir sicher das keine einzige (wichtige) Bank durchfallen wird.... Verweise hier auf Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... Denke das trotz der fast 60 Mrd $ an Kapitalerhöhungen der Banken in jüngster Zeit die Bezeichnung "Tropfen auf den heissen Stein" dürfte passen....

Cracks in the Chinese bubble? FT Alphaville

....the rule of law remains weak in Chinese property overall — 24 out of 30 developers surveyed said they knew of companies that had illegally taken out bank loans to buy land.

Land ministry finds 1,457 unused plots China Daily via FT Alphaville

China's Ministry of Land and Resources has found 1,457 unused plots of land nationwide and given a list of what companies hold rights to these plots to the China Banking Regulatory Commission, the China Securities Journal reported today, citing a person familiar with the situation.

The banking regulator will use the list to conduct a risk assessment, the Beijing-based newspaper reported. About 80 percent of the unused plots may be repossessed by the government, according to the report.

It looks like the latest spin attempt to keep the "story" intact comes along the line "excluding Tier 1 cities everything is fine "..... Where have i heard this bevore.... ? ;-)....

Sieht ganz so aus als wenn die nächste Sau die durchs Dorf getrieben wird um zumindest den Anschein zu erwecken das noch nicht alles verloren ist die Überschrift trägt "Abseits der Tier 1 Städte ist der Immobilienmarkt noch intakt"....... Wo habe ich das bloß vorher schon einmal gehört.... ? ;-)

Standart Chartered FT Alphaville

while the focus is on Tier 1 cities, there is a good chance that they do not represent the national trend.

There are, after all, hundreds of other cities around China that are busy growing, and in which people might be still busy building and selling apartments.
Sales have fallen in Tier 2 and Tier 3 cities too, but not by as much as in Tier 1 cities, as Chart 2 shows [above]. (In our chart, we have used data from 10 cities: Tianjin, Chongqing, Chengdu, Hefei, Wuhan, Changsha, Dalian, Nanjing, Suzhou and Changchun).

Indeed, in some cities – Hangzhou in Zhejiang province, for instance – we have actually seen prices push up a little since April.
This was a Tier 1 bubble and it looks to have been pricked without killing the Tier 2 and Tier 3 markets

China Real Estate Survey

H/T ZH

At least they acknowledge that Tier 1 is a bubble.....Take a secound look at the volume stat on page 2...... Crashing is defintely not an overstatement....UPDATE:StanChart: Chinese property correction imminent

Immerhin wird richtigerweise der Tier1 Immobilienmarkt als Bubble identifiziert.....Denke die Volumenangabe auf Seite 2 ist besonders "beeindruckend"..... Der Begriff "Crash" ist sicher nicht als übertrieben einzustufen....UPDATE: StanChart: Chinese property correction imminent

UPDATE:

Following the great (stock market) leader — China FT Alphaville

As equity markets should act as a leading indicator of broader economic growth trends, it seems, therefore, that the Chinese equity market has recently become ‘the leading indicator of the leading indicators’. Given that the local Shanghai Composite index and MSCI China have both rebounded by 13-15% from their recent lows and our China strategist, Minggao Shen, has just turned more bullish on the market1, these events are a positive mix for global emerging markets as a whole. This is, therefore, a good time to consider the Chinese market’s role as a signaling mechanism for GEMs as a whole.

China is now a very large economy (the second biggest in the world, accounting for an estimated 9% of global GDP in 2010) and a big stock market (the ninth biggest in the world).
The Chinese economy is also expected to account for as much as 23%10 of global growth (i.e., the rise in global GDP) in 2010, a share that is higher at present due to the weakness of developed economies . . .

China not only now accounts for a significant proportion of global growth in a but it is, by far, the biggest consumer of commodities. Our commodities analyst, Alan Heap11, reports that China currently accounts for the consumption of around 40% of several major metals including copper, nickel, and aluminum . . .

Oh boy.... Wall Street Finest / Shanghai strikes again.... Too bad that he didn´t mention that one reason for the rise in the stock market is probably the stalling real estate market.... With negative real interest rates Chinese have besides GOLD almost no place to put their money to work..... If my view on real estate is correct all his bullish arguments would be turned upside down......

Mal wieder perfektes ( Experten ) Timing..... Wäre nett gewesen wenn zumindest in einem Nebensatz erwähnt worden wäre das einer der Haupttreiber für den Geldfluss in die Aktienmärkte der rapide abkühlenden Immobiliensektor ist....Da die Chinesen mit negativen Realzinsen leben müssen und Abseits von GOLD nur der Aktienmarkt als Alternative übrig bleibt verwundert die gesehene "Stärke" nicht....Sollte ich mit meiner Meinung zum Immobilienmarkt in China auch nur im Ansatz Recht behalten drehen sich die o.a. "bullischen" Argumente über Nacht ins Gegenteil....

China To Open Gold Market, Improve Tax Policies, PBOC Says

2010-08-03T02:33:00.000-07:00

Keep in mind that just until a few years ago China had banned the private ownership of GOLD as an investment product.... Watch the clip & i assume the PBoC had to do something to keep the market operating in an orderly fashion....According to the Financial Times Deutschland GOLD in HK is trading already with very large premiums vs the London price....Another main reason could be to establish a stronger "alternative" to the quasi monopolists London & NY....Every bit of new competition for the London & NY exchanges is "appreciated"....

Vor dem Hintergrund das China bis vor einigen Jahren jeglichen privaten Besitz von GOLD im Zusammenhang mit Investments verboten hatte erscheint die Meldung in einem noch vorteilhafteren Licht.... Ich tippe mal, das wenn man sich den nachfolgenden Clip ansieht, die PBoC zumindest teilweise "Getriebener" der Entwicklung ist. Ohne eine weitere Liberalisierung könnte es leicht passieren das ein halbwegs geordneten Markt nicht mehr zu gewährleisten ist.....Wenn man der Financial Times Deutschland Glauben schenken darf wird GOLD in HK bereits jetzt mit einem mehr als happigen Aufschlag vs dem Londoner Kurs gehandelt....Ein weiteres wichtiges Argument dürfte sein eine schlagkräftige Handelsplatzalternative zu installieren....In jedem Fall ist jede zusätzliche Konkurrenz für die Börsen in London & NY mehr als willkommen.....

China to Open Gold Market, Improve Tax Policies, PBOC Says

Aug. 3 (Bloomberg) -- China will continue to open up its gold market and will study how to improve taxation policies for the use of gold for investment purposes, the People’s Bank of China said today.

China will improve foreign-exchange policies related to the gold markets and will allow more commercial banks to export and import the metal, the central bank said in a statement on its website.

The government is also studying allowing foreign suppliers to deliver bullion directly to the Shanghai Gold Exchange, it said.

The total volume of gold traded on the Shanghai Gold Exchange jumped 59 percent in the first six months from a year earlier to the equivalent of 3,174.5 metric tons (102.1 million troy ounces), Song Yuqin, vice general manager at the exchange, said last month.

The Shanghai Gold Exchange has five foreign bank members including the China units of HSBC Holdings Plc and Standard Chartered Plc, according to a statement on the bourse’s website.

Gold demand in China, the world’s second-largest consumer, increased in the first half as government measures to cool the property market and falling equities spurred investment, the exchange said July 7. Spot gold climbed to a record in June as investors sought to protect their wealth amid concerns about the global economic recovery.

“The Chinese central bank is liberalizing the gold market step by step and this is the latest move,” said Ellison Chu, managing director at the precious-metals desk at Standard Bank Asia Ltd. in Hong Kong. “It will allow more foreign participation in China’s growing gold market and it will also help China to be more integrated into the global gold-trading system.”

The central bank also said it would encourage and guide commercial banks to provide yuan-denominated gold derivative trading.

The following presentation monitoring the entire GOLD picture in China is taken from an earlier post In Fiat Money We Do Not Trust "Chinese Edition"

Die nachfolgende Präsentation die umfassend das Thema China & GOLD abhandelt stammt von einem früheren Posting In Fiat Money We Do Not Trust "Chinese Edition"
Gold Report China

More Proof That China´s Real Estate Market Is Fueled Mainly Via State & Local Owned Enterprises.....

2010-08-01T22:55:00.000-07:00

To get the entire picture you should read China : State & Local Owned Enterprises vs Madoff, Ponzi, Enron...... first..... Just last week i labeled the headline as a little bit "provocative"..... As usual i was too polite... ;-)

Empfehle zur Einführung und um das ganze Ausmaß zu erfassen vorweg China : State & Local Owned Enterprises vs Madoff, Ponzi, Enron...... zu lesen..... Letzte Woche habe ich die Überschrift bewusst noch als eine leichte Übertreibung tituliert.... War wie üblich mal wieder zu höflich.... ;-)

State-Owned Groups Fuel China’s Real Estate Boom NYT

WUHU, China — The Anhui Salt Industry Corporation is a state-owned company that has 11,000 employees, access to government salt mines and a Communist Party boss.

Now it has swaggered into a new line of business: real estate.

The company is developing a complex of luxury high-rises here called Platinum Bay on a parcel it acquired last year by outbidding two other developers to win a local government land auction.

Anhui Salt is hardly alone among big state-owned companies. The China Railway Group is developing residential complexes in Beijing after winning the auction for a huge piece of land there.

Likewise, the China Ordnance Group, a state-led military manufacturer best known for amphibious assault weapons, paid $260 million for Beijing property where it plans to build luxury residences and retail outlets.

And in one of China’s biggest land deals yet, the state-run shipbuilder Sino Ocean paid $1.3 billion last December and March to buy two giant tracts from Beijing’s municipal government to develop residential communities.

All around the nation, giant state-owned oil, chemical, military, telecom and highway groups are bidding up prices on sprawling plots of land for big real estate projects unrelated to their core businesses.

By driving up property prices, the state-owned companies, which are ultimately controlled by the national government, are working at cross-purposes with the central government’s effort to keep China’s real estate boom from becoming a debt-driven speculative bubble — like the one that devastated Western financial markets when it burst two years ago.

Here in Wuhu, a sleepy industrial town about 70 miles west of Nanjing, Anhui Salt is breaking ground on its high-rise project in the center of town — next to a hotel operated by Anhui Conch Holdings.

The land was put up for auction in May 2009, and there were just three bidders — another of which was also a state-owned company. Anhui Salt, which also boasts of operating a steel trading arm, a financing vehicle and even two Honda dealerships, says it is eager to expand beyond industrial products and table salt.

“Platinum Bay is Anhui Salt Industry’s first luxury project and targets the very rich, the very elite class of Wuhu,” said Su Chuanbo, marketing manager.

Asked why Anhui Salt wants to be a developer, Mr. Su said the central government had encouraged state companies to be more profitable, and that real estate was incredibly lucrative.

Add the following story to the mix ........

Das kombiniert mit der nachfolgenden Meldung......

Chinese Manufacturing Weakens in ‘Slowdown, Not a Meltdown’ Bloomberg

China’s July manufacturing data were the weakest in more than a year as the government clamped down on property speculation and investment in polluting and energy- intensive factories.

A purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics showed a contraction. A government-backed PMI slid to 51.2 from 52.1, the Federation of Logistics and Purchasing said yesterday.

The HSBC PMI slid to 49.4, the first reading below 50 in 16 months, from 50.4 in June. Measures of output, orders and export orders all showed contractions. The government PMI, released by the statistics bureau and the logistics federation, showed the weakest expansion in 17 months.

H/T Chart BI

Needless to say that stocks in tandem with commodities surged to a multi month high.....;-)

Überflüssig zu erwähnen das die Aktienmärkte Hand in Hand mit den Rohstoffen diese Nummer mit neuen Mehrmonatshochs abgefeiert haben.... ;-)

HSBC's July China services PMI points to expansion MW

China's service-sector growth accelerated in July, marking the fastest pace of expansion in three months, according to HSBC's Purchasing Managers' Index. The PMI came in at 56.3 in July, up from 55.6 in June, HSBC said in an emailed statement Wednesday. "This improvement in the July service PMI reading, though modest, reflects the resilience of the domestic part of the economy, in particular consumer-related sectors. Combined with the sustained recovery in the labor market, this should cushion the economic slowdown in the coming quarters," The July PMI marks the 20th consecutive month of expansion for the services sector

This "transition" is good in the long term..... Rebalancing is needed....

Immerhin ein Silberstreif am Horizont.... Die Entwicklung des Servicesektors ist dringend notwending um die Ungleichgewichte zumindest auf Lange Sicht halbwegs ins Lot zu bringen....

Clevelend Fed "One Measure Of Corporate Leverage Recently Reached A New Historical High"

2010-07-29T02:47:00.000-07:00

By now everybody has seen the following chart showing the very impressive cash position of corporates only waiting to be spend on dividends, buybacks, M&A, investments etc..... If you dig a little bit deeper it seems outside a few very strong companies ( mainly tech ) the overall "breath" isn´t quite as strong as reported...... On top of this to my knowledge a not insignificant percentage of the cash is "trapped" outside the US.... Without a special "tax holiday" there is only a very small chance that this money can be used freely..... See 2nd. UPDATE at the end of the post.....

Ich denke jeder hat den nachfolgenden Chart, der die starke Cashposition der US Unternehmen zeigt, inzwischen irgendwo gesehen bzw davon gelesen ( wird ja fast gebetsmühlenartig tagtäglich wiederholt )... Hoffnung der Märkte ist das dieser gigantische Batzen entweden in Form von Investments, Dividenden, Aktienrückkäufen oder Übernahmen den Weg zurück in die Kassen der Anleger und den Wirtschaftskreislauf findet.... Wenn man etwas genauer hinsieht ist ausserhalb einiger extrem starker Unternehmen ( hauptsächlich Technologie ) in der "Breite" nicht alles so rosig wie man allgemein vermuten könnte..... Darüberhinaus ist nach meinem Kenntnisstand ein nicht unerheblicher Teil der Gelder ausserhalb der US "gefangen"..... Ohne eine besondere Steuererleichterung wird keine der Firmen ohne extreme Nachteile ( glaube ca. 30%) über diese Gelder verfügen können.... Habe hierzu noch ein zweites Update am Ende des Postings gemacht.....

US corporate cash FT LEX

American companies are supposedly flush with cash. Therefore, the optimists say, we should own stocks instead of bonds. Bulging balance sheets should lead either to a mergers and acquisitions boom or, less interestingly, companies can always buy back their own stock. Either way, stocks win.

There is one big problem with this argument; in fact, judged in aggregate, corporate USA’s books are in bad shape. The error is looking at gross cash positions only, ignoring the near doubling in non-financial companies’ leverage since 1982.

Some sectors, such as technology, are genuinely cash rich: the members of the Bloomberg World Technology index have a net $260bn salted away, or 12 per cent of their total market capitalisation.

But, in aggregate, non-financial companies’ cash only covers about 25 per cent of the interest-paying debt on their balance sheets, in line with the norm for the past 40 years.

In the 1950s, companies’ cash covered more than half of their debt.

Corporate Cash: Top 20 Firms = $635 Billion Barry Ritholtz

We found that 3,000 non-financial firms have $1.641 trillion dollars in cash and equivalents.

Other details:

-The top 50 firms are over half of this dollar amount, accounting for $823.642 billion dollars.

-The top 20 firms, ranging from Berkshire to United Health Group account for most of this — $635.386 billion dollars.

-The automakers are another anomaly — Ford (at #3) is showing $46.67 billion dollars in cash — but its against $66.668 billion in liabilities. Even GM’s bankrupt stub Liquidation Motors (# 17) is showing $14.194 billion in cash against $73.934 billion in debt.

-I’m not sure if we should exclude Berkshire Hathaway or GE as financials, but they accounted for $146.644 and $111.176 billion dollars respectively.

Is Debt Overhang Causing Firms to Underinvest? Fed Of Clevelend

One measure of corporate leverage, the ratio of firms’ credit market debt to assets, recently reached a new historical high (see figures 1 and 2).

I assume when you include the pension liabilities / funding levels & "Stresstest the Goodwill" the picture isn´t getting better....

Tippe mal darauf das wenn man die massiv unterfinanzierten Pensionskassen miteinbezieht sowie den Goodwill einem Stresstest unterzieht verbessert sich das Bild nicht merklich.....

UPDATE:

Ending The "Cash On The Sidelines" Fallacy (Redux) ZH

iStockAnalyst

The Biggest Lie About U.S. Companies Brett Arends

American companies are not in robust financial shape. Federal Reserve data show that their debts have been rising, not falling. By some measures, they are now more leveraged than at any time since the Great Depression.

S&P 500 Full Year Sources And Uses Of Cash ZH

Yet despite consistent claims that companies have massive deleveraged, just $635 billion of debt was repaid, meaning only $35 billion of debt was actually retired! What the flow was used for, however, was to extend maturities, and to shift debt across different sections of the S&P500's balance sheet, lowering the debt cost of capital

I think the charts are showing a nice confirmation that the "breath" is unfortunatley not as strong as would be desirable....

Ich denke diese Charts zeigen leider recht deutlich das die "Breite" leider nicht wie wünschenswert gegeben ist....

2nd Update

Floyd Norris

It was called the “Homeland Investment Act,” and was sold to Congress as a way to spur investment in America, building plants, increasing research and development and creating jobs. It gave international companies a large one-time tax break on overseas profits, but only if the money was used for specified investments in the United States.

The law specifically said the money could not be used to raise dividends or to repurchase shares.

Now the most detailed analysis of what actually happened — using confidential government data as well as corporate reports — has estimated what happened to the $299 billion companies brought back from foreign subsidiaries.

About 92 percent of it went to shareholders, mostly in the form of increased share buybacks and the rest through increased dividends.

There is no evidence that companies that took advantage of the tax break — which enabled them to bring home, or repatriate, overseas profits while paying a tax rate far below the normal rate — used the money as Congress expected.

“Dell was a great example,” she added, referring to Dell Computer. “They lobbied very hard for the tax holiday. They said part of the money would be brought back to build a new plant in Winston-Salem, N.C. They did bring back $4 billion, and spent $100 million on the plant, which they admitted would have been built anyway. About two months after that, they used $2 billion for a share buyback.”

From the B.E.A. data, the researchers were able to calculate that $300 billion in overseas profit was repatriated by American companies in 2005, when they had to pay a tax rate of just 5.25 percent, rather than the normal corporate tax rate of 35 percent. The amount was five times the normal amount of repatriations.

Mmhhh.... After this "spectacular" outcome last time the chances for another tax break are probably not "overwhelming"...

Uh....Nachdem die Ergebnisse beim letzten Mal höflich formuliert "dürftig" waren stehen die Ampeln auf eine ähnlich gelagerte Steuererleichterung nicht gerade auf Grün....

China : State & Local Owned Enterprises vs Madoff, Ponzi, Enron......

2010-07-28T01:26:00.000-07:00

The headline is for sure a little bit "provocative" but at least in part some similarities are difficult to deny.... A nice follow up to Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... Looking more & more like an injuste to Kyrgyzstan & Co.....;-)

Die Überschrift ist sicher ne leichte Übertreibung..... Trotz allem kommt man schwer darum herum zumindest in Teilbereichen gewisse Gemeinsamkeiten zu entdecken.....Nette Ergänzung zu Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... Inzwischen fast als Beleidigung Islands zu bezeichnen.... ;-)

Just how risky are China’s housing markets? VoxEU

We collected data on all the residential land parcel auctions in Beijing dating back to Q1 2003, and created a constant quality price index for Beijing residential land, controlling for a number of location and site quality variables that are described in Wu et al. (2010).

Figure 5 shows that real, constant quality land values increased by over 750% since 2003 in the Chinese capital, with more than half of that rise occurring over the past two years. Additional regression analysis showed that state-owned enterprises controlled by the central government played a meaningful role in this increase, as prices were 27% higher on the parcels they won at auction compared to otherwise equivalent land sites purchased by other investors.

The role of state-owned enterprises also is potentially worrisome. It could be that these entities are superior investors and are purchasing sites that are of especially high quality in ways that we cannot control for in our empirical analysis. However, it also could be that moral hazard is at work here, as these entities are thought to have access to low cost capital from state-owned banks and may believe they are too big to fail. If this is the driving force, then prices are being bid up as one arm of the government buys from another.

More on the same topic.....

Mehr zum gleichen Thema.....

Meanwhile, in the Chinese property market… FT Alphaville

And once you’ve picked your eyeballs off the floor after seeing that 800 per cent figure, do note the interesting finding about the SOEs.

In particular, the paper says that a ‘meaningful fraction’ of the rise in prices was driven by the few but huge companies backed by central government — ‘central SOEs’. And central SOEs are getting more influential in the market — see chart:

And as the paper continues, by way of explanation:

…Central SOE developers pay high prices relative to the values of nearby housing unit sales prices. That suggests these particular buyers simply pay more and that this does not merely reflect omitted quality effects. Moral hazard arising from these entities believing they are too important to fail, combined with their access to low cost capital from state-owned banks, also could help explain their bidding behavior… It remains an open question as to why central SOE developers became so much more active in housing development over the past few years.

Here Comes The Real Stress: Only 27% Of China Project Loans To Be Repaid In Full ZH

Chinese banks may struggle to recoup about 23 percent of the 7.7 trillion yuan ($1.1 trillion) they’ve lent to finance local government infrastructure projects, according to a person with knowledge of data collected by the nation’s regulator

Local governments set up the financing vehicles to fund projects such as highways and airports due to limits on their ability to directly borrow money. The central government this year restricted borrowing on concern money isn’t being used for viable projects.

Only 27 percent of the loans to the financing vehicles can be repaid in full by cash generated by the projects they funded, the person said

Chinese rating agency criticises … Chinese rating agencies FT Alphaville

July 27 (Bloomberg) — Credit ratings assigned to yuan- denominated bonds issued on behalf of local governments in China are misleading and don’t reflect risks investors face, Dagong Global Credit Rating Co.’s chairman said.

Local government-backed borrowers shop around for the best rankings from Chinese ratings companies and “whoever gives them a better rating gets the business,” Guan Jianzhong, chairman of privately owned Dagong, one of China’s five official ratings agencies, said in a Bloomberg Television interview in Beijing yesterday. “This is very dangerous.”

Needless to say that every large bank has China Inc. as a majority owner.....

Denke man muß nicht extra erwähnen das zudem jeder der großen Banken unter Mehrheitskontrolle des chinesischen Staates steht.....

The PBoC can’t easily raise interest rates M. Pettis / China Financial Markets

One of the problems with a severely repressed financial system, especially one with rapid credit expansion, is that there tends to be a huge amount of capital misallocation supported by borrowing, and in an increasing number of cases it is only the artificially-reduced borrowing costs that allow these investments to remain viable. I worry that even if the PBoC wanted to raise rates, it would not be able to do so without exposing how dependent borrowers are on artificially cheap capital.

Take the most obvious example, the PBoC itself. The central bank officially has about $2.5 trillion in reserves. The PBoC has funded this position with an equivalent amount of RMB liabilities, which makes it very vulnerable to changes in the value of the currency.

Weirdly enough, although the numbers are huge, it has proven difficult to convince anyone that the PBoC is not the richest institution in the world, and that it is actually very vulnerable to big losses

The problem for the PBoC occurs not just because of the currency mismatch but also because it needs repressed funding costs to keep it profitable. How much do the PBoC foreign currency assets earn? I would guess probably between 3% and 4%, maybe less. The RMB funding cost, on the other hand, is roughly between 1.5% and 2.5%. This leaves the PBoC with a net positive carry of between 1% and 2%.

If the RMB appreciates by as little as 2% a year, in other words, the PBoC runs a negative carry on its assets. Every further 1% increase in interest rates, or additional 1% rise in the value of the RMB, then, erodes its capital by at least $25 billion (annually, if it happens through an increase in interest rates).

Many years of very low cost borrowing has created a huge dependency on low interest rates among SOEs, local governments, and other creditors of the bond markets and the banks (not to mention the banks themselves), all of whom are directly or indirectly funded by long-suffering households.

As I discussed in an entry several weeks ago, repressing the interest rate is the equivalent of granting hidden debt forgiveness

Moral Hazard everywhere.....

Moral Hazard wohin das Auge blickt......

UPDATE:

ICBC May Raise $6.6 Billion, Adding to China Bank Share Sales

ICBC’s offer brings to more than $60 billion the amount China’s five largest banks are raising after a record $1.4 trillion in lending last year put pressure on capital levels.

Bank of China Ltd. has also said it plans a CNY60 billion rights issue in Shanghai and Hong Kong and China Construction Bank Corp. is planning a CNY75 billion rights issue in both markets

I assume the term "Drop in the bucket" fits perfectly....

Denke die Bezeichnung "Tropfen auf den heissen Stein" dürfte passen....

Joke Of The Day From ECB´s Smaghi "€ More Stable Than Deutsche Mark"

2010-07-26T03:01:00.000-07:00

Quotes like this totally "neglecting" the almost € 1 trillion fund to "rescue" the €, IMF involvement, first "QE aka Montizing Of Debt" ever & including the once in a lifetime "elevated" ( at least by Bundesbank standarts... ) CPI close to 4% after the reunification are not suitable to regain at least a few percentage points of the already "diminished" credibility... At least in Germany... ;-)

Wenn man Zitate wie diese lesen muß, die zum einen den fast 1 Billion € schweren Rettungsfonds, der zur Stabilisierung des € notwending gewesen ist, und den Sündefall schlechthin ( Aufkauf von Staatsanleihen ) "ausblenden" sowie gleichzeitig die im Zuge der Wiedervereinigung entstandene Sondersituation von extrem erhöhten CPI Daten von knapp 4% komplett unberücksichtigt läßt, muß sich nicht wundern wenn auch noch der kümmerliche Rest in Sachen Glaubwürdigkeit langsam aber sicher "flöten" geht..Zumindest in Deutschland....;-)

Bloomberg

The euro has proven to be a more stable currency than the Deutsche Mark in the 11 years since its introduction, the board member said in the FAZ commentary.

The average inflation rate in those 11 years is lower than in all countries in the monetary union in the 10 years before, even in Germany, Bini Smaghi said, according to the newspaper.

Sometimes it´s better to stay silent.....

"Reden ist Silber, Schweigen ist GOLD".......

Only 35% Of Survey Participants Expect The Stess Test To Be Credible....

2010-07-23T06:08:00.000-07:00

I´m surprised that the rate is above 20 percent... ;-)

Ich bin ehrlich überrascht das immerhin 35% dem Stresstest eine Aussagekraft zubilligen.... ;-)

Goldman Sachs via FT Alphaville

It’s the results of a Goldman Sachs survey of 376 mostly-European market “participants” ahead of the results

GS Stress Test
H/T Zero Hedge

Get ready for at least a weekend full of spin......

Man kann sich jetzt schon einmal mindestens auf ein Wochenende voller "Spin" einstellen.....

UPDATE:

I assume after the results the percentage of believers hasn´t increased "significantly"....

Kann mir gut vorstellen das nach Bekanntgabe der Ergebnisse die Glaubwürdigkeit des Tests nicht "explosionsartig" hinzugewonnen hat....

Stress Test Results CEBS

5 Cajas ( Spain ), Ate Bank (Greece ), Hypo ( Germany ) failed....

CEBS SAYS 7 BANKS HAD OVERALL SHORTFALL OF EU3.5 BLN OF TIER 1

Stress Test Interactive Graph Spiegel

Apparently Not Too Stressful The Mess That Greenspan Made

Stress test’s sovereign support = senseless
the test parameters being rather cynically calibrated to achieve the desired result.
JPMorgan Shreds The Stress Tests, Says 54 Banks Should Have Failed, And That Investors Will Lose Confidence BI

Gaming the stress tests 101 FT Alphaville

Morgan Stanley On Stress Tests: "Lots Of Missed Opportunities" ZH

Van Steenis European Stress Tests

Twitter Humor

2010-07-23T06:07:00.000-07:00

If you are not Steve Jobs & you can withstand some "strong language" you shouldn´t miss this clip....:-)!

Wer nicht Steve Jobs heisst und vor etwas "deftigerer Wortwahl" nicht zurückschreckt sollte sich diesen Clip nicht entgehen lassen.....:-)!

H/T Blick Log

H/T Credit Writedowns

SNB Loses 14 Billion Swiss Francs On Euro's Fall

2010-07-21T02:09:00.001-07:00

At least they have managed to make a few Hungarian home owners (temporarily) happy.... ;-)

Immerhin hat die SNB es geschafft etlichen ungarischen Immobilienbesitzern ( vorübergehend ) Freude zu bereiten.....;-)

Marketwatch

The Swiss National Bank on Wednesday said the sharp rise of the Swiss franc, particularly against the euro, resulted in exchange-rate losses of more than 14 billion Swiss francs ($13.3 billion)in the first half of 2010.
But income from foreign-currency and Swiss franc positions and the steep rise in the price of gold limited the central bank's first-half loss, which is expected to total around 4 billion Swiss francs, the SNB said.
The SNB, which had intervened heavily in an effort to brake the decline of the versus the Swiss franc, said it increased foreign-currency investments by around 132 billion francs in the first half of 2010, with the bulk placed in euro-denominated investments

Swiss National Bank Confirms Massive FX Intervention Losses, As Spike In M3 Reported via ZH

Following such a massive losses for the small country (nearly 2% of GDP) it was only a matter of time before the other 26 Swiss cantons, which share in the profits and losses of the SNB, said enough.
"The SNB said last month it had stopped intervention. Its official reason was because deflationary risks from the surging currency had declined, but most economists ascribed the move to growing concerns about the risks from the massive foreign currency holdings."

The "success" to weaken the Swiss Franc can be clearly be seen in this chart......

Der "Erfolg" den Anstieg des Schweizer Franken zu verhindern wird im nächsten Chart eindrucksvoll veranschaulicht......

If they continue to fight the inevitable the SNB is on track to beat even their ""GOLDen Masterpiece"....

Sollte die SNB weiterhin versuchen das Unvermeidliche durch Interventionen zu verhindern bzw zu verlangsamen bestehen gute Chancen selbst Ihr bisheriges "Meisterstück" in Sachen GOLD noch zu toppen....

Household FX Loans " Eastern Europe Edition"

2010-07-19T10:59:00.000-07:00

Definitely a topic that won´t be included in any ( Austrian.... ) stresstest scenario.... Watching this Heat Map showing the foreign ( and mainly European ) bank presence in Eastern Europe i can understand why... ;-)

Mit Sicherheit ein Themenbereich der im "brutalst" möglichen Stresstest ( denke da besonders an Österreich ) keinerlei Beachtung finden wird....Wenn man sich auf dieser Heat Map den "nicht unwesentlichen" Einfluß der überwiegend europäischen Banken in Osteuropa ansieht, verwundert das wenig.... ;-)

BNP via FT Alphaville

[the forint] is under pressure and that around 70% of household loans in Hungary are FX loans (possibly either in swiss franc or euro), putting pressure on consumer balance sheets.

Now a special report only on CHF dominated loans..... You can do the math estimating the € share ( see next table )....

Nachfolgend eine Betrachtung der in CHF begebenen Kredite.... Daraus kann man die Summe in € in etwa ableiten ( siehe Tabelle )....

UBS via ZH

The total amount of outstanding Swiss franc loans to banks and non-banks rose from CHF 228bn in 1999 to CHF 558bn in the third quarter of 2008, before declining to CHF 488bn in 1Q 2010 (see Fig. 1).
To appreciate the magnitude of these figures, consider that the sum of these loans equals around ten times the sum of all Swiss banknotes in circulation (CHF 48 bn in May 2010), and that they are nearly equivalent to Switzerland's nominal GDP of CHF 535bn in 2009.
Further, the sum of franc loans abroad is equal to nearly 70% of the outstanding amount of loans in Switzerland (about CHF 723 bn in April 2010).
The CHF 488bn loans are roughly double the size of the SNB's foreign currency reserves. That means there is a large franc short position outstanding, which more than counterbalances the francs that the SNB has created with its current FX interventions.
Over the past decade, a growing number of foreign households and companies borrowed in Swiss francs to finance their local currency investments. Franc-denominated loans became popular in Austria and Eastern Europe owing to Switzerland's lower interest rates compared with their local currency loans. Moreover, the depreciation trend of the Swiss franc between 2003 and 2007 triggered demand for franc loans in Eastern Europe. As long as the franc weakened, demand for franc loans grew. And, for a time, mortgage payments denominated in francs (due to the weakening franc) became progressively less expensive. We suspect that many of these borrowers failed to anticipate the risk of rapid currency movements.

Since June 2010, the SNB no longer manages the exchange rate with interventions as it believes deflationary risks in Switzerland have largely disappeared. Since mid-June, the Swiss franc has appreciated sharply against all major currencies, which means that servicing franc-denominated debt has becomes increasingly expensive for foreigners.

•Absolute amounts of CHF loans outstanding to non-banks: In the Eurozone, Austria has the highest amount with CHF 81bn, followed by Germany (CHF 60bn), France (CHF 30bn) and Luxembourg (CHF 25bn). Outside the euro area, Poland is the leader with about CHF 53bn, followed by Hungary (CHF 36bn), the UK (CHF 23bn), and Croatia (CHF 7bn).
•CHF loans outstanding to non-banks as a share of total loans: The highest share can be observed in Hungary (34%), followed by Poland (20%), Austria (14%), and Croatia (13%).
•CHF loans outstanding to non-banks as a share of foreign-denominated loans: the highest share can be observed in Austria •(68%), followed by Poland (65%), Hungary (52%), and Croatia (about 18%).
•Romania and the Baltic states also have large shares of foreign currency-denominated loans, but they prefer the euro or US dollar (see Fig. 3).

Austrians have been borrowing in Swiss francs for more than 15 years (see Fig. 5), while eastern European countries started around 2004. As Hungary, Poland and Croatia have increased their Swiss franc loans aggressively in the last couple of years, the rapid appreciation of the franc and the weakness of their own currencies hurt borrowers in those three countries (see Figs. 6, 7, 8). New borrowers (who requested a CHF loan in 2007 and 2008), are affected more than earlier borrowers, as the latter took out Swiss-franc loans at lower exchange rates

In many cases, the rise of the franc will have lifted the value of the outstanding debt above the value of the asset(s) and made the credit/mortgage shaky.

At some point, franc borrowers might realize that the franc might stay strong for longer, which could induce them to switch their loans. While the franc is affected by many factors, should the borrowers of franc loans at some point decide to switch their loans into local currencies, it could support the franc further, as the borrowers have to unwind their franc short positions.

We therefore conclude that the large amount of outstanding Swiss franc loans to foreign countries remains a threat for the Swiss economy.

Unlike UBS i´m pretty sure that none of the borrowers cares about the stability of the swiss economy .... ;-)

Beim letzten Satz kann ich mir ein Schmunzeln nicht verkneifen... Bin mir ziemlich sicher das keiner der in Franken verschuldeten sich auch nur ansatzweise um die Stabilität der Schweizer Wirtschaft Sorgen macht.. ;-)

Stresstesting The DAX......

2010-07-19T03:41:00.000-07:00

A follow up on last years Number Of The Day " Goodwill On Top 133 Listed German Companies Balance Sheets....". Considering that German companies are usually rated as "solid", "conservative" & "prudent" the data is even more "stunning"....

Nettes Update zu Number Of The Day " Goodwill On Top 133 Listed German Companies Balance Sheets...." aus dem Vorjahr. Wenn man bedenkt das besonders Deutsche Firmen weltweit als überwiegend "solide", "konservativ" & "vorsichtig" gelten, finde ich die Daten umso "bemerkenswerter"....

Dax im Stresstest Wirtschaftswoche

The 30 companies listed in the DAX accumulated $ 265 Billion in goodwill. The number has risen almost € 30 billion over the past 2 years.

The total amount equals 5 times the annual earnings from all DAX members.....

180,6 Milliarden Euro an Firmenwerten, 30 Milliarden mehr als noch vor zwei Jahren, schleppen die 30 Dax-Unternehmen heute mit sich herum.

Das entspricht rund fünf Jahresgewinnen aller Dax-Firmen.

Despite that large part of the M&A was done during the boom years & the deepest recession in decades so far virtually no write downs have occurred....Ignoring "Mark to Market" is not only popular when it comes to the banking industry....;-) I doubt that the worldwide data looks much more favourably..... Keep this at least in mind when it´s again time for another episode of "Wall Street Finest : It´s Always A Good Time To Buy, Buy, Buy....."

Trotz der tiefsten Rezession seit Jahrzehnten sowie der Tatsache das ein Großteil der Übernahmen in den Boomjahren vollzigen worden sind de facto kaum Abschreibungen......Sieht so aus als wenn das Ausblenden von "Mark to Market" nicht nur bei den Banken äußerst beliebt ist.....;-)Tippe mal darauf das die Daten weltweit nicht wesentlich besser aussehen.....Kann nicht schaden sich das zumindest im Hinterkopf zu merken wenn es wieder heisst "Wall Street Finest : It´s Always A Good Time To Buy, Buy, Buy....."

Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan.....

2010-07-14T06:00:00.000-07:00

A follow up on Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... & "Enron-Esque Characteristics" Hiding An Even More Explosive Credit Growth In China .....

Als Nachschlag zu Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... & "Enron-Esque Characteristics" Hiding An Even More Explosive Credit Growth In China ......

Moody's average rating for their financial strength is D-. On that scale, only six countries are worse off, including Iceland and Kyrgyzstan.

Fitch goes aaaagh on Chinese securitisation FT Alphaville

Frightened with Fitch on Wednesday. The rating agency has looked at where Chinese lending is disappearing to — only to reiterate that rather too much is flowing into the black hole of informal securitisation.

A very black hole, as Fitch explains (our emphasis):

Fitch believes the vast majority of these transactions are not publicly disclosed by Chinese banks, and few, if any, traces of the loans remain in financial statements. The growing popularity of this activity is increasingly distorting credit growth figures at an institutional and system level, resulting in pervasive understatement of credit growth and credit exposure. Consequently, Chinese banks’ loan loss reserves and capital are more exposed to credit losses than current data suggests.

Adjusted for informal securitisation activity, Fitch estimates that the net amount of new CNY loans extended in H110 was closer to CNY5.9trn, or 28% above the official figure of CNY4.6trn. While this difference may seem small when compared to the total stock of CNY loans for banks involved in this activity (roughly CNY34trn at end-June 2010), on a flow basis the volume of credit being shifted off balance sheets in recent times has been large and rising. Activity also is largely concentrated among just a few dozen banks, and institution-specific exposure is often much higher.

Some banks very actively engaged in transactions last year are showing up in 2010 data as minimally involved, yet the bank’s own salespeople (responding to Fitch’s enquiries) state that business remains as strong as ever. Meanwhile, private placements of products to institutional investors are becoming more commonplace, most of which are never disclosed to any entity but the CBRC.
Because of this worsening in disclosure, data from third-party providers is capturing less and less transaction flow, with as much as 40% of deals in H110 going uncaptured, versus less than 10% prior to end-2009.

Although broadly similar, informal securitisation in China differs considerably from traditional securitisations in some critical aspects: asset pools are usually very heavily concentrated; the lack of a secondary market means investors typically must hold positions until maturity; there is no tranching based on credit risk; and the roles of loan originator, product distributor, custodian, and loan manager are frequently commingled, and in practice sometimes all played by a single bank.

Fitch on Chinese Banks; 7/2010

H/T Zero Hedge

China’s trust factor FT Alphaville

First, cash-rich depositors were frustrated with low [bank] deposit rates (around 2% for a one-year deposit), and trust companies were happy to offer 4% or thereabouts, principal guaranteed.

Keep in mind that even the reported CPI is running close to 3 percent......With this kind of "alternatives" in search for yield and a housing bubble already in place ( see Andie Xie: "China's Property Market Is One Of The Biggest Bubbles Ever..." it is no wonder that In Fiat Money We Do Not Trust "Chinese Edition" is getting more "popular"......

Wenn man jetzt noch bedenkt das selbst die offiziellen Daten eine CPI von 3% ausweist und man berücksichtigt das der Immobilienmarkt bereits bis zum Bersten aufgepumpt ist ( siehe Andie Xie: "China's Property Market Is One Of The Biggest Bubbles Ever..." kann es wenig verwundern das die Fraktion In Fiat Money We Do Not Trust "Chinese Edition" deutlich an Popularität gewinnt.....

Second, even though banks’ commissions on these products are low, they did not want their clients going to other banks, so they marketed them enthusiastically. Third, in some cases the banks were able to sell their own loan assets on to the trust company, which repackaged them and then sold them as wealth management products back to the bank’s own clients. This allowed the banks to manage their official outstanding net loan position, which was subject to the loan quota.

Trust loans. These are loans extended by the trust company to one or more borrowers, which are then repackaged and sold on. We understand that quite a few real estate firms have borrowed from trusts at 15-20% annualised interest rates, given the banks’ inability (since late last year) to increase their exposure to this sector. A bank that is unable to lend to a client itself may find a trust company that is willing to lend, and then sell the asset through its own branches . .

The point is, these are sizable positions. StanChart thinks the total amount of lending done by trusts and the total value of repackaged bank loan products issued in the first five months of this year was RMB690bn ($100bn). For context, that’s about a month’s worth of Chinese bank lending.

(Other estimates are even higher. The Economic Observer has RMB2,000bn in the first half of 2010, while the Shanghai Benefit Investment Consulting thinks they were at RMB2,5000bn).

The issue then, is that even as China attempts to curb bank loans — sometimes by literally pulling the plug on them — these trusts have stepped in to fill some of the space left behind.
Small wonder then, that the CBRC is so keen to crack down on the industry to make its lending restrictions effective

.

Red Light Flashes for a Bank Lending LoopholeCaixing Online

Despite the late 2009 orders from CBRC, "trust loans from bank-trust cooperation grew significantly in April and May," a commission official said. "Especially in May, the growth began surging. We often received text messages from banks marketing this type of wealth management product."

On June 1, CBRC convened an urgent meeting with the 12 largest of the nation's approximately 60 trust companies, asking that they slow bank cooperation. They asked that bank-trust cooperation at the end of June not exceed the level of deals posted on April 30.

Statistics from the Yanglee Trust Workshop said 504 bank-trust wealth management products were issued in June – an average 20 products per bank per day – valued at about 777 billion yuan, up 30 percent from May.

The CBRC obviously has a minor credibility issue..... ;-)

Sieht ganz so aus als wenn der Regulierer CBRC nicht ganz für voll genommen wird... ;-)

Japan Pension Fund Becomes Net Government Bond Seller

2010-07-12T22:40:00.000-07:00

So far every bet against JGB´s was a disaster.... But is at least not insignificant when the largest buyer for years has turned to a net seller...... I think when you take a look this link, the following presentation, the confident Rating Agencies & yields like this i think it´s safe to assume that the upside for bonds is "not substantial"......

Bisher haben Wetten gegen japanische Staatsanleihen etliche in den Wahnsinn und sicherlich auch in den finanziellen Ruin getrieben... Wenn aber nun der mit Abstand größte Akteur in diesem Segment nach Jahren von einem massiven Käufer zum Verkäufer notiert lässt das zumindest aufhorchen.....Wenn man sich diesen Link , die folgende Präsentation , die ( noch ) optimistischen Rating Agencies & die aktuellen Renditen vor Augen führt darf man sicherlich behaupten das sich das Chance/Risikoverhältnis nicht gerade merklich bessert...

Japan - Past the Point of No Return - By Vitaliy Katsenelson

H/T Barry Ritholtz

Flashback March 2010

The biggest JGB holder on the planet – the Government Pension Investment Fund (GPIF) – which has already admitted it’s no longer able to roll maturing bonds, has announced that it will open credit lines so it doesn’t have to sell them to fund its obligations…

Looks like they had to end the desperate attempt to stop the unavoidable....

Sieht ganz so aus als wenn jetzt der Zeitpunkt gekommen ist wo das Unvermeindliche nicht mehr länger hinausgezögert werden kann.....

Japan Pension Fund Becomes Net Government Bond Seller

July 13 (Bloomberg) -- Japan’s public pension fund sold more government bonds than it bought for the first time in nine years, underscoring concern that an aging population will make domestic investors less able to finance state borrowings.

The fund sold a net 443.2 billion yen ($5 billion) of Japanese government bonds in the year ended March 31, according to Bank of Japan data released last month. It held 79.5 trillion yen of the securities at the fiscal year end, 11.6 percent of the outstanding amount.

The retirement of baby boomers -- defined in Japan as those born between 1947 and 1949 -- may strain the public coffers as soon as 2012, according to Toshihiro Nagahama, chief economist at Dai-Ichi Life Research Institute in Tokyo. “That may be when Japan’s sovereign risk becomes evident,” he said in an interview in May.

So far the € crises has helped to fill the gap......

Da kommt die momentane € Krise ganz passend.....

M.Pettis

China bought a record amount of Japanese government bonds in May, in an apparent move to shift more of its massive foreign exchange reserves into Japanese debt. Chinese net purchases of Japanese government bonds soared to Y735.2bn ($8.3bn) in May, far outpacing the Y541bn in JGBs bought from January to April, according to Japanese finance ministry figures.

It will be interesting to see if or probably better when the BOJ will be "forced" to start QE Version 18 & 19..... With or without QE this alternative looks much more promising.....

Denke der entscheidende Faktor dürfte sein was die BOJ in Sachen QE machen wird.... Dürfte da über die Jahrezehnte wohl dann Version 18.0 & 19.0 sein..... Mit oder ohne QE ich denke diese Alternative dürfte in jedem Fall vielversprechender sein

Special Gold Report "In Gold We Trust" - Erste Group

2010-07-11T22:41:00.000-07:00

Probably the best summary ( 71 Pages full of charts & data ) on GOLD out there... As an example the following chart showing GOLD vs a currency basket that contains equal weights of US dollar, euro, Swiss franc, yuan, Indian rupee, British pound, and Australian dollar

Nicht umsonst wird der jährlich erscheinende GOLD Report ( satte 71 Seiten voller Daten und Charts...) der Ersten Bank als Standartwerk geadelt.....Exemplarisch der folgende Chart der GOLD vs einem gleichgewichteten Währungskorb bestehend aus of US dollar, euro, Swiss franc, yuan, Indian rupee, British pound, and Australian dollar zeigt .... Passend hierzu hat die Wirtschaftswoche ein Interview mit dem Autor der Studie in der aktuellen Ausgabe....

In GOLD We Trust / Special Report Erste Group June 2010

PDF Version
&
Slideshow Version

Hussman & Hester vs Wall Street Finest.......

2010-07-11T22:20:00.000-07:00

Once more brilliant "Anti Spin" & almost a rant from the usually polite Hussman.....Spot on with my take Of Course It Is Still A Good Time To Buy, Buy, Buy..... when it comes to Wall Street Finest.....

There maybe are legitimate reasons to buy stocks, but a favourable opinion from "Wall Street Finest" should definitely not play any role among your screening process .... Except you use them as a "contrary indicator".... ;-)

Einmal mehr deutliche Worte vom ansonsten doch recht zurückhaltenden Hussman....Eine erstklassige Ergänzung zu meinem früheren Posting Of Course It Is Still A Good Time To Buy, Buy, Buy.....

Grundsätzlich mag es ja durchaus gute Gründe die für Aktien sprechen geben, man sollte aber sicherstellen das die Einschätzungen der "Experten" beim Auswahlprozess keinerlei Rolle spielen....Es sei denn man nutzt sie als Kontraindikator.... ;-)

H/T Randy Glasbergen Collection

Misallocating resources John Hussman

On a valuation basis, the S&P 500 remains about 40% above historical norms on the basis of normalized earnings. The disparity between our valuation assessment and the putative undervaluation being touted by Wall Street analysts is so great that a few remarks are in order. First, virtually every assessment that "stocks are cheap" here is based on the ratio of the S&P 500 to year-ahead operating earnings estimates, and often comes with a comparison of the resulting "earnings yield" with the depressed 10-year Treasury yield. What's fascinating about this is that this is the same basis on which analysts deemed stocks to be about 40% undervalued just prior to the 2007 top, following which the market plunged by more than half.

To properly understand the price-to-forward operating earnings ratio, you have to recognize that operating earnings exclude a whole host of charges - what some observers correctly call "recurring non-recurring" charges. These include large and often quite regular losses that the companies deem, often on the thinnest basis, to be detached from their core business - even if the losses are directly related to their core business.

More on this topic in "Reported Earnings vs Operating Earnings"

Mehr zum Thema in "Reported Earnings vs Operating Earnings"

When you hear analysts say that the historical average P/E ratio is about 15, you have to recognize that this is the normal P/E based on trailing 12-month earnings after subtracting all writeoffs and other charges. Forward operating earnings are invariably much higher, and it turns out that the comparable historical norm, as I discuss in that 2007 piece, is only about 12. If you exclude the late 1990's bubble valuations, you get a historical norm closer to 11.5. The 1982 and 1974 market lows occurred at about 6 times estimated forward operating earnings

A final observation is crucial. Current forward operating earnings estimates assume profit margins for the S&P 500 companies that are nearly 50% above their long-term historical norms. While we did observe such profit margins for a brief shining moment in 2007, profit margins are extraordinarily cyclical. Investors will walk themselves over a cliff if they price stocks as if profit margins, going forward, will be dramatically and sustainably higher than U.S. companies achieved in all of market history.

They also ignore the large percentage of reported earnings that are actually quietly distributed to corporate insiders through the issuance of stock and options.
They blindly accept that "share repurchases" are somehow a pleasant distribution of earnings, whereas the majority of share repurchases are actually made by companies to do nothing more than offset the dilution from stock shares and options granted to insiders.
A good question to ask in the years ahead, immediately after profits are reported, is "how much of this figure is actually delivered to shareholders?" If you've been attentive over the past decade, the answer turns out to be much closer to the dividend yield than to the operating earnings yield that companies have reported.

For a moment, at least, it is good to be a corporate insider, particularly at major financial companies.
First, you get to report productivity gains and "operating profits" - not by making smart investments in productive assets, but instead by writing up debt thanks to Treasury intervention, by misstating your balance sheet thanks to FASB changes last year, and at industrial firms, by cutting the number of workers per unit of capital.
Next, you quietly write off large losses on bad investments and unrecoverable loans as "extraordinary expenses," to which investors pay no notice.
And to add insult to injury, you deliver a significant portion of the remaining profits to yourself as "incentive compensation," followed by buybacks of stock to offset the dilution, which investors actually cheer because they don't realize they've been taken for suckers.

Wall Street Earnings Expectations Ignore Economic Divergences Bill Hester / Hussman Funds

The graph below attempts to contrast the erosion in the global PMI indexes against the rising optimism of stock analysts.
Six series of data are plotted: the changes in earnings expected for the companies in the S&P 500 and the Euro Stoxx Index, and four PMI indexes for the US, the Euro area, Germany, and China. Each of the series is indexed to 100 in April, the month where most of the PMI data peaked.

Now take a look at the Chart showing the period between 2007 and 2008 using the same indices.... I highly recommend to read the entire links.... There is much more.....

Hier zum Vergleich der identische Chart für die Zeit von 2007 bis 2008...... Empfehle die kompletten Links zu lesen... Wie üblich findet man dort noch deutlich mehr "Anti Spin"......

UPDATE:

RARE INTERVIEW WITH JOHN HUSSMAN: WHY HE IS BEARISH RIGHT NOW PragCap

Stocks Expected To See 12% Increase In Revenues In Q2, 41% Increase In EPS, And A Summary Outlook From Rosenberg ZH

As for all of 2010, the consensus is at $82 operating EPS, and for a new record to be reached in 2011, at $96 — breaking the record of $88 three years ago. Good luck in seeing a further 30% increase in profits with nominal GDP rising at a 3.0-4.0% annual rate at best in the next six quarters and at a time when margins are already back to cycle peaks.

For the full John Hussman archive visit the blogroll.....

Für eine komplette Auflistung der gesammelten Werke von Joghn Hussman bitte Blogroll beachten.....

After Dumping 1.300 Tonnes Of GOLD Close To The Bottom During 2000-2005 The Swiss National Bank Makes A U-Turn.....

2010-07-06T03:18:00.000-07:00

Nice timing..... Last sale March 2005.......Almost as "good" as Gordon Brown

Da kann man in Sachen Timing nur noch gratulieren..... Der letzte Verkauf ging im März 2005 über die Bühne.....Fast so genial wie einst Gordon Brown

Make sure you click through the SNB presentation from 2005 & see the chart on page 11 with all the sales details..... Judging from the title of the presentation it´s probably time for a less "euphoric" update........ ;-)

Empfehle allen die Präsentation der SNB aus dem Jahre 2005 und insbesondere ab die Charts ab Seite 11 .......Wenn man sich den Titel der Präsentation so betrachtet dürfte es höchste Zeit für eine "Neuinterpretation" sein.....;-)

SNB Gold Sales – Lessons and Experiences

The Swiss National Bank completed its gold selling program of 1300 tonnes on March 30, 2005

Several hundred percent GOLD price & FX reserves increase later.....

Einige hundert Prozent GOLDpreisanstieg & Fremdwährungsreserven später......

FT Alphaville

A look through the FX reserve data shows that much of the fall can be accounted for by an increase in gold holdings. The SNB’s gold holdings at market value went from 39.1bn to 45bn showing an increase of 5.9bn (gold measured in CHF terms was actually down by 4.8% during June).
Thus instead of providing an indication of the SNB’s intervention stance, what we have is interesting insight into the SNB’s portfolio allocation which interestingly is showing a bias toward holding gold

"Debt Masking" Not Even Mentioned In Finreg......

2010-07-06T01:30:00.000-07:00

Oh Boy...... More on "Debt Masking" in "Surprise, Surprise....." Big Banks Mask Risk Levels - Quarter-End Loan Figures Sit 42% Below Peak

Das nennt man dann wohl brutalst mögliche Regulierung.......Mehr zum Thema wie frisiere ich Bilanzen und "Debt Masking" in "Surprise, Surprise....." Big Banks Mask Risk Levels - Quarter-End Loan Figures Sit 42% Below Peak

Interactive Graph : Masking Risk WSJ

Finreg, the FDIC and repo markets: a BarCap primer BarCap via FT Alphaville

One curious absence in this legislation is the lack of any commentary regarding “debt masking” – that is, using repo transactions to reduce balance sheet at quarter-end in order to report lower leverage.
Given all the (bad) press repo has received lately, we thought there would be more explicit language in the bill regarding such activity.

CHUZPAH!

Dilbert vs Wall Sreet Finest 1:0.......

2010-07-03T00:50:00.000-07:00

To understand the headline you should read Of Course It Is Still A Good Time To Buy, Buy, Buy..... Almost unbelievable that this link is just one month old......

Um die Überschrift zu verstehen empfehle ich Of Course It Is Still A Good Time To Buy, Buy, Buy..... zu lesen.... Kaum zu glauben das dieser Link erst einen Monat auf dem Buckel hat...

H/T Dilbert

UPDATE:

Looks like the guy mentioned in the first link named James Altucher doesn´t even have a rolling forecast ( at least not downwords ) .... He is more than ever in the S&P 500 will hit 1500 camp...Compare the clip with this one from June 2008 just before the big crash Forget Your Fears: 'Everything Is Cheap,' James Altucher Says..."BROKEN RECORD" comes to mind...No wonder even the usually polite Mish has called him "Completely Whacko".... This kind of "expertise" has "earned" him his own Blog label/tag.....I hope his remaining clients use him only as a contrary indicator..... Thank god he is bearish on GOLD ( Quote "It's just a rock.." ).... UPDATE: James Altucher Argues That The Fed Should Intervene Massively In The S&P Futures Market

Nett zu sehen das einer der Typen aus dem ersten Link Namens Altucher zumindest wenn es gen Süden geht nicht einmal im Ansatz einen "rolling forecast" im Repertoire hat... Er ist mehr denn je überzeugt das sein S&P Ziel von 1500 jetzt erst Recht erreicht wird.... Vegleicht den Clip mit dem folgenden vom Juni 2008 kurz brvor sich die Dow & Co halbiert haben Forget Your Fears: 'Everything Is Cheap,' James Altucher Says.. .Damit hat er sich jetz sein eigenes Blog Label/Tag verdient....Bleibt zu hoffen das seine verbliebenden Kunden ihn lediglich als Kontraindikator nutzen....Glücklicherweise ist er in Sachen GOLD weniger positiv...Zitat :"It's just a rock.." UPDATE: James Altucher Argues That The Fed Should Intervene Massively In The S&P Futures Market

"Wall Street Finest : It´s Always A Good Time To Buy, Buy, Buy....." BP Edition.....

2010-06-18T22:58:00.000-07:00

Even as i have to admit that the "BP SPILL DRAMA" is a very complicated to judge it is nevertheless a perfect fit to my earlier post Wall Street Finest.... Of Course It´s A Good Time To Buy, Buy, Buy..... and a nice confirmation for what i´ve said in the past ....

"There maybe are legitimate reasons to buy stocks, but a favourable opinion from "Wall Street Finest" should definitely not play any role in your screening process .... Except you use them as a "contrary indicator".... ;-) "

Selbst wenn ich zugeben muß das der BP GAU schwer einzuschätzen ist, passt es wie die Faust aufs Auge zu Wall Street Finest.... Of Course It´s A Good Time To Buy, Buy, Buy..... und ist nebenbei die Bestätigung zu dem was ich bereits seit langem zum Thema "Experten" zu sagen habe....

"Grundsätzlich mag es ja durchaus gute Gründe die für Aktien sprechen geben, man sollte aber sicherstellen das die Einschätzungen der "Experten" beim Auswahlprozess keinerlei Rolle spielen....Es sei denn man nutzt sie als Kontraindikator.... ;-)"

Special Report: Amid the Gulf crisis, Wall St touted BP stock Reuters

As early word of BP's Deepwater Horizon blowout began spreading, investors panicked. After closing above $60 before the April 20 disaster, the energy giant's shares plunged almost 20 percent in New York, to below $50, in just two weeks.

It is not hard to understand why. Even then, the out-of-control oil spill in the midst of rich fishing grounds and nearby resort beaches raised the specter of horrific damages and untold potential liabilities.

Yet, nearly to a person, the dozens of securities analysts who followed the British oil giant were unfazed. As BP shares continued to drop, most were screaming the same message: buy, baby, buy.

Credit Suisse, which had a "buy" rating on the stock at the time, did not even mention the accident in an April 28 report. The firm upgraded earnings estimates after BP reported strong quarterly results the day before.

A day later, with BP's shares then down 11 percent, Citigroup's Mark Fletcher weighed in. He argued that the decline was "disproportionate to the likely costs to the company, even assuming damages can be claimed." In the same report, he estimated BP's total share of the cleanup at just $450 million -- today, conservative guesses put the figure at $10 billion to $20 billion.

Around that time, Morgan Stanley was among the chorus citing the strong rebound of Exxon (XOM.N) shares after the 1989 Valdez tanker spill in Prince William Sound, Alaska, as a reason to be bullish. "We think the sell-off presents an attractive buying opportunity for investors with medium-term investment horizons," the firm wrote.

All told, 27 of 34 analysts tracked by Thomson Reuters rated the stock "buy" or "outperform" as recently as May 11. The other seven rated the shares "hold." There was not a single rating of "sell" or "underperform" among those tracked.

And then there was the exuberant television host Jim Cramer, who insisted that Bear Stearns was fine just days before the company's stock crashed. On May 10, he told viewers of his "Mad Money" (Cramer: "The Dividend Is Safe, Way Overdone On The Downside" / Stock just under $ 50 & Cramer:Gulf Spill Won’t Break BP / Stock above $ 50 ) show on CNBC that he was purchasing shares of BP for his charitable trust at just under $50. "If you get any good news at all, you're at the bottom," he said. "I'd like to buy it.

BP has at least managed to outperform his May 10th "Housing Shortage Top Pick" SPF... I doubt that he is still refering to his Housing Shortgage Play Version 1.0 July 2008 and has meanwhile switched to version 2.0 or 3.0....To be continued.....UPDATE: Watch his comments after the entire group has tumbled close to 30% & his top pick SPF worst.... To call him a revisionist is an understatement.... Couldn´t resist.....

Immerhin hat BP es geschafft besser als sein anderer Favorit SPF abzuschneiden....Nach seinen letzten Kommentaren im Angesicht einen 30% Crashes im Homebuildingsektor sowie einer Halbierung seines Favoriten SPF muß man schon sagen das der CHUZPAH mehr als treffend ist....

If he did, he didn't make out so well. As estimates of the spill grew -- and grew and grew -- and efforts to cap it failed, BP's stock sunk ever lower. It didn't hit bottom for another month, the New York-traded ADRs touching $29 in midday trading on June 9, down 52 percent from just before the Deepwater Horizon disaster. That's approaching $100 billion in shareholder wealth that has been destroyed.

GROUP THINK

Others say the failure of even one analyst at a major firm to grasp the potential risks and advise clients to dump the stock reflects the profession's overall group-think tendencies. "For sell-side analysts, the incentive is to remain toward the center of the pack. If they are going to be wrong, they have got to be in good company," said Michael MacPhee, at investment manager Baillie Gifford.

As the shares headed toward almost half their pre-disaster level, most analysts issued more cautious notes, with Goldman, Natixis, S&P equity research and Charles Stanley, cutting their ratings to neutral or hold from buy.

By June 16, BP was rated a buy by 16 analysts, outperform by eight, a hold by another 8 with only one sell, according to data on Reuters Knowledge. That was the date, of course, when BP agreed to fund a $20 billion escrow account and suspend its dividends for the year.

With the price around half what it was before the spill, analysts might have a stronger argument that BP was a buy in mid-June, though that will be of little comfort to anybody who followed the advice to buy a month ago.

H/T Reformed Broker

Bloomberg

The split over BP between U.K. and U.S. investors extends to analysts. The U.K. stock has 26 “buy” recommendations, while 12 analysts recommend holding the stock and two say to sell. In contrast, almost as many U.S. analysts advise against purchasing the stock as buying it. The ADRs have seven “buy” recommendations, five “holds” and one “sell.”

And when a guy like Chanos is shorting Exxon widely viewed as the goldstandart in the industry you have to wonder even more....

Wenn ein Typ wie Chanos momentan aber selbst den am meist angesehenen Titel im Sektor Exxon shortet ist das zumindest mehr als eine Randnotitz wert.....

Watch the percentage of sell ratings for S&P 500 companies flatlining even in the deepest recession since 1930........

Man beachte die rote Linie der Verkaufsempfehlungen für die 500 Unternehmen im S&P die selbst während der tiefsten Rezession seit 1930 "stabil" geblieben ist......

BP Oil Spill: Brief History of The Incredible Rising Cost Estimate WSJ Marketbeat

BofA Merrill, April 28 — “To put it in context, the Valdez clean-up cost reportedly reached [around] U.S. $3 billion and we expect the cost to BP to be lower at this point.”

BofA Merrill, April 30 — “If we assume the clean-up takes 6 months and include relief wells costs, total costs would be in the U.S. $2 billion range (U.S. $100 million per well + 180 days at $10 million/day). Even assuming additional civil damages similar to Exxon Valdez of US$2.5 [billion] awarded against [Exxon Mobil] in 2009, BP’s net costs for Macondo would approach [$3 billion] – just over half [first quarter 2010] earnings. While the market may not be willing to assume such a scenario, given ongoing uncertainty, it, nevertheless, underscores that the hit on BP’s shares looks overdone.”
BofA Merrill, May 28 — “The US Geological Survey (USGS) has independently estimated that the flow rate at Macondo is in the 12-19kb/d range. Whilst this is clearly larger than the previous [5,000 barrels a day range] estimate, it is inline with the flowrates of typical wells in the area as we had indicated (see BP: Making tangible progress 21-May). We note that this new information makes no difference to our worst case liability estimate of U.S. $10 [billion] – based on the recently proposed liability limit.”

BofA Merrill, June 10 — “Given the uncertainties presented by the spill (our base case cost est. is $28 [billion] but the worst case scenario cannot be adequately quantified.”

To be continued.....Check out the link for more stunning quotes.... Let´s all hope we won´t see an updated "Hurricane Edition".....

Fortsetzung folgt.......Mehr von den "Experten" gibt es hier.... Daumen drücken das wir um eine ähnliche Auflistung im Zusammenhang mit der "Hurricane Saison" herumkommen.....

"Enron-Esque Accounting" Still Rampant......

2010-06-14T00:45:00.000-07:00

"Austerity" New York Style........For more on this topic you should read Payback Time : State Debt Woes Grow Too Big to Camouflage & Seven State Pension Plans Out of Money by 2020 or just visit the Madoff, Ponzi links on Wikipedia..... ;-)

In Sachen Buchführung sehen im Vergleich mit den Amis selbst die Griechen alt aus....Mehr zum Thema entweder Payback Time : State Debt Woes Grow Too Big to Camouflage & Seven State Pension Plans Out of Money by 2020 oder direkt unter Wikipedia nach Madoff oder Ponzi suchen.... ;-)

State Plan Makes Fund Both Borrower and Lender NYT

ALBANY — Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund.

And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund — from the same pension fund.

As word of the plan spread, some denounced it as a shell game and a blatant effort by state leaders to avoid making difficult decisions, like cutting government spending or reducing pension benefits.

Under the plan, the state and municipalities would borrow the money to reduce their pension contributions for the next three years, in exchange for higher payments over the following decade. They would begin repaying what they borrowed, with interest, in 2013.

No wonder the "In Fiat Money We Do Not Trust Camp" is getting more popular, but when considering the following headline Households Bust $1 Trillion Muni Mark it should be clear that the term "crowded" could be used for other asset classes than GOLD....;-) Thanks to the World Cup posting will be very light during the next few weeks.....

Bei solch absurden Geschichten muß man sich nicht wundern wenn das "In Fiat Money We Do Not Trust Camp" merklich an Popularität gewinnt....Und wenn man sich die nachfolgende Zahl Households Bust $1 Trillion Muni Mark ansieht sollte sich auch die angestiegende Beliebtheit von GOLD relativieren....Da momentan auch bei mir das WM Fieber grassiert wird in Sachen Blog die nächsten Wochen eher wenig passieren...

UPDATE

61% Underfunded Illinois Teachers Pension Fund Goes For Broke, Becomes Next AIG-In-Waiting By Selling Billions In CDS ZH

“If you were to have faxed me this balance sheet and asked me to guess who it belonged to, I would have guessed, Citadel, Magnetar or even a proprietary trading desk at a bank.” So begins a story by Alexandra Harris of the Medill Journalism school at Northwestern, which, however, does not focus on some exotic product-specialized hedge fund, or some discount window (taxpayer capital) backed prop desk (hedge fund) at a TBTF bank, but instead at the 61% underfunded, $33.7 billion Illinois Teachers Retirement System (TRS), which just happened to lose $4.4 billion in 2009 (a year when, courtesy of America's conversion from capitalism to socialism, the market rose 60%), and 5% in2008.
Yet underperformance can be explained. What can not, is that the TRS has now become a shadow AIG. As Harris notes "TRS is largely on the risky side of the contracts, selling and writing OTC derivatives, including credit default swaps, insurance-like contracts that guarantee payment in the event of a default, that were blamed in part for the 2008 collapse of Lehman Bros. and bailout of insurance giant American International Group Inc., or AIG."

Suddenly NY pension plan isn´t looking as bad....... ;-)

Plötzlich sieht selbst die NY Pensionskasse ganz passabel aus..... ;-)

17 Minutes Bob Janjuah......

2010-06-04T08:53:00.000-07:00

Quite refreshing compared to the usual "Buy, Buy, Buy...." spin ( UPDATE: After todays market action worth a second look) that is flooding the wires these days..... Excellent takes on banks, debt, inflation/deflation, GOLD, the upcoming jobs report, the real economy etc.....You can read his note "Uber Bear Early Warning Alert" they are refering to here & his even more bearish update "Prepare for flash crash II and $10 trillion of QE"here.....This guy makes even me look like a bull.... ;-)

In diesem Interview werden alle relevanten Themen ( Banken, Inflation/Deflation, Arbeitsmarkt, reale Wirtschaft, GOLD, Verschuldung ... ) ziemlich schonungslos und meiner Meinung nach sehr treffend abgehandelt....Vergleicht diese Ansichten mit der "Buy, Buy, Buy....Mentalität" ( UPDATE: Ist speziell nach dem heutigem Handelstag einen "zweiten Blick" wert ) die ansonsten tagtäglich von Wall Street Finest gepredigt wird.... Wer möchte kann den "Uber Bear Early Warning Alert" auf dem im Interview Bezug genommen wird hier nachlesen oder sein noch negativeres Update "Prepare for flash crash II and $10 trillion of QE" hier zu Gemüte führen...... Im Vergleich dazu höre selbst ich mich bullish an.....

Here are some earlier highlights

Hier ein paar Zitate aus der letzten Zeit....

September 2009 FT Alphaville

I think balance sheets and sustainability - govt, central bank ANDprivate sector, MATTER
If they no longer matter, I will be WRONG, and I will have to accept that the policy of ‘Print/Borrow/Spend on Rubbish we don’t Need’ is a limitless phenomena, without consequences, which means there should never be a bear marketever again….

January 2010 FT Alphaville

Well I clearly underestimated the ability & willingness of the Public Sector, notably in the UK, US, parts of periph Europe and Japan, to take huge risks with their sovereign balance sheets, AND IMPORTANTLY, I over-estimated the ability & willingness of the Financial Sector/Market to see things for what they are (Another Debt Fuelled Bubble/Ponzi).

April 2010 ZH

We are trapped in some horrendous Keynesian/monetarist nightmare, where policymakers, aided/abetted/advised by their buddies in the media, in the lobbyist cabal and in financial system, have YET AGAIN decided to go down the route which merely delays the problem/pushes it down the road, but which virtually guarantees that when the NEXT bubble collapses (I assume it will be the Global Government Debt/Bond Bubble and/or the Global Fiat Money/Paper Money/FX Bubble), there is NO pleasant way back.

Tony Dwyer Is Not Alone..........Of Course It Is Still A Good Time To Buy, Buy, Buy.....

2010-06-01T09:40:00.000-07:00

What a "surprise"......Keep the following stats in mind when the daily spin "stocks are cheap on forward pe´s" is hitting the MSM... If you want to hear the "rationale" for a 2000 S&P target in 2013 visit Tony Dwyer & his "brilliant playbook" UPDATE: A guy named Altucher is almost as good It's Not a 'V', It's Even Better, Look for New Highs by 2012 .... There maybe are legitimate reasons to buy stocks, but a favourable opinion from "Wall Street Finest" should definitely not play any role among your screening process .... Except you use them as a "contrary indicator".... ;-)

Welch "Überraschung"......Behaltet die nachfolgenden Daten im Hinterkopf wenn es wie tagtäglich in den Medien und auch der Fachpresse gebehtsmühlenartig wieder heißt "das Aktien auf Bewertung der 2011er Gewinne günstig sind"..... Ein eindrucksvolles "Schauspiel" in dieser Disziplin bietet Tony Dwyer mitsamt seinem "brillianten Playbook" für sein 2000 S&P Ziel im Jahr 2013 UPDATE: Dieser Typ ist mindestens ebenbürtig It's Not a 'V', It's Even Better, Look for New Highs by 2012..... Grundsätzlich mag es ja durchaus gute Gründe die für Aktien sprechen geben, man sollte aber sicherstellen das die Einschätzungen der "Experten" beim Auswahlprozess keinerlei Rolle spielen....Es sei denn man nutzt sie als Kontraindikator.... ;-)

Bespoke

Bloomberg surveys sell-side Wall Street strategists on a weekly basis for their year-end S&P 500 price targets. At the start of 2010, the average year-end S&P 500 price target was 1,225, which would have been a gain of just about 10%. As markets moved higher in the first quarter, strategists upped their year-end targets, and the current average target stands at 1,268. (In the table below, green shaded price targets are ones that have been increased so far this year. No strategists have lowered their targets since the start of the year.) A target of 1,268 translates into a gain of 13.68% for the year and 16.48% from current S&P 500 levels.

There are no strategists with year-end targets that are lower than the index's current levels.

Analysts Projecting 27% Gain in S&P 500 Defy El-Erian Bloomberg

Combined price estimates from more than 2,000 forecasters tracked by Bloomberg show the S&P 500 will rise 27 percent in the next year, the fastest projected rate since February 2009, data compiled by Bloomberg show.
The rally above 1,350 will be led by industries most tied to the economy, according to analysts who boosted individual share projections by an average of 0.9 percent in May, the 14th straight monthly increase.

Should analysts’ forecasts for a 27 percent gain in the S&P 500 come true, the gauge would climb to 1,360 by next May, the highest level since June 2008.

The real story here are not the S&P 500 targets from the "strategist" but that they have managed to increase the target since the beginning of the year.... Despite events like the Flash Crash ( "Cancel All Orders, Cancel All Orders....." ), "minor headwinds" when it comes to Sovereign Debt,China , for US companies an unfavourable strong $ , impact from the "Oil Spill" on drillers & still insolvent Banks it´s fair to say that ROSE COLORED GLASSES are still a must have item among way too many among "Wall Street Finest"... ;-)

Die eigentliche Botschaft sind nicht die angegebenen Kursziele, sondern vielmehr die Tatsache das diese trotz einiger unschöner Ereignisse die vermehrt seit Jahresbeginn aufgetaucht sind wie dem sog. Flash Crash ( "Cancel All Orders, Cancel All Orders....." ), "minimalen" Problemen wenn es um Sovereign Debt,China den für US Firmen ungünstigen "starken $" , seit dem BP GAU die Probleme der Ölförderer & die immer noch bemerkenswert schwachen Banken geht, munter fleissig angehoben worden sind..... Denke es ist keine Übertreibung zu sagen das eine ROSAROTE BRILLE unter etlichen von "Wall Street Finest" noch immer zur "Standartausrüstung" gehört.... ;-)

I´ll let "Mr. Anti Spin" David Rosenberg du some further "bashing"..... Do yourself a favour & subscribe to his free DAILY REALITY CHECK... SUPERB!

Überlasse es "Mr. Anti Spin" David Rosenberg noch mehr Wasser in den Wein zu gießen....Empfehle allen sich frei Haus die tägliche Dosis Rosenberg zu genehmigen....

"It’s also fascinating to read the “Ahead of the Tape” column in the WSJ today and to read about the fabulous earnings performance of U.S. companies — a revival built on a weak U.S. dollar, accelerating global growth, fiscal stimulus and a steep yield curve.
Meanwhile, the consensus has just now gone ahead and projected peak earnings for 2011 just as each of these main crutches are reversing course."

AMEN....

McKinsey: Equity Analysts Are Still Too Bullish via Barry

Moreover, analysts have been persistently overoptimistic for the past 25 years, with estimates ranging from 10 to 12 percent a year, compared with actual earnings growth of 6 percent.
Over this time frame, actual earnings growth surpassed forecasts in only two instances, both during the earnings recovery following a recession. On average, analysts’ forecasts have been almost 100 percent too high.”

This chart completes the not so glory picture when is comes to the credibility & reputation from "Wall Street Finest".... If you have the "guts" to read the "rationale" behind Goldmans bullsih call you should read Goldman: "We Raised S&P 500 EPS Estimates Despite Worst May Performance In Almost 50 Years"

Dieser Chart paßt hervorragend ins Bild unm das das wenig glorreiche Bild abrunden....Für alle die die Nerven haben und wissen möchten auf welchen "Modellen" die Schätzungen von Goldman basieren Goldman sollte Goldman: "We Raised S&P 500 EPS Estimates Despite Worst May Performance In Almost 50 Years" lesen....

UPDATE:

Profit-Margin Outlook for U.S. Is ‘Extremely Bad’: Chart of Day Bloomberg

Best Stocks Liked Least by Analysts Missing U.S. Gain Bloomberg

In Fiat Money We Do Not Trust "Chinese Edition"

2010-05-25T11:50:00.000-07:00

Perfect follow up on In Fiat Money We Do Not Trust ... I think it´s safe to assume that China will be a net buyer of GOLD for some time to come......Especially when you consider the tiny FX to GOLD Reserves Ratio from the Central Bank......

Paßt hervorragend zu In Fiat Money We Do Not Trust .... Denke man kann ohne Übertreibung sagen das China bzw die Chinesen auf Sicht der nächsten Jahre sicher zu den Nettokäufern von GOLD gehören werden.....Gilt besonders wenn man sich das aktuelle Verhältnis der Fremdwährungen zu GOLD der Chinesischen Notenbank ansieht.....

H/T The Mess That Greenspan Made

I just wanted to add that it was illegal to buy GOLD as an investment vehicle in China for decades and with negative real interest rates & very few alternatives this kind of "GOLD FEVER" is probably less surprising...Since Greece has made headlines here in Germany the same store would have been almost as packed in Hamburg or Munich ;-)

Looks like Sorros knows this chart and wants to frontrun the "ultimate bubble".... Otherwise the 100% increase of his GOLD investment would make little sense.......

Ergänzend sollte man wissen das es in China bis vor kurzem verboten gewesen ist GOLD für Investmentzwecke zu erwerben und das es dank der seit Jahren notorisch negativen realen Guthabenzinsen & fehlender Alternativen nicht weiter verwunderlich ist das solche Läden so prosperieren....Seit Griechenland in Deutschland die Schlagzeilen beherrscht bin ich mir sicher das ein identischer Laden in Hamburg oder München ähnlich erfolgreich wäre.. ;-)

Sieht ganz so aus als wenn Sorros diesen Chart in Verbindung mit dem "ultimativen Bubble" vor Augen hat... Ansonsten würde es wenig Sinn machen das er sein GOLD Investment inzwischen verdoppelt hat.......

Gold Report China H/T ZH

The following chart won´t hurt their appetite for GOLD either......

Der nachfolgende Chart dürfte den Appetit in Sachen GOLD nicht gerade mindern.....

RBS on central banks’ underwater EUR positions FT Alphaville

Because over half the reserve accumulation in this period took place in the last 3 years, Chinese acquisition of reserves has been at relatively high EUR/USD levels. There is no data in the public domain on how much of China’s purchases were in EUR, but presumably diversification to lower the share of USD holdings may have pushed EUR purchases to close to half of all acquired reserves, and a majority of these purchases are well ‘out the money’.

The chart above shows that as much as 77% of Chinese reserves were accumulated at levels above EUR/USD 1.25. This does not discriminate between EUR purchases and USD purchases.

Most Impressive Sovereign Funding Official 2009 Award Went To Spyros Papanicolaou ( Greece )

2010-05-23T22:46:00.000-07:00

You cannot make this up......Very hard to hide a big deal of SCHADENFREUDE when you keep in mind that the awards were determined by a poll of bankers and borrowers .... On the other side it´s too bad that exact these same so called "sophisticated" investors ( not speculators! ) got once again bailed out for their ( ongoing ) very poor judgement.....The following quote from John "Anti Spin" Hussman "Prostituting the fiscal stability of an entire nation for the benefit of bondholders who made bad loans ?"( Hussman is really "upset"..... ) & this must see clip :-)! are unfortunately spot on... Go and read the entire link !

Kein Aprilscherz......Wenn man bedenkt das dieser Preis in einer Abstimmung von Bänkern und Investoren vegeben worden ist kann man sich eine gewisse Portion SCHADENFREUDE einfach nicht verkneifen...... Gleichzeitig wird die Wut darüber, das genau diese Investoren ( nicht Spekulanten! ) trotz Ihres offensichtlich zum wiederholten Male vernebeltem Urteilsvermögen erneut über immer größer werdende Bailouts rausgehauen werden, tagtäglich größer ......Leider handelt es sich beim nachfolgenden Zitat von John "Anti Spin" Hussman "Prostituting the fiscal stability of an entire nation for the benefit of bondholders who made bad loans?" ( Wer den ansonsten sehr besonnenen Hussman kennt kann erahnen das hier einer ziemlich "aufgebracht" ist ...) sowie diesem wunderbar humoristischen Clip :-)! um eine treffende Bestandsaufnahme und um keine Übertreibung......Empfehlen allen den kompletten Link zu lesen !

WSJ

Beware the lessons of history—especially when they involve Greece. The winner of Euroweek's 2010 award for most impressive sovereign funding official richly deserved it: Robert Stheeman, head of the U.K. Debt Management Office, steered through a whopping £185 billion ($268 billion) of gilt sales in the last fiscal year.
But Mr. Stheeman might not want to look too closely at the award's history: Last year's winner was one Spyros Papanicolaou, the former head of Greece's Public Debt Management Agency.

Rough times for GILTS & the POUND ahead.....

Sieht ganz so aus als wenn es für GILTS und das britische Pfund demnächst ruppig werden könnte......

In Fiat Money We Do Not Trust

2010-05-13T09:08:00.000-07:00

Nice addition to Gold...The Ultimate Triple-A Asset . If you are still not in the GOLD camp & "stunned" by the recent price action you really should give the link a chance..... Especially if you think GOLD is a bubble...... I think it´s more important than ever that a prudent asset allocation should at least have "some" GOLD exposure.......Doesn´t mean you have to do the "SPROTT","PAULSON" or "KAPLAN"......

Passt perfekt zu Gold...The Ultimate Triple-A Asset . Denke jeder der bisher die Preisbewegung beim Gold mit ungläubigem Staunen betrachtet sollte sich den Link zwingend zu Gemüte führen.... Gilt besonders für alle die ( oftmals seit Jahren ) im "GOLD IS A BUBBLE" Lager zu finden sind......... Ich bin mehr denn je der Meinung das jede vernünftige Portfolio Strukturierung zumindest "etwas" mit GOLD zu tun haben sollte.....Man muß ja nicht gleich den "SPROTT", "KAPLAN" oder "PAULSON" machen.....

H/T Wall Street Follies

The image from Wall Street Follies is well over 10 years old and an updated version would obviously include "QUNATITIVE EASING" aka "PRINTING MONEY"..... ;-)

Der Cartoon von Wall Street Follies ist deutlich über 10 Jahre alt..... Eine aktuelle Version würde sicher die Wörter "QUANTITIVE EASING" bzw "PRINTING PRESS" beinhalten..... ;-)

David Rosenberg ZH

Gold has broken out to the upside even as the U.S. dollar has done likewise on the back of a renewed flight-to-safety bid. What this means, of course, is that gold has managed to hit new highs even as, (i) the U.S. dollar has risen, which means gold is breaking out against all major currencies; and, (ii) other industrial commodities, such as oil and copper, have slumped from their recent highs.
So what this all means is that gold is no longer being considered as part of a resource complex that is outperforming the segment but is increasingly being viewed as a currency of its own.

Gold is a hedge against instability of all kinds — don’t think for a second that deflation does not engender instability whether it be financial, economic or political. To be sure, gold is also a hedge against inflation — but that is going to come much, much later and will be the icing on the cake.

Totally agree on the his deflation / inflation view & timeline....

Stimme zu 100% mit der Deflations / Inflationszeitachse überein....

In Fiat Money We Do Not Trust FT Alphaville

....the price of gold is rising against every major currency, not just the embattled euro.
Gregg Gibbs : "If the market won’t buy the government bonds, the central banks have to. There is no other choice. The alternative is just too damaging for the economy to contemplate. If the central banks don’t buy the debt, then governments are forced into a budget surplus (a surplus is required to cover interest payments on existing debt).
Imagine the carnage if major economies were forced from double digit deficits to surplus, you are talking Great Depression type scenario or worse."
Even though inflation is yet to break out, the price of gold is telling us that this threat is very real over the longer term. People rightly so do not trust fiat money anymore.

Pimco’s Mohamed El-Erian via Felix Salmon

I am inclined [to warn] against the long-term implications of additional steps to turn monetary authorities (with revolving balance sheets) into fiscal agencies (with more permanent exposure to dubious assets).
An even larger-scale use of central bank balance sheets, if it were to materialize, would provide only a temporary respite, and the collateral damage and unintended consequences would be serious, including the impact on inflationary expectations.

Welcome to the OECD debt trap George "Minsky" Magnus via FT Alphaville

There is little on offer in the underlying details of most governments’ deficit and debt arithmetic moreover that would suggest these debt ratios are about to peak and then decline to more manageable levels in the period ahead.
Indeed on current policy settings the evidence suggests that debt-to-GDP ratios will continue to climb.

The reasons are two-fold and relate to conventional textbook definitions of a ‘debt-trap1’

The first reason is that most governments will still be running a deficit on their cycle-adjusted primary budget balance in 2011 – the budget balance excluding interest payments that would appear if the economy was operating at full capacity.

The second reason concerns the relatively high real borrowing costs that governments are confronting at present, partly a function of low levels of inflation and – for some economies – the increasing premium that investors have been demanding to hold their sovereign debt. The ‘effective’ real borrowing rates for most OECD governments last year on their accumulated debt position was north of 3 percentage points (see charts below). For some economies it was north of 4 percentage points. Against an underlying backdrop where potential growth rates for most OECD economies are probably south of 2% and for many closer to 1.5%,this is deeply concerning.

Bill Gross WaPo

"In order to pay the interest and the bill when it comes due, we'll simply have to issue more IOUs. That, to me, is Ponzi-like," Gross said. "It's a game that can never be finished."

AMEN.....

Hinde Capital - ECB the European Commisssion's Whore May 2010

H/T ZH

Debasing the ECB’s Balance Sheet Hussman via Tim

A “sterilized intervention” is one where the euros created through the purchase
of distressed Euro-area debt will also be absorbed by selling other assets from
the ECB’s balance sheet

Therefore, we are fundamentally promising to debase the quality of our balance sheet, by exchanging higher quality Euro-area debt with lower-quality debt of countries that are ultimately likely to default.”.

Looks like even Hussman is too otimistioc when it comes to the ECB & "sterilisation"......

Beim Anblick des nächsten Links muß man leider sagen das wie zu befürcvhten war selbst Hussman beim Thema EZB und "Sterilisation" noch zu optimistisch ist....

Sterilised and scandalised FT Alphaville

But here’s the key bit from the ECB’s statement:

Fixed term deposits held with the Eurosystem are eligible as collateral for the Eurosystem’s credit operations.

Which means the ECB’s govt bond purchases will be offset for a full week — until the banks can repo the fixed term deposits at things like the Long-Term Refinancing Operation (LTRO). What liquidity the ECB takes away with one hand, via the term deposits, it gives in unlimited amounts with the other.

JP Morgan’s David Mackie

In the event, there was less symbolism than we expected . . .

what the ECB is doing is potentially far more worrying. The ECB is now purchasing the government debt of sovereigns whose solvency is in question: neither the Bank of England nor the Federal Reserve did that

"CENTRAL BANKSTERS".....;-)

Complacency Is Over....... "Cancel All Orders, Cancel All Orders....."

2010-05-07T06:05:00.000-07:00

I hope he has "survived" the trading day.... If you want a good explanation how the "surprising" market action could happen at you should read NO FAT FINGER! & "Rise ( & Fall ) Of The Machines" ... ... If my market view is correct i think we can enjoy similar clips in the future.........

Bleibt zu hoffen das er den Handelstag gesund überstanden hat....Mehr Hintergründe für das nicht wirklich überraschende Marktverhalten gibt es in NO FAT FINGER! & "Rise ( & Fall ) Of The Machines" ... Sollte ich mit meiner Marktbeurteilung recht behalten dürften uns noch einige solcher unterhaltsamen Videos ins Hause stehen....

H/T The Reformed Broker

Did he really cancel his orders near the bottom..... ;-)

Hört sich für mich so an als wenn er nahe dem Tief alle Orders gecancelt hat...... ;-)

UPDATE:

Ben Lichtenstein’s Breathless SPX Order-Taking

H/T Barry Ritholtz

INSTANT CLASSIC!

Gold...The Ultimate Triple-A Asset

2010-04-26T01:48:00.000-07:00

This is a perfect follow up on Eric Sprott Still Makes A Lot Of Sense...... ( !!! ) and shows that if you would eliminate the "Enron-Esque Accounting" probably 90% percent of all sovereign ratings are more than a little bit inflated...... UPDATE: Timing of the post could have been worse..... See end of the post.....

Die perfekte Ergänzung zu Eric Sprott Still Makes A Lot Of Sense...... ( !!! ) die eindrucksvoll aufzeigt das wenn man die "Enron-Esque Bilanzierung" miteinbeziehen würde wohl knapp 90% aller Staatsratings zum Teil erheblich "inflationiert" sind..... UPDATE: Timing des Postings hätte schlechter sein können... Siehe Ende des Postings....

Eric Sprott: Weakness Begets Weakness: from Banks to Sovereigns to Banks via ZH

The rating agencies’ ranking of the United States is even more disconnected from reality. To believe that the US sets the benchmark for sovereign debt credit ratings is preposterous.

While we have written ad nauseam about the excessive debt issuance by the United States, we found a recent update written by United States Government Accountability Office (GAO) to be particularly instructive. The update noted the US’s budget deficit equivalent to 9.9% of GDP in 2009 - the largest since 1945 - and stated that without significant policy changes the US government would soon face an "unsustainable growth in debt". This was not news to us.

It goes on to state, however, that using reasonable assumptions, "roughly 93 cents of every dollar of federal revenue will be spent on the major entitlement programs and net interest costs by 2020." This is news!
In less than ten years, using reasonable assumptions, there will essentially be no money left to run the US government - 93% of all tax revenues the US government collects will go to pay social security, Medicare, Medicaid and the interest costs on their national debt.

This implies no money left over for defense, homeland security, welfare, unemployment benefits, education or anything else we associate with the normal business of government. And the US government is rated AAA!?

Speaking of Rating Agencies :-)! ....

Da wir gerade bei den Rating Agenturen :-)! sind....

In our view it’s time for investors to acknowledge sovereign risk. The ratings agencies can opine all they want, but it seems clear to us that the only true AAA asset to protect your wealth is gold.
The risk inherent to investors, of course, is what happens when the bond market begins to realize and react to this new level of risk.

Banking To Debt Crisis Roundabout GLG Partners via FT Alphaville

Bond Traders Declare Inflation Dead After Yields Fall

The bond vigilantes who punished governments for profligate spending in past years have gone into hiding.
Sovereign bonds yield an average 2.385 percent, about the same as a year ago and below the average of 3.08 percent in 2008 when the credit market seizure led investors to seek the safety of government debt, according to Bank of America Merrill Lynch index data.
The cost to borrow is steady even though the amount of bonds in the index that includes nations from the U.S. to Germany and Japan has grown to $17.4 trillion from $13.4 trillion two years ago.

SUPERB RISK/REWARD........ ;-)

Scheint mir ein ausgewogenes Chance/Risikoprofil zu sein..... ;-)

Bob Janjuah: "We Are Trapped In Some Sort Of Horrendous Keynesian/Monetarists' Nightmare...." via ZH

We are trapped in some horrendous Keynesian/monetarist nightmare, where policymakers, aided/abetted/advised by their buddies in the media, in the lobbyist cabal and in financial system, have YET AGAIN decided to go down the route which merely delays the problem/pushes it down the road, but which virtually guarantees that when the NEXT bubble collapses (I assume it will be the Global Government Debt/Bond Bubble and/or the Global Fiat Money/Paper Money/FX Bubble), there is NO pleasant way back.

Bill Gross WaPo

"In order to pay the interest and the bill when it comes due, we'll simply have to issue more IOUs. That, to me, is Ponzi-like," Gross said. "It's a game that can never be finished."

Read this twice... Bill "The Bond King" Gross from PIMCO is hinting the obvious.....Glad that i didn´t have to bring PONZI into the mix myself....... All this should make all the "GOLD BUBBLE TALK" even more "credible.... ;-)

Das letzte Zitat von Bill "The Bond King" Gross, der ja mittels PIMCO bekanntlich der weltweit größte Investor in Anleihen ist, sollte zur Sicherheit lieber zweimal gelesen lesen werden........Bin dankbar das ich PONZI nicht selber ins Spiel bringen mußte.....Dieser "grundsoliden" Fundamentaldaten geben speziell all denen die noch immer nicht genug von der "GOLDBLASE" bekommen können sicher noch mehr "Nahrung"... ;-)

"GOLD BUBBLE CHART" ;-) from Todd Harrison / Minyanville via Pragmatic Capitalist

I highly recommend to read the entire links & to subscribe to the free Sprott Asset Management Newsletter.... No wonder the IMF has just Superzised Their "Backup Rescue Facility" By Half A Trillion ( no typo ) for "Contribution To Global Financial Stability"......

In dem Link sind noch etliche andere unangenehme Weisheiten speziell im Hinblick auf Griechenland. Empfehle daher sich die kompletten Links etwas genauer durchzulesen sowie den kostenlosen Sprott Asset Management Newsletter zu abonnieren....Kein Wunder das "vorsorglich" der IMF die Mittel zur "Stabilisierung" der Sorgenkinder mal eben still und heimlich auf 500 Mrd $ verzehnfacht hat ( kein Tipfehler )....

UPDATE:

S&P cuts Portugal’s ratings two notches to A- FT Alphaville

S&P cuts Greece ratings to junk status MW

S&P Downgrades Spain To AA On "Risks To Budgetary Position", Outlook Negative ZH

Eric Sprott Still Makes A Lot Of Sense......

2010-04-15T22:41:00.000-07:00

I admit, i´m biased.... My views on GOLD, Sovereign Debt,China, Banks & Markets are almost identical.... UPDATE: After todays really "shocking" & "surprising" GOLDMAN news i assume the "complacency" is now at least for a fews days over... So far this has been the perfect excuse to take profits after almost 50 days since the S&P 500 has had a pullback (one-day or multi-day) of 1%....The "Dumb Money" indicator is also hitting extreme levels... As a bull this won´t give me much comfort.... Monday will show if this in context of the bigger picture irrelevant news has the potential to be the trigger to finally play this market from the short site or if all the "famous" money on the sideline will buy the dip ....Overall i hope that this will give the "VOLCKER RULE" & a much tougher regulation a much needed boost....

Muß zugeben das ich da etwas voreingenommen bin..... Meine Meinung zum Thema GOLD,Sovereign Debt,China, Banks & den Märkten unterscheidet sich nur unwesentlich..... UPDATE: Nach der heutigen "schockierenden" GOLDMAN Meldung dürfte die grenzenlose Sorglosigkeit dürfte zumindest für ein paar Tage vorbei sein.... Bisher sind das lediglich Gewinnmitnahmen nachdem der S&P 500 fast 50 Handelstage keinen Tagesverlust von größer als 1% ausgewiesen hat....Zudem notiert der "Dumb Money" Indikator in extrem luftiger Höhe....Als Bulle würde mich diese Tatsachen nur noch nervöser machen.....Der Montag dürfte zeigen ob diese bei Betrachtung der in den anderen Links aufgeführten massiven Probleme eigentlich nicht wirklich wichtige Meldung das Potential den extrem heissgelaufenen Risikoappetit umzukehren & den Markt nach etlichen Monaten endlich auch für Shorts interessant machen oder aber ob das "berühmt berüchtige" Money on the Sidelines diesen "massiven" Rückschlag zum kaufen nutzt..... Bleibt in jedem Fall zu hoffen das die bereits totgesagte "VOLCKER RULE" und eine wirklich "harte" Regulierung dadurch den dringend benötigten Schub bekommt.....

H/T Jesse

He really puts his money where his mouth is.....75 percent related to GOLD, SILVER & Mining is almost unheard of & combined with his attempted & rejected bid to buy the remaining 191.3 tonnes from the IMF qualifies him for the titel "GOLD BUG OF THE YEAR".... Let´s hope his "guaranteed" physical GOLD trust ( not an ETF ) will be a running success ( UPDATE: Sprott Physical Gold Trust Announces Follow-On Offering of 18,000,000 Trust Units !! )..... This could make the dominant GOLD ETF´s quite "nervous".... The following script from Sprott is taken from an earlier post called Scarcity. That Is The Answer To The Question “Why Gold?” End Of Story ! highlighting why guys like Rosenberg & Tudor think that GOLD longterm ( short term i´m a little cautious / worried, but timing in probably one of the strongest bull market out there is very difficult UPDATE: possible GOLDMAN / PAULSON impact Net Gold Commercial Positions Surge To Multi-Month High Short Exposure) might not be such a bad idea.....

Bei 75 % GOLD, SILBER & Minengewichtung wird allerdings selbst mir schwindlig und zusammen mit seinem Vorstoss die vom IMF zum Verkauf gestellten 190 Tonnen Gold komplett zu kaufen dürfte es locker für den Titel "GOLD BUG DES JAHRES" reichen.... Drücke beide Daumen das der mit garantiert physischen GOLD hinterlegte Trust ( kein EFT ) ein Erfolg wird ( UPDATE: Sprott Physical Gold Trust Announces Follow-On Offering of 18,000,000 Trust Units !! )... Das könnte bei den vorherrschenden GOLD ETF´s doch leichte Nervosität auslösen.....Das nachfolgende Skript ist ebenfalls von Sprott und dem Posting Scarcity. That Is The Answer To The Question “Why Gold?” End Of Story ! entnommen. Wie der Titel schon sagt sind darin einige Gründe von Rosenberg & Tudor aufgeführt warum GOLD längerfristig ( Bin kurzfristig eher skeptisch, die Vergangenheit aber hat gezeigt das sich das Timing im vielleicht intaktesten Bullenmarkt überhaupt als fast unmöglich herausgestellt hat UPDATE: mögliche GOLDMAN / PAULSON Auswirkung Net Gold Commercial Positions Surge To Multi-Month High Short Exposure ) keine ganz schlechte Idee ist.....

Sprott Oct 2009 Comment

H/T ZH

Glitch In The Matrix......

2010-04-15T02:39:00.000-07:00

The "Wall Of Worry" is getting steeper...... Should the spreads remain elevated even after Greece has ""activated" the EU/IMF rescue package i think we could see the VIX spike to over 17.... ;-)

"Schockierend" .... ;-) Sollten jetzt selbst nach Aktivierung des EU/IMF Programmes die Auschläge nicht "merklich"sinken dürften mit hoher Wahrscheinlichkeit die nächste Stufe der Krise gezündet werden....

The Greek debt merry-go-round goes round again FT Alphaville

The 10-year Greek bond – German bund spread widened to 426 basis points on Thursday.

That’s up from 406bps on Wednesday — and nearing an 11-year high

Keep in mind that the bailouts are not to rescue Greece ( see Foreigners Holding 75 % of Greece’s Current Debt Stock & Bank Exposure To PIIGS / Chart ) .....

With everybody "Too Small To Fail" the prospects for a "GOLD-BUG" could be worse... ;-)

Nur zur Erinnerung, die teilweise wahnwitzigen Konstruktionen sind nur auf den ersten Blick zur Rettung der Griechen gedacht ( siehe Foreigners Holding 75 % of Greece’s Current Debt Stock & Bank Exposure To PIIGS / Chart ) ....

Da inzwischen weltweit die oberste Maxime selbst bei aussichtslosen Fällen "Too Small to Fail" ist dürften sich auf absehbare Zeit die Aussichten für einen "GOLD-BUG" nicht gerade verschlechtern....;-)

UPDATE: Fixing the Matrix........

IMF Prepares For Global Cataclysm, Expands Backup Rescue Facility By Half A Trillion For "Contribution To Global Financial Stability" ZH

EXTEND & PRETEND .......

Andie Xie: "China's Property Market Is One Of The Biggest Bubbles Ever..."

2010-04-14T08:22:00.000-07:00

We really live in very interesting times.....The update comes just in time for todays headline Property prices in China grew at the fastest pace in nearly five years in March.... The "Wall Of Worry" is getting steeper on a daily basis.... For more on the "China Syndrome" see here, here, here , here & here.....

Aufregende Zeiten.......Passend hierzu die heutige Nachricht Property prices in China grew at the fastest pace in nearly five years in March nicht passen....Eine ausführlichere Betrachtung des immer ernster werdenden "China Syndrome" gibt es hier, hier, hier , hier & hier.....

Empty : Though many of the properties in Kangbashi have been sold and a million people were projected to be living in Kangbashi by 2010, the city is still empty.

Ordos,China: A Modern Ghost Town Photo Gallery TIME

H/T The Mess That Greenspan Made

No Room To Relax Andy Xie / China International Business

The central government has unleashed another round of property tightening measures. This time it is focusing on mortgage lending terms: the mortgage interest discount for first-time homebuyers has been reduced; the discount for second-time homebuyers has been abolished and the down payment requirement raised to 40%; and the rate for third-time buyers is being left to the banks' discretion with down payments raised to 60%.

Predictably, sales volumes in both primary and secondary markets have collapsed. But no one is panicking, not even those who live off the property bubble. Why? Aren't they supposed to be terrified of the government's crackdown?

It seems we have seen this movie before. China has launched property-tightening measures several times but it relaxed them just when they began to bite.
The bottom line is that local governments, and the central government through them, depend very much on property for revenue. The market doesn't believe the government will cut off the hand that feeds it.

Local governments and developers are sitting on massive liquidity that they raised last year through land and property sales and borrowings, taking advantage of the "anything goes" window during the stimulus period. They seem to believe that the central government will change its mind before they run out of liquidity. So they are comfortable waiting and not cutting prices.

Cutting prices doesn't make sense if the government is expected to loosen policy again soon. The current lending terms effectively keep second- and third-time homebuyers out of the market. To sell, developers must cut prices to levels affordable to the buyers of first homes, who have low incomes and little wealth. All the players will play by the new rules only if the central government proves its credibility by maintaining the tightening policy until local governments and developers run out of money.

Contrary to the policies' intent, local governments are readying for another round of property inflation. Local governments have been using bank loans to resettle residents, and resettlement costs have skyrocketed since those being moved need enough compensation to buy properties at today's prices. Unless property prices rise considerably, local governments will end up losing money, which they cannot afford to do.

Resettlements played an important role in supporting demand for property last year. The overwhelming majority of end-user purchases probably came from resettled residents who used their compensation money for a down payment.
Resettlement compensation is the biggest transfer of wealth from the government to the household sector since the privatization of public housing at low prices a decade ago. It is probably the most important government action supporting today's economy.

The positive elements of resettlement compensation come with two major negatives. First, it is using a form of leverage to support demand. Local governments borrow to pay the compensation packages, using the land as collateral. The resettled residents use the compensation as down payment for mortgage borrowing; so government debt becomes equity for mortgage debt.
There is no real equity in the financing chain

China's property market is a massive bubble. The stock of residential properties, developers' inventories, and land that local governments have pledged to banks may exceed by three times the gross domestic product.

Get the yuan right, and prove pundits wrong Andy Xie / Caixin

Yuan appreciation hype ignores China's need for higher rates
The intensity and persistence of yuan appreciation expectations point to support for China's vast property bubble. These expectations have increased the concentration of hot money in China, which in turn has caused excess liquidity and speculation, fueling the property bubble.

By all measures (stock value to gross domestic product ratios, inventory value to GDP ratios, new property sales to GDP ratios, price to income ratios, rental yields and vacancy rates), China's property market is one of the biggest bubbles ever. It's probably much bigger than the U.S. property bubble relative to GDP.

Now, the same liquidity that fueled the property bubble is leading to a rapid pickup for consumer price inflation. One just needs to look around to see the seriousness of the inflation picture, regardless of how it's measured. Denying that inflation is serious in China right now is akin to burying one's head in the sand. This sort of denial is how countries in Southeast Asia got into a crisis situation in the past: They kept real interest rates too low and fueled speculation that eventually destroyed their banking systems.

If China's economic stimulus is withdrawn, the property bubble will cool. And it may even burst. This is why so many interest groups consistently argue against higher interest rates. Instead, they support using currency appreciation to cool inflation.

Many analysts argue that raising interest rates would attract more hot money. This is wrong. Hot money comes to China for currency appreciation and asset-bubble reasons, not to chase interest rates. When an interest rate is raised, expectations for property-price appreciation wane and hot money is more likely to fall than rise.

Increasing the yuan's value a bit would certainly trigger more frenzy. Any new property booms that follow may support the economy for a time. But the long-term consequences would be severe. Indeed, a small appreciation could make a crisis inevitable.

UPDATE:

Top ten reasons you know China has a financial bubble on its hands Ed Harrison

Jim Chanos On Charlie Rose - Full Interview ZH

China’s Debt Bubble: When Will the Ponzi Unravel? NC

Chinese consumer credit binge begins FT Alphaville

China - The Mother of All Black Swans ZH

Red hot real estate Economist Free Excahnge

China Bond Risk May Offset Reward WSJ