J. S. Kim (htp: Jesse) considers the $700 trillion derivatives market (worth maybe 23 times all the stockmarkets in the world), and notes that it's being used to disguise the true woeful state of the banking system. It is as though, when listing his personal assets, a compulsive big-time gambler could include all his current Lottery tickets and horse-racing betting slips:
"... when FASB suspended mark-to-market accounting rules recently, major international banks were allowed to re-value some of their derivative products closer to their notional value on their books to pad their balance sheets. Due to this change in accounting law, I can almost guarantee you that before market open Friday, Citigroup will announce better than expected financial results as they carried huge amounts of illiquid mortgages and financial derivatives on their balance sheets."
I fear that many major banks may be thoroughly ruined, and until the lying stops, effective action cannot be taken.
Tuesday, April 21, 2009
Monday, April 20, 2009
Straws in the wind, the flight of birds
Yesterday, I read the entrails and thought the market was due to tank. Today, the FTSE drops 102 points, the Dow 290. Tomorrow - "¿Quien sabe?"
Sunday, April 19, 2009
The deflationary bust
Looking around "Financial Sense"...
Professor Antal E. Fekete revisits his deflationary theory: we have passed a crucial point in debt accumulation. From now (actually, from 2006, he says) onward, the more politicians attempt to stimulate it with debt, the faster the economy will shrink. Gold, the machine's "governor" that set limits to debt, was decoupled from the system a century ago - it got in the way of war financing.
Stephen Tetreault says if there's a rise in stocks, sell: "I do not see a positive bullish catalyst in the making as we head into the earnings sector other than a potential short squeeze, relief rally that should which should be sold into." He notes that deflation means those that can, are paying down debt, but also lenders are widening the margins between the interest they pay and the interest they charge, which gives further impetus to deflation.
Tony Allison says, sooner or later energy is going to cost more. He's thinking about the right point to speculate, the rest of us should consider the effect of higher energy costs on family budgets, and therefore on how reduced disposable income will be allocated.
Captain Hook foresees a time when "the public finally gives up the ghost on stocks in general, correspondingly they will fully embrace the likelihood of deflation, which will trigger a temporary collapse in commodity prices, led by their paper representations." He thinks this will be the time when physical gold will win; I wonder whether that is so, when most of us are so dependent on an electronic system. We're not farmers, selling corn and cattle to each other; the machine cannot be allowed to stop. That's why I think there will be, for a time, a switch to currency inflation; then perhaps a rerun of the early Eighties, as someone public-spirited in public life takes unpopular action to prevent the dive into the abyss.
For E. M. Forster's extraordinarily accurate vision of the future, written in 1909, please click the last link above. Telephone, TV, a populace paralysed by lethargy and wealth in its bedrooms...
Professor Antal E. Fekete revisits his deflationary theory: we have passed a crucial point in debt accumulation. From now (actually, from 2006, he says) onward, the more politicians attempt to stimulate it with debt, the faster the economy will shrink. Gold, the machine's "governor" that set limits to debt, was decoupled from the system a century ago - it got in the way of war financing.
Stephen Tetreault says if there's a rise in stocks, sell: "I do not see a positive bullish catalyst in the making as we head into the earnings sector other than a potential short squeeze, relief rally that should which should be sold into." He notes that deflation means those that can, are paying down debt, but also lenders are widening the margins between the interest they pay and the interest they charge, which gives further impetus to deflation.
Tony Allison says, sooner or later energy is going to cost more. He's thinking about the right point to speculate, the rest of us should consider the effect of higher energy costs on family budgets, and therefore on how reduced disposable income will be allocated.
Captain Hook foresees a time when "the public finally gives up the ghost on stocks in general, correspondingly they will fully embrace the likelihood of deflation, which will trigger a temporary collapse in commodity prices, led by their paper representations." He thinks this will be the time when physical gold will win; I wonder whether that is so, when most of us are so dependent on an electronic system. We're not farmers, selling corn and cattle to each other; the machine cannot be allowed to stop. That's why I think there will be, for a time, a switch to currency inflation; then perhaps a rerun of the early Eighties, as someone public-spirited in public life takes unpopular action to prevent the dive into the abyss.
For E. M. Forster's extraordinarily accurate vision of the future, written in 1909, please click the last link above. Telephone, TV, a populace paralysed by lethargy and wealth in its bedrooms...
How much is left in the banking system?
Mark Wadsworth refers us to this US banking information, from which I extract and interpret the following:
This information is a year out of date - more, in the case of credit unions. I wonder where we are now? Ambrose Evans-Pritchard reports that US housing has dropped 29% from peak. Is the system, as some say, basically bust?
This information is a year out of date - more, in the case of credit unions. I wonder where we are now? Ambrose Evans-Pritchard reports that US housing has dropped 29% from peak. Is the system, as some say, basically bust?
Kill the old
Not my idea; but I saw it as a graffito on the back of a bus seat on the upper deck, where the schoolchildren gravitate - more than 20 years ago.
Now the FT comments on how longevity (plus the old's passion for killing the unborn and preventing conception) is going to ruin us. We think the young are selfish, and don't dare glance at their elders, who imagine they can quit their jobs in the prime of life and live like kings on the backs of their progeny and remoter descendants - or such few of them as the old permit to survive.
As Mark Steyn puts it:
“Over the next decade,” Frau Merkel pointed out, “we will undergo a massive demographic change, and, therefore, borrowing is a greater burden for the future than in a country with a much more continuously growing population, as in the United States of America.”
Translation: America can rack up multi-trillion-dollar deficits and stick it to its kids and grandkids. But in Europe there are no kids and grandkids to stick it to—just upside- down family trees: in Germany, Spain and Italy, four grandparents have two children have one grandchild. The Financial Times noted last week that the demographic death spiral is a far greater threat to fiscal solvency than the present economic downturn. And yet, despite Germany, Japan and Russia already being in net population decline, the G20 had not a word to say about it.
That bill's going to come in, and Herod himself can't prevent it. In fact, he caused it.
Now the FT comments on how longevity (plus the old's passion for killing the unborn and preventing conception) is going to ruin us. We think the young are selfish, and don't dare glance at their elders, who imagine they can quit their jobs in the prime of life and live like kings on the backs of their progeny and remoter descendants - or such few of them as the old permit to survive.
As Mark Steyn puts it:
“Over the next decade,” Frau Merkel pointed out, “we will undergo a massive demographic change, and, therefore, borrowing is a greater burden for the future than in a country with a much more continuously growing population, as in the United States of America.”
Translation: America can rack up multi-trillion-dollar deficits and stick it to its kids and grandkids. But in Europe there are no kids and grandkids to stick it to—just upside- down family trees: in Germany, Spain and Italy, four grandparents have two children have one grandchild. The Financial Times noted last week that the demographic death spiral is a far greater threat to fiscal solvency than the present economic downturn. And yet, despite Germany, Japan and Russia already being in net population decline, the G20 had not a word to say about it.
That bill's going to come in, and Herod himself can't prevent it. In fact, he caused it.
The market is going to tank
How do I know? I don't.
But I read this piece in the Grumbler.
Picture it. You are a rich broker - floated your company in May 2007 (how's that for timing?). Predicting good times ahead, you... sell £47m of your shares.
You say it's for "private projects", and throw the Mail journalist a tidbit about your beloved foopball club. The Mail journalist writing down your copy at least thinks to ask you how much of this cash will go towards the new stadium. You "decline to say".
Meanwhile, Charles Hugh Smith describes (April 18) the thinking that has led him to punt on a financial bear fund.
Straws in the wind, I'm thinking.
But I read this piece in the Grumbler.
Picture it. You are a rich broker - floated your company in May 2007 (how's that for timing?). Predicting good times ahead, you... sell £47m of your shares.
You say it's for "private projects", and throw the Mail journalist a tidbit about your beloved foopball club. The Mail journalist writing down your copy at least thinks to ask you how much of this cash will go towards the new stadium. You "decline to say".
Meanwhile, Charles Hugh Smith describes (April 18) the thinking that has led him to punt on a financial bear fund.
Straws in the wind, I'm thinking.
Wednesday, April 15, 2009
Will we ever learn?
With Sackerson away, Paddington will post some (possibly) off-topic comments.
The technology that enables 7 billion of us to survive, and provides creature comforts to those in the industrialized world, is due to a tiny percentage of talented and creative scientists, together with a core of engineers who adapted and refined the results, and a larger number who actually produce the products that we use.
Despite that, I am hard-pressed to find a society anywhere that gives those people the level of respect or adulation awarded to sports figures and entertainment personalities. The monetary rewards are far less than for the average investment or insurance agent, lawyer, accountant, or medical doctor.
In the extremist Muslim world, much of science is decried as 'anti-Islam'. Evolution, physics, and geology are under attack in at least 37 US states by creationists. Much of science is also discounted by the New Age thinkers, who don't like facts to get in the way of their own comfortable beliefs.
Yet our leaders believe that the answer to our economic meltdown is to throw money at the people who caused the crisis, and who produce nothing at all. Even at universities, where some rational thinking should be expected, the sciences are de-emphasized, since they are 'hard' and unpopular, while we build programs in psychology and business management.
Without a cultural change in these attitudes, I am fearful that we may see the end of technological civilization within a few generations.
The technology that enables 7 billion of us to survive, and provides creature comforts to those in the industrialized world, is due to a tiny percentage of talented and creative scientists, together with a core of engineers who adapted and refined the results, and a larger number who actually produce the products that we use.
Despite that, I am hard-pressed to find a society anywhere that gives those people the level of respect or adulation awarded to sports figures and entertainment personalities. The monetary rewards are far less than for the average investment or insurance agent, lawyer, accountant, or medical doctor.
In the extremist Muslim world, much of science is decried as 'anti-Islam'. Evolution, physics, and geology are under attack in at least 37 US states by creationists. Much of science is also discounted by the New Age thinkers, who don't like facts to get in the way of their own comfortable beliefs.
Yet our leaders believe that the answer to our economic meltdown is to throw money at the people who caused the crisis, and who produce nothing at all. Even at universities, where some rational thinking should be expected, the sciences are de-emphasized, since they are 'hard' and unpopular, while we build programs in psychology and business management.
Without a cultural change in these attitudes, I am fearful that we may see the end of technological civilization within a few generations.
Subscribe to:
Posts (Atom)