| | | Page 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28 | Watch, Its happening ,the global economic change.
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8/18/2007 8:30 AM | | FHL(C)
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8/18/2007 11:26 AM | | Anonymous Coward
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8/19/2007 1:34 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
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| Anonymous Coward
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8/19/2007 2:41 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
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| FHL(C)
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8/19/2007 6:34 AM | | .
User ID: 285890
8/20/2007 11:47 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
Business comment: Sub-prime crisis is the edge of a financial hurricane
By Bernard Connolly
Last Updated: 12:47am BST 20/08/2007
It is hard to overstate the seriousness of the global financial crisis. Yet the world's central monetary authorities - the central banks - have been culpably slow to recognise how dangerous things have become.
# Traders braced for another torrid week
# Oil traders keep an eye on Hurricane Dean
Initially, the crisis emerged from the US mortgage market, as payment delinquencies among sub-prime borrowers (borrowers in poor credit standing) began to mushroom. Things will get much worse as US unemployment begins rising, perhaps rapidly, making it harder for more and more borrowers to maintain timely interest and principal repayments on their mortgages.
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As long as US house prices were rising, it always seemed possible for homeowners who got into trouble to take out additional loans, in effect borrowing to finance their earlier borrowings: a classic Ponzi game. But when the oversupply of new houses in the US began forcing prices down instead of up, the avenues to ever-more borrowing were shut off, at least for late entrants into the game, the people who had been unable to build up enough equity in their houses via the earlier period of rising prices.
But US sub-prime is just the leading edge of a financial hurricane. For far too long, no-one seemed to care if borrowers would be able to service their debts: borrowers themselves seemed not to care; lenders seemed not to care; and investors in the packages of mortgage loans created by banks and sold to institutions such as pension funds seemed not to care. In short, there was a global credit bubble.
The root cause of a credit bubble is not financial market greed (though that has certainly been present) but an inappropriate level of real interest rates that sends misleading signals about the feasibility of continuing to consume today while ignoring tomorrow. In the US in the mid-1990s, the former Fed chairman, Alan Greenspan, ignored the message of the 1920s and failed to engineer a rise in real rates to match a rise, driven by optimism about productivity, in the expected rate of return on investment in the US economy.
The late-1990s result was, as in the late 1920s, a frenetic stock market boom, massive business over-investment financed by credit, not by postponed consumption (saving), and an inevitable collapse. Greenspan did manage to avoid, or at least to postpone, a re-run of the early 1930s by slashing interest rates in 2001 when the US economy threatened to fall off the edge of a cliff. That is a performance his successor is going to have to repeat now that the US housing and credit booms have collapsed.
In the US, the Fed is belatedly recognising that what is now happening is not a "healthy correction" of the previous under-pricing of risk but a virulent infection running rapidly through the financial system, threatening to inflict severe structural damage on the real economy. Its decision announced last Friday to cut the Discount Rate, the rate at which financial institutions can borrow directly from the Federal Reserve Banks, was a step in the right direction. But it will not be anything like enough.
The Fed is going to have to make very substantial cuts in the general level of interest rates if it is going to have any chance of preserving financial stability and avoiding an extremely serious recession. It will do that, even if it does not yet realise just how much it is going to have to do, because its mandate will make it do it. The Fed was created, in response to the 1907 financial crisis in the US, precisely to try to avoid further crises. And, whatever mistakes Greenspan may have made, he just got it wrong: he didn't deliberately set up this Greek Tragedy.
In contrast, the EU quite deliberately created the most dangerous credit bubble of all: EMU. And, whereas the mission of the Fed is to avoid a financial crisis, the mission of the ECB is to provoke one. The purpose of the crisis will be, as Prodi, then Commission president, said in 2002, to allow the EU to take more power for itself. The sacrificial victims will be, in the first instance, families and firms (and banks and investors) in countries such as Ireland and Club Med. Subsequently, German savers (or British taxpayers) will bear the burden of bailouts that a newly-empowered "EU economic government" will ordain.
The mechanism is plain to see. Germany entered the euro with an overvalued exchange rate. It then faced a long period of high unemployment that drove wages down and restored its competitive position. But Germany was also helped at the beginning of this process by the newly-established ECB, then dominated by the Bundesbank president, Tietmeyer, and his acolyte, Trichet, then governor of the Banque de France. The ECB initially set interest rates where Germany needed them - far too low for most other EMU countries - and allowed extreme euro weakness.
That combination, and Germany's initial uncompetitiveness, created booms in many other EMU countries. But, as in the US in the 1920 and again in the 1990s, inappropriate interest rates and temporarily booming growth totally distorted perceptions of today versus tomorrow. The result has been that firms and families in these countries have massively over-borrowed and banks and investors have massively over-lent, often on the illusory security of inflated house prices.
Several of these countries have built up enormous current account deficits. They are now the ones that over the next decade will have to restore competitiveness. But, trapped in EMU, they can do that only through unemployment and wage reductions. Very high unemployment and deflation will make debts simply unpayable. But, trapped in EMU, these countries cannot do for themselves what Greenspan did and Bernanke will have to do - slash interest rates. And Tietmeyer's successor, Weber, will be striving to ensure the ECB does not do it for them. The resulting carnage in the financial system of the whole euro area will make the present global financial crisis, serious though it is, seem almost insignificant.
Eventually, when things have got bad enough, the German public will be forced to acquiesce in lowered interest rates and high German inflation. But by then the EU will have taken the opportunity to seize control of the financial system (cheerfully punishing the London financial "casino" in the process), dictate budgetary policies, extort bail-out transfers from countries such as Britain and impose exchange controls with the rest of the world (and even, as reportedly threatened in a 1998 meeting of the EU Employment Committee, impose exit taxes - expropriation of life savings - on people seeking to flee the EU). And it will seek to "democratise" this power grab by instituting an emergency "European government".
Would Britain resist? The revived "constitution" now being rammed through allows future constitutional changes to be made just on the say-so of a cabal of heads of government, with no need for ratification. Would any British prime minister be prepared - or be allowed - to do his duty and say no in such a carefully-manufactured emergency?
The history of the past fifty years offers no reassurance whatsoever.
# Bernard Connolly is global strategist for Banque AIG and the former head of economic research for the European Commission Watch. |
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User ID: 285890
8/21/2007 12:24 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
Central banks are stealing from the average citizen
What happens when fiscal irresponsibility gets rewarded with bailouts? You get more fiscal irresponsibility. Let's stop rescuing greedy financiers and investors.
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By Bill Fleckenstein
As regular readers know, I have been a longtime critic of the Federal Reserve. Not too far back, that view was a decidedly minority one.
But as our credit bubble undergoes an ugly unwinding, it's dawning on folks that central banks lie at the epicenter of the problem. Andy Xie nailed it in Tuesday's Financial Times, which is why I've chosen to begin my column with quotes from his article "It's time for central banks to stop bailing out markets."
The bailout stops here
He writes: "The global credit bubble is bursting. This bubble is primarily leverage financing for owning risky assets. The people who were responsible for what happened played with other people's money, marketed arcane financial products with false promises of fat profits, but stuffed their own pockets with big bonuses. Neither these masters of the universe nor their greedy but naive investors deserve to be bailed out. They deserve what is coming to them.
"The central banks should focus on price stability, not financial market stability, and should provide liquidity only to contain the multiplier effect of the bubble bursting on the economy. Nor should central banks stimulate to avoid recession at any cost. Business cycles are not bad. Excesses must be followed with cleansing. . . .
"Markets have been taking more risk than they should because they believe that central banks will come to their aid during times of crisis, like now. The penchant of Alan Greenspan, former U.S. Federal Reserve chairman, to flood the market with liquidity during financial instability is the genesis of this 'central bank put.' As long as this expectation remains, financial bubbles will occur again and again. Now is the time to act. Let the crooks go bankrupt. Central banks should bury the Greenspan 'put' for good."
More from MSN Money
Traders © Digital Vision Ltd. / SuperStock
* Credit problems are too big for the feds to fix
* How far will the credit crunch spread?
* Why your 'cash' may not be safe
* How analysts missed a meltdown
* Warning: This mess will only get worse
All I can say is amen to that -- and hope this is how events turn out. Of course, given how central banks have behaved in the past decade, I'm not holding my breath. But perhaps this article in the Financial Times will help crystallize for them what it is they need to do. It's always possible that this time around, the central banks will let capitalism work. That could help hasten the cleansing process -- aka creative destruction -- which would be a positive development, for sure.
Illiquid versus insolvent
Similarly, folks should read what Nouriel Roubini says at RGE Monitor about the current crisis, because I think he hits the nail on the head.
Rather than being a liquidity crisis like the 1998 failure of Long-Term Capital Management -- which was more like a run on the bank and was stemmed by the powers that be -- Roubini describes the current situation as a "liquidity crisis that signals a more fundamental debt, credit and insolvency crisis among many economic agents in the U.S. and global economy."
For folks in a hurry, the last paragraph of Roubini's piece captures the essence of the problem. In the meantime, the last few lines nicely sum it up:
"We are indeed at a 'Minsky Moment' and this recent financial turmoil is the beginning of a much more serious and protracted U.S. and global credit crunch. The risks of a systemic crisis are rising: Liquidity injections and lender-of-last-resort bailout of insolvent borrowers -- however necessary and unavoidable during a liquidity panic -- will not work; they will only postpone and exacerbate the eventual and unavoidable insolvencies."
Video on MSN Money
Markets © Colin Anderson/Jupiterimages
The latest Fed cuts
The Fed cuts discount window rate by 50 basis points, with CNBC's Steve Liesman.
Turning to the intersection of big-bank and little-guy bailouts, a contact in the housing ATM notes that more folks than ever are electing not to pay their mortgages. Apparently, the thinking goes something like: "Gee, if some folks are not paying their mortgages and are going to get bailed out, why shouldn't I? Particularly if I have a little equity in my house."
That is the danger that's been created by the government talking about bailing out the housing market: A multitude of people decide to join the party and not pay. This is a slippery slope we've been going down for a long time, and it looks at long last like the problem will be too big to bail out. Bottom line: The dislocation and pain are starting to be felt throughout the financial system. We are headed to a lot of financial turmoil, and there's no getting around that.
Could the fall of Rome hit home?
Lastly, in a sad commentary about where we are as a country, U.S. Comptroller General David Walker was quoted Tuesday (also in the Financial Times), as follows: "Drawing parallels with the end of the Roman empire, Mr. Walker warned there were 'striking similarities' between America's current situation and the factors that brought down Rome, including 'declining moral values and political civility at home, an overconfident and overextended military in foreign lands, and fiscal irresponsibility by the central government.' "
Unfortunately, it seems to me that he is dead right. |
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User ID: 288611
8/26/2007 12:42 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
really significant doom, can the transformation of nation states to economic trade blocks be far behind? Will GWB become first emperor(but not king maker) of CanAmerixico.
[link to www.321gold.com] |
| Anonymous Coward
User ID: 288912
8/26/2007 9:43 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
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| FHL(C)
User ID: 289210
8/27/2007 12:11 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
FU&FW
[link to www.bitsofnews.com]
So the next time you hear the media declare that the worst of the housing market is behind us, refer to the table below. The worst ain't over.
img
History tells us it's usually foolhardy to doubt the power of the Fed to bail out financial markets, once the Fed starts a cycle of lowering interest rates. But the Fed is not all-powerful. The subprime/credit crisis is probably causing a lot of collateral damage in the multitrillion-dollar over-the-counter derivatives market. It's not like the Fed can immediately wipe the slate clean on every bad derivative trade made by hedge funds and banks. Much of the damage has already been done, no matter how the Fed responds. So this Fed easing cycle may be very different from prior ones.
It's also the case that the discount rate is more symbolic than effective in today's complex credit markets. The heart of today's credit market lies beyond the realm of old-fashioned banks…and therefore, beyond the realm of Fed rate cuts. Much of the credit risk that everyone's so worried about remains hidden on hedge fund balance sheets, transferred there via highly sophisticated derivative markets.
[link to freewordofgod.yuku.com] |
| Anonymous Coward
User ID: 289447
8/27/2007 9:36 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
Whats happening to and will do so more to the infrastructure of a bankrupt state.
[link to www.guardian.co.uk] |
| Anonymous Coward
User ID: 289447
8/28/2007 12:09 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
Aug. 25, 2007, 1:37AM
Mortgage meltdown claims new set of victims
[link to www.chron.com]
People do not have a clue what is really happening. All the talk everywhere, even by well placed people without a bone to grind politically and economically, keep calling this a failure in sub prime loans. This is presented as if securitized bonds (with the assumption that the collateral for the bonds were mortgages themselves) has lost all its value. This is not the case. What is worthless is a the mix of credit and default derivatives that make up the vast majority of many instruments held by financial and commercial paper dealing entities, both private and public.
Even if you forget that the economic figures recently released are whoppers and take them at face value as commentators are, you still have to ask why the equities market fails to do better. The answer is simple. Rallies in the equities are presently being supplied by those that understand the grave nature of the present problem.
This is why the attitude of the Fed is not commensurate with the gravity of the global problem being caused by the meltdown in credit and default derivatives.
If it was simple mortgages it isn’t apparent because as bad as the mortgage market is they have not all failed simultaneously as if all sub prime mortgage holders have been foreclosed on at once. That alone should give you a hint that the problem is not the advertised, but much larger.
The Fed altering their banking regulations has to give you a hint that the problem is not the advertised problem, but much larger.
The financial difficulty going global has to give you a hint that the problem is not the advertised problem, but much larger.
When you see bank after bank needing liquidity in substantial amounts, this has to give you a hint that the problem is not the advertised problem, but much larger
The hope for every central bank is that the real problem can be kept from public view.
[link to www.jsmineset.com] |
| Anonymous Coward
User ID: 290101
8/28/2007 10:42 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
Dollar collapse, stock market sell-off looms
Wall Street begging for Fed Funds cut, but rate already effectively lower
Posted: August 27, 2007
12:34 p.m. Eastern
By Jerome R. Corsi
© 2007 WorldNetDaily.com
With Wall Street begging the Federal Reserve to cut the Fed Funds target rate, few have noticed the effective rate already has been lowered, triggering what could be the beginning of an unprecedented worldwide dollar sell-off.
Econometrician John Williams documented in the most recent newsletter on his Shadow Government Statistics website that in the 11 trading days since the Fed has cut the discount rate, the effective Fed Funds rate has averaged 4.84 percent, ranging 25 to 50 basis points below the official 5.25 percent target rate.
The Fed Funds rate is the rate at which commercial banks may borrow excess reserves from one another. It is considered the key rate index set by the Federal Reserve Open Market Committee, or FOMC.
The minutes of the Aug. 7 FOMC are due to be released tomorrow and are certain to be scrutinized by Fed watchers for indications of the future direction of movement in Fed Fund target rates set by the committee.
Currently, Wall Street is begging for a rate ease as a return to the easy credit policy that fueled the credit markets in real estate, commercial paper and leveraged buyouts.
(Story continues below)
An unprecedented strategy of widely available easy credit has stimulated world stock markets to a string of record highs since 9/11, with the Dow Jones Industrial Average reaching a peak of more than 14,000 July 19.
To stabilize the Dow's 1,000-point drop since then, the Fed literally has printed money.
Williams estimates central banks around the world, including the Fed, have infused $1 trillion in the global banking system during the last two weeks.
While the European Central Bank has been raising rates, the drop in the effective Fed Funds rate and the reduction of the discount rate pushed the dollar down Friday to $80.68 on the U.S. dollar index, ending a brief rally that had begun in the prospect the Fed would hold rates in the face of a sell-off.
The Fed is in a dilemma. If it lowers the Fed Fund target rate, the dollar will suffer on world currency exchanges. A dollar sell-off will trigger a new stock market sell-off.
If the Fed holds or raises rates to support the dollar, it will almost certainly prompt a massive stock market sell-off.
Either way, the stock market in September and October is likely to drop below 13,000 and begin testing a new support level at 12,000.
Bob Chapman, whose International Forecaster newsletter reaches an international audience of about 100,000 subscribers, estimated in his Aug. 25 newsletter that his reconstruction of M3, an important index of the money supply, has been rising at a historically unprecedented rate of over 13 percent.
WND has reported the Fed simply stopped publishing M3 data after issuing a technically worded March 2006 announcement.
Not publishing M3 data has allowed the Fed to print money to infuse billions of new liquidity into the market following the 1,000-point August Dow decline in the current worldwide credit meltdown of real estate foreclosures and multiple forms of bad corporate debt that was allowed to be created by rating agencies that drastically underestimated risk.
Chapman agrees the dollar is at risk, writing in his current newsletter, "If Fed Chairman Bernanke cuts prime interest rates he will be abandoning the dollar, whose value will fall against other currencies and gold."
Chapman believes the current credit meltdown in the U.S. is headed toward a recession.
He notes, "Since the beginning of August, 25,000 workers nationwide have lost jobs in financial services. Since the start of the year, 40,000 have lost their jobs at mortgage institutions. We are told 20,000 have lost jobs in construction."
Even illegal aliens have been hurt, Chapman notes, writing, "In the last year, 200,000 illegal aliens have lost their construction jobs. This is far worse than in the airline industry in 2001, when 100,000 lost their jobs. We are talking about massive layoffs." |
| FHL(C)
User ID: 290244
8/29/2007 7:02 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
FU&FW
[link to www.oftwominds.com]
Global junk bond issuance has been frozen for two months. Fresh sales of collateralized debt obligations – the CDOs of subprime notoriety: a $1 trillion sold last year - have all but stopped. Banks have yet to off-load $300bn of debt from leveraged buy-out deals, forcing them to keep the liabilities on their books. They are all snake-bitten now.
Germany's Landesbank Losers (Forbes; Thanks to Albert T. for these two links)
As the European Central Bank continues to try to resuscitate the European banking system with daily injections of cash, the fate of German banks is worrying. On Tuesday the chief executive of WestLB warned that a reluctance of foreign banks to provide credit to their German peers could lead to a banking crisis in Germany.
Doesn't this indicate the inherent weaknesses hidden in seemingly "healthy" lumbering giants? The German banking market: Structural change:
The recent bank problems and closures show that the German banking industry is going through a difficult phase. Not only a few individual banks, but the industry as a whole, are affected.
This is an excellent article which details vast, profound changes in virtually every aspect of banking in Germany--corporate funding, merchant banking, investment of surplus funds, etc.
[link to freewordofgod.yuku.com] |
| FHL(C)
User ID: 290244
8/29/2007 9:38 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
[link to www.321gold.com]
Humpty Dumpty $$$
Bob Moriarty
Aug 29, 2007
All the king's horses and all the king's men
Couldn't put Humpty together again
It's very important to remember that all debt gets paid. It is paid either by the borrower or by the lender but it must in the end be paid. Right now there is about $460 trillion dollars in derivatives outstanding. Most of these are interest rate sensitive.
The $460 trillion dollars is notional value but included in the figure is trillions of dollars worth of fraud. That's far more money than even the most optimistic central bank or any group of central banks or all central banks together can possibly paper over. Someone must feel the pain for as we remember, all debt must be paid, even fictional debt.
What the Powers That Be refer to as Sub-Prime debt was better known in the industry as liar's loans. Or better and more accurately, Ninja Loans as they were termed by one inventive lender. No Income, No Job, or Assets. Ninja. Cute, very cute. I'm sure it convinced a lot of people to opt for the Ninja loans rather than the more tacky Liar's Loans.
The $460 trillion dollars in derivatives represents a giant crap game or casino some 40 times larger than the entire US economy yearly. Filled with liar's loans and Ninja loans all looking for a safe home. I've said for years that it's like a massive game of Musical Chairs where everyone in the financial world actually believed that when the music stopped, they would safely grab a chair.
What no one understood is that there are no chairs and the music just stopped. Little derivatives land mines are exploding all over the world. In the next month or so, the world's financial system is probably going to grind to a halt. Because all loans get paid. Either by the borrower or the lender.
Greenspan's opening of the monetary spigots in 2001 to remove the pain from the Dot.Com bubble has engendered a far more dangerous real estate and financial bubble all over the world. Fed by artificially low interests rates and by the Yen carry trade, derivatives exploded from just under $100 trillion dollars in 2001 to over $460 trillion dollars today.
Those are almost meaningless numbers but let me try to put it into perspective.
The annual GDP for the world is only $61 trillion. That of the United States a mere $12.2 trillion. So we have derivatives on derivatives on derivatives. The key to understanding why I am convinced we are headed directly over a cliff at once is based on the fact that in theory these trades were a zero-sum game. There was one winner and one loser for each trade and the loss was equal to the gain. But in fact, both sides were using mark-to-model and unrealistic valuations about both value and liquidity.
We just figured out how realistic the mark-to-model figures were. Hedge funds are blowing up all over the world. How bad is it going to get? There are about 4,000 hedge funds in the world. All of them are at risk. As are most commercial paper and half of the top ten banks in the world.
It's going to get far worse than anyone wants to admit. Even respected newsletter writers hesitate to suggest the truth.
It's the end of the financial system, as we know it. Central Banks might be able to paper over a few trillion dollars but the fraud is ten times what they can paper over.
Here's how absurd things are going to get. Bill Gross, aka "King of the American Bond Market" wants Bush to bail out the poor homemakers who can't afford to pay their mortgages. Let me make sure you understand this. The biggest and most powerful bond dealer in the world wants our beloved President to bail out those nice people who took out the Ninja loans. (No Income, No Job or Assets) Yea, right. And how did Bill actually pass Economics 101? Do you think maybe he is really asking Bush to bail out Bill Gross?
Get liquid. Stay liquid. Do not use margin unless you fully understand there is a great risk of losing your entire investment and more. It's time to hunker down. Everyone is going to lie to you, they all have a vested interest. I don't. I might be wrong but I'm not lying. It's going to be far worse than you can imagine.
Look for another market peak to open September and then a 6 week crash. It's going to get bloody. In the end, there will be a lot fewer hedge funds and major banks will close. It could mean the end of the dollar when the Chinese get tired of getting whacked by their trillion dollars worth of toilet paper.
At the end of the day, the only solution is a gold standard; all currencies are going to be worthless. It's going to be a real good time to own gold.
________
[link to freewordofgod.yuku.com] |
| Anonymous Coward
User ID: 160259
8/29/2007 9:42 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
The thread was made in 2005, lol funny subject (the GLP effect fully showing). |
| FHL(C)
User ID: 290244
8/29/2007 10:01 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
FU&FW
[link to www.safehaven.com]
August 27, 2007
USD R.I.P.
by Adrian Ash
"...The call for more money to fix the financial markets comes just as global inflation is beginning to cause real mischief..."
EVEN IN DEATH, it seems, you're no longer safe from the iniquities of inflation.
In Cheshire, England, a man has just been charged with stealing 400 bronze memorial plaques from his local crematorium. Bronze is 90% copper, and thanks to the price of copper quadrupling inside four years, the melt value of those R.I.P's now stands above £145,000 - some $290,000 at today's exchange rate.
Outside the Garden of Remembrance, beware the evils of inflation at dinner time, too. Fishmongers in Thailand have been disguising meat from the deadly, and therefore worthless puffer fish as salmon, reports the Associated Press, killing 15 people in the last three years.
Health and safety officials in Beijing, meantime, just raided a "recycled" chopsticks factory. It has been selling up to 100,000 pairs of used, disposable bamboo chopsticks per day, without using any kind of disinfectant first.
In the United States, "my wife came back from Wal-Mart," writes a reader of Mike Shedlock's Global Economic Analysis, "complaining about her favorite major brand chicken-breast patties going from fifteen per pack about a year ago to twelve this winter to ten per package at the same price recently."
Over at Whiskey & Gunpowder, Fred Sheehan notes the same trend - the trend of one Dollar buying less stuff with each day that passes. General Mills, the giant US foodmaker behind Lucky Stars and Cheerios, warned back in March that "input costs" were due to rise. Now the Minneapolis Star Tribune reports that, "customers will actually see lower prices per box, but the cereal boxes will be smaller, so the effect is a price increase of a few percent."
This kind of creeping inflation - Route #1 to giving you less stuff in return for each Dollar, Pound, Euro or Yen that you spend - is nothing new, of course. On the shelves of the candy store just next-door to our offices here at BullionVault in London, the King Size Mars Bar ain't what it used to be. It ain't even what the standard Mars Bar used to be, either.
"Among the things that money can't buy is everything it used to," as Max Kauffman, the comedian, joked in the 1950s. But US consumers have since lost their sense of humor. The Dollar has dropped another 86% of its purchasing power since then.
So where next for the flight to safety? Here in the United Kingdom, and despite the Pound Sterling breaking back above $2.00 already this week, the cost of living has risen 30 times over since 1945.
Put another way, the Pound - strongest of the world's five major currencies in 2007 - now buys only 3.3% of the "stuff" that it bought at the end of the Second World War. With the UK money supply still growing by 13% year on year, the trade-off between quantity and quality has only become clearer.
Less-stuff-per-Pound or Dollar is as plain a definition of inflation as you'll ever find. It works when prices rise - the common-or-garden use of the word - and it also works when rising prices are hidden by shrinking the size of what money buys.
In the inflation-crazed '70s, corporations "discovered that they could increase profits and expand market-share by degrading their product, advertising relentlessly, packaging it in a different form, and raising its unit price," reports David Hackett Fisher in The Great Wave, his grand history of price revolutions across the last eight centuries. But less-stuff-per-Dollar wasn't just a corporate strategy. It became a necessity as input prices rose across manufacturing, home-building, transport and most crucially the consumer goods sector.
David Slawson, a US economist, made a study of this "competitive inflation" in the price of chocolate bars. They rose seven-fold between the late 1950s and '83 in a series of small five-cent increments. "Each increase was disguised by the making the bar larger at the same time," he found, "the size of the bar having been gradually decreased since the time of the last price rise."
Fast forward 25 years, and what price a mid-morning Snickers as summer '07 drips through the guttering? The spot market in cocoa has taken a tumble so far this month, after forecasts of an over-sized surplus in the 2007/08 season. But the price of drinking a cup of tea in England rose by 5.5% in the year to July according to the official government data.
At the sillier end of the hot beverages market, rising prices have finally forced me to swap my favorite cup of over-priced foam for an inferior bucket of what passes for coffee. The government's statisticians might call this "substitution" - and as I'm now getting more liquid for less money, they might call the net result a drop in my cost of living, too!
But mud-flavored water - like second-hand chopsticks, unwashed and resold - does not mean the value of the cash in my wallet has risen.
"Governments are often tempted to answer the cry for more purchasing power by simply creating more money," as Jerry L.Jordan - a central banker of all people - wrote in a recent issue of the Federal Reserve Bank of St.Louis Review. "But in so doing, the opposite effect is achieved - the purchasing power of money is actually reduced."
"The result," Jordan continues, "is inflation: a rise in the number of Dollars required to purchase a given standard of living."
Put another way, the current crisis in world investment markets will only increase the quantity of money - not its quality - even if fresh central-bank lending somehow manages to bail out the world's biggest investment banks. (Bailing out US homeowners, whether through a dramatic return to the "emergency" interest rates of 2003, or by creating new money - out of thin air - to refinance their mortgage debt, will do just the same.)
One defense that cash savers and hard-put investors might choose is gold bullion. No one's credit-backed promise, and impossible to create at will, gold remains as far from today's mountain of complex financial junk as an investor can get.
[link to freewordofgod.yuku.com] |
| FHL(C)
User ID: 290244
8/29/2007 11:24 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
FU&FW
[link to www.marketoracle.co.uk]
In This Issue – Four Fingers Financial Markets Instability
* Banks Out On a Limb
* No Escape, aka “Roach Motels”
* Juggling Acts
* Return of the Resolution Trusts
As we move into September we must keep in mind that historically it is the worst month of the year for the stock markets. Years ending in 7 are particularly nasty as outlined in the July 15 th edition of the “Crack up boom” series. With the events this year, it would argue for more turmoil. As outlined in the previous edition of ‘Fingers of Instability', we are waiting for the cockroaches to emerge into the headlines and in this missive we will put a few “fingers” on them. The turmoil unfolding in the financial sectors of banks and prime brokers has a lot further to run before it will be safe to play on the long side. On the short side however, opportunities would appear to abound.
For greater insight into our publication, have a look at the Overview of Tedbits . It helps current and potential subscribers understand our mission in serving you. It also gives a broad description of what's unfolding globally and what you can expect from Tedbits as a regular reader.
Since the financials are the largest sector of the broad S&P 500 a nice sized down move can be anticipated. It's amazing how many markets (stocks, bonds, yen carry, and currencies) are arriving at Fibonacci retracements levels at the same time. We won't have to wait long to find out if this is a bounce in longer term (2 or 3 months) unwinding/re-pricing of risk or a blip in the Bull Market. My bet is on the former. Overconfidence by supposedly sophisticated investors, asset managers, and investment banks are the seeds of these unfolding debacles. In fact, the confidence levels were stretched to the point that nobody bothered to ask about the exit routes if things went awry. There are very few fire exits currently available and that is the source of these problems. Until they are devised and implemented, the problems shall continue.
Here are four “Fingers of Instability” to keep in mind:
Banks out on a limb
[link to freewordofgod.yuku.com] |
| .
User ID: 290617
8/29/2007 10:59 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
apparently not all markets are suffering, just a lot of western ones or westernised |
| Anonymous Coward
User ID: 290767
8/30/2007 10:50 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
August 30, 2007
By John Galt
Ah the good old days. When the “Uncola” meant a soft drink which created catchy commercials and sometimes a generally good memory of the days when I was younger. But now, anything with the prefix “un” implies a financial disaster on the horizon. Unfortunately, this story will not be any better. Way, way, way back on August 15, 2007, a whopping fifteen days ago (that’s nine years to Bubblevision) there was a real deadline, not an “un-real” situation as the bubblevisionistas attempted to promote. That deadline was so fixed, so real, and so ugly, it meant that fund managers actually had to “gasp” manage and financial wizards has to put their wands and secretaries up long enough to discombobulate the sudden sense of urgency being transmitted to them from their Calcutta call centers. You see, the wealthiest of Americans took one look at the poker table, and the decision was simple: No thanks, cash me out.
This meant the hedgies could not join the super wealthy at the Hamptons right away as they had to create more movement than a Larry Craig dance lesson in the men’s room stall. Suddenly, all of those financial instruments they created because they were allowed to operate overseas and behave like a bank, had to have a “value” assigned to them because their foundation, the mega-investors, demanded their cash back, penalties to be assessed and all. This unregulated “unbank” system of financial wannabes is finally coming home to roost and I’m postponing my trip to the Alps just to help explain all this to you (Don’t worry, the “Alps” is short for an Alpine butcher shop in town, not the mountains where they yodel; my Gulfstream is in the shop next to Lance Briggs’ Lamborghini). Thus the wealthiest of Americans, through their greed, ignorance and desire to preserve capital have created quite possibly the most devastating bank run in American history:
The Unbank Run.
Hedge funds became such huge success stories that everyone with a computer, the money to create a phone forwarding service in the Caymans or a boiler room operation in Mumbai, started to create a new industry that promised outlandish yields because the old mantra of “real estate never goes down, only up” was branded into the head of every American who watched those horrific Coke commercials on American Idol the last four seasons. The sad part is they convinced everyone that by offering mortgage backed securities, that safety was still there while the outlandish yield promises persisted as long as the price of real estate went up and people made their payments on time. Unfortunately, the people who had the money and time to actually make wise decisions found the appeal and promises of nine, ten and twenty plus percent yields so attractive they figured that only a few million at risk made no difference. As those fine average folks stood in line at the Countrywide branches nationwide last week, the millionaires got that sudden realization when the phone calls circumvented the globe and hit them in Monte Carlo or St. Johns; that they were in a bank run also. And the banksters, or “unbanksters” who made bank like promises of safety, security, and the ability to make money appear from behind their ears caused them to go into a tizzy and invest willy nilly. Now the real bank runs have hit home. And the unbank runs the millionaires and other investors have started will hit home. The belief that these hedgies were houses of ivory and stone was pierced when two of Bear Stearns hedge funds went into bankruptcy and rumors about every investment banker in America started to swirl. Then the realization that average people can not afford their mortgages caused another shock that there was a huge shortcoming in the new bankruptcy bill, the lack of debtor’s prisons, which meant that they could actually lose their money in the 20 to 1 leveraged Mortgaged Backed Securities that their unbanker told them were AAA safe like Treasuries.
So along comes the deadline for withdrawals from the hedge funds on August 15th and the most pressing concerns became obvious to all. First the family would have to leave without them for their vacations early. Second brokerages and investment banksters were facing wholesale abandonment as the super wealthy threatened lawsuits and complete account closure if the money was not made whole from the Cayman Casino operations the wiz kids created. After selling all of their highly liquid assets, the brokerages and banksters realized that some unbanks would have to liquidate and that might just cause a problem that they all knew about, but the public would be clueless about (that’s where us Dick Tracy historians come into the picture). The hedge fund managers in a panic called their parent companies, well, walked next door to the adjacent offices, and advised the head banksters that they would have to mark these creative financial devices they developed to market to sell them and raise cash. Of course after watching the Bear Stearns fiasco, the banksters all said “harrumph”, protested loudly and proclaimed “who dares to redeem our funds when we know what’s best for the world” and the problems started. The difference between JQP (John Q. Public) and the mega-wealthy commissioning a bank run is that we can be herded into a corner, convinced we are morons, and given a lollypop and sent along our way. The ultra wealthy, not so much. If you tell them they can not have their money, they send an army of attorneys or call their pet Congresscritter to launch an investigation which of course would reveal what almost everyone knows but doesn’t talk about. So the super banksters had to find a way to make their unbanks liquid and that meant, you guessed it, a call to Uncle Ben to get those helicopters airborne. The great academic that he is, Bernanke, thought there is no reason to get excited until the banksters whispered into his ear those dreaded words of “system failure” and that got him excited. So while the unbanks faced a bank run of their own, it became the Fed’s responsibility to fleece the taxpayers of billions of dollars to get the banksters liquid enough to pay off the investors in their foreign unbanks to prevent a real bank run at their own windows in New York. Make sense now? It shouldn’t, but sadly it does.
The dirty dark secret is that if the Fed did not act as it did, throwing money into the fire, promoting use of the discount window, and bending the law to accommodate the banksters, we would have seen a stock liquidation sale to cover the problems of the unbanks in the Caymans. We probably will still see this as the discovery that JQP can no longer afford their mortgage payments, especially when they work 20 out of 24 hours per day in 7-11’s thanks to the outsourcing of their jobs by these same mega-wealthy folks, is going to trigger another wave of derivative and bond payment defaults in the banking system. And that’s just the housing markets, just wait as word filters up that the commercial real estate market has crashed and the speculators in that business are about to stick it to the banksters and unbanksters in oh such a cruel manner.
The bottom line is that while we enjoy what’s left of summer and the mega-wealthy vacation in their palaces around the world, there is an unbank run underway. These hybrid animals created to speculate with our fiat currency under the impression that they would get taxpayer protection (which they are) are unwinding in such a fashion that there can not be a happy ending. Once the mega wealthy get their monies out, the impact will finally hit Main Street, USA in such a manner that the panic will make the early 1930’s look like a church social. The concerns people have about their retirement programs and the stability of the banking system are completely justified, as the people that manage both are the same ones who created the unbanks in an effort to circumvent regulatory supervision and fleece the middle class just one more time. The implosion is going to be of historic proportions, as when the unbank run ends, the real bank runs begin. Countrywide’s televised fiasco of long lines and upset customers was just a test drive for the future.
The individuals who had the common sense to see this coming, and got their money out ahead of time, get to watch the entire thing unfold before their eyes in the luxury of their own homes. And the even smarter souls who purchased precious metals as insurance against just such incompetence will have the ability to sleep at night and realize that the historical reality that all fiat currencies fail will come true once again. On the flip side, those that did not will at least get a lollipop and an IOU to sleep on. For some strange reason, I just do not think the power company will accept the lollipop to keep the lights on, even as the foreclosure and eviction notices are served. |
| Anonymous Coward
User ID: 291091
8/30/2007 11:44 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
Bank warns emergency borrowers
By Chris Giles and Peter Thal Larsen in London
Published: August 30 2007 20:13 | Last updated: August 30 2007 20:13
The Bank of England has warned financial institutions authorised to use its emergency lending facility that they are not supposed to discuss it publicly.
The warning came after it announced on Thursday that the facility had been tapped for a second time since turmoil gripped global money and credit markets.
On Wednesday, one or more banks borrowed £1.55bn ($3.13bn) overnight from the central bank, reigniting fears that UK banks faced severe liquidity difficulties and sending sterling and money markets sharply lower.
The overnight rate in the interbank market spiked higher to 6.13 per cent, almost 0.4 percentage points higher than the Bank of England’s official 5.75 per cent rate. The pound initially fell 0.5 per cent to $2.0046 against the dollar before recovering ground to close slightly up in London at $2.0160.
But the fears in the market appeared to be groundless last night. It is understood that the lending facility was used for operational reasons and not because a UK-based bank faced a sudden shortage of sterling.
The amount borrowed was large but the circumstances were understood to be of a technical nature. At the end of June other technical problems led to nearly £4bn being borrowed using the same facility.
The Bank of England stands ready to lend unlimited amounts at a rate of 6.75 per cent, one point above its official rate, in a facility that has been used 14 times already this year.
On Wednesday afternoon, the link between Crest, the UK settlements house, and the Bank of England’s electronic settlements system, broke down for an hour, potentially interfering with banks’ transactions. Crest said that it had extended the deadline for settlements by an hour in order to clear any backlog, and had not received any complaints.
Use of the Bank of England’s reserve facility, which goes largely unnoticed in calm markets, has been the subject of intense scrutiny in recent weeks as investors search for signs of financial distress. Last week, Barclays was drawn into an embarrassing dispute with HSBC, its UK rival, after being forced to borrow £314m from the reserve facility.
After the central bank’s warnings to users not to comment publicly, all the UK banks contacted by the Financial Times yesterday declined to comment.
[link to www.ft.com] |
| Anonymous Coward
User ID: 291091
8/30/2007 11:47 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
LONDON (Dow Jones) -- The chief executive of one of Germany's largest state- backed banks warned that foreigners were increasingly loath to extend credit to financial institutions in Europe's largest economy, which could spark a crisis.
"We sense reluctance on the part of foreign partners to extend credit to German banks," WestLB CEO Alexander Stuhlmann told journalists on the sidelines of a bank event, according to wire service reports.
"If we have a banking crisis in Germany with other countries cutting us off, then other banks will also face difficulties."
His comments come days after a German lender, SachsenLB, said it required a credit line of 17.3 billion euros ($23.2 billion) because of the investments it had made in securities affected by the U.S. subprime mortgage crisis. IKB Deutsche Industriebankrequired a similar bailout.
Both SachsenLB and IKB operated companies called conduits that issued short- term paper and then reinvested the proceeds in higher-yield, longer-term debt -- such as the residential mortgage-backed securities that have declined in value as poorer Americans default on risky mortgages.
A U.K. fund on Monday disclosed a similar problem.
But unlike the U.K. fund, SachsenLB and IKB were all or partly under government control, and that's one of the problems in Germany.
Germany is widely perceived as an "overbanked" country: there are more banks in Germany than in the U.K., France and Italy combined.
In turn, private-sector banks such as Deutsche Bank (DB) or state-backed institutions such as SachsenLB look overseas or to aggressive trading strategies for profit.
Stuhlmann has been CEO of WestLB since the end of July. His predecessor was ousted in the wake of losses from making bets on the moves of difference classes of shares in companies such as Volkswagen.
He insisted WestLB's liquidity was "very, very good," with limited exposure to the subprime sector. First-half results, to be released on Aug. 30, won't result in a "shockwave," he said.
Many analysts expect consolidation of the German savings banks, with the largest, Landesbank Baden-Wuerttemberg, widely considered a good fit with WestLB. |
| Anonymous Coward
User ID: 291091
8/30/2007 11:48 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
"its illusory though because the amount being borrowed is in reality far larger because of leverage,
when the fed allows 10 billion to wash into the pipes it represents anywhere from 300 billion to a trillion dollars in an environment where the debt obligations are leveraged from 30 to 100 times,
when the banko del englesi allows a bank to borrow 4 billion overnight it is servicing far higher numbers" |
| Anonymous Coward
User ID: 291091
8/31/2007 12:25 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
[link to www.moneymorning.com]
This $900 Million Bet Has Global Traders Talking…
By Keith Fitz-Gerald
Contributing Editor
Insiders trade when they know something. They’re not supposed to, but they do anyway. It’s just a fact of life.
Most of the time, it’s pretty petty-ante stuff, but occasionally a trade comes along that makes even jaded professionals like me sit up and take notice.
Just such a trade surfaced last Wednesday when anonymous parties agreed to buy and sell 120,000 SPY September call options using deep-in the-money strikes ranging from 60 to 95.
If you’re not options savvy, don’t worry. SPY (AMEX: SPY) – also referred to as a “Spider” in trader parlance – is an exchange-traded fund (ETF) that mimics the performance of the stock market’s closely watched Standard & Poor’s 500 Index (INX). These strike prices equate to a SPY trading between 600 and 950, or roughly 35.81% to 59.46% below where it was Monday.
Any way you cut it, this is a monster trade because it controls 12,000,000 SPY shares. In fact, at a blended price of $7,500 per option, this works out to a $900 million bet that will play out by Sept. 21, when these options expire.
Why haven’t you heard about this on your favorite cable TV money show, or read about it in the business section of your favorite newspaper? Simple: There are just so many possible explanations for this trade that your head would spin. The chances are good that the current lot of reporters just aren’t able to make heads nor tails out of this deal; and with nobody talking, there are simply no warm bodies to interview.
But that hasn’t stopped the professionals in the trading community from trying to figure it all out. In fact, since the trade first came to light about a week ago, the professional trading community I’m a part of has been abuzz with conjecture. That alone makes this a highly unusual trade because – like any small, professional community – we can usually figure out who’s doing what to whom and why – without even having to rely on more than one or two educated guesses. We just know.
But this time around, nobody’s talking.
Naturally, this silence has put the conspiracy theorists on edge and set the blogosphere aflame. Most of the theories are outrageous, but there are a couple that – quite frankly – aren’t so farfetched and even make some sense. But I have to stress, once again, that nobody who’s actually a party to either end of this transaction has been identified or is talking, which makes this all the more noteworthy – and maybe even a little spooky.
So absent the “who,” let’s take a moment and see if we can’t focus on, and figure out, the “why.”
Pushing aside anything that has to do with UFOs, the “third gunman” on the grassy knoll, the Philadelphia Experiment, or the Soviet K-129 submarine’s failed nuclear strike on Pearl Harbor, my experience as a longtime global-capital-markets trader tells me that there are actually some very real and very rational possibilities amidst the wild hypotheses circulating on the Internet. But, they’re just that – possibilities. And even with my admittedly conservative analysis, the scenarios I provide here could be wrong … either completely, or in part. Conversely, there may be an element of truth to one or more of these.
So let’s take a look at several of the possible scenarios that I’ve crafted for you.
A ‘Dividend Capture’ Strategy: Such a trade could conceivably be part of a monster dividend capture strategy used by several hedge funds, or even one of my favorite mutual funds, the Alpine Dynamic Dividend Fund (ADVDX). If ETFs are more your speed, check out the Alpine Global Dynamic Dividend Fund (AGD) or the Alpine Total Dynamic Dividend Fund (AOD). Under this scenario, it’s possible that whoever bought these options will exercise them immediately prior to securities going ex-dividend on Sept. 21, before dumping or selectively rotating out of stocks that don’t immediately take off upon dividends being issued. Such a trader would profit from a rise in the SPY.
A Major ‘Covered Call’ Play: If this is the scenario, we’re talking about one of the largest covered-call plays in recent memory, if not market history. In contrast to retail investors who commonly use out-of-the-money strategies, many professional traders like me prefer to use deep-in-the-money covered calls that reduce risk and enhance returns at the same time. It’s a volatility play that you won’t read about in any options trading textbook. But it’s also one that doesn’t require a trader to go this deep in the money to pull off, which would make this scenario a bit too strange. [Incidentally, I’ll be talking about this particular trade, as well as some of my other favorite options-trading strategies at the World Money Show in Florida next year].
A China ‘Dollar Dump’ Play: China hasn’t been stung by the subprime-mortgage mess – or, if it has, it hasn’t reported it, yet. But what if its financial system has been torpedoed by this growing global credit crunch? Well, although China has publicly promised not to, one possible consequence is that the country’s government may be planning to dump dollars in the next few weeks. This would obviously create havoc in the U.S. financial markets, but it would also subsequently give whoever shorted these options the chance to buy them back for pennies on the dollar after a knee-jerk “correction” that creates panic selling sometime over the next three weeks. Assuming China can even collect a mere $5 per option, the victor in this scenario would bank a cool $60 million for their efforts. A $10 profit per option would net $120 million, excluding carry and execution costs … (but with that many zeros, why sweat that “small stuff.”
The Dark Possibility: The fourth and final possibility I see out there is considerably more ominous. In essence, this trade potentially suggests that a very large player has effectively sold his or her SPY holdings for cash, without pressuring the market downward. If this is true, whoever placed this trade is essentially betting that the SPY – and, by extension, the broader market – will lose anywhere from 35% to 55% of its value in the next three weeks. Now – and I stress this – the “why” here is moot to even discuss; we have no idea what their thinking or motivations might be. What is important to understand here is that if this scenario is correct, whoever sold out did so to maximize the value of their SPY holdings, while at the same time avoiding the potential loss in value that such a large block transaction would inevitably cause under normal market operations.
Stick To The Facts
My advice is that this trade is an important piece of information for investors. Sure you can read the conspiracy theories or plug into the professional traders network, but at the end of the day, all you’ll be left with is still more conjecture.
That’s why I’ll stop short of advancing my own theories as to who made this trade and why.
Instead, I urge you to focus on the facts that we know, which is that somebody traded some very large blocks of options at some very unusual price points a mere three weeks prior to expiration. This means that at least one-half of the traders involved expect something big to happen, and pronto, while the other half hopes that nothing will happen – and feels confident enough to believe that they’re correct.
Interestingly, since I’ve been investigating this admittedly fascinating topic and talking about it at length with my network of professional trading colleagues, there’s been continued trading in the September 60, 65 and 70 strikes, which have added another 6,000 lots of open interest between them in the last few days.
Now for the $64,000 question…
How To Play This Information
There are clearly two courses of action available to individual investors, and each is uniquely dependent on what the investor thinks that this trade suggests.
Investors who believe this trade suggests an upside opportunity. If you see this big options transaction as a harbinger of higher stock prices, you could effectively cover your SPY trades with one deep-in-the-money SPY call option for every 100 SPY shares you own, and capture the volatility skew this trade exploits on the call side when your SPY shares are called out at expiration. Depending on your basis, you could conceivably use strikes as low as the mystery traders did to achieve that objective.
Investors who view this as a “preview of coming attractions,” that consists mostly of a sharp sell-off in stocks. If you’re more of a “half-empty” type of thinker, and expect stock prices to fall, you could buy a “grundle” of SPY puts at those same strikes – 90 and lower – for between 0.03 cents and 0.05 cents per lot (at least, that’s where they were trading as I write this). Then, if the market does tank for whatever reason in the next three weeks, you will benefit not only from the fall in price, but also from the resultant explosion in volatility that goes with such an event. The beauty of this trade possibility is that – depending on how far and how fast the market falls – you may not even have to see your puts come into the money to profit if you’re nimble enough. The obvious limitation in this scenario is that the time-value component of each option decays at a very high rate, and is working against you, meaning that the odds are very high that you’ll lose all of the money you use to purchase your put options if nothing ends up happening.
The Bottom Line
The bottom line here is that we may never know who placed the trades. But what we do know is that the trades were placed, and that other investors are apparently piling on for reasons that will only become known in hindsight – if at all.
And this, my friends, makes the trades noteworthy – if for no other reason than they are, like so many things in the global capital markets these days, a complete enigma at the very moment the decisions you must make are at their toughest. |
| FHL(C)
User ID: 294723
9/7/2007 1:37 PM | | Re: Watch, Its happening ,the global economic change. | Quote |
with thanks to thread poster and 007
[link to www.godlikeproductions.com]
007
User ID: 294719
9/7/2007 12:49 PM
Report abusive post
Re: GOLD-- ROCKET IS LAUNCHED ! Quote
I think you should buy some gold.
maybe 3 kilos. About same size as three cigarette
packets.
it is insurance for you. Gold is no risk of people tell lies. Gold is always money everywhere in the world. Gold is money for 5000 years. USDollar only 200 years already no good.
Gold is very cheap still.
1980 Gold Price was $860 USD today only $700 USD
.. house 1980 maybe $100000 today house $500000 and more. House very very overpriced ....Gold very very cheap.
Physical Gold in world very small amount .... paper gold in world very large ammount ..... price kept low for 30 years by making paper gold ,
shares and futues ..
price to buy gold is world price in USD plus 1%
price to sell gold is world price in USD less 1%
nobody makes commission
currency conversion at wholesale exchange rates not tourist rates so no loss
on exchange rate.
should be same price in every country
[link to freewordofgod.yuku.com] |
| Anonymous Coward
User ID: 295024
9/8/2007 3:25 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
> All
Posted On: Thursday, September 06, 2007, 6:00:00 PM EST
Streettracks Gold ETF Astounds, Adding 13.99 Tons In One Day
Author: Dan Norcini
Dear CIGAs,
In another stellar performance, the Streettracks Gold ETF added an astonishing 13.99 tons of gold today ( a 2.65% daily increase), bringing the total holdings to 542.35 tons and setting another new record high for gold holdings. I mentioned yesterday that an increase of this percentage size has not been seen since January 2006. I did not expect to be able to write the same thing again today.
At this rate, I am going to have to adjust my chart to accommodate the new levels of gold in storage. I set the upper boundary at 550 tons not realizing that it would be reached so quickly. A bit of math shows that gold holdings have jumped a whopping 16.8% or 77.98 tons since the beginning of July. That is outstanding investment demand.
Dan |
| Anonymous Coward
User ID: 295024
9/8/2007 3:27 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
Florida Housing 1920s Redux: History repeating in Florida and Lessons from the Roaring 20s.
History has a mysterious way of creeping up on those that fail to study it. Somehow, with all the talking heads going crazy, you would think this housing market has no parallel in history. When you hear that the national median home price has never gone down there is always the caveat of “since the Great Depression.” I’ve written 3 articles about the Great Depression (letter from a lawyer, letter from a president of a bank, and 3 main reasons why this bubble is worse) highlighting eerie similarities of this credit bubble to the Roaring 20s. Keep in mind during the 1920s the nation was engulfed with Coolidge prosperity and all things business were here to stay. In fact, today we are going to examine a few paragraphs from an amazing book by Frederick Lewis Allen called Only Yesterday written in 1931 which examines the decade of the 1920s in great detail. A reader of this blog recommended this book sometime ago and I'm glad I had the chance to read this in depth analysis of the 1920s from an author with an uncanny ability to retell history. Dispute it all you want but there is a chapter in the book called Home, Sweet Florida that if one didn’t see the date, could be published in the Miami Herald dated 2007.
[link to drhousingbubble.blogspot.com] |
| Anonymous Coward
User ID: 295024
9/8/2007 3:28 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
Let us compare and contrast the past with our current housing debacle:
“There was nothing languorous about the atmosphere of tropical Miami during that memorable summer and autumn of 1925. The whole city had become one frenzied real-estate exchange. There were said to be 2,000 real-estate offices and 25,000 agents marketing house-lots or acreage. The shirt-sleeved crowds hurrying to and fro under the widely advertised Florida sun talked of binders and options and water-frontages and hundred thousand-dollar profits; the city fathers had been forced to pass an ordinance forbidding the sale of property in the street, or even the showing of a map, to prevent inordinate traffic congestion. The warm air vibrated with the clatter of riveters, for the steel skeletons of skyscrapers were rising to give Miami a skyline appropriate to its metropolitan destiny. Motor-busses roared down Flagler Street, carrying "prospects" on free trips to watch dredges and steam-shovels converting the outlying mangrove swamps and the sandbars of the Bay of Biscayne into gorgeous Venetian cities for the American homemakers and pleasure-seekers of the future. The Dixie Highway was clogged with automobiles from every part of the country; a traveler caught in a traffic jam counted the license-plates of eighteen state among the sedans and flivvers waiting in line. Hotels were overcrowded. People were sleeping wherever they could lay their heads, in station waiting- rooms or in automobiles. The railroads had been forced to place an embargo on imperishable freight in order to avert the danger of famine; building materials were now being imported by water and the harbor bristled with shipping. Fresh vegetables were a rarity, the public utilities of the city were trying desperately to meet the suddenly multiplied demand for electricity and gas and telephone service, and there were recurrent shortages of ice.”
So first we must realize that real estate frenzies have occurred in the past. In addition, the idea of people waiting to bid on property not currently built occurred during the 1920s in Florida. And all those high-rise condos waiting to come online in 2008 or 2009? Florida again seems to be ground zero of the real estate frenzy. Even the out of town investors going zero down on a mortgage for a property that isn’t even built is something that happened long ago. Reminds many people of the multiple license plates in Arizona a few years ago of people extending their credit to buy a pre-fab construction only to flip it a few months down the road. Like any boom, this didn’t happen overnight back then either. What events led to Florida being the prime location? Let us take a look: |
| Anonymous Coward
User ID: 295024
9/8/2007 3:29 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
“For this amazing boom, which had gradually been gathering headway for several years but had not become sensational until 1924, there were a number of causes. Let us list them categorically.
1. First of all, of course, the climate-Florida's unanswerable argument.
2. The accessibility of the state to the populous cities of the Northeast-an advantage which Southern California could not well deny.
3. The automobile, which was rapidly making America into a nation of nomads; teaching all manner of men and women to explore their country, and enabling even the small farmer, the summer-boarding-house keeper, and the garage man to pack their families into flivvers and tour southward from auto-camp to auto-camp for a winter of sunny leisure.
4. The abounding confidence engendered by Coolidge Prosperity, which persuaded the four-thousand-dollar-a-year salesman that in some magical way he too might tomorrow be able to buy a fine house and all the good things of earth.
5. A paradoxical, widespread, but only half-acknowledged revolt against the very urbanization and industrialization of the country, the very concentration upon work, the very routine and smoke and congestion and twentieth- century standardization of living upon which Coolidge Prosperity was based. These things might bring the American businessman money, but to spend it he longed to escape from them-into the free sunshine of the remembered countryside, into the easy-going life and beauty of the European past, into some never-never land which combined American sport and comfort with Latin glamour-a Venice equipped with bathtubs and electric iceboxes, a Seville provided with three eighteen-hole golf courses.
6. The example of Southern California, which had advertised its climate at the top of its lungs and had prospered by so doing: why, argued the Floridians, couldn't Florida do likewise?
7. And finally, another result of Coolidge Prosperity: not only did John Jones expect that presently he might be able to afford a house at Boca Raton and a vacation-time of tarpon-fishing or polo, but he also was fed on stories of bold business enterprise and sudden wealth until he was ready to believe that the craziest real-estate development might be the gold-mine which would work this miracle for him.
Crazy real-estate developments? But were they crazy? By 1925 few of them looked so any longer. The men whose fantastic projects had seemed in 1923 to be evidences of megalomania were now coining millions: by the pragmatic test they were not madmen but-as the advertisements put it- inspired dreamers. Coral Gables, Hollywood-by-the-Sea, Miami Beach, Davis Islands-there they stood: mere patterns on a blue-print no longer, but actual cities of brick and concrete and stucco; unfinished, to be sure, but growing with amazing speed, while prospects stood in line to buy and every square foot within their limits leaped in price.”
Did someone write this yesterday? The book title is still accurate even though 1931 is a distant memory. |
| Anonymous Coward
User ID: 295024
9/8/2007 3:31 AM | | Re: Watch, Its happening ,the global economic change. | Quote |
By 1927, according to Homer B. Vanderblue, most of the elaborate real-estate offices on Flagler Street in Miami were either closed or practically empty; the Davis Islands project, "bankrupt and unfinished," had been taken over by a syndicate organized by Stone & Webster; and many Florida cities, including Miami, were having difficulty collecting their taxes. By 1928 Henry S. Villard, writing in The Nation, thus described the approach to Miami by road: "Dead subdivisions line the highway, their pompous names half-obliterated on crumbling stucco gates. Lonely white-way lights stand guard over miles of cement side- walks, where grass and palmetto take the place of homes that were to be .... Whole sections of outlying subdivisions are composed of unoccupied houses, past which one speeds on broad thoroughfares as if traversing a city in the grip of death." In 1928 there were thirty-one bank failures in Florida; in 1929 there were fifty-seven; in both of these years the liabilities of the failed banks reached greater totals than were recorded for any other state in the Union. The Mediterranean fruitfly added to the gravity of the local economic situation in 1929 by ravaging the citrus crop. Bank clearings for Miami, which had climbed sensationally to over a billion dollars in 1925, marched sadly downhill again:
1925.............................$1,066,528,000
1926................................632,867,000
1927................................260,039,000
1928................................143,364,000
1929................................142,316,000
And those were the very years when elsewhere in the country prosperity was triumphant! By the middle of 1930, after the general business depression had set in, no less than twenty-six Florida cities had gone into default of principal or interest on their bonds, the heaviest defaults being those of West Palm Beach, Miami, Sanford, and Lake Worth; and even Miami, which had a minor issue of bonds maturing in August, 1930, confessed its inability to redeem them and asked the bondholders for an extension.
[link to drhousingbubble.blogspot.com]
much more there |
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