Financial topics

[xakzen]

From the article below it is clear that insiders are not buying their own BS about valuations and the "emanate recovery" :

http://www.bloomberg.com/apps/news?pid= ... refer=home

Me thinks the sanguine cheer leading will soon turn to "Sell in May ..." and "buy the dips" platitudes until the market is hitting new lows by which time anyone still listening to these yahoos will be "all in"

[malleni]

> Could you please develop a discussion about influence of Chinas
> enormous Inflation vs. US enormous Deflation?

I don't understand this. Are you saying that the rembini will
undergo hyperinflation? How did you arrive at that conclusion?

Yes.

I probably reading same informations as you, but we obviously do not see the same trends.
Just some of them (some were already posted here):
http://forexdaily.org.ru/Dow_Jones/page.htm?id=397089
http://www.bloomberg.com/apps/news?pid= ... refer=asia
http://www.chinadaily.com.cn/bizchina/2 ... 660085.htm
http://www.chinadaily.com.cn/language_t ... 451682.htm

For me it looks like you (as many other "Anglo-Saxons") believe that China will continue to finance US debt to Eternity...
I do not think so.
I think that China is in some kind of prison (USD) and desperately try to find way - out.
Actually, it look like China (same as US -(sadly for US)) will try to find way out crises - in SPENDING.
AND only in Chinas case - this is probably only way out of the "dollar trap".
The only way out for me looks like China will inflate... enormously.

China has been in a constant "war" with the inflation caused by the dollar peg (similar as other countries around the World - but much stronger!).
Economic growth and sterilization operations alone have not been enough to absorb the growing liquidity, and China has been forced to turn to ever more drastic steps in its efforts to contain inflation. These stifling policy measures together with its sterilization efforts have enormously suppressed domestic demand and have distracting the government from developing key services enjoyed by other developed nations.
With Chinese authorities sidetracked by their export oriented focus and battle with overheating, the development of key government services enjoyed by other developed nations has been neglected.
Now what they try to do?
The PBOC bills are what China uses to mop up the yuan it prints because of the dollar peg.
Now the since Trade surplus is running around a record 40 billion (monthly!) and none of that is going to be sterilized, China's money supply is set to explode.

Now - lets take a look on the Chinese banks.
So if you looking just banking sector in China (and compare with US):
http://www.newsweek.com/id/178029
http://in.reuters.com/article/asiaCompa ... 4120090106
http://www.financeasia.com/article.aspx?CIaNID=92267

Since you are, as always "in Deflation" thoughts (even for China!) here is something very interesting with many links too, which you can probably just love:
http://www.moneymorning.com/2009/01/08/china-economy/
This article (written in January 2009) explains that the Chinese banks are hoarding cash and that the velocity of money in China is moving at a crawl.
Wow! Deflation In China?
No - of course - not.
If you considerate previous (newer articles) it is obviously that "something" happened in China. Obviously from plenty of sources that china is "underleveraged" financial system. (With other words - it is impossible to "deleverage" besides short fear (based on - what?) of "World deflationary spiral")
Once money starts moving again (and it obviously has already started!), there will be rampant inflation.


Influence of cash rich China on US deflation I tried to explain in simple example with grain on the other topic (deflation vs. inflation).
In short, prices in the US (and World) of "things we need to have" (food, energy, metals...) has very difficult to decrease since China will be buying those things immediately in order to - escape "dollar trap"!
The prices of US housings, cars, other real estates (US made) - will crushed... (they are "overleveraged" i.e. overvalued - and actually have NO use for others than for owners in US.)
The prices of the US (remained) industries - will continue to plunge until they are either destroyed or bought very cheep (time when Chinese price level=US price levels).


That is something about China and US relations as I see it.

Of course, I understand that those are just thoughts and can be incorrect too.

Regarding, your other questions (i.e. East Europe) I will write something soon.

Kind regards

[aedens]

https://www.cia.gov/library/publication ... 6rank.html

Nobody is clear what business taxes, regulations, and rules will be over the next few years. So, businesses have stopped expanding, stopped spending, and stopped hiring.
Yea predicated business cycles exist. The commentary is self evident on the consumer and many are saving more. As someone noted, in China, the local government will kick out the current farmers, build the factory, and get government credit if you open something. They will also ignore it if your workers die off like flies from lack of concern about safety or you dump toxic waste into the local water supply.
A leader in the easy money policy of late 1929 and 1930 was once more the New York Federal Reserve, headed by Governor George Harrison. The Federal Reserve, in fact, began the inflationist policy on its own. Inflation would have been greater in 1930 had not the stock market boom collapsed in the spring, and if not for the wave of bank failures in late 1930. (Rothbard, America's Great Depression p 240.) The the money supply increased during the time from June 30, 1921 to June 30, 1929 from $45.3 million to $73.26 milliion. (Rothbard p 92) In fact, if you read Rothbard's work, you might find in chapter 9 that the reason the money supply stayed "almost constant" from 1930 to 1931 was because the Federal Reserve was trying desperatly to keep the easy credit flowing.

As for today news. "Asked about the balance of financial power between China and the United States, one of the Chinese government’s top monetary economists, Yu Yongding, replied that “I think it’s mainly in favor of the United States.” He cited a saying attributed to John Maynard Keynes: “If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy.” "The abrupt slowdown in China’s accumulation of foreign reserves instead seems to suggest that investors were sending large sums of money out of mainland China early this year in response to worries about the country’s economic future and possibly its social stability in the face of rising unemployment." Does the Party believes it can outrun pressures for democracy through reform and performance? When is every one exhausted is the debate I guess to when larger issues come to play. You guys have a great dialog going and it would be a execise to see who is buying the context of bonds to gold ratio since SDR are a dialog they are poking at in the press also. I have not looked at MO to saving's rate ratio's lately given to treasury risk migration's as of late as it is read. Again great dialog here and thanks...

[malleni]

...
I'm sorry that you don't like Anglo-Saxons talking about Eastern
Europe, but there are two things you should keep in mind.

First, the euro is only ten years old, and could very well collapse
completely at any time.

Second, the last major international banking crisis was triggered by
the failure of the Austrian Credit-Anstalt on May 11, 1931, and a lot
of people are nervous about the possibility that Austria could lead
the way again.

The state of the Austrian economy and the Austrian banking system are
of interest to a lot of people besides Evans-Pritchard. How about
providing some of your insight about what's going on in Austria?

Actually, I do not care what Anglo-Saxons talking about Eastern
Europe.
I know what happened 1931 in Austria too.

Only what I could not find is:
- How you believe that "history repeated itself" - so literally?

That is - in my point of view - the main disturbing point in your explanations and theories.
The "Generational Dynamic theory" has some interesting ideas, because it looks that there are "a pattern of repeatings". (Even if "repeatings are not quite simple "repeatings" but sooner - similarities.)
In case of "predictions" on this kind of "theory" - the problem is always quite simple:
1. the huge amount of correlated data and lack of reliabilities in collected.
2. personally "believe in something" - in concrete case believe that "history always literally repeated itself."



But, never mind.
You ask about my opinion in situation in Austria and Europe.

Yes.
I can not say that you are not correct.
BUT I think that you can have more difficulties to prove your assumptions about euro correct.

If you ask me:
- are European banks greedy?
- is there in EU enormous bureaucracy?
- are there in EU a some kind of "financial mafia" in the power?
Answers are : Yes... Yes... Yes...

In normal situation - I could not see anything bright here, but when I take a another look - the things showed little bit different.
Despite all "Yeses" above, the EU in my point of view has also little bit luck... Namely EU was NOT the "Zentrum der Macht".
It is (WAS) - US and the little satellite GB.

All those financial engineerings was invented by "US financial engineers" (Actually I believe that original "engineers" were probably "GB financial engineers" - but that is not important right now).
Since US and GB had quite much more time to enjoy the fruits of "financial engineerings" - the logical implication is that they are much more deep in the shit too.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


But what happened in the last par months?
Increasingly choir of US, GB and "journalists and experts" near this sphere - "find" suddenly that EU has a "Great problem with East Europe"!!!

Even much bigger than "Anglo-Saxons"!!!
Wou!!!

Lets see little more on the facts, before we here in Europe starting to shiver.

1. Lets from "Anglo-Saxon" media "analogies" - there are two:
- Eastern Europe is the “subprime crisis” of the EU (understand: of course, everyone has its "own" subprime crisis (Which is of course wrong: no other country than the US and the UK presents such a convergence of disasters)
- a crisis in Eastern Europe will have the same terrible effect as the 1997 Asia crisis.
2. Of course "specialists" are always available for "Anglo-Saxons":
http://uk.reuters.com/article/hotStocks ... EO20090217
(in this case Moodys, which, first of all, is completely devoted to Wall Street, and then is incapable of seeing “an elephant in a corridor” (they missed the subprimes, the CDS, Bear Stearn, Lehman Brothers, AIG, ….).
But, for some "mysterious reason", the financial media keeps on repeating Moodys "specialist" opinions, probably applying the principle that they could be right some day purely out of statistical chance.)
3. To make the idea more credible, different "specialist" media (such as cited UK’s Telegraph and between others - Mr. Pritchard) "explaining" constantly this mysterious ticking bomb in Europe - but is currently blinded as regards the Eurozone by the collapse of the British economy and Pound Sterling)
Those "news items" circulate... and circulate ... so it with time "hopefully gain some credibility".

I think that this rubbish is possible to find each day in all Anglo-Saxon financial "news" at least couple times.
The main US and UK financial media, knowing the others will follow out of habit (it is so easy as regards the EU, slow as it is to understand and even slower to react, with the inevitable dissent that makes it possible for the manipulation to gain momentum).


So, as said you are able to read in "world financial media" similar titles about "EU devastating bombs" from :
- Hungary, Czech Republic, Poland, Latvia, Romania etc...etc... "defaulting on debts" and that is "a bomb"!!!

Boom!!!

This is indeed the core of the problem: in economy and finance, size matters - AND ALL the new Member-States put together comprise less than 10 percent of the EU GDP (among them, the biggest and richest ones, such as Poland and the Czech Republic, are hardly affected at all)


Never the less, there are indeed problems ahead for these countries and those commercially and financially involved with them, but these problems are no more serious than the average problems encountered by the global financial system; and they certainly do not compare with the problems faced by the financial markets of New York or London.
The bank most often cited as being the “detonator” of this “Eastern-European bomb”, i.e. the Austrian bank Raiffeisen , increased its profits 17 percent in 2008; a result beyond the wildest dreams of most US and UK banks today.
A good article with many facts about EU (Austrian too) banks in Eastern Europe:
http://seekingalpha.com/article/122856- ... overstated
Even this:
http://www.baltic-course.com/eng/analytics/?doc=10712

On the end, when talking about "real estates" even in East Europe - the price will fall.
It is clear (for same reason I explained before about China) - but it is also clear that prices will NOT fall dramatically.
After 50 years of communism, there is a shortage of modern buildings. And besides those buildings are mostly of good quality and NOT ballooned in price as US real estates. There on contrary (in US) an excessive number of houses were built during the last housing bubble, of variable quality and already depreciating in value in the most affected states. There, there is a real destruction of wealth for landowners, creditors, banks and the economy altogether.

Nonsense about Ukraine (I do not know when it become EU country?) - has special position.
http://www.forbes.com/2009/02/25/easter ... ubini.html
Ukraine is just a puppet of US in its "global fight" against Russia and its “orange revolution”(orchestrated from Washington of course).
Yes.
Collapse in Ukraine can cause problem in EU too, but similar as - dollar collapse.
A collapse of Ukraine (and of course overtaking from Russia) does not mean a collapse of EU and its policy. Sooner US (UK) policy.



To summarize:

The "news" about "bomb in Eastern Europe" and with "collapse of EU (Austrian) banks" - is in my opinion and with facts - just political manipulation of Anglo-Saxon media in accordance to cover huge problem - in house.

[freddyv]

John Wrote:

In a fragile world, a swine flu pandemic would have geopolitical consequences: Also: The big economic impact may trigger new financial crises....

The bulls are still swaggering as the stock market hangs in there yet we are once again seeing the scary new world force its way upon our once pleasant reality, this time in the form of a possible pandemic that so far seems remote and minor but could be just the thing to send the balance of the world sprialing out of control once again.

But earnings are improving!

No they're not. Analysts have simply started to get things right and what they're getting right is that earnings and revenue are doing a nose-dive.

But housing is bottoming!

No, foreclosures are once again growing and now it is not just sub-prime mortgages that are being foreclosed upon but prime as well.

But we don't have a Smoot Hawley act to damage trade this time!

Apparently it's not needed as trade is dropping off a cliff anyways as the engine of the world economy, the American consumer, decides they can do without that new car for a couple of years.

Yes, we are closer to the bottom but the view forward is also much clearer than it was last year and the view is downward as the world, just as John predicted, unravels right before our eyes. Watch closely because none of us will likely ever see a time like this again. All my life I have listened to doomsayers and while I liked to hear the tales I never really believed. Now I believe and I believe that things are about to get worse, much worse. I hate to say it John, but I believe that you are going to be more right than I. I believe that we are about to descend rapidly into a vortex that will shock the world and alter it for decades to come.

I hope I am wrong.

--Fred

[aedens]

This is wisdom and correct. The Blue dogs need to humble them selves to help ONLY the people who need it.

May reason prevail since we all Know the absense of it is is Hell.

http://www.city-journal.org/2009/19_2_e ... wartz.html


So when conservative Democrats and so-called moderate Republicans in the Senate, with the support of the Blue Dogs in the House, cut $100 billion from the stimulus package, they left in an estimated $36 billion new home tax credit whose benefits would skew heavily toward the upper middle class and wealthy, while cutting $98 million in school nutrition programs for poor kids? This kind of rhetoric obscures deeper questions of what government should provide, and which groups get squeezed when the screws are tightened.
The letter addressed to House Appropriations Committee Chairman David promised to return to “pay-as-you-go budgeting,” and stressed that the stimulus was an “extraordinary response to an extraordinary process” and thus subject to different rules.

“It should not be seen as an opportunity to abandon the fiscal discipline that we owe each and every taxpayer in spending their money – and that is critical to keeping the United States strong in a global, interdependent economy,” the letter stated.
“Moving forward, we need to return to the fiscal responsibility and pay-as-you-go budgeting that we had in the 1990’s for all non-emergency measures,” Orszag continued. “The President and his economic team look forward to working with the Congress to develop budget enforcement rules that are based on the tools that helped create the surpluses of a decade ago.

I read some Right Wing verbiage on obama's so called junket. I think they may remember Hadrian as seen from Aelius Spartianus POV.
"Those men whom he saw to be poor and innocent he enriched of his own accord, but those who had become rich through sharp practice he actually regarded with hatred."
For the Independant minded to date - remember what is important.

[MarshAviator]

NEW YORK (CNNMoney.com) -- U.S. stocks were set for a higher open Wednesday, after stock futures held their ground after a government reading of gross domestic product showed the economy contracted more than expected in the first quarter.

http://money.cnn.com/2009/04/29/markets ... /index.htm

So now we see the principal of maximum ruin in operation.
It would seem rational investors would be concerned about; pandemic flu, greater than expected GDP declines, automaker collapse, fake bank profits,et cetera.

Insanity in individuals is something rare - but in groups, parties, nations and epochs, it is the rule.
Friedrich Nietzsche
German philosopher (1844 - 1900)

Every day is like groundhog day, the pattern repeats, surely the guys in Washington know in their gut this isn't going to work.
Yet according to a prior president "the definition of insanity is doing the same thing and expecting a different result."

The world is full of irony. (apocryphal or unknown author).

[aedens]

I work as a resident doctor in one of the biggest hospitals in Mexico City and sadly, the situation is far from "under control". As a doctor, I realise that the media does not report the truth. Authorities distributed vaccines among all the medical personnel with no results, because two of my partners who worked in this hospital (interns) were killed by this new virus in less than six days even though they were vaccinated as all of us were. The official number of deaths is 20, nevertheless, the true number of victims are more than 200. I understand that we must avoid to panic, but telling the truth it might be better now to prevent and avoid more deaths.
Yeny Gregorio Dávila, Mexico City

http://news.bbc.co.uk/2/hi/talking_point/8018428.stm

In there words.... This has been going on from other reports I have not posted for longer than we are seeing...

[Witchiepoo]

I work as a resident doctor in one of the biggest hospitals in Mexico City and sadly, the situation is far from "under control". As a doctor, I realise that the media does not report the truth. Authorities distributed vaccines among all the medical personnel with no results, because two of my partners who worked in this hospital (interns) were killed by this new virus in less than six days even though they were vaccinated as all of us were. The official number of deaths is 20, nevertheless, the true number of victims are more than 200. I understand that we must avoid to panic, but telling the truth it might be better now to prevent and avoid more deaths.
Yeny Gregorio Dávila, Mexico City

http://news.bbc.co.uk/2/hi/talking_point/8018428.stm

In there words.... This has been going on from other reports I have not posted for longer than we are seeing...

FYI, I moved this post over to the swine flu thread.

[malleni]

Obviously, John do not discuss previous question further, but never mind,... lets go little bit further.

On this site some people just love to talk about "maximum ruin"...
Fine.

I understand that John will recommend everybody to buy US Treasuries (as usual custom here), but please, take a look - it may be worth...
Because, for me, it looks very much if you listen to John advice - IT will bring you to "maximum ruin"!
But - it is up to anyone to decide...

If you just take little time through some of this articles - it will be obvious that it (Johns advice!) is a bad (a VERY bad advice!)...
(Since we are able to read about it - believe me that Chinese, Japanese, Arabs, Russians, Europeans and ALL other creditors to US - know it too...):


Treasury to auction record $71 bln next week:
http://www.marketwatch.com/news/story/t ... dist=msr_4

The Federal Reserve refrained from increasing purchases of Treasuries and mortgage securities, signaling the worst of the recession may be over:
http://www.bloomberg.com/apps/news?pid= ... refer=home

Wall Street Selling Imaginary Treasuries:
- US treasury market reaches breaking point
As attention focuses on the treasury market's ability to cope with the US's growing funding needs, Euromoney reveals the structural issue that could cause the world's market of last resort to grind to a halt in its hour of greatest need.
The problem: the settlement system for the US government bond market has broken down
http://www.euromoney.com/Article/205407 ... point.html
http://www.euromoney.com/Article/205412 ... arket.html
http://www.euromoney.com/Article/205410 ... ofits.html
http://www.euromoney.com/Article/205410 ... liver.html

BUT fraudulent, imaginary Treasuries are not only problem for investors Worldwide to the (now more than clear!) - collapsed US financial system!
There are "Imaginary shares" too...
http://www.basherbusters.com/temp/naked ... lling.html

E-mail from three senators - who are really pissed off with "imaginary shares" too:
http://ftp.sec.gov/comments/s7-12-06/lkeith3346.pdf


Once again:
If anybody on this site - believe:
1. in nonsense of survival of US fraudulent and corrupted system - I am sure that is very difficult to find some OUTSIDE US who will share this belief ...
2. in nonsense that US Treasuries (debt of corrupted and bankrupt State) - can give hope in the survival of the tsunami (theory based on what...?) - it is time to think again.
3. that this discussion is unknown for many (ALL) people (investors) around the World - please, think twice...

Thank you for understanding
Best regards