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Thread: Financial Crisis - Page 53







Post#1301 at 12-02-2005 05:10 PM by catfishncod [at The People's Republic of Cambridge & Possum Town, MS joined Apr 2005 #posts 984]
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http://www.bizzyblog.com/?p=961
"Bizzy’s AM Coffee Biz-Econ Links of the Day (120205): 43% of the Country Believes We’re in a Recession!"

Catfish here.

You have to read this link to believe it, folks. Polls consistently show that a significant chunk of America believes we're in a recession. Yet all the economic indicators are uniformly positive.

BizzyBlog apparently can think of only one way this can happen: it must be that dratted evil Democratic mainstream media! Only their horrific mind control spells could cause people to believe the economy is doing poorly!

Baloney.

Why do large sections of the population think we're in a recession? Because they aren't getting any new benefits, that's why! Their wages haven't gone up, their towns don't look any spiffier, their health care is getting cut, their 401ks are barely ticking over, and their economic stability looks fragile. They're not getting any benefits of any "growth" and neither are their peers. So as far as they are concerned, the economy is not growing.

So there's more money on Wall Street! Terrific! Can they eat it?

This is the end result of the increasing wealth disparity of the Third Turning. Even as the "trickle-down effect" was championed by Reagan et al., they were implementing all the things that would turn the trickle down effect off. A rising tide does *not* necessarily float all boats, and that's what is happening now. More of the wealth being created in the current economic expansion is flowing to the upper class than ever before... at least in this saeculum. (This situation was common last saeculum. So was class unrest.)

I'm not a great fan of socialism -- I've read in the history books all the ways it can go wrong. But if things continue in this vain, it'll make a comeback.
'81, 30/70 X/Millie, trying to live in both Red and Blue America... "Catfish 'n Cod"







Post#1302 at 12-10-2005 03:22 PM by Tom Mazanec [at NE Ohio 1958 joined Sep 2001 #posts 1,511]
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Read this guy's blog. He has some frightening opinions on the financial crisis:
http://cyclone696.blogspot.com/







Post#1303 at 12-28-2005 03:07 PM by cbailey [at B. 1950 joined Sep 2001 #posts 1,559]
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REAL ESTATE HOLDS THE KEY

http://today.reuters.com/news/newsAr...archived=False

Too soon to tell what curve inversion means
Tue Dec 27, 2005 6:22 PM ET
For Discussion Only


By Oliver Ludwig

NEW YORK (Reuters) - The U.S. Treasury yield curve inverted on Tuesday, with two-year notes yielding more than 10-year notes for the first time in five years in a possible signal the U.S. economic recovery is topping out.

But many analysts were reluctant to embrace the traditional interpretation of an inverted yield curve, namely the economy is heading for a slowdown or possibly even a recession.

They say a buildup of savings around the world has found its way into the U.S. Treasury bond market, helping keep yields at unusually low levels and, according to officials at the Federal Reserve, possibly changing the rules of interpreting yield curve inversions.

As a result, all the yield curve is saying is the market believes the Fed's 18-month campaign to raise short-term interest rates to control inflationary pressures may well be near completion.

"This clearly suggests we are very close to the end of the tightening cycle ... and is not an indication of a recession," said Michael Rottmann, strategist at Hypovereinsbank.

"I think the Fed will raise interest rates by another 25 basis points to 4.50 percent, which will be the peak for this cycle," he said.

The Fed is widely expected to raise short-term interest rates one or two more times over the next three months.

It has raised rates at 13 straight meetings since June 2004, each time by a quarter-point. The federal funds rate now stands at 4.25 percent, up from 1 percent when it started raising rates.

Investors usually demand higher yields for bonds they hold for a longer time as protection against inflation risks. But when short-term bond yields rise to the point where they are higher than long-term yields, the yield curve flattens and may eventually slope downward.

The spread between 2-year and 10-year notes is usually seen as a proxy for the slope of the yield curve and that spread oscillated between positive and negative throughout Tuesday, falling to a low of negative 1.4 basis points (0.014 percent).

Late in the afternoon, a price rise of 10/32 of U.S. 10-year notes put benchmark yields at 4.343 percent -- 0.4 basis point below two-year yields of 4.347 percent.

By comparison, 10-year notes were yielding 189 basis points more than two-year notes when the Fed first began raising short-term interest rates in June 2004.

INVERSION OR INCURSION?

Part of the problem with judging Tuesday's yield-curve inversion was that it occurred during thin holiday trade in which price movements can be artificially inflated.

"Definitely if we have a large inversion or were to stay inverted for a long time, it's definitely a negative for the economy," said Adam Brown, a bond trader with Barclays Capital in New York. "But I don't think that going slightly inverted temporarily is going to send a strong signal" about a slowdown, he added.

But some economists insist that an inverted curve or even one that is quite flat poses clear problems for sustaining economic growth.

One factor raising concern is that two-year notes have been yielding more than both three- and five-year notes for nearly two weeks. On Tuesday three-year Treasury notes were yielding 4.312 percent and five-year notes were yielding 4.294 percent -- both below 4.347 percent two-year note yields.

That is important because banks typically borrow from depositors at lower rates than they lend at. A curve inversion turns that relationship on its head and may slow bank lending, and slow consumer spending and the economy as a whole.

Moreover, as the Fed continues to raise official short-term rates, loans linked to those rates, like home equity loans, are less likely to be tapped, putting a damper on economic growth.

"The yield curve is a really powerful indicator. It always has been," said Christopher Low, chief economist at FTN Financial in New York. "The shape of the curve still matters," Low said.

"There is a good chance in the second half of next year, we see growth slow down fairly dramatically," Low said. He predicted growth below 1.5 percent for two straight quarters, down from a third-quarter annual growth rate of 4.1 percent.

REAL ESTATE HOLDS THE KEY

The real estate sector will be key in determining whether the bond market is truly scenting a slowdown sometime in 2006, analysts said.

Rising house prices have sustained economic growth over the last five years, as low interest rates in the wake of a shallow recession in 2001 led homeowners to unlock the rising value of their homes and pump up their spending.

One sign the housing market is cooling was seen Friday when data from the Commerce Department showed new home sales fell 11.3 percent in November.

"There have been some signs that housing has slowed. I think if you get a month or two of (weak) numbers, then people would start jumping on the bandwagon," the primary-dealer trader said about the prospect of curve inversion signaling slower growth.
"To announce that there must be no criticism of the president, or that we are to stand by the president right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public." -- Theodore Roosevelt







Post#1304 at 12-30-2005 10:41 AM by [at joined #posts ]
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It looks like the Japanese have finally entered their First Turning. 8)







Post#1305 at 12-30-2005 01:42 PM by Zarathustra [at Where the Northwest meets the Southwest joined Mar 2003 #posts 9,198]
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Quote Originally Posted by Devil's Advocate
It looks like the Japanese have finally entered their First Turning. 8)
As usual, you're wrong. They are probably mid-3T. As for the Nikkei, here is another perspective you may want to consider. Then again, you don't believe other perspectives exist.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.







Post#1306 at 01-01-2006 02:20 AM by Pink Splice [at St. Louis MO (They Built An Entire Country Around Us) joined Apr 2005 #posts 5,439]
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Note that the Dow, S&P, and Nasdaq all failed to beat inflation this year. The Dow actually finished negative for the year as a whole.







Post#1307 at 01-06-2006 03:46 PM by Tom Mazanec [at NE Ohio 1958 joined Sep 2001 #posts 1,511]
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Post#1308 at 02-10-2006 05:25 PM by [at joined #posts ]
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02-10-2006, 05:25 PM #1308
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Here's some news I found buried in a stock market report today:
The U.S. budget registered a surprisingly big surplus of $20.99 billion in January as strong receipts outweighed spending, a Treasury Department report showed.
It looks like Bush's voodoo economics are continuing to destroy the country. If surpluses like this continue we're gonna have a crash that'll make 1929 look like a walk in the park. :evil:







Post#1309 at 02-10-2006 05:26 PM by Marx & Lennon [at '47 cohort still lost in Falwelland joined Sep 2001 #posts 16,709]
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Quote Originally Posted by Devil's Advocate
Here's some news I found buried in a stock market report today:
The U.S. budget registered a surprisingly big surplus of $20.99 billion in January as strong receipts outweighed spending, a Treasury Department report showed.
It looks like Bush's voodoo economics are continuing to destroy the country. If surpluses like this continue we're gonna have a crash that'll make 1929 look like a walk in the park. :evil:
Nice quote. Can we have a cite to go withi it?
Marx: Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.
Lennon: You either get tired fighting for peace, or you die.







Post#1310 at 02-10-2006 05:55 PM by Zarathustra [at Where the Northwest meets the Southwest joined Mar 2003 #posts 9,198]
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Quote Originally Posted by Marx & Lennon
Quote Originally Posted by Devil's Advocate
Here's some news I found buried in a stock market report today:
The U.S. budget registered a surprisingly big surplus of $20.99 billion in January as strong receipts outweighed spending, a Treasury Department report showed.
It looks like Bush's voodoo economics are continuing to destroy the country. If surpluses like this continue we're gonna have a crash that'll make 1929 look like a walk in the park. :evil:
Nice quote. Can we have a cite to go withi it?
Well, you know, that GDP slow down in 2005 4Q is what did it. You see, a slower economy brings in more revenue. It's a Laffer Curve thing. I don't expect liberals to understand. :wink:
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.







Post#1311 at 02-10-2006 05:59 PM by Child of Socrates [at Cybrarian from America's Dairyland, 1961 cohort joined Sep 2001 #posts 14,092]
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Quote Originally Posted by Marx & Lennon
Quote Originally Posted by Devil's Advocate
Here's some news I found buried in a stock market report today:
The U.S. budget registered a surprisingly big surplus of $20.99 billion in January as strong receipts outweighed spending, a Treasury Department report showed.
It looks like Bush's voodoo economics are continuing to destroy the country. If surpluses like this continue we're gonna have a crash that'll make 1929 look like a walk in the park. :evil:
Nice quote. Can we have a cite to go withi it?
Here. But always keep in mind that these guys are highballing their annual deficit projections so they can look good when the real numbers come in.







Post#1312 at 02-10-2006 06:02 PM by [at joined #posts ]
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02-10-2006, 06:02 PM #1312
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Quote Originally Posted by Marx & Lennon
Quote Originally Posted by Devil's Advocate
Here's some news I found buried in a stock market report today:
The U.S. budget registered a surprisingly big surplus of $20.99 billion in January as strong receipts outweighed spending, a Treasury Department report showed.
It looks like Bush's voodoo economics are continuing to destroy the country. If surpluses like this continue we're gonna have a crash that'll make 1929 look like a walk in the park. :evil:
Nice quote. Can we have a cite to go withi it?
Here's a few. You can pick the one that best suits your ideological spin.







Post#1313 at 02-10-2006 06:44 PM by scott 63 [at Birmingham joined Sep 2001 #posts 697]
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Quote Originally Posted by Devil's Advocate
Here's some news I found buried in a stock market report today:
The U.S. budget registered a surprisingly big surplus of $20.99 billion in January as strong receipts outweighed spending, a Treasury Department report showed.
It looks like Bush's voodoo economics are continuing to destroy the country. If surpluses like this continue we're gonna have a crash that'll make 1929 look like a walk in the park. :evil:
Yep. And judging from my bank balance on payday, I'm on track to be millionaire by year's end!

I am sure this surplus when combined with the surpluses in December and November should go a long way toward the $8 TRILLION debt... Whadya mean we're down $98.3 billion for the last four months?
Leave No Child Behind - Teach Evolution.







Post#1314 at 02-10-2006 07:33 PM by Finch [at In the belly of the Beast joined Feb 2004 #posts 1,734]
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Quote Originally Posted by scott 63
Yep. And judging from my bank balance on payday, I'm on track to be millionaire by year's end!
If only there weren't so much month at the end of my paycheck! :lol:


More from the article Wonkette linked:

Quote Originally Posted by MARTIN CRUTSINGER, AP Economics Writer
The Bush administration on Monday estimated that the deficit for this year will hit a record in dollar terms of $423 billion, surpassing the old mark of $413 billion set in 2004... However, private economists believe the deficit, while up from last year, will be smaller than the administration's forecasts. Many forecasters are pegging this year's deficit at around $360 billion. They note that the administration for the past two years has estimated a deficit for the current budget year that is significantly higher than other forecasts, allowing them to claim improvement at the end of the budget year.
Woot! Only $360 billion more in the red this year! :mrgreen: :mrgreen: :mrgreen: Happy Days Are Here Again! :mrgreen: :mrgreen: :mrgreen:
Yes we did!







Post#1315 at 02-10-2006 08:17 PM by Zarathustra [at Where the Northwest meets the Southwest joined Mar 2003 #posts 9,198]
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Quote Originally Posted by Devil's Advocate
Here's a few. You can pick the one that best suits your ideological spin.
You would know how that works!

It's very amusing how any small counter-trend, assuming it even existed, is suddenly "proof" from Marc that Dubya's doing a grand job. But when the larger trend reinstates itself, he's suddenly quiet on the subject. Mike A. was the first to point this out to him, again, and again, again, and again, and again.

If you'd listened to Marc, you'd think the Iraqi insurgency had been finished off a long time ago. Remember, they were in their "last throes" a long time ago (but somehow the liberal press keeps reporting that they're still there, damn them!). Well, now, the budget surplus is going to come back! Dang, let's cut those taxes some more!!!

But, hey, one's gotta have faith . . . right?
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.







Post#1316 at 02-14-2006 10:45 AM by [at joined #posts ]
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02-14-2006, 10:45 AM #1316
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The Coming of The New Depressionists

More devestating news for the U.S. economy. As these hideous numbers continue to mount, the ever growing pressure towards the Great Devaluation is bound to get stronger and stronger. Americans are fat (the Democrat's new 2008 campaign theme) and happy (the Republicans ongoing cheer for 2008), fully primed for the waiting arms of the Bears, and their brothers-in-arms; The New Depressionists, with their eager moral Crusade. 8)







Post#1317 at 02-14-2006 02:05 PM by scott 63 [at Birmingham joined Sep 2001 #posts 697]
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And you think YOU are a pessimist ...

Oil? America's addicted to everything!
And our denial is sabotaging the economy and markets


Quote Originally Posted by Paul B Farrell
Information is our new mind-numbing drug, worse than cocaine and heroin. Often distracted, in a stupor, narrowly focused on immediate gratification, we lose perspective, integrity, even our identity; we're addicts in a myopic bubble, in denial of the real world.
Quote Originally Posted by Paul B Farrell summed it up when he
Wake up America! Oil's only one minor symptom. We are a nation of addicts, in denial of so many threats external to our bubble world. Mentally we are at greater risk than with the irrational exuberance of 2000. Except this time the threat is global, systemic and potentially catastrophic, far outside the box of our mega-rational economic models and market forecasting systems. Soon your denial system may no longer work, reality will implode.
So please, be prepared for market losses far greater than the $8 trillion we lost between 2000 and 2002. Plan conservatively.
John X - you're losing you edge, man! :lol:
Leave No Child Behind - Teach Evolution.







Post#1318 at 02-14-2006 03:36 PM by Finch [at In the belly of the Beast joined Feb 2004 #posts 1,734]
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Quote Originally Posted by Paul B Farrell summed it up when he
Wake up America! Oil's only one minor symptom. We are a nation of addicts, in denial of so many threats external to our bubble world. Mentally we are at greater risk than with the irrational exuberance of 2000. Except this time the threat is global, systemic and potentially catastrophic, far outside the box of our mega-rational economic models and market forecasting systems. Soon your denial system may no longer work, reality will implode.
So please, be prepared for market losses far greater than the $8 trillion we lost between 2000 and 2002. Plan conservatively.
The Marketwatch site seems be having problems -- I get a 404 when I click that link. Still, the prediction of huge market losses is reasonable, since the market exhibits herd behavior, and tends to fall suddenly, irrespective of fundamentals. A book-value estimate places the "real" Dow value somewhere around 4000-6000; a downturn in market sentiment could easily overshoot that, at least for a while (a year or two.)

More disconcerting is the article about the jump in retail sales. I expected an increase over December, given the way gift card sales are recorded; but it appears that much of the increase is due to durable goods purchases, such as furniture and cars.

Why is this disconcerting? Because the US personal savings rate in 2005 was negative for the first time since the Depression; yet in January consumption still rose faster than income -- and on items that represent a significant increase in total debt. Very soon we will reach the tipping point (if we have not reached it already) where the average consumer is not even able to meet his debt service obligations; in other words, he will have to borrow money to pay just the cost of borrowing money. In business, this is known as the "death spiral".

So, no, the "robust" increase in spending is not cause for celebration, unless it is accompanied by an even greater increase in incomes. And a "robust" increase in real income is only possible through an increase in productivity, by producing more efficiently and effectively. Instead, we're exporting jobs and cash. And so the death spiral continues.
Yes we did!







Post#1319 at 02-14-2006 06:21 PM by John J. Xenakis [at Cambridge, MA joined May 2003 #posts 4,010]
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Re: And you think YOU are a pessimist ...

Quote Originally Posted by scott 63
Oil? America's addicted to everything!
And our denial is sabotaging the economy and markets


Quote Originally Posted by Paul B Farrell
Information is our new mind-numbing drug, worse than cocaine and heroin. Often distracted, in a stupor, narrowly focused on immediate gratification, we lose perspective, integrity, even our identity; we're addicts in a myopic bubble, in denial of the real world.
Quote Originally Posted by Paul B Farrell summed it up when he
Wake up America! Oil's only one minor symptom. We are a nation of addicts, in denial of so many threats external to our bubble world. Mentally we are at greater risk than with the irrational exuberance of 2000. Except this time the threat is global, systemic and potentially catastrophic, far outside the box of our mega-rational economic models and market forecasting systems. Soon your denial system may no longer work, reality will implode.
So please, be prepared for market losses far greater than the $8 trillion we lost between 2000 and 2002. Plan conservatively.
John X - you're losing your edge, man! :lol:

The sky is falling! The sky is falling!!

John







Post#1320 at 02-27-2006 03:28 PM by cbailey [at B. 1950 joined Sep 2001 #posts 1,559]
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Global credit ocean dries up
(Filed: 24/02/2006)
business.telegraph
For frightening Discussion Only



The cash machine that sustained a world boom is about to close, and it's going to get ugly, says Ambrose Evans-Pritchard

One by one, the eurozone, the Swedes, the Swiss and now even the Japanese, are turning off the tap of ultra-cheap credit that has flushed the global system for the past year, keeping the ageing asset boom alive.


The "carry trade" - as it is known - is a near limitless cash machine for banks and hedge funds. They can borrow at near zero interest rates in Japan, or 1pc in Switzerland, to re-lend anywhere in the world that offers higher yields, whether Argentine notes or US mortgage securities.

Arguably, it has prolonged asset bubbles everywhere, blunting the efforts of the US and other central banks to restrain over-heating in their own countries.

The Bank of International Settlements last year estimated the turnover in exchange and interest rates derivatives markets at $2,400bn a day.

"The carry trade has pervaded every single instrument imaginable, credit spreads, bond spreads: everything is poisoned," said David Bloom, currency analyst at HSBC.

"It's going to come to an end later this year and it's going to be ugly, even if we haven't reached the shake-out just yet," he said.

"People have a Panglossian belief in the march of global capitalism but that will change as soon as attention switches back to US financial imbalances," he said.

There were early signs of panic this week when the Icelandic krone crashed 8pc in two days, setting off dominoes in high-yielding currencies of New Zealand, Australia, South Africa, Hungary and Brazil.

The debacle was triggered when the rating agency Fitch downgraded Iceland's sovereign debt, a move that would not normally rattle markets.

The new skittishness comes against a backdrop of ever more hawkish moves by Japan and Europe.

"There are several hundred billion dollars of positions in the carry trade that will be unwound as soon as they become unprofitable," said Stephen Lewis, an economist at Monument Securities. "When the Bank of Japan starts tightening we may see some spectacular effects. The world has never been through this before, so there is a high risk of mistakes."

Toshihiko Fukui, the Japanese central bank governor, gave a fresh warning yesterday that this day is near, saying the country was pulling out of seven years of deflation. The economy grew at a 5.5pc rate in the fourth quarter of 2005.

In his strongest words yet, he said the bank would act "immediately" to curtail its extra injections of liquidity, preparing the way for rate rises above zero in coming months.

"The moment of truth is approaching,'' said Kenichiro Ikezawa of Daiwa SB. In Europe, Sweden raised rates to 2pc this week in the face of an overheated Stockholm property market, while Germany's IFO business climate index soared yesterday to its highest level in 14 years.

The European Central Bank will almost certainly raise eurozone rates to 2.5pc in March, with likely moves to 3pc by the end of the year.

Most of the world is now tightening, with no sign of a fresh credit window opening to keep the game going. This is new. Japan has had the tap on continuously as the trade exploded over the past five years, while America itself became the source of funds after it slashed rates to 1pc at the end of the dotcom bubble, and held them there until June 2004.

The US Federal Reserve has since raised rates 14 times to 4.5pc in a belated effort to restore monetary discipline, with at least two more rises priced into the markets.

It is an open question whether the yen, euro, Swiss franc and Swedish krona carry trades have occurred on such a scale that they have led to over-investment in Latin America and beyond, and compressed US yields, fuelling the American housing boom in 2005 despite Fed tightening.

There are other big forces at work: huge purchases of US Treasuries by Asian central banks, and petrodollar surpluses coming back to the US credit markets. Stephen Roach, chief economist at Morgan Stanley, warns that the carry trade is itself, in all its forms, a major cause of dangerous speculative excess. "The lure of the carry trade is so compelling, it creates artificial demand for 'carryable' assets that has the potential to turn normal asset price appreciation into bubble-like proportions," he said.

"History tells us that carry trades end when central bank tightening cycles begin," he said. Ominously, almost every bank other than the Bank of England is now tightening in unison.



The cash machine that sustained a world boom is about to close, and it's going to get ugly, says Ambrose Evans-Pritchard

One by one, the eurozone, the Swedes, the Swiss and now even the Japanese, are turning off the tap of ultra-cheap credit that has flushed the global system for the past year, keeping the ageing asset boom alive.


The "carry trade" - as it is known - is a near limitless cash machine for banks and hedge funds. They can borrow at near zero interest rates in Japan, or 1pc in Switzerland, to re-lend anywhere in the world that offers higher yields, whether Argentine notes or US mortgage securities.

Arguably, it has prolonged asset bubbles everywhere, blunting the efforts of the US and other central banks to restrain over-heating in their own countries.

The Bank of International Settlements last year estimated the turnover in exchange and interest rates derivatives markets at $2,400bn a day.

"The carry trade has pervaded every single instrument imaginable, credit spreads, bond spreads: everything is poisoned," said David Bloom, currency analyst at HSBC.

"It's going to come to an end later this year and it's going to be ugly, even if we haven't reached the shake-out just yet," he said.

"People have a Panglossian belief in the march of global capitalism but that will change as soon as attention switches back to US financial imbalances," he said.

There were early signs of panic this week when the Icelandic krone crashed 8pc in two days, setting off dominoes in high-yielding currencies of New Zealand, Australia, South Africa, Hungary and Brazil.

The debacle was triggered when the rating agency Fitch downgraded Iceland's sovereign debt, a move that would not normally rattle markets.

The new skittishness comes against a backdrop of ever more hawkish moves by Japan and Europe.

"There are several hundred billion dollars of positions in the carry trade that will be unwound as soon as they become unprofitable," said Stephen Lewis, an economist at Monument Securities. "When the Bank of Japan starts tightening we may see some spectacular effects. The world has never been through this before, so there is a high risk of mistakes."

Toshihiko Fukui, the Japanese central bank governor, gave a fresh warning yesterday that this day is near, saying the country was pulling out of seven years of deflation. The economy grew at a 5.5pc rate in the fourth quarter of 2005.

In his strongest words yet, he said the bank would act "immediately" to curtail its extra injections of liquidity, preparing the way for rate rises above zero in coming months.

"The moment of truth is approaching,'' said Kenichiro Ikezawa of Daiwa SB. In Europe, Sweden raised rates to 2pc this week in the face of an overheated Stockholm property market, while Germany's IFO business climate index soared yesterday to its highest level in 14 years.

The European Central Bank will almost certainly raise eurozone rates to 2.5pc in March, with likely moves to 3pc by the end of the year.

Most of the world is now tightening, with no sign of a fresh credit window opening to keep the game going. This is new. Japan has had the tap on continuously as the trade exploded over the past five years, while America itself became the source of funds after it slashed rates to 1pc at the end of the dotcom bubble, and held them there until June 2004.

The US Federal Reserve has since raised rates 14 times to 4.5pc in a belated effort to restore monetary discipline, with at least two more rises priced into the markets.

It is an open question whether the yen, euro, Swiss franc and Swedish krona carry trades have occurred on such a scale that they have led to over-investment in Latin America and beyond, and compressed US yields, fuelling the American housing boom in 2005 despite Fed tightening.

There are other big forces at work: huge purchases of US Treasuries by Asian central banks, and petrodollar surpluses coming back to the US credit markets. Stephen Roach, chief economist at Morgan Stanley, warns that the carry trade is itself, in all its forms, a major cause of dangerous speculative excess. "The lure of the carry trade is so compelling, it creates artificial demand for 'carryable' assets that has the potential to turn normal asset price appreciation into bubble-like proportions," he said.

"History tells us that carry trades end when central bank tightening cycles begin," he said. Ominously, almost every bank other than the Bank of England is now tightening in unison.
"To announce that there must be no criticism of the president, or that we are to stand by the president right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public." -- Theodore Roosevelt







Post#1321 at 03-01-2006 02:06 PM by Tom Mazanec [at NE Ohio 1958 joined Sep 2001 #posts 1,511]
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03-01-2006, 02:06 PM #1321
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Post#1322 at 03-06-2006 02:31 PM by Tom Mazanec [at NE Ohio 1958 joined Sep 2001 #posts 1,511]
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03-06-2006, 02:31 PM #1322
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How a housing bubble pop would hurt the economy:
http://www.msnbc.msn.com/id/11658208







Post#1323 at 03-06-2006 02:47 PM by Tom Mazanec [at NE Ohio 1958 joined Sep 2001 #posts 1,511]
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03-06-2006, 02:47 PM #1323
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More than a trillion over a decade:
http://www.nytimes.com/2006/03/04/po...in&oref=slogin







Post#1324 at 03-06-2006 02:51 PM by Tom Mazanec [at NE Ohio 1958 joined Sep 2001 #posts 1,511]
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03-06-2006, 02:51 PM #1324
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Post#1325 at 03-14-2006 09:24 PM by [at joined #posts ]
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03-14-2006, 09:24 PM #1325
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Sucking absolutely

What this means exactly, as Mr. Mazanec duly notes, is that if Bush Sucks, then absolute Bush Sucks Absolutely. Tis a giant "sucking sound" I hear!

Taint no doubt 'bout that, ya'all. :wink:
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