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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (45682)	1/23/2009 5:10:50 AM
From: TobagoJack	Respond to of 217970

no, global imbalances is not the deep cause fiat money inflation is the deep cause just in in-tray · It appears from the press leaks surrounding the Obama administration's mooted "bad bank" that Washington is still not yet prepared to go all the way and nationalise bust banks along the lines of the Swedish model. While the focus in Britain is on providing government insurance against losses on toxic debt as a hoped for quid pro quo that banks will make new loans. · In GREED & fear's view both approaches remain half baked and fundamentally flawed. The endgame to the systemic banking crisis in both countries is still likely to be nationalisation along the lines of the Swedish model. GREED & fear also continues to believe that the sooner this endgame is reached the better it will be for the overall health of the stock market. · Western banking is now facing a systemic crisis while for Asian banking it is only a severe cyclical challenge. GREED & fear continues to recommend hedging long Asian equity portfolios by remaining short Western financial stocks. · There remains scope for a violent counter trend rally at any time if the new Obama administration can positively surprise on the policy front, be it on the banking crisis, fiscal policy or housing. Still in GREED & fear's view any such rally would be more sustainable if it occurred after the implementation of a Swedish type approach. The most important point about the new administration in Washington is what it announces on the banking system. · Even if banks were tomorrow willing and able to lend to companies and consumers freely it remains extremely likely that the savings rate in America will return to long-term trend levels as a result of the massive psychological trauma consumers have experienced in terms of the hit to their personal balance sheets. · The long-term hope for the global economy over the next 20 years remains realisation of the Asian domestic demand story. This involves cultural issues as well as a policy driven realignment of policies away from the traditional mercantilist mindset with hopefully China leading the way. · It remains unfortunately the case that a lot of the horrific losses in Western banks continuing to be reported relate to toxic debt writedowns and hits to goodwill. This means that there remains a lot of scope for old fashioned NPLs to pick up from mundane bad loans as opposed to from more exotic sources. · A relative-return asset allocation will be introduced for Asia Pacific ex-Japan investors who include Australia in their benchmark. The main feature will be a zero weight in Australian financials. GREED & fear would prefer to own financial stocks in other Asian markets save for Korea because of the lack of a wholesale funding liability. · Australian gold stock Newcrest Mining will also be included in the Asia ex-Japan absolute-return portfolio. The investment will be paid for by removing Midland Holdings. Another change in the portfolio will be replacing Beijing Capital International Airport with China Mobile. · The increasingly manic policy response in the increasingly frightened West to the growing evidence of deflation is a long-term positive for gold. GREED & fear continues to believe that all investors need to be hedged in some way or other to the insurance provided by gold in an environment where the digitalised fiat paper credit system is becoming ever more fundamentally suspect. · There remains huge potential over the medium term for gold mining stocks given GREED & fear's long term price target for bullion of US$3,360/oz by the end of 2010 and also given the collapse in energy production costs as a consequence of oil's steep decline in price since late July. · So far most of the bad loan focus is on consumer loans such as mortgages turning bad. But there also remain huge problems in the formerly active areas of commercial real estate lending and lending to leveraged buyouts. The "private equity" model is dead in the perverted sense of leveraged buyouts. But the nasty unwind has yet to happen in terms of the public emergence of bodies on the street. · Foreign investors sold a record US$22.9bn of US Treasury bonds in November. Yet despite this selling the US bond market still rallied in November reflecting presumably strong domestic buying as a result of rising risk aversion. In another illustration of extreme risk aversion foreigners bought an astonishing US$352bn of US Treasury bills in the four month period from August to November, more than what they bought over the previous 30 years!