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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: pogohere who wrote (113143)	7/16/2010 3:45:06 PM
From: pogohere	Respond to of 116555

How Large is the Outstanding Value of Sovereign Bonds? by CalculatedRisk on 7/08/2010 11:02:00 AM CR Note: Reader "some investor guy" has put together some data on sovereign default risk. This is the first in a series of posts. Debt issued by governments worldwide is immense. According to the Bank for International Settlements, at year end 2009 worldwide sovereign debt exceeded $34 trillion, and is greater than the amount of corporate bonds outstanding. Japan and the US dwarf most other borrowers. Together they have about half of all sovereign debt worldwide. Still, 23 other countries have over $100 billion of debt outstanding. The other 100+ countries worldwide have a total debt of about $1.4 trillion. (more) calculatedriskblog.com

To: pogohere who wrote (113143)	7/17/2010 4:53:34 AM
From: Haim R. Branisteanu	3 Recommendations Read Replies (1) \| Respond to of 116555

A exchange of e-mail of possible interest after a visit of Mervin King to Glasgow; From: Ivor -.co.uk] Sent: Friday, July 16, 2010 3:18 PM To: Haim R. Branisteanu Cc: Subject: RE: Almost forgotten - The EUR is DEAD - Long Live the Clown Buck - REALY?? Hiya Haim Good for you! Well done especially if it earned you some cash. The question is what happens now and when? The Pound has also risen against the Euro but the UK has a balance of payment deficit as has the US yet the Euro zone has a surplus. The crisis was caused in part by these imbalances between surplus and saving Nations and the deficit and spending ones. The surpluses were invested in the deficit Countries who did not need the capital inflows and so they then invented fancy financial instruments to serve the Western Banks rather than any real customers. The consequence was that developing Countries did not get the capital they needed and their own people saved at home, and so abroad, to gain higher interest rates rather than invested and this increased this undesirable loop and led to the bubble that eventually burst with unprecedented severity to the surprise and consternation of those who thought the inevitable correction would be manageable and the frustration of Central Bankers whose remit allowed only one corrective mechanism interest rates which in fact operated against the real solution by exacerbating the whole process. Will G20 meetings solve this? No way. Not ever going by all past experience. Will surplus saving Nations start to spend more? Not enough or soon enough if ever in places like Germany and only if Chinese have a social safety net that encourages their poor to spend on improving their lot rather than saving everything they possibly can. Even in the rich Countries the absence of any return on savings is unlikely to encourage spending while earnings are being threatened and taxes raised and consumers are desperately unwinding debt. Can we avoid the deflation trap of Japan if we do not raise interest rates because we are fearful of the resultant effect on indebted consumers and corporations and in turn their Banks and Sovereign debt burdens? It does not look too likely, and hoping for a perfectly phased sequential recovery sounds like wishful thinking.If success cannot be managed with any certainty then failure is certain. Can failure be managed any better than avoided? We might soon know but in these circumstances given that the problem was caused by Politicians unless they are prepared to spend their surpluses to bail out their customers and spend their National savings if their population will not, then we have to leave it to the market to resolve as otherwise the gun will. Best Ivor Haim Response Dear Ivor, The economic issues are much more complex than you outline and it has to do with technological advances from transportation, communication to manufacturing and design. Same as I told you about the velocity of money which increased substantially applies also to that issue. At the beginning it reflected in increased productivity in developed countries farming out manufacturing to developing countries with cheap labor. Those countries are catching up on intellectual ability (most notably China and India) and advance in communication and transportation is FLATENING the world. During the same time and with the same technology the age old guard of buccaneers, pirates, thieves and swindlers are enamored in droves in joining paper shufflers whose sole purpose is to steal and dupe the unaware with sophisticated financial products – nothing new there. You had the tulip bubble in Holland, John Law’s - Mississippi Bubble that ruined France, the South Sea bubble and the list goes on. The main difference is that all the buccaneers, pirates, thieves and swindlers found an excellent cover up and this is the “WS Investment Banks” which at their inception where plain brokers of financial instruments reflecting real goods in a real economy and their influence was marginal less than 5% of the GDP in the US (today they are well over 25%). The problem is that those activities grew in size and scope as people started to save their hard earned money not in real currency or assets but in financial instruments dreamed up by the hordes of buccaneers, pirates, thieves and swindlers who discovered a legal way of plunder and joined in drove those WS broker/dealer institutions. We as humans cannot keep pace with the technological advances and are incapable to understand the new financial order and technological implication and the psychological effects on people and judge differences between various cultural mentalities and various societies customs or distinguish between an honest broker and a crook that work under the auspices of a so called “respectable bank” (compare the settlement time of checks and debit notes 25 years ago and now, same with other financial instruments transaction). Add to this all the velocity of manufacturing cycle from design to consumers, the velocity of money resulting form that (like the just in time inventory) and substantial growth in wasteful consumerism (when was the last time you gave your shoes for repair? – once they lasted almost a generation) therefore you have the sure prescription of disaster as people cannot see and understand the minute details of the new and fast moving financial world (when walking in the forest you notice every detail, each tree trunk, little flowers, grass, mushrooms etc., but when driving by it is just a forest with trees). During the last crisis I estimate that around $3 to $4 trillion went up in smoke, part in real terms part in imaginary terms (fall of the financial markets as an example) at a time that mostly the US syphoned well over $1 trillion of other people’s money into their pockets. In any ordinary world, such pillage and damage on this scale (as evidenced in the Goldman Sachs fraud which resulted in syphoning German income tax money to the US Treasury, via IKB Deutsche Industriebank AG) and will represent a “Casus Belli” and prompt a war and force the US to pay damages similar to the Germans who paid through their nose after WWI, and ruined their country. Unfortunate this is not happening and worst the US administration has no qualms about the pillage their corporate citizen have done and still doing to the world and continue to support the same group of buccaneers, pirates thieves and swindlers, even that under international laws plunder of public or private property is a war crime and that is exactly what the US and other WS banks did and still do. Until this will not be rectified nothing will change and all the other stories are the spinning propagated by the crooks sitting in Washington DC, some genuine crocks some clueless people that are duped into believing those fairytale stories. Economics is a simple phenomenon of monetary and asset movements based on supply and demand and people productivity and innovation. What makes it all extremely complex and on purpose are the fact that people gained over centuries their trust in the financial institution (no one is burying his hoards of gold coins in his back yard anymore) and fiat money with the ongoing fractional banking system which is fully exploited by the bunch of buccaneers, pirates thieves and swindlers in the financial markets. Keep in mind that 90% if not more of the financial activity taking place every day is pointless without any real benefit to the real economy and its population and only enrich the brokers who go by names like banks in their various forms and nuances, pension funds, insurance companies and the like. Therefore most the financial activity happen today do not bring any positive contribution to society at large and only enriches the bunch of buccaneers, pirates thieves and swindlers Ask Mervin King or one from his staff what percentage of transaction within the UK banks are related to real transaction for goods and services including exports and imports and how much is relating in jockeying position in the financial markets including front running ahead of a real life transaction. As I told you until those “financiers” will not be brought to justice forced to disgorge of their profits which are mostly illicit and even facing a firing squad which they deserve, nothing will change the future crises will only grow deeper and deprive more people of more of their savings. It is a fact that the fall of Lehman Bros inflicted over $300 billion in damages worldwide as a result of deceit of their financial statements and financial products build on fantasies – did anyone at Lehman go to jail or forced to disgorge their compensation and resulting assets? Did any of their senior managers forfeit their illicit profits? NO because the US treasury and other US enforcement agencies are populated with the same type of crooks that work on WS. The sad part of it is that they ALL think they make "GOD'S WORK" Those are my 2 cents to Mervin King remarks during his visit in Glasgow

To: pogohere who wrote (113143)	7/17/2010 5:10:38 AM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 116555

True but what about the US state and municipality debt? PIIGS debt is much lower and China does not invest in the US like in Greece for example

To: pogohere who wrote (113143)	7/19/2010 12:15:34 PM
From: pogohere	Read Replies (1) \| Respond to of 116555

EU Banks Stress Test In Focus As Mkts Worry About Resilience By Emma Charlton BRUSSELS (MNI) - The ability of Europe's banks to withstand market turmoil is in focus this week as investors worry about the solidity of the bloc's financial system and about whether tests currently under way are stringent enough to restore confidence. In a bid to reassure the markets that the European Union's financial system won't bend under pressure, the bloc is currently assessing whether its largest banks have sufficient capital buffers to withstand financial market turmoil or the onset of another recession. . . . The EU hasn't published the results of its stress tests before, but it is widely expected to follow the U.S., which published results of stress tests for 19 financial institutions last year under its Supervisory Capital Assessment Program and decreed that 10 of them needed more capital. Facing pressure from markets late last month, the EU agreed to publish the details of the stress tests and to significantly raise the number of European banks being tested from 26 to well over 100. But it's still unclear exactly what the testing parameters will be and which details will be published. The debate over how much detail to release is likely to be intense, because some EU delegations face national banking sector lobby groups who argue that publication of stress tests could have an adverse impact on the very market turbulence it seeks to mollify. In Germany, the biggest EU country, detailed results cannot be published without the agreement of the individual banks concerned, which could present a considerable hurdle. "The Ecofin which takes place next week (July 13) will make the decisions for the dates and methodology of the bank stress tests," a European Commission spokesperson said on Monday. At a meeting in Southern France, French finance minister Christine Largarde told reporters that the results would be published "around July 23." . . . The stakes are high, with many market participants beginning to worry -- even before the methodology has been released -- that the tests might not be vigorous enough. Fueling these concerns was a report in the Financial Times today saying that tests would include a scenario of a 3% haircut on sovereign debt -- a far more benign outlook than many market players think possible. Critics say the tests are largely a public relations exercise and won't price in enough exposure to Eurozone sovereign debt -- or a potential default on Greek or Spanish or Portuguese debt -- because it's too politically sensitive to do so. "In our view, a proper stress test would have to go for scenarios assuming a default on Greek sovereign bonds and a default of other periphery countries, leading to haircuts for these securities of 50% or so," said Jurgen Michels, an analyst at Citigroup in London. "Without such real stress testing, we doubt that the results of the stress test would provide much to restore confidence," Michels added. Moreover, he said, "it would be important to have facilities in place to immediately provide sufficient extra capital to banks that do not pass the stress tests." So far, there are no strong signs that governments are preparing to make such contingency capital available to their national banks. The ECB has said that it will not do so. The market is likely to focus on the fine print next week, when EU finance ministers agree what information they will publish and when. "The credibility of the stress test will depend on the underlying assumptions and their transparency," analysts at Nomura said in a note to investors. "We hope regulators will publish these in detail. If the stress scenarios are not painful enough, do not acknowledge the default risk from some European countries, or if the transparency of the assumptions used is poor, publishing the stress test could be counterproductive and raise more questions about solvency." If the market judges the stress test too lenient, it could punish the very securities the EU is trying to protect. [emphasis added] imarketnews.com