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To: Haim R. Branisteanu who wrote (76119)	7/7/2011 5:31:10 PM
From: TobagoJack	1 Recommendation Read Replies (1) \| Respond to of 219772

everything i wrote is either facts or my interpretation of facts, i.e. truth re icbc, yes, the wrap a/cs are marketed, very lightly and yes, bank of china system subsidiary banks do deal in paper gold, script silver, and fibre platinum the potential is there and being tee-ed up in the mean time, just in in-tray From: R Sent: Fri, July 8, 2011 1:30:43 AM Subject: The Subprime Loan Revisited The Subprime Loan Revisited Ramsey Su July 2011 The now infamous subprime loan has the following characteristics: 1. The Subprime Borrower - borrowers who have no ability to repay the amount of debt. 2. The Subprime Lender - lenders who are willing to lend because of some random AAA BBB CCC rating. 3. The Rating Agencies - the spineless pencil pushers who can be bought or pressured into assigning random alphabets to financial products. 4. Big Bad Banks - Banks that will sell refrigerators to igloos as long as there is a fee. They will even sell bad loans to themselves. 4. Stated Income - borrowers are allowed to state their income, with no verifications needed. 5. Accommodating Fed - the Federal Reserve is needed to provide easy credit and to keep rates low. 6. No Collateral Needed - appraisals are manipulated while lenders are willing to provide loans that are above the value of the inflated collateral. 7. Refinancing - subprime loans must be refinanced continuously just to make interest payments via increases in the principal balance. By the way, I am not talking about mortgages, I am referring to the world of subprime sovereign debt, from the Greek bonds to the US treasuries. Why would the Greeks or the Irish bother with repayment, especially with these painful austerity plans? Trichet ECB) this morning said default must be avoided. That is almost as silly as saying death must be avoided. When you lend someone an amount of money that they have no ability to repay, then lend them more money to pay interest, and keep repeating this process indefinitely, what outcome should a logical person expect? Why would US worry about debt ceiling? Taxpayers, through no fault of their own, are somehow obliged to pay on these subprime loans that they never intended on taking out. Instead of HAMP, why can't we have CAMP (country affordable modification program)? Instead of making loan payments that is too high, all borrowers should decide how much they like to repay, in interest as well as principal. Joking aside, the upcoming subprime sovereign debt crisis is even more obvious than the subprime mortgage crisis. Anyone who cares to do the simple math can see how the debt can only add up to disaster. Greenspan claimed that no one could have predicted the subprime credit melt down. Bernanke said he did not see it coming. Now Bernanke is dreaming about 2nd half recovery, again. The world would rather be lied to as long as the lies are what they want to hear. This human behavior is simply baffling, just a baffling as why the Greeks in Athens are not stock piling some food and water, and that there are still money left in Greek banks. As for me, I think I am going to Costco to buy a few pallets of canned food.

To: Haim R. Branisteanu who wrote (76119)	7/7/2011 8:21:10 PM
From: elmatador	Read Replies (2) \| Respond to of 219772

Central banks have pulled 635 tonnes of gold from the Bank for International Settlements in the past year, the largest withdrawal in more than a decade. Central banks pull most gold in a decade from BIS Central banks have pulled 635 tonnes of gold from the Bank for International Settlements in the past year, the largest withdrawal in more than a decade. The move, disclosed in the BIS’s annual report, marks a sharp reversal from the previous year when central banks added to deposits of gold at the so-called “bank for central banks” rather than lending it directly to the private sector amid growing concerns over counterparty risk. Central banks and other official institutions collectively hold about 30,000 tonnes of bullion in their reserves, and many seek to earn an income on their gold by lending it out, just as any other currency. However, demand to borrow gold has fallen sharply in the past decade, driving interest rates on gold lending to record lows. Hedging by gold miners, which is typically structured to involve borrowing gold, was traditionally the largest source of demand. But since miners have cut back their hedging programmes to almost zero, the gold lending market, which is mediated by large bullion-dealing banks, has dwindled. Lending gold for six months earned a rate of 0.1 per cent on Thursday, according to benchmark market assessments published by the London Bullion Market Association. In response to e-mailed questions, the BIS confirmed that the fall in the value of gold deposits disclosed in its annual report represented “a shift in customer gold holdings away from the BIS”. “The Bank’s gold deposit liabilities declined by around 635 tonnes between 31 March 2010 and 31 March 2011,” it added. Comparison with previous annual reports showed the withdrawal was the largest in at least 10 years. Traders said the move of gold holdings away from the BIS probably reflected a combination of factors. Some central banks, unimpressed with the paltry interest rates on offer, may have taken the decision not to lend their gold at all. “My perception is there’s less and less gold being put out by the central banks into the gold market,” said one banker. However, some central banks may have rediscovered an appetite for lending gold to the private sector, which can earn higher rates depending on the credit rating of the counterparty and structure of the transaction. “As commercial banks’ balance sheets have started to look better there may have been a switch back to lending to the private sector,” said Philip Klapwijk, executive chairman of GFMS, a consultancy. “Yield enhancement can be a powerful inducement to a central banker,” an industry executive added.

To: Haim R. Branisteanu who wrote (76119)	7/8/2011 7:08:31 AM
From: elmatador	Read Replies (1) \| Respond to of 219772

The process of reducing the rich world’s debt burden has barely begun Deleveraging You ain't seen nothing yet The process of reducing the rich world’s debt burden has barely begun Jul 7th 2011 \| WASHINGTON, DC \| from the print edition FOR Federal Reserve officials, marking down America’s economic outlook has become a depressing routine. A year ago they projected growth of about 4% this year and next. By last month they had chipped those numbers down to 2.8% this year and 3.5% next. “We don’t have a precise read on why this slower pace of growth is persisting,” said Ben Bernanke, the chairman. But he ventured that “balance-sheets and deleveraging issues” may be stronger headwinds than expected. The same diagnosis may explain similar disappointments in other highly indebted rich countries. In late 2009 the Bank of England reckoned Britain would be growing by 4% this year. It now thinks it will grow by closer to 2%; the private-sector consensus is a mere 1.5%. The Bank of Spain has avoided similar climbdowns by starting out pessimistic and remaining so. In a study early last year, the McKinsey Global Institute, the consultancy’s research arm, noted that combined public and private debt burdens had reached historic highs in many rich countries. Based on previous episodes of debt reduction, it reckoned that once deleveraging began, countries would on average spend the next six to seven years whittling those debt ratios back by around 25%. McKinsey has updated some of those numbers and has found that although debt for the most part has stopped rising as a share of GDP, in only one big economy, America, has it visibly fallen. Private-debt burdens have begun to drop but across the rich world that has been offset by an increase in public burdens (see charts). Deleveraging is “just starting”, says Charles Roxburgh of McKinsey. McKinsey’s original prognosis was grim: after a crisis, countries historically saw their economies contract in the first year or two of deleveraging. No big economy has yet fallen back into recession after exiting its post-crisis downturn (although that risk remains given the low level of growth and how far debt reduction has to go). But the deleveraging process helps explain why some recoveries have been vigorous and others tepid. Germany and Canada, for example, entered the crisis with relatively low levels of public and private debt. In Canada household debt has actually risen as the country’s housing market has inflated. Germany has grown faster than expected, while Canada’s growth, at around 3%, has been on target. Italy, France and Japan entered the recession with low household debt but high levels of government borrowing. France has implemented a fiscal consolidation plan; Italy’s cabinet approved one on June 30th. French growth is picking up but Italy’s continues to lag behind and Italian bond yields have risen lately as worries about peripheral European solvency spread. The earthquake and tsunami in March have disrupted both Japan’s recovery and its hopes of reducing its enormous debt burden. Spain, Britain and America have the worst of both worlds. All three started with dangerously stretched household balance-sheets. Now, because of the collapse in private economic activity and the use of stimulus measures, the public books are in similar straits. Even their experiences, however, differ in important ways. American households have already chipped their debts down to 112% of annual disposable income, according to Haver Analytics, from a peak of 127% in 2007. Britain’s decline has been less dramatic and Spain’s debt-to-income ratio has hardly fallen at all. Mr Roxburgh thinks the differing legal structure of mortgage markets may explain some of the difference. In many American states, in contrast to Britain and Spain, a lender has no recourse to a defaulting homeowner’s income or other assets. The borrower thus has an incentive to default on a mortgage worth more than his home. Write-offs are running at around 2% of banks’ secured loans in America but close to zero in the euro zone and Britain. In Spain and Britain house prices have also fallen less steeply than in America and borrowers have been cushioned by ultra-low interest rates, reducing their incentive to pay down or walk away from debt. Higher mortgage payments will add to the squeeze on Spanish households, however: the European Central Bank was expected to raise short-term interest rates for the second time this year on July 7th after The Economist went to press. The Spanish government is trying to lessen the pressure, announcing on July 1st that more of a borrower’s income would be shielded from seizure, and more of a mortgage could be cancelled once a property is auctioned. Britons have raised their savings rates more than Americans or Spaniards, despite a smaller increase in unemployment and comparable trends in income. A 2010 survey for the Bank of England suggested the government’s drastic deficit-reduction plan may be a reason: 18% of respondents expected to save more in response to higher taxes and reduced public services, and just 3% expected to spend more. This cannot fully explain Britain’s lacklustre recovery—higher fuel prices and disappointing export growth are also to blame. But it is still a cautionary tale for America. Both Britain and Spain “have adopted sobering deficit-reduction plans that have severely hit households’ expectations of real disposable income whereas the US has not,” says Simon Hayes of Barclays Capital. That may change soon: the Obama administration and Congress are currently negotiating a deficit-reduction package that could amount to $4 trillion or 2% of GDP over ten years. In June the IMF urged America to slash its structural deficit by a cumulative 7.5% of GDP by 2016, enough to trim 0.5-0.75 percentage points off average growth over the period. If that advice is followed, Mr Bernanke should brace for more downward revisions. from the print edition \| Finance and Economics