World economy talk

[Negus]

Lawrence Wilkerson, former chief of staff to United States Secretary of State Colin Powell:

From US debt to the geopolitics of oil, the US empire will come to an end

[ame="http://www.youtube.com/watch?v=9P8CzRbLnC4"]YouTube - Pt2 The Military-Industrial-Congressional Complex[/ame]

I’m interested to know where he got those numbers (14 trillion) . Did he forget Arabs, Russians and Brazilians ?
but there are some truths about what he says about Japanese housewives, aptly named "Mrs. Watanabe Effect".

[uls]

^^^

so far, there's still strong demand for USG debt paper

foreign AND domestic

U.S. households soaking up Treasury debt flood
http://www.reuters.com/article/ousiv...59R4AH20091028

WASHINGTON (Reuters) - Americans have developed an appetite for U.S. government debt at a most opportune time -- just when the Treasury has an awful lot of it to sell.

Stunned by an $11 trillion drop in wealth, households more than doubled Treasury debt holdings in the first half of 2009 to protect battered savings, helping soak up a flood of government borrowing.

The coming months will test whether the surge in demand was simply a short-lived flight to quality in the midst of a panic, or a more lasting shift in investor attitudes and behavior.

Depending on the answer, the implications for the broader economy are big. Without a sufficient core of willing buyers, the cost of financing government debt would soar, putting a drag on an economy fighting its way out of a deep recession.

While foreign central banks in countries such as China and Japan remain the most critical source of financing for U.S. debt, American households are quickly catching up.

With $605.9 billion in Treasuries as of June 30 -- up from $240 billion six months earlier -- U.S. households held more than the world's major oil exporters, Caribbean banking centers and Brazil combined. The only major foreign holders with larger positions were China and Japan.

The question is whether private investors remain loyal to U.S. bonds or are lured by bigger returns elsewhere once economic confidence returns.

"What we worry about in the U.S. Treasury market is, who is the next buyer after foreign central banks?" Drew Matus, U.S. economist with BofA Merrill Lynch Global Research, said in an interview. "If it's only the domestic U.S. investor, what's the (interest) rate that they want to get paid on it?"

The renewed household demand is critical now because the government needs somewhere between $1.5 trillion to $2 trillion in funding to cover a gaping budget deficit this fiscal year.

[tidus1203]

Gross domestic product grew at a 3.5 percent annual rate, beating the consensus forecast for a 3.3 percent pace. But two of the biggest contributors — spending on durable goods and residential investment — received substantial boosts from Washington's emergency rescue efforts.

Ok for textbook economists (I am not one of them, I am think out of the box) the recession is over kasi we have stopped the drop in GDP and now make a positive gain from the previous quarter. Try telling that to still millions of people unemployed! A real strength of an economy is when you remove government interventions and support and let the private entities run the economy at least as far as I am concerned.

[uls]

it's artificial recovery

it's massive govt spending (stimulus)

cash-for-clunkers, home buyer credit etc

it's the Fed's zero rates, QE

[tidus1203]

All the gains yesterday because of the positive GDP wiped out today and then some...

[uls]

everyone knows the GDP number was largely distorted by USG support

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the rally on Thursday created an excellent selling opportunity on Friday

those who wanted to sell on Wednesday but didnt sell sold on Friday

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the rally Thursday also sucked in bulls

only to be slaughtered on Friday

[tidus1203]

CIT Files Bankruptcy; U.S. Unlikely to Recoup Money
Nov. 1 (Bloomberg) -- CIT Group Inc., a 101-year-old commercial lender, filed for bankruptcy to cut $10 billion in debt after the credit crunch dried up its funding and a U.S. bailout and debt exchange offer failed.

http://www.bloomberg.com/apps/news?p..._GrxbL2U&pos=1

[Monseratto]

Zombie...zombie!!!

I hope this won't have a Lehman Brothers effect. The US goverment will now be more reluctant to save this too-big-to-fail zombie. Double dip recession?

[uls]

everyone knew CIT bankruptcy was inevitable

the USG already tried to save CIT (CIT received TARP money in Dec 2008)

$2.33B lugi ng US taxpayer

no, CIT bankruptcy won't have a big effect on the financial system

Lehman was way more systemically interconnected than CIT

banks all over the world had Lehman as a counterparty

CIT is just a lender to small and medium sized business

[br733]

i remember someone posted a a screencap of the number of put and call contracts for nymex crude a while back.

just want to know how the situation is now? are speculators long or short on crude now?

[uls]

December $70 puts were quite active last week (bets that oil will fall to that level)

also active were December $90 and $100 calls

--

as long as NYMEX crude stays above $75, it's bullish

if it falls below $75, it will be bearish

it's $77.44 now

[br733]

which has got more contracts? dec$70 put, dec$90 or $100 call?

i remember last year, the trader's position became a self fulfilling prophecy which lead to record oil prices.

[tidus1203]

everyone knew CIT bankruptcy was inevitable

the USG already tried to save CIT (CIT received TARP money in Dec 2008)

$2.33B lugi ng US taxpayer

no, CIT bankruptcy won't have a big effect on the financial system

Lehman was way more systemically interconnected than CIT

banks all over the world had Lehman as a counterparty

CIT is just a lender to small and medium sized business

Yes systematically very little effect but this is a big blow to the broader economy. SME's in the US create the needed jobs to spur the economy and not the big Wall Street corporations. This is going to be a long recession (my definition of recession not the governments) so brace yourselves!

[uls]

^^^

yep

small/medium sized businesses that depend on CIT for funding lost their source of funding

it's a chain reaction

workers get laid off, suppliers don't get paid...

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br733:

which has got more contracts? dec$70 put, dec$90 or $100 call?

i remember last year, the trader's position became a self fulfilling prophecy which lead to record oil prices.

the Dec $100 calls have more contracts

more than 70,000

the Dec $70 puts have around 45,000 contracts

[tidus1203]

Trade na trade na ako sitting in my comfy chair in front of my netbook then nagtataka ko why the hell is the market not moving 9:30PM Manila time na!!! So I thought it was a holiday, NOPE its not a holiday in the US. Yun pala, bumalik na sila sa regular time so 10:30PM Manila time na ang bukas ng US market which is 9:30AM New York time. I hate this thing, oh well it should last for 4 months...

[uls]

haha

ako din nagtaka

yun pala tapos na daylight savings time sa states

[br733]

the Dec $100 calls have more contracts

more than 70,000

the Dec $70 puts have around 45,000 contracts

thanks, uls

[uls]

but if you look at the put/call ratio, it's at 1

http://www.schaeffersresearch.com/st...odPutCall.aspx

[br733]

what do you mean the ratio is 1.

[tidus1203]

It means the amount of puts and call open interest in the market are the same, thus ratio is 1...