World economy talk

[Monseratto]

Black rant....ears bleeding from all the bad words!

In less than three years, Obama has taken a super power with an excellent reputation and made us a bunch of welfare dependent losers with bad credit and no jobs! But wait, I know...its all Bush's fault, right!

[ame="http://www.youtube.com/watch?v=-McpNtHet3w"]Real Sh*t: Felonious Munk Presents "Stop It B! OBAMA PAY YOUR F*ckin BILL" - YouTube[/ame]

[uls]

re Greece

Troika Talks on Aid to Greece Stall - WSJ.com

"I expect a hard default definitely before March, maybe this year, and it could come with this program review," said a senior IMF economist who is keeping close tabs on the situation. "The chances for a second program are slim."

[Monseratto]

Will Gold break the previous highs? This early in the day...it just might.



Especially with headlines like this...

IMF: global economy faces a 'threatening downward spiral'

Christine Lagarde, the IMF's managing-director, said the outlook had darkened suddenly over the summer.

"There has been a clear crisis of confidence that has seriously aggravated the situation. Measures need to be taken to ensure that this vicious circle is broken," she said.

The comments come at the start of a dramatic week for the eurozone as Italy prepares to roll over record sums of debt and Germany's constitutional court issues its long-awaited verdict on the legality of the EU's bail-out machinery.

Markets are already tense after the EU-IMF 'Troika' withdrew abruptly from Athens on Friday, accusing the Greek government of failing to comply with rescue terms.

The ECB has stabilised Italy's debt over the last four weeks, capping yields on 10-year bond yields near 5pc through purchases on the secondary market.

It is unclear how much longer the ECB can keep doing this after a string of top officials in Germany described the bank's actions as illegal.

"The ECB cannot substitute for governments," said Mr Trichet.

The ECB has bought an estimated €35bn of Italian debt under an implicit accord that Rome will deliver on austerity promises.

Premier Silvio Berlusconi has come close to breaching the terms by backsliding on a wealth tax and pension reform.

"It's clear that the euro has virtually failed over the last ten years, even if you are not supposed to say that. We pretended to be Germans, but it was an illusion," said Professor Giacomo Vaciago from Milan's Catholic University.

Separately, Germany's constitutional court is expected to rule on Wednesday that Berlin's participation in EU bail-outs is allowable so long as the Bundestag is given a veto over future payments. However, there is an outside risk that it will go further, concluding that the nexus of rescue policies subvert EU Treaty law and German fiscal sovereignty and must therefore be curbed. This would amount to a "sudden stop" for EMU debt markets.

The judges are aware of these risks, yet they ruled two years on the Lisbon Treaty that German democracy is "inviolable" and that Berlin is duty bound "to refuse further participation in the European Union" if the constitutional order is threatened.

German patience with Athens is already near exhaustion. Prince Hermann Otto zu Solms-Hohensolms-Lich, the Bundestag's deputy president, said Greece cannot bring its debts under control.

"We must consider whether it would not be better for the currency union and for Greece itself to go for debt restructuring and an exit from the euro," he told the Frankfurter Allgemeine.

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[tidus1203]

By the way no US markets today or shall I say tonight!

They have a LABOR DAY holiday... Kinda ironic after Friday's non-farm payrolls...

[Monseratto]

http://www.economicvoice.com/wikilea...igher/50023375

Wikileaks China buying gold memo set to push gold prices higher
September 4th, 2011
Author: Jeff Taylor

Over the last decade the price of gold has risen consistently and markedly in an ever increasingly steep manner, with the curve now almost parabolic.
This has tempted many to say that the end of the ‘gold bubble’ is nigh.


But this leaked cable sent from the US embassy in Beijing in April 2009 under the name of Picutta and posted on Wikileaks does suggest that China is buying gold with the intention of weakening the dollar’s reserve currency status and that gold prices will keep going up.

“3. CHINA’S GOLD RESERVES

“China increases its gold reserves in order to kill two birds with one stone”

The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): “According to China’s National Foreign Exchanges Administration China ’s gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold’s function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar’s role as the international reserve currency. China’s increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB.” “

But it’s not only China that is in the gold buying market. India is also seeing record demand for the yellow metal that in itself is believed will push up the price of gold.



But if China is also buying up in an attempt to weaken the US then where is that price likely to go?

Also, what would happen if the scenario put forward by Zerohedge on pension fund managers and the like also getting the gold bug as a more defensive financial posture is required.

As the piece points out the amount of gold held in investment funds across the globe is pitifully small (possibly because there is no commission in it). And that even the smallest percentage increase in that holding will send the price of gold stratospheric.


‘Now here’s the fun part. Let’s say fund managers as a group realize that bonds, equities, and real estate have become poor or risky investments and so decide to increase their allocation to the gold market. If they doubled their exposure to gold and gold stocks – which would still represent only 0.6% of their total assets – it would amount to $93.3 billion in new purchases.

How much is that? The assets of GLD total $55.2 billion, so this amount of money is 1.7 times bigger than the largest gold ETF. SLV, the largest silver ETF, has net assets of $9.3 billion, a mere one-tenth of that extra allocation.’

But that’s just fund managers, as Zerohedge points out, what about the $18.7 trillion in insurance companies, the $3.8 trillion in sovereign wealth funds …. .

If these players get the gold bug then any price may be cheap!

[uls]

^^^

China has so much paper wealth they have to convert part of it to hard assets

thing is whatever China is buying, prices are driven up

[tidus1203]

Bwisit di ako nakadagdag sa GOLD positions ko nung last correction. Ang bilis eh, 3 araw lang ata tinagal!

[Monseratto]

^ Spot gold touched the US$ 1902 level before dropping again...

NYMEX Gold

[tidus1203]

Deustche Bank's CEO Dr. Josef Ackermann on European banks...

Ackermann also warned that many European banks could go under if they had to accept the "haircut" on their sovereign debt holdings that has been proposed in some quarters.

"It's stating the obvious that many European banks would not survive having to revalue sovereign debt held on the banking book at market levels," he said.

News Headlines

So he is saying without some accounting magic, these banks are FAIL! so Europe has some ZOMBIE BANKS? Kinda like the one in the US in 2008. Should be dead, but are still living so they are UNDEAD!

[uls]

Deustche Bank's CEO Dr. Josef Ackermann on European banks...



News Headlines

So he is saying without some accounting magic, these banks are FAIL! so Europe has some ZOMBIE BANKS? Kinda like the one in the US in 2008. Should be dead, but are still living so they are UNDEAD!

di nila mark-to-market ang value ng mga bonds na yan. hold to maturity sila so they value those bonds at face value

if they mark-to-market those bonds (like some bonds are trading at 50% face value in the secondary market) a lot of eurozone banks' will be insolvent

[uls]

Greece 2 yr yield

50%!

[uls]

[tidus1203]

US markets is closed... But hell in European stock markets...

The DAX in Germany is down more than 5.50%

France CAC Quarante is down 5%

London's FTSE100 is down 3.7%

Total massacre in Europe...

[Monseratto]

Everything else is bloody red.

The cost of insuring against default on European sovereign debt surged to record highs on concern the region's debt crisis is worsening.

Credit-default swaps on Greece soared 100 basis points to 2,450, according to CMA. Contracts on Italy jumped 24.5 basis points to a record 427, Portugal climbed 33 to 1,013 and Spain rose 17 to 409, while Germany increased 4 to 83 and France was up 13.5 at an all-time high of 185.

[tidus1203]

Buti na lang I got rid of it when it was dancing in the 1.45 area... But I exchanged it for CAD so mas mababa nakuha ko since CAD>USD!

[Monseratto]

What's this?

http://streetlightblog.blogspot.com/...satlantic.html\

And now, the flip side of the story presented yesterday, in which ECB data seems to indicate that monetary financial institutions (MFIs) in Europe have been moving their deposits out of European banks. Where is that money going?

It looks like much of it is being placed with US banks instead. The following chart shows the total deposits at domestically chartered commercial banks in the US. (All data is from the Federal Reserve Board, through August 17, 2011.)

Clearly, something is going on -- the recent rise in deposits with US banks has been dramatic, with an above-trend increase in deposits of approximately $500 billion over the past 6 months.

Who is responsible for this sudden inflow of deposits into the US banking system? The answer is non-US banks, as illustrated in the following picture, which shows the cash assets of domestically chartered banks alongside the cash assets of foreign-owned banks in the US.

The cash assets (i.e. bank deposits) that foreign banks are keeping in the US banking system has risen sharply over the past 6 months -- not coincidentally, by about $500 billion. Meanwhile, domestic US banks have started showing some similar tendency toward accumulating cash, but only to the tune of approximately $150 billion, and only over the past 2 months.

Recall from yesterday's post that MFIs in Europe have drained their bank accounts at European banks by about €700 billion over the past year and half, which at current exchange rates is approximately $1 trillion. It seems that much of that money has recently found its way into the bank accounts that European MFIs keep in US banks. And conversely, it seems likely that the large inflow of cash deposits held at US banks this year is largely from European banks.

Putting it all together yields a compelling story: European banks are shifting their cash assets out of European banks and putting much of them into US banks. (An interesting question is what European MFIs have done with the remaining money they've withdrawn from the European banking system... but that's a story for another day.) This has happened at a significant rate, with a net transatlantic flow from European to US banks that probably totals close to half a trillion dollars in just six months.

If you're wondering exactly who has been the first to lose confidence in the European banking system, look no further. It seems that at the forefront is the European banking system itself.

Data released by the US Federal Reserve on Friday indicated that unnamed foreign banks transferred cash into the country's banking system over the summer, while separate data from the ECB that shows that European banks have been withdrawing their cash from the European banking system.

[Ry_Tower]

What's this?

The Street Light: Europe's Banking System: The Transatlantic Cash Flow

Nak nang.... natakot sa sariling multo! tsk tsk tsk

[uls]

let's go back to page 1 of this thread (July 2010)

uls:

European banks are in bad shape

they're all highly dependent on the ECB now

they'll collapse without the help of the ECB

uls:

the fear is -- if EU countries default on their debt, the banks holding the debt will suffer massive losses and could collapse

they haven't fixed anything

[uls]

brent