World economy talk

[badsekktor]

*badsektor

The Euro is the currency of the Eurozone which are the EU countries that use the Euro. There are still some EU countries most notably Britain and Sweeden that still use their local currencies the Pound and Krona respectively...

The Euro just like the USD is just a currency of one economic block. Remember the EU united so that they can compete as one economic block, more specifically so they can compete better against the US. So in that sense, the Euro is also not a good replacement for a reserve currency since its also controlled by one economic block which is in Europe. I think what China wants a true real international reserve currency accepted for trade worldwide.

Actually i'm just referring to the EURO as an example but what i'm trying to say is something you have just explained. A reserve currency that is agreed upon by most countries that would be controlled by the organization of nations (maybe World Bank or IMF).

In that way, when we save, we are actually holding real wealth and not a toilet paper.

[tidus1203]

In that way, when we save, we are actually holding real wealth and not a toilet paper.

Now someone else in Tsikot besides me is calling the USD toilet paper!

[uls]

hehe

pero for now, wala pa alternative e

people still go hide in Joy bathroom tissue when they're afraid

Joy bathroom tissue strengthened again last night when the stock market rally faded

safe haven tissue paper

[valvura]

Now someone else in Tsikot besides me is calling the USD toilet paper!

if :usa:$ is toilet paper :moon:, what will Php be? :poop:

[tidus1203]

Super ply toilet paper hahahaha...

No seriously what makes it bad is how they abuse the printing press. They abuse it because they can as the reserve currency. So everytime they borrow they just print the money to pay it back. Baka may pilosopo dyan sasabihin they are not printing money the Fed is merely buying more government bonds. BS, its all the same thing. I am just making it easier for the layman to understand what's really going on. The Philippines can't do that... Whe can't just print dollars and pay our foreign debts... We gotta earn our USD, but the US has a free passport via the printing press.

[Monseratto]

Ford is one lucky company... so far.

Why Ford execs can find reasons to smile

With each passing day, Ford Motor Co.'s determination to forgo federal loans is giving the company a sharper edge over its domestic rivals, who must now answer to the federal government.

While GM and Chrysler were scolded Monday by President Barack Obama's auto task force, Ford remains in control of its destiny and aims to keep it that way.

Ford had enough cash and credit left to forgo federal funding because in 2006 it mortgaged virtually all of the company's assets for more than $25 billion.

This year, Ford also has made major strides -- ahead of its rivals -- with the UAW and with its debt holders.

"I think it really speaks to the relationship we do have" with union leaders, Bill Ford said, "that we could do this without a gun to their heads ... absent any external pressure, i.e. the government."

What's more, Ford also has decided not to take part in the federal program to guarantee payments to suppliers.

"We have sufficient liquidity, so we are paying our suppliers," Mulally said.
Still, Ford faces huge challenges. The company lost a record $14.6 billion last year and burned through more than $1 billion in cash per month during the fourth quarter. Since then, industry sales worldwide and in the United States have declined further.

"They have made a lot of progress," said Robert Schulz, credit analyst with Standard & Poor's. "But if light-vehicle sales stay 9.8 million this year" in the United States "and 11 million next year, we still think there is a risk they would have to seek government funding."

[uls]

Tagal naman

Obama Said to Conclude Bankruptcy Best Option for GM, Chrysler
http://www.bloomberg.com/apps/news?p...=aUFsRbmQyiJU&

March 31 (Bloomberg) -- President Barack Obama has determined that a prepackaged bankruptcy is the best way for General Motors Corp. to restructure and become a competitive automaker, people familiar with the matter said.

Obama also is prepared to let Chrysler LLC go bankrupt and be sold off piecemeal if the third-largest U.S. automaker can’t form an alliance with Fiat SpA, said members of Congress who have been briefed on the subject and two other people familiar with the administration’s deliberations.

[uls]

Chinese philosopher Lao Tzu: A journey of a thousand miles begins with a single step

Ending USD dominance

STEP ONE: Avoid using the USD

UPDATE: PBOC Eyes More Currency Swaps To Up Trade In Crisis
http://online.wsj.com/article/BT-CO-...31-702771.html

BEIJING (Dow Jones)--China is in discussions with more central banks around the world to sign bilateral swap agreements, the People's Bank of China said Tuesday, in a bid to promote trade and direct investment during the financial crisis.

In a statement posted on its Web site, the PBOC said the swaps mean developing economies are "better positioned to play a bigger role in safeguarding regional and global financial stability and promoting trade and investment growth."

Since December last year, China has entered into currency swap arrangements totaling CNY650 billion with South Korea, Hong Kong, Malaysia, Indonesia, Belarus and Argentina.

Under the swap arrangements, those countries would receive yuan that can be used to settle trade with China.

"Currency swaps enable a central bank to inject the swapped amount in a foreign currency into its domestic financial system, which will be borrowed by domestic commercial entities to pay for imports from the other country," the central bank said.

[tidus1203]

Nice! Now these few countries at least agree to use their own currencies for trading instead of using the USD as the basis for trades... As the biggest victim of US debasement, China is leading the charge!

[uls]

what's the difference between Social Security and a ponzi scheme?

Northern Trust explains:
http://www.northerntrust.com/popups/...t/dd033109.pdf

What's the Difference between Madoff and U.S. Social Security?

Coercion. Both depend, or in the case of Madoff, depended, on being able to get new contributors into the scheme in order to pay off the previous contributors. The Social Security Administration has the power of the law to force new contributors into its scheme. Madoff did not have the power of the law to force new contributors into his scheme, therefore, he has been accused of breaking the law. Just another example of how it's good to be the king.

haha

if you're government, you can run a ponzi scheme

[tidus1203]

Yeah in essence the Social Security (even our local SSS or GSIS) is just a massive government sponsored ponzi scheme. Because the new entrants pay for the benefits of the old entrants... The difference is, private people can't operate a ponzi schemes and governments can. Even our monetary system is ponzi and its collpasing and they are trying to do their best from keeping it from collapsing.

[uls]

yep

it's all ponzi

we live in a ponzi world

[uls]

Do GM bondholders really want GM to survive?

i don't think so

here's why

GM bonds have already lost a lot of value

as it is, lugi na ang mga bondholders (if they want to sell the bonds)

GM Bonds Fall on Concern Obama Will Allow Bankruptcy (Update1)
http://www.bloomberg.com/apps/news?p...pFm2s&refer=us

April 1 (Bloomberg) -- General Motors Corp. bonds tumbled on concern that President Barack Obama will let the biggest U.S. automaker file for bankruptcy.

GM’s $500 million of 7.7 percent notes due in 2016 fell 8.8 cents to 10.4 cents on the dollar as of 9:45 a.m. in New York, a record low, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 79.7 percent, or 77 percentage points more than similar-maturity Treasuries, Trace data show.

that's 10 cents per dollar face value if they sell the bonds

90 percent value lost

Unless the bondholders bought protection against default (credit default swaps)

which just so happens is increasing in cost (increased demand for protection)

The cost to protect against a GM default for five years matched a record high. Credit-default swaps on GM rose 1 percentage point to 86 percent upfront, according to prices from Phoenix Partners Group and CMA DataVision. That’s in addition to 5 percent a year for five years, meaning it would cost $8.6 million initially and $500,000 annually to protect $10 million of the automaker’s debt. Contracts protecting against a default through Sept. 20 were trading at a mid-price of 73.4 percent upfront, CMA data show.

The derivatives, which are privately negotiated contracts used to hedge against losses or speculate on a company’s creditworthiness, pay the buyer face value in exchange for the underlying bonds or the cash equivalent set by the auction.

most big bondholders buy credit default swaps to protect against default

if GM goes bankrupt, the bondholders who bought protection will get paid face value by the protection sellers

Now, if you're a GM bondholder who bought protection , seeing the value of the bonds drop to 10 cents per dollar value, would you still want GM to survive? or go into bankruptcy?

hmmmm

hehe

[tidus1203]

The other interesting news bits are the current G20 meeting in London. Its the battle between the spenders (US and litte bro UK) vs the regulators (France and Germany) vs the anti-protectionists (China and the developing nations).

[uls]

correction on my post above:

which just so happens is increasing in cost (increased demand for protection)

should be (increased risk of protection)

---

anyway

how do you turn toxic assets into not-so-toxic assets?

you suspend an accounting rule that forces you value the assets at market prices (which makes them worthless in this environment)

FASB Eases Fair-Value Rules Amid Lawmaker Pressure
http://www.bloomberg.com/apps/news?p...4jc&refer=home

April 2 (Bloomberg) -- The Financial Accounting Standards Board, pressured by U.S. lawmakers and financial companies, voted to relax fair-value rules that Citigroup Inc. and Wells Fargo & Co. say don’t work when markets are inactive.

The changes to so-called mark-to-market accounting allow companies to use “significant” judgment when gauging the price of some investments on their books, including mortgage-backed securities. Analysts say the measure may reduce banks’ writedowns and boost their first-quarter net income by 20 percent or more. FASB voted on the rules at a meeting today in Norwalk, Connecticut.

the banks will now "use “significant” judgment when gauging the price of some investments on their books, including mortgage-backed securities"

the asset values will now be determined by the banks themselves, not the market

goodbye mark-to-market

hello MARK-TO-FANTASY

[tidus1203]

Natawa naman ako. Marked based on their JUDGEMENT??? Eh sino pa maniniwala dyan. Marked to market is the best method PERIOD! That is the price someone is willing to pay for the asset so you are assured may buyer at that price. Mark to Fantasy yan lang yung price NA GUSTO MO MAKITA pero sa presyong WALANG BIBILI

Nako daming ng Doctorate in Accounting...

[uls]

or MARK-TO-MAKE-BELIEVE

tuwang tuwa ang stock market

Dow up more than 200 pts as im typing

this is all artificial now

there's no more free market

[tidus1203]

I did say previously that the stock market has bottomed back in March 6 and I stand by that. However, I still believe walang BULL MARKET... So if you're dreaming the DJIA will go back up to 14,000 during the 2007 highs, dream on!

[uls]

Kermit!



stocks totally ignored the unemployment number

amazing

suspending mark-to-market caused this

[Monseratto]

Lahat dinadaan na lang sa sentiment rather than fundamentals. Wall Street is just running on air...BTW, 8.5% na pala ung unemployment rate and still counting.