World economy talk

[tidus1203]

Looks like the first phase is complete... I am actually now looking at the second phase. The INFLATIONARY PHASE, the phase were all those money in the sidelines start chasing goods in the economy again. hehehehe

[uls]

chasing not only goods...

money will be (or is already) flowing into higher risk, higher yielding assets

the trend of 2H 2008 (lalo na after Lehman died) to Jan/Feb 2009 is to dump everything and go into safe haven cash and treasuries

we are now beginning to see a reversal of that trend

[uls]

Baby steps

Hong Kong Ready to Start Trade Settlement in Yuan
http://www.bloomberg.com/apps/news?p...4Fc&refer=home

April 9 (Bloomberg) -- Hong Kong plans to be the first city outside mainland China to start settling trade in yuan, expanding use of the currency in a city whose exchange rate is pegged to the dollar, Chief Executive Donald Tsang said.

“It will reduce foreign-exchange risks for companies, create more business for Hong Kong banks and diversify use of yuan funds,” Tsang said at a press briefing in the city. “The policy has already been approved. It’s almost here.”

China is seeking to promote the yuan as an international currency after signing 650 billion yuan ($95 billion) in swap agreements with Hong Kong, Argentina, Indonesia, South Korea, Malaysia and Belarus in the past four months. The yuan has gained 21 percent against the dollar since its fixed exchange rate was scrapped in 2005, eroding the value of China’s central bank reserves and exporters’ profits.

[tidus1203]

I always wonder why is there still a Hong Kong dollar?? China should make the Yuan fully convertible and free floating. Then HK can adpot the Yuan as one country, once currency. The US is avoiding on using the term because they want to keep good relations with China, but since I am just an individual and not a government I will say it, they are "MANIPULATING" the currency and keeping it artificially low to prop up exports.

[uls]

the biggest US banks (19 of them) undergo stress testing to see if they can survive further economic deterioration

guess what?

they all passed (haha... maybe somebody made the stress test too easy)

some of them may need more capital (more taxpayer money)

Banks Holding Up in Tests, but May Still Need Aid
http://www.nytimes.com/2009/04/09/bu...2&ref=business

For the last eight weeks, nearly 200 federal examiners have labored inside some of the nation’s biggest banks to determine how those institutions would hold up if the recession deepened.

What they are discovering may come as a relief to both the financial industry and the public: the banking industry, broadly speaking, seems to be in better shape than many people think, officials involved in the examinations say.

That is the good news. The bad news is that many of the largest American lenders, despite all those bailouts, probably need to be bailed out again, either by private investors or, more likely, the federal government. After receiving many millions, and in some cases, many billions of taxpayer dollars, banks still need more capital, these officials say.

lahat pasado

Regulators say all 19 banks undergoing the exams will pass them. Indeed, they say this is a test that a bank simply will not fail: if the examiners determine that a bank needs “exceptional assistance,” the government, that is, taxpayers, will provide it.

oookaaay... so it's a test that everyone passes... it's just to see who needs more help

e hindi ba FAIL ang dapat itawag sa mga kelangan pa ng additional bailout?

---

the Fed tells the banks to shut the hell up...

the banks were told not to say anything or leak anything to the public about the stress tests

Fed Said to Order Banks to Stay Mum on ‘Stress Test’ Results
http://www.bloomberg.com/apps/news?p...MYY&refer=home

April 10 (Bloomberg) -- The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said.

Baket?! where the hell is transparency?

A ok... baka makaapekto pala sa stock prices ng mga bangko

The Fed wants to ensure that the report cards don’t leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government’s plan to release the results in an orderly fashion later this month.

“If you allow banks to talk about it, people are just going to assume that the ones that don’t comment about it failed,” said Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia.

banks stocks are rallying... we don't wanna do anything to disrupt the rally do we? hehe

[tidus1203]

Right. Kala ko ba they promise transparency? Something is fishy here, I can feel it... Maybe those CEO's and officers of the banks that so-called "NEEDS MORE CAPITAL INJECTIONS" wants the rally to continue a bit more so they can get the hell out and their relatives can start shorting the hell out of it

[tidus1203]

China foreign exchange reserves at $1.954 trillion


BEIJING (AP) -- China's central bank said Saturday that its foreign exchange reserves rose 16 percent year-on-year to $1.9537 trillion by the end of March.

China's reserves, already the world's largest, increased by $7.7 billion in the first quarter -- $146.2 billion less than the same period last year, the People's Bank of China said in a notice on its Web site.
That rise was substantially less than the fourth quarter increase of almost $45 billion, according to China's official Xinhua News Agency, showing the impact of slowing exports due to the financial crisis.
In March, the reserves increased by $41.7 billion, it said, $6.7 billion more than the same period last year.
Analysts believe China holds up to 70 percent of its foreign reserves in U.S. dollar-denominated assets, including Treasury securities.
China's reserves have ballooned as the central bank buys up dollars generated from its huge trade and influx of foreign investment.
While China's economy has slowed due to a plunge in trade and a slump in the domestic real estate industry, recent data show the drop eased in March.
Beijing has taken steps to hold down the price of exports by cutting taxes on exporters and stopping the rise of China's tightly controlled currency, the yuan, against the U.S. dollar. Economists say both steps could strain relations with trading partners if China is seen to be competing unfairly.
Western leaders including British Prime Minister Gordon Brown are pressing for China to contribute to a global bailout fund from its reserves.
Exports fell 17 percent in March from a year earlier, the fifth straight monthly decline but less severe than February's 25.7 plunge, the sharpest in a decade, the customs agency reported Friday. It said trade "showed clear signs of improvement."
Imports fell by 25.7 percent, widening the Chinese trade surplus to $18.6 billion from February's $4.8 billion gap.

http://finance.yahoo.com/news/China-...-14903719.html

[uls]

currency manipulation

printing yuan to buy dollars

reducing dollars in circulation strengthens dollar, large supply of yuan weakens yuan

from the article above:

China's reserves have ballooned as the central bank buys up dollars generated from its huge trade and influx of foreign investment.

China protectionism

Beijing has taken steps to hold down the price of exports by cutting taxes on exporters and stopping the rise of China's tightly controlled currency, the yuan, against the U.S. dollar. Economists say both steps could strain relations with trading partners if China is seen to be competing unfairly.

[uls]

About the stock rally, the USG and media propaganda, banks reporting profits...

The USG knows how bad things are

The USG knows that many of the biggest banks are technically insolvent and need more capital

but the American public is sick and tired of bailouts

the US congress probably will not approve another TARP fund

so banks would probably have to raise capital from the private sector

How are they gonna do that?

who's stupid enough to invest in those black holes?

well, look what's happening in the past few weeks...

The USG, Fed, and the mainstream media has been cheerleading the US economy... saying the economy has bottomed and showing signs of recovery... and banks are reporting profits for Q1 2009...

all that has improved market sentiment

aint this a great time to issue new shares?

with the positive mood, the market would be happy to buy the new shares

the banks would be able to raise capital on their own without USG (taxpayer) help.

just watch...

in the coming days or weeks, banks are gonna issue new shares

here's one of them:

Goldman Seeks New Stock Sale
http://online.wsj.com/article/SB123932742279007541.html

Goldman Sachs Group Inc., riding a rising market, is considering making a multibillion-dollar offering of its shares to investors as part of an effort to repay a $10 billion government loan, according to people familiar with the matter.

The move, which could be announced as early as next week, comes as the firm prepares to report solid first-quarter earnings Tuesday. Goldman executives haven't determined the exact size of the offering, but it is expected to be at least several billion dollars, these people say. They caution a final decision isn't made, and will be based partly on market conditions.

[Gen. Miting]

ang alam kaya lumabas noon araw sina bonnie and clyde and john dillinger and baby face eh kasi galit ang mga tao sa mga bangko. the american people in the 30's after the market crash literally made a hero of all the bank robbers that were sweeping the nation.

i think history will repeat itself. the public will turn its ire on all the banking institutions responsible for this mess.

AND then a new hero will emerge making promises that he will cleanse the sweeping corruption and connivance between govts. and financial institutions. kasi sobrang maghihirap mga tao in the next years to come.

some will even believe it will be the homo***uals in govt. and institutions that were partly responsible. kasi nga anti-family eh, kasi wala naman sila anak in the 1st palce. kumbaga society is decaying and we need a new kind of ideological hero.

that's how Hitler rose to power and how he took the entire european continent with little effort.


bale ganito yun

early 1930's stock market crash
mid 1930's the great depression, recession, hardships, poverty
late 1930's uncontrollable crime, lawlessness, anarchy violence all over the world
late 1930's the people begin to accept that society has decayed and fall in despair
1940's the new hope: the anti-christ masquerading as saviour
early 40's to mid 40's World War II and population reduction

ano kaya mangyari ulit?

[uls]

going into bankruptcy... in slooooow mooootioooon

tagal naman

anyway

this is either for real, or the Treasury is bluffing GM bonholders to accept the debt for equity swap

GM preparing for possible bankruptcy: report

Last update: 12:33 a.m. EDT April 13, 2009
LOS ANGELES (MarketWatch) -- The U.S. Treasury is directing General Motors Corp. to lay the groundwork for a bankruptcy filing by a June 1 deadline, despite GM's public contention that it could still reorganize outside court, the New York Times reported Sunday, citing unnamed people with knowledge of the plans.
Members of President Obama's automotive task force are holding ongoing meetings and conference calls with GM officials and their advisers in Detroit and Washington, the report said, with the goal to prepare for a fast "surgical" bankruptcy.
The preparations are aimed at assuring a GM bankruptcy filing is ready if the company is unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in GM and to get needed concessions from the United Automobile Workers union, the report said.

[tidus1203]

Bernanke Bet on Keynes Has Meltzer Seeing 1970s-Style Inflation

April 13 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke is siding with John Maynard Keynes against Milton Friedman by flooding the financial system with money.
If history is any guide, says Allan Meltzer, the effort will end in tears. Inflation “will get higher than it was in the 1970s,” says Meltzer, the Fed historian and professor of political economy at Carnegie Mellon University in Pittsburgh. At the end of that decade, consumer prices rose at a year-over- year rate of 13.3 percent.
Bernanke’s gamble that the highest jobless rate in 25 years and the most idle factory capacity on record will hold down inflation is straight out of the late British economist Keynes. Should late Nobel-prize-winner Friedman’s dictum that “inflation is always and everywhere a monetary phenomenon” prove right, the $1 trillion or more in liquidity Bernanke has pumped into the financial system by expanding the Fed’s balance sheet may leave him to cope with surging consumer prices.

http://www.bloomberg.com/apps/news?p....kU&refer=home


I think alam naman ng lahat na sa Tsikot (at least those who follow this thread) na I am not a big fan of John Meynard Keynes teachings... Meron pa ngang violent reaction dito when I called it fraudulent Go Milton Friedman hehehe!

[uls]

Ben is confident kasi when inflation starts to pick up, he will raise rates

and he will sell the assets he has accumulated to absorb the excess liquidity

let's see how good his timing is

if does it too early, economic growth will hit a wall

if he does it too late, there will already be very high inflation

like i said in an earlier post... we will see

we will see

[tidus1203]

I think there is no perfect timing in this one. My guess he will raise rates to late as political pressures will prevent him to raise it earlier as politicians and Wall Street is just starting to get addicted to the bubble he is creating again. In fact sa recent history ng Fed no one has really hit that sweet spot or the so-called Goldilocks economy. In the 70's they were not fast enough to raise rates to counter the inflation, and then Volcker overdid it. He killed inflation but the US suffered a severe downturn with his 20%++ interest rates...

[tidus1203]

Natawa ako sa headlines. GM shares tumble upon increasing chance of bankruptcy... Eh bakit ako last year pa lang even before the bailouts alam ko nang eventually bankrupt din yan. No one defeats the free markets, if the demand is not there and no one wants to buy GM cars no matter how you prop it up it will FAIL!

[uls]

mahilig kasi ang USG sa zombie movies

Night of the Living Dead Financials and Automakers

[tidus1203]

Yep they love the dead over the living. Pag ako USG I will let the zombies be exorcised and instead give the money to the living so they can further strengthen their businesses and be able to accomodate the market share left behind by the zombies. Stop bailing out the dead, start bailing out the living!!

[uls]

The Borg... i mean Goldman Sachs reports better than expected earnings

and as expect... announces a stock offering

Goldman wants to repay the TARP ASAP

http://www.cnbc.com/id/30195775

Goldman Sachs Group announced better-than-expected earnings of $3.39 a share, or $1.66 billion, for the first quarter, but the company's stock fell in after-hours trading on news of a $5 billion share offering.

The securities giant, unexpectedly announcing results a day early, said the higher-than-expected profit was helped by strong trading revenue.

The New York-based bank also announced a $5 billion offering of common shares to the public. The proceeds, plus additional funds, will be used to repay the $10 billion of capital it received from the U.S. government under the Troubled Assets Relief Program. The money will be repaid pending the results of the government's "stress test" on the bank, Goldman said.

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in other news...

ummm... there's no other news

hehe

[uls]

is there any surprise how Goldman Sachs made money in Q1 2009?

remember the credit default swap payouts from AIG?

March 16, 2009
AIG (AIG) Discloses Financial Counterparties; Goldman Sachs (GS) Received $13 Billion
http://www.streetinsider.com/Corporate+News/AIG+(AIG)+Discloses+Financial+Counterparties;+Gold man+Sachs+(GS)+Received+$13+Billion/4486979.html

After pressure from politicians, bailed out insurer AIG (NYSE: AIG) listed information identifying certain credit default swap counterparties, municipal counterparties and securities lending counterparties. The data shows that roughly two-thirds of the $173.3 billion in federal aid AIG received has been paid out to trading partners.

The data shows that Goldman Sachs (NYSE: GS) received $2.5 billion for AIGFP CDS couterparties payouts, $5.6 billion from Maiden Lane III CDS payouts and $4.8 billion from securities lending.

who is Maiden Lane III?

wiki:

Maiden Lane III LLC is a holding company created when American International Group Inc. (AIG) was taken over by the U.S. government in September 2008. Similar to Maiden Lane II LLC, Maiden Lane III LLC aims to purchase multi-sector collateralized debt obligations (CDOs) on which the Financial Products group of AIG had written credit default swap contracts. On November 25, 2008, the Federal Reserve Bank of New York began extending credit to Maiden Lane III LLC. As of December 17, 2008, The Federal Reserve's net portfolio holding of Maiden Lane III LLC is 19.656 billion dollars.

Goldman profitted from bets it made with AIG

the USG provided funds to AIG so AIG can pay its counterparties

taxpayer money

[tidus1203]

And the taxpayers won't even get a penny from Goldman Sachs as they benefited from the AIG bailout which also came from the taxpayers. Its just a massive transfer of wealth from the poor to the rich. Another reason why I was against the bailouts. Goldman Sachs is mart enough and old enough to understand the risks and now when they make money they won't share it back but if they lose money they whine and cry...

Anyway, regarding GS shareholders they will be diluted. So to hell with profit, I am getting diluted I am getting the hell out!