Imminent and severe market correction

[Whiskers]

arrr, well now, the problem is that common sense is not all that common

Agree there... self interest far more common.

 

[MRC & Co]

Yeah, agree to some extent MRC &Co.

The PPP thing came up out of a bit of a tiff I had with dukka about... not sure how it started now. You'll have to read back the thread.

ha ha, I think I will leave it, cant be bothered reading that many pages!

But PPP is more a long-run concept, interest parity a more short-term concept. Then you have the problems trade barriers, transport costs and different taxation systems in various countries. Another reason pointing to the restrictions of economics, but its still an interesting concept and does show to some extent a standard of living. However, Real GDP is a fare more useful measure IMO.

Cheers

 

[dhukka]

No doubt a lot of head aches to come in the bond insurance business... self interest of the rating agencies... a change of rating system or splitting up of insurers. Be interesting to see who wins out there. The Rating agencies have 'threatened' action ages ago but interestingly have not followed through. I guess it would not be very pleasent in their shoes if a subsequent inquiry found the stalemate or disaster of rating downgrades had a smell of unjustified anomolies and self-interest.

Interesting to note the muni bonds are safer than the bond insurers. Get a reasonable fix here and most of our worries go away for now.

Muni bonds are not the problem. the problem is the billions of worthless CDO crap that the monolines have insured. They don't have the capital to cover the potential losses and keep their AAA rating. If they lose their rating, it would mean billions in writedowns for the likes of Citi, Merrill etc.

The muni bonds are easy to take care of. Buffet and a dozen others would be glad to step in and reinsure them. The muni business is money for jam.

The rating agencies have given the monlines until the end of Feb to come up with more capital or some other plan. However the rating agencies hardly want to be blamed for a more massive writedowns so they'll do anything to avoid downgrading. Will be an interesting week for the monolines next week.

 

[Whiskers]

Muni bonds are not the problem. the problem is the billions of worthless CDO crap that the monolines have insured.

Yeah, I get that dhukka.

I should've reversed my last two sentences and into seperate paragraphs. It would have been clearer.

But in a sense the muni bonds seem to be a problem in that they are far more secure and deserve a higher rating than a lot of the stuff they are rated along side. Obviously part of the dilema in trying to get value for and determine what to split off and or sell.

The other issue that has been brewing for awhile and might be coming to a head re further intervention/regulation is poiniently outlined below.

February 21, 2008, 7:36 am
Muni mess: Another black eye for Wall Street
The mess in an obscure corner of the municipal bond market is turning into another black eye for the banking industry. Bloomberg reports that the collapse of the $342 billion market for so-called auction rate bonds “demonstrates that regulators are no match for Wall Street.” Dealers such as Goldman Sachs (GS), Citi (C) and Merrill Lynch (MER) previously propped the market up by bidding for bonds that otherwise would have gone unsold, but they are now walking away from this once-lucrative niche in a bid to preserve their own strained balance sheets. Auctions failed on between $80 billion and $85 billion of auction-rate debt failed last week alone, The Wall Street Journal reports. As a result, even high-quality bond issuers such as the Port Authority of New York and New Jersey and the University of Pittsburgh Medical Center have ended up paying interest rates as high as 20 percent after the auctions for their bonds failed to draw any bidders.

The government hasn’t been totally blind to the possible conflicts of interest in the auction rate market: An earlier SEC probe of possible bid-rigging ended with 15 banks agreeing in 2006 to a $13 million settlement. Now, however, taxpayers are left footing the bill as Wall Street seeks to save its own hide. Meanwhile, understatement remains the order of the day in Washington. Referring to the possibility of bid-rigging in the auction rate market, an SEC official tells Bloomberg that the recent collapse of demand at auction “appears to indicate those concerns were well founded.”
http://dailybriefing.blogs.fortune.cnn.com/2008/02/21/muni-mess-another-black-eye-for-wall-street/

 

[dhukka]

Yeah, I get that dhukka.

I should've reversed my last two sentences and into seperate paragraphs. It would have been clearer.

But in a sense the muni bonds seem to be a problem in that they are far more secure and deserve a higher rating than a lot of the stuff they are rated along side. Obviously part of the dilema in trying to get value for and determine what to split off and or sell.

The other issue that has been brewing for awhile and might be coming to a head re further intervention/regulation is poiniently outlined below.

The problem with the muni bonds is for the muni bond holders. If the monolines get downgraded the muni bond ratings get downgraded and then the muni bond holders have to sell because they aren't allowed to hold anything but AAA.

It's really a stupid situation when you think about it. The state of New York, which is already a top class credit, pays for insurance from a bond insurer that has a lower credit rating thatn the credit it is insuring.

 

[Kauri]

Well the Philly fed turned into Philly cream cheese,,, giving the Dow futures a bit of a knock... but if it's bad news it won't take long to pick up... after all bad news is good news..
Cheers
..........Kauri

 

[Whiskers]

Well the Philly fed turned into Philly cream cheese,,, giving the Dow futures a bit of a knock... but if it's bad news it won't take long to pick up... after all bad news is good news..
Cheers
..........Kauri

Well... they almost got over it... having another think about it!

Turning back to that China 'decoupling' thing...:hide:

The're clever little critters. This one's a bit out of left field, but just might work.

China farmers to get fridges, TVs to boost consumption

"This is like free food falling from the sky!"

Yuan was the beneficiary of a pilot scheme entitling each rural family in Shandong and two other provinces to a 13 percent government rebate on the purchase of up to two television sets, two refrigerators and two mobile handsets.

The subsidies are part of a battery of policies by Beijing aimed at spurring domestic consumption and improving the lot of the country's roughly 740 million rural residents, who make up 56 percent of the population but have not benefited nearly as much from the economy's roaring growth as people in cities.

The concept is enticingly simple: give farmers the same tax rebates long given to exporters of home appliances, removing a policy bias towards exports and helping manufacturers tap a potentially huge pool of consumers in rural China.
http://www.reuters.com/article/ousiv/idUSPEK26642620080221?pageNumber=1&virtualBrandChannel=0

 

[Kauri]

Well... they almost got over it... having another think about it!

Turning back to that China 'decoupling' thing...:hide:

The're clever little critters. This one's a bit out of left field, but just might work.

now all they need is the power to make them more than ornaments..

Cheers
.........Kauri

 

[Whiskers]

now all they need is the power to make them more than ornaments..

Cheers
.........Kauri

Coming into spring summer there soon... they'll be right for a little while, so long as they don't start giving out air conditioners.

 

[Kauri]

life is hard at the top....

the Fed's predicament is pretty hair-raising, with Bernanke and co willing to risk a battle with inflation over the medium to longer-term if it means keeping the housing-led credit crisis from sending the US economy into a tailspin in the near-term. That bet leaves the dollar vulnerable, particularly if the Fed is seen as losing both bets simultaneously, which recent data appear to suggest. Of course there is a 2-3 qtr lag between monetary stimulus and the economic payoff, so some are still betting on better US economic performance by mid-year, which may help the buck.

 

[Uncle Festivus]

Have a bet or stick to the facts?.........Mmmmmm, perhaps I'll toss a coin.

Perhaps it will become known as the 'Upsize My Derivatives' period? Do you want recession with your fried financials?

 

[dhukka]

Well... they almost got over it... having another think about it!

Turning back to that China 'decoupling' thing...:hide:

The're clever little critters. This one's a bit out of left field, but just might work.

This has go to be one of the stupidest things I've seen for a while. The government desperately encouraging people to buy crap they don't need to keep people in jobs. Yeah there's a viable economic model.

 

[Whiskers]

This has go to be one of the stupidest things I've seen for a while. The government desperately encouraging people to buy crap they don't need

Crap they don't need... wow, I'd have thought everyone needs a fridge, TV and phone these days. Common dhukka your're not being very charitable.

to keep people in jobs.

And you have to agree if they can pull it off it will enpower the rural poor to be more productive and efficient, to bridge the povety gap, probably enable more to stay in the country resulting in less conjestion and pollution in the cities.

The bit I like... it will reduce their increasing reliance on exports for their GDP and, as I say if they can pull it off, will be great for the continued prosperity of China and further decoupling from the US.

Yeah there's a viable economic model.

Too right :

 

[ithatheekret]

The Phily caught them at the trough .

That's the third successive number below zero , the fourth decline in a row ......... there's no recession out there , and pigs fly .

The ISM readings ......... well . apart from thinking the data is being squashed and moulded into something sheeple can swallow , is starting to sempahore that they can't hold back the numbers now .

Let's just have a look at the last round before we hit oh I don't know , say around 45 this go , but this was discussed a couple of months ago , I know couldn't find where so I thought I rehash it .

50.4 blip
50.0
48.4
50.7 blip
47.0 last reading

???? next ?

 

[dhukka]

Crap they don't need... wow, I'd have thought everyone needs a fridge, TV and phone these days. Common dhukka your're not being very charitable.

A fridge they need, 2 they don't, although it's debatable whether the rural poor need a mobile phone or even a TV for that matter.

And you have to agree if they can pull it off it will enpower the rural poor to be more productive and efficient, to bridge the povety gap, probably enable more to stay in the country resulting in less conjestion and pollution in the cities.

Please tell me you're joking. I would completely disagree, how does a TV make you more productive and efficient? The whole policy screams of inefficiency, using government money to artificially stimulate demand for discretionary items (fridge excluded). It's no better than the US's fiscal stimulus package of mailing checks to people. It's a clumsy inefficient use of government funds,

The bit I like... it will reduce their increasing reliance on exports for their GDP and, as I say if they can pull it off, will be great for the continued prosperity of China and further decoupling from the US.

It just doesn't get any funnier than this. I admit - you got me, hook, line and sinker.

 

[dhukka]

The Phily caught them at the trough .

That's the third successive number below zero , the fourth decline in a row ......... there's no recession out there , and pigs fly .

The ISM readings ......... well . apart from thinking the data is being squashed and moulded into something sheeple can swallow , is starting to sempahore that they can't hold back the numbers now .

Let's just have a look at the last round before we hit oh I don't know , say around 45 this go , but this was discussed a couple of months ago , I know couldn't find where so I thought I rehash it .

50.4 blip
50.0
48.4
50.7 blip
47.0 last reading

???? next ?

Leading economic indicators, (which ironically are mostly lagging) fell for the fourth straight month. The index has fallen 2% from July 2007 to January 2008 making it the largest six-month decline in the index since early 2001.

 

[Trembling Hand]

although it's debatable whether the rural poor need a mobile phone or even a TV for that matter.

I would completely disagree, how does a TV make you more productive and efficient? The whole policy screams of inefficiency, using government money to artificially stimulate demand for discretionary items (fridge excluded).

You would have to be kidding. Any form of communication especially phones but also Yes the idiot box is known to increase health and education for the disadvantaged. Which plainly increases productivity and efficiency?

Wealth distribution to the rural poor with targeted subsidies is a tactic that virtually every western governments uses. And its ultimately a very cheap way to decrease the gap between rural and urban disadvantage. A Fridge is a huge help to families thus increasing their productivity. You cannot see the disadvantage in not being able to store food??

 

[dhukka]

You would have to be kidding. Any form of communication especially phones but also Yes the idiot box is known to increase health and education for the disadvantaged. Which plainly increases productivity and efficiency?

Wealth distribution to the rural poor with targeted subsidies is a tactic that virtually every western governments uses. And its ultimately a very cheap way to decrease the gap between rural and urban disadvantage. A Fridge is a huge help to families thus increasing their productivity. You cannot see the disadvantage in not being able to store food??

Maybe you could read my post again, I wholeheartedly agree that a fridge is a necessity. A phone improves communication but who needs two mobiles in rural China?

How do you increase health exactly? Or do you mean improve health? Americans are the biggest watcher's of TV in the world and how's their health? The poorest and least healthy in the US, also watch the most TV, go figure. Most in the western world could improve their education if they turned off the TV and picked up a book or logged in to an informative discussion board like ASF.

 

[Trembling Hand]

Americans are the biggest watcher's of TV in the world and how's their health? The poorest and least healthy in the US, also watch the most TV, go figure. Most in the western world could improve their education if they turned off the TV and picked up a book or logged in to an informative discussion board like ASF.

By that logic as the Americans are also the biggest users of cars and the fattest in the world China shouldn't have cars??

Governments spread important health education messages via media.(mostly now TV). Many that have missed the boat with reading will only be able to learn and be informed via radio or TV. And are you saying that a TV has NO roll in informing the disadvantaged?

Most in the western world could improve their education if they turned off the TV and picked up a book or logged in to an informative discussion board like ASF.

Most in the developing world would improve their education if they didn't have to live a subsistence life while government invested surplus foreign income in the likes of Blackstone Group at a market top while they haven't the most basic necessities.

A Rural family I imagine would greatly welcome two phones as most have to leave home to find work elsewhere. As they receive no other help from a socialist government the idea that they can help communicating
is great for the family as well as the society. Strong family units add to the economy while broken family units cost the economy.

 

[theasxgorilla]

Most in the western world could improve their education if they turned off the TV and picked up a book or logged in to an informative discussion board like ASF.

Here, here!

The two-way flow of information at a forum like ASF encourages people to give their grey matter a workout...that's got to be a good thing!

ASX.G