and gather dust..
Yawn. Sri Jim Rogers has made and gotten some mighty bold calls bang-on target in the past. However, past perf is no guarantee of future returns.He said: 'Greece is insolvent, Portugal has a liquidity problem, Spain has a liquidity problem, Belgium has been cooking the books for a long time, Italy has been cooking the books for a long time and the UK is totally insolvent.'
Read more: http://www.thisismoney.co.uk/news/artic ... z17ftcNvPQ
Ain't that the truth. bwahahahahaha.While debt owed by the British government is less, relatively, than the amounts faced by Ireland, Greece or Japan, the UK's debts in total are 466% of annual economic output once consumer debt is included. That's second only to Japan.
Britain has so far escaped the wrath of bond markets, partly because it is has particularly long dates on its gilts, reducing the need to keep asking for more money, but also because of the belief that the large and efficient British economy will deliver strong growth that will produce rising tax receipts to pay of government debt and rising incomes to pay off consumer debt.
But Rogers has previously raised conerns that with North Sea oil nearing the end of its useful life, Britain has 'nothing left to sell'.
140 years ago was the 1857 War of Independence and its aftermath!The smart thing would be to forget about penalizing exporters. And forget about exports as well. It is a pity rain played spoilsport for cotton exporters. But they have had their chance. The government allowed them to go ahead and export, braving the fury and protest from domestic spinners and weavers. Now in all fairness it is time the domestic industry got reasonably sufficient quantities of raw material, without the constant threat of shipments hanging over their heads.
And farmers won’t be hurt either. If the crop is indeed low, and the CAB will check on that, then they are holding a golden egg. Most have sold off their crop any way because it has low shelf life this season. If the harvest improves and a genuine surplus re-emerges, exports can always be resumed.
Of course India's exit will drive the world cotton market ballistic. The highest prices in 140 years - that's as long as cotton has been traded - are refusing to climb down. The ban on cotton yarn has already kicked up world prices. By barring free trade of the physical commodity, India is clearly exporting textile inflation to cool its own WPI index. That may seem a complete waste of opportunity to Indian spinners and exporters. Their only consolation is that in government and in business, nothing is forever.
Indian cotton share was equal to the US southern cotton share. Both were feeding Manchester mills.ArmenT wrote:^^^
140 years ago, India wasn't a premier exporter of cotton though. The US was the big kahuna of cotton exports and 1861 was when the Civil war started. Before the Civil War started, the South started to mess with the cotton supply, with the hope of pressuring the European countries to support them. This was the primary cause of rise in cotton prices.
Such events can sometimes make elitemen improve the well being of commons. Sometimes, not always. The elitemen in West, when they see such events, act fast as they know that commons who are throwing stones today can also shoot guns tomorrow. But elitemen in India ignore such events as commons have no guns, and stones cant do much damage.Singha wrote:protesters attack prince charles & camilla's car over university fee 3X hike
http://www.nytimes.com/2010/12/10/world ... ml?_r=1&hp
LONDON — Britain’s coalition government survived the most serious challenge yet to its austerity plans on Thursday when Parliament narrowly approved a sharp increase in college fees. But violent student protests in central London, including an attack on a car carrying Prince Charles and his wife, Camilla, to the theater, provided a stark measure of growing public resistance .....
Brits carry weapons like Amirkhans eh?Rahul Mehta wrote: Such events can sometimes make elitemen improve the well being of commons. Sometimes, not always. The elitemen in West, when they see such events, act fast as they know that commons who are throwing stones today can also shoot guns tomorrow. But elitemen in India ignore such events as commons have no guns, and stones cant do much damage.
Events like these will ensure that West will re-stabilize, and for that matter West hasnt lost anything yet. But India may not recover at all.
It means people think a moderate economic recovery is underway. The yield went down because a slowdown if not another recession was expected, but now that the economy continues to grow, yields are going back up again.ramana wrote:Why is the 10 year rate ~ 3.23% now. It used to hover around ~2.xx % a few days ago? What does this mean ? Less money in the system? Or fears of inflation?
As recovery takes hold, money is rotating to other asset classes where returns are higher, so yields have to rise as a result. Without recovery, everyone piles on treasuries as no other asset class is seen as safe.Suraj wrote:QE2 sent bond prices down and yields up in the process. That is to be expected - greater federal debt load and greater risk premium demanded by the market.
there is no recovery. printing money & running up debt is all that's going on.vera_k wrote: As recovery takes hold,
There is a recovery in the short term. In the long run we're all dead anywaysNeshant wrote:there is no recovery. printing money & running up debt is all that's going on.
no productive industry has emerged to create well paying jobs on a mass scale.
There is no recovery, its just money printing and running up debt.There is a recovery in the short term.
That was stated by Maynard Keynes.In the long run we're all dead anyways
In the meantime there's money to be made investing next week and next year.Neshant wrote:I stand by my prediction that within 3 to 5 years, the federal reserve will be shut down.
Verravera_k wrote:As recovery takes hold, money is rotating to other asset classes where returns are higher, so yields have to rise as a result. Without recovery, everyone piles on treasuries as no other asset class is seen as safe.Suraj wrote: That is to be expected - greater federal debt load and greater risk premium demanded by the market.
A for illustration of how bond yields will stay low in the face of massive currency printing and weak economy.
Japanese yields
and you say exactly contradictoryQE2 sent bond prices down and yields up in the process. said suraj saar which is absolutely correct
when massive printing occurs the bond prices fall and the yield will go up.A for illustration of how bond yields will stay low in the face of massive currency printing and weak economy.
So it is the latter - i.e. inflation fears and not the lack of liquidity (the first in the 2 alternate reasons suggested by Ramanaji)? For long we've been told while there is plenty of liquidity at the primary dealer level (since Shri Bernanke turned spigot to fully open position) there was less money sloshing in the system as banks were not lending it. Looks like things have changed on that front.Suraj wrote:QE2 sent bond prices down and yields up in the process. That is to be expected - greater federal debt load and greater risk premium demanded by the market.
That is true under normal circumstances. But what happens if printing is done because everything is going kaboom and TINA to government bond?ShivaS wrote:when massive printing occurs the bond prices fall and the yield will go up.
when economy is in down turn the yield will fall as you pay higher price for the bond.. (opposite of stocks)
ramana wrote:Why am I posting this in this thread?
Please read the issue!
Foreign Affairs:Nov-Dec 2010 Issue
RamanajiThis reminds me of popular wall street belief. "Our banks may be insolvent, but we can get more bonus now". Who cares about other suckers in the world. I'm fine as long as I can make money.vera_k wrote:In the meantime there's money to be made investing next week and next year.
Years ago I'd read similar tales about parts of Cleveland. 'Twas only when I happened to pass through that city on a road trip did I realize the enormity of the match between fact and news report.Detroit has been bankrupt for years. It simply refuses to admit it. Detroit's schools are bankrupt as well. A mere 25% of students graduate from high school.
Yet, in spite of hints and threats from mayors and budget commissions, and in spite of common sense talk of bankruptcy, Detroit has not pulled the bankruptcy trigger.
In a futile attempt to stave off the inevitable one last time, Mayor Bing's latest plan is to cutoff city services including road repairs, police patrols, street lights, and garbage collection in 20% of Detroit.
Bing to Cede 20% of Detroit to Gangs and Homeless
City officials suggest this will not shrink the size of the city. Perhaps it won't shrink Detroit on Google Maps. However, Bing's plan would effectively surrender 20% of the city to gangs and the homeless.
Would you want to live in one of the gang war-zones that his plan would create? Would you want to live in a bordering neighborhood or in a bordering city?
Regardless of your answer, Bing's plan cannot and will not work and I believe Detroit will, sometime in 2011, file for bankruptcy. If so, expect massive turmoil in municipal bonds.
Yup, I'll be watching though I don't expect major fireworks. It'll happen slowly and managebly only. IMHO.Note the ridiculous rating of those bonds by Moody's and by Standard & Poor’s. If the Federal government is backing those bonds, then they are AAA. If not, they are junk. There is no in-between.
Thankfully, the extremely ridiculous Build-America-Bond program will expire on December 31. When it does, no one in their right mind will lend Detroit money, and that at long-last will mean "lights out" for Detroit.
A new Republican governor takes over in Michigan next year, complete with a new Republican legislature. I believe Governor-Elect Rick Snyder will be amenable to fixing what ails Detroit and numerous other cities in Michigan.
Should Mayor Bing not seek bankruptcy assistance, I propose for Governor Snyder to force Detroit into bankruptcy. It is the only hope Detroit has. Mayor Bing is clearly in over his head.
Governor Snyder would be a hero if he can turn Detroit around, and outside of bankruptcy that appears impossible.
Thus, forced or not, I believe Detroit will file bankruptcy in 2011, the state will accept it, and public unions will be forced to accept massive concessions in bankruptcy court.
Look for massive turmoil in the municipal bond market as a result.
Admittedly I too visit econoblogs far less these days. Work pressures preventing as much exploring as I want to do aaj kal....In Gulzar's words....Dil Dhoondta hai, phir wohi, fursat ke raat din....Hari Saar, you are an ardent follower of Mish, don't you get tired of his 'sensationalizing' every single news bit out there? I vividly remember him screaming about Seattle,Portland,Atlanta and almost every other city/county going bankrupt.I gave up reading his blog a long time ago..
Student janta in oirostan are a pampered lot or what? subsidized education as some entitlement and rioting tantrums/paki tactics otherwise? Reminds me of CPM goons trashing public property on Calcutta when Presidency college dared raise late fees on Library books by 10 paisa or something some yrs ago - yup, 10paisa that was!Student Riots in Rome http://on.wsj.com/hiUB9X Unemployment among Italians below the age of 29 is already near 30%
I've waited so long for bond mkt dislocation that I've become jaded only. Mind you, I wouldn't wish it on anyone - save TSP and UQ. Just being realistic only.Portugal must raise €38bn, Belgium €85bn, Spain €210bn, and Italy €374bn in 2011 to finance themselves. Zoiks! Bond slaughter here we come.
Aha. So when are the long suffering germanic tribes gonna give up on the last attempt at pan-oiro reich? Not long I reckon but hey, don't expect fireworks or anything overnight. Its gonna be slow-grind or so it will seem though by historical timescales the oiro disintegration might just happen quite quickly only.Germany has seen €1 trillion – or two thirds of its entire savings since 2002 – leak out to fund the EMU party, gutting investment at home.
Yup. Don't count on any of that happening anytime soon, though. Bread and circuses are more important than ever now to keep the heavily armed populace drowsy just a little more longer.In order to balance the budget the US government would have to cut 100% of Discretionary Spending and 34% of Mandatory Spending.
Bah. Nothing jaw-dropping or anything about this. Remember the time from just a few yrs ago when a billion dollahs was like a lot of money? In another decade a trillion dollahs won't be such a bog deal anymore only. Also, gotta reeeally appreciate the fed's ecological concerns and promotion of green agenda - physical printing of bills is out. electronic gaming is just so much more modern and cool.America’s government debt is set to expand by a jaw-dropping 42pc over the next few years, reaching $19.6 trillion by 2015
YAWN. And this is news because? Still, I can understand janta getting worked up and all. Someone somewhere must find this newsworthy, perhaps.66pc of Americans say country is on wrong track & 51pc worse off now than in 2008 http://bit.ly/i91N5I Bloomberg National poll.
Wow. Canada, even w/o a globe-spanning military industrial empire and associated costs, with more natural resources per capita than 'em khans and w/o the front org of a private banking cartel masqurading as central bank has managed to get deeper into debt than 'em khans, eh? The only way for kanada now seems to be thrust independence on quebec. Am told that province takes in some 200% of what it contributes to the federal revenue pool. only.Canadian prudence? Hahaha. Canadians With More Debt Than U.S. Spark Policy Makers' Warning http://bit.ly/hCNXyw 148pc vs 147pc. Go Canada!
Yawn. Deflation is reality. No inflationista is claiming printing driven hyper-inflation has arrived already. It will come, but not tomorrow or maybe even day after tomorrow (as Japan's sad case shows).QEII is proving to be deflationary. Higher rates mean falling home prices and thus more write offs for banks due to defaults. QEII supporting commodities. Margins collapsing for retailers as seen today with Best Buy. Consumers lack purchasing power for rising costs.
LOL. And a bigger rescue fund will rescue what exactly from the stench of inevitability??ECB urges bigger rescue fund as bond investors punish Spain http://bit.ly/gkloCv
Long live the mervyn king, eh? Anyone surprised UKstan was at the center of all the fraud, deception, mass wealth-transfer from citizienry to elite, mass-socialization of pvt losses, intensive+extensive cover-up, propagandu and what not, eh? Just like TSP is the center of jeehardy terror in the world, so is UQ that of financial terror only. Hmmph.WikiLeaks cables: Mervyn King plotted banks bailout by four cash-rich nations http://bit.ly/hBS1dU
Austria is better off than Belgium by all of these measures. Its debt and deficit are both considerably lower (68 percent of GDP versus 96 percent of GDP and 3.5 percent of GDP versus 6 percent of GDP, respectively), its political system is more or less in order, and its housing sector — nearly alone within Europe — was never overbuilt. Austria’s biggest outlier is that its banks are listing badly, due to their overexuberance in lending into the now-popped credit bubble that plagues Central Europe.
....
Austria and Belgium are advanced, technocratic economies with sophisticated financial sectors. Any financial contagion that breaks into the developed states of Western Europe via these two countries would terrify investors who have been fairly convinced that the euro’s problems were safely sequestered in the somewhat manageable states of the PIIGS grouping. Should Austria or Belgium go the way of Greece, all bets will be off in Europe.
Compare-and-contrast the fates of Ireland and Iceland:
Both had the same problem: Disproportionately large banks for the size of their respective economies. Both banking sectors of both countries had taken on liabilities which rendered them vulnerable as a baby’s belly to a falling knife.
In 2008, the knife fell: A lot of the assets on the balance sheets of both banks were proven to be worth fractions on the Euro—if not worthless altogether.
But in the fall of 2008, the two countries’ fates diverged:
On the one hand, Iceland’s people refused to have their government be saddled with the debt of their insolvent banks, Landsbanki and Kaupthing and the others. The Icelanders requested an IMF bailout to the tune of $2.1 billion (compared to their GDP of $12 billion). But they refused—vociferously—to be saddled with the debts of their banks.
What were the consequences? The Krona suffered an 80% devaluation, interest rates went to the moon. Unemployment spiked from 6% to 9.3% in a month . . .
. . . but it wasn’t that bad. It wasn’t fun, but it wasn’t the end of the word, either. Even with severe austerity measures that included higher taxes on all sectors of the economy and severe cuts in public services, unemployment reached only 9.6% at its worst point, averaged 8.8% during 2009, and is now only 7.6%. Source is here.
On the other hand, what did Ireland do?
When it’s banks were shown to be insolvent in the fall of 2008, Prime Minister Brian Cowen went and guaranteed the Irish banks. In other words, he made the Irish government assume the debts of the banking sector.
Ireland hasn’t had a moment’s peace of mind ever since—for two years, the Irish have been stumbling about, trying to make good on their banks’ liabilities, while the country slowly sinks.
Finally, a couple of weeks ago after a bond market mini-panic, the Irish were bailed out by the ECB and the IMF—the Irish fought centuries of British rule, only to finally surrender their sovereignty to bureacrats from Brussels.
Will the Irish situation get any better?
In a word, no. The Irish are still saddled with the euro—they haven’t been able to devalue their currency, in order to restart their internal economy, and make themselves attractive to foreign capital. Coupled with that, they have had to take severe austerity measures and tax hikes, in order to make good on the bonds that the Irish banks owe.
That is to say: The Irish people are suffering, so that UK and German bankers don’t have to take any losses.
Meanwhile, in Iceland today, after seven consecutive quarters of negative growth, the Icelander economy is picking up. In 2011, the Icelander government will have a surplus; the balance of trade is already in surplus. With the devalued Krona, Iceland became a magnet for foreign investment. Unemployment is going down.
Things are good in Iceland.
In Ireland? Not so much—and they won’t be getting any better any time soon. The rosiest predictions have the Irish economy turning around in 2013, 2014 . . . maybe.
Ok Take a sec and digest that. Yawn. I know. DC will intervene and bail out everybody. No? Well, maybe. We'll see. It has more to do with ability than desire, actually. Perhaps. And with 'em GOP nutters run riot in COTUS, compared to 'em mature, compassionate, serious, sane Dems (No?), who knows even about the desire part, eh? Esp when the states and cities most on the line are a deep blue hue, eh?...the US federal government is in the same position that Germany is with respect to Greece — the creditors (in this case public employee pensions) have to take a massive haircut for the numbers to add up. The delayed effect of the real estate collapse (which is still getting worse) is going to hit local revenues next year due to massive downward adjustment in tax assessments. This is the killer:
Plunging home prices fuel property tax appeals swamping US cities and towns
It’s cities, not states, that live off real estate taxes. Local government was riding the real estate boom along with everyone else but it takes a couple of years for the price collapse to work its way through tax assessments. What’s going to happen is two, three, many Harrisburg bankruptcies. The cities will collapse and the states will push them over the edge (like NY State with NYC in 1974). They’ll make a horrible example of a couple of states — California and Illinois — others will hold the line as the cities go down like ninepins
Boing boing. Ab chamka. How better also to break the 'em Dems' unionized base, eh?There are nearly 11 million local government employees (not counting 3.56 million part-time), or a full-time equivalent of 12.2 million. Full-time equivalent for states is only 4.4 million. So most of the savings (and union-busting) has to come from local governments in the first place.
Amen.There’s a limit to how far they can take this: Banks and insurance companies together have about $700 billion of munis. You can wipe out mom and pop (did so already with the auction securities market) but a 40% haircut would take out about $300 billion of financial institutions’ capital — not pretty. And that’s not to mention the spillover effect on other markets. That’s yet another reason not to own the banks’ common equity.