The WaveNET Perspective - Seeking Alpha © seekingalpha.com. Use of this feed is limited to personal, non-commercial use and is governed by Seeking Alpha's Terms of Use (http://seekingalpha.com/page/terms-of-use). Publishing this feed for public or commercial use and/or misrepresentation by a third party is prohibited. SeekingAlpha.com http://seekingalpha.com/author/the-wavenet-perspective Why A Durable Recovery Still Remains Elusive http://seekingalpha.com/article/477701-why-a-durable-recovery-still-remains-elusive?source=feed 477701 Last month, marked by Greece's massive debt restructuring along with renewed optimism in the world's stock markets, eclipsed the fact that expectations for a durable recovery are still resting on shaky financial foundations. By shaky financial foundations I refer to the insolvency risks still faced by a few big European banks and sovereign governments, despite enormous liquidity injections by central banks.

Central banks - acting as lenders of last resort - are critical to the functioning of a country's finances. According to official reports, the central banks of the G7 countries are now sitting on oversized balance sheets whose assets, consisting mostly of government bonds, now collectively approach $15 trillion. Since this is more than twice the amount they held before the Great Recession in 2007, it begs for a question: can these gigantic fixed-income positions be unwound without causing more instability?

No one knows yet. But until then, it

]]> Wed, 04 Apr 2012 04:27:11 -0400 The WaveNET Perspective Last month, marked by Greece's massive debt restructuring along with renewed optimism in the world's stock markets, eclipsed the fact that expectations for a durable recovery are still resting on shaky financial foundations. By shaky financial foundations I refer to the insolvency risks still faced by a few big European banks and sovereign governments, despite enormous liquidity injections by central banks.

Central banks - acting as lenders of last resort - are critical to the functioning of a country's finances. According to official reports, the central banks of the G7 countries are now sitting on oversized balance sheets whose assets, consisting mostly of government bonds, now collectively approach $15 trillion. Since this is more than twice the amount they held before the Great Recession in 2007, it begs for a question: can these gigantic fixed-income positions be unwound without causing more instability?

No one knows yet. But until then, it


Complete Story »]]> The WaveNET Perspective Financial Fitness: A Key Requirement For A Durable Recovery http://seekingalpha.com/article/435401-financial-fitness-a-key-requirement-for-a-durable-recovery?source=feed 435401 The Question from Greece

The month of March, marked by Greece's massive debt restructuring which averted a vastly destabilizing credit default, appeared to some as if a major obstacle to economic recovery was finally removed. Yet, for others, it served to refresh a still puzzling question for the world's rich countries: can economic recovery ever take hold on shaky financial foundations?

By shaky financial foundations I refer to the insolvency risks still faced by a few big banks and sovereign governments, despite enormous injections of liquidity by central banks everywhere.

The top 8 central banks of the world are now sitting on bloated balance sheets holding mostly fixed income securities in excess of US$16 trillion collectively, more than twice their asset-volume before 2007. They got there mostly by swapping cash for bonds -- courtesy of Quantitative Easing, or QE -- as they tried to bolster the reserves of commercial banks

]]> Thu, 15 Mar 2012 07:00:04 -0400 The WaveNET Perspective The Question from Greece

The month of March, marked by Greece's massive debt restructuring which averted a vastly destabilizing credit default, appeared to some as if a major obstacle to economic recovery was finally removed. Yet, for others, it served to refresh a still puzzling question for the world's rich countries: can economic recovery ever take hold on shaky financial foundations?

By shaky financial foundations I refer to the insolvency risks still faced by a few big banks and sovereign governments, despite enormous injections of liquidity by central banks everywhere.

The top 8 central banks of the world are now sitting on bloated balance sheets holding mostly fixed income securities in excess of US$16 trillion collectively, more than twice their asset-volume before 2007. They got there mostly by swapping cash for bonds -- courtesy of Quantitative Easing, or QE -- as they tried to bolster the reserves of commercial banks


Complete Story »]]> FXE UUP UDN FXY The WaveNET Perspective Banks Have Lost Their Power; Sovereign Debt Has Lost Its Meaning http://seekingalpha.com/article/311361-banks-have-lost-their-power-sovereign-debt-has-lost-its-meaning?source=feed 311361 Something strange happened yesterday, on the last day of November. Six central banks standing behind six endangered banking systems -- where 4 of them (U.S., eurozone, U.K. and Japan) have never been so strained -- decided to act in unison.

They have all agreed to provide cheaper dollar funding to the European Central Bank, so that it can now provide cheaper dollar loans to cash-strapped European banks. What a show of solidarity! Or, was that rather an act of despair disguised as magnanimity? We will certainly know the answer in a few months or less.

In times like these, it always helps to look at the facts and separate them from fantasy. With the exception of Canada and Switzerland (assuming the highly debatable “non-contagion” as a premise) all other central banks are encumbered with national megabanks that are overleveraged and, in many cases, insolvent. In simple terms, that means that

]]> Thu, 01 Dec 2011 16:10:06 -0500 The WaveNET Perspective Something strange happened yesterday, on the last day of November. Six central banks standing behind six endangered banking systems -- where 4 of them (U.S., eurozone, U.K. and Japan) have never been so strained -- decided to act in unison.

They have all agreed to provide cheaper dollar funding to the European Central Bank, so that it can now provide cheaper dollar loans to cash-strapped European banks. What a show of solidarity! Or, was that rather an act of despair disguised as magnanimity? We will certainly know the answer in a few months or less.

In times like these, it always helps to look at the facts and separate them from fantasy. With the exception of Canada and Switzerland (assuming the highly debatable “non-contagion” as a premise) all other central banks are encumbered with national megabanks that are overleveraged and, in many cases, insolvent. In simple terms, that means that


Complete Story »]]> The WaveNET Perspective The Arrogance Of Lecturing Europe With The Wrong Lesson http://seekingalpha.com/article/297448-the-arrogance-of-lecturing-europe-with-the-wrong-lesson?source=feed 297448 The month of October, this time around dressed in the clothing of the European Sovereign Debt Crisis, brings once again to the forefront fundamental questions on the future of Western world banking.

Since 2007, what originally started as a “housing bubble” in the United States and the United Kingdom quickly became a widespread credit crunch; was followed in September 2008 by an unprecedented crisis of confidence in world’s banks, central banks and the governments behind them; was later succeeded – and still is – by sovereign debt worries for developed countries, while inevitably pointing to the next waves of uncertainty: exchange rates and global trade.

What was most noteworthy last week was the dismissive European reaction to the advice dispensed by U.S. officials for decisively embracing a much larger rescue fund comparable to TARP. Who can blame them? It isn’t like TARP has worked any magic: it simply bought more

]]> Tue, 04 Oct 2011 09:59:39 -0400 The WaveNET Perspective The month of October, this time around dressed in the clothing of the European Sovereign Debt Crisis, brings once again to the forefront fundamental questions on the future of Western world banking.

Since 2007, what originally started as a “housing bubble” in the United States and the United Kingdom quickly became a widespread credit crunch; was followed in September 2008 by an unprecedented crisis of confidence in world’s banks, central banks and the governments behind them; was later succeeded – and still is – by sovereign debt worries for developed countries, while inevitably pointing to the next waves of uncertainty: exchange rates and global trade.

What was most noteworthy last week was the dismissive European reaction to the advice dispensed by U.S. officials for decisively embracing a much larger rescue fund comparable to TARP. Who can blame them? It isn’t like TARP has worked any magic: it simply bought more


Complete Story »]]> FXE UUP UDN The WaveNET Perspective Saving Western World Banking From Itself http://seekingalpha.com/article/295253-saving-western-world-banking-from-itself?source=feed 295253 Following the third anniversary last week of Lehman’s bankruptcy, it is disheartening to see that most banks, central banks and governments on both sides of the Atlantic have failed to draw the most important lesson: financial crises cannot be controlled by increasing bank capitalizations alone, if they are rooted in systemic deficiencies.

In the spotlight here are Universal Banks (as the Europeans call them) or Bank Holding Companies (as the Americans call them) allowing financial conglomerates to combine all sorts of banking services with a vast array of risk profiles, thinking that it is just a supermarket of sorts. That notion is dangerously misleading.
A supermarket is not allowed to sell firearms or toxic specialty chemicals for a simple reason: the collateral risks outweigh the economic benefits of sharing their distribution costs, not to mention that it would pose innumerable safety and security problems. The systemic deficiency here
]]> Thu, 22 Sep 2011 09:07:24 -0400 The WaveNET Perspective Following the third anniversary last week of Lehman’s bankruptcy, it is disheartening to see that most banks, central banks and governments on both sides of the Atlantic have failed to draw the most important lesson: financial crises cannot be controlled by increasing bank capitalizations alone, if they are rooted in systemic deficiencies.

In the spotlight here are Universal Banks (as the Europeans call them) or Bank Holding Companies (as the Americans call them) allowing financial conglomerates to combine all sorts of banking services with a vast array of risk profiles, thinking that it is just a supermarket of sorts. That notion is dangerously misleading.
A supermarket is not allowed to sell firearms or toxic specialty chemicals for a simple reason: the collateral risks outweigh the economic benefits of sharing their distribution costs, not to mention that it would pose innumerable safety and security problems. The systemic deficiency here

Complete Story »]]> UBS SCGLY.PK CS DB C BAC MS JPM GS The WaveNET Perspective Curing America's Triple-Deficit Syndrome: Part 1 http://seekingalpha.com/article/247994-curing-america-s-triple-deficit-syndrome-part-1?source=feed 247994 The triple-deficit nation at the crossroads

The steady and substantial decline of the US dollar against most major currencies over the last 8 years is no accident. It is the result of a nation suffering from the "triple deficit syndrome".
First, there is the public deficit resulting from budgetary shortfalls with our governments, whether federal, state or local. Estimated to exceed a disturbing 10% of the GDP in 2010 alone, the cumulative US Public Debt is now poised to surpass 90% of the GDP, including the still escalating liabilities in US Social Security and Medicare. Going above 100% is typically considered “high-risk” by the IMF for its potential to destabilize the sovereignty of nations.

Then, there is the trade deficit which stems from our imports dwarfing our exports. Now, that one is truly puzzling because, in theory, a depreciating currency should have made our exports a lot more attractive and
]]> Sun, 23 Jan 2011 06:23:26 -0500 The WaveNET Perspective The triple-deficit nation at the crossroads

The steady and substantial decline of the US dollar against most major currencies over the last 8 years is no accident. It is the result of a nation suffering from the "triple deficit syndrome".
First, there is the public deficit resulting from budgetary shortfalls with our governments, whether federal, state or local. Estimated to exceed a disturbing 10% of the GDP in 2010 alone, the cumulative US Public Debt is now poised to surpass 90% of the GDP, including the still escalating liabilities in US Social Security and Medicare. Going above 100% is typically considered “high-risk” by the IMF for its potential to destabilize the sovereignty of nations.

Then, there is the trade deficit which stems from our imports dwarfing our exports. Now, that one is truly puzzling because, in theory, a depreciating currency should have made our exports a lot more attractive and

Complete Story »]]> The WaveNET Perspective Financial Crisis: Remembering What Got Us There Is Critical http://seekingalpha.com/article/162905-financial-crisis-remembering-what-got-us-there-is-critical?source=feed 162905 Only 6 months ago, at the peak of the financial crisis, the world witnessed well over $30 trillion of its wealth disappear inexplicably. That came as a surprise to just about every banker or regulator, as none of them believed a general contraction of such severity was possible for our planet’s free-market economies.

Ironically, the real surprise is not that it happened, but that we still don’t know how it happened. Governments and economists everywhere are still perplexed as to how the global financial system sunk so deep and so fast. As the G20 nations prepare to discuss new banking regulations in Pittsburgh next week, the most critical element is still missing: consensus on the reasons behind the crisis. Without that, how can global regulations exist, let alone be effective?

But politics is a funny business: comprehension is always secondary to pleasing. It seems that debating compensation caps on bankers’

]]> Wed, 23 Sep 2009 04:51:53 -0400 The WaveNET Perspective Only 6 months ago, at the peak of the financial crisis, the world witnessed well over $30 trillion of its wealth disappear inexplicably. That came as a surprise to just about every banker or regulator, as none of them believed a general contraction of such severity was possible for our planet’s free-market economies.

Ironically, the real surprise is not that it happened, but that we still don’t know how it happened. Governments and economists everywhere are still perplexed as to how the global financial system sunk so deep and so fast. As the G20 nations prepare to discuss new banking regulations in Pittsburgh next week, the most critical element is still missing: consensus on the reasons behind the crisis. Without that, how can global regulations exist, let alone be effective?

But politics is a funny business: comprehension is always secondary to pleasing. It seems that debating compensation caps on bankers’


Complete Story »]]> DB JPM C BCS The WaveNET Perspective Lessons from Lehman's Bankruptcy http://seekingalpha.com/article/160617-lessons-from-lehman-s-bankruptcy?source=feed 160617
“More regulations are needed to restore trust in the global banking system”, was a resounding conclusion from the World Economic Forum held earlier this year. Considering that trust is the lifeblood of finance, this was an unmistakable admission that the model was disrupted and needed fixing.

Yet, six months after the summit at Davos, as we approach the anniversary of Lehman’s bankruptcy next week, solutions to prevent a relapse are, at best, unclear. This is partly because stock markets, at the moment, appear unconcerned that about $40 trillion of wealth was inexplicably erased worldwide at the peak of this crisis. Whether this is “selective amnesia” or “misguided optimism”, the next few months will certainly help in deciding which.

However, the real surprise is that we still don’t have a consensus on how the global financial system sunk so deep and so fast. And without some consensus, how can regulators
]]> Wed, 09 Sep 2009 10:18:29 -0400 The WaveNET Perspective
“More regulations are needed to restore trust in the global banking system”, was a resounding conclusion from the World Economic Forum held earlier this year. Considering that trust is the lifeblood of finance, this was an unmistakable admission that the model was disrupted and needed fixing.

Yet, six months after the summit at Davos, as we approach the anniversary of Lehman’s bankruptcy next week, solutions to prevent a relapse are, at best, unclear. This is partly because stock markets, at the moment, appear unconcerned that about $40 trillion of wealth was inexplicably erased worldwide at the peak of this crisis. Whether this is “selective amnesia” or “misguided optimism”, the next few months will certainly help in deciding which.

However, the real surprise is that we still don’t have a consensus on how the global financial system sunk so deep and so fast. And without some consensus, how can regulators

Complete Story »]]> C BAC JPM RBS BCS DB UBS XLF The WaveNET Perspective Pathology of the U.S. Debt Bubble http://seekingalpha.com/article/160370-pathology-of-the-u-s-debt-bubble?source=feed 160370 The global financial crisis, although triggered by the US subprime mortgage debacle, has its root cause elsewhere: global debt overdose. Most explanations focused on irresponsible debtors and careless lenders, whether pointing to excessive borrowings by consumers or even by entire countries, tell only part of the story.

There is another facet to this crisis which has remained shrouded in mystery: the steady and imbalanced growth in the indebtedness of financial institutions among G8 nations. That is where the most worrisome overdose occurred: one with lasting implications for global financial stability.

Simply put, some of these banks or financial institutions have been allowed to borrow and lend a lot more money than reasonable, disrupting, in the end, the delicate balance in world’s credit markets. The level of global wealth destruction in the 18 months following September 2007, the beginning of the crisis, is historically unprecedented: $40 trillion.

In September 2009,

]]> Tue, 08 Sep 2009 06:09:39 -0400 The WaveNET Perspective The global financial crisis, although triggered by the US subprime mortgage debacle, has its root cause elsewhere: global debt overdose. Most explanations focused on irresponsible debtors and careless lenders, whether pointing to excessive borrowings by consumers or even by entire countries, tell only part of the story.

There is another facet to this crisis which has remained shrouded in mystery: the steady and imbalanced growth in the indebtedness of financial institutions among G8 nations. That is where the most worrisome overdose occurred: one with lasting implications for global financial stability.

Simply put, some of these banks or financial institutions have been allowed to borrow and lend a lot more money than reasonable, disrupting, in the end, the delicate balance in world’s credit markets. The level of global wealth destruction in the 18 months following September 2007, the beginning of the crisis, is historically unprecedented: $40 trillion.

In September 2009,


Complete Story »]]> SPY DIA The WaveNET Perspective