Reinko's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/127835/comments http://seekingalpha.com/article/131951-boj-foot-dragging-continues-to-exert-upward-pressure-on-japan-s-bond-yields?source=feed#comment-471879 471879
The USA is heading towards a full decade long ZIRP system.

But the link posted at the end of the comment uses thousands and thousands of words and a lot of graphs that are not needed.

It's all pretty simple:

If average interest rates are about 5% and total debts inside an economy are 300% of the yearly gross domestic product, in that case 15% of the gross domestic product is needed to 'service the debt' (that means paying for the interest).

The USA has above 350% of debt on herself, so an average interest ratio of 5% would very soon lead to a complete and utter bankruptcy of the entire USA.

Simply because serving the interest is above the combined profits of the entire USA.

It is all so simple, why need thousands and thousands of words to arrive at this conclusion?????

Beats me...

As far as Japan is concerned, they have higher saving rates compared to the USA but their economy is not suited to survive when the USA finally defaults.
Poor poor Japs. ]]> Tue, 21 Apr 2009 18:54:32 -0400
The USA is heading towards a full decade long ZIRP system.

But the link posted at the end of the comment uses thousands and thousands of words and a lot of graphs that are not needed.

It's all pretty simple:

If average interest rates are about 5% and total debts inside an economy are 300% of the yearly gross domestic product, in that case 15% of the gross domestic product is needed to 'service the debt' (that means paying for the interest).

The USA has above 350% of debt on herself, so an average interest ratio of 5% would very soon lead to a complete and utter bankruptcy of the entire USA.

Simply because serving the interest is above the combined profits of the entire USA.

It is all so simple, why need thousands and thousands of words to arrive at this conclusion?????

Beats me...

As far as Japan is concerned, they have higher saving rates compared to the USA but their economy is not suited to survive when the USA finally defaults.
Poor poor Japs. ]]> http://seekingalpha.com/article/129780-mike-mayo-s-seven-deadly-sins-of-banking?source=feed#comment-455463 455463
His black and white picture looks like a seventeen year old, his writings are at best a 27 year old running on testorone.

There is only repetition on info that is already out, zero future stuff has been observed.

So Tyler; who are you & for example where is the US$ one year from now???]]> Tue, 07 Apr 2009 18:30:02 -0400
His black and white picture looks like a seventeen year old, his writings are at best a 27 year old running on testorone.

There is only repetition on info that is already out, zero future stuff has been observed.

So Tyler; who are you & for example where is the US$ one year from now???]]> http://seekingalpha.com/article/124476-defending-financial-journalists-and-bloggers?source=feed#comment-418370 418370
On CNBC I have less mercy, after all they pretend to be a financial channel. But the truth is that even on CNBC they every now and then invite some very bearish folks.

As a profession however, I think the economists are much much more to blame. So often the Nobel prize for economics went to the USA and all of these folks simply did not see it coming.
That is strange because already in the Spring of 2004 I published how (for example) Central Banks from developing nations should behave... Ok I was a bit early may be but all my doom and gloom scenario's came out; to be honest reality with AIG, the investment banks or the derivative fun was even a larger then expected by me.

My vote for the worst performing profession goes to the USA economists (a kind of incest qlique only looking at their local pals missing the rest of economical theory in the rest of the world).]]> Sun, 08 Mar 2009 16:49:19 -0400
On CNBC I have less mercy, after all they pretend to be a financial channel. But the truth is that even on CNBC they every now and then invite some very bearish folks.

As a profession however, I think the economists are much much more to blame. So often the Nobel prize for economics went to the USA and all of these folks simply did not see it coming.
That is strange because already in the Spring of 2004 I published how (for example) Central Banks from developing nations should behave... Ok I was a bit early may be but all my doom and gloom scenario's came out; to be honest reality with AIG, the investment banks or the derivative fun was even a larger then expected by me.

My vote for the worst performing profession goes to the USA economists (a kind of incest qlique only looking at their local pals missing the rest of economical theory in the rest of the world).]]> http://seekingalpha.com/article/124403-the-free-market-votes-still-no-change-we-can-believe-in?source=feed#comment-414926 414926
And Wall Street voting with their feet & money after some Obama remark? They never did this when the previous Dubya told time in and again 'The fundamentals of the economy are strong'.

Years ago anyone who was a bit 'economically illeterate' could see the US economy was only castle of sand. Castles of sand have a habbit of survinving until the next tide comes in, any idiot who understood how the US economy worked could see that.

When your building blocks are made from debt, your debt levels rise always faster compared to your profit growth, how can you expect to live in a castle made from stones?]]> Thu, 05 Mar 2009 16:57:08 -0500
And Wall Street voting with their feet & money after some Obama remark? They never did this when the previous Dubya told time in and again 'The fundamentals of the economy are strong'.

Years ago anyone who was a bit 'economically illeterate' could see the US economy was only castle of sand. Castles of sand have a habbit of survinving until the next tide comes in, any idiot who understood how the US economy worked could see that.

When your building blocks are made from debt, your debt levels rise always faster compared to your profit growth, how can you expect to live in a castle made from stones?]]> http://seekingalpha.com/article/121842-worrisome-prospects-for-european-banks?source=feed#comment-398127 398127
If you click on the first link from the author you get CDS on four banks I never heard of.

A far more important statistic is CDS on the USA; but unlike the author I do not have access to that 'grab' software he uses.

Of course CDS levels are sometimes rubbish and at other times a very reliable future indicator. CDS is often rubbsih when it comes to small players that can be wasted because CDS still has no real reserves when it comes to paying out the damage.

But as an indicator or the 'rumors' level it is very acceptable... ]]> Sat, 21 Feb 2009 19:59:18 -0500
If you click on the first link from the author you get CDS on four banks I never heard of.

A far more important statistic is CDS on the USA; but unlike the author I do not have access to that 'grab' software he uses.

Of course CDS levels are sometimes rubbish and at other times a very reliable future indicator. CDS is often rubbsih when it comes to small players that can be wasted because CDS still has no real reserves when it comes to paying out the damage.

But as an indicator or the 'rumors' level it is very acceptable... ]]> http://seekingalpha.com/article/121797-15-notes-on-the-global-economy?source=feed#comment-398112 398112
Nice to have some backup that the USA health care system is a lousy system.
I have worked a few times in Germany and I understand that you feel more freely in the USA, yet my relative liberal Dutch landscape is good enough for me.

Lets only zoom in on US healthcare and only one anecdote:

Lately I did read the adventures of a guy with a small company who managed to get health care for his entire family;

Entry costs only 5000 $ and above 1000$ a month for the entire family.

And what do you get?

Well if you go with a serious thing to a US hospital the first thing they do is run over 20 tests. (This to avoid judicial shit in the future.)

Here in the Dutch landscape when I go to the hospital, they first ask:
What is the problem?

And after that they try to solve the problem (that does not take away we have a lot of stupid doctors here too but the money thing is just different and better for the society as a whole).]]> Sat, 21 Feb 2009 19:13:14 -0500
Nice to have some backup that the USA health care system is a lousy system.
I have worked a few times in Germany and I understand that you feel more freely in the USA, yet my relative liberal Dutch landscape is good enough for me.

Lets only zoom in on US healthcare and only one anecdote:

Lately I did read the adventures of a guy with a small company who managed to get health care for his entire family;

Entry costs only 5000 $ and above 1000$ a month for the entire family.

And what do you get?

Well if you go with a serious thing to a US hospital the first thing they do is run over 20 tests. (This to avoid judicial shit in the future.)

Here in the Dutch landscape when I go to the hospital, they first ask:
What is the problem?

And after that they try to solve the problem (that does not take away we have a lot of stupid doctors here too but the money thing is just different and better for the society as a whole).]]> http://seekingalpha.com/article/121797-15-notes-on-the-global-economy?source=feed#comment-398024 398024
It is amazing how many people react on what I wrote, so lets look at a few comments on for example health care:

My health insurance is 110 € a month and the kids are free, to be precise I can voluntary pay about 25 € for dentist insurance.
A lot of people point to the fact that via taxes we pay for the rest of the insurance; that is not correct. Here in the Netherlands the employer also pays a large part.

With or without a job my health care is only 110 Euro, it is impossible not to be insured because by law everbody has to pay for health insurance.
(So there is no large pool of relative healthy people that opt for no insurance.)
Even stronger: The hospitals have insurance against those who are not insured (like illegal aliens).
In short: Here are no millions without healt care.
We might not have a third or a fourth car, but what extra happiness does that bring to society?

__________

Without backing it up, User64738 knows that we have far higher taxes compared to the USA. That falls into the category of popular myth; I did think that too for a long time but most USA folks pay 30 to 40% taxes on their income and that is pretty much in line with over here.
However in the past this has been a problem here after we had socialist labor parties running the country; above 100000 of income? Easily over 60% was taxed away and at some point in time people in high paid jobs refused to work any longer any overtimes because they more or less worked for free.

__________

Then otbricki adds that the few trillions towards East Europe will wipe out the Euro. He forgets to mention the logic involved; aren't it the countries that stayed out of the Euro that get the real beating?

The Euro might still be a young currency but without it troubles would have been much greater. Going back to a situation without the Euro would also multiply the problems; once more Europe would be a wheelbarrow with frogs.
Giving up the Euro would be the same as the Americans giving up the $.

Often you hear that in Europe there are no multinational organizations to deal with the problems, that is correct but this also brings the benefit of flexibility; every country can do what it wants where in the USA for exampla California is not allowed to run a deficit (or face Chapter 11 if they do).

And the fact that a lot of banks will go is obvious; there is much to much banking capacity anyway. Let them die!
In the USA before the crisis broke out, financial sector was 20% of the economy. If you think about it; that is crazy, counter productive and such a large size can only work as a parasite on the real economy.

__________

On the reserve status of the US dollar:

I simply stay with my many year long obervation that the reserve status has always propped up the dollar and the Americans got lazy by that.
I am also hefty against such a role for the € in the future; the first one or two decades it will bring benefits, after that you get similar sizes in drawbacks.

__________

On obesity rates:

It is well known that in the USA this is a statistic running rampant, in no other nation there are so many very fat people. When people get lazy they get fat, that is as simple as 1 + 1 = 2.

Here in Europe obesity is also on the rise but I never studied those statistics so I cannot make much comment on that.

Bosun.j wrote 130 million Europeans qualify for obesity; that would be a large fraction of the population. I think it is less, lets say 100 million, but it is on the rise so in this regard the crisis is a good thing...

__________

At last: The 17 trillion of debt the US financial sector has will be a giant producer of future toxic debt. It is not in the news but those folks at CNN or CNBC or Fox News do not understand what happens when debt is above one USA GDP and routinely grows faster then the GDP for a few decades.

Interest obligations (and coupon for bonds) are so huge; this credit crisis hasn't really begun yet.

Printing money will become more important because the sizes of toxic debt will be to large for taxpayer money.

__________

I hope (although one day late) I have answered some of the things you folks threw up.

Have a nice crisis or try to get one...;)

]]> Sat, 21 Feb 2009 17:15:06 -0500
It is amazing how many people react on what I wrote, so lets look at a few comments on for example health care:

My health insurance is 110 € a month and the kids are free, to be precise I can voluntary pay about 25 € for dentist insurance.
A lot of people point to the fact that via taxes we pay for the rest of the insurance; that is not correct. Here in the Netherlands the employer also pays a large part.

With or without a job my health care is only 110 Euro, it is impossible not to be insured because by law everbody has to pay for health insurance.
(So there is no large pool of relative healthy people that opt for no insurance.)
Even stronger: The hospitals have insurance against those who are not insured (like illegal aliens).
In short: Here are no millions without healt care.
We might not have a third or a fourth car, but what extra happiness does that bring to society?

__________

Without backing it up, User64738 knows that we have far higher taxes compared to the USA. That falls into the category of popular myth; I did think that too for a long time but most USA folks pay 30 to 40% taxes on their income and that is pretty much in line with over here.
However in the past this has been a problem here after we had socialist labor parties running the country; above 100000 of income? Easily over 60% was taxed away and at some point in time people in high paid jobs refused to work any longer any overtimes because they more or less worked for free.

__________

Then otbricki adds that the few trillions towards East Europe will wipe out the Euro. He forgets to mention the logic involved; aren't it the countries that stayed out of the Euro that get the real beating?

The Euro might still be a young currency but without it troubles would have been much greater. Going back to a situation without the Euro would also multiply the problems; once more Europe would be a wheelbarrow with frogs.
Giving up the Euro would be the same as the Americans giving up the $.

Often you hear that in Europe there are no multinational organizations to deal with the problems, that is correct but this also brings the benefit of flexibility; every country can do what it wants where in the USA for exampla California is not allowed to run a deficit (or face Chapter 11 if they do).

And the fact that a lot of banks will go is obvious; there is much to much banking capacity anyway. Let them die!
In the USA before the crisis broke out, financial sector was 20% of the economy. If you think about it; that is crazy, counter productive and such a large size can only work as a parasite on the real economy.

__________

On the reserve status of the US dollar:

I simply stay with my many year long obervation that the reserve status has always propped up the dollar and the Americans got lazy by that.
I am also hefty against such a role for the € in the future; the first one or two decades it will bring benefits, after that you get similar sizes in drawbacks.

__________

On obesity rates:

It is well known that in the USA this is a statistic running rampant, in no other nation there are so many very fat people. When people get lazy they get fat, that is as simple as 1 + 1 = 2.

Here in Europe obesity is also on the rise but I never studied those statistics so I cannot make much comment on that.

Bosun.j wrote 130 million Europeans qualify for obesity; that would be a large fraction of the population. I think it is less, lets say 100 million, but it is on the rise so in this regard the crisis is a good thing...

__________

At last: The 17 trillion of debt the US financial sector has will be a giant producer of future toxic debt. It is not in the news but those folks at CNN or CNBC or Fox News do not understand what happens when debt is above one USA GDP and routinely grows faster then the GDP for a few decades.

Interest obligations (and coupon for bonds) are so huge; this credit crisis hasn't really begun yet.

Printing money will become more important because the sizes of toxic debt will be to large for taxpayer money.

__________

I hope (although one day late) I have answered some of the things you folks threw up.

Have a nice crisis or try to get one...;)

]]> http://seekingalpha.com/article/121797-15-notes-on-the-global-economy?source=feed#comment-397164 397164
I never studied the details in depth but for the time being I consider this a non starter. From the very beginning it was clear tremendous amounts of money needed to go to East Europe.

Remeber the union between East and West Germany?

In those long lost years we were told the union could cost about one hundred billion Deutsche Marks, these were devestating numbers in those years.
But I visited East Germany during a Summer holiday as soon as that was possible and that was just the money needed.

Indeed for East Europe stuff strikes hard; the big motor behind defaults will be the currency decline.
For the time being I consider this a temporary problem; the East Europeans are willing to work hard and long and are willing to adept.

You connot compare that to the obese USA population that is waggling around without any serious industrial base and still think they are the masters of the universe.

If the Swiss nation will go bankrupt it will be because they hugged the US economical theories that make debt the central growing thing instead of savings. If the Swiss banks have done that they deserve to be wiped out, life is so easy...]]> Fri, 20 Feb 2009 17:26:55 -0500
I never studied the details in depth but for the time being I consider this a non starter. From the very beginning it was clear tremendous amounts of money needed to go to East Europe.

Remeber the union between East and West Germany?

In those long lost years we were told the union could cost about one hundred billion Deutsche Marks, these were devestating numbers in those years.
But I visited East Germany during a Summer holiday as soon as that was possible and that was just the money needed.

Indeed for East Europe stuff strikes hard; the big motor behind defaults will be the currency decline.
For the time being I consider this a temporary problem; the East Europeans are willing to work hard and long and are willing to adept.

You connot compare that to the obese USA population that is waggling around without any serious industrial base and still think they are the masters of the universe.

If the Swiss nation will go bankrupt it will be because they hugged the US economical theories that make debt the central growing thing instead of savings. If the Swiss banks have done that they deserve to be wiped out, life is so easy...]]> http://seekingalpha.com/article/118806-u-s-dealing-with-a-boatload-of-debt-moody-s?source=feed#comment-377412 377412
1) Indeed the 5.8 trillion $ mentioned is only the puclic outstanding debt as you can find for example in this FED file:

www.federalreserve.gov...

2) Lately the US Congress and/or Senate gave the new ceiling for US Federal debt: above 10 trillion $.
Although I am looking for this for a long time: It is still unknown if the two decades of so called emergency spending is in this ceiling yes or no.

It might very well be that the difference is only the combined sum as found in the Federal funds; all these funds contain Treasuries and the money is long long spend.

Example: The FDIC has a bank saving fund; but there is no money in it, all banks that need to be rescued directly come to the wallet of the taxpayers or freshly borrowed money.

3) The combined US financial sector has over 17 trillion of debt on herself, that is a manifold of the total profits and this debt still climbs double digit percent each year.
Needless to say: the financial sector is only a fraction of the US economy and the size is above one GDP. It grows faster than the GDP so this produces gigant sizes of so called 'toxic loans'.

4) As a whole the US economy has over 350% of GDP in debt, if interest rates return to a normal level, lets say 5%, then there is 17.5% of GDP needed just to cover interest expenses...

Conclusion: this will not survive!]]> Thu, 05 Feb 2009 15:44:43 -0500
1) Indeed the 5.8 trillion $ mentioned is only the puclic outstanding debt as you can find for example in this FED file:

www.federalreserve.gov...

2) Lately the US Congress and/or Senate gave the new ceiling for US Federal debt: above 10 trillion $.
Although I am looking for this for a long time: It is still unknown if the two decades of so called emergency spending is in this ceiling yes or no.

It might very well be that the difference is only the combined sum as found in the Federal funds; all these funds contain Treasuries and the money is long long spend.

Example: The FDIC has a bank saving fund; but there is no money in it, all banks that need to be rescued directly come to the wallet of the taxpayers or freshly borrowed money.

3) The combined US financial sector has over 17 trillion of debt on herself, that is a manifold of the total profits and this debt still climbs double digit percent each year.
Needless to say: the financial sector is only a fraction of the US economy and the size is above one GDP. It grows faster than the GDP so this produces gigant sizes of so called 'toxic loans'.

4) As a whole the US economy has over 350% of GDP in debt, if interest rates return to a normal level, lets say 5%, then there is 17.5% of GDP needed just to cover interest expenses...

Conclusion: this will not survive!]]> http://seekingalpha.com/article/114582-risks-to-u-s-aaa-rating-have-grown?source=feed#comment-354555 354555
The most important is the so called net Federal debt that is 42% of the GDP. You can find that 'net debt' for example in the next link from the FED:

www.federalreserve.gov...

It says: 5822.7 billion in Federal debt.

This is a nonsense figure; lately US Senate and Congress gave a new ceiling above 10 trillion.
Furthermore there is all kinds of hidden debt, for example the Pentagon has a budget in fiscal 2007/2008 of 700 billion;
That is 500 billion in 'real budget' and a small 200 billion in 'supplements' that do not count for the official deficit.

Just another example:
All Federal Funds do not contain money but US Treasuries, for example the Fund of the FDIC is filled with Treasuries. All insurance money laid in by the banks is long gone.
This goes for all Federal Funds, again a few trillion is added to the Federal debt. Think of the Social Security funds for example; no real money in it but only Treasuries...

In reality the 42% is a joke and debt stands far far above other AAA rated nations.

I could go on longer, but at S&P they know their stuff; as long as nobody complains they keep on doing their best for the USA.
]]> Tue, 13 Jan 2009 12:15:23 -0500
The most important is the so called net Federal debt that is 42% of the GDP. You can find that 'net debt' for example in the next link from the FED:

www.federalreserve.gov...

It says: 5822.7 billion in Federal debt.

This is a nonsense figure; lately US Senate and Congress gave a new ceiling above 10 trillion.
Furthermore there is all kinds of hidden debt, for example the Pentagon has a budget in fiscal 2007/2008 of 700 billion;
That is 500 billion in 'real budget' and a small 200 billion in 'supplements' that do not count for the official deficit.

Just another example:
All Federal Funds do not contain money but US Treasuries, for example the Fund of the FDIC is filled with Treasuries. All insurance money laid in by the banks is long gone.
This goes for all Federal Funds, again a few trillion is added to the Federal debt. Think of the Social Security funds for example; no real money in it but only Treasuries...

In reality the 42% is a joke and debt stands far far above other AAA rated nations.

I could go on longer, but at S&P they know their stuff; as long as nobody complains they keep on doing their best for the USA.
]]> http://seekingalpha.com/article/113734-the-first-and-possibly-last-euro-decade?source=feed#comment-349134 349134
So many actual faults in it and it still gets published?

Just look in the gold reserve positions in the table as publised above:

USA with a 300+ million population,
The Netherlands with only a 16+ million population

and we are to believed that gold reserves stand at:

USA = 76.5 % of reserves &
My country = 57.8 % of reserves...

In my country these reserves are not borrowed out, in the USA it is different.

Lets leave it with that....

Ok ok one more blast against this kind of stupidity:

In the USA the reserves of the FDIC are only Treasuries, all the money paid by the banks is gone by now. All their insurance money is replaced by US Treasuries. And every bank saved is only via tax payer money, or as lately money press fun from Ben Bernanke.

Here in the Dutch landscape we are not that stupid, here when we talk about reserves we talk about reserves.

That is saved money....

In the USA the only saved money is belly fat and on the bank accounts only debt is found.]]> Wed, 07 Jan 2009 18:49:37 -0500
So many actual faults in it and it still gets published?

Just look in the gold reserve positions in the table as publised above:

USA with a 300+ million population,
The Netherlands with only a 16+ million population

and we are to believed that gold reserves stand at:

USA = 76.5 % of reserves &
My country = 57.8 % of reserves...

In my country these reserves are not borrowed out, in the USA it is different.

Lets leave it with that....

Ok ok one more blast against this kind of stupidity:

In the USA the reserves of the FDIC are only Treasuries, all the money paid by the banks is gone by now. All their insurance money is replaced by US Treasuries. And every bank saved is only via tax payer money, or as lately money press fun from Ben Bernanke.

Here in the Dutch landscape we are not that stupid, here when we talk about reserves we talk about reserves.

That is saved money....

In the USA the only saved money is belly fat and on the bank accounts only debt is found.]]> http://seekingalpha.com/article/113695-forex-why-the-dollar-is-staying-strong?source=feed#comment-348966 348966
That gave an intraday swing of 2% on the €/$ pair.

Later Obama stated that trillion deficits will be there for a couple of years and almost nothing happens...

There simply is no economical theory that explains such weird behavior; one thing is clear:

Those who have the deep pockets to steer the value of the dollar neglect large parts of what the real value should be.
Don't forget: In the 600 trillion nominal value in the OTC derivative markets a tremendous amount is bounded to currencies; if we would have more insights who has what kind of derivatives you might better understand the weird weird behavior of the US dollar.

It might very well be that if the dollar gets too weak, a few trillions must be paid in the derivative markets...

That is not unreasonable.]]> Wed, 07 Jan 2009 15:47:57 -0500
That gave an intraday swing of 2% on the €/$ pair.

Later Obama stated that trillion deficits will be there for a couple of years and almost nothing happens...

There simply is no economical theory that explains such weird behavior; one thing is clear:

Those who have the deep pockets to steer the value of the dollar neglect large parts of what the real value should be.
Don't forget: In the 600 trillion nominal value in the OTC derivative markets a tremendous amount is bounded to currencies; if we would have more insights who has what kind of derivatives you might better understand the weird weird behavior of the US dollar.

It might very well be that if the dollar gets too weak, a few trillions must be paid in the derivative markets...

That is not unreasonable.]]> http://seekingalpha.com/article/113114-citigroup-s-derivatives-reduce-bailout-to-a-non-event?source=feed#comment-345724 345724
For example before all those weird investment banks fell; up to 25% of their total balance 'asset value' had to be financed via 24 hour borrowed money.

The working model was as next:

We borrow out money for the long term, this creates high yields.
We finance this (since we have no money for ourselves) with short term borrowed money that is cheap cheap cheap.

In the end 25% of total balances were financed by one day borrowings,
that is 'maturity mismatch'.

It is not very rigid by the way.]]> Sun, 04 Jan 2009 16:45:41 -0500
For example before all those weird investment banks fell; up to 25% of their total balance 'asset value' had to be financed via 24 hour borrowed money.

The working model was as next:

We borrow out money for the long term, this creates high yields.
We finance this (since we have no money for ourselves) with short term borrowed money that is cheap cheap cheap.

In the end 25% of total balances were financed by one day borrowings,
that is 'maturity mismatch'.

It is not very rigid by the way.]]> http://seekingalpha.com/article/113114-citigroup-s-derivatives-reduce-bailout-to-a-non-event?source=feed#comment-345588 345588
It could very well be that Citi has mostly those swap instruments on her derivative books. But this does not take away that worldwide there is over 600 trillion in nominal value in the OTC markets and that was bought and sold for about one US GDP (14.5 trillion).

The basic instability problem is as next:

As just a few percent of this 600 trillion has to be paid, money streams like one US GDP have to be there.

After my humble opnion this is a fairy tale world; no institution has a few trillion on the shelfs in case this need to be paid out...]]> Sun, 04 Jan 2009 13:58:47 -0500
It could very well be that Citi has mostly those swap instruments on her derivative books. But this does not take away that worldwide there is over 600 trillion in nominal value in the OTC markets and that was bought and sold for about one US GDP (14.5 trillion).

The basic instability problem is as next:

As just a few percent of this 600 trillion has to be paid, money streams like one US GDP have to be there.

After my humble opnion this is a fairy tale world; no institution has a few trillion on the shelfs in case this need to be paid out...]]> http://seekingalpha.com/article/107624-the-economic-history-of-interest?source=feed#comment-339272 339272
Al Qaida is having the fun of a lifetime with ZIRP.]]> Sat, 27 Dec 2008 11:01:51 -0500
Al Qaida is having the fun of a lifetime with ZIRP.]]> http://seekingalpha.com/article/111688-cds-industry-zero-sum-game-or-ponzi-scheme?source=feed#comment-335029 335029
These contracts did cost about 14.5 trillion or roughly one US GDP.

In terms of leverage it is about 1:40.

As usual the problem with stuff like this: Only a small rimple of a few percent in the 600 trillion fantasy world triggers and entire GDP size chunk of money to be paid.

Hardly a 'protective umbrella' after my humble opinion.]]> Sun, 21 Dec 2008 11:44:46 -0500
These contracts did cost about 14.5 trillion or roughly one US GDP.

In terms of leverage it is about 1:40.

As usual the problem with stuff like this: Only a small rimple of a few percent in the 600 trillion fantasy world triggers and entire GDP size chunk of money to be paid.

Hardly a 'protective umbrella' after my humble opinion.]]> http://seekingalpha.com/article/111672-federal-commitments-now-total-5-trillion?source=feed#comment-334954 334954
Lets hope that when the 10 or 15 trillion threshold in Federal commitments is there, people finally start turning positive and admire the smart and clever folks that lead them into prosperity...]]> Sun, 21 Dec 2008 10:01:47 -0500
Lets hope that when the 10 or 15 trillion threshold in Federal commitments is there, people finally start turning positive and admire the smart and clever folks that lead them into prosperity...]]> http://seekingalpha.com/article/109714-hope-springs-anew?source=feed#comment-323956 323956
Please use a bit so science and not 'hope', we are not sitting in the church but in a website with market comments...]]> Mon, 08 Dec 2008 13:13:41 -0500
Please use a bit so science and not 'hope', we are not sitting in the church but in a website with market comments...]]> http://seekingalpha.com/article/109447-job-losses-not-bottoming-yet?source=feed#comment-322598 322598
How can there be new jobs if the debt is unpaid?

How can you create 2.5 million new jobs when there are no savings at all in the entire economy? From the Federal government, to state and local government and even on the household level; there are no savings.

Who will pay for these jobs?

Again: The above article comes from Pluto...]]> Sat, 06 Dec 2008 19:01:29 -0500
How can there be new jobs if the debt is unpaid?

How can you create 2.5 million new jobs when there are no savings at all in the entire economy? From the Federal government, to state and local government and even on the household level; there are no savings.

Who will pay for these jobs?

Again: The above article comes from Pluto...]]> http://seekingalpha.com/article/109414-bleeding-in-the-labor-market?source=feed#comment-321885 321885
If you do that the situation is less draconic but job levels are clearly falling from a cliff.

That is logical; total housing value lost can be 10 to 11 trillion US$ in home value. Now we are about halfway and of course a lagging indicator like NFP numbers will get dragged down at some point in time.

At last: The Oct numbers were rivsed from minus 240 to minus 320.
This could mean that in the last two months about 900 K jobs are lost...]]> Fri, 05 Dec 2008 13:35:20 -0500
If you do that the situation is less draconic but job levels are clearly falling from a cliff.

That is logical; total housing value lost can be 10 to 11 trillion US$ in home value. Now we are about halfway and of course a lagging indicator like NFP numbers will get dragged down at some point in time.

At last: The Oct numbers were rivsed from minus 240 to minus 320.
This could mean that in the last two months about 900 K jobs are lost...]]> http://seekingalpha.com/article/109270-country-default-risk-rises-across-the-board?source=feed#comment-321163 321163
It if funny to observe Iceland hanging just in the middle of the UK and the USA.

Again: at bargain prices like this you are crazy not to buy such a cheap CDS contract on the UK or the USA.]]> Thu, 04 Dec 2008 18:43:38 -0500
It if funny to observe Iceland hanging just in the middle of the UK and the USA.

Again: at bargain prices like this you are crazy not to buy such a cheap CDS contract on the UK or the USA.]]> http://seekingalpha.com/article/109270-country-default-risk-rises-across-the-board?source=feed#comment-321155 321155
These are mostly five year long contracts with a minimum value of 10 million in government bonds to protect.

When the USA comes in at 60 this means 60 pips or a likelihood of 0.60% a year for the USA to default (during the next five years).

So the seller of this CDS stuff thinks it takes about 1/0.0060 = one in every 167 years for the USA to default (given the present conditions).

Of course the sellers of this kind of CDS use other 'more advanced' mathematical models to come to their pricing. Yet any idiot can see: the USA CDS is very very cheap & you don't have to own 10 million in US bonds to buy such a five year contract.]]> Thu, 04 Dec 2008 18:36:55 -0500
These are mostly five year long contracts with a minimum value of 10 million in government bonds to protect.

When the USA comes in at 60 this means 60 pips or a likelihood of 0.60% a year for the USA to default (during the next five years).

So the seller of this CDS stuff thinks it takes about 1/0.0060 = one in every 167 years for the USA to default (given the present conditions).

Of course the sellers of this kind of CDS use other 'more advanced' mathematical models to come to their pricing. Yet any idiot can see: the USA CDS is very very cheap & you don't have to own 10 million in US bonds to buy such a five year contract.]]> http://seekingalpha.com/article/109277-history-is-neither-bunk-nor-bible?source=feed#comment-321149 321149
The tone of the article suggests that the author thinks we are only in recession mode but there is no proof for that whatsoever.

It could also be depression mode although in the Treasuries there is still an giant amount of money found that needs to be burned away before true depression could sink in.

To RandyRuiz:

Don't forget it was the atomic bomb that did miracles to the US$ as a reserve currency in the long run. And it took a long long time since the start of the previous depression before the USA gained world leadership via the atomic bomb.

These decades are just so different, of course some part of US tech will have great worth in the future, but feeding more of the US obisity is not a wise investment for the foreign nations. They better feed their own populations and wait and see how things pan out in the USA.]]> Thu, 04 Dec 2008 18:17:53 -0500
The tone of the article suggests that the author thinks we are only in recession mode but there is no proof for that whatsoever.

It could also be depression mode although in the Treasuries there is still an giant amount of money found that needs to be burned away before true depression could sink in.

To RandyRuiz:

Don't forget it was the atomic bomb that did miracles to the US$ as a reserve currency in the long run. And it took a long long time since the start of the previous depression before the USA gained world leadership via the atomic bomb.

These decades are just so different, of course some part of US tech will have great worth in the future, but feeding more of the US obisity is not a wise investment for the foreign nations. They better feed their own populations and wait and see how things pan out in the USA.]]> http://seekingalpha.com/article/107989-the-more-things-change?source=feed#comment-314995 314995
But lets get serious:

The incestuous branch of US academic economists that gave their fiat for this mess will also control the new Obama presidency.
So David, you can have a long list of 'what to do first' things, but after my humble opinion the US academics need to be cleaned first from their rather outlandish ways of thinking.

When the US academic economists are cleaned from their incestual behavior, may be wisdom will trickle down...

By the way, I am against old currencies that are gold based.
I would like a labor standard and on top of that countries could have benefits like commodity resources (gold, silver, oil, natural gas, whatever what) inside their geographical boundaries.
Going back to gold, please David I expect better stuff from you!

In the meantime, from my side of the equation, all goes perfectly; I am only waiting for the 2010 US military budget... ]]> Tue, 25 Nov 2008 16:50:42 -0500
But lets get serious:

The incestuous branch of US academic economists that gave their fiat for this mess will also control the new Obama presidency.
So David, you can have a long list of 'what to do first' things, but after my humble opinion the US academics need to be cleaned first from their rather outlandish ways of thinking.

When the US academic economists are cleaned from their incestual behavior, may be wisdom will trickle down...

By the way, I am against old currencies that are gold based.
I would like a labor standard and on top of that countries could have benefits like commodity resources (gold, silver, oil, natural gas, whatever what) inside their geographical boundaries.
Going back to gold, please David I expect better stuff from you!

In the meantime, from my side of the equation, all goes perfectly; I am only waiting for the 2010 US military budget... ]]> http://seekingalpha.com/article/107815-equity-the-blind-optimist?source=feed#comment-314976 314976
It is strange that bonds have a higher yield compared to stock yields because stocks carry a higher risk.

It is logical that inflation is the main culprit here; but what was the main cause of all that inflation during so many decades?

__________Begin intermezzo

To Bearfund: US economical theory is the problem, please concentrate on the real long term problems that gave rise to the present situation.

For example: House prices are hefty undervalued in the consumer price index, now the USA pays a costly price for that.
All these years in the housing boom, consumer inflation was measured too low because of the weird consumer inflation statistics the US government uses.

Now you folks pay the price for that...

Blame the US economists please!

__________End intermezzo.

Mostly US (but also European) economists that argue that a small and slight inflation is 'good' for the economy.
Those economists had one thing wrong; in the basis of their thinking they thought that deflation was the reason for the long time the depression lasted.

They interchanged cause and effect; deflation was an effect of the crisis, not a cause. Ok ok. it made the crisis longer but that is not a reason to fight deflation during normal times.

On the contrary, in consumer paradise 1 or 2% deflation is like the rain that makes sure in a decade you can spend also like you do today...

For me it is strange to observe all those batallions of US economists standing outside normal economical thinking for so long. I guess this is one of the damages when you become a world power; when you start thinking rubish there is nobody to ram you back into reality.]]> Tue, 25 Nov 2008 16:28:07 -0500
It is strange that bonds have a higher yield compared to stock yields because stocks carry a higher risk.

It is logical that inflation is the main culprit here; but what was the main cause of all that inflation during so many decades?

__________Begin intermezzo

To Bearfund: US economical theory is the problem, please concentrate on the real long term problems that gave rise to the present situation.

For example: House prices are hefty undervalued in the consumer price index, now the USA pays a costly price for that.
All these years in the housing boom, consumer inflation was measured too low because of the weird consumer inflation statistics the US government uses.

Now you folks pay the price for that...

Blame the US economists please!

__________End intermezzo.

Mostly US (but also European) economists that argue that a small and slight inflation is 'good' for the economy.
Those economists had one thing wrong; in the basis of their thinking they thought that deflation was the reason for the long time the depression lasted.

They interchanged cause and effect; deflation was an effect of the crisis, not a cause. Ok ok. it made the crisis longer but that is not a reason to fight deflation during normal times.

On the contrary, in consumer paradise 1 or 2% deflation is like the rain that makes sure in a decade you can spend also like you do today...

For me it is strange to observe all those batallions of US economists standing outside normal economical thinking for so long. I guess this is one of the damages when you become a world power; when you start thinking rubish there is nobody to ram you back into reality.]]> http://seekingalpha.com/article/107934-september-case-shiller-housing-analysis?source=feed#comment-314705 314705
Only when the acceleration in price declines fades away, house declines are halfway.

It is very simple, in math this is known as a 'logistic curve', strangely enough no economist tells this simple to understand fact.

Remark: There can be valid reasons house price decline will not follow logistic decline, if for example strong inflation or deflation sets in things will be different.
Also when wages decline it will not be logistic but even worse.

Yet as a rule of thumb, we have to wait until year on year price declines stabilize and then we can say 'probably we are halfway now'. ]]> Tue, 25 Nov 2008 12:22:32 -0500
Only when the acceleration in price declines fades away, house declines are halfway.

It is very simple, in math this is known as a 'logistic curve', strangely enough no economist tells this simple to understand fact.

Remark: There can be valid reasons house price decline will not follow logistic decline, if for example strong inflation or deflation sets in things will be different.
Also when wages decline it will not be logistic but even worse.

Yet as a rule of thumb, we have to wait until year on year price declines stabilize and then we can say 'probably we are halfway now'. ]]> http://seekingalpha.com/article/107601-citigroup-another-ad-hoc-bailout?source=feed#comment-313732 313732
And the fractional reserve banking is out of the window for some time now, see the next link from the FED AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND THE MONETARY BASE:

www.federalreserve.gov.../

In the third column (the 'non borrowed' column) you see the real reserves are negative...

Isn't it strange to name the real reserves the 'non borrowed' ones?]]> Mon, 24 Nov 2008 11:44:38 -0500
And the fractional reserve banking is out of the window for some time now, see the next link from the FED AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND THE MONETARY BASE:

www.federalreserve.gov.../

In the third column (the 'non borrowed' column) you see the real reserves are negative...

Isn't it strange to name the real reserves the 'non borrowed' ones?]]> http://seekingalpha.com/article/107360-5-1-2-ways-to-make-the-market-rally?source=feed#comment-312419 312419
In case that is wise, why not introduce the concept of negative interest rates? Instead of all these positive rates that push honest home owners into oblibion, negative rates are the answer!

That brings down the cost of living so people have the possibilty to pay off the loan...

The journalists here in the Netherlands lately suggested another way to let stock markets boom: Make it punishable by law to let stock values going down, one or two years in prison for those who sell too much will do the trick and it brings also home the 'ownership society' where lots of people have lots of stock of highly valued companies...]]> Sat, 22 Nov 2008 10:46:57 -0500
In case that is wise, why not introduce the concept of negative interest rates? Instead of all these positive rates that push honest home owners into oblibion, negative rates are the answer!

That brings down the cost of living so people have the possibilty to pay off the loan...

The journalists here in the Netherlands lately suggested another way to let stock markets boom: Make it punishable by law to let stock values going down, one or two years in prison for those who sell too much will do the trick and it brings also home the 'ownership society' where lots of people have lots of stock of highly valued companies...]]> http://seekingalpha.com/article/106424-extreme-anxiety-in-the-anxious-index?source=feed#comment-308397 308397
In the end 25% of their entire balances were funded by day to day borrowings in order to ensure the longer stuff.

They are all gone, these investment banks are all gone.

When you live by your borrowing capacity you will die from it, when you live on your reserves you can make it to a high age...]]> Mon, 17 Nov 2008 18:50:05 -0500
In the end 25% of their entire balances were funded by day to day borrowings in order to ensure the longer stuff.

They are all gone, these investment banks are all gone.

When you live by your borrowing capacity you will die from it, when you live on your reserves you can make it to a high age...]]> http://seekingalpha.com/article/106411-john-hussman-the-market-is-not-in-uncharted-territory?source=feed#comment-308390 308390
So fill in the date (17 Nov 1998) for yourself in the box at the right lower bottom of the Yahoo S&P chart...]]> Mon, 17 Nov 2008 18:45:46 -0500
So fill in the date (17 Nov 1998) for yourself in the box at the right lower bottom of the Yahoo S&P chart...]]>