balois

Time for the U.S. Economy to Reindustrialize

...How can we rebuild a strong manufacturing capacity that can compete in the world market while employing human beings?...”

I am not sure I get this but if it is meant to advocate building a manufacturing base without (qualified) human beings then this contributors view of the real economy in the real world is mightily skewed, imho.

Have you noticed that in countries (or areas) with a tradition of a strong small and medium manufacturing base, owned and operated by human beings, delivering top quality products and related services, the great recession is being managed as one of those economic ripples that is part of life. And home foreclosures are virtually nonexistent, just to mention one side effect. Even if the ride is getting bumpy again, their chance of survival is better than any proxy economy where it is left to others to do the real work. And China or any other “cheap” labor country is not such an issue either. Only the availability of enough qualified human beings.

Of course commentators who have never run a business (i.e. noted economists, analysts and media talking heads) pontificate about how wrong it is when, during harder times, companies hang on to their employees, thus preserving their real capital: human know-how. Another classic is when these egg heads worry about exchange rates, especially the ascent of the Euro (or falling Dollar), preach local consumption and predict the imminent demise of the “export dependent” economies of some countries that are full of specialist enterprises but are – oh wonder – still able to keep on selling to the world at large.

Our gurus forget that for excellent products and services there are only a few problems: Know and keep your customers happy, do not expand too fast and, if at all possible, stay away from banks and avoid going public. And since these successful leaders really, truly believe that their most precious asset is their people, they do not panic and have no worry, to share the burden of lean times, when necessary, as well as the profit during good times, even ownership of the company.

Have a good day


NB: As a side line: I heard somewhere that parts and replacement of critical steam generators for the US Nuclear Sub fleet have to be imported, serviced by specialists from abroad. Well if this is a indication tinyurl.com/l6g352 (one heavy forging press left in the US for ingots, less than half the size of foreign competition) then this may be more than just gossip?

Prime Mortgages Are Also Going Sour

Gabe Borenstein – my favorite!

His clairvoyant prophetic words of wisdom Sep 22 2008 “...As the economy recovers, the financial issues will be resolved...”

But, when necessary, Gabe doesn't shy away from being brutally honest either: Oct 02 2008 “...Article after article on this platform spews economic garbage full of criticism and no logical and constructive ideas...”

And just so that we dummies do not forget his logical and constructive ideas:

Aug 21, 2008
“...both agencies (note: FNM, FRE) appear to be financially sound and their reserves are more than sufficient to cover any realistic exposure. Let's see if there are any more fairy tales left...”

July 20, 2008
“...It is the irrational rumors and the panic disseminated by some market segment and pseudo economists at a well known financial news TV program that have created the debacle...”

July 25, 2008
“...While economic deceleration is unnerving ,we are not in a recession...”

July 28, 2008   
“...All of the question marks about the U.S Financial institutions or system are waste of time...”

June 23, 2008  
“...Over the next 18 months, the Euro will slide to .80$...” (note: hurry up - 12 months down and we are at 1.45$)

June 20, 2008
“...the financial institutions...had written off most of the potentially risky exposure...”

May 07 2008
“...Perceived risks of today are not reality in the period ahead...”.

April 25, 2008
“...The housing market will recover by the third quarter of this year...all derivatives...will stabilize and stage a major rally...All the unrealized losses will turn into mega realized profits..”

April 09, 2008
“...the FED'S actions ,especially the "rescue" of Bear Sterns...had convinced me that the worse is over...”

March 30, 2008
“...all of the bond insurers can finally sit back and relax ...The FED ...is guaranteeing every institutional component of our system...”

Amen

Five Reasons the Market Could Crash This Fall

further up Current Asset67 writes

“...no citation of sources in the data, especially the derivatives chart ...“

For the eye popping numbers see Comptroller of the Currency report www.occ.treas.gov/ftp/...
Certain comments in the report are strange, as if simply copy/pasted from older versions, without updating or taking into account recent events. Or did I lose my reading skills?

Excerpts from OCC s 1 Q 09 report:

"...The notional value of derivatives held by U.S. commercial banks increased $1.6 trillion in the first quarter, or 1%, to $202.0 trillion..."

"...Derivatives activity in the U.S. banking system is dominated by a small group of large financial institutions. Five large commercial banks represent 96% of the total industry notional amount and 83% of industry net current credit exposure..."

"...because the highly specialized business of … derivatives transactions requires sophisticated tools and expertise, derivatives activity is concentrated in those institutions that have the resources needed to be able to operate this business in a safe and sound manner..."

Note balois: Yep, safe and sound like AIG and the small group of large financial institutions! Laugh, cry or run for the hill?

"...The notional amount of a derivative contract is a reference amount...but it is generally not an amount at risk …"

Note balois: Until a counterparty loses, goes belly up, then it is “generally” quite possible, as we now know, that notional is not so notional after all.

"...Credit risk in derivatives differs from credit risk in loans due to the more uncertain nature of the potential credit exposure..."

Note balois: That is comforting news. Sub-prime, move over.

"...in most derivatives transactions...the credit exposure is bilateral...banks do not know, and can only estimate, how much the value of the derivative contract might be..."

Note balois: See OCC report table page 3. Why are the Gross Positive Fair Values always greater than the Gross Negative Fair Values as reported by the banks and totaled by the OCC!?! Where are all the counterparty suckers with the Negative Fair Value billions making up the difference when all this is supposed to be a zero sum game? Sorry, I beg your pardon: “banks do not know and can only estimate..."

Have a good day

Nobody Knows What Bank Stocks Are Really Worth

Mr Cetin H, Keep on googling and be happy.

If your English is as good (or bad) as mine, do not read the following. It might cause you nightmares (albeit the brave comptrollers get lost in their own contradictions. Seriously deadly funny)

www.occ.treas.gov/ftp/...

have a good day

John Thain, R.I.P.

Frank Partnoy explained in detail, over a decade ago, in his book F.I.A.S.C.O., that these guys only know one gesture: Rip off your face. For everyone to see - if they wanted to.

have a good day