Dragoman

The Global Oil Scam: 50 Times Bigger than Madoff

Nice idea:
"Ask not what you can do for your country, but what your country can do for Goldman Sachs.." to paraphrase JKF, though Churchill words might also be tangled to nicely describe the situation:
"Never in the field of financial misadventure, have so many paid so much to so few.."


On Nov 12 03:25 AM chris coonan wrote:

> Goldman Sachs doesn't seem to be doing America any favors lately....but
> America has been doing a lot for them.

Why Krugman Is Wrong About the Yuan

Great to hear that Vietnam can produce cheaper than China!
It's seems like kicking a handicapped kid to point out that Christmas inventory was already priced and done so in dollars i.e. guess to takes the currency hit? Beyond that, the US doesn't export anything? Really? Someone please call the World Bank / IMF and tell them their stats are all wrong..
Basically I-phones are nice, but I'm not sure that the Chinese government manipulating their currency is winning much support among the US manufacturers servicing the construction sector - which was a bit larger than the market for mobile phones when I last looked - and has been slogged by cheap but contaminated Chinese product.
The reasons cited by Mr. Rein are the reasons why the US is in facing the trade crisis it is facing today. A policy of 'consume-or-die' is not the only option, and continuing a policy of exporting their personal wealth to China is understandably something American voters might not wish to continue.
If China doesn't agree to float the yuan, then maybe a gradual depreciation of the dollar would clarify the situation, having at once the gratifying effect of improving the competitiveness of American products on foreign markets at the expense of China's national reserves.

What China Can Buy for $2 Trillion

Maybe China should recapitalize their banks?

Demographics Make Russia a Risky Long-Term Investment

Don't forget, Western Russia is experiencing huge migration from Central Asia. The last Russian orthodox patriarch stated that Russia would be a majority Islamic country by 2036.

Russia: More 'Fun' for Foreign Investors

Absolutely on the money. If BP and Arcelor lost their money there, why will anyone else make out any better. The best risk-reward for direct investment in the world today is emphatically the EU-10 economies of Central and Eastern Europe. Great economic fundamentals, over-capitalized banking sectors, EU legislative environment and investor protection, excellent demographics and - unlike China - the people get to vote for a new government when they want a change. They have higher GDP per capita than any BRIC country and are members of the largest trade block on the planet.

Really Bad Banks: China’s Asset Management Companies

The Emperor has no clothes?

Will the EU Fiddle While Eastern Europe Burns?

Another feeble Eastern Europe article in SA. Does anyone study primary sources anymore or just regurgitate other ill-informed blogs?

1. According to the Bank of International Settlements, the total foreign debt of Emerging Europe (EU-10, Russia, Turkey) is 1,6 trillion USD. According to the World Bank, their GDP is 3,5 trillion USD. Would you get stressed if the TOTAL mortgage on your family home was 1/3 of your annual income?


2. Emerging Europe (EU-10, Russia, Turkey - population 320 million) has short-term foreign debt of 375 billion USD. By contrast, Ireland (population 4 million) has short-term foreign debt of 447 billion USD. Would you feel profligate if you credit card bill was 1/100th of your neighbour's?

The Eastern Europeans have low national debt and large foreign reserves (T-bills, sterling, eurobonds), yet according to S&P, the new European Union members' debt is junk and Ireland is AAA-rated.

The GDP of Emerging Europe is 3,5 trillion USD and China has GDP of 4,2 trillion USD. The Eastern Europeans have strong infrastructure, excellent education and massive natural resources. Yet the Chinese will save the world with a fraction of the Eastern European's schools, roads, gas and electricity?

What is it that the media hates about Eastern Europe so much? Why are there no articles by Eastern Europeans published?

Ukrainian Economy Getting Ugly

Ukraine may be nominally democratic, but corruption is endemic and criminality rampant in the corridors of power. The recent gas crisis highlighted all the reasons that helping the current regime is throwing good money after bad.

Since Ukraine is culturally and politically more similar to Russia than the EU, best let the Russians have it. Is that such a bad thing? The tragic reality is that the country needs another revolution against a venal political caste, but in the meantime, the relative stability of 'benign dictatorship' Mr. Putin has cultivated in Russia at least maintains social cohesion.

A really tragic situation.

Will Europe Come to the East's Rescue?

What is Eastern Europe? It is 2,3% of European 2009 financing. In stark contract to Western Europe, EU-10 members debt is exceeded by deposits. Irish debt is 242% of deposits and public sector debt vastly exceeds EU-10 averages, yet Irish government debt is investment grade and Romania is not!
Credit portfolio quality is not the issue in Eastern Europe, and articles in the international media more reflect the trading sentiment signal of currency speculators such as Nomura, Merill, etc.

By way of example, most local media reported 'No problem' stories this week from a TV interview with a leading Romanian Central Bank advisor where the advisor ranted on about large national reserves and short term debt to GDP being infinitesmal (less than 5% GDP v. EU average of 40%).

What was the Bloomberg article on the interview:
'Disaster! Romania has International Borrowings! Nomura told me to Sell'

Our Global Economy: How Credit-Crippled Eastern Europeans Can Sink Your 401k

This is pure NONSENSE. Have you heard of the Bank of International Settlements? Did you bother to inform yourself before publishing this ?

Poland, Czech and Romania which you mentioned represent 80% of the GDP of the EU-10 accession. As you failed to mentioned to readers, Central Europe credit portfolios are built on primary deposits from Czechs and Poles and is not covered by Austrian GDP, as suggested by the author and quite sensationally by the Austrian magazine - Profil - this week. I know this is probably an old-fashioned feature of the EU-10's banking world, but in Central Europe, hard-saving EU citizens give their cash to banks who then make loans to responsible borrowers - and we know they are responsible because delinquincy rates are lower than the US and Western Europe. While smaller EU-10 economies rightly belong in the 'sin bin', in Poland, Czech and Romania, deposits exceed loans, and bank Tier 1 capitalization is higher.

By example. a few quotes from leading Romanian financial newspaper Ziarul Financiar :

"Erste does not need the support of the Romanian state" Andres Treichl, CEO of BCR-Erste, specifically in regard to the stupid article in Austrian magazine Profil which sensationally suggested the Erste's entire Romanian portfolio could default.
"The capacity of local banks to absorb the economic shock is large, with core ratios of 12% capital, the local banks could be described as super-capitalized” Ion Dimitru, chief economist, Raiffeisenbank Romania,
"There is no need for the Romanian state to assist the banks, and there is not one bank in a situation to need such support,” said Bogdan Baltazar, Board Director of BRD-SocGen,

I have seen no sense of proportion in any analysis regarding the central european economies. Latvia is 10% the economic size of the Czech Republic and Poland is three times the size of Hungary. The vast majority of borrowing in these countries is in local currencies. According to BIS data, Romanian borrowers' total foreign short-term funding for refinancing in 2009 will be euro 9 billion. This is absolute peanuts when one considers the borrowers are local subsidiaries of international car companies, oil refineries, industrial multinationals and banks.

Without doubt the banks are screwed in Russia, but pigmies like the Baltic economies are by no means large enough to cause serious problems for the EU, and the hysteric fall in the currencies of the main Central European economies really should encourage value investors to seek opportunities. To me and Starbuck's chief, Howard Schultz, the UK and Western Europe looks to have fundamentals much more out of kilter.

This argument for gold is a joke, when undervalued Czech koruna bonds offer a great yield, are a liquid, safe asset, and probably will yield a currency uptick as the current hysteria abates and the zloty, koruna and lei bounch back in Q2. Goldman Sachs' seems to share this opinion and closed its short positions in Polish zloty and the Czech koruna last week. Does Mr LIchtenfeld know something Goldman Sach doesn't?

Emerging Markets Watch: Upcoming Eastern European Economic Cataclysm

Raises some interesting points, especially for Austrians. Definitely makes the bygone age of local/national banks doing local/national lending look much more attractive. The Austrian banks are putting a lot of pressure on the EU and East European government so cover their exposure. Since the East European EU members (with the exception of Hungary) have quite healthy reserves, not a bad idea...

The banks are still making lots of money in Easter Europe. In Romania, the banking sector reported made capital increases of 1,9 billion euro in response to that global crisis, but, importantly, generated 1,2 billion euro profits in 2008, representing a 67% increase in bottom line yoy, (see www.zf.ro/zf-english/r.../) . Likewise, the Czech banking system, with a 70% loan to deposit ratio is performing well with growing profits and no cataclysmic write-downs.

In many cases today, the Eastern European subsidiaries look a lot more healthy than the Western European parents..

How the World Almost Came to an End on September 18, 2008

Is this guy for real? How gullible do you have to be to get elected?
"Someone threw us into the middle of the Atlantic.." Duh! The 'somebody' was the guy telling you he needed 9,7 trillion but couldn't tell you how he was going to spend it..
The Fed told us 'somebody' withdrew 500 billion an hour one morning in September.. How? - cash? into money market accounts? into government securities? No mention of exchange rate operations so gotta have been keeping it in dollars.. Hmm who needs dollars? American banks and hedge funds?

Do elected representative believe that money can electronically disappear? Does this guy know what a computer is? Does he believe the assets cease to exist in cyberspace?

Since the Fed clearly thinks they're idiots and easily fobs them off with stories of electronic wizardry, it's hard for anyone else to have much time for such well meaning buffoons. I have a picture of the session when law-makers were being told the 'big story' by the Fed, whose representative in my mind's eye resembles Austin Power's archrival Dr. Evil...

Ha! ha! This is the funniest thing I've heard in months.. I've just been laughing for 15 minutes...

Japan, Turkey, Poland, Mexico the Rising World Powers?

I'm an Irishman working in private equity head in eastern europe for 14 years. While I would not presume to comment on Mr. Friedman's assessment of China, such an assinine and willfully uninformed analysis of Southern & Eastern Europe is simply dazzling..

Did Mr. Friedman not notice that the Top 5 CEE economies (Poland, Czech, Slovakia, Romania and Hungary) have a USD 1,1 trillion GDP - the same as Russia except with healthy diversfied non-commodity based economies and higher economic growth. Russia pressing on Poland? Russia's population is set to drop from 140 mil today to less than 100 mil in 2050, and the Russian patriach (and my Russian wife) is terrified it will become an Islamic country by 2036 !!

As for the Balkans, I live in Romania and as tragic as the ethnic conflicts of the 1990's were, the populations affected are very small (i.e. Macedonia, Montenegro) and today most Balkan countries are either members of the EU (Slovenia, Romania, Bulgaria, Greece) or are on the path to EU membership (Croatia, ex-Yugoslavia). By stark contrast, the sad diagnosis of many Turks for their country is that Turkey is falling to political pieces and the 21st century offers unending ethnic conflict (heard of Kurdistan & oil pipleines?) and constitutional tension between secular and religious society coming close to civil war.

Mr. Friedman could have checked European demographic data, researched national economy statistics and read some EU trade infrastructure plans before 'enlightening' us on Turkey and Eastern Europe. However, he didn't and his dreadful analysis of Eastern Europe sounds like my grandad who doesn't bother to read facts any more because he's old, fought in the war and is always right....

In Search of the Next Reserve Currency

The best medieval currencies in medieval Europe were the (silver) Prague gros and (gold) Florentine ducat. What is the 'military' value of paper currencies with no intrinsice value? Is the promise to pay that a paper note implies more convincing down the barrel of a gun?




On Nov 28 11:31 AM cyclingscholar wrote:

> For a country to have its currency be a reserve currency, the country
> must be politically, economically, and MILITARILY viable for a very
> long time horizon. This leaves Japan and the EU (or as i call it,
> the EEEEEEEuuuuuuuuuuuuuuw... out of consideration.
>
> cyclingscholar

Should We Really Bail Out the Big Three Automakers with $73.20 Per Hour Labor?

What do successful automakers do?

French automaker Renault has dependably delivered shareholders $2 billion - $3 billion a year profits for the past couple of years.

Renault produces the hugely successful Logan in Romania, a large and affordable car for emerging markets which is extremely reliable and cheap to maintain.

Cost of auto-labour in Romania: $324 / month.

Why should shareholders and taxpayers tolerate anything else?