Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1275.1 | 0.9 | 0.07% |
| Eurostoxx Index | 2304.9 | 6.280 | 0.27% |
| Oil (WTI) | 101.43 | -0.130 | -0.13% |
| LIBOR | 0.5805 | -0.001 | -0.17% |
| US Dollar Index (DXY) | 81.1 | -0.160 | -0.20% |
| 10 Year Govt Bond Yield | 1.98% | 0.02% |
Markets are flattish this morning on a lack of news. No major news out of Europe. Unicredito is the first Euro bank to start raising additional capital. The stock is down 12% on its rights issue.
Robert Samuelson has a column on the state of China’s real estate bubble. I don’t think people in the US fully grasp the size of that bubble. China has entire cities built on spec – in other words, they are completely built and vacant. Here are some satellite images. Apartments in Beijing are 27 times income. Chinese savers have few investment options, so real estate tends to absorb the majority of the excess capital. This could get ugly over the next few years. While the western banks don’t have a lot of direct exposure to Chinese banks, they do have exposure to HSBC and Standard Chartered. For those wanting a stronger Chinese currency, forget about it.
Earnings season kicks off tonight with Alcoa reporting after the close.
Filed under: Uncategorized |
All Things in Moderation 
Brent, I am repeating this comment from one I dropped in late on your Friday Report because I hope you can expand on it regarding significance. The initial quote is from the NYT."European Banks Stash Extra Cash With Central Bank Figures released on Friday showed that the European Central Bank had received 455 billion euros, or $578 billion, of overnight deposits from European banks, the highest figure since the euro zone was created in 1999."Significance? I would think more business activity in the private sector. When the southern tier of Fed Reserve Banks get an influx of Mexican cash before the MX elections it is because the wealthy in MX have moved big bucks into American banks in TX and CA.But I do not see how that phenomenon translates to Europe. One of my old friends is a senior economist at the Fed in Dallas and has written on the MX $$$ issue.
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Mark, I think the critical quote from the article is this:"It is a sign of mistrust in the interbank lending market where banks raise operating funds, suggesting they are depositing money with the central bank at low interest rates because they are afraid to lend it to other banks — for fear they won’t get paid back."
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OOOH! Thanks for pointing that out. If the level of mistrust is SO high that record central bank deposits result, will the central bankers push that money out to keep it circulating? Or is demand for funds low?
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Change You Can Believe In or Politics as Usual?Top Obama campaign aide lobbied for bank bailout"Senior campaign adviser Broderick Johnson was paid over $1 million to lobby for Wall St. over the past five years"
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@Mark,A high level of mistrust is also called a high level of risk aversion. Businesses tend to postpone expansion plans until after the economy recovers and banks prefer to sit in government securities instead of lending, even if those government securities (or deposits at the central bank) pay little or no interest. The central bank or government pushes cash out to the banking system, which gives it right back through the purchase of government securities.This is the classic Keynes liquidity trap.
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Got it. Thanks.
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timely to our discussion:Germany auctions Bills with Negative Yield:http://www.bloomberg.com/news/2012-01-09/germany-auctions-bills-with-yield-of-minus-0-01-correct-.html
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Does this mean demand for barely positive short term US Treasuries will increase?
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certainly could…
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Worth noting:Why Bernanke Has Failed, And Will Continue To Fail"Ben Bernanke's zero-interest rate policy (ZIRP) and command-economy efforts to maintain mispricing of risk, debt and assets are destroying capital and capitalism. No wonder his policies have failed so miserably. Bernanke's policy is to punish capital accumulation and reward leveraged debt expansion. Rather than enforce the market's discipline and transparent pricing of risk, debt and assets, Bernanke has explicitly set out to re-inflate a destructive, massively unproductive credit bubble. This is why Bernanke has failed so completely, and why he will continue to fail. He is not engaged in capitalism, he is engaged in the destruction of capital, investment discipline and the open pricing of risk, debt and assets."
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OT: Has anyone watched the movie Margin Call? It sounds interesting and seems to have good reviews.
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Stealing John's ThunderWill Obama's New Housing Plan Be a Big Ripoff?I'm thinking yes."Diana Olick broke the news this morning that the Obama administration is very close to announcing a plan that would sell government-owned foreclosed properties in bulk to investors who intend to use them as rental properties. The hope is that by taking this inventory out of the sale pipeline, the program could help the broader housing market recovery more quickly.This idea has a lot of support among some of the biggest real estate investors in the country. I first heard it touted at CNBC's Delivering Alpha conference in September during a panel with Bill Ackman of Pershing Square, Sam Zell, chairman of Equity Group Investments, and Barry Sternlicht, the chairman and CEO of Starwood Capital Group."…"This is one reason I suspect that the Obama administration's plan will likely involve a subsidy for the investors. Most likely, the government owners of the foreclosed property — such as Fannie Mae and Freddie Mac — will guarantee at least a portion of the loans made to the investors. Since the loans will be backed by the full faith and credit of the U.S., banks should be willing to finance the purchases at interest rates low enough that the investors can see a profit.To put it another way, in the name of supporting home prices, the Obama administration will likely put in place a system under which investors make private profits while the taxpayers subsidize the risk.Because of this subsidy, regulators are likely to require that investors who purchase the properties meet a variety of criteria demonstrating that they are "qualified investors." They'll likely have minimum capital requirements, minimum years servicing rental properties, and complex disclosure mandates.No doubt all of these are necessary to prevent fly-by-night investors from ramping up risk on the taxpayers dime. But the qualified investor criteria will also serve to lock-in already established real estate investors such as Zell and Sternlicht, while keeping out potential newcomers. The regulatory apparatus will create barriers of entry.This is the kind of program that we'll want to monitor closely. It has the potential to become a giant giveaway to financiers."No, it does not have "potential to become a giant giveaway to financiers". The program is designed from the beginning to be a giant giveaway to financiers.
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Latest from Matt TaibbiCredit Card Firms: They Don't Just Steal From CardholdersThe article he references is here:Park City Pasta Restaurant Balks at Credit Card Fines in Rare Court Fight
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No, it does not have "potential to become a giant giveaway to financiers". The program is designed from the beginning to be a giant giveaway to financiers.And yet there are still people who claim Obama is a progressive at heart……..lol
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President Obama's new White House Chief of Staff."Jack Lew: Obama's OMB Pick Oversaw Citigroup Unit That Shorted Housing Market Shahien Nasiripour First Posted: 7/14/10 11:55 AM ET Updated: 5/25/11 06:05 PM ET President Barack Obama's choice to lead the White House budget office oversaw a Citigroup unit that profited off the housing collapse and financial crisis by investing in a hedge fund king who correctly predicted the eventual subprime meltdown and now finds himself involved in the center of the U.S. government's fraud case against Goldman Sachs. Jacob Lew, named Tuesday as Obama's nominee to lead the Office of Management and Budget to replace departing OMB chief Peter Orszag, served as chief operating officer of Citigroup Alternative Investments in 2008. He has served as a top aide to Secretary of State Hillary Clinton since the administration came into office. Though Lew is a longtime public servant who's spent nearly 30 years in various positions throughout government, it is his few years at Citi — in particular the one year he spent at its then-$54 billion proprietary trading, hedge fund and private equity unit — that's likely to raise the most eyebrows in the coming weeks as Lew faces a Senate confirmation hearing. Especially his unit's investments in a hedge fund that bet on the housing market to collapse — a reality suffered by millions of American homeowners."
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