The Thailand expat forum for Travel, Lifestyle and Fun.

Butterfly

^ I think you are confusing truth with simplicity

bkkandrew

^And I think you are merely confused and perhaps a little simple.

bkkandrew

And factories grind to a halt:

Factory Orders in the U.S. Tumble More Than Forecast (Update1)





By Timothy R. Homan
Jan. 6 (Bloomberg) -- Orders placed with U.S. factories in November fell twice as much as forecast, signaling businesses are cutting back on investments as the recession deepens.

Demand fell 4.6 percent after a revised 6 percent decrease in October that was larger than previously estimated, the Commerce Department said today in Washington. The back-to-back decline was the biggest since records began in 1992.

Contuneud here:

Bloomberg.com: Worldwide

The phrase 'since records began' is being used a lot of late.

bkkandrew

And an admission that the TARP was just shovelled into a black hole:

Banks’ ‘Catatonic Fear’ Means Consumers Don’t Get TARP Relief



By James Sterngold

Jan. 5 (Bloomberg) -- As the new owner of $172.5 billion of preferred shares and warrants in 208 U.S. financial institutions, the Treasury Department hasn’t succeeded in thawing frozen credit markets, leaving taxpayers propping up an industry that won’t lend to them.

While inter-bank lending rates have fallen since Congress approved the $700 billion Troubled Asset Relief Program on Oct. 3, most bank lending to consumers remains tight and interest rates high. The average credit-card rate was 14.33 percent on Dec. 16, according to IndexCreditCards.com in Cleveland, almost unchanged from 14.41 percent in October 2007.

More at:

Bloomberg.com: Exclusive

Taxpayers pay the bill, but get no benefit (apart from another bill, one suspects...)

bkkandrew

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Investors shun German bond auction

By David Oakley

Published: January 7 2009 13:30 | Last updated: January 7 2009 13:30

Investors shunned one of the most liquid and safest assets in the world on Wednesday as a German bond auction failed in a warning for governments seeking to raise record amounts of debt to stimulate their slowing economies.

It is the first eurozone bond auction of the year and an ominous sign of potential trouble ahead for governments around the world, with an estimated $3,000bn expected to be issued in sovereign debt this year – three times more than in 2008.

The auction of 10-year bonds failed to attract enough bids to reach the €6bn the government wanted to raise. Although a number of German bond auctions failed last year, it was almost unheard of before the credit crisis.

Meyrick Chapman, a fixed-income strategist at UBS, said: “When a German bond auction fails, then that does suggest there is trouble ahead for governments wanting to raise money in the debt markets.

“There was certainly a supply/demand imbalance because of the large amount of issuance in the last quarter of 2008 and the large amount due in the coming months. Before the financial crisis, German bond auctions just did not fail.”

Although government bond yields are trading at historically low levels, because of fears of deflation and investor demand for safe government paper in an uncertain climate, the failed German auction is a sign that appetite for these bonds is starting to diminish.

A number of countries, including the UK, Italy, Spain, Austria, Belgium and the Netherlands, have either struggled to sell bonds or been forced to cancel debt offerings because of a lack of demand.

The UK successfully sold £2bn in gilts due to mature in 2038 on Wednesday.

However, Robert Stheeman, chief executive of the UK Debt Management Office, warned last month that the ÜK government could also struggle to sell bonds because of the vast amount of bond issuance in the pipeline.

The UK is planning to raise £146bn in bonds this financial year – three times more than last year.

From:

FT.com / Markets - Investors shun German bond auction

Oh dear. Inevitable really, I would lend Governments the buttons on my shirt at this time...

bkkandrew

State unemployment claim systems overwhelmed

ALBANY, N.Y. – Electronic unemployment filing systems have crashed in at least three states in recent days amid an unprecedented crush of thousands of newly jobless Americans seeking benefits, and other states were adjusting their systems to avoid being next.

About 4.5 million Americans are collecting jobless benefits, a 26-year high, so the Web sites and phone systems now commonly used to file for benefits are being tested like never before.

Even those that are holding up under the strain are in many cases leaving filers on the line for hours, or kissing them off with an "all circuits are busy" message. Agencies have been scrambling to hire hundreds more workers to handle the calls.
Systems in New York, North Carolina and Ohio were shut down completely by technical glitches and heavy volume, and labor officials in several other states are reporting higher-than-normal use.

"Regardless of when you call, be prepared to wait and just hang on. Try not to get frustrated," said Howard Cosgrove, a spokesman for the Wisconsin Department of Workforce Development, which boosted its staff of telephone operators by 25 percent last month to cope with a phone system that has been overloaded for weeks. "We sympathize, we're on their side, we're doing our best to help them out."

The nation's unemployment rate in November zoomed to 6.7 percent, a 15-year high. Economists predict it will rise to 7 percent in December, with another 500,000 jobs probably cut last month. The government releases its monthly employment report on Friday.

Full story here:

State unemployment claim systems overwhelmed - Yahoo! News

That's one way to cut the unemployment numbers, don't build an IT system that can handle them!

bkkandrew

And as if to underline the point, some copy from Reuters:

My bold (to help Butterfly's comprehension)...

bkkandrew

And they are even trying Enron, India style!

Satyam chairman resigns amid $1bn fraud

Rhys Blakely in Mumbai


One of India's biggest-ever corporate scandals took a dramatic twist today after the chairman of Satyam, the IT services giant, resigned and admitted he had orchestrated a $1billion fraud (£669 million).

Satyam, which means "truth" in Sanskrit, said today it had discovered 50.4 billion rupees of "inflated" cash on its balance sheet at the end of September.

It added that B. Ramalinga Raju, the company's chairman, had unsuccessfully tried to sell two companies last month to Satyam in the "last attempt to fill the fictitious assets with real ones".

In a notice to India's Stock Exchange, Mr Raju, 53, said: "I sincerely apologise to all Satyamites and stakeholders, who have made Satyam a special organisation, for the current situation." He added: "I am now prepared to subject myself to the laws of the land and face consequences thereof."

Mr Raju said the years of fraudulently inflating assets, revenues and profits margins were "like riding a tiger, not knowing how to get off without being eaten."

Continued here:

Satyam chairman resigns amid $1bn fraud - Times Online

This collapse isn't half uncovering some naughties, from New York Jews, to dodgy car dealers in Thailand and now to Indian software companies called 'Truth'.

bkkandrew

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Strauss-Kahn Says IMF May Need Another $150 Billion for Crisis

Email | Print | A A A



By Christopher Swann


Jan. 12 (Bloomberg) -- The International Monetary Fund may need another $150 billion to help counter the hit to emerging markets and poorer countries from a worsening global economic downturn, Managing Director Dominique Strauss-Kahn said.

The IMF chief, in an interview in Washington, also chided European leaders for failing to grasp the depth of the coming slump in their region, creating the risk of social upheaval. The fund will make a “significant” increase in its $1.4 trillion projection of global financial losses and writedowns, he added.

Full story here:

Bloomberg.com: Worldwide

Ho hum, where will all the money come from...

bkkandrew

.

The move caused fury in Madrid and revived fears in the currency and bond markets about the underlying health of Europe's monetary union.

Spanish officials are irked that S&P has placed Spain's debt on "CreditWatch Negative", a notch lower than the "outlook" alert issued on Irish bonds last week. It is the first time that a AAA country has suffered such a harsh verdict since the start of the global financial crisis.

Such a move typically precedes a downgrade within weeks but the finance ministry insisted last night this would not be allowed to happen. "There's not going to be a rating downgrade because we are taking measures to overcome the crisis," it said.

Trevor Cullinan and Myriam Fernández, the agency's analysts, said the housing crash had set off a downward spiral in Spain that would drive the budget deficit above 6pc by 2006, double the EU's Maastricht limit.

"We expect a substantial worsening in the Kingdom's public finances," it said, predicting 2pc contraction in 2009 and a long slump as years of credit excess are slowly purged.

Spain is discovering the limits of action within the eurozone. It can no longer let its currency take the strain, or follow the US, Switzerland, Sweden, Britain, in slashing rates. Indeed, Frankfurt raised eurozone rates last July at a time when Spain's housing crash was already under way. Unemployment has surged to 13.4pc, breaking the 3m barrier.

Michael Klawitter, from Dresdner Kleinwort, said Spain was now crumbling on every front. "Tax revenue is collapsing. There is a banking crisis and a massive deterioration linked to housing. It is arguable that Spain has already let matters go past the point of no return," he said.

"We are going to see fresh talk about the sustainability of monetary union and it is going to get messy. Spain is the most pro-EMU of the big states so there has not been any backlash against EMU, but who knows what will happen," he said.

Ian Stannard, a currency strategist at BNP Paribas, said Spain needs to raise €70bn (£63bn) this year on the bond markets, both to roll over old debts and to pay for a fiscal rescue package worth 1pc of GDP.

Europe's bond supply will reach €765bn this year, up 15pc from 2008. It is far from clear whether the markets can absorb so much debt. Although Spain's public debt is modest at under 40pc of GDP, this may not prevent a downgrade.

"The economy is less resilient than any other AAA state. It is more dependent on real estate and tourism, and there is very high corporate debt. Household debt is close to levels in Britain and the US," said Mr Fernandez.

From:

S&P threatens to strip Spain of top AAA rating - Telegraph

Spin

And who would want to lend to them? They all have a lower credit rating today than they did a year ago.

It isnt rocket science.

Banks should be encouraging people to come through their doors and open savings accounts for the difficult times that lie ahead.

Milkman

Interest rates are low.

Instead of putting money under mattresses, people are buying Treasuries at 0%, which is losing money.

Spin

Sadly yes but i think the fact savers are not getting any interest is an aside compared to what will happen if the lending system does break down completely.

bkkandrew

Hmmm, the higher yeild rates on T-bills now suggest people are realising what I save been saying for some while - that that the game is up for Government debt too. Investors face the stark reality of losing their money through a FED default or their investment inflated away when the printing presses are whirring at high speed...

Spin

^ Im a bit confused about all this talk of inflation. If this money that is being printed is largley being given to companies who are hoarding it to avaoid bankruptcy then how will that money ever trickle down into the economy to cause inflation.

Is there something I'm missing?, most talking heads seem to be of the opinion that inflation is off the table for at least the rest of 2009.

Milkman

Right now, there seem to be two camps of thought.

1. some think there will be inflation (and even hyper-inflation) because of the Treasury printing more money.

2. Others see deflation, or don't see any inflation as a result.


As things have changed, making predictions is even more difficult than in past. And as well know, economists often error in predicting for the future.

__________________
Military men are dumb, stupid animals, to be used as pawns for foreign policy

bkkandrew

There are two main causes of inflation, the most common being demand driven. Clearly there is little of that about right now...

The other is fiscally-driven, namely when a Government simply does not have enough money, cannot borrow (more) and, rather than cut expenditure (or default altogether), its prints money to pay those creditors that will accept its own currency. Thankfully Governments are seldom mad enough to try this, as it creates self-perpetuating inflation, i.e. more paper money chasing the same number of physical assets. Zimbabwe and the Weimar Republic are two good examples of this policy in full-swing.

At the same time, or even in fear that it will be attempted, confidence will be lost in the currency concerned, which will cause it to be devalued against other currencies. This effect on inflation was not so significant in the 1930's, as economies did not have total reliance on imported goods, as some do today, but it did add to the inflationary spiral. Recently, with great dependance of significant economies being utterly dependant on imports, such as the UK and USA, the risk of 'imported inflation' is large too. It is my view that, without printing so much as an additional 5-pound note, the UK's recent 30% drop in Sterling will see many goods increase in price well into double figures. Add the two effects together and you end up with Mugabenomics.

Spin

Meanwhile....across the pond

BRITAIN'S banks are to receive more of your money so they can continue to not lend it to you, it has emerged.

The banks say a second bail-out will be essential if they are to achieve their medium-term strategic goal of having all the money and throwing you out of your house.

Treasury sources admitted the initial multi-billion pound bail-out had not unlocked the credit markets as hoped and so the banks may now have to be filled with £10 notes until they burst.

Economists say this policy of 'quantatative bursting' will mean some money will eventually have to be released from the building so bank employees can at least get to their desks.

The government hopes this money will be picked up in the street by consumers who will then spend it on Jaguars and fine china.

A Treasury spokesman said: "Most of the banks have just piled the first lot of money in corridors and cleaning cupboards, although HBOS does seem to have spent quite a bit of it on magic beans and aromatherapy oil.

"We did plant the beans in the hope a massive beanstalk would appear which would then lead to a magical, golden egg-laying goose-type scenario. But that didn't happen."

He added: "We think the beans may have been eaten by a homeless man, or possibly a crow."

from here

Butterfly

not an option, the only way to achieve this would be to increase interest rates on deposits, money saved is money not spend, and that would have a dramatic effect on Aggregate Demand, and would "contract" Money Demand. Cost of borrowing would become high and distorted. Something you don't want now, like pouring oil on fire.

What a complete non-sense. If investors were expecting the Fed to default, they wouldn't accept the 0% interest rate they have now, the spread risk would be huge, and the Treasury yield on short term notes and medium term notes would be highly positive. This is not the case today. As usual, talking out of your ignorant ass.

That's right, it won't in the short term as everyone is adjusting his spending pattern and business investment, but it could in the long run once everyone realize that the storm has passed.

bkkandrew

As usual, you can't read my post properly, can't make a coherant argument, so decide to hurl insults.

The key word in my post was 'realising', i.e. before they did not realise. Now that this realisation is setting in the spread risk is increasing and will increase from here on in.