The Thailand expat forum for Travel, Lifestyle and Fun.

bkkandrew

^Sound card playing up on this PC, so will have to listen later. Anyway, a pic to be going on with.

Butterfly

speculation at this stage, only in your mind everything you say is real

bkkandrew

Butterfly's way of dealing with reality:

bkkandrew

So, does anyone else think the boom was out of control? This chart shows the amount of leveraged buyouts (usually funded through debt):



Its a lot to pay back.

bkkandrew

.

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...

Butterfly

you forgot to highlight that part, the likely scenario. Of course, you probably don't understand what that means.

bkkandrew

It means exactly what my point was, so there was no need to highlight it. THERE IS TOO MUCH DEBT TO FUND.

Is that bold/clear enough for you now?

Milkman

Correct, BKK Andrew,

Too much debt, and too much in obligations (entitlements) that are promised to be paid out as IOUs.

I put an article in the Social Security thread about Obama's statement today.

Medicare and SS, national debt, and the interest payments.

I do not see a way out of this for the USA.

It's going to be painful, to say the least.

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

Butterfly

that's exactly what I am saying, you completely missed the meaning of that section as you are demonstrating again above. The point was technical, as temporary imbalance in supply and demand for government securities. It doesn't mean at all there is too much debt to fund. These kinds of technical imbalance can happen many times, even there is no "crisis" in the background. You have no clue. As usual.

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

Reading is not really your strong point, is it? You even quoted it in your post 1066:

As you are keen on having things highlighted for you now, I will oblige:

So, not just the 'past quarter' as you pasted into your last post, but the coming months - and if you look at various Governments' own projections for 2009 and beyond it is for the forseeable future. The UK, for instance, projects more than doubling of National debt during the course of the next 5-years. It is unprecidented, unfundable and madness to even try.

Butterfly

^ again, you don't understand. Government securities are issued all the time, they retire some, and replace some. Actually government borrowing is deferred in accounting practice, it's not a cash economy where you raised billions overnight. Banks have been injected with cash by the Central bank, they need to keep ratios stable, the capital is invested, usually in government securities. This is ever more true these days as they are afraid of lending. Instead they run to buy Treasury securities, too much demand for them which has even the US short term notes turn into a negative yield.

bkkandrew

You are always about six-months behind the news, denying it every step of the way. T-Bill negative yeilds were yesterday's news, today's is the realisation that there is just too much debt to be funded, hence in the increase in spread risk, failed auctions and poor investor sentiment.

bkkandrew

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

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

bkkandrew

And furthermore:

From:

BBC NEWS | Business | US deficit 'to hit $1 trillion'

The mountain of debt to fund just gets bigger by the day. And bear in mind that we haven't solved any of the problems yet, this debt is just to get where we are now...

And, of course, add Obama's $800BN to the $1.186TR and you get a cool 2 TRILLION DOLLARS IN 1-YEAR!

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

.

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

Now what on earth are they on about? Wasnt TARP supposed to fix the toxic asset issue?

Fed Seeks New Effort to Cleanse U.S. Banks as Toxic Assets Retard Lending

an. 14 (Bloomberg) -- The Federal Reserve’s top two officials urged a new effort to address the toxic assets held by financial companies, warning that they threaten to prevent banks from resuming lending to households and companies.

Chairman Ben S. Bernanke and Vice Chairman Donald Kohn said in separate remarks yesterday that the illiquid investments raise questions about the “underlying value” of banks and may hinder “private investment and new lending.” They called for the government to remove or insure the assets.

The goal is to prevent the type of economic stagnation that plagued Japan in the 1990s, when banks weighed down with bad loans were unable to lend. President-elect Barack Obama has a window of opportunity to oversee a comprehensive bank restructuring plan after taking office next week.

“Banks are insolvent now,” said Paul Miller, a bank analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia, who estimates that financial institutions need an additional $1 trillion to $1.2 trillion in new help. “Until you address this shortfall, banks will continue to be credit hoarders and destroyers as they shrink their balance sheets.”

The remarks by Bernanke and Kohn came as Obama aides and legislators deliberated how to use the next half of the $700 billion financial-rescue program approved in October. Democratic House lawmakers want the Troubled Asset Relief Program deployed to help troubled homeowners, community banks and municipal-bond issuers rather than for large banks.

Lawmakers’ Priorities

House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, said yesterday at a hearing that with “the larger banks having gotten money, we can advance to the smaller banks and community banks” in the second part of TARP.

Representative Spencer Bachus of Alabama, the panel’s top Republican, said the TARP has already “prevented a doomsday scenario” and complained that the rest of the funds are becoming a “grab bag” for special interests. The Senate plans to vote on a motion to reject the release of the next $350 billion of TARP by Jan. 18. The House also expects to vote in coming days.

Financial shares show continued concern about mounting credit losses. The Standard & Poor’s 500 Financials Index is down 12 percent this month. Citigroup Inc., which has already received a taxpayer-funded bailout, slid 17 percent two days ago and is shedding assets including its Smith Barney brokerage unit in an effort to survive.

Bank Values

“The large quantity of troubled, hard-to-value” assets “significantly increases uncertainty about the underlying value of these institutions,” Bernanke said at the London School of Economics yesterday and Kohn told Frank’s panel, using identical language.

A sustained economic recovery requires “a comprehensive plan to stabilize the financial system and restore normal flows of credit,” Bernanke said in London. He added that the Obama team’s $775 billion spending and tax-relief plan would be “unlikely” on its own to revive growth if the credit system isn’t repaired.

Consumer borrowing dropped by a record $7.9 billion in November, capping the first back-to-back monthly decline since 1992, Fed figures showed last week. Financial companies worldwide are making it tougher to get loans after recording about $1 trillion of writedowns and losses during the crisis.

Paulson, with Bernanke’s support, originally sold the concept of the TARP to Congress as an asset-purchase program. The Treasury then switched to capital injections, investing $192 billion so far. Officials said it was faster to buy stakes in firms than design a process for buying investments at a time when confidence in the industry was collapsing.

Taxpayer Risk

“They tried it once before and the Treasury backed away from it for good reason,” said Bert Ely, head of Ely & Co., a bank consulting firm in Alexandria, Virginia. “They couldn’t figure out how to price this stuff. If you pay too much, it is great for the bank, but it is bad for the taxpayer.”

Bernanke and Kohn outlined three approaches to deal with troubled assets. Public purchases are one possibility, as was originally planned under departing Treasury Secretary Henry Paulson’s design for the TARP.

The government could also agree to absorb, in exchange for warrants or a fee, part of the losses on a specified portfolio of troubled assets, he said. Regulators used that method with their November rescue of Citigroup, agreeing to backstop $306 billion of the company’s investments, while also injecting $45 billion of taxpayer capital.

‘Bad Banks’

A third solution would be to set up and capitalize “bad banks” that would purchase assets from financial institutions in exchange for cash and equity in them, Bernanke said.

One example of how a bad bank could be designed comes from Switzerland. The Swiss National bank and UBS AG in October set up a special unit to buy as much as $60 billion in toxic assets from UBS.

Zurich-based UBS provided $6 billion in capital to the fund, which will be used as first protection against losses. The SNB finances the purchase of the assets with secured loans to the fund of up to $54 billion.

“Lack of confidence in the financial system is well justified” given the “trouble they are in,” Allen Sinai, chief economist at Decision Economics in New York, said in an interview with Bloomberg Television, referring to U.S. banks.

link

Spin

< I do believe i missed one of these off the end of....