Nouriel Roubini, the economist whose dire forecasts earned him the nickname "Doctor Doom", told CNBC Monday that the economic recovery is going to be "very ugly."
When asked about the economy Monday, Roubini said, "We may be out of a freefall for the financial system," said Roubini. "We have seen the worst in that sense. But in my view there is a sluggish U shaped recovery that might go into a W double dip if we don't fix the problems in the economy."
The global recession may end towards the end of 2009 rather than sooner and the global recovery in 2010 will be anemic and well below trend as leveraged and income/profit-challenged households, firms and financial institutions are constrained in their ability to borrow, lend and spend. Meanwhile a perfect storm of persistently large fiscal deficits and public debt accumulation, monetization of such deficits that will eventually increase expected inflation, rising government bond yields, soaring oil prices, weak profits, still falling jobs and stagnant growth has inched a little closer on the radar of this cloudy global economic outlook. It’s a storm that could blow the recovering world economy back into a double-dip recession by late 2010 or 2011. It doesn’t have to come to pass. But it is getting more likely unless a clear exit strategy from the massive monetary and fiscal stimulus is outlined even before it is implemented once a more sustained global recovery is achieved.
On investing in today's markets: "A "Stay away from risky assets. I think from now on the surprise will be on the downside in areas like commodities."
Below is his interview.
So what is your forecast for the recovery right now? I've been hearing sub par growth. What exactly does that mean?
ROUBINI: First of all, in my view the recession is going to continue through the end of the year. It's not over yet, and while potential growth rate for the U.S. economy is 3 percent, I expect that the growth rate of the economy is going to be very anemic, below trend, then on 1 percent for the next two years. Why? You have U.S. consumers are shopped out, saving less debt burden. They're not going to consume very much. Your financial system is severely damaged, and credit growth is going to be limited, and now we have also this massive re-leveraging of the public sector with a large budget deficit and increases in public debt are going to eventually crowd out the economic recovery of the private sector. So I don't see a lot of economic growth ahead of us.
Are you worried at all about a double-dip recession?
ROUBINI: Yeah, the risk is that by the end of the next year, if budget deficit remains very large, around $1.5 trillion, and if the Fed keep on monetizing them, essentially printing money to try to prevent increases in interest rates, expect that the inflation is going to go up, and if expecting inflation were to go up, long-term government bond yields would go up, and mortgage rates will go up. Borrowing costs for consumers (INAUDIBLE) will go up, and that's going to crowd out the recovery, so there's even a risk of a double-dip recession.
If your economic projections are correct and I have to point out that they are below consensus, it would seem that the stock market may have gotten way ahead of itself here at the current levels. Do you agree with that?
ROUBINI: Yes. Some increase in stock prices are justified because we avoided the risk of a near depression. That was the risk we were facing in the first quarter. But markets have gone up too much, too soon based on economic fundamentals. If the recovery is going to be weaker, therefore profits are not going to recover as fast. If you are going to have still weaknesses in the rest of the world, Europe, Japan I think there will be downside risk for the stock market from this point on.
What would you expect those stronger signs to be? What do you look for?
ROUBINI: Well, we have to look whether there's going to be any stabilization of the job market, but unfortunately I see unemployment rate well above 10 percent this year and close to 11 percent at the peak next year. We have to see a recovery of the U.S. consumer, but there's a massive weakness because of consumers being hit by default (ph) in the equity wealth, in this housing wealth, falling labor income, rising debt and debt servicing ratio (ph). That's why I'm somehow bearish about the recovery and don't expect the recovery to occur anytime soon and that's going to be a negative for the markets.
Above transcripts are taken from Video Interviews listed below:
One more video interview: http://www.pbs.org/nbr/info/local-player.html?s=nbre07s2cf0q4c4
Read More in http://www.cnbc.com/id/32012679/site/14081545
Showing posts with label Markets. Show all posts
Showing posts with label Markets. Show all posts
Is it good time to invest in Oil?
Well, it all depends on your trading style. Looking at the charts for USO (my favorite Oil ETF), everytime you say it cant go lower, it does just that. For me, I am going to wait for oil to actually make a higher low (swing high) before looking at investing in oil for the long run. What's interesting is that even though Oil continues to go lower, the price at the pump has stopped going lower and in fact is higher than it was months ago when oil was more per barrel.
When crude breaks above $50/barrel which would be late March/early April. On a daily chart it's forming a sideways base after it's down-trend ended in December.
If you buy now you're taking a speculative view in anticipation of the upside possibility and would need a contingency plan at a price where you will cut your loses if you're wrong.
Some analysts say : oil has quite a bit lower to go. I think the recession is going to get worse yet and unemployment is going to rise more. We have large amounts of oil in storage, excluding the strategic reserve. I think the price will eventually go below $20. And rise to around $75 in a couple of years.
Best advice is till the recovery in the share market in the world market started to come, no one should purchase the crude oil in the MCX.
Financial Turmoil - Year 2008
Sept 7, 2008 : U.S. bails out Fannie Mae and Freddie Mac
100 Billion Dollar to each.
Sept 9, 2008 : Lehman Brothers Struggles to Survive
Lehman Brothers struggled to survive after loosing more than half of its market value. Analysts feared that the investment bank was running out of time and options. Speculation rose that the government was unlikely to come to its rescue.
Sept 14, 2008 : Lehman Heads into bankruptacy, Merrill is sold
Lehman Heads into bankruptacy after it failed to find a buyer. Merrill Lynch agreed to be bought by Bank Of America.
Sept 16, 2008 : Fed's Loan Rescues AIG
The Federal Reserve agreed to lend AIG 85 Billion Dollar in exchange of control over AIG.
Sept 21, 2008 : Goldman Sachs and Morgan Stanly
The end of an era. Goldman Sachs and Morgan Stanly, the last big investment banks on Wall Street, got approval to become regulated bank holding companies.
Sept 25, 2008 : Washington Mutual Seized
Took over by FDIC, J P Morgan bough its deposits for $1.90
Sept 29, 2008 : Citi buys Wachovia
Initially Citigroup wanted to buy Wachovia’s banking operation for $2. Later Wells Fargo bought it for $15.1 billion.
Oct 01, 2008 : 700 Dollar Bailout Plan Reached
Senate passes $700 billion dollar financial bailout package.
Oct 06, 2008 : Global Markets Plummet
100 Billion Dollar to each.
Sept 9, 2008 : Lehman Brothers Struggles to Survive
Lehman Brothers struggled to survive after loosing more than half of its market value. Analysts feared that the investment bank was running out of time and options. Speculation rose that the government was unlikely to come to its rescue.
Sept 14, 2008 : Lehman Heads into bankruptacy, Merrill is sold
Lehman Heads into bankruptacy after it failed to find a buyer. Merrill Lynch agreed to be bought by Bank Of America.
Sept 16, 2008 : Fed's Loan Rescues AIG
The Federal Reserve agreed to lend AIG 85 Billion Dollar in exchange of control over AIG.
Sept 21, 2008 : Goldman Sachs and Morgan Stanly
The end of an era. Goldman Sachs and Morgan Stanly, the last big investment banks on Wall Street, got approval to become regulated bank holding companies.
Sept 25, 2008 : Washington Mutual Seized
Took over by FDIC, J P Morgan bough its deposits for $1.90
Sept 29, 2008 : Citi buys Wachovia
Initially Citigroup wanted to buy Wachovia’s banking operation for $2. Later Wells Fargo bought it for $15.1 billion.
Oct 01, 2008 : 700 Dollar Bailout Plan Reached
Senate passes $700 billion dollar financial bailout package.
Oct 06, 2008 : Global Markets Plummet
Economic Conditions To deteriorate Further
Two of the most accurate credit crisis forecasters predict that economic conditions will deteriorate further.
One is Nouriel Roubini, who predicted the financial crisis in July 2006. In February this year he forecast a ``catastrophic'' meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks exposed to mortgages and a ``sharp drop'' in equities. He also predicted that Financial Markets May be Shutdown.
Meredith Whitney, who was the first banking analyst to call the crisis in financials, and has made some notably astute calls, recently said her outlook for the industry had been "too optimistic."
This is what she says
" As an analyst, it is my job to do fundamental research and call it as I see it, and my bailiwick is financials. My outlook has been negative for over a year and, technically, I have been “right” on my calls. Seeing massive capital destruction has brought me no pleasure, but unfortunately I see little on the horizon that would change my outlook. In fact, after observing the US economy so derailed, I feel that I must act as a citizen of this great country to attempt to offer solutions to this economic train wreck we are all involved in.
First, I am more bearish today than I have been in the past 18 months. In so far as the market has impacted on the economy, capital destruction has been so intense that multi-trillions in capital raised by institutions through both private and public capital has gone to plug holes and not stabilise the effects of shrinking liquidity to corporations and consumers. More than $3,000bn (€2,365bn, £1,955bn) of available credit has been expunged from the markets and therefore corporate and consumer borrowers so far this year. "
One is Nouriel Roubini, who predicted the financial crisis in July 2006. In February this year he forecast a ``catastrophic'' meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks exposed to mortgages and a ``sharp drop'' in equities. He also predicted that Financial Markets May be Shutdown.
Meredith Whitney, who was the first banking analyst to call the crisis in financials, and has made some notably astute calls, recently said her outlook for the industry had been "too optimistic."
This is what she says
" As an analyst, it is my job to do fundamental research and call it as I see it, and my bailiwick is financials. My outlook has been negative for over a year and, technically, I have been “right” on my calls. Seeing massive capital destruction has brought me no pleasure, but unfortunately I see little on the horizon that would change my outlook. In fact, after observing the US economy so derailed, I feel that I must act as a citizen of this great country to attempt to offer solutions to this economic train wreck we are all involved in.
First, I am more bearish today than I have been in the past 18 months. In so far as the market has impacted on the economy, capital destruction has been so intense that multi-trillions in capital raised by institutions through both private and public capital has gone to plug holes and not stabilise the effects of shrinking liquidity to corporations and consumers. More than $3,000bn (€2,365bn, £1,955bn) of available credit has been expunged from the markets and therefore corporate and consumer borrowers so far this year. "
Things To Anticipate Over The Next Year
- Net earnings on the S&P 500 to be $50.
- State and local governments will be reducing spending significantly unless they get bailed out.
- A $500 billion fiscal stimulus package that focuses on rebuilding the US.
- Whatever solution the Fed comes up with, they will overdue it, but not before it’s too late.
- The government will continue to react to problems instead of anticipate them.
- Markets usually bottom when there is absolutely no hope left.
- Retailers, homebuilders, mortgage insurers, insurance companies (think annuities), banks, casinos and car manufacturers all going bankrupt at the same time, their stocks and bonds go to zero, and they start over.
- Highly dilutive secondary stock offers of which the proceeds will be used to pay down debt.
- Home prices to continue declining
- Increased savings. Obviously you then have decreased spending.
- GDP to decline 5%
- Unemployment to rise to 9% (That is a HUGE number)
- No IPO’s
- No Private Equity buyouts
- Limited corporate bond issuance
- A secular shift towards frugality
Things To Anticipate Over The Next 90 Days
- Service industries (retail, restaurants, hotels and affiliated) that had job growth in 2008 will begin to show declines along with everyone else.
- If the decline in the financials continues at the pace of the last 30 days then the whole financial system will be tested again. The short sellers are very interested in finding out what happens.
- Oil prices to continue falling (Still way too much supply out there in the short run)
- 50 basis point Fed rate cut (Effective funds rate is already at 0.30)
- Automaker(s) going bankrupt.
- Significant amount of companies being downgraded, which will mostly affect on bonds.
- Declining bond prices (Especially CMBS)
- Some companies will not be able to afford to rollover their debt and that will bankrupt them
- Even with all these problems, expect the government to NOT intervene as they wait for the new administration to take over. Looks like the short sellers are counting on it.
U.S. and Global Economic Conditions
The most recent set of events and the string of economic data are a clear sign that the crisis is not over, and the worst might very well be ahead of us.
On the one hand, consumer confidence got a boost from falling oil prices and new leadership in the U.S. government. On the other hand, yesterday’s Conference Board report confirms that the economy is in a deep recession (the confidence index is still at the lowest level on record since 1975) and points to further consumer spending declines in the coming quarters.
The release of preliminary Q3 real GDP growth in the U.S. (revised down to -0.5% from the initial -0.3%) displayed a downward revision to personal consumption from the original -3.1% down to -3.7%.
Consumption is expected to be a significant drag on the economy for a while. Analysts estimate that the fall in energy prices – a reflection of falling U.S. demand and a by-product of the fact that this severe recession is a global one – will boost real U.S. income by roughly $200bn (1.5% of GDP) but it is also. On the back of this, U.S. home prices keep falling, equity prices may still be very far from the bottom and employment losses are mounting.
Short Selling Might be Banned Again
IOSCO Technical Committee meeting is convened on Monday, November 24 by teleconference to discuss urgent regulatory issues in the ongoing credit crisis.
The Technical Committee meeting will consider:
- Short Selling — Consider the effectiveness of recent regulatory responses in reducing manipulative short selling without stifling legitimate short selling activity, and explore possible coordination on rules relating to naked short sales, in particular with regard to position reporting and delivery and pre-borrowing requirements
- Under-Regulated or Unregulated Products — Develop disclosure principles to promote transparency in OTC markets for derivatives and other financial instruments which will contribute to enhanced investor protection and mitigating systemic risk.
The meeting also will focus on:
- Credit Rating Agencies — Assess members' progress in adopting rules based on IOSCO's revised Code of Conduct, and accelerate work on developing a common examination module.
- International Accounting Standards — Ensure that the process of developing international accounting standards continues to take account of the interests of investors.
MetaView lets you view the stock market in 3D
Lyle Andrews has released MetaView, a new application that lets you view stock market data in 3D.
MetaView lets you group stocks to view in 3D. If you are grouping stocks you hold, you can enter the number of shares you have; MetaView will calculate the total value and display it in the main view. Yu can use a menu to view more information about individual stocks; save headlines and URLs of new stories for each stock; access Securities and Exchange Commission (SEC) filings and graph them by date; and enter historical events and assign them to groups.
MetaView provides.
• What stocks parallel each other and under what conditions do they diverge?
• What stocks are dependent on others?
• To what degree do news stories affect stock prices, and do the prices change before or after the stories get published?
• Are there certain historical events that move entire markets simultaneously?
Currently MetaView does the the following:
• You can create groups of stocks to view in 3D, if you enter the number of shares you have of each it will calculate the total value and display it in the main view.
• When you are viewing a particular stock in MetaView you can use a menu to jump to view more information about that stock at any of the free financial news sites out on the web.
• You can then save headlines (and URLs) for news stories for each stock and graph when they were published on the price graph.
• You can also access SEC filings and graph them by date.
• You can enter historical events and assign them to various groups, they will then be displayed as labels on the reference grid behind the stock charts.
• MetaView has a speech sythesis function that can give you an audible summary of each stock in a group as it automatically cycles through them.
• MetaView comes with a screensaver that shows the same view as the main window. It's eye catching and entertaining, as well as being informative, and tends to draw a lot of attention from friends and coworkers. The speech synthesizer can also be turned on and off while in screensaver mode.
• MetaView automatically downloads data for the U.S. market. You can schedule when this happens or use the default schedule. Because data is stored on your local hard drive rather than the net, access is very fast, and you can still use most of its functionality when you have no net connection.
Breaking News --- US Markets will go up on Monday
Obama to announce economic team on Monday in order to calm the markets.
Some Good News Stories..........
Chinese Want To Buy the Big 3 Automakers Huffington Post
Unable to recognize voices, unless it's Sean Connery The Body Odd
Goldman's Gold Standard Is Less Golden Walll Street Journal Sallie Krawchek, when she was an analyst at Sanford Bernstein covering Wall Street, dared to point out the obvious: it was better to be an employee of a securities firm than a shareholder. Note the reverse was generally the case when they were private partnerships. We said when Goldman went public it would eventually be the ruination of the firm.
China Now Largest Foreign Creditor Of United States Boom2Biust
Contemplating CAPM Option Armageddon
The Return of the $70 Per Hour Meme Felix Salmon. Debunking an urban legend.
Time for the Government to Buy Citigroup Brad De Long
Paulson Trying To Rewrite His Own History Bespoke Investment Group
Just give us the money Willem Buiter decided to become a bank (hat tip Ed Harrison).
Argentina's Impending Bankruptcy Independent Accountant
The Equity Market Has Nothing on Credit EconomicPic Data
The Simple Arithmetic of Hank Paulson's Financial Disaster David Fiderer, Huffington Post
The Big Easing Chevelle, Models and Agents. On how Bernanke lacks cojones.
30 Reasons for Great Depression 2 by 2011
1. America's credit rating may soon be downgraded below AAA
2. Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"
3. Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse
4. King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
5. Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this year
6. AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers
7. American Express joins Goldman, Morgan as bank holding firms, looking for Fed money
8. Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states
9. State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt
10. State, municipal, corporate pensions lost hundreds of billions on derivative swaps
11. Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
12. Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
13. Fed also plans to provide billions to $3.6 trillion money-market fund industry
14. Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
15. Washington manipulating data: War not $600 billion but estimates actually $3 trillion
16. Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs
17. Commodities down, resource exporters and currencies dropping, triggering a global meltdown
18. Big three automakers near bankruptcy; unions, workers, retirees will suffer
19. Corporate bond market, both junk and top-rated, slumps more than 25%
20. Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall
21. Unemployment heading toward 8% plus; more 1930's photos of soup lines
22. Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists
23. China's sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai
24. Despite global recession, U.S. trade deficit continues, now at $650 billion
25. The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities
26. Now 46 million uninsured as medical, drug costs explode
27. New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt
28. Outgoing leaders handicapping new administration with huge liabilities
29. The "antitaxes" message is a new bubble, a new version of the American
dream offering a free lunch, no sacrifices, exposing us to more false promises
30. At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan's Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America's problems will take years and will burn trillions.
He sees "nothing but large increases in the deficit ... I think it would be worse than the depression. ... Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds." It'll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government."
Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. 'I just want to get people thinking about this, and to realize this is a road to disaster,' said Whitehead. 'I've always been a positive person and optimistic, but I don't see a solution here.'"
Source Marketwatch
2. Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"
3. Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse
4. King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
5. Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this year
6. AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers
7. American Express joins Goldman, Morgan as bank holding firms, looking for Fed money
8. Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states
9. State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt
10. State, municipal, corporate pensions lost hundreds of billions on derivative swaps
11. Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
12. Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
13. Fed also plans to provide billions to $3.6 trillion money-market fund industry
14. Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
15. Washington manipulating data: War not $600 billion but estimates actually $3 trillion
16. Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs
17. Commodities down, resource exporters and currencies dropping, triggering a global meltdown
18. Big three automakers near bankruptcy; unions, workers, retirees will suffer
19. Corporate bond market, both junk and top-rated, slumps more than 25%
20. Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall
21. Unemployment heading toward 8% plus; more 1930's photos of soup lines
22. Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists
23. China's sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai
24. Despite global recession, U.S. trade deficit continues, now at $650 billion
25. The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities
26. Now 46 million uninsured as medical, drug costs explode
27. New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt
28. Outgoing leaders handicapping new administration with huge liabilities
29. The "antitaxes" message is a new bubble, a new version of the American
dream offering a free lunch, no sacrifices, exposing us to more false promises
30. At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan's Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America's problems will take years and will burn trillions.
He sees "nothing but large increases in the deficit ... I think it would be worse than the depression. ... Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds." It'll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government."
Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. 'I just want to get people thinking about this, and to realize this is a road to disaster,' said Whitehead. 'I've always been a positive person and optimistic, but I don't see a solution here.'"
Source Marketwatch
Market Analysis For This Week
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Markets
- US: CPI and FOMC Minutes
- U.S. Leading Indicators Continue to Weaken in Q4 2008: Will 2009 Look Worse?
- U.S. Housing Starts and Regional Manufacturing Indices
- Will the Treasury Bailout the Failing U.S. Auto Sector?
- TIC Data - Are Foreign Central Banks Still Buying Treasuries?
- FDIC Interbank Guarantee Modification?
- The Future of Fannie & Freddie: Paulson’s Speech and Congressional Hearing
- Moody’s: Record Number of Corporates are Cash-Strapped
- The Future of Investment Banking: What Might It Look Like?
- Portfolio Management: Are Indexes In, and Active Management Out?
- The Financial Crisis and Climate Change Momentum
- Oil Exporter Government Spending
- Global Oil Demand: Still Falling?
- Canadian Corporate profits for 3Q, Wholesale Trade and CPI
- BoE minutes: What’s next?
- UK Retail sales: Consumption collapsing?
- Has Quantitative Easing Returned To Japan?
- More details on China’s fiscal stimulus - Who Will Pay for It?
- Australia: Housing Finance and Wage Price Index Data
What is ZIRP(zero interest rate policy)???
Zero interest rate policy is coming again.. Japan had to maintain its benchmark interest rate at or near zero for most of the 1999-2006.....
America is almost there too. Since October 29th, the target for the federal funds rate has been at 1%, but the rate at which funds actually change hands, known as the “effective rate”, has averaged around 0.25%.
The US is at 1% and Japan at .3%. Some analysts even reckon the Fed could move toward outright ZIRP (zero interest rate policy) to revive the economy and financial system.
We are nowhere near the end of this housing/credit/insolvency crisis and think ZIRP is not out of the question in our future. Each time a new crisis erupts, the fed will print/cut/inject in an effort to contain it, but will eventually run out of monetary ammunition... That's when the real hyperinflationary fireworks will begin.
With the Fed funds rate already down to 1 percent, and below one percent on many days, the central bank is fast approaching what economists call the “zero bound.”
The Bank of Japan had to maintain its benchmark interest rate at or near zero for most of the 1999-2006 period, before policymakers finally felt comfortable that the economy was in a sustainable recovery.
The real question for policy makers is what to do if they reach a zero rate and still want to rev up the economy. Fed officials have studied the question closely, and the Fed chairman, Ben S. Bernanke, gave a famous speech on the issue when he was a Fed governor in 2002.
America is almost there too. Since October 29th, the target for the federal funds rate has been at 1%, but the rate at which funds actually change hands, known as the “effective rate”, has averaged around 0.25%.
The US is at 1% and Japan at .3%. Some analysts even reckon the Fed could move toward outright ZIRP (zero interest rate policy) to revive the economy and financial system.
We are nowhere near the end of this housing/credit/insolvency crisis and think ZIRP is not out of the question in our future. Each time a new crisis erupts, the fed will print/cut/inject in an effort to contain it, but will eventually run out of monetary ammunition... That's when the real hyperinflationary fireworks will begin.
With the Fed funds rate already down to 1 percent, and below one percent on many days, the central bank is fast approaching what economists call the “zero bound.”
The Bank of Japan had to maintain its benchmark interest rate at or near zero for most of the 1999-2006 period, before policymakers finally felt comfortable that the economy was in a sustainable recovery.
The real question for policy makers is what to do if they reach a zero rate and still want to rev up the economy. Fed officials have studied the question closely, and the Fed chairman, Ben S. Bernanke, gave a famous speech on the issue when he was a Fed governor in 2002.
Truths About Hedge Funds
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Labels:
Markets
It’s only a vehicle for investing, albeit one that happens to be less constrained than most. Your run-of-the-mill mutual fund, for example, buys stocks and bonds, and that’s pretty much it. Most are not even allowed to employ short selling, a way of betting that the price of a security will fall. Hedge funds can employ whatever investing tools they want, including leverage, the use of derivatives like options and futures, and short sales. The New York Times decided years ago to incessantly refer to hedge funds’ use of these instruments as “exotic and risky,” thereby adding to their aura of mystery. The funny thing: Practically all financial institutions use these “exotic” instruments.
Hedge funds are not regulated and consequently aren't required to make the same detailed financial disclosures that are required of publicly traded companies.
Hedge funds are not required to file reports with the U.S. Securities and Exchange Commission. They are supposed to make money all the time, and when they fail at this, their investors redeem and go to someone else who has recently been making money. Every three or four years, they deliver a one-in-a-hundred-year flood.
Hedge funds operate in private, but they often affect the public. Many market-watchers believe that hedge fund managers -- nervous about holding on to assets overnight -- sold stocks in such massive amounts that they caused the recentsteep declines in the Dow Jones industrial average that haveoccurred repeatedlyjust before the market closed.
Hedge funds often present many different barriers to withdrawal, and there are essentially no regulatory prohibitions on these barriers.
Certain hedge funds may only accept investments from individuals who hold at least $5 million in investments.
Hedge funds are not regulated and consequently aren't required to make the same detailed financial disclosures that are required of publicly traded companies.
Hedge funds are not required to file reports with the U.S. Securities and Exchange Commission. They are supposed to make money all the time, and when they fail at this, their investors redeem and go to someone else who has recently been making money. Every three or four years, they deliver a one-in-a-hundred-year flood.
Hedge funds operate in private, but they often affect the public. Many market-watchers believe that hedge fund managers -- nervous about holding on to assets overnight -- sold stocks in such massive amounts that they caused the recentsteep declines in the Dow Jones industrial average that haveoccurred repeatedlyjust before the market closed.
Hedge funds often present many different barriers to withdrawal, and there are essentially no regulatory prohibitions on these barriers.
Certain hedge funds may only accept investments from individuals who hold at least $5 million in investments.
Outcome of G20 Meeting
The Group of 20 summit Saturday came together on principles for regulations that may avert future crises but stopped short of an agreement for a global financial market enforcer, analysts said. Finance ministers, given a list of some 47 things to follow up on, agreed to meet again before the end of April.
Highlights of G20
G20 tries to get ball rolling on recovery
G20: Steps needed to restore funding for emerging economies
G20: IMF to take leading role in drawing lessons from crisis
G20 calls for new 'colleges' of supervisors for global banks
G20 wants quick action on credit default swaps
G20 agrees to push quickly for regulation of hedge funds
G20 quick steps focused mostly on accounting issues
Bush: Obama team 'fully briefed' on U.S. G20 stance
G20 sets 5 actions to be put in place by March '09
Bush: One meeting 'is not going to solve world's problems'
G20 calls for completion of Doha global trade round
G20 agrees to meet again by end of April '09
Bush: Efforts to stabilize markets 'beginning to work'
G20: Regulators need to increase global cooperation
G20: Do 'whatever' needed to stabilize markets
G20 calls for broader response to global downturn
Brown: We need to build new institutions for the future
G 20 Video from Wall Street Journal
Highlights of G20
G20 tries to get ball rolling on recovery
G20: Steps needed to restore funding for emerging economies
G20: IMF to take leading role in drawing lessons from crisis
G20 calls for new 'colleges' of supervisors for global banks
G20 wants quick action on credit default swaps
G20 agrees to push quickly for regulation of hedge funds
G20 quick steps focused mostly on accounting issues
Bush: Obama team 'fully briefed' on U.S. G20 stance
G20 sets 5 actions to be put in place by March '09
Bush: One meeting 'is not going to solve world's problems'
G20 calls for completion of Doha global trade round
G20 agrees to meet again by end of April '09
Bush: Efforts to stabilize markets 'beginning to work'
G20: Regulators need to increase global cooperation
G20: Do 'whatever' needed to stabilize markets
G20 calls for broader response to global downturn
Brown: We need to build new institutions for the future
G 20 Video from Wall Street Journal
5 Coming Aftershocks of the Credit Crisis
Here’s how you could earn 50% to 400% on every one of them, starting with
the next 379% windfall…
Aftershock #1: The collapse of investment banks… Bad news right? For the investment banks it’s a catastrophe. For others it’s going to be a windfall. That’s because “Two Big Money Shops” are about to takeover that business and become the next Goldman Sachs. Know how to play this mega “takeover” and steady gains of 222% and 160% are likely to come rolling in, as you’ll see below…
Aftershock #2: How about new government regulations? Starting immediately – and for at least the next 18 months – they’re going to destroy a whole crop of weakened companies. One new regulation secretly put into effect overnight by the U.S. Treasury is about to flatten one company in particular – you’ll see ways to profit right away, to the tune of 87% on this one.
Aftershock #3: The next shoe to drop in the credit crisis is a big one. $600 billion in loans is about to come due on these overlooked “mortgages.” And right now the next wave of “foreclosures” is imminent. When this explodes in the next 30 days, you’ll discover ways to play this event for consistent gains of 30% to 200%, week in and week out…
Aftershock # 4: If you think insurance giant AIG is the main event in crisis, think again. Seven other giants are about to get hit with a “triple-whammy.” Some will survive; others will thrive. We’ll give you the opportunity to score 50% to 75% on the way down – and a massive 379% on the way up. You’ll see below.
Aftershock # 5: No doubt, the crisis is global. So what is the International Monetary Fund doing to help? Few know this yet, but they’re about to pump a heartwarming $100 billion into a select few economies. When the money hits, you could be looking at a string of 100%-plus winners. See below.
Checkout here.. How you can gain from them...
http://www.oxfonline.com/TriggerEvent/EDI1108.html?pub=EDI&code=EEDIJB06&o=1588746&u=35929968&l=1596246
the next 379% windfall…
Aftershock #1: The collapse of investment banks… Bad news right? For the investment banks it’s a catastrophe. For others it’s going to be a windfall. That’s because “Two Big Money Shops” are about to takeover that business and become the next Goldman Sachs. Know how to play this mega “takeover” and steady gains of 222% and 160% are likely to come rolling in, as you’ll see below…
Aftershock #2: How about new government regulations? Starting immediately – and for at least the next 18 months – they’re going to destroy a whole crop of weakened companies. One new regulation secretly put into effect overnight by the U.S. Treasury is about to flatten one company in particular – you’ll see ways to profit right away, to the tune of 87% on this one.
Aftershock #3: The next shoe to drop in the credit crisis is a big one. $600 billion in loans is about to come due on these overlooked “mortgages.” And right now the next wave of “foreclosures” is imminent. When this explodes in the next 30 days, you’ll discover ways to play this event for consistent gains of 30% to 200%, week in and week out…
Aftershock # 4: If you think insurance giant AIG is the main event in crisis, think again. Seven other giants are about to get hit with a “triple-whammy.” Some will survive; others will thrive. We’ll give you the opportunity to score 50% to 75% on the way down – and a massive 379% on the way up. You’ll see below.
Aftershock # 5: No doubt, the crisis is global. So what is the International Monetary Fund doing to help? Few know this yet, but they’re about to pump a heartwarming $100 billion into a select few economies. When the money hits, you could be looking at a string of 100%-plus winners. See below.
Checkout here.. How you can gain from them...
http://www.oxfonline.com/TriggerEvent/EDI1108.html?pub=EDI&code=EEDIJB06&o=1588746&u=35929968&l=1596246
Thirty financials hit 52-week lows
The stocks of 30 of the more than 80 financial companies in the S&P 500 hit 52-week lows on Thursday, as the markets took a beating. The biggest decliners were Prudential Financial Inc, which was down as much as 25.4%, to $20.14, and American Express Co., which fell as low as $16.55, a 16.6% fall from its $19.85 opening price.
The averages broke through their previous lows set in October and tumbled to fresh lows before rebounding slightly. The S&P and Nasdaq have not been at these levels since 2003. Each of the major indices is down more than -2.60%, with the Nasdaq down more than -3.25%. Declining stocks are ahead of advancing stocks by a 4:1 margin while the down volume is ahead of up volume by 9:1. The financials continue to get pummeled, down another -3.90%, led by Citigroup (C) and Bank of America (BAC).
The averages broke through their previous lows set in October and tumbled to fresh lows before rebounding slightly. The S&P and Nasdaq have not been at these levels since 2003. Each of the major indices is down more than -2.60%, with the Nasdaq down more than -3.25%. Declining stocks are ahead of advancing stocks by a 4:1 margin while the down volume is ahead of up volume by 9:1. The financials continue to get pummeled, down another -3.90%, led by Citigroup (C) and Bank of America (BAC).
Depression Possible
George Soros, billionaire money manager, had his turn to join fellow hedge fund managers testifying before Congress.
Soros made a point of scaring the hell out of them.
According to Reuters, Soros said "a deep recession is now inevitable and the possibility of a depression cannot be ruled out."
He added "hedge funds will be "decimated" by the current financial crisis and forced to shrink their portfolios by 50-75 percent."
Soros made a point of scaring the hell out of them.
According to Reuters, Soros said "a deep recession is now inevitable and the possibility of a depression cannot be ruled out."
He added "hedge funds will be "decimated" by the current financial crisis and forced to shrink their portfolios by 50-75 percent."
US Debt Crisis - Will it shrink US into depression???
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Labels:
Bankruptacy,
Economy,
Markets
Depression is defined as a as a cumulative decline in GDP of more than 10.0% over four consecutive quarters. This data will refer to the official quarterly GDP figures as reported by the U.S. Department of Commerce.
The Debt Crisis, the Primary Catalyst of the Economy’s Decline, Is Far Too Big
for the U.S. Government to Control
1. Based on the Federal Reserve’s Flow of Funds report, there are now $52 trillion in interest-bearing debts in the U.S.
2. Based on estimates provided by the U.S. Government Accountability Office and other sources, it’s safe to assume that there are also at least $60 trillion in contingency debts and obligations now starting to kick in — for Social Security, Medicare and other pensions.
3. Separately, the Bank of International Settlements reports that the total value of debts and bets placed worldwide (derivatives) is $596 trillion, or more than a half quadrillion!
“If only Washington can avoid the mistakes it made in the 1930s … if only Washington can preemptively nip this crisis in the bud … if only Washington can be our lender and spender of last resort … Great Depression II will never come to pass.”
What they don’t see is the fact that the debt build-up in the U.S. today is far greater than it was on the eve of Great Depression I. Indeed, in the chart below,
Prior to the 1930s, the total debt in the U.S. was between 150% and 160% of GDP. Now it’s close to 350% of GDP.
Price for US Economy in Depression at intrade.com
The Debt Crisis, the Primary Catalyst of the Economy’s Decline, Is Far Too Big
for the U.S. Government to Control
1. Based on the Federal Reserve’s Flow of Funds report, there are now $52 trillion in interest-bearing debts in the U.S.
2. Based on estimates provided by the U.S. Government Accountability Office and other sources, it’s safe to assume that there are also at least $60 trillion in contingency debts and obligations now starting to kick in — for Social Security, Medicare and other pensions.
3. Separately, the Bank of International Settlements reports that the total value of debts and bets placed worldwide (derivatives) is $596 trillion, or more than a half quadrillion!
“If only Washington can avoid the mistakes it made in the 1930s … if only Washington can preemptively nip this crisis in the bud … if only Washington can be our lender and spender of last resort … Great Depression II will never come to pass.”
What they don’t see is the fact that the debt build-up in the U.S. today is far greater than it was on the eve of Great Depression I. Indeed, in the chart below,
Prior to the 1930s, the total debt in the U.S. was between 150% and 160% of GDP. Now it’s close to 350% of GDP.
Price for US Economy in Depression at intrade.com
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