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Daily Digest - Apr 3

Friday, April 3, 2009, 10:46 AM
  • Mark-to-market is dead
  • Geithner On Ousting CEOs, Reviving Economy
  • G20 summit: European demands threaten to wreck deal
  • UN chief says crisis could result in failed states
  • China agrees on need for co-operation
  • G20 Summit must focus on Derivatives, Off-Balance-Sheet Vehicles
  • Did Larry Summers fire derivatives whistleblower at Harvard
  • The Beast Screams to Be Fed
  • Obama Pushing "Quick, Surgical" Big Auto Bankruptcy Fantasy
  • What Was Going on Inside the Paulson Treasury?
  • Auto Sales (Chart, March '09 vs. March '08)
  • Top 10 Things the Letters "GM" Stands For

Economy

Mark-to-market is dead

This comes via Marc Chandler of Brown Brothers Harriman and is an even-handed review of what just happened:

As widely expected FASB modified fair value accounting rules. The key seems to be for assets for which there is not a market. The last traded price does not have to be used. Rather other methods, like discounted cash flows can be used. In essence, previously there was a presumption that if there was not market for an instrument, it is distressed. Within a few hours FASB is expected to make another announcement about the treatment of permanently distressed assets. Financial stocks appear to have led the equity rally in recent days, ostensibly partly on the anticipation of today's FASB announcement. Although it seems clear that the political pressure was brought to bear on FASB helped expedite the decision, this seemed to be the direction that they were moving. Cynics will claim this is a thinly veiled attempt to disguise the seriousness of the financial crisis and losses being faced. On the other hand, there are many who see the mark-to-market as an unreasonable demand for financial instruments with no markets. Regardless though of the merits or de-merits, the net impact could help boost bank earnings, reduce the need for capital injections and may help encourage participation in P-PIP and TALF programs.

Geithner On Ousting CEOs, Reviving Economy

Days after GM's CEO Rick Wagoner was forced out by the Obama administration, Treasury Secretary Timothy Geithner left open the possibility that such moves could happen again.

In an interview with CBS Evening News anchor Katie Couric, Geithner acknowledged the government has had to do "exceptional things" - citing AIG as well as Fannie Mae and Freddie Mac.

"We have changed management aboard," he said. "And where we've done that, we've done it because we thought that was necessary to make sure these institutions emerge stronger in the future."

Watch full version of Katie Couric's interview with Treasury Secretary Timothy Geithner:

When asked if he would leave open the option to pressure a bank CEO to resign, Geithner replied: "Of course."

In a separate interview with ABC News, Geithner said there was no difference in the way the administration has handled the auto and finance industries.

G20 summit: European demands threaten to wreck deal

France and Germany delivered a late threat to derail Gordon Brown's efforts to secure a global recovery deal last night by demanding new concessions from the United States on financial regulation.

In a classic show of eve-of-summit brinkmanship, Angela Merkel and Nicolas Sarkozy joined forces to give warning that they would refuse to sign any agreement that did not meet their "red lines" on tax havens, hedge fund regulation, tracing "securitised" assets sold around the world and capping bankers' remuneration. They also wanted the "naming and shaming" of tax havens that refused to go along with tougher regulatory rules, which is being opposed by the United States.

UN chief says crisis could result in failed states

UN chief Ban Ki-moon warned Thursday that failing to act to halt the global economic crisis could lead to widespread social unrest and failed states, ahead of the G20 crisis summit here.

"What began as a financial crisis has become a global economic crisis," the UN secretary general wrote in an article in the Guardian newspaper.

"I fear worse to come -- a full-blown political crisis defined by growing social unrest, weakened governments and angry publics who have lost all faith in their leaders and their own future."

He said the global economic downturn affected the poorest countries the most, and noted that in these countries "things fall apart alarmingly fast".

China agrees on need for co-operation

The White House also announced that Mr Obama would visit China in the second half of the year.

But with China demonstrating that it now wants to play a much more decisive role in international economic affairs, their meeting may have also set the tone for the rest of the London summit.

While talk of an emerging "G2" ignores the increasingly multilateral basis of financial diplomacy, it does reflect the reality that on a growing range of international issues, little can happen without agreement between the US and China.

G20 Summit must focus on Derivatives, Off-Balance-Sheet Vehicles

The global size of the derivatives bubble which was calculated last year at USD 190k per person-on-planet, has risen to USD 206k per person-on-planet. The ever rising commitment of governments for the repeated bailouts of financial institutions is partially linked to various flavours of derivatives exposure settlements and "black hole" losses emanating from off-balance-sheet vehicles.

The traditional argument has been to discount derivatives altogether: "On one side of the equation there is a loss, on the other side there is a gain. Nothing disappears. It is just one big shuffle of wealth and assets." However, if this is the case, why has the US tax-payer had to bail out AIG repeatedly in excess of a hundred and fifty billion dollars so that AIG could settle the Credit Default Swap (CDS) and other derivatives claims of the largest trans-national financial institutions in the world?

In the ATCA briefing, "The Invisible One Quadrillion Dollar Equation" published in September 2008 we discussed the main categories of the quadrillion dollar derivatives market as quoted by the Bank for International Settlements in Basel, Switzerland. Since then the quantum has grown significantly in certain crucial categories and the latest revised numbers follow:

1. Listed credit derivatives stood at USD 542 trillion, about the same as before; however

2. Over-The-Counter (OTC) derivatives stood in notional or face value at USD 863 trillion (UP +44%) and include:

a. Interest Rate Derivatives at about USD 458+ trillion (UP +16%);
b. Credit Default Swaps at about USD 57+ trillion (DOWN -1%);
c. Foreign Exchange Derivatives at about USD 62+ trillion (UP +10%);
d. Commodity Derivatives at about USD 13+ trillion (UP +44%);
e. Equity Linked Derivatives at about USD 10+ trillion (UP +17%); and
f. Unallocated Derivatives at about USD 81+ trillion (UP +14%).

The myth of the single bubble behind The Great Unwind -- manifest as the global credit crunch -- has essentially been dumped in the last few months and subprime mortgage default, a USD 1.5 trillion challenge within the USD 5 trillion mortgage based assets envelope, is seen as a component of a much larger overwhelming global crisis with unprecedented scale, speed, severity and synchronicity. The global crisis has wiped a staggering USD 50 trillion off the value of financial assets - currency, equity and bond markets worldwide - last year, according to the Asian Development Bank.

The truth that there are as many as "Eight Bubbles" [ATCA] at play and in the process of bursting together is understood to a greater extent now than in the past. We have gone from being able to "rescue the world" with less than USD 1 trillion in October 2008 to USD 11.6 trillion commitments in the US alone along with a further announcement of USD 1.2 trillion of quantitative easing by the US Fed in March 2009. There is a realisation worldwide including the G7 + BRIC + MISSAT that this is a USD 20 trillion problem and growing. As time goes by, the full extent of the collateral damage from the Quadrillion Play and 8 Bubbles burst is being revealed.

Did Larry Summers fire derivatives whistleblower at Harvard

A former quantitative analyst at Harvard Management Company, the university's once-vaunted endowment manager, tells the Harvard Crimson she was fired for voicing concern to then-university president Larry Summers' chief of staff about the money manager's risky use of derivatives the traders didn't understand.

The Beast Screams to Be Fed

Behold, America: the taxman cometh.

Even as taxpayers are struggling to make ends meet in a crumbling, tumbling economy, your friendly neighborhood (and state and federal) government is having a hard time making do with the meager trillions you're throwing its way, so it's relying on an old maxim:

If it exists, it can be taxed.

Obama Pushing "Quick, Surgical" Big Auto Bankruptcy Fantasy

Is Obama's leaked view that a "quick and surgical bankruptcy" was a "likely option" for GM and Chrysler a form of bizarre brinksmanship? If not, Obama has just painted himself in a corner based on what looks to be some very bad advice.

What Was Going on Inside the Paulson Treasury?

In the first - and not likely to be the last - lengthy behind-the-scenes account from veterans of the Bush administration, Phillip Swagel, who was assistant Treasury secretary for economic policy from December 2006 until January 2009, offers his take in a 50-page essay to be presented later this week at the Brookings Panel on Economic Activity. Swagel, who has an economics Ph.D. from Harvard, will teach at Georgetown's McDonough School of Business in the fall. Swagel says academic economists think the government has more power than it does. "A lesson for academics is any time the word ‘force' is used as a verb (‘the policy should be to force banks to do X or Y'), the next sentence should set forward the section of the U.S. legal code that allows such... action." (Read the full paper.)

Auto Sales (Chart, March '09 vs. March '08)

Top 10 Things the Letters "GM" Stands For

Top 10 Things the Letters "GM" Stands For

10. Got More?

9. Goals missed

8. Giant Mess

7. GO MARX

6. Government Mooch

5. Grossly Mismanaged

4. Got Mechanic?

3. Gasguzzlin' Monsters

2. Goodbye Michigan!

And the number-one thing the letters"G" and "M" stands for:

1. Gambled & Missed

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15 Comments

Davos's picture
Davos
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Re: Daily Digest - Apr 3

 

The Quadrillion block of debt. Per person? $206,000.00

 

[quadrillion_bldgs_A.jpg]

 

If you only have time to read one article today, this would be the one I would reccomend. 
G20 Summit must focus on Derivatives, Off-Balance-Sheet Vehicles

Take care.

PS I'd reccomend reading the Fair Value Accounting change that is being implimented in place of Mark to Market.... "It all sounds very much like the S&L rule changes, doesn’t it? Oh, and a reminder of what happened then: S&L’s went on to invest and lend recklessly, making the eventualbailout much, much bigger. Everyone in finance could see this coming from a mile away."

castlewp's picture
castlewp
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Re: Daily Digest - Apr 3

 

 Here is the official communiques from the G20 summit. 

London Summit – Leaders’ Statement

2 April 2009

1. We, the Leaders of the Group of Twenty, met in London on 2 April 2009.

2. We face the greatest challenge to the world economy in modern times; a crisis which has deepened since we last met, which affects the lives of women, men, and children in every country, and which all countries must join together to resolve. A global crisis requires a global solution.

3. We start from the belief that prosperity is indivisible; that growth, to be sustained, has to be shared; and that our global plan for recovery must have at its heart the needs and jobs of hard-working families, not just in developed countries but in emerging markets and the poorest countries of the world too; and must reflect the interests, not just of today’s population, but of future generations too. We believe that the only sure foundation for sustainable globalisation and rising prosperity for all is an open world economy based on market principles, effective regulation, and strong global institutions.

4. We have today therefore pledged to do whatever is necessary to:

 restore confidence, growth, and jobs;

 repair the financial system to restore lending;

 strengthen financial regulation to rebuild trust;

 fund and reform our international financial institutions to overcome this crisis and prevent future ones;

 promote global trade and investment and reject protectionism, to underpin prosperity; and

 build an inclusive, green, and sustainable recovery.

By acting together to fulfil these pledges we will bring the world economy out of recession and prevent a crisis like this from recurring in the future.

5. The agreements we have reached today, to treble resources available to the IMF to $750 billion, to support a new SDR allocation of $250 billion, to support at least $100 billion of additional lending by the MDBs, to ensure $250 billion of support for trade finance, and to use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries, constitute an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy. Together with the measures we have each taken nationally, this constitutes a global plan for recovery on an unprecedented scale.

Restoring growth and jobs

6. We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4 per cent, and accelerate the transition to a green economy. We are committed to deliver the scale of sustained fiscal effort necessary to restore growth.

7. Our central banks have also taken exceptional action. Interest rates have been cut aggressively in most countries, and our central banks have pledged to maintain expansionary policies for as long as needed and to use the full range of monetary policy instruments, including unconventional instruments, consistent with price stability.

8. Our actions to restore growth cannot be effective until we restore domestic lending and international capital flows. We have provided significant and comprehensive support to our banking systems to provide liquidity, recapitalise financial institutions, and address decisively the problem of impaired assets. We are committed to take all necessary actions to restore the normal flow of credit through the financial system and ensure the soundness of systemically important institutions, implementing our policies in line with the agreed G20 framework for restoring lending and repairing the financial sector.

9. Taken together, these actions will constitute the largest fiscal and monetary stimulus and the most comprehensive support programme for the financial sector in modern times. Acting together strengthens the impact and the exceptional policy actions announced so far must be implemented without delay. Today, we have further agreed over $1 trillion of additional resources for the world economy through our international financial institutions and trade finance.

10. Last month the IMF estimated that world growth in real terms would resume and rise to over 2 percent by the end of 2010. We are confident that the actions we have agreed today, and our unshakeable commitment to work together to restore growth and jobs, while preserving long-term fiscal sustainability, will accelerate the return to trend growth. We commit today to taking whatever action is necessary to secure that outcome, and we call on the IMF to assess regularly the actions taken and the global actions required.

11. We are resolved to ensure long-term fiscal sustainability and price stability and will put in place credible exit strategies from the measures that need to be taken now to support the financial sector and restore global demand. We are convinced that by implementing our agreed policies we will limit the longer-term costs to

 

our economies, thereby reducing the scale of the fiscal consolidation necessary over the longer term.

12. We will conduct all our economic policies cooperatively and responsibly with regard to the impact on other countries and will refrain from competitive devaluation of our currencies and promote a stable and well-functioning international monetary system. We will support, now and in the future, to candid, even-handed, and independent IMF surveillance of our economies and financial sectors, of the impact of our policies on others, and of risks facing the global economy.

Strengthening financial supervision and regulation

13. Major failures in the financial sector and in financial regulation and supervision were fundamental causes of the crisis. Confidence will not be restored until we rebuild trust in our financial system. We will take action to build a stronger, more globally consistent, supervisory and regulatory framework for the future financial sector, which will support sustainable global growth and serve the needs of business and citizens.

14. We each agree to ensure our domestic regulatory systems are strong. But we also agree to establish the much greater consistency and systematic cooperation between countries, and the framework of internationally agreed high standards, that a global financial system requires. Strengthened regulation and supervision must promote propriety, integrity and transparency; guard against risk across the financial system; dampen rather than amplify the financial and economic cycle; reduce reliance on inappropriately risky sources of financing; and discourage excessive risk-taking. Regulators and supervisors must protect consumers and investors, support market discipline, avoid adverse impacts on other countries, reduce the scope for regulatory arbitrage, support competition and dynamism, and keep pace with innovation in the marketplace.

15. To this end we are implementing the Action Plan agreed at our last meeting, as set out in the attached progress report. We have today also issued a Declaration, Strengthening the Financial System. In particular we agree:

to establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G20 countries, FSF members, Spain, and the European Commission;

that the FSB should collaborate with the IMF to provide early warning of macroeconomic and financial risks and the actions needed to address them;

 

to reshape our regulatory systems so that our authorities are able to identify and take account of macro-prudential risks;

to extend regulation and oversight to all systemically important financial institutions, instruments and markets. This will include, for the first time, systemically important hedge funds;

to endorse and implement the FSF’s tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms;

to take action, once recovery is assured, to improve the quality, quantity, and international consistency of capital in the banking system. In future, regulation must prevent excessive leverage and require buffers of resources to be built up in good times;

to take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information;

to call on the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards; and

to extend regulatory oversight and registration to Credit Rating Agencies to ensure they meet the international code of good practice, particularly to prevent unacceptable conflicts of interest.

16. We instruct our Finance Ministers to complete the implementation of these decisions in line with the timetable set out in the Action Plan. We have asked the FSB and the IMF to monitor progress, working with the Financial Action Taskforce and other relevant bodies, and to provide a report to the next meeting of our Finance Ministers in Scotland in November.

Strengthening our global financial institutions

17. Emerging markets and developing countries, which have been the engine of recent world growth, are also now facing challenges which are adding to the current downturn in the global economy. It is imperative for global confidence and economic recovery that capital continues to flow to them. This will require a substantial strengthening of the international financial institutions, particularly the

 

IMF. We have therefore agreed today to make available an additional $850 billion of resources through the global financial institutions to support growth in emerging market and developing countries by helping to finance counter-cyclical spending, bank recapitalisation, infrastructure, trade finance, balance of payments support, debt rollover, and social support. To this end:

 we have agreed to increase the resources available to the IMF through immediate financing from members of $250 billion, subsequently incorporated into an expanded and more flexible New Arrangements to Borrow, increased by up to $500 billion, and to consider market borrowing if necessary; and

 we support a substantial increase in lending of at least $100 billion by the Multilateral Development Banks (MDBs), including to low income countries, and ensure that all MDBs, including have the appropriate capital.

18. It is essential that these resources can be used effectively and flexibly to support growth. We welcome in this respect the progress made by the IMF with its new Flexible Credit Line (FCL) and its reformed lending and conditionality framework which will enable the IMF to ensure that its facilities address effectively the underlying causes of countries’ balance of payments financing needs, particularly the withdrawal of external capital flows to the banking and corporate sectors. We support Mexico’s decision to seek an FCL arrangement.

19. We have agreed to support a general SDR allocation which will inject $250 billion into the world economy and increase global liquidity, and urgent ratification of the Fourth Amendment.

20. In order for our financial institutions to help manage the crisis and prevent future crises we must strengthen their longer term relevance, effectiveness and legitimacy. So alongside the significant increase in resources agreed today we are determined to reform and modernise the international financial institutions to ensure they can assist members and shareholders effectively in the new challenges they face. We will reform their mandates, scope and governance to reflect changes in the world economy and the new challenges of globalisation, and that emerging and developing economies, including the poorest, must have greater voice and representation. This must be accompanied by action to increase the credibility and accountability of the institutions through better strategic oversight and decision making. To this end:

 

 we commit to implementing the package of IMF quota and voice reforms agreed in April 2008 and call on the IMF to complete the next review of quotas by January 2011;

 we agree that, alongside this, consideration should be given to greater involvement of the Fund’s Governors in providing strategic direction to the IMF and increasing its accountability;

 we commit to implementing the World Bank reforms agreed in October 2008. We look forward to further recommendations, at the next meetings, on voice and representation reforms on an accelerated timescale, to be agreed by the 2010 Spring Meetings;

 we agree that the heads and senior leadership of the international financial institutions should be appointed through an open, transparent, and merit-based selection process; and

 building on the current reviews of the IMF and World Bank we asked the Chairman, working with the G20 Finance Ministers, to consult widely in an inclusive process and report back to the next meeting with proposals for further reforms to improve the responsiveness and adaptability of the IFIs.

21. In addition to reforming our international financial institutions for the new challenges of globalisation we agreed on the desirability of a new global consensus on the key values and principles that will promote sustainable economic activity. We support discussion on such a charter for sustainable economic activity with a view to further discussion at our next meeting. We take note of the work started in other fora in this regard and look forward to further discussion of this charter for sustainable economic activity.

Resisting protectionism and promoting global trade and investment

22. World trade growth has underpinned rising prosperity for half a century. But it is now falling for the first time in 25 years. Falling demand is exacerbated by growing protectionist pressures and a withdrawal of trade credit. Reinvigorating world trade and investment is essential for restoring global growth. We will not repeat the historic mistakes of protectionism of previous eras. To this end:

we reaffirm the commitment made in Washington: to refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organisation (WTO)

 

inconsistent measures to stimulate exports. In addition we will rectify promptly any such measures. We extend this pledge to the end of 2010;

we will minimise any negative impact on trade and investment of our domestic policy actions including fiscal policy and action in support of the financial sector. We will not retreat into financial protectionism, particularly measures that constrain worldwide capital flows, especially to developing countries;

we will notify promptly the WTO of any such measures and we call on the WTO, together with other international bodies, within their respective mandates, to monitor and report publicly on our adherence to these undertakings on a quarterly basis;

we will take, at the same time, whatever steps we can to promote and facilitate trade and investment; and

we will ensure availability of at least $250 billion over the next two years to support trade finance through our export credit and investment agencies and through the MDBs. We also ask our regulators to make use of available flexibility in capital requirements for trade finance.

23. We remain committed to reaching an ambitious and balanced conclusion to the Doha Development Round, which is urgently needed. This could boost the global economy by at least $150 billion per annum. To achieve this we are committed to building on the progress already made, including with regard to modalities.

24. We will give renewed focus and political attention to this critical issue in the coming period and will use our continuing work and all international meetings that are relevant to drive progress.

Ensuring a fair and sustainable recovery for all

25. We are determined not only to restore growth but to lay the foundation for a fair and sustainable world economy. We recognise that the current crisis has a disproportionate impact on the vulnerable in the poorest countries and recognise our collective responsibility to mitigate the social impact of the crisis to minimise long-lasting damage to global potential. To this end:

we reaffirm our historic commitment to meeting the Millennium Development Goals and to achieving our respective ODA pledges, including commitments on Aid for Trade, debt relief, and the Gleneagles commitments, especially to sub-Saharan Africa;

 

the actions and decisions we have taken today will provide $50 billion to support social protection, boost trade and safeguard development in low income countries, as part of the significant increase in crisis support for these and other developing countries and emerging markets;

we are making available resources for social protection for the poorest countries, including through investing in long-term food security and through voluntary bilateral contributions to the World Bank’s Vulnerability Framework, including the Infrastructure Crisis Facility, and the Rapid Social Response Fund;

we have committed, consistent with the new income model, that additional resources from agreed sales of IMF gold will be used, together with surplus income, to provide $6 billion additional concessional and flexible finance for the poorest countries over the next 2 to 3 years. We call on the IMF to come forward with concrete proposals at the Spring Meetings;

we have agreed to review the flexibility of the Debt Sustainability Framework and call on the IMF and World Bank to report to the IMFC and Development Committee at the Annual Meetings; and

we call on the UN, working with other global institutions, to establish an effective mechanism to monitor the impact of the crisis on the poorest and most vulnerable.

26. We recognise the human dimension to the crisis. We commit to support those affected by the crisis by creating employment opportunities and through income support measures. We will build a fair and family-friendly labour market for both women and men. We therefore welcome the reports of the London Jobs Conference and the Rome Social Summit and the key principles they proposed. We will support employment by stimulating growth, investing in education and training, and through active labour market policies, focusing on the most vulnerable. We call upon the ILO, working with other relevant organisations, to assess the actions taken and those required for the future.

27. We agreed to make the best possible use of investment funded by fiscal stimulus programmes towards the goal of building a resilient, sustainable, and green recovery. We will make the transition towards clean, innovative, resource efficient, low carbon technologies and infrastructure. We encourage the MDBs to contribute fully to the achievement of this objective. We will identify and work together on further measures to build sustainable economies.

 

28. We reaffirm our commitment to address the threat of irreversible climate change, based on the principle of common but differentiated responsibilities, and to reach agreement at the UN Climate Change conference in Copenhagen in December 2009.

Delivering our commitments

29. We have committed ourselves to work together with urgency and determination to translate these words into action. We agreed to meet again before the end of this year to review progress on our commitmen

cejstrup's picture
cejstrup
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Re: Daily Digest - Apr 3

The G20 moves the world a step closer to a global currency

 

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/509652...

 

Global QE..Wow..This is going to be interesting Surprised

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Re: Daily Digest - Apr 3

Does someone have more info about the fact that the G20 authorize FMI  sale it's gold ?

 

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Re: Daily Digest - Apr 3 - Geithner interview

"In a separate interview with ABC News, Geithner said there was no
difference in the way the administration has handled the auto and
finance industries."

 

Huh? Maybe he means 'As in - poorly'.

Halogen's picture
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Re: Daily Digest - Apr 3

Very interesting piece on the G20 Summit. Smoke and mirrors abound.

http://www.spectator.co.uk/coffeehouse/3509801/browns-illusory-g20-deal.thtml 

Goal Digger's picture
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Re: Daily Digest - Apr 3

Quote from Obama's meeting with banking CEOs: 

“My administration,” the president added, “is the only thing between you and the pitchforks.”

So, if the President of the United States is the only thing between banking CEOs and the outraged public, doesn't that imply that the President of the United States is protecting the CEOs and, therefore, on the side of the CEOs over the public who voted him into office?

For being the highly educated Harvard graduate, he's not so smart afterall.  The teleprompter must have been turned off.

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Re: Daily Digest - Apr 3

G-20 Summit

From Agora's 5min blog:

As a snarky economic commentator -- really -- pictures like this are what dreams are made of: Berlusconi’s vintage moment of Italian overaffection… Medvedev’s uncomfortable “can’t believe you’re touching me” expression… Gordon Brown looks like he’s lost… both Asian representatives sticking to typically straight, honorable postures… Africa’s reprehensive (Meles Zenawi) off to the side, clearly an outsider… Saudi King Abdullah is looking awfully mischievous… and of course, our commander in chief, thumbs up and as confident as ever. If there is a picture out there that better captures the current state of global leadership, we haven’t seen it. 

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Davos
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Re: Daily Digest - Apr 3

A picture is worth a thousand words, seeing that I just know where this is heading. Can't wait to catch a clip of Cramer on the net. It'll be like icing on the cake.

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Re: Daily Digest - Apr 3 - Oil Prices - Matthew Simmons

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Oil Prices (and villages) - Matthew Simmons
vital wrote:

 

Thanks for the link,  I also like his note at the end about how we need to get back to the 'village' mode of living.

One other observation; nothing he said really surprised me, but the interviewer seemed shocked to hear about $300 + oil in the future and the idea that we maybe we just can't run all around in our cars in the future. This and other comments I see at this site make me realize that a lot of financial people really don't see the big picture. No wonder when I let others do my investing it turned out bad; they all have a group-think that can't/won't see past the (was) status quo.

FireJack's picture
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Re: Daily Digest - Apr 3

I don't understand, isn't that derivative article basically saying things will accelerate far past what we can handle really soon?

It's like, oh this 1 quadrillion dollars worth of derivative bubbles are going to pop and the banks/ financial institutions/governments are going to be the ones holding the bag. Those guys at G20 should talk about this.

Am I seeing something that's not there? I'm not sure if I should start going hardcore in stocking food or shrug my shoulders assuming it's not as bad as it looks.

Can anyone make any predictions on what is going to happen this year based on what is going on? I was thinking financial collapse this year based on what Iv'e been reading but maybe I'm just panicking 

Davos's picture
Davos
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Re: Daily Digest - Apr 3

Hello FireJack:

I myself can't answer what WILL happen.

All I know is that this much leverage and this much debt compounded with cooked books is very Enronesque. Consumers made up 70% of GDP. Most of that was on borrowed money, debt fueled like a Madoff afterburner, people thought the market and housing market were going to go to the upper flight levels and keep climbing.

The economy wasn't real since the majority was predicated on unrealistic debt. Debt that is now collapsing.

No bailout is going to bring back the consumer and without a consumer there won't be an economy. The bailouts will just prop up the house of cards. 

The new economy will be more realistic based on savings. I suspect it will take years to bring back barring some new energy technology that would create mega jobs. 

What to do? For us we got out of the market, taxes were cheaper than the loss we would have incurred. We bought a cow and split it with friends. Sheep are coming after Easter. Garden is going in for a second year. Chickens are producing. That is all we can do. What ever happens will happen, we can only be so prepared. I can sleep at night knowing that if things get like 1930 again we will hobble by. Hope that helps, take care. 

paranoid's picture
paranoid
Status: Silver Member (Offline)
Joined: Feb 27 2009
Posts: 140
Re: Daily Digest - Apr 3

great post Davos thanks for sharing, and for all you do! For all you do, this Bailouts for you! Silly budweiser commercial jingle in the background. lol

Davos wrote:

Hello FireJack:

I myself can't answer what WILL happen.

All I know is that this much leverage and this much debt compounded with cooked books is very Enronesque. Consumers made up 70% of GDP. Most of that was on borrowed money, debt fueled like a Madoff afterburner, people thought the market and housing market were going to go to the upper flight levels and keep climbing.

The economy wasn't real since the majority was predicated on unrealistic debt. Debt that is now collapsing.

No bailout is going to bring back the consumer and without a consumer there won't be an economy. The bailouts will just prop up the house of cards. 

The new economy will be more realistic based on savings. I suspect it will take years to bring back barring some new energy technology that would create mega jobs. 

What to do? For us we got out of the market, taxes were cheaper than the loss we would have incurred. We bought a cow and split it with friends. Sheep are coming after Easter. Garden is going in for a second year. Chickens are producing. That is all we can do. What ever happens will happen, we can only be so prepared. I can sleep at night knowing that if things get like 1930 again we will hobble by. Hope that helps, take care. 

Ransom's picture
Ransom
Status: Member (Offline)
Joined: Apr 4 2009
Posts: 1
Re Article: G20 Summit must focus on Derivatives...

It appears the author of the article:

"G20 Summit must focus on Derivatives, Off-Balance-Sheet Vehicles"

DK Matai is a fraud.

It appears to me he plagerized the original article from here.

According to Vmyths website about DK Matai and his "organization" mi2g :

"mi2g relies on hysteria to stir up free publicity. They love to associate hackers with real terrorists, and many reporters out there have a fetish for this kind of tripe. mi2g gives them the quotes they need for a juicy story."

IOW read the original article that I have linked above and disregard DK Matai's.

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