Posts Tagged ‘Paul Krugman’

Spanish CDS Spreads Surpass Iceland

In Financial Markets, Health and Environment, International Econnomic Politics, Law & Regulations, National Economic Politics, Views, commentaries and opinions on 27.11.10 at 04:53

This was unthinkable only a year ago: Iceland‘s sovereign CDS spread being closer to the German benchmark than the Spanish. This means that the credit market believes that it’s safer to lend money to a bankrupt little community out in the North Sea rather than to the ninth largest economy in the world.

“The problem is that Greece, Ireland and Iceland all said the same thing shortly before they were forced to receive help.”

Gavan Nolan

This is an apple!

The Markit iTraxx SovX Western Europe hit 190 basis points for the first time, Friday. Spain and Portugal hit record wide of 325 and 515 bp’s respectively. Ireland’s bailout last weekend has caused the credit markets to hone in on the other likely candidates for financial distress; Portugal and Spain.

“Ireland and Iceland have been compared often in the last two years. The two island nations in the North Atlantic are emblematic of the excessive financial debt that precipitated the global recession,” credit analyst Gavan Nolan points out in Markit Credit Wrap.

A recent blog post by Paul Krugman highlights Iceland’s strong performance relative to Ireland since 2009, which he attributed to the Nordic country’s “heterodox” economic policies: capital controls, a large devaluation and considerable debt restructuring.

“The CDS market reflects this view – Iceland’s spreads are trading at half Ireland’s level. Even Spain is now wider than Iceland, a scenario that would have seemed far-fetched at the beginning of this year,” Nolan writes.

Adding: “The dire fiscal state of the eurozone’s peripheral economies is well-established. But the last week has seen the situation deteriorate, with sovereign spreads reaching unprecedented levels today.”

Both Portugal and Spain were forced to issue denials that they needed external support today.

Portuguese government spokesman says that reports of fellow EU members pressurizing Portugal into accepting a bailout are “totally false”, Financial Times report, The passing of the government’s austerity budget – a major point of contention with the opposition parties – did little to relieve the pressure on the sovereign’s spreads.

Meanwhile, Spain did also issuing robust denials of bailout rumours. The country’s prime minister Jose Zapatero says  there is “absolutely” no need for a rescue.

“The problem for both countries is that Greece, Ireland and Iceland all said the same thing shortly before they were forced to receive help. Investors are all too aware of the credibility issue, and this is reflected in sovereign spreads,” Gavan Nolan writes.

More details of a bailout that is definitely happening, that of Ireland, are expected over the weekend.

A report in the Irish Times today that revealed the timetable caused bank spreads to widen sharply.

The report indicated that the EU-IMF mission in Dublin is looking at ways of making senior debt holders share the burden of the bailout, i.e. taking haircuts.

“A fear of such a measure has been bubbling under in the markets for some time now, particularly after the Anglo-Irish Bank debt exchange “offer” was first announced. If does come to fruition then it will be a significant moment in the recent history of financial market,” Nolan notes.

“Senior bondholders will no longer be considered untouchable, and this will inevitably have an effect on bank borrowing costs. On the other hand, if there is no mention of such a measure then it could cause spreads to snap back,” he concludes.


In other words – it’s gonna be another interesting Monday…


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Is Quantitative Easing An Attack On Your Freedom?

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 12.08.10 at 15:10

“In light of the US Central Bank‘s – I refuse to use their deceitful self-anointed Federal Reserve moniker – most recent grandstanding policy decision that has been referred to as QE light that precedes the inevitable QE2 launch sometime in the not so distant future, I present an open challenge to Paul Krugman and all like minded economists that support the monetary policy of dollar debasement,” J.S. Kim writes in a recent newsletter.  “The one question I want to see Mr. Krugman and his supporters answer is this:”

“If monetary debasement can truly create economic recovery, why did our Founding Fathers establish, in the US Coinage Act of 1792, that any persons discovered to be deliberately debasing US money shall be guilty of felony and shall be punished by death?”

J.S. Kim

“In light of the US Central Bank’s  – I refuse to use their deceitful self-anointed Federal Reserve moniker – most recent grandstanding policy decision that has been referred to as QE light that precedes the inevitable QE2 launch sometime in the not so distant future, I present an open challenge to Paul Krugman and all like minded economists, Nobel prize winning or not, that support the monetary policy of dollar debasement,” independent financial adviser J.S. Kim writes in a recent newsletter.

Here’s some more from the newsletter, published yesterday:

This will be a straightforward challenge issued by our Founding Fathers, in particular the first US Treasury Secretary, Alexander Hamilton, who scripted the US Coinage Act of 1792.

The one question I want to see Mr. Krugman and his supporters answer is this:

“If monetary debasement can truly create economic recovery, why did our Founding Fathers establish, in the US Coinage Act of 1792, that any persons discovered to be deliberately debasing US money ‘shall be guilty of felony and shall be punished by death’?”

Note that the punishment was not imprisonment, not even hard labor, but death. Why did our Founding Fathers, who had just gained freedom from the draconian monetary policies of the British monarch King George through the American Revolution and the Treaty of Paris in 1783 deem that monetary stability could not be separated from the conditions of freedom?

Why did they deem the act of monetary debasement so insidious that anyone found guilty of deliberately debasing US money would not be imprisoned but should be punished by death?

And why is monetary debasement today accepted as the “right thing to do” and “normalized” by prominent economists like Paul Krugman?

So this is all I ask of you Mr. Krugman – to repudiate Alexander Hamilton and explain why he was wrong. I don’t want the employment of “block and bridge” techniques that politicians are so deft at that fail to answer the question, and responses that entail long-winded dissertations on the relationships between monetary base, monetary supply and monetary velocity.

Merely answer the one question that Alexander Hamilton has posed to you above and explain your position.

J.S. Kim

On August 3, 2010, I posted a 3-part video series in regard to the Central Banks’ use of ideological subversion to mislead the masses. Step two of the process of ideological subversion requires the participation of academics to disseminate deceit if the deceit is to not only be widespread but successful in taking root in the consciousness of society.

The role of academics in shaping the discourse about the rationality of monetary debasement is critical to the belief system embraced by young impressionable minds for decades into the future as once a false belief takes root it is spread from one generation to the next.

In other words, the widespread adoption of the erroneous belief that monetary debasement is beneficial to the economic health of nations would be impossible without you, Mr. Krugman.


The Bank of Japan is another Central Bank guilty of executing the act of monetary debasement for decades.

And again, academics that reside both within and outside of Japan ensure that the Japanese do not understand how monetary stability is inextricably linked to their most sacrosanct right of freedom.

Read the rest of this article at SmartKnowledgeU here.

J.S. Kim

Managing Director & Chief Investment Strategist


Related by the Econotwist:

The US FED Launch The QE2 – Beta Version

USA Could Be Forced Into Another Trillion Dollar Bank Rescue

Helicopter Ben; Cleared For Take Off

A Report To Make You Go “Hmmm…”

Will Basel III Crush the Global Economy?


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Is Goldman Sachs Predicting A Double-Dip?

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 05.07.10 at 22:08

The economic mood at 200 West has officially shifted: In a report by Jan Hatzius, the Goldman chief economist warns that “the second half slowdown has begun.” Adding: “This is consistent with our long-standing forecast of materially slower growth of just 1½% (annualized) in the second half of 2010.” On top of that; Goldman’s Chief Economist is now sidelining with Paul Krugman & Co blaring an even louder warning about the government cutting off the fiscal subsidy spigot.

“There is some downside risk to our forecast of a gradual re-acceleration in 2011.”

Jan Hatzius

The two economic indicators that have broken Goldman’s indisputable faith in the recovery is the latest NFP and ISM reports. Here’s Hatzius’ commentaries:

“The economic data have weakened noticeably over the past few weeks. This is consistent with our longstanding forecast of materially slower growth of just 1½% (annualized) in the second half of 2010. This forecast is based on a very simple idea, namely that final demand growth has remained at just 1½% since the middle of 2009. There is little reason to expect a significant acceleration, and the inventory cycle is ending. All this is illustrated in Exhibit 1, which shows the growth rate of real GDP, the growth rate of real final demand, and the contribution of inventories to growth (the difference between the two).”

Manufacturing Starts to Slow…

Jan Hatzius

“One implication of our story as illustrated in Exhibit 1 is that the slowdown should be concentrated in the goods-producing sector, which previously enjoyed a disproportionate boost from the inventory cycle. This implies a significant decline in measures of factory growth such as the ISM manufacturing index. Historical experience would point to a drop to around 50 by early 2011.1 The drop in the index from 59.7 in May to 56.2 in June-? much of which was due to a sharp decline in the new orders index from 65.7 to 58.5? is the first significant step on this path.”


Here’s the rest – a copy of the full report.

h/t Zero Hedge

Related by the Econotwist:

Mr. Rubin’s Still Rockin’ The House

Goldman Sachs: Good Morning Europe!

Gulf Oil Spill: A Carefully Planned Inside Job?

6 U.S. Banks Collects 93% Of Industry’s Trading Revenue

The Rise Of The New Market Makers

Hey, America! Wall Street Got A Message For You

The Truth, Some Truth And Something Like The Truth

Global Economy On Fast Track To Disaster

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Global Economy On Fast Track To Disaster

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 18.06.10 at 14:02

In the last couple of days several prominent economic experts have concluded that the global debt crisis – currently ravaging Europe – is more or less unstoppable, and that recent events has been a major turn in the wrong direction. They are angry, frustrated and puts most of the blame on the German government.

“How bad will it be? Will it really be 1937 all over again? I don’t know. What I do know is that economic policy around the world has taken a major wrong turn, and that the odds of a prolonged slump are rising by the day. “

Paul Krugman

“Whatever the Europeans try to do to alleviate the crisis, it does not work: A blanket bank rescue, a €440bn special purpose vehicle to provide a protective shield, and one austerity package after another. Bond spreads and credit default swap indices continue to rise, and the money market is once again freezing up.”

That’s how associate editor and columnist for the Financial Times, Wolfgang Münchau, describes the situation.

And he points out the this is something that has never happened before to European politicians, who in the past were able to get away with a lot less effort. A statement was usually sufficient to placate the markets.

What Is Going On?

“For a start, there is no speculative attack, convenient as such an explanation may be,” Münchau writes, and put up the ugly picture that many politicians (and economists) still refuses to see:

“What has happened is that global investors have realized a deep underling truth about our European sovereign debt crisis – that at its core, it is not a sovereign debt crisis at all – but a highly interconnected banking crisis about to blow up.”

“There is a dynamic at work that the macroeconomic data does not convey – and that the political response to the crisis does not address,” he adds.

Those inter-connections are even bigger than previously thought – but it should not be surprising given the massive current account imbalances in the euro zone.

In its latest Quarterly Review, the Bank for International Settlements came out with some shocking figures:

* German banks have a $200bn exposure to Spain, $175bn to Ireland, and $50bn, respectively, to Greece and Portugal, making a total exposure to the four countries of almost $500bn, more than 20% of German GDP.

* French banks have an exposure of $250bn to Spain, $80bn to Ireland, $100bn to Greece, and $50bn to Portugal, also almost $500bn in exposures, but more than 25% of French GDP.

* Total foreign bank exposures are well over $1100bn to Spain and $800bn to Ireland.  Add the four countries together, and you are arrive at more than $2 trillion.

(Here’s the BIS report)


Wolfgang Münchau

Wolfgang Münchau

“Now, I am not saying that there is $2 trillion of bad debt. I have no idea how big the portion of genuinely bad debt is. The problem is that no one else knows it either, and that includes the banks, which are now refusing to lend in the inter-banking market,” Münchau writes.

As pointed out here at the Econotwist’s Blog several times since 2008 – there are a lot of parallels to the subprime crisis – including the scale, the inter-connectedness, and the information asymmetries.

In the presence of such factors, investors start to panic. The reason they are panicking despite the bank guarantees is that the markets no longer trust the government that have issued the guarantee. The spreads go up, thus reinforcing the crisis.

“A vicious circle is already well underway,” Wolfgang Münchau says.

The vicious cycle has now engulfed Spain. The Spanish private sector is now effectively cut off from global capital markets.

Fighting Derivatives – With Derivatives

The European Central Bank is now the lender of both first and last resort to the Spanish banks.

Spain’s share in ECB lending is already twice its share in the ECB, and rising.

The ECB is desperate for the Special Purpose Vehicle (SPV) to be in place by the summer. But while this would get the ECB off the hook, it does not solve the problem.

Münchau: “I would expect that early bond purchases by the SPV would trigger a generalized attack on southern European bond markets, France probably included. Having ignored sovereign default risk completely, the markets now regard everything as extremely risky that is not Germany. No matter what happens to the euro zone, Germany can always be relied upon to be a safe bet. If the euro zone ever were to split, there is much less certainty about which side of the euro zone fault line Italy and France would end up.”

The reason for this complete mess is – as usual when it comes to severe economic crisis – political.

So far, all those guarantees have not cost us a cent. No taxes have been raised, no expenditure has been cut.

But this will be different when the SPV’s are in place, and starts pay actual money.

These so-called Special Purpose Vehicles were originally invented by the engineers in the financial sector as a way to finance risky project without having to disclose them in their balance sheet – also called off-balance products.

But the thing is; governments can’t hide losses on SPV’s off-balance sheet in their national accounts.

“Though they will probably try,” Münchau writes. “In the end, money will flow – a lot of money.”

Germany’s To Blame

It’s unlikely that the Germany government has the stomach to bail everybody out – like the US administration and  Federal Reserve has done in America – even if such action probably is the best long term solution, also for  Germany.

In a recent column an angry professor Paul Krugman writes:

Paul Krugman

Paul Krugman

“German deficit hawkery has nothing to do with fiscal realism. Instead, it’s about moralizing and posturing. Germans tend to think of running deficits as being morally wrong, while balancing budgets is considered virtuous, never mind the circumstances or economic logic,” he proclaims.

Adding: “There will, of course, be a price for this posturing. Only part of that price will fall on Germany: German austerity will worsen the crisis in the euro area, making it that much harder for Spain and other troubled economies to recover. Europe’s troubles are also leading to a weak euro, which perversely helps German manufacturing, but also exports the consequences of German austerity to the rest of the world, including the United States.”

At the moment it would be no surprise if the Germans decides not to participate in any future bailouts.

Since each bailout requires unanimity, Germany could block any decision.

Germany, along with a small number of other EU countries, could unilaterally withdraw from the euro zone.

It’s Getting Dangerous

What can turns this into a dangerous crisis is not the absolute level of debt, but the intra-euro zone financial flows.

These are a mirror-image of the internal economic imbalances.

Germany’s massive current account surplus is per definition a surplus of domestic savings over domestic investment, and these savings are channeled towards economies with large current account deficits, like Spain, Portugal, Greece and Ireland.

Germany is now effectively being asked to bail out its customers. That would require a fiscal union, which Germany is not prepared to consider.

The reason the crisis is getting worse again is because investors cannot see how this conflagration can be untangled.

“German politicians seem determined to prove their strength by imposing suffering — and politicians around the world are following their lead,” Krugman writes.

“How bad will it be? Will it really be 1937 all over again? I don’t know. What I do know is that economic policy around the world has taken a major wrong turn, and that the odds of a prolonged slump are rising by the day. “

We’re In Desperate Need of….Something Big! 

Even “Ol’man” Greenspan is getting nervous.

Alan Greenspan

Alan Greenspan

I an article in The Wall Street Journal, Friday, the former FED chairman writes tht said the U.S. may soon face higher borrowing costs on its swelling debt.

“Perceptions of a large U.S. borrowing capacity are misleading, and current long-term bond yields are masking America’s debt challenge,” Greenspan says.

Greenspan rebutted “misplaced” concern that reducing the deficit would put the economic recovery in danger.

“The United States, and most of the rest of the developed world, is in need of a tectonic shift in fiscal policy,” according to Greenspan (84), adding that; “Incremental change will not be adequate.”

Whatever Mr. Greenspan means by “tectonic” isn’t quite clear.

However, it’s obviously something big and fundamental.

“The federal government is currently saddled with commitments for the next three decades that it will be unable to meet in real terms. The very severity of the pending crisis and growing analogies to Greece set the stage for a serious response.”

“Our economy cannot afford a major mistake in underestimating the corrosive momentum of this fiscal crisis. Our policy focus must therefore err significantly on the side of restraint,” Greenspan writes.


Related by the Econotwist:

EU Officials Fears Second Depression And War

U.S. Stock Market: Worst Week Since 1940

European Banks: “Leman Times Ten”

Albert Edwards: Europe On The Edge Of A Deflationary Precipice

Gerald Celente: “The Great Crash Has Occurred”

“We Stand At The Brink Of The Next Great Crisis”

Germany In Favour Of Creating European Army

2010 Analysis: “11 Black Swans”

2010 Analysis: Warns Against Social Unrest

2010 Analysis: Collapse of Credit

2010 Analysis: The Road to Disaster


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Easter Updates (7)

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 31.03.10 at 23:33

Here’s some essential reading for the Easter holidays, provided by high5finance:

Top Stories:

* Trading Outlook: April 5 – 9, 2010

* Gordon Brown: Global Bank Levy Accord Close

* Stocks, Commodities Rise

* Net Yen Shorts Surge As Euro Shorts Hit Fresh Record

* IMF: World Economy ”Not out of the Woods”

* Outlook: Investor Focus Turns to US Consumer, Fed

* ISM Survey: U.S. Service Industries Probably Accelerated

* Invasion of the Inflation Doves

* Australia Tries to Prevent Ship Breaking Up Near Reef

* 7.2 Earthquake Strikes Baja California

Latest News:

* U.S. Stock-Index Futures Advance

* Weighing the Week Ahead: Fed Fixation

* 300,000 iPads sold on day one

* Oil Surges to Highest Level in 17 Months

* Republicans dispute course of financial overhaul

* Suicide Bomber Kills Two Policemen in Russia

Latest Blog Posts:

Econotwist’s Blog: U.S. Republicans To Spend $50 million on “Tea Party” Today in Russian Business

Seeking Alpha: Complexity and Doom

Zero Hedge: A Cautionary Fable

The Huffington Post:The Unspoken Macro of the Citibank Saga

The Collector: Break through at Large Hadron Collider

Wall St. Cheat Sheet: Don’t Be a Fool: Watch the Bond Market, Not Bank Lending or Velocity

The EUobserver: Merkel´s treaty change

Latest Analysis:

* A Reason to Be Bullish?

* Time to Get Real About China

* Bulls Still Getting the Benefit of the Doubt

* American Bonds Most Likely to Crash

* Beijing Will Hike Rates, But Not So Soon

*A Few Caution Signals for the Bull Market

Recommended Reading:

* MasterCard, Visa, and the Card Sharks

* Credit card companies change tactics

* Russia’s Chechen War: It All Comes Down to Energy Rents

* Unserious About Iran

* The Biggest Victims of the Market Drop? Not Boomers

* The Recession’s 10 Most Outrageous Jobs Stories

* Is This an Economic Recovery?

* The Only iPad “Review” You Need To Read

The H5F-TV Toolbar – Download

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Dubai: "A Change of Scenery"

In Financial Markets, International Econnomic Politics, Views, commentaries and opinions on 29.11.09 at 16:09

The Dubai collaps marks a change of scenery in the financial crisis that’s been lasting for over a year. It’s being compared with the Lehman collaps, and signals new times with new problems. Here’s a collection of the most resent analysis of the situation i The United Arabic Emirates from the worlds leading experts at Goldmans Sachs, Barclays, Standard & Poor’s, Danske Bank, and others. 


“Dunai’s default will have serious implications for the global risk trade, especially in emerging markets. Thus far at the time of the writing of this report, the risk trade has begun unwinding with Asian markets having taken a huge hit and S&P futures down over 40 points.”

The Firecracker Report

(Article in Norwegian, links to analysis in English.)


Krisen i Dubai markerer et sceneskifte i den økonomiske krisen som har pågått i over ett år. Dubai-kollapsen blir sammenlignet med Lehman-konkursen , og varsler nye tider med nye problemer. Her er de siste analysene fra Goldman Sachs, Barclays, Moody’s, Paul Krugman, Danske Bank, m.fl.


New York Stock Exchange aktivert fredag regel nr.48 i børsforskriftene som gir børsen lov til å stanse handelen i enkeltaksjer eller i hele  markedet dersom volatiliteten blir for stor.


NYSE aktiverte regel 48 fire ganger i 2008 (22. og 23. januar, og 11. mars), men den eneste gang den ble brukt var etter kollapsen i Bear Stearns 17. mars i fjor.

Selv om det amerikanske aksjemarkedet var stengt fredag, hoppet volatilitetindeksen VIX over 20 prosent.

Det er bevegelser i rente- og valutamarkedet.

Japanske yen stuper, mens euro styrkes markert.

Prisen på Credit-default Swaps, som brukes for å forsikre statlige gjeldspapirer, på full fart opp i land som Hellas, Latvia og andre som har stor offentlig gjeld og svak økonomi.

Hva som skjer når markedene åpner mandag vet ingen.

Vi får de første signalene når handelen starter i Asia natt til mandag.

(I tilfelle: Her er linken til New York-børsens ”circut breaker”

Tredelt problem

Situasjonen er stadig like uklar etter at nabo-emiraten Abu Dahbi delvis har trukket tilbake sitt løfte om krisehjelp til Dubai.

Problemet er – som Bank of America påpeker – tredelt:

  • Hvem skylder hvor mye til hvem?
  • Når kan man forvente at lånene blir betalt?
  • Hva skjer om de ikke blir betalt?

Analytikere over hele verden sitter i øyeblikket med sine modeller og tabeller for å finne ut hva dette vil medføre og som kan bli worst case scenario.

Vi har samlet noen av de siste analysene og kommentarene fra noen av verdens fremste eksperter.

Her kan du studere dem en etter en.

Siste analyser og kommentarer:


–          Nyheten om betalingsproblemer i Dubai kommer som en overraskelse og har fundamentalt endret vårt markedssyn, skriver den britiske storbanken.

”Surprise, surprise”

Paul Krugman

”Dubai or not Dubai”, skriver økonomiprofessor og Nobelprisvinner Paul Krugman på sin blogside i New York Times.

Spørsmålet er hvor mange andre ”Dubai-er” det er blant de sju arabiske emiratene.

”Rashomon in the desert”


Kredittvurderingsbyrået Moody’s reagerte umiddelbart med å nedgradere både de statige og private verdipapirene i Dubai.

Moody’s peker på at mange virksomheter og prosjekter er avhengig av statlige midler.

”Moody’s downgrades Dubai GRI ratings”

Standard & Poor’s

“In our view, such a restructuring may be considered a default under our default criteria, and represents the failure of the Dubai government (not rated) to provide timely financial support to a core government-related entity.”

“Several Dubai Government-Related Entities Downgraded And On Watch Negative Following Debt Restructuring Announcement”

Danske Bank

–          Dubai signaliserer først og fremst et sceneskifte – et skifte som for aksjemarkedet består av nytt focus på bankenes utlånstap etter kreditthjelpen og bankboomen i 2009, skriver Danske Bank.

Sjefanalytiker Morten Kongshaug mener banktapene vil fortsette å vokse utover i s009, og kanskje inn i 2011.

“A Greek tragedy in Dubai”

The Firecracker Report

Risikoanalytikerne som blogger på nettstedet ”The Firecracker Report” har følgende konklusjon:

“DUBAI‟s default will have serious implications for the global risk trade, especially in emerging markets. Thus far at the time of the writing of this report, the risk trade has begun unwinding with Asian markets having taken a huge hit and S&P futures down over 40 points. Given that stock and commodity markets were already feeling heavily overbought, coupled with this crisis, markets could be in for a severe correction (unless of course Dubai announces a rescue plan for bondholders on Monday – unlikely in our opinion). It will be interesting to watch how far the U.S. Dollar index rallies in the coming days – whether it breaks above its 50 day moving average of 76. That will be a key indicator of the extent of the dollar carry trade. A lot of short dollar players could be in for a nasty squeeze.”

“Dubai Default Examined: Serious Implications for the Global Risk Trade, Especially in Emerging Markets”

Goldman Sachs

Goldman Sachs nevner ikke Dubai sin ukentlige analyse til sine kunder.

Men banken skriver at den venter fortsatt oppgang i det europeiske aksjemarkedet, men svakere enn den har vært til nå.

Sentimentet er mest positivt for basisråvarer, og dårligst for teknologisektoren.

Goldman Sachs anbefaler følgende strategi i kommende uke:

” Defensives beat cyclicals; large cap beat small cap; growth beat value.”

“Europe Weekly Kickstart”

Mulighetene for at det blir en ”kickstart” på kommende børsuke er absolutt tilstede.

The Evaporation of The Dollar

In Financial Markets, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 24.11.09 at 18:30

The Dollar is taking another dive monday, and economists can no longer see a bottom for the worlds reserve currency. The latest update from Federal Reserve shows that the $920 bn of money in cirkulation now is backed by the FEDs holdings of $997 bn in toxic assets, taken from the banking system. That means that the real value of american dollars probably is close to zero. But the market kicks the dollar substansial higher, together with stocks and several commodities. Gold reach a prise of $1170 pr ounce.

“The exeeded tax credit program for first time home buyers does not provide evidence of recovery in the housing market, on the countary, it shows that the market still needs life support.”

(Article in Norwegian)   


Dollaren er praktisk talt verdiløs. Reservene i Federal Reserve som skal garantere for dollarens verdi består nå i hovedsak av uomsettelige, verdiløse gjeldspapirer. Men markedet sender både dollarkursen, gullprisen og aksjekursene kraftig opp.


Ved å se nærmere på den oppdaterte oversikten fra Federal Reserve som ble offentliggjort fredag, viser det seg at verdiene som sentralbanken holder som garanti for verdien av den amerikanske dollaren nå i hovedsak består av råtne gjeldspapirer som er overtatt fra de kriserammede bankene.

Disse verdipapirene har falt dramatisk i verdi siden finanskrisen startet høsten 2008, det er fremdeles ikke mulig å vurdere hva de egentlig er verdt, de er i praksis uomsettelige og dermed også i praksis verdiløse.

Den totale mengden av amerikansk valuta i sirkulasjon er omtrent 920 milliarder dollar – sentralbankens beholdning av MBS (Mortgage-backed Securities) og lignende er på cirka 997 milliarder dollar.

Tallene fremkommer ved å sammenligne den amerikanske pengemengden. “Money Base”, (og ved å substraktere valuta i sirkulasjon fra FEDs reservebalanse), med sentralbankens beholdning av diverse råtne verdipapirer som myndighetene har fått i bytte fra bankene mot krisehjelp og garantier.

(FED oversikt; H.3, H.4.1)

“Et bilde er verdt mer enn tusen Krugman-kommentarer”, skriver finansbloggen Zero Hedge som har laget denne grafen.


(Klikk her for et større bilde)


En utypisk dag

Men dollarkursen styrker seg markert mandag – i hvert fall først på dagen – i løpet av ettermiddagen har den falt noe tilbake

Dollarindeksen (DXY) er opp 0,11 prosent. Dollaren er styrket overfor de fleste ledende valutaer.

Men dagen har også vært preget av stor volatilitet.

Siden mars i år har aksjer og råvarer konsekvent beveget seg i motsatt retning av dollaren, men mandag blir mønsteret delvis brutt.

Det er store forskjeller i hvordan råvareprisene har gått.



Særlig i USD/JPY-forholdet har det vært store svingninger mandag.

High Frequency Forvirring?

Oljeprisen er svakt ned, mens gullprisen gikk først fra 1150 til 1170 dollar per unse før den falt tilbake rundt 1160.

Kaffeprisen steg for første gang på tre dagen, mens prisen på kakao stupte.

Kontrakter på bomull hoppet til det høyeste nivået på 16 måneder, men appelsinjuice-prisen dundret ned.

Aksjemarkedet spratt opp om lag 1,3 prosent og holdt seg der ut dagen.

Det skal godt gjøres å forklare alle mekanismene som har vært i sving i dag, men det kan ikke utelukkes at det er den algoritmiske handelen som har skapt forvirring i markedet. 

Godt nytt?

Hovedforklaringen på oppgangen i aksjemarkedet mandag forklares i stor grad med en kraftig økning i salget av brukte boliger.

Ifølge National Association of Realtors økte boligsalget i USA med 10,1 prosent i oktober, mot en forventet økning på litt over 2 prosent.

Påfallende mange analytikere som uttaler seg i mediene hevder dette er et tegn på en kraftig bedring i boligmarkedet.

Det er nok en litt prematur konklusjon.

Obama-administrasjonen fornyet for kort tid siden ordningen med skatterabatt for førstegangskjøpere av bolig.

Ordningen skulle etter planen vært avviklet for en måned siden.

Det at subsidieringen av boligmarkedet forlenges er ikke et tegn på bedring, tvert i mot, det er et signal om at markedet fremdeles trenger “kunstig åndedrett” for å overleve.

Det samme gjelder for uttalelsene til FED-sjefen i Chicago om at sentralbanken kan komme til å holde på 0-renten kanskje så lenge som til slutten av 2011.

Aksjemarkedet reagerte positivt, men det betyr i realiteten at situasjonen i amerikansk økonomi er mer alvorlig enn først antatt.


Overnevnte kan være en meget mulig forklaring på at gullprisen gikk over 1170 dollar per unse mandag formiddag.

Men det er trolig andre faktorer som spiller inn her også.

Det faktum at sentralbanker og nasjoner – med nærmest ubegrenset kjøpekraft – har begynt å hamstre gull bringer spekulantene på banen.

I gull, som i oljemarkedet, er det meste som omsettes egentlig bare papirer, kontrakter og avtaler.

Det er relativt lite som beveger seg rent fysisk.

Hvor stor del av den voldsomme prisstigningen på gull som skyldes reell etterspørsel og hvor mye som skyldes kortsiktig spekulasjon med kontrakter kan ikke vites med sikkerhet.

Gull er tradisjonellt ansett som en forsikring mot sterk inflasjon, deflasjon, geopolitiske konflikter, sosial uro, etc.

Ikke som en investeringsklasse. Men dette er kanskje i ferd med å endre seg. 

De tekniske indikatorne gir sprikende signaler mandag.

Relative Strength Index:


RSI dalte det meste av dagen til den nådde underkjøpt territorium. Det utløste en kraftig reaksjon opp til over 70 poeng, for så å sette kursen ned igjen.

On-balance Volume:


OBV-indikatoren viser at selgerne er aktive i gullmarkedet.

Momentum Indicator:


Momentum i gullmarkedet har vært fallende mandag.


Force Index:


Force-indeksen viser – i motsetning til momentum-indikatoren – en stigende tendens og har gått fra å være negativ til positiv.

Joe Biden: "USA er i en depresjon"

In Financial Markets, Health and Environment, International Econnomic Politics on 23.10.09 at 13:39
Joe Biden, U.S. Senator from Delaware.
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“My grandpop used to say: When the guy in Minooka’s out of work, it’s an economic slowdown. When your brother- in-law’s out of work, it’s a recession. When you’re out of work, it’s a depression.”

Det sier USAs visepresident Joe Biden på denne videoen som ble offentliggjort tirsdag av den konservative radioverten Sean Hannity på Fox News.

Opptaket er fra en debatt i Kongressen, men det er uklart når opptaket ble gjort.

På spørsmål om hvordan han vurderer dagens situasjon, svarte visepresidenten: 

“Well, it’s a depression. It’s a depression for millions of Americans, through no fault of their own.”

Bare storkjeftet?

Nå er Joe Biden kjent for å bruke store ord, men samtidig legger han ikke fingrene imellom når det gjelder å beskrive tingene som de er.

Hvorvidt USA nå er i en økonomisk depresjon eller ikke kan sikkert økonomene føre endeløse diskusjoner om.

Vi konstanterer at følgede personer mener, mer eller mindre, det samme som visepresident Joe Biden:


* Administrerende direktør Nicu Harajci hos N1 Asset Management.

* Nobelprisvinner i økonomi Paul Krugman.

* Tidligere sjeføkonom i Merrill Lynch, David Rosenberg.

* Tidligere sjef for den amerikanske International Trade Commision, professor Peter Morici.

* Nobelprisvinner i økonomi, professor Joseph Stigliz.

* Tidligere Secretary of Labor, professor Robert Reich.

* Statsminister i Storbritannia, Gordon Brown. (Har senere sagt at uttalelsene var “a slip of the tounge”)

* Investeringsrådgiver Ray Dalio.

* Investeringsrådgiver Dough Casey.


Les også: IMF: – Depresjonen er her.