Rick Santelli: Rant of the Year

On CNBC

Cash Carry In the Hot Seat

Is he a chump? asks one congressman.

Peter Schiff Interview On Glenn Beck Radio

Part I



Part II

RIP: Good Times

Silicon Valley has been trying to digest news of a secret meeting held by top venture firm Sequoia Capital earlier this week. At the meeting, leading Sequoia partners laid out bleak short and long-term scenarios for the world economy — and strong medicine for the firm’s portfolio companies.(HT: venture beat )

Sequoia Capital on startups and the economic downturn

View SlideShare presentation or Upload your own. (tags: depression recession)

Biggest % Gain Days for the DJIA

The rally that I have been expecting, is finally here. Howeverm, it is likely to be a short term phenomenon. Here is an interesting set of historic data for the dow, shows a list of biggest percentage gain days for the DJIA.

1. 1933-03-15 62.10 +8.26 +15.34
2. 1931-10-06 99.34 +12.86 +14.87
3. 1929-10-30 258.47 +28.40 +12.34
4. 1932-09-21 75.16 +7.67 +11.36
5. 2008-10-13 9,387.61 +936.42 +11.08
6. 1987-10-21 2,027.85 +186.84 +10.15
7. 1932-08-03 58.22 +5.06 +9.52
8. 1932-02-11 78.60 +6.80 +9.47
9. 1929-11-14 217.28 +18.59 +9.36
10. 1931-12-18 80.69 +6.90 +9.35
11. 1932-02-13 85.82 +7.22 +9.19
12. 1932-05-06 59.01 +4.91 +9.08
13. 1933-04-19 68.31 +5.66 +9.03
14. 1931-10-08 105.79 +8.47 +8.70
15. 1932-06-10 48.94 +3.62 +7.99
16. 1939-09-05 148.12 +10.03 +7.26
17. 1931-06-03 130.37 +8.67 +7.12
18. 1932-01-06 76.31 +5.07 +7.12
19. 1932-10-14 63.84 +4.08 +6.83
20. 1907-03-15 81.33 +5.10 +6.69

October 13, 2008 was number 5 in ranking. Most of the biggest rallies in the stock market have come in the midst of furious bear markets.

Collateral Damage

Chesapeak CEO Sold All Stock to Meet Margin Calls

Chesapeake Energy Corp. said its chief executive officer, Aubrey McClendon, involuntarily sold ``substantially all'' of his common shares of the company's stock over the past three days to meet margin loan calls.

``These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis,'' McClendon said in today's statement. ``In no way do these sales reflect my view of the company's financial position or my view of Chesapeake's future performance potential.''

McClendon, 49, owned 33.5 million shares, or 5.8 percent of the company's common stock, according to a Sept. 30 filing with the U.S. Securities and Exchange Commission. He was the company's third-largest shareholder.

Chesapeake, this year's worst-performing petroleum producer in the Standard & Poor's 500, fell 6.7 percent in New York trading today amid concern hedging contracts won't protect the company against a plunge in natural-gas prices. McClendon's divestiture was announced after the close of regular trading on U.S. stock markets.

``You have to imagine Aubrey's lost a large portion of his fortune,'' Benjamin Dell, an analyst at Sanford C. Bernstein & Co., said today in a telephone interview. He rates the stock at ``market perform'' and owns none.

The Oil Drum has a good thread on this

Admission of Guilt! A Reply to Mish

Mish over at the Global Economic Analysis asks the following in the comments section:

“Can I ask a question?

With oil at $84 ....
Where is Oil Shock?

Mish
Like this comment?
link to the post

Oil Shock was indeed wrong. Yes, I called the bottom at $90 for oil. It was indeed the bottom until Oil declined one more time. Yes, so far it about 7% below that price. I still have called a perfect bottom in gold. Dollar index is about 2% higher than my prediction top.

Australian Dollar cliff dived yesterday, partly due to the unwinding of the carry trade. Just two months ago, the Ozzie was at near parity with the USD, but today you could buy 1 Ozzie for 64 cents U.S. Do you think Australian economy is fundamentally a lot weaker than the U.S economy? Do you think what happened to Iceland and Australia are impossible to happen here?

Much of the strength in dollar index is due to the weakness of Euro, it is not an indication of Dollar strength. Euro is a doomed currency. I heard somebody put it as the Deutsche Mark + some parasites, and that is very true.

Was my bottom and top calls based on any specific formula? No. It was just rhetoric meant to say that inflation is still in play. Did I strongly believe in my prediction? Yes I did. Did I know that for 100% sure that Oil will bottom at $90.00, and Gold at $750? No I did not.

As for all those deflationary derivatives worth 500 trillion floating around, it is all hogwash. Derivatives can go to zero and 80-90% of them do, even in a bull market. Have you read stats on options? Most of them go to zero? If one were to really believe that those derivatives are part of the money supply, what do you think the price of a refrigerator full of groceries would be?

Is there an unwillingness to lend right now? Yes. But all the debt will be monetized away, and some more will be accumulated by the local, state, and federal governments and monetized.

Stop kidding yourself. Oil at $84 is a lot higher than were it was, when Mish started denying that inflation was non-existent, go back, he has a lot of charts and graphs starting from 2005 to prove his point.

Mish has been consistently wrong for many years with his predictions, and yet he needs a great deal of credit for predicting the crisis very accurately as it unfolded. There were a lot of guys predicting shallow recessions, muddle throughs etc. But Mish could see a lot further than those others; he predicted a deeper recession. He was just a little early. Mish is still wrong about deflation.

Real wealth is ability to produce real goods, and that is one area that American economy lacks clearly. Yes, America has a lot of productive capacity, but no where close the purported size of the economy. So, what really is backing our dollar? yes,a lot of productive capacity, and a lot more of hot air.

Bail Out: What the Media didn't report

People protesting against the bail out. Why was this not reported in the MSM?

Blast From The Past

Peter Schiff on Neil Cavuto:



All these fools, who didn't see the crisis coming, are claiming they can solve the problem with 700B. Not counting all the bad debt that the Fed has already accumulated already, this 700B will be just the start. THere is a commercial real estate collapse still ahead of us, So is it with all the Alt-A, Option-ARM and then prime mortages.

The guy with the long hair apparently is on monetarist/supply-side kool-aid and Mike Norman is a Keynes cultist.

Peter Schiff versus Art Laffer:


Here is another one - Debate with Art Laffer. "Libertarian" Art Laffer's expertise will be sought by the GOVERNMENT to "solve" the current crisis.

Art Laffer said Economy is working beautifully, because of good monetary policy, good economic policy, good trade policy etc. He and his supply-side statists have no right to blame democrats or the government for the current crisis. He quotes GOVERNMENT produced lies, damn lies and statistics to "buttress" his statements.

Fed Seize WAMU & Bail Out In Shambles

Bail Out In Shambles:

Plutocrats, by that I mean the punters on Wall Street and the plunderers in D.C. have underestimated the will of the general public. Protests are breaking out all over the country, especially in D.C. and on Wall Street. Congressmen and Senators have their phone lines, fax lines and email inundated with calls, faxes and emails from their constituents.

An email from Manhattan: "I just walked by the New York Stock Exchange. Hundreds of demonstrators have gathered to protest the government's bailout of Wall Street. Several were holding placards that read "Stop the bailout! Read The Road to Serfdom by FA Hayek. Read mises.org " They were also handing out copies of Ron Paul's 2003 speech introducing his bill to eliminate subsidies to Fannie Mae and Freddie Mac. ( from blog.mises.org/blog )

Republicans have grown cojones ( pardon my French ) and decided to not go along, at least for now. Even if that is just a political stunt, if it really works, there is still hope for the rest of us mere mortals.

WAMU No More:
In the mean time, in an instance of biggest retail banking collapse in history, the Feds have seized the operations of Washington Mutual. A deal has been struck to transfer most of the operations to JP Morgan Chase.

Your Daddy's Financial Crisis?

The best case scenario for a way out of the current mess, at least as this amateur sees it, is a 1970s style high inflation decade. If the bail out goes through, there is a real possibility of a currency collapse. America is addicted, not just to foreign oil, but to foreign credit.

If bank collapses cascade, that in itself is negative for confidence in the dollar. Shrinking government revenues at local, state and federal level is enough incentive to run the printing presses. When push comes to shove, some form of bail out will happen anyway. But 700 billion price tag is a staggering start, not counting all the bad paper that the Federal reserve has already accumulated.

In conclusion, daddy's Financial Crisis is the best possible scenario. Let's hope that it doesn't get any worse.

Credit Bubble Update - 08/26/07

'Notional' value - like trying to nail down Jell-O

It's hard to think of anything more discretionary, non-vital or even downright unnecessary than a BlackBerry.

Oh sure, they're convenient. Your spouse can e-mail you a to-do list and you can't pretend you didn't get it. You can settle bar bets on the spot with a quick Google search. You can thumb away on the putting green like a big shot. Sometimes you even get work done with it.


Drowning in debt? Lifeguard is credit counseling service

The good news for the Consumer Credit Counseling Service is it's hiring like crazy.

The bad news is, it has to do that.

overwhelmed by desperate homeowners across the country teetering on the brink of foreclosure as the subprime mortgage industry implodes.


Indian outsourcers start to feel subprime fallout

Ripples from the U.S. subprime mortgage crisis have reached India's back-office outsourcing sector, where mostly smaller firms are feeling the pinch as U.S. companies cut back or stop some spending on services.

Already struggling with a stronger rupee and rising wages, the fear for outsourcers is that the subprime woes will spread, although larger players such as Infosys Technologies say this could open up new opportunities.


Sub-prime mortgages catalyst for freefall

For a while there, it seemed like the fair-weather types on Bay Street, and elsewhere in the financial world, had it right. We could all sit back, put our feet up and relax.

The tempest that convulsed the world's capital markets in late July and early August would be short-lived. Even those of us who were enjoying family vacations when the turbulence hit could hardly overlook the alarming reports on TV and radio newscasts and the startling headlines that appeared on the front pages of our newspapers.


Foreclosure fallout: Rescue scams

Jennifer Falke and her family had been in their Columbus, Ohio, home for nearly 12 years when they hit a rough patch in 2006. Falke was out of work and fell behind on the mortgage.

Falke said a flood of mailings and flyers then arrived at her door promising help from foreclosure rescue companies claiming to act as an intermediary between her and her lender to keep her from losing her home.


Moody's cuts 120 subprime RMBS tranches from 2005

Moody's on Wednesday cut the ratings on 120 subprime residential mortgage-backed securities tranches, citing higher-than-anticipated delinquency rates of first-lien subprime mortgage loans securitized in the second half of 2005.

The action affects over $1.5 billion of securities.


Ben Bernanke Walks the Line

Much of what Ben Bernanke spends his days doing oscillates between the incomprehensibly arcane and the unspeakably dull. Lately, though, the Federal Reserve chairman has a stark, even exciting task at hand. He's been imitating Jimmy Stewart in It's a Wonderful Life and trying to halt a bank run.

While Stewart's George Bailey had to make do with his powers of persuasion and his honeymoon fund to save the Bailey Building and Loan, Bernanke has the full faith and credit of the U.S. government behind him. The Fed can effectively print U.S. dollars at will. It can even, as Bernanke famously suggested in 2002, drop them out of helicopters, if that's what it takes.


Realtor numbers thin during slump

Victoria Rodriguez was not only a thriving real-estate agent in recent years, she was honored as one the area's top-selling real-estate agents four years in a row.

That was in the boom time, and that spigot shut down to a trickle nearly two years ago.


Mortgage Mess Hurts Main Street, Beyond

The walls are bare, the closets are empty, and Connie and Timothy Pent and their two teenage children are living out of boxes as they wait for a dreaded knock at the door of their three-bedroom house in Ocala, Fla.

They've fallen behind in payments on a their home loan, and their lender told them in July that foreclosure was imminent.

Credit Bubble Update - 07/18/07

Dollar sinking against other currencies

The dollar is sinking to new lows against the currencies of the major U.S. trading partners — good news for multinational companies and investors in international funds, but not for U.S. tourists and importers.

The Federal Reserve's trade-weighted exchange index has hit its lowest point since the Fed created the index in 1973. The index reflects the dollar's value relative to the currencies of seven major U.S. trading partners.


U.S. tech trade deficit tops $102 billion in 2006; California still first in tech exports

The U.S. technology industry imported more computers, high-tech components and consumer electronics in 2006 than it exported, resulting in a record $102 billion (€74 billion) trade deficit in the sector, according to a new report due out Tuesday.

Total tech imports hit $322 billion (€233.66 billion) in 2006, up 9 percent from the prior year, according to the report from the tech industry's largest trade group, AeA. The U.S. imported more high-tech goods from China than any other nation.


Subprime weakness erodes higher-rated ABX indexes

Investor anxiety over the U.S. housing downturn is spreading to the highest-rated mortgage securities, upsetting the expectations of some that the crisis in the subprime bond market would be contained.

Weakening credit quality in the $575 billion U.S. subprime mortgage market is eroding the value of "AAA" securities, heightening anxiety among investors and raising the cost of insuring that debt against default.


Danger signals on road to global prosperity

The stand-off between Britain and France over the top job at the International Monetary Fund lifts the lid on how these things work. Alistair Darling was done up like a kipper by Nicolas Sarkozy, who united every EU country bar Britain behind the former French finance minister, Dominique Strauss-Kahn.

It goes without saying that Darling had right on his side. The idea that the Fund is a European fiefdom, with the MD chosen not through an open and transparent process but as a result of a deal cut in Brussels is indefensible. But there is a bigger issue at stake.


Foreclosure auctions go silent

100% mortgages leave little profit potential for flippers; more bad news for housing
On a late June afternoon, Laurence Kallen stepped to the podium in the Randolph Street office that serves as his cramped auction house. Mr. Kallen had 11 foreclosed Chicago properties to sell and 10 bidders in attendance. The auction lasted 10 minutes. He didn't get a single bid.

Credit Bubble Update - 07/08/07

A Mortgage-Securities Hedge Fund Suspends Payouts

In another sign that troubles in the mortgage market are spreading, a prominent hedge fund that specializes in bonds backed by home loans has suspended redemption requests by investors.

The Horizon ABS Fund managed by John Devaney, a well-known trader of asset-backed securities who is based in Florida, said yesterday that it made the decision to block withdrawals after one investor who accounted for about a quarter of its $650 million in assets sought to leave the fund.


Italease blow-up stokes derivatives fears

A derivative blow-up at the Italian bank Italease has sent tremors through Milan's banking fraternity and exposed the hidden dangers of exotic credit instruments.

The bank has paid off 610 million euros (£419m) in recent days to counter-parties in what amounts to a massive margin call after interest rate rises in Europe caused hedging and derivative losses by clients to mushroom out of control.


Newmont Eliminates Gold Hedges, Creating the World's Largest Unhedged Gold Company, and Announces Strategic Initiatives

Newmont Mining Corporation today announced the elimination of its entire 1.85 million ounce gold hedge position, establishing the Company as the world's largest unhedged gold producer. Newmont also announced plans to monetize components of its royalty and equity portfolio in the next twelve months, resulting in the discontinuation of the Company's Merchant Banking Segment as a separate business unit.


Berlin defends its 'crown jewels'

Germany is drawing up detailed plans to stop strategic assets falling into the hands of "giant locust funds" controlled by Russia, China and Middle East governments.

Finance minister Peer Steinbrück said "telecoms, banks, post, logistics and energy" were among the sectors that would be shielded from sovereign wealth funds, the new state trusts that are fast swamping global asset markets.


Canadian dollar hits high vs. greenback

The Canadian dollar climbed to a 30-year high against the U.S. currency Friday, bolstered by higher oil prices, a strong economy and a looming interest rate hike.

Canada's currency advanced as high as 95.53 U.S. cents Friday, pushing past the 95 U.S. cents mark for the first time since May 1977. It has risen 10.8 percent so far this year.


As 'China effect' reverses, inflation threatens

When the Prime Minister appears on television vowing to "get to grips with inflation", you know that a serious problem is taking shape.

Gordon Brown had the good fortune to be Chancellor over a golden decade as the industrial revolutions of China, India and emerging Asia supplied us ever cheaper manufactures.

In this miracle world, we have had 5pc global growth for five years - the best since the Second World War - without overheating.


Money falls from sky

A German motorist surprised by euro notes swirling in the air around her car hit the brakes and collected a "substantial amount of money" before turning it over to police, authorities in Worms said on Thursday.

A police spokesman in the small western town said the 24-year-old woman saw the money flying through the air in her rear view mirror late on Wednesday. She pulled over and tried to collect all the notes, unsuccessfully.


Subprime risks come home to roost for hedge funds

Bad bets revealed by some hedge funds in recent weeks may mean other funds will be forced to accept the market's deteriorating views on subprime mortgages and report their own losses soon.

Some managers have resisted accepting market views on their assets, claiming declines represent short-term market volatility and not underlying financial value in their subprime bonds, analysts said. Since the bonds trade infrequently, managers' have turned to pricing models that may ignore market sentiment, buoying prices.


Spain selling gold to cover up worsening trade deficit

In an interesting commentary entitled “The Gold of Spain’s Central Bank,” Gerardo del Caz debates the reasoning behind Spain’s massive gold sales, selling off 30% of its reserves (80 tonnes) in just two months. In March of 2004, Spain held eleventh place in the world’s ranking with 523 tonnes, but today has little more than 300 tonnes.


Subprime poor practice risks turning to malpractice

Regulators tread a fine line between the Keystone Cops – galumphing hopelessly after escaping criminals – and Captain Renault in Casablanca. The Financial Services Authority has put paid to the first criticism by warning intermediaries and subprime mortgage lenders before poor practice turns to malpractice. But given the subprime scandal unfolding in the US, the regulator can’t really be “shocked, shocked” to have uncovered market weaknesses.


LBO Loans May Follow Subprime Collapse, Moulton Says

Loans to fund leveraged buyouts may dry up just like subprime mortgages in the U.S., according to Jon Moulton, the British venture capitalist who tried and failed to buy the carmaker MG Rover.

``It's near the top. There are some difficulties beginning to emerge in the debt markets,'' Moulton, who runs the private equity firm Alchemy Partners, told a meeting of the U.K. Parliament's Treasury committee today. ``At some stage no one will be willing to underwrite fresh debt.''

Credit Bubble Hysteria - 07/02/07

S&P, Moody's Mask $200 Billion of Subprime Bond Risk

Standard & Poor's, Moody's Investors Service and Fitch Ratings are masking burgeoning losses in the market for subprime mortgage bonds by failing to cut the credit ratings on about $200 billion of securities backed by home loans.

The highest default rates on home loans in a decade have reduced prices of some bonds backed by mortgages to people with poor or limited credit by more than 50 cents on the dollar and forced New York-based Bear Stearns Cos. to offer $3.2 billion to bail out a money-losing hedge fund. Almost 65 percent of the bonds in indexes that track subprime mortgage debt don't meet the ratings criteria in place when they were sold, according to data compiled by Bloomberg.


Pound hits 26-year high against dollar

The pound today hit a new 26-year high against the dollar, lifted by expectations that the Bank of England will hike interest rates on Thursday, to 5.75 per cent.

Sterling hit $2.0160 in afternoon deals. The dollar was also weaker against the euro, falling to within half a cent of a record low against the shared currency.


Who's behind the global credit bubble?

The storm warnings are coming thick and fast.

The Telegraph business section this morning has a distinctly bearish tone - even by The Telegraph’s standards.

We’re certainly not ones to criticise - it’s refreshing to see the concerns we’ve been raising for a considerable length of time now getting a serious airing in the mainstream press.


India May Trade Gap Widens to $6.2 Billion on Imports

India's trade deficit widened in May from a year earlier as imports of machinery and other goods surged in an economy that's growing at the fastest pace in almost 20 years.

The trade deficit was $6.22 billion in May compared with $4.26 billion a year earlier, the Ministry of Commerce and Industry said in a statement in New Delhi today. Imports grew 26.4 percent, outpacing an 18.1 percent rise in exports. The trade deficit reached a record $7.1 billion in April.


Wall Street played role in creating subprime troubles

Some on Wall Street want to blame the little guy for the latest hedge-fund mess. People with shoddy credit histories couldn't pay their mortgages so that pushed some funds to the brink of collapse and sent shock waves through financial markets.

Talk about a cop-out — that shifts blame away from the Wall Street firms and banks that had a hand in creating the subprime-mortgage mess but aren't taking responsibility for it.


When will the credit bubble burst?

To understand why there’s a credit bubble, how it’s inflating the price of stocks and what it will mean for you when it bursts, let’s consider the acquisition of Avaya.

The large telecommunications equipment maker recently announced it is being acquired by two private-equity firms, Texas Pacific Group and Silver Lake Partners.


Subprime problems hit WaMu

The Chicago job market continues to be haunted by problems in the nation's subprime mortgage industry, even as federal regulators fashion guidelines they hope will improve conditions in the sector.

Washington Mutual Inc. has disclosed that it is closing a subprime mortgage office at One Pierce Place in Itasca, leaving more than 100 employees out of work, according to a filing this week with the Illinois Department of Commerce and Economic Opportunity.


Liquidity Nightmare... Drowning In Cash

In 2005, Stephen King, managing director of economics at HSBC and also a columnist for the Independent.uk news site stated that there was a crisis of faith among central bankers. Two years later, we can see why this confession should have read as: central bankers must stick to their pseudo-religious tones to proliferate public delusions of invincibility.


Zimbabwe: IMF Says Govt Inflation Figures Understated

THE International Monetary Fund (IMF) this week painted a bleak picture of Zimbabwe's economic crisis predicting that annual inflation will hit the five-digits mark by year-end.

The Bretton Woods institution in written responses to the Zimbabwe Independent on Wednesday said the country was now experiencing hyperinflation as its month-on-month rate had shot above 50%.


Inflation risks still skewed to the upside

US. Core inflation fell more quickly than anticipated so far thanks to lower owners’ equivalent rents and the markdowns for apparel. In the short term, it could even still slide into the Fed’s comfort zone. But the tight labor market, recordhigh energy prices as well as strongly rising import prices will lead to higher trend inflation again over the medium term (pages 4-6).


Move away from U.S. dollar reserves still all talk

Central bank holdings of U.S. dollars continue to mount, despite talk of diversification into other currencies, but questions remain about the sustainability of the rise in dollar reserves.

On Friday, the International Monetary Fund said global central banks' hit a new record in reserves held in U.S. dollars at $2.24 trillion in the first quarter, a 4.0 percent increase from the final quarter of 2006.


Rolling in gold but still poverty-stricken

IN 1865, Jamsetji Nusserwanji Tata - a one-time opium trader and scion of a sparkling line of Parsee priests, Zoroastrians who had fled to western India from persecution in Iran - attended a lecture in Manchester given by Thomas Carlyle.

Carlyle, a cantankerous Scot, was known for his historical and philosophical essays, but he also put his mind to the budding field of political economy.


Report: China raises minimum wages

China's government has ordered minimum wages raised to help the poor cope with soaring food costs, a state news agency reported Friday.

Chinese leaders have been alarmed by a spike in inflation that saw the price of eggs rise 37.1 percent in May from their price in the same month last year. Meat and poultry were 26.5 percent more expensive in May compared to a year ago.

Credit Bubble Update - 06/28/07

Stocks and Bond Bull Markets - The Beginning of the End?

LIKE the often-prophesied end of the world, major correction in global bond and equity markets is a long time in coming - so much so that many investors are tempted to think that it may never happen. But, as two of our eminent investment experts comment in the panel discussion below, the most dangerous words in the English language are: 'This time it is different.'


BANK OF INTERNATIONAL SETTLEMENTS WARNS OF GREAT DEPRESSION

The Bank for International Settlements, the world's most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.

Boston: State, top lenders will seek remedies to foreclosure woes
State officials and executives from leading mortgage lenders are expected to meet today to discuss possible remedies to Massachusetts' wave of foreclosures.

The meeting was called by Dan O'Connell , the Patrick administration's secretary of housing and economic development , who wrote a letter asking the chief executives of the top 10 mortgage lenders in the state to attend, according to a person who has seen the letter but asked not to be identified. The letter did not spell out an agenda for the session, to be held at in the offices of Daniel Crane , director of the Office of Consumer Affairs and Business Regulation.

Subprime woes led to 50 lender failures: MBA

Nearly 50 mortgage lenders have folded due to the subprime crisis as part of a natural thinning of the industry, the leading trade association for those lenders said on Wednesday.

"About 50 (lenders) have suffered the consequences and many of those would have been our members," said John Robbins, chairman of the Mortgage Bankers Association, addressing the Reuters Global Real Estate Summit via teleconference from Washington.

Axed deals reflect subprime chill

Companies are pulling financing deals across the globe, in one of the clearest signs yet that investors’ worries about rising interest rates and US subprime mortgages could be infecting other areas of the credit world and driving up the cost of corporate borrowing.

MISC, the world’s biggest owner of liquefied gas tankers, day shelved its $750m bond offering.

Opaque Derivatives, Transparent Fed, `Bubblenomics': Timshel

The most stunning aspect of the demise of two hedge funds belonging to Bear Stearns Cos. is the almost total absence of transparency surrounding the bailout.

The debacle may finally provoke regulators, who have long suspected that buying derivatives is akin to running through a fireworks factory with a lighted blowtorch in each hand.

Carry trade threatens a deflationary global collapse

Concerns that the credit cycle may be turning down are growing. But so far, the impact on stock markets has been fairly limited.

Investors take comfort in three misguided beliefs. They believe that equities are not expensive and that there is no sign of any diminution in the flood of global "liquidity". Furthermore, they believe that if the worst happens, the US Federal Reserve will come to the rescue.

Banks 'set to call in a swathe of loans'

The United States faces a severe credit crunch as mounting losses on risky forms of debt catch up with the banks and force them to curb lending and call in existing loans, according to a report by Lombard Street Research.

The group said the fast-moving crisis at two Bear Stearns hedge funds had exposed the underlying rot in the US sub-prime mortgage market, and the vast nexus of collateralised debt obligations known as CDOs.

Debt, Deficits, Derivatives & Delusions - 06/11/07

Spain Shifting Reserve Assets To Bonds From Gold - Fin Min

The Bank of Spain's recent gold sales are part of a strategy to shift its reserves into more profitable fixed-income instruments, Spanish Finance Minister Pedro Solbes said Wednesday.

"What we aim to do is to sell gold, an unprofitable asset, to reinvest in bonds, which are more profitable," a Solbes spokeswoman quoted the minister as saying in answer to a question about the gold sales in a Senate hearing.

I'VE GOT A HOT TIP FOR THE FINANCIAL PRESS

The Labor Department over-estimated job growth again.

Last Friday the department reported that 157,000 new jobs were created in May.

That was considerably higher than the 140,000 that the "experts" had been expecting.

China may want BHP

BHP Billiton could be in the sights of a new $237 billion Chinese state-owned investment fund, according to Bell Potter research chief Peter Quinton.

The new Chinese State Investment Company was established last month to manage part of China's foreign investment reserves and made its debut on the world stage with a $US3 billion investment in private equity firm Blackstone.

LME intervenes in nickel market

The London Metal Exchange has intervened in the nickel market amid suspected collusion at a time of soaring prices and critically low stock levels.

“The LME has detected collusive behaviour in nickel trading and acted to tighten the lending guidelines for the metal significantly,” said John Kemp, analyst at Sempra Metals.

Putin wants new economic "architecture"

President Vladimir Putin sought to reassure investors and foreign leaders that Russia remained committed to free trade and investment for businesses that work here, in spite of a chill in political relations with the West.

But Putin said Russia would integrate with the world economy on its own terms - and possibly not by embracing the current rules of the global economic order.

OTC derivatives to reach USD550trn by 2008, says Celent

Over-the-counter derivatives will exceed the USD550trn mark in 2008, up from USD375trn at the end of 2006, according to a new report from Celent, a research and consulting firm that focuses on the application of information technology in the global financial services industry.

Growing OTC derivatives trading volume, escalating exposure to OTC derivatives and structured deals, the increased complexity of products and lack of trade automation have increased the importance of accurate valuation, according to the report, entitled Risk and Pricing Analytics: Addressing Valuation Challenges in OTC and Structured Products.

The subprime barn door

HOME FORECLOSURES are on the rise, and lenders specializing in subprime mortgages -- that is, loans for homebuyers with blemished credit -- have been evaporating left and right. At long last, lawmakers and regulators have taken an interest in this untidy corner of the mortgage market, and financial-services trade groups are getting in on the act, too, recently issuing a joint statement offering their response to the mess.

Narrowing U.S. trade deficit may lift economic growth

The U.S. trade imbalance with the rest of the world narrowed slightly in April, providing a tentative sign that less-lopsided trade could help lift the economy this year.

With economic growth expected to be only about two-thirds the pace of last year, trade could be an important factor in keeping the economy from stalling, economists said. Growth has slowed in the United States, but economies in Asia and Europe are surging and consuming more and more American exports.

Debt, Deficits, Derivatives & Delusions - 06/05/07

Foreclosure Forecast To Top 2 Million Homes

Foreclosures will top 2 million homes in the wake of the nation's worst real estate crisis since the U.S. Savings and Loan scandal, according to the Housing Predictor forecast.

Gold matches two-week highs

Gold steadied on Monday after matching the previous session’s two-week highs, and analysts said the metal was likely to trade in a range in the near term.

Silver matched Friday’s five-week peak, while platinum and palladium rose to their highest levels in nearly two weeks before easing.

India trade deficit near double on crude costs

India’s trade deficit nearly doubled in April, the first month of the financial year, from a year ago as costs for imported oil jumped, the government said in a statement yesterday.

CBOT to launch credit default swap futures

The Chicago Board of Trade (CBOT) on Thursday said it plans to launch exchange-traded futures contracts on credit default swaps, in an effort to increase liquidity and transparency in the burgeoning credit derivative market.

Banks sell risky portions of CDOs to public pension funds

U.S. securities companies are hawking the riskiest portions of collateralized debt obligations to public pension funds.

At a sales presentation by Bear Stearns to 50 public pension fund managers in a Las Vegas hotel ballroom, Jean Fleischhacker, a Bear Stearns senior managing director, told fund managers they could get a 20 percent annual return from the bottom level of a collateralized debt obligation, or CDO.

Forcing fast RMB rise will be lose-lose situation

Clutching at yuan revaluation like a magic bullet, the U.S. continues to press China for a major appreciation of the renminbi to narrow the U.S. trade deficit with China.

The renminbi was a focus of the second round of the China-U.S. Strategic Economic Dialogue (SED) in Washington last month.

Foreclosures and subprime crisis still a threat to U.S. economy

Foreclosure filings in the United States were up 62 percent in April of 2007 from the previous year according to an Irvine, California-based RealtyTrac. This glum news was somewhat tempered by the fact that foreclosure activity dipped from March of 2007 by about 1 percent.

Statistics from RealtyTrac showed almost 148,000 filings in March such as default notices, auction sale notices, and bank repossessions. Slowdowns or declines in home values and problems with so-called subprime loans made to borrowers with shaky credit histories are widely credited with fueling the housing slump.

Japanese Interest Rates, China-US Dollar Peg Ensure Cheap Credit Flood

What is really going in the stock market? Is it a melt-up or the prelude to a melt down, or both? While Woolworths (ASX:WOW) pursues Coles (ASX:CGJ) and James Packer retreats from the media business and rushes into the gambling, business, we take a quick step back this Monday to take in the whole freakin’ financial circus.

Debt, Deficits, Derivatives & Delusions - 06/01/07

ATI Funding Says Dollar's Free Fall Creates Once in a Lifetime Opportunity for Overseas Countries

ATI Funding is able to finance foreign companies as well as foreign governments on equipment and construction loans originating from the USA without collateral up to 100% Financing . ATI Funding's new program will also finance US companies exporting US products at rates and conditions never seen before.

SHINE A LIGHT ON THE PLUNGE PROTECTION TEAM

Dear John: Although I admire your quest to get information on the Plunge Protection Team, I'm not sure why you are doing so. Seems to me, if you consider it OK - in the public interest, as you say, - for the PPT to intervene in some emergencies, then you essentially consider it OK to intervene at all times.

Because who determines what a real emergency is? Where do you draw the line? You either believe in a free market or you don't. I.G.

J.P. Morgan Settles Copper Lawsuit

J.P. Morgan Chase & Co. has settled a long-running antitrust lawsuit filed by copper companies who claimed the bank's predecessor conspired with a Japanese trading house to manipulate the copper market in the 1990s.

A trial had been scheduled to begin Tuesday in federal court in Madison but court officials said the companies settled late Friday. The details of the settlement are confidential.

Bill seeks new US approach to currency battles

Senate leaders are close to finalising legislation that they hope will lead to a reversal of long-standing US policy of opposing intervention in currency markets, according to people familiar with the matter.

The Senate bill is to be introduced in the next month and will put pressure on the US Treasury to intervene in global markets if currencies become fundamentally “misaligned”, people invol­ved in the process said.

Italians claim country run by Goldman Sachs

Italians grumble that Goldman Sachs runs their country, much as the Jesuits ran countries during the Counter-Reformation.

Premier Romano Prodi is an ex-Goldman Sachs man, as is central bank president Mario Draghi and the deputy treasury chief Massimo Tononi.

Funds attack banks’ aid for subprime borrowers

Hedge funds are attacking bank decisions that help delinquent US mortgage borrowers remain in their homes in a move that pits some of the country’s richest people against its least well-off.

The dispute centres on derivatives contracts that pay money to investors when bonds backed by subprime mortgage loans – extended to people with past credit problems – run into trouble. The $1,200bn (€890bn) US subprime mortgage bond market has been hit recently by rapidly growing defaults, and hedge funds have profited from the crisis by buying such derivatives.

Banks are lending to private equity at below the interest rate

UK banks are taking the unprecedented step of lending to the private equity and hedge fund sector at below the official UK interest rate.

Experts said it was a sign of City institutions' growing desperation to buy into the booming alternative investments market.

U.S. Bank Loan Risk Falls on First Day of Derivatives Index

A credit-default swap index based on the U.S. high-yield, high-risk loan market rose in its first day of trading as hedge funds and other investors used the contracts to bet on the ability of companies to repay their bank loans.

The LCDX index rose 0.63 to 100.63 as of 4 p.m. in New York, according to London-based Markit Group Ltd., the index administrator. An increase in the index suggests improvement in the perception of credit quality; a decrease signals the opposite.

More home owners are struggling to make house payments

Dawn and Scott Hentschel came within a sliver of losing their home after Scott, a construction worker, was laid off two months earlier than usual last fall.

The couple saw a legal notice in the newspaper and then a note in the mail that said their bank planned to foreclose on the two-bedroom, ranch-style house they bought two years ago.

Foreclosures still raging in Chicago area

Chicago-area foreclosures, which set a record last year, are projected to reach full-blown crisis levels in 2007.

Cook County is on pace to record at least 30,000 and as many as 36,000 foreclosure filings this year, according to Cook County Circuit Court Judge Dorothy Kinnaird, who presides over the Chancery Division, which handles foreclosures. That would mean a 35% to 62% increase from 2006, when 22,248 filings were easily the highest in county history after having risen 36% from the previous year. (The court combines both commercial and home foreclosures, but residential mortgages comprise the vast majority of its cases.)

Subprime loan crisis is hitting Vallejo hard

Vallejo is the Bay Area's version of ground zero for the subprime loan crisis.

A significant number of residents of the largely blue-collar city of 120,000 have taken out subprime loans -- expensive mortgages issued to people with poor credit.

Venezuela Local Debt Tumbles as Protests Extend to Fifth Day

Venezuelan government debt tumbled in local markets as people took to the streets for a fifth day to protest President Hugo Chavez's decision to pull the country's most-watched television network off the air.

Concern that protests will turn violent again led investors to sell dollar- and bolivar-denominated bonds in the local market and move money out of the country, traders said. Police have detained 182 people since May 27, the day that Chavez let the concession granted to Radio Caracas Television expire, Interior Minister Pedro Carreno said last night.

U.S: Subprime Fallout - How Significant is it for Credit Markets?

In a recent speech, Fed Chairman Bernanke made the point that the impact of subprime lending on the credit markets was not significant. This is a welcome note in contrast to many commentators that portray the world in black and white. Subprime lending is having an impact but not the disaster some commentators assert.

Subprime: Correction or Calamity?
How may we gauge the significance of the subprime correction? First, the ABX bond index (top graph) dropped precipitously from 93 in early January to 63 in late February but recently has moved back up to the 76 level. This suggests that the value of these subprime instruments has declined but that the decline is limited and not building momentum towards a total collapse.

Debt, Deficits, Derivatives & Delusions - 05/21/07

Yen on record low against euro

The yen hit a record low against the euro on Monday, with sellers of the low-yielding currency encouraged by regional stock markets' calm reaction to China's surprise move to widen the yuan's trading band and raise interest rates.

Group of Eight finance ministers avoided discussing the yen's weakness at a weekend meeting, which market players also took as a green light to push up high-yielding currencies.

S.Korea's trade deficit with Japan rises to 10 bln USD in first four months this year

South Korea's trade deficit with Japan rises to 10.06 billion U.S. dollars in the first four months of this year, compared with 8.35 billion U.S. dollars during the same period of 2006, said a report of the Korea International Trade Association (KITA) on Monday.

The housing bubble's silver lining

THE ONCE-buoyant housing market is clearly in trouble. Last year, housing prices around the country fell for the first year since the Depression. In Southern California, one of the epicenters of the housing and housing-credit bubble, the pain has been acute. Local subprime lenders such as Ownit Mortgage Solutions in Agoura Hills and New Century Financial in Irvine have filed for bankruptcy protection. MortgageDaily.com estimated that 12,000 mortgage jobs have been cut in California since January 2006. Foreclosure rates are rising.

Saudi Arabia's gold demand up 7 per cent

Gold demand in Saudi Arabia was up by 7 per cent in the first quarter (Q1) of 2007 as against the same period last year and further increase is expected due to customs tariff reduction, according to the report issued by the regional office of the World Gold Council (WGC) on gold demand in the Middle East, the Gulf region and worldwide.

The Trade Deficit and Foreign Confidence in the U.S. Economy

If foreigners lose confidence in the U.S. economy and are less willing to hold dollar denominated assets, the supply of dollars in the global banking system will exceed demand and the exchange value of the dollar will fall...

Debt, Deficits, Derivatives & Delusions - 05/15/07

Trade deficit jumps with hike in oil imports

The trade deficit rose to the highest level in six months as a big jump in oil imports offset a narrowing of the politically sensitive deficit with China.

The gap between what the United States imports and what it sells to the rest of the world rose to $63.9 billion in March, up 10.4 percent from the February level, the Commerce Department reported Thursday.

A Sea of Debt

Warren Buffett has famously quipped “it’s only when the tide goes out that you learn who’s been swimming naked.” Well, the great sea of liquidity currently swamping the global financial system will eventually ebb, and many, many people will be caught without a bathing suit.

Every new generation believes that it is special, and not subject to the lessons of history, or the laws of economics. Until things go terribly wrong of course. Then historical parallels are crystal clear, in hindsight.

U.S. finds benefits in weakness of dollar

U.S. companies have been doing business abroad for a long time, but overseas markets have never been more important.

This year, for the first time, Standard & Poor's expects the 500 big companies in its benchmark stock index to generate more than half of their sales in foreign countries.

Housing costs taking their toll of society

One of the unplanned but most intractable legacies of the Blair decade is the distortion of any normal or sustainable relation between house prices and people’s incomes. If that link is not already broken it is certainly stretched to the limit.

The rate of price inflation may be slowing, just, but remains obstinately high.

Corporate restructuring: living in the bubble

The last 12 months has seen around 23% of UK listed corporates issuing profit warnings, the highest annual count since the impact of 9/11, SARS and the foot and mouth outbreak.

Underlying inflation is above the government’s target of 2%, broader price inflation measures are forecast to remain above 3% and interest rates have increased three times since August 2006 and are widely expected to continue to rise further in 2007. The prognosis further afield is not that great either as continental Europe is forecast to show only modest (sub 2%) GDP growth in the major economies.

Auction draws more than 1,200 bidders on Southern California houses, condos

The bidding on foreclosed homes was so fast and furious that Candace and Curtis Friedman were still feeling an adrenaline rush as they were escorted out of the auction to sign a purchase agreement.

“You don't have a lot of time to think,” said Curtis, a stay-at-home dad from El Cajon. “It's the fastest $200,000 we ever spent. It's over before you know what happened.”

Debt, Deficits, Derivatives & Delusions - 05/10/07

Zimbabwe: Country Reaches Official Hyperinflation Level

Official silence on Zimbabwe's latest inflation figures is being ascribed by Harare-based investment professionals to the authorities' embarrassment that the internationally accepted hyperinflation level has now been reached.

What is the real solution to America's trade deficit?
The US Congress seems more determined than ever to tighten the noose on China. The issue is trade policy – and the legislative response to America’s outsize bilateral trade deficit with China. The way things look today, bipartisan support for such efforts is deep enough to assure veto-proof passage of tough trade sanctions on a broad array of Chinese products shipped to the US. I continue to believe this could be a policy blunder of monumental proportions. By going after China, the US Congress is playing with fire.

Bank of America's Lewis Calls for Lending `Sanity'

Bank of America Corp. Chief Executive Officer Ken Lewis said a so-called credit bubble is about to break after six years of historically low interest rates and relaxed lending criteria.

``We are close to a time when we'll look back and say we did some stupid things,'' Lewis said, speaking at a lunch at the Swiss-American Chamber of Commerce in Zurich. ``We need a little more sanity in a period in which everyone feels invincible and thinks this is different.''

MONEY! MOOLA! CREDIT! CASH!

"Sarkozy must have won the elections," Elizabeth deduced.

Americans, meanwhile, are nowhere near elections, yet there too the politicians are hogging time on the big screen. People can't seem to take their eyes off of it - except to tune in to the Dow, of course, which hit yet another high on Friday.

Buffett On Derivatives: 'A Fool's Game'

Warren Buffett, the billionaire investor and long-time chairman of Berkshire Hathaway Inc. (BRK.A), is a man who speaks his mind. I'm not sure whether he's always been that way, or whether it is his exceptional wealth or his age -- or both -- that emboldens him to cut through Wall Street B.S. like a hot knife and expose the bloody truth about the foibles of modern finance.

Moneybox's Gross Goes Counterintuitive, Claims Bubbles Are Good

Every asset bubble leaves a new collection of bubble literature in its wake.

Some of the books go on to become classics: John Kenneth Galbraith's ``The Great Crash,'' for example. Others (``Dow 36,000'') are remembered for their curiosity value. Still others are just plain curious, as in, what was the author thinking?

The IRS, Amero And The Battleground For Liberty

"Taxation follows public debt, and in its train wretchedness and oppression." Thomas Jefferson to Samuel Kerchival, Monticello, 1816

I have been deluged with requests to cover IRS indictments or injunctions filed against individuals, i.e., last month the U.S. Department of Justice moved against Bob Schulz and his We the People Foundation; see court filing here. [Go to www.newswithviews.com to read from the original article, All the links from this article.] Many wonder why I didn't do my annual April 15th slave day column. So many wonder what has happened to the "tax movement." The IRS is systematically picking off individuals who fully understand the fraud being perpetrated against the American people and shipping them off to jail. Wonderful, decent Americans like Dr. Tom Clayton, is now serving a prison sentence because we have a federal judicial system that is so rotten, it shames the stench of rancid meat. Those who haven't done a lick of real research will shrug off that comment because ignorance is bliss and it's easier just to get down on your knees and welcome the chains of bondage and slavery than to stand up and fight for what's right. Reminds me of the theme song from an old western, "Rolling' rollin' rollin' Keep them cattle going. Raw-hide."

Living with derivatives: Riskier financial systems

The Reserve Bank of India (RBI) in its latest Annual Policy Statement has finally given the green signal for the introduction of credit derivative swaps, a kind of credit derivative instrument.

Ironically, the move comes just as there is renewed debate worldwide among regulators about the implications of the rapid growth of derivatives for the safety of the financial system. So how should the central bank proceed? Are there any takeaways, any research findings RBI could keep in mind as we enter what has so far been virtually uncharted territory?

Asia's real worry could be falling dollar

Although Asian finance ministers have just agreed on a new contingency measure to defend their currencies, their real concerns appear to be a plunge in the US dollar rather than a rise in their own units.

Debt, Deficit, Derivatives & Delusions - 05/04/07(Update 1)

Derivatives hint at weak April job growth

Investors believe the U.S. economy generated around 88,900 new jobs in April, according to the results of a derivatives auction.

Such a rise was smaller than that generally expected by Wall Street forecasters, who are looking for a somewhat larger 100,000 increase.

Paulson repeats China must let currency value rise

US Treasury Secretary Henry Paulson said on Thursday that China should quickly let its currency rise in value and let market forces play a greater role in recognition of its own economic might.

"It is quite important that their currency appreciate more rapidly," Paulson told several hundred students at Harvard University as he continued a series of discussions about the importance of keeping US-Chinese relations on an even keel.

India's trade deficit widens despite upward revision of export figures

India's trade deficit widened 40.5 per cent in the fiscal year ended March 31, this year to $56.74 billion despite an upward revision in export data for the April-February 2006-07 period.

While announcing the March 2007 foreign trade data, the commerce ministry has announced an upward revision of export data for April-February 2006-07 by about $3 billion.

Dick Cheney's Banker Grantham Sees World Bubble: William Pesek

You'd expect someone whom the famously dour Dick Cheney entrusts with millions of his dollars might have a gloomy view of the world. Jeremy Grantham does indeed.

``From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure and the junkiest bonds to mundane blue chips -- it's bubble time,'' he writes in Grantham, Mayo, Van Otterloo & Co.'s latest quarterly letter titled ``The First Truly Global Bubble.''

U.S. Dollar Declining, Global Community Rising

Martin Weiss, Ph.D. examines the declining value of the dollar and how it directly affects the U.S. economy as well as the global community. In this issue of Money and Markets, Dr. Weiss discusses the plunge in the dollar verses the rising values of foreign currencies as well as the affects the dollar is having on the U.S. Housing industry.

According to Weiss, the U.S. dollar is sinking. No one is able to come to the rescue. Investors who fail to take protective action could get hurt badly. And those that act promptly stand to make some of the greatest fortunes in recent memory.

THE WORLD’S GREATEST UNREPORTED HYPERINFLATION

Zimbabwe has entered the hell of hyperinflation. Indeed, inflation in March rose by well over the 50% monthly threshold for qualifying as hyperinflation. The reporting of Zimbabwe’s travails invariably includes the standard reference to Weimar Germany’s 1922-23 hyperinflation, in which the monthly inflation rate peaked at 32,400%. The choice of this Weimar reference is somewhat curious. After all, the world’s greatest monthly hyperinflation rate was recorded in Hungary in July 1946, and it was 12 orders of magnitude greater than that of the peak month of the Weimar hyperinflation. As is the case with much economic and financial data, the Hungarian record has simply tumbled down what George Orwell called a “memory hole.”

Indian trade deficit nears US$57b as oil imports soar

India's trade deficit widened to nearly US$57 billion in the year ended March as a surge in the cost of imports led by oil offset a record year for exports, government data showed Tuesday.

Exports rose 23.9 percent to a record US$124.6 billion, in line with a target of US$125 billion for the year, while imports jumped 29.3 percent to US$181.4 billion led by oil, the government said.

Asia Draws on $2.7 Trillion of Reserves to Safeguard Currencies

Asian finance ministers will this week probably agree to pool part of the region's $2.7 trillion in foreign-exchange holdings to prevent a repeat of the crisis that depleted reserves ten years ago.

Loan derivatives poised for explosive growth

The market for derivatives of the risky corporate loans that are generally used to fund private equity buy-out deals is beginning to enjoy improving trading volumes and many are predicting that the next 12 months will see explosive growth.

Canadian Mint Introduces Wheel-Sized Pure Gold Coin

The Royal Canadian Mint today unveiled a gold coin that's as big as a car wheel and as thick as a hardcover novel, in a bid to help win business lost to global competitors.

The 100-kilogram (220-pound) coin, which is 99.999 percent pure gold, the largest and purest piece ever made, was shown to reporters for the first time today at the mint in Ottawa. While each coin has a face value of C$1 million ($900,000), the purity and quantity of the bullion gold they're made of makes them worth more than twice as much, based on current prices.

Debt, Deficit, Derivatives & Delusions - 04/30/07

China's Protein Gap Will Stoke Global Inflation: Andy Mukherjee

The ``tortilla crisis'' that shook Mexico in January may not have been a flash in the pan.

If Jing Ulrich, the Hong Kong-based chairwoman of China equities at JPMorgan Chase & Co., is correct, everything from beer to steak might just become more expensive globally.

American Monetary Policy Will Ruin the European Union's Economy

The Fed has been engineering the continuance of a strong dollar and the EU has been forced to follow suit although both countries are facing an incipient recession. This article will explain why this policy will fail with the ultimate effect of impoverishing the working classes in both the US and the EU. In the interest of keeping the rich in the US happy, the FED has pursued policies designed to keep them rich but will ruin the working classes and ultimately ruin the rich as well. The foreign trade deficits which are the result of this policy will, within a short period, cause a catastrophic fall in the value of the dollar resulting in a worldwide financial implosion and worldwide recession. First it is necessary to explain the history of the economic policies which caused these deficits.

Five Things You Need to Know About the Mr. T Gold Indicator

1. About the Mr. T Gold Indicator

What is the Mr. T Gold Indicator?
The Mr. T Gold Indicator is a proprietary technical indicator created by Minyanville to identify and anticipate prospective exhaustion points in the price data for gold. Some technical indicators rely on formulas applied to the price data of a security, but these types of indicators can be very subjective, requiring an analyst to view the signals that are generated within the context of still more indicators! The Mr. T Gold indicator, on the other hand, is completely objective and easy to use. All you have to do is look at Mr. T. What could be easier than that?

Treasury to offer cross-border derivatives data

The U.S. Treasury said on Friday it will begin publishing data on the value of U.S. cross-border derivatives contracts in May, information that could alter size of the U.S. current account deficit.

The new data, which will be published quarterly alongside the Treasury International Capital data, will expand the information available on U.S. cross-border capital flows and international investment holdings.

Yen Gains as Carry Trades Cut After China Acts to Cool Growth

The yen rebounded from a record low against the euro as China curbed lending to cool its economy, prompting traders to sell Asian shares and investments funded by borrowing in the Japanese currency.

The yen gained against 15 of the 16 most actively traded currencies as investors unwound carry trades, where they borrow in Japan and buy higher-yielding assets elsewhere. Losses in the euro accelerated as the threat of military intervention in Turkey's election caused investors to pare holdings and repay yen loans.

Funny Money: An Inconvenient Truth

Boris Yeltsin passed away this week. I spent the summer of 1992 teaching English in Russia. In the short time I was there, post-Soviet hyperinflation caused the price of bananas to soar from 15 to 150 rubbles. Thanks Boris, you prepared me for the New York City housing market.

Boris Yeltsin, Kurt Vonnegut, David Halberstam. It's been a rough couple weeks. Is the universe giving me a hint? The people that influenced my youth are moving on, so maybe I should move on from my youth? Hmmm. Nah, let's make more jokes about funny-sounding company names.

Collateralized Debt Obligations the Fastest Growing Sector of the Fixed Income Market

Research and Markets (http://www.researchandmarkets.com/reports/c55373) has announced the addition of Developments in Collateralized Debt Obligations: New Products and Insights to their offering.

Developments In Collateralized Debt Obligations

The fastest growing sector of the fixed income market is the market for collateralized debt obligations (CDOs). Fostered by the development of credit default swaps (CDS) on all types of indexes of corporate bonds, emerging market bonds, commercial loans, and structured products, new products are being introduced into this market with incredible speed.

Debt, Deficits, Derivatives & Delusions - 04/23/07

Gold hits 11-month high, platinum jumps on dollar, ETF

Gold hit a new 11-month high on Friday and platinum rose to its highest in five months, buoyed by a weaker dollar and on hopes proposed exchange traded funds would boost demand for precious metals.

A rebound in Chinese stock markets also helped the bullion market, as it eased concerns that a possible hike in interest rates could hit demand in China.

At the risky end of finance

The use of credit derivatives has boomed and bemused. These new financial instruments have yet to face their biggest test

US Dollar Weakness: Who Wins, Who Loses

With the Euro hovering near its record highs and the British pound having breached the psychologically important 2.000 level, the extent of the US dollar’s weakness has finally been recognized. As we have seen in the past few months, the value of the US dollar is important not only for currency traders, but also for equity traders. It is hardly a coincidence that the US stock market hit an all time high around the same time that the US dollar reached multi decade lows against currencies like the British pound, New Zealand dollar and the Euro. The strength of those currencies has made US stocks attractive values for foreign investors and looking ahead, the value of the US dollar can be a useful tool for equity traders, especially those who are looking to buy or sell the shares of big US importers and exporters.


Financial Earnings

Earnings season provides us a quarterly glimpse into the workings of the Credit system. I was especially interested in the opportunity to examine how various institutions were responding to the subprime meltdown. Were lenders pulling back from home mortgage lending? Were they becoming more risk averse in the lending business generally? Any reverberations in securitizations or derivatives? Most important, are we seeing evidence of slowing financial sector growth – the lifeblood of market liquidity?

Global View: Money makes the world spin

Money is good, isn't it? The more, the better. Money makes the world go round. But sometimes it makes it spin giddily.

Why is the U.S. economy in difficulty? Why did the Argentine one collapse two years ago? It all has to do with tides of money.

Borrowing 'threatens UK economy'

Consumers must rein in their borrowing levels if a downturn in the UK economy is to be avoided, a report has warned.

The Ernst & Young Item Club's latest report says that the strong UK economy rests upon shaky foundations, with excessive levels of household debt posing a serious threat.

Paulson: Strong dollar in U.S. interest

U.S. Treasury Secretary Henry Paulson said on Friday he is "a big believer in a strong dollar" but reiterated that China's yuan currency needs to appreciate more against the greenback.

In a transcript of an interview with Public Broadcasting Service business commentator Charlie Rose airing on Friday night, Paulson said a strong dollar was good for the United States.

Deficits, Derivatives, Dollars & Delusion- 04/20/07

Trichet: Derivatives haven't been stress-tested

European Central Bank President Jean-Claude Trichet on Monday took note of the "explosion" of the global derivatives market, but he said these instruments have not been stress-tested yet.

In a question and answer forum after a speech at the Council of Foreign Relations, Trichet said, "We shouldn't be ... negative" on derivatives.

How Much Is Goldman Sachs Really Worth?

Over the past week or so, I've seen multiple articles questioning how Goldman Sachs (NYSE: GS) is being valued. Specifically, questions have been raised over why Goldman, which has been accused in the past of being a big hedge fund itself, is valued at less than 10 times trailing earnings when public-markets newcomer Fortress Investment Group (NYSE: FIG) is trading at a 40-plus multiple. As the Financial Times pointed out, Goldman manages $147 billion of alternative assets versus $30 billion for Fortress and $79 billion for Blackstone -- which will likely get an impressive valuation if its IPO makes it to market.

S. Korea's household debt may reach dangerous level: think tank

South Korea's household debt may reach a level similar to that seen at the end of 2002, when the consumer credit bubble burst and the country went into a two-year economic slump, the nation's leading private think tank said Wednesday.

The pace of South Korea's economic growth has been increasing since the two-year slump, but a surge in household debt last year stoked fears over defaults and a decline in the nation's consumer spending.

Credit Derivatives Risks: Can Smart Money Avoid the 'Dangerous Herding'?

Wall Street Polyannas, smoke-blowing pundits, and ivory-tower academics downplay or dismiss the risks associated with the rapidly-growing credit derivatives market, arguing that sophisticated market participants have a vested interest in working together to avert disaster. Yet according to a recent Bloomberg report, "Trichet Warns of `Dangerous Herding' Derivatives Risk," if and when someone eventually shouts "fire" in the crowded financial theater, cooler heads might not necessarily prevail among the "smart money" crowd.

Dollar Heads for Weekly Drop as U.S. Rate Premium to Diminish

The dollar headed for a fourth weekly decline against the euro on speculation the interest-rate advantage on U.S. assets will diminish as European borrowing costs rise.

The U.S. currency traded within a cent of an all-time low of $1.3666 versus the single currency as investors bet the Federal Reserve will lower its benchmark this year while the European Central Bank will raises rates as soon as June. The yield premium on two-year U.S. bonds over similar-maturity German bunds was the least in more than two years.

What Does a Dollar of Debt Buy You?

This weekend I am in La Jolla at good friend Rob Arnott's conference. Princeton Professor Burton Malkiel, of Random Walk fame, will be one of the luminaries at the annual Research Affiliates Advisory Panel. So, with that thought in mind, this week we take a seemingly random walk through the data to see if we can discern a trend.

How much debt does it take to grow GDP? You probably missed it, but the Bureau of Labor Statistics gives us data that contradicts the recent labor numbers. Why is consumer sentiment so moribund? And that recession I predicted for 2007? I have a few thoughts on that as well. It should make for an interesting letter with a lot of great charts and graphs.

Derivatives markets may hold key to U.S. recession

Relaxed lending standards may have contributed to a surge in U.S. mortgage failures this year, but the chance of recession could hang on the complex derivatives used to hedge loan risk, analysts say.

Collateralised Debt Obligations (CDOs) are baskets of bonds that give investors varying levels of exposure to defaults. CDOs helped fuel the U.S. housing boom by purchasing bonds backed by sub-prime mortgages and distributing the risk.

The Armageddon Gang

There are those who fret that current troubles in real estate will lead to an economic slowdown, maybe a recession. Then there's Peter Schiff. "Our standard of living is going to decline," the Connecticut stockbroker confidently declares. "There's no way around it, and it has just started."

Schiff owns Euro Pacific Capital, a smallish firm that specializes in moving clients' money into nondollar assets like foreign stocks and bonds. Over the past couple of years, he has become a regular, hectoring presence on cable-TV business shows--on CNBC they call him "Dr. Doom." Now he has a book out, ominously titled Crash Proof: How to Profit from the Coming Economic Collapse.

Financial Armageddon

Crash Proof

U.S. Bank Revenue From Derivatives Surged to Record

U.S. bank revenue from trading derivatives rose to a record $18.8 billion in 2006, driven by high client demand among hedge funds and other large institutional investors.

Revenue grew 31 percent from $14.4 billion in 2005, the previous record, the U.S. Office of the Comptroller of the Currency said in its quarterly bank derivatives report released today in Washington.

A Brief History of Derivatives

The history of derivatives is quite colorful and surprisingly a lot longer than most people think. A few years ago I compiled a list of the events that I thought shaped the history of derivatives. That list is published in its entirety in the Winter1995 is sue of Derivatives Quarterly. What follows here is a snapshot of the major events that I think form the evolution of derivatives.

I would like to first note that some of these stories are controversial. Do they really involve derivatives? Or do the minds of people like myself and others see derivatives everywhere?

Derivatives help, but don't ban risk-Fed officials

Booming credit derivative markets have spread risks more widely but have not made them disappear, top Federal Reserve officials said on Thursday as U.S. lawmakers debated the financial stress arising from the problems of subprime mortgage borrowers.

"I want to emphasize that the fundamental risks in credit markets have not been changed by the new instruments that are now being traded," Federal Reserve Governor Randall Kroszner told a credit market conference.