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"We need to correct the rules so that it is less interesting for
speculative capital to come running into Russia," Mr Putin told journalists while on a trip to Vladivostok, in the far east of Russia.
He said: "It flows in quite well, works here, but creates problems, because if crisis hits, it leaves quickly."http://www.ft.com/cms/s/0/1cb8df02-f4e2-11de-9cba-00144feab49a.html
In recent days, the US bond vigilantes have been speculating on the Fed raising interest rates in 2010. Speculative volume as well as poor auctions have resulted in yield spiking dramatically higher.“When the U.S. has to fund its deficit through the combination of issuing more Treasuries and printing more dollars, it is inevitable that the dollar will continue to weaken,” Deputy Governor Zhu said at a forum in Beijing today.
WASHINGTON (Dow Jones)--Former Federal Reserve Chairman Alan Greenspan said in prepared testimony the threat to U.S. fiscal stability is larger than ever, mostly because of rising medical costs.
Averting a situation where the U.S. struggles to finance unprecedented budget deficits "is more urgent than at any time in our history," he said in testimony Thursday before the U.S. Senate Committee on Homeland Security and Governmental Affairs.
Greenspan argued that the problem of large projected shortfalls in Medicare and Medicaid can't be wiped away with more appropriations from Congress. "It is a physical resource crisis," he argued, which will suck more of the U.S. labor force and capital investment into the medical sector.
There’s at least an 88 percent chance the U.S. will raise rates in 2010, up from 78 percent on Nov. 24, futures on the CME Group show. Prices indicate a 46 percent likelihood of an increase by June, up from 30 percent on Nov. 30. By contrast, overnight interest-rate swaps traders see no chance that the BOJ will increase its benchmark next year, Bloomberg data show.
http://www.creditwritedowns.com/2009/12/greece-risks-financial-armageddon-while-ireland-makes-cuts.htmlThe Irish government announced draconian spending cuts of 6 billion Euros in order to stave off a debt crisis in the worst modern-day downturn in the nation’s history. Even so, Irish government
bond yields have been rising relative to German government bond yields, the benchmark for the Eurozone. Over the past five years the spread had averaged about 40bps. Now it is 170bps. But, the Irish seem to be making the necessary cuts forced on them by lower tax receipts and currency union.The Greek government, on the other hand, is not taking the same tack. Witness comments by the country’s Premier as reported in the Telegraph by Ambrose Evans-Pritchard:
Salaried workers will not pay for this situation: we will not proceed with wage freezes or cuts. We did not come to power to tear down the social state.
The Chinese market is “on full tilt — booming is an understatement these days,” said John Bonnell, the director of Asia vehicle forecasting at J.D. Power & Associates.China is pulling ahead at this particular moment partly because Americans, debt-laden and worried about their jobs, are pulling back. After decades of gorging on consumption, Americans are saving. And the Chinese, whom economists thought were addicted to saving, are spending more.
Among China’s 1.3 billion people, rising incomes are finally making large numbers of Chinese prosperous enough to make big-ticket purchases.
http://www.nytimes.com/2009/12/10/business/economy/10consume.html?_r=2&ref=business
Transportation chief Ray LaHood predicted the federal government's gas tax of 18.4 cents per gallon would not be enough to offset the nearly $500-million gap between how much revenue is available and how much money the department hopes to receive next year.
That dilemma, he said, would present Congress with two choices: Cut some programs or consider increasing fees, including the federal gas tax -- an idea LaHood discussed, but did not explicitly endorse, during Monday's conference.
Apparently, Chinese speculators were not content with stockpiling copper. Now, the Financial Times reports that garlic is the newest craze. Wholesale prices of garlic have shot up 15x w/in the past few months. Accounts vary. Official accounts from the Chinese Ministry acknowledge that prices have soared 286 percent since March. Meanwhile, the Economist reports that prices have shot up 40x since the same period.
Fundamental factors like reduction in land acreage for planting have been supplanted by folk beliefs regarding the curative powers of garlic against the swine flu. Then there is plain, old fashioned greed.
"You need a warehouse, a lot of cash and a few trucks. That's how it works," said Mr Lou, describing the tools of the trade for speculators.
"Basically, what you do is try to arrest as much supply as possible, then you bid up the price. Moving garlic from one warehouse to the other, you make millions of dollars."
http://www.ft.com/cms/s/0/6a1bb282-da2b-11de-b2d5-00144feabdc0.html
http://www.economist.com/businessfinance/displaystory.cfm?story_id=14973037
Like I said in the previous post, the definition of insanity is repeating the same actions over again w/the expectations of different results. How bad must things get before people realize that a redefault rateof 39% is considered better than an industry average of 50%?
In a report due out today, Citi said the redefault rate in the third quarter on its $746.8 billion servicing portfolio did not exceed 39% for loans modified between the second quarter of 2008 and the second quarter of 2009. That rate — the percentage of borrowers who become delinquent 60 or 90 days after modification — was higher than Citi's redefault rate in the second quarter, which did not exceed 29%.
Still, Citi's third-quarter redefault rate was lower than the industry average of roughly 50% reported in September by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
Source: http://www.financial-planning.com/news/mod-redefaults-and-risks-2664714-1.html
SAN FRANCISCO — In January, Mike Rowland was so broke that he had to raid his retirement savings to move here from Boston.
A week ago, he and a couple of buddies bought a two-unit apartment building for nearly a million dollars. They had only a little cash to bring to the table but, with the federal government insuring the transaction, a large down payment was not necessary.“It was kind of crazy we could get this big a loan,” said Mr. Rowland, 27. “If a government official came out here, I would slap him a high-five.”
Moody’s system had previously allowed its analysts to assume that any official support given to a bank would also cover subordinated debt. But several subordinated instruments have been allowed to suffer losses during the crisis after regulators and other policymakers made it clear they expected the bondholders to share the pain felt by equity holders in bailed-out banks.
Wider ”notching” will also be applied among hybrids, with various issues rated differently depending on certain features,
"The expansion of the NOL carryback period will accelerate a $33 billion refund of previously paid taxes for much of Corporate America in a very short period of time," says John McMahon, director for business tax services at Ernst & Young.
The only companies banned from taking advantage of the new law are those that accepted government bailout money, says tax expert Robert Willens, who heads an eponymous consultancy in New York. Willens explains that the five-year NOL carryback doesn't apply to corporations that allowed the government to buy company stock or warrants in exchange for cash as part of the Troubled Asset Relief Program — even if the company has since repaid the funds.
Preliminary data from a dramatic experiment on the moon "indicates the mission successfully uncovered water in a permanently shadowed lunar crater," NASA said in a statement."The discovery opens a new chapter in our understanding of the moon," it added, as ecstatic scientists celebrated the landmark discovery.
"Yes indeed we found water and we did not find only a little bit but a significant amount," said Anthony Colaprete, project scientist and principal investigator for the 79-million-dollar LCROSS mission.
China’s central bank on Wednesday acknowledged the case for a stronger renminbi, days ahead of the arrival in Beijing of US president Barack Obama for talks expected to highlight mounting international concern over Chinese currency policy.
Thailand, South Korea, Russia and the Philippines have been snapping up dollars this week in order to hold down the value of their currencies, traders said Wednesday, as the U.S. currency wallowed near 15-month lows.
Experts estimate that some of the largest emerging economies may have spent as much as $150 billion on currency intervention over the past two months, judging from the growth of their international reserves, according to data from Brown Brothers Harriman. While that's not a huge amount in the currency markets, which have turnover of more than $3 trillion a day, traders pay keen attention to what the authorities are doing and where they are likely to intervene.
The new rules state that banks issuing the securities must account for them as if they were on their balance sheets.Under the old accounting standard, card issuers -- such as Citigroup Inc., Bank of America Corp., American Express Co., Capital One Financial Corp., J.P. Morgan Chase & Co. and Discover -- would package pools of credit-card loans and sell them to investors.
Until the accounting rule was changed, these securities didn't have to be included on the banks' balance sheets, so they weren't subject to the same accounting standards and disclosures required for on-balance-sheet items.
But critics argued this rule allowed companies to hide risky assets in these off-balance-sheet items. The new rule will force card issuers to bring off-the-book credit-card loans onto their balance sheets and set aside additional reserves to account for potential losses in these securities.
The flood of expiring debt will hit the US and the UK hard – with $2,000bn of debt coming due by 2012 – and could curb banks’ profits or force them to charge individuals and companies more for their services.
In the US, the market for credit default swaps – a gauge of investors’ fears about companies’ health – is already signalling concern.Tim Backshall, chief strategist at Credit Derivatives Research, said investors’ perception of risk, as measured by banks’ CDSs, was relatively low for the next three years.
But, on average, from three to five years the risk jumps about 30 per cent.
Corning's cash position makes the company less dependent on the credit markets for midsize deals. It also learned valuable lessons from the previous downturn in 2002, when the telecom bubble burst. "We decided then that we wanted to be prepared for the next downturn, whenever it came, by building up a significant amount of cash," Flaws explains. "We've done that, and have almost no debt coming due short-term. We're prepared to do deals now and we have the money to do them."
So what is he waiting for? "The valuations are higher than we think they should be," he says. "There were some companies we were interested in acquiring a few months ago, but the valuations were more than what we thought appropriate. Now they're lower and likely to get lower still."
The government designed the scheme to reopen the UK RMBS market by offering guarantees covering credit or extension risks at a cost of about 25 basis points over Libor plus the median five-year credit default swap spread on the issuer.
There has been no take-up, 'primarily because CDS swaps for banks have widened significantly since the start of the banking crisis, making the scheme's economic unworkable for more originators', Fitch said.
http://uk.biz.yahoo.com/21102009/323/uk-unlikely-extend-abs-guarantee-scheme-fitch.html
