Financial topics

[John]

Several weeks ago I wrote the following:

> In 2007, the Bank of International Settlements was reporting that
> there were over one quadrillion dollars nominal value (that's
> quadrillion with a "Q") of synthetic credit derivatives in
> portfolios around the world. That figure included about $60
> trillion in credit default swaps, and about $500 trillion in
> interest rate swaps.

> That's when the credit crunch began, and the "deleveraging"
> process began in financial institutions around the world. Today,
> the above figures have been approximately cut in half, meaning
> that there's about $500 trillion less in the world today.

> ** 28-Feb-11 News -- Peripheral stock markets continue to plunge, pressuring the center
> ** http://www.generationaldynamics.com/cgi ... 28#e110228

A web site reader asked, "If half of the synthetic securities are
gone, why haven't prices fallen more?"

I would speculate as follows: Not all synthetic securities are
fraudulent, and the half that have disappeared are probably the ones
that are solid. The fraudulent ones are still being kept on the books
of various financial institutions at nominal values. They can't sell
any of them, because that would force them to mark ALL of them to
market. So the fraudulent ones are the only ones that are still in
place. At some point there'll be a full scale panic, and then
we'll see whose right about inflation or deflation.

John

[John]

More bad news just announced:

GM auto sales for May down 1.2%.

Experts had predicted they would be up 1.5%.

If you put together news like this with the rapidly deteriorating
financial situation in Europe and political situation in the Mideast,
as well as the possibility that China's huge real estate bubble might
finally burst, then there's definitely a feeling that history is
speeding up toward something.

John

[shoshin]

...or that there was simply a tight supply of cars, due to manufacturing limitations (Fukusima?)...

[OLD1953]

Analysts have been jumping on the "US manufacturing to be cheaper than China by 2015" bandwagon recently, though I suspect they are actually using US overall data to reach that conclusion. I strongly believe that breaking the US up regionally would show cheaper costs in the SouthEast and MidWest than elsewhere, and that region has already passed China as the cheapest place to manufacture goods for delivery in the Western Hemisphere, when all relevant factors are taken into consideration, productivity, work stoppages, expected salary increases and transportation costs.

Given that manufacturers moved from a "brick and mortar" construction mode for factories to the readily mobile "tin shed" model, I think we'll see movement in happen more rapidly than the movement out.

Moreover, given the current political situation, it would not be impossible to have some form of import tariffs imposed on goods from Asia, which would certainly be an incentive to migrate jobs back to the US. I'm not promoting that, I'm just saying it's a natural result of the current political climate of wanting to have it all and have someone else pay for it.

[John]

> it would not be impossible to have some form of import tariffs
> imposed on goods from Asia, which would certainly be an incentive
> to migrate jobs back to the US.

This would be considered an act of war.

John

[Higgenbotham]

This is an excerpt of a comment I read in response to an interview with the Dean of Stanford Engineering.

When I read accounts and studies of how American industrial, governmental, and academic labs were resourced, staffed, and operated during the phenomenally consequential decades before, during, and after the second World War, I see operations that bear little resemblance to what we have now saddled ourselves with. Of course, the occasional, consequential technological advancement will be made. But one doesn't have to spend too much time in the massive 'literature' being produced to see that on the ground, the gruel produced is a thin one.

Our Universities seem poorly suited for what is headed our way. I generally don't hear noises consistent with meaningful reform coming from these places.

http://www.eetimes.com/electronics-news ... geNumber=2

A few things come to mind as a result of reading this article and comment. One, our science and engineering graduate schools are staffed with 1/2 to 3/4 Asian students, many from China. They are learning or stealing our technology as China aims to build an industrial and war machine to destroy the US.

This same commenter astutely and correctly identifies the reason why these graduate schools are staffed with 1/2 to 3/4 Asian students.

On educating more US engineers, we have a population base of over 300 million, and there really are plenty of bright, idealistic, and motivated young people reasonably well prepared, despite the easy cheap shots at our public education system -- certainly enough to handily populate our undergraduate and graduate engineering schools. They stay away not because they are stupid. They can, by definition, do the math. We offer a bad deal.

Like the prospective employers, graduate engineering programs like to see an abundance of cheap and obedient labor, labor that they didn't necessarily have to identify and train themselves. American students are generally smart enough to suss out that the pay will be low, the working conditions poor, and the degree of control over their own professional lives modest. Here, the celebrated "solution" of massive import of foreign talent pretty clearly has the effect of reinforcing and entrenching the problem.

I can say more of the obvious, but I think we can draw the appropriate Generational Dynamics conclusions.

[OLD1953]

That takes me all the way back to the third grade. I had a teacher then who several times emphasized that "the US ARMED our enemies, people were being killed by bombs made with US steel and steel scrap we sold Japan and Germany".

From the generational standpoint, I'd have to say the Baby Boomer managers are too stupid to care, and the GenXers are too greedy and simply don't believe a country is needed for any reason.

Found this while hunting for some source to that story, though there was scrap sent to Japan and Germany, of a certainty. This ones from after the war started though.

http://media.nara.gov/media/images/28/10/28-0957a.gif

Put the coffee down, then read this.

http://www.guardian.co.uk/business/2011 ... tment-fund

Gambling is losing out as a pastime.

http://www.lasvegassun.com/news/2009/ja ... o-profits/

the 266 casinos statewide that grossed $1 million or more in gaming revenue ended up with a 68.6 percent decline in net income.

http://www.pressofatlanticcity.com/news ... ge&photo=1

Losses on both coasts. Could the high rollers at the stock market be about to give it over too?

[aedens]

The failure was top to bottum Higgy and the Environmental Protection Agency (EPA) estimates there are more than 450,000 sites across the United States where hazardous substances, pollutants or contaminants are hampering redevelopment. Many remain abandoned or under-used because the cleanup costs are higher than the property's value, while the polluters have gone out of business and can't be forced to pay for it. President Barack Obama's administration is hoping to reinstate the polluter tax so the EPA no longer has to pay for cleanups through its general funds. It has also devoted nearly a billion dollars in stimulus funds. But it will still be years - probably decades - until the industrial mess can be removed. Pouring industrial by-products directly into the air, water and ground was standard practice until the EPA began regulating pollution with the Clean Air Act of 1970.

Meanwhile we burn from the inside out economically. Our parent company burned from the inside out also and we restarted in 1993 which is a matter of record in the Code of Federal regulations. Overall for the GD scope we all can agree that earliest recorded doomsday forecaster, according to Isaac Asimov's "Book of Facts" (1979), was written on an Assyrian clay tablet circa 2800 BC. It bore the words "Our earth is degenerate in these latter days. There are signs that the world is speedily coming to an end. Bribery and corruption are common."

Meanwhile any Government only do tolerate Capital. Economist can and will serve there defunct models as the taxpayers also burn from the inside out. Firms are screaming about security issue's as we know. My former partner runs a proxy server off router so interests can hack there way in so he can protect network clients upstream. Look the issue truly is they do not want to play by any rules and this is clearly fact since other than my Corporate work I started an ISP with some partners and decompiled bots from Communist's were returned to host with a package they did not like on extraction. The game has not changed and rogue capital chances are we bailed out do not care either. I got out of the ISP before the bubble since it was obvious and made a modest profit and learned what I needed to know for that business cycle. http://www.jthtl.org/content/articles/V ... sterle.PDF <---- after math of avarice and today they elect dead heads..
There is and never will be change until myopia masked as hubris and avarice are contained which as a fact will never be in business. We trend results from GD and never will I be warranted to understand policy to pragmatic taxpayers who let the gatekeeper destroy the republic. They have no excuse and never do I offer one also. There will be never a fulcrum of trust as we trend the GD as the spirit of the age. We can only convey reason and faith that the gatekeepers are on duty. To be blunt they are not top to bottum from acedemia who wishes to slip into Posts we the people trust in due diligence at our peril. True is that 90 percent to give the 10 percent a bad name.

Seymour Melman, Our Depleted Society (Holt, Rinehart & Windston, 1965).
Full understanding of the realities of deindustrialization. Chief among them is the post-war myth of a post-industrial society. In fact deterioration in the
production competence of U.S. industries had been well under way since 1960 and was reported in some detail by 1965.

Thereafter, management’s economists, informed by the theories of John Maynard Keynes, hoped that a new “public sector” military economy could help to restore industrial employment and stabilize the functioning of management’s decision processes. I have no regard for Koo's work since he has nothing to offer to the taxpayer we already do not know.

Meanwhile,
They are walking away as they spend more http://www.guardian.co.uk/world/2011/ma ... -migration

Something is going give and when it does. http://www.fxstreet.com/fundamental/mar ... 011/06/02/
The latency disconnects are historical endeavor's of lacking thought.
The second round of a Greek bailout may just be a few days away, and once again, most will come courtesy of tax-payers from the stronger economies in Europe; Meanwhile, according to the German newspaper FAZ, it is by now considered certain the IMF will not pay its share of 5th tranche of current aid to Greece at end June. We will see if the IMF has any cedibility soon.

[OLD1953]

Is China bribing Tibetans not to resist?

http://chinawatch.washingtonpost.com/20 ... ousing.php

Dawa, a 48-year-old farmer in a small village in the Tibet autonomous region, has seen many recent changes in both his house and life.

His family, who lives in Sangmda village of Doilungdeqen county near Lhasa, built a house at the end of 2008 after having received a subsidy of 24,000 yuan ($3,660) from the county government.

And an additional 3,000 yuan came a year later, when Dawa was doing work to protect the new building from earthquakes.

****************'

Highly interesting. And how long can they keep that up?

[aedens]

With high yield bonds yielding less than 8%, a 2 point drop in bond prices wipes out 3 months of carry.
http://cxa.marketwatch.com/finra/BondCe ... Type=Yield
http://apps.finra.org/regulatory_system ... regates/1/
http://www.investopedia.com/terms/c/cmbx_indexes.asp

Picked 50 percent equity and 50 percent cash. This was May 23 I took the advise of older than me attitude.
I feel direction will assert itself this quarter. They will eat themselves on margin.If the politicos think they
will enable a solution for there election cycle they are dead wrong.