| User Info
| Janet Tavakoli: China Defaults in forum [Market-Ticker]
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Karlmarxghost
Posts: 4147
Incept: 2009-01-26
I'm Your Huckleberry
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Checkmate, China wins. The golden rule, he who has the gold makes the rules, and right now China has the gold, our debt, a strong manufacturing base, and a consumer with a lot of money. Times are a changin indeed. Sad. I guess Ill go buy Rosetta Stone for Mandarin.... Thanks Washington for screwing our country.
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My views are my view and mine alone. Karl or ticker forum does not endorse or necessarily agree with my views. DO not trade on my views or take them personally.
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Steelhead23
Posts: 2041
Incept: 2008-09-09
Portland OR
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Isn't there an International Bank of Settlements that should have forced these banks to live up to their obligations? This seems a far more ominous action, in terms of its effects on markets, than anything else China might do. In the end, trust is imperative.
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"Give me control of a nation's money and I care not who makes it's laws" —Mayer Amschel Bauer Rothschild Benjamin Bernanke
For-profit commercial banks are a menace and should be eradicated
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Joesswan
Posts: 583
Incept: 2008-10-24
The Rust Belt
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Wow! How can all of the "free" media pass on this story?
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When Jefferson spoke of "my country," he was referring to Virginia.
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Ricka01
Posts: 1214
Incept: 2009-03-05
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This article echoes my view of the major damage done by the bailouts: loss of the U.S.'s credibility and negotiating leverage in regards to China. How can we ask China to stop subsidizing losing operations when the Fed, in fact, has/is doing the same thing?
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Genesis
Posts: 130704
Incept: 2007-06-26
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We can't, and that's the problem.
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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
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Mayorquimby
Posts: 13909
Incept: 2008-09-18
The Archaic Past
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They who wish to hurt you, work within the law.
- Morrissey
Gold is theft.
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Randy123
Posts: 5776
Incept: 2008-09-24
Earth
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Everytime I see Tavakoli I have a hankering for raviolis.
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China is the Enemy. Wake Up.
New Normal. Same As The Old Awful.
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Kwl88
Posts: 518
Incept: 2009-04-16
KC, MO
Banned
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I wondered when this story was going to hit The Ticker!
Question is - will we not be affected UNTIL 10 years from now when the dollar is officially not "The World's Currency" ? OR
Will we be affected by this almost immediately as major countries start trading with non-dollar assets?
Of course - Gold is now at an all-time high, is that correct? I've now seen on CNBC website that $2K Gold is a likely predicted outcome. Oil appears to be ramping up well past $70 and Nat Gas is finally on the move toward $5(this last one is actually good news, for me and my firm - maybe not for the general US population).
So, I ask - is 2010 going to be WORSE than 2009?! Back in 1Qtr of 2009 - I was thinking that 1Qtr 2010 would be the beginning of a slow recovery. NOW - I'm not so sure. TPTB appear to have NOT gotten the job done with regards to implementing a solution. Therefore - it appears as gov't meddling winds down due to lack of funds and lack of votes - the economy will be back to reality and will begin to actually fix itself by getting back into equilibrium....
Does that sound about right to one and all? OR What else will falter etc.? Is early 2010 the time to extremely gradually get back into equity markets, bond markets, emerging markets(ie like China), etc.?
Feedback? Input? All comments appreciated!
Reason: spelling error
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Karlmarxghost
Posts: 4147
Incept: 2009-01-26
I'm Your Huckleberry
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My views are my view and mine alone. Karl or ticker forum does not endorse or necessarily agree with my views. DO not trade on my views or take them personally.
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Asimov
Posts: 103936
Incept: 2007-08-26
East Tennessee Eastern Time
Online
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Quote:Wow! How can all of the "free" media pass on this story? The same way they can pass on a 2 million person protest on the mall in washington dc. They simply ignore it and it goes away.
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It's justifiably immoral to deal morally with an immoral entity.
If you trade based on what other people say, you will lose money. Especially what I say. I won't be held responsible. Festina lente.
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Fortune
Posts: 1542
Incept: 2008-04-21
A deep dark place...scary
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She's one classy lady. Beauty and brains. I continue to find her input very thoughtful, insightful and on target. Those at the helm of this sinking ship are not listening though.
P.S. Just my 2 cents, but Great idea about "Other Voices".
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It's a toss up.
It is the Rule of Law that transforms assets into money: Martin Armstrong
Math IS: Karl Denninger
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Widgeon
Posts: 13481
Incept: 2007-08-30
Region formerly known as the United States
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??? Maybe this is just semantics and not important.
Did they actually "Default?" (inability to pay) or did they purposefully refuse to continue to follow the agreement(s)? Is there a significant difference?
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Genesis
Posts: 130704
Incept: 2007-06-26
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An intentional default is still a default.
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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
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Ck_dexter
Posts: 3899
Incept: 2007-07-19
the south parlor
Online
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I'd like to not follow the agreement that says I have to pay for all this with my tax dollars. But alas, if i don't they come to my house with guns.
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"In other words, that the discussion about what is good, what is beautiful, what is noble, what is pure and what is true, could always go on. Why is that important, why would I like to do that? Because that's the only conversation worth having." Christopher Hitchens.
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Istt
Posts: 71
Incept: 2007-10-11
Cincinnati
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Yes, but if the dollar continues to weaken won't this bode well for US equities?
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Krzelune
Posts: 5513
Incept: 2007-10-08
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Who were the counterparties to the intentional defaults a year ago? Could it have something to do with all the BS rated investments they lost their butts on? Who is the fed buying their AAA pile of crap mortgages from now?
It's not buying oil in dollars or a basket of currencies that could destroy the dollar, but the lack of credibility of our markets and govt in all things financial.
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The desire of millions, the inconvenience of millions, the suffering of millions, the death of millions, does not concern them because of the evolutionary humanist lens they peer through.
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Tsberts
Posts: 2350
Incept: 2008-02-05
Minnesota
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I echo the applause for "other voices" column, but...
You've got to find a way to fix the formatting. All of those changes in fonts, size, spacing -- they made by brain hurt.
Did it look that bad in her original publication?
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Photoguy was an optimist.
In Soviet Russia, the banks are run by the politicians.
The cancer within the federal government has metastasized, it's now up to each of the states to contain the cancer.
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Genesis
Posts: 130704
Incept: 2007-06-26
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Ts, that's exactly as sent to me......
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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
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Tsberts
Posts: 2350
Incept: 2008-02-05
Minnesota
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Yeah, I looked at the source, and I could tell there was no way YOU would have mangled it that badly.
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Photoguy was an optimist.
In Soviet Russia, the banks are run by the politicians.
The cancer within the federal government has metastasized, it's now up to each of the states to contain the cancer.
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Otiswild
Posts: 5617
Incept: 2009-03-09
Inside you, the force is!
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Quote:Isn't there an International Bank of Settlements that should have forced these banks to live up to their obligations? How many carrier battle groups does the IBS have? |
Reza30
Posts: 289
Incept: 2009-02-15
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Karl says China defaults, then what about the U.S. default? Nice commentary on what is about to become reality. Quote:
The next major crisis brewing
The Fed’s FOMC announcement came out…
We got exactly what I expected, a kind of wishy-washy, “hedging our bets” statement from the Fed. You have to remember that Bernanke was Greenspan’s right hand man for much of the bubble days of the ‘90s and early ‘00s, so the guy is an expert at walking both sides of the line when it comes to policy and public statements.
For instance, the Fed announced it would keep interest rates between 0% and 0.25% for an “extended period.” No surprise there. As I’ve noted previously, 80%+ of the $200+ trillion in derivatives sitting on US commercial banks’ balance sheets are related to interest rates.
For the Fed to hint at raising rates (let alone raise them) would kick off a systemic implosion that would wipe out the very guys the Fed has been bailing out. Suffice to say the Fed won’t be raising interest rates now or anytime too soon (within the next 3-5 years, unless inflation destroys the dollar).
The Fed also announced it would be slowing its purchase of Mortgage-Backed Securities (what I call the Fed’s “cash for trash” program). The Fed has stated previously that it will buy $1.45 trillion in mortgage-backed securities from US banks and that this program will end by the end of 2009. However, last week the Fed said it will be extending the program (but not the amount of money spent) until the first quarter of 2010.
Again, this is not much of a surprise. The Fed performed a similar act with its Quantitative Easing Program (extending but not increasing the amount). However, given the increasing public outcry about the Fed’s balance sheet, this issue of buying toxic debt (and the mortgage backed securities the Fed is buying are nothing if not that) may become a hot topic in the near future. If there is ever a successful audit of the Fed’s balance sheet, kiss the big banks’ equity (and share prices) good-bye.
The Fed did announce that it would let its Quantitative Easing program end in October. If you’re not familiar with this program, it’s basically a fancy way of saying that the Fed has been buying US debt in order to finance Obama et al’s massive deficit.
This particular development is key. A little known fact (and one totally ignored by the mainstream media) is that the Fed accounted for nearly half of all Treasury purchases in the second quarter ($164 billion out of $339 billion). In fact, the Fed bought more Treasuries than the next three largest purchasers combined!
The Fed’s purchases outnumber foreign holders (foreign governments), US households, and Primary Dealers (mega banks) combined. One should also note that foreign holders reduced their purchases of US debt from $159 billion in 1Q09 to $101 billion in 2Q09 (a 40% decrease).
In simple terms, these numbers indicate that if it were not for the Fed, the US Treasury market would have almost assuredly had numerous failed auctions in the second quarter. It also shows us that foreign holders (China, Japan, etc.) are reducing their purchases of US debt at an incredible rate. This tells us two things:
1) China and pals are putting their money where their mouths are: refusing to service our debt as they did in the past
2) Treasuries will have to become a lot more attractive (higher yields) for foreign investors to start buying again
I’ve often stated that the Fed will have to sacrifice stocks or the US dollar. If the Fed does in fact end Quantitative Easing in October (as it has stated it will in last week’s FOMC), then we’ll see what the market really thinks of US debt as an investment class. It’s clear from the above data that foreign holders want higher rates (yields) in order for them to start buying more heavily. However, as I’ve stated before, the Fed cannot afford higher interest rates without blowing up US banks.
Keep your eyes on the Treasury market going forward. This could very well be the next major crisis brewing. It will certainly be our first taste of how a market operates without life support courtesy of the Fed.
I’m guessing the results won’t be pretty.
http://seekingalpha.com/article/164251-t....
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Snowmizuh
Posts: 1353
Incept: 2009-03-18
Alabama
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But if the dollar collapses who will buy all those plastic pumpkins?
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Hstella
Posts: 284
Incept: 2009-08-18
Colorado
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Bob Prechter warned about counterparty risk with shorting/puts as the decline proceeds. I wonder if there is any way to track the counterparties for my disaster insurance/leaps. How do you hedge for brazen default?
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Blurtman
Posts: 563
Incept: 2009-01-24
Banned
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Odd that the default by Bank of China and Industrial and Commercial Bank of China on derivatives contracts did not trigger a total collapse of the financial markets as we were told (threatened) that similar action by AIG would.
Fleeced again.
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I have a reading comprehension problem and the owner banned me for repeatedly displaying it after being warned.
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