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  • The First (and Possibly Last) Euro Decade
    Not often such a dumb article was published around here.

    So many actual faults in it and it still gets published?

    Just look in the gold reserve positions in the table as publised above:

    USA with a 300+ million population,
    The Netherlands with only a 16+ million population

    and we are to believed that gold reserves stand at:

    USA = 76.5 % of reserves &
    My country = 57.8 % of reserves...

    In my country these reserves are not borrowed out, in the USA it is different.

    Lets leave it with that....

    Ok ok one more blast against this kind of stupidity:

    In the USA the reserves of the FDIC are only Treasuries, all the money paid by the banks is gone by now. All their insurance money is replaced by US Treasuries. And every bank saved is only via tax payer money, or as lately money press fun from Ben Bernanke.

    Here in the Dutch landscape we are not that stupid, here when we talk about reserves we talk about reserves.

    That is saved money....

    In the USA the only saved money is belly fat and on the bank accounts only debt is found.
    Jan 07 18:49 pm |Rating: +5 -9 |Link to Comment |View article
  • Forex: Why the Dollar Is Staying Strong
    We have to take into account that dollar moves these years are often not good to explain, for example lately European inflation was reported at 1.6% instead of 1.8% (while core inflation still above 2%).

    That gave an intraday swing of 2% on the €/$ pair.

    Later Obama stated that trillion deficits will be there for a couple of years and almost nothing happens...

    There simply is no economical theory that explains such weird behavior; one thing is clear:

    Those who have the deep pockets to steer the value of the dollar neglect large parts of what the real value should be.
    Don't forget: In the 600 trillion nominal value in the OTC derivative markets a tremendous amount is bounded to currencies; if we would have more insights who has what kind of derivatives you might better understand the weird weird behavior of the US dollar.

    It might very well be that if the dollar gets too weak, a few trillions must be paid in the derivative markets...

    That is not unreasonable.
    Jan 07 15:47 pm |Rating: 0 0 |Link to Comment |View article
  • Citigroup's Derivatives Reduce Bailout to a Non-Event
    My dear reader, the author Rakesh Saxena is talking about 'maturity mismatches' but do you know what that is?

    For example before all those weird investment banks fell; up to 25% of their total balance 'asset value' had to be financed via 24 hour borrowed money.

    The working model was as next:

    We borrow out money for the long term, this creates high yields.
    We finance this (since we have no money for ourselves) with short term borrowed money that is cheap cheap cheap.

    In the end 25% of total balances were financed by one day borrowings,
    that is 'maturity mismatch'.

    It is not very rigid by the way.
    Jan 04 16:45 pm |Rating: +6 -1 |Link to Comment |View article
  • Citigroup's Derivatives Reduce Bailout to a Non-Event
    To 1977 degree C:

    It could very well be that Citi has mostly those swap instruments on her derivative books. But this does not take away that worldwide there is over 600 trillion in nominal value in the OTC markets and that was bought and sold for about one US GDP (14.5 trillion).

    The basic instability problem is as next:

    As just a few percent of this 600 trillion has to be paid, money streams like one US GDP have to be there.

    After my humble opnion this is a fairy tale world; no institution has a few trillion on the shelfs in case this need to be paid out...
    Jan 04 13:58 pm |Rating: +3 -1 |Link to Comment |View article
  • The Economic History of Interest
    Now the Federal Reserve has finally implemented the ZIRP it is only waiting until they tell you can only eat halal meat...

    Al Qaida is having the fun of a lifetime with ZIRP.
    Dec 27 11:01 am |Rating: +1 -7 |Link to Comment |View article
  • CDS Industry: Zero Sum Game or Ponzi Scheme?
    The CDS is only a small fraction of total over the counter derivates that total to about 600 trillion of notional amount.

    These contracts did cost about 14.5 trillion or roughly one US GDP.

    In terms of leverage it is about 1:40.

    As usual the problem with stuff like this: Only a small rimple of a few percent in the 600 trillion fantasy world triggers and entire GDP size chunk of money to be paid.

    Hardly a 'protective umbrella' after my humble opinion.
    Dec 21 11:44 am |Rating: 0 0 |Link to Comment |View article
  • Federal Commitments Now Total $5 Trillion
    Correct: All this negative doing on another trillion in commitments doesn't help only one quantum.

    Lets hope that when the 10 or 15 trillion threshold in Federal commitments is there, people finally start turning positive and admire the smart and clever folks that lead them into prosperity...
    Dec 21 10:01 am |Rating: +1 0 |Link to Comment |View article
  • Hope Springs Anew
    Instead of a careful analysis of how P/E ratio's behave (are they indeed too low?) we get stuff like 'hope is anew'.

    Please use a bit so science and not 'hope', we are not sitting in the church but in a website with market comments...
    Dec 08 13:13 pm |Rating: +1 -1 |Link to Comment |View article
  • Job Losses: Not Bottoming Yet
    As far as I know reality, this article comes from Pluto.

    How can there be new jobs if the debt is unpaid?

    How can you create 2.5 million new jobs when there are no savings at all in the entire economy? From the Federal government, to state and local government and even on the household level; there are no savings.

    Who will pay for these jobs?

    Again: The above article comes from Pluto...
    Dec 06 19:01 pm |Rating: 0 0 |Link to Comment |View article
  • Bleeding in the Labor Market
    Indeed it is a bit unhandy that these reports always come in a month on month reports. Often the stuff is seasonally adjusted but better would be to compare this month of Nov with Nov 2007.

    If you do that the situation is less draconic but job levels are clearly falling from a cliff.

    That is logical; total housing value lost can be 10 to 11 trillion US$ in home value. Now we are about halfway and of course a lagging indicator like NFP numbers will get dragged down at some point in time.

    At last: The Oct numbers were rivsed from minus 240 to minus 320.
    This could mean that in the last two months about 900 K jobs are lost...
    Dec 05 13:35 pm |Rating: 0 0 |Link to Comment |View article
  • Country Default Risk Rises Across the Board
    On the second graph:

    It if funny to observe Iceland hanging just in the middle of the UK and the USA.

    Again: at bargain prices like this you are crazy not to buy such a cheap CDS contract on the UK or the USA.
    Dec 04 18:43 pm |Rating: 0 0 |Link to Comment |View article
  • Country Default Risk Rises Across the Board
    As usual with the Bespoke guys, basic stuff is missing:

    These are mostly five year long contracts with a minimum value of 10 million in government bonds to protect.

    When the USA comes in at 60 this means 60 pips or a likelihood of 0.60% a year for the USA to default (during the next five years).

    So the seller of this CDS stuff thinks it takes about 1/0.0060 = one in every 167 years for the USA to default (given the present conditions).

    Of course the sellers of this kind of CDS use other 'more advanced' mathematical models to come to their pricing. Yet any idiot can see: the USA CDS is very very cheap & you don't have to own 10 million in US bonds to buy such a five year contract.
    Dec 04 18:36 pm |Rating: +1 0 |Link to Comment |View article
  • History Is Neither Bunk nor Bible
    To Chis B:

    The tone of the article suggests that the author thinks we are only in recession mode but there is no proof for that whatsoever.

    It could also be depression mode although in the Treasuries there is still an giant amount of money found that needs to be burned away before true depression could sink in.

    To RandyRuiz:

    Don't forget it was the atomic bomb that did miracles to the US$ as a reserve currency in the long run. And it took a long long time since the start of the previous depression before the USA gained world leadership via the atomic bomb.

    These decades are just so different, of course some part of US tech will have great worth in the future, but feeding more of the US obisity is not a wise investment for the foreign nations. They better feed their own populations and wait and see how things pan out in the USA.
    Dec 04 18:17 pm |Rating: 0 0 |Link to Comment |View article
  • The More Things Change ...
    Lovely article, I have 40 cents sitting next to me and this is also change compared to the 4 cents I am used to...;)

    But lets get serious:

    The incestuous branch of US academic economists that gave their fiat for this mess will also control the new Obama presidency.
    So David, you can have a long list of 'what to do first' things, but after my humble opinion the US academics need to be cleaned first from their rather outlandish ways of thinking.

    When the US academic economists are cleaned from their incestual behavior, may be wisdom will trickle down...

    By the way, I am against old currencies that are gold based.
    I would like a labor standard and on top of that countries could have benefits like commodity resources (gold, silver, oil, natural gas, whatever what) inside their geographical boundaries.
    Going back to gold, please David I expect better stuff from you!

    In the meantime, from my side of the equation, all goes perfectly; I am only waiting for the 2010 US military budget...
    Nov 25 16:50 pm |Rating: +1 0 |Link to Comment |View article
  • Equity, The Blind Optimist
    Until recently I was unaware of it but this old man Peter Bernstein made a simple eye opener for me:

    It is strange that bonds have a higher yield compared to stock yields because stocks carry a higher risk.

    It is logical that inflation is the main culprit here; but what was the main cause of all that inflation during so many decades?

    __________Begin intermezzo

    To Bearfund: US economical theory is the problem, please concentrate on the real long term problems that gave rise to the present situation.

    For example: House prices are hefty undervalued in the consumer price index, now the USA pays a costly price for that.
    All these years in the housing boom, consumer inflation was measured too low because of the weird consumer inflation statistics the US government uses.

    Now you folks pay the price for that...

    Blame the US economists please!

    __________End intermezzo.

    Mostly US (but also European) economists that argue that a small and slight inflation is 'good' for the economy.
    Those economists had one thing wrong; in the basis of their thinking they thought that deflation was the reason for the long time the depression lasted.

    They interchanged cause and effect; deflation was an effect of the crisis, not a cause. Ok ok. it made the crisis longer but that is not a reason to fight deflation during normal times.

    On the contrary, in consumer paradise 1 or 2% deflation is like the rain that makes sure in a decade you can spend also like you do today...

    For me it is strange to observe all those batallions of US economists standing outside normal economical thinking for so long. I guess this is one of the damages when you become a world power; when you start thinking rubish there is nobody to ram you back into reality.
    Nov 25 16:28 pm |Rating: 0 0 |Link to Comment |View article

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