saveyourassetsfirst3 |
- The October Market Melt-Up And The Aftermath
- Large Cap Financials: 3 To Buy, 2 To Avoid
- Why Silver Wheaton Has Tons Of Upside Now
- Why Gold, Silver are Rising and Not Falling?
- Gold And Silver Prices Ready For New Rally
- Gold & Gold Shares Waiting To Be Unleashed
- Philip Barton: How much gold stock is there really?
- Gold Plunges after Yen Move, Comex Traders "Cautious", "Useless" CDS
- Currency WAR: Japan makes another massive "intervention" to devalue the yen
- Money managers are betting big on commodities again
- Japan Delivers Gold and Silver Buying Op?
- A Cornered, Wounded Animal ….
- Gold & Silver Market Morning, October 31, 2011
- Clive Maund: Silver Market Update – 10.30.11
- Central Banks Top Up Gold Reserves
- Europe’s Economy is Falling Apart
- Silver Market Update
- Gold and Silver Miners Should Lead Market Rebound
- Silver price rising on increased investment demand
- Gold Market Update
- The Gold Standard and the Great Depression
- German Finance Minister Schäuble Calls for a Eurozone Tobin Tax
- Silver news you won't get anywhere else
- Yocum Silver Dollar: Fact or Legend?
- Gene Frieda: Europe’s Dying Bank Model
- Antal Fekete explains free coinage of gold - to New Zealanders
- Is China the bailout saviour in the European debt crisis?
- Satyajit Das: Central Counter Party Risk Taming
- classic newspaper describing silver coin death
- This past week in gold
| The October Market Melt-Up And The Aftermath Posted: 31 Oct 2011 06:00 AM PDT  By Davy Bui:
October's stock market melt-up has pushed most indices back into positive territory for the year. While my portfolio is outpacing the broader market, I lost ground during the month, as my large cash position equates to less exposure to market rallies (but conversely, better insulation against drops). I did manage to put some cash to work during the down days of August and September, opening/bolstering positions in Telefonica (TEF) and Devon Energy (DVN). In last month's portfolio review, I spotlighted both stocks as opportunities. While it is early days yet, and a rising market tide has lifted almost all boats, both DVN and TEF have outperformed the S&P 500: Note my actual return on DVN is slightly lower Complete Story » |
| Large Cap Financials: 3 To Buy, 2 To Avoid Posted: 31 Oct 2011 05:31 AM PDT By Vatalyst: This article will review five large cap banks that are selling at a discount to their 5-year historical book values. Specifically, these banks (barely) survived the subprime mortgage meltdown in which they saw their stock prices eviscerated. This article's goal is to determine if these banks have recovered from the meltdown, and if they are now good investments on a relative value basis. Here is my analysis: Bank of America (BAC) has a market cap of $73.17 billion and has traded in a 52-week range between $5.13 to $15.31. The stock is currently trading around $7. The company reported third-quarter revenues of $33.96 billion compared to revenues of $32.6 billion in the third quarter of 2010. Third-quarter net income was $6.23 billion compared to net income of $-7.3 billion in the third quarter of 2010. One of BAC's competitors is UBS AG (UBS). UBS is currently trading around $14 with Complete Story » |
| Why Silver Wheaton Has Tons Of Upside Now Posted: 31 Oct 2011 05:00 AM PDT By Vatalyst: Silver Wheaton Corp (SLW) owns more than a dozen silver purchasing agreements, whereby the company buys silver at low fixed prices, and then resells it at current market price. This trading strategy is known as silver streaming, and helps the company keep its costs low while maintaining large and fluid access to silver. Though the global slowdown may be disadvantageous to the industrial demand for silver, the global sovereign debt worries and creeping inflation should be good for the silver price, which has increased by more than 30% over the past twelve months. SLW shares are currently trading around $36, and the mean 12-month price target from analysts researching the stock is $50.25 (39% upside potential). This stock is trading above its 50-day exponential moving average of $34.76, and its 200-day exponential moving average of $34.96. The move above these averages, is medium term positive. Technically, the share price has Complete Story » |
| Why Gold, Silver are Rising and Not Falling? Posted: 31 Oct 2011 04:47 AM PDT
There are so many imagined relationships between gold and other factors and as each one proves incorrect, another takes its place. Is this because the media needs to keep our attention? In part yes, but the credibility that's given to these stories comes from the markets' desire for hope, often unrealistic desperate hope. Gold and silver, in their role as counters to currencies, are harbingers of uncertainty, fear and (to the banking system) a threat to the credibility of paper currencies. As a Counter to the Eurozone Crisis A single currency for different economies simply allows capital to flow from the weak to the strong and place untenable strains on the weak. The facilitation of this through loans far in excess of their capacity to repay them made the formula palatable, until now. While there has been a write-off of 50% of Greek's loans, they're burdened with a repayment schedule that continues to leave them in a weakened position. The same can be said of the other debt-distressed nations of the Eurozone (Portugal, Ireland, Italy and Spain). Until these major issues are rectified from the ground up, doubts about the credibility of the euro will persist and investors will remain cautious. So as a measure of value it remains suspect. This is positive for the euro, gold price… Is the USD any Better a Safe-haven? With a far better structure to cope with the strains currently being seen in Europe, one would assume that the dollar will be free of such strains, particularly because the Fed can print money at will and spread it across the world. That was the case until a few years ago. Then the perpetual U.S. Trade deficit stretched it credibility too far. The nations that took in these dollars ploughed their surpluses back to the U.S. and bought U.S Treasuries to the extent that they now own 50% of that market. In essence therefore the U.S. has borrowed back the money they exported. This is why it's so easy to keep interest rates so low. Foreign dollar holders are looking to preserve value and hardly care about the income they receive. This has stopped the Interest rate markets in the U.S. from functioning as they were designed to –to act as a control over the U.S. economy via interest rate levels. Now add to that, the raging over indebtedness of the U.S. government, a situation that would never be permitted by the markets for private investors. In the belief that the government would rectify this budget deficit, markets have remained benign to the behavior of policy-makers. But lo and behold, government cannot govern this matter, which is why we went through a protracted game of brinkmanship as partisan politics stymied the resolution of the problem. With the game apparently ending in the super-committee being tasked with cutbacks, the dollar was treated with respect again. But once more, we find partisan politics intervening. The super-committee (a misnomer for sure) is moving to brinkmanship again over party politics, threatening the credibility of the U.S. and its dollar. Read more @ GoldSeek.com |
| Gold And Silver Prices Ready For New Rally Posted: 31 Oct 2011 03:59 AM PDT
In contrast to platinum and palladium, traders have been off-setting positions in silver futures, according to the latest report from the German precious metals trading group Heraeus. Open Interest in silver futures held by global investors fell by almost 10% during the reporting period. The psychologically-important technical level of $30 per ounce has repeatedly been defended by bulls since the start of the correction phase in early May, and last week the silver price finally overcame technical resistance at $32.60 per ounce. The price climbed above $35 per ounce at the end of the last trading week. According to Heraeus, the white metal has further upside potential and could reach as high as $40 per ounce during this upward move. Many analysts expect a trading range of $30 to $43 in the final two months of this year. Gold profited from the decline of the US dollar as well and quoted at $ 1,745 per troy ounce on Friday evening. After breaking the technically important level of $1,700 per troy ounce to the upside, the yellow metal is expected to move higher still. However, continuing market speculation about a possible crash of China's economy could prove a burden to the gold price development in coming weeks. Warning signs of a significant slowdown in China are increasing – not least growing concerns about the enormous debt levels of Chinese local governments as well as fears of a crash in the country's real estate market. Commodity analysts are worrying about the negative impacts on world economy caused by a potentially significant decline in China's GDP growth in 2012, since China is the world's largest consumer of raw materials. A significant reduction in Chinese demand could have dramatic impacts on other Asian countries like Malaysia, Indonesia, Vietnam and Japan, whose national economies are likely to be severely affected if this event comes to pass. Australia's economic growth rate is expected to slow down significantly in the wake of a potential slump in commodity demand from China, as the country is one of the world's largest commodity exporters. How such a scenario would affect China's future gold and silver demand is hard to gauge at present. Read more @ GoldMoney.com |
| Gold & Gold Shares Waiting To Be Unleashed Posted: 31 Oct 2011 03:47 AM PDT
John Embry continues: Continue reading @ King World News |
| Philip Barton: How much gold stock is there really? Posted: 31 Oct 2011 03:30 AM PDT |
| Gold Plunges after Yen Move, Comex Traders "Cautious", "Useless" CDS Posted: 31 Oct 2011 02:19 AM PDT |
| Currency WAR: Japan makes another massive "intervention" to devalue the yen Posted: 31 Oct 2011 01:19 AM PDT From Bloomberg: The yen slumped the most in three years against the dollar as Japan stepped into foreign-exchange markets to weaken the currency for the third time this year after its gains to a postwar record threatened exporters. The euro fell the most in four weeks versus the dollar amid speculation Europe's leaders will struggle to garner financial support for their revamped crisis-fighting plan. The yen fell against all of its major counterparts tracked by Bloomberg after Japanese Finance Minister Jun Azumi ordered the intervention at 10:25 a.m. Tokyo time because "speculative moves" in the currency failed to reflect the nation's economic fundamentals. The dollar rose against all its major peers on refuge demand. "It appears that the intervention has been very aggressive," said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. "The measures are only likely to provide temporary relief. In a very uncertain world, demand for safe-haven currencies like the yen will remain high and it is likely to remain strong." Japan's currency sank 2.7 percent to 77.89 per dollar at 8:15 a.m. New York time after sliding as much as 4.6 percent, the biggest intraday drop since Oct. 28, 2008. The yen slid 1.7 percent to 109.10 per euro, and weakened 1.7 percent to 82.49 per Australian dollar. The euro fell 1 percent to $1.4007. Switzerland's franc gained 0.2 percent to 1.2193 per euro. Record Highs The yen and the franc both climbed to records this year as investors sought havens from fiscal crises in the U.S. and Europe. Switzerland's currency has weakened since Sept. 6 when the Swiss National Bank imposed a ceiling of 1.20 per euro and resumed purchases of foreign exchange. "In the short-term markets will likely be wary of buying yen," Mitul Kotecha, head of global currency strategy in Hong Kong at Credit Agricole CIB wrote in a note to investors. "There are plenty of exporters taking advantage of better levels, suggesting yen-selling will be met with some counter demand." The yen will remain around 80 per dollar until year-end, he said. Japan's Azumi pledged to keep selling yen in the foreign-exchange market after it climbed to a postwar record of 75.35 per dollar earlier today. Japan last intervened to weaken its currency in August, when it sold 4.51 trillion yen, the largest monthly amount since March 2004. "I've repeatedly said that we'll take bold action against speculative moves in the market," Azumi told reporters today after the government acted unilaterally. After spiking lower following the intervention, the yen remained at 79.20 for almost three hours in Asian trading. 'Very Large' "We're hearing in the market that there's a very, very large bid at the 79.20 level, which is holding dollar-yen there," said Charles Han, Hong Kong-based director of foreign-exchange trading at Newedge Financial HK Ltd. "The Bank of Japan is clearly adamant to hold dollar-yen at a certain level and make this intervention impactful." The yen and franc tend to strengthen in periods of financial turmoil because current-account surpluses in the nations make them less reliant on foreign capital. A stronger local currency hurts the overseas competitiveness of exporters and cuts the value of their overseas income when repatriated. The euro pared last week's advance versus the dollar as China's official Xinhua News Agency said the nation can't play the role of "savior" to Europe. European Bailout Euro-region's leaders agreed on Oct. 27 to increase their bailout fund to 1 trillion euros, recapitalize banks and convinced banks to write down their holdings of Greek debt by 50 percent. While the help of China and cooperation of the International Monetary Fund were immediately sought, pledges of hard cash are proving hard to come by as Group of 20 members press for more details of the plan. "There's a degree of disappointment creeping into the market about Europe's plan," Bank of Tokyo-Mitsubishi's Hardman said. "In the near term, the plan might help financial market stability but it doesn't really do much to address the fundamental problems of insolvency." Reports last week showed Europe's services and manufacturing output contracted at the fastest pace in more than two years in October and European economic confidence dropped to the lowest since 2009. Norway's krone weakened against all but one of its major peers after the central bank said it will buy foreign exchange equivalent to 1.6 billion kroner ($290 million) a day for the country's global pension fund in November. Weaker Krone The krone depreciated 0.5 percent against the euro to 7.7170, and fell 1.5 percent to 5.5123 per dollar. The Dollar Index, which IntercontinentalExchange Inc.'s used to track the U.S. currency against those of six U.S. trading partners, gained 1.2 percent to 75.99 as investors sought an alternative refuge to the yen. The Institute for Supply Management-Chicago Inc. will say today its business barometer fell to 59 this month from 60.4 in September, according to economists surveyed by Bloomberg News. A level of 50 is the dividing line between growth and contraction. "Data in the U.S. is pretty benign," said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. "There's no possibility the Fed is anywhere near raising rates. If anything, the rhetoric over the last week or two has been increasingly towards preparedness to do more quantitative easing, should that be required." The dollar has gained 3.7 percent in the past six months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. Japan's currency has gained 6.6 percent, and the euro has fallen 2.5 percent. To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net. More on currencies: Whatever you do, don't forget about the dollar Why it could be a great time to short the euro again Currency WAR: China retaliates against new U.S. currency bill |
| Money managers are betting big on commodities again Posted: 31 Oct 2011 01:11 AM PDT From Bloomberg: Speculators boosted wagers on higher commodity prices by the most since August as improving prospects for growth in the U.S. and Europe sent prices toward their biggest rally in 10 months. Money managers boosted combined net-long positions across 18 U.S. futures and options by 13 percent to 831,421 contracts in the week ended Oct. 25, Commodity Futures Trading Commission data show. The Standard & Poor's GSCI Index of 24 raw materials has jumped 9.5 percent in October, on track for the biggest gain since December. European leaders announced a bailout plan Oct. 27 to help relieve the region's debt crisis, and the U.S. economy grew by a more-than-expected 2.5 percent in the third quarter. The S&P 500 Index is headed for its largest monthly advance since 1974. The outlook for demand has recovered since September, when the GSCI fell 12 percent, the biggest monthly drop since November 2008, amid concern the global economy was set for another recession. "The big headwind that was overhanging the marketplace seems to be subsiding," said Jeffrey Sherman, who helps manage $18 billion for DoubleLine Capital LP in Los Angeles. "Everything seems to be correlated, specifically to what's going on in Europe, and the idea that they have a plan to make a plan." Greek Debt Nineteen of 24 commodities tracked by the GSCI rose last week, led by a 15 percent surge in copper that was the biggest gain since 1988. Silver jumped 13 percent, and crude oil touched a 12-week high on Oct. 25. Coffee, hogs, sugar, gasoline and cattle fell. The MSCI All-Country World Index of equities rose 5.6 percent last week, a fifth straight gain. Treasurys lost 0.8 percent, on a total return basis, Bank of America Corp. indexes show. Concern that a failure by European leaders to reach an agreement on a debt plan sent the GSCI into a bear market in September, when the gauge dropped more than 20 percent from a two-year high in April. As part of the deal struck last week, bondholders will accept 50 percent writedowns on Greek debt, while the bloc's rescue-fund capacity was boosted to 1 trillion euros ($1.4 trillion). The commodity gauge has rebounded 13 percent since touching a 10-month low on Oct. 4. 'Under Pressure' "Commodities have been under pressure for very big, macro reasons for the last several months, and that pressure is ending," said Monty Guild, the founder and chief investment officer of Los Angeles-based Guild Investment Management Inc., which manages $170 million. "We think commodities are going to go much higher because this new banking situation in Europe is going to create a lot more liquidity in the world system." Funds poured $423 million into commodities the week ended Oct. 26, before the European bailout was announced, said Cameron Brandt, the director of research at Cambridge, Massachusetts-based EPFR Global, which tracks investment flows. U.S. consumer confidence unexpectedly rose in October from the previous month, indicating the biggest part of the economy will keep the recovery intact. The Thomson Reuters/University of Michigan final sentiment index climbed to 60.9 from 59.4 in September, data showed on Oct. 28. The gauge was projected to drop to 58, according to the median forecast of 66 economists surveyed by Bloomberg News. $13.35 Trillion The value of goods and services produced in the U.S. surpassed its pre-recession level after 15 quarters. Adjusting for inflation, gross domestic product climbed to $13.35 trillion last quarter, topping the $13.33 trillion peak reached in the last three months of 2007, the Commerce Department said. China's manufacturing may expand in October for the first time in four months, snapping the longest contraction since 2009, after a preliminary index of purchasing managers showed a rebound in new orders and output, according to data from HSBC Holdings Plc and Markit Economics on Oct. 24. Net-long positions in crude oil jumped 15 percent from a week earlier to 197,280 contracts, the highest since late May, according to CFTC data. Crude futures climbed 6.8 percent on the New York Mercantile Exchange last week, the most since February. "Energy and base metals will rally, based on the fact that the economy is growing, especially one perceived to be weak like the U.S.," DoubleLine's Sherman said. "It's kind of bullish for consumption globally." Crude Stockpiles U.S. oil inventories dropped to the lowest level in 20 months in the week ended Oct. 14, the Energy Department said. Copper output in Chile, the world's top producer of the metal, fell 1.9 percent in September from a year earlier, according to the country's National Statistics Institute, while supply from Indonesia is threatened by a miners' strike. Copper prices may be "unimaginably" high in three years, with Chinese growth spurring consumption, Julian Zhu, a Goldman Sachs Group Inc. analyst, said in a speech at an Oct. 28 briefing in Beijing. Inventories monitored by exchanges in Shanghai, London and New York have tumbled 10 percent this month, heading for the biggest loss since May 2009. Speculators still expect copper to keep dropping, even after paring bearish bets 39 percent to a net-short position of 5,023 contracts, the CFTC data show. The most-active Comex contract dropped 3 percent to $3.5965 per pound by 10:15 a.m. in London, 23 percent below the record $4.6575 on Feb. 15. Eleven of 23 people surveyed by Bloomberg said copper will drop this week, eight predicted a gain, and four said prices will be little changed. The last time respondents were mostly negative, on Sept. 23, the metal slumped 4.6 percent in the following week. Agriculture Bets A measure of net-positions in 11 U.S. farm goods climbed for a second straight week, increasing 7.2 percent to 506,947 contracts. Net-long positions in corn jumped 19 percent from a week earlier, the first increase in seven weeks. Speculators cut bearish holdings in wheat by 24 percent from a week earlier, and increased bullish holdings in cocoa, sugar and hogs. Investors almost doubled wagers for higher prices on coffee to 10,768 contracts, even as futures dropped 4 percent last week. "The agriculture markets are connected to the financial markets just like everything else," said Kelly Wiesbrock, who helps manage $1.3 billion for San Francisco-based hedge fund Harvest Capital Management. "The current inventory situation is still tight pretty much across the board, which continues to lend itself to a lot of volatility, but probably higher than historical prices going forward." To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net. To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net. More on commodities: Casey Research: The outlook for commodities now This popular food item could skyrocket 40% in the next few weeks Surprising news from China sends copper and industrial metals soaring |
| Japan Delivers Gold and Silver Buying Op? Posted: 31 Oct 2011 12:02 AM PDT HOUSTON – We are back on Texas soil following a superb conference in New Orleans and we note that overnight the Japanese have intervened unilaterally in the FX markets, driving the Yen at times 400 basis points lower relative to the U.S. Dollar. Four full points in one trading session is a very large move in the world of currencies. We rather doubt that this first shot across the currency trading bow is the only shot we shall see from the BoJ and the Ministry of Finance there, because if it is the only shot the currency trading markets will "chew it up and spit it out" rather quickly if the past is any guide.
Japan is blaming "speculators" for the recent strength of the Yen – the always convenient scapegoat that governments use to justify their manipulation of markets. (As if government officials are better able to determine value than markets and as if there is ever any justification for government manipulation of the markets.) We have to expect more than one intervention and not necessarily when the markets are open and trading in Tokyo then and very soon. Otherwise the Japanese will lose credibility because the market will quickly restore its own impression of where the Yen belongs in the currency matrix.
Silver, on the other hand, seems to be more or less treading water, as if waiting for the next shot to be fired by the BoJ or perhaps a more definitive response by gold.
We are focused on the giant pile of new and interesting information (and about a ream of copious notes) we gathered at the four-day conference and will likely remain scarce for a little while longer as we assimilate the new info. Vultures may have already noted that we did post the changes to our various technical charts late Sunday evening. All of the technical charts are available to Vultures on the password protected subscriber pages, by the way. Vultures may also note that one of our fully fledged Vulture Bargain issues, VB#6, made it all the way into our blue panic buy target on Friday. But it did so as we were involved in the conference, so we only noted it after the market closed. Thus we were unable to take advantage of the opportunity then. We shall correct that this morning in the usual way – with a "ladder" on or just under the bid. Since we hold what amounts to a double Trophy Shares position in VB#6, and since it has already given us such a "good time" in the past – twice. We are likely to be aggressive if the seller that has driven our "Fave" into "the blue" (panic level target) is still active this morning. Of course everyone needs to do their own full due diligence and make up their own minds about such things. We are merely reporting our own intentions along those lines.
|
| A Cornered, Wounded Animal …. Posted: 30 Oct 2011 10:36 PM PDT This excerpt from Simon Black describes the behavior to expect from bankrupt, desperate governments: Stefan Homburg, one of Germany's few contrarian economists, recently summed this up to the German paper Sueddeutsche: "History shows that [bankrupt governments] take radical measures such as expropriation of private assets, wealth taxes, or banning gold ownership… and in a state of emergency, [...] |
| Gold & Silver Market Morning, October 31, 2011 Posted: 30 Oct 2011 10:00 PM PDT |
| Clive Maund: Silver Market Update – 10.30.11 Posted: 30 Oct 2011 08:47 PM PDT From Clive Maund: CLICK IMAGE TO ENLARGE
On its 4-month chart we can see how silver has broken out above the resistance at the upper boundary of its base area, and has advanced towards the higher more concentrated zone of resistance towards the lower boundary of the range of trading between July and September where a lot of trapped and traumatised traders are waiting for the chance to "get out even", hence the resistance in this zone. Some of them are prepared to sell for a slight loss which is why we can expect resistance to kick in before the price gets up there, and on Friday silver got up close to its falling 50-day moving average, and after 6 up days in a row it is looking short-term overbought, as shown by its MACD histogram (blue bars at the top). So it is reasonable to expect a reaction early next week, or at least some consolidation. If it does react, which could perhaps take it back to about $33.50, it will be a buy, for last week's breakout from the base area and advance is viewed as being the first leg of a major uptrend that should take silver comfortably to new highs. CLICK IMAGE TO ENLARGE
Read more @ CliveMaund.com |
| Central Banks Top Up Gold Reserves Posted: 30 Oct 2011 08:41 PM PDT
Over the past 20 years, central banks have been reducing their holdings of the precious metal, but concerns about paper money and global debt has turned them into net buyers. Also, the gold price has increased every year for the past 11 years. The price is up 23pc in the year to date, closing at $1,743.75 an ounce on Friday."Central banks, especially in emerging markets, have been diversifying their gold reserves," said Michael Widmer, head of metals research at Bank of America Merrill Lynch . "We would expect this to continue as gold can have a positive impact on smoothing the risk-return profile of reserve portfolios." The International Monetary Fund has been selling gold to boost its war chest for lending. Sales stopped in December last More @ telegraph.co.uk |
| Europe’s Economy is Falling Apart Posted: 30 Oct 2011 07:32 PM PDT Yves here. Note the comment at the end, that Sarkozy's sales pitch to China on the levered up EFSF did not go so well. If the Chinese don't relent, this greatly reduces of this scheme working, even in the short term. And further note that the flagging European growth is the result of the austerity hairshirt being imposed on highly indebted economies. Ambrose Evans-Pritchard has a pointed article on the consequences of the beggar-thy-neighbor German stance. By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness Angela Merkel has been warning for quite some time that Europe's economic woes will take up to a decade to fix and that it is time for Europe to rethink its economic strategy after years of living "beyond its means". It seems fairly obvious from those statements that the rest of the world is going to have to get use to Europe moving into a slow growth phase while it attempts to adjust away from what it considers to be unsustainable debt. In an attempt support the transition while keeping Europe together the European leaders have put together 3 part package to save Greece, re-capitalise the banks and provide a stability mechanism for countries that run into trouble. The problem is that once you understand the technicalities behind what they have come up with you come to realise that real economic growth is the only thing that actually matters. The latest news out of Europe for many of the 17 member nations is not good at all in that regard. It became obvious that Belgium was in trouble when it was forced to nationalise Dexia, and over the weekend the Belgium central bank reported that economy is now stalling:
Cyprus is looking far worse and as usual the IMF is calling for austerity:
On top of that property prices continue to fall and the real estate industry is reported to be in meltdown as construction activity has fallen by over 40% this year. Economic news from Portugal continues to be poor which is expected under the circumstances:
And Spain's economy continues to deteriorate in the worst possible way:
It now seems that France has little choice but to join the austerity budgeting brigade with Sarkozy warning his country of the coming budget cuts in a recent television broadcast:
And then there is Europe's economic engine, Germany, which on the back of the latest European PMI is now predicted to stall into the new year:
With new reports suggesting that Sarkozy and Regling's visits to China didn't go as well as planned it would seem that Europe still has a long way to go before the end of this crisis and the rest of the world is going to have to get used to Europe in the slow-lane for a lot longer.
|
| Posted: 30 Oct 2011 07:06 PM PDT |
| Gold and Silver Miners Should Lead Market Rebound Posted: 30 Oct 2011 06:43 PM PDT |
| Silver price rising on increased investment demand Posted: 30 Oct 2011 06:40 PM PDT |
| Posted: 30 Oct 2011 06:32 PM PDT |
| The Gold Standard and the Great Depression Posted: 30 Oct 2011 06:30 PM PDT Mises |
| German Finance Minister Schäuble Calls for a Eurozone Tobin Tax Posted: 30 Oct 2011 06:12 PM PDT A key German finance leader is talking tough about financial reform. But will his peers follow? Wolfgang Schäuble, in a Financial Times interview, called for a Tobin tax to discourage speculation. Schäuble urged the EU to proceed with the idea even if England balked. That's a sound move, since in too many markets, transaction costs have gotten to be so low that the ratio of real-economy related activity to mere opportunistic trading has gotten badly out of whack. The classic example is high frequency trading, where speculators add liquidity when it isn't particularly needed, and withdraw it in a destabilizing manner at the first sign of trouble. Readers may argue that banks will innovate around such a tax, but they miss crucial chokepoints that regulators have and have not yet used. All major banks that play in the Euro need direct access to payment facilities, and ultimately, payment systems controlled by the ECB. The big payments are almost all related to securities transactions; Perry Mehrling, in an interview, estimated the securities-related volumes as over 50X the real economy activity. A major bank can't afford to go through correspondents; both the transaction costs and the detrimental impact as far as corporate customers are concerned would be too great (I looked into this issue over two decades ago for a major Japanese bank; these issues would be even more acute now given the much greater importance of capital markets related activities to all banks). And Mehrling claims (and I haven't yet found any evidence to the contrary) that banks can't innovate around the need for direct access to central bank payment facilities. Since any global bank worth its salt has to do business in the euro, the ECB could well impose global rules relating to activity in the euro, including a transaction tax. That is not how we have tended to think of regulatory reach, but recall how the Fed acted as the dollar dealer of the last resort by extending currency swap lines during the crisis. No banking authority should be in the position of backstopping activity or institutions (in the Feds' case, Eurobanks) that it does not supervise. I doubt the Schäuble proposal will go far; there are too many well placed bankers who will have their knives out. But I hope he and others push hard on this idea, particularly since the odds of a Euro-centered financial crisis are high. It is important to keep pushing proposals for serious reform so that they will have been debugged via having objections raised and dealt with, and will gain legitimacy through greater exposure. The most important ones are those that have the potential to change the architecture of the financial system, and a well-designed Tobin tax would force banks to redesign their institutions in a major way.
|
| Silver news you won't get anywhere else Posted: 30 Oct 2011 06:11 PM PDT Shall we count how many bloggers pick up on this news item Chinese silver imports decline 39% y/y; exports tumble 44% y/y: Silver imports in China fell by 39% y/y and 16% m/m to 264.7 tonnes, the lowest level since February, while silver exports declined by 44% y/y to 83.5 tonnes, keeping China a net importer of the metal for two consecutive years on a monthly basis. On a product basis, silver powder, unwrought silver, semi-manufactured silver, and silver jewellery all declined y/y in September with the latter two products suffering the steepest decline and silver powder only falling by 4% y/y. Indeed, silver powder is the only product that has grown for the year-to-date. And from the "Chinese love paper more than physical" department, see China's gold frenzy gives birth to small bourses: The emerging exchanges offer a lot size as small as one ounce, which lowers the capital needed to begin trading, even though the margin requirements can be as high as 30 percent. With lot size set at 10 ounces and margins at 20 percent, the initial capital requirement to start trading is about half the amount required by the SGE. Emerging exchanges claim to trade physical gold, but most investors are not interested in taking physical delivery. Some exchanges make it difficult and expensive to take delivery. ... "Who would want to take physical gold? People just want to speculate on price moves and make a profit," said a customer service representative at the exchange who gave her last name as Chen. Analysts compared the gold investment spree to the wave of retail stock market investors in the last decade, who rushed to a bull market with little know-how, only to suffer huge losses during later market turbulence. ... Although China's central government has vowed to open up the market, and has made progress by allowing more foreign banks access to the two Shanghai exchanges, an open market for retail investors is yet to take shape. ... But it was unlikely to happen as long as the country's foreign currency exchange remains tightly controlled. Until foreign exchange controls are lifted, Chinese gold bugs would continue to need tables to put down their bets. "The Chinese love gambling," said Hou. Doesn't sound like China's exchanges are any different from COMEX. If the Chinese Government wanted its people to buy physical gold you'd think all this paper gold would be shut down. I suppose we will have to wait until the much hyped PAGE is up and running [sarcasm].  |
| Yocum Silver Dollar: Fact or Legend? Posted: 30 Oct 2011 06:00 PM PDT The Library |
| Gene Frieda: Europe’s Dying Bank Model Posted: 30 Oct 2011 05:18 PM PDT Yves here. Frieda makes a very important point in this Project Syndicate column, that of the role of the banking system in the European debt crisis. On one level, it may seem trivial to say that the sovereign debt crisis is the result of financial crisis. But the Eurozone leadership has not drilled into the next layer: how did this come about? The superficial explanation, that they all ate too much US subprime debt and got really sick, is superficial and shifts attention away from the real issues. European banks have huge balance sheets with a lot of low-return investments. I did some consulting work for some European banks over a decade ago (one of the remarkable things about banking is how little things change over time) and they tended to target commodity areas of banking in the US, not simply because that was where they could break in, but also because the returns were tolerable (although they did hope to move up the food chain into more lucrative business). Frieda argues that merely having banks raise capital ratios to the 9% level stipulated in the current version of the Eurozone rescue is inadequate. Absent more aggressive measures, "no amount of capital will restore investors' faith in eurozone banks." By Gene Frieda, a global strategist for Moore Europe Capital Management. Cross posted with author permission from Project Syndicate. The good news for Europe is that it will not reenact the dramatic collapse of Lehman Brothers. The European Central Bank's unlimited ability to provide liquidity ensures that. But European leaders have yet to recognize that old bank business models are obsolete, and that reliance on private-sector leverage for balance-sheet repair of both sovereigns and banks is doomed to failure. Two years into the crisis, the authorities have correctly identified four crucial problems – sovereign debt, bank capital, the risk of a Greek default, and deficient growth. But they have yet to agree on cause and effect. Understanding the obsolescence of most European banks' business models is absolutely crucial to sorting that out. In general, the eurozone has outsized banks (assets equivalent to 325% of GDP) that are highly leveraged (the 15 largest banks' leverage is 28.9 times their equity capital). They are also dependent on large quantities of wholesale debt – totaling €4.9 trillion (27% of total eurozone loans), with €660 billion maturing in the next two years – to fund low-yielding assets. According to Barclays Capital, the 15 largest banks increased their returns on equity by 58% between 1998 and 2007, with 90% of the gain coming from higher leverage. Returns have since collapsed. This model's viability depends on large amounts of cheap leverage, supported by implicit government backing. While leverage normally becomes scarce and expensive during recessions, this time declining confidence in sovereign debt also has increased the cost of capital. Government borrowing costs, which anchor banks' own funding, normally fall during recessions. But, as "risk-free" rates have risen six-fold in the past two years, the cost of bank equity and debt has often surged to levels at which investors balk. No one should be surprised, then, that they are reluctant to recapitalize – or, indeed, lend – to eurozone banks. Higher levels of capital are required for two main reasons. First, economic growth looks set to be much weaker than expected, meaning that capital buffers will need to be built. The European Banking Authority's stress-test scenario from June looks more like the baseline scenario today. If traditional asset-quality considerations were the only problem buffeting eurozone banks, recapitalization would restore investor confidence, debt markets would reopen, and banks would find raising capital much cheaper than it is now. That isn't happening, because the problem is growth. Second, with the demise of sovereign-debt equality, eurozone banks will require higher capital-adequacy ratios to compensate for higher risk. Banks in emerging markets tend to carry higher capital buffers for a similar reason. Just as business and credit cycles there tend to be more frequent and extreme, the real possibility of de facto currency crises in the eurozone, owing to higher sovereign borrowing costs and slow adjustment to shocks under fixed exchange rates, renders massive balance sheets unsupportable and thus obsolete. Higher capital ratios are required today and, absent a credible sovereign safety net, in the future. For example, French banks' risk-weighted assets are €2.2 trillion, against a capital base of €167 billion – just above the 7.5% ratio established by the international Basel 2 rules. But, once risk weights are removed, assets balloon to €8.1 trillion (roughly 400% of GDP), and the equity-to-asset ratio plummets to 2%. Wholesale debt funds only 10% of these assets, but amounts to €841 billion, or 41% of French GDP. In the event of a loss of market confidence, state guarantees for that much funding would further strain market perceptions of French creditworthiness, generating more pressure on French banks to shrink their balance sheets rapidly. And France is one of the stronger countries in the eurozone! The latest agreement between European Union member states forces banks to raise core "Tier 1" capital levels to 9%, and will apparently require €108 billion of additional capital. But this figure is well below market expectations, as it is based on the Basel 2 rules, which have proven deficient in terms of risk weights and capital "quality" during the crisis. With the sovereign ground quaking, reinforcing a 100-story skyscraper of leverage with an additional floor or two of concrete will not bring back wary tenants. Unless confidence in sovereign debt within the eurozone can be restored, Europe's banking skyscrapers will need to be cut in half. What is needed is a controlled deleveraging that recognizes that banks' balance sheets have become too large to support, and that business models dependent on massive leverage are obsolete. Restoring confidence in eurozone sovereign debt requires not only bank recapitalization, but also a credible, publicly-funded financial safety net that is sufficient to protect the bloc's larger states. Without that, no amount of capital will restore investors' faith in eurozone banks. Attempting to leverage with private money the new sovereign-debt bank known as the European Financial Stability Facility will fail for several reasons, but the simplest is that frightened private investors have already fled from European banks. After a massive private-sector boom-and-bust cycle, banks and households are deleveraging, and corporations are hoarding cash. These are the players being asked to fund the EFSF. Once a leveraged EFSF fails, it should be clear that the eurozone will not last in its current form. The cause is excessive public and private indebtedness, coupled with the absence of an effective bailout mechanism; the effect is collapsing confidence in banks and sovereign debt. The solution is either a broad and deep debt restructuring that imposes losses on the private sector, or an ever more expensive bailout by taxpayers. The latter would be credible only if carried out by the ECB, at the expense of its mandate. Until this choice is made, no amount of additional capital will assuage the private sectors' fears.
|
| Antal Fekete explains free coinage of gold - to New Zealanders Posted: 30 Oct 2011 05:00 PM PDT Gold University |
| Is China the bailout saviour in the European debt crisis? Posted: 30 Oct 2011 04:42 PM PDT It will be the greatest garage sale in European history. This week, for two days only, China will have unlimited access to a huge inventory of trophy assets in Europe. The Eiffel Tower! The Colosseum! The Parthenon! Those assets are marked to move. And everything must go! Two days only! But will China be the bailout saviour in the European debt crisis? That seems to be Europe's plan. Make the Chinese pay! China has $3.2 trillion in foreign exchange reserves. It has to do something with that money, doesn't it? Europe is hoping China becomes an investor in its bank bailout fund. A few hours after the Eurozone members announced their big plan last week, Klaus Regling, the head of the European Financial Stability Facility (EFSF), got straight on a plane (presumably not a grounded Qantas flight) for Beijing. What kind of offer did he make? Well, the EFSF is not structured like a bank. It must borrow the money it intends to lend. It will do that by selling bonds to investors. If it wants the Chinese to buy those bonds, the bonds may have to be priced in yuan (to protect the Chinese from currency losses) and the bonds may need to be insured against losses (since owning government bonds in Europe is no longer risk free). In the role of supplicant, Regling made remarks at China's Tsinghua University in which he said Europe would be pretty flexible (as in on bended knee) in order to get the money it needs from China. On the issue of bonds denominated in yuan he said...
Regling also described a feature of the new bailout fund. He said, "The EFSF will take a certain tranche that will be a junior tranche, which means if something goes wrong, the first loss will be carried by the EFSF. It could be around 20pc." Insurance against a 20% loss on their bond investments may not be enough to attract the Chinese, even if the Europeans are willing to be publicly servile. After all, the non-default default that the EU has just declared on Greek bonds will leave investors with a "voluntary" loss of 50%. Who's to say losses won't be greater on EFSF bonds? The bonds to be issued by the EFSF are backed by the full faith and credit of the major European countries. Standard and Poor's currently gives France an AAA rating. But with a public-debt-to-GDP ratio of 80% and climbing, French government debt could be downgraded. If it is, the EFSF could face a downgrade too. And then the 20% guarantee would be largely worthless. The Chinese know this. They know that by allowing Greece to default but not calling it a default, the Europeans have made global credit more expensive. Why? Investors who bought credit default swaps as insurance against default in government debt now know that that insurance is worthless. If the government coerces bondholders to accept a "voluntary" loss, it doesn't trigger a "credit event" in which the CDS kicks in. This suggests to us that the Europeans are going to have to offer the Chinese something a lot more compelling to get the money they're after. Like a free lifetime pass to Euro Disney. Or all the wine in Italy. Or all the olives in Greece. Or all the gold in Germany. When Chinese President Hu Jintao arrives in Cannes for the two-day G-20 summit later this week, it may be a European garage sale like no other! In the meantime, if Europe is a junior partner in the New World Financial Order, where does that leave Australia? Well, for starters, it puts the Reserve Bank of Australia in a pinch for its price fixing decision tomorrow. If global interest rates are headed higher thanks to the Europeans nullifying the use of credit default swaps on government debt, the RBA can't very well cut interest rates can it? Dan Denning for The Daily Reckoning Australia Similar Posts:
|
| Satyajit Das: Central Counter Party Risk Taming Posted: 30 Oct 2011 03:11 PM PDT By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010) This four part paper deals with a key element of derivative market reform – the CCP (Central Counter Party). The first part looked at the idea behind the CCP. This second part looked at the design of the CCP. The third part looks at the risk of the CCP itself and how that is managed. The key element of derivative market reform is a central clearinghouse, the central counter party ("CCP"). The CCP is designed to reduce and help manage credit risk in derivative transactions – the risk that each participant takes on the other side to perform their obligations (known as "counterparty risk"). The CCP also simplifies and reduces the complex chains of risk that link market participants in derivative markets. However, the proposal relies on the ability of the CCP itself to manage risk. Risque Matters … The CCP holds the credit risk of cleared derivatives. All participants in the clearing system have exposure to the CCP, specifically its risk management systems. The basic methodology is that used in exchange traded derivatives. The CCP receives an initial margin or deposit from all parties to a transaction that acts as surety or a security bond against performance. The contract is marked to market daily or more frequently, if market conditions dictate, to establish gains and losses. Parties must post margins to cover the losses on open positions. If a party fails to meet a margin call then the CCP closes out the position, replacing it in the market. The CCP will use the margin it is holding to cover the replacement cost. The CCP is reliant on risk models and the ability to value contracts. There are significant issues in pricing and valuing contracts and, for some products, reliance on complex models. The CCP risk management process assumes availability of market prices. In the OTC market, not all instruments trade with liquidity and reliable market prices may not be available. In 2009, Robert Pickel, then Chief Executive of the derivative industry body ISDA (International Swaps & Derivatives Association), told members of the U.S. House Agriculture Committee that some derivative contracts trade infrequently even if they have standardised economic terms. Under the CCP, only a few instruments will be capable of being marked to market against actual prices. For some instruments, it will be mark-to-model based on inputs that may be validated from market prices. In other cases especially more complex products, it will be a case of mark-to-make-believe or mark-to-myself. There are significant problems even with standard models for conventional derivatives. One interesting issue is the risk of counterparty credit risk and the extent to which this should be factored into the valuation. Subsequent to and in response to the global financial crisis, there have been significant changes in the way cash flows are discounted back over time in derivative transactions. Prior to the crisis, it was commonplace to discount back cash flows at the swap rate, which provided a reasonable proxy for the cost of funding for major banks around the world active as derivative traders. The sharp and significant differences in the funding costs of individual banks during and following the crisis have resulted in changes in models. A complicating factor is the use of collateralisation arrangements to enhance the credit of counterparty. The current trend is for dealers to discount future cash flows in uncollateralised trades at the rate at which each bank can borrow. For collateralised trades, cash flows are discounted at the relevant overnight index swap (OIS) rate. Unfortunately, there is no agreement between dealers on specific aspects of the models. For example, a US dollar transaction that stipulates the posting of dollar cash collateral should be discounted using the federal funds rate. But this becomes complex where the trade is backed by a variety of different collateral, involving a variety of credit risks, currencies and trading liquidity. While dealers agree the discount rate should in theory be based on the cheapest-to-deliver collateral, it is near impossible to determine what specific security this might be over the entire life of the transaction. It is not clear how the CCP will resolve these issues in the absence of agreement amongst dealers. For exotic products, the risk of inaccurate market prices is significant. There may no agreement on pricing models and inputs further complicating valuation. David Goldman, a former credit strategist, described quotes for credit default swap ("CDS") prices in the following terms: "The business looks like the window of a Brezhnev-era Soviet butcher shop. Mouldy scraps hanging in the window. Old women lining up at 4am to try and buy credit protection on General Motors. What are reported as trades are really ways to establish prices to satisfy the auditors." CCP risk management relies on models that are variants of the Value at Risk ("VAR") to establish the level of initial margin consistent with risk. The models are based on historical data and also assume price behaviour of assets inconsistent with actual performance under conditions of stress. These are the same class of models that proved problematic in the GFC. Some products present special modelling challenges. Small changes in market prices may have large valuation effects; for example, in knock-in and knock-out options or digital options. Similarly, CDS contracts are triggered by defaults. Unexpected and rapid deterioration in the credit condition of an entity can trigger large changes in value – known as "jump to default" risk. Such rapid changes in value are difficult to model and capture in risk management systems. These problems mean that initial margins may be too low, increasing the risk that the CCP is inadequately protected against counterparty default. Alternatively, the initial margin may be set too high creating disincentives for legitimate risk management activity. Where a margin is not paid, the mechanics of close-out assume the ability to replace the defaulted contract with a new counterparty at current market prices. This assumes an active market with liquid trading. In the aftermath of the Lehman Brothers' bankruptcy filing, market liquidity diminished sharply and price volatility increased. It was practically difficult to replace contracts. Market prices and valuations were significantly different from model valuations. It is not clear how these risks will be managed by the CCP. The CCP will, it is assumed, aggregate all positions across instruments and asset classes for each clearing party. Margins will be based on netting and cross margining across the portfolio of trades. The CCP risk models will need to incorporate correlation between different asset classes and products. There are important differences between different products and asset classes. For example, a CDS is different from an equity option. The CDS, a form of credit insurance, provides a binary outcome conditional upon default of the reference entity. In contrast, equity prices and the behaviour of equity options more closely approximate a continuous distribution of outcomes. These differences create modelling problems for formal relationships between asset classes, products and price distributions. Relationships are also likely to be highly unstable. Tractable correlations developed under benign and stable conditions may prove misleading under conditions of stress. These risks may undermine, perhaps severely, the ability of the CCP to manage its risks. Lack of liquid markets in many OTC products may distort prices and compound the problem. The CCP also requires high quality operational systems to manage its trading, payments, collateral management and risk oversight. All market participants subject to clearing will also need commensurate operational capabilities to manage liquidity demands and the collateral management processes. Gross and Net of It… There are two possible clearing models, with different risks. In the first, all participants deal with the CCP directly lodging, margins with the designated clearing entity ("gross clearing"). The second entails non-clearing participants dealing via a CCP clearing member (also known as a clearing broker or in the US a futures clearing merchant) ("net clearing"). In net clearing, non-clearing members have no direct relationship with the CCP when trading. They lodge margins with the clearing member who deals with and is accountable to the CCP for payments and contract performance. The CCP sets standards for and regulates clearing members. In a net margin arrangement, the relationship between clearing members and clients is entirely negotiated. Key elements agreed include the level of margins, the form of collateral permitted, netting of positions, the timing for meeting margin calls and the clearing fees. Clearing members may also provide credit facilities, funding margin calls on behalf of clients, enabling trading without credit enhancement. Commercial negotiations focus on the margin levels and type of permitted collateral, including haircuts on securities. Clearing members may cover some or all the margin requirements on a client's behalf, based on its own internal offsets with the CCP. It may also rely on offsets with the client, cross margining other transactions such as futures, bilateral trades and prime brokerage business. It may also rely on revenues from other business with the client, pricing the clearing function on a holistic basis. Competition between clearing members may reduce risk management standards, reducing the effectiveness of the CCP. A net margin arrangement creates complex inter-relationships between cleared and uncleared trades as well as different margining and netting models. Assume a transaction involving a cleared OTC derivative and a related uncleared non-standard derivative over it. The cleared derivative requires a CCP margin. Where the two transactions are transacted through a dealer who also acts as a clearing member, the dealer may not require collateral on the uncleared derivative using it own risk model to offset the two positions. This does not result in a lower margin requirement on a client's cleared transaction, but cuts the total margin paid across cleared and uncleared trades. Most existing futures exchanges use net clearing. This reflects the administrative and operational complexity of gross clearing. Dealers also favour net clearing, as it creates a profitable business for them clearing non-member trades. In existing exchange traded markets, most of the profits from futures broking comes from not from execution but clearing, including crucial access to client funds that can be reinvested at a profit. Dealers will push aggressively for net clearing, enabling them to develop a significant business clearing OTC derivatives trades for non-clearing parties. They will argue that this is essential to offset the losses from moving OTC derivatives trading to the CCP. Net clearing means that the CCP structure will resemble that set out in the Diagram 3 below. In practice, this means that there will be two separate layers of risk – at the level of the CCP and one at the level of the clearing members. Given that most inter-dealer OTC derivative trading is already collateralised to a substantial degree, the CPP arrangement only formalises these arrangements. For other OTC derivative participants that trade through clearing members, the risk remains with these entities. Given the dominant position of a few firms in OTC derivatives trading and eventually in clearing, this may not reduce risk concentrations significantly as sought. Diagram 3 – CCP Structure with Net Clearing Risk Taming … ISDA's case against the CCP is based on the fact that OTC products are difficult if not impossible to clear. ISDA argues that the CCP's ability to clear contracts is conditional upon liquidity and availability of market prices. Pickel on behalf of ISDA testified that this made "it difficult for [the CCP] to calculate collateral requirements consistent with prudent risk management." The U.K. Financial Services Authority ("FSA") also argues that some OTC derivatives may not be capable of clearing. In its December 2009 report Reforming OTC Derivative Markets: A UK Perspective, the FSA did not support mandatory clearing because "the clearing of all standardised derivatives could lead to a situation where a …CCP… is required to clear a product it is not able to risk manage adequately, with the potential for serious difficulties in the event of a default." The CCP's ability to manage risk effectively is questionable, at least for all products. This reflects the lack of availability of prices, limitations of market liquidity and inherent product attributes that may be difficult to model and mitigate. Rejecting the trading of CDS on the futures exchanges, Howard Simons, a Chicago exchange trader, identified the problems of risk management of certain OTC derivatives: "The clearing members of the CME [Chicago Mercantile Exchange] think trading this stuff is the stupidest idea in the world. I didn't work my whole life so some investment bank can take all our capital. Do I look like Hank Paulson?" Where products can be cleared, commercial, CCPs may undercut each other on margins and initial deposit requirements to gain market share, in the process undermining the stability of the system itself. Riccardo Rebonato, an experienced risk manager at Royal Bank of Scotland, noted: "In a world where CCPs are competing for an undifferentiated product – clearing – the main differentiating factor for an outsider is going to be the margin and some CCPs may be tempted to compete on margin. But margin must be compatible both with the systemic resilience of the new hub-and-spoke system and with considerations of commercial viability. LCH.Clearnet chief executive Roger Liddell recently criticised newer US rival International Derivatives Clearinghouse for "reckless" behaviour in setting low margin to win business. On 12 May 2010, the Basel-headquartered Committee on Payment and Settlement Systems ("CPSS") and the Madrid-based International Organization of Securities Commissions ("IOSCO") published 15 recommendations for CCPs. The guidelines were vague on risk management issues, only stating the need "more complex models and methodologies" to calculate risk exposure and margin requirements and requiring methodologies to "be reviewed periodically by a qualified, independent internal group or third party". CCP risk management may be based on the attributes identified by poet e. e. cummings: "all ignorance toboggans into know and trudges up to ignorance again." –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
|
| classic newspaper describing silver coin death Posted: 30 Oct 2011 02:22 PM PDT i love these old newspapers on google this one has the death of US monetary silver - the house appropriations committee does the deed other cool stuff - get your machines x-rayed! http://news.google.com/newspapers?id...=us+mint&hl=en |
| Posted: 30 Oct 2011 11:38 AM PDT This past week in gold By Jack Chan at www.simplyprofits.org 10/29/2011  GLD – on buy signal.  SLV – on buy signal.  GDX – on buy signal. XGD.TO – back to buy signal.  CEF – on buy signal. Summary Disclosure
|
From Julian D. W. Phillips of 
From 
From 
From 
| You are subscribed to email updates from Gold World News Flash 2 To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
No comments:
Post a Comment