dimelab dimelab: shrinking the gap between talk and action.

doubt Topic in The Credit Debacle Catalog

doubt hopes (1); raise doubt (1); Stiglitz Doubts Recovery (1); Stress Test Doubts (1).

naked capitalism Fri 2010-10-08 22:09 EDT

Doubts About Eurobailouts Come to the Fore

A brief recap of a couple of useful sighting on the ``rising anxieties in Europe'' front. Edward Hugh has a very thorough update (bond spread trends, underlying drivers, an astute discussion of politics) leavened by a great deal of wry humor ...Wolfgang Munchau at the Financial Times takes a hard look at a piece of the puzzle most have avoided, namely the CDO structure that the Eurozone members used for their €440 billion bailout fund. He's pushed some numbers around, and as far as he can tell, it will only be able to offer costly funding, and in much smaller amounts than advertised...

doubt; Eurobailouts Come; fore; naked capitalism.

Fri 2010-10-08 21:34 EDT

Improper GMAC Affidavits Leading to Charges of Document Fabrication to Change Title >> naked capitalism

...the web emanating from the GMAC affidavit improprieties extend much further than most may realize. Although GMAC continues to maintain that having its ``robot signor'' officers like Jeffrey Stephan provide affidavits on matters they know nothing about is a mere technical problem that they can remedy. In fact, an affidavit is a statement of someone with personal knowledge of a matter. Stephan signed as many as 10,000 documents a month and clearly could not have personal knowledge of the underlying situations. Deliberately preparing and submitting inaccurate documents in a legal proceeding is a fraud on the court...So as much as GMAC and its fellow servicers no doubt hope there little document mess will fade from public view, attorneys are using it as a new weapon to fight questionable foreclosures or force servicers to negotiate principal mods...

CHANGING TITLES; charges; Document Fabrication; Improper GMAC Affidavits Leading; naked capitalism.

PRAGMATIC CAPITALISM Mon 2010-09-20 09:57 EDT

WHITHER CHINA?

In all likelihood, China has entered the most critical and taxing period since the country was reopened to the outside world in the 1970s. Domestically, there are a slew of issues, any one of which could create instability...Few can know the full story of what goes on within the State Council, but there appears to be a battle royal being fought over the real estate sector. There are those within the leadership who are concerned that average home prices have gotten too high for most first-time buyers (see our previous visit report). They want to see average prices fall by 10-20% across the country. Against this group are not just real estate developers but local governments and many others within Beijing...In effect, what is being seen is a battle between central and local governments. In our view, this is a fight that central government cannot afford to lose...against a background of cheap money and plenty of credit, house prices across the country have become unaffordable to most first-time buyers...if these price developments continued unchecked the leadership would risk encountering social instability...we doubt there will be any easing of policy until average house prices fall into the 10-20% range. China is transiting into a very difficult period as focus shifts towards sustainable domestic growth and away from short-term measures to defend the 8% GDP mantra. This transition is occurring when the existing leadership is preparing to give way to the new set in 2012, when social stability could be threatened if there are policy mistakes...

China; PRAGMATIC CAPITALISM.

Mon 2010-08-16 12:51 EDT

Nathan Lewis: Where's The Gold?

...there are indications that the seller side of futures contracts (such as Deutsche Bank in April) are having a difficult time making good on their commitments. Second, the information reported by the Comex regarding physical inflows and outflows is looking more and more like a convenient fiction. Third, there is some doubt as to whether there is gold in inventory -- as there absolutely should be -- to match existing warehouse receipts. Fourth, the Comex warehouse is one of the most secure forms of gold investment in the world. If they can't be trusted, what does that say about ETFs, pooled accounts, futures, forwards, options, and all the other forms of "paper gold" out there? Fifth, if it becomes clearer that there is no physical supply to meet physical demand, the dollar price of gold could go much higher.

gold; Nathan Lewis; s.

Tue 2010-06-01 18:24 EDT

billy blog >> Blog Archive >> In the spirit of debate ... my reply Part 2

Today, I offer Part 2 of my responses to the comments raised in the debate so far...Modern monetary theory does not use the term ``money'' in the same way as the mainstream because it creates instant confusion. As Scott said ``Money is always someone's liability, so better to be precise about whose liabilities we are talking about than saying money.'' That is why we emphasis fully understanding the asset-liability matches that occur in monetary systems. And that leads you to realise that transactions between government and non-government create or destroy net financial assets denominated in the currency of issue whereas transactions within the non-government sector cannot create net financial positions...So modern monetary theorists prefer to concentrate on what is going on with balance sheets after certain flows have occured rather than narrowly defining some financial assets as money and others not...There is no doubt that the non-government institutions can increase credit. Some slack analysts call this an increase in money. But the accurate statement is that, as a matter of accounting it increases the (in Scott's words) ``the quantity of financial assets and financial liabilities 1 for 1 in the non-govt sector. So, with private credit, there is BY DEFINITION no NET increase in private sector financial assets created.'' Once we understand that and note that typically the non-government sector seeks to net save in the currency of issue then modern monetary theory tells you that the public sector must run a deficit to underwrite this desired net saving or else see an output gap widen...Who is in control is an interesting question. Clearly, the government cannot directly control the money supply which renders much of the analysis in mainstream macroeconomics textbooks as being irrelevant. The Monetarists via Milton Friedman persuaded central banks to adopt monetary targetting in the 1980s and it failed a few years later -- miserably...Then you might like to consider it from the other angle -- a government which accepts responsibility for full employment can ``finance'' the saving desires of the non-government sector by increasing its deficit up to the level warranted by the spending gap (left by the full employment non-government savings)...Orthodox macroeconomic theory struggles with the idea of involuntary unemployment and typically tries to fudge the explanation by appealing to market rigidities (typically nominal wage inflexibility). However, in general, the orthodox framework cannot convincingly explain systemic constraints that comprehensively negate individual volition. The modern monetary framework clearly explicates how involuntary unemployment arises. The private sector, in aggregate, may desire to spend less of the monetary unit of account than it earns. In this case, if this gap in spending is not met by government, then unemployment will occur. Nominal (or real) wage cuts per se do not clear the labour market, unless they somehow eliminate the private sector desire to net save and increase spending...to maintain high levels of employment and given that the public generally desire to hold some reserves of fiat money, the government balance will normally have to be in deficit...modern monetary theory demonstrates that if you want the non-government sector to net save...

Billy Blog; blogs Archive; Debate; reply Part 2; Spirit.

Mish's Global Economic Trend Analysis Tue 2010-05-18 16:29 EDT

Canaries in Coalmine: China, Asia, not Participating in Euro Bailout Lovefest; Beginnings of China Credit, Real Estate Bust

Is China a canary in the coalmine of an impending global slowdown, or is China simply overloved as a beacon of growth as it was in 2008? I think it's both. China's property and infrastructure bubbles are massive; that is for certain. Moreover, China's biggest export trading partner is Europe, just as Europe is headed for numerous austerity programs. While it's doubtful the European austerity programs bring deficits down to where they are supposed to be, those programs will for a while cause a decline in European spending along with much social unrest. Can China take a double whammy like this without overheating? I think not. And China will have to show things down, whether it wants to or not. ... The "China Story" that most of the world is in love with is nothing more than excess credit finding a home in malinvestments just as happened in the US.

Asia; Begins; canaries; China; China credit; coalminer; Euro Bailout Lovefest; Mish's Global Economic Trend Analysis; participated; real estate bust.

Jesse's Café Américain Sun 2010-05-09 10:07 EDT

NY Fed Cited in Cover-Up By SIGTARP's Barofsky - Possible Criminal Charges

It's never the crime, it's always the cover up.This is beyond a doubt the story of the week. Neil Barofsky has been a thorn in the side of the Treasury Department and the Fed since he first took office...his probe of an alleged New York Fed coverup in the AIG case could result in criminal or civil charges.

Cover; Jesse's Café Américain; NY Fed Cited; possible criminal charges; SIGTARP's Barofsky.

Jesse's Café Américain Wed 2010-05-05 16:22 EDT

Market Manipulation, Systemic Risk and Fraud, Pure and Simple, And It Continues Today

This article by the Financial Times should remove any doubt in anyone's mind that Goldman Sachs was willfully selling fraudulent financial instruments. It appears that they were working in conjunction with Ratings Agencies, Mortgage Origination Firms, and Hedge Funds to cheat investors...Tom Montag, then a senior Goldman executive and now head of corporate and investment banking at Bank of America, was quoted as describing the deal in an e-mail as follows: ``Boy that timeberwof (sic) was one shi**y (sic) deal,'' according to the Senate subcommittee...Within five months of issuance, Timberwolf lost 80 per cent of its value...

continued; fraud; Jesse's Café Américain; Market Manipulation; Pure; simple; systemic risk.

New Deal 2.0 Tue 2010-03-09 17:23 EST

Wall Street's War Against Consumers and Labor Heats Up

...Throughout the world, scaling back the 20th century's legacy of progressive taxation and untaxing real estate and finance has led to a public debt crisis. Property income hitherto paid to governments is now paid to the banks. And although Wall Street has extracted $13 trillion in bailouts just since October 2008, the thought of raising taxes on wealth to pay just $1 trillion over an entire decade for Social Security or health insurance is deemed a crisis that would lead Wall Street to shut down the economy. It is telling governments to shift to a regressive tax system to make up the fiscal shortfall by raising taxes on labor and cutting back public spending on the economy at large. This is what is plunging economies from California to Greece and the Baltics into fiscal and financial crisis. Wall Street's solution - to balance the budget by cutting back the government's social contract and deregulating finance all the more - will shrink the economy and make the budget deficits even more severe. Financial speculators no doubt will clean up on the turmoil.

0; consumer; labor heats; new dealing 2; Wall Street's War.

naked capitalism Sun 2010-02-28 13:08 EST

Martin Wolf is Very Gloomy, and With Good Reason

Martin Wolf, the Financial Times' highly respected chief economics editor, weighs in with a pretty pessimistic piece tonight. This makes for a companion to Peter Boone and Simon Johnson's Doomsday cycle post from yesterday...With the private sector debt overhang as great as it is, I doubt there is a way out of our mess that does not involve a period of debt restructuring and writeoffs. That process, no matter how adeptly handled, results in dislocation and has a chilling effect on bystanders...Swedish Lex interestingly sees another possible brake that may become operative prior to another bubble/bust cycle. He believes that the EU has much less tolerance for underwriting zombie banks than the US. The EuroBanks have written off less in the way of losses than their US peers, are also exposed to any EU sovereign debt defaults, and yet the biggest are still crucial parts of the international capital markets infrastructure (and therefore still tightly coupled to the very biggest US/UK firms). While any EU sovereign debt defaults could morph into a full blown crisis, the EU responses to the joint sovereign/bank debt overhang could lead to more radical changes in EU banking rules and practices that could blow back to the very biggest US banks in unexpected ways.

gloomy; good reason; Martin Wolf; naked capitalism.

Mon 2010-02-08 17:08 EST

The Bernanke Disaster: The Road to Debt Peonage

...On the political front, his reappointment is being cited as yet another proof that the Democrats care more for bankers than for American families and employees. As a result, it will do what seemed unfathomable a year ago: enable GOP candidates to strike the pose of FDR-type saviors of the embattled middle class. No doubt another decade of abject GOP economic failure would simply make the corporate Democrats appear once again to be the alternative. And so it goes... For Bernanke, the current financial system (or more to the point, the debt overhead) is to be saved so that the redistribution of wealth upward will continue...Meanwhile, the government is permitting corporate tollbooth to be erected across our economy -- and un-taxing this revenue so that it can be capitalized into financialized wealth paying only a 15 per cent tax rate on capital gains...Financial and fiscal policy thus reinforce each other in a way that polarizes the economy between the financial sector and the ``real'' economy.

Bernanke Disaster; DEBT peonage; Road.

Thu 2010-01-07 19:24 EST

Precious Metals Derivatives: Louder Music, Fewer Chairs

...The weight of gold and silver represented by derivatives on the precious metals has grown so large relative to all reasonable measures of physical supply that more and more questions and doubts are being raised about not only the integrity of the price discovery mechanisms for these metals, primarily among LBMA members and on the COMEX, but also the reliability of many paper claims to the physical delivery of them.

chair; Louder Music; Precious Metals Derivatives.

Mish's Global Economic Trend Analysis Mon 2009-10-12 09:22 EDT

One Hand Clapping Theory Analyzed

Numerous people have asked me to comment on Chris Martenson's article The Sound of One Hand Clapping - What Deflationists May Be Missing. Chris Writes: ...``Trillions in probable and provable losses quietly exist, out of sight, on the balance sheets of the Federal Reserve and other financial institutions. If they ever come out of hiding and onto the books, I think the deflationists will be proven correct beyond all doubt. But let me ask this: What prevents the authorities from simply storing them out of sight forever?...I am now wondering if they cannot keep this up indefinitely.'' ...In a credit based economy, the odds of a sustainable rebound without bank credit expanding, and consumers participating is not very good. Even if one mistakenly assumes that the recent rally is a result of pretending, should we count on sustained success now more so than a measurement of stock prices in April of 1930, or any of Japans' four 50% rallies? I think not. Pretending cannot accomplish much other than prolonging the agony for decades. This is the message of Japan. Moreover, the US is arguably is worse shape than Japan because our problems are unsustainable consumer debt, high unemployment, and massive retail sector overcapacity. Those are structural problems that no amount of pretending in the world can possibly cure. In due time, the market will focus on those problems.

hand clapping theory analyzed; Mish's Global Economic Trend Analysis.

Bruce Krasting Fri 2009-09-04 19:21 EDT

Fannie's Trading Derivatives Hard, and Losing

It has been my contention that the Agencies were a factor in the bond market volatility in the past three months. Fannies 10Q has the following information regarding their derivative activity in the first six months of the year. As of June 30 FNM had a balance sheet of $900 billion. Against that position they bought and sold over the counter derivative contracts totaling $1.2 Trillion. On average $100 billion per day. There can be little doubt but that FNM has been adding to the volatility in the credit market. As luck would have it, the end result of all of this was a loss of $2.2billion.

Bruce Krasting; Fannie's Trading Derivatives Hard; Lose.

naked capitalism Fri 2009-09-04 18:45 EDT

Stiglitz Doubts Recovery Can Be Sustained

Joseph Stiglitz takes issue with the view of economists (well, economists surveyed by Bloomberg and the Wall Street Journal, which not surprisingly have a Pollyannish optimistic streak) that the economy is in or on the verge of a recovery. ``In most quarters, there is a feeling we should move away from the dollar system. The question is do we do it in an orderly way, or a chaotic way,'' Stiglitz said. ``The size of the deficit and the size of the balance sheet of the Fed have just increased the anxiety and the desire that something be done...'' Between the fall of the Berlin Wall and the collapse of Lehman Brothers was ``the short period of American triumphalism, where we dominated the global scene. That period is over,'' Stiglitz said.

naked capitalism; Stiglitz Doubts Recovery; sustained.

Fri 2009-07-24 00:00 EDT

naked capitalism: Yet More Stress Test Doubts

Richard Kline: ``the entire core of the financial system has become an aggregated slime mold of formerly distinct Enrons, bloated 100 times larger''

naked capitalism; Stress Test Doubts.

Thu 2009-02-26 00:00 EST

FT Alphaville >> Blog Archive >> The United States Oil Fund mystery

-- ETF distorting markets, raising doubts of front-month contract's viability as a hedging instrument; ETF taking NAV loss every time it rolls

blogs Archive; FT Alphaville; United States Oil Fund mystery.

Tue 2008-08-12 00:00 EDT

Jesse's Café Américain: Long Term Gold and US Dollar Charts

Jesse's Café Américain: Long Term Gold and US Dollar Charts; "doubt this is a major trend change...dollar is at serious resistance, and gold has strong support"

dollar chart; Jesse's Café Américain; Long Term Gold.

Wed 2008-05-14 00:00 EDT

Mish's Global Economic Trend Analysis: LIBOR Credibility In Doubt

doubt; LIBOR Credibility; Mish's Global Economic Trend Analysis.