Sunday, November 29, 2009

Reckless Myopia - Hussman

"Banana Republic", "Disaster", "Reckless", "Unconstitutional Breach" ...... Uh ? When Hussman ( one of the best mangers out there > Performance Hussman 2000-2009 ) is using this kind of words it clearly qualifies for a rant..... Needless to say that i think he is spot on...... Just a few reasons why i´m long term bullish on Gold ( short term it looks a little bit crowded )....Along with Rosenberg, Faber one of my long time favourites......

Wenn ein ansonsten sehr besonnener und überaus erfolgreicher ( siehe Performance Hussman 2000-2009 ) Zeitgenosse wie Hussman zu solch drastischen Worten wie "Bananenrepublik", "Desaster", Verfassungswidrig" usw. greift sollte man aufhorchen..... Und das sind nur einige der gewichtigen Gründe warum ich langfristig bullisch für Gold bin ( kurzfristig sieht es allerdings etwas überhitzt aus ).... Wer meinen Blog etwas länger verfolgt weiß, das ich zu 100% übereinstimme.....

Reckless Myopia

From a long-term perspective, my record is very comfortable. But clearly, I was wrong about the extent to which Wall Street would respond to the ebb-and-flow in the economic data – particularly the obvious and temporary lull in the mortgage reset schedule between March and November 2009 – and drive stocks to the point where they are not only overvalued again, but strikingly dependent on a sustained economic recovery and the achievement and maintenance of record profit margins in the years ahead.

I should have assumed that Wall Street's tendency toward reckless myopia – ingrained over the past decade – would return at the first sign of even temporary stability. The eagerness of investors to chase revailing trends, and their unwillingness to concern themselves with predictable longer-term risks, drove a successive series of speculative advances and crashes during the past decade – the dot-com bubble, the tech bubble, the mortgage bubble, the private-equity bubble, and the commodities bubble. And here we are again.

We face two possible states of the world. One is a world in which our economic problems are largely solved, profits are on the mend, and things will soon be back to normal, except for a lot of unemployed people whose fate is, let's face it, of no concern to Wall Street. The other is a world that has enjoyed a brief intermission prior to a terrific second act in which an even larger share of credit losses will be taken, and in which the range of policy choices will be more restricted because we've already issued more government liabilities than a banana republic, and will steeply debase our currency if we do it again. It is not at all clear that the recent data have removed any uncertainty as to which world we are in.

What I do think is that over the past decade, investors (including people who hold themselves out as investment professionals) have become far more susceptible to reckless myopia than I would have liked to believe. They have become speculators up to the point of disaster.

Frankly, I've come to believe that the markets are no longer reliable or sound discounting mechanisms.

The repeated cycle of bubbles and predictable crashes over the recent decade makes that clear. Rather, investors appear to respond to emerging risks no more than about three months ahead of time.

Worse, far too many analysts and strategists appear to discount the future only in the most pedestrian way, by taking year-ahead earnings estimates at face value, and mindlessly applying some arbitrary and historically inconsistent multiple to them.

Discounting the markets three month ahead of time..... ? This is probably only true when they are sniffing around for the next dose of QE or some kind of bailout, subsidy, stimulus etc ...But to do that you don´t need to be a rocket scientist... Washington & the Fed have a 100 percent track record in bailing out anything.....Unlike in Dubai ....;-) I think here is Hussman way too kind........

Vorwegnehmen ?. Denke das die Vergangenheit bewiesen hat das die Märkte und besonders Wall Street Finest hier keinesfall im Vorwege Probleme kommen sehen.... Die Fähigkeit etwas vorwegzunehmen trifft wohl am ehesten zu, wenn es darum geht den nächsten Bailout usw zu erahnen ( der kommt ja bekanntermaßen bestimmt ).... Hier kommt zwischenzeitlich mal wieder der "alte" höfliche Hussman durch.... ;-)

In part, the market's increasing propensity toward speculation reflects the increasing lack of fiscal and monetary discipline from our leaders. Policy makers who seek quick fixes and could care less about long-term consequences undoubtedly encourage investors to embrace the same value system.

Paul Volcker was the last Fed Chairman to have any sense that discipline and the acceptance of temporary discomfort was good for the nation.

In my estimation, there is still close to an 80% probability (Bayes' Rule) that a second market plunge and economic downturn will unfold during the coming year. This is not certainty, but the evidence that we've observed in the equity market, labor market, and credit markets to-date is simply much more consistent with the recent advance being a component of a more drawn-out and painful deleveraging cycle.

As Gluskin Sheff chief economist David Rosenberg noted last week, “Even if the recession is over, the historical record shows that downturns induced by asset deflation and credit contraction are different than a garden-variety recession induced by Fed tightening and excessive manufacturing inventories since the former typically induce a secular shift in behavior and attitudes towards debt, asset allocation, avings, discretionary spending and homeownership. The latter fades more quickly.

Larger / Vergrößerte Version via VOX EU

> On this topic comes another excellent report ( see Charting The Great World Trade Collapse ) via VOX EU

> Empfehle in diesem Zusammenhang einen Blick auf Charting The Great World Trade Collapse ( ebenfalls von VOX EU ) zu werfen.....

“This is why people didn't figure out that it was the Great Depression until two years after the worst point in the crisis in the 1930s; and why it took decades, not months, quarters or even years, for the complete transition to the next sustainable economic expansion and bull market.

... It is truly mind-numbing that a moment after a temporary surge of trillions of dollars, borrowed and tossed out of a helicopter (though to specific corporations and private beneficiaries), analysts would hail a subsequent improvement in corporate results as evidence of “resilience.”

What matters is sustainability, and unfortunately, it is clear that credit continues to collapse.....

Emphatically, the trillions of dollars spent over the past year were not in the interest of protecting bank depositors or the general public. They went to protect bank bondholders.

Instead of taking appropriate losses on those bonds (which financed reckless mortgage lending), those bonds are happily priced near their face value, for the benefit of private individuals, thanks to an equivalent issuance of U.S. Treasury debt. But that's not enough. Outside of a very narrow set of institutions that are subject to compensation limits, just watch how much of the public's money – which benefitted several major investment banks following a very direct route – gets allocated to Wall Street bonuses in the next few weeks.



Guest Post: Dividends Are Still Trending Worse Than The Great Depression ZH

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Wednesday, November 25, 2009

Dubai World Seeks Debt Delay, Owes $59 Billion; Default Swaps Soar .... SCHADENFREUDE....

I have to repeat myself More Bad News For Dubai ...... I think after you have finished reading the follwing post & watching the clips it should be clear that the $ 60 - $ 80 billion from Dubai itself is only a fraction of all the bad loans sitting mainly on the regional bank balance sheets ( probably no coincidence that the supervisor aka regional lender of last resort gave some "prudent" accounting advice back in January > How Not To Restore Confidence....."United Arab Emirates Edition" ) .......

Muß mich da wohl erneut wiederholen More Bad News For Dubai ...... Ich denke das jeder der das folgende Posting gelesen und sich die Videos angeshen hat mit mir übereinstimmt das die jetzt im Raum stehenden bis zu 80 Mrd $ die Dubai selbst im Feuer stehen hat nur einen kleinen Teils der Summen ausmachen die ansonsten noch in den wohl überwiegend regionalen Bankenbilanzen ( obwohl man ja unsere Landesbanken nie unterschätzen sollte...;-) schlummern ( sicher kein Zufall das die Aufsicht bereits im Januar dazu aufgerufen hat sich bei der Bilanzierung "verantwortungsvoll" zu verhalten... > How Not To Restore Confidence....."United Arab Emirates Edition" ).....

Dubai World Seeks Debt Delay as Abu Dhabi Provides $5 Billion

Nov. 25 (Bloomberg) -- Dubai World, the government-owned holding company struggling with $59 billion of liabilities, is seeking to delay repayment on all of its debt, even after Abu Dhabi banks provided $5 billion for Dubai’s support fund.

Dubai World will ask all creditors for a “standstill agreement” as it negotiates to extend the maturities of its debt, including $3.52 billion of Islamic bonds due for repayment on Dec. 14 by its property unit Nakheel PJSC, the builder of Dubai’s palm tree-shaped islands, the company said in an e- mailed statement today.

The emirate, home to the world’s tallest tower and the biggest man-made islands, owes $4.3 billion next month and another $4.9 billion in the first quarter of 2010 through government and corporate debt, Deutsche Bank AG data show. Abu Dhabi government-controlled banks, National Bank of Abu Dhabi PJSC and Islamic lender Al Hilal Bank, bought all $5 billion of bonds from the government, Dubai’s Department of Finance said in an e-mailed statement today.

To understand how hyperinflated things are you should take a look at The Upcoming Skyscraper Tsunami & watch at least one of the YOUTUBE clips at the end of the post..........

Um zu verstehen wie größenwahnsinnig die Lage in Dubai ist empfehle ich dringend einen Blick auf The Upcoming Skyscraper Tsunami & zumindest auf einen der YOUTUBE Clips am Ende des Postings zu werfen.....

Dubai, the second biggest of seven sheikhdoms that make up the United Arab Emirates, set up a $20 billion Dubai Financial Support Fund after the credit crisis triggered the world’s worst property crash and hurt its finance and tourism industries. The emirate raised $10 billion by selling bonds to the U.A.E. central bank in February, with some of the money going to property developers.

What a difference a year makes ( see No Kidding.... Dubai May Need Help To Repay Debt....

Welch Unterschied doch ein Jahr ausmachen kann ( siehe No Kidding.... Dubai May Need Help To Repay Debt....

‘Shut Up’

Dubai ruler Sheikh Mohammed Bin Rashid Al-Maktoum said Nov. 9 the emirate’s bond program to raise a further $10 billion will be “well received,” and those who doubt the unity of Dubai and Abu Dhabi should “shut up.” Abu Dhabi, the U.A.E.’s capital, is owner of the world’s biggest sovereign wealth fund and holds almost all of its oil.

Home prices in Dubai plummeted 47 percent in the second quarter from a year ago, the steepest drop of any market, according to Knight Frank LLC. Property prices may drop further, a survey by Colliers International showed Oct. 14.

Let´s hope the following handsome "gesture" will be enough to please the new overlord.....;-)

Bleibt zu hoffen das die nachfolgende Geste genug sein wird um die neuen Herren im Hause zu weiteren Mrd. zu bewegen.... ;-)

Dubai Autonomy Fades as Crisis Strengthens Abu Dhabi

Nov. 24 (Bloomberg) -- Until last month, a billboard at one of Dubai’s busiest roundabouts featured one photo, of Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum. The new billboard says “Long live our Emirates union” and also shows United Arab Emirates President Sheikh Khalifa Bin Zayed Al Nahyan.
“For the general purposes of the Dubai Financial Support Fund…” FT Alphaville

As FT Alphaville noted the market was on Wednesday digesting news that the $5bn Dubai had raised from two Abu Dhabi government-controlled banks would not go to paying off Nakheel convert bond holders as expected. Instead the proceeds would go towards the general purposes of the Dubai Financial Support Fund (DFSF).

The likes of Barclays Capital, meanwhile, estimate the liabilities could be as much as $72bn, a figure that runs significantly beyond Dubai’s own ability to refinance without support from Abu Dhabi.

Non-bank external debt maturing over the next two years are sizable - Barclays Capital

In other words, there’s no telling how big the total hole Dubai has to plug is, much less its strategy for doing so, and more importantly how Dubai World bond holders — the government-owned group which owns Nakheel — rank in the fund’s priorities.

On the latter, the indication from today’s news is that they don’t rank highly at all.
CDS report: All eyes on Dubai World FT Alphaville

The Dubai Government announced that it is restructuring Dubai World, an Investment company owned by the government, with immediate effect. It has asked creditors for a six-month standstill on its obligations until at least 30 May 2010.

Spreads throughout the region widened on the shock news. More
volatility can be expected as investors await details of the restructuring

Markit chart of UAE CDS


Dubai’s hopes of becoming a world financial centre are proving to be nothing more than an Ozymandian dream. Wednesday’s unexpected decision by Dubai World, the Gulf emirate’s largest state-owned conglomerate, to impose a six-month debt standstill has foreign creditors up in arms. Earlier this month, Dubai’s ruler Sheikh Mohammed Bin Rashid Al Maktoum publicly pledged his support for the group and its obligations. Investors, perhaps foolishly, took him at his word.

The consequences of the standstill, and possible eventual default, are far-ranging. The repayment of Dubai World’s $4bn Nakheel bond was seen as a litmus test for the emirate’s ability to deal with the $80bn owed by the sovereign and its state-controlled companies. The emirate’s willingness to do this is now in doubt, especially as only an hour earlier it raised $5bn from two state-controlled banks in Abu Dhabi. This was only half what had been expected, but followed $10bn of earlier support from the kingdom’s richer neighbour.

Foreign creditors are muttering darkly about taking legal action.
You really cannot make this up..... No Bailout, lets sue them.....

Den Satz muß man sich mehrmals durchlesen... Erst dann wird deutlich in welcher Welt die Bankster in erster Linie wegen der andauernden Hilfe durch den Steuerzahler noch immer leben.....

Dubai shock after debt standstill call FT

Standard & Poor’s and Moody’s Investors Service immediately downgraded the ratings of all six government-related issuers in Dubai following news of the repayment delay and left them on review for possible further downgrade.Moody’s cut ratings on some government-related entities to junk status, while S&P cut ratings on some entities to one level above junk.

UBS: support for Dubai may be less than assumed MW

Analysts at UBS said authorities will not have taken the decision to restructure Dubai World lightly and that there are three potential explanations for the decision. Firstly, UBS said, Abu Dhabi's support for Dubai might be less generous than assumed. "Perhaps Abu Dhabi has forced Dubai to tackle the problem of excessive corporate debt 'in-house' first before extending more financial support," the broker said.

A second possibility is that corporate-sector problems might be more severe than assumed, UBS said.

Thirdly, Dubai's debt might be higher than the generally assumed $80 billion to $90 billion due to potential off-balance sheet liabilities, it added

Just in time.....


CSI Dubai FT Alphaville

Some Dubai World Unit Creditors Form Group WSJ

Among options bondholders are exploring is the possibility of seizing Dubai land that is being used to secure the bonds. But Julian Lim, a London-based bond analyst at Nomura, says there are question marks over the value of the land backing the bonds. In addition, it is unclear whether bondholders would even be able to seize the property given that local courts may consider those assets sovereign entities of Dubai, he added.
Detailed Debt & Maturity Profile Dubai, Abu Dhabi & UAE ZH

A Financial Mirage in the Desert NYT

Quantifying External UAE And Dubai Loss Exposure ZH

"Kreditgetriebene Fata Morgana" Querschüsse

Dubai's dramatic boom over the last decade in pictures Telegraph

FACTBOX - What assets Dubai could be forced to sell Reuters

Total Eclipse At The Heart Of Dubai’s World Edward Hugh

The question is, of course, now that the emirate’s lop sided growth model has been shown to be completely dysfunctional, what are the viable long term business prospects in a city with so much excess capacity as far as property goes. According to the Dubai Statistics Center, the total population was 1,422,000 as of 2006, of which 1,073,000 were male and only 349,000 were females.

Evidently activity associated with the construction industry can offer some part of the explanation for this massive gender imbalance. Just under 20% of the population are estimated to be UAE nationals. Approximately 85% of the expatriate population (and 71% of the emirate’s total population) is thought to be Asian, chiefly Indian (51%), Pakistani (15%), Bangladeshi (10%). This impression of a large construction industry oriented population is reinforced by the economic data

Real estate and construction account for about 23% of GDP and financial services for another 11%.


Dubai Cartoon Telegraph :-)

Dubai Bubble Burst Youtube

Die Finanzkrise erreicht Dubai Youtube ( German/Deutsch)

Geschichte von Dubai / UAE ARTE via Youtube

Dubai Real Estate CrashYoutube


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Tuesday, November 24, 2009

The FDIC Is Not "Well Capitalized".......

No wonder Bair has to produce "reasuring" Videos like this ( Clip from October ).....

Kein Wunder das Bair sich genötigt sieht solch "beruhigende" Botschaften unters Volk zu bringen ( Clip vom Oktober )....

FDIC’s insurance in the red, ‘problem banks’ hit 16-year high FT Alphaville

There are some shocking numbers in Federal Deposit Insurance Corp’s (FDIC) quarterly banking report for the three months to September 30, which the agency released on Tuesday.

Numbers like: -$8.2bn and 552. The first figure represents the balance on the FDIC’s insurance fund. That’s right - for the first time since 1992, the FDIC’s insurance fund has fallen — quite dramatically — into the red.

According to the report, the precipitous decline in the insurance fund was due to an additional $21.7bn set aside in the third quarter for expected bank failures. At the end of the second quarter, the FDIC’s insurance fund a balance of$10.4bn.

As for 552 - that’s how many US banks may claim, as of September 30, the dubious distinction of being included on the FDIC’s lists of “troubled” financial institutions. Total assets of “problem” institutions increased from $299.8 billion to $345.9 billion, the agency said.
Zero Hedge
More alarmingly, the massive spike in deposits ($491 billion in a single quarter) and total assets at problem institutions popped up $200 illionish in nine short months- exactly while the reserve ratio drops like a Cardiff girl's petticoat after 2am

Got GOLD.... ?

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Wednesday, November 18, 2009

Kass: The Quant Bubble

A must read...... Pflichtlektüre......

"When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing."

Chuck Prince, former chairman and CEO of Citigroup (told to the Financial Times on July 10, 2007).
Kass: The Quant Bubble TSC ( H/T Anti Lemming )

A portion of the sharp rise in several asset classes over the past few months could be the dominance of quant funds that worship at the altar of price momentum (and the self-fulfilling prophecy of the fund flows that follow the price momentum induced by the quants!).

By some estimates, this price-momentum-based quant trading now has doubled in significance since early in the year, to more than two-thirds of the average day's trading.

> I doubt that this figure is correct, but it is verry telling that combined with High Frenquency Trading the "Quants" are the main market force dominating trading...... Doesn´t give me much comfort that the recent gains are "sustainable" ...... Especially after one of the biggest Bear Market Rallies ever on almost non existent Volume ( ! ) ..... Thank god the retail investor this time is smarter than the so called "smart money" ( 13th Straight Week Of Domestic Equity Fund Outflows As Market Rips 11% Over Same Period ) BRAVO ;-)

> Ich bezweifle das die von Kass gennante Zahl in der Tat so hoch ist.... Das aber die Quants zusammen mit dem sonstigen computergetützten Handel ( HFT) der wesentliche "Spieler" ( Investor traue ich mich in diesem Zusammenhang nicht in den Mund zu nehmen.... ) an den momentanen Märkten sind fördert nicht gerade mein Vertrauen in die Nachhaltigkeit in einen nicht "unwesentlicher" Teil der bisher verbuchten Kursgewinne . Nicht verbessert wird das Gesamtbild das der Anstieg praktisch unter minimalen ( ! ) Handelsvolumen stattgefunden hat.. Wenn man jetzt noch bedenkt das wir gerade einer der größten Bear Market Rallies aller Zeiten hinter uns haben sind immer neue Kursziele die man so jeden Tag zu hören bekommt zumindest "mutig"...Glücklicherweise scheint es diesemal so das der "Kleinanleger" sich nicht erneut für das über Jahre erprobte "PUMP & DUMB" begeistern läßt ( 13th Straight Week Of Domestic Equity Fund Outflows As Market Rips 11% Over Same Period ). BRAVO ;-)

Growth of algo trading - Thomson Reuters

Trades initiated by these funds are insensitive to an underemployment rate approaching 18%, signs of an unsteady recovery in housing, the prospects for higher marginal tax rates and how we are going to finance our budget deficit, which hurdles ever higher.

If you don't believe me about the growing quant fund influence, speak to any prominent institutional trader or salesman: They will tell you that their business with plain vanilla institutions is weak and that the quant funds are the ever growing whales of trading.

The pattern is all-too familiar as a new marginal buyer of an asset class dominates the market until they don't.

Here is an anecdote that underscores the changing landscape and is reminiscent of other sectors hiring at tops. (To refresh your memory, this occurred several years ago in private equity and was followed by a sharp cyclical decline in private-equity deals.) At any rate, a subscriber wrote me a telling note recently about his son's friend who attends Wharton and is "a genius in math and game theory." He was just hired by a high-frequency trading firm after being interviewed by 15 similarly talented employees at the firm. He is 20 years old and has been offered approximately $100,000 a year, with a bonus that can add up to an additional $100,000 a quarter! That's far better than even the estimable Goldman Sachs pays!

Keep dancing if you will, but I continue to sit out the melt-up in stocks and the bubble in other asset classes. When investors/traders are arguably overinfluenced by prices (not fundamentals) that dominate the markets, and are all on a similar side, it has the potential to lead to a treacherous and slippery slope, as it did in 2007-08.

Remember, it is some of the same momentum-based quant funds that sold in March 2009 that have been buying over the past few months

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Tuesday, November 17, 2009

Mark Faber : "Gold Won't Go Below $1,000" & "Gold A Better Buy Than At $300/oz. "

Hearing quotes like this i sometimes have the feeling that i´m one of the more bearish GOLD-BUGS out there.... ;-)

Muß allerdings gestehen das ich bei solchen Zitaten so langsam als einer der pessimitischeren GOLD-BUGS durchgehe... ;-)

H/T Expected Returns for the videos & Tim from The Mess That Greenspan Made for digging out the following quote and analyzing it perfectly....

Dank an Expected Returns für die Videos und Tim von The Mess That Greenspan Made der nachfolgendes Zitat hervorgehoben hat und dies dann mehr als treffend analysiert hat.....

Faber : Maybe, gold at this level is a better buy than it was at $300 per ounce in 2001.

Tim: At first glance, the idea that gold priced at over $1,100 an ounce is "a better buy" than when the metal traded at about a quarter of that price seems reposterous. But, when you think about it just a little bit (i.e., what constitutes a "better buy" and how the fundamental factors have now swung so decidedly in gold's favor), maybe it isn't a crazy idea at all.

I wouldn't be surprised if, in another eight years - in 2017 - the yellow metal fetches $5,000 an ounce or more which, by my math, would make it a better buy. Gold may not rise as much against other currencies, but, after almost a decade of trillion dollar deficits, that almost seems like a slam dunk when the measuring stick is the U.S. dollar.

Compare yesterdays quotes from Yellen, Kohn & Bernanke with what Faber said.....In the context of these remarlks i just couldn´t resist to post the following video "highlighting" Bernanke´s past track record in seeing the obvious.... Gold is a not the way to get rich but is a wonderful way to PROTECT your "puchasing power" with a very long track record ( 750 Years Of Real Gold Prices )

Vergleicht die Zitate von Yellen, Kohn & natürlich Bernanke vom Vortag mit dem was Faber gesagt hat..... Konnte in diesem Zusammenhang nicht verkneifen das nachfolgende Video mit einigen von Bernankes vergangenen "Glanzleistungen" zu bringen wenn es darum geht einen gewissen "Überschwang" zu "sichten"......... Gold ist sicher nicht geeignet um zu spekulieren aber die Historie ( 750 Years Of Real Gold Prices ) zeigt das es sich bei Gold zumindest um eine der weinigen Möglichkeiten handelt die nachweisbar zumindest die KAUFKRAFT ERHALTEN......

Geithner Blames Collapse On Previous Admin Even As Tim Was President Of FRBNY Under Bush; Resignation Time H/T Zero Hedge

Dylan Grice / Societe Generale ZH

Of course, any gold bull, gold "bug" or otherwise, faces some serious competition, in the face of none other than Goldman Sachs' most recent partner in philanthropic, TARP subsidized ( disturbing table / diese Übersicht "entzaubert" Buffet zumindest als den "guten" Amerikaner, er bleibt ein guter Investor... mehr aber auch nicht....! ) deeds, Warren Buffett.

“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It as no utility. Anyone watching from Mars would be scratching their head.”

Warren Buffett
At least the quote is funny but after taking a look at the following link "Our Governments Are Insolvent" it is easy to see why Buffet is wrong. Wouldn´t be the first time.....At least one quote where he is not talking his book .... ;-) This Chart is clearly telling what is going on.......I´m still thinking that the Dow/Goldratio reached in 1980 is not "unrealistic" over time......

Immerhin ein witziges Zitat von Buffet das aber gerade wenn man die Grafik in "Our Governments Are Insolvent" ansieht wohl zu den weniger ruhmreichen Einschätzungen von Buffet gehören wird.....Dieser Chart spricht zumindest momentan eine eindeutige Sprache.....Bin mehr denn je der Meinung das ein Dow/Goldratio vergleichbar mit dem Jahr 1980 in den nächsten Jahren nicht "unrealistisch" ist....


Gold: Short-Term and Long-Term Outlook Expected Returns

The Fed is sending gold higher Rolfe Winkler

Wells Fargo Needs TARP Money More Than It Admits: Jonathan Weil "Buffet Watch....."

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Monday, November 16, 2009

Meridth Whithney "I Havn´t Been This Bearish In A Year"

So do i...... But at least from this point of view the market looks "rationale";-)

Genau wie ich ... Immerhin stimmt die Martbewertung wenn man diesen Maßstab ansetzt..;-)

Unlike Bernanke ( H/T Maxgreen) she at least managed to influence the $ longer than 30 minutes......No Surprise ;-) UPDATE : Bernanke vs. Meredith Whitney Mish

Im Gegensatzu zu Bernanke ( H/T Maxgreen ) hat Sie es zumindest geschafft des Verlauf des $ länger als 30 Minuten zu beeinflussen.... Keine Überraschung ;-) UPDATE :Bernanke vs. Meredith Whitney Mish

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Saturday, November 14, 2009

Central Planning & Ghost Towns In China.....

Fits perfectly to an earlier post ( see China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis ).

Paßt hervorragend zu einem früheren Posting ( siehe China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis .

China Digital Times

China’s economy is continuing to grow despite the global recession, helped by a massive government stimulus package of $585bn.

But doubts remain whether such strong growth can be sustained by public spending alone.

Al Jazeera’s Melissa Chan reports from Inner Mongolia, where a whole town built with government money is standing empty

> Here one interesting anecdotal evidence from a fund manager via M.Pettis.

> Hier eine recht interessante Einschätzung eines Fondsmanagers via M.Pettis

Notes on a real estate trip in China

I don’t know how much you travel around China. T and I do a fair bit, and most recently we were in Guiyang. I thought I’d seen insane excess in the past – 200 thousand square meter malls completely empty next to apartment complexes with 40 thousand units and 30% occupancy rates, etc. etc.

But what we saw over there is rather hard to fathom. It seems the Guiyang city mayor had the same idea as the Shenzhen mayor – to move the old downtown to a piece of undeveloped land.

Of course Guiyang has a quarter the population and probably a quarter the per capita income of Shenzhen. They built sprawling new government buildings about a 20-minute drive north of town. And then the residential high rise projects started going up. From driving around the area, we figured well over 100 20+ storey buildings.

What was most distressing was that the development has been totally uncoordinated – a project with 15 buildings here, in another field two miles away a project with one building, another mile in another direction three buildings, sprawled over what was easily over 30 square kms. of farmland well north of town. Every building we got close enough to see was either incomplete/under construction, or empty. Our tone gradually went from “Haha, another one!” to “Oh my God, another one.” We conservatively guesstimated that we saw US$10bn of NPLs in one afternoon.

The only buildings that were occupied were six-storey towers built to accommodate the peasants who had been displaced by the construction.

Back in the city proper, every neighborhood we saw was a convulsing mess of buildings being torn down, new ones being built, and unfinished high rises starting to crumble
> Another comment from a friend of M.Pettis

> Hier eine weiterere "amüsante" Beobachtung....

"By the way almost no one I know trusts the official vacancy rates.

A friend of mine who works in the financial service industry in Shanghai took advantage of the recent total solar eclipse to do his own vacancy rate analysis.

His message to me: “Today’s eclipse provided a perfect opportunity for keen-eyed observers on the ground to see how many floors of the nternational Financial Center (aka The Bottle Opener) are actually lit and ready for use: 25% at most.

Hope that’s of use the next time you comment on speculative office building.”

World's Largest Shopping Mall Sits Vacant Mish

The World's Largest Shopping MallThe world's largest shopping mall, in Guangzhou, China, is almost entirely empty

> I´ve written earlier about the CRE in Beijing ( see Beijing's Olympic Building Boom Becomes A Bust )....

> Hier ein paar Fakten zum Zustand des gewerblichen Immobiliensektors in Peking ( siehe Beijing's Olympic Building Boom Becomes A Bust )

By Rodman's calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn't include huge projects developed by the government.

He says 100 million square feet of office space is vacant -- a 14-year supply if it filled up at the same rate as in the best years, 2004 through '06, when about 7 million square feet a year was leased.

Big property bubble forming in China, warns leading developer FT
"In Manhattan, they have vacancy rates of 10-15 per cent and they feel like the sky is falling, but in Pudong [the central business district in Shanghai] vacancy rates are as high as 50 per cent and they are still building new skyscrapers," she said.
> It seems clear that the "magic´" race to achive the 8-10% GDP growth target is going hand in hand with massive mailinvetments.....Looking at the 2009 credit "explosion" i have some doubts that this has changed.....I have to repeat myself.....I wrote in February ( see Number Of The Day "Credit Explosion In China" ) "This almost surreal number is signalling a real panic among the leaders..." & "I wonder what percentage of the loans will default"....There is nothing to add ( except the percentage will be sky high ) UPDATE: Is China Frontin’ On Us All?

> Es scheint ziemlich klar das die 8-10% zentige Pflichterfüllung des BSP Wachstums über Jahre zu massivsten Fehinvestitionen geführt hat.... Den Kreditzahlen dieses Jahr zu urteilen dürfte sich das nocheinmal beschleunigt haben......Mein letzter Kommentar hat leider noch immer Bestand.....Ich schrieb im Februar ( siehe Number Of The Day "Credit Explosion In China" ) "Diese unheimliche Zahl signalisiert ne echte Panik der chinesischen Führung...." & "Möchte nicht wissen welcher Prozentsatz dieser Ausleihungen in 24 Monaten als notleidend deklariert werden muß......" Nach aktueller Datenlage ist dem wenig hinzuzufügen.... Höchstens die Gewissheit das die Panik noch zugenommen hat und das eine gigantische Zahl dieser Kredite implodieren wird".... UPDATE: Is China Frontin’ On Us All?

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Friday, November 13, 2009

I´m Not An Art Expert, But This Price Looks "Frothy"......

Stories like this might explain why some still call the debt & equity "markets" a buy .....;-) Probably ( not) a coincidence that my May 2007 post Speaking Of Bubbles......What About Art? was highlighting another Warhol work sold for the "distressed" price of just $US71.7 million almost matched the peak for other asset classes as well.....

Solche Geschichten erklären wohl auch warum immer noch fast alle die Aktien und Anleihemärkte als klaren Kauf einstufen.... ;-) Sicher (k)ein Zufall das mein letztes Posting zu diesem Thema vom Mai 2007 Speaking Of Bubbles......What About Art? wo ein weiteres Warholwerk für den Schnäppchenpreis von lediglich 71.7 million $ den Besitzer gewechselt hat zeitlich mit dem Top in anderen Märkten einherging.....

Warhol’s ‘200 One Dollar Bills’ Fetches $43.8 Million in N.Y.

Andy Warhol’s 1962 “200 One Dollar Bills” fetched $43.8 million tonight at Sotheby’s contemporary- art auction in New York.

The seller was London-based collector Pauline Karpidas, according to two people familiar with the situation. Karpidas couldn’t immediately be reached for comment.

The work, estimated to sell for $8 million to $12 million, is among the artist’s earliest silkscreen paintings, a process that became his signature technique

> I don´t argue with the art ( see picture ) but when the price estimate is $8 to $12 million and it the final price is almost 400 percent higher something is indeed very "frothy"...... UPDATE: See final comment in the post.....

> Mir macht weniger der Preis für das Bild ( siehe oben ) zu schaffen als vielmehr das die ursprüngliche Preisspanne von 8-12 Mio $ mal eben um fast 400% übetroffen worden ist.....Solch Verhalten geht unabhängig von der Anlageklasse fast immer mit einerm Top bzw einer Blase einher..... UPDATE: Verweise auf meinen aktualisierten Abschlußkommentar am Ende des Postings....

Alex Rotter , head of the contemporary art department

"Andy Warhol's 200 One Dollar Bills is a hugely important work for American art history. Not only was it one of the starting points of pop art, but this picture had the perfect ownership history - directly from Warhol's dealer to the legendary collector Robert C Scull, and then from his estate sale at Sotheby's to the current owner who acquired it in 1986 for USD 385,000,"

This spinmaster could easily work on Wall Street.....

Man muß diese Kunstkritiker einfach lieben......


The Great Contemporary Art Bubble Trailer Documentary by Ben Lewis

I hope you have the chance to see this "brilliant" documentary! After watching the entire doc i´m now 100 percent sure that the lates Warhol auction represents a bubble or is a scam.....Not sure what is better..... Guess who shortet the hell out of Sothebys.... Famous Hedge Fund manger Jim Chanos...This guy rocks!

Hoffentlich ergibt sich für Euch die Möglichkeit sich die wirklich bombastische Doku in voller Länge anzusehen....Bin mir nun zu 100% sicher das es sich bei der o.g. Auktion um eine neue Blase handelt bzw die Auktion getürkt gewesen ist...Weiß nicht was ich besser finden soll....Verglichen mit dem Kunstmarkt scheint selbst Wall Street etisch ganz weit vorne zu sein..... Übrigens schön zu sehen das einer der besten Hedge Fond Manager Jim Chanos auch hier das richtige Näßchen gehabt hat und Sothebys in Grund und Boden geshortet hat.... Der Typ rockt!

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Saturday, November 07, 2009

"Main Street vs Wall Street" Monty Python Edition & Update Blogroll

Posting will probably be a little less frequent than in the past.....

Werde in nächster Zeit "blogtechnisch" etwas weniger aktiv sein.....

Agnes Crane & Caroline Baum & Dilbert & John Kemp & Jonathan Weil & Marc Gilbert & News Stories In Photographs & The Baseline Scenario & The Colbert Report & The Daily Show & The Pragmatic Capitalist & The Reformed Broker & Washington´s Blog


H/T Rolfe Winkler

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Thursday, November 05, 2009

"The New Bubble Is In Stimulants....." Rosenberg

I want to add that the bubble is also in outright & hidden bailouts.....Nothing really new but hours/days away from the next mega bailout ( FHA ) a sober summary how wasteful the resources are "squandered"......

Finde zudem das man der Überschrift von Rosenberg noch hinzufügen sollte das es eine Blase in Sachen unverblümten und verschleierten Bailouts gibt..... Nichts wirklich neues, aber im Angesicht des nächsten unmittelbar anstehenden Megabailouts ( FHA ) eine wirklich deprimierende Zusammenfassung wie sinnlos unvorstellbare Summen verschleudert werden.....

H/T Gary Varvel


So the U.S. economy is growing again. But how can it not be growing with all the dramatic stimulus? The question should be “why only 3.5%”?
> If you can stand more details you can read "A Sham GDP For A Sham Economy"......

> Für einen teiferen Einblick was die USA veranstalten müssen um überhaupt ein positives GDP Ergebnis auf die Beine zu stellen kann das in "A Sham GDP For A Sham Economy"...... nachlesen....
Now the U.S. government is going to not just extend but indeed expand the tax credits for homeownership. This is happening at a time when the fiscal deficit is 10% of GDP. Simply amazing. The sector already receives more in the way of government support than any other area, and it adds zero to the capital stock or productivity growth. Oh, but it makes us better citizens. Renting must be for losers.

And then we see that the Fed’s TALF (Term Asset-Backed Securities Loan Facility) program that began in March just broke the $90 billion mark. This has basically supported 75% of the growth in the asset-backed market, almost evenly split between auto credit and credit cards because at over a 130% household liability-to-disposable income ratio, the government seems to believe we don't have enough debt on our balance sheets. Honestly — you can't make this stuff up.

But here is the real kicker. The Federal Housing Authority (FHA). If you’re wondering how it is that the U.S. housing market has managed to rise from the ashes, well, consider that the government-insured FHA program moved into high gear this year and has basically filled the gap vacated by the private sector.

[No Easy Exit for Government as Housing Market's Savior]

The efforts to allow practically anyone to secure a mortgage not just for a new purchase but for refinancing purposes (where default rates are really becoming a problem) should not go unnoticed (and they weren’t by the staff at the WSJ that uncovered the growing problems in yesterday's edition — FHA Digging Out After Loans Sour on page A2).

[Bigger Burden chart]

The efforts to stimulate were so profound that the damn-the-torpedoes-full-steam-ahead policy has resulted in an expected 24% default rate on loans originated in 2007, and 20% for 2008. So, what has happened is that the taxpayer has taken over the bad lending decisions that were Wall Street’s domain three, four and five years ago.

>The following chart is from the must read Quote Of The Day..... "The Defaults Are Worth It " Guess who said this......

>Der nachfolgende Chart stammt vom unbedingt zu lesenden Quote Of The Day..... "The Defaults Are Worth It " . Gut zu wissen das der Typ der dieses Zitat gebracht dem Bankenausschuß vorsteht......

[FHA Chart]

Indeed, the FHA began its aggressive moves to support the housing market in 2007 and has since spread its tentacles

According to the WSJ, the FHA is going to publish a report acknowledging that it may need to tap into general tax revenues for the first time in its 75 year history. Oh, but don’t worry, FHA officials say the agency has enough capital to withstand any expected losses.

> I think David missed the "surprising" news that the FHA Delays Fiscal Report . The only question is now how "shocking" & "surprising" the multibillion $ bailout will be...... Cannot wait to hear Barney Frank´s "outrage" ( "The Defaults Are Worth It " ) .........

> Ich denke Davis hat diese "überraschende" Meldung von heute übersehen das die FHA den Fiscal Report "verschiebt". Fragt sich nur wie "schockierend" & "überraschend" der sicher zweistellige Mrd $ Bailout sein wird...... Am lautesten wird sich sicher Barney Frank aufregen ( "The Defaults Are Worth It " ) ......

The FHA began its aggressive moves to support the housing market in 2007 and has since spread its tentacles. The FHA actions, foreclosure moratorium and tax credit have all given a false impression that we have seen a bottom in residential real estate.

But all that’s happened here is the risks have been transferred to the public sector balance sheet. The share of FHA-insured borrowers with a sub-600 FICO score has rapidly approached the 40% mark. So, we have stimulated a recovery by inducing more bad debt accumulation, which got us into trouble to begin with. But it’s not Wall Street taking on the risks now, its Capitol Hill.

This is an effective way to fight a credit collapse? No wonder global central banks are diversifying into gold. The U.S. is hardly going to pay for this by raising taxes (the newly emboldened GOP will see to that) nor by cutting spending (the union lobby groups won't stand for that). Moreover, we'll have to assume that global central banks are not stupid and can see the future supply of dollars that will be printed to fund all these initiatives.

All this must be part of the famous "strong $ policy"........ ;-) Good to be a GOLD-BUG......

Denke all dies ist Ausdrück der berühmt berüchtigten "strong $ policy" der USA..... ;-) Da weiß man doch gleich wieder warum ein bekennender GOLD-BUG ist......


Fannie Mae: $18.9 Billion Loss, Requests Another $15 Billion CR

Total nonperforming loans in our guaranty book of business were $198.3 billion

In the past year, the government has invested more than $110 billion in Fannie and Freddie, and it has pledged to invest as much as $200 billion in each company to keep them afloat.

[Seeking Shelter chart]

$45 Billion Boondoggle of Which $33 Billion Goes To Homebuilders Mish

It would loosen tax rules for homebuilders and other money-losing companies to let them claim an estimated $33 billion in tax refunds this year, according to Joint Committee on Taxation estimates.

The most galling thing about it is $33 billion of the $45 billion is not going to do anything but pad the pockets of those who helped create this mess. A mere $2.4 billion was given to extend unemployment benefits.

If Goldman Sachs is correct (and I believe they are), then most of the $10 billion in tax credits is a waste as well. Moreover, we have a huge inventory of homes already and we are creating incentives to build more.

The whole thing reeks and the Senate knows it. Note that Senator Christopher Bond called it a waste of money but there was not a single "No Vote". The bill passed 98-0 undoubtedly because the homebuilders padded the pockets of those voting for it with campaign contributions. This is the way Congress "works".

You cannot make this up...... This explain why i have the "Banana Republic Watch" label tagged to this post.... ;-)

Erklärt warum ich diesem Post das Prädikat "Banana Republic Watch" zugeteilt habe......;-)

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Monday, November 02, 2009

IMF Sells Gold To India's Reserve Bank & Remembering The "Brown Bottom"

Good to be a GOLD-BUG .......Take a look at this excellent Graph to put today´s news when it comes to gold & central banks into perspective..... So much for the overhang of the "massive" IMF gold sale threatening the price of gold...... As discussed earlier it looks like the headwind has transformed into a tailwind.....The price is flirting with new highs today....And it´s not only a "weak US$ story" ( H/T The Privateer via Mish ).... The chances are very high that Gold will continue to outperform for some time to come ( not so sure obout the short term ).......

Schon schön wenn.. man ein GOLD-BUG ist..... Diese Grafik gibt einen erstklassigen Überblick wenn es um Gold und Zentralbanken geht..... Da Gold heute nahe neuer Hochs (und das nicht nur in US$ , H/TThe Privateer via Mish )notiert ist von dem vielbeschworenen Überhang der den Goldpreis angeblich extrem belasten wird wenn das Gold letztendlich verkauft wird nicht viel zu spüren....Wie bereits früher erwähnt sieht es ganz so aus als wenn aus dem jahrelangen Gegenwind von Verkäufen durch die Institutionen zunehmend ein Rückenwind geworden ist..... ;-) Die Chancen stehen mehr als gut das Gold auch weiterhin outperformen wird ( kurzfristig bin ich mir weniger sicher ) .....

IMF sells gold to India's Reserve Bank

The International Monetary Fund said Monday it's selling 200 metric tons of gold to the Reserve Bank of India, to help shore up the fund's finances. The sale is part of a total of 403.3 metric tons of gold approved for sale in September, the IMF said.

via Jesse

RBI’s decision to shore up its gold reserves needs to be seen in the context of other central banks across the globe increasing their gold reserves. Among them are the central banks of China, Russia and a few countries in the European Union.

In the last one year, China has increased its gold holdings, by weight, by 75.69%, Russia by 18.78%, the Philippines by 18.50% and Mexico by 108.91%.

Compared with this, India’s central bank did not add anything to its gold reserves in the last one year, according to Bloomberg data.

In fact, the share of gold in India’s total reserves has dwindled over the decade.

In March 1994, the share of gold in the total reserves of the country was 20.86%; by the end of June 2009, gold constituted only 3.7% of the total reserves.

“Gold is the ultimate currency. In fact, only gold came to our rescue during (the) 1991 crisis, so it makes sense that RBI should try to increase its gold holdings,” Patil said.

At the current market value of $1,054 an ounce, or per 28.5g, RBI would need to spend about $7.4 billion to buy 200 tonnes of gold. With this, its gold reserve will rise to $17.716 billion, or roughly 6.20% of the total reserves.

A committee set up by a group of central banks overseeing the gold sales by the IMF has allowed the fund to sell 400 tonnes of its gold annually and 2,000 tonnes in total during the five years starting 27 September.

According to a report by the Associated Press dated 20 September, India, along with China and Russia, had evinced interest in buying IMF-held gold.

IMF’s total holding at historical price is valued at about $9.2 billion on its balance sheet. At market prices, as of 28 August, the fund’s total gold holdings were worth $98.8 billion.
I just coudn´t resist......

Konnte mir den nachfolgenden Chart einfach nicht verkneifen......

Gold: Does Gordon Brown's regret selling half of Britains' gold reserves 10 years ago?

Gold chart: Price of gold since Britain sold half of its reserves in 1999

Adjusting to todays & future prices combined with the "rock solid" outlook for the pound the "Brown Bottom" will provide even more reasons for SCHADENFREUDE for years to come.....

Auf aktuelle und zukünftige Preise gemünzt und den mehr als soliden Ausblick für das "britische Pfund" dürfe der "Brown Bottom" noch jahrelang für gehörig SCHADENFREUDE sorgen......

The Mess That Greenspan Made

IMAGE Make sure you read The significance of the IMF-RBI gold sales also from Tim

Verweise zudem auf The significance of the IMF-RBI gold sales ebenfalls von Tim. Sehr gute Zusammenfassung


Couldn´resist...... Nice call...... ;-)

Wohl ein Trade an dem Goldman kein Geld verdient...... ;-)

Goldman on Gold Prices: Central Bank Buying Something to Watch

“In addition to this potential shift of central banks from being net sellers to net buyers of gold, the continued weakness in real interest rates continues to provide strong support to gold prices over the medium term,” Goldman analysts write.

IMF gold data - Goldman Sachs

Low interest rates could make for “upside risk” to Goldman’s price forecast of $960 a troy ounce.

But we can’t help but notice that they haven’t raised their forecast even though we’re already around $1,100. The obvious question is when does Goldman see a pullback coming?

The following chart via Rolfe Winkler sums it up...

Denke der nachfolgende Chart von Rolfe Winkler spricht Bände....

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