Yfirforsætisráðherrann setur vísvitandi samningana í uppnám. Geðráð Íslands mun koma saman í hádeginu og álykta um málið

Frétt af mbl.is

Óbreyttir stýrivextir
Viðskipti | mbl.is | 14.2.2008 | 9:04
Bankastjórn Seðlabanka Íslands ákvað á fundi sínum að halda stýrivöxtum óbreyttum í 13,75%. Er þetta í samræmi við spá greiningardeilda. Bankastjórn mun kynna rök fyrir ákvörðun sinni á sérstökum fundi sem sjónvarpað verður á vef bankans klukkan 11.
Lesa meira

 

 

Óbreyttir stýrivextir

Geir Haarde hefur áhyggjur af lygnum mönnum enda hefur hann sína innrætingu og hugmyndafræði úr umhverfi þar sem sannleiksást og heiðarleiki ráða algjörlega ríkjum

Frétt af mbl.is

Fundur boðaður með aðilum á fjármálamarkaði
Viðskipti | mbl.is | 13.2.2008 | 15:51
Ríkisstjórn Íslands hefur boðað aðila á fjármálamarkaði til fundar á morgun til að ræða um viðbrögð við versnandi stöðu á fjármálamörkuðum. Telur ríkisstjórnin eðlilegt að vera í viðbragðstöðu og undirbúa ráðstafanir í því skyni að draga úr neikvæðum afleiðingum hugsanlegrar lánsfjárkreppu á alþjóðamörkuðum.
Lesa meira

 

"""Að sögn Geir þá gætir enn neikvæðrar umfjöllunar hjá einstaka greiningaraðilum og fjölmiðlum um stöðu íslensks efnahagslífs. „Þar er iðulega farið með hreinar stað­reynda­villur og lýsingar á stöðu íslenska hagkerfisins eru mjög ýktar. Það er áhyggjuefni að þessir aðilar skuli ekki taka tillit til þeirra ítarlegu upplýsinga sem öllum eru aðgengilegar og lýsa sterkri stöðu bankanna og ríkissjóðs. Hér virðast önnur öfl ráða ferðinni en leitin að sannleikanum." """

 

-----------------------------------------------------------------------------

 

Það er von að Geir sé misboðið enda er hann mótaður í umhverfi þar sem sannleiksást og hreinskilni gilda rúmlega 100% og lygarnar eru gleymdar um leið og þær verða til og eru því eiginlega aldrei til frekar en hjá Stalín og George Orwell. Sjálfur er hann formaður flokks sem er systurflokkur repúblikanaflokksins í BNA og hefur sína hugmyndafræði þaðan frá aðilum sem ljúga aldrei og blekkja amk. á meðan þeir eru sofandi. Þarna þegar pyndingaflugsfárið kom upp og vinir Dabba og Geirs í Washington tjáðu sig um það sagði Geir að "engin ástæða væri til að efast um orð bandar. stjórnvalda". Þetta byggði hann á meðfæddri skarpskyggni og innsæi og á sama hátt og hann gat með góðri samvisku staðfest sannsögli og heiðarleika valinkunnra sómamanna í Washington sér hann núna léttilega í gegnum lygar einhverra vondra manna sem eru að rakka peningana okkar niður.

 

 

 

 

 

Fundur boðaður með aðilum á fjármálamarkaði

Núna er krónan algjörlega ofurseld spákaupmönnum og við höfum því í raun tapað okkar efnahagslega sjálfstæði

Frétt af mbl.is

Geir: tveir kostir í boði
Viðskipti | mbl.is | 13.2.2008 | 15:41
Geir H. Haarde, forsætisráðherra, segir að flestir séu búnir að átta sig á því að einungis tveir kostir séu í stöðunni, að halda íslensku krónunni eða taka upp evru sem jafnframt þýðir inngöngu í Evrópusambandið. Það er einfaldlega ekki kostur að taka einhliða upp evru. Lesa meira


----------------------------------------------------------------

Þessir spekúlantar hafa spilað með krónuna eins og jójó upp og niður síðustu árin og upp á síðkastið hafa þeir verið að hugsa til heimferðar með sitt fé enda farið að hilla undir að seðlabankinn neyðist til að byrja að lækka vexti. Þetta er skammtímakapítal sem hefur verið að spila á gríðarlegan vaxtamun krónunnar og annarra mynta. Fjárhæðirnar eru gríðarlegar og núna nema skammtímaskuldir þjóðarbúsins eitthvað um 1500 milljörðum króna (nærri fjórum sinnum hærri fjárhæð en nemur árlegum tekjum ríkissjóðs og líklega 10 sinnum meira en nemur gjaldeyrisvarasjóði seðlabankans), með öðrum orðum ríkissjóður og seðlabanki eru dvergar sem engu máli skipta í þessu sambandi og fjárhagsleg geta þeirra í sambandi við gengishreyfingar krónunnar mælist varla. Þetta er staðan sem blasir við eftir innihaldslaust mjálm forsætisráðherra landsins og yfirforsætisráðherrans í seðlabankanum síðustu misserin. Ég býst við að markaðsaðilar hljóti að gefast upp á þessu mjálmi og byrji að taka upp evru hvað sem hver segir. Það þýðir ekkert að bíða með það eftir mönnum sem ekkert hafa að segja og munu koma af fjöllum þegar krónan hrynur endanlega. Það er mikilvægast að eyða áhrifum spekúlantanna á krónuna og jafnframt festa þá við okkur með sameiginlegum gjaldmiðli, með því að taka upp evru. Við verðum að vinna gegn því að þetta gríðarlega skammtímafjármagn hlaupi frá okkur ásamt meðfylgjandi gengishruni og óðaverðbólgu og eina leiðin til þess er að losna við krónuna (og helst áðurnefnda innihaldslausa mjálmara í leiðinni) og taka upp evru. 

 

 

Geir: tveir kostir í boði

Reality Check on the Buffett Bounce

Nauðsynleg lesning.

------------------------------------------------------

By Elizabeth MacDonald

http://emac.blogs.foxbusiness.com/2008/02/12/reality-check-on-the-buffett-bounce/

The market rallied on the news that Buffett is stepping in to reinsure up to $800bn in municipal bonds.

But it seems like someone’s reality check has bounced here. Read behind the news. This is not Buffett the white knight,he’s not taking on the bond insurers’ liabilities–he’s selling reinsurance to the bond insurers, to make money on a pretty safe business.

Buffett is basically selling a second level of insurance to the severely damaged bond insurers, MBIA, Ambac and FGIC. Under the deal, Berkshire would stand to collect a hefty 150% premium of the companies’ unearned premium reserves over the life of the bonds. The bond insurers have taken massive writedowns for insuring all sorts of bad securities backed by shoddy loans created in the subprime crisis.

The market is reacting positively because Buffett effectively would sell to the bond insurers, who are fast losing their Triple A status, his own more stellar Triple A credit rating (a Triple A rating at the bond insurers these days is worth about as much as the GoodHousekeeping rubber stamp seal of approval on an old blender circa 1952). Also, Buffett has already opened up a new bond insurer that’s going to charge more than his competitors for his Triple A.

And Buffett is only offering to pick off the safest parts of the bond insurers’ business, government bonds that hardly ever default. Investors in bonds issued by the biggest municipality that defaulted, Orange County, Calif., eventually got paid in full (only after the county filed for bankruptcy and only after a protracted court fight).

Muni bonds are considered safe because they are backed by local taxpayers and by hard assets like bridges, tunnels or highways. Which should make you stop and think about why the bond insurers exist at all (yes, yes yes, cheaper yields because of a paper promise that basically reap fat fees for the insurers).

The very idea, as Bill Gross of Pimco points out, that, say, bond insurer Ambac with its microscopic $5bn in capital reserves can insure all of the municipal bonds of California, the sixth largest economy in the world, is absurd.

Again, take a look at the credit risk of munis, the business Buffett likes and wants to make more money off of by reinsuring the bond insurers.

From 1970 to 2005, the 10-year cumulative default rate for all investment-grade municipal bonds was a microscopic 0.06%, compared to 2.23% for comparably rated corporate bonds, says Moody’s.

Moreover, muni bond investors get way more money back after a default than corporate bond investors. The average recovery rate on defaulted municipal bonds has been a fat 66% of par, versus 42% for defaulted corporate bonds.

And muni bond investors have a higher chance of greater recovery. Nearly half of investors in defaulted muni bonds recovered between 75%-to-100% of par, versus 17% for defaulted corporate bonds. Meanwhile, nearly two-thirds of investors in defaulted corporate bonds recovered less than 50% of par.

Moreover, Buffett is not taking on the subprime toxic waste in bond insurers’ portfolios—signs that there is intelligent life in the universe (and I assure you he wouldn’t do it unless he got some government guarantees on that business).

Bond insurers ran headlong into the subprime mess in 1998 when it started collecting fees to insure corporate securitizations like collateralized debt obligations—talk about picking up nickels in front of avalanche boulders, not just steamrollers.

As mortgage defaults rose, bond insurers, such as Ambac and FGIC, have been downgraded by ratings agencies due to their weak capital base. MBIA faces a similar fate.

Buffett wants to leave the smoking wreck of this subprime junk debt crackup behind him on the highway, which makes the bond insurers even more vulnerable to a credit rating downgrade. So is it any wonder Buffett’s phone is not ringing off the hook with calls from the bond insurers?

Nightmare on Wall Street now Nightmare on Elm Street: The problem is spreading. What is likely the greatest credit bubble in the history of the stock market has the Federal Reserve, central bankers around the world, Congress, and banking regulators scrambling.

On top of Fed rate cuts and a $168bn fiscal stimulus plan comes the new plan from six big mortgage lenders, including Bank of America and Washington Mutual, to freeze interest rates and forestall foreclosures on both subprime and prime loans. To date, less than 10% of about 7 million subprime loans have gone through a workout.

And it’s that data that matters—for the market to get back on its feet, investors need to see light at the end of the tunnel and they need to get a grip on the size of the damages. Which is why they’re grabbing onto the Buffett news like a piece of Styrofoam in a tidal wave.

This all calls for a recap.

A recent meeting of the G7, a group of major industrial powers, saw this nail-biter of a report: That write-offs of losses on securities tied to US subprime mortgages could reach $400bn.

This is on top of the $125bn in writedowns on a global basis that financial outfits, including Merrill Lynch, Citigroup, Morgan Stanley and UBS, have already taken. Already, January 30, S&P downgraded, or placed on review, more than 8,000 bonds and CDOs. For its part, S&P says that could double losses in these securities to $265bn. So the range of future losses is $265bn to $400bn.

There’s more. Separate from that, banks are exposed to about $125bn in collateralized debt obligation hedges with bond insurers, says S&P. But just a quarter to a third of those exposures have been disclosed in company filings. Merrill lynch and Citigroup have disclosed their hedges. Merrill Lynch says its hedges have $3.5bn of mark to market value. U.S. financial institutions could face fresh write-downs of as much as $70 billion if the bond insurers lose their top rating, with the biggest hits at Merrill Lynch, Citigroup, and UBS, says Meredith Whitney, a top analyst at Oppenheimer.

On top of this, an estimated 150 lenders will fail due to problems at regional and local banks that made loans to developers to build way too many malls, condos, and other properties.

The Fed’s last survey of senior commercial loan officers showed eight out of 10 tightened lending standards on commercial real estate loans, and zero, that’s right, no commercial mortgage backed securities were issued in January—the first time since the survey was taken in 1990.

The regional banks could get wiped out on a large scale. As much as a third of community banks have commercial property loans that would wipe out their capital reserves more than three times over, says the Comptroller of the Currency, John Dugan. RBC Capital Markets figures anywhere from 50 to 150 regionals could go bellyup in by 2010. That’s the highest rate we’ve seen since the S&L crisis of the late 1980s, early ’90s.

All this has got San Francisco Federal Reserve president Janet Yellen coming out saying that while she thinks rate cuts may avert a recession, she remains concerned about the contraction in bank lending (did Yellen get a heads up about the FDIC Quarterly Banking Profile for Q4 2007, set to be released on Feb 21?)

There’s more.

On top of all this, Standard & Poor’s figures that the banks may be stuck with $148bn worth of leveraged buyout loans still in the pipeline waiting to be syndicated. Banks couldn’t syndicate $14 billion of Harrah’s debt, and puts at risk the $15 billion of debt for the buy-out of Clear Channel.

Wall Street’s pain is already on Main Street, with money market funds around the globe suffering losses, even drug maker Bristol Meyers Squibb reporting subprime-related losses. The US Central Federal Credit Union, a big lender to the nation’s coop banks, lost its AAA rating from S&P because of toxic subprime waste in its mortgage portfolio.

Yes the credit markets are thawing a bit but not enough.

The bottom line: The Fed will likely have to cut rates again on March 18 to 2.5%.

Evran í 150 kr. á árinu ?

Hún er núna í sögulegum toppi gagnvart krónunni enda hefur evrópskt spekúlantafjármagn verið að fara aftur til síns heima (sbr. einnig hrynjandi hlutabréfamarkað í því sambandi).

Þegar seðlabankinn neyðist til að byrja að lækka vexti má búast við að enn herði á þessum fjárflótta og þar af leiðandi hruni krónunnar. Hún getur hrunið afar hratt og hefur gert það, um tugi prósenta á nokkrum mánuðum, sbr. neðangreint graf evru gegn krónu sl. fimm ár.  

 

Tortured 9/11 "Suspects" face Kangaroo Court in Guantanamo Bay - YAWN

URL:- http://www.timesonline.co.uk/tol/news/world/us_and_americas/article33417...
US set for trial of 9/11 suspects
Tony Allen-Mills, New York

MORE than six years after the terrorist attacks of September 11, 2001, US military prosecutors are preparing to file formal charges against six high-ranking Al-Qaeda detainees, among them Khalid Sheikh Mohammed, who allegedly confessed to masterminding the plot.

The accused terrorists are all being held at Guantanamo Bay in Cuba. US officials said yesterday that war crime charges could be filed as early as this week, although it may be many months before the cases are ready to go to trial.

The apparent breakthrough in a heavily criticised judicial process would open the door to the first prosecutions of the alleged 9/11 ringleaders since the hijacking of four aircraft resulted in the deaths of almost 3,000 people.

The proceedings are certain to inflame worldwide criticism of the US military justice system, including the severely limited legal rights of Guantanamo detainees and the use of torture during interrogations. ....

Villi verður sendiherra í Timbúktú og veggir fundarherbergis Seðlabankans verða fóðraðir með mjúku efni

Er meðal helstu nauðlendinga sem neyðarfundir íhaldsins hafa fundið upp um helgina. Þá hefur verið ákveðið að sýna Geir Haarde opinberlega á amk. þriggja mánaða fresti. Meira síðar.

Enn hrynja króna og hlutabréf

Evran er alveg við 100 kall og hefur aldrei verið hærri gagnvart krónunni.

Eftir að Kaupþing tilkynnti að vaxtalækkunarferli seðlabankans væri að fara í gang hefur hert á hruni krónunnar og gengisvísitalan nálgast nú ört toppinn frá því um vorið 2006 (135). Eftir að hann hefur verið tekinn út er næsta stopp væntanlega í kringum 150 (toppurinn frá 2001).

Hlutabréfin ættu að hafa verulegt support í kringum 4000 (mikilvægur botn frá árinu 2004).

Þetta virðist hvorttveggja vera aðeins spurning um tíma. Hvort um vikur eða mánuði er að ræða verður að koma í ljós.

Örhryllingssaga sem tekur tíu sekúndur í flutningi. Ath. ekki fyrir viðkvæma

Formaður stjórnar seðlabanka Íslands heitir Halldór Blöndal.

Numero duo heitir Hannes Hólmsteinn Gissurarson.

Aðalgúrú þessarar furðustofnunar heitir Davíð Oddsson.

Dario Fo hefði ekki getað stillt upp öðrum eins persónum í leikhúsi fáránleikans.

 

Free Reserves Go Negative, Blogosphere Goes Bonkers

06 February 2008

http://jessescrossroadscafe.blogspot.com/2008/02/free-reserves-go-negative-bloggers-go.html

Free Reserves Go Negative, Blogosphere Goes Bonkers

There has been a recent circumstance where some of the occasionally reading public have noticed that in the bowels of the Fed's publications, in a series affectionately known as the H-Reports, that Non-Borrowed Reserves of the Banks went NEGATIVE last week. Oh my Lord, and heavens to betsy! This is surely a sign of impending insolvency, deflation, and probably the end of Life as we know it (TEOLAWKI).

We've grappled with this for serveral days now, not so much in trying to understand what is happening with the banks, which we think we understand, although there is enough opaqueness, if not outright deception, in the system to make us doubt just about everything, but rather, to try and figure out how to explain this to a group of readers who likely don't know much about central banks, monetary systems, and bank accounting. This is no deficiency on their part, and its probably healthy since we cannot think of a more useless waste of productive effort for those who are not specialist drones in some bureaucratic accounting structure, or a major university.

But since the bankers appear to be going wild, and the economists are either in retreat up in the hills or selling whiskey to the angry villagers on behalf of some political warlord, we seem to be in a position where trying to lend insight into this might be considered a duty. We take this up reluctantly, believe us, because both the goldbugs (said somewhat affectionately) and the deflationists (leave a magazine but please go away) are both holding up their torches and chanting.

So if duty calls, we have decided not to belabor this one, but to just spit it out, provide a reference work for those who have extreme masochistic tendencies, and then run off to do more productive if not enjoyable things like making a living. Keep in mind this is a simplified explanation, will have a lot of technical holes in it, but the major foundations of the argument are pretty sound. We also wrote it at one sitting with no rewrites and precious little spell checking.

Banks are profit seeking, and to shareholders preferably profit maximizing in their behaviour. Put very simply, they have a portfolio of things they 'own' which they wish to use to generate profits. This implies that the must acquire things which is costly, and even the things they already own can cost plenty, as anyone who has ever married a trophy wife must surely know.

When banks put together that portfolio of things that they 'own' they consider the various costs of possessing or acquiring those things, and what they might get in return for doing things with them to generate some income, the net result being often referred to as 'profit.'

Doesn't that sound familiar? Portfolio? As in portfolio theory? Even the investor has often entertained the notion that if they have a portfolio of things, with different returns, risk, and maturities, they might have the ability to tinker with that combination to get the best bang for the buck, so to speak. That's where a little knowledge is dangerous, because the example of the individual goes sour pretty quickly when you start applying it to accounting for banks. But let's go with it a bit.

A bank can have a group of things it 'owns' including cash, Treasuries, loan portfolios, etc. Banks are the ultimate leverage machine. They don't like to hold reserves, because reserves are most often things that are not performing to their multiplying maximum. Very inconvenient and all that. In the UK as we recall, the reserve requirment is zero, but you better not miss it. in the US its some handwavy existential notion that people think of as 10 percent, but with sweeps and so forth its a little virtual. Still it does exist, and the Fed does track it.

Does it matter WHERE the reserves come from? After all they must come from somewhere. Vault cash (ugh no return there) is one example. Banks, contrary to popular belief, hate cash. necessary evil and all that. Pesky stuff.

As you probably know, banks borrow from each other to make reserve requirements (Fed funds rate or effective funds rate if you will) and from the Fed (Discount Rate).

What if the Fed created an extra groovily priced borrowing facility for the banks, that offered 1. privacy 2. ease of use with favorable durations and required collateral 3. a cost that is less than inflation.

Let's repeat number three. The Fed offers the stuff that banks use to make money, capital, and it does it for a cost that is less than inflation. Some might refer to that as 'free money.'

If you put enough of that into the system, what would happen? 1. The effective Fed Funds rate would drop faster than a local hardware store's prospects when the new Walmart gets built, 2. Relatively riskless investment returning even a little better than the super secret discount rate (aka TAF) would plummet in return as too much money chased them. 3. Relatively safe assets would start inflating as the search for return grew more intense.

If you don't believe us take a look at some of the whacky things going on with the yield curve, especially with the two to five year Treasuries since this is where the risk aversion return hungry genie is pointing.

This free money concept sounds great! Why don't they do it all the time? Beats working. Well, the trick is to provide free money without letting on that its free money, at least to the tourists, and especially your creditors who buy and hold your sovereign debt. Its a dollar dropping in value thing.

To do that you have to make people think there is less inflation than there really is. Check. Second thing you have to do is set up an opaque and somewhat exclusive mechanism by which you direct the 'free money.' TAF anyone? Anyone? Bueller?

So what else should a bank do. Acquire more depositors? Sure, and compete with money market funds, and scramble for high cost nickels when the Fed is offering low cost megabucks. Where's the unemployment line Rudy? The money machine is right down the hall in Ben's office.

What we are seeing are a lot of skewing and distorting of the data as the Fed takes extraordinary actions to push liquidity into the system by offering 'free money' to the part of the system where you want to put the juice to make things get moving again, the primary dealer banks. They would still like some non-supply side action in the form of a stimulus to consumers, but the Fed can't do that (yet) and must rely on Congress (where no stimulus goes forward without a hefty chunk for numero uno someway somehow).

This is NOT to say that there are not serious problems in the financial system. This is NOT to say that deflation is impossible (hey fiat cuts both ways and if the Fed raised Fed Funds, margin money and reserve requirments tomorroww to the max we'd probably see something in the ensuing chaos resembling deflation.

However, if and when the real cracks in the system show up, its unlikely to be in one of the H-series documents, as cool and esoteric as they might seem to someone who never looked at them before. They are not secret. They are on the web for God's sake.

The real problems will come like a thief in the night, and most likely with some exogenous shock from a foreign creditor, or an irrational panic like a market crash or a bank run that exposes the weakness hidden in the system. Well hidden until the tide goes out.

We warned you it would be simple, and full of technical holes, but it is sound. If you want the intermediate version read this free book online: Monetary Economics by Jagdish Handa. Its not the best but its fairly readable and the price is right.

As for the real source of the problem? Its not loose money. That's just a prerequisite.

We live in a time when lying is no longer considered dishonorable if you succeed in achieving your objective. It might even be your government sanctioned duty. Heck, you might be admired for it, get a really nice golden parachute, be knighted, or even elected president. And economists are no different, being sullied by their exposure to the marketplace, which is much more richly adorning than a quiet department office and admiring but amazingly similar students.

These are the times in which we live. We are no different than prior civilizations. We just are grading behaviour on a really exceptionally generous curve. No financier, lobbyist, businessman, or corrupt politician left behind.