tagged w/ Credit Crunch
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Is there about to be another round of bank failures? According to Bloomberg, if history is our guide, the answer is a terrifying YES. Some highlights from the article:
* "More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5% or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival. The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged. Almost 300 reported 3% or more of their loans were nonperforming, a term for commercial and consumer debt that has stopped collecting interest or will no longer be paid in full."
* "Also left out were the 19 lenders that underwent the Treasury’s stress tests in May; they were deemed “too big to fail” and told by regulators that government capital was available to keep them in business."
* "Excluding the stress-test list, banks with nonperformers above 5 percent had combined deposits of $193 billion, according to Bloomberg data. That’s almost 15 times the size of the FDIC’s deposit insurance fund at the end of the first quarter."
One thing the article fails to mention is why a ratio as low as 5% is such a problem. Unless I am mistaken, it is because of the way our banking systems' fractional reserve lending works. By law, banks must keep the ratio of outstanding loans to assets at 10:1, or to put it another way, for every dollar the bank has in deposits, they can loan out $9. That means that a "well capitalized" bank will have only 10% of its outstanding loans on hand.
What a systemIs there about to be another round of bank failures? According to Bloomberg, if... more
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It would appear that everyone's favourite communist country has run out of toilet paper. Cuba's been running low for a while due to a sh*tload of hurricanes and the global economic crisis. Sanctions and embargos haven't helped.
Of course this story could be a load of crap, but I for one believe this sh*t's real. Could this send the country down the pan? Will it float or sink? We'll have to wait and see.It would appear that everyone's favourite communist country has run out of toilet... more
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'Strawberry', a female parrot aged five, has proven herself to be a better investor than her adult human, less-fruitily-named rivals.
From AFP: 'Human investors picked any stocks they wanted. The parrot, using its beak, made random choices from balls representing 30 blue chips including Samsung Electronics.'
Ten people and one parrot took part in the experiment. Strawberry, who is originally from Papua New Guinea, came in at third place.'Strawberry', a female parrot aged five, has proven herself to be a better... more
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In a new twist on the Nigerian email scam, online rental ads are soliciting potential renters to wire money for several months rent, in exchange for super low rent rates. A scam alert from the FBI warns against the latest Nigerian scam.
Online rentals found through sites like Craigslist are attracting this new Nigerian scam.
The FBI warns renters searching for apartments and rentals to be wary of anyone asking for personal information, or who isn't local.
While it's a relatively new angle, the methods are still the same. To avoid being trapped by these scams, use the same due diligence you would in your other financial transactions. The FBI cautions renters:
* Only deal with landlords or renters who are local;
* Be suspicious if you’re asked to only use a wire transfer service;
* Beware of e-mail correspondence from the “landlord” that’s written in poor or broken English;
* Research the average rental rates in that area and be suspicious if the rate is significantly lower;
* Don’t give out personal information, like social security, bank account, or credit card numbers.In a new twist on the Nigerian email scam, online rental ads are soliciting potential... more
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Wealthy Jonathan Blain's 200 year old home The Bakehouse near Totnes in Devon is just not shifting, despite being on the market for more than a year.
And now Blain has got so desperate to sell his home he's gone to extreme measures to offload it. He's already offered a £100,000 pound "reward" to anyone who can seal the deal within four weeks. And now he's offering to throw in a brand new Range Rover and speedboat too.
He originally put his swanky pad on the market at an asking price of £3 million pounds, but has had to drop the price to - a meagre by comparison - £1.35 million quid.
Oh Jonathan I hope a very rich person makes all your dreams come true.Wealthy Jonathan Blain's 200 year old home The Bakehouse near Totnes in Devon is... more
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Heres a video I did of my friend lauren derwent and her fantastic band, performing live at the now closed (due to credit credit crunch) soho revue bar in london.Heres a video I did of my friend lauren derwent and her fantastic band, performing... more
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Friday 17 July 2009: Political street theatre group Government of the Dead too kto the streets again, this time on the steps of the Royal Exchange in London's financial district. They came with pig masks, a trough full of pig swill and a banner declaring "Bonuses Are Back". The "Pig Party" was to draw attention to the "business as usual" policy of the banks of sky-high bonus payouts not one year after the UK taxpayer bailed out the economy and banking system to the tune of £500 million.
Government of the Dead: http://graveyard.at/
Blog: jasonnparkinson.blogspot.comFriday 17 July 2009: Political street theatre group Government of the Dead too kto the... more
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Esat Sezer, SVP & CIO for Coca Cola Enterprises, has confirmed attendance as the keynote speaker at the CIO Summit US, one of the most important meetings this year for America’s top CIOs.
The summit, which will be held from September 8-10 in Scottsdale, Arizona, has been highlighted as a vital meeting place for all major companies across the US and their CIOs to discuss future investments in order to create an economic upturn for America.
In today’s world, corporations such as Coca Cola Enterprises have the financial reserves to weather the economic climate with the ability to increase their spends over the next year. Stability in US markets are vital during the last quarter of 2009, and we need to see the major players in business come together to execute and promote their companies, creating vital partnerships and investments with each other in order to steer the nation out of any further economic decline.
Sezer is set to highlight the need for better communication, internally and externally, referencing to Coca Cola Enterprises’ 6 month migration to SaaS, and the benefits this has drawn from its increased Employee Productivity and essential Cost Management. He will be joined by impresarios such as Rajesh Rawal, SVP & CIO of Burger King Corporations, Cassio De Oliveira, VP & CIO of Panasonic Corporation of North America, Mike Goodwin, SVP & CIO of Hallmark Cards, Inc., and Paul Johnson, EVP & CIO of BB&T, amongst 50 other visionaries at the meeting in September.
The unstable nature of the climate requires forward-thinking and visionary executives who operate and make decisions outside the vacuum of directors. It is vital that to stabilise the economy, America needs to look towards its large corporations which span over a wide spectrum of markets for quick decisions that will hopefully create an uprise.
Ironically, the world is now relying on companies like Coca Cola and Burger King to help shape its economy – how did we arrive at a place where unhealthy junk food corporations could be the answer to the world’s economic crisis?Esat Sezer, SVP & CIO for Coca Cola Enterprises, has confirmed attendance as the... more
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Debt, unemployment and repossession have all been concrete and visible effects of the recession but there isn't as much focus on how it affects people emotionally. According to counselling charity Relate, many younger people are having a tough time at the moment. They see 15,000 young people every year and reckon a quarter are depressed about money...
From BBC Radio1 NEWSBEATDebt, unemployment and repossession have all been concrete and visible effects of the... more
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pcs007
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2 years ago
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The anti-trust division of the Department of Justice has opened an investigation into the Markit Group over their role in the Credit Default Swap market. Let's hope something comes of this.
Who exactly is Markit Group? They provide pricing data on the CDS market and has developed many of the most closely-watched derivatives pricing benchmarks in it. And who are the shareholders in this group, which was set up in 2001? You guessed it: JPMorgan Chase, Goldman Sachs, Deutsche Bank, Bank of America and Morgan Stanley to name a few.
Just look at the graph linked to the story. From 2001, the CDS market grew from virtually nothing to over a $60 trillion market in only 6 years... Keep in mind, according to the World Bank, the GDP of the US in 2008 was $14 trillion and the GDP of the entire globe was only around $60 trillion. Looking at those stats, how was the size of the CDS market even possible?
Why do I have a feeling these banks were doing something wrong?
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"The Department of Justice has opened an investigation into the credit derivatives market, with letters sent to over a dozen dealers asking for several years’ worth of detailed information about trading and pricing.
The move comes as the regulatory spotlight continues to shine on the credit default swaps (CDS) market, a sector of the privately-traded derivatives universe that grew dramatically in the last decade and generated huge profits for Wall Street.
Initially devised as a type of insurance on defaults, the CDS market is widely blamed for amplifying the credit crisis as it became a means for institutions like AIG to place vast bets on corporate credit and mortgage debt.
The letters, sent to banks with an equity stake in Markit Group, which provides pricing data on the CDS market and has developed many of the most closely-watched derivatives pricing benchmarks in it such as the mortgage sector’s ABX, CDX and ITraxx Europe indices, were sent recently.
According to people who have seen the letter, it does not specify why the DoJ is seeking the information and whether it is a fact-gathering mission or linked to specific concerns of misconduct or market dominance.
It was sent by the anti-trust division of the DoJ. The DoJ declined to comment.
Markit said in a statement it “has been informed of an investigation by the Department of Justice into the credit derivatives and related markets. We will work with the Department to provide any information requested of us.”"
(Follow the link to complete the article)The anti-trust division of the Department of Justice has opened an investigation into... more
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lovemoney.com (via Yahoo!) lists nine "wacky" ways to make money - including this advert, or so it seems!
Highlights include: Selling your hair, driving a rickshaw, helping out in ID parades and turning your home into a film set (disaster movie?)
They've left out sperm donating - which I believe is the number one means of income for students (male ones, obviously!)lovemoney.com (via Yahoo!) lists nine "wacky" ways to make money - including... more
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There are now websites that can help you rent out your under-used driveway to needy commuters. How much money can one get? Well it depends on the demand. If you're located in the Outer Hebrides, don't expect your home's double driveway at the end of a one mile private road to be worth as much as a Smart car-sized single in Sheperd's Bush.
The article looks at the pros and cons of the whole shebang and has links to the companies involved.There are now websites that can help you rent out your under-used driveway to needy... more
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ITN's Lucrezia Millarini asks the punters at the Isle of Wight Festival if they are tightening their purse strings.
From ITNITN's Lucrezia Millarini asks the punters at the Isle of Wight Festival if they... more
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pcs007
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2 years ago
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BBC is cutting star's salaries by up to 40%
The BBC's director general, Mark Thompson, delivered the bad news on Monday night, in what was described as a 'very grim meeting' by one of those who attended.
Yes, it's very very bad news that they won't be getting the full £130,000+ salary they were expecting.
Gutted.BBC is cutting star's salaries by up to 40%
The BBC's director general,... more
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Recession trends are slowing down, but there is still no proof we are nearing the end of the recession, Kristijan Floricic the co-owner of the Croatian investment funds management company Aureus Invest said at the company's workshop which took place in the western town of Rovinj at the weekend.Recession trends are slowing down, but there is still no proof we are nearing the end... more
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Here's some ways to make (or save) money during one's lunch hour - including using a social network that pays, complaining and doing your grocery shop online.
I do the complaining and grocery shop and yeah, you save money but there's no way you can do them in an hour!Here's some ways to make (or save) money during one's lunch hour - including... more
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A guy by the name of Jon Fast (awesome name by the way, Jon) rents out his Wii for $30 a day or $50 for a whole weekend. Not a bad return for something that might otherwise go unused. In this clip from CBS News you'll see Dorinda Vassigh, one of the people that have rented Jon's Wii and why she chose to do so (long story short, she was babysitting her niece - wanted to keep her occupied, didn't need a Wii for the long term).
Mr Fast isn't alone in doing this - apparently more and more people are doing so, thanks to the help of a new website called Zilok. The site helps match people up in the same area, in this case San Francisco, who want to lend/borrow an item.
All seems like a good idea, but what happens if the item breaks? Or you don't get it back? Is it covered by warranty if it breaks? If it's not returned - can you claim it on you household insurance?A guy by the name of Jon Fast (awesome name by the way, Jon) rents out his Wii for $30... more
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"Last week I covered the horror of America’s usury law problem and how it has caused a massive imbalance of where our money should be. It has shifted dramatically to the financial sector, where it is used to produce nothing. The worst of the worst of the financial sector are the payday lenders. They are scum of the earth and should be shut down immediately. They prey upon the weak and cause endless suffering. Other than that, they are great guys...."
Hit the link above for a breakdown of payday lending from my favorite political columnist and voice of extreme reason, FearTheReaper."Last week I covered the horror of America’s usury law problem and how it... more
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When the economy starts to lift itself out of this recession, what will be the leading indicator that tells us we have turned the corner? Extramarital affairs and the price of Latvian hookers. And both are telling us that there is still plenty of trouble ahead.
These two measures were proposed recently as reliable economic barometers, and they warrant consideration. Economists often say “animal spirits” play a role in keeping the wheels of the business cycle turning. They have given little advice on how we should measure those spirits. Now we may have the answer.
In the U.K., a website called www.illicitencounters.co.uk allows married people who are planning to play a few matches away from home to meet up with each other. It has at least 300,000 members, indicating that the British have more on their minds than just the work expenses of politicians and the threat of unemployment.
The website crunched its traffic and membership numbers and found that there was a big increase in both when there was a turning point in the FTSE-100 index, which measures the leading companies listed in London. When the market collapses, people plot affairs. And when the bulls rage, the same thing happens. When it is trading sideways, they stick with their partners.
In a similar vein, John Hempton, who runs the financial blog Bronte Capital, has monitored the health of the Baltic economies based on the price of Latvian sex workers -- currently about 30 lati ($60) for the standard service. His argument is that since the prices have collapsed by about two-thirds in a year, Latvia and the other Baltic states are still in big trouble with deflation lurking.
Using sex as a measuring stick for the economy and markets tells us we aren’t over the worst yet. Affairs increase when the market turns. Traffic on Illicit Encounters soared in November as the markets collapsed, but it hasn’t surged again. The message: The jump in share prices of the past two months is a bear-market rally, not the start of a genuine recovery.
As for the Latvian hookers, there is no sign of prices recovering yet. The message: The International Monetary Fund should remain on high alert. And so should most of Europe’s banking system.
Infidelity websites and Latvian escorts can say a lot about where the economy is heading. Just be discreet if you decide to follow these two benchmarks.When the economy starts to lift itself out of this recession, what will be the leading... more
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This program is about using skills as currency. What credit crunch?
For example:
An IT technician spends an hour fixing a decorators computer
The decorator spends an hour painting the IT technicians house
This is going on in Texas, would it work in the UK?This program is about using skills as currency. What credit crunch?
For example:... more
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