Just in, this will bail out China, London, and other Foreign Banks

[bpr]

Re: Just in, this will bail out China, London, and other Foreign Banks

Where are people coming up with $.2 or $.3; Thirty cents on the dollar sounds like fire sale prices, to me. From what I've read and heard, they will not be paying "fire sale prices" for this debt, but something closer to maturity value (according to Bernanke at the House hearing). Either way, what they pay totally up to the discretion of the Treasury.

[Supercilious]

Re: Just in, this will bail out China, London, and other Foreign Banks

Because taxpayers aren't going to pay for this!!! This isn't an expense: it's a holding company, a shell. Once we get lending again, the NAV of these products will increase. Anyway, more SWF's(ahem GCC ahem) will pour money into the underlying assets (RE and other crap). The US gov attacks liquidity of assets, SWF's pour money(upon passage of bill) into US RE, then PE money follows (once duly repatriated sans taxes), and voila, NAV of assets crap increases.

Remember GSE spreads before FNM bailout and after? It was one of gross' few good calls this year.

Phirang nailed it here. I have to agree, at least, partially with that. The US taxpayers will take some losses to their wallets but that's nothing compared to the losses the Rest of The World taxpayers will take. And that makes sense, since J6P is already in debt up to his eyeballs. There is not much left Wall Street can rip-off from the poor fella.

Still, the US tax payer will have to pay for the minimum monthly payment of the Fed's negative interest rate Magic Credit Card issued by the International Dollar Swindle Bank (aka US Department of Treasury)

[phirang]

Re: Just in, this will bail out China, London, and other Foreign Banks

Phirang nailed it here. I have to agree, at least, partially with that. The US taxpayers will take some losses to their wallets but that's nothing compared to the losses the Rest of The World taxpayers will take. And that makes sense, since J6P is already in debt up to his eyeballs. There is not much left Wall Street can rip-off from the poor fella.

Still, the US tax payer will have to pay for the minimum monthly payment of the Fed's negative interest rate Magic Credit Card issued by the International Dollar Swindle Bank (aka US Department of Treasury)

Ah, but the Fed has zeee zolution:

thinner dollars!

bwahahaha!

[c1ue]

Re: Just in, this will bail out China, London, and other Foreign Banks

WHO CARES: the USD is the reserve currency: this is why debts don't matter!!! For that 1 of money china paid us for that worthless paper, we're buying it back for, what, $0.2? $0.3? We're not even factoring in a discount rate! That's called profit, my friend!

We export PAPER and get HARD ASSETS in return. Our "allies" and trading partners finance our military and our excesses. Pretty good deal if you ask me.

Demagogues are exploiting the ignorance of the hoi polloi to win concessions and differentiate themselves from their colleagues. The only other plan that makes senses is an equity stake, but that'll be hell to get through.

Phirang,

Past performance is no indicator of future performance.

Secondly you're lumping yourself with all Americans.

I don't think the majority of Americans feel like they're getting anything for free. The bullets shot in Iraq and Afghanistan do very little to benefit the rest of the population - at least the after-tax, after-inflation income numbers seem to reflect that.

On the other hand - housing, food, and fuel costs are all rising.

Sure, the rentiers are making a mint. But there's not enough going around to placate the masses, and the housing ATM machine is broken for at least a generation.

Then there's the foreigners. I still have yet to see a convincing argument that China, India, Brazil, and Russia have any need to hitch themselves to the US' wagon any longer. Europe is a little more complicated - there is a lot of intertwining of the economies, especially the UK. Germany as the world's largest exporter naturally would also be hurt by a US fall from grace.

In the past, it was as Bulls pulling the US' wagon in return for feed and maintenance (money for infrastructure development).

Now the choice is pull the wagon after getting your balls ripped off (Becoming an Ox). No future just a job until you get too old, die, and are converted to glue and cutlets.

Doesn't seem very attractive to me.

[VIT]

Re: Just in, this will bail out China, London, and other Foreign Banks

WHO CARES: the USD is the reserve currency: this is why debts don't matter!!! For that 1 of money china paid us for that worthless paper, we're buying it back for, what, $0.2? $0.3? We're not even factoring in a discount rate! That's called profit, my friend!

We export PAPER and get HARD ASSETS in return. Our "allies" and trading partners finance our military and our excesses. Pretty good deal if you ask me.

I see it the same way. Only if you believe US will repay 11 trn USD of its debt this will be taxpayer money. This bill will not cure the patient but can stabilize him before the surgery. Without surgey he will die later.

[Guest]

Re: Just in, this will bail out China, London, and other Foreign Banks

No disrespect Phirang, just a challenge of the ideas you put forward at iTulip (as is the normal function of these pages), but your "astute and checkmating US FED" idea sounds implausible. To call the scenario you describe a trumping move by the FED is a stretch. A lot of hints instead suggest the opposite, that the aFED is merely running scared. For one thing the patsy creditors you describe are going to be about as easy for the FED to grab a firm hold of as a bunch of greased eels. You are talking about securing the global checkmate for a tottering world currency order, with a scam in which the creditors en masse are locked in as unwilling participants? The creditors?

Pissing one's creditors off even more by abandoning the last semblance of good faith implies one has complete assurance one's trap is inescapable, but it is anything but inescapable. Meanwhile, the counterparties to this checkmate ( rich and obliging patsies ) among our large creditors are players in your scenario with all the apparent initiative of a bunch of wooden posts stuck in the ground? I don't believe that banks trying to cement new global currency orders figure they can pull off imperial tithing scams, based solely on the strength of a momentary tactical advantage in a process with a certain resemblance to three card monte. And buying former obligations back from the presumed creditor vassals at thirty cents on the dollar is hardly a scheme designed for longevity.

The intended patsies more likely turn into greased eels fairly early on (a whole new crop of modern day De Gaulles), and elude the gambit pretty quick. More likely Phirang the FED are merely running along helplessly, "making it up as they go along".

When you saw Paulson going hat in hand to China a year ago, did that strike you as the picture of a finance minister who was going to be holding any sort of trump card for long?

WHO CARES: the USD is the reserve currency: this is why debts don't matter!!! For that 1 of money china paid us for that worthless paper, we're buying it back for, what, $0.2? $0.3? We're not even factoring in a discount rate! That's called profit, my friend!

We export PAPER and get HARD ASSETS in return. Our "allies" and trading partners finance our military and our excesses. Pretty good deal if you ask me.

Demagogues are exploiting the ignorance of the hoi polloi to win concessions and differentiate themselves from their colleagues. The only other plan that makes senses is an equity stake, but that'll be hell to get through.

[Supercilious]

Re: Just in, this will bail out China, London, and other Foreign Banks

I see it the same way. Only if you believe US will repay 11 trn USD of its debt this will be taxpayer money. This bill will not cure the patient but can stabilize him before the surgery. Without surgey he will die later.

VIT this is the beauty of the Wall Street Scam. Actually the taxpayer is supposed to pay only $2-4 trillion of the debt to the ROW, because is "recycled" back into Wall Street. This is how the negative interest loans work.

This beats Ponzi and every other well known financial scam. And there is nobody to stop them.

[Guest]

Re: Just in, this will bail out China, London, and other Foreign Banks

Yes $#* - but the point you overlook is that it is not anybody's daydream of a real world "trumping gambit", which would imply a strengthened global positioin thereafter. It is a "desperate seat of the pants" gambit. A gambit that leads straightaway to total loss of international credibility and utter destruction of the dollar's reserve status in the world. Big hole in the center of your broader thesis, that it was all "planned and intended towards US fiat supremacy".

VIT this is the beauty of the Wall Street Scam. Actually the taxpayer is supposed to pay only $2-4 trillion of the debt to the ROW, because is "recycled" back into Wall Street. This is how the negative interest loans work.

This beats Ponzi and every other well known financial scam. And there is nobody to stop them.

[Supercilious]

Re: Just in, this will bail out China, London, and other Foreign Banks

When you saw Paulson going hat in hand to China a year ago, did that strike you as the picture of a finance minister who was going to be holding any sort of trump card for long?

Many snake oil businessmen/retailers knock at your door hat in hand offering you an exceptional business "opportunity".

http://www.chinaeconomicreview.com/e...ck-to-america/

We’ve heard plenty in the news this year about rising prices hurting export-oriented businesses in places like Guangdong and, more recently, Zhejiang. Clearly some areas of China that were once “workshops” for the world’s cheap goods are pricing themselves out of the market, with the slashing of export rebates, inflation, currency appreciation (though that appears to be slowing viz. the US dollar) and rising labor, material and fuel costs all playing a part. The next step for these areas, local governments hope, is to climb the greasy pole value chain and start producing higher-value goods.
So who’s going to make our cheap furniture and sleeping bags now? Americans?
Not as strange as it sounds. In some cases, according to this interesting article by the Washington Post’s Ariana Eunjung Cha, some low-cost American manufacturers are headed back home.

And to very interesting charts form Brad Setser:




and,



I cant' wait to see the numbers for Q2 and Q3 2008 ;)

Where did all the money go?

[Guest]

Re: Just in, this will bail out China, London, and other Foreign Banks

$#* - If your thesis rests on a "startlingly persistent" improvement of the US's financing needs and a "cast in stone" future demand for USD you are not employing long range reasons that I can spot or recognise. That John Williams guy must have been utterly deluded writing about how we've been mired in the debt trap over here already for a while. According to the "new macro" you depict, we'll just naturally wind up being the most well recuperated (formerly 5o trillion dollars in debt) Cinderella in history. You really mean it with this argument? EJ needs to go completely back to the drawing board and start over. He's missed the entire point - that we have the world snookered in a vise-like US dollar gambit, while all of our slow witted creditors were foolishly thinking it was our goose that was cooked.

Many snake oil businessmen/retailers knock at your door hat in hand offering you an exceptional business "opportunity". And to very interesting charts form Brad Setser: I cant' wait to see the [ declining financing need ] numbers for Q2 and Q3 2008 ;)

Where did all the money go?

Let's just say $#* that we have what might be called "diametrically opposite conclusions" about who is actually in the driver's seat regarding America's future options. BTW I greatly enjoy your trenchant and caustic sense of humor. If it were employed congruent to what I must conclude is the bedrock reality on issues such as America's breadth of financial and currency options at this juncture (close to zero), I'd be even more appreciative.

[Supercilious]

Re: Just in, this will bail out China, London, and other Foreign Banks

You really mean it with this argument? EJ needs to go completely back to the drawing board and start over.

I can't tell EJ what to do. Anyway I don't think that will happen soon because (I guess ) he is very busy with the King Plan

He's missed the entire point - that we have the world snookered in a vise-like US dollar gambit, while all of our slow witted creditors were foolishly thinking it was our goose that was cooked.

Pretty much yes. Our creditors didn't know that there is no free lunch.

I was curious about the Q2 and Q3 numbers (and I realize those numbers will arrive too late for a prediction) in order to get a possible indication if the liquidity crisis is pushed to the point in which low level hedge funds will start soon popping like popcorn in the microwave... just that

Let's just say $#* that we have what might be called "diametrically opposite conclusions" about who is actually in the driver's seat regarding America's future options.

Lukester, that's the beauty of it. iTulip would be an extremely boring and sterile place without disagreements (just imagine one EJ and 500 faithful and completely fabulous metalmans).

As long as we use common sense and no BS even if we agree in general term on a subject, there will always be significant details left to argue about.

BTW I greatly enjoy your trenchant and caustic sense of humor. If it were employed congruent to what I must conclude is the bedrock reality on issues such as America's breadth of financial and currency options at this juncture (close to zero), I'd be even more appreciative.

Thank you Lukester. I hope I employ my humor in an entertaining way and congruently to what I perceive as being a not quite rosy reality.

[Guest]

Re: Just in, this will bail out China, London, and other Foreign Banks

[ our creditors are snookered ] Pretty much yes. Our creditors didn't know that there is no free lunch.

RINSE, REPEAT ARGUMENT: Yes $#* - but the point you overlook is that it is not anybody's daydream of a real world "trumping gambit", which would imply a strengthened global position thereafter. It is a "desperate seat of the pants" gambit. A gambit that leads straightaway to total loss of international credibility and utter destruction of the dollar's reserve status in the world. Big hole in the center of your broader thesis, that it was all "planned and intended towards US fiat supremacy".

[Supercilious]

Re: Just in, this will bail out China, London, and other Foreign Banks

RINSE, REPEAT ARGUMENT: Yes $#* - but the point you overlook is that it is not anybody's daydream of a real world "trumping gambit", which would imply a strengthened global position thereafter.

Lukester this is not a gambit. It's a scam presented as a gambit. Remember the fall of Bretton Woods? The Nixon Shock? At that time everybody was scared that without any gold backing nobody would buy dollars, and a lot of people panicked ... well ...

If deficits and debt are transformed in negative interest loans they become a very profitable form of investment... I know it's a little bit counterintuitive, but try to imagine what if you would get a credit card with -30% interest rate. What would you do ? What would happen to the bank that has only one major client (you) which has only negative interest credit cards?

[xtronics]

Re: Just in, this will bail out China, London, and other Foreign Banks

Something else seems to be happening - Have they pegged their currency to the dollar?

http://finance.google.com/finance?q=USDCNY

I don't see any news about this??

[c1ue]

Re: Just in, this will bail out China, London, and other Foreign Banks

X,

The time frame you are looking at is too short.

The 1 year or longer picture shows the true story: that China has been gradually strengthening the yuan vs. the dollar.

But recently this has stopped.

The question is: is this due to a policy change on China's part? i.e. no more buying of Treasuries to keep the yuan undervalued vs. the dollar?

Or is this due to the short term swings from the bailout drama?

Time will tell.