Are banks well-capitalized or insolvent?

[skyson]

Re: Are banks well-capitalized or insolvent?

Look at what happens with Russia. If the loss of Russia's reserve is not the first stage of an economic war ... (in which Putin's siloviki regime is a fifth column) then I don't know what to say any more.

I am kind of lost here. Could you explain this in a bit more detail?

It is also more and more obvious the next big fat foreign target for defrauding is... China.

What are the likely mechanisms of defaulting?

In the last few months, while the fed injecting trillions of dollars in the market, yet the Yuan/$US exchange rate essentially the same. Does this indicate that the Chinese CB is also printing money like no tomorrow? If both sides choose high inflation, then the debt owed by US to China might become less and less in real terms, which could possibly acceptable to both governments politically, as comparing to the unilateral outright default by the US(if the Chinese figure that there is no hope of getting the payment)?

In another thread, there was an article from Asian Times arguing the Chinese might actually have much less US dollar denominated currency reserve than commonly assumed by the west media, and they are aggressively dumping the this same reserve(buying mines in Australia, South America, Africa, etc.). If they has less to dump, they might have enough time to exchange it to some thing real?

[Supercilious]

Re: Are banks well-capitalized or insolvent?

Do you mean, get large numbers of people to work for below market wages due to [insert cause]? ...cough.. cough.. WWII playbook.. cough...

Did someone say U-3? no problems with U-3!

They have a limited set of options to deal with the issue and they are playing it by the book ... that book

To the keynesian leaches, their savings base is looking like a glass a water looked to someone marching to bataan. Given their protectionism, it's now just a matter of executing the final parts of the con at this point.

Yup. You are right. Probably they are waiting for the prey to get a little bit fatter. While the rest of the world is delevering, China is levering more by ballooning RMB credit, and the Chinese leaders are shouting loud everything is fine... The latest entry made by Michael Pettis is at the border of humour:
http://mpettis.com/2009/04/this-is-g...e-crisis-over/

I think, that the US is more effective in inflating their way out, than japan, because of the dollar reserve status. And the effect a weaker dollar will have on emerging economies, commodities, etc. However. at one point, the tide of liquidity will move directly into the US and boost the dollar, even if the US spends like drunken sailors. If the liquidity beast can experience exploding profit margins and a hot stock market through moving to a new host, then that's what this beast will do. I just don't know if the US market is deflated enough through inflation to have reached the moment it is ready to be host to all the liquidity that was spread all over the world, since 2003. I suppose it could be more like in 2014-2016 before that happens. Right now it could instead be China. However, who knows, at one point, there will be a Dow 30000 bull.

Hmmm... you are pretty much on the spot describing a section of Fed's Hamer Drill Theory.
And, of course, I believe you are right (with a few exceptions of small additional details).
I think at this point the US is deflated enough at this point and we shall see the now the stage of fast inflation (while the scared herd is still crying 'Uncle Deflation"), By the time they will adjust to the idea of fast inflation, we will have already low inflation levels and and we will get the boost from the tide of liquidity from abroad. The herd will be, of course, fleeced again (history tells us that sheep investors are fleeced again and again but keep staying in the market). Nothing new here... well we may see though a gold bubble developing at the inflection point between the two distinct inflationary regimes ;)

How do you think I was able to predict when the FDI will turn from deflation to inflation? I neither a genius nor have I a magical crystal ball.

In order to understand how the markets will move next one needs to understand how the crooks think and discard all the chaff dispensed by the media and by the banking cronies in government. In order to perform this financial scam the number of options is limited, and the simple obvious game has to be covered with smoke and mirrors. I'll put here again one of my favourite quotes:

Think of a chess game. On the surface, it appears that each player has twenty potential opening moves. In fact, there are many fewer because most of these moves are so bad that they quickly lead to defeat. The better you are at chess, the more clearly you see your options, and the fewer moves there actually are available. The better the player, the more predictable the moves. The grandmaster plays with absolute predictable precision—until that one brilliant, unexpected stroke."

So far the game has been utterly predictable for those not fooled by smoke and mirrors tricks...

[audrey_girl]

Re: Are banks well-capitalized or insolvent?

i think this is one of those questions where if you come right out and ask it - you already intuitively know the answer. and it is not good

[cobben]

Re: Are banks well-capitalized or insolvent?

1. "Are banks well-capitalized or insolvent?"

The answer is an obvious and unequivacal "yes!"
(so what else were you expecting?)

2. "How can you do that with interest rates at zero?"

You obviously have to drive them below zero, next question please.

3. "get large numbers of people to work for below market wages"

But if there is no market the going rate is 0.
Coaxing people to work for free, or preferably pay to work (= below market wages) may work for a few years (think MLM scams), it did in the post-soviet world.

[medved]

Re: Are banks well-capitalized or insolvent?

1. "Are banks well-capitalized or insolvent?"

The answer is an obvious and unequivacal "yes!"
(so what else were you expecting?)

2. "How can you do that with interest rates at zero?"

You obviously have to drive them below zero, next question please.

3. "get large numbers of people to work for below market wages"

But if there is no market the going rate is 0.
Coaxing people to work for free, or preferably pay to work (= below market wages) may work for a few years (think MLM scams), it did in the post-soviet world.

Exactly.

For some reason, iTulipers concentrate on analyzing financial problems in the context of financial solutions. There is no point in limiting ourselves to this segment of the economy. Whatever problems were created by the rotten financial system will be “fixed” by the gov’t whatever it takes by going outside of the financial system. If it takes nationalizing big segments of the real economy (health care, oil industry, agriculture etc.), it will be done. The same applies to the draconian taxes on savers (especially, successful savers i.e. gold “hoarders”).

Also, no matter amount of money printing it takes to drown the toxic waste, it will not create hyperinflation. If the society accepts printing money as the solution to the financial crisis, it will accept price controls to kill the hyper monster.

[nero3]

Re: Are banks well-capitalized or insolvent?

They have a limited set of options to deal with the issue and they are playing it by the book ... that book






Hmmm... you are pretty much on the spot describing a section of Fed's Hamer Drill Theory.
And, of course, I believe you are right (with a few exceptions of small additional details).
I think at this point the US is deflated enough at this point and we shall see the now the stage of fast inflation (while the scared herd is still crying 'Uncle Deflation"), By the time they will adjust to the idea of fast inflation, we will have already low inflation levels and and we will get the boost from the tide of liquidity from abroad. The herd will be, of course, fleeced again (history tells us that sheep investors are fleeced again and again but keep staying in the market). Nothing new here... well we may see though a gold bubble developing at the inflection point between the two distinct inflationary regimes ;)

enius nor have I a magical crystal ball.

In order to understand how the markets will move next one needs to understand how the crooks think and discard all the chaff dispensed by the media and by the banking cronies in government. In order to perform this financial scam the number of options is limited, and the simple obvious game has to be covered with smoke and mirrors. I'll put here again one of my favourite quotes:



So far the game has been utterly predictable for those not fooled by smoke and mirrors tricks...

Any links to details on your drill theory?

I think the CRB from 1998/2001-2008, did pretty much as it did from 1971-1980, yet it does feel like it's not the same when looking at gold, oil service, etc, it looks more like it's only halfway through, but if it's through, then I think there is a potential for a final blow off phase, on ultra low interest rates, and a strong dollar boom at the same time. In that crazy scenario, the 2000-2009 move in GE, would just be a correction, before the parabolic upmove from 1980, would go on further, in a strong dollar boom. Seems crazy, it I can't rule it out. (for GE-s part I think this is more a replay of 1938, but for the sake of this chart, a replay of the 73-74 correction.)
http://finance.yahoo.com/echarts?s=G...ol=GE;range=my

[nero3]

Re: Are banks well-capitalized or insolvent?

Of course. We can never rule out a new round of brutal capitalism. North Korea, and Cuba, is certainly ready to provide cheap quality goods for nickel and dimes soon. However it seems the US as the part of it's coming protectionism, will be more a guard dog, on pollution, so this arbitrage, where you hire cheap manpower and pollute like crazy becomes less profitable, it was summers that even predicted this trend as early as 1991.

[unlucky]

Re: Are banks well-capitalized or insolvent?

People, let's be logic. The banks are insolvent. There is no such thing as illiquid assets. Everything can be sold at the right price and to the right people...

I think yesterday on Tickerforum a bond trader posted the following message about the valuation of mortgage crap:
http://www.tickerforum.org/cgi-ticke...www?post=92096

If the banks were to sell the toxic crap at market prices the losses on these assets would make them all insolvent. They are loaded with paper which is nothing else than bad debt that cannot be repaid and will be defaulted.

Thanks for the above link, I think it pretty much answers the question.

I can't escape the feeling that in this world, there is some level where accountability cannot be avoided.

[metalman]

Re: Are banks well-capitalized or insolvent?

Any links to details on your theory?

not so much a 'theory' as an 'idea'... tho 'theory' makes it sound 500 pages of analysis and 100 charts were made to back it up. not so much an idea, come to think of it... rather a bunch of hunches to pull out now and then to suit the occasion.

I think the CRB from 1998/2001-2008, did pretty much as it did from 1971-1980,

really? huh. that's funny because i distinctly recall 18% inflation and 20% interest rates in the 1971 - 1980 period but not 2001 - 2008... and no asset price inflation 1971 - 1980 but humongous asset price inflation 2001 - 2008. crb 2007/2008 close to crb 1979/1980 at the end but the background inflation, interest rate, asset bubble and debt environment... not even close.

yet it does feel like it's not the same when looking at gold, oil service, etc, it looks more like it's only halfway through, but if it's through, then I think there is a potential for a final blow off phase, on ultra low interest rates, and a strong dollar boom at the same time.

gold and oil today are nothing like then. the world's a 100% difference place.

we had a lot of undiscovered oil in 1980, not now.

the average american had savings and bought gold not sold it when inflation got to 10% and the price went up.

there are many alternatives to gold today to hedge inflation.

you assume today is like a previous time, ignoring all evidence to the contrary. start by listing all of the differences between eras instead of looking for the similarities to fit your hunches. you'll get a better result.

[Supercilious]

Re: Are banks well-capitalized or insolvent?

Any links to details on your drill theory?

Well, I didn't have time to put it in a formal presentation, but I splashed it all over iTulip in my posts . I called it Fed's Hammer Drill as a joke because at that time there was a great theory here on iTulip called the Dollar Ratchet (or something like this)

Here is the brief and basic description of my 'theory', that should give you a rough idea.

(As you see nero I don't dare to ask what happened with the predictions of the Dollar Ratchet Theory ... which had some very interesting predictions and was defended keenly by metalman with the same ardour he exhibits in his replies to your posts )

[nero3]

Re: Are banks well-capitalized or insolvent?

n


really? huh. that's funny because i distinctly recall 18% inflation and 20% interest rates in the 1971 - 1980 period but not 2001 - 2008... and no asset price inflation 1971 - 1980 but humongous asset price inflation 2001 - 2008.

CRB 1971-1980, increase roughly 3,5 times

From 2001-2008, increase roughly 3,5 times

You appeal to my violent side, dumb-ass.

Seventies, house prices up, now, house prices up, then dow flat, now dow flat.

[metalman]

Re: Are banks well-capitalized or insolvent?

CRB 1971-1980, increase roughly 3,5 times

From 2001-2008, increase roughly 3,5 times

dog measures A + B + C = 3.5 feet



cat measures = 3.5 feet



conclusion... dogs are cats!

You appeal to my violent side, dumb-ass.

then stop trying to dis-educate me.

Seventies, house prices up, now, house prices up, then dow flat, now dow flat.

yep... houses prices up then just like now.



i'm buying when they hit 60 and my old friends (they'll be 80 by then) say, 'you f*cking idiot! housing is for losers'.

[nero3]

Re: Are banks well-capitalized or insolvent?

Well, I didn't have time to put it in a formal presentation, but I splashed it all over iTulip in my posts . I called it Fed's Hammer Drill as a joke because at that time there was a great theory here on iTulip called the Dollar Ratchet (or something like this)

Here is the brief and basic description of my 'theory', that should give you a rough idea.

(As you see nero I don't dare to ask what happened with the predictions of the Dollar Ratchet Theory ... which had some very interesting predictions and was defended keenly by metalman with the same ardour he exhibits in his replies to your posts )

Well great stuff. Obama is left handed. So was Ford, Reagan and Clinton. I'd say the odds are in favour that Obama will be a new Reagan/Clinton, and not a Ford, all the retarded gold bugs adds to that thought. However I would not rule out a Ford, even a Carter.

[metalman]

Re: Are banks well-capitalized or insolvent?

Well great stuff. Obama is left handed. So was Ford, Reagan and Clinton. I'd say the odds are in favour that Obama will be a new Reagan/Clinton, and not a Ford, all the retarded gold bugs adds to that thought. However I would not rule out a Ford, even a Carter.

wait... thought you said housing prices are going up. how can that be so and also the info posted on tickerforum by the bond guy be true?

good data, btw. eye popping.

[nero3]

Re: Are banks well-capitalized or insolvent?

dog measures A + B + C = 3.5 feet




i'm buying when they hit 60 and my old friends (they'll be 80 by then) say, 'you f*cking idiot! housing is for losers'.

I doubt your 3 gold coins can buy a house even then, but you never know. Oh, on housing. I think there is a flaw with the CPI, therefore things are not as they look on that chart. Try instead to find the nominal prices, from 1971-1980, deflate by the CRB. do the same for 2001-2009