Here's my Top 10 links from around the Internet at 11.30 am in association with NZ Mint.
I welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.
I'll pop the extras into the comment stream.See all previous Top 10s here.
Sorry I didn't get a Top 10 out yesterday. Tad busy in Wellington. Good crop of videos today. Particularly Clarke and Dawe. I LMAO as the youth might text...
1. China wants physical assets - Ambrose Evans Pritchard writes at the Telegraph that China has let slip that it wants to 'liquidate' US Treasury bonds at some stage and buy physical assets, including the likes of Boeing and Apple.
This is a key moment, if it happens.
It's the moment when China essentially calls in its debts and wants to exchange worthless debt paper for worthy equity in real assets.
This will be a theme of years to come.
How does China convert its liquid paper assets in America and other places into physical assets in America and elsewhere.
That includes New Zealand. China is our biggest buyer of our government bonds.
At some stage it will want to swap that debt for equity. Perhaps we'll have some SOEs left to hand over at that point.
Or maybe we'll just have land left...
Here's Ambrose:
A key rate setter-for China's central bank let slip – or was it a slip? – that Beijing aims to run down its portfolio of US debt as soon as safely possible.
"The incremental parts of our of our foreign reserve holdings should be invested in physical assets," said Li Daokui at the World Economic Forum in the very rainy city of Dalian – former Port Arthur from Russian colonial days.
"We would like to buy stakes in Boeing, Intel, and Apple, and maybe we should invest in these types of companies in a proactive way."
"Once the US Treasury market stabilizes we can liquidate more of our holdings of Treasuries," he said.
2. The problem with mark-to-make believe - Jonathan Weil writes well at Bloomberg about how changes in 2008 to mark-to-market rules for banks valuing assets such as toxic bonds (which allowed them to ignore market collapses and avoid valuation death spirals) has undermined confidence in banks now because investors now don't believe the mark-to-make believe numbers banks value their assets at.
There’s a simple solution here. In 2005, when the IASB and the U.S. Financial Accounting Standards Board began discussing how to overhaul the rules for financial instruments, they said one of their top three long-term objectives was this: “Require all financial instruments to be measured at fair value with realized and unrealized gains and losses recognized in the period in which they occur.”
Both boards have abandoned that path. Bowing to pressure from Congress and the banking industry, the FASB in early 2009 changed its rules to let companies keep large losses on impaired bonds out of net income. If the broad principle the boards set forth six years ago were in effect today, it wouldn’t be possible to have multiple accounting treatments for the same kind of bond on a company’s books. There would be only one.
The markets, meanwhile, know better than to believe the banking industry’s balance sheets. And so we get the present situation where most of Europe’s largest banks, including France’sBNP Paribas (BNP) SA and Societe Generale (GLE) SA, are trading for far less than what their books say their net assets are worth. The problem with fair-value accounting now is investors don’t get enough of it. Those banks that are destined to blow up will do so regardless.
3. A A$310 billion problem - Leith van Onselen writes at Macrobusiness.com.au about the scale of the short term foreign funding problem that Australian banks have, which the Reserve Bank of New Zealand referred to indirectly in yesterday's September quarter Monetary Policy Statement.
Here's a great chart and van Onselen's comments:
As you can see, offshore borrowings by depository corporations (banks mostly) has exploded over the past 20 years, from around $50 billion in 1988 to around $650 billion currently.
Currently, depository corporations have around $310 billion of short-term foreign borrowings maturing within 12 months, in addition to another $350 billion of longer-term foreign borrowings outstanding. Other things equal, this $310 billion of short-term foreign borrowings must be refinanced within 12 months just to maintain the current level of credit within the Australian economy (let alone increase it).
What should be clear from the above charts is that the growth in Australian housing values has been funded, to a large extent, by foreign borrowings, much of it short-term.A key risk going forward is that the banks’ ability to refinance their borrowings rests with the willingness of foreign investors to continue to lend them money. But in times of heightened risk-aversion – such as the impending European debt crisis – foreign investors can become nervous and less inclined to continue extending credit, which could leave Australia’s banks, house prices, and broader economy exposed to a sudden funding freeze.
4. At least he made the trains run on time - I can't resist a good Downfall spoof video and this one with Murray McCully lecturing Len Brown and John Key is a cracker.
5. 46 out of 50 US states insolvent - Economic Policy Journal points out Cass Business School economist Kevin Dowd saying almost all US states are insolvent. He argues that inflation will take off soon and then this will happen:
Once inflation makes a comeback, a point will eventually come where the Fed policy has to go into sharp reverse – just like the late 1970s, interest rates will be hiked upwards to slow down monetary growth. The consequences would be most unpleasant: the U.S. would experience the renewed miseries of stagflation – and a severe one at that, given the carnage of a renewed financial crisis and the large increases in money supply working through the system.
Moreover, as in the early 1980s, higher interest rates would lead to major falls in asset prices and inflict further losses on financial institutions, wiping out their capital bases in the process. Thus, renewed inflation and higher interest rates would deliver yet another blow to an already gravely weakened financial system.
6. Bigger than 9/11 - Frank Rich writes at the New York Magazine that the mass looting of America's wealth by bankers and the rich through the 2000s was a bigger disaster for America than 9/11. Fair enough.
In retrospect, the most consequential event of the past ten years may not have been 9/11 or the Iraq War but the looting of the American economy by those in power in Washington and on Wall Street. This was happening in plain sight—or so we can now see from a distance. At the time, we were so caught up in Al Qaeda’s external threat to America that we didn’t pay proper attention to the more prosaic threats within.
By portraying Afghanistan and Iraq as utterly cost-free to a credulous public, the Bush administration injected the cancer into the American body politic that threatens it today: If we don’t need new taxes to fight two wars, why do we need them for anything? But that’s only half the story in this alternative chronicle of the decade’s history. Even as the middle class was promised a free ride, those at the top were awarded a free pass—not just with historically low tax rates that compounded America’s rampant economic inequality but with lax supervision of their own fiscal misbehavior.
7. Useful graphics - Here's a useful site called 100 companies created off the back of Paul Callaghan's widely watched 'Mapping our future' speech.
It shows manufacturing in New Zealand produces higher wages, more GDP per worker and is actually our biggest employer.
Try telling that to our Prime Minister and Reserve Bank Governor, who seem determined to destroy what's left of our manufacturing sector with their disinterest in the high New Zealand dollar.
I've linked to it before, but here's a repeat of Callaghan's speech.
8. A wider moral malaise - The Chief Rabbi of Britain (and the Commonwealth), Jonathan Sacks has written an important reflection on 9/11. He says the West was vulnerable because of its own arrogance and wasteful consumerism in the wake of the end of the Cold War. Fair enough.
All great civilisations eventually decline, and when they begin to do so they are vulnerable. That is what Osama bin Laden believed about the West and so did some of the West’s own greatest minds.
If so, then 9/11 belongs to a wider series of phenomena affecting the West: the disintegration of the family, the demise of authority, the build-up of personal debt, the collapse of financial institutions, the downgrading of the American economy, the continuing failure of some European economies, the loss of a sense of honour, loyalty and integrity that has brought once esteemed groups into disrepute, the waning throughout the West of a sense of national identity; even last month’s riots.
These are all signs of the arteriosclerosis of a culture, a civilisation grown old. Whenever Me takes precedence over We, and pleasure today over viability tomorrow, a society is in trouble. If so, then the enemy is not radical Islam, it is us and our by now unsustainable self-indulgence.
The West has expended much energy and courage fighting wars in Afghanistan and Iraq abroad and defeating terror at home. It has spent far less, if any, in renewing its own morality and the institutions — families, communities, ethical codes, standards in public life — where it is created and sustained. But if I am right, this is the West’s greatest weakness in the eyes of its enemies as well as its friends.
9. Who killed Economic growth - Richard Heinberg has created this video below talking about the limits to growth. Powerdownkiwi will appreciate this and may already have seen it before.
10. Totally Clarke and Dawe - John Clarke is a European banker that is preparing to call in Italy's debt...
"Lift feet and brace for impact..."
"Is Mrs Default there please...."
53 Comments
9. Watched some months back....a great little video....
Never mind houses will still go up in value.....
PIs, get ready to; bend over, grin and bear it....
regards
Fantastic spoof on McSilly...Smiley John and Sweaty Len...really good laugh and probably close to the mark.. Thanks my style for sure.
9) I came up with that video about 6 weeks ago. I think the video has good educational value, especially for those, who thing the world’s economy is based on growth and just continue as usual.
People are so worried about the world's economy!
Why can't you see that the coming war against the Moon Nazis will take care of all that?
I’m sure some of the “world powerfools” are brewing up a reason to go for war again – no doubt about that. Some developments are scary obvious.
While the “Big Boys” http://www.youtube.com/watch?v=Kw8KrHkpr_8 are still playing casino within banks – the consequences are starting marching up from the bottom – affecting increasingly the masses.
“Der Spiegel” is reporting that pharmacy company giant Roche stopped deliveries to some state- owned Greek hospitals, because of unpaid bills since years.
http://www.reuters.com/article/2011/09/17/roche-greece-idUSS1E78F1RJ20110917
Has there been a council debt bubble here? I don't seem to recall any analysis of this. Low interest rates, rampant stadia building, balloning rates bills, do they point in that direction?
Nelson appears to have about $2500 of borrowing per capita as far as I can tell. Is that normal?
yes, I'd like to know more
Lots of towns in France are bankrupt
Only half?....
strange thing but I dont see Joe Public up in arms and marching down the street for the repeal of the RMA, in fact ppl seem to be doing the opposite....
Fuel costs, what did you expect with peak oil?
Gravy train ideas seem to be more from inside the council than central Govn from what I can see....but you know we voted them in there.....we get what we deserve....
regards
The financial industry has got to decide whether it will continue its quest for short-term gains, or whether it will start financing the real economy. The banking industry has had a golden summer, now the unwinding of toxic debt will take it toll. As some might say.....end game.
7) I agree totally, a lower exchange rate would make our manufacturing sector far more comppetitive, and society as a whole far better off, as opposed to trying to be a low wage country competing with sweatshops overseas.
7) Inspirational – highly recommended listening.
I don’t know if our PM, having a different professional background understands that. The fact is Brownlee, Hide and Joyce aren’t working in that direction, but let the production sector down. To develop and support sustainable production isn’t part of government’s culture.
#9. Fine and dandy explaining the problem (if it wasn't already obvious), but what's the solution?
A cheap alternative energy source to replace oil, but I don't think that goes far enough without changes to human behaviour.
A massive change to self sustainability which also requires changes to human behaviour. And the ability to purchase land and build shelter for those that don't already have it.
#7. Irrelevant if #9 isn't sorted.
Economists generally accept that a low level of inflation (1-3%) is a good thing, as it encourages consumption and keeps the economy running.
What if we had a low level of deflation instead? A dollar saved now would worth more in the future, so we'd only buy the stuff we really need or really want now, as it'd be cheaper in future. It'd encourage us to conserve our planet's resources rather than consuming now. The Greens should be all in favour of it.
You might say that it might cause the end of life as we know it as people stop buying and the economy grinds to a halt, but that's not the case. We still need to eat. And even other stuff would still get bought. For example, electronics is already deflationary - that new TV or computer you buy now will be cheaper or out-of-date in a year, but people still buy them.
I doubt such a thing would really happen but it's a fun thought experiment :)
It 3~4% inflation also keeps un-employment low.....
Inflation is hard enough to contain and maintain as it is, deflation cannot be controlled from what I can read...to a low level....so lets say we tried to hold deflation at 2%....that would be 1% more un-employment every year......more Welfare spend every year...
I can see your point and actually its a good one in theory.....if you accept that peak oil is here and that future oil supply will be constrained then deflation is what we are going to get...
Does anyone doubt deflation? I dont.....in some things its clearly here.....
Electronics.....power tools...diy materials....all are showing signs of price falls.....I ve just seem a makita 1216 saw for $1397...the cheapest ever.....or $1599 on its stand....15% to 20% spot discounts now seem quite common...Briscos now seem to have constant sales.....Bond and Bond etc will take discounts straight up.....
and its going to get a lot bigger IMHO....we are staring at a second great depression.....3 to 6 years of a 10% drop per annum.....which will be interesting to...uh....watch...so many ppl think it just cant happen...its the old "this time its different scene......seems groundhog day is coming around.
regards
Me thinks we will see things we need continue to rise in price, and things we dont need fall, for the next wee while.
Until the big event when people finally loose confidence in their currency. Then its all on, everyone will run for the exits, there will likely be a rush to exchange their paper for realstuff before it looses any more of its value.
Thats my thinking anyway.
Yum. Those Power tools are so tasty. Anyone care to share any cooking tips?
I believe Fish is popular for some on Fridays. What day of the week will we be eating power tools?
It's been happening in Japan for the last 30 years or so.
#7 - Bernard, good point about manufacturing in New Zealand producing higher wages, more GDP per worker and actually being our biggest employer. However you don't really believe RB and John Key give a fig about employing people, do you?
#4 - sides still splitting man, a cracker.
#3 - CFR to the rescue! Plus, specify and vary the minimum % of domestic funding banks must use. Question for Leith, what effects would implementing and robustly using these two ratios from about 2002, say, have had on the property bubble? Plus, am keen to get your comment on the potential effects compared to constrained land supply effects?
Cheers, Les.
John Key cares about jobs, how about that cycle way. What a massive boot to the economy that is.
It has been a lifesaver to the small villages along the Central Otago Rail Trail . We talked to the locals in the townships along the way , as we bought our snacks & coffees ... and they told us how the cycle way had re-vitalized their local economy .. particularly in food & accomodation demand .
.. the coffee tasted so much better , knowing that .
[.. Disclaimer : Younger bro-gummy cycled : yours truely drove the car ! ..]
Didn't that successful cycleway precede John Key?
Yes it did . And it proved to be so successful that Jolly Kid decided to extend the idea .
Anyone who claims that policy in NZ has controlled inflation is ignorant of the numbers.
The domestic economy has been outside the target band, damn near forever. Headline inflation has been in band as a result of tradeable deflation and overvalued currency.
Anyone who thinks that can last is both ignorant and dumb.
Most of the population must think we have an infinite planet....therefore it must be flat....otherwise how can we grow for ever?......who is dumb enough to think we can?......just about everyone it seems.
We are now in the period after peak oil where energy will be expensive, manufacturers and exporters are not even in pain yet....
regards
Peak oil is obvious, and equally obvious are the other peaks that have been or are comming or have been. Peak oxygen, 300million years ago , when are we going to hit peak steel, or peak lithium, or peak fresh water? There is a good argument to be made for managing these resources for future generations.
Oh don't worry , if you are paying attention you can see the plans being progressed ever day for the control of resources. Not sure it will be for the benefit of joe blows family though.
Peak fresh water, not quite clear on how this works, but likely have something to do with passing some debt enducing legislation then having to "privAtize" metro water for example, rather predictable actually. It won't always be though natural events that's for certain. Clearly some parts of the world have issues with availability.
It's Friday Yay..!!!.and you know what that means... all is good in the world...!
dedicated today for those who attended higher seats of learning and experienced the pressure that comes with it......This could have quite easily been a parody on Steven's university attendance.
GHOST SEX A professor at the Auburn University was giving a lecture on Paranormal Studies. To get a feel for his audience, he asks, 'How many people here believe in ghosts?' About 90 students raise their hands. Well, that's a good start. Out of those who believe in ghosts, do any of you think you have seen a ghost?' About 40 students raise their hands. That's really good. I'm really glad you take this seriously. Has anyone here ever talked to a ghost?' About 15 students raise their hand. Has anyone here ever touched a ghost?' Three students raise their hands. That's fantastic. Now let me ask you one question further...Have any of you ever made love to a ghost?' Way in the back, Ahmed raises his hand. The professor takes off his glasses and says 'Son, all the years I've been giving this lecture, no one has ever claimed to have made love to a ghost. You've got to come up here and tell us about your experience.' The Middle Eastern student replied with a nod and a grin, and began to make his way up to the podium. When he reached the front of the room, the professor asks, 'So, Ahmed, tell us what it's like to have sex with a ghost?' Ahmed replied, "Oh shit, from way back there I thought you said Goats."
So the poor sheep must be feeling a bit rejected:( Might need counselling.
Have a great weekend.
Shit ! ..... I'm in trouble now , ... all those years as a kiddie in Sunday School I was praying to the " Father , the Son , and the Holy Goat " .... whoooops !
You are obviously a catholic then
No , C of E ... but you caught me out ( been watching way too much " Father Ted " ) ...... we used to say " The Father , the Son , and the Holy Spiggot " ...
Come on GBH ............... a Church of England is just a Catholic with a license to behead an inconvenient wife.....while spreading themselves aboot the place... the true beginnings of self indugent Capitalism.
So wotcha saying it that my beloved religion is just a bunch of misogynistic pathologically murderous wankers ? ... Huh !
... yeah , I can live with that .
Well I may not have gone that far......but if your comfortable ...that is the main thing.
I find fornicators...preferable to wankers as the latter is not excluded in the following......
will not inherit the kingdom of God? Do not be deceived; neither fornicators, nor idolaters, nor adulterers, nor effeminate, ..
gees....!... I guess that's gonna be one very exclusive but slightly low key club .
There's not many fornicators around here , they usually come in groups of three .
...... but I wonder if the " effeminates " are excluded from heaven 'cos God needs big burly guys to push the lawn mowers around . ... Yer seen the pictures of heaven , Count ? ..... ooooh , a mightly lot of green pasture there .....
D'yer reckon God gets grassgrub in his , too ?
I'd have to consult with Fonterra executives on that .....I understand that's their top goal for world domination....usurping God ..... would help stabilize the price of milk solids.....not to mention obtaining the power to smote objectors and unproductive cattle.
Aha ! ... hence the expression : " Have you herd of God ."
Here's Bloomberg on the stress in Europe's interbank market. Some of the numbers are astonishing, even in Italy. The final quote about the ECB accepting garbage for collateral is telling.
http://www.bloomberg.com/news/2011-09-13/deposit-flight-from-european-b…
Retail and institutional deposits at Greek banks fell 19 percent in the past year and almost 40 percent at Irish lenders in 18 months. Meanwhile, European Union financial firms are lending less to one another and U.S. money-market funds have reduced their investments in German, French and Spanish banks.
While retail deposits at Italian banks have fallen only 1 percent in the past year, the outflow of money from financial institutions has exceeded $100 billion, a 13 percent decline, according to Bank of Italy and ECB data.
In Portugal, where banks raised the interest rates they pay savers, non-residents have reduced deposits by 19 percent since March 2010.
The eight largest U.S. money-market funds halved their lending to German, French and U.K. banks over the past 12 months and stopped financing Italian and Spanish financial firms, according to data compiled by Bloomberg from investment reports.
The ECB said today it will lend $575 million to two euro- area banks, without identifying them, a sign that they’re finding it difficult to borrow the U.S. currency in markets.
By accepting those countries’ bonds as collateral in exchange for funds, the ECB is piling up risk, said Desmond Lachman, a fellow at the American Enterprise Institute in Washington. In the event of a default, the ECB’s losses would be borne by the EU’s member states. Lending to the region’s banks by the ECB and other central banks is about seven times the capital of the Eurosystem, the consolidated balance sheet of all euro zone central banks.
“If there are sovereign defaults, the ECB will be left with garbage that has been accepted as collateral,” said Lachman. “It’s putting EU taxpayers’ money at risk in a very non-transparent way. But there’s no alternative. The ECB is the only game in town.”
The Greeks are revolting against the new land tax being imposed to stave off bankruptcy, Der Spiegel reports.
http://www.spiegel.de/international/europe/0,1518,785993,00.html
The Greek government's new real estate tax, a desperate bid to meet its budget goals and secure fresh foreign aid, will hit the population hard. Greeks have almost their entire wealth invested in property -- and are more worried about the tax than about the prospect of a national insolvency or leaving the euro.
"Everyone here has had bad experiences with the euro," he said. That may be a little exaggerated. But for many Greeks, the real estate tax poses a bigger problem than the currency. "I can't judge whether the drachma would be better or worse," says Irida Thanopolous, 40, who runs a small street café nearby.
Many Greeks did the same as Thanopolous (buy property). Because the drachma wasn't a hard currency, they invested their savings in property. Some 85 percent of the people's wealth is invested in houses and apartments. That explains the outraged response to the surprise tax. "Monster Tax," left-wing newspaper Eleftherotypia screamed in a headline, while conservative Eleftehros Typos commented: "The citizens will go bankrupt."
Many Greeks are likely to circumvent the new real estate tax, either by using loopholes, of which there are many in the Greek tax system, or by simply boycotting payments. Pensioner Foteinos has already decided what he's going to do: "I'm not going to pay. Let them shut off my electricity."
Bernard , " too much information " , buddy .
... Let's just leave it at " The Greeks are revolting " , and not bother to finish the sentence .
I think that by now , we all know how it ends ...
And Tony Alexander now says floating is better than fixing...
http://www.stuff.co.nz/business/5634297/Global-worries-restrain-interes…
BNZ's Alexander said everyone was likely to stay on a floating rate, even as those rates rose next year. "I'd sit floating, unreservedly," he said.
A Dutch anthropologist is doing a study of London bankers for a blog in the Guardian.
Very interesting.
http://www.guardian.co.uk/commentisfree/joris-luyendijk-banking-blog
Beneath the layers of lingo there are subcultures and dress codes and ways of speech, their mutual stereotypes, conventions, taboos and of course jokes: "Every economist knows that there are three kinds of economists; there are those who know how to count, and there are those who don't."It is quite a change for me, exploring bankers. I used to do anthropological fieldwork among students in the slums of Cairo, then worked as a Middle East correspondent going back and forth between Hamas leaders and Jewish settlers.
The hours some of these people put in seem completely insane. Here's the PR officer for a brokerage firm.
"I get up around 4.30am. I watch some news, see what the Asian markets are doing, read my Reuters, Bloomberg, perhaps do some Skypeing, make phone calls, watch or listen to the BBC. I am building an understanding of what is happening, and what will happen. I write my report and as the day progresses and the markets move, I may update it. Most days I throw in the towel around 6-6.30pm. Unless there's more radio to do, then I might go on 'til seven or eight."
Even after only a couple of dozen interviews, it seems fair to say that this is not a sector for whiners. The same PR officer, a veteran of four decades in the City, said this about the top bankers, the ones with the huge bonuses: "In the old days the caricature was of a fat man with a cigar in one hand and a glass of brandy in the other. In the current environment somebody like that wouldn't last a week."
Here's more detail on the Chinese housing boom.
http://knowledge.wharton.upenn.edu/arabic/article.cfm?articleid=2715&la…
China Knowledge@Wharton: In the course of your research, have you seen any similarities in what's going on in the U.S. and in China?
Joseph Gyourko: I certainly have, although they are very different markets. The motivations for people buying homes are very different. There's a lot more speculation in China -- a lot of the purchases are not for occupancy. That's one of the huge differences. It's hard to tell what's going to happen there.
But you see an extraordinary boom in China by any count. Real prices increased by about 225% between 2000 and 2010, with around 60% of the increase happening since the beginning of 2007. You certainly see a boom in land prices -- in Beijing, they increased nearly 800% over seven years between the first quarter of 2003 and the first quarter of 2010, with half of the increase occurring over the last two years of the research. But one of the differences is that we haven't seen a bust on the housing side in China.
My worry is that people will begin to think that because the property boom in China has lasted for a long time, it will last forever. That is the big risk. People can become complacent about the risks of prices dropping. I fear that too many people think real estate has become risk-less, and it is obviously not.
Right now, what's fueling this is that there are a lot of people in China who don't have anything better to do with their money. In the U.S., you can put your money in a lot of different places, such as stocks and bonds. In China, you can only put your money in the bank and earn an absolutely guaranteed negative real rate of return on your bank deposits, since the Chinese government controls the interest rate. Many people who thought they would put their money in housing instead have seen a big appreciation over the last seven or so years.
China Knowledge@Wharton: But does the longevity of China's rising property prices play into the argument that the country isn't actually facing a property bubble?
Gyourko: It's precisely because prices have been increasing for such a long time that I'm worried. One of the problems in the U.S. was that the good times lasted for a long time -- we had a boom from 1996 to 2006-2007 -- before things really started to crater. China has almost had that long of a period of rise.
Not just China , big guy ! ... We're experiencing a condo boom in Manila , too . All the cheap credit sloshing around has led to an explosion in construction of sky-scrapers in this dirt poor nation .
... As the Philippine correspondent of " Sovereign Man " reported yesterday , why pay $US 100 000 for a condo unit in Makati ( Manila's financial district ) , when that money will buy you a 3 brm home , on a beachfront in the boondocks , ... with enough left over for a jeepney , two pump boats , 3 tricycles with sidecars , and an endless supply of Tanduay Rhum , Sky-Flakes , and mistresses .
The Americans want the Europeans to leverage their bailout fund into something bigger to bail out the laggards of Europe...ie you can solve a debt problem with even more debt...
http://www.reuters.com/article/2011/09/15/us-eurozone-geithner-efsf-idU…
Treasury Secretary Timothy Geithner is likely to suggest to European finance ministers on Friday that they leverage their bailout fund along the lines of the U.S. TALF program, EU officials said.
"Geithner will probably insist on the importance of leverage to have more funds to ringfence the big Europeans, Italy and Spain, and to find a solution for Greece," one EU official said.
"The leveraging of the EFSF -- I think this is something that he will put on the table," the official said. "There could be some openness to the proposal."
The signs aren't looking good for Gerry Brownlee in Monte Carlo.
Here's what the CEO of Europe's biggest insurer told Bloomberg in Monte Carlo:
http://news.businessweek.com/article.asp?documentKey=1376-LRIK820UQVI901-7IO87A9PLJUF4UR0BMK999TKEO
Allianz SE's reinsurance unit is selling less hurricane and earthquake coverage to third parties as it focuses on commercial property and casualty and agricultural policies.
“Allianz Re plans to write fewer peak risks in its open market business,” Clemens von Weichs, chief executive officer of the unit of Europe's biggest insurer, said in an interview in Monte Carlo. “We want to diversify into other lines of business.”
and what happens if the likes of AMI or Tower cant get re-insurance? they can I assume cancel the householders policy at 1 month's notice......leaving the policyholder no where to go......what then happens to mortgages? the bank calls them in?
It could get very ugly....but its Ok we have the fat controller and Bill and Ben as a backstop....oh wait.....maybe not.
regards
This is fun. Berlusconi is in trouble for lots of reasons, including this via the Guardian:
Mr Berlusconi's ability to deal with Italy's massive debt and economic stagnation has been compromised by a fresh series of gaffes and scandals.
It was reported this week that during a telephone conversation with a newspaper editor in July he made derogatory comments about the weight of Angela Merkel, the German chancellor.
The alleged insult, picked up in a conversation taped by prosecutors, was condemned yesterday by five Italian MEPs from three opposition parties.
In a statement, they said it was "intolerable" for a political leader to make vulgar jokes about the physical appearance of any woman, let alone the German chancellor.
In all fairness to Berlusconi , we had a riot with that photo of Angela Merkel ( which Christov kindly brought ot our attention . ) .
.... if the German Chancellor can't be bothered to engage some technically brilliant air-brushers of photography as our aesthetically-challenged Helen Clark did , then more the fool her .
Heck we get all upset about our politicians lying to us, then we get even more upset when they actually tell the truth.
Too many problems on too many fronts – with no real solutions !
Under the intense and devastating shift of economic and political power to the East for many countries, tension in the Middle East region is rising.
http://news.yahoo.com/china-paper-warns-us-against-palestinian-un-veto-…
Obviously Germany is the big player in the future of Europe. Here a link with information what is happening there and on other places in Europe.
http://www.spiegel.de/international/topic/euro_crisis/
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