Here's my Top 10 links from around the Internet at 12 midday 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.
Today it is the US banks that have torn their groin muscles and are out of the tournament...
1. US bank stock panic - Reuters reports US banks stock slumped this morning on growing fears about what a European banking crisis would mean for them.
The P word was used.
Mitsubishi UFJ even stepped in to say it would support Morgan Stanley.
Bank of America's website has been up and down all evening, which is not inspiring confidence.
This all feels a lot like it felt exactly three years ago when Lehman Brothers was collapsing.
There is some real ugliness brewing inside the banking systems of Europe and America.
Analysts and investors said the sharp sell-off in financial stocks in recent weeks has been reminiscent of the financial crisis. Bank of America and Citi hit intraday lows not seen since the market bottomed in March 2009, while Morgan Stanley hadn't traded at its intraday low since December 2008.
"I remember in '08, when all hell was breaking loose, these were the levels where you thought there was going to be no bank tomorrow," said Jamie Lissette, founder of The Hammerstone Group, a Westport, Connecticut-based firm that operates discussion forums for investors.
Nancy Bush, a veteran bank-stock analyst and contributing editor at SNL Financial, described the sell-off as a "panic." She predicted that the volatility of recent months will continue. "You get great relief rallies when it looks like things are getting resolved in Europe," she said. "Then it just sinks back into the mire. It'll just keep going up and down until there is a sense that things have finally stabilized."
In a sign of support, Japanese lender Mitsubishi UFJ Financial Group Inc, which has a large stock investment and joint venture with Morgan Stanley, released a statement reiterating a commitment to its U.S. partner.
2 CDS spreads for US banks blow out - Bloomberg reports on the carnage in trading around US bank debt and the credit default swaps (CDS) on that debt.
The cost to protect the debt of Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) surged to the highest levels since the weeks after Lehman Brothers Holdings Inc.’s bankruptcy as concern intensified that Europe’s debt crisis will infect the global banking system.
Contracts on Morgan Stanley, the New York-based owner of the world’s largest retail brokerage, soared 92 basis points to a mid-price of 583 basis points as of 4:30 p.m. in New York, the highest since October 2008, according to London-based data provider CMA. Those on Goldman Sachs increased 65 basis points to a mid-price of 395.
Traders pushed the cost of protecting banks and U.S. companies higher after German Finance Minister Wolfgang Schaeuble opposed moves to increase the scale of the euro rescue fund, complicating efforts to prevent a Greek default. Swaps on Bank of America Corp. (BAC) jumped to a record and a measure of U.S. corporate credit risk rose to the most since May 2009.
3. America's big banks are America's financial Vietnam - So says Peter G Miller in this fine piece of polemic wrapping together the banks' various failings and how they gotten even more dangerous since the Lehman crisis of 2008.
Three years ago the most-powerful instutitions in America were the nation’s largest banks and brokerages, Wall Street for short. While millions of people were losing their homes, their jobs and their savings, the nation’s elite extracted a $700 billion line-of-credit from Uncle Sam. Now Wall Street is our financial Vietnam. It’s broken. The old cures and postponements won’t work. Everyone knows it.
“High risk mortgage lending and shortcomings in consumer protections for mortgage borrowers were among the most important underlying causes of the housing bubble and the financial crisis that resulted,” according to Sheila Bair, past chairman of the FDIC.
“Not only did the proliferation of high-risk subprime and nontraditional mortgage products help to push home prices up during the boom, but excessive reliance on foreclosure as a remedy to default have helped to push home prices down since the peak of the market over four years ago.”
4. Cloud powered facial recognition is terrifying - This is quite some piece in the Atlantic on the amazing implications of putting photos on the web and then having the software change on you.
The implications are profound.
Unlike Groucho Marx, unfortunately, the cloud never forgets. That's the logic behind a new application developed by Carnegie Mellon University's Heinz College that's designed to take a photograph of a total stranger and, using the facial recognition software PittPatt, track down their real identity in a matter of minutes. Facial recognition isn't that new -- the rudimentary technology has been around since the late 1960s -- but this system is faster, more efficient, and more thorough than any other system ever used. Why? Because it's powered by the cloud.
With Carnegie Mellon's cloud-centric new mobile app, the process of matching a casual snapshot with a person's online identity takes less than a minute. Tools like PittPatt and other cloud-based facial recognition services rely on finding publicly available pictures of you online, whether it's a profile image for social networks like Facebook and Google Plus or from something more official from a company website or a college athletic portrait. In their most recent round of facial recognition studies, researchers at Carnegie Mellon were able to not only match unidentified profile photos from a dating website (where the vast majority of users operate pseudonymously) with positively identified Facebook photos, but also match pedestrians on a North American college campus with their online identities.
5. So much for that grand plan - The WSJ's WashingtonWire blog reports Barack Obama's big jobs bill, touted as the saviour only a few weeks ago, is dead on the floor of Congress.
“The president continues to say, ‘Pass my bill in its entirety,’” Mr. Cantor said in a press briefing. “As I’ve said from the outset, the all-or-nothing approach is just unacceptable.”
6. Even the Accountants are grumpy - Bloomberg reports The International Accounting Standards Board (IASB) has said that allowing banks to hold no capital against government bonds is risky.
You betcha.
Read this story to find out everything you need to know about the European and US banks. And no wonder the confidence levels are low.
It’s “extremely risky to have a capital regime which says for certain types of assets you don’t need to put aside any capital,” Hans Hoogervorst, IASB chairman, told lawmakers in Brussels today.“There’s no such thing as a safe asset,” Hoogervorst said. “That’s why we’re in difficulty now -- because we allowed our financial industry to essentially run with zero capital.”
7. Dr Copper set to fall again - The copper price's collapse in recent weeks has been a harbinger of Chinese hard landing doom. Now Reuters reports the CME has raised margin requirements for copper and platinum futures, which is likely to hit copper again.
Something for Wolly to chew on.
8. Bill Gross' latest newsletter - The PIMCO maestro is always worth a read. Here are the highlights:
- Long-term profits cannot ultimately grow unless they are partnered with near equal benefits for labor.
- There is only a New Normal economy at best and a global recession at worst to look forward to in future years.
- If global policymakers could focus on structural as opposed to cyclical financial solutions, New Normal growth as opposed to recession might be possible.
9. The problem with not bailing out banks - The BBC's Robert Peston is in pensive mood on the live-again issue of bank bailouts.
Equity and debt markets haven't imploded today, but my goodness bankers are feeling jumpy.
Having spoken to a load of them, there is a presumption that something bad and inescapable is round the next corner.
We live in a time of paradox, such that governments' understandable desire to shelter taxpayers from bank losses is increasing the fragility of the banking system at this juncture - and making it more likely that the banking crisis of 2008 will rise from the dead to haunt us as a renewed financial and economic horror.
10. Totally irrelevant video about a cyclist in a scrapyard - Quite spectacular in a cycling sort of way. HT MarcusLush via twitter.
50 Comments
And ZH reports this from Goldman Sachs on Europe's meltdown:
"The increase in financial risk is likely to lead the European Central Bank to ease its liquidity policies further this month, and the economic weakness will probably result in a cut in the repo rate by 50bp to 1% by December."
good to see the market is turning upwards again for gold as all else falls....the flight to safety is starting for real now and i don't mean Comex, ETF's etc....human psychology demands that we have a best case and worst case picture in our mindscape and gold is the only thing that can supply that as we go " whitewater rafting" down the global economic chute ...intrinsic use of the metal has nought to do with it...gold is gold...a symbol and a backstop to trade....get used to it !
Buy land Rob they don't make that any more either. At least with a decent block and a good water supply and the aid of my book on self sufficiency you'll be able to sit on your deck in your rocker with the shottie on your knee, the jar of moonshine by your side and maybe the dog and thumb your nose at all and sundry especialy the guvmint and they bankers.
That sounds good and probably would have worked in the past, but won't now because you will need to pay a number of substantial taxes to local and regional councils for the privilege of owning that land - with the addition of central government taxes likely not that far away.
Its never actually work, because property taxes have always been a deciding factor as to whether farms will economically fail or not. Local governments often raise property taxes during economic crisis as their other funding sources decline, and work in collusion with banks to force mortgage sales on farmers, particuarly in areas around metropolitan areas which once the economic tide turns, will become valuable real estate.
Farmers in the United States during the 1930s Great Depression and 1980s farm crisis, neighbouring farmers responded to these mortgagee sales in auctions by banding around their neighbours to defend them against the banks by mobbing the auction with low bids and threatening those who were making legitimate bids to buy the farms.
Banks have been targetting America's independant farmers since immediately after independance, State governments tried to pay off war debt owed largely (and ironicially) to British creditors, and were forced to raise taxes during an economic (essentially agricultural) depression, This precipitated a rebellion by irate farmers against the depredations of banks and merchant class, which scared the newly independant nation's elite no end and played into the hands of those like Alexander Hamilton who wished for a strengthened Federal Government. He used the event to convince his frightened colleagues to complywith his wishes for a Federalist governmemnt and a National Bank in return for the Federal Government assuming each States foreign debt obligations for the cost of the war. Debt is truely a powerful thing.
"As he wrote his essays, Hamilton kept in mind the problems in Massachusetts, declaring in Federalist Number 6 that "If Shays had not been a DESPERATE DEBTOR, it is much to be doubted whether Massachusetts would have been plunged into a civil war."(11)
As President Washington's Secretary of the Treasury, Hamilton produced his first "Report on the Public Credit" in 1790. Hamilton argued in his report that consolidating the war debt and having the national government assume the responsibility for repaying it would stabilize the states."
http://shaysrebellion.stcc.edu/shaysapp/person.do?shortName=alexander_hamilton
I dont now where you get this idea that gold's price wont collapse like everything else....certainly forget inflation....cash is king in a recession/depression....til you hit bottom, then sure maybe move into gold.......but you are an adult make your own decision.
regards
The U.S. Senate voted Monday to advance legislation designed to press China to let its yuan currency rise in value, setting up a debate between lawmakers who say the bill will create jobs and critics who warn it could spark a trade war.
For the inflationista's
Stoneleigh: Chris Martenson recently posted a rebuttal to the deflationist take on commodities - Commodities Look Set to Rocket Higher. In contrast, our deflationary view here at The Automatic Earth, written at the end of August, is encapsulated in Et tu, Commodities?. To recap, our position is that commodity prices are coming off the top of a major speculative episode and consequently have a very long way to fall.
http://theautomaticearth.blogspot.com/"... we are going to see a rapid and substantial shift towards a desire to maintain liquidity, on the grounds that liquidity represents uncommitted choices, and that people will be anxious to maintain their freedom of action to respond to massive uncertainty. This is likely to last into the medium term (ie probably a number of years). It is absolutely vital to anticipate this type of trend change. Extrapolating past trends forward is simply not good enough" Fabulous read, Andrew. Thanks, once more, for Et tu, Commodities, your link above.
Speculators stage record exit from ag commodities
http://www.agrimoney.com/news/speculators-stage-record-exit-from-ag-com…
Know your doctor well Bernard...I'll wait until they are throwing the shares away...which will happen. Then pile into the better stuff with the cash....Bernanke will do QE3 and 4 next year in time to boost Obama in the election...cos Barry will keep Ben on if he wins...what a farce.
And this from the Europeans. It's going to be ugly tonight. Greece is not resolved and all the noise from the politicians is they don't want to do a 'bazooka' plan to rescue the euro.
Buckle up.
Eurozone finance ministers have put off until next month any decision to give the green light for a further €8bn bailout for Greece despite recognising that the Athens government had made some considerable progress in slashing the country's debts.In a move certain to disappoint markets, the 17 finance ministers sent signals they had no intention of agreeing to reboot the zone's rescue fund of €440bn closer to the €2tn or more demanded by leading investors and analysts. EU officials reiterated that there was "no Plan B".
HK down again in this morning's session.
#OccupyWallStreet is the Tea Party with brains writes David Weidner at MarketWatch
http://www.marketwatch.com/story/occupy-wall-street-is-a-tea-party-with-brains-2011-10-04?siteid=rss
The revolution just might be televised after all.
More than two weeks after a band of young people began camping out under the shadow of the New York Stock Exchange, the movement to remake America’s inequitable financial system is growing
It’s been called the Woodstock of Wall Street, but that’s hardly an apt comparison. The gathering at Max Yasgur’s farm 42 years ago was built on a generation looking for peace, love, some drugs and acid rock. The kids today are looking for real, tangible change of the capitalist sort. They’re organized, lucid and motivated.
The US Senate's vote to allow businesses to seek duties on Chinese imports because of its overvalued exchange rate sparked this response from Beijing.
The People’s Bank of China “regrets” the vote in the U.S. Senate yesterday that would let American businesses seek duties on Chinese imports, the central bank said in a statement on its website today.
In 2005 when senators Charles Schumer and Lindsay Graham started calling for the Chinese to "level" the exchange rate field they estimated the yuan to be 27.5% under valued. That was therefore the size of the tariff they demanded.
http://schumer.senate.gov/record.cfm?id=323135
Yet since 2005 China has let the exchange rate increase in value about 23%, from 12.1c to 15.7c - or - to invert that the USD has dropped in value from 8.28 yuan to 6.38 yuan.
Once has to conclude their argument to be largely political.
At least Darth Hickey is attempting to get the news out there to Kiwis that perhaps they should be preparing for very tough times ahead as the global economic system creaks.
In contrast TVNZ1 spend the first 15 minutes of its flagship newscast last night focusing on a) Graham Henry's views on Dan Carters groin, b) Dan Carter's views on his own groin c) Dan Carter's parents views on their son's groin and d) sundry individuals from a small town south of CChurch (where Dan Carter comes from) and their respective views on Dan Carter's groin.
The force is strong with this one.
Impressive. Most impressive. Obi-Wan has taught you well. You have controlled your fear. Now, release your anger. Only your hatred can destroy me.
http://equotes.wetpaint.com/page/Darth+Vader+Quotes
;)
cheers
Darth
Steven - actually, I think copper is something to store, always did and will continue to do so.
It's at or past peak, certainly past it's cherry-picked/easy gotten peak.
It's a conductor, second to none in practical terms. It's also one of the best (the Romans had trouble with lead) pipe materials known, and given we make pipe out of oil......
And - as you know - I think we value the wrong thing; money is worth diddly-squat if there is no confidence, or if it gets inflated in Weimar fashion, or if the system crashes.
A scarce item with real uses in a variety of social scenarios, is copper.
somebody gets it mostly right:
Regarding #4 on facial recognition...
Just think, one day soon we'll be able to click on images of anonymous people appearing in dodgy porn movies that were made years ago but which are only now available online, and find out who they are, as well as what other movies they have appeared in. Cool...
Anyone who has appeared in a 'Dancing Bear' movie will be sh***ing themselves soon. :-)
Quick then Martin - who's this?
http://sorrycomics.blogspot.com/2011/09/rome-didnt-collapse-in-day.html
:)
I ran it through the CMU facial recognition software... it scanned... it processed... it downloaded updates... security patches... timed out... reconnected... and after fifty mouse clicks came back with the answer: Marge Simpson.
;-)
Like the comic strip by the way :) I just bought a second solder rework station, for parts, in case the first one breaks.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.