Global economic situation for liveaboard cruising yachties

about once a month some monster exotic pet makes the news
ate the kids
or game granny a heart attack
I guess that latest is snake heads
its a fish thats also a delicacy on the Asian menu
so naturally it would be a good idea to stock a few ponds with them
now apparently the everglades are burred in em and they have a lovely habit of eating all the other fish

ah well
pop another brew
sit back
and watch the show

always love tearful endings anyway

B

 

Yeah, a burmese python ate alittle girl not too far from here about a month ago.

 

ya I think I might have read about that
the parents had several large reptiles and one got out
or something like that

did they get charged with anything
whats the latest

 

I don't know, but I think it was in Sumter County.

 

See:http://www.msnbc.msn.com/id/31684161/

 

Also, pythons are high up in the food chain and have too much mercury in their system to be safe to eat; probably from eating too many discarded compact fluorescent bulbs.

 

Bamby, do you know who uploaded that:?: None other than our own Frosty:!::!::!: in another life as that is his original avatar... - - - - and on the second, one not quite, Au$ = 1/1137 th of an ounce of gold approximately.... That kitco chart must be run by an apprentice that got kicked out of the TV series.... - - 26:00 hrs - - WTF - - 23:59 then 00:00 as there are only 24 hours in a day:?::!:

 

grim
oh well
I guess Darwin's theory is a live and well at least

or at least thats what I say every time I see a downed cyclist in the road

 

http://www.moneymorning.com.au/subscribe and get the likes of this from near the ******** of "Downunder" but the stuff is not necessarily of that nature...

a copy&paste job:- The Great Banking Death Spiral - - - Friday, 16 October 2009 - Melbourne Australia
All roads lead to Rome.

And all arguments lead to banking.

That seems to be the way it works anyway. Almost every story we write has a direct or indirect link to the banking sector. Although in reality the banks are really just the 'beards' covering up the real culprits - government.

But even so, today we'll have another crack at our corrupt friends in banking.

Yesterday afternoon, after we'd knocked out the October issue of Australian Wealth Gameplan, we thought we'd re-read a couple of the Money Morning stories from earlier this week.

It was Tuesday's edition that stood out. And not just because of the superb writing style either!

It was the transcript from ABC Radio of banking analyst Brian Johnson questioning an unnamed ANZ Bank economist that caught our attention again.

If you haven't read it yet it, take a look now by clicking here.

There's something eerily bizarre about it. It's just more evidence - if it was needed - that the banks have one thing on their agenda, and that's to lend as much cash as they possibly can.

Don't worry about the risks, because that will be back-stopped by the taxpayer anyway.

The banks' greed for more interest income is unstoppable. In fact, either in tomorrow's Money Weekend or Monday's Money Morning, expert chair builder and assistant editor, Shae Smith will look at how the banks will shortly scam even more loans onto their books.

But anyway, as we were reading through a couple of the comments on Tuesday's article left by Money Morning readers, one of them stuck out. It was written by 'Kohl':

"I would like an explanation of the $13 trillion in 'OFF BALANCE SHEET BUSINESS" as detailed in the RBA's B4 table. $191289 million of this is identified as credit derivatives not related to foreign exchange or interest rate swaps. Maybe property? No one ever talks about this startling $13 trillion "off-balance sheet " business."

Actually, we've got a feeling that we've brought this up before, but we'll give it a good going over again anyway.

Kohl is right, according to the Reserve Bank of Australia (RBA), banks in Australia have $13,006,783,131,920.80 of off-balance sheet finances. That's a lazy six billion over $13 trillion.

But don't just take my word for it, click here and look for yourself.

Most of it relates to interest rate contracts and foreign exchange contracts. Plus there's a tiny $191 billion that's just classified as "Other." Clearly $191 billion is too small a number to worry about itemizing.

As I've mentioned before, I make no claim to being an expert on the workings of a bank balance sheet. To me the whole business model just stinks and I'd rather not have a bar of it.

However, we'll make of it what we can. But if you know more about banks and their balance sheets and what they do with the off-balance sheet stuff then feel free to leave a comment on the Money Morning website.

According to the RBA data, the banks have $8.5 trillion worth of interest rate contracts. A number that's too big for our Canon LS-100TS calculator to cope with.

But whatever it means, it's quite clear that the banks have a massively huge enormous exposure to interest rates. I'm sure you knew that already, but seeing numbers as big as these should put it into some perspective.

So what are these interest rate contracts for? Our guess is it's part of their hedging strategy to try and protect them against interest rate movements. This helps them lock in 'guaranteed' profits regardless of what happens to the underlying interest rate.

What else does it mean? Well, it undoubtedly has a big connection with the housing and mortgage market. Remember that Commonwealth Bank has about 50% of its lending book exposed to residential mortgages.

And even better than that, as technical analyst Murray Dawes pointed out recently, Bank of Queensland's business has a 73% exposure to residential mortgages. That's a figure which the bank claims makes the bank "safe."

It stands to reason that the off balance sheet interest rate contracts are tied into mortgages. We can see that if we rely on a couple of stats from the RBA.

First is a chart I've knocked up showing the growth in off balance sheet interest rate contracts going back to 1989 - that's the earliest data the RBA has:

Banker's Trillions


As you can see, in the last twenty years these contracts have grown from less than $1 trillion, to just under $9 trillion now.

The next chart shows bank lending to the residential owner-occupier mortgage market:

Assets or Liabilities?


Is there a connection?

Who knows.

Maybe.

Or is it just a coincidence. Oh, and by the way, the Bank Lending chart doesn't include 'securitisations', that's where the bank has packaged up loans and flogged them off as AAA or AA securities.

But whether there's a connection or not, it doesn't matter the real important point is that we're talking big numbers here. We talking about numbers that could break an economy in two even if a small percentage of the 'assets' went smelly.

Talking of which, also remember that a banking balance sheet or off-balance sheet is like no other.

Sure, banks have assets and liabilities like anyone else. But that's pretty much as far as the similarity goes. The rest is just smoke and mirrors. Let me give you a quick comparison.

If you're looking at the balance sheet of a supermarket chain, its assets are inventories, property, and equipment. Plus it's got other stuff such as receivables and intangibles.

But the lion's share of its assets are things that you would generally call an asset. It's something the company owns.

Take a look at the balance sheet of a bank and you'll see it's entirely different.

In the liabilities column the bank lists everything that it owes people, eg. Savings deposits. And in the assets column it lists... well, it lists what it claims to be "assets."

These "assets" of course, are nothing more than other people's obligations and promises to owe the bank money. The banks stay afloat on a 'promise.'

In other words, if you're a first home buyer who has taken out a $280,000 mortgage, then the bank lists that as an asset.

But it's not much of an asset is it? An asset that's based purely on the ability of a bunch of people to keep paying their bills. If those people suddenly stop paying, what happens to those "assets"?

That's easy to answer, they get revalued to fire-sale prices.

The complacency which the mainstream press has towards the banking industry staggers us. They have the false impression that bankers are meticulously assessing the risk of the borrower and declining loans if they don't fit in.

Of course that's all nonsense. Banks don't decline borrowers - not until they've exhausted all possible avenues first. They can't decline borrowers, they need to bring on as many borrowers as they possibly can.

Anything to make sure the value of their existing assets, or loans to borrowers remains high.

And to do that they need to grab as many deposits as they can too. If you read mainstream commentators such as our friend Michael Pascoe, you'll think it's a good thing the banks are bidding for your business.

Don't believe a word of it. It's desperation. The banks need the deposits so they can continue lending out as much money as possible. They're grabbing at your pockets, pleading for you to allow them to look after your hard-earned money.

But look out, because as soon as the value of loans written starts falling, it will put pressure on the value of their existing loans. And once that happens, the Banking Death Spiral formation will begin.

Other Stuff on the Markets

The S&P/ASX200 closed yesterday at 4,859.90, up by 28 points, while overnight on Wall Street the Dow Jones Industrial Average dropped by 47 points to 10,062.94. In Europe the FTSE100 finished at 5,222.95, down by 0.63% and the CAC40 was down 0.03%.

The price of gold in Australian dollars is trading at $1,141.48, while in US Dollars it is trading at $1,050.85. And the price of silver in Aussie dollars is $18.89 and in US Dollars it is $17.38.

The Aussie dollar gained a little versus the US dollar, trading at USD$0.9208, and improved against the Japanese Yen JPY83.37.

Crude oil closed overnight at USD$77.58

For the biggest movers on the market yesterday click here...

Cheers.
Kris.


[Please note: neither the authors nor any of the employees of Port Phillip Publishing own shares in any of the stocks discussed in Money Morning unless specifically stated. The articles do not give trading or personal investment advice, but are intended to provide a useful, independent news and analysis service to supplement your own investing and trading. Consult your financial advisor before making any investment decisions.]

 

subscribe here and you will receive the likes of these pearls of wisdom in your email box... http://www.dailyreckoning.com.au/

And now over to Bill Bonner in London, England:

What a marvelous flimflam! So obvious...and yet so effective! It's a pleasure to watch.

Yesterday, the Dow soared over they 10,000 mark. If it keeps going at this rate - up 144 points yesterday - it will soon equal the post-'29 bounce. All we need is two more days and we're there.

Oil rose over $75. Gold closed the day at $1,064, after a big move to the upside over the last few days. And the dollar fell - to just $1.49 per euro.

The reason for yesterday's big move is announced on the front page of almost every financial rag this morning:

"JPMorgan profits lift the Dow."

JPMorgan, the Wall Street firm that was bailed out by the feds a year ago, reported income of $3.6 billion in the 3rd quarter. With that kind of profit in the financial sector, it won't be long before the whole economy is running red hot, right?

That's what the papers seem to think. The International Herald Tribune says the bank's profits are just another sign that a major recovery is underway. Investors seem to believe it, too. "Earnings optimism," is behind the buying, says a broker.

But is it true? Is the real economy growing, expanding, and making money? Let's look:

"Still on the job, at half the pay," is a headline in The New York Times. It tells the story of an airline pilot whose position has been downgraded and whose pay has been cut in half. The fellow is now earning $30,000 a year rather than $60,000. He is not counted in the unemployment statistics but he has much less spending power than he had a year ago. Practically all his discretionary spending power has been wiped out.

The NYT:

"The Bureau of Labor Statistics does not track pay cuts, but it suggests they are reflected in the steep decline of another statistic: total weekly pay for production workers, pilots among them, representing 80 percent of the work force. That index has fallen for nine consecutive months, an unprecedented string over the 44 years the bureau has calculated weekly pay, capturing the large number of people out of work, those working fewer hours and those whose wages have been cut. The old record was a two-month decline, during the 1981-1982 recession.

"What this means," said Thomas J. Nardone, an assistant commissioner at the bureau, "is that the amount of money people are paid has taken a big hit; not just those who have lost their jobs, but those who are still employed."

All over the country incomes are falling. Officially, about 15 million people have no jobs. Many others have given up looking for jobs. And now, for the first time ever, more than half of those who lose their jobs run out of unemployment benefits before they find another one. Many others never get any benefits at all, because their jobs are not eliminated, they are merely cut back...either in the number of hours they can work or in the compensation itself.

Yesterday, we reported that Baby Boomers are actually working longer hours...but earning less. The boomers are in an especially tight spot. They've got only a few years to save money for their retirements...and it won't be easy in this slumpy economy.

And we reported the plight of the callow youths...whom BusinessWeek has called the "Lost Generation." Their unemployment rate is twice the national average. They're at the bottom of the labor pool, and unless the economy begins to expand they'll have a very hard time finding the bottom rung of the ladder.

Take all the people who are unemployed...who are working fewer hours...who have given up looking for work...whose positions have been downgraded...and add the family members who depend on them for their daily bread...and you have nearly a quarter of the population. How can companies expect to increase sales and profits with a quarter of the population forced to cut back severely?

They can't. The earnings numbers are misleading. Most of the earnings that we've seen come from cost cutting, not growing top-line sales. How do businesses cut costs? By trimming employees! In other words, the earnings figures we're seeing are contributing to the slump...not alleviating it.

You can see how, in the short run this can lead to increased profits. But it can't go on for long. The more businesses cut costs the more their sales go down, because consumers (who are also their employees) have less money to spend.

And according to a Wall Street Journal report, with too much capacity...and falling sales, businesses "are hesitant to reinvest such profits into their businesses."

That's why business investment, as we reported two days ago, is falling even faster than sales. And it's why people who are looking for a job are going to have a hard time finding one.

How did JPMorgan earn so much money in such a bad economy?

We begin with a bit of skepticism. After all, we know consumers aren't borrowing. Consumer credit is going down. So they can't be making money there. And we know businesses aren't expanding, so they can't be making money by lending to corporations either.

Wait a minute. JPMorgan is a bank, right? Don't banks make money by lending money? Yes...that's what we thought. Then who is JPMorgan lending to?

The only net borrower is the government.

The Financial Times confirms that Morgan's "US consumer businesses continued to bleed, with its credit card unit losing $700 million in the quarter and its retail bank...barely breaking even." It wrote off $7 billion in uncollectible consumer loans - more than twice as much as last year.

Its mortgage group lost money too. And it surely didn't make any money helping US business build new factories and expand payrolls.

So what does that leave? All the components of the business that have to do with the real economy are losing money or barely breaking even. What's left?

The news reports attribute the huge profits to "trading." But trading is a broad category. And our guess is that if you look more closely you will find that JPMorgan made its money the old fashioned way - by ripping off the government.

'You mean, JPMorgan took the feds' money and now is showing huge profits because it is just lending money back to the people they got it from?'

Yes. But not only that. They're also probably speculating on gold, oil and stocks...along with everyone else. The feds' money has pushed all these speculative trades into profit.

'And now, they're going to pay themselves big bonuses, aren't they?'
Yes. The papers tell us, "bonuses explode on Wall Street to a new record."

'So, then...when the next crisis comes...they won't have any money in the banks, will they?'

Nope.

'So they'll have to get bailed out again.'

Yep.

'But maybe the next time the feds will wise up and just let them go broke.'

Not a chance. Wall Street has plenty of friends in the highest places in Washington. A report in today's media tells us that "Geithner Aides Reaped Millions Working for Banks, Hedge Funds." The aides earn about $150,000 for their government work. On the side, they advise the financial firms they're supposed to be regulating, and get paid millions.

Such a nice relationship. They make sure Wall Street prospers - even when it does stupid things. Wall Street makes sure they prosper - even when they advise the government to do stupid things. And when their gig is over in Washington they go back to Wall Street where they earn millions more. America's centers of political and financial power have a cozy little game going. It won't end any time soon. It's too profitable for both of them.

Until next time,

Bill Bonner
for The Daily Reckoning Australia

[Editor's Note: Bill Bonner & Lila Rajiva's new book, Mobs, Messiahs and Markets, is now available in Australia from The Educated Investor.


and and and and

From Dan Denning in Melbourne:

--"Where might another shock come from? I'm not sure there will be one. I don't think there will be," said Reserve Bank Governor Glenn Stevens at a conference in Perth yesterday. Uh. You'd better mark those words.

--The Guv also said he would not be too timid about raising interest rates. He believes the threat [of global financial calamity] has passed and that the bigger threat may well be inflation. That kind of tough talk sent the Aussie dollar right up to over 92 cents against the greenback. If it weren't late fall, now might be the perfect time to take a trip to America and see how cheap things really are.

--But it is a bit surprising that a Central banker would say he's not sure there WILL be another shock to the world's financial system. The last twenty years show a history of regular shocks. The economic models of economists suggest these shocks are 100-year or even 500-year events. But they just keep happening!

--The Peso Crisis...the Asian Crisis...the Russian bond crisis which led to the fall of Long Term Capital Management...Bear Stearns...Iceland...Northern Rock...the entire GFC...nope! None of those could ever happen again. Especially in a world that's reducing debt where asset markets are now undervalued and house prices have dramatically corrected and banks have recapitalised.

--Well, that's the story that Stevens probably believes. But you know our view. There's a lot more bad debt out there posing as assets. There are more credit write downs. Banks have a boatload of commercial real estate and residential housing assets and a thin slice of equity capital supporting them. There is still a lot of leverage in the financial system. And that leverage exposes banks to losses.

--For example, today's AFR cites research from the International Monetary Fund and concludes that Aussie banks could lose as much as two percent of total loans outstanding if corporate and household defaults increase. And gee, that's not likely at all when interest rates rise quickly, is it?

--According to the AFR, the IMF report does conclude Aussie banks are "very sound", but they could lose $33 billion from rising defaults. We're not sure what default rate the report assumed, but we reckon it was probably too low. Nearly everyone in the financial establishment underestimated the depth of the crisis last time, too.

--The other threat is that that Aussie banks source 30% of their loan funding from international credit markets, according to the IMF. Australia's short-term external debt is about $400 billion this year, according to the AFR. Is that really a threat?

--It doesn't seem like one right now. Interest rates are rising and the Aussie dollar looks like it's headed to parity against the USD. This makes Australia a popular destination for international capital flows. After all, you have heaps of foreign investors pouring in to buy Australian property. The place is a capital nirvana!

--But yes, it is vulnerability. For one, it means growth in the Australian economy is not sourced from domestic savings but from borrowed foreign money, which must later be repaid. Second, it means that the income and rent from Australia's capital stock (houses, property, shares, and bonds) may not be making Australians rich or even staying in Australia.

--Granted, if the Boomers are selling their houses to Chinese investors in order to finance a comfortable retirement, it should work out well for the Boomers. But their children may be renting from Chinese landlords for a long time to come. And no, we're not blaming the Chinese for this at all. It's a great move for Chinese investors. But it may not be such a great development in the capital structure of Australia.

--But at the moment, you wouldn't get that sense that rising public debts and the transfer of ownership of Australia's capital assets are any worry whatsoever. Sure haven't seen much of it in the papers or on the TV shows. It's like everyone's forgotten that the more integrated the world's financial markets have become, the more they've tended toward instability. Or everyone believes whatever was wrong before has been fixed now.

--One person who had his wagon fixed yesterday was Bank of America CEO Ken Lewis. America's new pay tsar (the U.S. Treasury Special Master for Compensation, Kenneth Feinberg) stripped Lewis of his 2009 salary. Don't cry for Lewis just yet. His retirement package will leave him with between US$70 and US$120 million.

--But why is there even a pay master to begin with? Isn't that the job of boards of directors and shareholders? Could government charades to regulate the corporate sector get any more cosmetic? Coming soon, a pay master for your job.

--It's not too late to sign up for the gold conference in Canberra next month. The conference is run by the Gold Standard Institute of Australia. You can find out more about it here. http://www.goldstandardinstitute.com/html/events.html

--If there was ever a time to find out about gold as an asset class and gold as money, it's now. With gold making new highs side by side with the Dow, we reckon a lot of people will put off looking into gold because it seems like everything in the economy is back to normal. That's not the case.

--It's a big mistake to trust the sooth platitudes from politicians and economists right now. Remember, these were the same schmucks who didn't say a word as the world's biggest credit bubble ever inflated. Now, all they do is blame corporate greed.

--What they don't want you to investigate - perhaps because they themselves don't understand it - is that there is no free market economy to speak of at the moment. And nowhere is that more true than the market for money. The government has granted a monopoly on the supply of money to organisations made up mostly of bankers. Their main goal is to get you into debt and keep you there.

--Gold is not anyone else's liability. And the government can't print it. For thousands of years, people have found it to be most useful, stable medium of exchange and store of value. If you don't quite understand that yet, or why it's the case, or what to do next, you should learn more. http://www.goldstandardinstitute.com/html/events.html

 

http://www.gata.org/node/7903 "Munich precious metals show puts Internet site in English too" - - - - - Good doogs - http://www.edelmetallmesse.com/en/index.php

http://www.gata.org/node/7904 "Gene Arensberg: Two U.S. banks still hold over half silver shorts" - - - - Further evidence of ILLEGAL & IMMORAL market manipulation http://www.stockhouse.com/Columnists/2009/Oct/15/Got-Gold-Report--Two-U-S--banks-still-hold-over-ha

http://www.caseyresearch.com/displayCdd.php?id=250 "Bad Loans, Bad Business" - - - raised to the second power:!::!:

 

http://www.abc.net.au/tv/fora/stories/2009/10/06/2706358.htm This is an excellent speaker and should be listened to/watched - - your choice of podcast download - - The rest in the series are all interesting and challenging of the mind and your perceptions... http://www.abc.net.au/tv/fora/

Here is a good speaker (english is not his first language) http://www.abc.net.au/tv/fora/stories/2009/09/23/2694610.htm and I think at one stage were both "recognised" by the same university...

 

Are you serious

Pearls of wisdom like this crap that I am spammed with regularly.

WHO ELSE WANTS TO MAKE MONEY OUT OF "THIN AIR"?

or
OPERATION: SLIPSREAM

Well you certainly got that part right Bill Conner and Kris Sayce.

All I can say is that I'm glad your crap turns up at a throw a way gmail account.

 

The stories are interesting - The spam I was un-aware, (Sorry I am not a good liar), of as it is filtered out. - - enjoy it if you get it (spam that is) the other stuff just ensures you get to see the other side too I have been trying to find some "free stuff" I can post to show "fair and unbiased clippings" from Orstraliar, maybe I trawled a bit close to the rectum at the wrong time:?::?:

If you have some rabid or otherwise stuff, please post links of whatever... Thanks..


http://www.gata.org/node/7905 "Fed's gold swap admission is another reason for audit, Paul says"

 

Less Tin Hattery from me


Robert Gottliebsen and Alan Kohlers Eureka Report

Nouriel Roubini's RGE Monitor

Alan Kohlers's Business Spectator

Australasian Investment Review

Mining Australia

And

Mining News

Are my daily to weekly reads.

Plus a few news feeds by subject