atp’s posterous

---"it's called math"? à mon avis c'est bien plus sophistiqué que ça: it's called financial engineering! http://www.dilbert.com/strips/comic/2008-12-13/ ---

---mais de quelle secte nous viennent-ils donc? il semblerait que che paulson et kashkari soient les membres proéminents de la confrérie des franc-paysagistes. ils dirigeraient l'aile bancaire du mouvement. et aucun doute ne subsiste: après leur passage le paysage bancaire sera méconnaissable… ---

http://americannewsproject.com/node/181

--- mama mia, ma tous nos amis ritals vont devenir millionnaires d'ici peu… lorsqu'ils retrouveront leur bonne vieille lira J http://ftalphaville.ft.com/blog/2008/12/04/19075/things-a-government-minister-shouldnt-say-italian-default-edition/ ---

"We cannot even remotely afford that an auction of Italy’s government bonds goes uncovered…That would lead to a unique lack of liquidity for the payment of pensions and salaries. It would be like Argentina." That’s Maurizio Sacconi, the Italian Labour Minister speaking to RAI television yesterday.

And to add a little grist to that disaster-mill, here’s the Italian Finance Minister, also speaking yesterday, but to the country’s parliament: "[Italy’s debt] will be in competition with growing issues of government’s bonds by other European countries."

The below graph shows the latest CDS price for Italy - from Markit.

--- et ouais, le moteur de notre économie globale a fini par se faire brider! http://www.fx-concepts.com/private_client/attachments/2325926.pdf ---

The whole world seems to be following the

same course to the bottom that the Japanese

pioneered about 18 years ago.

[…]

In the Japanese case, the financial

system was simple as it involved nothing but

banks, and almost all of the loans involved

equity markets, businesses and real estate.

They were not fancy, just too large for the

underlying value. When the equity market and

land market began to go down, collateral

shrunk, and the loans turned bad. It was like a

game of musical chairs, with not enough value

for everyone to sit down. In Japan there was

very few players involved and it still took more

than a decade to straighten it out – and we

would argue the job is not finished yet as

Japanese rates are headed back to zero and

quantitative easing is still present. The global

financial system is at least a power of ten more

complex, and there is no single government in

charge. Liabilities of an incredible variety and

number cannot be repaid and the asset side of

financial balance sheets are not worth what

they say. In this game of musical chairs there

is not one circle but many levels and circles.

Almost no banks (the near banks are already

gone) will find a chair to sit on. In Japan banks

stopped creating new assets – making loans –

for years, and in the whole world the same will

happen. For how long? We would argue that it

will be a very long time, as the credit creation

machine is almost totally broken and the

schemes we have seen so far will not result in

new loans. They are only band-aids to keep

the banks alive, allowing them to pay interest to

depositors and settle outstanding business

commitments, not make new ones. The

governments must step in to make the new

loans, either by nationalizing the banks, making

the loans directly, or helping start new banks –

or better yet, all three. Despite the explosive

growth of the Fed’s balance sheet, the banks

and Wall Street are shrinking faster than the

Fed is growing, and the situation is worse in

Europe.

--- …to save the previous one! http://www.globecartoon.com ---

--- nouvelle facétie de la Bonne Nurse Suisse. elle ne publie plus les traitements qu'elle prodigue à (ses) son patient(s), de peur que l'identité de ce dernier ne soit découverte et que sa réputation et sa market cap ne détériore irrémédiablement. mais quelle abnégation à éviter le seul diagnostique réaliste: mort clinique! http://snb.ch/en/mmr/speeches/id/ref_20081127_jpr ---

[…]

Today, central banks operate with the market, rather than ‘against the market’, as in the past. Financial market participants are therefore able to foresee central bank actions. Since the early 2000s, our communication policy has focused on transparency, and our experience with this has been positive. Thus, transparency increases the effectiveness of monetary policy.

Yet, in the recent financial turbulence, transparency in monetary policy operations also turned out to be a double-edged sword, as communication problems arose. Indeed, there is a risk that operations to provide extraordinary liquidity assistance will impair the reputation of the recipient organisations, and thereby destabilise the market. There are a number of possible solutions with which a balance can be achieved between transparency and stability.

--- dès que les banques –ou quelqu'autre entité du système- reprendront le rôle de créditeur, le money multiplier va repartir vers le haut et les risque d'inflation vers la stratosphère! attention au retour de manivelle… http://ftalphaville.ft.com/blog/2008/11/26/18724/the-pictorial-quantitative-easing ---

The Fed’s liquidity programmes, such as the TAF, have combined to inject about $1,100bn into the financial system (Figure 10) — and simultaneously jacked up the Fed’s assets. Normally the Fed offsets an increase in its assets by selling new treasuries, which decreases the amount of currency in circulation and conversely increases its liabilities. This is called sterilisation and is one way the Fed can increase assets without expanding the money supply.

Only, as Figures 11 and 13 show, the Fed’s primary method of draining the excess liquidity (The SFP programme) has only gotten rid of about $500bn of that $800bn increase. The Fed is not fully sterilising its massive increase in assets — in effect it is increasing the money supply.

This is not necessarily a bad thing. For a start, inflation helps you pay off debts — which are fixed, and of which there are a lot in the US — by essentially devaluing your debt (and conversely, in a perverse sort of way, making the savings of those who had the foresight tendency to err on the side of prudence, worth less).

The inflationary effect is, however, mitigated by one thing — the breakdown of the money multiplier (Figure 12) as bank lending has seized up. Thus, money supply has increased, in this case measured by M1, but it’s increased less than the rise in the base money supply would suggest.

A final word on the matter, from BoA’s Jeffrey Rosenberg, regarding yesterday’s announcement that the Fed would start buying mortgage-backed stuff (MBS) from the GSEs Fannie and Freddie (emphasis our own):

"Today’s Fed announcement on GSE purchases launches explicit QE that kills two birds with one stone. QE offsets the current deflationary impact of financial system distress and directing these purchases towards GSE debt and MBS may help reduce mortgage rates, a key goal to stabilizing the housing market. While QE may offset current deflationary risks, longer term these measures must be temporary to avoid creating their own problems of inflation and dollar devaluation, a risk highlighted by today’s USD decline and increase in gold…"

--- ce week-end, soyez créatifs: imaginez, dessinez et taguez la multitude de carrés à venir! http://www.nytimes.com/imagepages/2008/11/26/business/20081126_FED_graph1.html ---

--- voila c'est fait, l'ubs trade dans le single digit. ça ne devrait plus être très long maintenant… ---

UBS N (NYX)

http://www.ubs.com/1/e/index/bcqv/quotes.html?m(bcvProfile)=BCQV_CH&m(lang)=en&m(searchBySymbol)=GO&m(searchInput)=ubs

--- quoi? c est quoi ces balivernes? depuis quand une banque centrale baisse son taux directeur de 100 bps juste parce que les prix du pétrole et des matières premières sont en baisse? surtout que l'économie suisse est loin d'être dans un état aussi anémique que les US ou UK. ah… oh… mais attendez… mon décryptologue viens de m'apporter la traduction de l'annonce officielle de la Bonne Nurse Suisse. ah, voilà que tout s'explique, dans le language de la BNS "prices of raw material and oil" est un code pour "UBS stock price"! http://snb.ch/en/mmr/reference/pre_20081120/source/pre_20081120.en.pdf ---

The Swiss National Bank (SNB) is lowering the three-month Libor target range by 100 basis points to 0.5–1.5% with immediate effect. It will provide (the Swiss franc money market) UBS with a generous and flexible supply of liquidity in order to bring (the Libor down to the middle of the target range) UBS to live through its last xmas.

As a result of (the decline in the prices of raw materials and oil) UBS being only a few hours away from collapse, (price stability) taxpayer money will be (restored) wasted sooner than expected, and inflation is likely to fall below 2% as early as the end of this year. Moreover, international economic conditions have worsened appreciably, bringing a higher risk of a (marked slowdown) dramatic collapse in (economic) banking activity in Switzerland next year.

By lowering the Libor target range by 100 basis points, the SNB is making abuse of its room for manoeuvre.

[…]