The power of congress lies in the ignorance of it's victims.

Reality is your friend. Men and women who hide behind fictions are not.

I must say that would set the cat among the pidgeons, confidence in the US Financial System would go into complete meltdown. Would the public take that risk, I would say not, the devil you know always wins through.

It could happen after the financial meltdown though.

To be honest I don't see anything changing apart from some new kind of global currency.. which would still be controlled by the same entities.

Where's the timestamp, as he edited his post? Or was it edited by ahem... some moderator?

http://www.housepricecrash.co.uk/forum/ind...t&p=1039250

Well I have been around for a couple of hours and have seen no Moderator logged in, BTW there is a way to edit a post without a time stamp but I would rather not give the method away.

Cgnao I am no longer a Moderator in case you have not noticed.

Thank you for taking the time to reply, I will take it away to digest. The thought occurs that if central banks can control the price then there is little point speculating as they will always be able to do exactly as you say by simply lending out more gold
to dampen the market (unless you think they are close to running out).

Either way I will consider myself warned and informed.

Also some more reading.

http://www.gata.org/

No amount of stock market manipulation, secret bailouts etc. will work if the price of gold is seen to rocket.
I think psychologically this is far more likely to panic the sheeple, for example into withdrawing from stock and pensions, causing brokers etc. to come under pressure;withdrawing cash from retail banks etc.

The Times front page was a shocker on Friday 14th March

"Gold soars as collapse frightens investors.
-City braces itself for string of fund failures
-Fears of US recession mount as oil hits high"

If this frankness spreads as a contagion to the front pages of other papers, and more articles appear predicting 20% drops in house prices this year/two years, the sheeple will turn on the government.

Bring on an election. I knew when GB bottled it last year he had thrown away his only chance of victory before the HPC. Now we will have to pay for his grubby attempts deceive us into electing him again.

CG, no need to be defensive with me! - I really appreciate the link you posted on the Argentinian debt default; I was not aware of this, and it certainly did surprise me. I suppose the brainwashing on Sov. debt starts so early, it's like a mantra one repeats.
By the way, I don't think I misspelled precise, but I did misspell Sovereign as Sovreign in the OP. It is still there..Also 'perceived' and 'difference' were misspelled. Sorry... must have been late.


EDIT: not sure what happens in EuroLand if, for example, the Spanish government refuses to pay coupons on it's Euro denominated debt?

EDIT2: Was the Argentinian debt denominated in USD? If so, that is not what I'm talking about; I mean debt denominated in the currency of the sovereign state. Just a question...no aggression intended!

Chris,

When you say you are not sure what happens, are you talking about the CDS world or something different?

BTW the PV on a CDS is ZERO if the ProbabilityOfDefault of the Bond(Issuer) is zero.

I think this implies that any sovereign bonds with a functioning CDS market have (or had at point of writing) a ProdbabilityOfDefault(Issuer, Bond) which is non zero.

Re: Euroland the fact that there is a Spread between GermanBonds and many of the others suggests that the ProbabilityOfDefault of the countries mentioned here (for example) is not the same.

I will check tomorrow, but I recall the 5Y CDS for the US being around 10bps and UK 15bps. The UK was 2.5 around six months ago, so while the market is pricing in a very small chance of default, it is getting bigger. I think Spain/Iceland is a fair bit higher.

Markit treat foreign and domestic debt differently

SECDOM – secured debt, or for sovereigns, domestic debt
SNRFOR – senior unsecured debt, or for sovereigns, foreign debt (SNRFOR rather than SECDOM should be considered standard for most corporates)

http://www.markit.com/information/products...defaultswap.pdf (I can't recall if this document is correct)

Agreed, the spreads are quite telling; there is some risk.. but EuroLand is a 'special' case in that the countries issuing the debt don't control the treasury outright; with a more normal situation such as Gilts or T-Bills, where debt is issued by a soverign state posessing its own treasury and that debt is denominated in the currency of the soverign state, my inclination is still to go to the 'zero risk of default', unless CG/others can show me some debt which is an exception.. (and there might be, just that I don't know...)




Not CDS specifically; I was really wondering what the mechanics would be in terms of the other countries which share the currency and how they would / could react to a default.

Arguably there was 'no currency of the sovereign state'

Surely if currency collapse occurs, then central banks will give up and not want to sell gold. It may even make sense for them to increase their reserves with something that holds value.

From what I have read the debt tends to be issued in foreign currency

"Typically, only bonds issued in external markets and denominated in one of the “standard
specified currencies” are deliverable.4 In particular, bonds issued in domestic currency, issued
domestically, or governed by domestic laws are not deliverable"

http://www.stanford.edu/~kenneths/sovcds.pdf

That is the case in the CDS world - someone with more experience of bonds may be able to contribute...

Latest OCC report

http://www.occ.treas.gov/ftp/release/2008-36a.pdf

I am curious, we keep hearing threats from financial institutions that they intend to divorce the good debt from the bad. Firstly is this plausable/conceivable/legal in Europe/US? Secondly who would bare the financial cost of this?

We the people. Profits privatised. Losses socialised. Basically facism.

I have been the super moderator (Administrator) of 2 forums and for both web sites the administrator's edits are not time stamped, you are effectively under the radar although I can't specifically speak for IP.Board.

You spend too much time on here! You have posted 481 posts since 5-January 08...

Why would this be the case? The banks seem to be suggesting this is the way forward to avoid a collapse and nationalisation and if I am not a share holder why would I bare the cost?

I am also interested if this is even legal! What's to stop me off loading my debts to one of my companies and then declaring the company bankrupt, I would suggest this isn't legally possible, I'm sure my creditors would still pursue me for the full amount.

You'll bear the cost through increased inflation. Its hardly capitalist is it? To bail out banks that lend recklessly? With freshlyprinted money no less that drives up the cost of living for everyone.......and that hits those at the bottom hardest.

Perhaps I am not making myself clear. I am talking about pre collapse and an alternative to nationalisation and as a mechanism for dealing with this problem. Banks seem to be suggesting that this is an alternative to the collapse that has been suffered by Bear Sterns.

If banks are insolvent and they have to take money from the national bank to survive then perhaps they should be nationalised.

I bet £5 you are female, as you have gone off on a tangent and not answered my questions.

Anyone else?

That because your questions aren't very coherent. Do you want to clarify what it is you are asking?

Here you go maybe this is clearer?

"UBS also said it would create a unit to ring-fence its toxic assets. The unit will be a separate company and could be sold or spun off, the bank said. Mr Rohner said the move would help to reduce the distraction of the assets for its main businesses"

Do you owe me £5?

No




This is hardly a solution.........a turd is still a turd even if you polish it.




Why would anyone invest in a spin off of the assets that UBS dont want? The only fools left who would consider it are governments with taxpayers money.

We're still not answering my questions... This solution has been suggested for Ambac, Bear Sterns and now UBS, it is obviously a potential solution, otherwise I would not have heard it suggested 3 times! What I would like to know is:

i) Is this legal knowing full well that the underlying debtors will default and the company will very likely suffer a financial collapse.

ii) Who would foot the bill for such an exercise, the bank, the depositors or the investors/share holders?

Yes I have.....now you have new questions.





If you think its such a great a great solution then why dont you call UBS and ask them if you can invest your pension in their spin off fund made up of assets that they themselves describe as 'toxic'?




If a goverment bails them out then presumably they will make it legal.




Well you would hope that the shareholders would......but I fear taxpayers will foot the bill

I don't want to be rude to you, but you're forcing my hand. You're an idiot and I still think you're female, you make no sense. Please do not reply to this... before I lose the will to live (and I'm close!) can anyone offer an intelligent insight?

Look........of course it is plausable/conceivable/legal for governemnts to loan banks vast amounts of money against non performing, badly written loans that are now 'toxic'. This give the banks the liquidity that they crave. As to who bares the cost? Well the money can be printed......yes it has to be paid back, with interest.......but it is also inflationary in that it introduces new cash into the system.....so we all pay in terms of increased cost of goods (down the line). I hope that the shareholders of the banks would bare the cost.....but I think that it would end up being taxpayers (through inflation).

Someone save me please...

just look at the kittens

group hug...

These are the marks of the derivative beast.

Protect yourselves NOW, before the confidence in the monetary system evaporates overnight.

http://www.guardian.co.uk/business/2008/ap...bearstearns.usa
More than $10bn of Bear's liquidity evaporated in one day, Congress hears

Thursday April 3 2008

The breakneck speed at which Bear Stearns went bust became clear today as American congressmen heard that more than $10bn of the 85-year-old Wall Street investment bank's financial liquidity evaporated in a single disastrous day.

Top officials from the Federal Reserve and the Securities and Exchange Commission told the Senate banking committee that they were forced to step in with a $30bn public guarantee to prevent an "abrupt and disorderly" bankruptcy from threatening America's financial stability.

Christopher Cox, chairman of the Securities and Exchange Commission, said regulators had been encouraging Bear Stearns to bolster its capital since two of the bank's hedge funds collapsed in June last year.

Under pressure from the SEC, the bank upped its cash resources from $8.4bn at the end of January to a peak of $21bn at the beginning of March. But as rumours of problems at Bear circulated in the market, this sum quickly declined and on March 13, the bank's liquidity dived from $12.4bn to just $2bn prompting a distress call for emergency help.

"There was a complete evaporation of confidence and a refusal by counterparties to deal," said Cox, who agreed with a suggestion that Bear suffered a run on the bank. "Although we're not accustomed to using that term in the investment banking sphere, the analogy is nearly complete."

-------------------------


http://www.iht.com/articles/2008/04/03/business/gbank.php
BayernLB, a German state-owned lender, announces huge write-down

April 3, 2008

BayernLB, a public German lender, said Thursday it would write down €4.3 billion, double its previous estimate, as the contagion from a credit crisis continued to spread to state-owned banks in Germany.

I'll help you. The infinitive form of the verb commonly used to imply a support or a carrying of liability is "to bear", not "to bare".

The rest is beyond you.

Que black friday anyone??

" they were forced to step in with a $30bn public guarantee to prevent an "abrupt and disorderly" bankruptcy from threatening America's financial stability"

....and how much did it take us to avoid the same with NR?

Yeah, righty-oh mate...

Timing seems to be impossible to predict.

I think cgnao is most likely correct and the mountains of dodgy derivatives and the absolutely enormous debt created in the first worldwide credit bubble will destroy the financial system.

I thought it was imminent the weekend before Bear Stearns failed.

Instead we have a return to some sort of confidence.

If it happens it will be sudden, the best protection gold is on sale now.

Yeah.. and even though the black threads are annoying the hell out of me I cannot help but think that there is only so much the markets can continue to take before something big happens...

Could be another month or two before something tanks.. but we wait...

Can anyone explained why this hasn't happened?
I the last week of Feb, I thought this is it......

Either way, getting 10 or 20% in gold is not that risky - gold will never collapse to nothing like a speculative share.

These updates on the credit markets are very interesting, don't know where you find them all but thanks for posting.

Neither will a quantity of manure... but I wouldn't encourage you to invest 20% of your wealth in manure... especially not if the only potential disposal would be to another speculator like yourself.

Unlike manure or gold, a share pays dividends.

For the morally inclined, a share also (admittedly very indirectly) finances businesses - and, in doing so, facilitates industry and progress... in a way that speculating in either manure or gold will not.

Thanks for this. I'm starting to pop a prozac before reading your posts Cgnao; just as i think things are starting to improve i get a Cgnao delivered kick in the plums

The thing that struck me when reading about the Russian collapse was how long totally untenable financial arrangements could continue just through sheer inertia and the participants unwillingness to change, acceptance of a changed reality and changes of behaviour can come slowly if panic does not exist.

Possibly it's the same now.

Not just that but there are a lot of VI's plus the CB's and goverments willing to risk anything to stop the dam from overspilling. I think the name of the game for them is to slow it down and let the toxin trickle into the limelight not flood in and kill the host.

Not speculating mate , insurance.

If it collapses in value I can be pretty sure the financial system is OK and in that case I dont need it.

I am near retirement my pension is if fully honoured sufficient for retirement from age 55. Gold is good to hold extra to this because if the gold price drops significantly it is likely my pension will be OK. If geopolitical factors or economic collapse means the pension is not payable it is probably safe to conclude that of all investments gold is the only one with any real possibility of sufficient appreciation to offset loss of the pension.

Incidentally manure is a real investment not paper and in the event of economic collapse would retain value as fertilizer.

Incidentally I agree, investing in real businesses is good I am an employer and have today done my PAYE year end.