Jump to content
House Price Crash Forum
Sign in to follow this  
dryrot

Ambrose Evans-pritchard "really Frightened"..

Recommended Posts

hi

http://www.telegraph.co.uk/money/main.jhtm...3/ccview103.xml

I'd laid in a case of champagne - because between the revolution and the firing squad, there's always time for a glass - but this from today's telegraph makes me rip the foil from another bottle. :) Through the sodden, glass-ringed paper I blearily make out...

"The verdict is in. The Fed's emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation. Much more drastic action will be needed"

"The extent of de-leveraging involves a wholesale destruction of credit. The risk is that the 'shadow banking system' completely collapses," he said.

For the first time since this Greek tragedy began, I am now really frightened."

Share this post


Link to post
Share on other sites
For the first time since this Greek tragedy began, I am now really frightened.

:lol: hopefully the big guns will act quickly and rip that plaster off , taking the short term pain instead of a depression.

Edited by maxwell

Share this post


Link to post
Share on other sites

The article says:

No sane mortal needs to know what term-auction means, except that it too became a tool of the US credit alchemists. Banks briefly used the market as laboratory for conjuring long-term loans at Alan Greenspan's giveaway short-term rates. It has come unstuck. Next in line is the $45trillion derivatives market for credit default swaps (CDS).

Maybe they think we don't need to know what a term auction is, but credibility is blown with the statement about a $45trillion derivative market for CDS. As far as I know, the derivitives market has a nominal value of about $45 trillion, but CDS are only one form of derivative. The best estimate I have is that in 2006 CDS accounted for 16% of derivatives contracts by nominal value. While the proportion may have risen, I think we're looking at considerably less than $45 trillion in CDS.

Edited by A.steve

Share this post


Link to post
Share on other sites

A freind of mine who works as a failry high flying consultant for one of the big UK banks told me several months ago that the state of banking smells like a depression. I have always believed the entire banking system was insolvent qua. the size of the house price credit bubble and the availability of funds to cover massive defaults.

Trillions have been fabricated out of the air* and when it all bursts a lot of people are going to lose a lot of money--more than the banks can afford to pay. Thus massive deflation.

_______________

* This methodology was deployed by Gordon to give us a housing "miracle" in the UK which turned every house into a cash machine from which unlimited funds could be withdrawn (MEW) to buy things to keep our shops busy importing from China. BTL was, like gold, a sure-fire investment and was a foolproof substitute for a pension plan. It all went horribly worng, of course, because economies are cyclical and credit based growth is not really growth after all, but debt.

Share this post


Link to post
Share on other sites
Guest An Bearin Bui

Amazing the pressure that is building for rate cuts all round - the Japan scenario is now being presented as a viable option rather than the disaster that it would be. What no-one seems to be recognising is that the Japan solution DIDN'T WORK! It just condemned their economy to more than a decade of stagnation and deflation. And moreover, they could only sustain it because they were a creditor nation. 0% rates are obviously not a viable option for debtor nations like the UK and US that rely on the reserve status of their currencies.

Pritchard-Evans goes a long way to try and portray the eurozone as full of dithering idiots who are over-concerned about "false inflation" and should just cut rates.

Half the eurozone is grinding to a halt. Italy is slipping into recession. Property prices are flat or falling in Ireland, Spain, France, southern Italy and now Germany. French consumer moral is the lowest in 20 years.

He ignores the fact that property prices have been stagnant / falling in Germany for years already and that the eurozone has actually reported 3% inflation recently so has a legitimate concern on that front. This article is really just propaganda for rate cuts in another guise. I'm seeing more and more of this in the media - it's apparent bear-food but it's actually just brain-washing to bully the BoE into ill-considered rate cuts. What they all seem to be missing is the fact that the rate cuts have not as yet worked so why will more rate cuts fix the hangover from the debt binge? Even the stalwart Paul Krugman, who has been one of the few good commentators on the credit bubble, capitulated in his blog today, saying "Keep cutting, Ben!"

HPC loses another hero... :angry:

Share this post


Link to post
Share on other sites
The article says:

Maybe they think we don't need to know what a term auction is, but credibility is blown with the statement about a $45trillion derivative market for CDS. As far as I know, the derivitives market has a nominal value of about $45 trillion, but CDS are only one form of derivative. The best estimate I have is that in 2006 CDS accounted for 16% of derivatives contracts by nominal value. While the proportion may have risen, I think we're looking at considerably less than $45 trillion in CDS.

Wrong.

http://www.isda.org/press/press092607.html

Share this post


Link to post
Share on other sites

Good post. Good article.

However, I guess it will be moved to the Economic sub-forum, the same as Cgnao's thread on the same topic was:

http://www.housepricecrash.co.uk/forum/ind...c=69767&hl=

Although I have to admit, when I read Ambrose's piece on that thread, it was so frightening, I thought it was a written by Cgnao!

Share this post


Link to post
Share on other sites

On other forum I've just been called fearmonger because I've posted that article and written bearish comment. LOL. They don't know how bad is situation...

Derivative Trades on Exchanges Fell Most in 14 Years (Update1)

http://www.bloomberg.com/apps/news?pid=206...amp;refer=funds

Asset-Backed, Commercial-Mortgage Spreads Met `Ebola' (Update2)

http://www.bloomberg.com/apps/news?pid=new...id=aPboISAayuaA

while there is more and more gloomy news...

Share this post


Link to post
Share on other sites
Guest mattsta1964
hi

http://www.telegraph.co.uk/money/main.jhtm...3/ccview103.xml

I'd laid in a case of champagne - because between the revolution and the firing squad, there's always time for a glass - but this from today's telegraph makes me rip the foil from another bottle. :) Through the sodden, glass-ringed paper I blearily make out...

"The verdict is in. The Fed's emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation. Much more drastic action will be needed"

"The extent of de-leveraging involves a wholesale destruction of credit. The risk is that the 'shadow banking system' completely collapses," he said.

For the first time since this Greek tragedy began, I am now really frightened."

When you read a renown financial journo say something like that, you know the turd meteorite isn't far away.

Share this post


Link to post
Share on other sites
The article says:

[deleted]

The best estimate I have is that in 2006 CDS accounted for 16% of derivatives contracts by nominal value. While the proportion may have risen, I think we're looking at considerably less than $45 trillion in CDS.

~20% of 45trillion is what, 9trillion?

phew! thx, feel much better :)

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 294 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.