Baltic Dry Index. 871 -11 Brent Crude 49.73
“It is hard for us, without being flippant, to even see a scenario
within any kind of realm of reason that would see us losing one dollar in any
of those [Credit Default Swap] transactions.”
Joseph J. Cassano, a former A.I.G. executive, August 2007, on Credit
Default Swaps that wiped out A.I.G in 2008.
We open today, while
we await the week’s big fight Friday in Hamburg, with more on “God’s work,” from Goldman. Bring
on war or recession, they demand, though according to Goldie, there’s only a 25
percent chance of a recession in the next two years. So that’ll be war then, I suppose.
I hope no one is actually paying Goldie for this “research.” But if there’s no
recession for another 24 months, that would make this recovery the longest on
record, if the weakest. My guess is that Goldie will be proved wrong. But what
do I know compared to Goldie. Doing God’s work in 2008, brought down Bear Stearns,
AIG and Lehman Brothers, though no one saw it coming, of course, least of all
at the Fed.
Below, Goldie on our
future, and a trip down memory lane.
“I’m just a banker doing
God’s work”
Lloyd
Blankfein, “Mr. Goldman Sacks,” CEO of
Goldman Sachs. The Times, London. [But did The Times suffer a misprint?]
War or Recession Might Be Needed to Break Low-Vol, Goldman Says
By Will Davies
It’ll take more than central bank tightening to shake volatility from
its yearlong slumber, according to Goldman Sachs Group Inc. A large shock such
as recession or war is usually required.
That’s generally been the case for the 14 similar low volatility
“regimes” since 1928, at least in equity markets, Goldman Sachs strategists
Christian Mueller-Glissmann and Alessio Rizzi said. These periods on average
lasted nearly two years, featured short-lived spikes and realized S&P 500
volatility was usually at or below 10.
Swings picked up across assets in the past week and investors are
positioning for a shift higher, in part because of fears of central bank
tightening, the strategists wrote in a July 3 report. But a sustained breakout
is unlikely without an escalation in uncertainty or recession risk, they said.
“Volatility spikes have been hard to predict as they often occur after
unpredictable major geopolitical events, such as wars and terror attacks, or
adverse economic or financial shocks and so-called ‘unknown unknowns’ (e.g.
Black Monday in 1987),” London-based Mueller-Glissmann and Rizzi said.
“Recessions and a slowing business cycle have historically resulted in a high
vol regime across assets.”
Goldman Sachs puts the chances of a recession in the next two years at
25 percent.
More
25 People to Blame for the Financial Crisis
The good intentions, bad managers and greed behind the meltdown
Joe Cassano
Before
the financial-sector meltdown, few people had ever heard of credit-default
swaps (CDS). They are insurance contracts — or, if you prefer, wagers — that a
company will pay its debt. As a founding member of AIG's financial-products
unit, Cassano, who ran the group until he stepped down in early 2008, knew them
quite well. In good times, AIG's massive CDS-issuance business minted money for
the insurer's other companies. But those same contracts turned out to be at the
heart of AIG's downfall and subsequent taxpayer rescue. So far, the U.S.
government has invested and lent $150 billion to keep AIG afloat.
We just got a new insight into a crucial crisis-era dispute between Goldman Sachs and AIG
Matt Turner Mar.
11, 2016, 8:48 PM
The National Archives did a
document dump on Friday, releasing transcripts, meeting agendas, and
confidentiality agreements from the Financial Crisis Inquiry Commission.The group was set up in the aftermath of the crisis by Congress to look into the causes of the crash, and the documents are a gold mine of information.
----Another document that caught our eye was a memo from an interview with Joe Cassano.
To recap, he was the chief executive of AIG Financial Products, the unit at the insurance giant responsible for the outsized losses that led to its bailout.
The business would underwrite a kind of insurance on collateralized debt obligations (CDOs). When those
CDOs fell in value, AIG found itself under pressure to post more collateral to those who had bought the insurance and were on the other side of the trade.
Those collateral calls led to a dispute with Goldman Sachs. It was in some quarters accused of helping to bring down AIG by demanding collateral. Goldman's version of events is posted on its website.
The memo from the interview with Cassano sets out his version of events, and his dealings with Michael Sherwood, co-chief executive of Goldman Sachs International, and David Viniar, the former chief financial officer.
In short, Goldman's early collateral calls kept changing, which Cassano thinks is evidence that "no one could get a handle on the market." Other companies also sought collateral from AIG, but Goldman was asking for the most.
Even as late as January 2008, as it disputed Goldman's collateral demands, AIG was assuming full value for some of the securities. That's something Goldman executives described as "incredible."
Goldman Sachs' chief, Lloyd Blankfein, according to a separate memo from an interview with him, told the commission that he became aware of the dispute in late 2007.
"I was posted that the conversations were hard, that [AIG] owed us money and weren't paying it, and were being very stubborn about the valuation issue," he said, according to the memo.
Blankfein said that he spoke to AIG CEO Martin Sullivan to encourage a resolution, and that he recalled Sullivan expressing deference to Cassano on the call, conveying the view that AIG was confident in its marks.
More
In other news, this
morning, Asian stocks, North Korea’s
ICBM, China and Germany plot Uncle Sam’s downfall, Russia says it will be
alright on the night.
SE Asia Stocks-Cautious as Korea tensions brew; Fed minutes awaited
July 5
Southeast Asian markets were largely range-bound on Wednesday as tensions
brewing on the Korean peninsula kept investor sentiment subdued as they awaited
further clues on the U.S. Federal Reserve's monetary policy.
A holiday in the United States and a lack
of market catalysts muted Asian trading, although minutes of the Federal Reserve's
last meeting due later in the day could signal how
committed it
was to raising rates again this year and any detail on plans to wind back its
massive balance sheet.
Risk sentiment took a hit as North Korea
said it had conducted a test of a newly developed intercontinental ballistic missile
(ICBM) that can carry a large and heavy nuclear warhead.
"Southeast Asian markets are quite
mixed due to geopolitical tensions created by the launching of ICBM from North
Korea," said Manny Cruz, an analyst with Manila-based Asiasec Equities Inc.
"I think the cautiousness is due to
the perception that it might precede some harsh action from major countries
like U.S. and Japan."
Meanwhile, a private business survey showed
China's services sector grew at a slower pace in June as new orders slumped, pointing
to a softening outlook for the economy.
Singapore shares gained as much as 0.7
percent, aided by financial stocks, with Oversea-Chinese Banking Corp climbing
as much as 0.7 percent.
Philippine shares were flat, with
industrials such as Aboitiz Equity Ventures Inc weighing down the index. The Philippines' annual inflation eased for
a second straight month in June due to slower price increases in food and transport,
data from the statistics agency showed on Wednesday.
Indonesian shares edged lower, dragged by
telecom stocks such as Telekomunikasi Indonesia (Persero) Tbk PT , which fell
as much as 1.1 percent.
More
North Korea says its ICBM can carry nuclear warhead; U.S. calls for global action
North Korea said on Wednesday its newly developed intercontinental
ballistic missile (ICBM) can carry a large nuclear warhead, triggering a call
by Washington for global action to hold it accountable for pursuing nuclear
weapons.
A spokeswoman for the U.S. Defense Department said it had concluded that
North Korea test-launched an ICBM on Tuesday, which some experts now believe
had the range to reach the U.S. state of Alaska as well as parts of the
mainland United States.
U.S. Secretary of State Rex Tillerson said the test, on the eve of the
U.S. Independence Day holiday, represented "a new escalation of the
threat" to the United States and its allies, and vowed to take stronger
measures.
North Korean leader Kim Jong Un said the test completed his country's
strategic weapons capability that includes atomic and hydrogen bombs and ICBMs,
the state KCNA news agency said.
Pyongyang would not negotiate with the United States to give up those
weapons until Washington abandons its hostile policy against the North, KCNA
quoted Kim as saying.
"He, with a broad smile on his face, told officials, scientists and
technicians that the U.S. would be displeased ... as it was given a 'package of
gifts' on its 'Independence Day'," KCNA said.
Kim ordered them to "frequently send big and small 'gift packages'
to the Yankees," it added.
More
China, Germany Step Up as U.S. Retires From World Leadership
Marc Champion, Peter Martin and Brian Parkin
3 July 2017, 23:00 GMT+1 4 July 2017, 11:11 GMT+1
The U.S. traditionally takes point in the search for common approaches
to the big global issues of the day at G-20 summits. Not this time.
When world leaders meet in Hamburg on Friday, China and Germany will
move in to usurp the U.S.’s role.
The two industrial powerhouses of Asia and Europe are being nudged into an
informal alliance to pick up the leadership baton that the U.S. is accused of
having dropped since President Donald Trump’s inauguration earlier this year,
according to diplomats and officials from several Group of 20 members.The situation has crystallized ahead of this year’s annual G-20 meeting, which will be held in Germany’s busiest commercial port. That’s in part because, for the first time since the group’s founding, the U.S. will be represented by a president who embraces protectionism, abandoning decades of American cheer-leading for free trade.
“The strategic character of Chinese-German relations is steadily gaining in importance,” Chinese President Xi Jinping said in an op-ed article published Tuesday in German newspaper Die Welt. The two countries “should intensify cooperation on implementing China’s ‘One Belt, One Road’ and jointly make contributions to the security, stability and prosperity of neighboring countries.”
More
Russia Hopes for Good Atmosphere at Putin-Trump Meeting
By Ilya Arkhipov and Henry Meyer
3 July 2017, 16:02 GMT+1 3 July 2017, 20:52 GMT+1
Russia isn’t expecting any immediate breakthroughs at the first meeting
between Presidents Vladimir Putin and Donald Trump, though the Kremlin hopes the two
leaders can get off to a good start that lets them begin tackling thorny
issues, Putin’s top foreign policy aide said.“We understand that it’s complicated, that relations with Russia have become hostage to the internal political squabbles in the U.S., but so what? It’s hard for us too. But we want to and will work together with America,” Putin adviser Yuri Ushakov told reporters on Monday. “Relations have to be taken out of the state they’re currently in.”
Russian and U.S. officials are seeking a window in the schedules of both presidents at the July 7-8 Group of 20 summit in Hamburg, Ushakov said. Putin and Trump plan to discuss the conflicts in Syria and Ukraine and the fight against terrorism as well as a dispute over Russian diplomatic property seized in December, the official said.
Putin’s hopes of improved ties promised by Trump before the election have run into fierce resistance in Washington, as the U.S. president grapples with investigations into possible collusion between his campaign officials and a Russian hacking campaign allegedly aimed at influencing last year’s vote. The Obama administration in December expelled 35 Russian diplomats and shut down two diplomatic compounds outside New York and Washington in retaliation for the Kremlin’s interference, properties which the Russian government is now seeking to get back.
More
"The history of paper money is an account of abuse, mismanagement, and financial disaster."
Richard M. Ebeling
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, the ugly reality of the EUSSR in all its glory. Too many EU
Presidents. Too many EU egos. Too much wealth and Jobs destroying bureaucracy.
Fantasy made up sentiment statistics that differ wildly from real world hard
data statistics. Never ending bailouts. Rules? What rules?
"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton
'They're frankly dubious!' Eurozone growth rates WILDLY exaggerated, says top economist
GROWTH rates in the Eurozone have been "wildly exaggerated" by a major survey, a leading economist has warned.
By Tom Parfitt 05:00, Tue, Jul 4, 2017 | UPDATED:
07:59, Tue, Jul 4, 2017
The Purchasing Managers' Index (PMI), published by data firm IHS Marit,
showed a six-year high in Eurozone manufacturing.It also suggested Britain's recent export recovery ranks as the worst among Europe's major economies.
But Paul Donovan, managing director at UBS Wealth Management, dismissed the PMI as unreliable.
He told US TV station CNBC earlier today: "This data has been
wildly exaggerated.
"We do not have 3.5 or 4 per cent growth in Europe. We are not
going to get 3.5 or 4 per cent growth in Europe.
"What we are seeing is a correction in a rather dubious indicator,
frankly.
"It's a sentiment indicator, it's not a real-world indicator, and
it's coming back down."
He added people do not fill in "these surveys" properly.
Mr Donovan said: "We can prove they don't fill in the surveys
properly looking at the export numbers.
"We know that survey reliability has been declining in recent
years, and we know that the survey data has been exaggerated for the last 12
months.
"It's due a correction, it doesn't tell us anything about the real
world."
More
'I'm NEVER coming back' FURIOUS row erupts between EU chiefs in front of aghast parliament
A FURIOUS row erupted between two senior EU chiefs on the floor of the bloc’s parliament this morning as aghast MEPs watched on open-mouthed.
08:22, Tue, Jul
4, 2017 | UPDATED: 09:26, Tue, Jul 4, 2017
Amid extraordinary scenes EU Commission chief Jean-Claude Juncker and
his counterpart in the EU Parliament Antonio Tajani tore chunks out of each
other whilst the stunned chamber watched on from above.
It all began when Mr Juncker altered a speech to deliver a brutal
tongue-lashing to MEPs, branding the parliament “totally ridiculous” and vowing
never to attend any of its meetings again.
That provoked a furious response by a raging Mr Tajani, who told his
counterpart to show some respect to the directly elected institution and
insisted that the parliament “should control” the Commission.
As the two locked horns in a verbal brawl MEPs watched on completely
stunned, with the end of the argument being greeted by a moment of total and
shocked silence in the chamber.
The jaw-dropping row all began when a thunderous looking Mr Juncker rose
to give his speech to MEPs marking the end of the Maltese presidency of the
European Council.
Joseph Muscat, the prime minister of the tiny island, had already given
his opening remarks summing up the achievements of his country’s six-month
tenure which primarily focussed on the issues of migration and Brexit.
But instead of delivering the usual platitudes, the chief eurocrat
launched into an extraordinary tirade against the number of European
parliamentarians present in the chamber.
He raged: "Mr President, Prime Minister, members of the European
Parliament. I would like to welcome those that have actually taken the trouble
to turn out this morning.
"But the fact that there’s about 30 members of parliament present
in this debate only really illustrates the fact that parliament is not serious
in this. And I’m putting it to you today that if Mr Muscat was Mrs Merkel or Mr
Macron it would’ve been full house.
A furious Mr Tajani then lost his patience and butted in, shouting:
"Mr President could you please have a more respectful attitude. You may
criticise the Parliament yes but the Commission does not control the Parliament
it’s the Parliament that should be controlling the Commission."
But Mr Juncker, waving his arms so wildly he hit his own microphone,
venomously retorted: “There are only few members in the plenary to control the
Commission! You are ridiculous. I wanted to pay tribute to the
Maltese."
That prompted an increasingly enraged looking Mr Tajani to interject
again, waving his arms wildly and loudly urging him: "Mr President I would
ask you please to change your language. We are not ridiculous please, please."
But undeterred, Mr Juncker spat: “I will never again attend the meeting
of this kind. The Commission is under the control of the Parliament but the
Parliament has to respect even the presidency of the smaller countries which
the Parliament is not doing.”
More
Backlash at Euro MEPs travel as secret meetings revealed with ASSAD
ROGUE meetings attended by European Union politicians are “seriously undermining” Brussels, it has been claimed, as MEPs jet off around the world to be hosted by leaders like Syrian dictator Bashar al-Assad.
By Zoie
O'Brien 08:27, Tue, Jul 4,
2017 | UPDATED: 09:50, Tue, Jul 4, 2017
Despite the official stance of the EU on certain dangerous and divisive
global territories - European Parliament officials have been travelling on free
trips and giving out their personal opinions on divisive issues.
Secretive meetings have taken place in Syria and Ukraine, as well as
parts of the Balkans as MEPs undertake meetings on unofficial visits to
politically sensitive destinations.
In July 2016 MEPs caused outrage among their counterparts when a group
from Spain, Latvia and Estonia met with Assad in Damascus.
David McAllister, a German member of the European People’s Party, said
trouble has been caused by the visits, according to paperwork obtained by
Politico.
He said: “A great majority of these visits don’t cause any trouble.
“But there are cases of misconduct that can undermine the image of the
EU abroad as people in some countries don’t distinguish between the Parliament
and the EU.
“We have a recurring number of cases — in Ukraine, in Azerbaijan, in
Morocco, in the Balkans, to name a few — where the positions of the Parliament
are misrepresented and the local authorities and media are not able — or
voluntarily avoid — to understand that the official European Parliament
position is different.
“The Parliament recommends members who travel unofficially do ‘not
engage in any activities which might result in confusion with the official
activities of Parliament or of its bodies’.”
More
Monte Paschi Wins EU Backing for $6.1 Billion in State Aid
By Sonia Sirletti and Aoife White
4 July 2017, 14:30 GMT+1
Banca
Monte dei Paschi di Siena SpA won formal European Union approval to receive
5.4 billion euros ($6.1 billion) in aid from Italy’s government, removing a
further source of turmoil from the country’s financial system.After months of negotiations, the European Commission cleared the so-called precautionary recapitalization of a lender that needs state support to survive even though regulators have declared it solvent. Monte Paschi turned to Italy for help after it failed to raise funding from investors in December.
Italy
is struggling to fix a crisis-era legacy of about 313 billion euros of soured loans
that’s holding back credit and weighing on its weak recovery. The
government approved a law last year to plow as much as 20 billion euros into
troubled lenders as part of its efforts to revamp its banking industry and
break a slump in lending. Last month the government committed as much as 17
billion euros to wind down Banca Popolare di Vicenza SpA and Veneto Banca SpA
after trying for months to find a way to keep the regional banks afloat.
----In
return for the state aid, Monte Paschi agreed to a five-year restructuring plan
that includes changes in its business model and steps to improve efficiency and
management of credit risk. It must also sell about 26 billion euros of bad
loans packaged into securities, and impose a salary cap on senior managers.
Further details of the plan will be presented during an analyst conference call
at 8:30 a.m. local time on Wednesday.
More
“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”
“Adam Smith” aka George Goodman.
Technology Update.
With events happening
fast in the development of solar power and graphene, I’ve added this section.
Updates as they get reported. Is converting sunlight to usable cheap AC or DC
energy mankind’s future from the 21st century onwards? DC? A quantum
computer next?
Scientists May Have Discovered a Sweet Way to Mass Produce Graphene
July 3, 2017
Nanotechnologists from Rice University and China’s Tianjin University
have come up with a way to make centimeter-sized objects of atomically thin
graphene that’s pretty sweet. The method is simple, can be performed at
room temperature, and only requires sugar and nickel in a process called “3D
laser printing.” Due to the printing method, the scientists were able to
control the shapes to the level of the pore and make them 99 percent air —
retaining graphene’s lightness.
This is a landmark for the “miracle material” — composed of a
single atomic layer of hexagonally linked carbon — which has paradigm-shifting
potential due to its high strength (200 times stronger than steel) and
conductivity.
“3D laser printing” differs from the commercially available 3D printing.
Instead of sculpting using melted plastic pressed through the end of a thin
needle, this process melts or “sinters” powders with a laser. Then, a new
powder is applied to the cooled and solid layer beneath it, ultimately forming
an object layer by layer.
After they realized that applying this form of printing to nickel and sugar produced graphene when the mixture cooled, the team optimized the time and laser power required to produce the material. The researchers recently published their results in the journal ACS Nano.
Co-lead author of the study Junwei Sha, a postdoctoral researcher at Tianjin University, said in an interview for a Rice press release that this is also a customizable process: “We should also be able to use this process to produce specific types of graphene foam like 3D printed rebar graphene (graphene reinforced with carbon nanotubes) as well as both nitrogen-and sulfur-doped graphene foam by changing the precursor powders.”
Graphene has been one of the most discussed materials of the decade, with possible applications in diverse fields ranging from increasing upload rates, to being used in quantum computers, to cleaning seawater, to bionic implants.
However, its progress has been impeded by our inability to mass-produce it — a problem which this process could solve. Rice chemist James Tour stated in the press release, “We have shown how to make 3D graphene foams from non-graphene starting materials, and the method lends itself to being scaled to graphene foams for additive manufacturing applications.”
More
"The first requisite of a sound monetary system is that it put the least possible power over the quantity or quality of money in the hands of the politicians."
Henry Hazlitt
The monthly Coppock Indicators finished June
DJIA: 21,350 +196 Up. NASDAQ: 6,140 +235 Up. SP500: 2,423 +166 Up.
No comments:
Post a Comment