Just in, this will bail out China, London, and other Foreign Banks [Archive]

Kimmons

10-01-08, 11:00 AM

Senator Sherman "the bill is very clear, assets now held in China and London can be sold to the us on Monday and then sold to the treasury on Tuesday...hundreds of billions of dollars are going to bailout foreign investors, they know it, they've demanded it and the bill has been carefully written to make sure that can happen"

1:46 seconds into video...CNBC.

http://www.youtube.com/watch?v=GqIFoBXGizc

Folks, this is it...do something! :mad:

<hr style="color: rgb(144, 152, 154);" size="1">   Call them for you kids.

For Floridians....

http://www.senate.gov/general/contac...m.cfm?State=FL (http://www.senate.gov/general/contact_information/senators_cfm.cfm?State=FL)

Everyone else....
http://www.senate.gov/

If the phone's busy send e-mail, send a fax, bang on their door!

phirang

10-01-08, 11:05 AM

Senator Sherman "the bill is very clear, assets now held in China and London can be sold to the us on Monday and then sold to the treasury on Tuesday...hundreds of billions of dollars are going to bailout foreign investors, they know it, they've demanded it and the bill has been carefully written to make sure that can happen"

1:46 seconds into video...CNBC.

http://www.youtube.com/watch?v=GqIFoBXGizc

Folks, this is it...do something! :mad:

<HR style="COLOR: rgb(144,152,154)" SIZE=1>   Call them for you kids.

For Floridians....

http://www.senate.gov/general/contac...m.cfm?State=FL (http://www.senate.gov/general/contact_information/senators_cfm.cfm?State=FL)

Everyone else....
http://www.senate.gov/

If the phone's busy send e-mail, send a fax, bang on their door!

There's apparently an inverse relationship between activism and understanding... please learn something about trade.

Tulpen

10-01-08, 11:13 AM

There's apparently an inverse relationship between activism and understanding... please learn something about trade.
Fact of the matter is that if someone is lending money there is always a chance the counter party defaults. Why do you call it a "lack of understanding" if people do not want the taxpayer to cover such defaults?

phirang

10-01-08, 11:18 AM

Fact of the matter is that if someone is lending money there is always a chance the counter party defaults. Why do you call it a "lack of understanding" if people do not want the taxpayer to cover such defaults?

Because taxpayers aren't going to pay for this!!! This isn't an expense: it's a holding company, a shell. Once we get lending again, the NAV of these products will increase. Anyway, more SWF's(ahem GCC ahem) will pour money into the underlying assets (RE and other crap). The US gov attacks liquidity of assets, SWF's pour money(upon passage of bill) into US RE, then PE money follows (once duly repatriated sans taxes), and voila, NAV of assets crap increases.

Remember GSE spreads before FNM bailout and after? It was one of gross' few good calls this year.:)

Kimmons

10-01-08, 11:18 AM

Phirang,

Interesting comment.

It it your understanding that most US citizens know we will be buying bad debt from foreign countries as well?

phirang

10-01-08, 11:23 AM

Phirang,

Interesting comment.

It it your understanding that most US citizens know we will be buying bad debt from foreign countries as well?

WHO CARES: the USD is the reserve currency: this is why debts don't matter!!! For that 1 of money china paid us for that worthless paper, we're buying it back for, what, $0.2? $0.3? We're not even factoring in a discount rate! That's called profit, my friend!

We export PAPER and get HARD ASSETS in return. Our "allies" and trading partners finance our military and our excesses. Pretty good deal if you ask me.

Demagogues are exploiting the ignorance of the hoi polloi to win concessions and differentiate themselves from their colleagues. The only other plan that makes senses is an equity stake, but that'll be hell to get through.

Tulpen

10-01-08, 11:23 AM

Because taxpayers aren't going to pay for this!!! This isn't an expense: it's a holding company, a shell. Once we get lending again, the NAV of these products will increase.

Then why don't YOU invest your private money into it.

phirang

10-01-08, 11:24 AM

Then why don't YOU invest your private money into it.

Same reason why I won't buy GS: i can't get WB's terms.

Tulpen

10-01-08, 11:25 AM

Same reason why I won't buy GS: i can't get WB's terms.
Right, so you want taxpayers money on the line for an even worse deal.

phirang

10-01-08, 11:27 AM

Right, so you want taxpayers money on the line for an even worse deal.

It can work, whereas doing nothing means 20%+ unemployment.

The Outback Oracle

10-01-08, 11:31 AM

Hmmmmmmm and what happens if they decide they are sick of your stupid game?

Edit...sorry ignore that...it does not relate to the topic.

Tulpen

10-01-08, 11:39 AM

Kimmons

10-01-08, 11:44 AM

Because taxpayers aren't going to pay for this!!! . This isn't an expense: as far as I know the government doesn’t have any money, it’s all our money. ..in fact we don’t have any money either, so we would have to borrow it…that seems like an expense to me, at the very least a liability. If what you’re saying is true, why don’t we just borrow enough to pay off the national debt, then we’ll be debt free, won't we? :confused:

WHO CARES: the USD is the reserve currency:
That may be the case now, can you verify that will be true 10, 40 or 80 years from now? This is why we are in trouble…short sightedness.

For that 1 of money china paid us for that worthless paper, we're buying it back for, what, $0.2? $0.3? We're not even factoring in a discount rate! That's called profit, my friend! and you think this can go on forever? You don't think China realizes this. Good point on the worthless part so what happens when you keep making more and more of those worthless pieces of paper…you’re saying there is no cost? How do you explain away the decrease in purchasing power?

Don’t hardly know you yet, but you sound like a good candidate for the next Fed Chairman.

sishya

10-01-08, 11:47 AM

Tulpen

10-01-08, 11:51 AM

Because taxpayers aren't going to pay for this!!! This isn't an expense: it's a holding company, a shell. Once we get lending again, the NAV of these products will increase. Anyway, more SWF's(ahem GCC ahem) will pour money into the underlying assets (RE and other crap). The US gov attacks liquidity of assets, SWF's pour money(upon passage of bill) into US RE, then PE money follows (once duly repatriated sans taxes), and voila, NAV of assets crap increases.

Remember GSE spreads before FNM bailout and after? It was one of gross' few good calls this year.:)
5 Days ago you wrote:
"there's a massive liquidity crunch at the Fed, hence the need for taxpayer dollars to move dogshit from fed b.s. to a greater fool."

So now the dogshit is good for the taxpayer?

http://www.itulip.com/forums/showpost.php?p=50380&postcount=1

bpr

10-01-08, 12:18 PM

Where are people coming up with $.2 or $.3; Thirty cents on the dollar sounds like fire sale prices, to me. From what I've read and heard, they will not be paying "fire sale prices" for this debt, but something closer to maturity value (according to Bernanke at the House hearing). Either way, what they pay totally up to the discretion of the Treasury.

$#*

10-01-08, 12:50 PM

Because taxpayers aren't going to pay for this!!! This isn't an expense: it's a holding company, a shell. Once we get lending again, the NAV of these products will increase. Anyway, more SWF's(ahem GCC ahem) will pour money into the underlying assets (RE and other crap). The US gov attacks liquidity of assets, SWF's pour money(upon passage of bill) into US RE, then PE money follows (once duly repatriated sans taxes), and voila, NAV of assets crap increases.

Remember GSE spreads before FNM bailout and after? It was one of gross' few good calls this year.:)

Phirang nailed it here. I have to agree, at least, partially with that. The US taxpayers will take some losses to their wallets but that's nothing compared to the losses the Rest of The World taxpayers will take. And that makes sense, since J6P is already in debt up to his eyeballs. There is not much left Wall Street can rip-off from the poor fella.

Still, the US tax payer will have to pay for the minimum monthly payment of the Fed's negative interest rate Magic Credit Card issued by the International Dollar Swindle Bank (aka US Department of Treasury)

phirang

10-01-08, 12:55 PM

Phirang nailed it here. I have to agree, at least, partially with that. The US taxpayers will take some losses to their wallets but that's nothing compared to the losses the Rest of The World taxpayers will take. And that makes sense, since J6P is already in debt up to his eyeballs. There is not much left Wall Street can rip-off from the poor fella.

Still, the US tax payer will have to pay for the minimum monthly payment of the Fed's negative interest rate Magic Credit Card issued by the International Dollar Swindle Bank (aka US Department of Treasury)

Ah, but the Fed has zeee zolution:

thinner dollars!

bwahahaha!

c1ue

10-01-08, 02:34 PM

WHO CARES: the USD is the reserve currency: this is why debts don't matter!!! For that 1 of money china paid us for that worthless paper, we're buying it back for, what, $0.2? $0.3? We're not even factoring in a discount rate! That's called profit, my friend!

We export PAPER and get HARD ASSETS in return. Our "allies" and trading partners finance our military and our excesses. Pretty good deal if you ask me.

Demagogues are exploiting the ignorance of the hoi polloi to win concessions and differentiate themselves from their colleagues. The only other plan that makes senses is an equity stake, but that'll be hell to get through.

Phirang,

Past performance is no indicator of future performance.

Secondly you're lumping yourself with all Americans.

I don't think the majority of Americans feel like they're getting anything for free. The bullets shot in Iraq and Afghanistan do very little to benefit the rest of the population - at least the after-tax, after-inflation income numbers seem to reflect that.

On the other hand - housing, food, and fuel costs are all rising.

Sure, the rentiers are making a mint. But there's not enough going around to placate the masses, and the housing ATM machine is broken for at least a generation.

Then there's the foreigners. I still have yet to see a convincing argument that China, India, Brazil, and Russia have any need to hitch themselves to the US' wagon any longer. Europe is a little more complicated - there is a lot of intertwining of the economies, especially the UK. Germany as the world's largest exporter naturally would also be hurt by a US fall from grace.

In the past, it was as Bulls pulling the US' wagon in return for feed and maintenance (money for infrastructure development).

Now the choice is pull the wagon after getting your balls ripped off (Becoming an Ox). No future just a job until you get too old, die, and are converted to glue and cutlets.

Doesn't seem very attractive to me.

VIT

10-01-08, 11:54 PM

Lukester

10-02-08, 02:43 AM

No disrespect Phirang, just a challenge of the ideas you put forward at iTulip (as is the normal function of these pages), but your "astute and checkmating US FED" idea sounds implausible. To call the scenario you describe a trumping move by the FED is a stretch. A lot of hints instead suggest the opposite, that the aFED is merely running scared. For one thing the patsy creditors you describe are going to be about as easy for the FED to grab a firm hold of as a bunch of greased eels. You are talking about securing the global checkmate for a tottering world currency order, with a scam in which the creditors en masse are locked in as unwilling participants? The creditors?

Pissing one's creditors off even more by abandoning the last semblance of good faith implies one has complete assurance one's trap is inescapable, but it is anything but inescapable. Meanwhile, the counterparties to this checkmate ( rich and obliging patsies ) among our large creditors are players in your scenario with all the apparent initiative of a bunch of wooden posts stuck in the ground? I don't believe that banks trying to cement new global currency orders figure they can pull off imperial tithing scams, based solely on the strength of a momentary tactical advantage in a process with a certain resemblance to three card monte. And buying former obligations back from the presumed creditor vassals at thirty cents on the dollar is hardly a scheme designed for longevity.

The intended patsies more likely turn into greased eels fairly early on (a whole new crop of modern day De Gaulles), and elude the gambit pretty quick. More likely Phirang the FED are merely running along helplessly, "making it up as they go along".

When you saw Paulson going hat in hand to China a year ago, did that strike you as the picture of a finance minister who was going to be holding any sort of trump card for long?

WHO CARES: the USD is the reserve currency: this is why debts don't matter!!! For that 1 of money china paid us for that worthless paper, we're buying it back for, what, $0.2? $0.3? We're not even factoring in a discount rate! That's called profit, my friend!

We export PAPER and get HARD ASSETS in return. Our "allies" and trading partners finance our military and our excesses. Pretty good deal if you ask me.

Demagogues are exploiting the ignorance of the hoi polloi to win concessions and differentiate themselves from their colleagues. The only other plan that makes senses is an equity stake, but that'll be hell to get through.

$#*

10-02-08, 02:48 AM

I see it the same way. Only if you believe US will repay 11 trn USD of its debt this will be taxpayer money. This bill will not cure the patient but can stabilize him before the surgery. Without surgey he will die later.
VIT this is the beauty of the Wall Street Scam. Actually the taxpayer is supposed to pay only $2-4 trillion of the debt to the ROW, because is "recycled" back into Wall Street. This is how the negative interest loans work.

This beats Ponzi and every other well known financial scam. And there is nobody to stop them.

Lukester

10-02-08, 02:59 AM

Yes $#* - but the point you overlook is that it is not anybody's daydream of a real world "trumping gambit", which would imply a strengthened global positioin thereafter. It is a "desperate seat of the pants" gambit. A gambit that leads straightaway to total loss of international credibility and utter destruction of the dollar's reserve status in the world. Big hole in the center of your broader thesis, that it was all "planned and intended towards US fiat supremacy".

VIT this is the beauty of the Wall Street Scam. Actually the taxpayer is supposed to pay only $2-4 trillion of the debt to the ROW, because is "recycled" back into Wall Street. This is how the negative interest loans work.

This beats Ponzi and every other well known financial scam. And there is nobody to stop them.

$#*

10-02-08, 03:06 AM

When you saw Paulson going hat in hand to China a year ago, did that strike you as the picture of a finance minister who was going to be holding any sort of trump card for long?

Many snake oil businessmen/retailers knock at your door hat in hand offering you an exceptional business "opportunity".

http://www.chinaeconomicreview.com/editors/2008/09/08/chinas-getting-too-expensive-back-to-america/

We’ve heard plenty in the news this year about rising prices hurting export-oriented businesses in places like Guangdong (http://www.chinaeconomicreview.com/dailybriefing/2007_12_13/Shoemakers_squeezed_in_Guangdong.html) and, more recently, Zhejiang (http://www.chinaeconomicreview.com/dailybriefing/2008_08_14/Exporters_in_Zhejiang_facing__serious_situation.ht ml). Clearly some areas of China that were once “workshops” for the world’s cheap goods are pricing themselves out of the market, with the slashing of export rebates, inflation, currency appreciation (though that appears to be slowing viz. the US dollar) and rising labor, material and fuel costs all playing a part. The next step for these areas, local governments hope, is to climb the greasy pole value chain and start producing higher-value goods.
So who’s going to make our cheap furniture and sleeping bags now? Americans?
Not as strange as it sounds. In some cases, according to this interesting article (http://www.washingtonpost.com/wp-dyn/content/article/2008/09/07/AR2008090702262.html?hpid=moreheadlines) by the Washington Post’s Ariana Eunjung Cha, some low-cost American manufacturers are headed back home. And to very interesting charts form Brad Setser:

http://blogs.cfr.org/setser/files/2008/09/opaque-world-2.PNG

and,

http://blogs.cfr.org/setser/files/2008/09/opaque-world-3.PNG

I cant' wait to see the numbers for Q2 and Q3 2008 ;)

Where did all the money go? http://www.itulip.com/forums/picture.php?albumid=7&pictureid=29

Lukester

10-02-08, 03:19 AM

$#* - If your thesis rests on a "startlingly persistent" improvement of the US's financing needs and a "cast in stone" future demand for USD you are not employing long range reasons that I can spot or recognise. That John Williams guy must have been utterly deluded writing about how we've been mired in the debt trap over here already for a while. According to the "new macro" you depict, we'll just naturally wind up being the most well recuperated (formerly 5o trillion dollars in debt) Cinderella in history. You really mean it with this argument? EJ needs to go completely back to the drawing board and start over. He's missed the entire point - that we have the world snookered in a vise-like US dollar gambit, while all of our slow witted creditors were foolishly thinking it was our goose that was cooked.

Many snake oil businessmen/retailers knock at your door hat in hand offering you an exceptional business "opportunity". And to very interesting charts form Brad Setser: I cant' wait to see the [ declining financing need ] numbers for Q2 and Q3 2008 ;)

Where did all the money go? http://www.itulip.com/forums/picture.php?albumid=7&pictureid=29

Let's just say $#* that we have what might be called "diametrically opposite conclusions" about who is actually in the driver's seat regarding America's future options. BTW I greatly enjoy your trenchant and caustic sense of humor. If it were employed congruent to what I must conclude is the bedrock reality on issues such as America's breadth of financial and currency options at this juncture (close to zero), I'd be even more appreciative.

$#*

10-02-08, 03:51 AM

You really mean it with this argument? EJ needs to go completely back to the drawing board and start over.
I can't tell EJ what to do. Anyway I don't think that will happen soon because (I guess ) he is very busy with the King Plan :)

He's missed the entire point - that we have the world snookered in a vise-like US dollar gambit, while all of our slow witted creditors were foolishly thinking it was our goose that was cooked.

Pretty much yes. Our creditors didn't know that there is no free lunch.

I was curious about the Q2 and Q3 numbers (and I realize those numbers will arrive too late for a prediction) in order to get a possible indication if the liquidity crisis is pushed to the point in which low level hedge funds will start soon popping like popcorn in the microwave... just that :)

Let's just say $#* that we have what might be called "diametrically opposite conclusions" about who is actually in the driver's seat regarding America's future options.
Lukester, that's the beauty of it. iTulip would be an extremely boring and sterile place without disagreements (just imagine one EJ and 500 faithful and completely fabulous metalmans).

As long as we use common sense and no BS even if we agree in general term on a subject, there will always be significant details left to argue about.

BTW I greatly enjoy your trenchant and caustic sense of humor. If it were employed congruent to what I must conclude is the bedrock reality on issues such as America's breadth of financial and currency options at this juncture (close to zero), I'd be even more appreciative.
Thank you Lukester. I hope I employ my humor in an entertaining way and congruently to what I perceive as being a not quite rosy reality.

Lukester

10-02-08, 03:58 AM

[ our creditors are snookered ] Pretty much yes. Our creditors didn't know that there is no free lunch.

RINSE, REPEAT ARGUMENT: Yes $#* - but the point you overlook is that it is not anybody's daydream of a real world "trumping gambit", which would imply a strengthened global position thereafter. It is a "desperate seat of the pants" gambit. A gambit that leads straightaway to total loss of international credibility and utter destruction of the dollar's reserve status in the world. Big hole in the center of your broader thesis, that it was all "planned and intended towards US fiat supremacy".

$#*

10-02-08, 04:51 AM

RINSE, REPEAT ARGUMENT: Yes $#* - but the point you overlook is that it is not anybody's daydream of a real world "trumping gambit", which would imply a strengthened global position thereafter.

Lukester this is not a gambit. It's a scam presented as a gambit. Remember the fall of Bretton Woods? The Nixon Shock? At that time everybody was scared that without any gold backing nobody would buy dollars, and a lot of people panicked ... well ...:D

If deficits and debt are transformed in negative interest loans they become a very profitable form of investment... I know it's a little bit counterintuitive, but try to imagine what if you would get a credit card with -30% interest rate. What would you do ? What would happen to the bank that has only one major client (you) which has only negative interest credit cards?

xtronics

10-02-08, 11:03 AM

Something else seems to be happening - Have they pegged their currency to the dollar?

http://finance.google.com/finance?q=USDCNY

I don't see any news about this??

c1ue

10-02-08, 12:59 PM

X,

The time frame you are looking at is too short.

The 1 year or longer picture shows the true story: that China has been gradually strengthening the yuan vs. the dollar.

But recently this has stopped.

The question is: is this due to a policy change on China's part? i.e. no more buying of Treasuries to keep the yuan undervalued vs. the dollar?

Or is this due to the short term swings from the bailout drama?

Time will tell.

xtronics

10-02-08, 01:12 PM

X,

But recently this has stopped.

The question is: is this due to a policy change on China's part? i.e. no more buying of Treasuries to keep the yuan undervalued vs. the dollar?

Something has happened:

http://finance.google.com/finance?q=USDCNY

You will noticed what appears to be a peg put in place in the last few days.

$#*

10-02-08, 01:30 PM

Something has happened:

http://finance.google.com/finance?q=USDCNY

You will noticed what appears to be a peg put in place in the last few days.
Yep. In the inflation growth debate , it seems that the growth faction won.

The sad part is that there is no real debate, because there are no good options left for them:

http://piaohaoreport.sampasite.com/china-financial-markets/blog/The-currency-debate-re-ignites.htm

Welcome to iTulip xtronics !

xtronics

10-02-08, 04:29 PM

Yep. In the inflation growth debate , it seems that the growth faction won.

--snip --
<snip>
Welcome to iTulip xtronics !

Nothing in the news speaks directly of this??

Thanks - I have been working at import deals from China - I think this changes things. Their export prices in US$ (as The Outback Oracle has also pointed out) were ballooning.

The Chinese are really in a spot - they have a lot of US$ and need to keep growing to keep the calm at home. This should stop the price increases at Wallmart for now.

I expected the DOW to go up today after the senate passed the bill - instead it took a dive?? I think the house will pass this bill - eventually - and there should be a false rally. I really think this bill is really bad news - and once it passes I expect more and more to line up for their handout.</snip>

VIT

10-02-08, 10:31 PM

Lukester this is not a gambit. It's a scam presented as a gambit. Remember the fall of Bretton Woods? The Nixon Shock? At that time everybody was scared that without any gold backing nobody would buy dollars, and a lot of people panicked ... well ...:D

If deficits and debt are transformed in negative interest loans they become a very profitable form of investment... I know it's a little bit counterintuitive, but try to imagine what if you would get a credit card with -30% interest rate. What would you do ? What would happen to the bank that has only one major client (you) which has only negative interest credit cards?

Probably it is not correct to call it "scam". Everybody benefited in this scheme:
- US as originator of it
- China by rapid industrialization
- Oil countries by creating SWF funds, buying western assets and creating real building / infrastructure inside.

But it can not be infinite game. Now we can see "game over". The question is if the "end" will be in controllable manner or not :D

$#*

10-03-08, 02:52 AM

Probably it is not correct to call it "scam". Everybody benefited in this scheme:
- US as originator of it
- China by rapid industrialization
- Oil countries by creating SWF funds, buying western assets and creating real building / infrastructure inside.

But it can not be infinite game. Now we can see "game over". The question is if the "end" will be in controllable manner or not :D
There is no end, because it's designed as cyclical process, And the collapse happens, but it happens in other countries.

http://www.itulip.com/forums/showpost.php?p=47409&postcount=7

This is the worse form of monetary (imperial) neocolonialism.

And it will go on because nobody is doing anything to stop it.

The Americans are blinded with scare tactics (WMD, AQ, total economic collapse and now even national collapse and Martial Law) and kept under control by debt.

The ROW governments are lured into this scheme with hollow promises of economic growth, and foreign corrupt, totalitarian or simply idiotic governments are buying into it.

I personally can't do anything else than shake my head and watch in dismay the ordered and optimistic march of their victims towards disaster.

Look what happens to the mighty Euro:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3104666/Banking-crash-hits-Europe-as-ECB-loses-traction.html

"The interbank market has collapsed," said Hans Redeker, currency chief at BNP Paribas.
"We're now seeing a domino effect as the credit multiplier goes into reverse and forces banks to cut back lending to clients," he said.
Mr Redeker said the latest alarming twist is a move by banks to deposit €28bn in funds at the European Central Bank in a panic flight to safety. This has jammed the mechanism used by the authorities to shore up the financial system in a crisis.
"The ECB is no longer able to inject liquidity because the money is just coming back to them again. This is extremely serious. If monetary policy is no longer working, there is a risk that the whole system will blow up in days," he said.
WTF is that ? They have a liquidity crisis in the EU financial system, ECB throwing money at it and the money bounces back? What's that? Jean Claude Trichet trying to play tennis with the EU financial system without realizing he is on a pelote (http://en.wikipedia.org/wiki/Pelote) court?

How is this possible when EU has such tight deficit controls?
How is this possible when the dollar is supposed to tank as a worthless currency being replaced by the sound euro?

There are no "irrational'markets. There are only markets for which we completely miss the fundamentals.

Now I'm going to put back my tinfoil hat and watch the Great Game.