Global Debt Time Bomb explodes soon

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Re: Global Debt Time Bomb explodes soon

Post by CaptBrainFreeze » Tue Sep 13, 2011 10:09 am

How in the hell did we get in such a shape that a bad loan can make a country lose it's land and resources to another country buying it with money that has a questionable future while betting the loan won't be repaid.

Anyone else's head starting to hurt?
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Re: Global Debt Time Bomb explodes soon

Post by SeerSavant » Tue Sep 13, 2011 11:24 am

I think of what China is doing as a form of... Economic Colonization? The art of nibbling away at economic war?

It's actually pretty damn smart, for China, even if they loose a certain percentage, they still have a lock in various areas around the world... They are like a savvy Monopoly player buying up all the really cheap properties, and while a chance landing may not have the huge payoff (as we would have with boardwark and park place) When almost every other property is owned by them, they will nickle and dime everyone else into submission...


And yeah... It not only makes my head hurt, but when I think of my kid and grandson's future, it gives me a knot in the pit of my stomach... And angry... Not at the chinese... at the idiots here that jump at any chance at an easy solution to a problem that really has none... Even if it means cutting their own throat...

What's the analogy. A group of employees are given a choice, times are tough, how about a ten percent cut in pay until time gets better? They shout NO! Okay then... Ten percent will get fired arbitrarily...
we've been shouting no for years, and now people are getting fired and whining that they never saw it coming...

It's a shitty analogy, I know... But I'm not that up on economics, so I see everything in a very simple way...
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Re: Global Debt Time Bomb explodes soon

Post by mr_slappy75 » Tue Sep 13, 2011 12:52 pm

SeerSavant wrote:I think of what China is doing as a form of... Economic Colonization? The art of nibbling away at economic war?

It's actually pretty damn smart, for China, even if they loose a certain percentage, they still have a lock in various areas around the world... They are like a savvy Monopoly player buying up all the really cheap properties, and while a chance landing may not have the huge payoff (as we would have with boardwark and park place) When almost every other property is owned by them, they will nickle and dime everyone else into submission...


And yeah... It not only makes my head hurt, but when I think of my kid and grandson's future, it gives me a knot in the pit of my stomach... And angry... Not at the chinese... at the idiots here that jump at any chance at an easy solution to a problem that really has none... Even if it means cutting their own throat...

What's the analogy. A group of employees are given a choice, times are tough, how about a ten percent cut in pay until time gets better? They shout NO! Okay then... Ten percent will get fired arbitrarily...
we've been shouting no for years, and now people are getting fired and whining that they never saw it coming...

It's a shitty analogy, I know... But I'm not that up on economics, so I see everything in a very simple way...
Well Seer, it might not be fancyful and all glitzy but it does work for me because this scenario is being repeated in all levels of the geopolitical and socioeconomic landscape.

From day laborers, going right past unionized labor & trade, bringing along both entry level, college educated professionals and old corporate battleaxes, not forgetting .gov employees, politicians and the long term system juicing unemployed. At a cultural level we are all so concerned with it 'not being a little bit of mine' that in the end this whole culture of self-denial and fiscal irresponsibility is going to mean 'a whole lot from all of us'.

I am happy to say that my above statement is neither political nor religious in nature (Ms. Shrap please don't flail me) but a mere observation of what a very base human behavior does to a fairly complex econo-industrial system.
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Re: Global Debt Time Bomb explodes soon

Post by Lynxian » Tue Sep 13, 2011 5:00 pm

A reliable Dutch news source (RTL Nieuws (Dutch-alert)) has reported that a high ranking official from the Dutch ministry of Finance has said that a Greek bankrupcy is unavoidable and that preperations are being made to create a smooth bankrupcy with maximum damage control. This news prompted a crisis meeting within the Dutch cabinet who then - not surprisingly - denied the statement, as predicted by the political correspondent. While this may sound like sensationalism on part of the media, it's likely to be true since the correspondent in question has proven to be very reliable and accurate in the past. The bankrupcy is also being pushed forward to prevent a rippling effect from happing with other PIIGS countries. Some fuel for discussion, no doubt.
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Re: Global Debt Time Bomb explodes soon

Post by NoAm » Tue Sep 13, 2011 6:36 pm

SeerSavant wrote:I think of what China is doing as a form of... Economic Colonization? The art of nibbling away at economic war?

It's actually pretty damn smart, for China, even if they loose a certain percentage, they still have a lock in various areas around the world... They are like a savvy Monopoly player buying up all the really cheap properties, and while a chance landing may not have the huge payoff (as we would have with boardwark and park place) When almost every other property is owned by them, they will nickle and dime everyone else into submission...


And yeah... It not only makes my head hurt, but when I think of my kid and grandson's future, it gives me a knot in the pit of my stomach... And angry... Not at the chinese... at the idiots here that jump at any chance at an easy solution to a problem that really has none... Even if it means cutting their own throat...

What's the analogy. A group of employees are given a choice, times are tough, how about a ten percent cut in pay until time gets better? They shout NO! Okay then... Ten percent will get fired arbitrarily...
we've been shouting no for years, and now people are getting fired and whining that they never saw it coming...

It's a shitty analogy, I know... But I'm not that up on economics, so I see everything in a very simple way...
Not at all! I enjoy a good parallel scenario to relate to things such as these. It makes something that can seem SO surreal and turn it into a subject that is easier to study and understand.

So my thanks to you!
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Re: Global Debt Time Bomb explodes soon

Post by SeerSavant » Tue Sep 13, 2011 8:35 pm

No thanks needed, Raptor has brought many things down to my own "Capt. Dummy" level of understanding... In fact, J.C. and hell, everyone on this thread has kept it far above considerate and if any bad humor has infected it, I can only remember one and it was my own damn fault.. :oops:

I think that most folks here are far past helpfull... But I do think that most of us need a Wonky to English dictionary...

If there was a thread gold standard (yeah, it's my pun.... :mrgreen: ) This thread has earned it...
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Re: Global Debt Time Bomb explodes soon

Post by TC » Wed Sep 14, 2011 1:55 am

Reuters wrote: China, U.S. raise alarm over euro debt crisis

(Reuters) - China and the United States urged Europe's leaders to prevent the euro area debt mess from spreading, underlining the international alarm over a crisis now threatening Italy, the zone's third-biggest economy.

President Barack Obama urged "more effective coordinated fiscal policy" by the euro area states. Chinese Premier Wen Jiabao said Beijing was willing to help its biggest trading partner, but added that Europe must stop the crisis from growing.

Investors are increasingly sceptical the debt debacle in the 17-nation currency area can be resolved. Credit markets are factoring in a 90 percent chance Greece will default on its debts and they demanded the highest risk premium on Italian five-year bonds at auction on Tuesday since the country joined the euro in 1999.

"What we have to take note of now is to prevent the sovereign debt crises from spreading and expanding further," Wen said on Wednesday.

Trying to contain the crisis, Italy is expected to approve a 54-billion-euro (47 billion pound) austerity package on Wednesday, although news of the measures has so far done little to reverse investor alarm over whether the country can manage its debts.

Prime Minister Silvio Berlusconi's government has tabled a confidence motion which would force it to resign if it lost. An initial vote is scheduled for around 1 p.m. British time ahead of final approval of the austerity package around 7 p.m. British time.

Greek Prime Minister George Papandreou will hold a conference call on Wednesday with French President Nicolas Sarkozy and German Chancellor Angela Merkel. The call is scheduled for 5 p.m. British time, Papandreou's office said.

A rebound in stock prices and the euro stalled in Asia on Wednesday as investors remained spooked about a crisis that has also roiled French banks because of their debt exposure to both Greece and Italy, raising fears of a fresh banking crisis.

A combination of a banking crisis akin to the global credit crunch, a Greek default and a financial meltdown in Italy could tear the euro zone apart...(continued at link)
BBC wrote: French bank ratings downgraded by Moody's

Credit rating agency Moody's has downgraded two French banks due to their exposure to Greek debt.

Credit Agricole was cut from Aa1 to Aa2 and Societe Generale from Aa2 to Aa3.

A third major French bank, BNP Paribas, was kept on review for a possible downgrade.

German Chancellor Angela Merkel and French President Nicolas Sarkozy are due to hold talks on Wednesday in response to growing market expectations of an imminent default by Greece.

The two downgraded banks have seen their share prices fall 60% and 65% respectively since February, while BNP has fallen 53% over the same period...(continued at link)
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Re: Global Debt Time Bomb explodes soon

Post by Pilsung » Wed Sep 14, 2011 6:56 am

‘Perfect Storm’ Of Global Banking and Sovereign Debt Crisis To Lead to Global Currency Crisis

http://www.zerohedge.com/news/%E2%80%98 ... ncy-crisis" onclick="window.open(this.href);return false;

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Re: Global Debt Time Bomb explodes soon

Post by phil_in_cs » Wed Sep 14, 2011 7:46 am

"I think there is a possibility, if the wrong steps are taken, that the system goes off the rails," Sergio Marchionne, the CEO of Italian carmaker Fiat, told reporters in Frankfurt when asked if the euro's survival was at risk.
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Re: Global Debt Time Bomb explodes soon

Post by Pilsung » Wed Sep 14, 2011 8:05 am

http://www.zerohedge.com/news/purely-co ... year-yield" onclick="window.open(this.href);return false;

Greek one-year bond yield hits 143%. Can't figure out why they don't just default and get it over with.

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Re: Global Debt Time Bomb explodes soon

Post by raptor » Wed Sep 14, 2011 11:42 am

The Chinese Premier said China will buy Italian bonds with a quid pro quo.
Overnight Wednesday, Chinese Premiere Wen Jiabao confirmed the speculation, with caveats.
"We have been concerned about the difficulties faced by the European economy for a long time and we have repeated our willingness to extend a helping hand and increase our investment," Wen said at the World Economic Forum's annual meeting in Dalian.
In exchange, Wen asked the Euorpean Union to recognize its status as a market economy under WTO rules prior to 2016 as currently scheduled. "If EU nations can demonstrate their sincerity several years earlier, it would reflect our friendship," Wen said.
The quid pro quo offer is consistent with what Kenneth Lieberthal director of the John L. Thornton China Center and a senior Fellow at the Brookings Institution expects from China, which in 2010 purchased $500 million of Spanish debt and pledged to buy Greek debt as well.
http://finance.yahoo.com/blogs/daily-ti ... et=&ccode=" onclick="window.open(this.href);return false;

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Re: Global Debt Time Bomb explodes soon

Post by razi » Wed Sep 14, 2011 5:47 pm

I'm not sure where else to put this:

http://english.aljazeera.net/indepth/fe ... 20396.html
China is shifting some of its massive foreign holdings into gold and away from the US dollar, undermining the dollar's role as the world's reserve currency, accoding to a recently released WikiLeaks cable.

"They [the US and Europe] intend to weaken gold's function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the US dollar or Euro," stated the 2009 cable, quoting Chinese Radio International. "China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold."
This is one reason why the price of gold is (and will continue to) skyrocket.
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Re: Global Debt Time Bomb explodes soon

Post by TC » Thu Sep 15, 2011 4:33 am

Wow:
Reuters wrote: UBS hit by $2 billion rogue trader loss

(Reuters) - UBS said a trader had lost around $2 billion (1.27 billion pounds) in unauthorised dealing and warned it might post a loss in the third quarter, a huge blow as the Swiss bank struggles to rebuild its credibility after years of crises.

The loss raises doubts over Chief Executive Oswald Gruebel's efforts to put UBS back on its feet after heavy losses in the credit crisis, and a damaging scandal over bankers helping rich U.S. clients dodge taxes.

"The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2 billion," the bank said in a brief statement.

UBS shares were 5.5 percent lower at 10.33 Swiss francs at 9:37 a.m. British time, far weaker than the European banking sector, which was up 1.3 percent.

The bank said it was possible that the trading loss could cause an overall loss in the third quarter of this year. It also said that no client positions were affected.

A spokesman declined to give any further detail...(continued at link)
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Re: Global Debt Time Bomb explodes soon

Post by the_alias » Thu Sep 15, 2011 4:39 am

^ I can't say I'm too surprised in all honesty...

Another name to add to the list of the likes of

Jerome Kerviel
Fabrice Tourre
etc
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Re: Global Debt Time Bomb explodes soon

Post by TC » Thu Sep 15, 2011 5:16 am

the_alias wrote:^ I can't say I'm too surprised in all honesty...

Another name to add to the list of the likes of

Jerome Kerviel
Fabrice Tourre
etc
Yeah. Could be a problem considering how exposed UBS is to Greek debt though.
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Re: Global Debt Time Bomb explodes soon

Post by NoAm » Thu Sep 15, 2011 6:10 am

China states price for Italian rescue
China has called for major strategic concessions from Europe before agreeing to rescue the eurozone, chilling hopes for immediate purchases of Italian bonds.

http://www.telegraph.co.uk/finance/chin ... escue.html

Premier Wen Jiabao said his country and will play its part to "prevent the further spread of the sovereign debt crisis," but warned that China will not sign a blank cheque for states that have failed to carry out full reform.

No problem guys, just raise the debt ceiling and all will be fixed!
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Re: Global Debt Time Bomb explodes soon

Post by raptor » Thu Sep 15, 2011 10:31 am

TC wrote:Wow:
Reuters wrote: UBS hit by $2 billion rogue trader loss

(Reuters) - UBS said a trader had lost around $2 billion (1.27 billion pounds) in unauthorised dealing and warned it might post a loss in the third quarter, a huge blow as the Swiss bank struggles to rebuild its credibility after years of crises.

The loss raises doubts over Chief Executive Oswald Gruebel's efforts to put UBS back on its feet after heavy losses in the credit crisis, and a damaging scandal over bankers helping rich U.S. clients dodge taxes.

"The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2 billion," the bank said in a brief statement.

UBS shares were 5.5 percent lower at 10.33 Swiss francs at 9:37 a.m. British time, far weaker than the European banking sector, which was up 1.3 percent.

The bank said it was possible that the trading loss could cause an overall loss in the third quarter of this year. It also said that no client positions were affected.

A spokesman declined to give any further detail...(continued at link)

I saw that article and thought OMG where were the internal controls and where was this guy's supervisor,as well as the investment committee? These high level traders frequently have a lot of latitude in trades (and they do trade large volumes) but there is always an internal control group that does nothing but track these trades. This guy could have skimmed a portion of these trades by having an friend on the other side of some of the trades. Every time I see "rogue trader" I think incompetent management.

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Re: Global Debt Time Bomb explodes soon

Post by phil_in_cs » Thu Sep 15, 2011 11:22 am

raptor wrote: Every time I see "rogue trader" I think incompetent management.
Agreed, which begs the question how many more traders are they incompetently managing?
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Re: Global Debt Time Bomb explodes soon

Post by raptor » Thu Sep 15, 2011 11:33 am

phil_in_cs wrote:
raptor wrote: Every time I see "rogue trader" I think incompetent management.
Agreed, which begs the question how many more traders are they incompetently managing?
There seems to be a "rogue trader" every year, so I assume there are a lot of them.

Here is a link to 6 biggees.

http://www.investopedia.com/articles/tr ... z1Y2W5ceuZ" onclick="window.open(this.href);return false;

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Re: Global Debt Time Bomb explodes soon

Post by NoAm » Thu Sep 15, 2011 12:39 pm

Looks like they got someone.................................
Swiss bank UBS said a trader who had lost it around $2 billion in unauthorized deals had been arrested in London, where police were holding 31-year-old Kweku Adoboli
http://www.reuters.com/article/2011/09/ ... 5I20110915
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Re: Global Debt Time Bomb explodes soon

Post by TC » Thu Sep 15, 2011 12:44 pm

Yup, Trader hinted at turmoil in Facebook posts.

"On July 31 he posted: “Will they? Won’t they? Reduced to watching Fox News for guidance, it’s a grim affair.""
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Re: Global Debt Time Bomb explodes soon

Post by SlobberToofTigger » Thu Sep 15, 2011 1:04 pm

Interesting week for banks.

I was chatting with a few bank executives this week about BofA and their chances for failure based on the current news and got into a conversation on jobs and US companies. But before I go into jobs here were their points on BofA:
1. BofA has paid off its TARP loan. In other words they are making money.
2. Most of the 30 to 40k that are going to get fired should have already been let go. They are essentially the overstaff that you end up with after a bunch of acquisitions. Seven years of acquisitions can load you up with a bunch of extra employees.
3. Even if B0fA were to fail (everyone felt they would not) the government would just print more money to cover the FDIC insured deposits if it were required.

Back to the jobs and US companies. It seems that the Federal bank regulators have tightened down the screws on business loans so that it is almost imposable to get a loan to grow or even operate your business. In fact they are reviewing current loans and even if the business is paying as promised and is in no threat of default, if the collateral does not meet newly set standards, they are forcing the banks to call the loans. To put this another way, while the president and congress are out harping about how they want to create jobs, their employees (the federal bank regulators) are out forcing profitable businesses to shut down by pulling their funding out from under them which means more unemployed.

What one of the execs ended up saying is that there cannot and will not be a recovery until a new source of business loans exists outside of traditional banking.

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Re: Global Debt Time Bomb explodes soon

Post by TC » Fri Sep 16, 2011 4:05 am

Even more wow:
BBC wrote: UBS trader told bank of error, the BBC learns

The BBC has learned that the UBS trader being questioned on suspicion of unauthorised trading alerted the bank himself.

The BBC's business editor, Robert Peston, says UBS's internal controls did not pick up the huge loss allegedly generated by its trader Kweku Adoboli.

He says Mr Adoboli told UBS that he had engaged in unauthorised trades.

UBS then examined his trading positions and informed the Financial Services Authority and the police.

Mr Adoboli was arrested by the police at 03:30 yesterday.

Our correspondent says: "The disclosure that it was Mr Adoboli's decision to inform his colleagues of his actions that set alarm bells ringing at UBS, rather than its own monitoring system, will add to concerns that investment banks simply aren't capable of controlling the huge risks that their traders take."

The Financial Services Authority, the City's regulator, is investigating why UBS failed to identify the unauthorised transactions...(continued at link)
KentsOkay wrote: I immediately thought about calling 911, but once we got to the T stop and got her out of her jeans, things seemed to be going a lot better.
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Re: Global Debt Time Bomb explodes soon

Post by the_alias » Fri Sep 16, 2011 4:19 am

A lot of these investment bankers know very little "Buy this" one minute "Sell it" the next.

Just glad I don't bank with UBS!
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