snowychap Posted January 9, 2012 Share Posted January 9, 2012 link 10.39am: In a record move -- Germany has sold €3.9bn of six-month bills at a negative interest rate. The Bundesbank just announced that it sold the debt, repayable in July, at a average yield of - 0.0122%. That means that investors agreed to receive less than they lent to Germany, when the bills are repaid. According to the Bundesbank, this is the first time that investors have agreed a negative yield at an auction of German debt. Link to comment Share on other sites More sharing options...
Eames Posted January 9, 2012 Share Posted January 9, 2012 link 10.39am: In a record move -- Germany has sold €3.9bn of six-month bills at a negative interest rate. The Bundesbank just announced that it sold the debt, repayable in July, at a average yield of - 0.0122%. That means that investors agreed to receive less than they lent to Germany, when the bills are repaid. According to the Bundesbank, this is the first time that investors have agreed a negative yield at an auction of German debt. Presumably that is a typo...... where they have used the word "investor" they mean "imbecile" Why on earth would you do that? Unless you are a pension/hedge fund thinking you will only make bigger losses elsewhere? Link to comment Share on other sites More sharing options...
tonyh29 Posted January 9, 2012 Share Posted January 9, 2012 Why on earth would you do that? Unless you are a pension/hedge fund thinking you will only make bigger losses elsewhere? maybe a small loss is better than a huge one ? Link to comment Share on other sites More sharing options...
Eames Posted January 9, 2012 Share Posted January 9, 2012 Well yeah, but if that was my investment manager, I would still be giving the clearing in the woods a good kicking bearing in mind sticking my investment in the bank would at least guarantee a positive return, albeit a tiny one. That just makes no sense whatsoever. Link to comment Share on other sites More sharing options...
snowychap Posted January 9, 2012 Share Posted January 9, 2012 Presumably that is a typo...... where they have used the word "investor" they mean "imbecile" Why on earth would you do that? Unless you are a pension/hedge fund thinking you will only make bigger losses elsewhere? As it says on the link: So why would anyone accept a negative interest rate? Typically, this happens for two reasons. Either buyers want protection from deflation, or they fear that there is nowhere better to place their money. In this case, the rush for Safe Havens is probably to blame. Hasn't it, effectively, been happening for a while with some countries anyway? Surely lending to someone at a lower rate than inflation is a real term negative interest rate. I would still be giving the clearing in the woods a good kicking bearing in mind sticking my investment in the bank would at least guarantee a positive return I'm not sure that's necessarily true. That may be the case with a few quid or a few million quid but not, perhaps, 3.9 billion euro. Even still, I;ve read some comments (such as here that some banks are charging depositors which is, effectively a negative interest rate). Link to comment Share on other sites More sharing options...
LondonLax Posted January 9, 2012 Share Posted January 9, 2012 Germany are doing very well out of this 'crisis' so far. Also, here is a comment from below the line on accepting a negative rate to hold german debt: If you are punting on a break up of the eurozone, you will expect that German debt will become revalued upwards in whatever currency becomes the domestic currency of Germany i.e. you will be repaid in a currency which is worth more than it is now relative to all other currencies. Link to comment Share on other sites More sharing options...
JulieB Posted January 28, 2012 Share Posted January 28, 2012 Last night there's was a huge debate on twitter and Sky News concerning #whatsabankerworth after the anger over RBS CEO Hester is to accept a bonus of £1M I mentioned in other threads a film called Inside Job - which is narrated by Matt Damon & is a brilliant award winning film. If you've not seen Inside Job before it is available to watch online Linky It concerns the background to how the financial meltdown came about in 2008 and why powerful forces are manipulating the governments still today. It will make you seeth! Larry Summers (who features in the film and is one of Obama's current economic advisers) refused to be interviewed for Inside Job. However this week he said in an inteview that Inside Job had nearly all it's facts wrong. Many disagree! Frontline have made another top notch documentary going back to how the credit bubble came abou in the 1990s and how one woman Brooksley Born fought a losing battle to regulate the derivatives market and how she single handedly tried to warn Washington that these "off balance sheet" "bets" which derivatives really are - posed an enormous threat to the US Economy. Larry Summers was amoung the "Working Parties" that fought her all the way. This fascinating 56 minute documentary provides a brilliant background to Inside Job and is available to watch online The Warning I would recommend to every one who wants to understand what's going on and understand why our economic situation is still dire. "We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?" Link to comment Share on other sites More sharing options...
JulieB Posted January 29, 2012 Share Posted January 29, 2012 Really interesting interview with author Michael Hudson - who is now assisting the Occupy Wall Street Movement - about the economic collapse in the Western nations and how this collapse gap thesis applies to the European economies currently experiencing a huge crisis. This weeks Link to comment Share on other sites More sharing options...
snowychap Posted January 29, 2012 Share Posted January 29, 2012 Many disagree! Which many? Who many? Link to comment Share on other sites More sharing options...
VILLAFC2000 Posted January 29, 2012 Share Posted January 29, 2012 They say that the first industries to be hit are the retail sector and the building sector. We have needed some work done on our house and every BUILDER who has given us a quote has said they have stack of work on...! Surely this is a good thing and sign. Does anyone here work in the building trade whats there opinions...? Link to comment Share on other sites More sharing options...
chrisp65 Posted January 29, 2012 Share Posted January 29, 2012 They say that the first industries to be hit are the retail sector and the building sector. We have needed some work done on our house and every BUILDER who has given us a quote has said they have stack of work on...! Surely this is a good thing and sign. Does anyone here work in the building trade whats there opinions...? It's dead. But a very complex dead. There is very little going on, and what is hapening is skewing the industry. With very little work many people have elected to leave or been forced out of the industry. this means the pool of talent has contracted to reflect the lack of money making opportunities. This is then made more complicated by the occassional 'big job' such as an Olympics contract, where, the few people in any one specialism that are still in circulation all get sucked into one big job. We are in a situation at present where all the big construction firms have laid off their own labour and workforce and now rely on subbies and agencies for everything. Problem with that, is that when a big contract comes along, they just don't honestly have the resource they claim to have access to. I've seen a number of instances lately where national contractors have won multi million pound jobs and then cannot perform or deliver on time. They've made a promise reliant on subbies, those remaining subbies, all shafted by the big boys for the last 4 years now just work for the highest bidder on any given day. This is particularly clear in government contracts. They won't deal with smaller firms, they demand the lowest price will win regardless of people knowing it can't be delivered at some of the stupid prices offered. Then, big surprise, the winner can't deliver on time. Solution? Well we can go legal, or throw more money at it and pay more than the other tenderers originally wanted. Result? Every contract costs more than forecast. Every project over runs. Every bricky, plasterer and sparky knows that if he's still in the game at the end of this year, he should be making a good living. Link to comment Share on other sites More sharing options...
JulieB Posted January 29, 2012 Share Posted January 29, 2012 Many disagree! Which many? Who many? THE Many who have been warning that the banksters were turning the West into an Oligarchy! If Nothing is going on WHY would ANY politician support investment banks having the ability to trade/take bets in off balance sheet activities in a multi trillon dollar market with no transaparency and no accountabiliy. Like Brooksley Born said... "What are they hiding?" When she said these words initially this unregulated "dark martket" was worth an estimated $27 Billion. - In 2008 when Lehman's crashed it was estimated to be about $585 TRILLION! Bigger than the entire world's economy! Now look what's happening with Greece... The Silent Anschluss: Germany Formally Requests That Greece Hand Over Its Fiscal Independence Update 2: the first local headlines are coming in now, from Spiegel: Griechenland soll Kontrolle über Haushalt abgeben (loosely Greece must give up domestic control), and Kathimerini: Germany proposes Greece relinquish some fiscal powers, sources say Update: Formal Greek annexation order attached. It was tried previously (several times) under "slightly different" circumstances, and failed. Yet when it comes to taking over a country without spilling even one drop of blood, and converting its citizens into debt slaves, Germany's Merkel may have just succeeded where so many of her predecessors failed. According to a Reuters exclusive, "Germany is pushing for Greece to relinquish control over its budget policy to European institutions as part of discussions over a second rescue package, a European source told Reuters on Friday." Reuters add: "There are internal discussions within the Euro group and proposals, one of which comes from Germany, on how to constructively treat country aid programs that are continuously off track, whether this can simply be ignored or whether we say that's enough," the source said.' So while the great distraction that is the Charles Dallara "negotiation" with Hedge Funds continues (as its outcome is irrelevant: a Greece default is assured at this point), the real development once again was behind the scenes where Germany was cleanly and clinically taking over Greece. Because while today it is the fiscal apparatus, tomorrow it is the legislative. As for the executive: who cares. At that point Goldman will merely appoint one of its retired partners as Greek president and Greece will become the first 21st century German, pardon, European colony. But at least it will have its precious euro. We can't wait until Greek citizens find out about this quiet coup. More from Reuters: The source added that under the proposals European institutions already operating in Greece should be given "certain decision-making powers" over fiscal policy. "This could be carried out even more stringently through external expertise," the source said. The German demands for greater control over Greek budget policy comes amid intense talks to finalize a second 130-billion euro rescue package for Greece, which has repeatedly failed to meet the fiscal targets set out for it by its international lenders. It is likely to spark a strong reaction in Athens ahead of elections expected to take place in April. "Strong reaction?" Is that the politically correct parlance for "civil war" these days? We must be out of the loop on that one... The specific language that strips Greece of its sovereignty and which will be plastered over every front page in the Greek media tomorrow: Budget consolidation has to be put under a strict steering and control system. Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time. A budget commissioner has to be appointed by the Eurogroup with the task of ensuring budgetary control. He must have the power a) to implement a centralized reporting and surveillance system covering all major blocks of expenditure in the Greek budget, to veto decisions not in line with the budgetary targets set by the Troika and c) will be tasked to ensure compliance with the above mentioned rule to prioritize debt service. The new surveillance and institutional approach should be formulated in the MoU as follows: “In the case of non-compliance, confirmed by the ECB, IMF and EU COM, a new budget commissioner appointed by the Eurogroup would help implementing reforms. The commissioner will have broad surveillance competences over public expenditure and a veto right against budget decisions not in line with the set budgetary targets and the rule giving priority to debt service.” Greece has to ensure that the new surveillance mechanism is fully enshrined in national law, preferably through constitutional amendme Link with the full formal pre-annexation order on Zerohedge.com Now on the BBC Website and being reported in the Financial Times. Link to comment Share on other sites More sharing options...
JulieB Posted January 29, 2012 Share Posted January 29, 2012 Brooksley Born wanted the dark market of "off balance sheet" derivatives regulated to protect the savings and pensions the American people, because of the enormous risks being taken... After being derided by people like Larry Summers, Alan Greenspan as someone who didn't understand the markets and how Wall St & the City of London worked..... more and more her words appear to have been coming back to haunt everyone...... U.S. treasury raids federal employee pension funds to cover debts J. D. Heyes January 25, 2012 (NaturalNews) There is a saying, "Desperate times call for desperate measures." Roughly, it's an expression that's meant to be reassuring, conjuring up an image of a true statesman-like leader who is preparing to do whatever is necessary to lead the masses out of danger. Of course, the expression doesn't have the same connotation when applied to the Obama administration in itsfutile struggle to balance the nation's books. Left to fend for itself by a hapless Congress that couldn't agree on the color of red bricks, let alone pass a budget that actually curbed spending and lowered the national debt, the administration has taken to theft as a way to pay the country's bills. Specifically, the Treasury Department is stealing cash from federal employees pension funds so the government can obtain more credit to pay its debts. More in the Full Article Link to comment Share on other sites More sharing options...
VILLAFC2000 Posted January 29, 2012 Share Posted January 29, 2012 They say that the first industries to be hit are the retail sector and the building sector. We have needed some work done on our house and every BUILDER who has given us a quote has said they have stack of work on...! Surely this is a good thing and sign. Does anyone here work in the building trade whats there opinions...? It's dead. But a very complex dead. There is very little going on, and what is hapening is skewing the industry. With very little work many people have elected to leave or been forced out of the industry. this means the pool of talent has contracted to reflect the lack of money making opportunities. This is then made more complicated by the occassional 'big job' such as an Olympics contract, where, the few people in any one specialism that are still in circulation all get sucked into one big job. We are in a situation at present where all the big construction firms have laid off their own labour and workforce and now rely on subbies and agencies for everything. Problem with that, is that when a big contract comes along, they just don't honestly have the resource they claim to have access to. I've seen a number of instances lately where national contractors have won multi million pound jobs and then cannot perform or deliver on time. They've made a promise reliant on subbies, those remaining subbies, all shafted by the big boys for the last 4 years now just work for the highest bidder on any given day. This is particularly clear in government contracts. They won't deal with smaller firms, they demand the lowest price will win regardless of people knowing it can't be delivered at some of the stupid prices offered. Then, big surprise, the winner can't deliver on time. Solution? Well we can go legal, or throw more money at it and pay more than the other tenderers originally wanted. Result? Every contract costs more than forecast. Every project over runs. Every bricky, plasterer and sparky knows that if he's still in the game at the end of this year, he should be making a good living. nice post. So what are a lot of laborers unemployed at the moment? Link to comment Share on other sites More sharing options...
chrisp65 Posted January 29, 2012 Share Posted January 29, 2012 For contractors to make money at present they have to 'sweat' their assets to use a trendy current term. That is, previously they would have had a number of staff on tap to allow a rolling programme of work. A couple of guys setting up a site and starting the basics, whilst the majority worked on the current main scheme, whilst a couple mopped up the snags on the last job. Now, there isn't the profit for the luxury of 'spare' staff. This means unemployment for many, and running around like overworked idiots for those retained or working through agencies etc.. It also means that 'snaggging' is now a struggle. Nobody wants to pay a day rate to a subby or an agency to sort out a couple of minor faults. A £500 day rate to fix those annoying last odds and ends isn't going to get shelled out by the contractor, it eats profit. Similalry, the agency or subby isn't going to do an hour and a half for you, when he can get £500 a day elswhere. Link to comment Share on other sites More sharing options...
peterms Posted January 30, 2012 Share Posted January 30, 2012 ...This is particularly clear in government contracts. They won't deal with smaller firms, they demand the lowest price will win regardless of people knowing it can't be delivered at some of the stupid prices offered. Then, big surprise, the winner can't deliver on time. Solution? Well we can go legal, or throw more money at it and pay more than the other tenderers originally wanted. Result? Every contract costs more than forecast. Every project over runs. Every bricky, plasterer and sparky knows that if he's still in the game at the end of this year, he should be making a good living. How depressing. We had a situation in the 1980s where the construction industry spent more on litigation than on research and development. Then we had Latham, Egan, and Constructing Excellence, all intended to try to shift the culture away from corner-cutting, nit-picking over dodgy contract terms, and crap quality. Part of this was about getting away from cheapest-price contracts, towards an understanding that good quality and a less adversarial approach meant not just a better product but lower cost over the lifetime of the building. How little has changed. Link to comment Share on other sites More sharing options...
JulieB Posted February 2, 2012 Share Posted February 2, 2012 Controversial 9 minute video showing exactly why Greece is in ruins and who takes much of the blame. Warren Buffet indeed calls "off balance sheet trades" weapons of mass financial destruction.... you can see why! Link to comment Share on other sites More sharing options...
snowychap Posted February 2, 2012 Share Posted February 2, 2012 Warren Buffet indeed calls "off balance sheet trades" weapons of mass financial destruction... Is that because it's the kind of thing that Buffett would have indulged in himself? Link to comment Share on other sites More sharing options...
JulieB Posted February 2, 2012 Share Posted February 2, 2012 Warren Buffet indeed calls "off balance sheet trades" weapons of mass financial destruction... Is that because it's the kind of thing that Buffett would have indulged in himself? I'm not sure what you're getting at Snowy? Did you watch the video at all? Warren Buffet is NOT an investment banker - he's an 81 year old investor - considered to be one of the most savvy. He's also a philanthropist like Bill Gates and although being one of the richest men in the world - he gives most of his fortune away. He's one of THE INVESTORS of the World who surely are fighting the other corner in opposition to the Investment banks these days. Maybe that wasn't true when he was younger because Investment banks DID what it states on the tin - they used mainly their own private equity to INVEST - in ventures etc and markets that commercial banks found too risky. Investment banks used to be the venture capitalists - now they're mostly addictive gamblers in suits! Do I think Warren Buffet would have been an uncaring speculator who would have ever put at risk the trillions of taxpayers money that is being recklessy gambled on via the City of London - NO I don't! Link to comment Share on other sites More sharing options...
JulieB Posted February 2, 2012 Share Posted February 2, 2012 Interview with Warren Buffet from 2003 - Beeb Website His warnings on Derivatives - EXACTLY what they have become and the non regulation of this market has proved to be absolutely spot on... Everything he said in this interview is what has come about. Buffett warns on investment 'time bomb' "Derivatives are financial weapons of mass destruction" Warren Buffett The rapidly growing trade in derivatives poses a "mega-catastrophic risk" for the economy and most shares are still "too expensive", legendary investor Warren Buffett has warned. The world's second-richest man made the comments in his famous and plain-spoken "annual letter to shareholders", excerpts of which have been published by Fortune magazine. The derivatives market has exploded in recent years, with investment banks selling billions of dollars worth of these investments to clients as a way to off-load or manage market risk. But Mr Buffett argues that such highly complex financial instruments are time bombs and "financial weapons of mass destruction" that could harm not only their buyers and sellers, but the whole economic system. Contracts devised by 'madmen' Derivatives are financial instruments that allow investors to speculate on the future price of, for example, commodities or shares - without buying the underlying investment. Derivatives generate reported earnings that are often wildly overstated and based on estimates whose inaccuracy may not be exposed for many years Derivates like futures, options and swaps were developed to allow investors hedge risks in financial markets - in effect buy insurance against market movements -, but have quickly become a means of investment in their own right. Outstanding derivatives contracts - excluding those traded on exchanges such as the International Petroleum Exchange - are worth close to $85 trillion, according to the International Swaps and Derivatives Association. Some derivatives contracts, Mr Buffett says, appear to have been devised by "madmen". He warns that derivatives can push companies onto a "spiral that can lead to a corporate meltdown", like the demise of the notorious hedge fund Long-Term Capital Management in 1998. Derivatives are like 'hell' Large amounts of risk have become concentrated in the hands of relatively few derivatives dealers ... which can trigger serious systemic problems Derivatives also pose a dangerous incentive for false accounting, Mr Buffett says. The profits and losses from derivates deals are booked straight away, even though no actual money changes hand. In many cases the real costs hit companies only many years later. This can result in nasty accounting errors. Some of them spring from "honest" optimism. But others are the result of "huge-scale fraud", and Mr Buffett points to the US energy market, which relied for most of its deals on derivatives trading and resulted in the collapse of Enron. Berkshire Hathaway, the investment group led by Mr Buffett, is pulling out of the market, closing down the derivatives trading subsidiary it bought as part of a huge reinsurance company a few years ago. In his letter Mr Buffett compares the derivatives business to "hell... easy to enter and almost impossible to exit", and predicts that it will take years to unwind the complex deals struck by its subsidiary General Re Securities. Warren Buffett, dubbed "the sage of Omaha", from where he controls Berkshire Hathaway, is well-known for both his blunt assessments of the markets and the high returns he delivers to shareholders. This year, he remains cool towards further share investments, despite the sharp correction in stock market values. Mr Buffett says this "dismal fact is testimony to the insanity of valuations reached during The Great Bubble". Berkshire backyard barbecues A good friend of Bill Gates, he famously refused to invest in technology shares during the boom years that came to a sudden end in March 2000. As a result, Berkshire was sitting pretty after the technology bubble burst. In marked contrast to the hubris of former managers at fallen firms like Enron and WorldCom, Mr Buffett is known for his down-to-earth style, summoning shareholders not to glitzy hotels but "Berkshire backyard barbecues" and baseball games in out-of-the-way Omaha, Nebraska. But his strategy of identifying undervalued companies with good management in unfashionable retail sectors or the insurance industry and investing in them for the long-term has produced spectacular returns. During the past 37 years, the company has delivered an average annual return of 22.6%. Since 1965 the company's book value has gone up by 194,936%. However in 2001, the last year for which detailed numbers are available, heavy losses in the insurance industry worldwide resulted in a $3.77bn loss at Berkshire Hathaway - the first loss in the firm's history under Warren Buffett Link to comment Share on other sites More sharing options...
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