Ultima hora¡
El nobel de economia ha sido concecido a un tal josé luis rodriguez zapatero, por su aportación a las finanzas conductistas bajo el lema "niega la crisis hasta que puedas decir que ya vamos camino de recuperar", que surgió de aquel viejo principio caradura de "vive de tus padres hasta que puedas vivir de tus hijos"
El Crash que viene // modo rally
La evolución de las estimaciones de beneficios han sido mixtas en el ultimo mes y medio. Las estimaciones de JP Morgan estaban en tendencia alcista, pero hay otros bancos que han ido decayendo. A ver si sorprenden. Aunque los resultados de las compañias financieras son los más maquillados y falsos de todos, como es evidente. (Fijate en los "beneficios" de las financieras españolas, puro beneficio contable creado por el BAnco de España) Veremos entre esta sesión de beneficios y la del proximo trimestre si la economia real se recupera.
Lo cual va a ser sorprendente, porque el crédito no corre y sin crédito se paraliza toda la economía. Veremos.
Lo cual va a ser sorprendente, porque el crédito no corre y sin crédito se paraliza toda la economía. Veremos.
No te digo que no.
Ademas JPM ha subido provisiones, lo cual es preocupante. El caso es saber por que las han subido, si pq el credito ha empeorado o por otras razones mas propias de la coyuntura de la empresa (por ejemplo aprovechar este trimestre de altos beneficios para provisionar mas que en otros). Veremos como esta el tema realmente segun presenten resultados los demas.
Ademas JPM ha subido provisiones, lo cual es preocupante. El caso es saber por que las han subido, si pq el credito ha empeorado o por otras razones mas propias de la coyuntura de la empresa (por ejemplo aprovechar este trimestre de altos beneficios para provisionar mas que en otros). Veremos como esta el tema realmente segun presenten resultados los demas.
Lo de las materias primas, el oro y etc es curioso.
No hay inflación y se ha usado el argumento de que el mercado espera inflación, pero los indicadores adelantados de inflación dicen que en el 2011 la inflación seguirá siendo negativa (eso son dos años cuidado).
El dinero lo tienen los bancos y no lo sueltan. Bien puede ser que no hay inflación de bienes de consumo pero si inflación de activos y que la inflación de los activos no se derive hacia los bienes de consumo.
En ese caso si cabría hablar de inflación de activos y por ello suben el oro, las materias primas, la bolsa y hasta los bonos. Tiene mucha lógica. La mayor avalancha de liquidez de todos los tiempos y hay inflación de toda clase de activos pero por las circunstancias esa inflación no se deriva hacia los bienes de consumo.
Esa es la hipótesis A.
Se ha dicho que el oro sube con la inflación, pero yo he revisado eso y la inflación no pintan nada para que suba el oro. El oro sube cuando hay problemas. Si la inflación es disparatada hay problemas y el oro subirá, como ocurrió en los 80s. Pero una inflación ligeramente por encima de lo normal el oro no va a subir por eso.
Lo cierto es que el oro sube y es porque en algun lado hay problemas. De eso no hay ninguna duda. El problema no es la inflación de bienes de consumo. Pudiera ser la de los activos financieros y commodities, pero en ese caso, más vale invertir directamente en esos activos. ¿no?
La hipótesis B es que todos los juegos de la FED y del papel fiat han puesto al dolar contra las cuerdas. Y no encontramos en una crisis del dolar, de la confianza en la moneda más importante y por tanto hay desconfianza de que pueda suplirse todo el oro que se demanda, ya que cuando hay desconfianza que se rompa la cadena de confianza, el dolar es la última puerta a la que llamar. En este entorno, todos los activos subirian por la depreciación del dolar, ya que han de reflejar proporcionalmente la caida del dolar.
Oro que canta, algo tiene en la garganta.
Inflación de activos o crisis del dolar. NO se como se demuestra si hay inflación de activos, pero tengo la sensación de que lo que está ocurriendo es que estamos en la crisis del dolar y por tanto de la escasez de oro. Pero solo es una opinión. El tiempo nos dirá.
America parece encantada, un dolar debil para poner un 3% de crecimiento en el PIB pero ¿hasta cuando es sano dejar caer el dolar?
Si usted tuviera que irse 10 años a Marte y tuviera que dejar sus ahorros terrícolas debajo del colchón... que moneda o activos guardarías alli? Yo compraria bonos de todos los paises, pero nunca una sola moneda basura de estas.
No hay inflación y se ha usado el argumento de que el mercado espera inflación, pero los indicadores adelantados de inflación dicen que en el 2011 la inflación seguirá siendo negativa (eso son dos años cuidado).
El dinero lo tienen los bancos y no lo sueltan. Bien puede ser que no hay inflación de bienes de consumo pero si inflación de activos y que la inflación de los activos no se derive hacia los bienes de consumo.
En ese caso si cabría hablar de inflación de activos y por ello suben el oro, las materias primas, la bolsa y hasta los bonos. Tiene mucha lógica. La mayor avalancha de liquidez de todos los tiempos y hay inflación de toda clase de activos pero por las circunstancias esa inflación no se deriva hacia los bienes de consumo.
Esa es la hipótesis A.
Se ha dicho que el oro sube con la inflación, pero yo he revisado eso y la inflación no pintan nada para que suba el oro. El oro sube cuando hay problemas. Si la inflación es disparatada hay problemas y el oro subirá, como ocurrió en los 80s. Pero una inflación ligeramente por encima de lo normal el oro no va a subir por eso.
Lo cierto es que el oro sube y es porque en algun lado hay problemas. De eso no hay ninguna duda. El problema no es la inflación de bienes de consumo. Pudiera ser la de los activos financieros y commodities, pero en ese caso, más vale invertir directamente en esos activos. ¿no?
La hipótesis B es que todos los juegos de la FED y del papel fiat han puesto al dolar contra las cuerdas. Y no encontramos en una crisis del dolar, de la confianza en la moneda más importante y por tanto hay desconfianza de que pueda suplirse todo el oro que se demanda, ya que cuando hay desconfianza que se rompa la cadena de confianza, el dolar es la última puerta a la que llamar. En este entorno, todos los activos subirian por la depreciación del dolar, ya que han de reflejar proporcionalmente la caida del dolar.
Oro que canta, algo tiene en la garganta.
Inflación de activos o crisis del dolar. NO se como se demuestra si hay inflación de activos, pero tengo la sensación de que lo que está ocurriendo es que estamos en la crisis del dolar y por tanto de la escasez de oro. Pero solo es una opinión. El tiempo nos dirá.
America parece encantada, un dolar debil para poner un 3% de crecimiento en el PIB pero ¿hasta cuando es sano dejar caer el dolar?
Si usted tuviera que irse 10 años a Marte y tuviera que dejar sus ahorros terrícolas debajo del colchón... que moneda o activos guardarías alli? Yo compraria bonos de todos los paises, pero nunca una sola moneda basura de estas.
Mr. burbujistas ya vuelve a la carga. No le bastó con sugerir la burbuja inmobiliaria de 2003-2007. Además ya ha propuesta la segunda para los tiempos actuales. Tan mal está la cosa para proponer una nueva burbuja en forma de ayuda?
http://www.libertaddigital.com/economia ... 276373090/
http://www.libertaddigital.com/economia ... 276373090/
One more time: A USA le interesa un dolar debil.
One more: A USA le interesa un dolar debil.
One more: A USA le interesa un dolar debil.
Asi podria seguir toda la noche.
El oro cotiza en dolares, asi que mas o menos la mitad de la subida del oro se debe a la depreciacion del dolar, que a USA la interesa (esto creo que ya lo habia dicho).
Ponle un poquito de prevision de inflacion futura por aqui.
Ponle otro poquito de especulacion por alla.
Ponle que Rusia y China se quejan sobre el dolar (jajaja).
Y agregale que venimos de la crisis mas grave desde hace decadas y aun hay gente que sigue haciendose caquita.
Y todavia se me queda corta la cotizacion del oro. Si realmente hubiera una debacle en ciernes no estariamos mirando de cerca los 1.000, sino tal vez los 1.500.
Y lo de Krugman pues tampoco esta tan mal y tiene mucho sentido, porque la maquinaria no debe parar y este es un juego que empezo ayer y le quedan decadas. Vamos a decirlo claro: mientras USA tenga el ejercito mas grande del mundo y a Irak y Arabia (y proximamente a Iran, Obama Nobel style mediante) bajo su control, SE LA PELA lo que valga el dolar. Repito, SE LA PELA lo que haga el dolar, y SE LA PELA lo que digan China y Rusia de buen rollete (otra cosa seria que se pusieran a apuntar con sus misiles, cosa que no va a suceder en el corto plazo).
Como dije hace meses, SE LA ESTAN METIENDO DOBLADA AL MUNDO ENTERO, y aqui casi nadie parece estarse dando cuenta, lo cual casi me da hasta miedo.
Ah, una ultima cosa: a USA le interesa un dolar debil.
Saludos.
One more: A USA le interesa un dolar debil.
One more: A USA le interesa un dolar debil.
Asi podria seguir toda la noche.
El oro cotiza en dolares, asi que mas o menos la mitad de la subida del oro se debe a la depreciacion del dolar, que a USA la interesa (esto creo que ya lo habia dicho).
Ponle un poquito de prevision de inflacion futura por aqui.
Ponle otro poquito de especulacion por alla.
Ponle que Rusia y China se quejan sobre el dolar (jajaja).
Y agregale que venimos de la crisis mas grave desde hace decadas y aun hay gente que sigue haciendose caquita.
Y todavia se me queda corta la cotizacion del oro. Si realmente hubiera una debacle en ciernes no estariamos mirando de cerca los 1.000, sino tal vez los 1.500.
Y lo de Krugman pues tampoco esta tan mal y tiene mucho sentido, porque la maquinaria no debe parar y este es un juego que empezo ayer y le quedan decadas. Vamos a decirlo claro: mientras USA tenga el ejercito mas grande del mundo y a Irak y Arabia (y proximamente a Iran, Obama Nobel style mediante) bajo su control, SE LA PELA lo que valga el dolar. Repito, SE LA PELA lo que haga el dolar, y SE LA PELA lo que digan China y Rusia de buen rollete (otra cosa seria que se pusieran a apuntar con sus misiles, cosa que no va a suceder en el corto plazo).
Como dije hace meses, SE LA ESTAN METIENDO DOBLADA AL MUNDO ENTERO, y aqui casi nadie parece estarse dando cuenta, lo cual casi me da hasta miedo.
Ah, una ultima cosa: a USA le interesa un dolar debil.
Saludos.
En eso no tenemos dudas ni tu ni yo. Les interesa un dolar flojo. Pero y el oro? El contrato de Diciembre 2010 practicamente vale lo mismo que ahora, y el de febrero de 2011 vale menos. Síntoma de escasez. Porque si fuera solo que el dolar baja de valor, la oferta de oro debería ser sana. Pero no es nada sana.
Cuando el oro canta, algo tiene en la garganta.
kikiriki
Cuando el oro canta, algo tiene en la garganta.
kikirikisiguen haciendolo mejor de lo esperado los bancos.
interesante este artículo sobre el oro. Algo huele muy mal en los mercados de futuros de oro. ¿Que cosa tan grave está ocurriendo?
Rob Kirby lo tiene claro: en el oro. Esto es lo que se deduce del sorprendente artículo Central Banking: A Blight On Humanity y que traduzco a continuación.
Los bancos centrales: una ruina para la humanidad
Fuentes dignas de toda confianza me han informado que el 30 de septiembre (último día de negociación para los contratos de septiembre de 2009) varias personas adineradas “compraron” una cantidad considerable de toneladas de oro en el mercado de futuros del LBMA (London Bullion Market Association), diciendo a continuación a sus contrapartes que deseaban ejecutarlo y recibir la entrega inmediata de los lingotes físicos que soportaban la entrega a futuro.
Esta inesperada demanda inmediata de tanto oro en lingotes creó un gran pánico como mínimo en los dos bancos que hacían de contrapartida: J.P. Morgan Chase y el Deutsche Bank. Y sucedió esto porque sencillamente no disponían de los lingotes subyacentes al haberlos vendido en corto (mejor dicho, los habían vendido de forma ilegal bajo la fórmula del naked short selling).
Como estos dos bancos no tenían los lingotes para honrar lo comprometido en el contrato, uno de los dos se dirigió a los compradores buscando alguna fórmula para entregar sólo el contravalor en dólares, absolviendose de esta forma la entrega de la mercancía física. Los compradores insistieron en que no estaban interesados en esa opción, así que pidieron la entrega de los lingotes en los 5 días de plazo que marcaba el contrato. La contraparte llegó a ofrecer una prima del 25% sobre el precio spot (es decir, ofreció entre 1250 y 1300 $/oz) con tal de hacer la entrega en moneda fiduciaria y evitar la embarazosa situación de reconocer públicamente que el LBMA no tenía material suficiente para honrar el contrato.
A principios de la semana pasada, como mínimo dos bancos centrales se vieron involucrados en la entrega física de este oro. Uno de ellos fue el BoE (Bank of England). Y según me han informado, el oro que terminaron entregando no cumplía los estándares estipulados por el LBMA, pues eran de pureza inferior, y además las barras no tenían el tamaño estandarizado.
Les guste o no, esta historia testifica en favor de la escasa disponibilidad de oro físico, amigos.
Resumiendo: bancos como J.P. Morgan Chase y Deutsche Bank (que estaban vendiendo cantidades sin fin de contratos futuros valorando la onza entre 950 y 1025 dólares), estan haciendo al mismo tiempo “acuerdos en paralelo” con los sujetos a los que tienen que vender los contratos futuros, ofreciendo el precio spot más una prima del 25% con tal de entregar moneda fiduciaria y evitar que la contraparte demande la entrega de las toneladas de oro físico en lingotes.
Por increible que parezca, si esta información es cierta (y no tengo la menor duda de que lo sea), significa que el oro ya se encuentra en un intenso backwardation, y desde luego este hecho está siendo ocultado al público.
Así que para proteger a su conveniencia la “integridad” del mercado de futuros como un “mecanismo para descubrir el precio”, los bancos centrales ayudan y favorecen el desvalijamiento de los activos soberanos de sus respectivos países con tal de poder rescatar a sus agentes-amigos, barriendo toda esa sangrante porquería debajo de la alfombra.
¡Y pensar que todavía hay gente que se está preguntando por qué nuestro sistema monetario fiduciario va a ser pronto achicharrado! Menudo insulto a la humanidad.
interesante este artículo sobre el oro. Algo huele muy mal en los mercados de futuros de oro. ¿Que cosa tan grave está ocurriendo?
Rob Kirby lo tiene claro: en el oro. Esto es lo que se deduce del sorprendente artículo Central Banking: A Blight On Humanity y que traduzco a continuación.
Los bancos centrales: una ruina para la humanidad
Fuentes dignas de toda confianza me han informado que el 30 de septiembre (último día de negociación para los contratos de septiembre de 2009) varias personas adineradas “compraron” una cantidad considerable de toneladas de oro en el mercado de futuros del LBMA (London Bullion Market Association), diciendo a continuación a sus contrapartes que deseaban ejecutarlo y recibir la entrega inmediata de los lingotes físicos que soportaban la entrega a futuro.
Esta inesperada demanda inmediata de tanto oro en lingotes creó un gran pánico como mínimo en los dos bancos que hacían de contrapartida: J.P. Morgan Chase y el Deutsche Bank. Y sucedió esto porque sencillamente no disponían de los lingotes subyacentes al haberlos vendido en corto (mejor dicho, los habían vendido de forma ilegal bajo la fórmula del naked short selling).
Como estos dos bancos no tenían los lingotes para honrar lo comprometido en el contrato, uno de los dos se dirigió a los compradores buscando alguna fórmula para entregar sólo el contravalor en dólares, absolviendose de esta forma la entrega de la mercancía física. Los compradores insistieron en que no estaban interesados en esa opción, así que pidieron la entrega de los lingotes en los 5 días de plazo que marcaba el contrato. La contraparte llegó a ofrecer una prima del 25% sobre el precio spot (es decir, ofreció entre 1250 y 1300 $/oz) con tal de hacer la entrega en moneda fiduciaria y evitar la embarazosa situación de reconocer públicamente que el LBMA no tenía material suficiente para honrar el contrato.
A principios de la semana pasada, como mínimo dos bancos centrales se vieron involucrados en la entrega física de este oro. Uno de ellos fue el BoE (Bank of England). Y según me han informado, el oro que terminaron entregando no cumplía los estándares estipulados por el LBMA, pues eran de pureza inferior, y además las barras no tenían el tamaño estandarizado.
Les guste o no, esta historia testifica en favor de la escasa disponibilidad de oro físico, amigos.
Resumiendo: bancos como J.P. Morgan Chase y Deutsche Bank (que estaban vendiendo cantidades sin fin de contratos futuros valorando la onza entre 950 y 1025 dólares), estan haciendo al mismo tiempo “acuerdos en paralelo” con los sujetos a los que tienen que vender los contratos futuros, ofreciendo el precio spot más una prima del 25% con tal de entregar moneda fiduciaria y evitar que la contraparte demande la entrega de las toneladas de oro físico en lingotes.
Por increible que parezca, si esta información es cierta (y no tengo la menor duda de que lo sea), significa que el oro ya se encuentra en un intenso backwardation, y desde luego este hecho está siendo ocultado al público.
Así que para proteger a su conveniencia la “integridad” del mercado de futuros como un “mecanismo para descubrir el precio”, los bancos centrales ayudan y favorecen el desvalijamiento de los activos soberanos de sus respectivos países con tal de poder rescatar a sus agentes-amigos, barriendo toda esa sangrante porquería debajo de la alfombra.
¡Y pensar que todavía hay gente que se está preguntando por qué nuestro sistema monetario fiduciario va a ser pronto achicharrado! Menudo insulto a la humanidad.
Google como se esperaba, a ver que tal resultan las demás compañias no financieras. Lo importante va a ser la reacción del mercado a todos esos resultados. Cualquier patrón de giro o de cambio va a venir con fuerza creo.
La ultima luna llena marcó un mínimo, como ha hecho a lo largo del año.
Se acerca -ya estamos de hecho- en la antesala de noviembre. Históricamente uno de los mejores momentos del año para comprar......pero parece que la estacionalidad este año viene bastante cambiada. Enero - marzo que suele ser excelente fue muy complicado.. Y mayo - octubre que suele ser complicado ha sido una bomba. Estaremos otra vez con el pie cambiado en la estacionalidad?
Yo por lo menos apuesto como mínmo que estamos en un gran lateral.
La ultima luna llena marcó un mínimo, como ha hecho a lo largo del año.
Se acerca -ya estamos de hecho- en la antesala de noviembre. Históricamente uno de los mejores momentos del año para comprar......pero parece que la estacionalidad este año viene bastante cambiada. Enero - marzo que suele ser excelente fue muy complicado.. Y mayo - octubre que suele ser complicado ha sido una bomba. Estaremos otra vez con el pie cambiado en la estacionalidad?
Yo por lo menos apuesto como mínmo que estamos en un gran lateral.
Vil-trader escribió:En eso no tenemos dudas ni tu ni yo. Les interesa un dolar flojo. Pero y el oro? El contrato de Diciembre 2010 practicamente vale lo mismo que ahora, y el de febrero de 2011 vale menos. Síntoma de escasez. Porque si fuera solo que el dolar baja de valor, la oferta de oro debería ser sana. Pero no es nada sana.
Cuando el oro canta, algo tiene en la garganta.
Bonico slogan vil
Vengo leyendo este hilo con sumo interés porque lo que expones no es nada descabellado, pero por otra parte hay datos muy contradictorios que dan que pensar y uno de ellos es el criterio del Ecri, que lleva “diciendo” demasiadas semanas que la economía se está recuperando y no se ha equivocado nunca hasta ahora.
En cuanto al oro la relación con el dóllar es clara y su ascensión creo que es más por el billete verde, que como valor refugio
El crudo creo que hay más factores a valorar, pero a nada que aumente el consumo nos vamos a los 100 en un plis plas.
La economía está mucho peor de lo que nos la pintan, esto es una obviedad, ¿que hay mucha mierda escondida? demasiada sin duda, pero mientras el dinero siga siendo deuda, la única salida es vendernos humo.
Quizás la respuesta venga cuando el dow esté por los 10200-500, y el jefe por los 1150-1200creo que por estos niveles, será un buen termómetro de y ver para donde van los tiros.
Sigo siendo muy escéptico de cara al futuro (ya se que es poco, pero es lo que hay)
Saludos
El mar, la mar, el mar
tan distinto y siempre igual
tan distinto y siempre igual
Ser escepticos es nuestra obligación. Dudar de todo hehe.
Interesante artículo de un ex-morgan stanley. Habla sobre la creación de esta burbuja que afecta a todos los activos y que ha sido muy veloz y para salvar la crisis de balances. En un momento dice algo muy interante, algo asi como "creo que esta situación de mercado es la más borrega de toda la historia. en base a un dolar debil todo lo demás suba. cuando el dolar se de la vuelta puede haber una estampida"
Former Morgan Stanley analyst Andy Xie explains why the crisis is leading to other problems, including bubbles . . .
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The financial crisis taught crucial lessons about the dangers of bubbles, loose regulation and debt. It’s a pity we didn’t learn.
Lehman Brothers collapsed one year ago. The U.S. government refused a bailout and warned other financial institutions to be careful. The government felt other institutions had already severed their dealings with Lehman’s investment network, and that a collapse could be walled in.
Little did the government realize that the whole financial system was one giant Lehman. The securities firm borrowed short-term money to punt in risky and illiquid assets. The debt market supported the financial sector, believing the government would bail out everyone in a crisis. But when Lehman was allowed to collapse, the market’s faith was shaken.
The debt market refused to roll over financing for financial institutions. Of course, financial institutions couldn’t unload assets to pay off debts. The whole financial system started teetering. Eventually, governments and central banks were forced to bail out everyone with direct lending or guarantees.
The Lehman collapse strategy backfired. Governments were forced to make implicit guarantees explicit. Ever since, no one has dared argue about letting a major financial institution go bankrupt. The debt market is supporting financial institutions again only because they are confident in government guarantees. The government lost in the Lehman saga, and Wall Street won.
So Lehman died in vain. Today, governments and central banks are celebrating their victorious stabilizing of the global financial system. To achieve the same, they could have saved Lehman with US$ 50 billion. Instead, they have spent trillions of dollars — probably more than US$ 10 trillion when we get the final tally — to reach the same objective. Meanwhile, a broader goal to reform the financial system has seen absolutely no progress.
First, let’s look at the most basic objective of deleveraging the financial sector. Top executives on Wall Street talk about having cut leverage by half. That is actually due to an expanding equity capital base rather than shrinking assets. According to the Federal Reserve, total debt for the financial sector was US$ 16.5 trillion in the second quarter 2009 — about the same as the US$ 16.6 trillion reported one year earlier. After the Lehman collapse, financial sector leverage increased due to Fed support. It has come down as the Fed pulled back some support, creating the perception of deleveraging. The basic conclusion is that financial sector debt is the same as it was a year ago, and the reduction in leverage is due to equity base expansion, partly due to government funding.
Second, financial institutions are operating as before. Institutions led in reporting profit gains in the first half 2009 during a period of global economic contraction. When corporate earnings expand in a shrinking economy, redistribution plays a role. Most of these strong earnings came from trading income, which is really all about getting in and out of financial markets at the right time. With assets backed up by US$ 16.5 trillion in debt, a 1 percent asset appreciation would lead to US$ 16.5 billion in profits. Considering how much financial markets rose in the first half, strong profits were easy to imagine.
Trading gains are a form of income redistribution. In the best scenario, smart traders buy assets ahead of others because they see a stronger economy ahead. Such redistribution comes from giving a bigger share of the future growth to those who are willing to take risk ahead of others. Past experience, however, demonstrates that most trading profits involve redistributions from many to a few in zero-sum bubbles. The trick is to get the credulous masses to join the bubble game at high prices. When the bubble bursts, even though asset prices may be the same as they were at the beginning, most people lose money to the few. What’s occurring now is another bubble that is again redistributing income from the masses to the few.
Third, financial supervision has not changed. After the Lehman crash, most governments were talking about strengthening financial regulations and regulatory agencies, and possibly establishing an international regulatory body. The developments in the past year have actually made financial supervision worse. To support financial institutions, the U.S. government suspended mark-to-market accounting rules for assets on the books of financial institutions, which has allowed them to report profits.
Revamping the financial system has been reduced to political moves over regulating banker salaries. If this could be done, incentives for financial institutions to manufacture bubbles would be removed. But it can’t be done. Financial professionals can be based anywhere in the world, and there will always be some countries willing to host them. Because of such competitive concerns, a global consensus on regulating pay for financial professionals is unlikely.
I think the ultimate objective for financial reforms is to make leverage transparent. There are many reasons that a bubble forms. Debt leverage, however, is always at the center of a property bubble — the most damaging kind. Leverage within a financial system’s assets-to-equity capital ratio is a driving force for an asset bubble. Complex accounting rules and varying treatment of different financial institutions make it difficult to measure leverage. The international standard for a bank’s capital is 8 percent, which allows 12 times leverage. How off-balance sheet assets are treated can make a huge difference. A lot of big banks had 30 times leverage at the beginning of the crisis due to off-balance assets.
Other institutions such as finance companies are harder to regulate. Some industrial companies such as General Electric and General Motors took advantage of loopholes and created finance companies that are essentially banks. Hedge funds, mutual funds, private equity firms, etc., are even more lightly regulated. When they purchase securitized debt securities and engage in lending, they are like banks.
One interesting phenomenon is how money market funds wreaked havoc after Lehman crashed. These funds are supposed to be ultra safe for buying triple-A, short-term, liquid debt instruments. The problem was their demand for liquidity. Self-manufactured liquidity provided a false sense of security despite the risks of underlying securities, such as short-term paper issued by investment banks. When that false sense of security was jolted by the Lehman collapse, all rushed to exit at the same time. Without government support, they wouldn’t have been able to get their money back.
The problem with financial regulation is not the banking system per se, but the shadow banking system. It provides leverage with much less capital than the banking system. When leverage in the economy is rising, asset prices rise, too. Rising asset prices boost collateral value and, hence, more borrowing. A surge in earnings among financial institutions usually accompanies such a spiral of rising leverage and rising asset prices.
It is extremely difficult for an established regulatory regime to stop such a spiral. Usually new financial institutions or products come on the scene, and then a new leverage game begins. It would be impossible for an existing regime to be comprehensive enough to anticipate future institutions and products. Governments may need to install principle-based, not just rule-based, regulatory agencies that could take action to control new financial creations.
The U.S. government is proposing a consumer protection agency for financial products. Such an agency could at least respond to new financial products sold to consumers and, therefore, could be an effective mechanism for stopping some future bubbles. The proposal has met vehement opposition from the financial industry. It may not get through.
What can we speak for after spending trillions of dollars? Not much. Few major players went to jail. The U.S. government sent many more to prison in the 1980s after the junk bond bubble burst. This bubble is 10 times bigger. Yet, apart from the most obvious criminals such as Bernie Madoff and Allen Stanford, who ran multibillion-dollar Ponzi schemes, none of the big shots have landed behind bars. Indeed, a lot of the big shots who brought down the world are still out there running things. The lesson from the Lehman collapse seems to be, “Take whatever you can and, when it crashes, you get to keep it.” How governments and central banks have dealt with this bubble will encourage more people to join bubble making in the future.
Since governments have failed to take advantage of the crisis and build a better financial system, it will become very difficult to push it forward now. The sense of urgency is gone. One may argue that, since markets are stable now, there is no need for radical reforms. This is exactly the wrong conclusion. Trillions of dollars have been spent to buy today’s stability. If the money isn’t spent in vain, serious reforms should take place to decrease the possibility of a catastrophe like this in the future.
The big change that happened is a rapid increase in the U.S. household savings rate. It happened much more quickly than I expected and has the potential to change the global economy. The economic explanation is negative wealth effect. U.S. household net wealth declined 20 percent, or nearly 100 percent of GDP. The rule of the thumb is that it would lead to a 5 percent reduction in spending. The U.S. household savings rate has increased more than that — and continues to rise. It could rise above 10 percent next year. Because of rising savings, the U.S. trade deficit has already halved from the peak. It could halve again next year. This is why I have turned positive on the dollar.
Financial markets are still maximum bearish on the dollar. Liquidity is being channeled out of dollar into all other assets. This is why there is such a high correlation between the dollar and other assets. I think this is the most crowded trade in the world. When the dollar reverses, the short squeeze could cause a global crisis.
Because no meaningful financial reforms have occurred, bubble-making rapidly came back in fashion. The drivers are faith in an ever-depreciating dollar and, later, inflation. Stocks, commodities, and even property values in some cities have skyrocketed this year. It is happening amid a synchronous global recession.
Of course, bulls would argue the market recovery is forecasting a strong global economy ahead. I seriously doubt it. With savings and unemployment rising, the OECD bloc is unlikely to stage a strong recovery from the recession. This view is not the market’s consensus, which assumes all stimuli will lead to a strong and sustained recovery. As I have argued before, supply and demand become misaligned during a big bubble. When it bursts, the economy must restructure supply and demand before the economy can be fully employed. Government stimulus can’t solve the problem. Realignment will take time.
Because policymakers mistakenly think stimulus spending can bring back growth, they are pushing too hard. The eventual consequences are inflation and bubbles along the way. These bubbles will be short-lived. The current boom market is a good example. At the beginning of the year, I predicted such a bubble from March to September. I still hold to this belief. China’s stock market peaked in August and the U.S. market is peaking in September. The reason for the shortness of the bubble is its limited impact on real demand.
How long a bubble lasts depends on the size of its multiplier effect on the economy. A large multiplier effect leads to an economic boom that boosts asset returns. Market watchers can make a plausible case that high asset prices reflect a revaluation rather than a bubble. Strong fundamentals and rising asset prices could sustain each other for a period. The dotcom bubble began in 1996 and lasted five years. The global property bubble began in 2002 and lasted five years, too.
A technology bubble can be extended by cutting costs and boosting profits. A property bubble stimulates demand in many parts of demand and can boost corporate earnings, benefiting financial institutions, retailers, construction companies and material suppliers. This large multiplier effect is why a property bubble usually lasts many years.
Only a multiplier effect from the current bubble is stopping financial institutions from going under. However, weighed down by trillions of dollars in non-performing assets, they cannot lend with abandon again, which makes it impossible to revive property bubbles. Besides, American households won’t join the “borrow-and-spend” game again. Essentially, the main short-term impact of the current bubble is preventing the financial system from collapsing. It won’t lead to substantial demand creation.
Many investors today think a bubble is inevitable and, when it bursts, another can be created quickly to keep on going with life as usual. What has occurred over the past six months seems to validate this viewpoint. History, however, is not kind to this view. Serial bubble making leads to a bigger economic crisis later. What occurred in the United States in the 1930s and Japan over the past two decades are good examples in that regard. If a new bubble were always available for bailouts, we’d have the ultimate free lunch. But there is no free lunch.
Our serial bubble making began 10 years ago with the Asian Financial Crisis. It led to loose monetary policy in developed economies, especially in the United States, and undervalued exchange rates in developing economies. The inflationary force from this loose monetary policy was kept down by excess capacity or capacity creation in developing economies. The environment for tolerating such a loose monetary environment ends when inflation surges in emerging economies first and developed economies second.
When inflation becomes a political problem and policymakers are forced to respond, money supplies will be cut. After that, no more bubbles.
Interesante artículo de un ex-morgan stanley. Habla sobre la creación de esta burbuja que afecta a todos los activos y que ha sido muy veloz y para salvar la crisis de balances. En un momento dice algo muy interante, algo asi como "creo que esta situación de mercado es la más borrega de toda la historia. en base a un dolar debil todo lo demás suba. cuando el dolar se de la vuelta puede haber una estampida"
Former Morgan Stanley analyst Andy Xie explains why the crisis is leading to other problems, including bubbles . . .
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The financial crisis taught crucial lessons about the dangers of bubbles, loose regulation and debt. It’s a pity we didn’t learn.
Lehman Brothers collapsed one year ago. The U.S. government refused a bailout and warned other financial institutions to be careful. The government felt other institutions had already severed their dealings with Lehman’s investment network, and that a collapse could be walled in.
Little did the government realize that the whole financial system was one giant Lehman. The securities firm borrowed short-term money to punt in risky and illiquid assets. The debt market supported the financial sector, believing the government would bail out everyone in a crisis. But when Lehman was allowed to collapse, the market’s faith was shaken.
The debt market refused to roll over financing for financial institutions. Of course, financial institutions couldn’t unload assets to pay off debts. The whole financial system started teetering. Eventually, governments and central banks were forced to bail out everyone with direct lending or guarantees.
The Lehman collapse strategy backfired. Governments were forced to make implicit guarantees explicit. Ever since, no one has dared argue about letting a major financial institution go bankrupt. The debt market is supporting financial institutions again only because they are confident in government guarantees. The government lost in the Lehman saga, and Wall Street won.
So Lehman died in vain. Today, governments and central banks are celebrating their victorious stabilizing of the global financial system. To achieve the same, they could have saved Lehman with US$ 50 billion. Instead, they have spent trillions of dollars — probably more than US$ 10 trillion when we get the final tally — to reach the same objective. Meanwhile, a broader goal to reform the financial system has seen absolutely no progress.
First, let’s look at the most basic objective of deleveraging the financial sector. Top executives on Wall Street talk about having cut leverage by half. That is actually due to an expanding equity capital base rather than shrinking assets. According to the Federal Reserve, total debt for the financial sector was US$ 16.5 trillion in the second quarter 2009 — about the same as the US$ 16.6 trillion reported one year earlier. After the Lehman collapse, financial sector leverage increased due to Fed support. It has come down as the Fed pulled back some support, creating the perception of deleveraging. The basic conclusion is that financial sector debt is the same as it was a year ago, and the reduction in leverage is due to equity base expansion, partly due to government funding.
Second, financial institutions are operating as before. Institutions led in reporting profit gains in the first half 2009 during a period of global economic contraction. When corporate earnings expand in a shrinking economy, redistribution plays a role. Most of these strong earnings came from trading income, which is really all about getting in and out of financial markets at the right time. With assets backed up by US$ 16.5 trillion in debt, a 1 percent asset appreciation would lead to US$ 16.5 billion in profits. Considering how much financial markets rose in the first half, strong profits were easy to imagine.
Trading gains are a form of income redistribution. In the best scenario, smart traders buy assets ahead of others because they see a stronger economy ahead. Such redistribution comes from giving a bigger share of the future growth to those who are willing to take risk ahead of others. Past experience, however, demonstrates that most trading profits involve redistributions from many to a few in zero-sum bubbles. The trick is to get the credulous masses to join the bubble game at high prices. When the bubble bursts, even though asset prices may be the same as they were at the beginning, most people lose money to the few. What’s occurring now is another bubble that is again redistributing income from the masses to the few.
Third, financial supervision has not changed. After the Lehman crash, most governments were talking about strengthening financial regulations and regulatory agencies, and possibly establishing an international regulatory body. The developments in the past year have actually made financial supervision worse. To support financial institutions, the U.S. government suspended mark-to-market accounting rules for assets on the books of financial institutions, which has allowed them to report profits.
Revamping the financial system has been reduced to political moves over regulating banker salaries. If this could be done, incentives for financial institutions to manufacture bubbles would be removed. But it can’t be done. Financial professionals can be based anywhere in the world, and there will always be some countries willing to host them. Because of such competitive concerns, a global consensus on regulating pay for financial professionals is unlikely.
I think the ultimate objective for financial reforms is to make leverage transparent. There are many reasons that a bubble forms. Debt leverage, however, is always at the center of a property bubble — the most damaging kind. Leverage within a financial system’s assets-to-equity capital ratio is a driving force for an asset bubble. Complex accounting rules and varying treatment of different financial institutions make it difficult to measure leverage. The international standard for a bank’s capital is 8 percent, which allows 12 times leverage. How off-balance sheet assets are treated can make a huge difference. A lot of big banks had 30 times leverage at the beginning of the crisis due to off-balance assets.
Other institutions such as finance companies are harder to regulate. Some industrial companies such as General Electric and General Motors took advantage of loopholes and created finance companies that are essentially banks. Hedge funds, mutual funds, private equity firms, etc., are even more lightly regulated. When they purchase securitized debt securities and engage in lending, they are like banks.
One interesting phenomenon is how money market funds wreaked havoc after Lehman crashed. These funds are supposed to be ultra safe for buying triple-A, short-term, liquid debt instruments. The problem was their demand for liquidity. Self-manufactured liquidity provided a false sense of security despite the risks of underlying securities, such as short-term paper issued by investment banks. When that false sense of security was jolted by the Lehman collapse, all rushed to exit at the same time. Without government support, they wouldn’t have been able to get their money back.
The problem with financial regulation is not the banking system per se, but the shadow banking system. It provides leverage with much less capital than the banking system. When leverage in the economy is rising, asset prices rise, too. Rising asset prices boost collateral value and, hence, more borrowing. A surge in earnings among financial institutions usually accompanies such a spiral of rising leverage and rising asset prices.
It is extremely difficult for an established regulatory regime to stop such a spiral. Usually new financial institutions or products come on the scene, and then a new leverage game begins. It would be impossible for an existing regime to be comprehensive enough to anticipate future institutions and products. Governments may need to install principle-based, not just rule-based, regulatory agencies that could take action to control new financial creations.
The U.S. government is proposing a consumer protection agency for financial products. Such an agency could at least respond to new financial products sold to consumers and, therefore, could be an effective mechanism for stopping some future bubbles. The proposal has met vehement opposition from the financial industry. It may not get through.
What can we speak for after spending trillions of dollars? Not much. Few major players went to jail. The U.S. government sent many more to prison in the 1980s after the junk bond bubble burst. This bubble is 10 times bigger. Yet, apart from the most obvious criminals such as Bernie Madoff and Allen Stanford, who ran multibillion-dollar Ponzi schemes, none of the big shots have landed behind bars. Indeed, a lot of the big shots who brought down the world are still out there running things. The lesson from the Lehman collapse seems to be, “Take whatever you can and, when it crashes, you get to keep it.” How governments and central banks have dealt with this bubble will encourage more people to join bubble making in the future.
Since governments have failed to take advantage of the crisis and build a better financial system, it will become very difficult to push it forward now. The sense of urgency is gone. One may argue that, since markets are stable now, there is no need for radical reforms. This is exactly the wrong conclusion. Trillions of dollars have been spent to buy today’s stability. If the money isn’t spent in vain, serious reforms should take place to decrease the possibility of a catastrophe like this in the future.
The big change that happened is a rapid increase in the U.S. household savings rate. It happened much more quickly than I expected and has the potential to change the global economy. The economic explanation is negative wealth effect. U.S. household net wealth declined 20 percent, or nearly 100 percent of GDP. The rule of the thumb is that it would lead to a 5 percent reduction in spending. The U.S. household savings rate has increased more than that — and continues to rise. It could rise above 10 percent next year. Because of rising savings, the U.S. trade deficit has already halved from the peak. It could halve again next year. This is why I have turned positive on the dollar.
Financial markets are still maximum bearish on the dollar. Liquidity is being channeled out of dollar into all other assets. This is why there is such a high correlation between the dollar and other assets. I think this is the most crowded trade in the world. When the dollar reverses, the short squeeze could cause a global crisis.
Because no meaningful financial reforms have occurred, bubble-making rapidly came back in fashion. The drivers are faith in an ever-depreciating dollar and, later, inflation. Stocks, commodities, and even property values in some cities have skyrocketed this year. It is happening amid a synchronous global recession.
Of course, bulls would argue the market recovery is forecasting a strong global economy ahead. I seriously doubt it. With savings and unemployment rising, the OECD bloc is unlikely to stage a strong recovery from the recession. This view is not the market’s consensus, which assumes all stimuli will lead to a strong and sustained recovery. As I have argued before, supply and demand become misaligned during a big bubble. When it bursts, the economy must restructure supply and demand before the economy can be fully employed. Government stimulus can’t solve the problem. Realignment will take time.
Because policymakers mistakenly think stimulus spending can bring back growth, they are pushing too hard. The eventual consequences are inflation and bubbles along the way. These bubbles will be short-lived. The current boom market is a good example. At the beginning of the year, I predicted such a bubble from March to September. I still hold to this belief. China’s stock market peaked in August and the U.S. market is peaking in September. The reason for the shortness of the bubble is its limited impact on real demand.
How long a bubble lasts depends on the size of its multiplier effect on the economy. A large multiplier effect leads to an economic boom that boosts asset returns. Market watchers can make a plausible case that high asset prices reflect a revaluation rather than a bubble. Strong fundamentals and rising asset prices could sustain each other for a period. The dotcom bubble began in 1996 and lasted five years. The global property bubble began in 2002 and lasted five years, too.
A technology bubble can be extended by cutting costs and boosting profits. A property bubble stimulates demand in many parts of demand and can boost corporate earnings, benefiting financial institutions, retailers, construction companies and material suppliers. This large multiplier effect is why a property bubble usually lasts many years.
Only a multiplier effect from the current bubble is stopping financial institutions from going under. However, weighed down by trillions of dollars in non-performing assets, they cannot lend with abandon again, which makes it impossible to revive property bubbles. Besides, American households won’t join the “borrow-and-spend” game again. Essentially, the main short-term impact of the current bubble is preventing the financial system from collapsing. It won’t lead to substantial demand creation.
Many investors today think a bubble is inevitable and, when it bursts, another can be created quickly to keep on going with life as usual. What has occurred over the past six months seems to validate this viewpoint. History, however, is not kind to this view. Serial bubble making leads to a bigger economic crisis later. What occurred in the United States in the 1930s and Japan over the past two decades are good examples in that regard. If a new bubble were always available for bailouts, we’d have the ultimate free lunch. But there is no free lunch.
Our serial bubble making began 10 years ago with the Asian Financial Crisis. It led to loose monetary policy in developed economies, especially in the United States, and undervalued exchange rates in developing economies. The inflationary force from this loose monetary policy was kept down by excess capacity or capacity creation in developing economies. The environment for tolerating such a loose monetary environment ends when inflation surges in emerging economies first and developed economies second.
When inflation becomes a political problem and policymakers are forced to respond, money supplies will be cut. After that, no more bubbles.
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