jeudi 6 mai 2010

Pour l'histoire (2)

Voici deux posts successifs de Naked Capitalism (le premier est plus bas). La question est: Le premier explique-t-il le second? Si c'est le cas, c'est une sorte de "doomsday machine" (machine infernale) comme dans docteur folamour: si vous me touchez, tout saute!

Thursday, May 6, 2010

The Crisis is Back. Dow Drops 998, Biggest Intraday Point Fall in History, Rallies Big from There

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It most certainly is ugly out there.

Yesterday, CDS spreads gapped out on all sovereign risk trades, with dealers reporting that there was big protection buying any time spreads eased

All risk aversion trades are back. The euro continues to fall versus the dollar, dropping from 130 to 125 in a mere 24 hours. The yen has shot to 88. the new risk aversion darling, gold, rallied $15 dollars. Dealers report the credit markets are in disarray.

US stocks did a cliff dive, with the Dow dropping a just shy of 1000 points, and market participants believe it was a single monster seller. The Dow and S&P have rallied hard from there, but are still in seriously negative territory, with the S&P having breeched the technically significant level of 1145 decisively.

Here is the time frame, courtesy Scott (from MarketWatch):

2:38 PM: Dow down 360

2:48 PM: Dow down 600

2:51 PM: Dow down 900

Dow is now down around 500

Another indicator: I am have been unable to access Bloomberg for the last twenty minutes, which NEVER happened during the crisis. Key headlines:

Corporate Credit Risk in U.S. Rises to 2010 High on European Debt Crisis

Dow Plunges 998 Before Recovering

More on this topic (What's this?)
16 Quality Dividend Stocks for the long run
Where Now for the Dow?
Read more on Dow Jones Industrial Average (DJI), S&P 500 (SPX) at Wikinvest

Guest Post: The Tide Is Turning … Call Your Senator NOW!

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Washington’s Blog

As usual, my views do not necessary reflect those of Yves Smith or her website. The views herein are solely my own …

The tide is now turning towards real financial reform:

  • In a major development, Senator Harry Reid is now supporting breaking up the giant banks and auditing the Fed
  • Number two Senate majority leader, Sen. Dick Durbin (D-Ill.), came out Tuesday in favor of a far-reaching amendment that would break up big banks and cap their size (the Brown-Kaufman amendment)
  • Senator Feingold has announced that he will filibuster and financial regulation which does not include serious banking reform

I asked a friend on the hill – a top aide for a very important Congress member – whether people would be wasting their time by calling their Senator. I explained that many people called and demanded that the U.S. not invade Iraq, but that Congress just ignored us. I said that many people feel that traditional political activism, like phonecalls, can’t work, as the level of political corruption is too high.

He responded that given the bipartisan support of many congress people and the American people for financial reform, this is very different from Iraq.

He urged everyone to call their Senators and demand the giant banks be broken up and the Fed be audited.

Senator Sanders’ bill to audit the Fed will probably be voted on today. Please call your Senator now.

Quand la politique d'Euro fort affaiblit... l'Euro

Trichet a annoncé aujourd'hui qu'il ne veut pas acheter de dette grecque. Cela est en théorie bon pour l'Euro puisque cela veut dire que la dette grecque ne sera pas monétisée. Seulement à cause des doutes structurels sur l'Euro, les marchés auraient préféré que Trichet annonce l'ouverture total des vannes monétaires comme aux Etats-Unis. La dernière croyance du marché est en effet que l'insolvabilité des acteurs économiques (particuliers, entreprises, banques ou Etats) peut être soignée par une abondance de liquidité.

Autrement dit, les marchés croient au Père-Noël mais ils l'ont rebaptisé "banque centrale". Tout ce qui va vers plus de laxisme est plébiscité. Tout ce qui va dans le sens de la rigueur monétaire est honni. Cela s'appelle "extend and pretend". Ca ne peut que mal se terminer mais les banquiers se disent sans doute qu'ils auront peut-être droit à une dernière saison de bonus si les banques centrales se plient à leur desiderata et poursuivent ce jeu de massacre. Cette politique de la FED (mais aussi de la BCE qui ne refuse qu'aux Etats ses largesses - pour combien de temps?) permet de faire survivre artificiellement un système failli et devenu incroyablement injuste (tout l'ordre économique ne vise plus qu'à assurer la prospérité des banques le plus longtemps possible!!!). Et après, le déluge...

Pour l'histoire...

Quand les agences abaissent la note de pays européens au pire moment (quand on pense qu'on va avoir droit à un peu de calme après la conclusion d'un accord sur la dette grecque par exemple), c'est l'oeuvre de Wawa, le complexe Wall Street-Washington (et Stiglitz qui fournit les headlines qui vont bien, c'est du même ordre). Et ceux qui disent qu'il s'agit d'une "conspiracy theory" sont soit des imbéciles, soit payés par les banques.

Sur l'inféodation des agences de notation à Wall Street (via Calculated Risks):

Rating Agency Testimony: "Must say yes" to Wall Street

by CalculatedRisk on 4/23/2010 03:34:00 PM

From Kevin Hall at McClatchy Newspapers: Executives testify: Bond-rating agencies corrupted themselves

Testifying under oath before the Senate Permanent Subcommittee on Investigations, officials who were closely involved in giving investment-grade ratings to complex financial instruments backed by shaky U.S. mortgages described how they were pressured to give Wall Street what it wanted.
Called to appear before the panel, Richard Michalek, a former Moody's vice president and senior credit officer, described the ratings process for deals that could bring more than $1 million in fees as a "must say yes" atmosphere.
The testimony is pretty amazing, but how is this being fixed?

Les pause-cafés louches d'Alan Greenspan

Alan Greenspan n'aimait décidément pas qu'on parle de bulle immobilière aux meetings de la FED. C'est en 2004 à nouveau, l'année où cet escroc invitait les américains à s'endetter à taux variables (alors que les taux ne pouvaient que monter et qu'il le savait parfaitement). (via Calculated Risk)

Here are some comments from Minneapolis Fed President Gary Stern at the November 10, 2004 FOMC meeting that answers those questions:
Stern: A little over a week ago, we hosted at the Bank a meeting on housing and residential construction activity. There were several reasons for this. One, of course, was the fact that we hear periodic discussions of a potential bubble in house prices. But second, I’ve been struck, as I’ve watched developments in the Twin Cities and as I’ve traveled around other cities in the last several years, by the absolutely high level of construction activity that seems to be occurring. It’s not only new building, but conversions of all sorts of warehouses, schools, and former office buildings to residential property. A change in mix seems to be occurring as well, with more of the construction and renovation yielding townhouses and condominiums rather than the standard single-family home.
Let me just note three specific issues that came up because I, at least, found them of interest. The first, which it won’t surprise this group to hear, is that they attributed a good deal of the strength in housing to very favorable financial conditions. In this regard they talked not only about low interest rates but also lower down-payment requirements. I might add that a couple of the lenders did say that they thought the credit pendulum had swung too far. They felt that credit conditions had become too easy, and they were anticipating some potential difficulties going forward—presumably in somebody else’s shop! [Laughter] Second, they reported that at least in some markets a significant percentage of the purchases of new units were by investors, where the term “investors” means people who don’t intend to occupy the property, at least not immediately. As best they could judge, in some markets investors were buying up to 30 percent of the new additions to supply. And finally, they noted that there seemed to be some acceleration of purchases by first-time homebuyers who were concerned that they were going to be priced out of the market if they waited longer. The implications of that, of course, are that at some point such sales will slow because people will have acted if they could.

CHAIRMAN GREENSPAN. Shall we take a coffee break and return in fifteen minutes, please.
Loose lending standards, widespread speculation, conversion of all kinds of buildings to residential - and this in flat land!

So in March 2004 a Fed researcher was expressing concern about house prices being out of line with fundamentals, and in November 2004 a Fed President is talking about widespread speculation ... and then there was no further discussion. The 2005 transcripts will be very interesting (to be released next year).

Audit de la FED et $1 Trillion

Alan Grayson enfonce des portes ouvertes qui méritent d'être enfoncées de temps en temps (via ZH):

The Fed doesn't want to be audited. Who does? Do you want to be audited? I don't want to be audited, but sometimes it's necessary,” he said. “When you're handing out a trillion dollars at a time -- a trillion dollars at a time, which works out to $3,000 for every man woman and child in this country -- don't we have a right to know what happened to it?”