Monday 30 March 2009

I don't like Mondays

A sell-off in Asia this morning is causing ripples in the European markets as we are closing down the first quarter of 2009. Profit taking before month end.
Reuters reported that GM and Chrysler would not receive more aid, resulting in the ousting of the CEO Rick Wagoner of GM and the warning that Chrysler has to form a partnership with Fiat within 30 days.
UBS has more writedowns and the G20 jamboree motivates some activities in the streets of London not seen for a while.
Part of the leaked G20 communiqué is that the IMF is urged to accelerate their gold sales.
From FT: "Hundreds of Russian banks are likely to go under by the end of the year as the amount of bad loans surges, potentially hitting as much as 20 per cent of credit portfolios, a senior Russian banker has warned. Pyotr Aven, president of Alfa Bank, one of Russia’s largest private banks, called on the government to move swiftly to recapitalize the top 30 banks and name the institutions that will receive assistance to help kick-start the flow of credit, which has almost dried up amid growing fears over bad loans."
A spiral of fear caused by diminished expectations is bringing the economies down. After a full year of a serious banking crisis, the economy is still waiting to experience the full consequences of the shock real estate combined with a financial crisis caused.
It is Paul Kedrosky using the term ‘The New Normal’. And it’s not normal. It’s an economic recalibration which is not going to restore our consumption economy, but bring us down to a new level of more savings, less debt and less spending.
There is an article in the NY Post that Citigroup and Bank of America have been buying toxic securities, paying more than the market price. Could it be possible they gonna sell this stuff in the new PPIP program.
Wait a second: the taxpayer is going to subsidize this plan for hedge funds and bank and these guys are once more screwing up the system.
Was this the intention of Tim Geithner in order to deal with the banks’ toxic debt?
It gets even better: there are plans that banks could take equity stakes in the public-private partnership funds. The banks would pay for these stakes with the loans they are selling to the partnerships. The difference between the market price of this toxic waste and the price these funds are going to pay for is subsidized by the government.
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