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' Yet, perhaps there is some room for optimism, faint though it be.
From the same NY Times article :
Quote
The cabinet called for stimulating the economy through faster construction of railroads, schools, clinics and other infrastructure. With the Chinese economy still heavily dependent on investment spending, some economists are optimistic that China can quickly reignite growth.
“When you’ve got state banks lending to state enterprises to implement the state’s five-year plan, you don’t have a lot of downside to investment,” said Paul Gruenwald, a former International Monetary Fund official....
emphasis added.
Socialism comes to the rescue!!
...or is it State Capitalism?
You can't tell the difference without help from the Brainwashing Machine!! · · ·
The number of Problem Banks has remained stubbornly high since the start of the banking/financial crisis in 2008. Prior to 2008, the number of problem banks was relatively small. For example, in 2007, only 76 banks were classified as problem banks. After 2008, the number of problem banks soared, reaching a high of 884 in December 2010. The recently issued FDIC Quarterly Banking Profile for the first quarter of 2012 showed a decline in the number of problem banks to 772, but the total is still historically very high. The number of problem banks currently comprise 10.5% of the 7,359 federally insured banks and savings associations. Total assets of the problem banks total $292.1 billion as of March 31, 2012.
A little bump,to toss in a prognostication article on derivatives.
Inside the blog, is a partial explanation of the turmoil going in in JP Morgan, regarding it's recent request to move a portion of their derivatives into the customer account portion of their equity. (as the other major banks were allowed to do during the crisis).
JP Morgan is known to have a liquidity problem, which could lead to selling derivatives. This would cause a rush by other banks to cash in at rapacious rates, and likely cause a domino effect in the industry. At this point, JP Morgan is holding on to the derivatives to avoid this. If the problems continue, the FED will likely bail out JP Morgan.
It also outlines the problems with the Dodd-Frank bill, whereby the derivatives market itself could be bailed out by the Federal Reserve.
According to the blog, the derivatives held by banks is 200 Trillion, 3 times the size of the global economy. A bailout of the derivatives market would be on the backs of the US taxpayer. Shelia Bair's warning None of this is reaching Page 1. You can draw your own conclusions.
............................................ Yes, unthinkable and so the dangers disappear from the news. We know this is unlikely to happen, but the question remains, how will this scenario be avoided.
'at's cause it aint news. Goldman Sachs losing $2 Bil, now that was news! Though it isn't news it's pretty good information. Financial regulation is off somewhere on the horizon because taxpayers cannot and will not be held up for the gambling losses of billionaires again. The last bailout saved the economy(ostensibly) but it also grubstaked the gamblers who continued their spree at the world's expense. Next time they come looking for a handout I don't think they will find government or the taxpayers so compliant. At least that's my hope, and of course, just my opinion.
What I can't understand is why the jobs situation isn't booming what with the job creators having been grubstaked by the rest of us?
Maybe it would work better to grubstake the jobs di-reckly and fuhgeddabout the incompetent job creators?
You never change things by fighting the existing reality. To change something, build a new model that makes the old model obsolete. R. Buckminster Fuller
If lower interest rates and lower taxes creates jobs, we ought to be rolling in jobs right now and needing to bring in illegals to handle the surplus. The thing that creates jobs is the sales of goods, materials, and services. The majority of Americans have stopped spending money on anything but necessities. So what are speculators investing in and making a killing on? The very necessities we cannot live without.
For no reason except it caught my eye, here's an article about Chesapeake... Shades of Enron excerpt:
Quote
“Chesapeake has valuable assets, but they have a financial dynamic that only works in the fourth dimension: they need $12 billion when their cash flow is just $2 billion.”
Chesapeake has outspent its cash flow every year for the past decade — forging ahead with acquisitions of land and drilling more wells than any operator — convinced that it will be able to find others to finance its growth. The strategy worked pretty well, as McClendon and long-time friends like Ralph Eads, chairman of Jefferies & Co. (and former head of energy trading at El Paso) lined up willing buyers among foreign governments and orchestrated a string of off-balance-sheet vehicles like the Volumetric Production Payments. McClendon has been able to make Chesapeake’s ends meet, because, as Olson says, he can rely on Greater Fool Theory. “All it takes is one buyer.”
A fun read... makes ya wonder how many more Chesapeakes are out there.
edit to add this companion article with a few more details... Chesapeake (a $4Billion bridge loan from Goldman Sachs and Jeffries, and the price of gas is still falling.) Between leverage and low stock prices, this is a devil's brew.
Last edited by itstarted; 06/05/1212:12 AM. Reason: add links
The natural gas business is now toying with the idea of FLARING OFF excess supply in an effort to prevent FREE MARKET forces from doing their work.
UTTER HYPOCRISY...proof once again that there is no such thing as a free market and there never has been. It's a fantasy. What they really mean is, "us that gots the gold gets to make the rules and the fact that you still have even a scrap of copper means we can't make all the rules and change them at will."
"The Best of the Leon Russell Festivals" DVD deepfreezefilms.com
Why didn't I think of that? 
