He commented on 12 January (those quiet days) in the Crash of 1929 entry , responding to a reader the following:
My personal opinion is to take no position yet in equities, but as a human I am I can be wrong. It would not take positions until we see some sign of improvement in employment, or the indicator HMI ECRI. While it is found that is getting worse, I prefer to stay the margin. My maxim is to preserve capital and I think that buying now is no danger of losing much of it. I agree with you that the stock market has proven to be the most liquid asset, but I'm not in relation to the assessments have been completed. Much remains to be settled according to the situation from getting worse and need to obtain cash.
In general, regardless of the bag, I do not think the financial system the situation is now calm after the turbulence passes. Being a very leveraged business, the expected worsening of the entire economy will result in further losses, which again can have rescue. I also consider an error where governments save all banks, for that is because the banks still running excessive risks, assuming that someone will save it back. Not be protected by governments the interests of banks, but those of savers. It makes no sense to reward that has proved to be an irresponsible and do not measure risk. That the Governments pledge to save every possible bank troubles, far from reducing the problem of the financial system, which sharpens and moves directly to the risk taken by banks to the States, so that future solvency problems may have as protagonists the same . I think the bill for this crisis will be huge and will have to pay for many many years.
Little has lasted peacefully and as expected we go again with the second wave of bank systemic risk. The news is disquieting to the utmost, then a sample:
Major UK banks are "technically insolvent"
Bank of Spain expects first-half figures to decide whether an entity involved
"There are a dozen entities that do not meet the solvency ratio, and some are in bankruptcy."
guru Roubini crisis is not cut: "The financial system is bankrupt"
Jaime Guardiola, Banco Sabadell: "We are halfway to the system default"
"also has not ruled that the State enter the capital of some financial institutions "
The truth is pretty scary to think of the tremendous leverage of financial institutions and that losses can be assumed about their capital. And be very clear that the financial sector on the brink economic recovery and no recovery of the bags as possible. This is not solved from one day to another.
I can not understand how reassuring that the states saved any troubled bank. If there is no room to save all, not really save anyone. The only thing you should ensure are the deposits of savers, to prevent bank runs, but then to try to save hopeless ... The problem is that being the whole web of credit derivatives as interconnected, not a big one would save the collapse of the entire system, thus saving all banks almost becomes an obligation. We pray not to exploit the hoax of the CDS, that it is a weapon of mass destruction. Save
all banks at any price moves all risk to the States. Following the bankruptcy of Iceland, it seems that Ireland is now in all the pools: McWilliams "or declare us in default or go out of Europe," and in general, seem to be at the forefront of countries with respect oversized financial system to its GDP. One was Iceland, another Ireland, and the third makes very good watches.
After Iceland, is it Swiss?
October 31, 2008 (LPAC) .- The German Telepolis website quoted Richard Portes of the London Business School today, warning that Switzerland and Britain, with large financial sectors, could share the fate of Iceland. Only the bank holdings are 7 times higher than the GNP of Switzerland and "obligations short-term Swiss banks," he said, "are 13 times greater than the GDP of Switzerland. In the case of Iceland, this factor was 5, which is lower. This is potentially dangerous for Switzerland. His banking sector is currently too large for the Swiss national bank rescue him. "
One should add that Switzerland is also heavily exposed via the carry trade, in loans in emerging markets, which only that, accounting for 50% of the GDP of Switzerland.
And about our beloved country, I am disappointed with our government when I read things like this: Aido spends almost € 60,000 in furniture budget auteur
say that man reacts only when you are on the brink. I thought so, and I thought that something good would this recession, depression, and would return to sanity in government spending. But I'm beginning to think I was wrong when I read news like that, or squandering as more than two million euros each year comprises 27 consultants in Alcorcón councilman. Also naively thought that the necessary merger of the banks would reduce the cost structure supports its oversized, but it is not, that instead of merging banks Castilla-León and reduce costs, we create a new society on them to increase it. Very well. Are you aware of our political class that government revenues will continue to decline for many years? All this vast expenditure was only tolerable in a climate of maximum revenue that will not return, or spending adapts to new conditions or when we want to respond there will be no solution.
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