AND HE SHOULD KNOW?

May 19, 2008
Article from: The Australian

THE end of the global credit crisis is drawing closer, Deutsche Bank chief executive Josef Ackermann says.He also said it will leave Deutsche Bank relatively unscathed and possibly in a stronger position. "Yes, I believe we are getting closer to the end of the financial crisis," Josef Ackermann told Swiss Sunday paper Sonntagsblick. "It is not fully over yet, but the signs from the US are encouraging."
Mr Ackermann said he believes the pragmatic approach taken in the US towards limiting the impact of the crisis on the financial system should soon be paying off. "We should feel the effects in the second half of the year already and see a strong recovery on the US real estate market," Mr Ackermann told Sonntagsblick.

The global financial crisis originated from the defaulting of US households on mortgage payments, which affected global credit markets as the risk from the lending was spread internationally through structured products traded among banks. Separately, Mr Ackermann told German Sunday paper Frankfurter Allgemeine Sonntagszeitung he doesn't see the danger of a collapse of the global financial markets. "This is out of the question," Mr Ackermann said, adding that he believes the impact of the crisis on the real economy will be limited.

In London
Even “five star” home buyers are struggling to move in many cases because it can take months for them to secure a deal.
The problem has been blamed on banks holding onto funds to boost their cash reserves, which mortgage experts said is “choking” the housing market.

Quantitative easing only one week to run, economists warn
The unprecedented programme of quantitative easing could be coming to an end, with just one more week of the Bank of England buying back government bonds, economists warned.

The Monetary Policy Committee has a target to pump £125bn of cash directly into the economy by buying government and corporate debt, the process known as quantitative easing (QE), and has already gone above £120bn. This week will see it reach £125bn, according to Michael Saunders, chief western European economist at Citigroup.

Suspension of Mark to Market is Fraud
Every pumper of stocks is saying that suspension of mark to market is good for banks, good for the stock market, Suspension of mark to market is where the banks estimate the value of assets that the banks are refusing to sell that are labeled as "toxic" assets instead of letting the free market determine the value of the assets.

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CDO'S and MBS's, these are what the banks would package and sell in the free market to creat liquidity and finace their loans....the FED has been monetizing the debt when others dont step in to buy in attempt to keep interest rates low. Banks do not trust these instruments from each other, the market is FROZEN.

Mark to Market suspension has allowed banks not to recongnize paper losses in value of the loans they still hold on their books, so free market has no place here in the valuing of bank assets. Which IMHO puts into question the banking sectors in fluence on the S and P 500 earnings results. We are approaching paying 20 X 2009 earnings of $55 which we could argue is OVERSTATED. We again reach overpriced stocks with dividend yields nowhere close to prior BEar Market levels of near 6%.

Did anyone worry about paying up for INTERNET STOCK values in 1999? or even worry about profits.....so stocks can rise anticipating the future, problem here is the future is unknown and likely fraught with more downside.

The engine to economies is Consumer spending especially here in the US some 70%. But Consumers access to credit is being hampered by rising credit score requirements, down payments, slowly rising int rates, falling home vlaues, loss of employment, underemployment, and a rise in the savings rate.

WHAT will the climate be for this XMAS season shopping? With unemployment probably not abating by then......it is the time of year MANY Retailers make or break it.

ONE VIEW OF K WAVE
How the Kondratieff Cycle Might Play Out

There is a very important point that many deflation advocates seem to be ignoring: Unlike Kondratieff winters of past eras, a modern Kondratieff winter does not necessarily have to follow in like fashion. I believe Ian Gordon and Robert Prechter are right about a winter coming, i.e., massive recessionary forces descending upon America and the world. We are confronting the end phase of the 60-70 year cycle that is now in its fourth repeat over the past 240 years. The fact that it must play out is, in my opinion, inevitable. But HOW it plays out is, by no means, set in stone. This is because we can now intervene with monetary and political policies that can alter the nature of the winter phase of the cycle. We can change its form. (can we?)


Quote of the Day"There are three classes of people: those who see, those who see when they are shown, those who do not see." Leonardo da Vinci
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The main idea of Kondratieff was that the market economy self-heals itself each time it goes into trouble. USA was the strongest country in the world in 1929, and it still was the strongest country in 1940’s, after the Great Depression. So the Great Depression does not break the economy, it heals it. The idea is that all the bad debt must be eliminated, which probably means that pretty much all debt must be eliminated. The nation of spenders is converted into the nation of savers, which can export more than it imports, which produces more than it consumes, which saves more than it spends. (this is happening now)

The collapsing credit is essentially equivalent to the collapse of monetary base, because the debt obligations are essentially money, or at least very similar to money. The collapse of money supply is called deflation. It leads to the decrease of all kind of prices – goods, real estate, labor, stock market. There is no enough money and too much goods competing for money. It’s a time of oversupply. Too many factories, too many factory workers. <<<<

Remeber my comment on china, they are BLITZING the country with money....problem is there is ALREADY TOO MUCH CAPACITY!!! so the money is going RIGHT into the SHANGHAI stock market and Chinese real estate....creating tons more BAD LOANS and one hell of a mess coming.!!!

DROPPING MARK TO MARKET IMHO has spit in the face of K winter and having the banks cleanse themselves INSTEAD those TOXIC deals are SITTING on their books not being RECOGNIZED...NOT BEING DEALT with.

ZERO INT RATE MONIES FREE TO firms like GS and being sucked up like a HOOVER and FED right into the US stock market PUMPING it up as we speak.

AS SHORTS COVER, as potential sidelined money is DRAWN in afraid to miss the boat.....when we reach the point REALITY will reappear and those same bastards pumping will be DUMPING on YOU.

D