There will be haircuts
http://www.pimco.com/EN/Insights/Pages/ ... rcuts.aspx
Nothing new but a nice summary
Eurozone debt crisis
This months Absolute return letter is a good read
http://arpinvestments.com/The_Absolute_ ... r_0513.pdf
http://arpinvestments.com/The_Absolute_ ... r_0513.pdf
Crisis is over it appears?
Euro crisis is over, says France's Francois Hollande
http://www.bbc.co.uk/news/business-22832471
Euro crisis is over, says France's Francois Hollande
http://www.bbc.co.uk/news/business-22832471
Crisis appears to be on the wane, but China looks a hot spot of potential trouble and de-leveraging will still need to happen in indebted markets. But who cares if your house just went up a couple of hundred quid last month! 
Interesting piece in WSJ
Financial Crisis Anniversary: For Corporations and Investors, Debt Makes a Comeback
Posted: 09 Sep 2013 06:00 AM PDT
Looking back, J. Russell Porter said his company was "almost at death's door" when the U.S. economy hit bottom.
With credit markets near frozen, he said, Gastar Exploration in 2009 couldn't find banks or investors willing to provide the $35 million the oil-and-gas producer needed to refinance its crushing debt.
Mr. Porter, Gastar's chief executive, concentrated on survival. He sold off a major project and repaid most of the company's obligations. In financial terms, Gastar was deleveraging, or reducing its dependence on debt to minimize risk, part of a broader trend triggered by the financial crisis.
This year, Mr. Porter reversed course. Gastar borrowed $200 million in the junk-bond market to acquire oil wells in Oklahoma. It offered an 8.625% interest rate on the bond, which investors eagerly grabbed. The money fueled quick growth.
Five years after excessive debt propelled a housing-market collapse into a financial crisis and recession, similar bets are being placed across the U.S.
…..
Many people are chasing higher returns with margin loans that use investment portfolios as collateral. Margin debt reached a record $384 billion earlier this year, up 29% from 2012 and slightly more than the previous high set in 2008.
Gerald Schatz of Fort Washington, Pa., discovered a couple of years ago he could use the Fed's low rates in his favor. After borrowing $500,000 on margin at 1.6% from his broker, the 78-year-old earned about 6% by investing the money in stocks and bonds.
To Mr. Schatz, the move was a no-brainer—as long as interest rates stayed low, stock prices rose and bond yields stayed high. "This just made so much sense to me," said Mr. Schatz, president of a nonprofit group that operates child-care centers. "Leverage is just using cheap money. I don't consider that to be a big risk."
...................
Related quotes (or related warnings, if you will):
Warren Buffett on debt:
"We rarely use much debt and, when we do, we attempt to structure it on a long-term fixed rate basis. We will reject interesting opportunities rather than over-leverage our balance sheet. This conservatism has penalized our results but it is the only behavior that leaves us comfortable, considering our fiduciary obligations to policyholders, depositors, lenders and the many equity holders who have committed unusually large portions of their net worth to our care."
"In the end, alchemy, whether it is metallurgical or financial, fails. A base business can not be transformed into a golden business by tricks of accounting or capital structure. The man claiming to be a financial alchemist may become rich. But gullible investors rather than business achievements will usually be the source of his wealth.”
"You really don’t need leverage in this world much. If you’re smart, you’re going to make a lot of money without borrowing. I’ve never borrowed a significant amount of money in my life. Never. Never will. I’ve got no interest in it. The other reason is I never thought I would be way happier when I had 2X instead of X. You ought to have a good time all the time as you go along.”
And:
"The financial calculus that Charlie and I employ would never permit our trading a good night's sleep for a shot at a few extra percentage points of return. I've never believed in risking what my friends and family have and need in order to pursue what they don't have and don't need."
Interesting piece in WSJ
Financial Crisis Anniversary: For Corporations and Investors, Debt Makes a Comeback
Posted: 09 Sep 2013 06:00 AM PDT
Looking back, J. Russell Porter said his company was "almost at death's door" when the U.S. economy hit bottom.
With credit markets near frozen, he said, Gastar Exploration in 2009 couldn't find banks or investors willing to provide the $35 million the oil-and-gas producer needed to refinance its crushing debt.
Mr. Porter, Gastar's chief executive, concentrated on survival. He sold off a major project and repaid most of the company's obligations. In financial terms, Gastar was deleveraging, or reducing its dependence on debt to minimize risk, part of a broader trend triggered by the financial crisis.
This year, Mr. Porter reversed course. Gastar borrowed $200 million in the junk-bond market to acquire oil wells in Oklahoma. It offered an 8.625% interest rate on the bond, which investors eagerly grabbed. The money fueled quick growth.
Five years after excessive debt propelled a housing-market collapse into a financial crisis and recession, similar bets are being placed across the U.S.
…..
Many people are chasing higher returns with margin loans that use investment portfolios as collateral. Margin debt reached a record $384 billion earlier this year, up 29% from 2012 and slightly more than the previous high set in 2008.
Gerald Schatz of Fort Washington, Pa., discovered a couple of years ago he could use the Fed's low rates in his favor. After borrowing $500,000 on margin at 1.6% from his broker, the 78-year-old earned about 6% by investing the money in stocks and bonds.
To Mr. Schatz, the move was a no-brainer—as long as interest rates stayed low, stock prices rose and bond yields stayed high. "This just made so much sense to me," said Mr. Schatz, president of a nonprofit group that operates child-care centers. "Leverage is just using cheap money. I don't consider that to be a big risk."
...................
Related quotes (or related warnings, if you will):
Warren Buffett on debt:
"We rarely use much debt and, when we do, we attempt to structure it on a long-term fixed rate basis. We will reject interesting opportunities rather than over-leverage our balance sheet. This conservatism has penalized our results but it is the only behavior that leaves us comfortable, considering our fiduciary obligations to policyholders, depositors, lenders and the many equity holders who have committed unusually large portions of their net worth to our care."
"In the end, alchemy, whether it is metallurgical or financial, fails. A base business can not be transformed into a golden business by tricks of accounting or capital structure. The man claiming to be a financial alchemist may become rich. But gullible investors rather than business achievements will usually be the source of his wealth.”
"You really don’t need leverage in this world much. If you’re smart, you’re going to make a lot of money without borrowing. I’ve never borrowed a significant amount of money in my life. Never. Never will. I’ve got no interest in it. The other reason is I never thought I would be way happier when I had 2X instead of X. You ought to have a good time all the time as you go along.”
And:
"The financial calculus that Charlie and I employ would never permit our trading a good night's sleep for a shot at a few extra percentage points of return. I've never believed in risking what my friends and family have and need in order to pursue what they don't have and don't need."
Ireland to exit international bailout in December
Ireland is to make a clean break from its three-year 85bn euro (£71bn) bailout programme next month, without seeking precautionary funding.
http://www.bbc.co.uk/news/world-europe-24937245
Ireland is to make a clean break from its three-year 85bn euro (£71bn) bailout programme next month, without seeking precautionary funding.
http://www.bbc.co.uk/news/world-europe-24937245
Shocked by this BBC report.
http://www.bbc.co.uk/news/business-25861717
Is HSBC the next Northern Rock?
http://www.bbc.co.uk/news/business-25861717
Is HSBC the next Northern Rock?
Doubt it.BJGardner wrote:Shocked by this BBC report.
http://www.bbc.co.uk/news/business-25861717
Is HSBC the next Northern Rock?
Just looks like anti-money laundering/anti-drugs/anti-jihadists. Maybe communicated wonky but reasonable.
They got burned in Mexico...
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andyfuller
- Posts: 4619
- Joined: Wed Mar 25, 2009 12:23 pm
Got burned in Mexico is one interpretation of what went on.....
As for this latest story, it is a non story imo. Staff just being a bit over the top with their checks whichs sounds like it is being sorted out with new guidance from Head Office.
As for this latest story, it is a non story imo. Staff just being a bit over the top with their checks whichs sounds like it is being sorted out with new guidance from Head Office.
How things have changed in Greece
Huge investor demand for Greece bonds
http://www.bbc.co.uk/news/business-26967027
Huge investor demand for Greece bonds
http://www.bbc.co.uk/news/business-26967027
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superfrank
- Posts: 2762
- Joined: Fri Aug 14, 2009 8:28 pm
they haven't changed, Greece is still royally screwed. the only reason there is appetite for these bonds is that the ECB have provided a backstop (promising to buy PIIGS bonds if the yield rises too high to prevent default), so it's 5% for zero risk to captial, which isn't bad in the current environment - especially if you're a bank that can borrow from central banks at virtually nothing and make the spread risk free.Euler wrote:How things have changed in Greece
Huge investor demand for Greece bonds
http://www.bbc.co.uk/news/business-26967027
just more market manipulation and crony capitalism.
but "investors" are getting rich so everything must be just fine!The country's economic output has shrunk by a quarter and unemployment remains close to 28%. There are fewer Greeks employed than at any time in the past 33 years.
Did anyone read an article on the BBC recently about trying to standardise how GDP'd ae calculated across Europe? In the UK Drugs and prostitution is calculated to add 10BN. Admittedly trivial but depending if there are any changes to consideration of the informal economy that is big in some countries those debt ratios could start to look a whole lot different
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superfrank
- Posts: 2762
- Joined: Fri Aug 14, 2009 8:28 pm
so Greece votes in the socialists... 'can't say I blame the people, they've been royally screwed by their 'leaders'. Greece didn't get a bailout; the French and German banks who lent money to the Greek govt got the bailout.
what a coincidence that Draghi is allowed to print 1.1 trillion Euros a few days before the Greek elections to ensure markets remain propped up.
what a coincidence that Draghi is allowed to print 1.1 trillion Euros a few days before the Greek elections to ensure markets remain propped up.
