The 2008–2009 Icelandic financial crisis is a major ongoing economic problem that involves the collapse of ALL THREE of the country's major banks, following their difficulties in refinancing their short-term debt and a run on deposits in the United Kingdom. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history!
In late September 2008, it was announced that the Glitnir Bank would be nationalized. The following week, control of Landsbanki and Glitnir was handed over to receivers appointed by the Financial Supervisory Authority (FME). Soon after that, the same organization placed Iceland's largest bank, Kaupthing, into receivership as well.
At the end of the second quarter 2008, Iceland's external debt was 9.553 trillion Icelandic Krónur, more than 80% of which was held by the banking sector. This value is nearly EIGHT TIMES 2007 Gross Domestic Product (GDP) of 1.293 trillion Krónur! The assets of the three banks taken under the control of the FME totaled 14.437 trillion Krónur at the end of the second quarter, 2008.
The financial crisis has had serious consequences for the Icelandic economy. The national currency has fallen sharply in value, foreign currency transactions were virtually suspended for weeks and the market capitalization of the Icelandic stock exchange has dropped by more than 90%!
The full cost of the crisis cannot yet be determined, but already it exceeds 75% of the country's 2007 GDP. Outside Iceland, more than half a million depositors (far more than the entire population of Iceland!) found their bank accounts frozen amid a diplomatic argument over deposit insurance. German bank BayernLB faces losses of up to €1.5 billion (approximately $2 billion), and has had to seek help from the German federal government. The government of the Isle of Man will pay out half of its reserves, equivalent to 7.5% of the island's GDP, in deposit insurance.
The bulk of Iceland's external debt is owed to Great Britain and the Netherlands. Icelanders rejected a proposed plan to pay back the U.K in a special election conducted yesterday.
Over 93% of voters cast ballots opposing the £3.5 billion deal to compensate the British and the Dutch state, initial results showed. The propsed deal would require each person to pay around £90 a month for eight years and many Icelandic taxpayers say they cannot afford it.
The island is grappling with a 9% unemployment rate, a 7% annual inflation rate and an economy that is still shrinking.
Last-minute talks broke down this week, despite offers by Britain for more favorable terms, including a significant cut on the interest rate in the original deal.
Despite stalled talks and the rejection in the referendum, Iceland's government said it still believed it could strike a deal.
"The government of Iceland is confident that a solution acceptable to all parties can be achieved," it said in a statement.
The global financial meltdown has left nearly no country unscathed. Yesterday, we reviewed the unfortunate situation in tiny Dubai
(http://markostake.blogspot.com/2010/03/dubai-enough-to-make-you-cry.html).
As this unprecedented crisis continues, the contagion of the inter-connectedness of the global economy will continue to affect more and more nations. Who's next?
Marko's Take
Our fourth installment of the new YouTube series is expected to be posted shortly. Episode 4 will de-mystify the ever-so-secretive Federal Reserve. We hope you've enjoyed our first 3 segments which featured the mock "State Of The Union" address and our two videos on "Peak Oil". If you haven't seen them yet, you can access them here: http://www.youtube.com/markostaketv.
In the future, we will cover the Income Tax, Social Security and many others. A definitive schedule will be published in the next several days.
Sunday, March 7, 2010
Saturday, March 6, 2010
Dubai, Enough To Make You Cry!
The tiny middle-eastern country of Dubai is going through a crisis that would be considered much more high profile if it weren't for the panoply of problems the rest of world is wrestling. It's investment arm, Dubai World, borrowed BILLIONS in the development of the world's largest office complex and resort, in an attempt to rival Las Vegas and Atlantic City. Dubai, not oil-rich, is one of the seven states comprising the United Arab Emirates (UAE).
Dubai World is an investment company that manages and supervises a portfolio of businesses and projects for the Dubai government. Its projects reach across a wide variety of industry segments and projects that promote Dubai as a hub for commerce and trading.
Dubai World is the Emirate's flag bearer in global investments and has a central role in the direction of Dubai's economy. Assets include DP World, which caused a storm when trying to take over six US ports. Nakheel, its property arm built The Palm Islands, The World Developments and Istithmar World, its investment company. It is chaired by Sultan Ahmed bin Sulayem.
The country's ambitious plans went terribly wrong in late 2009. Dubai World proposed to delay repayment of its debt, which raised the risk of the largest government default since the Argentine debt restructuring in 2001. Dubai World, the investment vehicle for the Emirate, asked for a six month payment delay on $26 billion of debt. The extent of the debt rattled markets causing many indices to drop - including oil prices. Since then, estimates of the amounts owed have jumped markedly.
The genesis of the crisis is the country's bursting real-estate bubble, which has caused all development to come to a grinding halt and the worldwile economic problems, which also have reduced tourism. Half of all the UAE's construction projects, totalling $582 billion, have either been put on hold or cancelled, leaving a trail of half-built towers on the outskirts of the city stretching into the desert.
Among the casualties is the tower Donald Trump promised would be "the ultimate in luxury", a $100 billion resort complex by the beach, and four huge theme parks and an artificial island developed by the state company Nakheel.
Banks have stopped lending and the stock market has plunged 70%. Look beneath the surface of the fashion parades and VIP parties, and the evidence of economic slowdown are obvious. Luxury hotels are three-quarters empty. Shopkeepers in newly-built malls are reporting a drop in sales. In Dubai you expect to see a Ferrari parked beside a Rolls-Royce. But not, as is the case now, with "For Sale" signs taped to the windows.
Under Dubai's strict legal code, defaulting on debt or bouncing a check, is punishable with jail, also known as "debtor's prison". Any expatriate in financial difficulty knows the safest bet is to take the next outbound flight.
Dubai, which has barely a trickle of oil in comparison with neighbor Abu Dhabi, is projecting a 42% increase in public spending on infrastructure projects, to compensate for vanishing private investment. But it cannot go it alone. Abu Dhabi is increasingly expected to bail out its poorer neighbour, and the two ruling families are meeting regularly to decide how to transfer cash into Dubai's ailing economy.
But Abu Dhabi has its own problems. The Emirate's sovereign wealth fund – once said to be worth $1 trillion – has taken a hit in the global recession, while the lifeblood of the economy – the price of oil – is down more than 60%.
The amount of debt owed by Dubai to the rest of the world is unclear. Guestimates have it at more than $100 billion, which could place the tiny country as the largest sovereign debt defaulter in history!
With all the problems facing planet Earth, the Dubai problem is merely another straw in the desert country's "camel's back".
Comments or questions? TAKE ME ON!
Marko's Take
Our fourth installment of our new You Tube series will be posted shortly here: http://www.youtube.com/markostaketv. Episode 4 will cover the secret Federal Reserve. We will continue to add new episodes on a weekly basis.
Dubai World is an investment company that manages and supervises a portfolio of businesses and projects for the Dubai government. Its projects reach across a wide variety of industry segments and projects that promote Dubai as a hub for commerce and trading.
Dubai World is the Emirate's flag bearer in global investments and has a central role in the direction of Dubai's economy. Assets include DP World, which caused a storm when trying to take over six US ports. Nakheel, its property arm built The Palm Islands, The World Developments and Istithmar World, its investment company. It is chaired by Sultan Ahmed bin Sulayem.
The country's ambitious plans went terribly wrong in late 2009. Dubai World proposed to delay repayment of its debt, which raised the risk of the largest government default since the Argentine debt restructuring in 2001. Dubai World, the investment vehicle for the Emirate, asked for a six month payment delay on $26 billion of debt. The extent of the debt rattled markets causing many indices to drop - including oil prices. Since then, estimates of the amounts owed have jumped markedly.
The genesis of the crisis is the country's bursting real-estate bubble, which has caused all development to come to a grinding halt and the worldwile economic problems, which also have reduced tourism. Half of all the UAE's construction projects, totalling $582 billion, have either been put on hold or cancelled, leaving a trail of half-built towers on the outskirts of the city stretching into the desert.
Among the casualties is the tower Donald Trump promised would be "the ultimate in luxury", a $100 billion resort complex by the beach, and four huge theme parks and an artificial island developed by the state company Nakheel.
Banks have stopped lending and the stock market has plunged 70%. Look beneath the surface of the fashion parades and VIP parties, and the evidence of economic slowdown are obvious. Luxury hotels are three-quarters empty. Shopkeepers in newly-built malls are reporting a drop in sales. In Dubai you expect to see a Ferrari parked beside a Rolls-Royce. But not, as is the case now, with "For Sale" signs taped to the windows.
Under Dubai's strict legal code, defaulting on debt or bouncing a check, is punishable with jail, also known as "debtor's prison". Any expatriate in financial difficulty knows the safest bet is to take the next outbound flight.
Dubai, which has barely a trickle of oil in comparison with neighbor Abu Dhabi, is projecting a 42% increase in public spending on infrastructure projects, to compensate for vanishing private investment. But it cannot go it alone. Abu Dhabi is increasingly expected to bail out its poorer neighbour, and the two ruling families are meeting regularly to decide how to transfer cash into Dubai's ailing economy.
But Abu Dhabi has its own problems. The Emirate's sovereign wealth fund – once said to be worth $1 trillion – has taken a hit in the global recession, while the lifeblood of the economy – the price of oil – is down more than 60%.
The amount of debt owed by Dubai to the rest of the world is unclear. Guestimates have it at more than $100 billion, which could place the tiny country as the largest sovereign debt defaulter in history!
With all the problems facing planet Earth, the Dubai problem is merely another straw in the desert country's "camel's back".
Comments or questions? TAKE ME ON!
Marko's Take
Our fourth installment of our new You Tube series will be posted shortly here: http://www.youtube.com/markostaketv. Episode 4 will cover the secret Federal Reserve. We will continue to add new episodes on a weekly basis.
Friday, March 5, 2010
Great News!... More Jobs Lost!
The audacity of the Obama Administration to spin a systemic unemployment problem is nothing short of Orwellian. "Good news is good news". "Bad news is good news"! Is this the Audacity of Hope?
This morning, the closely watched jobs report came out. The Labor Department, which carried out its surveys at the same time that the snowstorms battered the East Coast, said in a report today that non-farm payrolls fell by 36,000 compared with a revised 26,000 drop in January.
While to most people, including all of us at Marko's Take, losing jobs AGAIN would seem like bad news.
But we don't live in Washington, D.C. where it's more important to "beat the spread" than to win.
Economists polled by Dow Jones Newswires were expecting payrolls to fall by 75,000, mainly because of the severe weather. So, the loss of "only" 36,000 jobs was a WIN! The January figure was revised from an originally reported 20,000 decline.
While jobs were LOST, the unemployment rate went DOWN! The unemployment rate, which is calculated using a different household survey, remained at 9.7% last month. Economists had forecast the jobless rate would edge higher to 9.8%.
A major factor in the "great" jobs number was care of Uncle Sam. Employment fell in construction and information, while temporary help services added jobs. Total government employment fell by 18,000, but that is mostly due to a decline in state and local jobs. The FEDERAL work force grew by 7,000, helped by an influx of Census workers along with the addition of 15,000 temporary workers!
Since December 2007, the start of the worst U.S. recession in decades, payroll employment has fallen by 8.4 million. So, what's another 36,000 jobs lost, unless, of course, you're one of those folks that are now jobless!
The White House continues to BLAME THE WEATHER!
Dr. Williams of ShadowStats (http://www.shadowstats.com/) has a far less sanguine view of the jobs situation than da boyz in D.C. According to Dr. Williams, "the weekly new claims for unemployment insurance numbers appears to have stabilized well off its peak at around an average of 470,000 per week, a level last seen as the current economic downturn was formally underway in early 2008."
Dr. Williams goes further on to say that "there has been some flattening out in activity, where a certain layer of layoffs has tended to run its course. Layoffs should start to rise again in the next couple of months. On the offsetting hiring side, the Conference Board’s seasonally-adjusted January help-wanted advertising (newspapers) was unchanged month-to-month at 10, while the seasonally-adjusted help-wanted advertising (online) declined".
So, this "great" jobs report (sarcasm intentional!) is likely to prove to be temporary, and as the second Dip of the Double-Dip-Depression takes its grip on the economy, the unemployment rate is likely to resume its rise. We hate to be the bearers of bad news, but we just tell it like it is!
Think we're in a recovery? Think the jobs news was really good news? TAKE ME ON!
Marko's Take
Episode 4 of our new YouTube series will be posted shortly. You can access it here: http://www.youtube.com/markostaketv. We are planning 5 more episodes in the near future and will publish a schedule of upcoming segments all based on Marko's Take. I hope you've had a chance to tune in and leave comments!
This morning, the closely watched jobs report came out. The Labor Department, which carried out its surveys at the same time that the snowstorms battered the East Coast, said in a report today that non-farm payrolls fell by 36,000 compared with a revised 26,000 drop in January.
While to most people, including all of us at Marko's Take, losing jobs AGAIN would seem like bad news.
But we don't live in Washington, D.C. where it's more important to "beat the spread" than to win.
Economists polled by Dow Jones Newswires were expecting payrolls to fall by 75,000, mainly because of the severe weather. So, the loss of "only" 36,000 jobs was a WIN! The January figure was revised from an originally reported 20,000 decline.
While jobs were LOST, the unemployment rate went DOWN! The unemployment rate, which is calculated using a different household survey, remained at 9.7% last month. Economists had forecast the jobless rate would edge higher to 9.8%.
A major factor in the "great" jobs number was care of Uncle Sam. Employment fell in construction and information, while temporary help services added jobs. Total government employment fell by 18,000, but that is mostly due to a decline in state and local jobs. The FEDERAL work force grew by 7,000, helped by an influx of Census workers along with the addition of 15,000 temporary workers!
Since December 2007, the start of the worst U.S. recession in decades, payroll employment has fallen by 8.4 million. So, what's another 36,000 jobs lost, unless, of course, you're one of those folks that are now jobless!
The White House continues to BLAME THE WEATHER!
Dr. Williams of ShadowStats (http://www.shadowstats.com/) has a far less sanguine view of the jobs situation than da boyz in D.C. According to Dr. Williams, "the weekly new claims for unemployment insurance numbers appears to have stabilized well off its peak at around an average of 470,000 per week, a level last seen as the current economic downturn was formally underway in early 2008."
Dr. Williams goes further on to say that "there has been some flattening out in activity, where a certain layer of layoffs has tended to run its course. Layoffs should start to rise again in the next couple of months. On the offsetting hiring side, the Conference Board’s seasonally-adjusted January help-wanted advertising (newspapers) was unchanged month-to-month at 10, while the seasonally-adjusted help-wanted advertising (online) declined".
So, this "great" jobs report (sarcasm intentional!) is likely to prove to be temporary, and as the second Dip of the Double-Dip-Depression takes its grip on the economy, the unemployment rate is likely to resume its rise. We hate to be the bearers of bad news, but we just tell it like it is!
Think we're in a recovery? Think the jobs news was really good news? TAKE ME ON!
Marko's Take
Episode 4 of our new YouTube series will be posted shortly. You can access it here: http://www.youtube.com/markostaketv. We are planning 5 more episodes in the near future and will publish a schedule of upcoming segments all based on Marko's Take. I hope you've had a chance to tune in and leave comments!
Thursday, March 4, 2010
Blame It On The Weather... When It's Convenient!
Everybody talks about the weather, but no one does anything about it, except use it as an excuse! Yesterday, it was the Obama Administration's own Lawrence Summers citing the weather as a reason for the stubbornly high unemployment (http://markostake.blogspot.com/2010/03/more-unemployment-more-excuses.html)!
This morning, according to a report aired on CNBC, reporter Diana Olick stated that the pending home sales index fell by 7.6% in January to 90.4. The index is based on contracts signed in January. The number came in much lower than expected despite an anticipated surge resulting from the first-time home buyer's credit. The index fell the most in the west - a whopping 13.2%! Hasn't snowed all that much here! Get your excuses together folks!
Retailers, however, despite the crippling weather, did BETTER than expected. I never knew this but shopping is helped by snow, while pending home sales and hiring are hurt by the white stuff. Someone ought to let Wikipedia know about this! Has anyone let Al Gore know about this climatological affect? If not, send him a subsciption to Marko's Take! Seems like global cooling is proving more harmful than global warming (sarcasm intentional!).
According to the Wall Street Journal, many U.S. retailers, especially those geared to teen shoppers, reported improved sales in February, thanks to easy year-ago comparisons and despite winter storms that crippled large swaths of the country(http://online.wsj.com/article/SB10001424052748704187204575101290171056982.html?mod=djemTMB_h).
As retailers reported their monthly figures this morning, the industry appeared on track to report their sixth straight month of rising sales at stores open at least a year, known as same-store sales, with 70% of retailers surpassing Wall Street expectations, according to Thomson Reuters.
The winners say they came into February with lean inventories that minimized markdowns and they also saw some emerging demand. Those with disappointing sales figures are largely BLAMING THE WEATHER, as non-mall retailers appeared to struggle, including BJ's Wholesale Club Inc. and Costco Wholesale Corp., which both reported lower-than-projected quarterly results.
More important, observers said, will be how March shapes up because it is a longer month and will include this year more spending related to Easter, which falls on April 4, earlier than last year.
Nonetheless, February proved to be a healthy month for many retailers. Surprisingly, sales were strong from teen retailer Zumiez Inc., which reported same-store sales growth of 11% in February, compared with Wall Street's projection of 1.2% growth and last year's 13% slide.
Also strong was Limited Brands Inc., which reported a 10% increase in February same-store sales, benefiting from vibrant Valentine's Day-related sales at its Victoria Secret division, where same-store sales rose 10%. Limited's total sales rose to $600.1 million from $547.8 million a year ago.
On the weak side was Destination Maternity Corp., which reported a 9.3% drop in February same-store sales, while apparel and accessory store Stage Stores Inc. saw same-store sales slide 3.9%. Undoubtedly, it was the weather!
Marko's Take NEVER blames the weather! We're here, telling it like it is. Rain, snow, hail, or gloom of night! Hope the weather where you are isn't getting you down!
If you think the "Blame It On The Weather" BS has its merits, TAKE ME ON!
Marko's Take
Our fourth episode on YouTube, which will unravel the mysterious Federal Reserve and take a peek behind the FED curtain, will be posted shortly. You can access it by clicking here: http://www.youtube.com/markostaketv.
This morning, according to a report aired on CNBC, reporter Diana Olick stated that the pending home sales index fell by 7.6% in January to 90.4. The index is based on contracts signed in January. The number came in much lower than expected despite an anticipated surge resulting from the first-time home buyer's credit. The index fell the most in the west - a whopping 13.2%! Hasn't snowed all that much here! Get your excuses together folks!
Retailers, however, despite the crippling weather, did BETTER than expected. I never knew this but shopping is helped by snow, while pending home sales and hiring are hurt by the white stuff. Someone ought to let Wikipedia know about this! Has anyone let Al Gore know about this climatological affect? If not, send him a subsciption to Marko's Take! Seems like global cooling is proving more harmful than global warming (sarcasm intentional!).
According to the Wall Street Journal, many U.S. retailers, especially those geared to teen shoppers, reported improved sales in February, thanks to easy year-ago comparisons and despite winter storms that crippled large swaths of the country(http://online.wsj.com/article/SB10001424052748704187204575101290171056982.html?mod=djemTMB_h).
As retailers reported their monthly figures this morning, the industry appeared on track to report their sixth straight month of rising sales at stores open at least a year, known as same-store sales, with 70% of retailers surpassing Wall Street expectations, according to Thomson Reuters.
The winners say they came into February with lean inventories that minimized markdowns and they also saw some emerging demand. Those with disappointing sales figures are largely BLAMING THE WEATHER, as non-mall retailers appeared to struggle, including BJ's Wholesale Club Inc. and Costco Wholesale Corp., which both reported lower-than-projected quarterly results.
More important, observers said, will be how March shapes up because it is a longer month and will include this year more spending related to Easter, which falls on April 4, earlier than last year.
Nonetheless, February proved to be a healthy month for many retailers. Surprisingly, sales were strong from teen retailer Zumiez Inc., which reported same-store sales growth of 11% in February, compared with Wall Street's projection of 1.2% growth and last year's 13% slide.
Also strong was Limited Brands Inc., which reported a 10% increase in February same-store sales, benefiting from vibrant Valentine's Day-related sales at its Victoria Secret division, where same-store sales rose 10%. Limited's total sales rose to $600.1 million from $547.8 million a year ago.
On the weak side was Destination Maternity Corp., which reported a 9.3% drop in February same-store sales, while apparel and accessory store Stage Stores Inc. saw same-store sales slide 3.9%. Undoubtedly, it was the weather!
Marko's Take NEVER blames the weather! We're here, telling it like it is. Rain, snow, hail, or gloom of night! Hope the weather where you are isn't getting you down!
If you think the "Blame It On The Weather" BS has its merits, TAKE ME ON!
Marko's Take
Our fourth episode on YouTube, which will unravel the mysterious Federal Reserve and take a peek behind the FED curtain, will be posted shortly. You can access it by clicking here: http://www.youtube.com/markostaketv.
Wednesday, March 3, 2010
More Unemployment... More Excuses!
As the so-called "recovery" sputters forward, one essential ingredient continues to be missing: jobs! But there's no shortage of excuses! The Obama Administration has already passed along responsibility to, of all things, the WEATHER! White House economic adviser Larry Summers said on Monday, winter blizzards were likely to distort U.S. February jobless figures, which are due to be released on Friday.
Spin, spin, spin. Anyone getting dizzy?
"The blizzards that affected much of the country during the last month are likely to distort the statistics. So it's going to be very important ... to look past whatever the next figures are to gauge the underlying trends," Larry Summers said in an interview with CNBC, according to a transcript.
According to a recent article in Atlantic Magazine, (http://www.theatlantic.com/magazine/archive/2010/03/how-a-new-jobless-era-will-transform-america/7919/) a new jobless era is upon us.
The Great Recession may be over. Oh,but it's NOT! But, this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults. It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades. Ultimately, it is likely to warp our politics, our culture and the character of our society for years to come.
You know the spin-meisters are working full-time when job losses are spun to be something good. Take an article in Yahoo today which claims that FEWER job losses are somehow good. The problem? With more people out of work, THERE are fewer people to LOSE JOBS!
According to the Yahoo piece, U.S. private employers eliminated fewer jobs last month, suggesting the job market may be on the mend, while the U.S. services sector grew at its fastest pace in more than two years.(http://finance.yahoo.com/news/Private-sector-sheds-20000-rb-1815769018.html?x=0&sec=topStories&pos=3&asset=&ccode).
Analysts expect the Friday report to show the economy lost 50,000 jobs last month, compared with 20,000 the month before, according to Reuters data. So, the GOOD news is WHERE?
Of course, readers of Marko's Take know that unemployment is nowhere near the 10% level claimed by the Obama Administration. More accurate statistics compiled by ShadowStats (http://www.shadowstats.com/), reflect unemployment to be higher - 22% and hovering, with barely a downtick.
This despite the far-fetched claims of the Obama Administration that it has created so many millions of jobs through its "brilliant" stimulus policies (sarcasm intentional!) or, if all else fails, its claims to have SAVED millions of jobs that would have been lost but for their HEROIC efforts! I don't see the connection between heroism and profligate spending, but that's just me. Certainly, there must be something to it, or the media lap dogs wouldn't be eating it up!
Think I'm being unfair? Think our President deserves credit? TAKE ME ON!
Marko's Take
Our fourth segment of the new YouTube series de-mystifying the internal machinations of the Federal Reserve will be up shortly at http://www.youtube.com/markostake. We will continue to add more segments on a weekly basis. Our thanks to our partner Phoenix Film Group (http://www.phoenixfilmgroup/).
Spin, spin, spin. Anyone getting dizzy?
"The blizzards that affected much of the country during the last month are likely to distort the statistics. So it's going to be very important ... to look past whatever the next figures are to gauge the underlying trends," Larry Summers said in an interview with CNBC, according to a transcript.
According to a recent article in Atlantic Magazine, (http://www.theatlantic.com/magazine/archive/2010/03/how-a-new-jobless-era-will-transform-america/7919/) a new jobless era is upon us.
The Great Recession may be over. Oh,but it's NOT! But, this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults. It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades. Ultimately, it is likely to warp our politics, our culture and the character of our society for years to come.
You know the spin-meisters are working full-time when job losses are spun to be something good. Take an article in Yahoo today which claims that FEWER job losses are somehow good. The problem? With more people out of work, THERE are fewer people to LOSE JOBS!
According to the Yahoo piece, U.S. private employers eliminated fewer jobs last month, suggesting the job market may be on the mend, while the U.S. services sector grew at its fastest pace in more than two years.(http://finance.yahoo.com/news/Private-sector-sheds-20000-rb-1815769018.html?x=0&sec=topStories&pos=3&asset=&ccode).
Analysts expect the Friday report to show the economy lost 50,000 jobs last month, compared with 20,000 the month before, according to Reuters data. So, the GOOD news is WHERE?
Of course, readers of Marko's Take know that unemployment is nowhere near the 10% level claimed by the Obama Administration. More accurate statistics compiled by ShadowStats (http://www.shadowstats.com/), reflect unemployment to be higher - 22% and hovering, with barely a downtick.
This despite the far-fetched claims of the Obama Administration that it has created so many millions of jobs through its "brilliant" stimulus policies (sarcasm intentional!) or, if all else fails, its claims to have SAVED millions of jobs that would have been lost but for their HEROIC efforts! I don't see the connection between heroism and profligate spending, but that's just me. Certainly, there must be something to it, or the media lap dogs wouldn't be eating it up!
Think I'm being unfair? Think our President deserves credit? TAKE ME ON!
Marko's Take
Our fourth segment of the new YouTube series de-mystifying the internal machinations of the Federal Reserve will be up shortly at http://www.youtube.com/markostake. We will continue to add more segments on a weekly basis. Our thanks to our partner Phoenix Film Group (http://www.phoenixfilmgroup/).
Tuesday, March 2, 2010
Government Sachs Under Fire!
Poor ole Government Sachs (sarcasm intentional!). Now, because of all the bad publicity, it seems that they have to disclose, as a "risk factor" of the company, the increasing drumbeat of negative publicity. We, at Marko's Take, are proud to have done our share to contribute to that negative publicity. Could the timing be more than just coincidental (immodesty intentional)?
Recall that just a couple of days ago, we took a hard, long look at the boys behind the curtain (http://markostake.blogspot.com/2010/02/government-sachs-how-big-menace-is-it.html).
Now, Goldman Sachs (GS) has been forced to whine that adverse publicity has become a "risk factor" in its annual report that any investor need to take into account before making an investment in the company (http://online.wsj.com/article/SB10001424052748704754604575095313135203110.html?mod=djemTMB_h). I can't recall such a disclosure in decades of being a professional investor!
In its annual report, the New York company said "adverse publicity" could have "a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations."
The unusual disclosure in a 12-page section of "risk factors", ranging from rocky financial markets to natural disasters, is the latest sign of Goldman's whipping-boy status among rivals, lawmakers and angry Americans because of the firm's giant profits.
Some corporate-governance experts said the move isn't surprising given all the unwelcome attention Goldman has received since the financial crisis erupted. In July, a Rolling Stone article compared Goldman to a "great vampire squid wrapped around the face of humanity." The phrase has been widely repeated in other publications and online, along with Chief Executive Lloyd Blankfein's comment to a U.K. newspaper in November that the firm is doing "God's work." (GOD'S WORK???)
But, before you feel TOO sorry for the boys, GS just released a report, filed with the Securities and Exchange Commission (SEC), confirming what Marko's Take reported in our piece last Friday: they make their money from proprietary trading, not traditional banking or investment banking activities
(http://www.ft.com/cms/s/0/a6ce91f6-256f-11df-9cdb-00144feab49a.html).
According to the report, GS made at least $100 million in net trading revenues on 131 days last year! – equivalent to once every other trading day, according to the filing with the SEC.
Goldman managed the result even as it took greater trading risks in 2009 than in the previous year. Its daily “value at risk” (VAR) – the most that the bank estimates that its traders could lose on a given day – was $218 million in 2009, up from $180 million during the previous fiscal year, which closed in November 2008.
Helps to have friends in high places, NO?
Goldman’s 131 $100 million trading days in 2009 shattered its previous high of 90 days, set in 2008. In last year’s 263 trading days, the bank lost money 19 times, Goldman said in the filing. Its daily losses never exceeded $100 milion. “It’s impressive, but it’s not unexpected,” David Hendler, an analyst with CreditSights said. “They were one of the few games in town in 2009.”
Trading and principal investments, which includes Goldman’s merchant banking activities, account for more than 75% of its total net revenue.
Once we at Marko's Take stop sobbing for poor GS, we would love to field your comments. Think we're picking on them? TAKE ME ON!
Marko's Take
Episode 3 of our new YouTube series is now posted at (http://www.youtube.com/markostaketv). Look for episode 4 exposing the internal machinations of the Federal Reserve to be posted shortly. Federal Reserve? Or do we mean Goldman Sachs? It's tough to tell the players apart without a scorecard!
Recall that just a couple of days ago, we took a hard, long look at the boys behind the curtain (http://markostake.blogspot.com/2010/02/government-sachs-how-big-menace-is-it.html).
Now, Goldman Sachs (GS) has been forced to whine that adverse publicity has become a "risk factor" in its annual report that any investor need to take into account before making an investment in the company (http://online.wsj.com/article/SB10001424052748704754604575095313135203110.html?mod=djemTMB_h). I can't recall such a disclosure in decades of being a professional investor!
In its annual report, the New York company said "adverse publicity" could have "a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations."
The unusual disclosure in a 12-page section of "risk factors", ranging from rocky financial markets to natural disasters, is the latest sign of Goldman's whipping-boy status among rivals, lawmakers and angry Americans because of the firm's giant profits.
Some corporate-governance experts said the move isn't surprising given all the unwelcome attention Goldman has received since the financial crisis erupted. In July, a Rolling Stone article compared Goldman to a "great vampire squid wrapped around the face of humanity." The phrase has been widely repeated in other publications and online, along with Chief Executive Lloyd Blankfein's comment to a U.K. newspaper in November that the firm is doing "God's work." (GOD'S WORK???)
But, before you feel TOO sorry for the boys, GS just released a report, filed with the Securities and Exchange Commission (SEC), confirming what Marko's Take reported in our piece last Friday: they make their money from proprietary trading, not traditional banking or investment banking activities
(http://www.ft.com/cms/s/0/a6ce91f6-256f-11df-9cdb-00144feab49a.html).
According to the report, GS made at least $100 million in net trading revenues on 131 days last year! – equivalent to once every other trading day, according to the filing with the SEC.
Goldman managed the result even as it took greater trading risks in 2009 than in the previous year. Its daily “value at risk” (VAR) – the most that the bank estimates that its traders could lose on a given day – was $218 million in 2009, up from $180 million during the previous fiscal year, which closed in November 2008.
Helps to have friends in high places, NO?
Goldman’s 131 $100 million trading days in 2009 shattered its previous high of 90 days, set in 2008. In last year’s 263 trading days, the bank lost money 19 times, Goldman said in the filing. Its daily losses never exceeded $100 milion. “It’s impressive, but it’s not unexpected,” David Hendler, an analyst with CreditSights said. “They were one of the few games in town in 2009.”
Trading and principal investments, which includes Goldman’s merchant banking activities, account for more than 75% of its total net revenue.
Once we at Marko's Take stop sobbing for poor GS, we would love to field your comments. Think we're picking on them? TAKE ME ON!
Marko's Take
Episode 3 of our new YouTube series is now posted at (http://www.youtube.com/markostaketv). Look for episode 4 exposing the internal machinations of the Federal Reserve to be posted shortly. Federal Reserve? Or do we mean Goldman Sachs? It's tough to tell the players apart without a scorecard!
Monday, March 1, 2010
Pound Gets Pounded!
Fiat currencies are in big trouble. Dominique Strauss-Kahn, the head of the International Monetary Fund, suggested Friday the organization might one day be called on to provide countries with a global reserve currency that would serve as an alternative to the U.S. Dollar.
Currency problems don't end with the Dollar. The Euro is in trouble, too (http://markostake.blogspot.com/2010/02/euro-now-leads-dollar-in-race-to.html).
Next on the currency hit parade is the Pound Sterling. Rumors are swirling that hedge funds, including the carnivorous George Soros, are taking heavy short positions in anticipation of a Pound meltdown. Weakness in the Pound is partially being blamed on gridlock in Parliament.
The Pound hit a nine-month low against the Dollar today as fears over a hung parliament sparked a sterling sell-off. The currency fell sharply to as low as 1.478 against the greenback as well as slumping below 1.10 against the Euro. Pressure on the Pound comes as the Conservatives’ poll lead against Labour narrows – threatening an indecisive general election result when markets want firm action to sort out the UK’s dire public finances.
There are also fears that U.K. sovereign debt is in deep trouble. Joining the fray has been a recent report by Morgan Stanley (http://www.fundmymutualfund.com/2009/12/morgan-stanley-ms-lists-uk-sovereign.html).
Britian risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full blown debt crisis over the coming months.
"In an extreme situation a fiscal crisis could lead to some domestic capital flight, severe Pound weakness and a sell-off in UK government bonds. The Bank of England may feel forced to hike rates to shore up confidence in monetary policy and stabilize the currency, threatening the fragile economic recovery,” the report said.
Morgan Stanley said that such a chain of events could drive up yields on 10-year UK gilts by 150 basis points. This would raise borrowing costs to well over 5% - the sort of level now confronting Greece and far higher than costs for Italy, Mexico or Brazil.
This morning, the Pound dropped almost four cents in a frantic two hour period of trading as the breach of the key $1.50 level triggered a wave of speculative selling in the currency.
Hans Redeker, global head of foreign exchange strategy at BNP Paribas, said relatively high yields on UK government debt were no longer providing the Pound with support because they did not reflect better UK economic prospects but a re-assessment of UK sovereign risk.
Marko's Take? The multi-national death of fiat currency is well on its way to fruition. Ironically, the U.S. Dollar is rallying - not because of its strength, but because of the Pounds' and Euros' weakness!
It's simply a matter of time before some form of hard asset-backed currecy replaces all the increasingly growing worthless paper flying around. This is a key step to stabilizing the world financial system!
Think the Gold Standard is a bad idea? TAKE ME ON!
Marko's Take
Our third You Tube segment "What Is Peak Oil... Part 2" has now been posted on You Tube. You can access our new channel by clicking here (http://www.youtube.com/markostaketv).
Currency problems don't end with the Dollar. The Euro is in trouble, too (http://markostake.blogspot.com/2010/02/euro-now-leads-dollar-in-race-to.html).
Next on the currency hit parade is the Pound Sterling. Rumors are swirling that hedge funds, including the carnivorous George Soros, are taking heavy short positions in anticipation of a Pound meltdown. Weakness in the Pound is partially being blamed on gridlock in Parliament.
The Pound hit a nine-month low against the Dollar today as fears over a hung parliament sparked a sterling sell-off. The currency fell sharply to as low as 1.478 against the greenback as well as slumping below 1.10 against the Euro. Pressure on the Pound comes as the Conservatives’ poll lead against Labour narrows – threatening an indecisive general election result when markets want firm action to sort out the UK’s dire public finances.
There are also fears that U.K. sovereign debt is in deep trouble. Joining the fray has been a recent report by Morgan Stanley (http://www.fundmymutualfund.com/2009/12/morgan-stanley-ms-lists-uk-sovereign.html).
Britian risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full blown debt crisis over the coming months.
"In an extreme situation a fiscal crisis could lead to some domestic capital flight, severe Pound weakness and a sell-off in UK government bonds. The Bank of England may feel forced to hike rates to shore up confidence in monetary policy and stabilize the currency, threatening the fragile economic recovery,” the report said.
Morgan Stanley said that such a chain of events could drive up yields on 10-year UK gilts by 150 basis points. This would raise borrowing costs to well over 5% - the sort of level now confronting Greece and far higher than costs for Italy, Mexico or Brazil.
This morning, the Pound dropped almost four cents in a frantic two hour period of trading as the breach of the key $1.50 level triggered a wave of speculative selling in the currency.
Hans Redeker, global head of foreign exchange strategy at BNP Paribas, said relatively high yields on UK government debt were no longer providing the Pound with support because they did not reflect better UK economic prospects but a re-assessment of UK sovereign risk.
Marko's Take? The multi-national death of fiat currency is well on its way to fruition. Ironically, the U.S. Dollar is rallying - not because of its strength, but because of the Pounds' and Euros' weakness!
It's simply a matter of time before some form of hard asset-backed currecy replaces all the increasingly growing worthless paper flying around. This is a key step to stabilizing the world financial system!
Think the Gold Standard is a bad idea? TAKE ME ON!
Marko's Take
Our third You Tube segment "What Is Peak Oil... Part 2" has now been posted on You Tube. You can access our new channel by clicking here (http://www.youtube.com/markostaketv).
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