It’s been a long day so I’ll keep this short.
A few days ago there were breathless reports of how exports from Germany had shot up. Today markets fell world wide, in part, because of news that growth in both the US and China has slowed, probably quite a lot.
So where was germany exporting to? Has everyone in Kalimantan just bought a Merc? Perhaps huge factories are tooling up somewhere in Greenlandd now that the ice has melted and freed up a lot of cheap land.
I’m not saying Germany didin’t export. I’m just a little tired of the witlessly breathless headline writing. Germany’s exports jumped but where from? Low that’s where. Is it a sure sign of renewed global growth? Well obviously not from today’s news. Might it have been because after nearly two years of nobody buying much of anything from anybody, somebody’s car had died and just had to be replaced or the same for some heavy factory equipment. This is re-tooling and replacement buying NOT growth.
OK got that one off my chest. One step closer to bed.
Next step. Nearly every stock market in the world fell by between 2.5% to 3%. Which is a lot. More intersting is to compare the market with financials. In almost all cases the banks and their pals fell twice as far and fast as the markets they trade in. The DOW was down 2.49%. Wells Fargo fell 5.29%. AIG 5.85% while Citigroup fell ‘only’ 3.75% but to trade at a massive and highly sustainable $3.75 per share. Just for reference it used to trade at about $50 and its low point was $1.03. I think that should give you a measure of how the ‘recovery’ has worked for one of America’s big four banks.
But let us not pick unfairly on one bank.
Let’s look at Santander of Spain. The fell today a heart-warming and confidence-tastic 7.62%. BBVA the other spanish big-bank fell 7.7% While Deutsche, pride of Germany, fell a mere 5.78, only more than twice what the DAX (the german exchange)as a whole fell by.
These are big falls. There was no ramp job to save the day. No one, least of all the banks themselves, rushed to buy the bank stocks. Why? Because the market and the bakns themselves, know that without real growth, without jobs to pay those mortgages and buy those goods ans services – and there is none of either – the banks are going to bleed all over again.
The Fed has already said it is going to spend $150 Billion on buying up more mortgage-backed and agency securities. The announcement did precisely nothing to help because all it said was that a) the Fed agrees growth is shot and so is real estate, b) the Fed is running out of bullets. $150 billion is a large amount of money. But compared to the likely losses on Heloc and Option ARMs at the big four banks and commercial real estate losses at the regionals, 150 billion is less than impressive. More a pop-gun than a bazooka.
The market just voted with its wallet and said clearly that the banks are in more trouble than anyone else. If this was just an ordinary recession or down-turn, then the bank’s shares would be suffering along with everyone elses. But they’re not. They’re suffering more tha twice as badly as anyone elses’. This isn’t me arguing that the banks are the cause. This is the market shouting it.
And this latest bout of bank dysentery is coming at a time when governments are going to have a bad time selling yet another bail-out of any real size to electorates who are finally waking up to the reality of austerity cuts.
In the UK the Spending Review, or as it should now be known, the slaugher house, will dominate our autumn, while in the US there will be the Mid terms when Obama will get his own kicking.
Santander and BBVA are the ones which will keep the lights burning at the ECB. When you lose getting on for 8% of your value in a day, it is just a little difficult to then go to the interbank market or the broader bond market to ask for a loan. The interbank market will price Santander and BBVA out entirely.
Face it. If other banks won’t buy their stock, why would they line up to give them a loan? And if the other banks won’t lend to them, neither will the bond market. Spain’s strongest banks are hurting. Do you even want to know about their weak ones?
Just for the sake of black comedy I should add that the Irish disaster zone formerly known as Anglo Irish Bank was just given EU approval for ANOTHER €10 billion bail out. Which could see the Irish budget shortfall this year reaching an insane 20%!
But bail outs are both necessary and they work. Remeber that. Which means there is no need to worry that today, after the bail out – Anglo droped another 6% to 0.22 euro per share.
I have seen the future – its ireland.
I see that Gillian Tett is doom-mongering again too !
Web of shadow banking must be unravelled
By Gillian Tett
Published: August 12 2010 17:11 | Last updated: August 12 2010 17:11
A couple of years ago, it occurred to me that the 21st century financial system had come to resemble a huge ball of candy floss (or cotton candy, as Americans might say). For bankers had become so adept at slicing and dicing debt instruments, and then re-using these in numerous deals, they had in effect spun a great web of leverage and trading activity – in much the same way that sugar is spun in a bowl to create candy floss.
From a distance, that activity looked impressive. But the underlying asset base was surprisingly small. Thus the key question that has hung over the system – and is doubly relevant now – is whether that cloud of trading activity could crumble back into itself? And what might the impact of that be?
Hi Golem !
On a non-financial subject. A number of us have been following the Guardian's non-coverage of this ATOS scandal, a group of dissidents round at the Cifthreadrefugee site in particular.I just wondered if any of your mates might be working on a documentary on it, or thinking about doing so ?
A post there yesterday shows why —
Paul said…
Afternoon all
Have beeen browsing a lot of sites recently where people have been describing their experiences of these infamous medicals that ATOS are conducting for people claiming ESA.Makes for extremely grim reading.
Came a little bit closer to home earlier when me other half was telling me about the experience of a work colleague of hers whose daughter had been summoned to an ATOS examination centre.The daughter is in her early 20,s and suffers from some sort of anxiety disorder which keeps her housebound for much of the time.Yet as far as ATOS were concerned this young woman didn,t score enough points in her medical and since then the DWP have stopped her benefit and advised her to apply for JSA.She is going to appeal and her GP will support the appeal.Plus she,s still living at home so she won,t starve in the interim period when she,s being left without any income.But what a disgrace.
Also this woman told my partner about the attitude of the ATOS staff which she said was cold,brisk and indifferent.Plus she said something of some of the other people who were in the waiting room waiting to be examined.A woman who clearly had back problems and couldn,t get up when she was called.Who was reduced to tears by the pain she was in and whose husband was forced to remonstrate with the nurse who was unsympathetic to her plight and did nothing to either help or reassure her.Another woman who was both deaf and dumb and who was abandoned at the examination centre by her carer.And was therefore unable to respond when her name was called.And it was left to the other people in the waiting room g to intervene and explain her circumstances to the stroppy receptionist who apparently been made aware of her condition but who had 'forgotten'.A man who had some sort of fit in the waiting room followed by a profuse nosebleed.And a young man who had clearly had some sort of accident and was wearing a neck brace as well as having an arm and a leg in plaster.
We don,t know whether any of these other people were also declared fit for work by ATOS but it,s clearly outrageous that they were summoned in the first place.And in all probability there are ATOS waiting rooms all over Britain with a similar collection of sick,vulnerable people who have enough to worry about without being put through this added humiliation.
What i have described will almost certainly become more commonplace as those currently on IB are summoned by ATOS to see if they are eligible for the new ESA benefit.And it makes my blood boil that so many people seem unaware of what,s going on.And that the Guardian is still nowhere near wholeheartedly joining the fight to get these barbaric ATOS medicals stopped.
12 August, 2010 14:34
Now, this was a 'semi-private' communication on a small blogsite, so unwise to stick into wide circulation because people could be identified and possibly be 'inconvenienced', but gives you a good idea I think !
If you google the name 'mikebach' he has posted on disability threads at the G, and has a well-documented website too. Bloke with a brain tumour judged fit to work …
Seeya !
Frog2,
So far no one I know is making one. Means nothing though. Indie companies won't breath a word if they are researching, in case someone tries to muscle in on an idea. So there could well be someone looking into it.
I'll ask further.