Baseball91's Weblog

Dancing In The Dark

baseball91 — Wed, 30 Nov 2011 15:53:05 +0000

The Federal Reserve moved Wednesday with other major central banks in a co-ordinated dance affecting world monetary policy. In the co-ordinated move with the Chinese Central Bank, the Bank of Japan, the European Central Bank, and the central banks of Britain, Canada and Switzerland, the United States Federal Reserve shared in a new version of QE2, easing the liquidity requirements to to the Euroepan Central Bank for European banks as a whole. Apparently to avoid, in times of dependency, world-wide runs on all banks. Just as European banks are dumping European government debt.

The Chinese government on Wednesday evening unexpectedly reversed its year-long move toward tighter monetary policy which had been aimed at curbing inflation which still persists. Weakening economic growth has now replaced inflation as the top worry in China, with the dramatic fall in exports to Europe announced within the past thirty days. The Chinese announcement to buttress the financial system, a particular surprise because the central bank usually announces moves on Friday evenings, came after the Shanghai stock market had slumped 3.3 percent on worries that the government might not act. The reduction in the so-called reserve requirement ratio – an important step to encourage banks to resume lending – came after the central bank had in 2011 increased interest rates three times, and raised the reserve requirement ratio six times.

In a speech in San Francisco Fed’s vice chair, Janet Yellen, on Tuesday underscored “the urgency of strengthened international policy cooperation”. She said that “the global economy is facing critical challenges.” The Federal Reserve then acted Wednesday morning with other major central banks to increase the availability of dollars outside the United States, reflecting a growing concern about the fallout of the European debt crisis. Banks outside the euro zone have been cutting their lines of credit to those inside the zone, as the United States was about to embark on a new stress test of its lenders which includes contingency planning against further disruptions in Europe. It would not be be surprising if the planned new stress testing would provoke American banks to cut their exposure to their euro counterparts, further exacerbating European funding problems.

It’s a wonderful life. As QE2 sails to Europe, on the back of the Federal Reserve Bank. The terms of the revised agreement announced by the Federal Reserve Wednesday reduces to 0.5 percentage points an existing premium of one percentage point, cutting the cost nearly in half. A most recent loan to the Euroepan Central Bank which had carried an interest rate of 1.08 percent, now would cost 0.58 percent.

Xia Bin is a member of the Chinese Central Bank who had said one year ago that U.S. quantitative easing amounted to “uncontrolled” money printing. The academic member of the Chinese central bank, Xia Bin had been quoted this week as saying a crucial part of China’s fine-tuning of monetary policy is to differentiate reserve requirements between banks. He is probably not as well tuned in as Janet Yellin, at least concerning reductions in the reserve requirement ratio.

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Filed under: China, European Union Tagged: It's A Wonderful Life, LIBOR rate, QE2, Xia Bin

Cell Coverage in Bullpen of Saint Louis

baseball91 — Tue, 25 Oct 2011 15:26:34 +0000

Some background, on the communication problem between Tony La Russa with his bullpen. Twelve months ago, the St. Louis Cardinals fired bullpen coach Marty Mason, the longtime right-hand man of pitching coach Dave Duncan. John Mozeliak’s move was one indication why there had been hesitation on the part of Tony LaRussa to announce his return to manage this year. On only a one year contract.

In the eighth inning of pivotal game five of the World Series, Tony La Russa explained that twice the bullpen “didn’t hear Jason Motte’s name– did not get Motte” up to warm up. “I don’t know if it was noisy…probably real noisy. They just didn’t hear the second time.”

Twelve months ago, Marty Mason had been replaced as bullpen coach by Derek Lilliquist, who since 2002 was in the organization, previously working as pitching coordinator at the team’s Jupiter, Florida spring training headquarters as part of injury rehabilitation. Lilliquist had moved into the dugout during the entire run in September 20111 which earned a wildcard spot, as pitching coach Dave Duncan took a leave of absence due to his wife’s health. Lilliquist’s job duties had never involved talking on the bullpen phone until this season.

There has been tension within the Cardinal organization ever since Walt Jocketty’s firing as general manager. Tony LaRussa still was having to address the different philosophy of owner Bill DeWitt and the other members of the organization to the press, it was said in 2010, on questions about the relationship between the Cardinals’ minor-league development and the club’s major-league coaching staff. And it was getting more and more personal.

Twelve months ago general manager John Mozeliak demoted longtime La Russa confidante Barry Weinberg –Cardinals head trainer since 1998– to assistant trainer, reversing roles with Greg Hauck who was promoted to head athletic trainer. Weinberg had also worked during La Russa’s 10-year term in Oakland as part of his overall sixteen seasons as Oakland A’s head athletic trainer for 16 seasons.

So last night, when asked the sort of procedure when you call down to the bullpen, as to who gets the word, and how do the convey it, Tony said: “The bullpen coach hears it, and like he heard Lynn.”

LaRussa said he wanted right-hander Jason Motte in a matchup with Texas’ right-hand-hitting Napoli, so he called down to the bullpen, but coach Derek Lilliquist misunderstood his instructions. According to the Saint Louis Post-Dispatch:
Question: ‘He heard Lynn?”
Answer: “Yeah. That’s why Lynn got up…and I went out there. I thought it was Motte …and they were yelling at me as I went out. I didn’t hear them. It wasn’t Motte. So I saw Lynn, I went, ‘Oh, what are you doing here?’”

When LaRussa signed his one year contract for the 2011 season, it was the makeup of his coaching staff which was believed to be the final detail in his decision whether he would return. Was it with his eyeglasses on or off that LaRussa had said twelve months ago that 15 years is a long time for one manager in “one place,” that the organization might benefit from “freshness”?

The Cardinals were an organization which had fired Jocketty, fired Marty Mason –Mason had worked under La Russa for the 12 seasons after working as a Triple-A pitching coach from 1997-1999 — demoted Weisberg, and had a manager whose contract was up in two week.

Bobby Valentine attributed a major mistake to the move by Tony LaRussa, though the ongoing power struggle within the organization — unchanged since that departure of Walt Jocketty — showed up in the call to the bullpen last night, and might have determined the champion of the World Series. Tony LaRussa never really let those kind of mistake happens. Though he has said he would never manage another team after the Cardinals, the timing might be right for White Sox Chairman Jerry Reinsdorf to pull the plug on his general manager and hire a new White Sox general manager. According to two team sources, meetings at the conclusion of the World Series will involve Jerry Reinsdorf, a few front office executives, new manager Robin Ventura and his coaching staff, and only a few selected scouts. The timing seems right for Reinsdorf to bring back his one-time manager to Chicago. To take some of the Theo spotlight back to the southside.

Filed under: baseball, Chicago White Sox, St. Louis Cardinals, World Series Tagged: Derek Lilliquist, enwordpress.com/tag/baseball/, enwordpress.com/tag/cardinals/, Theo Epstein, Tony Larussa, World Series, Your Morning Phil

Ten Years of Central Bank Policy

baseball91 — Thu, 20 Oct 2011 05:33:42 +0000

Quantitative Easing as one grand conspiracy with the ongoing central bank policy?

We were living in the information age—or too much the disinformation age? There was a difference between legitimate economic growth and debt-induced demand. The failed leadership of not just a Republican president and a Democrat president, but a Congress that over ten years passed the bailout, passed the Patriot’s Act, and has funded without a rise in taxes the ongoing wars in Iraq and Afghanistan.

And with the monetary policy which has funded these wars, on the backs of all economies which used the hegemony of the US dollar, was it intervention or manipulation with monetary policy, to get a party re-elected? Someone left the cake out in the rain, and it took so long to make it, it took so long to bake it, and we’ll never have that recipe again.

The dishonesty of it all. All of this liquidity created by going into debt, at below two percent interest, in the aftermath of September 11, during the invasion of Iraq and into the election, as this Fed took historic fiscal and monetary strides on the back of the bubble, with this cheap money policy. TrimTabs tracks liquidity flows in the market, and the source of approximately $600 billion net new cash which had lifted the market capitalization overall by $6 trillion in 2009 could not be identified from traditional players by TrimTabs. The money, Charles Biderman said in a statement, had not come from retail investors, foreign investors, hedge funds or pension funds. It was more than eighteen months ago when Charles Biderman, chief executive of TrimTabs Investment Research, said, “We cannot identify the source of the new money that pushed stock prices up so far so fast.” So market manipulations by governments? Charles Biderman did admit he held no evidence of market manipulation, though he had his suspicions. Who was manipulating the market? When such manipulation by the Federal Reserve and the Treasury Department clearly was illegal.

Home equity loans. All the speculators and the scalpers on e-bay. Clearly there was manipulation of one market– the real estate market — which all began with the Fed’s monetary policy. So how many other markets were manipulated?

The Federal Reserve chief knows that the stock market is the world’s largest thermometer. What happens to journalists who center their perspective on serving the interests of power and gaining proximity to it, aligning their beliefs and priorities with those of the state. People who speak not to those in power but report on the truth? Did you trust themselves strategic partners who sponsored the broadcasts? On cable networks? Did you know that the paradigm set up had arranged for Fox Sports Networks to get $48 million per year direct from your cable company? The cable system approved by local governments. The governments like in the city of Minneapolis which had a mayor promoting — after the horse was out of the barn — another new stadium.

The dishonesty of it all. What happens to governments which spent so much on security? But quit regulating with the power vested in commissions? The television media, its sponsors, and all of the many spin doctors living close by with an ability to provide and package information, filter unwanted noise and offer dynamic real-time insight – all in the context of total transparency–as a precursor to the next generation. The lobbyists. American media always want to fit events in the region into an American narrative.

The only difference, writes Todd Harrison, “between intervention and manipulation is one of advanced communication. When the Bank of Japan telegraphs their actions and buys yen, it’s intervention. If they don’t communicate their actions, then it’s manipulation. It’s a subtle yet important distinction that is the difference when discussing central bank policy.” He wrote in 2005, “In particular, I’m concerned that one of two things must happen in the years ahead. Either the US dollar must further devalue, as it has to the tune of 25% since 2002, or asset classes will deflate in synch. I’m unsure if these are mutually exclusive events but we’ll likely jockey between the two as we figure it out. I will also offer that the greenback will serve as a proxy of isolationism as America delicately dances through a difficult war and sets protectionist policies in place.” That dollar is now down forty percent.

Instead of building a counter narrative with any kind of vision of different perspective, journalists too often perpetuate the dominant ideology. In my locale, the NBC affiliate is leading the news each night with stories about building a new billion dollar stadium for the Minnesota Vikings – with government money. As the elites of the world, the top one percent, owns almost 40% of all wealth in the United States, as compared to 13 percent twenty-five years ago.

What happens to government and systems of governments which spent so much time disseminating illusion? It had been the media which had produced too much of the present day “values” as opposed to those who could critically resolve problems.

Filed under: Ben Benanke, Minnesota Vikings, Moneyball

Newly Engineered European Bailouts

baseball91 — Sun, 16 Oct 2011 06:23:18 +0000

“We are in the middle of a crisis. It is not over. It is to be taken seriously, but it is centrally an American crisis.” – German Finance Ministry spokesman Torsten Albig on September 15, 2008.

Economic physics. Can you spell C R A S H? The Great Depression was all about a crash. Credit markets dried up after The Crash on Wall Street. Secular declines, market trends which head in the opposite direction, follow crashes in long time frames anywhere from five to twenty-five years. With all the earmarks of deflation now setting in, in Europe.

WHILE EUROPE SLEPT

“At this stage, we’re quite confident.” – A spokesman for the French Finance Ministry, who said that French banks and French government debt agency, Agence France-Tresor, are not in danger from the market turmoil in the U.S. on September 15, 2008

The system. European banks have become pretend banks, with no money. Across Europe, according to Autonomous Research, loans to banks exceed their deposits by 6 percent. Among French banks, loans exceed deposits by 19 percent. In Greece, they swamp deposits by 32 percent.

THREE YEARS AFTER

On Saturday, Finance ministers and central bankers from the Group of 20 called on European leaders to deliver a comprehensive plan to address the European continent’s deepening sovereign-debt crisis. On Wednesday, representatives of the European Union had told European banks that they need to raise more capital to protect themselves against losses on sovereign debt, or politicians will do it. The G20 meeting included non-European countries who have pushed Europe to speed up the plan taking shape among euro-zone countries to address the euro crisis, with the scramble to save the euro and prevent Greece’s debt woes from spreading. Ah, I think they have not been reading the papers about the monetary wars.

About the market dynamics which serve as the regulator out of control world of currency. The Post Traumatic Stress Syndrome on currency which came to all currency out of monetary wars. The current euro crisis was such an after-effect. After the dollar has eroded forty percent over the past decade, the recent rise of the dollar over the past sixty days has itself been a cause of worry in the United States? To whom? Do you need further proof that a weak currency is inflationary than a trip to the grocery store?

If you believed the experts – and I do not – the cause of the bubble which began hissing in 2008 was sub-prime loans, as the political spin doctors in Washington were able to point fingers at bankers rather than at this monetary policy set by the Federl Reserve Bank and the Treasury Department.

It was a world where governments levy taxes not to finance its operations, but to give value to its fiat money as sovereign credit instruments. French Finance Minister Christine Lagarde in June 2010 had said that budget consolidation is “priority No. 1” for most G-20 members, as Timothy Geithner at the conclusion of the June 2010 G20 meeting expressed concern over the confidence in the system.

The current [euros?] crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. We are now in a period of wealth destruction. The system is broken.” — George Soros

Can you spell C R A S H? That is what wealth destruction is all about. Less concerned about the loss of buying power for their own citizens, a lot of nations pursue a policy of a weak currencies, hoping that will help their exporters. Especially in monetary wars which have funded the American wars in Iraq and Afghanistan, with no rise in taxes leveled on an American public over the past ten years.

As the European debt crisis threatens to halt an anemic global economic recovery, and efforts to deliver a plan to address the crisis dominated discussion at the G20 Paris talks. here is recent discussion over direct exposure of the U.S. financial system to the countries under the most pressure in Europe, with little regard to the indirect exposure. Last week, officials at Morgan Stanley worked overtime trying to calm investors about the bank’s $39 billion in exposure to French banks at the end of last year, not counting hedges and collateral. The total amount of insurance written do not reflect other offsetting trades that bring down these banks’ actual exposure significantly. For investors, the challenges in trying to assess the true exposures are real. At the end of the week, Morgan Stanley appeared to have relieved some investor fears over its exposure to Europe. (Some analysts argue that the amount today is far lower than $39 billion.) Therefore investors have to trust that the institutions are being appropriately rigorous .

“Many of the risks in these institutions are maddeningly hard to plumb, and open to a range of interpretations as banks reduce their exposure to a possible loss by the amount of collateral they have collected from a trading partner. Is the collateral that has been supplied to secure derivatives contracts solid? Is the bank valuing it properly? Can it be located quickly?” asks Gretchen Morgenson. How about in a deflating European economy, when there is no money being loaned?

Monetary war. After the Bank of England announced, in a desperate effort to stave off a new credit crisis and a UK recession, it would pump more money into the economy, the cost of borrowing sterling for three months in the London interbank market fell Friday, its first drop since June 8. Meanwhile, the cost of borrowing dollars and euros for three months in the London interbank market rose last Monday. Ten days ago the Bank of England had announced a fresh round of quantitative easing to stimulate economic growth, meaning it will print an extra GBP75 billion of cash to buy bonds. Data from the British Bankers' Association showed the three-month sterling LIBOR (London Interbank Offered Rate) falling to 0.95875% from 0.96000%. The spread between the three-month dollar LIBOR and the three-month overnight index swap rate–a barometer of banks' willingness to lend–widened to 30.4 basis points from 30.2 basis points Thursday. The euro rate rose to 1.50375% from 1.49563% Thursday, while the three-month dollar rate rose to 0.39111% from 0.38778%.

European banks now have become pretend banks, with no money. Across Europe, according to Autonomous Research, loans to banks exceed their deposits by 6 percent. Among French banks, loans exceed deposits by 19 percent. In Greece, they swamp deposits by 32 percent, writes Gretchen Morgenson.

This is why, writes Gretchen Morgenson, it is becoming such a problem for European banks that so many short-term lenders are declining to renew when loans come due. Money market funds, traditionally big investors in short-term paper issued by European banks, have been reducing exposures. A recent Fitch Ratings report shows that for the two months ended July 31, the 10 largest United States prime money market funds pared their holdings in European banks by 20.4 percent, in dollar terms. In the same period, the funds cut their exposure to Italian and Spanish banks by 97 percent.

But these money funds, with total assets of $658 billion, held $309 billion in debt obligations issued by European banks. That’s equivalent to 47 percent of these funds’ total assets. “We’re seeing a lot of the same things in the markets that we saw in the Lehman era,” Carl B. Weinberg, chief economist at High Frequency Economics in Valhalla, N.Y., told Gretchen Morgenson.

“The economic performance of euro zone countries is diverging at a fast clip,” writes Fred Norris of the New York Times, “when financing became hard to get for many exporters, and customers slashed orders.” The divergence is caused by the battle of deflation with inflation, in the long recognized monetary wars. The trend in countries like Germany is continuing for countries whose economies are in decent shape, though the recovery in trade in other European nations appears to be over. “The issue now is a simple one – the buyers cannot afford what they used to buy, writes Fred Norris. “Imports have returned to pre-crisis levels in Italy and France, as well as much more dramatically in Ireland, Portugal and Spain”— the largest nations forced to seek bailouts.

Pretend banks in a pretend world of union. These European nations have no more unity, never had union, like so many couples living together in sin. And when the going gets tough, a lot more people getting going or just tossed out.

Carl B. Weinberg outlined to Gretchen Morgenson of the New York Times what he sees as the major risks which fall into two categories. “Outside the U.S., we never really resumed credit growth since 2009,” he said. “Another hit now would bring credit down and impose a huge squeeze on small businesses throughout Europe and over here also.” Of the two areas of major risk, explained to Gretchen Morgenson, one is the potential for losses incurred by financial institutions that wrote credit insurance on European government debt and the European banks which own so much of that paper. The other major concern is the likely economic hit as banks in the euro zone curb lending significantly. A crucial mechanism linking financial players in the United States to the problems in Europe involves credit derivatives contracts. Carl B. Weinberg expects credit around the world to become even scarcer.

Accounting rule makers even disagree about the right way to approach the manner in which an institution offsets its winning and losing derivatives trades to come up with a so-called net exposure. Standard setters in the United States allow an institution to survey all the contracts it has with a trading partner and compute exposure as the difference between winning trades and losing ones. The Bank for International Settlement, Gretchen Morgenson point out, has a different standard for European banks.

“Stock investors have a bad habit of dismissing problems in the credit markets until it is too late. Make no mistake: the troubles of Europe and its debt-weakened banks will imperil the United States.” For many, it is no longer a question of whether but WHEN Greece will default on its government debt. “Back in the summer of 2007, the stock market was roaring, despite obvious problems in the mortgage market,” writes Gretchen Morgenson.

When credit is the air that business breathes. All over the world. In China, Cheng Siwei, head of Beijing's International Finance Forum and a former deputy speaker of the People's Congress, said interest rate rises and credit curbs to cool overheating were inflicting real pain on thousands of companies used by local party bosses to fund the construction boom. "The tightening policy is creating a lot of difficulties for local governments trying to repay debt, and is causing defaults," he told a meeting at the World Economic Forum in Dalian. "Our version of subprime in the US is lending to local authorities and the government is taking this very seriously."

If he had been correct about the United States in 2008, when Willem H. Buiter then of the European Institute, Professor of European Political Economy, London School of Economics and Political Science said that there “was little doubt, in my view, that the Federal authorities will choose the inflation and currency depreciation route over the default route,” his theory would seem to apply to the Eurpean Union. “Together will the foreseeable increase in actual government liabilities because of vastly increased future Federal deficits, this implies the need for a future private to public sector resource transfer that is most unlikely to be politically feasible without recourse to inflation. The only alternative is default on the debt.” He now works for Citibank.

And about those credit derivative that got AIG into the bailout. Still they are sold, unregulated, without requirements for companies to post reserves like the state regulated insurance industry. And speculators can really play games in such markets, with so little supervision. When the next bubble pops, the credit derivative folks with their Ponzi scheme will be the only people left with money.

Of course those European regulators did not address their own problems. In the words of Gretchen Morgenson, ""ONE troubling aspect of the euro zone crisis is just how large the European banks’ sovereign debt holdings are. "At many institutions, the positions dwarf what American institutions held in mortgage-related securities, for example, when compared to book values. Why? Regulators encouraged European banks to hold huge amounts of European government debt by letting them account for these investments as if they posed zero risk. — and that meant the banks didn’t need to set aside a single euro in capital against those holdings. Now, according to an analysis by Autonomous Research, 43 large European banks hold debt in troubled sovereigns that is equal to 63 percent of those institutions’ book values. Adding to the peril is that these banks are funded primarily by short-term investors, like buyers of commercial paper, rather than by depositors, as is more often the case with American banks. This was the same problem faced by Bear Stearns and Lehman Brothers, which collapsed after short-term lenders fled in panic."

Economic union was not true union. And in the age of the divorce, in the sign of the times, the custody battle was foreseeable in this failed relationship issue, involving credit cards.

“The average life span of the world’s greatest civilizations has been two hundred years … and once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent … overspends … with costly wars. Wealth inequity and social tensions increase. And society enters a secular decline.” –Marc Faber

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Filed under: euro, European Union

Gradual Appreciation

baseball91 — Mon, 10 Oct 2011 23:11:54 +0000

Monetary wars: On Tuesday the U.S. Senate considered a vote on al bill which threatens China, unless it revalues its currency, with broad-ranging sanctions, while ignoring a whole host of other factors in the Chinese economy which distort price signals, beyond currency. Some here, like Senator Charles Schumer, apparently think that the US still has the broad power which the national economy provided following World War II. Proposed by New York Senator Chuck Schumer, the motivation in this legislation has more to do with an upcoming national elecction of the ongoing recession, and less to do with Chinese inaction. Over the past twelve months, China actually has allowed the renimbi to gradually appreciate by 5.2% which means Chinese goods are at least 10% more expensive than one year ago. The intent of the Senate bill was directed at persistent high unemployment in the States. The Senate bill would likely damage U.S. relations with Beijing, said China’s Vice Foreign Minister Cui Tiankai.

The yuan appreciated to 6.3486 per dollar, the strongest level since China unified the official and market exchange rates at the end of 1993. With mounting concerns about China’s growth, fears of yuan depreciation could spark outflows of speculative funds. Setting the official yuan-dollar exchange rate at a record high signals a commitment to letting the currency rise, forestalling destabilizing capital flight. Amidst speculation policy makers will tolerate gains after the United States accuses China of undervaluing its currency, at moments like this Beijing often will attempt to guide the yuan higher to take the ire out of complaints from trade partners – in a little exchange-rate diplomacy. When you sat on billions in reserves, you had a few monetry moves to make from your quiver.

The strategy in Beijing was one of gradual appreciation. Tom Orlik of the Wall Street Journal writes, don’t bet on a change in China’s exchange-rate strategy. Since the the end of June, the Hang Seng China Enterprises Index has fallen 35 percent. “Yes, China heads into the possibility of a second global downturn with more problems than it did the first,” writes Orlik, “but markets have gotten ahead of themselves.” China’s main weaknesses are its dependency on exports and a real-estate bubble.

A weaker dollar does continue to boost investment demand in commodities. The yuan’s rebound came after data earlier this month showed a continued expansion in manufacturing activity in China. The strength in the yuan comes despite the Chinese central bank’s efforts to guide its currency slightly weaker after a week-long public holiday, with mounting Chinese domestic inflation. The larger-than-expected increase in Sep U.S. payrolls reduced recession concerns. After a week-long holiday, with resumption of trading, the Shanghai Stock Index fell to its lowest level in sixteen months on speculation the government will maintain tighter monetary policy. The euro rose to a one-week high against the dollar after German Chancellor Merkel said European leaders will do “everything necessary” to ensure that banks have enough capital, and after the European Commission said it will make proposals in the coming days on possible coordination of bank recapitalization in the EU. One day after German Chancellor Merkel and French President Sarkozy said they will deliver a plan to recapitalize European banks and find a “durable” solution for Greece’s debt load by the November 3rd Group of 20 summit, no details have been provided. Promises, promises, by those new Romantic European leaders who were supposed to be expanding the bailout fund for those in the euro zone, who use the euro. That had been the content of the July 2011 agreement by leaders who now were in largely inconclusive talks. The July agreement did require unanimous approval from member state parliaments, though Slovakia, along with Malta, had yet to approve it. With a vote on the matter due in the Slovakian parliament Tuesday, on Monday the Slovakia governing coalition failed to reach a compromise on an endorsement.

Relationship issues. In the age of divorce, the G20 nations, seeing but not knowing what the commitment issues involved. Other Asian stock markets advanced on optimism that European leaders will resolve the region’s debt crisis and boost the earnings outlook for Asian exporters, despite Fitch Ratings downgraded of Italy’s and Spain’s credit ratings at the close of the Friday’s market.

Filed under: China, currency, Moneyball

When the World Was Flat

baseball91 — Tue, 20 Sep 2011 19:18:48 +0000

This week in football. Like had happened to all of the intercollegiate conferences over the past fourteen months in the States, off the agenda is any public discussion of the possible break-up of the euro zone , the nations using the euro for their currency. Having lost lost confidence in their European counterparts, banks in the US have started shutting European banks out of inter-bank funding markets. Speaking of globalization, eh Thomas Friedman?

In the 2011 playdowns of World Series Kick the Can, more immediately kicking Greece out was not to be spoken of. Of the European Union. Out loud.

The world was playing as if the eurozone was in some kind of neutral transition, unaware that the game was now in penalty time. In a less sophisticated continent, this would be just another week of “kick the can” from the road from one G7 weekend in Marseille along to the Wroclaw meeting of the ‘‘Eurogroup’’ finance ministers which followed seven days later, with all of the potential “irrational exuberance” by fans that their country would not be affected, and that they hoped to continue as always. If the goalkeeper stood up to expectations.

Speaking of hooliganism, the Finns are demanding “collateral” for any new loans to Greece from the central bail-out fund; the Austrians are against the Finns. Tim Geithner was there cheer-leading, urging EU policy-makers to avoid “loose talk,” in playing their variety of kick the can, with so little body contact for which Eurpean ice hockey used to be famous. Angela Merkel may only win a German vote at the end of September with opposition support, while some of her own coalition MPs in particular are fiercely opposed to taking on such a bottomless commitment to the size of the Eurozone nations. And Slovakia does not vote on the bailout until December. As one on Geithner’s team said at Marseille, “Seventy-five per cent of the dark things happening in the world economy are because of the eurozone.”

Divorce Greek-style. European Commission President José Manuel Barroso said that it was time to look at a mechanism to break apart the euro zone. So with the supposedly increased muscle since July of the European Financial Stability Facility – the central bail-out fund – the action requires parliamentary approval for each member nation’s contribution, which still is by no means a certainty. Almost as taboo as the notion of dismantling the currency itself, LIBOR rates have risen over the past thirty days, as the European Central Banks’ dollar funding scheme to stave off the onset of another credit crunch demonstrates a coming fear in credit markets. And the air around Europe provided by credit markets seemed to be polluted, seizing-up the international banking system, one day soon. Yields on Greek debt, Spanish debt, Portuguese debt, and Italian debt continued to climb. After the discussion of ‘‘euro bonds’’ – central borrowings effectively on the back of the Germans to fund all eurozone member governments – was so far from agreement.

The European Central Bank has reported an up-tick in deposits from eurozone banks, an indication the banks feel more secure with deposits in central banks than lending to one another. “To stop financial contagion and manage the bankruptcy of the Greek government, you need to support the banking system. It’s the only solution, and it is appropriate to use European Financial Stability Facility funds,” said Jan Bureš, an economist with Československá Obchodní Banka.

Jean-Claude Juncker, the Luxembourg prime minister presiding over the Eurogroup, called at least for “verbal discipline,” if no other economic discipline. With global central bankers’ support and Amerrican cheerleading, Europe started this week trying on the surface to work as a team. “Of course, it’s not easy to speak now about increasing the funds available in that mechanism, and it will take some time.”

Bank bailouts in Europe in 2011. Bailouts for banks which dull motivation for a bank to invest responsibly. A reasonable solution, and maybe the only solution to debt contagion, “another bailout raises the specter of moral hazard, the idea that in the same way bailouts for governments decrease the motivation for responsible state spending, wrote the Prague Post. “What’s more, if governments bail out banks, it could result in sending those governments into debt.”

Mutual distrust in the times of monetary wars. Visible mistrust in the LIBOR rate since the failure of Lehman Brothers.

As a new credit crisis once again infects the economy, in a stair-step process through industries until debt is destroyed and a more sustainable economic foundation takes root. Starting with Greece, spreading to the financials in French banks, engulfing even Germany. When all those European nations were in this together. And eventually all that globalization sung about at the start of the decade, eventually phases through retail, technology companies in the United States, and the creditor in China. As commodities begin to fall, signaling deflation in Europe. I wonder now what the asking price for Durty Nelly’s, the oldest pub in Ireland, in the middle of no where. It had been ten million euros in January 2010.

Back home as another NFL season got underway after a labor dispute, with the NBA still on strike, each political party is still playing kick the can over American debt. And those in the know had worries from belief that European banks are sitting on crippling losses on their government bond holdings. And in this version of sport, it was like watching the NHL All-Star game, with so little close checking by so many participants. And US government officials were heard in Marseille seeking to shift blame for America’s domestic performance onto the influences from Europe.

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Filed under: Business, Czech Republic, European Union, Hyman Minsky, Ireland, Lisbon Treaty, Money, Nebraska Tagged: http://en.wordpress.com/tag/currency, http://en.wordpress.com/tag/HymanMinsky, http://en.wordpress.com/tag/LIBOR, LIBOR rate

When Spring Turns to Falls

baseball91 — Thu, 08 Sep 2011 18:17:32 +0000

With investment in the country valued at $19.4 billion in 2009, with additional exports to Syria estimated to be $1.1 billion in 2010, the Russian government dispatched Deputy Foreign Minister Mikhail Bogdanov to Damascus last week to urge Syrian leader Bashar Assad to halt “violence” against protesters, and implement promised political changes, The Moscow Times reports today.

Russian firms have quite a presence in Syrian involving infrastructure, energy and tourism, along with lucrative arms contracts. So, Russia has blocked efforts by the European Union and United States to impose punitive measures through the United Nations, after a “crackdown” on unrest since March. Russia also has rejected U.S. and European calls for Bashad Assad to step down. “Russia is categorically against any interference, especially military, in the internal affairs of a country,” Deputy Foreign Minister Mikhail Bogdanov said Tuesday in response to e-mailed questions to the Moscow Times. “Efforts to resolve the problems in Syria through outside force would provoke utter chaos in the Middle East.”

This “utter chaos” has already resulted in the death of 2,200 Syrian demonstrators, according to United Nations estimates. But there is a lot at stake in Syrian, a Soviet-era ally, for Russia. Russia maintains its only military facility in the Middle East with its Tartus naval base in the Mediterranean. In January 2011, oil-producer Tatneft, based in Tatarstan, had announced it would spend $12.8 million drilling exploratory wells near the Syria- Iraqi border.

With a staff of 80 Russians on the ground, Stroitransgaz has been working in Syria for more than 50 years. Nikolai Grishenko, director of Sovintervod, compared today’s protests to the 1980s civil unrest in Syria, which the government “successfully” crushed at the price of up to 25,000 dead and wounded civilians. With a 20-person team in Aleppo, Grishenko added his belief that Assad was a “decent man.”

According to data from the Moscow Defense Brief, there are more than $4 billion in active arms contracts between Syria and Russian capital, including MiG-29 fighters, Pantsir surface-to-air missiles, artillery systems and anti-tank weaponry. The Arab Spring has already put at risk an estimated $10 billion worth of business contracts Russia had with Gadhafi’s regime in Libya.

The Russians are having as bad a year as the Minnesota Twins.

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Filed under: Minnesota, Minnesota Twins Tagged: Arab Spring, Bashad Assad, Free the Hikers, Mikhail Bogdanov, Russia, Syria, Tatneft

When You Absolutely, Positively Needed it Overnight: Overnight Millionaires

baseball91 — Wed, 17 Aug 2011 18:28:53 +0000

With less than a six percent chance to make it to the big leagues, three of the following were made millionaires over night. Of course by waiting until the last minute before the August 15th deadline, these three guys lost out on interest of more than $4,000, at five percent interest, if not a year closer to their own development as big league players. If they truly really were big league players, where the average salary was somewhere between two million to three million dollars per year.

Here is the list of draftees of the Minnesota Twins, the round signed for in parentheses, along with the amount signed for, in a year where all 30 major league ball clubs spent approximately $228 million in draft bonuses:

SS Levi Michael (1) $1.175 million, last minute sign before senior year.
3RD Trevr Harrison (1), $1.05 million, out of high school, last minute sign.
RHP Hudson Boyd (1) 1 million, out of high school, last minute sign.
RHP Madison Boer (2), Oregon; $405,000, native of Eden Prairie, MN signed right away.
LHP Corey Williams (3), Vanderbilt reliever; $575,000, after missing much of last season with a shattered kneecap, a 5.64 ERA in 24 appearances. Signing at end of July double the slot.
RHP Matthew Summers (4), Cal-Irvine, hard-throwing pitcher, 9-2 with a 1.90, wanted $500,000 to sign out of high school as a pitcher but $100,000 to sign as an outfielder. Unknown amount signed for.
INF Tyler Grimes (5), Wichita State; 30 errors in 329 chances in 2011.
LHP Jason Wheeler (8), Loyola Marymount, 6-4 with a 3.84 ERA as a 6-foot-8 junior, last minute sign, 2010 Northwoods League pitcher of the year (8-1 with a 1.35 ERA last summer for the St. Cloud River Bats). How much do those signing at this point of a season want to play? The minor league season has less than 3 weeks left.
C Matthew Koch (12), Loyola Marymont, 313/.357/.483 this season

Described by scouting director Deron Johnson as a switch-hitting 20-year old college shortstop with speed, Levi Michael signed for $1.175 million, $86,000 above all the discussion of slots. Selected 30th overall, junior INF Levi Michael appeared in 65 games in 2011 for the University of North Carolina, batting .289 in 242 at-bats with 22 extra base hits, five home runs and 48 or 49 RBI. These are million dollar statistics? In 2010, Michael appeared in 60 games, with a .346 average and 76 runs scored. So his performance diminished over the last twelve months, as well as his own private hopes of player development missing the 2011 season, setting him one season behind his own contemporaries. He must have a really bad agent, if he can play the game. And I heard about a bad performance in the College World Series. Not exactly a jump on my back Kirby Puckett type.

Power-hitting third baseman Trevor Harrison, a 50th overall pick from Tustin High School in California, reportedly signed for $1.05 million.

Righthanded pitcher Hudson Boyd, a 55th overall pick as a right-handed starter from Bishop Verot High School in Florida, who once attended school directly across the street from the Twins’ spring training complex in Fort Myers, reportedly signed for $1 million.

All these guys who have a six percent chance to get to the big league asking for big league bonuses to sign. It was the system, from the free agency draft. What did a big league club have to budget to sign these guys the first time?

There was a lot of money in baseball over the last ten years. And what was the legacy built? By players like Mike Jacobs, who made it to the big leagues. Mike Jacobs was given his unconditional release by the Colorado Rockies after testing positive for Human Growth Hormone. Their press release said, “There is no place in baseball for such substances, and we have and will continue to do what we can to eliminate them from our game.” Mike Jacobs was leading the Triple-A Colorado Springs affiliate of the Rockies’ in home runs (23), doubles (30) and runs batted in (97). The 30-year-old first baseman did receive a 50-game suspension by MLB, should anyone elect to pick him up. In a 2005 call up by the Mets, Jacobs hit 11 home runs in 30 games. He was soon traded to Miami for Carlis Delgado before the 2006 season. Jacobs did hit 32 home runs for he Marlins in 2008 when he was traded at season’s end for Leo Nunez. He made $3.25 million playing for Kansas City in 2009, being used primarily as a DH, hitting 19 home runs. He was released following the 2009 season by Kansas City. The validity of his first 80 home runs are in question for this confessed cheater who played six seasons in the major leagues, with diminishing performance based upon the statistics, earning in his big league career $5.27 million, playing with the New York Mets, Florida Marlins and Kansas City Royals.

How could there ever be any remorse by those in the front office about having to let these one-time prima donnas go some day when they did not measure up, 94 percent of the time? Was it a wonder that the people working in the front offices today, as described in Pat Gillick’s Hall of Fame speech, had little deep concern for guys like Mike Jacobs, who should be scorned by anyone who ever played the game professionally — like a priest might hold scorn for a colleague who tarnished his profession — and maybe little deep concern for each other.

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Filed under: baseball, Minnesota, Moneyball Tagged: 2011 major league draft

Domestic Surveillance Under the Foreign Intelligence Surveillance Act

baseball91 — Thu, 11 Aug 2011 15:22:18 +0000

There are at least sixteen agencies in Washington which have since September 2001 been involved in domestic and international intelligence. In one of these agencies, concerning how the Obama Administration is interpreting parts of the Patriot Act, the Director of Legislative Affairs for the Office of the Director of National Intelligence says that it is “difficult to answer” whether the government has the right to track Americans’ location through cellphones for intelligence purposes, according to a letter sent to Congress on August 11th.

In response to questions presented by Senator Mark Udall (D-CO) and Senator Ron Wyden (D-OR), who asked in a letter to the the Office of the Director of National Intelligence whether the intelligence community has the authority to collect geolocation information on American citizens, Kathleen Turner, the director of legislative affairs for the Office of the Director of National Intelligence, responded that the government is still defining its “view of the full contours of this authority and will get back to you.”

As the senators asked just where such authority might come from, the response from the director of legislative affairs for the Office of the Director of National Intelligence was that though the amount of evidence that can be collected and the procedures required to get it haven’t been settled yet, “the government has some authority to collect cell phone mobility data under appropriate circumstances.” So how many people in the U.S. have had their communications reviewed under authority granted by 2008 legislation, amending the Foreign Intelligence Surveillance Act? The response of the director of legislative affairs for the Office of the Director of National Intelligence was, “It is not reasonably possible to identify the number of people located in the United States whose communications may have been reviewed.”

As the Obama Administration has been in practice over 1466 days.addressing these issues, this response was disingenuous. How can this “Hope and Change” government still be defining its “view of the full contours of this authority.” If it is not reasonably possible to identify the number of people located in the United States whose communications may have been reviewed, how was it possible for law enforcement to identify the people whose communications they selected to review? It might be difficult to justify whether the government has the right to track Americans’ location through cellphones for intelligence purposes, it might be difficult to rationalize actual domestic surveillance under the Foreign Intelligence Surveillance Act, but it should not be difficult to answer the question after 1466 days executing the law. This was one sign an arrogance had developed after 1466 days, not much different than the arrogance of the previous administration.

Didn’t the legislative branch know the day-to-day effort of protecting the liberty of the American public on these shores? Or didn’t the executive branch see the irony of a nation, which now fought foreign wars to export democracy and freedom at a cost of $193 million dollars per day, spying at home on its own citizens? Or didn’t the electorate see the real reason for the ongoing cost of cheap money, to finance the wars without a tax increase? As the value of the currency was diminished forty percent over the last ten years.

Concerning all of the cost of war, when Senator Ron Wyden from Oregon had also the same above questions to an attorney from the National Security Agency earlier this week, he received a similar answer. However the attorney from the NSA indicated that his intelligence community would be working on a better response before the first meeting of the Senate Intelligence Committee in September. The NSA attorney seemed wise enough to recognize the full contours of contempt of Congress, where arrogance of one branch of government was a still a crime.

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Filed under: Afghanistan, Haqqani, Homeland Security, The Rocky Mountain News Tagged: Dana Priest, Domestic Abuse, Office of the Director of National Intelligence, Senator Mark Udall, Senator Ron Wyden

The Downgrade

baseball91 — Wed, 10 Aug 2011 21:58:23 +0000

German philosopher Arthur Schopenhauer: “All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” About a rolling depression. As James Fallow wrote five years ago, “As it comes to the old parties, the story boils down to this: in the age of television, Democrats can’t win except when everything is handed to them or goes their way, while Republicans can’t govern without breaking the bank.”

Seaworthy vessels do not sink. There are boat inspectors who check out sinkability of those vessels. Likewise, the sole job of credit-rating agencies like Moody’s Investment Service, Fitch Rating and Standard & Poor’s is to gauge creditworthiness. As market concerns about France’s triple-A credit rating increased, shares in French banking stocks plunged Wednesday on renewed market jitters over their exposure to Greek debt. “If the maturity of Greek government bonds is extended to 2024, this could mean further depreciation of the assets of French banks that are exposed to Greek debt,” said the trader, who spoke on condition of anonymity.

Société Générale SA was trading down 17% at €21.61, as spokeswoman for Société Générale said, “”We categorically deny all market rumors.”

Loan demand, wise men and women argue, is so, those low interest rates won’t go higher anytime soon. So the downgrade by Standard and Poor’s of U. S. debt logically means a shift in credit quality. The rules of the game have not changed, only the grading system. “If the AAA is no longer AAA, then everything else has to get downgraded,” Edward Dempsey explained.

The credit-rating agencies whose sole job is to gauge the creditworthiness of bonds, all reiterated that France has a stable outlook, with an unchanged triple-A credit rating. France’s credit rating was thrust into the spotlight Monday when cost of insuring its debt against default spiked. Amidst concerns France may be the next triple-A-rated sovereign to suffer a credit downgrade, as another leader came unexpectedly back from holiday to call a meeting with key cabinet ministers along with Bank of France governor Christian Noyer, President Nicolas Sarkozy sought to defend France’s credibility, saying France will do whatever it takes to ensure meeting its deficit-reduction targets.

Not long ago, consumers leveraged their homes to maintain a lifestyles in an era of limited wage growth. Subsequently the U.S. government took on debt to bail out the economy. However the U S government now collects less tax revenue than in did in 2008, yet its debt is trillions higher. The current scenario witnessed falling income levels and rising debt levels worldwide. Something has to give.

“They know,” Edward Dempsey writes, “which is why they are desperately trying to create inflation… to pay that debt back with cheaper money.”

In France, new concerns were triggered that the government may turn to banks to help reduce its deficit. During the latest round of global sell-off, changes were implemented to the Euro currency bloc’s bailout mechanism, along with a new bailout package for Greece. Before a July 21st summit, France’s minister for European Affairs had said initiatives weighing a tax on banks to resolve the Greek debt crisis would be discussed, though no mention was ever made in the conclusions of that summit.

In China, money meanwhile continues to flow in, as the government reported on Tuesday that consumer prices jumped 6.5% in July, its fastest pace in three years. With all these other export-dependent Asian economies, since Friday’s downgrade by Standard & Poor’s of the credit rating of the United States, foreign investors have been unloading shares in Korea – Asia’s fourth-largest economy attracting so much capital in recent years, heavily dependent on exports, accounting for roughly more than half of the country’s GDP. Those foreign investors hold about one-third of the market’s total capitalization in Korea. How long before China feels the affects of a recession which is in transition toward an European Depression?

On August 3, the Obama administration released its own eight-page national strategy for countering domestic violent extremism.

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FOOTNOTE on how to mess up a baseball organization.
http://www.stltoday.com/sports/baseball/professional/article_eb8ffce2-a988-5bb2-8912-3b789f3aad56.html

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Filed under: Banking, Ben Benanke, European Union Tagged: http://en.wordpress.com/tag/ArthurSchopenhauer, http://en.wordpress.com/tag/ChristianNoyer, Nicolas Sarkozy, Société Générale SA