Bonds are ripping as yield tank. Equity markets did the right thing today early in the morning when they were tanking given all the terrible economic news, but then we saw some extreme futures buying that brought the market up on the day and any selling pressure has been met by these outsized futures buys that push the market back to the 1100 level. The most likely explanation is that today is the end of month and end of month options expiration so the S&P is getting pinned at 1100 level. Similarly there is window dressing by fund managers to make their month end look better especially if they missed most of the bounce-back rally. It does not matter however ridiculous and stupid that rally is.
This market is still more than 50% overvalued by any measure and the outlook for the economy looks terrible. You do not want to be long stocks except for defensive names such as utilities and some consumer staples. Even those are suspect when the crash comes, but holding some as a hedge against a currency/fiat money collapse is a smart idea. Of course you need to have gold in your portfolio and it has to be in the physical form. If after everything happens, you come up to me and tell me and say you have been saying this all along, but I didn't do it, I might headbutt you.
Enjoy the weekend.
Friday, July 30, 2010
Can't Help It: Have To Comment On CNBC
This is the worst TV channel ever with the most annoying group of people getting together daily and saying the stupidest things possible about things they do not even understand or care to understand in a true representation of the greed and deception of Wall Street. The bubbleheads called the speakers -Maria, Kudlow, Cramer, Liesman (he lies all the time), Erin Burnett, and the older Blond woman whose name I will not even bother to look up, Bryan or whatever that Brit's name is, and the poor man Pisani- get out there and talk about how the economy is getting much better and how the stocks should increase all the time. They remind me of George Orwell's 1984 and the TV in that book.
Cramer and Burnett took it to a new high today by talking about Chelsea Clinton's wedding and how they are spending $15 grand on a party-potty and claiming that this is a show of confidence as if the Clinton's are regular people representative of the population. What world do these bubbleheads live in? That party-potty is more luxurious than half the studio apartments in NYC and many other mid to low income people's houses in the country.
Rick Santelli is the one guy that makes any sense and has a brain behind his mouth.
We know who Bartiromo slept with to get where she got. What about Burnett and the others????
Cramer and Burnett took it to a new high today by talking about Chelsea Clinton's wedding and how they are spending $15 grand on a party-potty and claiming that this is a show of confidence as if the Clinton's are regular people representative of the population. What world do these bubbleheads live in? That party-potty is more luxurious than half the studio apartments in NYC and many other mid to low income people's houses in the country.
Rick Santelli is the one guy that makes any sense and has a brain behind his mouth.
We know who Bartiromo slept with to get where she got. What about Burnett and the others????
Wednesday, July 28, 2010
Investing Ideas - Not Trading
The idea for longer term investors and not traders that can stomach market volatility in the meantime is to be in high dividend paying companies facing inelastic demand curves. These would be utility and consumer staples companies. The idea behind this is that it does not make sense to park your money in bonds given the very low yields you would be earning and the inherent risk in owning fiat money instruments. Stocks are paper assets, too, but assuming the world does not go into a Mad Max state, one should still be fine holding certain stocks that are based on real things with as low volatility as possible. Had I liked stock valuations, I would like mining stocks, but at current valuations -even though they are 30% to 50% below their 2007-2008 peaks- are in the bubble territory. This does not mean that in all this illogical market action they cannot go higher into the bubble territory, but that is not investing, but gambling. My advice is for those concerned investors who cannot put all their money into gold.
You should still put at least 5-20% of your money in physical gold. Possibly even more is smart, but I know most people are still not too comfortable with the idea of holding physical gold. On top of that 5-20% in gold you should put some money into silver, palladium and to a lesser extent platinum. I, similar to Jim Rogers and Marc Faber, like agriculture and arable land and cows and wheat, etc. But these are not realistic investments for many not so wealthy people. I do not believe in holding the futures for the longer term, but you can go that route if you really want to. Comex is a fraud, so I do not like doing anything related to them personally.
Utility and consumer stocks should hopefully be better inflation hedges than bonds for sure. They should, also, act as hedges against a collapse of fiat money. While banks and many other companies will falter in such an environment, people cannot live without food and energy, so utility and consumer companies should still be around and doing well in such a scenario. These are not sexy investments, but rather hedges and longer term protection of buying power ideas with a little bit of an income kicker through high dividends.
Some of the names that come to mind are Verizon (VZ), Exelon (EXC), PPL Corporation(PPL), Public Service Enterprise (PEG), First Energy (FE), etc. There are a lot of them. The best idea would be to create a diversified portfolio of these to hedge yourself against company risk. As a complementary speculative idea, I like some oilsands companies with high dividend rates such as Canadian Oilsands (COS-U CN) in Canada with its 7% dividend yield.
You should still put at least 5-20% of your money in physical gold. Possibly even more is smart, but I know most people are still not too comfortable with the idea of holding physical gold. On top of that 5-20% in gold you should put some money into silver, palladium and to a lesser extent platinum. I, similar to Jim Rogers and Marc Faber, like agriculture and arable land and cows and wheat, etc. But these are not realistic investments for many not so wealthy people. I do not believe in holding the futures for the longer term, but you can go that route if you really want to. Comex is a fraud, so I do not like doing anything related to them personally.
Utility and consumer stocks should hopefully be better inflation hedges than bonds for sure. They should, also, act as hedges against a collapse of fiat money. While banks and many other companies will falter in such an environment, people cannot live without food and energy, so utility and consumer companies should still be around and doing well in such a scenario. These are not sexy investments, but rather hedges and longer term protection of buying power ideas with a little bit of an income kicker through high dividends.
Some of the names that come to mind are Verizon (VZ), Exelon (EXC), PPL Corporation(PPL), Public Service Enterprise (PEG), First Energy (FE), etc. There are a lot of them. The best idea would be to create a diversified portfolio of these to hedge yourself against company risk. As a complementary speculative idea, I like some oilsands companies with high dividend rates such as Canadian Oilsands (COS-U CN) in Canada with its 7% dividend yield.
Friday, July 23, 2010
China's Long Term Plans And End of The USD and Treasuries
The following is from the FT:
"
Published: July 21 2010 16:22 | Last updated: July 21 2010 16:22
The head of China’s largest credit rating agency has slammed his western counterparts for causing the global financial crisis and said that as the world’s largest creditor nation China should have a bigger say in how governments and their debt are rated.
“The western rating agencies are politicised and highly ideological and they do not adhere to objective standards,” Guan Jianzhong, chairman of Dagong Global Credit Rating, told the Financial Times in an interview. “China is the biggest creditor nation in the world and with the rise and national rejuvenation of China we should have our say in how the credit risks of states are judged.”
On the corporate side, Mr Guan argues Moody’s Investors Service, Standard & Poor’s and Fitch Ratings – the three companies that dominate the global credit rating industry – have become too close to the clients they are supposed to be objectively assessing.
He specifically criticised the practice of “rating shopping” by companies who offer their business to the agency that provides the most favourable rating.
In the aftermath of the financial crisis “rating shopping” has been one of the key complaints from western regulators , who have heavily criticised the big three agencies for handing top ratings to mortgage-linked securities that turned toxic when the US housing market collapsed in 2007.
“The financial crisis was caused because rating agencies didn’t properly disclose risk and this brought the entire US financial system to the verge of collapse, causing huge damage to the US and its strategic interests,” Mr Guan said.
Recently, the rating agencies have been criticised for being too slow to downgrade some of the heavily indebted peripheral eurozone economies, most notably Spain, which still holds triple A ratings from Moody’s.
There is also a view among many investors that the agencies would shy away from withdrawing triple A ratings to countries such as the US and UK because of the political pressure that would bear down on them in the event of such actions.
Last week, privately-owned Dagong published its own sovereign credit ranking in what it said was a first for a non-western credit rating agency.
The results were very different from those published by Moody’s, Standard & Poor’s and Fitch, with China ranking higher than the United States, Britain, Japan, France and most other major economies, reflecting Dagong’s belief that China is more politically and economically stable than all of these countries.
Mr Guan said his company’s methodology has been developed over the last five years and reflects a more objective assessment of a government’s fiscal position, ability to govern, economic power, foreign reserves, debt burden and ability to create future wealth.
“The US is insolvent and faces bankruptcy as a pure debtor nation but the rating agencies still give it high rankings ,” Mr Guan said. “Actually, the huge military expenditure of the US is not created by themselves but comes from borrowed money, which is not sustainable.”
A wildly enthusiastic editorial published by Xinhua , China’s official state newswire, lauded Dagong’s report as a significant step toward breaking the monopoly of western rating agencies of which it said China has long been a “victim”.
“Compared with the US’ conquest of the world by means of force, Moody’s has controlled the world through its dominance in credit ratings,” the editorial said.
First established in 1994, Dagong signed a three-year “technology co-operation” agreement in 1999 with Moody’s, which provided the Chinese company with its “core knowledge” and its first “systemic understanding”, according to Mr Guan.
In fact, Dagong is more similar to its three global competitors than it might like to admit.
Dagong’s share of China’s fledgling credit rating market is around 25 per cent, while subsidiaries of the big three global agencies control most of the rest.
Dagong’s next goal is to break into the international market, starting with the US.
But even if the company can overcome reluctance from US regulators it may have a hard time convincing international clients that it is more objective than its western peers, especially considering the overtly nationalistic tone it strikes at home.
Additional reporting, David Oakley in London
"
The following is the Xinhua News Agency report:
"
Editor: Wang Guanqun
"
"
China rating agency condemns rivals
By Jamil Anderlini in BeijingPublished: July 21 2010 16:22 | Last updated: July 21 2010 16:22
The head of China’s largest credit rating agency has slammed his western counterparts for causing the global financial crisis and said that as the world’s largest creditor nation China should have a bigger say in how governments and their debt are rated.
“The western rating agencies are politicised and highly ideological and they do not adhere to objective standards,” Guan Jianzhong, chairman of Dagong Global Credit Rating, told the Financial Times in an interview. “China is the biggest creditor nation in the world and with the rise and national rejuvenation of China we should have our say in how the credit risks of states are judged.”
On the corporate side, Mr Guan argues Moody’s Investors Service, Standard & Poor’s and Fitch Ratings – the three companies that dominate the global credit rating industry – have become too close to the clients they are supposed to be objectively assessing.
He specifically criticised the practice of “rating shopping” by companies who offer their business to the agency that provides the most favourable rating.
In the aftermath of the financial crisis “rating shopping” has been one of the key complaints from western regulators , who have heavily criticised the big three agencies for handing top ratings to mortgage-linked securities that turned toxic when the US housing market collapsed in 2007.
“The financial crisis was caused because rating agencies didn’t properly disclose risk and this brought the entire US financial system to the verge of collapse, causing huge damage to the US and its strategic interests,” Mr Guan said.
Recently, the rating agencies have been criticised for being too slow to downgrade some of the heavily indebted peripheral eurozone economies, most notably Spain, which still holds triple A ratings from Moody’s.
There is also a view among many investors that the agencies would shy away from withdrawing triple A ratings to countries such as the US and UK because of the political pressure that would bear down on them in the event of such actions.
Last week, privately-owned Dagong published its own sovereign credit ranking in what it said was a first for a non-western credit rating agency.
The results were very different from those published by Moody’s, Standard & Poor’s and Fitch, with China ranking higher than the United States, Britain, Japan, France and most other major economies, reflecting Dagong’s belief that China is more politically and economically stable than all of these countries.
Mr Guan said his company’s methodology has been developed over the last five years and reflects a more objective assessment of a government’s fiscal position, ability to govern, economic power, foreign reserves, debt burden and ability to create future wealth.
“The US is insolvent and faces bankruptcy as a pure debtor nation but the rating agencies still give it high rankings ,” Mr Guan said. “Actually, the huge military expenditure of the US is not created by themselves but comes from borrowed money, which is not sustainable.”
A wildly enthusiastic editorial published by Xinhua , China’s official state newswire, lauded Dagong’s report as a significant step toward breaking the monopoly of western rating agencies of which it said China has long been a “victim”.
“Compared with the US’ conquest of the world by means of force, Moody’s has controlled the world through its dominance in credit ratings,” the editorial said.
First established in 1994, Dagong signed a three-year “technology co-operation” agreement in 1999 with Moody’s, which provided the Chinese company with its “core knowledge” and its first “systemic understanding”, according to Mr Guan.
In fact, Dagong is more similar to its three global competitors than it might like to admit.
Dagong’s share of China’s fledgling credit rating market is around 25 per cent, while subsidiaries of the big three global agencies control most of the rest.
Dagong’s next goal is to break into the international market, starting with the US.
But even if the company can overcome reluctance from US regulators it may have a hard time convincing international clients that it is more objective than its western peers, especially considering the overtly nationalistic tone it strikes at home.
Additional reporting, David Oakley in London
"
The following is the Xinhua News Agency report:
"
|
| English.news.cn 2010-07-19 09:07:29 |  Feedback  Print RSS  |
By Deng Yuwen
BEIJING, July 19 (Xinhuanet) -- A recent report by Dagong Global Credit Rating Co Ltd on the world's sovereign credit status and its risks, is a significant step by a non-Western entity to break the long-established monopoly of Western ratings agencies over the global credit ratings business.
The report by China's first domestic ratings agency covered 50 countries whose gross domestic product (GDP) accounts for 90 percent of the world economy, and evaluated 27 countries differently from how Western rating agencies such as Moody's, Standard & Poor's (S&P) and Fitch have been doing.
In its report, Dagong gave some emerging and well-performing economies higher ratings than the three Western rating giants did. It also gave a comparatively lower rating to those slow-growing developed countries that have been bogged down in economic and debt troubles.
Due to its good economic performance in the context of the global financial crisis, China received a higher credit rating than the United States and some other Western countries, chiefly due to their worsening deficits.
China's local-currency rating was AA+ and foreign currency rating AAA, according to the Dagong report, both higher than those given by Moody's, S&P and Fitch. In its report, Dagong rated the US "AA" with a negative outlook both in its local as well as foreign currency.
In its report, Dagong mainly based its credit ratings criteria on different countries' comprehensive institutional strength and their fiscal conditions, with the former reflecting an economic entity's ability to guarantee wealth creation, an index that indicates its potential to create wealth and fiscal revenues in future, according to a manager of the agency's risks evaluation department.
Fiscal conditions reflect an economic entity's funding fluidity in future through comparing its revenues and debt status.
Dagong rated the 50 countries according to its own credit rating standards, which include the ability to govern a country, economic power, financial ability, fiscal status and foreign reserves, according to Guan Jianzhong, chairman of the non-governmental ratings agency.
Undoubtedly, China's current political and economic institutions ensure that it has far higher ability than the US in wealth creation and revenue collection. Beijing's fiscal conditions are also much better than Washington's, not just now but also likely in the years ahead.
A comparison between the two countries' GDP growth trends, foreign trade, international balance of payments, foreign reserves, their foreign debt and its structure, fiscal revenues and financial policies, all factors that influence a country's debt repayment ability, easily helped draw these conclusions.
Dagong's report is expected to help break the long-established monopoly of Moody's, S&P and Fitch over the global credit ratings market. For a long time, the credit ratings offered by the three have caused controversies across the world due to their lack of an independent, impartial, objective and scientific perspective.
Also, US values and standards have been mainly used to evaluate other countries' sovereign debt as well as those of their enterprises. This has not only resulted in their repeated failure to issue a necessary alert in a timely and accurate manner but has also contributed much to global financial turbulences.
There exists two super-hegemonies in the current world, with one being the US and the other Moody's, a US politician once put it. Compared with the US' conquest of the world by means of force, Moody's has controlled the world through its dominance in credit ratings.
Credit ratings agencies are a new hegemony in the post-Cold War period, a New York Times editorial once pointed out. That could explain why the European Union felt anger at Moody's, S&P and Fitch and announced that it would set up its own ratings agency after the three US-led agencies rated the Greek sovereign credit as junk, a rating that caused Greece's crisis to spread to the rest of the european continent.
China has also been a victim of the three ratings agencies. At a time when China launched accelerated efforts to list some domestic banks in overseas markets in 2003, S&P turned a blind eye to the country's fast and sustainable economic growth and announced that it would maintain its BBB-grade rating of the country's sovereign debt, the minimal level "suitable for investment".
It also gave 13 Chinese commercial banks a junk rating. S&P, together with Moody's and Fitch, even gave China's sovereign debt a lower credit rating than debt-plagued Spain.
To reform the West-dominated international financial order, more credit ratings agencies should be set up in non-Western countries to break Western monopoly over the global credit ratings business.
Dagong's recent report signals China's efforts to participate in making new rules for international ratings and to seek a larger say in this area. However, China still has a long way to go before it can increase its own influence in its credit ratings system given that the country still faces huge difficulties in expanding the authority of its fledgling credit ratings agency and letting its ratings report be accepted by the international community.
As its economic strength grows further, China's credit ratings agency is expected to win a proportionate international status. What the country should do now is to map out the development layout for its credit ratings system as soon as possible and make related laws and regulations in a bid to offer institutional support for the country's pursuit of a deserved voice in the international financial market and the power to make international financial rules.
The author is a senior editor with the Study Times.Editor: Wang Guanqun
"
Gold Manipulation Continues Everyday
From the mouth of the beast:
“Central banks stand ready to lease gold in increasing quantities should the price rise.”
Sir Alan Greenspan, US Federal Reserve Bank, 24 July 1998
"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K."
Sir Eddie George, Bank of England, September 1999
“Central banks stand ready to lease gold in increasing quantities should the price rise.”
Sir Alan Greenspan, US Federal Reserve Bank, 24 July 1998
"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K."
Sir Eddie George, Bank of England, September 1999
Thursday, July 22, 2010
Deflation vs. Inflation
There is a lot of talk and discussion between people talking about inflation and deflation. People who think inflation will be the problem point out the hyperbolic expansion in the money supply due to the printing press of Bernanke doing overtime for the last few years as well as since the closing of the gold window in 1971 by Nixon and cutting all ties of money with gold. Deflationists argue that Fed is failing on expanding the money supply due to a fall in the velocity of money and lack of lending by the banks even as the Fed continues to increase the monetary base to unprecedented levels. These people argue that "asset" prices will go down and people will be faced with deflation.
Without picking a winner first, we can see how we would first see deflation (as described by the deflationists as a decrease in asset prices) followed by even more money printing by the Fed ending in a hyperinflationary scenario as more financial institutions, municipalities, and sovereigns have trouble raising more debt to cover their interest payments and deficits and in the case of banks mask their insolvency. However, there is a possibility where we have deflation in asset prices and inflation in consumer prices. Asset prices that could fall meaningfully are houses and stocks and debt instruments. Consumer prices that could go up in the face of falling asset prices are food and energy prices as well as other essentials as well as some other discretionary items that are consumable. The main reason for this is demand and supply and valuations. Stocks, houses, and bonds are very overvalued. By ridiculous amounts. They should all be down 50% and more. On the other hand the prices of a lot of commodities such as wheat, beef, gold, silver, natural gas, sugar, soy beans, and etc. are still very cheap compared to what stock, home, and debt instrument prices have done in the past several decades. There is an imbalance between different asset prices due to government subsidies, policies, central bank manipulation, and the bubble mindset of moneyed interests and the common public.
Imbalances never last for ever even if they can last for quite a few decades. We are coming to the end of one of those cycles. Another cycle that is ending is the expansionary cycle of debt and that of the experiment of fiat money that enabled another cycle that is about to be over: ever expanding deficits and indebtedness of both individuals (mainly Americans) as well as firms and governments.
Gold continues to be a highly manipulated (suppressed by the Federal Reserve) asset that is a great investment for the longer term both as a way to preserve your wealth and as a speculative investment if you have the time as the unsustainable short position of the Federal Reserve, which is short 30,000 to 50,000 tonnes of gold (to put it in perspective: all central banks combined claim to have 30,000 tonnes of gold and all the gold ever mined in history add up to 160,000 tonnes of gold) creates a very explosive situation with a very uncertain timing due to lack of justice and transparency in the current environment surrounding the Fed.
Without picking a winner first, we can see how we would first see deflation (as described by the deflationists as a decrease in asset prices) followed by even more money printing by the Fed ending in a hyperinflationary scenario as more financial institutions, municipalities, and sovereigns have trouble raising more debt to cover their interest payments and deficits and in the case of banks mask their insolvency. However, there is a possibility where we have deflation in asset prices and inflation in consumer prices. Asset prices that could fall meaningfully are houses and stocks and debt instruments. Consumer prices that could go up in the face of falling asset prices are food and energy prices as well as other essentials as well as some other discretionary items that are consumable. The main reason for this is demand and supply and valuations. Stocks, houses, and bonds are very overvalued. By ridiculous amounts. They should all be down 50% and more. On the other hand the prices of a lot of commodities such as wheat, beef, gold, silver, natural gas, sugar, soy beans, and etc. are still very cheap compared to what stock, home, and debt instrument prices have done in the past several decades. There is an imbalance between different asset prices due to government subsidies, policies, central bank manipulation, and the bubble mindset of moneyed interests and the common public.
Imbalances never last for ever even if they can last for quite a few decades. We are coming to the end of one of those cycles. Another cycle that is ending is the expansionary cycle of debt and that of the experiment of fiat money that enabled another cycle that is about to be over: ever expanding deficits and indebtedness of both individuals (mainly Americans) as well as firms and governments.
Gold continues to be a highly manipulated (suppressed by the Federal Reserve) asset that is a great investment for the longer term both as a way to preserve your wealth and as a speculative investment if you have the time as the unsustainable short position of the Federal Reserve, which is short 30,000 to 50,000 tonnes of gold (to put it in perspective: all central banks combined claim to have 30,000 tonnes of gold and all the gold ever mined in history add up to 160,000 tonnes of gold) creates a very explosive situation with a very uncertain timing due to lack of justice and transparency in the current environment surrounding the Fed.
GM Buys Subprime Lender Americredit
I thought this was the problem with the economy and part of the problem with GM, which is why they let go of GMAC, which is practically bankrupt. They are 61% owned by the government and they are going out and doing more of what got themselves and the whole economy in trouble???!!! What kind of a joke is this? History repeats itself. The crisis that we never got out of is going to repeat itself as these clowns keep doing the same thing. It is more an more obvious nobody learned anything. The same is true for the whole market. How are stocks still not tanking and sovereign bonds, especially that of peripheral Europe and US and Japan still going as high as ever. This will all end really bad again.
The following is from Yahoo.
But the acquisition, announced Thursday, also means that GM, which is 61 percent owned by the U.S. government, is getting back into the business of making risky loans.
GM executives have said for months that they were missing sales opportunities due to lack of credit for lease deals and financing for subprime buyers, those with credit scores below 620 on a 300-to-850-point scale.
GM Chief Financial Officer Chris Liddell said Thursday that customers could now expect more lease deals from GM. Only 7 percent of its sales are from leases, compared with 21 percent for the industry, he said. Only 4 percent of GM's sales come from subprime buyers, which the company hopes to expand with its AmeriCredit acquisition.
"If you just had a modest increase from 4 to 5 percent, that's a significant number in its own right," Liddell told reporters.
GM sold just over 1 million vehicles in the U.S. during the first half of the year.
The Detroit automaker will pay $3.5 billion in cash to buy all of the Ft. Worth, Texas-based AmeriCredit's shares at a price of $24.50 each -- a 24 percent premium over Wednesday's close.
GM expects the deal to close in the fourth quarter.
The automaker says that its partner Ally Financial -- formerly known as GMAC Financial Services Inc. -- will continue to finance GM's dealer inventory and make loans to buyers with good credit.
GM says it is not considering a purchase of Ally's auto financing unit. GM sold controlling interest in GMAC in 2006. The company eventually had to be bailed out by the U.S. government because of problems with its home mortgage loan unit.
The following is from Yahoo.
GM to buy AmeriCredit to expand subprime lending
General Motors says AmeriCredit acquisition will boost financing, lease options for car buyers
, On Thursday July 22, 2010, 9:15 am
DETROIT (AP) -- General Motors Co. will buy AmeriCredit Corp. for $3.5 billion, a deal that allows the automaker to expand loans to customers with poor credit and offer more leases, key areas where GM must grow to accelerate its car sales.But the acquisition, announced Thursday, also means that GM, which is 61 percent owned by the U.S. government, is getting back into the business of making risky loans.
GM executives have said for months that they were missing sales opportunities due to lack of credit for lease deals and financing for subprime buyers, those with credit scores below 620 on a 300-to-850-point scale.
GM Chief Financial Officer Chris Liddell said Thursday that customers could now expect more lease deals from GM. Only 7 percent of its sales are from leases, compared with 21 percent for the industry, he said. Only 4 percent of GM's sales come from subprime buyers, which the company hopes to expand with its AmeriCredit acquisition.
"If you just had a modest increase from 4 to 5 percent, that's a significant number in its own right," Liddell told reporters.
GM sold just over 1 million vehicles in the U.S. during the first half of the year.
The Detroit automaker will pay $3.5 billion in cash to buy all of the Ft. Worth, Texas-based AmeriCredit's shares at a price of $24.50 each -- a 24 percent premium over Wednesday's close.
GM expects the deal to close in the fourth quarter.
The automaker says that its partner Ally Financial -- formerly known as GMAC Financial Services Inc. -- will continue to finance GM's dealer inventory and make loans to buyers with good credit.
GM says it is not considering a purchase of Ally's auto financing unit. GM sold controlling interest in GMAC in 2006. The company eventually had to be bailed out by the U.S. government because of problems with its home mortgage loan unit.
Tuesday, July 20, 2010
China Should Sell Treasuries When Demand Is String Says Chinese Economist
Here is an article from Reuters:
Beijing reduced its Treasury holdings in May by $32.5 billion to $867.7 billion, but it actually bought a net $3 billion in long-term Treasuries and remained the largest single holder of U.S. government debt, the Treasury reported on Friday.
Yu Yongding, a former academic adviser to the central bank and now a professor with the Chinese Academy of Social Sciences, said Beijing should invest in assets denominated in other currencies as well as other financial instruments and real goods.
"Although assets in other currencies and forms are not an ideal replacement for U.S. Treasury bonds, diversification should be a basic principle," Yu wrote in the China Securities Journal.
"When demand for U.S. Treasury securities is strong, it's a rare opportunity for us to gradually pull back. That way, it will not have a big impact on prices and China will not suffer too much," he said.
Zhang Monan, a researcher with the State Information Center, a think tank under the powerful National Development and Reform Commission, told the paper that China should invest more of its $2.5 trillion of foreign exchange reserves, the world's largest stockpile, in hard assets such as gold.
(Reporting by Langi Chiang and Alan Wheatley; Editing by Ken Wills)
BEIJING |
BEIJING (Reuters) - China should cut its holdings of U.S. Treasury securities when market demand is strong, a prominent economist said in remarks published on Monday.Beijing reduced its Treasury holdings in May by $32.5 billion to $867.7 billion, but it actually bought a net $3 billion in long-term Treasuries and remained the largest single holder of U.S. government debt, the Treasury reported on Friday.
Yu Yongding, a former academic adviser to the central bank and now a professor with the Chinese Academy of Social Sciences, said Beijing should invest in assets denominated in other currencies as well as other financial instruments and real goods.
"Although assets in other currencies and forms are not an ideal replacement for U.S. Treasury bonds, diversification should be a basic principle," Yu wrote in the China Securities Journal.
"When demand for U.S. Treasury securities is strong, it's a rare opportunity for us to gradually pull back. That way, it will not have a big impact on prices and China will not suffer too much," he said.
Zhang Monan, a researcher with the State Information Center, a think tank under the powerful National Development and Reform Commission, told the paper that China should invest more of its $2.5 trillion of foreign exchange reserves, the world's largest stockpile, in hard assets such as gold.
(Reporting by Langi Chiang and Alan Wheatley; Editing by Ken Wills)
Thursday, July 8, 2010
Gold Manipulation and the BIS
Gold keeps being manipulated down by heavy hands everyday in the fraudulent paper market mainly in the Comex. What is going on has no ties to the physical market. There is a shortage of physical, yet gold price keeps falling due to 10,000 contracts being sold in less than 2 minutes on the Comex. 10,000 contracts is $1.2 billion of gold considering each contract is 100 ounces. 10,000 contracts is 1,000,000 ounces. That is a 31 tones of gold. Considering the annual global production is 2,300 tones, 31 tones and more being sold in minutes is beyond ridiculous. Especially considering the seller has no regard for falling prices as if it (the Fed) wants to sell it as cheap as possible.
Now we have the news of the BIS (Bank of International Settlements) and central banks -mainly the Fed- doing gold swaps to the tune of 346 tones which is roughly $14 billion. Now this is obviously not to raise money. They can and have been printing trillions at will. The central banks do not need to swap gold to raise/borrow money. They can just print it and the number is laughable in the realm of the liabilities of all the big financial institutions that are still way insolvent, but in the gold market 346 tones is sizable since gold is so rare. There could be two reasons this is done.
First reason could be to bail out some run on the Comex or bullion banks that do not have the physical gold to back up their manipulation scheme as more and more investors are asking for physical delivery as they realize that the Comex and GLD are both frauds. This is to mask the fact that there is a huge shortage problem in the physical market, which would cause the gold to reach $2,000 in a heartbeat. The only reason gold is not at $5,000 is the heavy manipulation of the Fed as it is short close to 50,000 tones of gold.
The second reason could be to create an atmosphere of fear for gold buyers and manipulate the price down. The repetitive news of IMF announce that it is selling the same gold over and over is not working any longer as people realize that IMF keeps saying that, but does not sell it as well as people realizing that India or China or some other central bank being ready to by this gold. Even Eric Sprott offered to buy the gold IMF had to sell. The IMF denied Mr. Sprott's request to buy it. This is a case of Sprott calling the bluff of IMF and IMF tucking its tail in between its legs and running away. So the Fed had to find another way to try and attempt to manipulate the markets with some other ridiculous news. And that is why we hear about the BIS having 346 tones of gold in swaps from central banks.
Give it a rest you crooks. Your game is almost up. You'll have a gold run on you and it will be apparent you are short 50,000 tones of gold and gold will skyrocket beyond belief at that point. Good luck covering that short and avoiding jail time.
Now we have the news of the BIS (Bank of International Settlements) and central banks -mainly the Fed- doing gold swaps to the tune of 346 tones which is roughly $14 billion. Now this is obviously not to raise money. They can and have been printing trillions at will. The central banks do not need to swap gold to raise/borrow money. They can just print it and the number is laughable in the realm of the liabilities of all the big financial institutions that are still way insolvent, but in the gold market 346 tones is sizable since gold is so rare. There could be two reasons this is done.
First reason could be to bail out some run on the Comex or bullion banks that do not have the physical gold to back up their manipulation scheme as more and more investors are asking for physical delivery as they realize that the Comex and GLD are both frauds. This is to mask the fact that there is a huge shortage problem in the physical market, which would cause the gold to reach $2,000 in a heartbeat. The only reason gold is not at $5,000 is the heavy manipulation of the Fed as it is short close to 50,000 tones of gold.
The second reason could be to create an atmosphere of fear for gold buyers and manipulate the price down. The repetitive news of IMF announce that it is selling the same gold over and over is not working any longer as people realize that IMF keeps saying that, but does not sell it as well as people realizing that India or China or some other central bank being ready to by this gold. Even Eric Sprott offered to buy the gold IMF had to sell. The IMF denied Mr. Sprott's request to buy it. This is a case of Sprott calling the bluff of IMF and IMF tucking its tail in between its legs and running away. So the Fed had to find another way to try and attempt to manipulate the markets with some other ridiculous news. And that is why we hear about the BIS having 346 tones of gold in swaps from central banks.
Give it a rest you crooks. Your game is almost up. You'll have a gold run on you and it will be apparent you are short 50,000 tones of gold and gold will skyrocket beyond belief at that point. Good luck covering that short and avoiding jail time.
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