Silent Treatment On Bank Write-Downs

More "transparent" accounting........ At least nice to see that even the WSJ calls this accounting "bizarre".....

Schön zu sehen das die Bilanzierung im Finanzwesen seit der Krise noch "transparenter" geworden ist und...... Immerhin bleibt zu bemerken das selbst das ansonsten extrem bankenfreunldiche WSJ diese Bilanzierungsform als "bizarr" klassifiziert.....

Silent Treatment on Bank Write-Downs WSJ

Whenever asset write-downs don't hurt earnings, it pays to look closely. As banks snap up weaker peers, a little-known and somewhat bizarre accounting treatment suddenly has come to the fore.

The past 18 months has spawned the acquisitions of Wachovia by Wells Fargo, Washington Mutual by J.P. Morgan Chase, Countrywide by Bank of America and National City by PNC Financial Services Group. And while bank megamergers likely are over, there could be plenty of fair-size deals among regional banks.

Deserving special scrutiny is the accounting treatment that allows banks to write down acquired loans after the deal, but keep those hits out of their income statements.

It works like this. Bank A buys Bank B, acquiring a loan portfolio, $1 billion of which it believes won't get paid in full. It therefore takes a $200 million write-down on these impaired loans, meaning they come onto Bank A's balance sheet with a fair value of $800 million at the deal date. If those loans subsequently deteriorate, the bank typically has to book a reserve against them, hurting earnings.

However, there is a situation in which postdeal marks don't hit earnings, but only affect shareholders' equity. That is when such adjustments are based on factors that actually existed at the acquisition date, but the acquirer was ignorant of. In the example, Bank A might say it discovered after the deal that another $500 million of acquired loans were in fact impaired at the time of the deal. Bank A's income statement would avoid the hit it then takes on those loans.

Granted, banks can't know everything at the time of a deal. However, adjustments have been large in recent cases, they can take place for a whole year after the deal, and they have happened after acquirers say they have done extensive due diligence.

Moreover, outsiders have no way of gauging whether the circumstances that led to the "look-back" write-downs actually were there at the time of the deal. Their best hope is that auditors are keeping track.

PNC initially classified $19.29 billion of National City loans as impaired, as of closing at year-end 2008, marking them down to $11.9 billion. But in the first half of this year, PNC classified another $2.6 billion of National City loans as impaired, marking them down by $1.6 billion, or a sizable 62%.

If look-back adjustments weren't allowed, PNC might have had to take a hefty reserve against these loans, possibly eroding the bank's $905 million of first-half pretax earnings.

PNC said it had only 69 days between announcing the deal and closing it to review loans, while real-estate appraisers faced a "significant backlog." And the bank has booked reserves on other impaired National City loans, because of deterioration after the deal.

> Compared to other "creative" accounting stunts this example isn´t sounding really "bizarre"......;-) Will be interesting to see if Wells Fargo will use this tool to manage their earnings and especially if the market is once again willing to accept the often very poor earnings & balance sheet quality of almost all financial companies.... Could be the inflection point to short this market.....

> Verglichen mit all den anderen kreativen Bilanzierungsformen hört sich selbst das o.g. Beispiel wenig "bizarr" an......;-) Ich denke es lohnt sich darauf zu achten ob insbesondere Wells Fargo das o.g. Schlupfloch nutzen wird. Sollte der Markt die oft extrem schwache Gewinn und Bilanzqaulität der Finanzinstitue zur Abwechslung mal nicht abfeiern könnte dies der Wendepunkt für die Märkte sein.

Dilbert......

:-)!

Bigger
Version / Größere Version

"Today I Think Of Myself As A Government Contractor......"

When you here this kind of quote in context with the mortgage business it should be clear that in the not so distant future another not so "insignificant" bailout is already in the cards..... Looks like the Phony Mae & Fraudie Mac pain wasn´t enough.......

Wenn mal soclche Sätze im Zusammenhang mit dem Hypothekengeschäft hört ist der nächste "nicht unwesentliche" Bailout nicht weit.... Sieht ganz so aus als wenn der Phony Mae & Fraudie Mac Schaden doch noch nicht hoch genug war....... Da geht noch was......

No Easy Exit for Government as Housing Market's Savior WSJ

After a year of extraordinary interventions in the economy, the federal government is starting to pare its support for the private sector. It doesn't look that way to Peter Lansing, president of mortgage firm Universal Lending.

The Denver home lender sees every day how dependent the housing market has become on the government. At the height of the boom, just 20% of Universal's mortgages were backed by the Federal Housing Administration, an arm of the government that guarantees loans to borrowers who can't afford big down payments. Today, the FHA accounts for more than 80% of his business. For Mr. Lansing, this represents a new way of life -- more government, more paperwork, but also a lot of sales that wouldn't have happened otherwise.

"Over 29 years in business, we've always thought of ourselves as being in the free-enterprise system. Today I think of myself as a government contractor,"

Over the past year, the government has intervened heavily at essentially every stage of the home-buying process. In fact, more than 80% of the new residential mortgage loans made this year benefited from some form of government support, according to the trade publication Inside Mortgage Finance.

Speaking of CHUZPAH....... Make sure you compare this comment with the last update at the end of the post....Same CEO ......

Einigen Bänkern sind selbstredend auch die 80% noch zu wenig...... Vergleicht den nachfolgenden Kommentar mit dem vom Update am Ende des Posting.... Handelt sich um den selben CEO....

Wells Fargo urges US to boost mortgage market

The US government should help revive the moribund market for big mortgages by getting Fannie Mae and Freddie Mac to buy large home loans from banks, the chief executive of the lender Wells Fargo urged in an interview with the FT on Tuesday. John Stumpf, whose bank originates a quarter of all US mortgages, called for an increase in the size of loans purchased by Fannie and Freddie, the troubled finance groups controlled by the authorities.

Buffet will be proud ......

Buffet wird es freuen.....

Behind FHA Strains, a Push to Lift Housing WSJ

The FHA insures loans secured with down payments as low as 3.5%. But values in many markets in which it has been increasing its activity have fallen far more than that in the past year. The result: A growing number of homeowners with FHA-backed loans owe more than their homes are worth and are more likely to default.

At the end of June, some 7.8% of FHA-backed loans were 90 days late or more, or in foreclosure, according to the Mortgage Bankers Association, up from 5.4% a year ago.

In July, California accounted for 13% of the FHA's mortgages, up from 1.5% in 2006.

Mounting losses have eaten into the FHA's cash cushion. Federal law says the FHA must maintain, after expected losses, reserves equal to at least 2% of the loans insured by the agency. The ratio last year was around 3%, down from 6.4% in 2007.

UPDATE: WaPo: FHA Cash Reserves Will Drop Below Requirement

The Next Fannie Mae : Ginnie Mae and FHA are becoming $1 trillion subprime guarantors WSJ

Only last week, Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June. Ginnie Mae President Joseph Murin sounded almost giddy as he cheered this “phenomenal growth.” Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year—or far more than double the dollar amount of 2007. (See the nearby table.) Earlier this summer, Reuters quoted Anthony Medici of the Housing Department’s Inspector General’s office as saying, “Who would have predicted that Ginnie Mae and Fannie Mae would have swapped positions” in loan volume?

Ginnie’s mission is to bundle, guarantee and then sell mortgages insured by the Federal Housing Administration, which is Uncle Sam’s home mortgage shop. Ginnie’s growth is a by-product of the FHA’s spectacular growth. The FHA now insures $560 billion of mortgages—quadruple the amount in 2006. Among the FHA, Ginnie, Fannie and Freddie, nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee.

Banks Load Up on Mortgages, in New Way WSJ

Banks have been silent partners in the meteoric rise of the Federal Housing Administration.

In the past year, the nation's financial institutions have snapped up securities backed by Ginnie Mae, a government-owned agency that guarantees payments on mortgages backed by the FHA. That helped drive demand for Ginnie securities and created an outlet for billions of dollars of FHA-backed loans made to borrowers who in many cases couldn't afford big down payments.

As of June 30, the roughly 8,500 federally insured banks and thrifts were holding $113.5 billion of Ginnie securities, compared with just $41 billion a year earlier, according to a Wall Street Journal analysis of bank financial disclosures. It is the largest amount that banks have reported holding since at least 1994.

Banks, sometimes with the blessing of federal regulators, have been loading up on Ginnie securities for one main reason: They make their balance sheets look healthier. Since the securities are guaranteed by the government, federal banking regulators have deemed them risk-free, meaning that adding them to a bank's investment portfolio, or replacing assets deemed riskier, lowers the overall risk of the portfolio in the eyes of regulators.

Some banks have used government cash infusions under the Troubled Asset Relief Program to buy Ginnie Mae bonds.

Holding Ginnie bonds help banks look better because federal bank-capital guidelines give the Ginnie securities a "risk weighting" of 0%. That means banks don't have to hold any cash in reserve to protect against losses. By contrast, securities backed by Fannie Mae and Freddie Mac, the two mortgage giants seized by the government, carry a 20% risk weighting, meaning some cash needs to be set aside to hold them, even though most banks and investors think there is scant risk of Fannie or Freddie securities defaulting. Privately issued mortgage-backed securities can receive risk weightings of 50%, while many other types of debt carry 100%.

Because of the different risk weightings, bankers say they are selling relatively safe assets like Fannie securities and replacing them with Ginnie securities. The move doesn't shrink banks' balance sheets or remove their troubled assets. But it reduces their total assets on a risk-weighted basis. That is important because risk-weighted assets are the denominator in some key ratios of bank capital.

Like some peers, First State bankrolled those purchases partly with taxpayer dollars that were intended to stabilize the banking industry and jump-start lending. The 32-branch bank used a "significant portion" of the $20 million it received through TARP to buy Ginnie securities, Mr. Clark said.

Mr. Clark credits the strategy with helping First State preserve its capital ratios even as loan defaults swelled to $9.5 million on June 30 from $1.6 million a year earlier. During the same period, its total risk-based capital ratio climbed to 11.3% from 10.7%. That gave First State some breathing room above the 10% ratio regulators require for banks to be deemed "well capitalized."

Ms. Keeling acknowledged that the strategy doesn't ease the bank's underlying problems. "The whole capital ratio can be manipulated ... in many ways to make it appear better or worse," she said.

In St. Augustine, Fla., Prosperity Bank increased its holdings of Ginnie securities tenfold over the past year. The lender, with 20 branches and $1.2 billion in assets, simultaneously dumped most of its Fannie and Freddie securities, even though they seemed safe.

"There's no more risk in Fannie and Freddie securities than in a Ginnie security," despite the different capital treatments, said CEO Eddie Creamer.

Ginnie and the FHA, units of the U.S. Department of Housing and Urban Development, have become two of the most powerful mortgage financiers in the U.S. When banks make home loans, the FHA insures them against default. Then the mortgages are pooled together and packaged into mortgage-backed securities. Ginnie guarantees that buyers of those securities -- including banks and other investors -- will continue to receive interest and principal payments on the debt, even if borrowers start to default.

Rolfe Winkler nails it!

Rolfe Winkler formuliert es perfekt!

"It’s equally likely the agency will continue to be a conduit through which the Obama administration funnels cash to the housing market"

Over $600 billion of loans backed by the end of this year — many very risky due to very low downpayments — but no chief risk officer….

A canary in the coal mine was the raid on Taylor Bean & Whitaker, a multi-billion dollar lender that had seen its FHA lending business expand very quickly over the past year. But TBW’s underwriting was terrible so FHA suspended them from issuing its loans. By the end, TBW’s business had grown to $100m-$150m worth of loans per day. The suspension put TBW out of business overnight.

Karl Denninger is also "passionate" when it comes to the FHA topic..... ;-)

Wer die etwas "deftigere" Sprache bevorzugt dem empfehle ich die FHA Sichtweise von Karl Denninger.... ;-)

Uncle Sam Bets the House on Mortgages WSJ

Right now, housing remains on government life support. Treasury-backed entities are guaranteeing about 85% of new mortgages, while the Fed buys 80% of the securities into which these taxpayer-backed mortgages are packaged

Rather than trying to implement change, the government appears to be reinforcing a system in which it provides subsidies to an asset that periodically goes through highly leveraged speculative booms.

Despite the bust, conforming mortgages that qualify for government backing remain mispriced. That can be seen in the fact that banks have no desire to keep the most common mortgage on their books.

Wells's chief executive, John Stumpf, recently said: "We're not putting on 30-year [fixed-rate] mortgages at these rates."

So why should the taxpayer take them?

Stuffing Sam Sudden Debt

In financial market parlance "getting stuffed" is being left with a losing position in a trade because the counterparty to the transaction claims to not recognize it (also known as DK, or Don't Know). It's equivalent to someone dropping their trash on your doorstep and walking away, claiming it's not theirs.....

The following chart gives the breakdown in the 1Q2009; a massive 41% of all mortgages outstanding are now directly owned or guaranteed by Uncle Sam, since Fannie and Freddie have been placed into federal conservatorship.

Trade Tensions Are Brewing........

Juts what the doctor ordered...... As i´ve feared last week the "conditions" for world trade are not getting better...... Lets all hope that the tensions don´t escalate....... Just in China to request WTO consultations with US over tyre dispute - Commerce Ministry China says: - US tyre decision violates WTO rules. - Wants dialogue with US on tyre tariffs.Source: RTRS

Würde noch zum perfektem Sturm fehlen...... Wie bereits letzte Woche befürchtet verbessen die die "Rahmenbedingungen" für den immer noch in der Reha befindlichen Welthandel nicht wirklich. Die Spannungen zwischen einzelnen Ländern und der Ruf nach Protektionismus wird doch deutlich vernehmbarer. Bleibt nur zu hoffen das diese nicht wirklich eskalieren....... Update: China to request WTO consultations with US over tyre dispute - Commerce Ministry China says: - US tyre decision violates WTO rules. - Wants dialogue with US on tyre tariffs.Source: RTRS )

A Tale of Two Depressions VOX

The downward spiral in global trade volumes has abated, and the most recent month for which we have data (June) shows a modest uptick. Nonetheless, the collapse of global trade, even now, remains dramatic by the standards of the Great Depression.

Volume of world trade, now vs then

China Probes ‘Unfair Trade’ in U.S. Chicken and Auto Products

Sept. 14 (Bloomberg) -- China announced dumping and subsidy probes of chicken and auto products from the U.S., two days after President Barack Obama imposed tariffs on tires from the Asian nation.

Chinese industries complain that they’re being hurt by “unfair trade practices,” the nation’s Ministry of Commerce said on its Web site yesterday. The dumping investigation relates to poultry alone, a spokesman said in Beijing today. The ministry didn’t specify the value of imports of the products.

Rising protectionism may hamper world trade and undermine the global economy’s recovery from recession, the European Central Bank ( see end of the post for details )said last week.

The U.S. placed tariffs starting at 35 percent on $1.8 billion of tire imports from China, backing a United Steelworkers union complaint against the second-largest U.S. trading partner.

China Reacts Quickly and Badly to Tire Tariffs Naked Capitalism

It would be better if we were not proven correct on this one, but when the US imposed stiff tariffs on imported tires from China late on Friday, we noted, “This could get interesting in a bad way.” The Chinese responded quickly over the weekend to announce they were investigating US auto parts and chicken, which together account for roughly as much as the disputed tires ($1.2 billion versus $1.3 billion for tires).

But protectionism is driven by the desire to protect jobs. Unemployment has not peaked in the US, and some analysts suggest that China’s job losses are far worse than the 20 million often bandied about, more on the order of 30 to 50 million. So political pressure is set to intensify.

The New York Times treats the Chinese reaction as a surprise. But the tire tariffs relied upon a special provision in the WTO agreement for China’s entry that set a lower bar for trade violations than the normal anti-dumping sort. This is the first time that rule has been used as the basis for an action against China, and China may feel it important to fight that precedent.

Obama Risks Global Trade War With Misguided Tariffs Mish

Not a single job will return to the US as a result of these tariffs. Imports from China will drop but imports from elsewhere will rise.Thus, the unfortunate tragedy in this mess is that Obama's kowtowing to the unions is going to cost union jobs. The ultimate irony is misguided unions are cheering every step of the way.To date, Obama is repeating the same mistakes Roosevelt and Hoover made during the Great Depression

Now, Obama's tire and steel tariffs will strongly encourage more unions and labor groups to seek relief under "Section 421" of U.S. trade law. That misguided law does not require petitioners to prove unfair trade practices.

If Obama keeps this foolishness up, which right now seems highly likely, he risks a global trade war similar to the global trade crash kicked off by the Smoot-Hawley Tariff Act signed by President Hoover in the early stages of Great Depression.

China Strikes Back on Trade WSJ

Citing a jump in Chinese imports, the Obama administration said Friday it would impose stiff tariffs on Chinese-made tires for the next three years, invoking a section of trade law that China agreed to as a condition for its joining the World Trade Organization in 2001. The move essentially would cut off the source of nearly 17% of all tires sold in the U.S. last year and hit cost-conscious consumers particularly hard, as retailers will have to find alternative sources for the lower-end tires that make up much of what China sends to the U.S.

Beijing responded quickly. Sunday, its Ministry of Commerce said it was starting antidumping procedures against U.S. exporters into China of chicken and auto products. It said it had received complaints from local producers that the U.S. products were being dumped in China at below-market prices. The ministry denied that the move, which could lead to sanctions, was protectionist.

Both chicken and auto products have been part of a battle between China and the U.S. in which both sides have already instituted trade-restricting measures. China has already effectively blocked U.S. exports of poultry products in retaliation for a similar U.S. block of Chinese poultry. And earlier this year, China raised tariffs on imported auto parts.

Foreign businesses operating in China have also argued that China is itself engaging in protectionism. The European Union Chamber of Commerce in China recently released a catalog of business complaints chronicling a deteriorating atmosphere for foreign enterprises operating in China. The country's recent stimulus package, for example, in some cases favored domestic manufacturers, the EU Chamber said.

Chinese President Hu Jintao is set to meet Mr. Obama this month at an economic summit in Pittsburgh. Mr. Obama is to visit China in mid-November.

Chinese officials "are definitely going to do something to express their dissatisfaction, but it won't be serious," Mr. Yan said. "The two sides need each other."

Michael Pettis / China Financial Markets

A few months ago I wrote about an HKMA paper that suggested that the implicit interest-rate subsidy to SOEs ( State Owned Enterprises)– not relative to the “right” interest rate in China (whatever that may be but which is certainly many percentage points higher than the official lending rates) but relative to the borrowing cost of large Chinese private corporations – accounted for 100% of SOE profitability. If China had reasonable interest rates, in other words, (and in fact there were negative real rates for much of the recent past), SOEs would on average be value destroyers.

Most of the press focus is on US-China disputes, and the truth is that these matter a lot because this is the most important trade relationship, but trade-surplus countries are in disputes almost everywhere. This, in my opinion, is only likely to continue. I suspect that we will make a concerted effort to coordinate the adjustment process only after things have gotten much worse for everybody.

>Here is the comment from the ECB.....

>Hier der oben angesprochene Kommentar der EZB......

Protektionismus : EZB sieht "Spirale der Vergeltung" FTD

The ECB is pointing to a study that after the G-20 Summit in November 2008 17 of the 20 states have been implementing protectionist measures.... This is in stark contrast to what they have promised ( my translation )

Sie verweist auf eine Studie, nach der nach dem G-20-Gipfel im November 2008 17 der 20 Staaten protektionistische Maßnahmen angekündigt hatten - obwohl sich die Staats- und Regierungschefs dort klar gegen jeden Protektionismus ausgesprochen hatten

More Bad News For Dubai ......

Time for another update from Dubai...... Compared to The Upcoming Skyscraper Tsunami the rotten performance of their SWF is only a minor problem...... But it seems that almost everything Dubai pushed forward during the past few years is running into trouble...... Clearly a poster child for the bubble years......

Es ist mal wieder Zeit für ein Update aus dem vermeintlichen Wunderland Dubai....... Sieht so als fast alles was die dort anfassen wirklich nur auf Sand gebaut ist...... Verglichen mit dem Upcoming Skyscraper Tsunami ist die lausige Performance des SWF wohl aber nur ein winziges Problem...... Dubai ist sicher das Paradebeispiel für die Bubble Jahre. Was hier an Gigantismuß in den Wüstensand bzw. auf künstlichen Inseln versenkt worden sprengt wirklich jeden Rahmen......
Istithmar Said to Halt Investment; Dubai Weighs Sale (Bloomberg)

Istithmar World, the Dubai sovereign wealth fund, is halting investments as part of a restructuring effort after spending more than $25 billion this decade on stakes ranging from a yacht marina to luxury retailer Barneys New York, according to people familiar with the plan.

> I just couldn´t resist.... via Istithmar World

> Konnte hier einfach nicht widerstehen.... via Istithmar World

Retail Deal of the Year for 2007 for acquisition of Barneys New York (2007) Investment Dealers Digest

Istithmar World Capital Announces Additional Capital Support For Barneys New York 2009

"Istithmar World Capital has provided a significant level of additional capital to support Barneys New York. Working closely with management, we believe that this amount allows the company financial flexibility to work with the company's major vendors and financial intermediaries.

> With deals like this no wonder Istithmar has won several awards..... ;-)

> Dank solch gelungener Deals ist es kein Wunder das Istithmar mit Preisen überhäuft worden ist.... ;-)

Best Private Equity House (2008) Banker Middle East

Best Private Equity House Award (2007) Banker Middle East

> Surprising to see that the WHITE ELEFANT MGM City Center in Vegas didn´t win a special award..... Update: Video City Center

> Fast überraschend zu sehen das die wohl größte Fehlleistung das MGM City Center in Vegas nicht auch noch einen Sonderpreis abgeräumt hat..... Update: Video City Center

> Back to Bloomberg....

The process may result in a sale of the fund or its assets, they said. Istithmar, run by David Jackson, said this week that co-chief investment officers John Amato and Felix Herlihy would leave the firm. Jackson’s job is under review, the people said.

A restructuring by Istithmar and its parent Dubai World may mark the most public reversal of fortune for a state-controlled investment firm since global credit markets seized up in 2007.

Sovereign wealth funds, fueled in part by oil revenue, have become sources of capital around the world for companies, including Citigroup Inc. and Morgan Stanley.

Istithmar and Dubai World have struggled this year on investments, including Barneys, which may be facing a restructuring or bankruptcy, according to people familiar with the retailer, and CityCenter, an $11 billion project in Las Vegas.

Abu Dhabi, the wealthiest member of the United Arab Emirates, provided a $10 billion bailout this year for Dubai as the emirate struggled to meet payments on $80 billion of debt used to finance real-estate projects. ....

> Won´t be the last time Abu Dhabi will be bailing out Dubai........ What a mess....

> Abu Dhabi darf sich jetzt schon einmal freuen das hier demnächst in regelmäßigen Abständen Bailouts fällig werden.... Sieht immer mehr so aus als wenn hinter den glitzernden Fassaden nur heisse Luft steckt.... Ein gewisses Maß an Schadenfreude kann ich mir da nicht verkneifen.....

UPDATE: Dubai’s Trail of Dud Deals Shows Sovereign Wealth Gone Awry

Dubai investment firm Istithmar World may be the first sovereign wealth fund to liquidate after a $27 billion spending spree financed largely with borrowed money, people briefed on the matter said.

Unlike government-controlled funds in Kuwait and Abu Dhabi, flush with cash from oil production, or in China, backed by export earnings, Istithmar fueled purchases such as the takeover of Barneys New York by borrowing as much as 90 percent of the money, the people said.

Istithmar’s parent, Dubai World, tapped Middle Eastern and European banks including Barclays Plc, Royal Bank of Scotland Group Plc and Deutsche Bank AG, leaving those three with combined debt holdings of at least $1.5 billion, the people said.

“Dubai sovereign wealth funds are leveraged like private equity funds"

Istithmar contributed about $2.5 billion of its own cash to back $27 billion of purchases since 2003, the people said, speaking anonymously because the strategy was private. It used so-called non-recourse bank loans, backed by specific assets, to finance about 75 percent of its acquisitions, one of the people said.

Dubai World is in talks with its creditor banks to restructure at least $12 billion in debt, a person close to the talks said, speaking anonymously because the negotiations are private.

Istithmar or its assets will probably be sold to help its parent repay the debt, the person said. Nakheel PJSC, the Dubai World unit behind a series of palm-shaped, man-made islands on the emirate’s coast, has a $3.52 billion Islamic bond due in December

One example of risky investing, according to Turner, came in 2007, when Dubai World bought about $5.5 billion of MGM Mirage stock at between $82 and $95 without any hedge. The stock now trades at about $12.

Refinancing Dubai’s debt became more difficult with the onset of the global credit crisis as lending froze. It has about $80 billion of outstanding corporate and government debt, according a report by Moody’s in February. That almost matches the emirate’s $82 billion gross domestic product in 2008, the report said.

A Dubai Investment Arm Struggles With Debt Load NYT

Set up in 2003, Istithmar came to be seen as the public face of a brash, acquisitive Dubai, which, unlike more conservative sovereign funds operating in the region, deployed high levels of leverage to finance a shopping spree that included the Queen Elizabeth 2 luxury liner; the department store Barneys New York; a stake in Cirque du Soleil, from Montreal; as well as luxury hotels in New York like the W on Union Square and the Mandarin Oriental on Columbus Circle.

Most of these investments — including that in Perella Weinberg Partners, the investment boutique, and GLG Partners, the asset management company — were done at the top of the market, from 2005 to 2007.

Istithmar was in many respects a scaled-down version of Dubai — using bravado, debt and some dollops of cash to invest in global markets

Competitive Devaluation "Israel Edition"

With exports making up about 45% of the country's economy it is no wonder the Bank of Israel is intervening massively.....More countries will follow the Swiss, Israel & China......Will be interesting to see when Japan will voice "their concern" about the recent Yen strength.....This are not good news for global trade......I expect the € to be the main target of the intervetions.... More significant "headwinds" for European exporters.......

Da Exporte knapp 45% der Wirtschaftsleistung ausmachen ist es wenig verwunderlich das die Bank of Israel diesen für alle Tradingpartner ungünstigen Weg gewählt hat gegen den Shekel zu intervenieren......Denke das auf Sicht sich immer mehr Länder der Schweiz, Israel und China ( die USA kommen ja schon seit geraumer Zeit ohne Interventionen aus... ;-) anschließen werden.... Bin gespannt wann Japan in den Ring steigt und sein "Unbehagen" über die jüngste Yen Stärke zum Ausdruck bringt......Unschwer zu erkennsen das dies auf Dauer für den globalen Handel wenig förderlich ist..... Da der Großteil der Anpassungen zu Lasten des € geht sind das alles in allem keine guten Nachrichten für die europäischen Exporteure......


Israel's Fischer Wins Kudos for Central Bank Role Amid Crisis WSJ

From May 2008 through the end of last month, Mr. Fischer spent $28.4 billion, or about 14% of Israel's gross domestic product, buying foreign currency. While the central bank never said it was acting to weaken the Israeli shekel, the purchases did just that, helping to keep Israeli exports competitively priced.

> If you consider that since the intervetion the Shekel has devalued even against the Greenback you know how "succsessful" they have been.....You can watch the effects on the exchange rate here ( switch to the 1 year chart )

> Man muß eigentlich nur erwähnen das der Shekel seit der Intervention sogar gegenüber dem USD abgewertet hat..... Einen besseren "Erfolgsnachweis" kann es nicht geben......Den Effekt der Anwertung kann hier ( bitte die Jahrescharts Einstellung wählen ) "bewundert" werden

Update:

US Fires Opening Salvo In Trade Wars With China Mish

Trade Tensions With China Quietly Escalating Naked Capitalism

Protektionismus : EZB sieht "Spirale der Vergeltung" FTD

Sie verweist auf eine Studie, nach der nach dem G-20-Gipfel im November 2008 17 der 20 Staaten protektionistische Maßnahmen angekündigt hatten - obwohl sich die Staats- und Regierungschefs dort klar gegen jeden Protektionismus ausgesprochen hatten

The ECB is pointing to a study that after the G-20 Summit in November 2008 17 of the 20 states have been implementing protectionist measures.... This is in stark contrast to what they have promised ( my translation )

A Tale of Two Depressions VOX

The downward spiral in global trade volumes has abated, and the most recent month for which we have data (June) shows a modest uptick. Nonetheless, the collapse of global trade, even now, remains dramatic by the standards of the Great Depression.

Volume of world trade, now vs then

Update Blogroll

Time for a another update and as a "Goldbug" ( even while i´m in the deflation camp for some time to come , i think the latest "interest" in Gold has something to do that more and more are realizing that we havn´t seen the latest chapter in this timeline..... H/T The Mess That Greenspan Made ) i couldn´t resist to post this timeless image from Wall Street Follies .....

Es ist mal wieder höchste Zeit meine Blogroll auf Vordermann zu bringen..... Als "Goldbug" ( obwohl ich die bis auf weiteres der Deflationsfraktion zuzuorden bin... Denke das erneute Interesse in Gold hat vielmehr damit zu tun das immer mehr begreifen das wir noch lange nicht das letzte Kapitel in dieser Zeitachse geschrieben haben.....) kann ich mir aus gegebenen Anlaß natürlich nicht verkneifen die zeitlose "Empfehlung" von Wall Street Follies zu posten.....

Chris Martenson

Contrary Investor

Expected Returns

Felix Salmon

Global Economy Matters / Edward Hugh

Markt-Daten-Blog / German

News From 1930

The Market Ticker / Karl Denninger

Ultimi Barbarorum