the rally is likely over, western actives will sink further&further

Corrupt “experts”, paid cash for that dirty job even in credit crunch times,  were disseminating during the April SR rally their usual bullshit, CRIMINAL disnformation they R paid 4. Hell is waiting for them: they’ll have all the time they want, to study Political Economy and to repent down there, at home … In Dante’s terms, they should & will suffer infinitely, the  souffrance they inflicted to the naive people believing their BULLSHIT optimism, spread on purpose in the middle of the worst ever crisis of Capitalism.

Please, remember the bloody Warren Buffet, Obama’s richest friend, who right  in the middle of the Fall of the Wall Street Temple, said last December “it was time 2 buy”. He bought, and lost all those $. We the poor, can’t afford such a luxury propaganda game.

Time 2 buy will come soon, most likely  in a couple of years time:

iff, provided the crisis will play thoroughly,   and bring to an end its own chirurgical work, no one else can do: to clean the ground, to make room (no room – in a filled up space of resources allocation) in order to allow for a new mechaism of growth to self-organize, emerge, and establish its coeherent, new economic geography & interregional DIVISION OF LABOUR. Marxian & Austrian, Hayekian & Schumpeterian sagesse, that neo-converted Keynesans (most of them actually never read  Keynes) and profiteering Obamist blatanty ignore.  

As we discuss in our teaching blog, things are not that simple & straightforward: there are  many mistakes in the Austrian  credo, although not so many  as their adversaries argue. First of all: why the hell in our MIXED  economies, that is a variety – from SF – LA to Beijing-Tokyo –  of combinations, mixes of  free markets (full of monopolies & market failures: what  Austrians oversee, for their ideological bias at odds with science) & Statism, should the most ineffcient fail, and the crisis VISIBLE  FOOT make a proper job of resources liberation from bad, worst uses? Monopolies, Detroit, Mr Profumo’s Unicredit: they R all TOO BIG TO FAIL. Who fails, is the foreclosure victim, not his killer.

In sum: while monetary policies are doing their job – they keep the crisis fever at the right temperature, avoiding a fall into stagdeflation  –  fiscal stimuli are most likely useless, 0 multiplier hence 0 impact (apart a Mob, Mafiosa misallocation of buying rights to friends, friends of friends etc. – e.g. Obama’s stimulus over-concentrating public exp. in Washington DC versus FDR’s regional balancing policy, iconised by the TVA, Tennesse Valley Authority).



says – from official sources, and itself an official, public-communist source – that China power use is currently dropping -4% (April 2009 n April 2008) at odds with evidently  FALSE official GDP figures from the Empre, saying that   China is growing 6% but will B up soon to 7%. Can you believe there was such a sudden jump of energy efficiency : +10??? 6 – (-4) = 10.

Published in: on May 5, 2009 at 8:38 am  Leave a Comment  
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A bubble graph of “the BBBubble”

Read carefully and .. meditate (COMPENSATION obviusly refer to top executive incentives). But, please (see previous post, below, in case of TEMPTATION), don’t hurry up to ANY scapegoat conclusion, pleeeeeeease: it’d be highly misleading, just a proto-antropoid RITE for the sake of changing nothing. And we are sincerely FED UP with scapegoat mechanisms (René Girard had explained it almost all, but perhaps this was useless, since we are still Sapiens doomed to repeat horrific rites  on and on- Le Sacré du Printemps, et c’est juste Printemps).

I cut and copy:

Tempting fate

Dare we put up a bubble chart? Apparently we do. From Zero Hedge.

Zero Hedge - Writedowns, leverage and compensation

Related links:

The Merrill bubble – Zero Hedge
Salaries from a bygone era – FT Alphaville

This entry was posted by Tracy Alloway on Wednesday, February 25th, 2009 at 13:55 and is filed under Capital markets.

Black Monday: the day after


Understanding Black Monday. IT IS NO “NEGATIVE BUBBLE”, as silly bulls say.

a) It’s a low fundamentals issue, STUPID !!!

From yesterday on, global markets  are anticipating the real size of the  Main Street’s REAL RECESSION. The  shadow financial  – formal finance meltdown – credit crunch – deep recession chain is working from August 2007,  WITH NO COUNTERBALANCE in terms of policies and rules. Just post factum inadequate interventions on the consequences (even them, chaotic in Europe), and nothing upon the factors: neither Obama, nor McCain of course, are dealing prospectively with them (SEE OUR subcrime key document; in sum, long run deflation from a low global effective demand, hyper – concentration of income and wealth, imbalances and over-unemployment generated by: Reaganism, US private debts system and the post- communism “2nd Great Transformation”).

Prof. Roubini confirms today the title of our blog (which was inspired, last January, by our readings of Prof. Roubini himself):

The global economy is now already in a recession (as GDP is now contracting in all advanced economies and sharply slowing down in emerging market economies). We need now to take steps avoid a global depression.

And today’s rge papers aggregation “Are We Headed Towards a Global Recession?” specifies further:

IMF: The global financial crisis may have “extremely serious” consequences – including famines – in developing countries in Africa and Latin America.

◦ IMF: Signs of deceleration are most pronounced for several Emerging Asian economies that are tightly linked to the global manufacturing cycle: Philippines, Thailand, Malaysia, Taiwan PoC, Singapore, Hong Kong SAR, and—to a lesser extent—India.

b) In Europe, an institutional factor adds up. The ususal no-EU keynesian and structural policies issue. The one, that already made EU the only 0 growth world region (Aglietta and Berrebi).

WAKING UP FROM A DREAM: the gloom understanding that European finance is not free from the consequences of the $ 10 tr. global SHADOW FINANCE MELTDOWN. As Breakingnews said yesterday (see quotation in our Black Monday  post),

” It shouldn’t have come to this. A year ago, Europe looked well placed to fend off financial ills. True, the UK had US-style problems with a housing bubble and a big trade deficit, but the eurozone had few bubbles, balanced trade, reasonably prudent governments, a firm central bank and a strong tradition of government guidance and support in banking. 

It turned out, though, that some European banks had dabbled too much in overvalued and overly complex US assets. The authorities have also been slow.”


After Reaganism, which blend of Socialism?

We quote from our ” AAA updates on subCrimes” static page, par. 2 on policies.

The Oct. 6 BLACK MONDAY, mainly but not only in  European stock markets (worst from 1987 Black Monday) confirms thet WE WERE RIGHT ON CONDEMNING THE PAULSON – BERNANKE  hurried up plan. Markets don’t care about it, and discount the recession is on and its size is much worst than they expected. Therefore the issue moves to the alternative between:

a) a financial (pseudo-) socialism: once failed again, the finance K party will move to nationalisations and direct State and SWF re-capitalisations … . It would eventually cure the financial meltdown, not the risk of the recession giving rise to a long depression in the 2010s.

b) a Keynesian socialism: redistribute drastically  income and wealth  (through policies, rules and Robin Hood fiscal policies) in order to gradually sort out of the 1990s longrun global deflation (Aglietta and Berrebi, Chesnais).

More in our .pdf –  subcrime key document.



Drowned World Tour

By Daniel Politi
Posted Tuesday, Oct. 7, 2008, at 6:29 AM ETIt’s a new week, and the bad news keeps getting worse. “The global financial crisis has taken a perilous turn,” declares the Wall Street Journal. Hopes that the massive bailout package approved by Congress last week would give investors some breathing room were quickly dashed as soon as the markets opened. And pretty much the whole world is feeling the pain. Markets in Asia, Europe, and Latin America closed deep in the red yesterday, a pattern that was repeated in the United States. The Dow Jones industrial average plunged 800 points, or 7.7 percent, before rebounding late in the day to close down nearly 370 points, or 3.6 percent. It marked the first time the Dow fell below the 10,000 mark since 2004. USA Today helpfully puts it in perspective and points out that the Dow has lost nearly 30 percent since Oct. 9, 2007.

The New York Times and Washington Post highlight word that the Federal Reserve is considering a plan to buy large amounts of unsecured short-term debt–so-called commercial paper–in an effort to revive the financial system. This “radical new plan” (NYT) would essentially make the Fed “a major funder of a wide range of U.S. businesses facing imminent cash shortages,” explains thePost. While the growing financial crisis is putting pressure on government officials to act, the Los Angeles Times points out that if there’s a clear message from yesterday’s worldwide sell-off it’s that investors are increasingly concerned“that government intervention won’t be enough to stave off a potentially severe global recession.”


TENGONO LE BORSE EUROPEE, ma non recuperano il crollo storico di ieri, mentre a NY il Dow Jones scende di oltre  il 5%, S&P del 5.7%, a conferma della bocciatura del, e sfiducia nell’ affrettato ed elettorale Piano Paulson. I titoli finanziari di NY al loro minimo dal 1997 (solo oggi -25% Morgan Stanley e BoA). In caduta libera le grandi banche inglesi (-50% in 2 giorni  HBOS e RBS), forzando un Piano Straordinario di Gordon Brown tra i $60 e 90 bn. Paul Krugman commenta:

Britain leads the way?


According to the FT,Gordon Brown, the UK prime minister, on Tuesday night ordered a massive taxpayer-backed cash injection to rebuild the balance sheets of Britain’s high street banks, in effect part-nationalising the sector at a cost of tens of billions of pounds.


Marco Onado su Il Sole 24 ore.

– la autocritica del CEO UniCredit, Aless. Profumo, in una lunga intervista a La Repubblica: abbiamo fatto il passo più lungo della gamba e sottovalutato il financial meltdown. Il fatto: gli azionisti (le fondazioni bancarie) che ricapitalizzano la prima banca italiana, al momento si guardano bene (in piena crisi e tentativo di rilancio, risanamento) dal dimissionare Profumo (responsabile di una strategia di crescita del tutto azzardata e FUORI TEMPO rispetto al ciclo mondiale, come lui stesso e’ costretto ad ammettere POST FACTUM), ma lo mettono SOTTO TUTELA. Escludendo le liquidazioni, nel 2007 e’ il manager più pagato d’Italia.

– DA IERI, ripreso oggi in Italia su La Stampa, l’incredibile udienza parlamentare di Mr Fuld PADRE-PADRONE di Lehman Bros (che i nostri lettori conoscono MOLTO BENE).

– IERI SERA ottimo dibattito alla morente LA 7 (che la Telecom vuol chiudere), all’Infedele, con parterre de rois che includeva dei Grandi come Marcello DeCecco ed un lucido, mordace Tony Negri. Peccato che, dopo averla tenuta a bagnomaria con Tronchetti Provera, ora la chiudano di brutto. L’ultima voce libera, troppo ose’  per la thanato-politica cavalier-leghista.

ORA LEGALE 13: il punto.

MERCATI VOLATILI. Abortisce un primo tentativo di rimbalzo delle borse europee in mattinata, che dura appena un’ora. A mezzogiorno nuova spinta verso il positivo, MENO CHE  A  MILANO. Qui Piazz’affari appesantita specie da una  UniCredit senza pace. Le ammissioni a denti stretti di Profumo (intervista cit.) non rassicurano molto: costui ha sbagliato proprio tutto,  con una iper-crescita non proporzionale alla capitalizzazione, in tempi di deflazione mondiale strutturale e di evidente (ad ogni osservatore onesto) preparazione della catastrofe della shadow finance, con tutte le conseguenze che oggi si dipanano.

Alle 13: Milano sullo 0%, resto Europa + 1%. UniCredito -4.4%, Telecom – 5,5% e  sotto gli E 0,9, Impregilo – 7%, e sospesa per ribasso Tiscali (-15%).

Nel pomeriggio escono i 3 Nobel della Fisica: gli svedesi hanno fregato il Gabibbo, e dato il Nobel a 2 giapponesi che avevano sviluppato la sua scoperta. Che figura di merda ci fanno a stoccolma!


Come avevamo previsto, oggi nessun nuovo tonfo ne’ recupero dell’abbassamento fundamentals-driven di ieri, LUNEDI NERO. A Milano (-0 .6%) problemi specifici:

– LA POPOLARE continua a tonfare (qualcuno deve sapere perche’),

– UniCredit insensibile alle dotte auto-critiche EX POST, perde un altro 4% perche’, mentre ieri S&P aveva mantenuto il rating stabile, questo pomeriggio Moody l’ha abbassato.

– Pianto greco del CFO Telecom: a queste quotazioni frazionali sotto €0.9, improbabile si facciano vivi gli  investitori potenziali, come SWF libici, Q8 e russi.

The UniCredit exception


1-year UniCredit  performance at Milano stock exchange, Oct. 3  mid-day, current price: 2.87 EUR0 (median price target suggested by analysts: 5.10 EUR0)


After yesterday’s extraordinary Council meeting and decisions, the title is highly volatile this morning, while all Euro arkets are down, and Milan more than 5% at mid-day; UniCredit is highly volatile: down to -15%, then up to -3% (becoming the best share in Milan, falling -8%). As with their decisions for discouraging speculation, they come late, and exactly at the time markets are discounting that there is ONLY A WALL STREET BAILOUT, but nothing similar in Europe (after the miserable and inconclusive meeting  in Paris last Saturday). Sincerely, UniCredit CEO Mr Profumo has admitted mistakes this morning, in a “mea culpa“.

Emergency Meeting

After its emergency meeting, UniCredit said it was cutting its 2008 earnings per share target to 39 European cents, before the €3 billion capital increase, from the previous 52 cents. The bank said the total amount of its capital strengthening measures was €6.6 billion. Also included is the placement of a €3 billion core Tier 1 convertible bond that has mostly already been sold to a group of institutional investors and some core shareholders of the bank.

The overall aim is to strengthen the bank’s capital ratios to 6.7% at the end of 2008 from previous 6.2% under so-called Basel II international capital requirements.

“Finally, management addressed the key problem which is capital,” said Marcello Zanardo, a banking analyst with Keefe, Bruyette & Woods Ltd. “This should have been addressed earlier, and it comes at the expense of management credibility.”

Source: wsj, Oct.6 –

See also ft: UniCredit seeks to raise €6.6bn – 09:10, today Monday, Oct. 6


UniCredit: not any specific deep crisis, but  MAINLY (NOT ONLY) a general one

While the credit crunch storm is hitting hard even the more robust European banking system, here is how the current share crisis of Unicredit is seen from Wall Street and London.

In brief, the fact that even such a robust, large bank, unexposed to subcrime toxic products, as UniCredit has been under speculative attack this week, is: 

a) a symptom of the wide diffusion of the subcrime virus: now the credit crunch is at full work (a financial accelerator with a negative sign), therefore the entire banking system is  hit, and consequently its clients as well  (Main Street);

b) as the WSJ notes below (please note that at mid September that Journal, as well as most analysts and economists, discovered we were in one of the worst recessions in history, although they didn’t understand much of it yet), the recession started in 08Q2 in Germany  (a core UniCredit business area) and spreading from there into East Europe (the major area of UniCredit expansion):

c) finally, UniCredit had some minor financial unbalances due to its high growth, aso illustrated by the wsj: no reason for a crisis or panic (wrongly and stupidly, some people in Italy thought they  better retire their deposits: my deposits are there and I have no doubt) – except that the credit-finance crisis is general, and  every minor imperfection looks like bigger.

d) THE UniCredit PARADOX (see Lex), in a moment of catastrophe’  of capitalism and globalisation, is that the bank is a target just because it’s the leader in the late (e.g., compared to Spain) internationalisation of the Italian credit industry.

e) Our suggestion is: BUY. But we are not the only ones suspecting that someone is buying already, and that an undervalued UniCredit creates appetites among competitors. Analysts suggest: 1st buy, 2nd hold. 

LEX, ft:


Published: September 30 2008 09:33 | Last updated: September 30 2008 23:01

“Welcome to the first truly European bank,” UniCredit’s website proudly proclaims. But the only Italian bank to break the national mould and spread its wings well beyond its Milan headquarters, getting half of its revenues outside Italy, is now paying the price. In today’s climate, being a global bank is to be on a hiding to nothing. UniCredit’s share price has collapsed to 10-year lows and trading this week has been suspended several times for excessive losses. Hedge funds, prevented from short selling in the UK and other markets, may well be having a field day, although questions about UniCredit run deeper.

One of these is UniCredit’s exposure to retail banking in Germany, where it controls HVB and has been roped in to help bail out Hypo Real Estate. UniCredit can also expect diminishing returns from its investments in eastern Europe as economies there slow (even if the rest of Europe slows more). Further writedowns are also expected on its investment banking exposure, the largest in Italy. After years of extravagant praise for his bold vision, chief executive Alessandro Profumo is now on the defensive. He uncharacteristically sent a memo to employees to reassure them the bank has no liquidity problems and has no need to raise capital. But perception, not liquidity, is the issue – although the fact that default swaps on UniCredit debt have widened no more than European peers such as Spain’s BBVA shows investor perceptions also vary across markets.


The UniCredit Exception

Credit default swaps of Italy’s biggest bank by assets are among the tightest in Europe, but its stock price has underperformed the DJ STOXX Banks Index by 25% this year.

Unlike many of its European rivals, UniCredit is well funded, with no need to refinance its debt until 2010. That’s reassuring for the bank’s creditors.

One factor putting a strain on the share price is that UniCredit was one of the world’s last few big banks whose shares investors could sell short — until Italy imposed short-selling restrictions of its own late Tuesday.

And even though it has little exposure to subprime-tainted U.S. assets, it is short of capital. To reach a 6.2% Tier 1 capital ratio target by year-end, the bank will have to raise cash, possibly by cutting its dividend or selling stock.

Another problem is that a $75 billion acquisition spree between 2005 and 2007, with buys in Italy, Germany, Ukraine, Kazakhstan and Austria, has resulted in a tenfold jump in the value of goodwill to €21 billion ($30.02 billion). This is straining UniCredit’s balance sheet because banking rules exclude goodwill when it comes to calculating capital adequacy, leaving it with relatively little tangible equity to support its assets.

These new assets are also unlikely to generate the returns UniCredit was expecting, as the euro zone may tip into recession later this year, with the slowdown sure to spill over to Eastern Europe, where the bank is heavily invested.

UniCredit has promised modest asset sales to raise a slice of extra capital. A more convincing move would be to slash its dividend.


Published in: on October 1, 2008 at 7:11 pm  Leave a Comment  
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Financial Communism


Whoever will be at the White House. Although:

Lex, FT on  Friday 18.

Better Fed than dead
This was the week that socialism came to Washington. The US government had to firm up its “implicit” support of the government sponsored enterprises, Fannie Mae and Freddie Mac which between them own or guarantee 22 per cent of the $24,300bn borrowed by US households and non-financial businesses.

So Fannie and Freddie, traditional tools of the debt-based US housing policy that lead to the subcrime crisis, own or guarantee up to $ 5.2 trillion. Although it was well  known they are a target of foreign investment,  few had in mind that F&F are MORE THAN 10% IN COMMUNIST CHINESE HANDS.

Brad Setser on Sat. 12

Too Chinese (and Russian) to fail?

Brad corrects official data, estimating that China holds NOT JUST $ 422, BUT $500-600 bn of Fannie and Freddie GSE (Gov. sponsored ent.s), i.e. 10% of the outstanding stock (5.2 trillions) and almost 15% of China’s GDP. Russia has $156 bn, more than 10% of its GDP.

I would certainly expect that Vice Premier Wang is on the phone to Paulson this weekend, politely asking how exactly the US plans to backstop the Agencies. (…)

MORE IN SETTSER’s BLOG, quoted this morning July 17th by LEX, FT: “China and Fannie Mae”, and in our static page: AAA Updates on subcrimes.

Published in: on July 20, 2008 at 11:05 am  Leave a Comment  
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