The ongoing financial turmoil and financial discussion thread

[Flame Of Liberty]

Mr. Change is saving american jobs again, this time by imposing tariffs on chinese tires. And eventhough protectionist measures are known to work (in opposite way than intended, but that's not important), someone should remind Mr. Hope who is financing US debt.

WASHINGTON -- The Obama administration will put steep import duties on Chinese passenger and light truck tires, responding to what the U.S. International Trade Commission determined to be a surge of Chinese tire exports that has rocked the domestic U.S. tire industry and displaced thousands of jobs, U.S. Trade Representative Ron Kirk announced Friday night.

China's government responded quickly to the announcement, saying in a statement that it "strongly opposes" what it called "a serious act of trade protectionism." China "reserves the right to make further response," the Ministry of Commerce statement said.

"By taking this unprecedented action, the Obama administration is now at odds with its own public statements about refraining from increasing tariffs above current levels," Mr. DeIorio said. "This decision will cost many more American jobs than it will create. It will also increase costs for, and take away choices from, American consumers."

The Chinese government's statement, issued by commerce ministry spokesman Yao Jian on the ministry's Web site, said the U.S. decision "not only violates WTO rules, but also runs against U.S. pledges at the G-20 summits, constitutes an abuse of trade remedy measures, and sets an extremely bad precedent in the current backdrop of a world economy in crisis." China could refer the case to the WTO, the statement said.

http://online.wsj.com/article/SB125271824237605479.html

[Tron_fdc]

Interesting opinion this morning from Joseph Stiglitz (Nobel prize winning economist). His opinion was apparently roasted by Jim Cramer the other day, so if that's the case he's probably right.....we're all screwed

“In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,” Stiglitz said in an interview yesterday in Paris. “The problems are worse than they were in 2007 before the crisis.”

http://www.bloomberg.com/apps/news?p...d=aSbIT8GZjdKI

Kind of a scary thought if you ask me. If this guy is right he's saying that we didn't really learn anything, and without some pretty major bank reforms we're setting ourselves up for another collapse.

[yads]

In a strange development TD is raising Tier 1 capital. $750 million worth. Maybe banks aren't as healthy as we thought or maybe they think this is a sucker's rally.

http://micro.newswire.ca/release.cgi...&Start=0&htm=0

[mykalberta]

Not totally on topic, but as good as place to any to ask.

With all Countries but Canada specifically. They are slated to go into debt by 50 billion this year. Where is that 50$ billion coming from.

I know before it used to come from Canada Savings Bonds and the like or they used to get it our of the capital markets - but with the capital markets taking a hit I am wondering where they are getting the money from.

Is Canada printing the money and the deficit is simply an IOU to repay it back to restore the currency valuation?

Same question for the US, Trillions of dollars spent, where are they getting this money from.

The reason I ask is I was having a friendly debate with some of my more Liberal (Edmonton) friends. They believe its actual debt - as in someone has given Canada/Us the money and is expecting a return on investment in the form of interest payments.

I on the other hand believe while a small % of that (>50) might be gotten that way, I believe they are simply printing money. Yes normally that would spell currency doom but with every country in the world injecting money - I find it hard to believe that there was these trillions of dollars out there waiting to be invest in governments. I am of the belief that they are simply printing this money and that its "owed" to no one but the government itself - in other words a "fake" debt.

Just wondering what others think, and if they have any articles - I find it hard to believe that in a world that has lost so much valuation that there are lenders out there with enough to borrow to countries.

I guess Canada would be one as 50bil or so isnt a lot of money, but the US in particular, who has these trillions that were just lying around untill the US govt needs to borrow money.

[Tron_fdc]

As I understand it MYK, the US is indeed printing money in the form of T-bills to raise capital and selling them off, mainly to China.

This is an old link, but it sort of explains it.

http://www.msnbc.msn.com/id/29833741/


It's a dangerous game. China is buying up US "debt" in the form of t-bills as fast as they are printing them. They are currently the largest holder of US debt in the world....which is all fine and dandy, as long as they don't sell them off.

You can see what would happen if they did. It would virtually crush the US dollar, and the US economy along with it, which makes Obama's protectionist policies even more intriguing considering the size of the stick the Chinese government has over the US right now (touched on in FOL's link).

http://online.wsj.com/article/SB125271824237605479.html

[CaptainCrunch]

Its time for a debtors meeting with China

China - "Where's the money that you owe us"

Obama - "Yeah, we'd totally pay you back, but we spent all of our money on these invisible bombers behind me"

[Azure]

Originally Posted by Tron_fdc

As I understand it MYK, the US is indeed printing money in the form of T-bills to raise capital and selling them off, mainly to China.

This is an old link, but it sort of explains it.

http://www.msnbc.msn.com/id/29833741/


It's a dangerous game. China is buying up US "debt" in the form of t-bills as fast as they are printing them. They are currently the largest holder of US debt in the world....which is all fine and dandy, as long as they don't sell them off.

You can see what would happen if they did. It would virtually crush the US dollar, and the US economy along with it, which makes Obama's protectionist policies even more intriguing considering the size of the stick the Chinese government has over the US right now (touched on in FOL's link).

http://online.wsj.com/article/SB125271824237605479.html

And that is exactly why the US needs to get its spending under control.

They can't just continue to run up the debt year after year.

[Cowperson]

Originally Posted by yads

In a strange development TD is raising Tier 1 capital. $750 million worth. Maybe banks aren't as healthy as we thought or maybe they think this is a sucker's rally.

http://micro.newswire.ca/release.cgi...&Start=0&htm=0

They are the second major Canadian bank to indicate future plans for raising large pools of money with the primary goal to position themselves for future acquisitions.

Cowperson

[moncton golden flames]

with all this talk of how the us is printing money and the likely inflation to follow. are there any indicators to when an inflationary recession/depression is close?

[Cowperson]

Originally Posted by mykalberta

Not totally on topic, but as good as place to any to ask.

With all Countries but Canada specifically. They are slated to go into debt by 50 billion this year. Where is that 50$ billion coming from.

I know before it used to come from Canada Savings Bonds and the like or they used to get it our of the capital markets - but with the capital markets taking a hit I am wondering where they are getting the money from.

Is Canada printing the money and the deficit is simply an IOU to repay it back to restore the currency valuation?

Same question for the US, Trillions of dollars spent, where are they getting this money from.

The reason I ask is I was having a friendly debate with some of my more Liberal (Edmonton) friends. They believe its actual debt - as in someone has given Canada/Us the money and is expecting a return on investment in the form of interest payments.

I on the other hand believe while a small % of that (>50) might be gotten that way, I believe they are simply printing money. Yes normally that would spell currency doom but with every country in the world injecting money - I find it hard to believe that there was these trillions of dollars out there waiting to be invest in governments. I am of the belief that they are simply printing this money and that its "owed" to no one but the government itself - in other words a "fake" debt.

Just wondering what others think, and if they have any articles - I find it hard to believe that in a world that has lost so much valuation that there are lenders out there with enough to borrow to countries.

I guess Canada would be one as 50bil or so isnt a lot of money, but the US in particular, who has these trillions that were just lying around untill the US govt needs to borrow money.

One thing we must always remember is that the USA is a massive economy and can absorb expenditures that would look monstrously huge in any other jurisdiction.

Right now the USA has as much a problem with falling tax revenues - resulting from the recession - as it does with expenditures.

Sooner rather than later, those tax revenues are going to recover.

A recent, good, fairly non-partisan look at future debt burdens by Robert Samuelson, a generally respected columnist on economic matters in the Washington Post. He does, however, make the obvious point that the American economy might not be able to outgrow the Obama deficits as it has outgrown so many perilous predictions in the past . . . . which eventually goes to your question.

http://www.washingtonpost.com/wp-dyn...d=opinionsbox1

But, again, remember how big America really is in relation to the world economy. Fareed Zakaria in Newsweek reminded us of this a month ago in a column with this observation:

“The rise of emerging powers like China, India, and Brazil is real. But for now, there is still just one 800-pound gorilla. The American consumer is the single largest factor at play in the global economy. American consumer spending is currently equal to the entire economies of China and India added together and then doubled.”

Below, sort of the same topic, a non-partisan and mercifully short article on the impact of the Lehman failure last year on the global economy . . . . the different impacts inside and outside of America.

http://www.newsweek.com/id/215342

Cowperson

[Potty]

Originally Posted by Tron_fdc

It's a dangerous game. China is buying up US "debt" in the form of t-bills as fast as they are printing them. They are currently the largest holder of US debt in the world....which is all fine and dandy, as long as they don't sell them off.

You can see what would happen if they did. It would virtually crush the US dollar, and the US economy along with it, which makes Obama's protectionist policies even more intriguing considering the size of the stick the Chinese government has over the US right now (touched on in FOL's link).

http://online.wsj.com/article/SB125271824237605479.html

They don't hold all the cards though. Their economy is very much dependant on Americans importing Chinese goods right now. If America tanks, the Chinese economy will tank as well. Only they wouldn't be buried in debt and would be able to recover.

[Slava]

Originally Posted by Potty

They don't hold all the cards though. Their economy is very much dependant on Americans importing Chinese goods right now. If America tanks, the Chinese economy will tank as well. Only they wouldn't be buried in debt and would be able to recover.

While there no doubting the power and influence of the american consumer the export portion of Chinas economy is a mere 7% of its total. So while that is significant, its pretty clear that the majority of their economy is not based on the demands of the US consumer and their spending prowess.

[yads]

Originally Posted by Cowperson

They are the second major Canadian bank to indicate future plans for raising large pools of money with the primary goal to position themselves for future acquisitions.

Cowperson

These are the same guys that can basically borrow from the BOC for essentially nothing, think it's a good idea to to raise tier 1 capital (money they need to have on the books) at 6.6%?

[Cowperson]

Originally Posted by yads

These are the same guys that can basically borrow from the BOC for essentially nothing, think it's a good idea to to raise tier 1 capital (money they need to have on the books) at 6.6%?

The Bank of Canada is not there to give money to a Canadian bank for the purposes we're talking about . . . . not going forward anyway.

Before, through and after this crisis, all Canadian banks have/will have tens of billions of dollars of variously priced debt floating out there somewhere.

At the darkest moments of the economic crisis, Canadian banks were essentially forced to issue hundreds of millions of dollars of pricey rate/reset preference shares, as one example, in January through March to shore up tier one capital ratios under the implied threat of a short attack if they didn't . . . . . and most would concede those rate/resets are going to be eliminated at the earliest call date in 4.5 years as the crisis fades.

Royal Bank last week issued a shelf prospectus under which it would generate $15 billion through the sale of various debt securities with most believing it would use the money to expand it's USA operations.

There's always something going on.

Cowperson

[mykalberta]

Originally Posted by Slava

While there no doubting the power and influence of the american consumer the export portion of Chinas economy is a mere 7% of its total. So while that is significant, its pretty clear that the majority of their economy is not based on the demands of the US consumer and their spending prowess.

This is why I wonder is if this debt is actual debt or just funny debt.
I just find it hard to believe that China has these Trillions of dollars sitting around waiting to buy US T Bills. If they do then the world is in serious trouble when every major democracy is running deficits.

I am in firm belief that the US is printing money and applying that to the debt - and likely has been for a while. With other countries that would spell doom, but when your currency is the global standard, it doesnt hurt as much.

On a much smaller scale, but even with Canada. Has Canada determined the US is just printing money and as such Ottawa is just printing money and they record it as a debt, but its owed to no one.

Example, some of the biggest companies in Canada have a market cap of the same amount of deficit that the Canadian govt will run - 50 Bil - and with every other company or bank in the world, I find it difficult to believe that some of them have this free capital lying around so much so that they can borrow it to Canada. And its not just Canada, Canada is small potatoes when it comes to stimulus spending, where is Germany/France/UK etc getting money for this Stimulus. China cannot be buying up all the worlds debt can it?

[bluejays]

I hate to break up all this monetary policy talk, but somewhat related, the CDN dollar did a pretty nice run-up today. I really, personally, despite all the doomsday, have confidence the USD bounces back soon enough as it seems to always show resiliance, and tomorrow will likely be moving a chunk of my savings in USD's as an investment. I'm guessing in the morning it'll be available for about 1.06, which I can't imagine it being less come December. We shall see.

[chemgear]

Originally Posted by Cowboy89

For me it's that guy's voice that makes me think scam! Either that or his ad that talks about gaining from world food demand that was airing before the market crash, during the market crash, and after the market crash and still on TV now.

http://www.wealthstreet.ca/about_us.aspx

Also interesting to note that he thinks that there is only one "Perfect Portfolio" allocation template as described in the link. As an aside interesting to know that the Wealthstreet guy Dave Jones is also the CEO of Concrete Equities.

Bump of an older thread but an update on Wealthstreet & Concrete Equities:

http://www.calgaryherald.com/news/he...764/story.html

http://www.calgaryherald.com/news/Fi...768/story.html

[Frequitude]

I thought this got bumped because the TSX is getting hammered today. What, don't like the PCP?!?

[Tinordi]

Any good value buy recommendationss?

[Shazam]

Originally Posted by fleury

I hate to break up all this monetary policy talk, but somewhat related, the CDN dollar did a pretty nice run-up today. I really, personally, despite all the doomsday, have confidence the USD bounces back soon enough as it seems to always show resiliance, and tomorrow will likely be moving a chunk of my savings in USD's as an investment. I'm guessing in the morning it'll be available for about 1.06, which I can't imagine it being less come December. We shall see.

Someone got screwed.