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MAJOR DERIVATIVE MELTDOWN ALERT

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The UK is the next Lehmans, but with larger consequences

Do you still think autumn for this? (wasn't that your call?)

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Dagong International Credit Rating - Well someone had to do it !!!

 

http://www.telegraph.co.uk/finance/china-b...AAA-status.html

 

Chinese rating agency strips Western nations of AAA status

 

China's leading credit rating agency has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favour of the West.

Dagong Global Credit Rating Co used its first foray into sovereign debt to paint a revolutionary picture of creditworthiness around the world, giving much greater weight to "wealth creating capacity" and foreign reserves than Fitch, Standard & Poor's, or Moody's.

 

The US falls to AA, while Britain and France slither down to AA-. Belgium, Spain, Italy are ranked at A- along with Malaysia.

 

Dominique Strauss-Kahn, chief of the International Monetary Fund, agreed on Monday that the rising East is a transforming global force. "Asia's time has come," he said.

 

The IMF expects Asia to grow by 7.7pc in 2010, vastly outpacing the eurozone at 1pc and the US at 3.3pc. Emerging nations hold 75pc of the world's $8.4 trillion (£5.6 trillion) of reserves.

 

Dagong rates Norway, Denmark, Switzerland, and Singapore at AAA, along with the commodity twins Australia and New Zealand.

 

Chinese president Hu Jintao said in April that the world needs "an objective, fair, and reasonable standard" for rating sovereign debt. Dagong appears to have stepped into the role, saying its objective was to assess countries using methods that would "not be affected by ideology".

 

"The reason for the global financial crisis and debt crisis in Europe is that the current international credit rating system does not correctly reveal the debtor's repayment ability," said Guan Jianzhong, Dagong's chairman.

 

The agency, known in China for rating companies, said its goal is to "correct the defects" of the existing system and offer a counter-weight to Western agencies.

 

Dagong appears to base growth potential on past performance but this can be misleading, especially in states enjoying technology catch-up. Japan was a high-flyer in 1970s and 1980s before stalling when the Nikkei bubble burst. It has been trapped in near perma-slump ever since.

 

China may start to face some of Japan's demographic problems by the middle of this decade when the working age population peaks.

 

The Western rating agencies put a high value on a long-established rule of law and government institutions that have proved resilient over many decades, or even centuries. China's political system may appear strong – as did the Soviet Union's – but only time will tell whether its foundations are brittle. The violent upheavals of the Cultural Revolution are still a very fresh memory

 

- by AEP

 

+ see also

 

http://jessescrossroadscafe.blogspot.com/2...es-us-debt.html

 

 

- I just wonder how much notice the Chinese will take of this?

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Dagong International Credit Rating - Well someone had to do it !!!

 

http://www.telegraph.co.uk/finance/china-b...AAA-status.html

 

Chinese rating agency strips Western nations of AAA status

 

China's leading credit rating agency has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favour of the West.

Dagong Global Credit Rating Co used its first foray into sovereign debt to paint a revolutionary picture of creditworthiness around the world, giving much greater weight to "wealth creating capacity" and foreign reserves than Fitch, Standard & Poor's, or Moody's.

 

The US falls to AA, while Britain and France slither down to AA-. Belgium, Spain, Italy are ranked at A- along with Malaysia.

 

Dominique Strauss-Kahn, chief of the International Monetary Fund, agreed on Monday that the rising East is a transforming global force. "Asia's time has come," he said.

 

The IMF expects Asia to grow by 7.7pc in 2010, vastly outpacing the eurozone at 1pc and the US at 3.3pc. Emerging nations hold 75pc of the world's $8.4 trillion (£5.6 trillion) of reserves.

 

Dagong rates Norway, Denmark, Switzerland, and Singapore at AAA, along with the commodity twins Australia and New Zealand.

 

Chinese president Hu Jintao said in April that the world needs "an objective, fair, and reasonable standard" for rating sovereign debt. Dagong appears to have stepped into the role, saying its objective was to assess countries using methods that would "not be affected by ideology".

 

"The reason for the global financial crisis and debt crisis in Europe is that the current international credit rating system does not correctly reveal the debtor's repayment ability," said Guan Jianzhong, Dagong's chairman.

 

The agency, known in China for rating companies, said its goal is to "correct the defects" of the existing system and offer a counter-weight to Western agencies.

 

Dagong appears to base growth potential on past performance but this can be misleading, especially in states enjoying technology catch-up. Japan was a high-flyer in 1970s and 1980s before stalling when the Nikkei bubble burst. It has been trapped in near perma-slump ever since.

 

China may start to face some of Japan's demographic problems by the middle of this decade when the working age population peaks.

 

The Western rating agencies put a high value on a long-established rule of law and government institutions that have proved resilient over many decades, or even centuries. China's political system may appear strong – as did the Soviet Union's – but only time will tell whether its foundations are brittle. The violent upheavals of the Cultural Revolution are still a very fresh memory

 

- by AEP

 

+ see also

 

http://jessescrossroadscafe.blogspot.com/2...es-us-debt.html

 

 

- I just wonder how much notice the Chinese will take of this?

 

 

Its a step in right direction but seems that they been more than generous with some of these countries. I suppose China doesn't want to rock the boat.

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You could not make this stuff up!

 

http://www.bloomberg.com/news/2010-07-22/g...-5-billion.html

GM Agrees to Buy Lender AmeriCredit for $3.5 Billion

 

General Motors Co., the automaker 61 percent owned by the U.S., is buying subprime lender AmeriCredit Corp. for $3.5 billion to help it reach more customers with leases and loans to borrowers with faulty credit records.

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:blink:

Thats actually pretty god damn sneaky.

http://www.usatoday.com/money/autos/2006-04-03-gm-deal_x.htm

 

GMAC, is of course, now screwed, because no one is paying their loans back.

GM loads GMAC up with bad debt, selling lots and lots of cars and making a tidy profit.

GM sell GMAC in 2006 before the SHTF

Bit of Hollywood accounting ensures the US tax payer foots the bill for all the bonus's

 

Then GM buys Americredit to rinse repeat.

 

I wonder which fools will buy AmeriCredit when they are done loading them up with bad debt, GM just quietly dump them into the open market when the time comes?

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I thought the whole point of capitalism was that you find someone with wealth and give them something they want in exchange for some of it. Perhaps these people with "faulty credit records" might have enough wealth to buy a car in a few years though. Those green shoots etc, you know. Assuming they can still afford the gas by then...

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I thought the whole point of capitalism was that you find someone with wealth and give them something they want in exchange for some of it. Perhaps these people with "faulty credit records" might have enough wealth to buy a car in a few years though. Those green shoots etc, you know. Assuming they can still afford the gas by then...

NAh, thats Free Market Economics.

Capitalism is just everyone for themselves under the royal cane.

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Freddie Mac Seeks More Aid After a Big Loss

 

WASHINGTON (AP) — The government-controlled mortgage buyer Freddie Mac on Monday asked for $1.8 billion in additional federal aid after posting a larger loss in the second quarter. Freddie Mac said that it lost $6 billion, or $1.85 a share, in the quarter. The company is required to pay a 10 percent annual dividend to the Treasury Department on money it has received from the government. That made up $1.3 billion of the company’s second-quarter losses.

 

The company lost $840 million, or 26 cents a share, in the same quarter last year.

 

The government rescued Freddie Mac and its sibling company, Fannie Mae, from the brink of failure nearly two years ago. The new request means they have needed $148.2 billion to stay afloat, about $63.1 billion of which is being used by Freddie Mac.

 

Freddie Mac is losing money from bad loans it backed, many of them before the housing market went bust. It had $118 billion in bad loans at the end of June, up from $103.4 billion at the end of last year. It owned more than 62,000 foreclosed properties in June, up from about 35,000 a year earlier.

 

Both Fannie Mae and Freddie Mac have lost tens of billions of dollars in the last two years and both are asking the government to prop them up. Last week, Fannie Mae requested $1.5 billion after posting a loss of $3.13 billion, or 55 cents a share, in the second quarter.

 

Still, the two companies are taking different approaches to their situations. Fannie Mae sounded optimistic while Freddie Mac offered a more tempered view.

 

“We recognize that high unemployment and other factors still pose very real challenges for the housing market,” the chief executive, Charles E. Haldeman Jr., said in a statement. “With that in mind, we continue to focus on the quality of the new business we are adding to our book to be responsible stewards of taxpayer funds.”

 

Fannie and Freddie own or guarantee about half of all American mortgages, or nearly 31 million home loans worth more than $5 trillion.

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http://blogs.telegraph.co.uk/news/nilegard...rdinary-people/

 

The Obama presidency increasingly resembles a modern-day Ancien Régime: extravagant and out of touch with the American people

 

 

http://www.nydailynews.com/opinions/2010/0...zy_spanish.html

 

Material girl Michelle Obama is a modern-day Marie Antoinette on a glitzy Spanish vacation

 

Instead, Michelle Obama seems more like a modern-day Marie Antoinette - the French queen who spent extravagantly on clothes and jewels without a thought for her subjects' plight - than an average mother of two. While she's spent her time in the White House telling parents they should relieve their chubby kids' dependency on sugar and stressing the importance of an organic veggie garden, hopping a jet to Europe to meet with Spanish royalty isn't the visual the White House probably wants to project. Perhaps they've forgotten the damning image of John Kerry, on the eve of the 2004 election, windsurfing off the coast of Nantucket?

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Well the combination of circumstantial evidence and irony makes me laugh!

 

http://www.ajc.com/business/eu-oks-new-financial-607746.html

 

The systemic risk board will be chaired by European Central Bank president Jean-Claude Trichet out of Frankfurt. It still needs the formal backing of the European Parliament, but that is expected later

this month.

 

Jean-Claude Juncker also Prime Minister of a Luxembourg (since 20 January 1995) is known for this great quote (2007): "We know what to do, we just dont know how to get elected afterwards.

 

Also in charge of the European Bank stress tests... You couldnt make it up!

 

 

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Shutting the stable door after the horse has bolted, or preparing for worse to come?

 

http://www.bbc.co.uk/news/business-11392274

Savers with banks, building societies and credit unions will soon have greater protection if their savings institution goes bust.

 

From 1 January 2011 the compensation limit rises from £50,000 to the equivalent of 100,000 euros (currently £84,450).

 

The change is as a result of European legislation.

P.S. Isn't this the very provision that royally screwed the Icelandic people? I'm so glad Britain doesn't have an oversize banking sector. :unsure:

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Pennsylvania Speeds Aid to Its Struggling Capital

 

Pennsylvania is speeding payments of $3.6 million to its debt-laden capital, Harrisburg, to prevent the city from defaulting on a general obligation bond, Gov. Edward G. Rendell said on Sunday.

 

To help the city with its cash flow, the state is fast-tracking payments, which were already in progress, of $1 million for fire protection and $2.6 million for an annual pension fund payment, according to a news release from the governor’s office.

 

This month, Harrisburg said it did not have the money to make a scheduled bond payment of $3.3 million on Sept. 15. City Council members met in early September to discuss a possible bankruptcy declaration, a rare step for a city.

 

But Governor Rendell said bankruptcy should be a last resort for Harrisburg and that missing a bond payment was not an option because a default could have repercussions for other municipalities in the state.

 

“Harrisburg’s financial future is still very cloudy, and difficult decisions still need to be made to return this city to fiscal stability,” Mr. Rendell said in the statement. “Allowing a missed bond payment, however, would not be a good decision. It would devastate not only the city, but the school district, the county and Central Pennsylvania’s reputation.”

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Yep.

I agree: US States & European countries : The Next Credit Crisis !

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The Next Crisis Will Come from the States

 

As we watch the debt crisis unfold at the federal level, another disaster is looming closer to most of our homes (literally). It could bring many of our cities down. What’s more, the scale of the damage could be so large that the federal government wouldn’t be able to provide a bailout big enough to help (though I would be against a bailout anyway). The looming crisis: municipal debt.

 

To anyone who claims that the reason state and local governments have trouble meeting their budgets is lack of revenue rather than overspending, I would suggest a look at the growth in municipal debt since 2000. According to a new report by the Meredith Whitney Advisory Group, it has doubled since then. Spending has grown much faster than revenues. And those were the good years, the years when states’ coffers were filling up quickly. Just not as fast as needed to satisfy state and local governments’ endless appetite for spending.

 

According to Time Magazine, some cities are even looking at bankruptcy:

 

A couple of municipalities, such as Los Angeles and Detroit, have even whispered the “B” word. Former Los Angeles Mayor Richard Riordan argued in an editorial in the Wall Street Journal earlier this month that the city will likely have little choice but to declare bankruptcy between now and 2014. Also, several smaller markets, such as Harrisburg, Pa., and Jefferson County, Ala., have openly talked about filing for Chapter 9 bankruptcy — a reorganization available only to municipalities.

 

The mystery, you may ask, is why anyone would be willing to lend money to L.A. or Detroit. They are, after all, not known for their fiscal responsibility. The answer is that a series of artificial legal, tax, and regulatory incentives lured investors into thinking that lending to bankrupted cities would be profitable (in pretty much the same way that government incentives led banks to lend money to people who should never have been able to borrow that much to buy a house).

 

In this case, it is the stable and tax-free nature of muni bonds that explains why we have seen investors pouring their money into municipal debt in recent years. We are talking billions of dollars here: According to the Investment Company Institute, $84 billion went into long-term municipal bond mutual funds in 2010, and about $69 billion in 2009. The 2009 level represents a 785 percent increase from the 2008 level of $7.8 billion.

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In other words, it's going to be "contained"

 

http://www.reuters.com/article/idUSTRE69C5KO20101013

 

WASHINGTON | Wed Oct 13, 2010 3:37pm EDT

 

WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke pledged to pursue "appropriate remedies" to address potential problems with home foreclosure documents, a low-income housing advocacy group said on Wednesday.

 

"Chairman Bernanke informed us that they have in fact discussed the issue with the major lenders, and that they are meeting with other regulatory agencies to review the problems associated with foreclosures; that they will pursue appropriate remedies relative to document signing and MERS issues," National Community Reinvestment Coalition President John Taylor said in a statement.

 

MERS is the Mortgage Electronic Registration Systems used by lenders to track mortgages as they are bought and sold.

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In other words, it's going to be "contained"

 

"Contained" as in, if only they can master the art of single handedly, inserting a red hot length of cooked Spaghetti up the ass, of an alert, young, slightly wounded tom cat?

 

That is my understanding of the Federal definition of "contained"

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"Contained" as in, if only they can master the art of single handedly, inserting a red hot length of cooked Spaghetti up the ass, of an alert, young, slightly wounded tom cat?

 

That is my understanding of the Federal definition of "contained"

 

Excuse my ignorance but I just read the following piece on ZH and thought 'Holy Shit' I know that this is not new *news* but as the implications start to reverberate around my head this can't end well surely?

 

http://www.zerohedge.com/article/meet-fore...es-workers-all-

 

And I guess the other big question I have is 'what does this mean for PM's? (sorry OT)

 

This makes the sub-prime NINJA issue look like a walk in the park - surely no one is going to want to hold $ after this??!!

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CG posting a bit regularly on GEI looks ominous for USD. Everyone knows dollar is dying, the question is only when is has its last breath?

 

link

 

nigeriag.jpg

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CDS:

 

US banks all gapping wider on foreclosure story...we don't think anything new out there, just journalist chat....but it's putting pressure on spreads.

BAC 5YR 198/208 (+23)

WFC 5y 133/143 (+15)

markets are fast so pls ask for live prices.

 

What could reverse the USD?

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ORANGE ALERT!

 

Banks starting to crash again.

 

The recovery is a mirage.

It would make sense. FASB blowing up big time.

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