Personal comment.
After the miracle that was expected (and confirmed) this week, which is called a black and Hussein Obama becomes president of the USA (another miracle is that she does), I received news of aid from our government the mortgage and I thought if there were any other one this week and the government would have done if we are from here when called for direct aid to the people. But I am afraid that has not happened: the government first decided to deny the crisis and support the banking industry after a series of measures hardly justifiable to the alleged strength of our financial sector. Now they have submitted results boxes and banks and profits have continued to be astronomical (if they are not means that aid has not been a change of transparency, still missing that no entity in Spain this loss when there are solutions in other countries more solid than ours) decide to "help" directly to individual mortgaged helping them go through this slump. But once again become a more aid for banks to the public. I think in the forum has already been felt all the opinions on this subject and I must also say that very acutely so I just want to emphasize again that the prevailing idea is something like: "We are in the worst of the crisis, guaranteed deposits until 2010 and helped the mortgaged two years and then with the revival that will fix everything is "What will happen if those unemployed after a two-year moratorium can not find work? For this reason there is no response.
Of course it is desirable that all this is a bad streak but most cyclical of time this seems far removed from reality. The numbers continue to decline week to week and what is valued as improvement may simply be adjustments after a very sharp. Fixed in this original graphic where we can see how it appears the trend for banks to borrow from the Federal Reserve is changing, but if we compare with other periods in which there is not even needed to resort to the EDF, it is easy to appreciate the level of banking crisis of the USA and alejadísimo that this is settled:
I do not see any signal that enables believe that this crisis will last only a few months. E insist not to confuse the bag (which may well bounce for a few weeks as he was bouncing a few days) with the real economy. The macro data are disastrous, unreservedly and hope that the lowering of rates might change, whether justified or not-only be realized within several months, and that if this drives the rebate credit. If not, only reduce the benefits of saving without encouraging the activity to the investor. And the worst thing is that the states are running out of room for maneuver as in Spain itself has acknowledged Solbes (http://www.elpais.com/articulo/economia/Solbes/dice/habra/recursos/afrontar/crisis/elpepueco / 20081105elpepieco_6/Tes)
Turning to the bag, the idea of "This is a pothole, a historic opportunity to buy, but months back in the upward path" is being installed. And yet this week (except in Europe, from Thursday to Thursday-closed flat, with some better rates and other worse) has come to a negative balance. And that if we look at the percentage rise since we have been minimal, is notable because the descent was very sharp. And was the upward trend in November and the maximum rise (Tuesday) after a day of low volatility (Monday). But neither with the help of central banks has been with the resistance led by commenting two weeks ago and is still stuck in a dangerous area. The Dax rose well above 5000 but has been unable to keep them in the SP and the arrival in 1000 has been the perfect excuse to very aggressive sales. The Dow and the Ibex nor have approached the 10 mil ...
The fear is still there as we saw on Wednesday because although statistically markets operate best on the day following the victory of a Republican than a Democrat the truth is that it should have been positive that the forecasts were met and there were no surprises, however these As of last week to buy the rumor and sell the news is becoming a habit and this caused a deep bearish movement. As I commented last week, while there are rises in quiet but there are a lot of threat falls hurry to sell. And he has returned to fulfill. However, I detect many voices that speak of buying in the fall of the year-end rally is possible .... I remain neutral and to envy to keep clear at these levels because I keep seeing danger to both sides. Today it is known the figure of unemployed last month and is feared to be disastrous, most of -200 thousand. As a curious statistic you remember that it was not a bad figure since March 2003, just the month in which he died the previous bearish trend and started the bull that ended in the fall of 2007.
And with regard to the Euribor, a point: that is truly novel now has one year deposits in financial institutions and which are due before 2010 and thus are guaranteed by the state, giving a return similar to the cost of a mortgage. It seems to me that an abnormality was corrected when 2009 arrives and there is much need for liquidity in the face of squaring balance at the end of the year. The Euribor rate comparing to a year with the intervention to 14 days of the ECB should better compare the returns offered by your bank for a year and what you pay for mortgages at that same bank and verify that the differential is not so much . Not to defend the banks with this, just describe a reality, the battle to capture a liability is so great that the differential between what it receives a customer with money and what they should pay that money for a mortgage is minimal. One consolation: yesterday in U.S. rates were at 1% and libor to 12 months to 2.84 (a 184% more), here had to 3.25 and the Euribor to 12 months to 4.70 (a 44.62% increase). But much remains could be even worse ...
(continue reading ...)
Written by Droblo on November 7, 2008 with 295 reviews
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Following the reduction in UK rates (from 4.5% to 3%) and Switzerland, the ECB has decided to follow in his footsteps with a drop of 0.5 points from 3.75% to 3.25%. The threat of recession, and less inflationary pressure prompted by the drop in oil prices has encouraged Trichet and his team to make this decision. But the drop was not as strong as many analysts expected and the stock markets have reacted with immediate descents. Meanwhile, we have to Euribor with the most bearish streak since 2000.
What do you think of this fall? Is it enough or is left more bullets in the chamber? What is more correct, the descent of the Bank of England bestial or as little risky strategy of the ECB?
PS: For you have arrived late, I remind you that you have the rule of the day here.
Written by Carlos Lopez on Nov. 6, 2008 with 275 comments
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One of the first songs we worked when I was a kid and took me to an academy to learn English, which was the most well-known hymn "I want it all" (Aiguaniral) from Queen, the legendary British group led by the late Freddy Mercury (not Freddy Mae, also deceased). The teacher, a typical pipe including English, told us that the chorus (I want it all and I want it now), referring to the attitude of today's youth (then), that "I want everything that I want Now. " We are talking about a word that in his time (almost 20 years ago) were recorded and that over the years have been taking effect.
In today's society, marketing and the social need of belonging to the herd, we are "forced" to follow this maxim of wanting to have everything and want to have it now, and this, subjective considerations aside, it has a cost, of which we can not escape . When older people tell us they saved before you buy what they wanted or needed, we seem alien, and therefore can be seen in shopping malls, we ignore its recommendations.
Let's analyze this cost component.
The component "I want it all" refers to the price (not value) of the goods we want, plasma, the movable bar with xenon lights, the A4 Wagon (also with xenon lights), etc ... It is part the problem of over-consumption in which we live, but it is not the critical point, because if comprásemos paying debts (with cash in our pockets), would enhance the consumption and production, but then we are not going to the trouble arrival of the crisis.
The component "I want it now" is the most problematic, because we live in a system which penalizes savings for consumption on credit. Financial institutions themselves do not offer attractive savings products, at least until last year that have needed money like water to drink and have espabilado.
Let's do some calculations to put "face-saving or spending that accounts for us" I want it now ". Take for example the purchase of a vehicle priced around € 30,000.
We can ask for a loan to the concessionaire's financial and pay 8% in 4 years (operation amortization of capital), or conversely, start saving now, put a fixed amount each month into a high pay or deposit ( operation of capital). We count the cars go up in price as the CPI, so that the second option will need more money for the car of the future. The numbers are as follows
A credit:
Amount to finance: 30,000
TAE: 8%
Fee: € 732.39 / month
Contributions: 48
Interest paid: € 5154.61 (ALARM APPLES AND PEARS)
Total paid: 35154.61 € (ALARM APPLES AND PEARS)
With savings:
Saving monthly fee: 640 €
APR: 4.50%
Contributions 48
Capital contributed: 30720.00 € (ALARM APPLES AND PEARS)
Interest income: € 2872.52 (ALARM APPLES AND PEARS)
Money saved: 33592.52 € (ALARM APPLES AND PEARS)
Now might be demagogue and say that in a way we have paid € 5154.61 interests and the other we have gained € 2872.52 so the difference is somewhat more than 8.000 €, which is € 30,000 on something more than a 25 %, But since the other day we were practicing the theme of assimilation into Income Financial, we observe that the savings produced is equivalent to an income of 48 payments of 92.39 € (732,39-640) that as of today has a value of 2133.34 (3.50% upgraded to the expected price of money), which is € 30,000 on an approximately 7.1%.
As you can see, the finances are a bit disappointing, because so many numbers to only € 2,000, but we have to look at is that in taking the decision to save or finance a spending just generate a present value of € 2133. Despite this expenditure (which corresponds to the value of the bank's profit margin on the discount rate used to calculate the present value), is relatively cheap to buy on credit, and therefore it is logical that in making decisions, in a context that does not criminalize the debt, purchases are made on credit.
As a final conclusion, we note that the money is cheap, and those who serve us (banks and the ECB) are as responsible as ourselves that "I want it now" is our daily bread. If we repeat the calculations with interest at 15% and pay 12% of accounts on the numbers changed much since the difference is almost € 200 monthly, not insignificant amount.
A few days ago, speaking with a solvent employer of impeccable career and clear ideas, I commented that the cheap money in recent years is a cause of the impoverishment of the middle class by the low pressure that have made the unions before the loss purchasing power, as we have slowly changed the salary for the credit, keeping the "apparent consumption capacity."
Therefore, it is now quite logical who preferred to buy on credit to save money because the tycoons and what we "impose" disincentives absolutely planning, savings and budgetary control, becoming "semi-slaves" of credit, working to pay what we have already consumed. When you do not owe anything to anyone can plantarte, leaving the system and go to the mountain goat rearing, but when what they should eat last month is very complicated exit the system. Consuming 20% less every month, would need five months to salirte of "VISA", and in five months, the purposes may fall easily (with a little help from the marketing), but look far during the aims of Eve.
And in conclusion, the usual summary of the press:
Written by Oriolrc on November 3, 2008 with 220 comments
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After the data today, last month, we can confirm that the Euribor twelve months ended in October 5248%, after 0601 points down in the month, which puts you at the lowest level since last May.
Although the closing date of October representing a decrease compared to September revisions of mortgages to take this figure as a reference shall be to the upside. For example, anyone with a mortgage rate of 150,000 euros to 25 years with an interest rate of Euribor plus 0.5%, will see their monthly letter and is encouraged by almost 60 Euro to be at 946 euros.
But after the latest run-rate of the ECB, the Euribor has come down considerably over the last few days of the month, closing on June 31 in 4865 which makes us think that will end the year below 5%.
Written by Carlos Lopez on Oct. 31, 2008 with 24 comments
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Personal comment .-
Last Friday, shares of ING in Amsterdam stock market suffered strong selling pressure (at the close lost 27%) and rumoreaba were urgently in need of capital. The bank's management held a press conference to give figures for the financial soundness of the institution. Over the weekend the Dutch state has injected 10 billion € in the bank. This time no one can accuse the situation of the bank to a massive withdrawal of deposits since the Dutch state had guaranteed all loans until 2009 and, in fact, the rumor did not say that ING suspend payments but that it would expand capital and the Netherlands. So, what was said at the press conference on Friday was false. Once again, as he lied with Bear Stearns, Fortis or Northern Rock. In all countries the same process: the trend is more reliable stock of a bank can assert that what the authorities. And no one takes responsibility for the lies to shareholders. ¿Conclusion? At the moment there is confidence in the statements that assume the mismanagement of private banking but do Confidence in the financial system? What would be weird having it (the text of the press):
"The measure was taken just ten days after the same ING took control of the assets of the failed bank islándico Kaupthing. At that time, a communique from the bank said it did from a position of strength because it had more than $ 1.8 trillion in assets and 85 million customers around the world. "
And the British Barclays state offered him money after assuming the risk of buying the spoils of Lehman and I am sure if the Santander would like the Spanish state would give money with which to finance their adventures in high-risk British and American ...
Another topic, it appears that Spain wants Arab countries to buy state debt, up there perfect, but coincides in time with the purchase of the Spanish state debt from the banks. Ie Spain with its own guarantee fund picks, with that money buy what they do not sell their banks, trusts that these banks use the money to increase the credit and that those who capture the credit it back to the state via taxes ... I know that but as I said, Why do so many middlemen? If Spain is debt, which is to inject money into society and not to those banks which can not be compelled to increase the credit. Lower taxes or subsidies for mortgages and loans before recapitalize banks would be a lot more social and above all faster to end the crisis. Instead, we still do not return to those who were negative ...
As to bag it is clear that we have entered a range that is below a support at least a year and are now above the 10 thousand of Ibex (and the Dow again be paired), 5000's Dax or 1000 of SP500, breaking that level would accelerate the movement in the short (as we have seen this Thursday when the Ibex lost its previous annual minimum) without necessarily changing the trend in the medium term, which remains bearish aplastantemente. As it is not all bag, I think it is noteworthy that gold, rather than value refuge from the crisis, is another asset that is at minimum a year. And the explanation, apart from the rising and falling $ crude, which usually follows, is that gold has traditionally been the refuge against inflation and recession may now be discounted prices that seem been removed as a problem. This is Scramble to many investors and funds who once were compensated for losses in equities with earnings of metals, oil or food ... and even within the equities exchanges between emerging and non emerging. This year the losses are accumulated in a variety of products.
Finally, it was assumed that the October 29 the FED will cut rates and that the ECB will make the Nov. 6. The bearish trend continues and with it the Euribor. Hopefully crude oil continue to support the lowering of inflation although I must admit last week I was too optimistic about the price of petrol and I am confused by looking at graphics fiarme USA and a poor source of the Internet for transforming a gallon in his corresponding liters. And to top it all, the $ is going against us. And it's really odd that just before the elections the U.S. $, despite the huge deficit and its rates so low, is in the $ maximum of two years.
(continue reading ...)
Written by Droblo on October 24, 2008 with 438 reviews
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Personal comment
Friday September 19 2008: Hours before Paulson announced an ambitious plan to rescue financially. European stock markets make the biggest rise in its history entrusted to it in the end to the crisis. 3 weeks after these same bags had fallen since the close of that day more than 25%, a quarter of its value Monday Oct 13: Several hours before governments approve a plan to safeguard the health bank. European stock markets again marked the biggest rise in historia.3 days after their increase has been volatilized, And yet there are those who believe that we will learn from this crisis when time and again repeat the same mistakes? This week we're still positive on that but I still indexes closed Thursday at close of Thursday (we save space by putting) the situation is very bad. The British stock market for example has lost 10.48% in the week despite having injected millions and millions of € to shore up its financial system. Perhaps even more rounds remaining this cartridge or perhaps need more time but it seems that continue to burn, consumed and the stock market does not react. Neither the interbank. Neither the economy.
Changing the subject, on Wednesday left the auction of treasury bills to 12 months to 2 points below Euribor! We are talking about the Spanish state which is funded almost 40% cheaper in the same period which commercial banks and if we add the spreads on the Euribor almost half that individuals and companies. IF this same state that so many assurances that have offered to guarantee liquidity for just over a year all claims, why there is still much distrust, why not lend money to one year in interest if a bank bankruptcy will be aided by the state rather than pass it on to the state by 40% cheaper? The only explanation I can think of is that there is confidence in the soundness of the state but not in its ability to meet its commitments to the banks ... Is not that serious? And so, would it not be easier then it was the state that gave us the liquidity via reduction in taxes that do not track back to a bench that is still without his money?
As for seasonal patterns, technological values on average do better than the overall market over the last three months of the year. In each of the past five years, the Nasdaq Composite has risen more than the SP 500 index in the last quarter, perhaps for the "Christmas campaign" that focuses largely on consumer electronic devices. Another said that in the past 16 years, the worst that it had in the first three quarters of the year, was always the best sector in the fourth quarter, which in theory should be good for the financial sector. However, the uniqueness of these days do little reliable data. It should be borne in mind that in the past 80 years nop ahn arrived or 40 days in which the Dow Jones has risen more than 6% in a single sitting and just this year has been so bearish and several times ... To height of uncertainty today is expiration of some futures and options (such as the Ibex) and thus further distorting the ability to pause an analysis of the situation.
If a council permitís me, I know that many are waiting to see levels similar to those of the annual minimum to buy but if we reach those levels and lose the crash can be brutal, it is unwise to enter bearish trend when it is in levels of support, it is better to go when you're back. Aim to buy at a minimum is entelechy. The time to buy, on the contrary, it will be when you have climbed well over how it is now. I follow the SP500 because it is the principal stock exchange in the world and one of the most "technical" and do not recommend buying until there are levels of 1150 (closed yesterday near 950), this will be the test for me that the market is has given a return, then it is only for trading, "in-bags" in language more castizo, but not to hope for a change of trend, is to "look, not touch." In any case, the first thing you should do is calm down the market, that will be the first sign of a significant reduction of fear.
Finally, I think the bearish trend of the Euribor will continue: if everything goes well because there will be more credit and relax the fear factor that gripped the now 12-month interbank and if you're wrong, because it will lower rates a coordinated and influence something. Falling crude oil or from afar been reflected in the price of fuel and when I do (if it maintained two months at around $ 75 I calculate that gasoline should be 80 cents for January) inflation will give many joys official .
(continue reading ...)
Written by Droblo on October 17, 2008 with 323 reviews
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