In the normal financial system, which are banks, the institutions have all owners are represented by the respective boards of directors. These tips caring for their own benefit, not to lend to companies that are insolvent or can be assumed that in future it is found that there are problems, provisions such loans, and proceed to execute warrants that have little if that exist. But the bankers can not do what they want with that handle credit and the bank is not theirs. Are accountable to shareholders, depositors before (because misuse of credit can break the bank and lose all their money) and the public finances if, for example, is considered a loan as an expense in the knowledge that would not be returned.
That was the case of Mario Conde who was sentenced to six years in prison for paying 600 million pesetas for a company, Argentia Trust no guarantee (which later proved that it then distributed the money among various Spanish politicians to influence in governmental decisions in the interests of Mario Conde was not the reason for his detention but he gave the money without collateral Banesto). I know that in recent times and bankers in some countries have ignored these rules and to cap it had not been punished but for the moment in Spain are not in that situation and all the banks are reporting profits.
Unfortunately, the savings in the hands of local politicians, it can grant credit without reserve and without running guarantees, especially political parties, or can not?, Or may not be? If it does occur quite frequently ... And now it is intended that these boxes are made even stronger, uniéndolas. No doubt it is a good solution for their survival (in exchange for thousands of layoffs, though) but also magnify the problem of those entities whose management is so unclear.
The boxes have lost their land, opening branches around the country and even have the largest investment abroad. There is a market Murcia, La Rioja and the Basque, a European level in the category regionalistic no sense. It could be said of its social function, but this is a vague concept which is not quantifiable and spending that could be replaced by an increase in tax relief to certain tasks such as banking sponsorship of culture. If you become the greatest pass two things: whether it is within a community of its economic importance is so great that the economic and political autonomy is even more confused if we unite and boxes of different communities, how to ensure balance, how to unify if the political influence of each region is different, and still remain the same ensuring that Cajamadrid-for example, is just in its social spending with Murcia case to merge with the Fund in Murcia? I believe the management problems worsen.
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Written by Droblo on December 3, 2008 with 294 comments
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They often try to give a touch of optimism in the blog to show the positive sides of the crisis and the opportunities it offers. Therefore, joining the Italian Mafia're in luck because it is one of the few economic drivers that are not affected by the crisis, at least that's what they told us the BBC in this article.
The Confesercenti small Italian entrepreneurs in the study ensures that the criminal activity of the mafia now equivalent to approximately 6% of gross domestic product of Italy, estimated that their illegal activities generate a combined turnover of about U.S. $ 163,000 million a year.
Their vast financial resources allow it to gain new market sectors and benefit from the lack of cash to purchase real estate and companies, "says the document.
Back again to the importance of liquidity (in the background, never ceased to be important). In this case we are not talking about a story because it is 6% of Italian GDP, to then say what's going on here. Impressive.
In our country the situation was different, and the only time we are giving mafia war are the Russians acting in favor of the oil company Lukoil.
Two major leaders of the Russian mafia, and Zakho Tariel Oniani Kalashov, acted on behalf of the Russian oil company Lukoil when it made its first efforts to establish a network of 150 gas stations in Spain between 2003 and 2004. That fact is clear from police investigations carried out during Operation Avispa and are reflected in the summary. Similarly, a document sent by the Swiss Prosecutor's Office, dated March 29, 2007, the Audiencia Nacional, maintained that Kalashov "possess a significant part of one of the largest Russian companies of oil, ie, the company Lukoil" .
What we lacked that "Organizatsiya is metiese at the pump, hence the excitement is mounting that this saga of Repsol. However, the Cosa Nostra in the purest style ibérico these years has been devoted to other things and if it is to ask Miloon Khotari (UN), author of a report on the problem of access to housing in Spain.
In Spain I have seen more than elsewhere, high levels of corruption. Corruption directly related to land tenure, property and housing. Meet the factors mentioned above, income disparity, disconnection policies and enrichment and an increase as a result of cartels or the Mafia housing have acted with absolute impunity. Moreover, these cartels have very good connections with politicians and it was clear that this would lead to a crisis very important. I was clear that this would happen, but I was very surprised the scale, the magnitude of the crisis.
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Written by Carlos Lopez on November 25, 2008 with 267 comments
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Personal comment.
On Friday, the markets appeared to throw a sense of strength: General Motors touched lows and reported that no government assistance would go to the bankruptcy and unemployment in the U.S. grew in two months in more than half a million people and yet the stock market rose. However, if one takes into account that since 1896 he had never lost in both the Dow Jones three days after a presidential election, the SP down together on Wednesday and Thursday is the highest in two days since 1987 and the rebound technical after he was so down-low volume, and could give an explanation and it was feared an exception to the weekly trend. The large package of measures the Chinese government of the weekend (from $ 600 billion is the fifth of GDP, which would be another and a few cartridges) extended this feeling positive in Asia and Europe on Monday morning with the exception of Ibex. There's no joy until the afternoon of Thursday in USA.
The bank Santander on October 28, at the mouth of its CEO Alfredo Sáez, denied need more capital. On November 10 announced an expansion. In these few days has been convinced of the impossibility of selling the Bank of Venezuela, shared ABN assets, Cepsa, the fund management and insurance, the price demanded. In short, he has bought unsold before and now has met with a liquidity problem ... (safe somewhere caught in a mortgage-bridge that sounds something) and expanding it is costing all shareholders million in market capitalization euros. And serve to illustrate what is happening with the economy and that makes this crisis only: no matter how much lower interest rates, including EURIBOR, if that cheaper finance is not paid and if there is interest in using this possible liquidity to invest. Until Santander wants to sell assets and unable to do so raises the liquidity of its shareholders or attempts to capture new ones. Santander can do that, but how many companies can do the same, how much funding will get lower rates?
I attached two charts USA, with shading on the cycles of recession, one is the unemployment rate in the U.S. and its forecast to reach 8%
The other is the ISM manufacturing index:
In Spain the situation is similar at other times we have seen much worse economic data and if the figures do not even the bank bad debt is still worrying (http://www.economistas.tv/la-morosidad-oficial-no- is-so /) As shown in the figures economic cycles have been more desperate, it might be a cyclical crisis and give more reason to feel optimistic that you can leave it in months. But it is necessary to recover the credit market, without this condition will worsen and data, as we have seen this week, the suspension of payments that began in financial, banking and then went on to insurance companies, will reach shops and industrial companies.
And that perception is destroying the economy and stock markets, the beneficial effect of lower interest rates. If we add to that the fact that I said the need to sell assets in order to have lost value of cash, accounts for the balance of the week. The best quality of the bag-your-liquidity now is one of the greatest obstacles to the upward trend since it is one of the few markets to draw cash if needed, even at the level of citizens is even easier to sell shares to lose a lot to try to sell another property. As positive aspects of this bad stock weeks, two factors: the low volume decreases (although it can also mean that we remain far from the capitulation later also from the ground) and the finding of the telecoms sector as a safe-to-date available. Now we have to have faith in the famous reunion this weekend but particularly in the aspect I have more faith in market potential manipulation bullish next Friday 21 expiration of the effect of some future (which is the Ibex) and options almost all indices. In fact, statistically the next weeks is a very friendly bags.
Finally, it is very important, despite the rebound yesterday afternoon, falling crude oil (although the effect of the weak € and other causes less understandable its effect on the price of a liter of fuel is less noticeable), gas natural and, in general, all the raw materials. This is no longer seen as something positive because it's getting the bags in many economies where there is much money ... the most important example is Russia. You may see manipulative maneuvers to prevent the oil-icon of all raw materials and lower-stop-confident person to make a speculation in a possible rebound in oil prices and gold. (More ...)
Written by Droblo on November 14, 2008 with 337 comments
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The other day I read that the figure that the U.S. state is being spent on trying to resolve the financial crisis is already 2.7 billion dollars, and that in a country that even before all this and much needed money. He also knew the number of jobs: 524 thousand new unemployed in two months. And I looked for information on the actual situation of finance USA. Let a couple of numbers and put all the zeros, that more than one trillion translates as billions and trillions when we lees and I had to document only American websites:
- On November 11 days to 09.14, the debt is U.S. $ 10.635.794.969.002 amount that increases second to second, and in fact there is a ticking clock that will (http://en.wikipedia.org/wiki / National_Debt_Clock) and discussed here not long ago that going from 9 to 10 billion had to fix it. Currently increases 500.000.000.000 month since October, a figure that is expected to increase sharply reduced because it is what they grew on average annually since 2003. In September, the U.S. government extended, very appropriately, the limit of debt from 10.6 trillion to 11.3 but it seems that it fell short in 2009
- The estimated GDP for 2007 is U.S. 13,800,000,000,000, then the current debt is around 75% of GDP and it seems to get worse closer to 90% just by increasing the debt, if we also take into that GDP may actually be reduced if there is recession, this could be even worse. The highs are not as shown in the chart but we must remember that only exceeded 100% due to World War:
However, many countries are worse off and for years (from the "big" Japan is close to 200%, and in Italy, Belgium and Greece around 100%) the big problem is that this is only the debt State which is a fraction of the total debt of banks, families and American businesses is estimated that approximately 50,000,000,000,000, nearly 5 times more than the public and more than 3 times the entire GDP. In Spain, where we have this feeling of total debt private debt is double the GDP. (More ...)
Written by Droblo on November 11, 2008 with 243 comments
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Personal comment.
After the miracle that was expected (and confirmed) this week, which is called a black Hussein Obama and get to the president of USA (another miracle will do so well), I received news of the aid of our government the mortgage and I thought if there were any other one this week and the government have gone from here when called for direct aid to the people. But I fear not the case: the government decided to deny the crisis first and then support the bank with a series of measures hardly justifiable to the alleged strength of our financial sector. Now that results have boxes and banks and profits have continued to be astronomical (if they are not imply that aid has not been a change in transparency, any entity which is still missing in Spain this loss when it is stronger in other countries that we) decided to "help" directly to certain mortgage helping them go through this downturn. But once again become a more aid for banks to citizens. I think the forum has already been felt all of opinion on this issue and I must say that very sharply so I just want to emphasize again that the prevailing idea is something like: "We are in the worst of the crisis, the guarantee deposits until 2010 and help the mortgage and two years later with the revival that will all be fine, "What will happen if those unemployed after a moratorium of two years can not find work? For that there is no answer.
Of course it is desirable that all this is more a cyclical rough patch but for the moment this seems far removed from reality. The figures continue to worsen every week and what is valued as improvement after adjustments may simply be a very sharp. Look at this original graphic where we can see how it appears the tendency of banks to borrow from the Federal Reserve is changing, but if we compare with other periods in which not even need to resort to EDF, it is easy to appreciate the level of banking crisis the USA and alejadísimo that this is settled:
I do not see any signs to believe that this crisis will last only a few months. E insist not confuse the stock market (which may well bounce for a few weeks as he was bounced a few days) with the real economy. The macro data are disastrous, unreservedly and hope that the discount-rate change can be justified or not, just realized for many months, and that if it lowers the credit drives. If not, only reduce the benefits of saving activity without encouraging investors. The worst thing is that the states are running out of room for maneuver 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 bump, a historic opportunity to buy, but months back upward path" is being installed. And yet this week (except in Europe, Thursday-closed flat Thursday, with some other better and worse) has to have a negative balance. And what if we look at the percentage increase since we have been minimal, the drop is notable because it was very abrupt. And they met the upward trend in November and rise up to (Tuesday) after a day of low volatility (Monday). But even with the help of central banks has been with the resistance that led commenting two weeks ago and is still stuck in a dangerous area. The Dax rose well above the 5000 but was unable to keep the SP and the arrival in 1000 was the perfect excuse to very aggressive sales. The Dow and the Ibex or have approached the 10 mil ...
The fear is still there and as we saw on Wednesday that although statistically the markets work better on the day following the victory of a Republican than a Democrat is that the truth should have been positive expectations were met and there were no surprises, but these recent weeks about buying the rumor and sell the news is becoming a habit and this caused deep bass movement. As I said last week, while there is calm but rising threat falls in there in a 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 envy it is clear that at these levels because I keep seeing danger to both sides. Today we know the data of unemployment last month and is feared to be disastrous, more than -200 thousand. As you recall that statistical curiosity was not so bad a figure since March 2003, just months in the death of the previous bearish trend upward and eventually began in fall 2007.
And what about 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. I think that an abnormality is corrected when the 2009 and not much need for liquidity to match balance at the end of the year. The Euribor rate comparing with a year to 14 days of intervention by the ECB should better compare the profitability offered by your bank to a year and what it pays in the same mortgage 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 liability is so great that the difference between what a customer receives money and what they must pay money for a mortgage is minimal. One consolation: yesterday in U.S. rates were at 1% and 12 months at LIBOR 2.84 (a 184% increase), here have andalusia 3.25 and Euribor 12 months to 4.70 (a 44.62% increase). But still could be much worse ...
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Written by Droblo on November 7, 2008 with 297 comments
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An ancient legend says that Sheram, Prince of India, was so surprised when they learned the game of chess, who wanted to reward generously Sessa, the inventor of that entertainment. He said: "Ask me anything you want." Sessa said: "Sovereign, send me a grain of wheat delivered by the first section of the board, two in the second, four for third, eight in the fourth, and so on until the box 64.
The prince could not please you, because the outcome of the operation S = 1 + 2 + 4 + ... + 2 63 is approximately 18 trillion grains. To get that would sow the whole Earth 65 times.
Sometimes I think that some banks have been passed as the prince of the story, which has pledged the money first and then calculated and it is not, nor had it had the human form they have.
In February 2006 there was a political controversy in the United States following the purchase of the management of six major ports by a Dubai state-owned. President Bush hailed the operation but the Congress, arguing national security, be achieved by delaying the agreement until finally an American company took over the contract. Many Americans were afraid that Dubai-ally considered by the government but in Muslim-majority manage something as important as the safety of the major seaports of the country.
However, in the financial world, the main U.S. takes months and months looking for money regardless of their origin. The crisis of liquidity and confidence has given back to the tortilla and not know what Americans think of walking, but the executives do not disclose any financial problem that the savings (and therefore also the management of pensions in a country where they are mostly private), the decision to grant credits and direction of investment by major banks in the world (in the list of those who have received money from Asia are also the Swiss UBS and Britain's Barclays) are largely mediated by governments that are dictatorships (such as UAE and Kuwait and China where there are elections but women could not vote), representing a majority population and whose anti-Western geostrategic interests (such as Chinese) are conflicting with U.S. interests.
To top the liquidity available for U.S. equities (on the debt is not the case) according to official figures has been largely allocated by fund managers to buy outside the country:
In the first eight months U.S. investors took 68 bn. $ Equity funds, of which 51.8 bn. Funds were invested in U.S. stock market. A year ago was much worse: 81 bn entries. $ In equity funds with sales of 16.4 bn. funds that invested in U.S. stock market.
Ie, in 2007 bought a large amount of money outside the U.S. and made money out of the bag USA. It could have been suspicious of the $ a thought (that was correct until recently) in more profitable assets in yen and € but it is symptomatic: USA managers draw money from American equities even in uptrend begging for money and now Arabic and Chinese.
Should not because the U.S. authorities in their efforts to monitor these flows interventionist? And no Asian investors should consider that might not be good where there buy sell? And the big question: Will there be enough money in the world to solve this in the story or have to wait 65 crops?
PS: And since today is a day as stated in that a change was consummated in the presidency and we are talking about USA miscalculation might be interesting to recall the cost of the intervention in Iraq that the Nobel JOSEPH E. STIGLITZ estimated in March this year and $ 3 trillion according to some voices that should already be in the 4 billion. Money which, remember, has pulled sunk as many taxes they pay to the state that some companies have won contracts in Iraq, or will not reach 10% of that figure. Who says that the reason for all the depth of this crisis can not be in that cost when the U.S. authorities argue that less than 1 trillion will fix the financial crisis?
And to complete the usual summary of the press in which we are all aware of as he lay on the economy Obama's victory:
Written by Droblo on November 5, 2008 with 259 comments
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