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blogs.wsj.com/brussels/2011/06/30/...-not-so-green-presidency/

Poland’s Not-So-Green Presidency

By Alessandro Torello


Reuters
Tonight at midnight, Poland takes the helm of the European Union for the first time.

An awkward proposal to increase the European Union’s budget by a minimum 5% for 2014-20 will place Poland in the uncomfortable position of finding agreement among EU governments  and the European Parliament, and risks making it it a difficult six months. But there may some strains also over Poland’s environmental credentials.

At a meeting of environment ministers last week, Poland refused to sign off to a set of conclusions that it thought were suggesting that the EU could be moving to a more ambitious target in cutting CO2 emissions by 2020 beyond the current 20%.

There was so little controversy over the final document that the Hungarian minister who chaired the meeting –his country holds the presidency until Poland takes over tonight– was already declaring it approved, when Poland finally got his attention and spoke out against it.

Many countries wouldn’t be happy to face more ambitious targets as it would mean spending more money at a time of financial constraints, but Poland is more nervous than others because 95% of its electricity production comes from burning coal, which has a high rate of CO2 emissions.

Even though the momentum for climate-change policies has slowed since the fiasco of the United-Nations sponsored Copenhagen conference, the debate has never faded, especially in the EU, where a dedicated commissioner –Connie Hedegaard– keeps it alive and running.

Poland’s chairmanship of climate talks within the EU will likely mean that many issues will be frozen until next year, when Denmark takes over.

This may also have a more global consequence because in December South Africa will host another UN-sponsored global climate conference, at which Poland will lead the EU delegation.

Expectations for the Durban meeting are not, it must be said, particularly high, but the EU still has the ambition of being an inspiring force behind the international negotiations for a deal to cut CO2 emissions, and having a skeptical lead negotiator may not help.

So, where will the Poles focus their climate and energy efforts during the six months?

Shale gas is a good bet. Poland is seeking to develop this technology that’s changing the global natural gas market since the U.S. brought it to an industrial scale. Poland is considered one of the countries with the most significant resources in Europe, even though research is just starting.

Shale gas –whose environmental consequences are questioned by many– would have a big impact economically and politically for Poland, helping reduce the country’s dependence on gas imports from Russia. This dependence gives Moscow strong political leverage, Brussels a lingering concern of possible disruptions in case of a dispute, and Warsaw a big gas bill.

Gas also emits much less CO2 when it’s burned to produce electricity, so it would help the country reduce its impact on climate change, in line with European goals.

That may not help much for 2020, though: Shale gas production might still be a decade away even then.

Forget Greece: 10 Not-So-Fun-Facts About German Banks
July, 5th 2011   by The Ox
Source ;
seekingalpha.com/article/...cts-about-german-banks?source=feed


1. German banks are perhaps the most leveraged in the developed world- far more so than any of the so called PIIGS countries. The graph below is based on data from the IMF Global Financial Stability Report and was created by earlywarn.blogspot.com. The IMF defines leverage as tangible assets to tangible common equity."



2. In the 2010 stress tests of European banks, 6 of the 14 German Banks tested declined to publish the expected detailed breakdown of their sovereign debt holdings. The only other European bank to shirk this disclosure was Greece’s ATE bank, which ended up failing the test.

3. According to John Mauldin, his sources tell him “many of the state-owned German Landesbanks are essentially insolvent, with massive amounts of sovereign debt.”

4. Landesbanks are a group of state owned banks – they account for about 20% of German bank assets. Competitors of Landesbanks complain that the Landesbanks have an unfair advantage over commercial banks because they can raise money at a cheaper rate, due to their implicit government backing. Kind of like people used to complain about Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB).

5. In May 2011, Germany’s financial regulator, BaFin banned naked shorts against several large German banks, insurance companies, and reinsurance firms.

6. In April 2009, a German newspaper published a leaked list from BaFin that showed German banks had approximately 816 billion euros in toxic assets, about twice what was generally assumed prior to then. German Finance Minister Peer Steinbrueck told Reuters that it was “regrettable" that the list was publicized. Steinbruek said the leak was "not funny.”

7. The German Bank Restructuring Act, which was passed in November, makes it less likely that German taxpayers will have to bail out bondholders with Tier 2 seniority. Moody’s responded to the rule change by downgrading the subordinated debt of 23 German banks.

8. Ben Bernake stated last week that US money market funds had substantial exposure to core European banks. “A disorderly Greek default would have significant effects on the US” economy, according to the Federal Reserve Chairman.

9. The Euribor rate, which approximates the average interest rate banks offer to lend unsecured funds to each other, has been steadily rising since the Spring of 2010 and has more than doubled since then.

10. As the chart below illustrates, the iShares MSCI Europe Financials Index ETF, EUFN is close to having its 50 day moving average cross below its 200 day moving average. At Ox Mountain, our extensive research indicates it’s generally a good idea to exit an ETF when the 50-200 downward cross occurs.
(Click to enlarge)

For a summary of which other ETFs are gaining or losing momentum this week, please go here. www.fairweatherinvesting.com/resources/market-news

To see how following a long term moving average strategy can possibly increase your risk-adjusted returns considerably, please go here.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

This article is tagged with: The Macro View, Economy

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Signals to Expect From ECB's Trichet
July, 6th 2011

online.wsj.com/article/...731982195632.html?mod=googlenews_wsj

By BRIAN BLACKSTONE

European Central Bank chief Jean-Claude Trichet's monthly news conference on Thursday could be among the most significant in recent memory: Greece is edging closer to default; Moody's has pushed Portugal into junk status with Greece; euro-zone inflation is near two-year highs; and the economy is slowing.

Oh, and the ECB is almost certain to raise interest rates for the second time in three months, further distancing itself from the U.S. Federal Reserve and Bank of England, which have rates closer to zero and are expected to hold them there for many more months.

Here's a road map for Thursday:

Greece: The ECB initially took a strong stance against debt restructuring or any sort of arrangement with the private sector that leads to default by rating agencies. It forced Germany to back down from its earlier insistence for a maturity extension (which would have almost certainly been ruled a default).

But ECB officials ceded control of the debate when they started speaking favorably about voluntary private-sector participation. The problem is that, ultimately, what constitutes voluntary participation is a judgment call. Governments and banks have touted recent Greek rollover plans as strictly voluntary. Rating agencies are skeptical. Mr. Trichet's remarks will be eyed for whether he thinks private-sector participation is still useful to even be discussing, or whether the very debate is doing more harm than good.

Collateral rules: The ECB suspended its collateral requirements for Greece one year ago, meaning its bonds can be used at the ECB's lending window despite being rated deep into junk status. A default rating changes things, because the ECB rules also require "adequate" collateral be posted.

One question that needs clarity is whether the ECB will look for loopholes to keep Greek banks afloat. For instance, it could insist that all three rating agencies declare a default before cutting Greece off, or make distinctions between individual bond issues and the rating of Greece itself, or make it clear that emergency loans from the Greek central bank would still be available to Greek banks. That would provide some calm to markets and governments, but at the expense of the ECB's credibility.

If Mr. Trichet takes a hard line, suggesting he would side with the first default ruling and cut Greece off, the onus would shift back to governments and banks to either come up with rollover plans that pass muster with the rating agencies, or abandon the idea altogether.

Rating agencies: Moody's on Tuesday cut Portugal's rating to junk status, the first agency to do so. If S&P and Fitch follow suit in coming weeks, Portuguese bonds risk losing their eligibility at the ECB (though economists think the ECB would suspend the rules for Portugal as it already has for Greece and Ireland). Still, the move raises two issues for the ECB. First, given its vast exposure to Greece, Ireland and Portugal via bond purchases and collateral, how secure is the ECB's balance sheet? And second, why are rating agencies still given such a central role in the ECB's crisis response? Expect Mr. Trichet to be quizzed on both.

The economy/inflation: The ECB has been largely upbeat on the economic outlook and worried about inflation. But growth appears to have weakened in the second quarter, raising the question as to whether this is a temporary soft patch or start of a more pronounced slowdown. Inflation, meanwhile, was 2.7% in June. That's above the ECB's 2% target but below its recent peak of 2.8% in April. Mr. Trichet's comments may provide clues to whether the ECB thinks the worst of inflation is over, or whether the risk remains for a renewed upturn.

Interest rates: Lost in the Greek drama is the fact that the ECB will almost surely raise its main policy rate to 1.5% from 1.25%, the second increase in three months. The Fed and Bank of England appear nowhere near raising rates, meaning further ECB rate increases may put upward pressure on the euro. Look for any hints from Mr. Trichet on whether more increases are in the pipeline later this year (by, for instance, continuing to warn about inflation risks) or if he is ready to hit the pause button.

Write to Brian Blackstone at brian.blackstone@dowjones.com

www.reuters.com/article/2011/07/07/...ve-idUSTRE7660GE20110707

Exclusive: Treasury secretly weighs options to avert default
WASHINGTON | Wed Jul 6, 2011 11:40pm EDT

(Reuters) - A small team of Treasury officials is discussing options to stave off default if Congress fails to raise the country's borrowing limit by an August 2 deadline, sources familiar with the matter said on Wednesday.

Senior officials, including Treasury Secretary Timothy Geithner, have repeatedly said there are no contingency plans if lawmakers do not give the U.S. government the authority to borrow more money.

But behind the scenes, top Treasury officials have been exploring ways to prevent a financial meltdown that would be triggered if the government were unable to pay its bills on time, sources told Reuters.

Treasury has studied the following issues:

- Whether the administration can delay payments to try to manage cash flows after August 2

- If the U.S. Constitution allows President Barack Obama to ignore Congress and the government to continue to issue debt

- Whether a 1985 finding by a government watchdog gives the government legal authority to prioritize payments.

The Treasury team has also spoken to the Federal Reserve about how the central bank -- specifically the New York Federal Reserve Bank -- would operate as Treasury's broker in the markets if a deal to raise the United States' $14.3 trillion borrowing cap is not reached on time.

The U.S. government currently borrows about $125 billion each month. The Obama administration wants Congress to raise the limit by more than $2 trillion to meet the country's borrowing needs through the 2012 presidential election.

The contingency discussions, which have remained a closely guarded secret throughout weeks of negotiations with Congress over the debt ceiling, are being led by Mary Miller, Assistant Secretary for Financial Markets, who is effectively custodian of the country's public debt.

Miller's team has debated whether Obama could ignore Congress and order continued borrowing -- by relying on the 14th Amendment of the U.S. Constitution -- if it fails to raise the borrowing cap.

The fourth section of the 14th Amendment states the United States' public debt "shall not be questioned." Some argue the clause means the government cannot renege on its debts.

Obama dismissed talk of invoking the amendment on Wednesday. "I don't think we should even get to the constitutional issue," he said. "Congress has a responsibility to make sure we pay our bills. We've always paid them in the past."

HINT OF PLAN B COULD HURT TALKS

The White House declined to comment on the discussions at Treasury, but administration officials sought to tamp down talk of relying on the 14th Amendment.

There has been growing speculation in Washington in recent days that the administration could use the amendment to ignore the congressionally imposed limit on the amount of money the United States can borrow.

"Despite suggestions to the contrary, the 14th Amendment is not a failsafe that would allow the government to avoid defaulting on its obligations," said White House spokeswoman Amy Brundage.

Miller's team has discussed the Government Accountability Office's 1985 assessment that Treasury has the authority to prioritize payments in the event of a default -- an option Treasury officials have been wary of.

The administration's nightmare scenario is that investors panic at the prospect of a default, triggering a crisis that eclipses the 2008 financial meltdown. That could plunge the U.S. economy into another recession, something that could doom Obama's re-election prospects in 2012.

Some conservative Republicans have argued the Treasury can prioritize payments and manage a default. The administration wants to keep lawmakers focused on the August 2 deadline, and even a hint of a "Plan B" could lessen the urgency to strike a deal by then.

"As we have said repeatedly over the past six months, there is no alternative to raising the debt limit," Treasury spokeswoman Colleen Murray said when asked to comment on the Treasury discussions.

"The only way to prevent a default crisis and protect America's credit-worthiness is to enact a timely debt limit increase, which we remain confident Congress will do."

TREASURY OFFICIALS MUM

Obama meets leaders from both parties at the White House on Thursday as he seeks to get an agreement to cut trillions from the U.S. deficit, which Republicans have demanded in exchange for their support to raise the debt limit.

The fear of any loss of momentum in the debt and deficit talks is so great that even in their private conversations with former colleagues and investors, administration officials are refusing to admit to contingency discussions.

"There has to be contingency planning," said one former Obama administration official. "But they won't even tell me that."

That view was echoed by numerous former officials from the Clinton, Bush and Obama administrations.

"You have to have a backup plan. If you are relying on Congress to avoid the possibility of an Armageddon, you can't just bet on that," said Keith Hennessey, who headed the White House National Economic Council during President George W. Bush's administration.

In August, the Treasury will take in roughly $172 billion, but is obligated to make $306 billion in payments -- meaning it cannot pay about 45 percent of its bills without borrowing more money, according to the Bipartisan Policy Center, a Washington think tank.

That would force the administration to make some difficult choices, even though officials believe emergency measures will buy little time and cannot stave off an economic catastrophe.

OPTIONS "PRETTY UGLY"

If Treasury were to decide to delay some payments, one option could be to postpone a disbursement of more than $49 billion to Social Security recipients that is due on August 3.

It would be a politically explosive step but one that could allow the government to temporarily pay bondholders to try to avoid foreign investors dumping U.S. Treasuries and the dollar.

The administration has warned that any missed payments, including those to retirees, veterans and contractors, would be default by another name, and the Treasury team still has concerns that any contingency plan would prove unworkable.

Steve McMillin, a former deputy director of the White House Office of Management and Budget under Bush, said Treasury has options but most of them are "pretty ugly."

If Treasury were to decide to delay payments, it would need to re-program government computers that generate automatic payments as they fall due -- a massive and difficult undertaking. Treasury makes about 3 million payments each day.

From their second floor offices in Treasury, Miller and Fiscal Assistant Secretary Richard Gregg, are the lieutenants Geithner is relying on if the administration's first option of negotiating a deal with Republicans falls apart.

"She's dealing with this day in and day out," said a former Treasury official.

The former official said Treasury aides were "speaking with Congress on a daily basis," giving them the latest updates on receipts and when default could occur.

The source said White House Chief of Staff Bill Daley and other officials regularly ask Miller for information.

"Every day they talk about the debt ceiling. The night before, they get the most recent numbers," the source said.

Michael Barr, a former Treasury official who worked closely with Miller, said he spoke with Miller and Gregg a month ago.

"They were exploring if there were any legal and practical alternatives. It was not obvious to them that the president has the legal authority to pick and choose who gets paid," he said.

Barr added: "It is not obvious that even if they had legal authority, that as a practical matter you can do it."

As recently as June 21, Miller told a group of sovereign debt holders in London that there is no Plan B and assured them that the debt limit would be raised before August 2.

Publicly, Treasury has maintained there is no contingency plan. "Our plan is for Congress to pass the debt limit," Geithner said late in May. "Our fall-back plan is for Congress to pass the debt limit, and our fall-back plan to the fall-back plan is for Congress to pass the debt limit."

(By Richard Cowan, Rachelle Younglai, Tim Reid, and Caren Bohan)

(Editing by Ross Colvin and Jackie Frank)

Der Hauptsitz des Unternehmens muss sich in Deutschland befinden. Außer um den Rechtssitz kann es sich hierbei auch um den operativen Sitz des Unternehmens handeln. Der operative Sitz ist der teilweise oder vollständige Sitz der Geschäftsleitung oder der Unternehmensverwaltung. Befindet sich der Hauptsitz nicht in Deutschland, muss der Schwerpunkt des Börsenhandels mit der Aktie an der Frankfurter Börse liegen, und das Unternehmen muss seinen juristischen Sitz in der Europäischen Union oder einem Staat der Europäischen Freihandelszone (EFTA) haben.
Liegt der operative Sitz eines Unternehmens in Deutschland, nicht jedoch dessen Rechtssitz, muss das Unternehmen diese In-formation öffentlich kenntlich machen. Die Hauptanforderung des Umsatzschwerpunkts ist erfüllt, wenn mindestens 33 Prozent des Gesamtumsatzes innerhalb der letzten drei Monate über die Frankfurter Wertpapierbörse (einschließlich XETRA) liefen.
Bei Erfüllung dieser Kriterien basiert die Auswahl der Indexwertpapiere im DAX® Index auf dem Orderbuchumsatz in XETRA® und auf dem Parkett der Frankfurter Wertpapierbörse innerhalb der letzten 12 Monate sowie der Streubesitz-Marktkapitalisierung (nachstehend die "Streubesitz-Marktkapitalisierung") zu einem bestimmten Berichtszeitpunkt (letzter Handelstag des Monats). Diese Marktkapitalisierung wird unter Verwendung des Durchschnitts der volumengewichteten Durchschnittspreise der letzten 20 Handelstage vor dem letzten Tag des Monats bestimmt.
Zusammenstellung des DAX® Index
Die Auswahl von Unternehmen für den DAX® Index basiert ausschließlich auf zwei quantitativen Kriterien: Börsenumsatz und Marktkapitalisierung. Dazu werden vier Regeln (Fast Exit, Fast Entry, Regular Exit und Regular Entry) angewandt. In Ausnah-mefällen, einschließlich kurzfristig angekündigter Übernahmen oder wesentlicher Veränderungen in Bezug auf den Streubesitz eines Unternehmens, kann die Geschäftsleitung des Indexanbieters in Absprache mit dem Arbeitskreis Aktienindizes von diesen Regeln abweichen. Eine reguläre Anpassung findet jährlich statt. Erfüllen mehrere Unternehmen die Kriterien, werden die besten bzw. schlechtesten Kandidaten gemäß ihrer Streubesitz-Marktkapitalisierung aufgenommen bzw. ausgeschlossen.
Der DAX® Index ist kapitalgewichtet, wobei die Gewichtung der einzelnen Titel dem jeweiligen Anteil an der Gesamtkapitalisierung aller den Index bildenden Titel entspricht. Die Gewichtung basiert ausschließlich auf dem als Streubesitz geltenden Anteil des Grundkapitals einer jeden Aktiengattung. Sowohl die Anzahl der Aktien des Grundkapitals als auch der Streubesitzfaktor werden vierteljährlich bei der Verkettung aktualisiert. Im Rahmen der Verkettung kann die Anzahl der Aktien einzelner Unternehmen reduziert werden, um eine begrenzte Gewichtung dieser Unternehmen innerhalb des DAX® Index zu erreichen. Die Obergrenze beträgt 10%. Die Berechnung des Index erfolgt unter Verwendung der Laspeyres-Formel.
Weitere Informationen
Die Deutsche Börse AG hat Leitfäden zu ihren Aktienindizes herausgegeben. Die Leitfäden werden fortlaufend aktualisiert und können von der Deutsche Börse AG bezogen oder über das Internet unter www.deutsche-boerse.com abgerufen werden.

The Right Way to Use Inverse Funds


By Keith Fitz-Gerald  

www.minyanville.com/businessmarkets/...=portals&from=yahoo


More by Keith Fitz-Gerald
3 Ways to Slash Your Risk Despite the Negative Investing Outlook
Socially Responsible Investing: Four Ways to Profit as You Help Clean Up Wall Street
Financial Reform Follies: By Upstaging Bernanke, JPMorgan's Dimon Shows Us Where Washington Went Wrong
          §
Editor's Note: Keith Fitz-Gerald is the chief investment strategist for Money Morning, an online investment research site.

So-called "inverse funds" are widely misunderstood and can be tricky to use, but these specialized investments have a place in most portfolios.

In fact, with US stocks having zoomed more than 80% off their March 2009 market lows, now could be the ideal time to add inverse exchange-traded funds to your portfolio.

But there's definitely a right way and a wrong way to use them, so it's worth taking a closer look.

The Lowdown on Inverse ETFs

If you're not familiar with inverse exchange-traded funds (ETFs) -- or haven't used them -- don't worry. You're not alone. Despite the fact that they've been around a few years, I've found that many investors either aren't aware of them or don't quite understand how they can be used.

Others who are familiar with inverse ETFs view them solely as a hedging instrument and don't realize that their strategic use can lead to higher, more-consistent returns over time.

That's ironic, because they've proven their worth time and again -- such as during the run-up in oil prices that we saw in 2005 and 2006, and during the financial crisis that got its start in late 2007.

As their name implies, an inverse ETF is a specialized investment vehicle that moves opposite whatever security or index they're designed to track.

Inverse ETFs trade just like stocks on regular exchanges, which means that investors who want to use them don't have to have special accounts or approval from their brokers. And because they are priced in "real time" -- just like regular stocks (and as opposed to conventional mutual funds) -- investors who want to really fine-tune their approach can literally monitor their exposure down to the minute or the tick if they wish.

Inverse funds can utilize a variety or combination of financial instruments -- including options and futures -- to achieve their objectives. And yet, their operation is almost completely invisible to the investor. That makes ETFs ideal for counter-balancing long positions in a diversified portfolio without having to worry about the intricacies of short selling, put options, liquidity, taxes, or margin management.

Inverse funds also remove the element of market timing from the equation. And that's a very good thing, since the vast majority of investors -- individual and professional alike -- fail to keep pace with the market averages. In fact, in any given year, about three-quarters of all professional managers lag the performance of the Standard & Poor's 500 Index.

Rydex/SGI created one of the first inverse funds: The Rydex Inverse S&P 500 Strategy Inverse Fund (RYURX). In professional trading circles, it was known as the Rydex URSA, or simply "ursa," which is Latin for "bear."

Today, as part of a $1 trillion industry segment, there are more than 100 inverse funds tracking the S&P 500, the Nasdaq Composite Index, the Dow Jones Industrial Average, as well as all sorts of other indices ranging from domestic small caps to foreign choices like the iShares FTSE/Xinhua China 25 Index (FXI).

There are even so-called "ultra" inverse funds, which offer double or even triple the inverse results if you want to be more aggressive. These come with their own unique wrinkles because they use leverage to achieve their objectives. But don't necessarily believe all the bad press they've received in recent years. If used properly, they're hardly the "return killers" pundits would have you believe.

I like to use inverse funds in two ways:

As an "income stabilizer."
And as an "absolute-return producer."

Let's take a look at both.

Inverse Funds as an Income Stabilizer

If you've ever been sailing and hit rough water, you might be familiar with something called a "storm anchor." It's something that's thrown overboard in an effort to stabilize the boat.

That's a great analogy. Because inverse funds are truly non-correlated assets, they serve the same purpose as a storm anchor. So if you're dependent on income, using inverse funds can stabilize the principal value of your holdings, while allowing you to concentrate on preserving your income.

This is more of a "set-it-and-forget-it" approach to income investing. And research studies underscore that having 5% to 10% of your overall assets in such holdings is just about right.

Income as an Absolute-Return Producer

If you're more aggressive, you can use inverse funds to achieve absolute returns (aka profits) during rough market stretches in which everyone else around you is fretting about the losses they're incurring.

Investors who travel this route typically allocate more than 5% to 10% of their portfolios in inverse-type investments -- depending upon what it is that they're trying to hedge.

Investors in this group also tend to rebalance their inverse funds regularly -- sometimes even daily -- to accommodate the market's inevitable ebbs and flows (see related graphic).



Consider, for example, a $10,000 investment that outperforms the markets by 5%. An investor who uses inverse funds to hedge that investment would now want to add an additional $500 to an appropriate inverse fund to rebalance the incremental return (or "alpha," as it's referred to by professional investors).

Similarly, if a hedged investment has fallen by 5%, that same investor would want to sell $500 worth of inverse funds to reduce the net exposure to zero ($0.00).

A Worthwhile Sacrifice

In investing, as in physics, there is no "free lunch." In other words, in order to get the security that these inverse funds provide, you have to give up something.

Because inverse funds move in the opposite direction to the underlying indices they track, they'll take a little off the top when markets are rising.

However, in a world characterized by out-of-control government spending and markets that are exposed to the risks created by seriously out-of-control financial institutions, that's an acceptable trade-off. Especially when it comes to the peace of mind I get by using them.

Actions to Take

Although they are specialized investments, I believe "inverse funds" have a place in most portfolios.

Here are a few of my favorite choices to help you get started.

If you're partial to US stocks, consider the aforementioned Rydex Inverse S&P 500 Strategy Inverse Fund. It moves opposite the S&P 500 Index.

If you've got heavy US Treasury exposure -- particularly at the longer end of the spectrum as many investors do right now -- consider the Rydex Inverse Government Long Bond Strategy Inverse Fund (RYJUX) or even the iPath US Treasury Long Bond Bear ETN (DLBS). Although the latter is technically an exchange-traded note (ETN), the purpose and function is similar.

If you're an investor who favors high tech, or who is big into energy, there's the ProShares Short QQQ ETF (PSQ) or the United States Short Oil Fund (DNO).

If you find that you share one of my major worries, and are concerned about the outlook for the US dollar, or if you have the majority of your portfolio in dollar-denominated investments, you might find that the PowerShares DB US Dollar Index Bearish (UDN) will provide the security that eases those fears.

Finally, if you share my view that China represents the greatest long-term investment potential on the planet -- but you still wish to "smooth out" some of the interim volatility that's certain to come -- consider the Ultrashort FTSE/Xinhua China Proshares ETF (FXP). This is kind of the yin to the yang of the aforementioned iShares FTSE/Xinhua China 25 Index ETF.

For more on ETFs, try a free trial of Ron Coby and Denny Lamson's Grail ETF & Equity Investor.

How are we certain it was just a price correction? The slope of the 200-day moving average line (blue line) remained positive during the price dip. I viewed that as a strong indicator that the overall “investment community” remained committed to the long side of the US stock market.

Remember, technical analysis reflects trader psychology, and human investment patterns tend to be repetitive.

Once key support is identified, and that region was verified (the fact the index held support above our proprietary region in July 2010), we thought it prudent to to go long the index. That was in in August 2010 at 1044. We remained in that posture until March 2011 as the market traded above 1325, just prior to the April high and subsequent correction to the end of June.

Is history repeating itself once again this year (April to end of June correction) as it did last? Currently it appears that way, and if so we should expect constructive price action ahead for the next few months.

Currently the S&P 500 Index continues to work its way toward historical highs (the 1575 region) as we get closer to our overall prognostication. That being said, the last 20% will be the toughest as the area of the old highs, denoted by the double top on the chart, will provide a formidable test.

How to play this move?

As stated above, our long term view is the S&P 500 will reach new historical highs before year end. However, during the last five to six trading days the index has exhibited a near term parabolic move to the upside. Therefore, to chase the market at current levels is not prudent. Traders may want to wait for a pullback to go long the SPY, near the $131.00 region.

Editor's Note: For more content, visit www.thechartlab.com.

www.minyanville.com/businessmarkets/...arket/7/8/2011/id/35619

source
seekingalpha.com/article/...-portfolio-management?source=yahoo

Barclays iPath ETNs: Useful Tools for Bond Portfolio Management

by Lawrence Weiman

Since August, Barclays iPath has introduced two sets of ETNs that make available to smaller investors bond portfolio management tools which were previously only available through the use of futures or swaps markets. They allow investors to take positions on the particular parts of the yield curve or on the shape of the yield curve. I will focus on the first set in this article.

iPath offers bull and bear instruments on two year interest rates (DTUS, DTUL), 10 year interest rates (DTYS, DTYL) and 30 year rates (DLBS, DLBL). The “bear” instruments (ticker ends in S) increase in value with increases in interest rates, and vice versa for the bull notes (ticker ending in L).

Unlike many of the ETFs in fixed income, these instruments are based on absolute moves, not daily moves, and they are not leveraged.

While the most obvious use of these instruments would be simply to take an outright view on interest rates, the more interesting application for investors would be to make use of these as tools for modifying the risk of an overall fixed income strategy, much in the way institutional investors make use of futures and interest rate swaps.

Here are a few examples:nterest Rate Risk Management
The bull and bear ETNs allow fixed income investors to alter the risk of their fixed income investments and exposure to the impact of changing interest rates, without the need to liquidate bond holdings. A couple examples:

1. An investor holds an existing portfolio of individual corporate bonds, including some maturing in 2021 that were purchased in 2006 at rates well above current 10-year rates and with an attractive spread over Treasuries for the bonds.

The investor has unrealized gains on those bonds but feels that long term rates have bottomed. The investor would prefer not to sell the individual bond because of issues related to liquidity, bid ask spreads and the current low spreads for high grade corporates vs. Treasuries.

By purchasing the 10 year bearish ETN, the investor would accomplish the following:

Lock in the gains on the bond due to the fall in long term interest rates;
Preserve the attractive spread vs. Treasuries on his existing corporate bond;
Eliminate the need to trade out of the illiquid corporate bond;
Retain the flexibility to easily alter his strategy in response to changes in market conditions and / or his view of the market.
2. When constructing fixed income portfolios, most investors assess their outlook for interest rates and shorten or extend maturities based on their forecast of future interest rates.

For example, in the current interest rate environment with three month T-bills at .15 and 2-year Treasuries at .61%, there is a strong disincentive for investors anticipating higher rates to lock in a two year investment.

An investor anticipating higher inflation and thus higher interest rates would keep maturities very short. This would eliminate the risk of locking in current rates and leave open the opportunity to benefit from rolling the short term investment at higher rates at a later date.

As an alternative, an investor anticipating higher rates could do the following:

Invest cash in short term T-bills or an ETF with a very short duration;
purchase the 2-year bear ETN.
A variation on this strategy that sought to generate higher yield would be to combine a position in a floating rate loan fund such as Fidelity Floating Rate High Income (FFRHX - yield 2.80%) combined with the 2-year bear note. The yield on the fund will rise along with short term rates and the 2-year bear note would increase in value as well.

The graph below, with 3 month T-bills (red) vs. 2-year Treasury notes (blue), shows both extremely low levels of overall interest rates as well as a large spread between three month and two year rates. A "reversion to the mean" would mean both higher interest rates and a narrower spread between the two rates.

As tools for interest rate management, these ETNs allow an investor to alter the interest rate risk of his portfolio without selling off individual bonds or trading in and out of his bond ETF or mutual funds.


“Stripping Out” Interest Rate Risk From a Bond Position
Use of these interest rate ETNs can be particularly useful for investors in municipal or corporate bonds by allowing the investor to “strip out” the interest rate risk from the credit risk out of a corporate or municpal bond position. Here are two examples:

1. Municipal Bonds

Consider the municipal bond investor who feels that the current relationship between municipal bonds and Treasuries presents an attractive opportunity. The investor is considering buying a 10-year municipal bond with yields above those of Treasuries, while the long term average is for such bonds to trade at a yield .85 of Treasuries.

However, the investor anticipates that the overall level of long term interest rates will rise, meaning that even if the spreads between munis and Treasuries revert to the mean, the investor will get hurt by the increase in the overall level of interest rates. Purchasing a bear ETN on the 10-year interest rates would eliminate the risk associated with overall interest rates and make the municipal bond purchase a “pure play” on the relative levels of munis vs. Treasuries.

2. Credit Spreads

In a similar manner, investors could take advantage of opportunities in investment grade or high yield bonds without taking a view on interest rates.

For example in a typical “flight to quality” financial panic scenario, it is very common for interest rates on government securities to fall sharply while credit spreads for both investment grade and high yield bonds move to extremely high levels. The investor who anticipates a “reversion to the mean” after the panic subsides would expect rates to rise and credit spreads to narrow. The graph below shows several periods, including 2008, when a flight to quality pushed the spread between corporate bonds (red) and Treasuries (blue) to extreme levels and then subsequently narrowed:



Thus, if this investor purchased investment grade or high yield individual bonds or ETFs, part of the gain from the narrowing of the yield spreads would be offset by losses due to the increase in interest rates. A strategy that would have combined the purchase of the credit risk bonds with the purchase of a bear Treasury ETN would, in combination with the credit bond position, create a “pure play” on the narrowing of the interest rate spreads regardless of the overall level of interest rates. I would not be surprised if an ETN is soon introduced that will offer a direct way to express a view on credit spreads

All of these strategies have been used by institutional fixed income investors for decades but they required either the complications of futures contracts, shorting bonds or ETFs and / or accesss to the institutional-only swaps markets. With these new ETNs, retail investors have some new tools for their portfolio management.

I will cover the other new fixed income ETNs on the yield curve in my next article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

T

There is no inflation furthermore ; deflation is coming. Groupon/coupon society wont allow higher prices, we all use Grocery/Gas discount points etc. locally as well, more "discounting" so buy bonds it aint over yet, 30+ years of gains, again read Gary Shilling latest book. buy zero coupon 30yr for max gain potential (Bea of Yahoo think).

This picture belowed to the posted article by L. Weiman .

Source  (July, 8th 2011)

finance.yahoo.com/blogs/breakout/...worry-bonds-125525974.html

With Stocks Near the Top, It’s Time to Worry About Bonds

Remember the archery contest in Robin Hood where they are shooting arrows and each time they hit the bullseye, they move the target 10 paces further away and shoot again, with the fair Maid Marian watching all the while? I kind of get the feeling that's how money manager Chip Cobb of BMT Asset Management feels right now. He's happy to have reached his full year target of 1350 on the S&P 500, but woeful that it happened only one week into the second-half of the year.
How do you play a market that you think is going nowhere for the next 25 weeks? Answer: you worry about bonds.
"My biggest concern is with the fixed income markets" Cobb says, explaining that he thinks a lot of people are going to get hurt by rising market rates long before the Fed actually lifts its own. "So much money flood into the bond market...but unfortunately, these people who tried to do the right thing at the time and go away from risk assets are going to be greatly disappointed when rates start to rise," he says.
Cobb doesn't see the Fed raising rates for at least another year and says even when they do they won't be ''overly aggressive." And given the many headwinds we face, he says it makes sense for Treasury buyers to look at other asset classes, even ''higher paying dividend stocks, north of 3%, to get a better return for the next 12 months."
And maybe he's right. With the S&P 500 now up about 8% year-to-date and paying about 1.8% in dividends, it's right on target (to keep with the Robin Hood theme) with its long-term average of 10%.
When asked about the imminent start of 2nd quarter earnings season, Cobb flatly recites "the driver of markets has been, and will continue to be corporate earnings" before warning that record profit margins "have already started a very mild retreat."
Cobb adds, "If you're a worker, you might be disappointed with your job prospects, but if you're a shareholder, it doesn't get much better than this."
Extrapolate that to his call on the stock market, add in the fact that profitability is either at or very near the the top, and doggonit, you might consider pulling a different arrow from your quiver too.

Forget Gold and Silver: THIS Could be the SAFEST Way to Protect Against Inflation

www.streetauthority.com/bonds/...tect-against-inflation-458324

Whenever the topic of inflation arises, the two words that most often come from investors' mouths are "gold" and "silver." And while it's true that gold and silver are inflation hedges that offer large potential returns, they also tend to carry an equally large degree of risk.
Common wisdom holds that the prices of commodities will keep up with inflation and help investors by delivering high potential returns even as consumer prices rise. There's just one problem with that. Volatility. Risk is measured by volatility. Huge losses that occur when you need the money can be disastrous, as many investors learned in the two recent bear markets.
There is, however, a near-riskless way to hedge against inflation. This doesn't mean you can't lose money, but it does mean if inflation goes up, then your investment will likely increase in value and greatly reduce the risk of loss. In fact, economic laws practically dictate that this investment will rise with inflation, and markets almost always respect basic economic laws.

Another basic principle of economics is that the interest rate on a bond is like rent paid by the bond issuer to use the investor's money for a time. Academic research has shown that bonds deliver an average return of 3.7% a year more than inflation. The total return is equal to this rent income plus an inflation premium. Right now, with long-term rates at record lows, investors aren't getting any inflation premium.
Because interest rates include that inflation premium, interest rates and inflation usually move in the same direction. If inflation rises, then interest rates will have to go up. While investors in gold and other inflation hedges are trying to protect against inflation, one of the only ways you are virtually guaranteed to be on the right side of the inflation bet is to own interest rates.
As an exchange-traded fund (ETF), ProShares UltraShort Lehman 20+ Year Treasury (NYSE: TBT)makes it possible for you to do this. This ETF is designed to go up in value when the interest rates on long-term Treasury bonds go up. It uses derivative contracts that take leveraged positions in these bonds. Fund managers buy $2 worth of contracts for each dollar invested, giving investors leverage and a little more bang for their investment buck.
Bond prices move down as interest rates move up, and this ETF allows you to profit from a decline in the price of bonds. Again, it uses derivative contracts, but by using Treasuries, almost all of the credit risk is eliminated. The U.S. government has never defaulted on its debt, and investors in Treasuries continue to assume a default will never actually happen.
The potential upside for TBT is impressive. Right now, the Federal Reserve is buying most of the available U.S. bonds. Since the financial crisis began in 2008, the Fed has purchased almost 70% of all Treasury bonds issued, and they now own even more than China. When its program of buying these bonds, known as "QE2," ends, most likely later this year, prices are likely to fall and TBT could bounce as much as 25% higher to about $40. This projection is based on the security's chart pattern, with $40 representing the first level of resistance (see the chart below).
Long-term, in the next year or so, could see TBT double as interest rates go back to more normal, pre-crisis levels -- especially if inflation rises above 3%. This would put TBT at the level where it traded before the financial crisis, when economic conditions were considered normal.


TBT's price is near its all-time low. It is also oversold on a technical basis, meaning we should expect a move higher. Stocks can remain oversold for extended periods of time, however, they almost always follow the fundamental trend. Value investors use oversold extremes to establish long-term positions, confident that they will be rewarded in time. With the fundamental trend likely to favor higher inflation, TBT represents a value play on that idea.
The chart above shows the Rate of Change (ROC) indicator in the bottom of the frame is about two standard deviations below normal. The ROC indicator is like a car's speedometer for the stock price, showing how fast the price is moving. Just like cars moving too fast or too slow in traffic tend to cause problems, stocks moving up or down too fast also tend to encounter problems.
To help spot what's too fast or too slow, I've added Bollinger bands to the ROC indicator. These bands apply standard deviations to the indicator, a term that's used to define what's "normal" from a mathematical perspective. They are often used by technicians on price charts, but applying them to an indicator like ROC provides insight into when a "buy" or "sell" should be made. When the ROC moves outside of the bands, the general trend of the stock price usually changes direction. So in TBT's case, we see that ROC fell below the lower Band. What's important to notice is how the black line in the bottom (rate of change) tends to bounce between the two blue Bollinger Bands. From the bottom, where it is now, I expect the rate of change to increase along with the price.

Action to Takeý The risk for this investment is limited. A more detailed review of the chart shows there is support at $31, and I would not expect TBT to fall below that level. This price level is where the double bottom can be seen forming last August and September. These are usually reliable bottom patterns, and prices should remain above those lows. If inflation picks up to as much as 3%, then we can easily expect the long-term interest rate to rise to about 6%. From current levels, that would lead TBT to roughly double in the value.
If you're worried about inflation, consider TBT. As a leveraged ETF investment that goes up along with interest rates, I think it's a better bet than gold, silver or other commodities as a hedge against inflation. Consider placing a stop-loss order at $31, limiting risk to less than 10%. When QE2 ends, you could very well see a quick 25% gain and possibly even a 100% gain in the next 12-18 months.


--Michael Carr

Die Zinsen in den Ländern der Eurozone waren jahrelang ähnlich. Im November 2009 haben es „die Märkte“ geschafft, aus Bonitätsdifferenzen Zinsdifferenzen zu erzwingen. „Die Märkte“ – das sind die Seismografen von Ratingagenturen, die aus diesen Differenzen ein Geschäft machen. Diese Agenturen werden von den Investmentbanken bezahlt, deren Papiere sie bewerten. AAA-Bewertungen generieren mehr Geschäft. Die Gewinne der Ratingagenturen Fitch und Standard & Poor haben sich von 2000 bis 2007 verdoppelt, der Gewinn von Moody’s hat sich auf US$ 2,2 Milliarden verdreifacht.
Die Ratingagenturen haben die Bonität einzelner Euroländer herabgestuft. Das hat Kreditausfallversicherungen (CDS) gegen diese Länder lukrativ gemacht. Die reichen Euroländer wussten, dass die Entgleisung eines ersten Landes aus den Euroschienen in Zeitlupe die Entgleisung des ganzen Zuges auslösen würde. Schweden hatte auf Betreiben einer Ratingagentur schon die kostenlose Kinderbetreuung abschaffen und Kanada sein Schienennetz vom Atlantik bis zum Pazifik gegen CAN$ 2 Milliarden privatisieren müssen.

Die Hinrichtung der Griechen
Die Neue Züricher Zeitung berichtet am 14. Juni 2011, dass „Gläubiger, welche in griechische Staatsanleihen mit noch zweijähriger Laufzeit investieren, EU-weit garantierte Renditen von um die 25 % einstreichen“. Als die deutsche Bundesregierung diese privaten Gläubiger aufgefordert hat, sich an der Rettung Griechenlands zu beteiligen, fand Bankensprecher Josef Ackermann die Diskussion „ganz unglücklich“ und drohte zunächst, die Märkte würden das negativ aufnehmen.
Am 30. Juni 2011 hat er dann einer Beteiligung im Umfang von 1 % der griechischen Schuldenlast doch zugestimmt – gemessen am Gesamtpaket „Peanuts“, wie einer seiner Vorgänger gesagt hätte. Die Banken würden auf dieses 1 % auch nicht verzichten, sondern es in griechische Staatsanleihen reinvestieren. Damit wäre das Arrangement auf Kosten der Steuerzahler politisch durchsetzbar. Die Milliarden fließen ohnehin nicht nach Griechenland, sondern zum größten Teil direkt an die Gläubiger.
Die Ratingagenturen haben dann aber sogar diesen bescheidenen Beitrag privater Gläubiger mit der Drohung verhindert, den Euro dann zu zerschießen. „Wenn es den US-Ratingagenturen und Finanzalchemiebanken gelingt, einen Anstieg der Zinsen spanischer und italienischer Staatspapiere gegen 7 % zu erreichen“, schreibt Stephan Schulmeister aus Wien, „hat das Endspiel um den Euro begonnen. Denn Spanien und Italien passen unter keinen Rettungsschirm“.
Dann ist – dank europäischer Dummheit – die Position des Dollars als Weltleitwährung gewahrt. Südeuropäische Staaten sinken auf Prekariatsstatus und die Europäische Union unterwirft sich mit ihren Mitgliedern der hoheitlichen Gewalt US-amerikanischer Ratingagenturen. Auch US-Behörden sind machtlos. Die effiziente Lobbyarbeit der Finanzbranche hat erreicht, dass das Personal der US-Bankenaufsicht (Securities and Exchange Commission) systematisch abgebaut worden ist, so dass eine wirksame Überprüfung ihres Geschäftsgebarens nicht mehr möglich ist.
Für die Griechen wäre ein Schuldenschnitt ein Befreiungsschlag, aber sie haben nicht die Macht, das durchzusetzen. Die Sparauflagen zerren das Land immer tiefer in den Strudel.
Mit Griechenland hat das Bankhaus Goldman Sachs beizeiten und heimlich einen Sprengsatz in die Eurozone eingeschleust und dadurch den Fortbestand des Dollars als Weltleitwährung vorerst gesichert:
Die damalige griechische Regierung wurde 2001 gegen ein Honorar von 300.000 Dollar und einen Kredit von mehreren Milliarden Dollar darin unterstützt, die Statistiken so geschickt zu fälschen, dass die Kriterien für den Eintritt in die Eurozone erfüllt schienen. Die Bürokraten in Brüssel haben dieses perfide Spiel nicht durchschaut.
Als jeder amerikanische Staatsbürger mit siebenfach höherer öffentlicher Schuld belastet war als ein griechischer Staatsbürger und der Euro den Dollar als Weltleitwährung hätte ablösen können, haben die US-Ratingagenturen Griechenland wegen zu hoher Verschuldung, Spanien dagegen wegen zu niedriger Verschuldung herabgestuft. Pensionsfonds und institutionelle Investoren konnten in Anleihen dieser Staaten jetzt nicht mehr investieren. Die USA behielten ihr AAA-Rating, der Kurs amerikanischer Staatsanleihen stieg, die Zinsen sanken. Portugal musste für zehnjährige Anleihen 11 % Prozent zahlen, die USA nur 3 %.

„Die Märkte“ unterhöhlen die Demokratie
Wer sind diese „Märkte“, vor denen alle zittern? Sie treiben viele Regierungen dazu, ihre Völker in Elend und Verzweiflung zu stoßen. Sie lösen weltweit Hungersnöte aus – Jean Ziegler spricht von hundert Millionen „Morden“. Sie zwingen Regierungen dazu, die Parlamente zu übergehen, Gesetze zu brechen und in wenigen Tagen Rettungsschirme in Milliardenhöhe auf Kosten der Steuerzahler aufzuspannen – „alternativlos“, wie die deutsche Kanzlerin zu sagen pflegt. In den USA haben sie die Zahl der Zwangsvollstreckungen von Wohnhäusern auf sechs Millionen pro Jahr vervielfacht.
Sind „die Märkte“ eine abstrakte, unsichtbare Kraft, die über aller politischen Macht thront? Über dem Selbstbestimmungsrecht und dem Willen der Völker? Über der unantastbaren Würde des Menschen, welche das deutsche Grundgesetz zu garantieren meint? Über den „unveräußerlichen Rechten wie Leben, Freiheit und dem Streben nach Glück“ in der großartigen Vision der amerikanischen Verfassungsväter? Sind diese „Märkte“ stärker als alle militärische Gewalt? Wirkungsvoller als alle Aktionen von Selbstmordattentätern?
Vor dem Gesetz mögen alle Menschen gleich sein. Die Gesetze aber werden im Interesse derer gemacht und umgesetzt, die die Gleichheit der Menschen vor dem Gesetz durch die Gleichheit der Dollars und Euros vor dem Gesetz ersetzt haben. Wall Street Börsenmakler haben Regierungsbeamte bestochen, Bücher gefälscht, Kunden betrogen, Geldwäsche betrieben, Scheinverluste gedeckt, bei der Steuerflucht geholfen, Betrug begangen und vieles mehr. Dafür haben sie eine Strafe von $ 1 Milliarde akzeptiert.
Credit Suisse hat eine Strafe von $ ½ Milliarde angenommen, die Deutsche Bank $ 554 Mio, die UBS $ 780 Mio, Citibank, JP Morgan und Merrill Lynch je $ 385 Mio, die weltweit größte Versicherungsgesellschaft AIG $ 1,6 Milliarden und die Bank of America gar $ 8,5 Milliarden – immer in Verbindung mit einer „Nichtverfolgungsvereinbarung“ mit der amerikanischen Staatsanwaltschaft und der Steuerbehörde IRS. Auch in London wollten die Behörden durchgreifen: £ 840.000 Strafe und £ 1,5 Mio Entschädigung wurden der Deutschen Bank auferlegt. In Südkorea, musste sie € 642.000 Strafe zahlen und ihre Wertpapiergeschäfte für sechs Monate teilweise aussetzen.
Im Gegensatz zu Mafiabossen sind die hierfür Verantwortlichen strafrechtlich nirgendwo belangt worden. Vielleicht weil sie – wie Marcus Antonius über Marcus Iunius Brutus gesagt haben soll – zwar korrupt sind, morden und die Welt zerstören, es sich aber um ehrenwerte Leute handelt. Wer sind denn diejenigen, die die ganze Welt in ihrem Bann halten?

Korrupte Männer beherrschen die Märkte
Henry M. Paulson begann seine Karriere als stellvertretender US-Verteidigungsminister. Als Chef des Bankhauses Goldman Sachs war sein Jahresverdienst $ 37 Mio. Als er in 2006 Finanzminister wurde, musste er Goldman Sachs Aktien im Wert von $ 485 Mio verkaufen. Der Verkaufserlös war nach einem vom Bush-Vater durchgebrachten Gesetz steuerfrei.  
Der Chef des Bankhauses Merrill Lynch hat 2006 und 2007 $ 90 Mio verdient und bei seinem Ausscheiden Aktien im Wert von $ 131 Mio und eine Barabfindung von $ 30 Mio erhalten. Sein Nachfolger bekam für 2007 noch $ 87 Mio. Merrill Lynch ist im Dezember 2008 vom Staat gerettet und von der Bank of America übernommen worden. Zuvor haben sich deren vier höchste Manager Erfolgsbeteiligungen in Höhe von $ 121 Mio gezahlt. Nach der Rettung mit Steuergeldern kassierte das Management insgesamt Boni $ 3,6 Milliarden.
Am 16. September 2008 ist Lehman Brothers in Konkurs gegangen. Ein späterer Prüfbericht hat aufgedeckt, dass die Investmentbank Bilanzen geschönt hatte und schon Wochen vor dem Zusammenbruch insolvent war. Fünf Männer an der Spitze, die ihre eigene Bank zerstört und die ganze Welt in eine Finanzkrise gestürzt haben, haben sich für die Jahre 2000 bis 2007 eine Erfolgsbeteiligung von $ 1,1 Milliarden gezahlt, die sie nach der Pleite behalten durften. Der Vorstand der Bank hatte sechs Firmenjets und zahlreiche Hubschrauber und der Vorsitzende Richard Fuld einen persönlichen Aufzug, der ihn direkt in das 31. Stockwerk brachte. Für sein Ausscheiden erhielt er eine Prämie von $ ½ Milliarde.
Martin J. Sullivan hat mit Finanzprodukten der weltgrößten Versicherungsgesellschaft AIG in 2008 einen Verlust von $ 11 Milliarden produziert. Die AIG ist danach verstaatlicht worden. Der heutige Finanzminister Timothy F. Geithner hat dafür $ 150 Milliarden Steuergelder eingesetzt, private Gläubiger aber nicht beteiligt. „Sie behalten alle Zahlungsansprüche aus dem AIG-Incentiveplan für Finanzprodukte und erhalten zusätzlich ein monatliches Beratungshonorar von $ 1 Mio“, wird Sullivan bei seiner Entlassung bestätigt.
Die AIG-Zweigstelle in London hatte 400 Mitarbeiter, denen bis 2007 jährlich $ 3,5 Milliarden gezahlt wurden – also im Durchschnitt für jeden fast $ 9 Mio pro Jahr. Der Chef der Londoner Niederlassung erhielt jährlich $ 35 Mio. Joseph St. Denis, der aus Protest gegen solche Geschäftspraktiken gekündigt hatte, wurde in der Jahresversammlung voller Häme nachgerufen, Versagern wie ihm, die vom Geschäft nichts verstünden, könnte selbstverständlich nichts gezahlt werden.
2008 hat Henry Paulson mit einem Rettungspaket von $ 700 Milliarden aus öffentlichen Geldern das Überleben der US-Finanz-„industrie“ gesichert. In 2009 und 2010 haben Morgan Stanley und Goldman Sachs ihren Managern wieder Erfolgsprämien im zweistelligen Milliardenbereich gezahlt. Goldman-Sachs-Chef Lloyd D. Blankfein, der mit seinem berühmten Spruch „Ich bin ein Banker, der Gottes Werk verrichtet“ Aufsehen erregt hatte, hat nach Berechnungen der Frankfurter Allgemeinen in 2010 ca. $ 20 Mio verdient und hält Goldman Sachs Aktien im Wert von $ ½ Milliarde.
In Deutschland sind die Maßstäbe etwas verschoben: Die HRE ist mit € 10 Milliarden Steuergeldern verstaatlicht worden und musste mit Garantien von € 150 Milliarden gestützt werden. Die Vorstände Axel Wieandt, Kai Wilhelm Franzmeyer und Frank Krings, die nur ca. zwei Jahre bei der Bank tätig waren, erhalten nach Erreichen der Altersgrenze eine jährliche Betriebsrente von 240.000 bzw. 192.000 Euro.
Im Vergleich mit dem Einkommen des New Yorker Hedgefondsmanagers John Paulson sind solche Summen lächerlich. In 2007 verdiente er $ 3,7 Milliarden. In 2010 konnte er sein Einkommen auf $ 5 Milliarden steigern – an jedem einzelnen Tag mehr als das Jahreseinkommen des armen Deutsche-Bank-Chefs Josef Ackermann. Ermittlungen der US-Wertpapierbehörde wegen gemeinschaftlichen Betrugs von John Paulson mit dem Bankhaus Goldman Sachs sind gegen Zahlung von mehr als einer $ ½ Milliarde eingestellt worden.

Die Nach-uns-die-Sintflut-Mentalität
Ein richtiger Ingenieur entwickelt und produziert technischen Fortschritt. Ein „financial engineer“, wie es im Fachjargon heißt (also ein Finanzingenieur – vielleicht besser Finanzjongleur) entwickelt oder produziert nichts, was irgendjemandem das Leben erleichtert. Im Gegenteil – er vernichtet Arbeitsplätze, Ersparnisse, Altersversorgungen, Ausbildungshoffnungen, Lebenschancen, ja Leben und vermehrt Not, Verzweiflung und Hunger auf der Welt. Aber er verdient bis zu hundert Mal mehr als ein richtiger Ingenieur.
Die Erfolgsprämien der Wall Street Banker stiegen von $ 9 Milliarden in 2002 auf $ 33 Milliarden in 2006. Das durchschnittliche Jahresgehalt eines Angestellten im öffentlichen Dienst ist in vielen US-Bundesstaaten um $ 20.000. Das durchschnittliche Jahresgehalt eines Mitarbeiters von Goldman Sachs beträgt $ 600.000. Die durchschnittliche private Verschuldung eines amerikanischen Haushalts ist von $ 18.000 in 1980 auf $ 47.000 in 2008 gestiegen. „Wenn du keine Augen zum Sehen hast, wirst du sie brauchen, um zu weinen“, hat Jean-Paul Sartre das erbärmliche Los dieser Ausgebeuteten beschrieben.
Das Bankhaus Goldman Sachs – „Gottes Stellvertreter auf Erden“ – hat für $ 40 Milliarden nicht werthaltige Hypothekenpapiere verkauft, davon $ 22 an die AIG und heimlich auf den Zusammenbruch des US-Hypothekenmarktes gewettet. Gleichzeitig haben sie sich gegen eine Prämie von $ 150 Mio gegen einen Bankrott von AIG versichert.
Neue Papiere sind speziell auf einen maximalen Verlust bei den Käufern hin konstruiert worden. Kongressabgeordnete haben das Goldman-Sachs-Chef Lloyd Blankfein später als verbrecherisch vorgehalten. Der meinte dazu: „Im Zusammenhang mit Marketingoptimierung ist das kein Verbrechen“. Sein Kollege von der Citibank kommentierte diese Bemerkung mit Bezug auf den Titanic-Untergang: „Wir müssen tanzen, solange die Musik spielt“.
Der weltweite Handel mit diesen seltsamen, für die Realwirtschaft nutzlosen Wertpapieren hat inzwischen ein Volumen von mehr als $ 600.000 Milliarden erreicht – das Zehnfache des Bruttoinlandsprodukts der ganzen Erde. Solange die Regeln dieses Spiels bleiben wie sie sind, haben die Finanzinstitutionen, die diese Papiere herausgeben und mit ihnen handeln die Macht, die Welt jederzeit in den Abgrund zu stürzen – oder zumindest damit zu drohen und so zu erzwingen, was immer ihnen in den Sinn kommt.
Der amerikanische Finanzjournalist Max Keiser nennt die Finanzmogule „Papier-Terroristen“ und Präsident Abraham Lincoln (1809 – 1865) erkannte: „Der Finanzsektor ist despotischer als eine Monarchie, unverschämter als eine Diktatur, selbstsüchtiger als die Bürokratie. Sie wird ihre Herrschaft ausdehnen, bis aller Reichtum in wenigen Händen und die Republik zerstört ist“. Lincoln ist ermordet worden. Der New Yorker Finanzkolumnist John Cassidy meint, Wall Street und das Finanzzentrum in London könnten einfach abgeschafft werden, ohne irgendeinen Nachteil für die reale Wirtschaft.

Prof. Berger ist Mitglied im wissenschaftlichen Beirat der Wissensmanufakturund wird einer der Referenten beim WISSENS-FORUM 2011 sein.  Er leitet das Business Reframing Institut Karlsruhe (www.business-reframing.de), das mit einer schnellen und wirksamen Methode artgerechte Menschenführung in mittelständischen Unternehmen einführt. Sein Interesse an Fragen der Finanzordnung hat sich aus dem Leiden des Mittelstands an den Machenschaften der Finanz-„industrie“ ergeben.
www.wissensmanufaktur.net

www.wissensmanufaktur.net/bankrotterklaerung

Auszug aus dem Interview der Börsenzeitung vom 4.6.2011

Frage:
Aber wieder wird der Aufschwung auf Pump finanziert. Wer hält den Mechanismus eigentlich am Laufen: Sind es die Sparer, die ihre Anlagen wie vor der Krise in die USA transferieren? Oder findet die Geldschöpfung im Bankensystem statt, gefördert durch die viel zu niedrigen Zinsen der Notenbanken?

Bofinger:
Beides. Es ist ja nicht so, dass das Verschuldungsniveau durch eine vorgegebene Ersparnisbildung begrenzt wird, wie in den Lehrbüchern immer suggeriert wird. Stattdessen gilt: Banken können so lange uneingeschränkt Kredite schöpfen, wie sich das angesichts des Leitzinsniveaus noch rechnet. Die einzelne Bank ist also nie richtig restringiert. Wenn sie Liquidität benötigt, geht sie einfach zur Notenbank, oder sie holt sich die Refinanzierung am Geldmarkt. Das hat nichts mit dem Lehrbuch-Modell zu tun, wo Banken nur dann Kredite vergeben, wenn sie zufällig eine Einlage durch einen Sparer bekommen oder wenn ihnen die Notenbank am Geldmarkt eine Anleihe abkauft.



Diese im ersten Moment für den Laien nicht besonders revolutionär klingende Aussage Bofingers hat gewaltige Konsequenzen für alle Bürger, die über Sparguthaben verfügen. Wer nun als Betroffener noch ruhig bleibt (nach dem Motto, „Das kriegen Die schon wieder hin“), sollte spätestens jetzt sein Weltbild hinterfragen.

Regelmäßige Leser oder Zuschauer unserer Veröffentlichungen wissen, dass Banken nur dann durch Kredite neues Geld erzeugen dürfen, wenn sie gewisse Auflagen für Mindestreserven in Form von Spareinlagen und einen „Hauch“ von Eigenkapital erfüllen. Auf diese Weise sollte das Volumen der Geldschöpfung durch Banken eigentlich begrenzt werden. Laut Bofinger spielt diese Grundlage im Rahmen der Krise offenbar nun keine Rolle mehr.

Man kann also seitens der Kreditinstitute Geld produzieren, wie es beliebt.

Mir ist wichtig, dass diese „Bankrotterklärung“ ganz Europas (!) in diesem Fall nicht von der Wissensmanufaktur benannt wird, sondern von einem der Wirtschaftsweisen! Nun tröstet es wenig, wenn eigentlich alle Staaten der Welt (allem voran die USA) durch diese Banksystempraxis bankrott sind. Diese Realität wird natürlich nur hinter verschlossenen Türen in Expertenzirkeln ausgesprochen. Ausgerechnet diese Personen verkünden aber über die Medien mit ihren Politdarstellern stets „Sicherheit“ für alle Sparer.

Was ich neulich in einem n-tv-Interview mit Herrn Prof. Norbert Walter (ehem. Chefvolkswirt der Deutschen Bank) hörte, hatte mich ebenfalls geschockt. Da wurde von dem Journalisten Frank Meyer (den ich sehr schätze) in aller Klarheit darauf hingewiesen, dass die Euro-Rettung am Beispiel Griechenland komplett gegen geltendes Recht verstößt, worauf Herr Walter mit einem süffisanten und menschenverachtenden „Ich bin mir dessen bewusst…“ reagierte. Interview siehe:

www.n-tv.de/mediathek/sendungen/...nigsweg-article3286506.html

Diese Dreistigkeit und Beleidigung unseres angeblichen Rechtsstaates sucht natürlich ihresgleichen, aber ich dachte mir, dass dieser Volkswirt sich schon bei der Einführung des Euros auf ganzer Linie irrte und ich seinen Kommentaren eh nur noch wenig Gehalt beimesse.

Nun aber Bofinger, der in Amt und Würden des Sachverständigenrates mit dem heutigen Wissen und den Erfahrungen des Euro-Irrtums solche Bomben in Texte einbaut, ist eine gewaltige Entwicklung. Hier arbeitet offenbar ein Insider an seiner Reputation, die nach der Enteignung der Sparer wohl weiterhin erhalten bleiben soll (nach dem Motto, „Ich hab es ja schon immer gesagt…). Es erschließt sich mir nicht, ob Herr Bofinger über das Abstraktionsvermögen verfügt, dass er hier eine widerrechtliche Tyrannei beschreibt und offenbar toleriert, mehr noch, die er sogar im Rahmen seiner Funktion aktiv mitgestaltet… Für unser Institut ist dieser Vorgang besonders erwähnenswert, da wir schon seit langem erklären, dass Banken quasi ohne Restriktionen Geld produzieren können, woraufhin wir oft nur Kopfschütteln von Bankenvertretern ernten…

Wie aber kommen solche dramatischen rechtsverachtenden Verwerfungen zustande, die man nur noch als „bananenrepublikanisch“ bezeichnen kann? Die Herstellung von „Willkür-Geld“ durch private Geschäftsbanken bedeutet schließlich eine fundamentale Machtabgabe des Staates (also der Bürger) zugunsten der Banken.

Ich glaube nicht, dass es zu weit geht, wenn ich an dieser Stelle das Grundgesetz zitiere:



Grundgesetz Art. 20

Die Bundesrepublik Deutschland ist ein demokratischer und sozialer Bundesstaat.
Alle Staatsgewalt geht vom Volke aus. Sie wird vom Volke in Wahlen und Abstimmungen und durch besondere Organe der Gesetzgebung, der vollziehenden Gewalt und der Rechtsprechung ausgeübt.
Die Gesetzgebung ist an die verfassungsmäßige Ordnung, die vollziehende Gewalt und die Rechtsprechung sind an Gesetz und Recht gebunden.
Gegen jeden, der es unternimmt, diese Ordnung zu beseitigen, haben alle Deutschen das Recht zum Widerstand, wenn andere Abhilfe nicht möglich ist.


Nun stellt sich die Frage, inwieweit wir nun berechtigt (oder sogar verpflichtet?) sind, gemäß Art. 20 Abs. 4 Widerstand zu leisten, da der Rechtsbruch der Systemfunktionäre nun völlig offen und für jeden klar erkennbar stattfindet. Wie könnte das aussehen, denn wer will schon Ärger haben? Auf die Gerichte und deren Repräsentanten können wir wohl eher nicht hoffen. Wenn der Rechtstaat (wie durch Herrn Prof. Walter geschehen) schon offen negiert werden darf, was hat dann das Grundgesetz für einen Wert?

Ich will an dieser Stelle keine Diskussion zur Rechtmäßigkeit des oft irrtümlich „Verfassung“ genannten Grundgesetzes eröffnen, sondern auf der Basis des Systems argumentieren (welches sich gerade selbst ad absurdum erklärt). In meinen Vorträgen zur momentan praktizierten „Demokratie“ vertrete ich seit Langem die Ansicht, dass diese Gesellschaftsform grundsätzlich(!) in eine Tyrannei entarten muss.

Zurück zum Bankensystem, bevor ich mir komplett die Finger verbrenne…

Eine Geschäftsbank soll laut Lehrmeinung über zwei klassische Funktionen verfügen:

Das Kreditgeschäft, welches eine Art „Vermittlungstätigkeit“ darstellen soll, ist der bekannteste Part, denn er versorgt durch Geldverleihung konkret Menschen und Firmen mit finanziellen Mitteln.
Eine Art „Schleusenfunktion“ dient der Zentral- bzw. Notenbank, die Geldmenge im Verhältnis zur Realwirtschaft zu steuern. Dazu benötigt sie Geschäftsbanken. Es geht also um einen volkswirtschaftlich wichtigen Vorgang.
Beleuchten wir diese Punkte ein bisschen tiefer. Da gibt es auf der einen Seite Anleger, die bei einer Bank Kapital parken und auf der anderen Seite Kreditnehmer, die dieses Geld mit einem Zinsaufschlag ausleihen, um damit z.B. wirtschaftlich produktiv zu werden oder schlicht zu konsumieren. In den Statuten der Mindestreservehaltung wird es dann konkreter. Danach kann eine Geschäftsbank das angelegte Sparergeld bis zu 50-fach als neues Geld in Form von Krediten verleihen.

(Bei der FED 10-fach, bei der EZB 50-fach, Mindestreservesatz = 2%) Auf Basis von 200,- Euro Kundenanlagen kann die Bank also 10.000,- Euro Kredit geben. Diese neuen 9.800,- Euro entstehen also erst durch den Kredit. Die Bank bekommt also für 9.800,- Euro Zinsen, obwohl sie nur 200,- Euro als Grundlage benötigt.

Auch wenn es dramatisch klingt, ist diese Regel zumindest eine Einschränkung der Geschäftsbanken, denn wenn kein Geld mehr angelegt würde, könnte keines mehr produziert werden. Die Notenbanken legen ein verbindliches Zinsniveau (Leitzins) für die Kreditwirtschaft im Interesse der Volkswirtschaft fest. Eine Notenbank (z.B. die EZB) hat die Aufgabe der Geldwertstabilität und muss dafür sorgen, dass die Geldmenge im Verhältnis zu den realen Waren und Dienstleistungen angemessen ist. Gibt es ein hohes reales Wirtschaftswachstum zu verzeichnen, kann die Notenbank das Zinsniveau senken und somit den Geschäftsbanken günstiges Buchgeld verleihen, die dafür im Gegenzug ihrerseits Sicherheiten in Form von Wertpapieren bieten muss.

Zurzeit erkennen wir deutlich, dass die Zentralbanken allerdings auch „Schrottanleihen“ als „Sicherheit“ akzeptieren. Der derzeitige niedrige Zins führt zu günstigen Krediten und somit zu mehr Geld in der Wirtschaft, welches ja entsteht, wenn die Geschäftsbanken diese Reserven nun bis zu 50-fach gehebelt weiterverleihen. Das Gegenteil wäre die Zinserhöhung, die den Kreditfluss senkt, da Darlehen nun teurer werden und somit die Geldmenge reduziert wird. Bei einer rückläufigen Realwirtschaft ist dieser Vorgang im Interesse der kalkulierbaren Kaufkraft des Geldes enorm wichtig.

Ein selbst von den meisten Experten unerkanntes Problem ist die Tatsache, dass bei einer Geldschöpfung durch Kredit nur der Kreditbetrag entsteht, der Schuldner aber den Kreditbetrag plus Zinsen und Gebühren zurückzahlen muss. Diese erhöhte Summe muss nun von anderen Marktteilnehmern „herausgewirtschaftet“, um nicht zu sagen „gepresst“, werden. Da sind Verwerfungen vorprogrammiert und immer mehr Menschen geraten in Armut, bzw. können ihre Kredite nicht mehr zurückzahlen.

(Sehen Sie hierzu auch das Video:
„Wie funktioniert Geld“ www.wissensmanufaktur.net/externe-videos).

Deshalb legen Banken bekanntlich einen so großen Wert auf Sicherheiten. Kann jemand seine Kredite nicht mehr bedienen, ermächtigt sich die Geschäftsbank einfach des Pfandes, bzw. der weiteren Arbeitskraft, falls dieses nicht ausreicht. Man könnte auch böswillig „moderne Sklaverei“ dazu sagen. Diese beschriebenen Vorgänge führen zu unglaublichen Vermögen einiger weniger Marktteilnehmer, deren Zinsforderungen aus Guthaben ähnlich eines astronomischen Schwarzen Loches ansteigen und zum Desaster führen müssen.

Um diese Umverteilungsmechanismen auf die Spitze zu treiben bzw. zu verlängern, entstanden in den 1990er Jahren Investmentbanken. In dieser Zeit war die Macht der Kapitalsammelbecken schon extrem angewachsen und die Politiker hingen als kleine „Blinddärme“ unten drunter. Um die unendliche Zins-Gier zu befriedigen, senkten die Zentralbanken einfach das Zinsniveau (obwohl die realökonomische Lage das Gegenteil gebot), sodass die Geschäftsbanken sich nun günstig Geld leihen konnten, um selbst wieder als Kapitalanleger aufzutreten. Diese Anlagegelder dienen nun wieder als Grundlage neuer Kredite mit dem Faktor 50. Dass diese „Politik“ zu einer Krise führen musste, lag auf der Hand. Schon im Jahre 2003 beschrieb ich diese Zusammenhänge in meinem Buch „Brot und Spiele“, auch wenn diese Texte damals belächelt wurden.

Richtig wäre es, wenn die Zentralbanken die Zinsforderungen gegenüber den Geschäftsbanken höher ansetzen würden, als diese von den Kreditkunden an Zinsen zurückbekommen. Das reduzierte natürlich massiv die Nachfrage nach Mindestreserven-Buchgeld, um darauf neue Kredite zu schöpfen. Stattdessen bekommt die EZB fast gar keine Zinsen und Kreditinstitute leihen sich diese neuen(!) Gelder lustig aus, um sie selbst höherverzinslich anzulegen.

Wir erkennen an dieser verwerflichen Praxis zugunsten des Geldmonopols und zu Lasten der Bürger eine Umkehr der vermeintlichen Hierarchie des Bankenwesens in sich. Die Kreditinstitute für das Publikum (z.B. Sparkassen, Commerzbank, Deutsche Bank, usw.) scheinen bei der Machtfrage gegenüber den Zentralbanken (z.B. EZB) übergeordnet.

Zusammenfassend möchte ich festhalten:

Selbst wenn die Bankkunden durch ein berechtigtes Misstrauen in das System ihre Guthaben abziehen würden und somit den Kreditinstituten die Grundlage für das Kreditgeschäft entzögen, könnte laut Bofinger weiterhin die Schuldenproduktion und somit die Geldflutung vollzogen werden. Man produziert sich seine Sparanlagen eben selbst, um es bissig auszudrücken.

Nur so ist es übrigens zu erklären, dass die Banken immer noch in der Lage sind, Geld auszuzahlen, obwohl der gefürchtete „Bankrun“ längst im Gange ist. Was das für die Währung Euro bedeutet, sollte spätestens jetzt klar sein. Er ist zum Untergang verurteilt worden und das von denselben Leuten, die predigen, dass er gerettet werden müsse.

An dieser Stelle möchte ich wieder einmal darauf hinweisen, dass wir in der Wissensmanufaktur längst relativ ausgereifte Lösungen entwickelt haben, um im Rahmen einer neuen Ordnung diesen sich steigernden Verelendungsprozess zu stoppen, der bei vielen Normalbürgern in ganz Europa immer sichtbarer wird. Der propagierte Wirtschaftsaufschwung dient halt nicht allen Menschen, sondern vor allem den globalisierten Konzernen. Die klassische, noch aktuelle Wirtschaftswissenschaft hat komplett versagt. Leider werden wir von führenden Politikern nicht nach unserem Rat gefragt. In meinem Buch „Der Währungs-Countdown“ steige ich in die Lösungen konkret ein.

Der Kapitalismus hat das ausschließliche Ziel des Profits, wie es der Begriff schon aussagt. Die Demokratie beschreibt den Menschen als Mittelpunkt (sog. Volkssouverän). Die Kombination eines demokratischen Kapitalismus oder einer kapitalistischen Demokratie ist paradox. Warum wird dieser sichtbare Widerspruch eigentlich nie hinterfragt?

Wir stehen voll hinter der Europäischen Idee und wollen Frieden zwischen den Völkern und einen konstruktiven internationalen Handel, im Rahmen einer ehrlichen ressourcenschonenden Wirtschaft.

Der Euro aber ist eine Lunte (?) gegen die europäischen Völker. Wir können schon jetzt immer öfter in den Medien hören, dass „wir Deutschen“ den „faulen Griechen“ keine Hilfe mehr schicken sollten. In Griechenland werden Plakate mit deutschen Fahnen und Hakenkreuzen geschwenkt, weil sie sich nicht bevormunden lassen wollen. Das dramatische ist nur, dass sich die Opfer gegenseitig beschuldigen und offenbar nicht erkennen, dass dieses „Teile- und Herrsche-Spiel“ System hat.



Ihr Andreas Popp, Juli 2011

Eine Delegation des Deutschen Bundestages unter Leitung des Vorsitzenden des Rechtsausschusses, Siegfried Kauder, hat an der mündlichen Verhandlung teilgenommen. Kauder wies in seiner Eingangsstellungnahme den Vorwurf, das Parlament habe sich bei den Beratungen der entsprechenden Gesetze von der Bundesregierung erpressen lassen, als unrichtig zurück. Er erläuterte den Richtern, dass das Parlament im Zuge seiner Beratungen vielmehr auf weitergehende Kontrollrechte bei der Übernahme finanzieller Garantien bestanden und diese auch gegenüber der Bundesregierung durchgesetzt hat. Der Deutsche Bundestag hat seine Rechte in den parlamentarischen Beratungen der „Griechenland-Hilfe“ und des „Euro-Rettungsschirms“ daher mit großem Selbstbewusstsein wahrgenommen. Der Prozessbevollmächtigte des Deutschen Bundestages, Prof. Dr. Franz Mayer von der Universität Bielefeld, unterstrich einleitend, dass schon erhebliche Zweifel an der Zulässigkeit der Verfassungsbeschwerden bestünden, sie jedenfalls aber unbegründet seien. Die Beschwerdeführer würden sich auf ein neuartiges Recht berufen, das bisher gar nicht existiere, nämlich ein umfassendes Grundrecht auf Demokratie. Für die Anerkennung eines solchen Grundrechts und eine damit verbundene Ausweitung der Möglichkeiten zur Verfassungsbeschwerde gebe es aber keinen Anlass. Die rechtlichen Vorgaben zur Beteiligung des Bundestages seien eingehalten worden und die Durchführung eines den verfassungsrechtlichen Anforderungen genügenden Gesetzgebungsverfahrens in kürzester Zeit gerade ein Ausweis für die Leistungsfähigkeit des Bundestages in Krisenzeiten. Wiederholt betonte Mayer die Einschätzungsprärogative von Bundestag und  Bundesregierung zu den vorliegenden schwierigen währungs- und finanzpolitischen Fragen."
Der Delegation gehören folgende Abgeordnete des Deutschen Bundestages an: Siegfried Kauder (Vorsitzender des Rechtsausschusses), CDU/CSU, Gunther Krichbaum (Vorsitzender des Ausschusses für die Angelegenheiten der Europäischen Union), CDU/CSU, Dr.Michael Meister (Stellvertretender Fraktionsvorsitzender), CDU/CSU, Thomas Silberhorn, CDU/CSU, Michael Stübgen, CDU/CSU, Werner Schieder, SPD, Christian Ahrendt, FDP, Florian Toncar, FDP, Manuel Sarrazin, BÜNDNIS 90/DIE GRÜNEN.

Quelle:www.bundestag.de/presse/pressemitteilungen/2011/pm_1107051.html



Kurzer Auszug aus einem E-Mail Dialog zwischen Prof. Karl Albrecht Schachtschneider und Andreas Popp vom 10.7.2011:
Schachtschneider: "…Der Anspruch auf Demokratie folgt richtigerweise aus Art. 2 Abs. 1 GG, dem Grundrecht der politischen Freiheit, in Verbindung mit Art. 20 GG, der die Fundamentalprinzipien der deutschen Verfassung regelt, auch das demokratische Prinzip. Das Bundesverfassungsgericht leitet begrenzte demokratische Rechte des Bürgers aus Art. 38 GG, wonach die Abgeordneten Vertreter des ganzen Volkes sind, her. Das ermöglicht dem Gericht, den Schutz der Demokratie so eng zu ziehen, wie es passt. Darauf wird es in der Entscheidung in Sachen Rettungsschirm und Griechenlandhilfe entscheidend ankommen. Das materielle Recht wird nur in den engen Grenzen des zugestandenen Grundrechtsschutzes geprüft. Traurig, aber wahr. Ich habe schon vor Jahrzehnten, 1970, in meinem ersten Aufsatz nach der Promotion einen Anspruch auf Demokratie dogmatisiert und postuliert. Allmählich komme ich zum Ziel. Vierzig Jahre braucht man schon. Die Mühlen der Justiz mahlen langsam…"

source www.wissensmanufaktur.net/bankrotterklaerung

ps. bitte lesen Sie mein Beitrag zum Frau Merkel Rede (Abschafung der Demokratie)

Category: US Economy, Global Markets
Topic: Greek Bailout

by John Tamny,  Toreador Research and Trading (Guest Contributor)

www.valueexpectations.com/blogs/...al-economic-mistake07062011

As any sentient being knew would happen, the Greek government got its bailout. It was a foregone conclusion, and there's a 99% chance that the IMF would have disbursed more billions to the profligate government even if Greece's Parliament had failed to pass an "austerity" program.
The reason why Greece was saved should be obvious, but if not, let's be clear that the bailout was not one meant to aid a Greek government that has been in default for much of its debt-issuing existence, rather it was a bailout of banks around the world that have exposure to Greek debt. If the latter were not the case, if Greek debt were locally held, it's near certain that the IMF would not have stepped in, and those with exposure to the debt would have taken a "haircut" on their holdings as normal investors in stocks and bonds do with great regularity.
Sadly for the rest of us, from individuals to small-business owners to big-business CEOs, we'll all suffer globally for this egregious mistake by an IMF that is the dictionary definition of mission creep. We will because the bailout of Greek government creditors (meaning banks) signals to investors worldwide that all government debt is safe. Indeed, if a country as economically insignificant as Greece can't be allowed to default given what it would mean for the wards of the state that we call banks, no country can.The global economic implications are ugly because it's now true beyond any doubt that fiscally incontinent governments will always be able to raise more debt owing to certainty among creditors that if governments ever experience revenue shortfalls, other governments or other government-sponsored entities will step in to save them as a backdoor bailout of the financial institutions that would be rendered insolvent by a default. The economic harm here is obvious.

Indeed, by virtue of propping up Greece the global economic bureaucracy has clearly stated that government debt is preferred debt. This means the very government spending that screams capital destruction will continue without endpoint, often in support of other strapped governments that will have zero incentive to fix their finances.  At the same time private individuals and private businesses governed by market discipline such that they can default will only receive what's left. There are no entrepreneurs, businesses and jobs without capital, but thanks to the privileged status that governments enjoy in the capital markets, there will be less and less capital for those actually interested in creating wealth with it.

Assuming the opposite of what's transpired, as in if we lived in a world governed by market signals whereby government creditors were singed, and governments subsequently put on a diet, there would be some room for optimism. Simply put, if Greece's creditors had suffered a haircut, and a few (or many) banks had failed, the economic signal would be a positive one for investors/creditors being made aware in none too subtle fashion that government debt is not a one-way bet. If so, investors would be forced to rethink their allocation strategies such that what is always limited capital would migrate away from the capital destruction that is government spending, and into private, capital expanding hands.

Of corse, the economic tragedy that is the Greek bailout doesn't quite end there. Indeed, the beauty of pure capitalism is that much like the blind scales of justice, it only knows profit and loss. Or put more simply, capitalism is merely a word for a beautiful process in which bad, economy sapping ideas are regularly starved of capital, while good, economy-enhancing ideas receive it in abundance.

Considering banks, markets guided by the invisible, non-discriminatory hand of capitalism have for at least 100 years been trying to shrink a banking sector that is increasingly unnecessary when it comes to the allocation of capital. If this is doubted, consider that as of the fall of 2008, which was the last time markets tried to right-size finance, 80% of all lending occurred away from traditional banks. To state the supremely obvious, free markets have been trying to rid the economy of banks since at least the early part of the 20th Century, but with banks nothing if not heavily regulated - meaning politically protected - their natural path to obsolescence has been blocked.

The global economy suffers the political class's unwillingness to let markets work in two harmful ways. For one, bank bailouts disguised as government bailouts ensure that governments around the world will continue to extract far more capital from the productive private sector than they would if actual market discipline were brought to bear on their fiscally irresponsible ways.

For two, banks, which are nothing more than collections of good and bad human talent, would play an even smaller role in the private economy if true capitalism were allowed to work its magic. No doubt some or many financial institutions would fail, and while this would bring short-term pain, the long-term gain from such a scenario would be profoundly good for economic growth given the certainty that former financial professionals, pushed out of a profession that the economy needs less of, would find their way to higher value, economy-enhancing work.

Naturally some will say that the Lehman experience means we can't let governments default because we can't let banks fail, but that's a gross misinterpretation of what occurred nearly three years ago. Lehman's bankruptcy on its own could never have caused a crisis. Instead, the "crisis" revealed itself precisely because governments occasionally (and improperly) bail out financial institutions. If banks were treated like most other failed economic ideas - as in, allowed to fold - the markets would have been prepared for Lehman's demise well in advance, and it would have been a quiet economic event.

As Adam Smith long ago observed, stationary economies are stagnant, recessionary ones for the stationary economic state repelling investment. In short, every day we prop up banks that should be allowed to go under for their mistakes, is another day of economic advancement lost for unnecessary concepts being perpetuated at the expense of necessary ones that don't see the light of day due to capital remaining locked up in the sectors of yesterday.
Though a small, economically irrelevant country, Greece's troubles and our bailout of same signal something much worse for the global economy. Economies can't advance without failure, and if fear of near-term pain means we can't even let Greece fail, we should all get ready for many more years of economic pain.



About John Tamny:
Mr. Tamny is a senior economic advisor to Toreador Research & Trading, columnist for Forbes and editor of RealClearMarkets.com. Mr. Tamny frequently writes about the securities markets, along with tax, trade and monetary policy issues that impact those markets for a variety of publications including the Wall Street Journal, National Review and the Washington Times. He’s also a frequent guest on CNBC’s Kudlow & Co. along with the Fox Business Channel.

My recurring nightmare ever since the Western debt edifice began to crumble four years ago is that the denouement would track the events of mid-1931, when leaders failed to reform a destructive fixed exchange system (Gold Standard) and the fuse finally detonated on Europe’s banking system. It was when political blunders turned recession into the Great Depression, and ideology intruded with a vengeance.
The narrative of 1931 is already well-known to readers. France sabotaged a rescue of Vienna’s Credit Anstalt because of strategic disputes with Germany. This set off a financial chain reaction. Frightened markets tested the weak links of the Gold Standard. They withdrew funds from Britain after naval ratings “mutinied” over pay cuts. Contagion spread back to New York. By October 1931 the international system had collapsed, though the full horror did not become evident until the next year. A string of countries retreated into variants of autarky, or fascism, or both. Communists and Nazis together won more than half the seats in the Reichstag election of July 1932.
It is far from clear that the international order is more secure today than it was in the seemingly calm days of May 1931, so one cannot lightly forgive the reckless brinkmanship on Capitol Hill over recent days.
I write before knowing the outcome of weekend talks but we can rule out any form of US default. President Barack Obama can invoke the 14th Amendment in extremis, or issue a Bush-style “Catastrophic Emergency” directive.
The more plausible risk is that the debt ceiling is not raised, forcing a ferocious fiscal squeeze to avoid default. Washington would have to slash spending at an annual rate equal to 11pc of GDP, and do so in a disorderly fashion that would shatter confidence.
There are historical cases of respectable growth following fiscal contractions, not least in Britain after 1932 and 1993, but the scale of cuts needed to close America’s double-digit deficit at a stroke is of an entirely different order. You do not have to be Keynesian to see the dangers of such a violent shock in an over-leveraged economy.
If cuts continued into September without either side blinking, the knock-on effects might rapidly set off serial defaults by states and an implosion of the $2.5 trillion municipal bond market. The bankruptcy saga of Jefferson County, Alabama, is a foretaste.
Maryland, Virginia, South Carolina, New Mexico and Tennessee have all be put on negative watch. California has had to raise an emergency $5bn loan. Nevada is spending half its tax-take on debt service costs, and Michigan 40pc. These states are hanging on by their fingernails.
Yet if disaster is an outside risk in America, it is an odds-on likelihood in Europe. It is already clear that the latest EU summit deal is too little to stop a spiralling crisis in confidence, let alone acknowledge that North and South have diverged too far to share a currency union. Spanish and Italian yields are back to pre-summit danger levels, and might fly out of control at any moment unless a lender-of-last resort steps in to guarantee the market.
The European Central Bank still refuses to do so, and the EFSF bail-out fund cannot legally do so until all national parliaments ratify the summit deal to widen its remit. Yet these chambers have shut down for the summer. Europe’s leaders have gone on holiday. The €440bn EFSF is an any case too small. The bond vigilantes broadly agree that the EFSF needs €2 trillion in pre-emptive firepower to forestall a twin crisis in Italy and Spain, though quite how France might pay for this without being drawn into the maelstrom itself is an open question.
Germany’s “triangulating” finance minister Wolfgang Schauble has once again over-promised in Brussels, only to retreat under pressure in Berlin. There will be no “carte blanche” for EFSF bond purchases. So will Germany do whatever it takes to uphold monetary union in its current form, or will it not? We are no wiser.
As the details dribble out from the summit deal, we can now see that Greece will enjoy no debt relief despite having been pushed into default. Citigroup said the net effect will increase Greece’s debt by a further 4pc of GDP to more than 160pc next year. Since this is obviously untenable, Greece will need a third rescue.
The EU has brought about the first sovereign default in Western Europe since the Second World War and set a fateful precedent without actually resolving the Greek problem. This is the worst of all worlds.
Moody’s cited the summit terms as a key reason why it put Spain on negative watch last week. “Pressures are likely to increase still further following the official package for Greece, which has signaled a clear shift in risk for bondholders of countries with high debt burdens or large budget deficits,” it said.
EU ineptitude - or rather, German, Dutch and Finnish unwillingness to face up to the implications of EMU - have raised the risk of a traumatic August crisis in Italy and Spain. EU leaders are bringing about exactly what they pledged to avoid.
The US cannot insulate itself against the consequences of Europe’s elemental EMU blunder, but it can mitigate the effects by restoring order in its own political house. The Fed has already bought a degree of insurance by gunning the money supply in advance. The executive institutions of the US government are viable and still functioning.
We can only pray that at least one half of the Atlantic system holds relatively firm. If both go down together, buy a shotgun and prepare for 1932.

Ambrose Evans-Pritchard

Source;

www.telegraph.co.uk/finance/comment/...Europe-risks-death.html

Unlike those maddeningly lucky or well-run economies at the top of the triple-A tree, Switzerland, Norway, Canada and Australia et al, it's going to take a miracle for these three to hang on. They'll have to implement, then deliver, years of highly uncharacteristic state austerity. And they'll probably have to do it against a backdrop of agonizingly slow economic growth, if any, falling tax takes and rising unemployment. Good luck with that.

France will also hold presidential elections in 2012; these are not times when candidates like to play Scrooge; and, in any case, the opposition Socialist Party is implacably opposed to current incumbent Nicolas Sarkozy's plans to write a balanced budget into the constitution. It's not buying austerity.

And there is another important wrinkle in any chance of a French downgrade that doesn't apply to the Anglo-Saxon pair. France's triple-A rating doesn't just stand behind the Fifth Republic anymore. It stands behind the euro zone's chief bailout mechanism, the European Financial Stability Facility. Thanks to recent beefing up, the EFSF should soon be authorized to lend up to €440 billion in support of any struggling member state locked out of the markets, with a total guarantee capacity of €780 billion.

At the moment, its borrowings are rated triple-A, but that's largely thanks to the presence the euro zone's twin, top-rated titans, Germany and France, as guarantors. There are other triple-A states in the mix of course--Luxembourg, Finland, the Netherlands and Austria--but the big two bring the real firepower and economic depth.

As Rabobank put it this week, "an important question, and one to which the rating agencies have yet to provide an answer, is how a downgrade to the rating of the participating guarantor countries (particularly the largest AAA countries of Germany, France and the Netherlands) would affect the credit rating of the EFSF."

Now there are very good reasons why the agencies haven't answered this. At the moment, the ratings in question are stable, and they needn't deal in hypotheticals, even when they aren't circling like vultures over the U.S.

But the most likely consequence of a French downgrade would be a smaller EFSF, with a more limited ability to lend. "Its lending capacity would drop," says UBS strategist Simon Penn, even if it's tough to say by how much.

In any case that would hardly suit financial markets, already worried that the fund is too small to stand behind Spain or Italy should the need arise.

It probably wouldn't suit the German electorate, either; Germany left naked as sole major guarantor, once again, as yet another, less prudent nation folds.

Unhappily, France is also the country with the greatest overall exposure to Greek debt. According to the last quarterly data from the Bank for International Settlements, French institutions had nearly $57 billion of Greek debt on their books (though Germany was revealed to be the biggest single holder of Greek government paper, with close to $23 billion).

Little wonder, then, that the premium demanded by investors for holding French bonds rather than German bunds more than doubled in the two weeks leading up to the Greek bailout deal announced on July 21.

And we needn't stray too far into the realm of fantasy to imagine a future Greek debt crisis requiring a vast rescue of French banks that finally puts paid to France's triple-A rating, undermines the EFSF and, well, so on down the line.

The ancient Romans used to look at their endemically corrupt city guard and wonder gloomily "who watches the watchmen." The modern Greeks, Irish and Portuguse may well look at the credit ratings of France, creaking ominously behind the façade of the EFSF, and wonder who will bail out the bailers.

Write to David Cottle at david.cottle@dowjones.com

source;
online.wsj.com/article/...3111903341404576479951926219690.html

Aftershock to Economy Has a Precedent That Holds Lessons

By JAMES B. STEWART
Published: August 12, 2011

source ;
www.nytimes.com/2011/08/13/business/...-in-history.html?src=se

Like earthquakes, financial crises seem to be accompanied by aftershocks, like the one we’ve been living through this week. They can feel every bit as bad as the crisis itself. But economic history and academic research suggest they can set the stage for a sustainable recovery — and eventual sharp stock market gains.

The events of the last few weeks — gridlock in Washington, brinksmanship over raising the debt ceiling, Standard & Poor’s downgrade of long-term Treasuries, renewed fears about European debt and a dizzying plunge in the stock market — bear an intriguing resemblance to some of the events of 1937-38, the so-called recession within the Depression, with a major caveat: it was a lot worse back then. The Dow Jones industrial average dropped 49 percent from its peak in 1937. Manufacturing output fell by 37 percent, a steeper decline than in 1929-33. Unemployment, which had been slowly declining, to 14 percent from 25 percent, surged to 19 percent. Price declines led to deflation.

“The parallels to what is happening now are very strong,” Robert McElvaine, author of “The Great Depression: America, 1929-1941” and a professor of history at Millsaps College, said this week. Then as now, policy makers were struggling with how and when to turn off the fiscal stimulus and monetary easing that had been used to combat the initial crisis.

Are we at similar risk today? David Bianco, chief investment strategist for Merrill Lynch Bank of America, told me this week that “the market is collapsing faster than any fundamentals would warrant.” The possibility that the United States faces a recession as bad as 1937’s seems far-fetched. Nonetheless, Mr. Bianco notes that the market is now pricing in an 80 percent chance of recession, one likely to be more severe than in 1991. (He said Merrill Lynch places the odds at 35 percent.) He noted that there had been only three instances when such a steep market decline was not followed by recession: 1966, 1987 (after the October stock market crash) and 1998 (after the implosion of Long Term Capital Management.) “Confidence is shaken and rapidly falling,” he said, a problem worsened by falling stock prices.

By 1937 an economic recovery seemed to be in full swing, giving policy makers every reason to believe the economy was strong enough to withdraw government stimulus. Growth from 1933 to 1936 averaged a booming 9 percent a year (rivaling modern-day China’s), albeit from a very low base. The federal debt had swelled to 40 percent of gross domestic product in 1936 (from 16 percent in 1929.). Faced with strident calls from both Republicans and members of his own party to balance the federal budget, President Franklin D. Roosevelt and Congress raised income taxes, levied a Social Security tax (which preceded by several years any payments of benefits) and slashed federal spending in an effort to balance the federal budget. Income-tax revenue grew by 66 percent between 1936 and 1937 and the marginal tax rate on incomes over $4,000 nearly doubled, to 11.6 percent from an average marginal rate of 6.4 percent. (The marginal tax rate on the rich — those making over $1 million — went to 75 percent, from 59 percent.)

The Federal Reserve did its part to throw the economy back into recession by tightening credit. Wholesale prices were rising in 1936, setting off inflation fears. There was concern that the Fed’s accommodative monetary policies of the 1920s had led to asset speculation that precipitated the 1929 crash and ensuing Depression. The Fed responded by increasing banks’ reserve requirements in several stages, leading to a drop in the money supply.

The possible causes of the ensuing stock market plunge and steep contraction in the economy provide fodder for just about everyone in the current political debate. Republicans can point to the Roosevelt tax increases. Democrats have the spending reductions, which coincides with Mr. McElvaine’s view. “It appears clear to me that the cause was policies put into effect in 1936-37, mainly cutting spending when F.D.R. believed his re-election was secured,” he said.

The Nobel-prize winning economist Milton Friedman blamed the Fed and the contraction in the money supply in his epic “Monetary History of the U.S.” And the stock market itself may have been a culprit, falling so steeply that it wiped out the wealth effect of rising prices, undermined confidence and brought back painful memories of the crash. But taken together, they suggest that policy makers moved too quickly to withdraw government support for the economy.

In the current context, it’s hard to blame the Fed for being too restrictive in its monetary policy, as the Fed was in 1937. If anything, critics fault it for being too accommodating, raising many of the same issues that led the Fed to tighten in 1937. Ben S. Bernanke, the Fed chairman, is a student of Depression history and is well aware of Mr. Friedman’s monetary analysis. “He won’t make the same mistake,” Jeremy Siegel, professor of finance at the Wharton School of the University of Pennsylvania, said.

The Fed’s pledge this week to keep interest rates near zero not just for a vague “extended period” but for a full two years rendered two-year Treasuries virtually risk-free and depressed their yields to a record low of 0.19 percent. This should lead investors to seek income from riskier assets, leading to lower interest rates across the spectrum, including mortgage rates.
Despite a brief stock market rally after the Fed’s announcement, Mr. Bianco said he believed investors might be underestimating the significance of the Fed’s move. “You will see household funding costs go down. That will be a benefit and should boost confidence.” At the least, “The Fed has not abandoned us. They’re doing what they can,” he said.

But monetary policy can only do so much, especially if fiscal policy is moving in the opposite direction.

Christina Romer, a professor at the University of California, Berkeley, who has written extensively about the Great Depression, declared two years ago while chairman of President Obama’s Council of Economic Advisors: “The urge to declare victory and get back to normal after an economic crisis is strong. That urge needs to be resisted.”

Yet both political parties have strapped themselves to the mast of deficit reduction, one through spending cuts, the other tax increases. The recent market plunge may reflect not the largely symbolic S.& P. downgrade of United States Treasuries or worries about political gridlock, but widespread investor fears that both approaches risk a renewed recession by withdrawing stimulus from a fragile economy too soon. No one seriously disagrees that the budget deficit has to be addressed, either through spending cuts or tax increases or in some combination of the two. The question is when.

The good news about the 1937-38 recession, severe though it was, is that it lasted just a year, from May 1937 to June 1938 by most calculations. The precipitous 1937 stock market decline and surging unemployment jolted Washington into action. The Fed reversed its higher bank reserves policy and cut the discount rate to 1 percent. In April, President Roosevelt announced a $2 billion “spend-lend” program and embraced deficit spending. But the tax increases remained in effect. Economic growth resumed in June 1938 and was stronger than it had been in the 1933-37 period. Stocks surged.

Of course, history never repeats itself exactly, and unfortunately for today’s policy makers, the causes of the 1938 economic rebound seem less clear than the causes of the recession. While Keynesians have embraced the Roosevelt stimulus package to support their arguments for government intervention, others argue it came too late and was too small to account for the recovery. A Federal Reserve Bank of Chicago senior economist, François Velde, concluded that while traditional monetary and fiscal analyses tended to account for the severity of the 1937 downturn, other still-unidentified factors are needed to explain why the economy “rebounded so strongly.”

Still, the sense that Washington was doing something to address the problems may have played a key role by bolstering confidence, which was reinforced by rising stock prices.

Historians can’t know if the 1938 recovery, strong as it was, would have been enough to finally end the Great Depression. World War II intervened. But nothing today seems nearly as dire as the problems facing the world in 1938. The 1937 aftershocks had the effect of galvanizing policy makers who had grown complacent about the recovery. The result was renewed economic growth, higher employment, higher wages and productivity — and higher stock prices. Investors who had the courage to buy stocks at their 1937 lows were looking at a 60 percent gain less than a year later.

This article has been revised to reflect the following correction:

Correction: August 12, 2011


An earlier version of this column published online paraphrased the views of the chief investment strategist for Merrill Lynch Bank of America incorrectly. The strategist, David Bianco, said that the market is pricing in an 80 percent chance of a recession; that is not his personal opinion. (He said Merrill Lynch places the odds at 35 percent.)

A version of this article appeared in print on August 13, 2011, on page B1 of the New York edition with the headline: An Aftershock With Precedent.

AUGUST 10, 2011, 1:26 PM ET
Without France, EFSF Sad

source

blogs.wsj.com/brussels/2011/08/10/...=WSJBlog&mod=brussels

By Charles Forelle


Markets were convulsed today by speculation about France’s creditworthiness.

Nicolas Sarkozy even interrupted his summer by the sea to jet back to the capital for an emergency cabinet meeting. (But only briefly.)

Our colleague David Gauthier-Villars in Paris reports:

The surprise cabinet meeting and the announcement of likely extra belt-tightening efforts came as economists have started to question whether France—the euro zone’s second largest economy after Germany—can retain its triple-A credit rating and avoid being swept up in the broad reassessment of the creditworthiness of highly indebted developed countries.

The credit-rating companies all reiterated Wednesday their triple-A designation of France and gave no indication it would change.

We have no insight into that question, but we can run some numbers on what would happen to the European Financial Stability Facility, the euro zone’s bailout fund, if France were downgraded.

It’s not pretty.

For the EFSF to retain its own triple-A status, without a loss of lending firepower, Germany would see its guarantee to the fund rise to €325 billion, or 13% of the country’s 2010 GDP, from €211 billion under the system expected to come into place this fall and €119 billion right now.

Recall that the EFSF, in order to borrow at low cost, seeks a triple-A rating for its own bonds. To do so, it commits that all its bond issues are backed either by the guarantee of a triple-A country or by cash it holds in its own account. The EFSF is structured as an off-balance-sheet vehicle that issues debt backed by the guarantees of all 17 euro-zone countries (less the ones that are getting aid), but in practice only the guarantees of the six triple-A euro-zone countries count towards the amount the EFSF can borrow.

EFSF 1.0 (which is the current version) uses an absurdly complicated combination of prepaid interest, cash buffers, overguarantees and the like to ensure that all its debt issues are backed by triple-A guarantees or cash. EFSF 2.0, expected to be ratified this fall, makes things (relatively) simpler.

In EFSF 2.0, all the 17 countries pledge guarantees totaling €779.8 billion. Subtracting the guarantees of bailed-out Greece, Ireland and Portugal brings the total down to €726 billion. The countries agree that every EFSF bond will be backed by up to 165% of its size in guarantees, so the EFSF can borrow a maximum of €440 billion (since €440 billion x 1.65 = €726 billion).

Helpfully, the individual guarantees of the six triple-A countries–Germany, France, the Netherlands, Austria, Finland and Luxembourg–total €450 billion.

France’s guarantee accounts for €158 billion of that €450 billion.

Losing it would mean the other five countries would have to raise their guarantees so that the triple-A portion remained around €450 billion. In other words, everyone gets a 54% bump.

There are a few ways to mitigate this:

First, the EFSF could issue non-triple-A bonds. Hey, if double-A-plus is good enough for the U.S….

Second, the EFSF could return to a model that takes cash in advance through fees and prepaid interest. Unfortunately, there isn’t much room for that now that the EFSF seems to be lending around cost to its patients. When it was charging above-cost rates, it could roll up that profit margin and receive it up front.

Third, it could take capital from countries immediately, and leverage that to amplify its borrowing power and reduce the need for guarantees. That’s what the EFSF’s successor, the ESM, is supposed to do when it starts running in 2013. But there probably isn’t much appetite for cash commitments to a bailout fund in euro-zone capitals right now.

Here are the figures, in billions:

   Country§EFSF 1.0 EFSF 2.0 EFSF 2.0 ex-FR
   Germany    €119.4    €211.0    €325.2§
    France     €89.7    €158.5         -§
Netherlands     €25.1     €44.4     €68.5§
   Austria     €12.2     €21.6     €33.3§
   Finland      €7.9     €14.0     €21.5§
Luxembourg      €1.1      €1.9§€3.0

Follow @charlesforelle on Twitter.

AUGUST 13, 2011
French Growth Falls to a Flat Zero
Economy Stalled in Second Quarter, Complicating Government Efforts to Cut the Budget Deficit

Source;
online.wsj.com/article/...ml?mod=WSJEUROPE_hpp_LEFTTopWhatNews

By WILLIAM HOROBIN And NATHALIE BOSCHAT

PARIS—France's economic growth fell to zero in the second quarter, dashing expectations of a modest expansion, as consumers sharply cut spending.

The data complicate the French government's plans to reduce its budget deficit at a time when financial markets are questioning France's prized triple-A credit rating.

Gross domestic product in the euro zone's second-largest economy was flat in the second quarter after growing at a nearly 4% annualized rate in the first quarter, according to figures from national statistics agency Insee. The data fueled concerns that France, a key player in supporting euro countries in bailout programs, might struggle to meet its deficit targets.
Consumer spending, the traditional driver of the domestic economy, held up during the recession in 2009, but fell at an annualized rate of nearly 3% in the second quarter.

Earlier this year, spending was fueled by deliveries of new cars snapped up by households under a government-sponsored scrapping scheme. The cutoff for those incentives was the end of 2010.

Exports also stopped growing in the second quarter after a strong increase in the first, although weaker imports minimized the impact.

As France suffered economic tremors, other euro-zone countries in investors' sights made progress on their fiscal fronts.

Italy, which has become the latest major flashpoint for the debt crisis, unveiled a new package of measures on Friday designed to reassure investors who are worried about whether the country can pay down its €1.9 trillion ($2.7 trillion) debt, equivalent to 120% of GDP.

The measures seek to balance Italy's budget by 2013, a year earlier than planned, by slashing €45 billion in public spending.

Also Friday, officials from the European Union, the International Monetary Fund and the European Central Bank gave a positive first review of Portugal's implementation of a €78 billion bailout program. They said they are confident Portugal will meet budget-deficit targets for 2011 and that further stress in the euro zone shouldn't hurt that goal.

Meanwhile, Greek GDP contracted at an annual rate of 6.9% in the second quarter, compared with a decline of 8.1% in the first three months of the year—slightly better than expected. The GDP flash estimate published Friday by the country's statistics service wasn't seasonally adjusted, however.

In seasonally adjusted terms, economists had expected a contraction of 5.1% from a year earlier. The latest data correspond to a seasonally adjusted contraction of around 4.8% to 5%.

But the Greek economy remains in recession, as austerity measures promised in exchange for two international bailout packages bite into consumer spending.
Meanwhile, June industrial production in the 17 countries that make up the euro zone fell 0.7% from May, the sharpest drop since December, the European Union's Eurostat agency said.

The industrial output was 2.9% stronger than in June last year, which is the weakest annual rise since January last year and another sign that the currency area's economy is slowing rapidly. But output growth in May was revised up slightly to 0.2% on the month and 4.4% on the year.

The French GDP data capped a bruising week for France, where markets were whipsawed by speculation about the fate of the nation's credit rating and rumors about the vulnerability of the large French banks.

The market volatility prompted France's stock-market regulator, along with others in Belgium, Spain and Italy, to slap restrictions on short-selling of financial shares.

Analysts said the ban was partly responsible for gains in French assets on Friday, with financial stocks rallying, French bond yields falling and the cost of insuring French debt against default sliding sharply. Traders said the moves in French assets also stemmed from a sense that this week's drubbing was overdone.

Some economists are concerned that the French government was too optimistic when it factored a 2% economic-growth forecast into this year's budget and 2.25% into next year's. Weaker-than-expected growth could result in lower tax collection and higher spending on unemployment benefits, making it harder for the government to meet its budget-deficit target of 5.7% of GDP this year, 4.6% in 2012 and 3% in 2013.

France already has come under pressure from the IMF to craft contingency measures to ensure it meets its targets.

Economists started to pare their forecasts on Friday. French bank Natixis cut its French GDP-growth estimate for 2011 to 1.6% from 1.8% and to 1.2% for 2012 from 1.6% previously.

According to the bank, the deficit for 2011 still could come in fairly close to the government's target at 5.8% of GDP, but in 2012 it would diverge significantly at 5.4%—instead of the 4.6% the government forecasts for 2012.

"GDP growth is the most important factor in state budget projections," ING senior economist Philippe Ledent said. Less growth puts downward pressure on tax intake and upward pressure on spending, such as on jobless benefits.

The government insisted it will meet its deficit targets no matter what, and signaled after an emergency meeting between President Nicolas Sarkozy and members of his cabinet this week that it will make further spending cuts and possibly eliminate more tax exemptions and loopholes.

A sharper-than-expected slowdown, however, would increase pressure on Mr. Sarkozy to announce large, unpopular spending cuts.

That would be a tricky move with less than a year to go to presidential elections in May 2012.

French Finance Minister François Baroin sought Friday to cast the growth outlook in a positive light.

"For this year we are in line," he said on French radio, adding the parameters the government is working on for its 2012 budget were unchanged.

Economists were less bullish.

"Without a miracle there won't be a return to strong growth in the coming six months, unless the euro falls steeply," said Nicolas Bouzou, economist at French financial consultancy Asterès. "There is no margin for stimulus," he added.

—Nicholas Winning in London, Patricia Kowsmann in Lisbon, and Stelios Bouras and Alkman Granitsas in Athens contributed to this article.
Write to William Horobin at William.Horobin@dowjones.com and Nathalie Boschat at nathalie.boschat@dowjones.com

Some of Europe's biggest banks—including France's Société Générale SA, Germany's Deutsche Bank AG and Italy's UniCredit SpA—have major operations in the U.S. and rely heavily on borrowed funds to finance those operations. There is no indication that regulators are focused in particular on those banks.
Foreign banks that lack extensive U.S. branch networks have a handful of ways to bankroll U.S. operations. They can borrow dollars from money-market funds, central banks or other commercial banks. Or they can swap their home currencies, such as euros, for dollars in the foreign-exchange market. The problem is, most of those options can vanish in a crisis.

Until recently, that hasn't been a problem. Thanks partly to the Federal Reserve's so-called quantitative-easing program, huge amounts of dollars have been sloshing around the financial system, and much of it has landed at international banks, according to weekly Fed reports on bank balance sheets.

Fed officials recently have held meetings with U.S.-based executives from top European banks to discuss their funding positions, according to the people familiar with the matter. Officials also are in contact with regulators in the countries where the European banks are headquartered.

The New York Fed has also been coordinating with New York's superintendent of financial services, Benjamin M. Lawsky, to monitor the foreign banks' funding positions, said people familiar with the matter. The state regulator supervises the New York outposts of many major European banks, and it has the power to force them to keep more money on hand in the U.S. Mr. Lawsky's office has been getting near-daily updates from examiners embedded in European banks' New York offices about their funding positions.

Regulators are trying to guard against the possibility European banks that encounter trouble could siphon funds out of their U.S. arms, these people said. Regulators recently have ramped up pressure on European banks to transform their U.S. businesses into self-financed organizations that are better insulated from problems with their parent companies, a senior bank executive said.

In one sign of how European banks may be having trouble getting dollar funding, an unidentified European bank on Wednesday borrowed $500 million in one-week debt from the European Central Bank, according to ECB data. The bank paid a higher cost than what other banks would pay to borrow dollars from fellow lenders. It was the first time for that type of borrowing since Feb 23.

Anxiety about European banks' U.S. funding comes amid broader concerns about whether Europe's struggling banks will be able to refinance maturing debt in coming years. Investors, wary of many European banks' holdings of debt issued by troubled euro-zone governments, are shunning large swaths of the sector. While top European banks already have satisfied about 90% of their funding needs for 2011, they still need to raise a total of roughly €80 billion ($115 billion) by the end of the year, according to Morgan Stanley.

Part of what is unsettling regulators and bankers is the speed at which funding can reverse direction. This spring, foreign banks were able to build up ample cash cushions, thanks largely to quantitative easing—the Fed's $600 billion bond-buying program, which brought more money into the banking system in the U.S., including foreign banks' coffers.

In July 2010, non-U.S. banks had $418.7 billion on reserve and collecting interest at the Fed, according to Fed data. By July 13 of this year, the total had more than doubled, to about $900 billion. Some major European banks were among the main drivers of this trend, according to their U.S. regulatory filings.

On June 30, 2010, for example, Société Générale had $55 million in cash reserves in its main New York branch. A year later, that amount had soared to $24.6 billion. At Deutsche Bank, cash reserves at its U.S. arm rose to $66.8 billion from $178 million.

Spokesmen for Société Générale and Deutsche Bank declined to comment on the reasons for the funding buildup or whether there has been a pullback.

In recent weeks, though, the cash piles at foreign banks' U.S. arms have diminished. While individual banks haven't reported data after June 30, foreign banks' overall U.S. cash reserves fell to $758 billion as of Aug. 3, the latest data available. That is down 16% from three weeks earlier, though it's still up sharply from the beginning of the year.

The latest Fed data "could be telltale signs that foreign banks are in need [of dollars] again, or institutional investors are getting concerned about foreign bank credit," said George Goncalves, a rates strategist for Nomura Securities.

—Aaron Lucchetti
and Liz Rappaport
contributed to this article.
Write to David Enrich at david.enrich@wsj.com and at carrick.mollenkamp@wsj.com

online.wsj.com/article/...3111904070604576514431203667092.html

from  online.wsj.com/article/...3111903639404576514442074736706.html


Latest European Tax Plan Is an Emotional Irrelevance

By GEOFFREY T. SMITH

I suppose we knew that the meeting between Angela Merkel and Nicolas Sarkozy on Tuesday wouldn't produce any serious results. After all, there had been pretty clear guidance from both sides that there would be no ground-breaking agreements on euro-zone bonds or increasing the European Financial Stability Facility.

What we were unprepared for, however, was the emphasis on an initiative for a financial-transactions tax, and this is surely the best explanation for the markets' disappointed reaction Wednesday. Quite apart from being negative for markets in its own right, it signaled better than anything the fact that they had nothing more urgent to agree on.

For one thing, common wisdom argues that FTTs will achieve nothing unless adopted everywhere, and the chance of that happening has been virtually zero since the International Monetary Fund came down against them in a report to the G-20 in June 2010. The report, which in many other ways was sympathetic to the notion of making the financial sector pay for the damage it had caused to the world economy, spelled out that FTTs did nothing to address the root cause of financial instability, and said that any marginal benefit from damping the effects of short-term trading activity—i.e., speculation—was outweighed by the extra cost of capital it imposed on companies by making markets less liquid. Moreover, it stressed that the costs of such taxes are invariably passed on to bank customers, rather than absorbed by banks.

The IMF recommended—and most of the G-20 states appeared to agree—that there were better ways both to collect more revenue from the financial sector and to address the financial-stability issues raised by the crisis. A raft of bank levies at national level have followed, as well as the new Basel III regulations on capital and liquidity, and there is plenty of evidence to suggest these are having, within the limits of realistic expectations, the desired effect: deleveraging has begun, higher-risk activities are being isolated from Main Street's savings, and more and more business is being channeled through platforms where regulators can keep a better eye on them.

With the intellectual basis for the FTT rather convincingly rubbished, it may seem strange that the European Commission has made such a startling U-turn on the issue in the past 12 months, to the point where it now supports the introduction of a tax of 0.1% on equity and bond transactions and 0.01% on derivatives.

The explanation isn't simple, but it goes roughly like this: In both France and Germany, the financial sector is still the best possible scapegoat for the ills caused by the financial crisis. Despite the bank levies and, in Germany, the salary caps, the perception is still that the cost to the taxpayer of bailing out the banks—estimated around 27% of euro-zone GDP by European Central Bank President Jean-Claude Trichet—still far outweighs the financial-stability benefits. Emotion, in politics a force as unreliable as it is irresistible, demands that more be squeezed from the bankers. Since nationally levied FTTs can't function in a world of free capital movements, the only solution is to levy it at European level.

Meanwhile, in Brussels, a European-levied FTT satisfies the traditional yearning for a way to bolster the EU's own resources without having to beg national governments. Tax Commissioner Algirdas Semeta, a late and, one senses, reluctant convert to the idea of the FTT, argues that the revenue would replace the money transferred from national budgets to fund the EU budget, rather than represent a new tax. He also says the tax will be levied according to the domicile of the customer ordering the transaction, rather than according to the marketplace in which it is executed. This supposedly solves the problem of the funds being generated largely in the U.K., France and Germany.

So far, so good. Mr. Sarkozy and Ms. Merkel get the credit for soaking the banks, while Mr. Semeta gets to show his receptiveness to the democratic demands of the EU Parliament, which passed a nonbinding vote on the issue by a thumping majority in March (again, what parliament doesn't vote for more resources to fund its own budget?).

In years gone by, none of this would have mattered because the U.K. government would simply have vetoed it, both as threatening to the British economy and as an unjustifiable expansion of the EU's revenue-raising powers. Also, if the Continent had plowed ahead, regardless of its ability to impose its will on the U.K., the reaction in London would have been one of unalloyed joy, as yet more jobs and income migrated from the overregulated mainland to the single market's offshore paradise.

But the U.K. authorities' response to such a development today might not necessarily be the same. The government, while no less hostile to the EU, is certainly less naïve about the financial-services industry, and the Bank of England is painfully aware of the systemic risks to the broader economy from the sector's sheer size.

The central U.K. objection—that business would still migrate to jurisdictions without the tax—stands. But it is equally clear that a large taxable mass would stay in the EU. Setting an example would also make it easier for other jurisdictions to follow, though one can hardly see this U.S. Congress adopting it. In short, an FTT might—just—be more workable now than in the past, but only if your most serious political purpose in life is to soak the rich in an inefficient and essentially emotional way. Europe has to do better than that.

Write to Geoffrey T. Smith at geoffrey.smith@dowjones.com

------

I agree with Geofrey.

AUGUST 17, 2011, 12:37 PM GMT /  

blogs.wsj.com/source/2011/08/17/...-sarkozy-recycle-old-ideas/


Merkel and Sarkozy Recycle Old Ideas

By BERND RADOWITZ

It’s not surprising that investors gave a lukewarm reaction to the proposals made by German Chancellor Angela Merkel and French President Nicolas Sarkozy Tuesday–with great fanfare–in the Élysée Palace in Paris.

JP Morgan Chase Bank’s Malcolm Barr said the measures consist of lots of rhetoric with questionable substance.

“Tough questions about sanctions for fiscal misbehavior and the degree of sovereignty nations are prepared to pool remain unanswered,” Mr. Barr said.

Safe-haven German bunds were higher Wednesday. At 0955 GMT, 10-year bunds were yielding 2.27%, from 2.31% Tuesday, according to Tradeweb. Italian and Spanish 10-year yields were unchanged at just below 5%. They have been at or close to this level since the European Central Bank began buying Italian and Spanish sovereign bonds last week.

European stocks were falling early Wednesday as investors digested the proposals.

Mrs. Merkel acknowledged she doesn’t believe the troubles of the euro zone can be fixed with a “big bang.” But what the leaders of Europe’s top two economies recommended nevertheless disappointed as it looked rather like a series of recycled ideas.

Take the proposal that all members of the currency area enshrine balanced budget amendments in their constitutions by next summer. Trying to appease a population and parliament at home that is increasingly unwilling to pay for their neighbors’ fiscal sins, Mrs. Merkel has been trying to export Berlin’s “debt brake,” as the balanced budget clause in Germany’s constitution is called.

But during a March EU summit, she wasn’t able to convince her peers to adopt the idea. Mrs. Merkel may figure that as the escalation of the debt crisis now threatens EU core countries Italy and France, now is the time she may succeed in whipping her euro zone peers into line on the debt brake.

Mr. Sarkozy Tuesday lobbied for the “golden rule,” as the measure is dubbed in France, knowing that he faces headwinds from the opposition Socialists in a Congress of all French lawmakers that needs to approve the constitutional change.

Mrs. Merkel and Mr. Sarkozy also proposed to set up an economic council, or economic government, for the euro zone. It would consist of the currency area’s heads of state and government and meet at least twice a year. In practice, euro zone leaders already hold irregular meetings. But those gatherings have never been formalized.

Non-euro zone countries like the U.K. had complained the summits could take important decisions affecting financial policy that affects it, while having no say in the outcome. Reviving the idea again could lead to new resistance. On the other hand it’s not clear why those summits would bring the necessary breakthrough the informal meetings or the summits of all 27 EU leaders don’t achieve.

The renewed commitment by Mrs. Merkel and Mr. Sarkozy to a Europe-wide tax on financial transactions further soured the mood in financial markets. The U.K.’s well-known objection to the measure should render it impracticable, though, as London is the continent’s main financial hub.

Mark Brown and David Roman contributed to this article.

Mind the gap; bonds signal a depression
Another day, another stomach churning fall in stock markets.

www.telegraph.co.uk/finance/comment/...ignal-a-depression.html

By Jeremy Warner
9:00PM BST 18 Aug 201172 Comments

The economic news from the US was universally appalling on Thursday, and to add to everything else, there is now growing evidence of another credit crunch in the European banking system.
Some of the weaker European banks in peripheral eurozone economies are again struggling to secure market funding, particularly dollar denominated funding, and are therefore once more being forced to throw themselves back on central bank lender of last resort support.
A banking crisis which transmogrified into an economic and sovereign debt crisis now shows every sign of transforming itself back into another banking crisis. There's a terrible circularity about it all which policymakers seem powerless to break. The outlook grows steadily grimmer.
Still, no matter. Stocks are cheap, right, and on the buy-on-the-dips philosophy, isn't now the time to be wading back in? Yes indeed. On most conventional yardsticks, including price earnings ratios, dividend yield and book value, shares do indeed look good value.
What is more, the corporate sector has in some respects never looked more financially robust. Costs have been cut and cash hoarded. On the face of it, there's enough balance sheet strength there for dividends to survive even the severest of economic winters.

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It's hard to be optimistic about prospects for the UK and European economies right now, but actually, the London stock market is much more reflective of the world economy as a whole than its own back yard.
It is, if you like, the Chelsea Football Club of the stock market scene – it's largely made up of foreign concerns. Grim as things may look here in the UK, thanks to emerging market buoyancy there's still quite a bit of growth in the world economy as a whole.
Then finally, shares have never looked cheaper relative to cash and bonds, in most of our lifetimes at least. You'll struggle to get any rate of return at all on cash right now; safer banks in Switzerland and the US have even started charging for the privilege of lodging your nest egg with them.
And government bond yields in most of the big sovereigns are at their lowest levels in more than 100 years.
Against that, you can get 5pc plus by investing in Marks & Spencer, Sainsbury and Vodafone, and an astonishing 8pc in Aviva. None of these companies are at all likely to go bust, and in only one of these cases does the dividend look in any way vulnerable.
Yet stocks are normally cheap for a good reason, and the fact that they look inexpensive compared with bonds does not necessarily make them a screaming buy.
To the contrary, the relationship now observed between dividend and bond yields provides the clearest evidence yet of an economic hurricane in the making. The yield on 10-year Treasuries on Thursday dropped below 2pc for the first time in US history.
This is great news for holders of US bonds, and in time it will make the US deficit a whole lot cheaper to finance, but it is very bad news for equities, for it signals a depression.
The traditional relationship, which has ruled with only a small number of aberrations since the late 1950s, is that bonds yield more than equities. This juxtaposition is underpinned by the idea that equities are able to grow their earnings at least in line with GDP, and therefore over time will offer a better rate of return than fixed income investment.
The man most credited with creating this relationship was George Ross Goobey, who back in the 50s headed the Imperial Tobacco pension fund. By advocating equity investment as an appropriate policy for pension funds, he brought about a revolution in investment thinking.
Pension funds developed a previously non-existent appetite for risk and switched wholesale from fixed income into shares. The "cult of equity" was born. Shares began to yield less than bonds to reflect their supposedly superior growth and inflation hedging characteristics.
But what happens when growth slows, society ages and risk appetite diminishes? Well as it happens, bonds have been outperforming equities for many years now, but it was only with the onset of the financial crisis that the cult of equity's fifty-year reign started to crumble.
Post the Lehman crisis, we saw an extreme reversal in the yield gap, followed, after the policy response and signs of a spluttering economic recovery, by an uneasy truce, when the two yields essentially tracked each other. But since June this year, the relationship has gone unambiguously back into the post Lehman danger zone.
It's still too early to say this is the new normal. We are once more in one of those periods of extreme risk aversion, with multiple uncertainties crowding in on investors. It's not surprising that there should be a dash for safe haven assets.
In a downturn, corporate profits will fall, dividends will get cut and insolvencies will rise. Bonds, by contrast, become the default security of choice. Money that would normally be spent on consumption or invested in productive assets gets hoarded instead, generally in cash or the nearest equivalent, government bonds.
As risk aversion grows, a vicious circle establishes itself of falling demand, employment, and economic activity. The more risk averse that companies and households become, the more they save. In Japan, they've had this phenomenon for twenty years now and still there is no end in sight to the deflationary funk.
The mood is infectious; having let rip with deficit spending in the immediate aftermath of the Lehman's collapse, governments too are losing their appetite for further risk and are reining in as fast as they reasonably can.
It's hard to be bullish about prospects for equities right now. Investors won't return until uncertainties over the US and eurozone economies are lifted, and that's going to require a level of political leadership which right now seems entirely absent on both sides of the Atlantic.
Extreme volatility and sideways trading look set to remain the order of the day for some while. That's not to say equities are not worth buying. Some businesses prosper, even in a depression. But we seem to be going back to the old, pre-war days, when equity was priced for risk.
Equity is becoming scarcer, and therefore more costly, just at a time when large swathes of the banking and corporate landscape, not to mention the economy as a whole, need most.

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Die Kiwis haben schon vorgemacht, was mit Bank(st)er zu machen ist.