11 Temmuz 2012 Çarşamba
Prisoners Inside Chinese Labor Camp Play MMORPGs To Harvest Virtual Gold
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10 Temmuz 2012 Salı
9 Temmuz 2012 Pazartesi
Google Alert - natural gas futures
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| US natgas futures edge up early after Friday slide Reuters NEW YORK, July 9 (Reuters) - U.S. natural gas futures edgedhigher early on Monday, rebounding after Friday's steep slideand on slightly warmer extended weather forecasts that shouldstir up more demand. See all stories on this topic » | ||
| Increasing Natural Gas Demand in China - Diversification of Gas Sources to ... MarketWatch (press release) "Increasing Natural Gas Demand in China - Diversification of Gas Sources to Ensure Future Supply", is the latest report from GlobalData, the industry analysis specialists, that analyzes China's strategy to meet increasing natural gas demand in the country. See all stories on this topic » |
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Google Alert - oil prices today
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| Rajkot Oilseed Complex Close-JUL 09 Reuters Sesame oil increased due to bullish trend in seed prices. 5. Vanaspati Ghee prices firmed up due to price rise in imported edible oils. Closing prices of groundnut in Rajkot, in rupees per 20 kg: Groundnut small Groundnut bold Today's Previous Today's ... See all stories on this topic » | ||
| Ohio gas prices jump after storms knock out power Youngstown Vindicator The average price for a gallon of regular gas was $3.51 in today's survey from auto club AAA, the Oil Price Information Service and Wright Express. That's up 26 cents from a week ago. But it's about a dime cheaper than at this time last year. Ohio gas ... See all stories on this topic » | ||
| Oil steady to start the week International Business Times Today China's inflation rate eased to a 29 month low opening the door for the Chinese government to get even more aggressive in its monetary policy. In fact Premier .... I still think the oil price is overvalued especially after last Friday's huge ... See all stories on this topic » |
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Google Alert - kitco gold
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| Gold Climbs Back After Weak Jobs Report resourceINTELLIGENCE TV Gold for August delivery was climbing $8.30 to $1587.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1589.90 and as low as $1576 an ounce, while the spot price was up $4.40, according to Kitco's ... See all stories on this topic » |
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Google Alert - dow jones today
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| Midday Market Stats: Dow Jones Industrial Average Backpedals 67 Points Schaeffers Research Stocks are lower so far today, as Wall Street chews on high Spanish bond yields, and patiently awaits Alcoa's (NYSE:AA) after-hours earnings report -- which ushers in second-quarter earnings season. At last check, the Dow Jones Industrial Average (DJI ... See all stories on this topic » | ||
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| The Dow Jones Industrials Model - A View From The Inside Seeking Alpha On June 28, 2011, I wrote an article to introduce Capital Max's proprietary short- term momentum model, based on the Dow Jones Industrials. Actually, don't get me wrong, this happens but not all the time -- this was a pretty good call. We were at 12044 ... See all stories on this topic » | ||
| Exxon weighs on Dow as energy stocks retreat MarketWatch NEW YORK (MarketWatch) — Energy stocks fell into the red at midday on Monday, as Exxon Mobil Corp. ranked as one of the worst performers among the 30 stocks in the Dow Jones Industrial Average. The downward moves came despite gains in some ... See all stories on this topic » | ||
| Dow Prepares for Three Straight in the Red, Alcoa Takes the Stage Schaeffers Research Heading into a week likely chock-full of equities-induced market movement, fear is showing its face on the Dow Jones Industrial Average (DJI). A number of key technical ... Symbol, Today's Volume, Expiration, Strike, Put Call, % on Bid Price, % on Ask ... See all stories on this topic » |
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| Natural Gas: July Is Dangerous, But Fall Is A Rally Seeking Alpha What the EIA is saying is that right now, supply is slowing because natural gas prices are too low to continue production. Industries and consumers are responding to low natural gas prices by increasing their demand and use of natural gas. Supplier ... See all stories on this topic » | ||
| US spot natgas prices slip as heat wave eases Reuters Henry Hub cash slips after Friday's six-month high * Mild early-week temperatures slow demand * Warmer late-week forecasts seen limiting downside By Joe Silha NEW YORK, July 9 (Reuters) - U.S. spot natural gas prices were mostly lower on Monday for the ... See all stories on this topic » | ||
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| MARKET WATCH: Crude oil, natural gas prices fall further Oil & Gas Journal In sum, we expect 1) ethane and propane will continue to exhibit a stronger correlation with weak natural gas prices (i.e., natural gas acts as a floor for light-end NGLs), and 2) heavier-end NGLs (i.e., n-butane, isobutane, natural gasoline) will ... See all stories on this topic » | ||
| Weak Oil And Natural Gas Prices Overshadow Anadarko's $90 Value Trefis (NYSE:APC) has seen its share price drop by more than 25% from a peak price of $88 in February 2012 on weak natural gas prices in the U.S. and lower oil prices. The fall masks the company's considerable success in the offshore exploration program in ... See all stories on this topic » |
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8 Temmuz 2012 Pazar
Student Loans Near $1 Trillion Hurt Young U.S. Buyers: Mortgages
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From Bloomberg:
Roshell Schenck has a Ph.D in pharmacy and earns $125,000 a year, yet can’t qualify for a mortgage for a house for herself and her 9-year-old daughter. The 2008 graduate of Lake Erie College of Osteopathic Medicine, in Erie, Pennsylvania, has more than $110,000 in student debt.
“I’d love to buy and can afford to buy,” said Schenck, 28. Since lenders place closer scrutiny on college loans than in prior years, she says, “it’s almost impossible for me to get a loan. My debt is crushing my chances of purchasing a home.”
As outstanding student debt approaches $1 trillion, it’s one more reason record-low interest rates aren’t doing more to boost housing. The tighter lending standards that have emerged in the wake of the recession weigh particularly on younger, first-time home buyers, according to a Federal Reserve study sent to Congress on Jan. 4. These households tend to be younger, often have relatively new credit profiles, lower-than-average credit scores and fewer economic resources to make a large down payment, the report said.
“Potential first-time homebuyers have been disproportionately affected by the very tight conditions in mortgage markets,” Federal Reserve Chairman Ben S. Bernanke said at a homebuilders conference last week. “First-time homebuyers are typically an important source of incremental housing demand, so their smaller presence in the market affects house prices and construction quite broadly.”
The Fed’s white paper said 9 percent of 29- to 34-year-olds got a first-time mortgage between 2009 and 2011, compared with 17 percent 10 years earlier. “These data suggest a large decline in mortgage borrowing by potential first-time homebuyers due to not only weaker housing demand, but also the effect of tighter credit conditions,” the Fed said.
Outstanding education debt surpassed credit-card debt last year for the first time, according to Mark Kantrowitz, publisher of FinAid.org, a student loan website. Recent college graduates carry an average debt load of more $25,000 each, which can limit their ability to qualify for mortgages even if they’re fortunate enough to land a job in a market with an unemployment rate of 9 percent for 25 to 34 year-olds.
Calling it a “student-loan debt bomb,” the National Association of Consumer Bankruptcy Attorneys warned Feb. 7 about the effects of rising student debt on recent graduates, parents who cosigned their loans and older Americans who have gone back to school for job training.
‘Drag on the Economy’
“Just as the housing bubble created a mortgage debt overhang that absorbs the income of consumers and renders them unable to engage in consumer spending that sustains the economy, so too are student loans beginning to have the same effect, which will be a drag on the economy for the foreseeable future,” John Rao, vice president of the NACBA, said on a conference call.
People age 25 to 34 made up 27 percent of all home buyers in 2011, the lowest in the last decade and compared with 33 percent in 2001, according to the National Association of Realtors. At the same time, first-time buyers last year accounted for 37 percent of all purchases, the lowest since 2006, when home prices peaked and the housing boom was showing cracks.
“Students coming out of college are burdened with more debt than traditionally they have been, and they are also coming into an economy that is underperforming previous recoveries,” said Rick Palacios, a senior analyst at John Burns Real Estate Consulting LLC in Irvine, California. “These things pile on each other and tell us it’s not going to help the housing recovery right now.”
http://www.bloomberg.com/news/2012-02-16/student-loans-approaching-1-trillion-hurting-first-time-buyers-mortgages.html
Subprime: Those lovely student loans keep coming up on mainstream media articles. With funding for Universities drying up on the state level the gap will have to be shouldered by the students with more loans. Even Obama the Great referenced the cost of tuition in his State of the Ponzi address by taking a jab at the Universities. With the trillion dollar level reached (or about to be reached) it's only a matter of time until this tuition bubble pops. Comments under articles referencing the student debt time-bomb show younger people have caught on to the rip off and are very hesitant to take on the debt in exchange for a degree. I'm guessing that at some point even the wall street boys get pissed off as earnings get hurt due to younger Americans unable to afford big ticket items. Or perhaps serfdom is the way of the future for this country as 50% of S&P 500 revenues are derived overseas, affording less importance on the American consumer.
I hope to see students turn on their Universities as the cost of education is out of control, leaving millions of young Americans buried in debt. With younger households unable to purchase homes, how do boomers expect to sell their homes and retire? Oh, well they can sell them (so long as they aren't underwater) but for a much lower price than they ever imagined. But even the boomers are getting hammered with student loan debt as many of them are going back to school in order to increase their earning potential.
What a sorry state this country has devolved into. America the Great, not.
Roshell Schenck has a Ph.D in pharmacy and earns $125,000 a year, yet can’t qualify for a mortgage for a house for herself and her 9-year-old daughter. The 2008 graduate of Lake Erie College of Osteopathic Medicine, in Erie, Pennsylvania, has more than $110,000 in student debt.
“I’d love to buy and can afford to buy,” said Schenck, 28. Since lenders place closer scrutiny on college loans than in prior years, she says, “it’s almost impossible for me to get a loan. My debt is crushing my chances of purchasing a home.”
As outstanding student debt approaches $1 trillion, it’s one more reason record-low interest rates aren’t doing more to boost housing. The tighter lending standards that have emerged in the wake of the recession weigh particularly on younger, first-time home buyers, according to a Federal Reserve study sent to Congress on Jan. 4. These households tend to be younger, often have relatively new credit profiles, lower-than-average credit scores and fewer economic resources to make a large down payment, the report said.
“Potential first-time homebuyers have been disproportionately affected by the very tight conditions in mortgage markets,” Federal Reserve Chairman Ben S. Bernanke said at a homebuilders conference last week. “First-time homebuyers are typically an important source of incremental housing demand, so their smaller presence in the market affects house prices and construction quite broadly.”
The Fed’s white paper said 9 percent of 29- to 34-year-olds got a first-time mortgage between 2009 and 2011, compared with 17 percent 10 years earlier. “These data suggest a large decline in mortgage borrowing by potential first-time homebuyers due to not only weaker housing demand, but also the effect of tighter credit conditions,” the Fed said.
Outstanding education debt surpassed credit-card debt last year for the first time, according to Mark Kantrowitz, publisher of FinAid.org, a student loan website. Recent college graduates carry an average debt load of more $25,000 each, which can limit their ability to qualify for mortgages even if they’re fortunate enough to land a job in a market with an unemployment rate of 9 percent for 25 to 34 year-olds.
Calling it a “student-loan debt bomb,” the National Association of Consumer Bankruptcy Attorneys warned Feb. 7 about the effects of rising student debt on recent graduates, parents who cosigned their loans and older Americans who have gone back to school for job training.
‘Drag on the Economy’
“Just as the housing bubble created a mortgage debt overhang that absorbs the income of consumers and renders them unable to engage in consumer spending that sustains the economy, so too are student loans beginning to have the same effect, which will be a drag on the economy for the foreseeable future,” John Rao, vice president of the NACBA, said on a conference call.
People age 25 to 34 made up 27 percent of all home buyers in 2011, the lowest in the last decade and compared with 33 percent in 2001, according to the National Association of Realtors. At the same time, first-time buyers last year accounted for 37 percent of all purchases, the lowest since 2006, when home prices peaked and the housing boom was showing cracks.
“Students coming out of college are burdened with more debt than traditionally they have been, and they are also coming into an economy that is underperforming previous recoveries,” said Rick Palacios, a senior analyst at John Burns Real Estate Consulting LLC in Irvine, California. “These things pile on each other and tell us it’s not going to help the housing recovery right now.”
http://www.bloomberg.com/news/2012-02-16/student-loans-approaching-1-trillion-hurting-first-time-buyers-mortgages.html
Subprime: Those lovely student loans keep coming up on mainstream media articles. With funding for Universities drying up on the state level the gap will have to be shouldered by the students with more loans. Even Obama the Great referenced the cost of tuition in his State of the Ponzi address by taking a jab at the Universities. With the trillion dollar level reached (or about to be reached) it's only a matter of time until this tuition bubble pops. Comments under articles referencing the student debt time-bomb show younger people have caught on to the rip off and are very hesitant to take on the debt in exchange for a degree. I'm guessing that at some point even the wall street boys get pissed off as earnings get hurt due to younger Americans unable to afford big ticket items. Or perhaps serfdom is the way of the future for this country as 50% of S&P 500 revenues are derived overseas, affording less importance on the American consumer.
I hope to see students turn on their Universities as the cost of education is out of control, leaving millions of young Americans buried in debt. With younger households unable to purchase homes, how do boomers expect to sell their homes and retire? Oh, well they can sell them (so long as they aren't underwater) but for a much lower price than they ever imagined. But even the boomers are getting hammered with student loan debt as many of them are going back to school in order to increase their earning potential.
What a sorry state this country has devolved into. America the Great, not.
Let Them Eat Cake: Wall Street Bonus Withdrawal Means Trading Aspen for Coupons
To contact us Click HERE
From Bloomberg:
Facing a slump in revenue from investment banking and trading, Wall Street firms have trimmed 2011 discretionary pay. At Goldman Sachs Group Inc. (GS) and Barclays Capital, the cuts were at least 25 percent. Morgan Stanley (MS) capped cash bonuses at $125,000, and Deutsche Bank AG (DBK) increased the percentage of deferred pay.
Wall Street’s cash bonus pool fell by 14 percent last year to $19.7 billion, the lowest since 2008, according to projections by New York state Comptroller Thomas DiNapoli.
“It’s a disaster,” said Ilana Weinstein, chief executive officer of New York-based search firm IDW Group LLC. “The entire construct of compensation has changed.”
Most people can only dream of Wall Street’s shrinking paychecks. Median household income in 2010 was $49,445, according to the U.S. Census Bureau, lower than the previous year and less than 1 percent of Goldman Sachs CEO Lloyd Blankfein’s $7 million restricted-stock bonus for 2011. The percentage of Americans living in poverty climbed to 15.1 percent, the highest in almost two decades.
House of Mirth
Comfortable New Yorkers assessing their discomforts is at least as old as Edith Wharton’s 1905 novel “The House of Mirth,” whose heroine Lily Bart said “the only way not to think about money is to have a great deal of it.”
Wall Street headhunter Daniel Arbeeny said his “income has gone down tremendously.” On a recent Sunday, he drove to Fairway Market in the Red Hook section of Brooklyn to buy discounted salmon for $5.99 a pound.
“They have a circular that they leave in front of the buildings in our neighborhood,” said Arbeeny, 49, who lives in nearby Cobble Hill, namesake for a line of pebbled-leather Kate Spade handbags. “We sit there, and I look through all of them to find out where it’s worth going.”
Executive-search veterans who work with hedge funds and banks make about $500,000 in good years, said Arbeeny, managing principal at New York-based CMF Partners LLC, declining to discuss specifics about his own income. He said he no longer goes on annual ski trips to Whistler (WB), Tahoe or Aspen.
He reads other supermarket circulars to find good prices for his favorite cereal, Wheat Chex.
“Wow, did I waste a lot of money,” Arbeeny said.
Richard Scheiner, 58, a real-estate investor and hedge-fund manager, said most people on Wall Street don’t save.
“When their means are cut, they’re stuck,” said Scheiner, whose New York-based hedge fund, Lane Gate Partners LLC, was down about 15 percent last year. “Not so much an issue for me and my wife because we’ve always saved.”
Scheiner said he spends about $500 a month to park one of his two Audis in a garage and at least $7,500 a year each for memberships at the Trump National Golf Club in Westchester and a gun club in upstate New York. A labradoodle named Zelda and a rescued bichon frise, Duke, cost $17,000 a year, including food, health care, boarding and a daily dog-walker who charges $17 each per outing, he said.
‘Crushing Setback’
Still, he sold two motorcycles he didn’t use and called his Porsche 911 Carrera 4S Cabriolet “the Volkswagen of supercars.” He and his wife have given more than $100,000 to a nonprofit she founded that promotes employment for people with Asperger syndrome, he said.
Scheiner pays $30,000 a year to be part of a New York-based peer-learning group for investors called Tiger 21. Founder Michael Sonnenfeldt said members, most with a net worth of at least $10 million, have been forced to “re-examine lots of assumptions about how grand their life would be.”
While they aren’t asking for sympathy, “at their level, in a different way but in the same way, the rug got pulled out,” said Sonnenfeldt, 56. “For many people of wealth, they’ve had a crushing setback as well.”
He described a feeling of “malaise” and a “paralysis that does not allow one to believe that generally things are going to get better,” listing geopolitical hot spots such as Iran and low interest rates that have been “artificially manipulated” by the Federal Reserve.
Poly Prep
The malaise is shared by Schiff, the New York-based marketing director for Euro Pacific Capital, where his brother is CEO. His family rents the lower duplex of a brownstone in Cobble Hill, where his two children share a room. His 10-year- old daughter is a student at $32,000-a-year Poly Prep Country Day School in Brooklyn. His son, 7, will apply in a few years.
“I can’t imagine what I’m going to do,” Schiff said. “I’m crammed into 1,200 square feet. I don’t have a dishwasher. We do all our dishes by hand.”
He wants 1,800 square feet -- “a room for each kid, three bedrooms, maybe four,” he said. “Imagine four bedrooms. You have the luxury of a guest room, how crazy is that?”
The family rents a three-bedroom summer house in Connecticut and will go there again this year for one month instead of four. Schiff said he brings home less than $200,000 after taxes, health-insurance and 401(k) contributions. The closing costs, renovation and down payment on one of the $1.5 million 17-foot-wide row houses nearby, what he called “the low rung on the brownstone ladder,” would consume “every dime” of the family’s savings, he said.
“I wouldn’t want to whine,” Schiff said. “All I want is the stuff that I always thought, growing up, that successful parents had.”
http://www.bloomberg.com/news/2012-02-29/wall-street-bonus-withdrawal-means-trading-aspen-for-cheap-chex.html#disqus_thread
Now some of the comments show how pissed off the average person is getting. Take a look:
Surviving the crash
This cannot be serious. These are the people who broke the US Economy and now that they are finally getting bit by that rabid dog, they have the audacity to WHINE about never expecting to earn LESS than $500 K? Try having three science degrees and an MBA and not being able to find a job because these very people championed outsourcing. Try having to live off $22K and hope you don't have to apply for SNAP this year because gas is going to hit $5. The real indicator here is that somehow ‘poor’ people just don’t understand the more important stresses the wealthy suffer when their income is slashed. We understand, and frankly we applaud and look forward to a day when YOUR wages are deemed too expensive and your position will be actively outsourced to someone in a third world country who will work for food. Spoiled is as spoiled does. Remember, the global Plutonomy doesn’t owe you a thing
AND
Guest
Burn in the fires of hell.
Jimfaul
I am all for class warfare. This guys are so out of touch
Jim
Someone reading this who can't afford the nice car and home will merely shake their head in disgust at the inanity of the complaints put forth by these rich people.
Someone reading this who can't afford the MRI scan for their sick child is likely to ready the pitchforks and torches.
The inequalities of the 1920's led to the Red Scares of the 1930's. Every action has an equal and opposite reaction.
Wrestler Yoo
“... We do all our dishes by hand.” ...like goddamn animals.
Keith Tyler
The more times I read this the more angry it makes me. These people... there is no place for these people in a cohesive society. Their existence completely tears at the fabric of civilised society. And their stupidity... god, their sheer, utter, complete stupidity and ignorance... belies just how BS it is that they ever got paid even as much as they do now... they are not intelligent people, they are spoiled brats, with silver spoon jobs. There is no way in my mind a person could be remotely intelligent and not be able to comprehend the solution to "I can't afford to put my daughter in a top-tier private school." It is clearly not brains that puts them in the jobs they have and gives them the salaries they have. It is something much less meritorious.
Frankly I say cut their pay even more. Let them have to live in 1,000 square feet and drive a Honda. That's still about 2 times better off than the average American.
Barf. It's one thing to be 10+ times wealthier than 150 million other people in this country, it's another to complain about it not being enough to live on. They can go to hell. After all, that is the mantra towards the rest of America, and the world, that they have lived -- and continue to live -- by
Therondor
I work as an industrial maintenance mec and machine assembler i work between 42 and 60 hours a week if i can get part time work at a local marina and i made $56,000 last year and these peole are stressed. comunism is looking less and less wrong right now, if these people were worth thier pay the us would still be on top and all of the americans that wanted jobs could have them
and
salvage salvage
Eat the rich? This lot would leave such a foul taste I wouldn't recommend it, just straight up French Revolution style social reordering.
To the whiny bitche fretting about having to pull his equally foul (I'm sure) spawn from private school? Quantum science hasn't developed a violin small enough.
It's not the article that compelled me to post this but the comments. I'm seeing more use of "fighting" words in comments lately as people are starting to get squeezed by flat incomes but higher costs. The Fed has found itself in a bind as the markets clamor for QE but crude oil is too high for comfort. Brent crude recently traded as high as $125 per barrel and even made a record when priced in Euros. Go ahead Bernank, go ahead and prime the pump and when US gasoline soars above $5.00 things will start getting interesting here in the grand ol USSA.
Facing a slump in revenue from investment banking and trading, Wall Street firms have trimmed 2011 discretionary pay. At Goldman Sachs Group Inc. (GS) and Barclays Capital, the cuts were at least 25 percent. Morgan Stanley (MS) capped cash bonuses at $125,000, and Deutsche Bank AG (DBK) increased the percentage of deferred pay.
Wall Street’s cash bonus pool fell by 14 percent last year to $19.7 billion, the lowest since 2008, according to projections by New York state Comptroller Thomas DiNapoli.
“It’s a disaster,” said Ilana Weinstein, chief executive officer of New York-based search firm IDW Group LLC. “The entire construct of compensation has changed.”
Most people can only dream of Wall Street’s shrinking paychecks. Median household income in 2010 was $49,445, according to the U.S. Census Bureau, lower than the previous year and less than 1 percent of Goldman Sachs CEO Lloyd Blankfein’s $7 million restricted-stock bonus for 2011. The percentage of Americans living in poverty climbed to 15.1 percent, the highest in almost two decades.
House of Mirth
Comfortable New Yorkers assessing their discomforts is at least as old as Edith Wharton’s 1905 novel “The House of Mirth,” whose heroine Lily Bart said “the only way not to think about money is to have a great deal of it.”
Wall Street headhunter Daniel Arbeeny said his “income has gone down tremendously.” On a recent Sunday, he drove to Fairway Market in the Red Hook section of Brooklyn to buy discounted salmon for $5.99 a pound.
“They have a circular that they leave in front of the buildings in our neighborhood,” said Arbeeny, 49, who lives in nearby Cobble Hill, namesake for a line of pebbled-leather Kate Spade handbags. “We sit there, and I look through all of them to find out where it’s worth going.”
Executive-search veterans who work with hedge funds and banks make about $500,000 in good years, said Arbeeny, managing principal at New York-based CMF Partners LLC, declining to discuss specifics about his own income. He said he no longer goes on annual ski trips to Whistler (WB), Tahoe or Aspen.
He reads other supermarket circulars to find good prices for his favorite cereal, Wheat Chex.
“Wow, did I waste a lot of money,” Arbeeny said.
Richard Scheiner, 58, a real-estate investor and hedge-fund manager, said most people on Wall Street don’t save.
“When their means are cut, they’re stuck,” said Scheiner, whose New York-based hedge fund, Lane Gate Partners LLC, was down about 15 percent last year. “Not so much an issue for me and my wife because we’ve always saved.”
Scheiner said he spends about $500 a month to park one of his two Audis in a garage and at least $7,500 a year each for memberships at the Trump National Golf Club in Westchester and a gun club in upstate New York. A labradoodle named Zelda and a rescued bichon frise, Duke, cost $17,000 a year, including food, health care, boarding and a daily dog-walker who charges $17 each per outing, he said.
‘Crushing Setback’
Still, he sold two motorcycles he didn’t use and called his Porsche 911 Carrera 4S Cabriolet “the Volkswagen of supercars.” He and his wife have given more than $100,000 to a nonprofit she founded that promotes employment for people with Asperger syndrome, he said.
Scheiner pays $30,000 a year to be part of a New York-based peer-learning group for investors called Tiger 21. Founder Michael Sonnenfeldt said members, most with a net worth of at least $10 million, have been forced to “re-examine lots of assumptions about how grand their life would be.”
While they aren’t asking for sympathy, “at their level, in a different way but in the same way, the rug got pulled out,” said Sonnenfeldt, 56. “For many people of wealth, they’ve had a crushing setback as well.”
He described a feeling of “malaise” and a “paralysis that does not allow one to believe that generally things are going to get better,” listing geopolitical hot spots such as Iran and low interest rates that have been “artificially manipulated” by the Federal Reserve.
Poly Prep
The malaise is shared by Schiff, the New York-based marketing director for Euro Pacific Capital, where his brother is CEO. His family rents the lower duplex of a brownstone in Cobble Hill, where his two children share a room. His 10-year- old daughter is a student at $32,000-a-year Poly Prep Country Day School in Brooklyn. His son, 7, will apply in a few years.
“I can’t imagine what I’m going to do,” Schiff said. “I’m crammed into 1,200 square feet. I don’t have a dishwasher. We do all our dishes by hand.”
He wants 1,800 square feet -- “a room for each kid, three bedrooms, maybe four,” he said. “Imagine four bedrooms. You have the luxury of a guest room, how crazy is that?”
The family rents a three-bedroom summer house in Connecticut and will go there again this year for one month instead of four. Schiff said he brings home less than $200,000 after taxes, health-insurance and 401(k) contributions. The closing costs, renovation and down payment on one of the $1.5 million 17-foot-wide row houses nearby, what he called “the low rung on the brownstone ladder,” would consume “every dime” of the family’s savings, he said.
“I wouldn’t want to whine,” Schiff said. “All I want is the stuff that I always thought, growing up, that successful parents had.”
http://www.bloomberg.com/news/2012-02-29/wall-street-bonus-withdrawal-means-trading-aspen-for-cheap-chex.html#disqus_thread
Now some of the comments show how pissed off the average person is getting. Take a look:
Surviving the crash
This cannot be serious. These are the people who broke the US Economy and now that they are finally getting bit by that rabid dog, they have the audacity to WHINE about never expecting to earn LESS than $500 K? Try having three science degrees and an MBA and not being able to find a job because these very people championed outsourcing. Try having to live off $22K and hope you don't have to apply for SNAP this year because gas is going to hit $5. The real indicator here is that somehow ‘poor’ people just don’t understand the more important stresses the wealthy suffer when their income is slashed. We understand, and frankly we applaud and look forward to a day when YOUR wages are deemed too expensive and your position will be actively outsourced to someone in a third world country who will work for food. Spoiled is as spoiled does. Remember, the global Plutonomy doesn’t owe you a thing
AND
Guest
Burn in the fires of hell.
Jimfaul
I am all for class warfare. This guys are so out of touch
Jim
Someone reading this who can't afford the nice car and home will merely shake their head in disgust at the inanity of the complaints put forth by these rich people.
Someone reading this who can't afford the MRI scan for their sick child is likely to ready the pitchforks and torches.
The inequalities of the 1920's led to the Red Scares of the 1930's. Every action has an equal and opposite reaction.
Wrestler Yoo
“... We do all our dishes by hand.” ...like goddamn animals.
Keith Tyler
The more times I read this the more angry it makes me. These people... there is no place for these people in a cohesive society. Their existence completely tears at the fabric of civilised society. And their stupidity... god, their sheer, utter, complete stupidity and ignorance... belies just how BS it is that they ever got paid even as much as they do now... they are not intelligent people, they are spoiled brats, with silver spoon jobs. There is no way in my mind a person could be remotely intelligent and not be able to comprehend the solution to "I can't afford to put my daughter in a top-tier private school." It is clearly not brains that puts them in the jobs they have and gives them the salaries they have. It is something much less meritorious.
Frankly I say cut their pay even more. Let them have to live in 1,000 square feet and drive a Honda. That's still about 2 times better off than the average American.
Barf. It's one thing to be 10+ times wealthier than 150 million other people in this country, it's another to complain about it not being enough to live on. They can go to hell. After all, that is the mantra towards the rest of America, and the world, that they have lived -- and continue to live -- by
Therondor
I work as an industrial maintenance mec and machine assembler i work between 42 and 60 hours a week if i can get part time work at a local marina and i made $56,000 last year and these peole are stressed. comunism is looking less and less wrong right now, if these people were worth thier pay the us would still be on top and all of the americans that wanted jobs could have them
and
salvage salvage
Eat the rich? This lot would leave such a foul taste I wouldn't recommend it, just straight up French Revolution style social reordering.
To the whiny bitche fretting about having to pull his equally foul (I'm sure) spawn from private school? Quantum science hasn't developed a violin small enough.
It's not the article that compelled me to post this but the comments. I'm seeing more use of "fighting" words in comments lately as people are starting to get squeezed by flat incomes but higher costs. The Fed has found itself in a bind as the markets clamor for QE but crude oil is too high for comfort. Brent crude recently traded as high as $125 per barrel and even made a record when priced in Euros. Go ahead Bernank, go ahead and prime the pump and when US gasoline soars above $5.00 things will start getting interesting here in the grand ol USSA.
New York Federal Reserve Bank Study on Student Loans
To contact us Click HERE
From the Chicago Tribune:
A new analysis from the Federal Reserve Bank of New York gives startling details on the rising levels of student loan debt in the U.S. The report finds that Americans had a total of about $870 billion in student loan debt in the third quarter of 2011.
The report, based on analysis of data on 241 million Americans from credit reporting agency Equifax, adds to a growing list of troubling indicators about the cost of higher education. Here are some startling figures that illustrate the growing specter of student debt:
It's bigger than plastic. Outstanding student loan balance has surpassed the nation's $693 billion credit card balance, according to the report. According to recent data, nearly 80 percent of Americans held credit cards as of 2008, compared to 15 percent of consumers who now hold student debt, according to the Fed report. That contrast illustrates just how small of a pool of Americans holds this large chunk of debt.
But with tougher repayment. According to one calculation, delinquency rates on student loan debt are nearly twice that of other household debt. The New York Fed report estimates that past-due student loan balances equal $85 billion, or around 10 percent of the total national student loan debt burden. More than 1 in 4 of the 37 million student loan borrowers represented in the Equifax data have past-due balances.
Growing debt, stagnant wages. Unlike many goods that people buy with their credit cards, an education doesn't depreciate in value, and can boost lifetime income by hundreds of thousands of dollars. Despite growing debt, some graduates aren't reaping those benefits. From the second to the third quarter of 2011 alone, outstanding student debt grew 2.1 percent. Data suggest that wages are not keeping up with that growing debt. In 2006, new graduates left school with an average of $19,646 in debt, according to the Project on Student Debt, an initiative of the Institute for College Access and Success. In 2010, that figure was up 29 percent to $25,250. Meanwhile, in 2010, median weekly earnings for college graduates 25 and older were at $1,144, up only 10 percent over 2006, according to the Labor Department.
It's not just a Generation Y problem. According to the New York Fed's report, 5.3 percent of the 37 million borrowers are age 60 and over, and another 11.8 percent are 50 to 59. This doesn't necessarily mean that boomers are going back to school (or still paying off their loans from the 1970s). Rather, it may be one sign that parents are increasingly taking out loans to pay for their kids' educations. According to a February report from the National Association of Consumer Bankruptcy Attorneys, 17 percent of parents whose children graduated in 2010 took out loans, up from 5.6 percent in 1992-93.
http://www.chicagotribune.com/classified/realestate/foreclosure/sc-cons-0308-money-consumer-watch-20120308,0,516758.story
Given that the New York Fed was compelled to do a study of the student loan boondoggle it is apparent that the policy makers are beginning to worry about this. As we all are well aware the student loan crisis is going to be a major fucking problem. This country is so levered up to its eyeballs in debt I fear the consequences will make Greece's problems seem like a walk in the park. Today we got the lovely headline that February 2012 had the highest deficit in US history. So much for the recovery.
From the Washington Times:
The federal government recorded its worst monthly deficit in history in February, according to a preliminary report Wednesday from the Congressional Budget Office that said the deficit in fiscal year 2012 is already more than half a trillion dollars.
The CBO’s figures show that despite repeated efforts to trim spending, the government has borrowed 42 cents of every dollar it spent during the first five months of this fiscal year. The nonpartisan agency projected the government will run a deficit of $229 billion in February, the highest monthly figure ever.
http://www.washingtontimes.com/news/2012/mar/8/govt-sets-record-deficit-february/
As I have stated from when I first started blogging 2 years ago, my outlook on the US economy is extremely dark. Since then, what has transpired has only solidified my view. How is this generation going to spend, invest and do all the other things that the generations before did with this huge debt burden? Guess what, many of us won't. Because our policy makers have decided to make student loans nondischargeable in bankruptcy, many will toil away to pay off this odious debt. So Uncle Scam makes his points on the interest while the principal was front loaded to faculty, book publishers, laptop producers and landlords (many student loan borrowers use the money to pay rent as well).
What an excellent way to run a country, by throwing the latest batch of earners into heavy debt. I pray that you all find jobs in this difficult time. I've been employed at a decent job now for 15 months but I worry as the field is far from stable. I'll call defense counsel on a case that I've been working on for some time and before you know it "Mr. Y is no longer with the firm." Fuck that creeps me out.
Being from Greece I have spoken to many people back home and they tell me the situation is terrible. Many of them feel that they have no hope and are searching abroad for opportunity. The reality is, almost none of these people are in debt. When I tell my cousins that I know many people that owe more than 200k in student loans with no jobs they don't believe me. It truly is a joke what we have going on in America, the freest country in the world. Not. Welcome your new overlords. America is going the way of feudalism much quicker than I ever expected. Even that punk bitch Romney told some college student "not to expect bankruptcy" options. To hell with you, Mitt. Tell your boy Trump that's filed bk three times that he has to have his salary clawed back to pay his creditors. Oh, wait. In this new fascist America different rules apply to different people.
At least awareness is growing about this student loan timebomb. After all, how do underwater home owners ever expect to dump their overpriced homes if we debt slaves can't ever qualify??? Obviously we won't be buying any homes any time soon so enjoy watching what little equity you have vanish the same way customer accounts vanished at MF Global after it's largely ignored implosion.
Peace
A new analysis from the Federal Reserve Bank of New York gives startling details on the rising levels of student loan debt in the U.S. The report finds that Americans had a total of about $870 billion in student loan debt in the third quarter of 2011.
The report, based on analysis of data on 241 million Americans from credit reporting agency Equifax, adds to a growing list of troubling indicators about the cost of higher education. Here are some startling figures that illustrate the growing specter of student debt:
It's bigger than plastic. Outstanding student loan balance has surpassed the nation's $693 billion credit card balance, according to the report. According to recent data, nearly 80 percent of Americans held credit cards as of 2008, compared to 15 percent of consumers who now hold student debt, according to the Fed report. That contrast illustrates just how small of a pool of Americans holds this large chunk of debt.
But with tougher repayment. According to one calculation, delinquency rates on student loan debt are nearly twice that of other household debt. The New York Fed report estimates that past-due student loan balances equal $85 billion, or around 10 percent of the total national student loan debt burden. More than 1 in 4 of the 37 million student loan borrowers represented in the Equifax data have past-due balances.
Growing debt, stagnant wages. Unlike many goods that people buy with their credit cards, an education doesn't depreciate in value, and can boost lifetime income by hundreds of thousands of dollars. Despite growing debt, some graduates aren't reaping those benefits. From the second to the third quarter of 2011 alone, outstanding student debt grew 2.1 percent. Data suggest that wages are not keeping up with that growing debt. In 2006, new graduates left school with an average of $19,646 in debt, according to the Project on Student Debt, an initiative of the Institute for College Access and Success. In 2010, that figure was up 29 percent to $25,250. Meanwhile, in 2010, median weekly earnings for college graduates 25 and older were at $1,144, up only 10 percent over 2006, according to the Labor Department.
It's not just a Generation Y problem. According to the New York Fed's report, 5.3 percent of the 37 million borrowers are age 60 and over, and another 11.8 percent are 50 to 59. This doesn't necessarily mean that boomers are going back to school (or still paying off their loans from the 1970s). Rather, it may be one sign that parents are increasingly taking out loans to pay for their kids' educations. According to a February report from the National Association of Consumer Bankruptcy Attorneys, 17 percent of parents whose children graduated in 2010 took out loans, up from 5.6 percent in 1992-93.
http://www.chicagotribune.com/classified/realestate/foreclosure/sc-cons-0308-money-consumer-watch-20120308,0,516758.story
Given that the New York Fed was compelled to do a study of the student loan boondoggle it is apparent that the policy makers are beginning to worry about this. As we all are well aware the student loan crisis is going to be a major fucking problem. This country is so levered up to its eyeballs in debt I fear the consequences will make Greece's problems seem like a walk in the park. Today we got the lovely headline that February 2012 had the highest deficit in US history. So much for the recovery.
From the Washington Times:
The federal government recorded its worst monthly deficit in history in February, according to a preliminary report Wednesday from the Congressional Budget Office that said the deficit in fiscal year 2012 is already more than half a trillion dollars.
The CBO’s figures show that despite repeated efforts to trim spending, the government has borrowed 42 cents of every dollar it spent during the first five months of this fiscal year. The nonpartisan agency projected the government will run a deficit of $229 billion in February, the highest monthly figure ever.
http://www.washingtontimes.com/news/2012/mar/8/govt-sets-record-deficit-february/
As I have stated from when I first started blogging 2 years ago, my outlook on the US economy is extremely dark. Since then, what has transpired has only solidified my view. How is this generation going to spend, invest and do all the other things that the generations before did with this huge debt burden? Guess what, many of us won't. Because our policy makers have decided to make student loans nondischargeable in bankruptcy, many will toil away to pay off this odious debt. So Uncle Scam makes his points on the interest while the principal was front loaded to faculty, book publishers, laptop producers and landlords (many student loan borrowers use the money to pay rent as well).
What an excellent way to run a country, by throwing the latest batch of earners into heavy debt. I pray that you all find jobs in this difficult time. I've been employed at a decent job now for 15 months but I worry as the field is far from stable. I'll call defense counsel on a case that I've been working on for some time and before you know it "Mr. Y is no longer with the firm." Fuck that creeps me out.
Being from Greece I have spoken to many people back home and they tell me the situation is terrible. Many of them feel that they have no hope and are searching abroad for opportunity. The reality is, almost none of these people are in debt. When I tell my cousins that I know many people that owe more than 200k in student loans with no jobs they don't believe me. It truly is a joke what we have going on in America, the freest country in the world. Not. Welcome your new overlords. America is going the way of feudalism much quicker than I ever expected. Even that punk bitch Romney told some college student "not to expect bankruptcy" options. To hell with you, Mitt. Tell your boy Trump that's filed bk three times that he has to have his salary clawed back to pay his creditors. Oh, wait. In this new fascist America different rules apply to different people.
At least awareness is growing about this student loan timebomb. After all, how do underwater home owners ever expect to dump their overpriced homes if we debt slaves can't ever qualify??? Obviously we won't be buying any homes any time soon so enjoy watching what little equity you have vanish the same way customer accounts vanished at MF Global after it's largely ignored implosion.
Peace
Sharp Drop in LSAT Takers for Second Year Now
To contact us Click HERE
This is great news. Thanks again David Segal.
From the New York Times:
The organization behind the Law School Admission Test reported that the number of tests it administered this year dropped by more than 16 percent, the largest decline in more than a decade.
The Law School Admission Council reported that the LSAT was given 129,925 times in the 2011-12 academic year. That was well off the 155,050 of the year before and far from the peak of 171,514 in the year before that. In all, the number of test takers has fallen by nearly 25 percent in the last two years.
The decline reflects a spreading view that the legal market in the United States is in terrible shape and will have a hard time absorbing the roughly 45,000 students who are expected to graduate from law school in each of the next three years. And the problem may be deep and systemic.
Many lawyers and law professors have argued in recent years that the legal market will either stagnate or shrink as technology allows more low-end legal work to be handled overseas, and as corporations demand more cost-efficient fee arrangements from their firms.
That argument, and news that so many new lawyers are struggling with immense debt, is changing the way law school is perceived by undergrads. Word is getting through that law school is no longer a safe place to sit out an economic downturn — an article of faith for years — and that strong grades at an above-average school no longer guarantees a six-figure law firm job.
“For a long time there has been this culturally embedded perception that if you go to law school, it will be worth the money,” said Kyle McEntee of Law School Transparency, a legal education policy organization. “The idea that law school is an easy ticket to financial security is finally breaking down.”
Law schools have also suffered through some withering press in the last couple of years. Some blogs, most of them written by unemployed or underemployed graduates, have accused law schools of enticing students with shady data. Attention has focused on a crucial statistic: the percentage of graduates who are employed nine months after graduation.
In recent months, class-action lawsuits have been filed against more than a dozen law schools, charging that students were snookered into enrolling by postgraduate employment figures that were vastly, and fraudulently, inflated. Even if law schools are able to defeat these lawsuits — and many legal scholars anticipate they will — the media attention has been bruising. Steve Schwartz, an LSAT tutor, said the new LSAT figures were not a surprise, given the steady decline in the number of students seeking one-on-one tutoring.
“This is a major turn of events,” he wrote of the newly reported test numbers on his LSAT Blog, “The tide is turning, folks.”
For some law schools, the dwindling number of test-takers represents a serious long-term challenge.
“What I’d anticipate is that you’ll see the biggest falloff in applications in the bottom end of the law school food chain,” said Andrew Morriss of the University of Alabama School of Law. “Those schools are going to have significant difficulty because they are dependent on tuition to fund themselves and they’ll either have to cut class size to maintain standards, or accept students with lower credentials.”
If they take the second course, Mr. Morriss said, it would hurt the school three years later because there is a strong correlation between poor performance on the LSAT and poor performance on the bar exam. If students start failing the bar, then the prestige of the school will drop, which would mean lowering standards even more. “At that point,” Mr. Morriss said, “the school is risking a death spiral.”
http://www.nytimes.com/2012/03/20/business/for-lsat-sharp-drop-in-popularity-for-second-year.html?_r=1
From the New York Times:
The organization behind the Law School Admission Test reported that the number of tests it administered this year dropped by more than 16 percent, the largest decline in more than a decade.
The Law School Admission Council reported that the LSAT was given 129,925 times in the 2011-12 academic year. That was well off the 155,050 of the year before and far from the peak of 171,514 in the year before that. In all, the number of test takers has fallen by nearly 25 percent in the last two years.
The decline reflects a spreading view that the legal market in the United States is in terrible shape and will have a hard time absorbing the roughly 45,000 students who are expected to graduate from law school in each of the next three years. And the problem may be deep and systemic.
Many lawyers and law professors have argued in recent years that the legal market will either stagnate or shrink as technology allows more low-end legal work to be handled overseas, and as corporations demand more cost-efficient fee arrangements from their firms.
That argument, and news that so many new lawyers are struggling with immense debt, is changing the way law school is perceived by undergrads. Word is getting through that law school is no longer a safe place to sit out an economic downturn — an article of faith for years — and that strong grades at an above-average school no longer guarantees a six-figure law firm job.
“For a long time there has been this culturally embedded perception that if you go to law school, it will be worth the money,” said Kyle McEntee of Law School Transparency, a legal education policy organization. “The idea that law school is an easy ticket to financial security is finally breaking down.”
Law schools have also suffered through some withering press in the last couple of years. Some blogs, most of them written by unemployed or underemployed graduates, have accused law schools of enticing students with shady data. Attention has focused on a crucial statistic: the percentage of graduates who are employed nine months after graduation.
In recent months, class-action lawsuits have been filed against more than a dozen law schools, charging that students were snookered into enrolling by postgraduate employment figures that were vastly, and fraudulently, inflated. Even if law schools are able to defeat these lawsuits — and many legal scholars anticipate they will — the media attention has been bruising. Steve Schwartz, an LSAT tutor, said the new LSAT figures were not a surprise, given the steady decline in the number of students seeking one-on-one tutoring.
“This is a major turn of events,” he wrote of the newly reported test numbers on his LSAT Blog, “The tide is turning, folks.”
For some law schools, the dwindling number of test-takers represents a serious long-term challenge.
“What I’d anticipate is that you’ll see the biggest falloff in applications in the bottom end of the law school food chain,” said Andrew Morriss of the University of Alabama School of Law. “Those schools are going to have significant difficulty because they are dependent on tuition to fund themselves and they’ll either have to cut class size to maintain standards, or accept students with lower credentials.”
If they take the second course, Mr. Morriss said, it would hurt the school three years later because there is a strong correlation between poor performance on the LSAT and poor performance on the bar exam. If students start failing the bar, then the prestige of the school will drop, which would mean lowering standards even more. “At that point,” Mr. Morriss said, “the school is risking a death spiral.”
http://www.nytimes.com/2012/03/20/business/for-lsat-sharp-drop-in-popularity-for-second-year.html?_r=1
A Message to Recent Graduates
To contact us Click HERE
Specifically the class of 2011. Many of you right now are probably in a panic, especially for those that have passed the bar and been admitted. I know the feeling and it blows. We're coming up on April 2012 and its been nearly a year since graduation. The black hole of the job search continues as resume after resume gets sent with no reply. Nothing. Once in a while a computer generated response of receipt and that's about it. The frustration can be maddening. I know the feeling and went through the experience myself. It took me 19 months post graduation to get the job. At the near end I practically gave up. But out of stubbornness I'd continue to send out resumes until something bit. Here are some tips for you unemployed or underemployed grads.
For California grads, and the same applies generally nation wide, GO TO COURT. I cannot stress how important this is. Go to any superior court and check out the calendars outside the department. There are trials going on all the time. Watch how the juries get selected, opening argument, expert witness testimony and cross examination. Even something as stupid as getting medical records admitted has tripped up many new grads and some mid term vets. Even regular hearings such as case management conferences, trial setting conferences, hearings on motions such as demurrers, MSJs and motion to compel. You can learn plenty just by watching.
Many of these trials are short and to the point. Auto accident cases are the best because they are easy but can show you all the basics. And you get to watch the plaintiff and defense doctors come to the exact opposite conclusions LOL. Liability cases with an accident reconstruction expert would be the best.
At this point, as an unemployed grad you don't have too many options other than sending resumes or sulking in your room/basement/bridge. Simply going to court, watching and taking good notes can show you how the system works. It's a shame that law school doesn't require ANY court participation whatsoever. What better training than to watch live?? Rather, they are too busy spouting the same shit they've been teaching for the last 30 yrs instead of actually trying to teach students real legal skills.
The sad reality is that more than half of these recent grads will place in full time jobs. Many will be part time and the remainder will work in "business" or "industry" which means retail, sales, busboy, cab driver, etc. For those that want to give the law a shot should take my advice and check out the courts.
peace
For California grads, and the same applies generally nation wide, GO TO COURT. I cannot stress how important this is. Go to any superior court and check out the calendars outside the department. There are trials going on all the time. Watch how the juries get selected, opening argument, expert witness testimony and cross examination. Even something as stupid as getting medical records admitted has tripped up many new grads and some mid term vets. Even regular hearings such as case management conferences, trial setting conferences, hearings on motions such as demurrers, MSJs and motion to compel. You can learn plenty just by watching.
Many of these trials are short and to the point. Auto accident cases are the best because they are easy but can show you all the basics. And you get to watch the plaintiff and defense doctors come to the exact opposite conclusions LOL. Liability cases with an accident reconstruction expert would be the best.
At this point, as an unemployed grad you don't have too many options other than sending resumes or sulking in your room/basement/bridge. Simply going to court, watching and taking good notes can show you how the system works. It's a shame that law school doesn't require ANY court participation whatsoever. What better training than to watch live?? Rather, they are too busy spouting the same shit they've been teaching for the last 30 yrs instead of actually trying to teach students real legal skills.
The sad reality is that more than half of these recent grads will place in full time jobs. Many will be part time and the remainder will work in "business" or "industry" which means retail, sales, busboy, cab driver, etc. For those that want to give the law a shot should take my advice and check out the courts.
peace
7 Temmuz 2012 Cumartesi
Krugman Creates a Stir about Greek Euro Exit
To contact us Click HERE
14 May 2012
This is interesting. As readers of my blog will be aware, I have many differences with Paul Krugman as to economic theory and practice. In particular, I am in opposition to his view that rescuing the badly behaved is wise economic policy.
However, Mr. Krugman's recent comments on the imminent necessity of Greece's leaving the Euro as a shared common currency are of importance.
I'll focus on these two points in Mr. Krugman's brief post:
1. Greek euro exit, very possibly next month.
I for one am paying attention to Mr. Krugman this time.
Watch Spain and Italy... now!
_
This is interesting. As readers of my blog will be aware, I have many differences with Paul Krugman as to economic theory and practice. In particular, I am in opposition to his view that rescuing the badly behaved is wise economic policy.
However, Mr. Krugman's recent comments on the imminent necessity of Greece's leaving the Euro as a shared common currency are of importance.I'll focus on these two points in Mr. Krugman's brief post:
1. Greek euro exit, very possibly next month.
2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.
Many economists are concerned about the possible implications of a Greek withdrawal from the Euro, now considered probable, based on the dramatic "anti-austerity" results of the recent Greek election.I for one am paying attention to Mr. Krugman this time.
Watch Spain and Italy... now!
_
Our Safety Net: HUI:GOLD .204; HUI 275-300; Gold $1360 or so...
To contact us Click HERE
15 May 2012
I posted this letter to my friends today, and it's intended for readers with some technical knowledge of the gold and gold mining markets:
The HUI is not going to retest its 2008 lows, but the HUI:GOLD ratio is. Looks like we're gaming for a double (or triple, if you prefer) bottom on this chart, meaning the HUI:GOLD ratio probably falls to the 2000/2008 lows (.204). We're now at .243, so that's actually only four decimal points to go. No big deal (ha!).
Assuming gold swoons to $1400 or so, or stays higher, that means the low for the HUI would be 275-300, vs its low of 150 in 2008.
With the HUI at 375 today, gold at $1545, etc., I'd say the numbers stated above are the visible bottom. That is much lower than I expected, but the HUI and gold would both double their 2008 lows, which sounds a bit fractal to me.
My call: HUI:GOLD .204; HUI 275-300, Gold $1400 or so ($1360 is double the 2008 low). I'm not happy about this, but it's twice the Oct 2008 level.
On a positive note, so long as we're thinking it's a fractal double (remember, the sellers will be extinct), then the upside target for the HUI is an optimistic 1275, so who's complaining? As they say on the street, we're closer to the bottom than the top, and we're certainly finding the bottom in a hurry! I'd be a buyer at HUI 300, and there's probably no rush to take action before then!
I also expect gold to lead on the way back up while the broad market continues to fall, as we're getting some kind of revisit of 2008 for some reason....(More thoughts later, maybe???)
Here is the HUI:GOLD chart:
Hold on everybody. It will be steep and hard, but relatively brief at this juncture!
NOTE: Dan Norcini has thoughts similar to my own. Click here for Dan's thoughts on the current rout (a consequence of the parabolic September 2011 blowoff in the gold price, by the way).
17 May 2012: Possibly the levels I have identified here are our safety net. That is, if we don't fall off the tightrope, we may not have to fall this far! At this point, I'm not sure. The good news is that there IS a safety net in place, making us secure for the time being!
24 May 2012: Hmmm. More bottoming signs are in. If we're basing and starting a new uptrend, take my word for it, we shall soon be seeing the mother of all bull runs in the gold and silver markets!
_
I posted this letter to my friends today, and it's intended for readers with some technical knowledge of the gold and gold mining markets:
The HUI is not going to retest its 2008 lows, but the HUI:GOLD ratio is. Looks like we're gaming for a double (or triple, if you prefer) bottom on this chart, meaning the HUI:GOLD ratio probably falls to the 2000/2008 lows (.204). We're now at .243, so that's actually only four decimal points to go. No big deal (ha!).Assuming gold swoons to $1400 or so, or stays higher, that means the low for the HUI would be 275-300, vs its low of 150 in 2008.With the HUI at 375 today, gold at $1545, etc., I'd say the numbers stated above are the visible bottom. That is much lower than I expected, but the HUI and gold would both double their 2008 lows, which sounds a bit fractal to me.
My call: HUI:GOLD .204; HUI 275-300, Gold $1400 or so ($1360 is double the 2008 low). I'm not happy about this, but it's twice the Oct 2008 level.
On a positive note, so long as we're thinking it's a fractal double (remember, the sellers will be extinct), then the upside target for the HUI is an optimistic 1275, so who's complaining? As they say on the street, we're closer to the bottom than the top, and we're certainly finding the bottom in a hurry! I'd be a buyer at HUI 300, and there's probably no rush to take action before then!
I also expect gold to lead on the way back up while the broad market continues to fall, as we're getting some kind of revisit of 2008 for some reason....(More thoughts later, maybe???)
Here is the HUI:GOLD chart:
Hold on everybody. It will be steep and hard, but relatively brief at this juncture!NOTE: Dan Norcini has thoughts similar to my own. Click here for Dan's thoughts on the current rout (a consequence of the parabolic September 2011 blowoff in the gold price, by the way). 17 May 2012: Possibly the levels I have identified here are our safety net. That is, if we don't fall off the tightrope, we may not have to fall this far! At this point, I'm not sure. The good news is that there IS a safety net in place, making us secure for the time being!24 May 2012: Hmmm. More bottoming signs are in. If we're basing and starting a new uptrend, take my word for it, we shall soon be seeing the mother of all bull runs in the gold and silver markets!
_
The Market is an Instinctual Beast
To contact us Click HERE
31 May 2012
I've been thinking about the behaviour of markets lately. While there is a theory of "rational markets," I don't think it can be defended.
Better Mr. Keynes' trenchant observation, "Markets can remain irrational a lot longer than you and I can remain solvent!"
Indeed.
Rather, I argue that markets are instinctual beasts.
Having had years of experience horseback riding in the Canadian Rockies, I can attest that the horse is a very instinctual animal. It is also unstoppable when under the immediate influence of instincts such as "fight or flight," "startle," or "running with the herd." As the average horse weighs a half ton, basically, you don't stand in the way of an instinctual beast that is many times your own weight.
So too, we should not stand in the way of the market when its instincts are triggered. You have to "go with" the market, though obviously we can "steer" by choosing where we place our investments!
Another image of the market as an instinctual animal references the seasonal instincts of the birds. Right now, the robins are building their nests. As I have about 300 trees surrounding my home, I'm seeing lots of robin activity, right now. A naive investor might therefore conclude that the best place to invest is in nest-building materials.
However, as the seasons change, the instinctual behaviour of the robins will alter as well. Based on my own experience, after nest-building comes the territorial defense of the anticipated, and then the newly-hatched young.
And of course, the seasons change again, as they do in their cycles, and soon enough, all of the seasonal brids will leave, flying south. Those invested in nest-building materials will experience a "bear market."
Then it shall be widely assumed by the market that, as robins no longer live here, robins simply aren't a good investment. Until, of course, they return the following spring. The instinctual beast does not think that far ahead!
And so it goes with the markets.
Bill Fleckenstein observed this week, "the market is playing checkers, not chess." It thinks ahead, but only in somewhat obvious ways.
My present take is that the markets have been in a so-called "risk off" mode since 1999-2000, which involves moving out of equities and into government and other bond instruments. (In fact, the original move to bonds occurred with the ascent of Paul Volcker at the Federal Reserve, as, due to his influence, the prime rate peaked at 21.5% in December 1980, though that is another story.)
Now it is no secret that inflationary monetary policy relies on low interest rates to enable the jugglers to keep all their bowling pins in the air.
Of course, when inflation is in vogue, debts accumulate, and ultimately, this undermines the foundation of the bond market, as investors grow concerned about inflation eating away at their investment (as governments rely on monetary inflation to make debt repayment "affordable").
Bond buyers then demand higher interest rates as a "risk premium." This is what's happening in Greece, Spain and Italy right now. But countries with printing presses are accorded continuing low rates, as we are all willing to pretend - for a season - that inflation is not real.
Now it is my prediction that the seasons of the market will change yet again - it would hardly be surprising to anyone with a historical view. I suggest further that with the next seasonal transition, the markets' instunctual responses will also shift - and dramatically so!
When the robins have flown south, bonds will be viewed as vulnerable to devaluation by inflation (it's already happening, as I've written many times, but we simply pretend it's not).
The "risk off" instinct towards bonds has prevailed for 12 years, with a seemingly solid 20-year foundation undelying the recent era of the dominance of bonds. But this season, too, shall change, as all seasons do.
Now, when the instintual behaviour of the market next shifts, what should we expect?. In my view, bonds will become the next "risky" asset, and investors will begin to flee them in droves, with bonds emerging as "the next bear market." Today's ultra-low, even record-low bond interest rates will prove unsustainable, just as did investing in the nest-building business.
So if "risk off" is the current instinct of the market, driven by the buying of the bonds of governments that print their own money, what then shall be the next instinctive market trend?
Well, bonds will remain in a bear market, probably for a very lenghty period. The stock market, already dead in the water for 12 years, is not set to recover any time soon.
My prediction is that the next season will be that of the treasure hunter - dominated by those seeking "security" through a search for value. The new treasure seekers will dig much more deeply than today's "risk off" traders, who have little more than herd instinct to guide them.
Where have treasure hunters always looked? You know and I know that the object of the treasure hunter is gold, and this is where the instinctive behaviour of the market will turn next.
So, my advice is to find your treasure now, by holding your savings in precious metals and in the stocks of companies that mine or derive royalties from precious metal production.
I wish successful treaure hunting to you all!
_
I've been thinking about the behaviour of markets lately. While there is a theory of "rational markets," I don't think it can be defended.
Better Mr. Keynes' trenchant observation, "Markets can remain irrational a lot longer than you and I can remain solvent!"Indeed.
Rather, I argue that markets are instinctual beasts.Having had years of experience horseback riding in the Canadian Rockies, I can attest that the horse is a very instinctual animal. It is also unstoppable when under the immediate influence of instincts such as "fight or flight," "startle," or "running with the herd." As the average horse weighs a half ton, basically, you don't stand in the way of an instinctual beast that is many times your own weight.
So too, we should not stand in the way of the market when its instincts are triggered. You have to "go with" the market, though obviously we can "steer" by choosing where we place our investments!
Another image of the market as an instinctual animal references the seasonal instincts of the birds. Right now, the robins are building their nests. As I have about 300 trees surrounding my home, I'm seeing lots of robin activity, right now. A naive investor might therefore conclude that the best place to invest is in nest-building materials.
However, as the seasons change, the instinctual behaviour of the robins will alter as well. Based on my own experience, after nest-building comes the territorial defense of the anticipated, and then the newly-hatched young.And of course, the seasons change again, as they do in their cycles, and soon enough, all of the seasonal brids will leave, flying south. Those invested in nest-building materials will experience a "bear market."Then it shall be widely assumed by the market that, as robins no longer live here, robins simply aren't a good investment. Until, of course, they return the following spring. The instinctual beast does not think that far ahead!And so it goes with the markets.
Bill Fleckenstein observed this week, "the market is playing checkers, not chess." It thinks ahead, but only in somewhat obvious ways.My present take is that the markets have been in a so-called "risk off" mode since 1999-2000, which involves moving out of equities and into government and other bond instruments. (In fact, the original move to bonds occurred with the ascent of Paul Volcker at the Federal Reserve, as, due to his influence, the prime rate peaked at 21.5% in December 1980, though that is another story.)
Now it is no secret that inflationary monetary policy relies on low interest rates to enable the jugglers to keep all their bowling pins in the air.Of course, when inflation is in vogue, debts accumulate, and ultimately, this undermines the foundation of the bond market, as investors grow concerned about inflation eating away at their investment (as governments rely on monetary inflation to make debt repayment "affordable").
Bond buyers then demand higher interest rates as a "risk premium." This is what's happening in Greece, Spain and Italy right now. But countries with printing presses are accorded continuing low rates, as we are all willing to pretend - for a season - that inflation is not real.
Now it is my prediction that the seasons of the market will change yet again - it would hardly be surprising to anyone with a historical view. I suggest further that with the next seasonal transition, the markets' instunctual responses will also shift - and dramatically so!
When the robins have flown south, bonds will be viewed as vulnerable to devaluation by inflation (it's already happening, as I've written many times, but we simply pretend it's not).
The "risk off" instinct towards bonds has prevailed for 12 years, with a seemingly solid 20-year foundation undelying the recent era of the dominance of bonds. But this season, too, shall change, as all seasons do.
Now, when the instintual behaviour of the market next shifts, what should we expect?. In my view, bonds will become the next "risky" asset, and investors will begin to flee them in droves, with bonds emerging as "the next bear market." Today's ultra-low, even record-low bond interest rates will prove unsustainable, just as did investing in the nest-building business.So if "risk off" is the current instinct of the market, driven by the buying of the bonds of governments that print their own money, what then shall be the next instinctive market trend?
Well, bonds will remain in a bear market, probably for a very lenghty period. The stock market, already dead in the water for 12 years, is not set to recover any time soon.My prediction is that the next season will be that of the treasure hunter - dominated by those seeking "security" through a search for value. The new treasure seekers will dig much more deeply than today's "risk off" traders, who have little more than herd instinct to guide them.
Where have treasure hunters always looked? You know and I know that the object of the treasure hunter is gold, and this is where the instinctive behaviour of the market will turn next.
So, my advice is to find your treasure now, by holding your savings in precious metals and in the stocks of companies that mine or derive royalties from precious metal production.
I wish successful treaure hunting to you all!
_
What Is Wrong.... A One-Paragraph Summary
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7 June 2012
This is a paragraph that I wrote to a liberal friend today (slightly expanded from the original):
I am not a conservative, but I also differ with many liberals, so I'm not sure what category I fall in. I believe in free markets, but our present market is manipulated. Our corporate "titans" seem to manage businesses for themselves, not for their shareholders. General Electric Corporation, as an example, has shed 58% of its value since the year 2000, and the broad markets have punished shareholders for 12 years. The ultra-rich are taking everything private, and closing out public participation in ownership of assets. Governments are adding gatekeepers and regulators, and shedding service providers, builders and maintenance workers. The income tax code is a Byzantine labyrinth that favours the rich and punishes the middle class. We are conducting costly wars on drugs, privacy and terror. Paul Krugman is calling for more debt, which cannot possibly work long-term (look at Japan for a trip down that road). Unions are losing the battle to protect their members, but winning the battle to prevent young people from entering the workplace. I hope you grasp my dilemma. It seems that everyone on both the left and the right is doing exactly the wrong thing. My personal investment strategy (precious metals) is predicated on the assumption that decision-makers everywhere, given a choice, will take action without consideration of long-term consequences. Our governments are accumulating debts that the young cannot pay, and the prospect is that we shall all be taxed at ever greater levels in order to fund the ballooning cost of a world that none of us wants. There are of course bright spots out there, but the broad trend is as negative as I have ever seen.
_
This is a paragraph that I wrote to a liberal friend today (slightly expanded from the original):
I am not a conservative, but I also differ with many liberals, so I'm not sure what category I fall in. I believe in free markets, but our present market is manipulated. Our corporate "titans" seem to manage businesses for themselves, not for their shareholders. General Electric Corporation, as an example, has shed 58% of its value since the year 2000, and the broad markets have punished shareholders for 12 years. The ultra-rich are taking everything private, and closing out public participation in ownership of assets. Governments are adding gatekeepers and regulators, and shedding service providers, builders and maintenance workers. The income tax code is a Byzantine labyrinth that favours the rich and punishes the middle class. We are conducting costly wars on drugs, privacy and terror. Paul Krugman is calling for more debt, which cannot possibly work long-term (look at Japan for a trip down that road). Unions are losing the battle to protect their members, but winning the battle to prevent young people from entering the workplace. I hope you grasp my dilemma. It seems that everyone on both the left and the right is doing exactly the wrong thing. My personal investment strategy (precious metals) is predicated on the assumption that decision-makers everywhere, given a choice, will take action without consideration of long-term consequences. Our governments are accumulating debts that the young cannot pay, and the prospect is that we shall all be taxed at ever greater levels in order to fund the ballooning cost of a world that none of us wants. There are of course bright spots out there, but the broad trend is as negative as I have ever seen._
Differential Rates of Currency Decay Explain Europe's Unsolvable Dilemma
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10 June 2012
Quick comment.
Since the nations of the world, led by the example of the United States, aboandoned the gold standard, all of them have allowed their currencies to decay at a steady clip. We call it "inflation," perhaps a euphemism. My suggestion, we should call currency destruction what is is, "currency decay."
If you understand this concept, you will understand the present problem with Europe.
In brief, the Deutsch Mark, if it stil existed, would rise relative to other currencies, as German monetary policy is less inflationary than that of most other major nations. Note - it is still inflationary, just less so relative to the policies of its peers.
In brief, this is why the European Monetary Union is failing. Greece has always permitted a rapidly decaying currency, as Greek citizens have a habit of taking long holidays, retiring at 60, not paying income and property taxes, and not even paying for government-provided services, including electricity. Similarly, Spain, Portugal and even Italy are "relaxed" when compared to the more industrious French and German economies.
So what we are seeing now is currency decay to the point of outright "rot" in Greece, and quickening currency decline in Spain (with Portugal, Italy, Ireland and certainly others "following along").
How does one maintain monetary union in such a case?
In brief, it can't be done.
The nations with slowly decaying currencies must continuously bail out those that tolerate more rapid decay and outright decomposition, with Greece being the current poster child.
It's not fixable.
(Thanks to Hookedblog for today's images.)
_
Quick comment.
Since the nations of the world, led by the example of the United States, aboandoned the gold standard, all of them have allowed their currencies to decay at a steady clip. We call it "inflation," perhaps a euphemism. My suggestion, we should call currency destruction what is is, "currency decay."If you understand this concept, you will understand the present problem with Europe.
In brief, the Deutsch Mark, if it stil existed, would rise relative to other currencies, as German monetary policy is less inflationary than that of most other major nations. Note - it is still inflationary, just less so relative to the policies of its peers.
In brief, this is why the European Monetary Union is failing. Greece has always permitted a rapidly decaying currency, as Greek citizens have a habit of taking long holidays, retiring at 60, not paying income and property taxes, and not even paying for government-provided services, including electricity. Similarly, Spain, Portugal and even Italy are "relaxed" when compared to the more industrious French and German economies.So what we are seeing now is currency decay to the point of outright "rot" in Greece, and quickening currency decline in Spain (with Portugal, Italy, Ireland and certainly others "following along").
How does one maintain monetary union in such a case?
In brief, it can't be done.
The nations with slowly decaying currencies must continuously bail out those that tolerate more rapid decay and outright decomposition, with Greece being the current poster child.
It's not fixable.
(Thanks to Hookedblog for today's images.)
_
5 Temmuz 2012 Perşembe
China stock market june 25 2012
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China stock market june 25 2012 : The Shanghai Composite Index fell 1.60 percent, or 36.76 points, today to close at 2,224.11 points on transaction value of 54.81 billion yuan. The Shenzhen Component Index plunged 268.47 points, or 2.77 percent, to close at 9,414.21 points on transaction value of 58.17 billion yuan. Opening down, the two bourses extended losses in the afternoon session, with coal, real estate, steel, cement, non-ferrous metal and brokerage sectors all down.
Reports said fund inflows were concentrated in the bio pharmaceutical, banking and public utitlies sectors, while outflows hit the non-ferrous metal, brokerage and trust and equipment production sectors.
According to Chnia's Ministry of Human Resources and Social Security, 12 provinces have either filed or published salary guides, a majority of which sharply cut the rate of pay increases. Some experts attributed the drop in growth rates to a decline in profits for enterprises amid an overall economic slowdown.
CICC said in a report that the Chinese economy will go through a complicated bottoming process in the second half of 2012, though it would be near a bottom with policy support. The bank anticipated GDP growth of 7.8 percent in 2012 and 8.3 percent in 2013, while inflation in 2012 is estimated to hit 2.8 percent. CICC also believes the stock market will rebound in July and August as policies are relaxed, in addition to improved liquidity. CICC said that the Shanghai bourse might climb as high as between 2,500 points and 2,600 points, while a 15 times forward P/E ratio for the overall market corresponds to a level of 2,540 points.
Zhang Yujun, general manager at Shanghai Stock Exchange, said that the exchange projects to achieve annual turnover of 100 trillion yuan as it looks to double its market scale to 30 trillion to 40 trillion yuan by the end of the 12th Five Year Plan period. During the five year period, the exchange hopes to become the second-largest exchange worldwide, while turnover could hit 70 trillion to 80 trillion yuan. At present, the Chinese stock market capitalization is 21.48 trillion yuan, ranking third globally.
According to Guodu Securities, open-end stock funds had average stock positions of 79.22 percent last week, down 1.07 percentage points from a week ago. It was reported by the brokerage firm that mutual funds actively cut stock holdings by 0.81 percentage points last week, reflecting their cautious attitude. Last week, 53.6 percent of mutual funds cut their stock holdings, including 45.8 percent that lowered stock holdings by less than three percent and 7.8 percent of funds that cut holdings by three to five percent.
Equity Movers
Cement makers were the worst-performing stocks today on concern that the Chinese economy will not bottom by the end of the second quarter; top losers were BBMG Corporation (601992, 6.99, -8.27%), Sichuan Shuangma Cement (000935, 7.39, -8.20%) and Tangshan Jidong Cement (000401, 14.17, -8.17%).
Coal-related companies took more heavy losses today, with Wintime Energy (600157, 8.78, -7.48%), Guizhou Panjiang Refined Coal (600395, 25.51, -6.45%) and Yang Quan Coal Industry (Group) (600348, 15.07, -7.72%) losing more than five percent.
With the exception of China Merchants Bank (60036, 10.99, +0.83%), Industrial and Commercial Bank of China (601398, 3.94, +0.77%) and Industrial Bank (601166, 12.80, +0.09%), most financial firms edged lower.
The most bearish financial firms were Hong Yuan Securities (000562, 16.20, -10.00%), Soochow Securities (601555, 8.53, -6.06%) and Western Securities (002673, 16.60, -5.79%).
Non-ferrous metals companies mostly retreated and the top losers included Shengda Mining (000603, 19.95, -8.49%), Huludao Zinc Industry (000751, 3.43, -3.92%) and Zhuzhou Smelter Group (600961, 9.98, -5.31%).
China Vanke (000002, 8.75, -3.10%), Poly Estate Group (600048, 10.94, -4.87 %) and Gemdale Corporation (600383, 6.39, -6.44%) were hit hard.
Both Sinopec (600028, 6.37, -0.47%) and PetroChina (601857, 9.08, -0.44%) dropped for two consecutive trading days.
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Asian stock market drop june 29 2012
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Asian stock market drop june 29 2012 : Asian shares and the euro were pressured on Friday as European leaders argued over how to ease borrowing strains in Italy and Spain and stop the euro zone debt crisis spreading, with investors fearful of U.S. reaction to the deadlock.
"Investors are waiting for further developments overnight in Europe and the reaction in Wall Street before making their bets,Trading looks to be quiet as the market braces for what might be a busy Monday."
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 percent, down 9.9 percent on the quarter and on track for its first quarterly loss since end-September.
Japan's Nikkei average opened down 0.7 percent.
As the first of a two-day EU summit drew to a close on Thursday, European Council President Herman Van Rompuy announced a deal in principle for a 120 billion euro ($149 billion) growth package and moves to boost capital for the EU's lending arm, the European Investment Bank.
But Italy, Spain and some other countries refused to sign off on the deal until they saw steps to allow euro zone rescue funds to buy their government bonds and support their banks.
"What the markets want to see is more clarity in the scheme to allow the rescue fund to buy Italian and Spanish bonds and progress in a roadmap for banking supervision and deposit insurance scheme,Markets will remain guarded until there is certainty in these key issues, keeping the euro in ranges with a downside bias,
The euro stood around $1.2442, above its lowest against the dollar in more than three weeks of $1.2407 reached on Thursday.
Euro zone finance officials have proposed to the bloc's leaders that a single banking supervisory body be set up as soon as possible, according to a document drafted at an EU summit on Thursday, and allow the euro zone's permanent rescue fund to recapitalise struggling banks directly, rather than having to lend to governments.
Van Rompuy and European Commission President Jose Manuel Barroso have set long-term goals of creating a euro zone treasury to issue joint bonds in the medium-term, and establishing a banking union with central supervision, a joint deposit guarantee and a resolution fund.
But Germany opposes common euro bonds, putting priority on fiscal and economic policies.
The EU divisions pushed Spanish 10-year yields above 7 percent, a level widely seen as unsustainable, on Thursday. Investors were relieved Italy sold five and 10 year bonds at the top of its issuance range and the market absorbed the supply without a hitch, but its borrowing costs on both issues rose to their highest since December.
As the prolonged euro zone debt crisis continues to stifle global growth prospects, crude oil futures were on track for the worst quarterly performance since the 2008 financial debacle.
Early on Friday, U.S. crude was up 0.9 percent at $78.37 a barrel and Brent also recovered up 0.7 percent at $91.96 a barrel.
Data showed the U.S. economy is losing momentum, while Germany's unemployment rose in June, posing a risk for global growth.
But China, the world's second-largest economy, may stabilise in the third quarter and the government is confident it can meet its growth target of 7.5 percent for 2012, the chief researcher at the finance ministry said on Thursday.
Asian credit markets were subdued, with the spread on the iTraxx Asia ex-Japan investment-grade index widening by 1 basis point.
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Impact ECB cut Deposit Rate Decision
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Impact ECB cut Deposit Rate Decision : A cut in the European Central Bank's deposit rate, rather than its main policy rate, could distort money markets and hammer the euro on a sustained basis, particularly if it is moved to zero, analysts warned Thursday.
As such, some now think the ECB could opt to just fine tune the rate when it announces its decision at 1145 GMT, or hold off altogether, even though a weaker euro would be a boon for the bloc's struggling exporters.
More than two-thirds of the 46 banks and think tanks polled by Dow Jones Newswires forecast that the ECB will cut its one-week lending or "refi" rate by 0.25 percentage points to 0.75% while nine are predicting a deeper cut to 0.50%.
But there is growing speculation too that the ECB may also lower its overnight deposit rate, the interest it pays commercial banks on the deposits they park with the ECB, which is currently at 0.25%.
"It is tempting to assume that an ECB rate cut does not matter today," said currency strategist George Saravelos at Deutsche Bank in London.
"If the central bank just cuts the refi, we would agree... [But] we think that what happens to the deposit rate is of far greater significance...particularly if it is cut to zero," he said.
Why the deposit rate should matter so much is because the ECB overnight deposit window has sucked in funds. Despite a slew of cash injections, some banks wary of lending to their peers are continuing to park their excess funds with the ECB.
Banks deposited 790.98 billion euros ($994.29 billion) at the ECB's deposit facility on Wednesday.
If a deposit rate cut makes it uneconomic for money market funds to park their funds with the ECB, all that money would have to go elsewhere, presumably to debt havens which already have skinny yields.
A cut in the deposit rate to 0%, in particular, could drag yields on top-rated debt that is used as collateral to borrow funds from the market down into negative territory. Treasury bill yields--which are already negative for those countries that are perceived to be havens, such as Switzerland--may fall further.
As such some market strategists, such as Alessandro Giansanti at ING, think it more likely now that the ECB will lower the deposit facility by just 10 to 15 basis points. Others, such as Peter Chatwell at Credit Agricole CIB, think the ECB could even leave the deposit rate unchanged.
For foreign exchange markets, the concern is also that any cut in the ECB deposit rate would leave it below the deposit rates of other central banks, including the Federal Reserve, potentially provoking big portfolio outflows as capital seeking higher returns exits the euro zone.
In the case of a cut to 0%, the ECB's deposit rate would drop below that of Japan, which has a deposit rate closer to just 0.10% percentage points, Saravelos said.
That would have a sustained negative impact on the euro by making it the pre-eminent global currency of choice to sell when investing in higher yielding currencies, he said.
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