G-7 Communiqué: Just Generalities
Submitted by
CalculatedRisk on Fri, 10/10/2008 - 2:57pm (101 comments)
Shopping at Amazon?
Wait! If you click on the Amazon banner link at the top of the page first, HCN will get a percentage of anything you purchase for 24 hours!
Open predictions
Our local book authors
User login
Who's online
There are currently 36 members and 183 guests online.
Currently online
- RayOnTheFarm
- steelhead
- Comrade Alexei Mikhailovich
- Cat Daddy
- Spatch
- traderwalt
- Rajesh
- BarleyReturns
- Former Idealist
- curious
- Mike in Long Island
- Bad Dawg Bobby
- Outsider
- fried
- Blackhalo
- Tom Stone
- Antipodes
- Comrade Kristina
- Rob Dawg
- 1 currency now -yogi
- Lobbyist Ben Dover
- ResistanceIsFeudal
- picosec
- Citizen AllenM
- aleister perdurabo
- some investor guy
- gruntled
- blinkered
- sscripko
- MaryAnn
- Vic
- nova
- zephyrum
- sporkfed
- marie
- volker the viking
Recent Recommendations
welcome to platitude central!
Being first: priceless.
oh, and SECOND! (fourth?)
In related news, water is wet.
Nemo-5
Darth, Hanky Panky is basically telling you that he will be buying equity and propping markets starting "soon"- it will be on Monday.
Recapitalize institutions.
Focus on using authorities to support institutions that are critical to the system.
Mortgage markets here.
Massive coordinated intervention.
Hanky basically says "ability to do a wide range of things, including asset purchases, equities"
I don't think I am off my rocker.
Immediate focus on liquidity.
Capital plan. Bah.
That is smoke and mirrors. Stopping the hemorraging in equities today was important beyond belief.
Darth a thousand point swing today from bottom to top!!
Throw your charts away- that was a bottom.
Someday this war's gonna end...
Yes, Miranda, there is a santie clause (check subsection 8b of TARP)
Mr. Paulson appears to be sweating just a touch.
Way to go, G7. You guys are SO incisive!
G-7 urges China for faster yuan appreciation...
WTF???
This does not bode well for Monday ...
GS and MS are in danger.
We must spend taxpayer money to protect these folks.
Paulson says they will inject capital "as soon as possible". "Working around the clock ..."
more sporadic intervention and nothing for systemic trust ...
Go long Monday (uh, well, then again, maybe not)
Do stock prices of banks have any meaning if the gubmint starts pumping in $? Are they going to mail me shares?
Calculated Risk writes:
Paulson says they will inject capital "as soon as possible". "Working around the clock ..."
~~~~~
Britain has already done that ...without an international plan the credit markets don't unfreeze ...
How will the finance academics work in the future? Will all models have one big dummy variable (perhaps called a Paulson coefficient) for this time period?
HP: Some volatility for a while.
Coordinated intervention.
EuroTarp next for american mortgage trash.
Nobody is going to say the truth. Massive support of liquidity equals massive intervention in the markets.
The options market also needs to reach a much higher point for equilibrium (sustainable damage for options market makers).
This will be utterly facinating to watch play out.
G20 comments are related to Brown's idiocy re Iceland and what to do about that lovefest.
Someday this war's gonna end...
So, Paulson does this, and crisis averted? That's what people seeing it on the news are going to think.
Massive support of liquidity equals massive intervention in the markets.
~
The Japanese model I fear ...
That's what people seeing it on the news are going to think.
~~~
The credit markets speak for themselves ... and have the last word...
"We'll take take decisive action... next Tuesday"
I guess we could call this an advance plan for investing the social security tbonds into the market.
Lol!
We are all in this together.
When they broke down gold today I took that as an intervention to prevent a dollar crisis too.
I feel crazy these days- but that would be the proper frame of mind to view this economy and market.
Someday this war's gonna end...
Italian Dude "Bank Bailout to be decided on case by case basis"
If Bush were sincere about restoring confidence and solving the problem, he would have announced his resignation -- and Cheney's -- this a.m.
Nodding w/ Fair Economist: the credit markets are in control. They aren't trading for any number of reasons, but, I suspect a lot of managers are wondering if that CDS they bought in order to justify the issue might ever actually pay off.
BTW-Lehman "sold" at ~$.09/$1 today. OOOf!
Collectively, that looks around better than $390B worth of claims being requested over the weekend.
Note: prolly not all cash settlements though.
Q: How long til protection sellers just "pick up the payments" to prevent an event of default?
If he really wanted to boost confidence, he'd resign NOW.
But this lying fender-headed f*ck just wants to loot the nation. Anyone who thinks this man has any concern whatsoever for the common folk is crazier than Ted Kaczynski at COMDEX.
Paulson effect, come Monday.
"We don't have any investment banks left today. We have two new bank holding companies."
In the absence of generally-agreed concrete specifics in the G7 plan, each G7 nation had better put out its own detailed action-item list promptly.
Bernanke say anything ?
His lawyer told him not to ...
But this lying fender-headed f*ck just wants to loot the nation.
Wants?!! Man, he's done it. Brilliant, really...
This was like the shortest G7 communique, ever.
Paulson was asked if Morgan Stanley or Goldman Sachs qualified as banks too big to fail. He there was no discussion of specific banks.
Clearly they are going to invest capital, but there are no specifics available.
Best to all.
Yes, decisive action... but how will who decide? And how do you get to be a "systemically important financial institution" that is supported and prevented from failure? ("I am changing my name to Chrysler, I am going down to Washington, DC; gonna tell some power broker what you did for Iaccoca would be perfectly acceptable to me!")
Central planning might be tolerable.... if there were any central planners available to do it. Last I looked, all we gots is the guys who used to run Goldman Sachs when it was an IB...
Well he made sure that no stinking government officials will tell Goldman how to run their business with taxpayer money.
each G7 nation had better put out its own detailed action-item list promptly.
Paulson: I heard platitudes and calls for patience and trust.
I'm glad I kept my puts.
Hopefully there will be a transcrip of the Q&A. If anyone sees one, please send it to me. Thanks!
Best to all.
IF these guys don't come up with something more decisive by Monday, I predict the market will fall another 1000 points by Friday. Just my opinion as a homeowner with no mortgages and zero credit card debt.
This is all about the shorts ...
They are attacking Paulson's pet company Goldman.
"voodoo economist writes:
If Bush were sincere about restoring confidence and solving the problem, he would have announced his resignation -- and Cheney's -- this a.m."
But then we'd have President Pelosi, and you've gotta believe that the global players in this fiasco would rather deal with known quantities even if they suck. No, we have to keep the current team on the field until after the election.
I do, however, expect Bush to fall on his sword following the inauguration. (Or be pushed...)
Test of the Friday lows on Monday morning
Well, they ARE now banks, and there ARENT that many left now, AND the number is shrinking. Anyone wanna take a guess as to whether those two are on the "to be saved" list? Id bet the latter (GS) is, but not necessarily the former.
Comrades:
que pasa? I needed to be away from the mkts today - for my sanity....
Each country making their decisions equals GD 1.0 all over again.
We are SCREWED if they don't get the credit markets open within a week.
relax everybody, it's Friday evening
the attendees will now retire to an evening of dining and drinking followed by a breakout into unofficial subgroups which will form various alliances
come Saturday, Paulson et al really pour the pressure on and a subsequent, albeit stronger product is formulated
more dining and drinking
Sunday, coming in time for the evening news cycle the final product is published
voila!
Wisdom - you can bet that the grownups (and Paulson) will ask Obama (or unlikely, but still would ask McCain) to join a co-presidency kind of situation. No way they wait to get things running until Jan 20ish. Bush already has his first class ticket to Paraguay. They wont have enough secret service protection to keep him safe in this country, unless he is planning on moving in with Cheney in his other bunker.
Bush should drop off the keys to the winner on election day and get his dumb arse to Paraguay where he belongs. His vicious corrupt Nixon redux administration can all go straight to hell. I truly hope Dick Cheney goes to his undisclosed location immediately. They are sub human garbage.
Is cynical Yes my doppleganger?
FROM ALL ONE.
FROM ONE ALL.....
can I opt out?
The equity will be structured as either
1) a perpetual zero coupon
2) a perpetual European option
3) Some combination of the above
All in all a win-win for the taxpayer and free market capitalism.
I was expecting a clarification on the number of ponies.
Man, I was hoping to close out my shorts during a massive right-before-a-scary weekend selloff.
It has been a long 18 mos. being 2X short the market. Lately, it has been profitable, too. But, it has been a long wait.
Next Thu.: trip to Zurich to open the Swiss bank account for future purchase and storage of gold.
It has been painful fighting this Fed!
No way you can have a co-presidency with Obama and McCain. Not after the knives came out this week.
At the next debate someone ought to press Obama and McCain to specify, immediately following the election, who will be their cabinet members, especially SecTreas, and get the inbound cabinet working alongside the current cabinet ASAP.
--
The first half of 1930 all over again despite all manners of pre-emptive actions. We know the rest of the script.
Greater Depression is dead-ahead.
Jas
Hey, in three years, when they sell of the banks to go private again, will they send me a check for part of the proceeds?
All in all a win-win for the taxpayer and free market capitalism.
Wanderer
~~~~~~~~
Until they go bust ...
Oh I so want to see GS go down while Hank is still the Treasury Secretary.
So when do they take the meeting to draw up the plan to make meetings to finalize these broad and misunderstood directives?
I'll be a contrarian here and say that Paulson is learning quickly. The initial plan was a disaster, the fact that he's moving on to direct recapitalization is encouraging. I think he'll end up getting this right and I hope he continues.
It won't stop the recession of course.
All of the biggest banks now are too big to fail.
Kudlow is an idiot. Cramer told you the big plan. Equity will pour in to the biggest banks and they will use it to make markets move. They will not provide all you small traders with convenient notice to closed you shorts.
You know what that means, stability will be delivered, at a price to be paid later.
America is willing to pay that price.
Who care about the FDIC more than 250k limit. Big banks are going to get guaranteed- the biggest backstop of all has just been put into place.
Why do I encounter soooo much resistance just pointing out the obvious?
Someday this war's gonna end...
Did Italy sign?
virgile
Congress stopped Paulson's looting in its tracks with the oversight ...
But Paulson can still play favorites ...
Yep.. and those who resist initially will suffer consequences and fall in line.
Volker the Viking writes:
relax everybody, it's Friday evening
the attendees will now retire to an evening of dining and drinking followed by a breakout into unofficial subgroups which will form various alliances
come Saturday, Paulson et al really pour the pressure on and a subsequent, albeit stronger product is formulated
more dining and drinking
Sunday, coming in time for the evening news cycle the final product is published
voila!
Volker the Viking | 10.10.08 - 7:25 pm | #
Market Observation - Tim W. Wood 12.04.2009
Sorry, meant no Obama/McCain co-pres through election day.
I agree with a deliberate sharing/transfer of power between Election day and Inauguration Day. That might be Bush's team's last chance to show some actual class. And for that reason I doubt it will happen.
Italy wants to revisit Bretton wodds?
I don't understand why NEW banks couldn't be capitalized. Sure, money would flow out of the old banks into the new banks, but so what? Unless the "old" bankers are your friends and former colleagues. 700 billion at 10X leverage is 7 Trillion dollars. Those would be some fine, excellent banks, no?
I agree, he was first trying to save the status quo, but has had his "road to damascus" moment. He has started to realize that the status quo is not tenable.
_virgile writes:
I'll be a contrarian here and say that Paulson is learning quickly. The initial plan was a disaster, the fact that he's moving on to direct recapitalization is encouraging. I think he'll end up getting this right and I hope he continues.
It won't stop the recession of course.
virgile | 10.10.08 - 7:29 pm | #
Six of the G7 nations have center-right governments; only the UK is center-left.
Anyone else think Shepard Smith is a weenie?
"Who care about the FDIC more than 250k limit. Big banks are going to get guaranteed- the biggest backstop of all has just been put into place.
Why do I encounter soooo much resistance just pointing out the obvious?"
Perhaps because they've already given the markets a couple of trillion to play with and it's still 40% below it's highs.
Ask Japan investors how direct equity injections helped their Nikkei long buys.
I want every American citizen to receive their share of non-voting preferred shares with schedules and limits of redeemption.
Ask Japan investors how direct equity injections helped their Nikkei long buys.
Pissed in California
~~~~~~~~
big yep ...
By Monday the world could all be ZIRP...I'd like to think that was a joke, yeah, I'm pretty sure that's a joke.
I would like my non-voting preferreds stapled to a pony, please.
Can someone answer a couple of questions for me about the credit markets? It is my understanding that the credit markets have seized up and that banks are not loaning money to one another at all. It is also my understanding that during the past 8 years, an unprecedented amount of cheap credit in all forms has been made available by more entities than ever before.
In relative historical terms, I assume there is an equilibrium or average over time in terms of the number of institutions offering credit and the amount of credit offered. My questions are as follows: Are things so bad that lending between institutions has gone from X to zero over the past two months? Won't the credit markets swing back towards equilibrium or is credit dead for the foreseeable future? Even if institutions fail, won't other institutions come in to fill the gap? Thanks to anyone who answers.
Screw it. The jig is up. Our system has failed.
*******NEW POST UP*******
I would like my non-voting preferreds stapled to a pony, please.
I want mine in government cheese.
I have to say that until 4 weeks ago, I thought we headed for GD II.
But I think recent events in Europe and Asia have changed that. Humans today are not as nationalistic as were before- think about WW1, GD and WW2 or even the cold war- none would have been possible without serious nationalism. Today we are fairly similar to each other and quote cynical about nationalistic fervor. I think that bodes well for the future.
@Wanderer - ROFL! Too bad it went over so many heads.
@Virgile / mmckinl - "Congress stopped Paulson's looting in its tracks with the oversight ... But Paulson can still play favorites ..."
Better go read that TARP bill again. Toothless and infrequent oversight is no oversight at all. The only real oversight I saw was in the debt ceiling and the limited initial appropriation.
On the other hand, if Paulson gets his head on straight and starts representing the national and global interest rather than the GS interest, the lack of strings might actually give him the flexibility to do what truly needs to be done.
oh ye of little faith
we will revisit Bretton Woods
we must
consider that a major force has a silver backed currency being readied for introduction
talk about a flight to safety when it emerges...
Team,
Its Friday Night. The Dow is Down. Iceland is broke. Most Financial Institutions are on Double Secret Probation. And the Man is talking about shutting down the Pit (at least for a day). We have to fight back. There is only one thing to do....
Toga Party!!!!!
YouTube - Up for a toga party? - from Animal House (1978)
God Bless You All,
Deaco
I'll be a contrarian here and say that Paulson is learning quickly.
Every sane economist on the planet told him what to do and he tried to ignore it as long as he could.
Not exactly a quick learner.
Even if institutions fail, won't other institutions come in to fill the gap? Thanks to anyone who answers.
char
~~~~~~~
The institutions that fail will be real productive businesses as well as banks. Many more in fact ...
Look, the Toga Party thing isn't a bad idea. The Roman Empire made it for several hundred years by keeping their masses entertained. The last gladiator game took place in 404 AD and the empire fell in 476 AD.
So lets say Bush announces that next week Hank and his old team from GS are going to have a cage match against Ben and his boys - to the death.
But only if banks would lend to one another and the stock market had to go up. I for one would go long in the market.
The next week we start with CDS sellers v buyers - again to the death. If we take the biggest names first, soon the CDS problem would go away.
We continue down the economic problem list until finally we have subprime borrowers against realtors and brokers.
Since we charge a nominal fee for these fights, we can also help the deficit out.
Each week we could have these cage matches until the economy started working again.
Yankee-
great link. Thanks
Geoff at 7:11 not the worst start. A lot of housing models seem to need a dummy for 20042007, or the "Greenspan ARM" era.
Wonder what else JKHamilton would suggest.
Given that it was a room full of egos at Treasury today, the meeting ending statement seems to me substantive enough, rather more substantive than any previous G-7 meeting enders.
We need to cut these finance ministers some slack, because they represent a hugely divergent group of nations with competing interests as well as some common bonds. I'd say they did pretty well.
The first signs of their success will be in the debt/credit markets Already commercial paper seems to be on the road to normalcy. Next will come some sort of agreed bank interparty lending guarantees which will further free things up (LIBOR, etc.). We and other countries have more insured financial institutions than are needed, and there will be a triage going on for some years as the losers are merged or closed.
Then more oversight of the men behind the curtains who do derivatives will be forthcoming, as well as some constraints on hedge fund activities. Overall, financial matters are looking good IMHO.
What will not happen any time soon is a stock market recovery. It seems equity prices are approachingr a reasonable level (reversion to the mean), having been inflated, along with other assets (especially real estate), by the excess liquidity that came sloshing to our shores from China et al in recent years. Judging by past experience, it may well be a decade or more before the Dow reaches 14,000 again.
In other words, I foresee a gradual financial recovery, including a return to solid banking basics, but the financial markets' restoration will be decoupled from the stock market because that market was greatly overvalued and will be in a slump for years.
We are SCREWED if they don't get the credit markets open within a week.
Pissed in California
Especially with ships in harbor with grain and Christmas doo-dads sitting there rotting. OY, these people are truly incompetent.
At the next debate someone ought to press Obama and McCain to specify, immediately following the election, who will be their cabinet members, especially SecTreas, and get the inbound cabinet working alongside the current cabinet ASAP.
Wisdom Seeker
Obama already has transition teams working on each agaency. My bet is Volcker is working Treasury.
Obama, McCain Transition Efforts Are Worlds Apart
They are kicking it to the G20 tomorrow, this is a placeholder, but the main risk is that G20 comes up with something even lamer and less coordinated.
If then an IMFC statement tomorrow doesn't look good, then there will be another run at the World Bank Govs statement on Sunday, leading to EU financial panic summit late EU Sunday.
Ultimately, some investors will wake up and see that the statements have no bearing on risk and reward and will recalibrate. Badly.
CC
I am tired of pessimism!
concerning Shepherd Smith... he's a big pot head... watched the NCAA b-ball final at Nevada Smith's in NYC... he told my friend who is a bartender there (can't disclose name, wants to keep his job)
that he wuz jonesing cause his weed dealer had screwed up and missed delivery... he smokes weekly!
he'd never pass a drug test at Fox
I'm just gonna be huffing jenkem throughout this spectacle.
Hey why didn't anyone here tell me how much the stock market could go down?
I've been reading here since March. But you all speak in euphemisms! Isn't "excess liquidity" literally agnostic as to whether prices are high or low? Instead most people use it to mean "wild overpricing". And doesn't "more volatility" not literally imply whether something's going up or down, just a larger-amplitude random walk? Instead when people say "more volatile" they mean "going way down".
I took MOST of my money out of the stock market, should have taken all.
Generalities and blaming Iran.
Anyone else wonder about the last paragraph of Paulson's statement today?
HP-1196: Statement by Secretary Henry M. Paulson, Jr.at the International Monetary and Financial Committee Meeting
Markets will close or crash Monday - bet they will be closed . Bank holidays as well , all week for both - Hit ATM's tonight , get out Max for Sat and Sunday - All credit markets may be shut down - G7 and G20 are not going to resolve by then . This is same vaugery as the initial 700 billion bailout plan . Lay your hands on CASH NOW !!!!!
Bill
Democracy means dealing with congress and dissent - the kinds of things that make an "empire" lethargic and ineffective.
Are These the Forging Fires of the NWO We Feel? « Your Mortgage or Your Life…