naked capitalism

ndk says:

I seem to recall other irresponsibly honest German authorities (BAFIN) warning over a year ago about the dangers in the present situation, suggesting it could be the worst banking crisis since 1931. Let’s hope they’re less prescient this time.

Hope everyone had a restful weekend, because here we go again: AUD/JPY already off another 3.5% from its closing levels on Friday.

Anonymous says:

Bloomberg has speculation of a Fed rate cut of 75 bp to 0.75%. Do you all think Paulson/Bernanke want to cut fed funds rate below 1% in order to force money market funds to start losing money (they start losing money with rates below 1% due to the limited spread between the short duration investments they make and the rates they pay investors). If money market funds shut down in response, this could drive savings from money market funds back to bank deposits, to give banks a source of funding.

Matt Dubuque says:

Matt Dubuque

Germany is in kind of an interesting position with respect to its bank bailout package, as the article alludes to in its final paragraph.

Despite a substantial revision after its initial passage, quite a few German banks are STILL refusing to sign up, describing its terms and conditions as too draconian.

Some of these banks are probably engaged in brinkmanship, but other banks seem to hold their views sincerely.

Matt Dubuque

Anonymous says:

Here is the headshakingly awesome opposing viewpoint at SeekingAlpha

Owner Earnings says:

“”Anonymous” how do you plan to make more than 3%” over the next 12 months? Including taxes?

Molecool says:

I was raised all over Europe and have the luxury of being able to read German and French news in their native issues. At this point I do not even look at U.S. news anymore, as they are sugarcoated at best and outright lies and obfuscations at worst.

Anonymous says:

3% plus tax is not that far a reach when the VIX is above 50 and therefore OTM calls and puts are trading rich.

If you think the market can move down another 40% (not saying I don’t), then, yeah, 3% is a stretch. But if you are ready to stick your neck out a bit, you can easily write OTM and ATM covered calls at these levels and do much better than 3%, assuming you’re comfortable holding what you buy.

Right now, you can “start your engines” by selling OTM puts for better than a 3% return (assuming no change in underlying).

Diversify your put selections, take the premia on the stocks that hold up, take the assignment on the stocks that do not. Write calls. Pay your taxes. Repeat.

However, if it all goes down the gurgler, yeah, the 3% may have been pie/sky dreaming.

Just thinking out loud.

R in NY

michael says:

I’m from Germany and I cannot even laugh about the German finance minister Steinbrueck anymore.
Two days after he declared all is well in German banking (and Ambrose Evans-Pritchard ridiculed him for that, and rightly so) Hypo Real Estate blew up. Then he had to be talked into putting a rescue package together.
And now he is big-mouthing again to try to maintain the view he is on top of things.

When looking at all available sources, not just at the “Bild” newspaper or CNBC, I’d say the US authorities are releasing about 25% of the truth, while in Europe its less than 10%. More to come…

a_REAL_American says:

Just more unpatriotic negativism from liberals that hate America, and the troops.

Anonymous says:

I wasn’t aware that the German banks were shunning the government’s bailout plan. It’s kind of refreshing that a supposedly quasi-socialistic country like Germany gives its banks the option whil we abrogate the rule of law and force our banks to accept government money. So much for stereotypes.

rick says:

Molecool – I’ve bookmarked http://www.spiegel.de – thanks for the tip.

I’ve also just begun reading chinadaily.com hoping to get some news

hater says:

Yo 3% Anon, you’re one whitewater dude after my own heart. For some trading is a profession; for others, a calling; for a few, the drug of choice. If money did me at all, I’d be there, too, but it just doesn’t make my pleasure centers activate a tittle; like watching poplars have sex. I’ll bet you deathmatch, too, something else that puts me to sleep.

Anonymous says:

It’s hard to reconcile Steinbrück on Sunday (”risk of collapse”) with Steinbrück a couple of weeks ago (”American problem”). I think in fact he is way out of his depth and he is just blustering about. German finance ministers traditionally do not have a great deal to say about world finance. Their job is to look after the budget and make sure no-one overspends (a stern, grumpy look, steel-rimmed glasses and frequent use of the word “no” is part of the job). The chancellor (German prime minister) is supposed to do the international heavy lifting. But we have Merkel as chancellor and she really doesn’t know anything about finance, having grown up, studied and worked in the communist DDR. So they all rely on a couple of top level backroom bureaucrats (Jörg Asmussen in the Finance Ministry and Jens Weidmann in the Chancellor’s office) and the top bankers like Deutsche Bank’s Ackermann.

The result is this hotch-potch system of take it or leave it. Instead of forcing the banks to accept additional capital, as in UK, France, USA, the German banks have to out themselves as needing capital first. Really stupid.

Instead, the German government should go one step better than all the others in Europe and USA and force the banks to open the books first and write down all the bad assets and then take additional capital. Otherwise we are all just throwing bad money after good – and that’s of course what no good German finance minister wants to do.