Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news Swiss bank UBS has uncovered US$2 billion of losses caused by a rogue trader in London.
Police arrested UBS' director of exchange trading and Delta 1, Kweku Adoboli, at 3.30 am at UBS' London offices after UBS uncovered the losses the previous afternoon.
UBS shares slumped 10% after it announced the losses would wipe out all its third quarter profits and destroy the benefits of a job cutting programme that cost 3,500 staff their jobs.
Adoboli is a 31 year old computer science and management graduate from Nottingham University. See more here at Reuters.
Here's a useful list from Bloomberg of the worst rogue trading losses in recent history, including Societe Generale's Jerome Kerviel and Barings' Nick Leeson.
Meanwhile, the European Central Bank announced coordinated intervention with the Bank of Japan, the Bank of England and the US Federal Reserve to lend unlimited amounts of three month US$ funds to European banks.
Many of these banks have been cut off from such US$ funds by US money market funds and US banks, who are nervous about the exposure of European banks to a Greek default and any resulting financial contagion. See more here at Reuters.
European stocks rallied 3.5% after the announcement and the Dow closed up 186 points or 1.7%. See more here at Bloomberg.
The New Zealand dollar recovered its losses from yesterday on the improved appetites for risk overnight.
It fell about a cent yesterday after a dovish RBNZ outlook for interest rates. See our comprehensive report here on the RBNZ's statement.
(Updated with links)
No chart with that title exists.
29 Comments
This is significant - China confirms it will 'liquidate' its holdings of US debt:
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100011987/c…
If the Chinese are working to a plan, it is seemingly going well. They have succeeded in gutting the industrial base of the US - phase 2 now involves dumping the debt acquired while achieving this, and mopping up whats left.
Andyh, the most recommended commenter on that article
There are High Streets, Factories, Utilities, Industries and even Banks all over the Western World just waiting to be plucked up at fire sale bargain prices. The next gladiatorial games will be between Chinese, Indian and Middle East/Oil State sovereign funds battling it out for the best pickings.
Joe Public in the West can't even begin to see the future!
P.S. See the strategic industries they're interested in - Boeing, Intel, Apple etc. etc. Technical Transfers from the late 80's onwards, as part of trade negotiations, have been bad enough but are clearly not now sufficient to feed their increasing national appetites. The West's Leaders will be apoplectic but, failing a preemptive strike, can do little to stop it.
P.P.S. For the UK, we can now see the ongoing consequences of the fatal flaw of Thatcher's policies. She did wonders for the recovery of the UK following the wasted years of Wilson, Heath and Callaghan - something DC and Co. are pathetically failing to achieve. However, the underlying ideology, that free global markets alone would solve our problems, has simply been an open door for other non-UK countries and companies to pillage and wrest control of a very significant proportion of the UK's industrial, infrastructure and even commercial strategic assets. Critical elements of these assets have subsequently been run down, shut down, or transferred overseas. France, and particularly Germany by one means or another had strategies in place to retain such assets for themselves, but our cupboard is relatively very bare and core skills have largely gone or been retired off and not replaced.
Can protectionism now be used by the UK in these further constrained conditions to retain what's left of our expertise, and will it be effective? Where is DC and Co. managing this inevitable development which greatly affects any growth and recovery policy - in fact where are the details of the supposed growth and recovery strategy? Or is our future simply to provide ever lower wage servicing of others' industrial companies and national demands, in competition with the developing world, with the R&D related added value works drifting ever more overseas?
and then we get John Boehner coming out fighting,
21.19 House Speaker John Boehner is speaking live on Bloomberg at the moment. Here are a few of the more interesting comments he's made:
I think this Super Committee have got a big job to do. I don't underestimate the challenges they have.
The fact is the American people are concerned about the economy. The American people don't want us to run up the deficit, they don't want is to ease taxes, they want us to get our spending under control.
I do think that the extra regulations coming out of this administration are holding the economy back.
I just think that if we're serious about long-term, sustainable economic growth, we need to pull back the regulatory overload.
I'm hopeful that we'll be able to find enough common ground. There are some areas where I think we can find common ground.
I came here to Washington to do something on behalf of my country. I've got two of my brothers who are out of work. Now is not the time to be playing around.
You can't tax the very people you expect to reinvest in the economy.
Now the American ppl are concerned about the economy? like not for the last three years? oh yeah right....with the real jobless 16% to 20%? and bankers are back to getting fat bonuses and taking huge risks?
"Now is not the time to be playing around" that is long last, that was 2009 at the latest....
He isnt in touch with reality....IMHO.
regards
A concise explanation of what is going on as the status quo defends using preception management/propaganda. Think Bill English, John Key, Alan Bollard, MAF, bank economists and Treasury's new boss/propagadist:
http://www.oftwominds.com/blogsept11/perception-management9-11.html
Even better Colin
http://hat4uk.wordpress.com/2011/09/15/at-the-end-of-the-day-72/#comments
So let me, just for a few paragraphs, speak plainly about it.
It is not ‘a wonderful thing’ that the world’s central banks have today announced they are pumping money into a banking system because the banks themselves don’t trust each other enough to do so. It is no better for anyone than the news two days ago that Jean-Claude Trichet of the EU Central Bank had thrown half a trillion dollars at the debt maintenance of three ClubMed countries because those same banks didn’t trust the Sovereign borrowers to pay up on time and over time. These are signs of desperation – of a mad global construct throwing the ship’s shelter from the elements into the engines, in a last, wild attempt to make shore.
Since 2004, everything in the world economy has been artificial…and about as efficient as a wooden leg. Earnings based on derivative sales produced notional money, not real wealth. Cheap commercial money kept stock markets unfeasibly high, and gave ordinary people a sense of wealth that was entirely false. 86% of the British economy was a confection, based on the foolish idea that we could go on and on selling more and more credit to more and more people who had less and less money to pay it back. UK employment was kept above realistic levels by swelling the ranks of the public sector, and inventing entire new professions based on health, safety, race or gender equality, and a litigious approach to existence. At the EU level, booms were manufactured with recklessly cheap ECB money and taxpayer subsidies. Recessions were postponed by showering the banking systems with money.
It is good, and complimentary rather than better:
http://hat4uk.wordpress.com/2011/09/15/at-the-end-of-the-day-72/
This too is good on Tony Blair and Gordon Brown. Far worse than simply leadership deficits. And to think Helen Clark modeled her government and self on Blair:
Steven, look what your litle friend from Alaska had to say,
Quote from NYT:
So here is something I never thought I would write: a column about Sarah Palin’s ideas………………..There was plenty of the usual Palin schtick, words that make clear that she is not speaking to everyone but to a particular strain of American. ………But when her throat was cleared at last, Ms. Palin had something considerably more substantive to say.
She made three interlocking points.
First, that the United States is now governed by a “permanent political class,” drawn from both parties, that is increasingly cut off from the concerns of regular people.
Second, that these Republicans and Democrats have allied with big business to mutual advantage to create what she called “corporate crony capitalism.”
Third, that the real political divide in the United States may no longer be between friends and foes of Big Government, but between friends and foes of vast, remote, unaccountable institutions (both public and private).
In supporting her first point, about the permanent political class, she attacked both parties’ tendency to talk of spending cuts while spending more and more; to stoke public anxiety about a credit downgrade, but take a vacation anyway; to arrive in Washington of modest means and then somehow ride the gravy train to fabulous wealth.
She observed that 7 of the 10 wealthiest counties in the United States happen to be suburbs of the nation’s capital.
Her second point, about money in politics, helped to explain the first. The permanent class stays in power because it positions itself between two deep troughs: the money spent by the government and the money spent by big companies to secure decisions from government that help them make more money.
“Do you want to know why nothing ever really gets done?” she said, referring to politicians. “It’s because there’s nothing in it for them. They’ve got a lot of mouths to feed, a lot of corporate lobbyists and a lot of special interests that are counting on them to keep the good times and the money rolling along.”
Because her party has agitated for the wholesale deregulation of money in politics and the unshackling of lobbyists, these will be heard in some quarters as sacrilegious words.
Ms. Palin’s third point was more striking still: in contrast to the sweeping paeans to capitalism and the free market delivered by the Republican presidential candidates whose ranks she has yet to join, she sought to make a distinction between good capitalists and bad ones.
The good ones, in her telling, are those small businesses that take risks and sink and swim in the churning market; the bad ones are well connected mega corporations that live off bailouts, dodge taxes and profit terrifically while creating no jobs.
Strangely, she was saying things that liberals might like, if not for Ms. Palin’s having said them.
“This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk,” she said of the crony variety. She added: “It’s the collusion of big government and big business and big finance to the detriment of all the rest, to the little guys. It’s a slap in the face to our small business owners, the true entrepreneurs, the job creators accounting for 70 percent of the jobs in America.”
Is there a hint of a political breakthrough hiding in there?
The political conversation in the United States is paralyzed by a simplistic division of labor. Democrats protect that portion of human flourishing that is threatened by big money and enhanced by government action. Republicans protect that portion of human flourishing that is threatened by big government and enhanced by the free market.
What is seldom said is that human flourishing is a complex and delicate thing, and that we needn’t choose whether government or the market jeopardizes it more, because both can threaten it at the same time.
Ms. Palin may be hinting at a new political alignment that would pit a vigorous localism against a kind of national-global institutionalism.
On one side would be those Americans who believe in the power of vast, well developed institutions like Goldman Sachs, the Teamsters Union, General Electric, Google and the U.S. Department of Education to make the world better.
On the other side would be people who believe that power, whether public or private, becomes corrupt and unresponsive the more remote and more anonymous it becomes; they would press to live in self-contained, self-governing enclaves that bear the burden of their own prosperity.
No one knows yet whether Ms. Palin will actually run for president. But she did just get more interesting.
Unquote.
Ms. Palin has had some rough handling by the US and World media and indeed may not be amongst the intellectuals or even those who are best educated. But perhaps her critics have been protesting too much.
The irony here AJ is this is not something people don't know or at least suspect has been the case for the longest time....but for it to take Palin to give it credibility ....!
The snow machine will run amok to discredit and mock her.....she needs to get some noteworthy people onside quickly .....
Nothing wrong with the statement just the messenger.......slippery ground indeed.
Here's a good piece from yesterday ...Robert Zoellick goes off
http://m.ibtimes.com/world-economy-in-danger-zone-zoellick-214219.html
I know, now the Main stream press are accusing her of snorting cocaine and sleeping with black basketball stars.
http://www.guardian.co.uk/world/2011/sep/15/sarah-palin-alleged-cocaine…
the book written by a guy who rented the house alongside her and was accused of harrasing her children.
Her image is getting tarnished a bit....amongst rumours she will make a political bid next year......
Be that as it may, the devil of course is in the detail.....classic do as I say and not do as I do.....but she's aiming to resonate amongst the tea party supporters and I think she'll get quite a lot of support....I dont know if its her steering this course or someone "brighter" hard to credit her with such navigation.....but cunning doesnt require intelligence.
"No one knows yet whether Ms. Palin will actually run for president. But she did just get more interesting."
Agree.....
"Ms. Palin has had some rough handling by the US and World media and indeed may not be amongst the intellectuals........."
Given the very volitle, even chaotic, uncertain and ugly future we all face, she as a leader (if not the leader)in this group is where she needs to be.........or to be able to manage ppl who are....
So she's aiming for the Tea Party support to boost her into the VP position....fair enough....
regards
Palin made these comment in her address over labour weekend when I was visiting. I saw her all over TV and her delivery certainly has improved. If you visit the States one thing that stands out is Americans are quite open on talking about politics unlike here. I have been surprised over the past year how many people actually support her, it is way more than you would ever expect. I was very surprised. May explain why the media beat up. She is a threat.
The $2 Billion UBS Incident: 'Rogue Trader' My Ass
I Wondered why their shares were down 10% this morning while everyone else was up...
"'Rogue Trader' My Ass" indeed yet it seems a lot of ppl are playing the game and getting back in...Im amazed by what I think is irrational behaviour.....no one it seems cares about risk...when this blows up there will be a lot of blood on the floor......so much ppl might need a snorkle........being a fly on the wall in 1929 would have been interesting I think...
Some great links as always, thanks.
regards
Congratulations. You've just figured out that Sarah Palin is simply repeating the principles of the USA on it's founding. It's not new. It just requires some understanding of history and heritage which she, for all her supposed faults, actually has. That this is seen as some kind of innovation is really, really, sad.
Amen to that Bozobit...sad is the word that came to mind.....but that returns us to apathy..for the U.S.to truly be awakened it will take nothing short of a class revolt ..and a redefining of the Constitution. In a rather cautious way I think that is where she was going with the statement wanting to gauge the real depth of resentment at ground level.
i hope she's not stupid enough to be playing revolution politics ...because that is a powderkeg just waiting for the fuse and some dick to ask for a light.
Here's a great wake up call. I'm about 3/4 the way through it. I recommmend anything written by Mark Steyn, who has a great way telling you that your in deep trouble and making you laugh at the same time.
http://www.amazon.com/After-America-Get-Ready-Armageddon/dp/1596981008
Cheers i'll get on it.....I'm a fan of Hunter S.Thompson. you read any of his stuff ...here's a quote long time back.
America.....just a nation of two hundred million used car salesmen with all the money we need to buy guns and no qualms about killing anybody else in the world who tries to make us uncomfortable.
and this.
A word to the wise is infuriating.
Ambrose is in China, not on holiday :-)
"There is a large potential risk," said Zhu Min, the deputy managing director of the International Monetary Fund and a former Chinese official.
Mr Zhu said China had doubled the loan ratio from below 100pc of GDP before the Lehman crisis to roughly 200pc today.
The danger is that this excess could start to unwind just as the West goes into a sharp downturn, and possibly a double-dip recession.
"If we have a hard landing, the government is not going to be able to pay salaries," said Wang Jianlin, Dalian's biggest property developer.
What is clear is that if Europe and America fall back into recession, China will not be able to buttress the global economy a second time.
Here's the UBS press release on its rogue trader in full:
"UBS has discovered a loss due to unauthorized trading by a trader in its Investment Bank. The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of USD 2 billion. It is possible that this could lead UBS to report a loss for the third quarter of 2011. No client positions were affected."
The big boys club !
When will governments stop operating of casinos within banks ? When will governments prevent banks of corruption/ greed and further damage to economies and societies?
....and the most important question: When will societies demand from governments to stop banksters from wrong doing ?
Probably when it is too late - and "things" start burning.
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