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luni, 2 noiembrie 2015

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Election day

Every day, people vote.

They vote for brands, for habits, for the people they trust. They vote for where they will place their attention, their money and their time.

The big difference is that you can do just fine in today's election without winning a majority of votes. Most elections aren't winner-take-all.

The people at the edges, the special interest groups and the weird ones matter a lot when you don't need a landslide to make a difference.

The magic is this: As soon as you stop acting like you need every single vote, you can earn the votes of the people you seek to serve.

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duminică, 1 noiembrie 2015

Mish's Global Economic Trend Analysis

Greek Banks Need €14 Bn Recapitalization Following Latest Stress-Free Tests

Posted: 01 Nov 2015 05:34 PM PST

Greek banks did much better than expected in the latest ECB stress test (undoubtedly stress-free). The ECB's adverse scenario shows Greek banks only underfunded to the tune of €14 Billion.

A scramble is now underway to raise that amount and Stabilize the Greek Banking Sector.

Greece's four big banks will this week finalise recapitalisation plans to raise €14bn the European Central Bank says they require, in the latest move to stabilise the Greek economy.

After a weekend in which the ECB announced the result of stress tests for the banks and the Greek parliament passed legislation paving the way for the state to inject more funds into the sector, a senior Greek banker said the banks' needs were manageable, but stressed that time was short.

Much attention has focused on whether the recapitalisation of the four banks — Piraeus Bank, National Bank of Greece, Alpha Bank and Eurobank — will dilute international investors' equity stakes.

"So far, so good . . . the outcome of the stress tests could have been much worse," the banker said. He was referring to the ECB's finding that the banks would be short of €14.4bn of capital under the so-called "adverse scenario", where lenders must be able to withstand a worsening of economic and financial conditions. "But there's still a lot of work to be done in a very short time."

The banks have until Friday to present their recapitalisation plans for approval by the European Central Bank's single supervisory mechanism.

One person with knowledge of the discussions added that the government would steer clear of heavily diluting international investors' equity.

"We're looking at a 25 per cent direct equity stake for the Greek state and 75 per cent in the form of cocos [hybrid bonds that convert into equity only if a bank's capital falls below a certain level]," this person said.

In addition, the senior banker also suggested that it would be counter-productive to "bail-in" senior bondholders to any recapitalisation by imposing losses on them, even though such a course of action might be possible under the new framework legislation.

"It is clear that if adopted [a bail-in] would become a legal minefield that could affect the sector's overall stability," the banker said.

Stress-Free Results

Heaven forbid bondholders take any losses. And of course the €14 Billion stress-free result was better than anyone expected: nudge-nudge, wink-wink.

As we all know, bondholders generally don't lose (except to bail out public unions and public pension plans as in GM, Detroit, and various California cities).

Mike "Mish" Shedlock

Seth's Blog : It's not your fault

It's not your fault

... but it might be your responsibility.

That's a fork in the road on the way to becoming a professional.

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sâmbătă, 31 octombrie 2015

Mish's Global Economic Trend Analysis

China Contraction Unexpectedly Continues Third Month

Posted: 31 Oct 2015 09:50 PM PDT

Given that economists hardly expect anything bad ever, this headline is hardly shocking: China's Factory Activity Shrinks for an Unexpected Third Month.

Activity in China's manufacturing sector unexpectedly shrank for a third straight month in October, an official survey showed on Sunday, fueling fears that the economy may be cooling further in the fourth quarter despite a raft of stimulus measures.

The official Purchasing Managers' Index (PMI) was at 49.8 in October, the same pace as in previous month and lagging market expectations of 50.0.

To shore up growth, the government has cut interest rates six times since November and lowered the amount of cash that banks must hold as reserves four times this year. The latest cut in interest rates and banks' reserve requirement came in late October.

Beijing has also ramped up infrastructure spending and eased restrictions on home purchases to revive the flagging property market.

Gee. Who Coulda Thunk?

Mike "Mish" Shedlock

€238 Billion Nonperforming Loans at Spanish Banks Despite ECB's Helping Hand

Posted: 31 Oct 2015 09:08 AM PDT

Via translation, El Confidential comments on the Banking Drag of €238 Billion Nonperforming Loans at Spanish Banks.

The profitability of banks has plummeted. And only the loose monetary policy of the ECB has improved the results. That is underscored by a report on the performance of Spanish banks by International Financial Analyst (AFI).

The report estimates the Spanish banking sector accumulated €238 Billion poor credit and foreclosed assets (8.8% of the balance), with coverage average of 44%.

Only the ECB's monetary policy, its strategy of zero interest rates and asset purchase, keeps the banks alive.

The ROE of the banking sector, has been reduced by 6.8 points, reaching levels of 5.3%, mainly due to higher capital requirements.

As the report makes clear, higher capital requirements (to maintain solvency) are here to stay, so it is difficult for the results of the fixed income portfolios in recent years to be repeated in the short term.

In fact, unrealized gains associated with these portfolios have declined more than 50% in 2015. This means that banks are eating the benefits associated with the decline in interest rates.

In the words of AFI, ECB monetary policies have contained the fall in the profitability of the sector in recent years, and this has benefited "substantially" the peripheral countries including the Spanish banking system.

Non-performing assets could be reducing the annual profitability of the sector up by 5.4 percentage points according to the report.

With treasury yields low or negative in Eurozone countries, the recapitalization benefits of ECB policy (banks loading up on their own sovereign bonds) have run their course. In case of another downturn, there will be little else the ECB can do.
.
Mike "Mish" Shedlock

Seth's Blog : Witch hunts make no sense

Witch hunts make no sense

They are based on a fallacy: "I am irrationally afraid and persecuting this innocent person will make me feel better."

Which is expressed by those in power as: "There's a good reason I'm afraid and punishing this person will make that reason go away."

Hunting witches never makes things better. Partly because there are no witches.

But mostly because it's really unlikely that we're afraid for a good reason (our fear is just about always irrational). And of course, our irrational fear has nothing to do with the person or the group we're using a scapegoat.

So much more useful and productive to say, "I'm afraid," and leave it at that.

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luni, 2 noiembrie 2015

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Seth's Blog : Election day

Election day

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duminică, 1 noiembrie 2015

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sâmbătă, 31 octombrie 2015

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