http://www.schiffradio.com/b/The-Bond-Trap/-641416973848578483.html
http://www.ft.com/cms/s/0/290ed010-f567-11e3-91a8-00144feabdc0.html#axzz35eEsPJwp
How will all these new measure could and potentially rock the financial markets? I really don't know. But I do not think any positive outcomes is the result!
Wednesday, June 25, 2014
Another bank run in Europe???? Bulgaria
http://uk.reuters.com/article/2014/06/24/bulgaria-bond-sale-idUKL6N0P54EA20140624?feedType%3DRSS%26feedName%3DrbssFinancialServicesAndRealEstateNews
SOFIA, June 24 (Reuters) - Bulgaria will go ahead as planned with a 1.5 billion euro bond sale despite a sovereign credit rating downgrade and an expected state rescue of a local bank as these will not push yields up to unattractive levels, two sources familiar with the sale said.
Bulgaria kicked off a European investor road show in Germany on Monday to raise money needed to repay global bonds that mature in January and to finance a budget deficit the government targets at 1.8 percent of gross domestic product this year.
The road show, which also travels to London, Paris and Vienna this week, has been overshadowed by a run on Corporate Commercial Bank (Corpbank) by depositors rattled by media reports of suspect deals at Bulgaria's No.4 lender.
Both the bank and its main shareholder deny any wrongdoing.
Bulgaria's central bank has taken control of Corpbank and a recently acquired subsidiary and has outlined a plan for a state rescue of the lender if talks with existing shareholders to prop up the bank with more capital fail.
The bank run followed on the heels of a sovereign downgrade by global ratings agency Standard and Poor's earlier in June to one notch above junk, citing ongoing political turmoil that has put the brakes on reforms needed to spur economic growth.
(Borrowing to pay outstanding debts .... 10 dustbins with 9 covers)
SOFIA, June 24 (Reuters) - Bulgaria will go ahead as planned with a 1.5 billion euro bond sale despite a sovereign credit rating downgrade and an expected state rescue of a local bank as these will not push yields up to unattractive levels, two sources familiar with the sale said.
Bulgaria kicked off a European investor road show in Germany on Monday to raise money needed to repay global bonds that mature in January and to finance a budget deficit the government targets at 1.8 percent of gross domestic product this year.
The road show, which also travels to London, Paris and Vienna this week, has been overshadowed by a run on Corporate Commercial Bank (Corpbank) by depositors rattled by media reports of suspect deals at Bulgaria's No.4 lender.
Both the bank and its main shareholder deny any wrongdoing.
Bulgaria's central bank has taken control of Corpbank and a recently acquired subsidiary and has outlined a plan for a state rescue of the lender if talks with existing shareholders to prop up the bank with more capital fail.
The bank run followed on the heels of a sovereign downgrade by global ratings agency Standard and Poor's earlier in June to one notch above junk, citing ongoing political turmoil that has put the brakes on reforms needed to spur economic growth.
(Borrowing to pay outstanding debts .... 10 dustbins with 9 covers)
Is another potential financial crisis bigger than GFC on the horizon?
What if another crisis sets off ....from one of the major member of the EUROZONE? In the past we saw musical chair being pass around called the CRISIS chair. Time will tell who is next!
Reuters
Tuesday, Jun 24, 2014
SINGAPORE - Singapore is to bring in
new rules to ensure all banks operating in the city-state have enough liquid
assets to withstand a sudden shock to the financial system, falling in line
with the global regulatory trend for tougher liquidity rules.
DBS, Oversea-Chinese Banking Group
and United Overseas Bank, and foreign banks with a major local presence will
have to meet a requirement proposed by the Basel Committee on Banking known as
the liquidity coverage ratio (LCR) by 2015, Lim Hng Kiang, Singapore's trade
and industry minister, said in a speech on Tuesday.
Regulators proposed the LCR in the
wake of the 2008 financial crisis to ensure banks have a big enough buffer of
top quality assets such as cash and government bonds so they can withstand 30
days of outflows at a time when it is tough to get funding on the wholesale
markets.
Under the rules formulated by
Singapore, the three local banks will have to meet the full LCR requirement for
Singapore-dollar assets by January 2015 and an all-currency LCR of 60 per cent.
They will then have to meet the all-currency LCR in full by 2019, meaning they
will need to have enough assets to withstand a sudden outflow of deposits and
other liabilities, regardless of the currency.
Foreign banks will have to meet a
Singapore dollar LCR of 100 per cent and an all-currency LCR of 50 per cent.
These rules for foreign banks will apply from January 2016.
Lim did not specify which assets
will be regarded as "high quality", an issue that has been of
concern, as assets regarded as liquid in western markets, such as domestic
government bonds, are scarce in Singapore due to a low level of public debt.
DBS Group CEO Piyush Gupta told
Reuters that initially the central bank was proposing a separate liquidity
requirement for the US dollar alone, which they have done away with due to
opposition from the banking industry.
The industry is comfortable with the
new rules because now it covers all currencies and it is easy to meet the
liquidity requirements, he said. "The crisis experience shows how the
buildup of risks can severely destabilise even the most developed and
sophisticated financial markets," Lim, who is also the deputy chairman of
the Monetary Authority of Singapore (MAS), told a banking event. "Securing
the safety and robustness of our banking sector must be an ongoing
process," he added.
NEW FRAMEWORK
Lim also said the central bank will
come up with a new framework of rules for local and foreign banks with a large
retail presence in Singapore, to ensure the domestic banking system is
protected in the event they run into difficulties.
This will include ensuring they have
a well-developed recovery and resolution plan, so they have a clear blueprint
of what to do in the event they were to become distressed.
MAS proposes to regard a bank as
having a significant retail presence if its market share of resident non-bank
deposits is 3 per cent or more, and if it has 150,000 or more depositors with
accounts under S$250,000.
This suggests these rules will apply
not only to Singapore's three main banks, but also to international lenders
such as Citigroup, Standard Chartered and Malaysia's Maybank.
- See more at:
http://business.asiaone.com/news/singapore-unveils-new-liquidity-rules-banks#sthash.KLaDCQm6.dpuf
Tuesday, June 24, 2014
Are you USA citizen or dual nationality?
Today I got a call from my Relationship Manager to confirm if I am a USA citizen and verify if I am a dual citizen!!! Well the hunt for USA citizen and entity offshore accounts is confirm ON!!!
My guess is probably all this will settle in a year or less and by then the funds that is needed to be force repatriated will be back in USA. Where these offshore funds will end up is anybody guess!!!
With Europe Negative interest rate to deflect deflation and USA tracking offshore funds, we are in for a year or less of merry go round. If there is a flow back to USA equity markets, probably DJIA will stand for a year or less before we see a major correction. Timing is always an issue but we all know it is long overdue. With such many interventions, all these attempts refer back to support financial markets.
In the past the hunt was for illegal terrorism funding. Today, I do not know what to call it since it is targeting USA citizens and enterprises!
Now you start to wonder if being USA citizen has its privilege!!!
My guess is probably all this will settle in a year or less and by then the funds that is needed to be force repatriated will be back in USA. Where these offshore funds will end up is anybody guess!!!
With Europe Negative interest rate to deflect deflation and USA tracking offshore funds, we are in for a year or less of merry go round. If there is a flow back to USA equity markets, probably DJIA will stand for a year or less before we see a major correction. Timing is always an issue but we all know it is long overdue. With such many interventions, all these attempts refer back to support financial markets.
In the past the hunt was for illegal terrorism funding. Today, I do not know what to call it since it is targeting USA citizens and enterprises!
Now you start to wonder if being USA citizen has its privilege!!!
Friday, June 20, 2014
WHAT IS HAPPENING to BANKS and US Govt.
The actions of US Govt restricting USA entities and individuals with foreign accounts is the beginning of a new paradigm. Foreign banks slapped with heavy penalties is sending the signals to banks and account holders. I do not know which part of the Banking & Financial acts were violated but definitely something is brewing!
Where is the money in the offshore accounts going? Back to USA?
Other than MNCs and US citizens operating businesses or employments, opening accounts offshore will be closely scrutinized.
Probably somewhere, someone has been tracking the total "USA" offshore funds which must be substantial and someone is forcing to bring back this funds.
I do not know the agenda and how it will impact global markets but definitely and hopefully something will turn out positively. Otherwise we can wait for negative outcomes.
IF these funds were to be repatriated back to USA, where will it reside? Bank? Dividends? Share buy back? ....Some of these or all of these?
Maybe soon we can expect capital gain tax on investments .... when the govt decided that this is a new way to find money!!!!
Where is the money in the offshore accounts going? Back to USA?
Other than MNCs and US citizens operating businesses or employments, opening accounts offshore will be closely scrutinized.
Probably somewhere, someone has been tracking the total "USA" offshore funds which must be substantial and someone is forcing to bring back this funds.
I do not know the agenda and how it will impact global markets but definitely and hopefully something will turn out positively. Otherwise we can wait for negative outcomes.
IF these funds were to be repatriated back to USA, where will it reside? Bank? Dividends? Share buy back? ....Some of these or all of these?
Maybe soon we can expect capital gain tax on investments .... when the govt decided that this is a new way to find money!!!!
Saturday, June 7, 2014
Financial Economics - The new paradigm
Economics of today is far different from Laissez faire concepts that we learned in school or universities. Enormous Govt. intervention after and during GFC has distorted the global economy rendering the classical economics and finance to be nearly worthless.
Such great govt. interventions has resulted a different and new sets of global problems. It is true the economy and the financial markets are decoupled.
How long will this floating in the air will last? I have no idea. As a cycle believer and practitioner, the momentum will continue and runs its course before deflates. I share and agree that the global markets is due for a serious correction. What and where I beg to differ is the timing this will happen!
Will this deflation and correction come tomorrow? Next week? Next month? Next year? I have no idea and I will let my own financial model guide me along the way.
For now and the immediate future, I do not think the music will stop abruptly. Again, it is markets with interventions and this makes prediction more difficult.
Until the actual serious correction comes, ignore the soothsayers but be prepared when it comes!
Such great govt. interventions has resulted a different and new sets of global problems. It is true the economy and the financial markets are decoupled.
How long will this floating in the air will last? I have no idea. As a cycle believer and practitioner, the momentum will continue and runs its course before deflates. I share and agree that the global markets is due for a serious correction. What and where I beg to differ is the timing this will happen!
Will this deflation and correction come tomorrow? Next week? Next month? Next year? I have no idea and I will let my own financial model guide me along the way.
For now and the immediate future, I do not think the music will stop abruptly. Again, it is markets with interventions and this makes prediction more difficult.
Until the actual serious correction comes, ignore the soothsayers but be prepared when it comes!
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