From Bad To Worse – European Non-Performing Loans In Context

From Bad To Worse – European Non-Performing Loans In Context

Tyler Durden on 04/15/2013 10:41 -0400

Europe remains in a critical state – despite the protestations of its leadership and the indications of its nepotistic bond markets.Unconventional monetary operations have enhanced liquidity, but have done little-to-nothing to solve the real issue – insolvency. As Jassaud and Hesse notevulnerabilities remain; as reliance on central-bank liquidity is still high especially for banks in peripheral countries. Assets continue deteriorating and remain on banks’ balance sheets, weighing on profitability. Non-performing loans (NPLs) in EU banks continue to soar, drastically outpacing loan growth. Since 2007, loans to the ‘real’ economy have decreased by 3% while NPLs increased by almost 150%, i.e., €308 billion in absolute terms. This trend shows no sign of reversal, reflecting the continued macro deterioration in parts of the EU and the absence of restructuring (until the new ‘template’). During the last European Banking Authority recapitalisation exercise, 30% of the increase in capital ratio was reached by reducing risk-weighted assets, of which one third came from risk-weighted asset ‘recalibrations’ – i.e. from rotations among the peripheral bonds that (while ultimately risky) are deemed risk-free by the ECB. For a sense of just how absolutely dire the situation is (and entirely unsustainable) across the entire Eurozone, the following chart shows thecurrent ratio of NPL-to-Total-Loans relative to Dec-2007… As ever, credit creation inflated asset prices and provided the cushion for an increase in liabilities (and never a bubble is seen) but once the bubble in asset prices begins to deflate, reality sinks in and the liabilities remain (large as ever). Thus the central bank inspired cycle of credit boom and bust continues – until, of course, there is no capacity left (and no gold to transfer).



Amazon Goes After Older Adults & Seniors With New Store

Amazon Goes After Older Adults & Seniors With New Store


posted 11 mins ago


Amazon has launched a new store catering to mature adults and seniors, the company announced today. But while “Amazon Seniors” would have a nice ring to it, Amazon went with a more polite, if wordy, branding: “50+ Active and Healthy Living Store.” As the name implies, the new store will be focused on a variety of “healthy living” needs, including nutritional products, wellness, exercise, fitness, medical, personal care, beauty and entertainment items and more.

The site also serves as another smart extension of one of Amazon’s lesser-known features: subscription-based ordering. Today’s its “Subscribe & Save” program allows Amazon customers to schedule automatic deliveries of household products (cleansers, paper towels, etc.) and other replenishable goods, including baby products (diapers, wipes, etc.), personal care items (deodorant, lotions, etc.), and more. Read more of this post

From Foot Soldier to Finance Minister: Takahashi Korekiyo, Japan’s Keynes

From Foot Soldier to Finance Minister: Takahashi Korekiyo, Japan’s Keynes (Harvard East Asian Monographs)[Paperback]

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Publication Date: November 30, 2009 | ISBN-10: 0674036204 | ISBN-13: 978-0674036208

From his birth in the lowest stratum of the samurai class to his assassination at the hands of right-wing militarists, Takahashi Korekiyo (1854-1936) lived through tumultuous times that shaped the course of modern Japanese history. Takahashi is considered “Japan’s Keynes” in many circles because of the forward-thinking (and controversial) fiscal and monetary policies–including deficit financing, currency devaluation, and lower interest rates–that he implemented to help Japan rebound from the Great Depression and move toward a modern economy.

Richard J. Smethurst’s engaging biography underscores the profound influence of the seven-time finance minister on the political and economic development of Japan by casting new light on Takahashi’s unusual background, unique talents, and singular experiences as a charismatic and cosmopolitan financial statesman.

Along with the many fascinating personal episodes–such as working as a houseboy in California and running a silver mine in the Andes–that molded Takahashi and his thinking, the book also highlights four major aspects of Takahashi’s life: his unorthodox self-education, his two decades of service at the highest levels of government, his pathbreaking economic and political policies before and during the Depression, and his efforts to stem the rising tide of militarism in the 1930s. Deftly weaving together archival sources, personal correspondence, and historical analysis, Smethurst’s study paints an intimate portrait of a key figure in the history of modern Japan. Read more of this post

BOJ Finds Inspiration in a 1930s Iconoclast Korekiyo Takahashi

BOJ Finds Inspiration in a 1930s Iconoclast

By Michael Schiltz  Apr 11, 2013


Korekiyo Takahashi, left, in an undated photo, had a long career in public office, including stints as Japan’s finance minister in the 1930s. Source: Library of Congress, Prints and Photographs Division

The Bank of Japan has decided to take bold action to reverse the nation’s economic decline.

The bank’s governor, Haruhiko Kuroda, announced a “new dimension in monetary easing,” vowing to double the purchases of government bonds and expand the monetary base. The BOJ also formally adopted a previously announced two-year target of 2 percent inflation. Quantitative easing will be the bank’s core business for the near future, a strategy that resembles the Federal Reserve’s response to the collapse of Lehman Brothers Holdings Inc.

The BOJ’s actions also mark a return, at least partly, to the unorthodox efforts of Japan’s finance minister in the early 1930s, Korekiyo Takahashi, who was praised by Fed Chairman Ben Bernanke for “brilliantly rescuing Japan from the Great Depression through reflationary policies.” Read more of this post

Chinese industry caught in vicious circle of over-production

Chinese industry caught in vicious circle of over-production

Staff Reporter, 2013-04-15

Chinese industries are caught in a vicious circle of over-production and loss, owing to conflicting government policies and expectations, according to the Guangzhou-based 21st Century Business Herald. The country’s producer price index dropped by a total of 1.9% this year due to overproduction, which includes a 5.6% slump in ferrous metals and a 2.6% fall in non-ferrous metals sectors. The country’s steel industry produced 2.2 million tonnes of steel per day in February, which was a historic high and will ultimately drive up annual production to 800 million tonnes. The record production came despite most producers operating at a loss. Aluminum production increased from 24 million tonnes in 2011 to 26 million tonnes in 2012, yet only 20 million tonnes were sold in 2012. The slump in prices caused by overproduction has prompted the government to close outdated and inefficient plants, especially those which were producing iron, steel, electrolytic aluminum and coke. Despite closing plants a different government agency has contrarily offered to subsidize electricity for the non-ferrous metal industry, especially in aluminum factories which use electricity in production. Read more of this post

Which Country’s Gold Will Be Sold Next?

Which Country’s Gold Will Be Sold Next?

Tyler Durden on 04/15/2013 08:05 -0400

The first time the Status Quo/Troika tried to force a (not so) stealthy gold confiscation on an insolvent European country was back in early 2012, when as part of the most recent Greek bailout MOU, it was disclosed that “Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.” However, the public outcry was so loud that the Troika had no choice but to shelve its plans and proceed with a full scale bondholder restructuring instead. Fast forward to last week, when Europe’s appetite for physical gold came back with a bang, this time as part of the Cyprus “Debt Sustainability Analysis“, and subsequent comments from Mario Draghi, demanding that tiny Cyprus, whose opposition, already weakened by the confiscation of uninsured deposits would be far less vocal than Greece’s, sell off €400MM, or virtually all of its sovereign gold, over 10 of its 13.9 total tons, to cover the excess costs of its ever ballooning sovereign bailout. So who’s next? It remains to be seen, although we are certain there will be a very clear correlation between the next country to see its gold “purchased” by the status quo, likely some time in the next 1-3 months, and the amount of total non-performing loans on said country’s bank balance sheets. The usual suspects are presented below. And, in the parlance of Goldman Sachs, these countries better scramble to sell, sell, sell now before gold hits 0, or maybe even goes negative.

sovereign gold_0

Canadians losing faith in economic “miracle”

Analysis: Canadians losing faith in economic “miracle”

1:16am EDT

By Louise Egan and Andrea Hopkins

OTTAWA/TORONTO (Reuters) – Factory worker Nelson Claros has little time for talk of the Canadian economic miracle.

The 50-year-old was laid off last year from his job of 22 years at a bus-assembly plant northwest of Toronto, and has since applied for 130 jobs. His best offer: A job at $12 an hour, half his previous wage and not enough to pay his bills.

“Really there is a recession right now. They don’t call it a recession, but the companies are closing, there are a lot of layoffs. How can this be a miracle economy?” he asked.

It wasn’t supposed to be like this. Canada’s recovery from a mild 2008-09 recession was quick and job-filled, and the country added nearly 900,000 jobs to take the jobless rate to 7.2 percent from 8.7 percent at the depths of the downturn. Read more of this post

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