What is truth?

Posts tagged ‘Constantin Gurdgiev’

Euro Area GDP per capita: the legacy of the crisis

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I have posted previously on the decline in GDP per capita during the current crises across the euro area states, the US and UK. Here is another look:

Let’s take GDP per capita at the peak before the crisis.

For some countries this would be year 2007, for others 2008. Keep in mind, many comparatives in the media and by analysts treat the peak as 2008. This is simply not true. Only 89countries of the sample of 20 countries comprising EA18, plus US and UK have peaked their GDP per capita in real terms in 2008, the rest peaked in 2007. Hence, for the former countries, the GDP per capita decline started in 2009 and the for the latter in 2008. Now, take GDP per capita declines cumulated over the years when the GDP per capita was running, in real terms, below the peak. Again, the sample of the countries is not homogeneous here: for some countries, GDP per capita regained pre-crisis peak by 2011 (Germany, Malta and Slovak Republic), by 2013 (Austria and U.S.) and by 2014 (Latvia). For all the rest of the countries, the GDP per capita peak was not regained through 2014.

Now, let’s plot the overall cumulated losses over the years of the crisis (over the years from the crisis start through either the year prior to regaining pre-crisis GDP per capita levels for the countries where this was attained, or through 2014 for the countries that did not yet recover pre-crisis levels.

full article at source: http://trueeconomics.blogspot.ie/

Beware of German (KfW) Bearing Gifts?..

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As reported in today’s press, Ireland has secured a sort-of backstop to its exit from the bailout via an agreement with Germany‘s state- and local authorities-owned KFW Development Bank (see: http://www.irishtimes.com/news/politics/kfw-is-a-public-bank-providing-development-loans-at-lower-interest-than-commercial-rates-1.1595460 and http://www.irishexaminer.com/ireland/bailout-a-calculated-political-gamble-that-just-might-not-pay-off-249727.html). This was blessed by Germany (http://www.independent.ie/business/irish/merkel-backs-ireland-bailout-exit-without-overdraft-29754656.html). And it may or may not qualify as a backstop for the Exchequer (see speculative analysis here: http://www.irishexaminer.com/archives/2013/1115/ireland/bailout-exit-declaration-exaggerated-half-truth-249716.html).
One can only speculate as to the possible conditionalities imposed by Angela Merkel and her potential coalition partners on Ireland under the exit deal, but here’s an interesting parallel development that has been unfolding in recent weeks……

full article at source: http://trueeconomics.blogspot.ie/

Banks-Sovereign Contagion: It’s Getting Worse in Europe

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  • European authorities and nation states have pushed for banks to ‘play a greater role’ in ‘supporting recovery’ – euphemism for forcing or incentivising (or both) banks to buy more Government debt to fund fiscal deficits (gross effect: increase holdings of Government by the banks, making banks even more too-big/important-to-fail);
  • European authorities and nation states have pushed for separating the banks-sovereign contagion links, primarily by loading more contingent liabilities in the case of insolvency on investors, lenders and depositors (gross effect: attempting to decrease potential call on sovereigns from the defaulting banks);
  • European authorities and nation states have continued to treat Government bonds as zero risk-weighted ‘safe’ assets, while pushing for banks to hold more capital (the twin effect is the direct incentive for banks to increase, not decrease, their direct links to the states via bond holdings).
The net result: the contagion risk conduit is now bigger than ever, while the customer/investor security in the banking system is now weaker than ever. If someone wanted to purposefully design a system to destroy the European banking, they couldn’t have dreamt up a better one than that…

Namawinelake closure

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I do not know the reasons behind the Namawinelake decision to stop operations, but the announcement that the blog will cease publishing new material starting from tomorrow was a shocker for me.
I can attest from my own & others’ experiences that those of us who run anything independent of the officialdom mouthpieces (regardless of political / ideological orientation or even the lack of one) have near-zero support (moral or citations- and links-wise) from our internal (not to be confused with international) media and all businesses.
Those in our society, including the traditional media, who only benefit from the free analysis and the climate of openness and debate the independent analysts help to create prefer to endlessly endorse and support, including via advertising revenues, cross-links, citations and readership, those who offer no alternative but…….

full article at source:http://trueeconomics.blogspot.ie/

There are jobs & then there are…

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Off the start – there is nothing wrong with debt collection as business when it is properly delivered and regulated / supervised. And there is nothing wrong with debt collection agency growing its workforce.

But, then again, there is nothing particularly laudable about this either.

Unless, that is, you are an Irish Government Minister who cares none but for a headline grabbing opportunity.Capita – some background on the company is given here: http://www.rte.ie/news/2013/0516/450722-capita-jobs/ and http://namawinelake.wordpress.com/2010/08/15/capita-aka-crapita-%E2%80%93-service-provider-for-one-of-nama%E2%80%99s-most-lucrative-contracts/ – is to double its workforce in Ireland by bringing in 800 new jobs……

full article at source::http://trueeconomics.blogspot.ie/

Ireland’s Manufacturing PMI for November 2012

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NCB Purchasing Manager Indices for Manufacturing for Ireland are out this morning with a deserved upbeat soundings on foot of the core data showing continued growth in the sector. Here are some details, both worth a positive overall note and some warning signs of potential tightness ahead.

Business conditions continued to improve in the Irish manufacturing sector during November, marking the ninth consecutive month of such increases, though there were slower rises in output and new orders.

Overall PMI was running at 52.4 in November, slightly up on October 52.1. November reading was the highest since July 2012. Strictly-speaking, both October and November indices were statistically indistinguishable from 50.0, however, with the last index reading that was statistically significantly above 50.0 was July 2012 and the last time this happened before then was April 2011.

Not to rain too much on the parade, 12mo MA through November 2012 is at 51.1 and 6mo MA is at 52.4,

full article at source : http://trueeconomics.blogspot.de/

 

Ignoring that which almost happened?

In recent years, I am finding myself migrating more firmly toward behavioralist views on finance and economics. Not that this view, in my mind, is contradictory to the classes of models and logic I am accustomed to. It is rather an additional enrichment of them, adding toward completeness.
With this in mind – here’s a fascinating new study.
How Near-Miss events Amplify or Attenuate Risky Decision Making, written by Catherine Tinsley, Robin Dillon and Matthew Cronin and published in April 2012 issue of Management Science studied the way people change their risk attitudes “in the aftermath of many natural and man-made disasters”.

full article at source:  http://trueeconomics.blogspot.com/

Comment:

These observations seems to be borne out by the behaviour of the Big Banks just look at the news coming from JP Morgan ,another  big gamble gone wrong using credit derivatives and $2,000,000,000:00 losses ,nothing learned .The Banks are going to continue to gamble and make the same mistakes as long as they know the taxpayers  will bail them out and they are too big to be allowed to go bust !

“Insanity: doing the same thing over and over again and expecting different results.”
Albert Einstein

10/12/20111: Euro summit twin tests: deficits and structural deficits

In the wake of the European summit, it’s worth taking a look at historical and projected future performance of the member states of the Euro area based on the parameters for fiscal sustainability.
First, consider historical performance of the Euro area member states based on the 3% Government deficit criteria. Charts summarize:

full report at source: http://trueeconomics.blogspot.com/

A Dept Finance note on Anglo Bonds Repayments

 by Dr. Constantin Gurdgiev

Here’s the bull***t that passes for ‘advisory analysis’ for politicians – the copy of the note sent out
to Government TDs from a specific party based on the Department of Finance
information. I am publishing it here without any specific comments – judge for
yourselves reading it – my only general comment is that it is uses a number of
deceitful tricks, false juxtapositions and selective omissions to present the
case for repaying unsecured unguaranteed bondholders in Anglo Irish Bank /
IBRC.

(You can click on the pages to enlarge the text. I am publishing it
without an explicit HT so as not reveal my source).

full article at source: http://trueeconomics.blogspot.com/2011/11/02112011-doff-note-on-anglo-bonds.html

Comment:

I rest my case we cannot trust our own politicians who are in fact the mouthpieces of the vested interests.We are been lied to all the time and the Department of Finance are the biggest liars they can’t even count for god sakes!

Nice work Dr.Gurdgiev

Negative Equity and Debt Restructuring

We are all aware for the huge problem homeowners are facing
with negative equity issues

Dr. Constantin Gurdgiev has outlined here in this article a costing and a possible road map of what a possible bailout of the ordinary Irish home owner could look like.I find it an excellent well thought out process and the Government of the day should give it serious
consideration .It is not possible to continue to bailout the gangsters in the
banks and at the same time demand homeowners continue to pay back the full
The amount on properties that are now only worth less than half of what the banks
lent out to the hapless mortgage holders. It takes two to tangle and the banks
were negligent to say the least when offering these mortgages in the first
place .(due diligence and all that) I believe the banks have to step up to the
plate and the take on their part of the responsibility .The total lack of
regulation also implicates the Government and there is an obligation on the government
to take its share of the blame so in this case would advocate that up to two
thirds of the total debts be written off.But what chance of that ever happening?? None!Kenny and the boys are there to look after the banks and themselves

machholz

Negative Equity and Debt Restructuring

by Dr. Constantin Gurdgiev

This week, we finally learned the official figure for what
it would cost to address one of the biggest problems facing this
country.According to the Keane Report – or the Inter-Departmental
Mortgage Arrears Working Group Report – writing off negative equity for all
Irish mortgages will cost “in the region of €14 billion”. Doing the same just
for mortgages taken out between 2006 and 2008 would require some €10
billion. These numbers are truly staggering, not because of they are
so high, but the opposite: because they contrast the State’s unwillingness to
help ordinary Irish families caught in the gravest economic crisis we have ever
faced with the relatively low cost it would take to do so.

Let me explain. full article at source:http://trueeconomics.blogspot.com/2011/10/16102011-negative-equity-and-debt.html

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