April recovery #2

Another thing that should not be underestimated in the "profits" for the first quarter this year is the effect of bailing out AIG. The money was drained into the global financial system, which was tallied for a few of the larger recipients by Yahoo News as follows:

Through three separate types of transactions, Goldman received an aggregate $12.9 billion. Among European banks, SocGen was the biggest recipient at $11.9 billion, Deutsche got $11.8 billion and Barclays was paid $8.5 billion.

Additionally, many states were bailed out through AIG, with the largest recipient, California, receiving over $1 billion.

Beware of April

April has many "surprises" in store, though a few of them have been telegraphed:

• Goldman Sachs and Morgan Stanley delayed their earnings announcements from mid-March to mid-April - it is currently still possible to find them referenced as earlier in old calendars.
• These delays shortly happened before the Mark to Market relaxing legislation in the US, affecting financial reports delivered after April 2nd. This change will allow banks to decide how much their assets are worth - a ball of string could be declared as worth $2 Billion after this if the bank so chose. The expectation is that the US banks will change their books to produce massive "write-ups" (accounting only profits) on their investments in things now worth not more than said ball of string.
• The "uptick" rule is expected to come out of the April 8th SEC meeting. This is supposed to be some magical rule that will ensure the market doesn't go down, or something, it's not entirely clear what chain of causation would result in an improvement in anything.
• The Federal Reserve is now buying longer term US government debt - $300 Billion happening right now. This is meant to keep interest rates down, which in turn is meant to stimulate the economy.
• There's plans for the Treasury and the FDIC to provide speculators money to buy the toxic assets from the banks. The most likely end result of this is that the banks speculate on their own toxic assets and transfer all future losses to the taxpayer.
  

There's 2 possible causes for this confluence. Either there's something truly awful coming out in April that they're trying to offset, or it's a coordinated attempt to force the stock market higher so the looting can continue just a little longer.

IMF: Iceland on the road to recovery

I'm not sure what they mean by "road to recovery". To a certain degree, having recently lost the 4th of their big four banks, they can't lose any more of them. The real content of this statement may be as little as is found in "we're heading in to the future".

Babcock and Brown down and out

Babcock and Brown found that leverage upon leverage and the practice of funding dividends from the money provided by new investors (aka a Ponzi Scheme) results inevitably in bankruptcy. While only $3 billion of debt was directly impacted, it should be remembered that all of its children, who are now running for cover, have a total debt load of over $50 billion. The question that has to be asked at this point is: Why was Babcock & Brown terminated this soon, and why before Centro?

Printing is safe

Apparently, printing is safe, according to the Bank of England's deputy governor.

Now if only central banks would release their statistics at the end of the month, rather than lagging 3 months we'd know how much "safety" has been added to the major economies.

GDP

Treasury's Forecast: 1.0%
IMF's Forecast: -0.2%
Official Statistics: -0.5%
Reality smashing up the stock market and currency: Expensive

Bank ratings - under threat

Moody's has been going hack & slash on the ratings of our banks. Firstly, it put ANZ, Commonwealth Bank and Westpac on negative credit watch (NAB got hit earlier). Then it downgraded St George and Suncorp, both in Bank Financial Stability Rating and in debt rating - note that debt rating is considering the risk of the company going bankrupt, which involves the share price going to zero.