Dear CIGAs,
While market players feel grip of the October selling fear, they fail to see the comparisons of 2009 with 2003. After the Japanese liquidity blast from 2002-2003, the dollar began to fall aggressively in 2003. Stocks soared.
Today’s infinite QE of 2008-2009 makes the Japanese liquidity blast of 2002-2003 look like a mini sip from a Dixie cup. As a result, the dollar is falling aggressively. Like 2003, expect gold and equities to follow the lead of a lower dollar in 2009.
Oh by the way gold ran from $319 to $425 from April 2003 to April 2004.
CIGA Eric
Click chart to enlarge
Dear Jim,
This was found by a friend of mine. Notice her comments below.
Respectfully yours,
Monty Guild
www.GuildInvestment.com
Monty,
I found this on Bloomberg, but most of the information after the first paragraph had already been dropped. I find that when a story could affect the markets, it disappears… (not just from Bloomberg). This below is from a London source:
Nicole Reynolds, CFA
Problem Loans Up 174%
The annual report of the combined regulatory agencies (Federal Reserve Board of Governors, Federal Deposit Insurance Corp (FDIC), Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) yesterday said “losses from syndicated loans facing banks and other financial institutions tripled to $53 billion in 2009, due to poor underwriting standards and the continuing weakness in economic conditions.” The report is named “the Shared National Credit Program (SNC) 2009 Review.”
Reuters says “According to the report, criticized assets rated ‘special mention’, ‘substandard’, ‘doubtful’ and ‘loss’, touched $642 billion, representing 22.3 percent of the SNC portfolio, compared with 13.4 percent a year ago.
Classified assets rated ‘substandard’, ‘doubtful’, and ‘loss,’ rose to $447 billion from $163 billion in 2008. The volume of SNCs rated ‘doubtful’ and ‘loss’ in 2009 rose almost 14-fold to $110 billion, while non-accrual loans touched $172 billion, up from $22 billion in 2008.
“The report also said foreign banks held about 38 percent of the $2.9 trillion in loans, while hedge funds, pension funds, insurance companies and other entities held about 21 percent. The report also said that non-banks continued to hold a "disproportionate share" of classified assets compared with their total share of the SNC portfolio. They hold 47 percent of loans seen as ‘substandard’, ‘doubtful’ and ‘loss’.”
Let’s note that hedge funds, pension funds, et al. do not have access to TARP money but it looks like the credit issue has not been resolved, even if some bank recipients have been paying back TARP money.
Jim Sinclair’s Commentary
This is another correct take on the same report.
Dear Jim,
Every bit of the "recovery" in bank profits this year was an illusion stemming from the FASB being intimidated into abandoning fair value accounting requirements. The reality is rapid deterioration across the entirety of their loan portfolios, as evidenced by the following article. This is the kind of MOPE that influences honest investors to lose more of their dwindling savings in order to prop up struggling financial companies.
Respectfully yours,
CIGA Richard B.
U.S. large-loan bank losses triple to $53 billion
On Friday September 25, 2009, 6:05 am EDT
(Reuters) – U.S. regulators say that the level of losses from syndicated loans facing banks and other financial institutions tripled to $53 billion in 2009, due to poor underwriting standards and the continuing weakness in economic conditions.
According to the Shared National Credit Program (SNC) 2009 Review, an annual inter-agency report released on Thursday, credit quality deteriorated to record levels with respect to large loans and loan commitments.
The Shared National Credit Program which was set up in 1977 to review large syndicated loans now reviews and classifies all institutional loans of at least $20 million that are shared by three or more supervised institutions.
According to the report, criticized assets rated ‘special mention’, ‘substandard’, ‘doubtful’ and ‘loss’, touched $642 billion, representing 22.3 percent of the SNC portfolio, compared with 13.4 percent a year ago.
Classified assets rated ‘substandard’, ‘doubtful’, and ‘loss,’ rose to $447 billion from $163 billion in 2008.
