The Week Ahead: Ed’s Daily Notes for August 4th   15 comments

It is fairly quiet on the news front today. As for the week ahead, even the economic reports are a little dull after last week. However, we are nearing the end of earnings season:

MONDAY: American International Group (AIG)
WEDNESDAY: Time Warner (TWX)
THURSDAY: Duke Energy (DUK)
FRIDAY: Brookfield Asset Management (BAM)


Posted August 4, 2014 by edmcgon in Earnings Season, News

15 responses to “The Week Ahead: Ed’s Daily Notes for August 4th

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  1. Portugal injected 4,9 biljon euros (3% of its GDP, but it is European money) in Banco esprito and made a bad bank for its toxic products. The bad bank will be at risk of the stake-holders; Crédit Agricole has a 15% stake in Banco Esprito and will take losses.
    Now there is 1,5 bilion euros of european money left to save the other banks in Portugal.
    Another bank crisis in Europe looming?

    • Plas,
      I would call it inevitable. Eventually, Europe will make the decision to no longer bailout the banks. When that happens, the house of cards will collapse.

      • I know, financial system in Europe will collapse since it still has major fundamental flaws and nothing has been resolved since 2011 (which was just a walk in the park compared to what’s coming, I think). I’m just wondering if this is our Lehmann-moment.

    • Splitting Citigroup into a good bank/bad bank didn’t precipitate a house of cards collapse in the US banking sector.

      How exactly are you both defining a collapse? Since it is “inevitable” how are you positioning yourselves to profit from it?


      • A collapse for me is an event with very big consequences, like the crash in 2008. I absolutely have no idea what will happen, since the outcome depends on so many things, not the least in the choices the politicians will make (just a very basic one: “all for one” in the EU or a split?).
        Since I cannot have a good idea what will happen and even less when and how it will happen, I don’t really plan on profiting from it, but I do prepare myself a bit: not all cash in one bank, some cash in a safe, some hedged with gold. If I could, I would put a part of my money over-sea, but if I do that, I will be haunted by the goverment.
        Another part of me is preparing for the long-term consequences. I do think less money (well, less inflation-adjusted money) and wealth will be available (especially in the west), so I’m trying to plan my life without a goverment-pension, with less consumption-oriented life. The can take my money, but not my knowledge. I’m investing in being able as long as it needs on in a comfortable way (this is one of the reasons I’m studying Chinese Medicine at the moment)
        I think these are things I can control in one way or another. I cannot control where the society will turn to, but I do can control how I position myself in that society (or I have the choice to opt-out and leave the EU).
        For me both the euro and the dollar are doomed: one because of the fundamental flaws in the union and its socialism, the other has had its best time as the reserve-currency.

      • Robb,
        Last time I checked, Citigroup was still in operation. And feel free to explain to me how “too big to fail” has been fixed, since all of the TBTF banks are now bigger than they were in 2008?

        As for profiting from this, there is no way to profit from a collapse of the financial sytem. The best you can do is hope you have the foresight to see it coming before it hits (which could take as long as a year or 20 years), and then position yourself to avoid the worst of it.

      • The amount of leverage the TBTF banks use has dropped dramatically. Personally I think they should chop up all the TBTF banks but simply because they exist doesn’t indicate there is an issue. We seem to go through some sort of banking crisis every decade, I don’t think having or not having TBTF banks will make any difference.

        How exactly would a “collapse of the financial system” work? Would we all move to the barter system? How would it impact the running of the federal government? How about day to day life for someone like yourself? I read something like your statement and I honestly have no idea what you mean by it.


      • “The amount of leverage the TBTF banks use has dropped dramatically”
        Guess again. Now, I don’t know about the situation in the USA, but this is definitely not the case in Europe. Deutsche Bank for example has a leverage up to 50:1. Look at the leverage in China, and look a little deeper into the shadow-banking of China.

      • Robb,
        It will take a crisis to get politicians to do something about it. What they will do the next time around is anyone’s guess, leaving the impact of their reactions as a big question. It could cause anything from complete financial ruin to even a possibly better financial system, although more likely it will end up being somewhere between those two extremes.

      • Plas I am speaking about US banks. With China there is no way to know what the government will do nor what the true situation looks like. Anyone predicting banking events in China is at best throwing a dart at a board.

        Ed so the collapse could happen 1 to 20 years from now and we could have a better financial system or complete financial ruin afterwards and there is no way to predict what the collapse will entail. Are you predicting a banking collapse in Europe, the US or globally?

        Still chuckling at the alarming language “collapse of the financial system” with no meat whatsoever behind it. It sounds like you expect another financial shock to occur similar to 2008 and the results will be dictated by the government’s response. Since we tend to have financial shocks of some sort fairly frequently seems like a safe prediction, kind of like predicting an earthquake will occur somewhere in the world.


      • Robb,
        I don’t use that language lightly. I’ll leave it to you to keep requesting tunes from the band as the Titanic sinks…

      • Robb,
        Have you read “This time it’s different” (Reinhart&Rogoff)? If not, do read it. If you did, read it again. With this info in mind, look at the west with their debts, socialism, its balance sheets and its rising mean age.
        Combine this with the decline of the dollar as a reserve currence which alone will have a major impact on the world.
        Something big has gotta give. 2008 was just the warning sign our society neglects. When, how and what will happen? No idea. I’m with Ed on this one.

      • Ed,
        And I will leave it to you to be chicken little.


      • So Ed are you going to become a “prepper”?

        Maybe in 20 years things will be different, but the way I see it now.
        If the US/dollar collapses the world goes with it.

        If it does the people that think gold is a safe haven are going to find out that water, food and lead, are far more valuable.
        (Gold is only valuable to people that already have their basic needs met and have started up the “lust” scale)
        If we come to that point, there is no point for me to live it that world so I don’t care.

        As long as any kind of society still exists it is going to breakdown into two main forms as far as I can see.
        1) Religious based. Depending on the extremeness of this, I will put that in the category of the one where you have to kill your fellow man to live. I will prefer death.
        2) Any society that values and rewards people that can contribute to it, and where at least sort of your standing is based on what you can contribute. Well I feel that I can contribute in a number of ways, so I don’t feel that I will be at the bottom of the heap, so I will probably do OK.

        Personally I’m not planing for the fall of the world, because strictly speaking it doesn’t matter if it comes to that.

      • Chris,
        If I see the end coming, I will. Right now, I only see the inevitability of it. The timing remains a mystery.

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