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  1. Hi db76, Your statements ring true, and thanks for the suggestions. In addition to the two references I previously posted, there's this one: REPORT 158 Survey of the OTC Derivatives Market in Australia May 2009 A joint report by the Australian Prudential Regulation Authority, Australian Securities and Investments Commission, and Reserve Bank of Australia I found the conclusions of this report quite interesting. There are probably messages between the lines as well, if you can look past the careful phrasing. Overall, it does at least show that the regulators have taken a detailed interest, and they did have some reassuring things to say. However, it appears that there was also plenty of room for improved practices within the Australian derivatives markets, at least back in May 2009. It remains to be seen how these markets might weather a sovereign debt crisis, if one should eventuate. Presumably there would be some losses if adverse circumstances concatenated. Whether these would constitute a gravel rash or a mauling would depend on how widely separated derivatives theory and practice are, if the economy starts pushing its limit stops.
  2. Hi Mungo I don't know enough about the effect of the reserve asset ratio to comment about the significance of a variation in values from 8.5% to 10%, given that other factors might also be in play. BTW, I'm guessing that your information comes from somewhere other than the links I provided. My attitude is one of considerable scepticism toward the utterances of journalists, bankers and central bankers (and politicians, and corporates, and treasury officials, and...). However, while I'm inclined to suspect that "GFC2 - The Night of the Sovereign Megadebt" is coming to a theatre near us sooner or later, I can't ascertain to my satisfaction if Oz banks, particularly the Big Four, are proofed against it, or prone to it. The popular line is that Oz banks are wiser, less greedy, more prudent, better regulated, less exposed, and so on, than their offshore counterparts - and maybe they are. But a little probing here and there can't hurt, particularly given that we'll have to bail the mongrels out if they get it wrong, plus we'd want to have pre-positioned ourselves as best we could against the market consequences. My amateurish probing into the significance of the off-balance sheet amount of ~$13T of Australian banks has got me as far as wondering how accurate and unbiased the various assumptions of the RBA are in estimating that <$200B of net risk exposure is associated with the $13T. Certainly the RBA has strong mission-related motives for erring on the side of maintaining public confidence, in matters moot or murky. I seriously doubt if anyone - anyone willing to talk, at any rate - actually knows the risks. When it comes to OTC derivatives, opacity rules, OK. They're very complex and have tendrils going to all sorts of places, and there is a seamless transition from hedging with them to gaming them. But I'd stress that I don't have definite adverse knowledge, I'm merely suspicious.
  3. The following links may be of interest in understanding the risk exposures of Australian banks. Supervision of Banks’ Derivative Activities - Reserve Bank of Australia Bulletin - August 1993 Outlook for Australian Banks - Australian Investors' Association - Equities Bulletin - Issue 54 : May 2010 (Bank risk exposures are relevant because they reflect and influence the availability of credit, and thus affect the kingship of cash.)
  4. I appreciate your taking the time to provide an answer C.W.
  5. Thanks for your reply C.W. When you say that these transactions are balanced, I would have thought that $13T was several times what would be required to legitimately balance interest rate and foreign currency exposures. In other words, I'm wondering if our banks are exposed to unbalanced risks through large-scale gaming of the derivatives markets. This was my main issue, so I think I'll save my responses to your other points, at least for the moment, to avoid muddying the waters.
  6. Hi C.W., I've a question if you don't mind. If you go to RBA Statistics and open the Excel file titled : "Banks - Consolidated Group Off-balance Sheet Business - B4 [XLS]" - and you read the far right column, you should be able to confirm that the total off-balance sheet business for Oz banks is around $13T or so. The banks (and the Oz economy) being exposed to $13T worth of counter-parties during a financial crisis seems extremely risky to me. What do you think?
  7. Wossname


    "Does this look like a depreciating ZAR against the USD?" Errrrr.......Ummmmm.........Well........Ectually.........Unless my eyes deceive me.........Errr...........Well......In fact.......It does........?
  8. Wossname


    In reply to: flower on Saturday 16/08/08 12:53pm The stability of the AUD gold price, as shown by the relative stability of the green curve on your interesting graph, reflects the commodity-currency status of the AUD, and the fact that gold is seen as just another commodity. The valuations of both are diving in formation relative to the USD - for now. But I wouldn't have invested in gold if it was just a commodity. I will have squandered my meagre wealth if that's all it is. I bought it because it naturally qualifies as money, and other forms of money - the paper kinds - are currently headed for the trash bin. There is no popular recognition of that at the moment. People must actually believe the "strong dollar" rhetoric, or, as you imply, there may be "big boys" - international supporters maybe - acting in the background... Bernanke will probably have to show his hand again soon - maybe via another bail-out. How is it that people aren't noticing that the ink on the bail-out money is still wet? That the Merkin' Gummint has nothing to offer otherwise but IOUs?
  9. Wossname


    It seems that people who would buy gold for sustainable reasons are either too unaware as yet, or too crafty, to buy heavily. Meanwhile there have been too many players who held gold in unsustainable ways (over-leveraged) or for unsustainable reasons (as a supposed boom-times commodity instead of as a tough-times store of value). If that theory is correct, and I believe it is, then the current drop in gold popularity may be a necessary precursor to any sustainable gains. Meanwhile, the dilutionary processes (currently including interest rate suppression and bailouts) which always eventually destroy fiat currencies as gold's competitor are continuing unabated. Endure.
  10. The lies being disseminated about the state of the USA economy are so transparently false that they cannot be accepted without an irrational bias. That is, mass denial of the USA's state of economic illness, not governmental inefficiency or corruption, is currently the main blockage to taking corrective action IMO. I had assumed that a state of denial naturally righted itself over time, but it need not. People regularly die of willful blindness to various dangers. I don't have any idea of how long the present state of mass denial may go on for, so I don't have a picture of how terminal the condition is likely to be. Any mass psychologists out there?
  11. Wossname


    In reply to: blackburn f.c on Friday 27/06/08 12:32pm 1.5c now. Well done.
  12. Wossname


    Just a couple of points in passing: 1. The inflationary outlook now does not bear comparison with the situation in the late 1980's. Then, it was feasible to tighten up on interest rates without completely stalling the economy. Now, however, the adverse consequences of encouraging inflation to run amok are actually less disastrous, in economic and political terms, than the effects of a massive debt-fuelled deflationary implosion. Debt and risk exposures now are that extreme. 2. While gold has some price drivers in common with commodities, the drivers for possible explosive growth in gold prices are unique to precious metals. What's more, these unique drivers don't obey the same cyclic phasings, amplitudes, or durations as those of commodities. May be off air for a day or two. Cheers
  13. Wossname


    Something happened! A 10,000,000 share transaction! It could even be significant! http://www.sharescene.com/html/emoticons/blink.gif
  14. Wossname


    The price of an item or commodity is said to depend on supply and demand. What often isn't remembered is that this applies to both sides of the transaction - the supply and demand for cash, relative to the supply and demand for the commodity. It's a complex situation because each of these factors tends to vary. So complex, in fact, that not even the experts can agree on how it all works. A quote from the Wikipedia treatment of monetarism: "David Hackett Fischer, in his study The Great Wave, questioned the implicit basis of monetarism by examining long periods of secular inflation that stretched over decades. In doing so, he produced data which suggests that prior to a wave of monetary inflation, there is a wave of commodity inflation, which governments respond to, rather than lead. Whether this formulation undermines the monetary data which underpins the fundamental work of monetarism is still a matter of contention." I'm a simple-minded dude, and I figure that if Bernanke has said that "We have the keys to the printing press, and we are not afraid to use them", then he will meet current massive USA debt and risk liabilities with escalating injections of liquidity. I hope, therefore, that he will manage to overwhelm the deflationary influences of any slumps in demand for goods, or any rises in demand for cash, and that the resulting inflation will help gold prices. But I can't prove this, and in any case the timing is uncertain. We humans have the quaint trait of contending the most heatedly about those matters which are least amenable of resolution. Uncertainty is wearing on the nerves, but there may not be anything we can do about it.
  15. Wossname


    Quoting Jim Sinclair on 9 June 2008 in "Total Notional Value Of Derivatives Outstanding Surpasses One Quadrillion" at: http://www.jsmineset.com/ARhome.asp?VAfg=1...229&T_ARID=6284 "This means that no OTC derivative house can be allowed to go broke. This means that whatever funds are required to rescue failing international investment banks, banks and financial entities will be provided." If such bailouts eventuate it will be a massive inflationary influence. Such blatant elitism might also finally open the eyes of the populace to rampant monetary lies and corruption.
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