Moderator: Peak Moderation
Paper gold - can't make it up! Considering that the ratio of physical to paper is nearly one to a hundred, the mismatch between the two may become a huge one in the future.UndercoverElephant wrote:I love this bit:
Paper bullion!why there may eventually be two prices for bullion: one for paper and (a much higher one) for physical...
Yesterday, rating agency Moody's Investors downgraded Portugal's credit rating to junk status.
Unbelievable. If you don't like the message then shoot the messenger. The problem is not the fact that Portugal is heading towards bankruptcy but that those darned US rating agencies "have this behaviour". What behaviour? Errr...they are behaving like rating agencies who have already had lots of fingers pointing at them for failing to downgrade bad credit risks before the 2008 crash. Solution? Create our own credit rating agencies which will do what we tell them, which is what the US agencies did before the 2008 crash.LISBON, July 6 (Reuters) - Two leading Portuguese bankers called on the European Union on Wednesday to set up its own credit ratings criteria and stop using U.S.-based agencies, a day after Moody's slashed Portugal's credit standing to junk status.
"If these ratings agencies have this behaviour, that worries us all and apparently also worries European leaders, the thing to do would be to stop using their criteria," Fernando Ulrich, head of the country's third-largest listed bank, Banco BPI , told Reuters by telephone.
Well, they are at least (now) trying to make it look like they are doing their job. If they were actually doing their job then the US would have had its credit rating lowered a long time ago.Lord Beria3 wrote:
The rating agencies are doing their job.
The ratings agencies own survival now depends on them downgrading when it would be ludicrous not to: if everybody knows it is a spade, then they have no choice but to call it a spade or cease to have any reason for existing. But the people who want to preserve the integrity of the Euro/EU (and the same problems will occur in the US with individual states going bust) need to be able bail out (properly bail out, not just loan) Greece without it being called a default. They are happy to accept that they aren't going to get all of their money back, but there's no point in them doing it at all if the rating agency is going to call the spade/default a spade/default, because this will cause contagion and lead to even greater losses.Banks wrestle with no-default help for Greece
PARIS — Leading banks were meeting in Paris on Wednesday on how to support a new rescue for Greece, their spokesman told AFP shortly after a rating agency issued a new warning and another downgraded Portugal.
The critical issue, which has delayed until September any eurozone decision on a new rescue for Greece, is how banks could shoulder part of the cost of help without triggering dangerous default repercussions across financial markets.
What exactly does this mean? That for every investor who holds an ounce of physical gold there are one hundred investors who hold paper which supposedly entitles them to an ounce of physical gold? Or that for every hundred paper ounces there is only one physical ounce held by the issuers of the paper?Lord Beria3 wrote:Paper gold - can't make it up! Considering that the ratio of physical to paper is nearly one to a hundred, the mismatch between the two may become a huge one in the future.UndercoverElephant wrote:I love this bit:
Paper bullion!why there may eventually be two prices for bullion: one for paper and (a much higher one) for physical...
Ah...in that case why don't they just change the rules? They seem to be quite happy to change all sorts of other rules in the middle of the game, why not that one?DominicJ wrote:UE
In their infinite wisdom, regulators declared certain insitutions were legaly required to own a certain amount AAA rated assets, and set limits to the lower qualities.
Thats starting to have serious effects as sovereign debt is cut....
Got it in one! Think of it as a inverted pyramid. A tiny base of physical backs a gigantic amount of paper promises.UndercoverElephant wrote:What exactly does this mean? That for every investor who holds an ounce of physical gold there are one hundred investors who hold paper which supposedly entitles them to an ounce of physical gold? Or that for every hundred paper ounces there is only one physical ounce held by the issuers of the paper?Lord Beria3 wrote:Paper gold - can't make it up! Considering that the ratio of physical to paper is nearly one to a hundred, the mismatch between the two may become a huge one in the future.UndercoverElephant wrote:I love this bit:
Paper bullion!
Just to make sure....you are saying that for every hundred "paper gold" ounces there is only one physical ounce held by the issuers of the paper, not that for every investor who holds an ounce of physical gold there are one hundred investors who hold paper which supposedly entitles them to an ounce of physical gold, yes?Lord Beria3 wrote:Got it in one! Think of it as a inverted pyramid. A tiny base of physical backs a gigantic amount of paper promises.UndercoverElephant wrote:What exactly does this mean? That for every investor who holds an ounce of physical gold there are one hundred investors who hold paper which supposedly entitles them to an ounce of physical gold? Or that for every hundred paper ounces there is only one physical ounce held by the issuers of the paper?Lord Beria3 wrote: Paper gold - can't make it up! Considering that the ratio of physical to paper is nearly one to a hundred, the mismatch between the two may become a huge one in the future.
