ANZ - ANZ Banking Group

[grace]

You know it's funny, I've got some speculative shares which have not lost as much as my ANZ holding over the past 3 months! ANZ is my worst performing share today!

[Moneybags]

I hear ya Grace, what makes it worse is this was a recommendation from my broker some time back......makes you wonder. My speccies holding up rather well also.

MB

[Kimosabi]

Here we go, get ready for more of this type of news as the year wears on. Anyone who thinks Aussie banks are immune from global credit market turmoil will need to adjust their expectations. The excerpt below is from ANZ's trading update released today.

It's only a matter of time before this stuff starts slamming hard into Real Estate, better hold on tight kiddies, this bubble pop is going to be a real doozy...

[numbercruncher]

Yup, rising interest rates = rising defaults = banks get smashed, as bearish as I am, all things considered I am surprised how much the banks have tanked already in absence of any substantial proof of a realestate bust, ala rest of the world style

One would assume the market is partially pricing in this possibility on top of all the other problems related to the global credit crunch !

[jersey10]

It's only a matter of time before this stuff starts slamming hard into Real Estate, better hold on tight kiddies, this bubble pop is going to be a real doozy...

Are you saying you think house prices are going to experience a crash / correction similar to what the sharemarket has over the last 6 weeks??

[nomore4s]

Are you saying you think house prices are going to experience a crash / correction similar to what the sharemarket has over the last 6 weeks??

lol, both Kimosabi & NC have been calling a real estate crash for as long as I can recall.

While I'm somewhat bearish on RE atm I'm nowhere near as enthusiatic about it as those 2, lol. There are a lot of things to play out yet imo, but I do think the top of the RE market has been reached for awhile and it looks like the stockmarket is pricing alot more risk into the banks atm.

[vishalt]

I never thought on my life that I would see the banks at these prices again.

Girls,

I am going shopping.

[grace]

I never thought on my life that I would see the banks at these prices again.

Girls,

I am going shopping.

Why don't you wait until they have the red light sale? I don't think we have seen the end of the slaying of banks yet. Wait until we have our real estate correction and then go shopping!

[refined silver]

I never thought on my life that I would see the banks at these prices again.

Girls,

I am going shopping.

Eeerh ladies, maybe a bit of caution is in order.

The ANZ is in trouble with Credit Default Swaps an OTC derivative which according to the Bank of International Settlements (BIS) is a major component of the more than $500 TRILLION of unregulated, non-clearing house guaranteed, private contracts and therefore without a market, pile of toxic OTC derivatives. So far the first part of the pile the CDOs and sub-prime derivatives have hit the fan, looks like the second much larger pile might be starting to shake.

The chart below shows the behind the scenes borrowing going on right now in the financial sector. Compare it to 1929, 1974, 1987, 2000, etc...

[MRC & Co]

Is that graph in real or nominal monetary terms?

Dare I say, the nature of compounding inflation since around 1922, that $3bil (around) would now be larger than the current $45bil. Just to put a bit of context into the graph.

[Miner]

Fantastic Graph
Dumb question : what was the value of $4 Billion in 1920 would be today ?
What was the gold price in 1920 compared to today?
Graphs must be adjusted in real price term. I hope the US treasury is not usng the same graph to explain their money supply and M1, M2 AND M3.
Probably ANZ will go down further on Tuesday. Nevertheless today's price has been one of the best since 18 months.

Cheers

[refined silver]

Is that graph in real or nominal monetary terms?

Dare I say, the nature of compounding inflation since around 1922, that $3bil (around) would now be larger than the current $45bil. Just to put a bit of context into the graph.

I assume it's not adjusted for inflation.

$3b in 1922 adjusted for inflation = $38.5b in 2008. http://woodrow.mpls.frb.fed.us/research/data/us/calc/ (Fed Bank of Missouri inflation calculator.)

Remember though that in the Great Depression over 5,000 banks went bust!!

Compare the graph to more recent events 1974, 1987, 1998, 2000, 9/11 etc and then remember the current figure shown on the graph is still growing as we keep getting new writedowns every day, (eg today Northern Rock was nationalised in the UK meaning effectively they are insolvent) and you can see we are not looking at your common garden variety business cycle downturn.

[MRC & Co]

No doubt, the graph is troubling. However, what growth has there been in money supply over the period?

Economic growth has far superceeded inflation, hence we have seen huge real GDP growth figures over that period (just look around you). So even after its adjusted for inflation, the amount of money in circulation is much higher than in the 1920s. Man, this economic mumbo jumbo seems like a world away these days!

Dont get me wrong, it isnt good, but I cannot see this "global crisis" hitting anywhere near the levels of the great depression.

[So_Cynical]

You know it's funny, I've got some speculative shares which have not lost as much as my ANZ holding over the past 3 months! ANZ is my worst performing share today!

Yep top end of town getting hit...my gold specky watch lists are holding up ok
most of them anyway...great value in the banks ATM.

Never though i would be looking to buying into a bank....at some stage.

[MRC & Co]

Yep top end of town getting hit...my gold specky watch lists are holding up ok
most of them anyway...great value in the banks ATM.

Never though i would be looking to buying into a bank....at some stage.

Banking sector getting hit (of course with a credit crunch scenario, this is the industry which is going to suffer most, with it then spilling over to the retail sector)!

Commodities are holding up a lot better!

[refined silver]

Dont get me wrong, it isnt good, but I cannot see this "global crisis" hitting anywhere near the levels of the great depression.

That might be an interesting quote to review in 6-12 months time.

People just don't get that OTC derivatives are in the hundreds of TRILLIONS and write offs so far are around $120b. All of these OTC derivatives are dependent on the balance sheet of the loser in the transaction. As soon as one can't pay, it unravels the huge loops of the daisy chain.

We've barely begun.

[MRC & Co]

That might be an interesting quote to review in 6-12 months time.

We've barely begun.

We have just begun, I am also sure a lot more sh*t has to hit the fan, so to speak.

However, have you been to China lately? Its growth is unbeleivable, some of the cities in China these days make New York look like its stuck in a time warp! Buildings practically MADE of marble!

The resources they will demand over the coming years are going to be unforseen. As GDP rises, so does the demand for consumption exponentially and lets face it, they have a whole lot to grow yet. India is also doing well. Hate to sound cliche, but these two sleeping giants really do have us looking at an unforseen global phenomenon!

Superannuation is expected to more than double over the next ten years (I beleive), thanks to the baby boomers.

We are going to see some huge fallout from this credit crunch, but its 10 years down the track and thereafter in which my worries belong, once properties and stocks start to be sold up wholesale in order to fund retirements and living habits of the rich.

Just my opinion, guess we will see over the coming years.

But in what sense do you beleive this will be worse than the great depression? In that it will hit stockmarket indicies by a larger %? Or that we will end up with people begging for jobs at the gate of the local wharf and mealtickets will become a common occurance once more?

[refined silver]

Hi MRC & Co,

I agree with the India and China bit, and that they will keep growing despite world financial system convulsions. Commodities will keep going up, but with volatility.

I see the depression scenario in a financial system melt down due to unmitigated greed, fraud, and foolishness in the lending/finance sector. There is no way to stop the derivative melt down, and the numbers just defy imagination. That means many entities going belly-up in a domino chain. It means unemployment and many wiped out investments. It means Central Banks feverishly pumping money into the system but effectively only monetising bankrupcy and insolvency, resulting in fierce real world inflation not in assets like houses which is nice, but in food, energy, commodities which squeeze the poor lower and middle classes even harder. These lumpen masses then have wages virtually capped by outsourcing to developing world countries like the said China and India meaning a serious drop in living standards. You have the end of the US empire and and a return to the 1500s where China etc was as advanced and wealthy as Europe.

We're probably getting off the thread topic, but to get back on it again, its not good news for financial institutions.

[MRC & Co]

Yes, I think we are getting a bit off topic and I think the emergence of China was inevitable anyways. South Korea did it, as did Japan, with the population of China, it will take longer, but its on the cards.

I also agree with the rest of what you said, they tried to contain the banking crisis within the industry but it has well and truly spilt over to the rest of the economy. Falling IR only increases the probability of stagflation, which is pretty much the worst possible scenario to economists, dare I say, worse than Japans liquidity trap.

Only time will tell. Back to ANZ, SELL SELL SELL!

[ROE]

From what I can read.. ANZ is conditioning investors for bad times ahead and to soften the hammer on share price if and when bad news start to emerge.

maybe banking sector right now have Cockroach eggs.
Sooner or later that egg will hatch and I thinking they all playing a waiting to see who come out first with the Cockroach.

When you spot one Cockroach, there are more to come

my 2 cents