20120701-181958.jpgGood morning

The headlines:

  1. An update on Iran’s oil sanctions. 

    Link: they’re still happening.

    The US is freezing the US assets of supposed “front companies” for the Iranian oil trade. The main one is the National Iranian Tanker Co (NITC).

    Although, if the NITC is a front company – they could have picked a more camouflaged name…

    It seems that NITC ships are the only ones to have approached Kharg Island* since the EU and US sanctions came into effect. So that EU ban on insuring Iranian-oil-carrying ships seems to be working.

    *Iran’s largest oil export terminal.

  2. An update on Lehman Brothers.

    Link: Not gone, just forgotten.

    Lehman is currently attempting to dispose its illiquid assets in order to pay back creditors. Assets which include a large share in Formula One (I thought it was interesting).

    We often forget that bankrupt companies don’t disappear – bankruptcy is just a confession that you can’t pay your obligations, and so you get put under new management while the liquidators and co. recover what they can.

    And who, you might wonder, would work for such a bank? Well, the current board have been given a target of $53 billion to repay creditors. On the first $10 billion above that, they earn 17 basis points (0.17%) of the $10 billion as a bonus. And on the next $5 billion, they earn 44 basis points (0.44%) of the $5 billion as a bonus.

    To put this in perspective, back in April, Lehman Brothers made a payment of $22.5 billion to creditors – 53% more than initially expected.

    Assuming the trend continues**, 53% more of $53 billion is an extra $28 billion. That puts current management well in bonus territory. If we assume that they make the extra $15 billion, that’s $39 million in bonuses.

    That’s not a bad bonus for a few years’ work. Some might say that it’s better than what the executives at the non-bankrupt banks are having to work for. Especially when pesky governments keep trying to make them forgo bonuses.

    **Always remembering that part of the reason for Lehman’s collapse was being stuck in illiquid trades. What’s needed for illiquid trades is time. And now they have it. If the bankruptcy payout settlement were based on values at the date of bankruptcy, many of those positions may well have recovered…

  3. China’s growth figures are out.

    Link: 7.6%.

    It’s lower than it’s been for a long time. Which does seem to be a fairly constant trend with regard to recent China data.

    On the other hand, what doesn’t seem to be consistent is the trends within the Chinese data. Electricity usage in June 2012 is the same as in June 2011. In an economy has expanded some 7.6%.

    You cannot be serious.

    In 2010, China’s GDP (based on World Bank figures) was $5.93 trillion. And increase on 7.6% is in the magnitude of $0.5 trillion. And that was entirely manual?

    See line above about seriousness.

  4. China’s growth figures are questioned.

    Link: Ah – wikileaks.

    The “man-made” and “for reference only” data. It sounds like “for reference only” means “for the rest of the world’s reference only”.

    That’s a quote from 2007 by Li Keqiang, the man expected to shortly become the Chinese premier. Based on a wikileaks diplomatic cable.

    I liked this article.

  5. The weakening of the Rand.

    Link: rate cut speculation.

    Yields are dropping on the expectation that the SARB will cut interest rates, following the example of Brazil and South Korea.

    We shall see next week.

That’s all for now.

Have a good day.