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  • Stability Of The European Union (14) June 13, 2012 To August 2) 172 comments
    Aug 2, 2012 8:41 PM

    I changed the name of this Insta on Nov 21, 2010, after Ireland said they are seeking a bailout.

    This Instablog is the result of a question by one of the Renegades in OptionsGirl [OG] Quick Chat 90
    tinyurl.com/24y6u87

    Basically, what I wanted to address was what shoe is going to fall first, the US Dollar, or the Euro... I also wanted to see if there was any evidence for a time estimate with respect to issues for the Euro.

    I added more information on August 21, 2010.

    ____________________________________________
    Things are not looking good for Greece. I don't think they are going to be able to service all that debt. Enormous cuts in spending accompanied with increased taxes will likely destabilize their government. Remember, they can't print money as a way out of their debt trap. Investors are going to buy the safest assets in this environment. That should drive Greece's bowering rate higher. Here is some relevant information from a recent Bloomberg article:
    ___________________
    (August 13) Spanish, Greek Bonds Fall on Renewed Growth Concern; Bunds Gain By Anchalee Worrachate

    On August 13, the extra yield, or spread, investors demand to hold Greek 10-year securities instead of equivalent-maturity German debt, Europe's benchmark, rose 11 basis points to 808 basis points. That's the most since May 7, before the European Union announced a 750 billion-euro financial backstop for the region's most indebted nations.

    Concern some European nations would struggle to pay their debts helped boost demand this year for bunds, the region's benchmark securities. Spanish bonds returned 1.5 percent this year and Irish debt 0.5 percent, compared with an 8 percent gain from German securities, according to indexes compiled by European Federation of Financial Analysts Societies. Greek bonds lost 19 percent.

    Data today showed Spanish banks borrowed a record amount from the European Central Bank in July as investors shunned the indebted nation's lenders. Borrowing rose 3.1 percent to 130.2 billion euros ($167 billion) from 126.3 billion euros in June, according to daily averages compiled by the Bank of Spain.

    Spanish bonds are heading for their first weekly loss in five on renewed concern that climbing borrowing costs for Spanish regions put the national budget at risk.

    Catalonia, which accounts for a fifth of Spanish gross domestic product, has been shut out of public bond markets since March and the extra yield it pays over national government debt has almost tripled this year.

    The yield spread between 10-year Irish bonds and the benchmark German debt widened to 294 basis points today, the most since June 29, as investors bet the government will have to inject more capital into banks, including Anglo Irish Bank Corp.

    Ireland's borrowing costs rose at an auction of its six-and eight-month bills yesterday as investors demanded higher compensation for risk facing the government's finances. The country will sell 2014 and 2020 bonds debt next week.tinyurl.com/2dtuc5v
    ______________________________________________

    While the US is in a somewhat similar position, the US can print money, and our bonds have not be rated as junk. The higher the interest rate, the higher the perceived risk. The higher the interest rate, the deeper into the debt trap you go.

    I conclude that the Euro will drop relative to the dollar as money seeks less risk. How rapidly will this occur? I think the following chart provides some evidence with respect to timing.

    From June 2010 to August 2010 the average ten year Greek bond interest rate went from 64% of its peak crisis level to 85.5% of the peak crisis level.

    As of August, the Greek ten year bond interest rate is at the second highest level its been at over the past five years.

    If the interest rate is proportional to risk, than in the last three months, the risk level of the Greek ten year bond has increased at an average rate of 7.2% per month [ (85.5 - 64)/3 ].

    I suppose a natural accompaniment to shorting the Euro would be to go long on the dollar. This assumes that the debt crisis of the European Union will reach critical mass in advance of the US dollar.

    ______________________________________________________
    Added August 21, 2010

    A picture is often worth a thousand words. Here we have the Percent Economic Growth Rates for three countries: US, Greece, Germany. Note the distinct downturn in the US Economic Growth Rate.


    tinyurl.com/25vyea7

    Here is National debt as a percentage of GDP in 2009 for the Euro Zone. Look at Greece and Italy.


    tinyurl.com/2vvcnxv

    Here is Government deficit as a percent of GDP for 2009. Look at Greece and Ireland. Look at UK and Spain.


    tinyurl.com/2vvcnxv

    Here is the all important Jobs Picture as of March 2010. Look at Greece, Spain, Ireland and France.

    tinyurl.com/29grmpy

    =================
    Added September 29, 2011.

    What is the EFSF?:

    The European Financial Stability Facility (EFSF) is a special purpose vehicle financed by members of the Eurozone to combat the European sovereign debt crisis. The €110 billion bailout to Greece is not part of the EFSF guarantees, but a separate commitment.

    When you look at the Guarantee commitments by the different euro zone countries [tinyurl.com/3xde35o] you will see something interesting. Greece, Ireland, Italy, Portugal, and Spain (i.e., the PIIGS) account for over one-thrid (36.7%) of EFSF commitments. All by themselves, Italy and Spain have a financial commitment of almost one-thrid (29.8%) of the total EFSF commitment.

    ___________
    (October 23, 2011) I added this nice summary graphic of the Dominoes effect associated with the European debt crisis. You can also see the graphic and the accompanying article with the following link:

    (October 23, 2011) Guest Post: The European Financial Crisis In One Graphic: The Dominoes Of Debt. From: Zero Hedge, by: Tyler Durden.tinyurl.com/3ulxgmj

    The original copyrighted graphic is from Charles Hugh Smith (" 2011) attinyurl.com/ygsa6j

    Added February 9, 2012

    Greek General Government Debt Percent GDP
    tinyurl.com/73h5q2x

    (March 10, 2012) Europe's Scariest Chart Just Got Scarier. From: Zero Hedge, by Tyler Durden. tinyurl.com/7moa6tg

    Unemployment for individuals less than 25 rose to 51.1 %, twice as high as three years ago as budget cuts imposed by the European Union and the International Monetary Fund as a condition for dealing with the country's debt problems have caused a wave of corporate closures and bankruptcies.

    Fantasy Greek GDP Growth Rates:

    In the fantasy report "Greece: Preliminary debt Sustainability Analysis" dated February 15, 2012 which I referred to as the "Deus ex machine" report one of the EUs key economic assumptions was that Greek GDP growth in 2012 would be -4.8% and -1% in 2013.

    The Greek economy saw growth rates of:

    -0.2% in 2008,
    -3.3% in 2009,
    -3.4% in 2010,
    -6.9% in 2011
    -7.5% in fourth quarter of 2011.
    (Data from John Mauldin report tinyurl.com/7axvcmw)

    I plotted the Greek GDP data below and projected the GDP values for 2012 and 2013 based on the current data. I also plotted the Greek GDP projections from the Deus ex machine report - blue line.

    There is no Greek stimulus, jobs are in freefall. Which projection do you believe?

    (March 29, 2012) Greek Deposit Run Update: Hopeless And Getting Worse. tinyurl.com/8425yf7

    ============

    Added April 27, 2012

    Q1 unemployment is now one quarter of the working population or 24.44%, up nearly 2% from the 22.85% as of December 31

    (click to enlarge)

    Global PMI Changes from March to April 2012

    (click to enlarge)

    From: ZeroHedge tinyurl.com/76d39dj

    FUNDING GAP

    (click to enlarge)

    From: ZeroHedge - tinyurl.com/88qfjmc

    Ten Year Bond Yield Curves as of 7/20/2012

    From: The Disciplined Investor tinyurl.com/7yg5zku

    (click to enlarge)

    ----------------------------
    WARNING: This is a no Troll Zone. If you are disruptive, your comments will be deleted.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Comments (172)
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  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    Might as well start this one with a question posed by the masked man K202 if that is his real name. What will become of the Swiss Franc peg to the Euro? When the peg is dropped what will happen to assets valued in that currency like allot of mortgages in Eastern Europe? I'm paraphrasing here as his question was more detailed with better perspective.
    13 Jun 2012, 06:21 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » I think they will have to drop the peg. If the euro keeps going lower against other currencies, the Swiss franc which is pegged to the Euro will do the same thing.

     

    However, if Switzerland were to de-peg the Swiss franc from the euro and the euro keeps going lower, there would be a tremendous upside in the Swiss franc.
    13 Jun 2012, 06:53 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    Switzerland will depeg, and it will be with little warning when it happens.

     

    China will devalue the yuan (and firm up the newly repositioned dollar peg at the same time), also with little warning.

     

    I look for both events to occur within the next 12 months.
    13 Jun 2012, 08:00 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » OANDA Corporation is a financial services provider of currency conversion, online retail foreign exchange (forex) trading.

     

    Just announced from OANDA:
    Due to the extreme volatility some market analysts foresee, OANDA fxTrade will not accept any trading activity from 6:00 AM EST until approximately 3:00 PM EST, on Sunday, June 17, 2012.

     

    OANDA believes the convergence of a major market event [Greek elections June 17th.] during off-market hours represents a potential trading risk and has taken this rare step to protect traders from excessive rate fluctuations.

     

    Please note that during this halt in trading, you can still access your account details but no trading activity will be accepted. For this reason, OANDA strongly recommends that all traders consider MINIMIZING currency exposures prior to the trading halt.

     

    If you do intend to maintain open positions during this period, be aware that OANDA will hold exchange rates steady during the trading halt. However, when trading resumes, rates will immediately adjust to the current market rate AND IT IS POSSIBLE THAT THE UPDATED RATE COULD RESULT IN A MARGIN CLOSEOUT IF THE PRICE HAS MOVED SIGNIFICANTLY AGAINST YOUR POSITIONS.

     

    Therefore, it is your responsibility to ensure you have adequate funds in your account to prevent a margin closeout.

     

    -----
    Time to start digging your foxholes...
    14 Jun 2012, 01:06 AM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    My hat's off to OANDA for those steps. That's about as open and honest as someone in that business could be right now.

     

    Fair warning indeed...
    14 Jun 2012, 07:34 AM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2710) | Send Message
     
    Just saw that trading halt announcement on ZeroHedge, FPA. Margin calls beget other margin calls ... beget other margin calls ... well you know how the story ends. Let's hope we don't see this one play out next week!
    14 Jun 2012, 06:24 AM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    The HFT's and their quantmonkies will be all over it. They must be counting their quarterly bonuses already...
    14 Jun 2012, 07:35 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Wow, I was late on this one I see. Just posted it on quick chat, @8 hours after FPA posted it here. LOL

     

    Feel like the marathon runner crossing the finish line 8 hours after the race ended.
    14 Jun 2012, 09:04 AM Reply Like
  • Mayascribe
    , contributor
    Comments (11198) | Send Message
     
    We all have been targeting June 17 for some time, as the commencement of another leg down. So I will start with saying a big bad UGH! But yet...

     

    Very Cool! I have a decent-sized WFC bond getting called tomorrow. But I'll probably add that to the dry powder heap.

     

    Thanks FPA, others.

     

    ####

     

    Going to be interesting visiting the Liberty Bell and Independence Hall today. Our founding fathers would be rumbling, ready to start another war...against Capitol Hill.
    14 Jun 2012, 10:48 AM Reply Like
  • Mayascribe
    , contributor
    Comments (11198) | Send Message
     
    Live coverage of Greek exit polls:

     

    1603 GMT: EXIT POLLS ALSO INDICATE NEO-NAZI GOLDEN DAWN PARTY BACK IN PARLIAMENT

     

    http://yhoo.it/MiDcmD
    17 Jun 2012, 02:18 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Really bad times equals desperate choices.
    17 Jun 2012, 03:55 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    Greek law calls for 3% minimum share of the vote total to get seats...
    17 Jun 2012, 05:22 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » French Socialists Win An Absolute Majority In Parliament. So the French socialists don't need to rely on other parties. They have received a 'blank check'.

     

    Meanwhile...
    The Greek PASOK party of former PM G-Pap threw a grenade into coalition discussions, following an announcement by Katerina Diamantopoulou that Pasok will NOT join into a coalition government with ND unless Syriza also joins said coalition. Which Syriza stated moments ago it would NOT do. PASOK did the same thing for the last election.

     

    OH... and this just in: "GERMANY'S WESTERWELLE SAYS GREEK PACKAGE CAN'T BE NEGOTIATED.
    ---
    A true idiot.
    17 Jun 2012, 04:00 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » My guess is that IF the New Democracy and PASOK parties can form a majority of seats (GE 151) that they will form a government irrespective of SYRIZA. I believe this will constitute a pyrrhic victory unless the crushing austerity measures can be scaled back.
    17 Jun 2012, 04:30 PM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2710) | Send Message
     
    FPA,
    Andrew Freris of BNP Paribas is also supportive of your view that "they will form a government irrespective of SYRIZA." He pointed out tonight on Bloomberg that Syriza's recent growth in political support was in part driven by defectors from the Pasok Party. As I understood his reasoning, Pasok leader Venizelos' demand that Syriza be a part of a unity coalition -- is likely an effort to attract back former Pasok members into the new coalition -- thereby weakening some of the Syriza resistance to play ball with the new government.

     

    This was insight I had not read elsewhere -- and it certainly appears plausible.
    mj
    17 Jun 2012, 09:26 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Yes, I like that reasoning. I don't think the strategy will be particularly successful since PASOK is likely to be seen as the whipping boy in this for a long time to come.
    17 Jun 2012, 10:36 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » So much for the market euphoria offered up by the popular news media.

     

    Meanwhile, one major outcome of the weekend elections, Hollande's French Socialists winning an absolute majority is getting treated as a non-news event. I think this is a huge event given that it gives Hollande a green light for his anti-austerity and therefore anti-German policies. The implications of that story are huge. On top of this we have the Spain bailout situation coupled with the fact that the source for Spain's bailout funds has not as yet been ratified by the Germans. My guess was that yields for Spain's sovereign debt would continue to climb and this morning we have this: (June 18, 2012) Spain 10yr bond yield up 22bp to 7.08%. The private capital markets are closing for Spanish debt.
    Nothing has been resolved.

     

    Than of course we have Egypt's weekend election, and their military leaders latest action that will likely ignite the powder keg.
    18 Jun 2012, 04:57 AM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    I viewed the Socialist victory as a foregone conclusion, so I guess I didn't notice when the media treated it that way, too...

     

    Its absolutely true that this has huge implications for Merkel, who is soon to lose control of the Bundestag, following the French example as Germany rushes toward the socialists and the Greens.

     

    Egypt may or may not blow up, depending entirely upon whether or not the military decides to side with the Brotherhood. I don't believe this is a decided issue by any means, but I think the odds are better than even that they will.
    18 Jun 2012, 08:31 AM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
     
    Democrats had a majority and did nothing of utility... spent two years trying to negotiate with Republican to appease the middle... which got them voted out of office.

     

    I expect similar behavior from French Socialists. Politicians these days worry too much about the next election... which is why so many are voted out.
    19 Jun 2012, 10:33 AM Reply Like
  • Mayascribe
    , contributor
    Comments (11198) | Send Message
     
    Article from EconIntersect about "Spailout."

     

    http://bit.ly/LWxdF7

     

    --[extraction] The problem is that Spain and Italy have combined total needs of 620 billion euros in the next two years alone.

     

    If you're doing this math in your head, you'll quickly realize that's 233 billion euros more than the total bailout mechanisms now in existence.

     

    Oops.

     

    Call me crazy, but under the circumstances I don't understand how European leaders can pursue the same course of sorry-assed lending in Spain that they did in Greece and expect different results.

     

    It's simply irrational.
    18 Jun 2012, 01:41 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » One definition of insanity is doing the same thing over and over again and expecting different results.
    18 Jun 2012, 03:46 PM Reply Like
  • Mayascribe
    , contributor
    Comments (11198) | Send Message
     
    Yep, FPA.

     

    I'll be in Pittsburgh/New Castle applying little attention to what I believe will be a telling sign come this Thursday:

     

    Spain will be auctioning 5 year bonds. Who is going to buy them? At what rate?

     

    If today's Greece news wasn't risk on....
    19 Jun 2012, 12:38 AM Reply Like
  • DRich
    , contributor
    Comments (4819) | Send Message
     
    >Mayascribe ... I'll be happy to buy all the Spanish bonds I can get my hands on .... just as soon as my FED loan approval comes through following their Treasury auction purchase. Then I can repo them back to the FED for face value plus 3% for on reserve deposit.

     

    So nice of US taxpayers to help Germany's banks out. This game is getting old.
    19 Jun 2012, 12:51 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Spain sold €3B in 12 and 18 month debt. The average rate on the one year increased 410 basis points from 2.99 in May to 5.07%. The yield on the 18 month jumped 354 basis points from 3.3 to 5.11%. The sale came amid a report that a second, more detailed audit of Spanish banks has been delayed [can kicked] from July to September.
    ---
    Meanwhile:
    The EU voted to scrap the use of ratings agencies.
    19 Jun 2012, 12:16 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    Simple justice for the zerosum europols - bonds that sell at what a free market's price discovery calls "fair"...

     

    But dumping the ratings agencies?

     

    LOL, also simple justice. They are a disgrace even running in this crowd.
    19 Jun 2012, 12:22 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » The rating agencies have disgraced themselves. However, the people using the rating agencies will make the decision as to whether the ratings are irrelevant, not the EU which is related to the sellers of the paper. Saying you don't need the rating agencies when your bonds are close to worthless and in great danger of haircuts and subordination should raise all kinds of red flags to lenders.

     

    I have been thinking about the EUs desire for a fiscal union. One way to force a fiscal union would be to already have control of much of a states taxpayers revenues through non-subordinated debt bailout mechanisms. Is it plausible that the EU is trying to make it possible for banks to buy more worthless sovereign bonds? Are they attempting a new kind of takeover, a fiscal kind of coup?
    19 Jun 2012, 12:53 PM Reply Like
  • H. T. Love
    , contributor
    Comments (19488) | Send Message
     
    FPA: "The EU voted to scrap the use of ratings agencies.".

     

    Unless they were using Egan Jones(?), probably no harm as the ratings agencies we depended on are always late or wrong if not late.

     

    That was sort of a joke! :-))

     

    HardToLove
    19 Jun 2012, 12:53 PM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    "already have control of much of a states taxpayers revenues"

     

    This really is the bottom line. The purpose of the fiscal union, would allow the taxation of wealth where it exsists, to be transferred where it does not exist. What they are trying to get, is just such a taxing mechanism that doesn't appear to be just such a taxing mechanism. The fiscal union in the US does this all the time. Income taxes in one state, pay for earned income credit refunds in another state.

     

    If they did have a fiscal union, they could impose a Euro wide income tax on everyone and then buy stock in failing banks. The problem is that such a bailout is obvious. They would prefer to do it with debt or inflation, like the US did with TARP. That way the pain is not so obvious.

     

    Their struggles to date have been all about getting such a clandestine taxing mechanism in place to bail out their financial sector, but since they never started with such a union, any approach reveals the tax for what it is. Thus, politically, it has been a hard sell.

     

    Keep in mind though, even if they do get a union, they will be unified behind an unworkable business model. They are and will be, a collective behind the idea that consumption drives production, and its really the other way around. Even if they do get a tax to shore up their financial sector, all they have done is bought time. They will be right back where they are now (the US union didn't stop us from losing almost 9 million jobs via a federally induced real estate bubble), and all that paper they will create will once again be struggling to find value. And, it will be paper that doesn't enjoy reserve status. So any damage they do they will do mostly to themselves. They won't be able to export it via their currency the way the US does.

     

    When this happens, be prepared to ride a risk on trade on the way up, but be ready to bail when the signs of the cracks appear. The question is, "when will they pull this off?"

     

    They will literally, eventually tax themselves into severe austerity.
    19 Jun 2012, 01:18 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    A teaser...

     

    Its 1860 in Berlin, and they are figuring out how to continue their dominance of the Union...

     

    The payoffs have been made, and the opposition has been distracted by the bait, and only the few manipulating behind the scene see the coming war as both welcome and essential to their plans...

     

    Any similarity to the American War Between the States is just because the process of turning an alliance of willing and equal participants into an empire of the unwilling and the unequal ruled from a central capitol by an oligarchy is usually a violent process.

     

    Is it possible that the Europeans have been so domesticated that they will meekly exchange freedom and sovereignty for promises of security? Yes, perhaps even likely...

     

    But I still think it's 1860 for some.
    19 Jun 2012, 01:33 PM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2743) | Send Message
     
    So, if you "get rid of" the ratings agencies, does that mean that non-EZ entities will now buy Spanish bonds with a 3.5% yield?

     

    Politician thinking, obviously. Just keep repeating the lie.
    19 Jun 2012, 04:51 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    Call me cynical (please), but I believe giving the boot to the ratings agencies had something to do with the pending downgrade of France...
    19 Jun 2012, 04:53 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Actually now that private purchasers of bonds have been subordinated there will be no private bond purchasers. Add this to the Sovereigns now flailing about trying to get the monkey off each others back the game has become simply a game of hide the monkey.

     

    Ratings agencies kept telling everyone where the monkey was and that was ruining the game.The rules shall be changed as often as needed to ensure the outcome is politically acceptable. Everyone will win the same.....ummmm.... lose the same would be more like it.The domesticated sheeple of the EU have not a clue how badly this will end.
    20 Jun 2012, 06:47 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    Our problem is that we are funding much of the gaming clandestinely with borrowed money. These chickens will come home to roost for sure. Jhooper asks the salient question: When?
    20 Jun 2012, 10:09 AM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    As an old industrial engineer, I have a lot of arcane lore built up from my multitude of noobie mistakes when I was just figuring out my job. One of them involved doing time strudies for new machinery and establishes methods for the workers to use when operating the new machinery. Since these were piecework jobs determining what the company would pay for each piece produced was a key task. Since this was my first large project of this kind, I labored long and hard to arrive at the prices, only to discover after spending weeks figuring out intricate methods for the human operators to use that the human function was "internal to the cycle time of the machine". By this I mean that even a very sloppy method didn't matter, since the human was going to have to wait for the machine to complete its task before they could do their bit, and then wait again on the next machine, etc.

     

    All that time creating intricate methods was largely a waste, and in the end had no impact on the costs to the company or the pay to the employee (I ultimately decided these were not good candidates for piecework and they became hourly jobs).

     

    In the case of trying to determine "When?" for the future impact of the sovereign debt decisions being made now, I fear that we investors are "internal to the cycle time of the machine". I don't believe its knowable as the result of any train of logic, but is instead something best monitored constantly with a personal safety net woven by each investor as best they can.
    20 Jun 2012, 10:28 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    TB: Greetings. Indeed, your assessment is spot on. Vigilance is the only protection at this point.
    20 Jun 2012, 02:13 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    As most already knew here comes the print. ECB will determine its own ratings on bonds it accepts for collateral.

     

    http://bit.ly/KWvj5Z

     

    A great song that fits this altered state of reality.

     

    http://bit.ly/M9DDD7
    21 Jun 2012, 12:09 PM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    Then they will hypothecate the bonds selling CDS along the way. What could go wrong?
    21 Jun 2012, 12:12 PM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2743) | Send Message
     
    "What could go wrong? "

     

    Ummm, investors refuse to take their nice mind altering drugs?
    21 Jun 2012, 12:46 PM Reply Like
  • Mayascribe
    , contributor
    Comments (11198) | Send Message
     
    Moody's downgrades 15 major banks:

     

    http://on-msn.com/LkOgDW

     

    What did I write years ago...Wells Fargo ain't on this list!

     

    ####

     

    Being sneaky here, for you closest of pals. It's late. The final Axionistas are all now resting their heads here at the Hampton Inn.

     

    Great day. Fantastic.

     

    But, "yinz" pals, I will not be able to due a summation at least until Saturday or Sunday. Last year I was doing the final polishing on my Notes and More...from the Axion SC, around 2AM.

     

    It's now 2AM. No way am I going to embark on a tally of today's meet. Stay tuned. I will turn out something by Saturday or Sunday. Lots of stuff.

     

    Bottom line for you pins and needles folks? I have positively no doubt that Axion will achieve the 300% YoY revenues.

     

    I did not want to post anything on the APCs tonight. But I did want to let you guys know my take away is positive...way more than last year, or at the November PowerCube unveiling.

     

    Sorry FPA, to cloud this blog with AXPW stuff, but again, I am not prepared yet to write the full blown summation of this visit, and yet I figured that some of you might want a tad of Mayascribe input.
    22 Jun 2012, 02:09 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Thanks Tons Maya. I hope you had some fun and your dental work did not bother you much.
    22 Jun 2012, 03:28 AM Reply Like
  • SMaturin
    , contributor
    Comments (2268) | Send Message
     
    Appreciate it, Maya!

     

    Looking forward to your full New Castle story.
    22 Jun 2012, 12:59 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    Thanks, Mr. M.
    22 Jun 2012, 01:06 PM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    Maya: Greetings. I too look forward to reading your observations.
    22 Jun 2012, 01:06 PM Reply Like
  • Mayascribe
    , contributor
    Comments (11198) | Send Message
     
    Piling on continues; Moody's downgrades 28 Spanish banks.

     

    http://cnnmon.ie/NFD1Vq

     

    This week is surely an interesting one. Now France on deck.
    25 Jun 2012, 10:54 PM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2710) | Send Message
     
    European deposit insurance -- a game changer??

     

    In preparation for EU Summit #732 (sarcasm) this Thursday -- a briefing document will be discussed regarding the Euro zone's ESM fund which could backstop bank deposits: http://bit.ly/OoS48v
    Still at issue are the facts that 1) the ESM still awaits final ratification; 2) the ESM (and the EFSF) combined are capped at a ceiling of 500 billion euros; 3) Germany has been reluctant to support a European deposit insurance scheme; and 4) the multitude of EU summits have rarely delivered much more than a plan to do more planning. Maybe this time it's different?

     

    Meanwhile sovereign debt costs continue to mushroom. Early this morning "Spain's borrowing costs doubled and even tripled in an auction of 3- and 6-month bills, the first sale since the country formally asked the EU for bank bailout money." http://bit.ly/LcGAzc
    26 Jun 2012, 05:45 AM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    "Germany has been reluctant to support a European deposit insurance scheme;"

     

    Its not often talked about, but before the FDIC, some of the individual states provided deposit insurance. The reason they stopped, was because they kept going belly up. It seems that if you provide a guarantee, people don't punish banks that take on too much risk. The result is lots of risky lending because banks no longer have to compete for deposits via performance, asset inflation follows, followed by a bust, that takes down lots of banks and finally the insurance fund. Moving this moral hazard to a national scale or an international scale does nothing to change the physics of all this. It just translates the moral hazard to a broader capital base, allowing for an even bigger bubble to be created.

     

    The FDIC is basically busted right now. The estimates for them to get the reserve fund to its required ratios, should be sometime in 2025. If Europe pulls off deposit insurance, more asset bubbles will form. It could take years for them to burst, but the result will be the same. If you could time the bubble, you could have a great deal of wealth transferred your way.
    26 Jun 2012, 07:00 AM Reply Like
  • magounsq
    , contributor
    Comments (958) | Send Message
     
    jhooper

     

    "The reason they stopped, was because they kept going belly up. It seems that if you provide a guarantee, people don't punish banks that take on too much risk. The result is lots of risky lending because banks no longer have to compete for deposits via performance, asset inflation follows, followed by a bust, that takes down lots of banks and finally the insurance fund."

     

    Well put.
    It also dampens innovation and competition (FDIC insurance).
    At some point the insurance should be lessened considerably.
    26 Jun 2012, 04:07 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    My problem with government insurance programs is that they are not really operated as a true insurance program, particularly for the banking industry. Real insurance companies do not suffer catastrophic losses such as those seen by the FDIC in the recent fiscal meltdown without reacting by raising rates on the offending industry in no uncertain terms. Government does not react in this fashion, but in the opposite direction, dipping deep into the taxpayer's pocketbook to pull out uncounted treasure to compensate the banksters for their outrageous risk failures. In the sense of fair play I WILL admit that this is probably because government is also largely to blame for some of the fix the banks find themselves in, having been responsible for regulating the industry and also for many of the social engineering experiments (home mortgages for just about anyone with a pulse) which lay beneath the disaster...

     

    Still, it might be entertaining to sit down with some insurance actuaries and have them run a thorough analysis on the banks and come up with a fair price for insurance going forward...

     

    LOL, it would most certainly cost a lot more than the FDIC fees collect.
    26 Jun 2012, 04:18 PM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    Its important to remember that the distinguishing difference between gov action and private action is that gov gets to use force. As such, no gov ever makes profits, has trusts, charges premiums, or any other sort of fee that is derived based on voluntary inducements.

     

    Gov taxes plain and simple. The Fed is a taxing agency. The ECB is a taxing agency. The FDIC is a taxing agency. They are called something else, because that is how you fool the public into believing that they aren't being TAXED for these things.
    26 Jun 2012, 04:41 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    The upcoming eurosummit this week may see the foundation laid for a Euro Treasury... At which point, fiscal unity would be at least begun, and sovereignty for the EU members translated into a true fantasy.

     

    The question really is whether or not enough members have experienced enough pain to sign off on this essential step toward a US of E.
    26 Jun 2012, 08:05 AM Reply Like
  • optionsgirl
    , contributor
    Comments (5202) | Send Message
     
    Cyprus just asked for an EU bail out and the Greek Financial Minister just resigned for health reasons, right before the summit and with the new government six days old.
    Cheers.
    26 Jun 2012, 11:22 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » And the prime minister is in the hospital and will not attend the summit.
    26 Jun 2012, 11:37 AM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    Hmmm. Are all the heads of Europe suffering from sovereign debt flu?
    26 Jun 2012, 11:59 AM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    Maybe its just the PIIGS that have swine flu.
    26 Jun 2012, 12:01 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    LOL, I ALMOST went there too....
    26 Jun 2012, 12:02 PM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    This is probably what's going on here.

     

    http://bit.ly/LNOPmr
    26 Jun 2012, 12:14 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Things are getting a bit testy....

     

    Germany's Merkel says Europe will not have shared liability for debt as long as she lives

     

    Italy's Unelected PM Mario Monti: "If the Chancellor does not give up I will tell you that I resign because if things do not change are not able to bring Italy out of the abyss".
    26 Jun 2012, 12:32 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    About now would be a good time for our own leadership to voice encouragement and support for the Europeans...

     

    While simultaneously slamming shut the Fed eurowindow, forcing our brokerages and banks to prepare for disaster in Europe, and making plans to swoop in and scarf up anything good which survives the carnage.

     

    Lamentably we are doing the opposite, anchoring the whole floating mass disaster to the US$ and the UStaxpayer.

     

    I guess nobody in the White House ever took a lifesaving course which included what to do in the event that the person you are trying to save insists on trying to take you down with them...
    26 Jun 2012, 01:44 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Latest info on Spain's budget from MISH'S Global Economic Trend Analysis:

     

    There are two main components to Spain's budget: State (3.5% objective) and Regional (1.5% objective). The Total Public Administration deficit, which is supposed to come in at 5.3% for the year, is a combination of the two (+ 0.3% from somewhere else). The current Regional figure is not given in the article, but it is likely to be not too far off 1.5% for the year.

     

    The problem is that Spain has reached its' yearly budget deficit target of 3.5% of GDP in 5 months, not 12. If this continues, the State alone will come in at better than 8% for the year. Added to the Regional and the wiggle, that gives 10% for the year.
    26 Jun 2012, 08:36 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » July 2, 2012

     

    U.K. June Manufacturing PMI rises to 48.6, beating expectations of 46.5 and better than the 45.9 registered in May. Input prices fall at fastest pace since May 2009.

     

    Greece June Manufacturing PMI shows accelerated contraction, coming in at 40.1 in June vs. 43.1 in May.

     

    Eurozone PMI June Manufacturing comes in at 45.1, unchanged from May but up slightly from the June flash estimate of 44.8.

     

    German Manufacturing PMI (final) comes in at 45.0 in June, better than a prior estimate of 44.7 but down from May's 45.2. It's the lowest reading in three years.

     

    France June Manufacturing PMI (final) comes in at 45.2 vs. prior estimate of 45.3. Jobs were cut at the fastest pace since Sept. 2009.

     

    Italy June Manufacturing PMI at 44.6, down slightly from 44.8 in May. New orders drop sharply. Input prices decrease at fastest rate since July 2009.

     

    Spain June PMI Manufacturing falls to 41.1 vs 42.0 in May. This is the fifth month of acceleration in the rate of output decline. The sharp reduction in employment continue.

     

    China's official PMI falls to 50.2 in June - the slowest growth this year - from 50.4 in May vs. consensus of 49.9 and the HSBC flash reading of 48.1.

     

    US PMI at 9 AM today, ISM at 10 AM.
    2 Jul 2012, 05:20 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Some more PMI results:

     

    PMI reports on major exporters South Korea and Taiwan also indicated new orders from overseas were falling. The manufacturing sectors in these countries contracted in June for the first time in five months, the reports showed.
    2 Jul 2012, 05:38 AM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2710) | Send Message
     
    FPA, thanks for the PMI highlights. The one that REALLY surprised me was Norway's sharp drop in June to 46.3, down from 54.5 in May That's a huge one month drop after 5 straight months of growth. I think it reflects well the fall in global industrial activity. http://bit.ly/KO0JKp

     

    mj
    2 Jul 2012, 06:55 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Thanks Mercy... I think the results go a long way to explaining what has been happening with oil and with coal. I don't buy the claim that the coal drop is due to conversion to natural gas. I think many economies have slowed, and that means less energy is needed. I am thinking of taking profits on my oil positions today and sitting back for a bit.
    2 Jul 2012, 07:11 AM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2710) | Send Message
     
    Agree FPA. I am not letting strong gains on anything sit on the table very long (selling part or in whole). My energy positions which have been "steady Eddy" growers I am not as concerned about (e.g. Statoil). But, those that gain 18% in 3 days (e.g. Arc Resources) are definite candidates IMHO for booking at least some gains.
    2 Jul 2012, 07:21 AM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    If the soft landing in China did indeed start late this month as I suspect, we could see a pretty snappy rebound next month.

     

    China COULD lose the handle though if they are slow backing the Bad Banks in backing the trillion dollars in real estate at risk of imploding, starting with the Trusts.

     

    WSJ has good article today on this...
    5 Jul 2012, 01:10 PM Reply Like
  • Mayascribe
    , contributor
    Comments (11198) | Send Message
     
    Here's a global PMI chart, and it ain't pretty:

     

    http://read.bi/LRJL27
    5 Jul 2012, 03:56 PM Reply Like
  • H. T. Love
    , contributor
    Comments (19488) | Send Message
     
    Good to see the numbers catching up with the reality we've been knowing is coming for quite a while.

     

    Regardless, the CNBS majority of guest commentators are talking market up - everybody must be counting on BB's helicopter (and his new cadre of recruits from around the world) to inflate assets.

     

    I don't know whether to laugh or cry at this "nominal wealth" effect vs. "real wealth" we should be targeting.

     

    Maybe we should get some Zimbabwe notes as a hedge, huh?

     

    Let's hope they can't re-inflate the credit bubble along with everything else or we'll really have some hurt put on us down the road.

     

    MHO,
    HardToLove
    5 Jul 2012, 04:11 PM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2710) | Send Message
     
    Thanks for the good chart Maya. IMO that downward slope is likely to get increasingly propped up between now and November -- with fancy footwork around subsequent revisions to official data reporting.
    5 Jul 2012, 04:41 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » From Reuters:
    Finland and the Netherlands will block the euro zone's permanent bailout fund from buying bonds in secondary markets, the Finnish government said on Monday, despite European leaders' decision last week that rescue funds be available to stabilize markets.

     

    ESM bond buying from secondary markets would require unanimity and that seems unlikely because Finland and the Netherlands are against it.
    ---------
    Finland and the Netherlands probably want collateral on the "loans".
    2 Jul 2012, 07:25 AM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2710) | Send Message
     
    Marc Chandler just posted "10 Observations About Europe." IMO it represents a well informed summary of the perceived changes which incited the large market rally -- but which largely show that not much has substantively changed in the EZ.

     

    2 of his points particularly rang true for me:
    1) "This is not so much a retreat by Germany as a replication of the creditor/debtor debate in a new terrain."
    2) "Monti may herald the summit as a victory, but the real, material concessions seem few."

     

    http://seekingalpha.co...
    3 Jul 2012, 08:26 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Right... nothing really changed at all and they still don't have the money.

     

    Meanwhile a big storm is brewing over the LIBOR manipulation... My instincts tell me this is a big story. I was researching it early this morning with the idea of writing a few articles on it, but the more I look at it the more my head hurts.
    3 Jul 2012, 08:42 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Farage On EU Summit 'Breakthrough': "It's Not Credible; Nobody Believes You" http://tinyurl.com/c27...
    3 Jul 2012, 08:55 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » The Spanish 10 Year is back to satanic 6.66%. Time for another summit.
    5 Jul 2012, 10:18 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    Spain is a ticking time bomb with no way to defuse it. Their real estate bubble was far worse than the US bubble proportionally.
    5 Jul 2012, 06:14 PM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2743) | Send Message
     
    rbf: Am I correct in thinking the Spanish banks have not marked their real estate loans to reflect the open market resale value of the collateral properties? Is there any credible number on how big the gap is?
    5 Jul 2012, 11:29 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
     
    Perspective.

     

    Ireland increased the number of physical dwellings in the entire country by 50% between 1998 and 2008. Having visited the country in 1999 and 2010, all I can say is the difference in number of structures was daunting.

     

    Spain is believed to have had a worse real estate bubble than Ireland... never mind us.

     

    +++++

     

    Yet, I think something often lost when we discuss the collapse of these bubbles is the collapse of job skills. People developed skills for jobs in the global construction boom for about a decade that are now, in many cases, irrelevant skills with no jobs. They're not trained for other things. Losing a job is one thing; not having the skills to get a comparably well-paying job is another.
    6 Jul 2012, 12:03 AM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2710) | Send Message
     
    It would be really hard to make this stuff up re: EU impotent leadership -- YES, NO, MAYBE SO -- no let's do more planning. Guess last Friday's rally was all one big misunderstanding:

     

    SA: 7/6
    10:34 AM No aid from the ESM can be given to banks without the guarantee of the sovereign, says a senior EU official, squashing post-summit ideas the rescue fund could directly bail out lenders. "This is very much not the case," he says, scratching his head at how markets ever got such an idea.
    6 Jul 2012, 10:58 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » In Spain, the Yield is back above 7%

     

    And over in Greece....

     

    During the recent election every party promised to renegotiate the terms of their agreement with the Troika. This was the cornerstone of political debate as promises were poured on the populace in an attempt to gain power. Well, they got their power.

     

    Today all of the promises hit the wall and stopped as the IMF told Greece that there would be NO NEW NEGOTIATIONS, and the leaders in Greece said they will no longer try to renegotiate bailout terms. The Troika’s report on the financial condition of Greece is going to be damning and they know it.

     

    Over the last year Greece raided their university, pension, and hospital funds. They stopped paying their suppliers and raided their banks. They are out of cash, and very likely out of credit. Greece will default. This is also going to be a disaster for the IMF and the EU.

     

    The fat lady is singing for Greece... I think she will be quite busy this quarter.
    http://tinyurl.com/bqy...
    6 Jul 2012, 11:28 AM Reply Like
  • magounsq
    , contributor
    Comments (958) | Send Message
     
    "This stuff is getting old! I just wish they would get on with it. Politicians are playing catch as catch can... I haven't seen people get all the right people into the room and close the door and put a solution up on the wall. God knows, some really stupid things were done by American banks and American investment bankers...some stupid things were done...but it wasn't just the bankers. Where were the regulators in all this?"

     

    Jamie Dimon, JPMorgan
    2009

     

    My, how far we have come!
    Where are our leaders?
    6 Jul 2012, 11:36 AM Reply Like
  • DRich
    , contributor
    Comments (4819) | Send Message
     
    >magounsq ... "Where were the regulators in all this?" I'll venture to guess they were waiting for their term to end so they could take a well paid job with those corporations they regulated. Meanwhile the "People's Representatives", our leaders, were in a contribution bidding war to fill those regulator jobs with people from the winning firm.

     

    I think it works nearly perfectly for those that matter. An ever smaller & smaller (& richer) group of people we just can't live without. How could this system possibly not work smoothly?
    6 Jul 2012, 11:50 AM Reply Like
  • Mayascribe
    , contributor
    Comments (11198) | Send Message
     
    Today, Euribor follows ECB policy rates to record lows:

     

    http://reut.rs/M5uahz

     

    -- "The ECB rate cut has failed to produce a meaningful
    turn-around in market dynamics," Lena Komileva of G+ Economics
    said.
    "If anything, it has increased monetary divergence between
    the core and the periphery within the euro zone, which poses
    questions about the ability of fiscal policy to bridge the gap."
    Three-month Euribor rates, traditionally the
    main gauge of bank-to-bank lending, saw its biggest fall on
    record to hit an all time low of 0.549 percent, down from 0.641
    percent.
    6 Jul 2012, 03:53 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Japan's core machinery orders were expected to post a modest -2.6% drop. Instead they plunged by 14.8% . [ack!] Current account surplus plunged by 62.6% verses the forecast -14.5%. On Thursday the BOJ is expected to ease again.
    9 Jul 2012, 01:05 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » The Spanish economy has deteriorated so badly in the last few months that the Economic ministers of the Eurozone are set to approve an extension of one year for Spain to correct its excessive deficit and return to bringing it below the threshold of 3% of GDP in the next year.
    ----
    NigelFarage is correct, these people are not credible.
    9 Jul 2012, 08:09 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » This comment, attributed to an anonymous senior European official, as told to Matina Stevis at The Wall Street Journal, is generating quite a bit of discussion.
    ---
    I need to make clear what the ESM can do: the ESM is able – if one were to decide ever on such an instrument – to take an equity share in a bank. But only against full guarantee by the sovereign concerned. What you have is that it cuts out the effect of that loan on the debt-to-GDP ratio of the sovereign.

     

    Does it still remain the risk of the sovereign or does it go to the ESM?
    Answer: It remains the risk of the sovereign.
    ...

     

    So while in public all the talk was about how Spanish banks would get a bailout without it burdening the government debt [risk level], this anonymous senior European official is saying that the bailout to the banks really is just a loan to the government in disguise because "it remains the risk of the sovereign."
    - - - - -
    [In other words, they are trying to game the Debt-to-GDP ratio of the sovereign, presumably with the intent of lowering yield rates. Of course, what everyone with a cortex will do is add a corrective factor to the Debt-to-GDP ratio to get a more accurate picture of the risk. ]

     

    Meanwhile:

     

    * EU SAYS NO SOVEREIGN GUARANTEE NEEDED FOR DIRECT ESM BANK FUNDS

     

    BUT

     

    The exact same thing was said after the last Euro summit sending the EURUSD higher by 200 pips, only to see it crash to 2 year lows in the week following after Germany made it clear this was not really the case.

     

    Turns out it is not really the case this time either:

     

    * Details of how the future system will work remain to be negotiated: Commission spokesman Simon O’Connor

     

    You can see the half-life of this latest attempted manipulation in todays ERUUSD currency rates.
    9 Jul 2012, 09:13 AM Reply Like
  • Stilldazed
    , contributor
    Comments (3698) | Send Message
     
    Ho hum, more of the same. The magician waves his hands, says some nonsensical words, there is a bright flash with a little smoke, but that darn rabbit is still there.
    9 Jul 2012, 03:03 PM Reply Like
  • H. T. Love
    , contributor
    Comments (19488) | Send Message
     
    SD: Wait for the climax when the lady is sawed into two parts. Always more exciting.

     

    HardToLove
    9 Jul 2012, 03:16 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    Its ironic (in the darkest sense of the word).

     

    I am haunted by the final days of Keynes, when he awkwardly recanted his lifelong economic theories, and acknowledged that Smith's "invisible hand" might actually be necessary and real after all...

     

    Jump foward to a world where a panicked leadership has managed to finally kill the invisible hand... LOL, but where the clueless leadership persists in waiting for it to save them like it always has in the past.

     

    Having slain the golden goose, they gather together over and over and plot how best to use the golden eggs which will be arriving any minute now.... Soon.... No? Well, that's odd, I guess we must just do some more delaying tactics, for surely it will put in an appearance any day now...

     

    I just picked up my ancient copy of Atlas Shrugged, tattered from use, and wondered how many of those leaders have ever read it, or if so, viewed it as prophecy rather than a ridiculous dark vision of the future.
    9 Jul 2012, 03:50 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Trip! I was getting worried. Great to see you.
    9 Jul 2012, 03:56 PM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2710) | Send Message
     
    Me, too, we had to go cold turkey for a few days on your words of wisdom. :-))
    9 Jul 2012, 04:06 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    Just got back from 2 weeks of art festivals and excruciating heat and work. I had moments when I really doubted I could hack it...

     

    Great to be back. Next show is not until August...
    9 Jul 2012, 04:31 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Did you get your fans working?
    9 Jul 2012, 04:32 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    Yes, but of course these shows all had electricity. Without fans and plenty of fluids I would not be here...

     

    Thanks for asking. I am still working on battery backups, we use Ryobi rechargeables for fans, but lighting is going to require a heavier battery (probably the biggest Penn marine offering, though I have not made a final choice just yet).
    9 Jul 2012, 04:36 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Would diode lighting be acceptable?
    9 Jul 2012, 04:42 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    I will probably be using LED trac lights for most of our lighting.
    9 Jul 2012, 05:09 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    An interesting read. A clip from it to tease you below.

     

    http://bit.ly/M2hpT0

     

    And the report ventured into what had been euro blasphemy: it discussed the pros and cons of the reintroduction of national currencies including ... gasp ... the “reintroduction of the D-Mark.” That the words came from the Council of Economic Experts in an official manner is another step towards what appears to be more and more the inevitable—though they labor to explain why it would be better for German industry to hang on to the euro, and though they warn of the high risks of an “uncontrolled break-up” of the Eurozone.

     

    Finnish Finance Minister Jutta Urpilainen set the scene for the long European summer break when she declared that Finland wouldn’t agree to take on “collective responsibility for debts and risks of other countries.” And if push came to shove: “We are prepared for all scenarios, including abandoning the Euro.” For what promises to be a torturous summer, read.... The Euro Crash Refuses To Go On Vacation.
    11 Jul 2012, 05:23 AM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2710) | Send Message
     
    DG, sobering messages from the "experts." I also found their statement re: the ESM pretty dramatic:

     

    "The Council of Economic Experts that advises the federal government on economic policy came out with a sobering study that concluded that the current bailout funds—the temporary EFSF and the permanent, still non-existent, and highly controversial ESM—the very instruments that would save the Eurozone, could in fact not save the Eurozone."

     

    Thanks,
    mj
    11 Jul 2012, 05:40 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Yep very sobering. I am sitting here drinking coffee, sober and shocked that there will obviously be no solution for the EU till after summer. Shocked I tell you, shocked. LOL

     

    This is Euro in its most dire moments still acting as if life is a beach and a 6 week vacation.

     

    http://bit.ly/MgTR9H

     

    The cartoon with the song is perfect.
    11 Jul 2012, 05:55 AM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
     
    Sobering?

     

    Drink up is what I say! You know if they can't bail themselves out, Ben is going to.
    11 Jul 2012, 09:08 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    So we bail them out. Now I think I will take that drink.
    11 Jul 2012, 11:26 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » July 11, 2012 Spain will have to cede most control of banks: WSJAs reported in MarketWatch, By Barbara Kollmeyer
    Spain will likely have to cede most control over its banks to Europe in exchange for assistance, according to a draft agreement of the bank bailout agreement. The requirements could mean holders of junior bonds and preferred shares issued by banks that are bailed out will face losses [i.e., subordination]. Many individuals in Spain have bought preferred shares of local banks.
    ---
    So even preferred shareholders, issued under local law, are going to get a haircut if not a decapitation. I can't find a reference to how much of Spanish debt is under English Law, but according to the Wall Street Examiner, there is about 1.2 Trillion euros worth of Italian and Spanish bonds. http://tinyurl.com/87b....
    What would be very interesting would be how much of the 7% yield bonds are under local Vs. English law?
    ---
    “Spain is not Uganda.” – Spanish PM Rajoy
    “Uganda does not want to be Spain.” – Uganda Foreign Minister
    11 Jul 2012, 09:24 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Spain’s Rajoy unveils €65 billion in new austerity.
    From: MarketWatch, By David Roman.

     

    The additional austerity includes an increase in the standard rate of value-added tax from 18% to 21%, and the lower rate to 8% to 10%. The measures also include a cut in jobless benefits for new claimants [unspecified amount], a salary cut of around 7% for state employees, and [unspecified amount] billions of euros in savings from local government reforms.
    ---
    Want to bet they took current tax revenues divided by the old tax rate, than substituted the new tax rates to project revenue increases? My bet is that sales and employment will decrease as the new taxes adversely affect sales. This is the problem with following an austerity solution. What about Growth? The statement from the Spanish Prime Minister Mariano Rajoy is designed to grease the bailout funds from the EU. Spain will take on more debt and the debt/ death spiral will accelerate. Why was this obvious piece of fluff published? Unspecified billions of euros in savings from local government reforms... Crapola.
    11 Jul 2012, 09:49 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Typo in that sales tax figure. Its FROM 8 to 10 percent.

     

    How are Spain's people reacting to the news that they have just been screwed by their government and the banks?

     

    Cops are using rubber bullets on protesters.
    11 Jul 2012, 10:36 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Wonder how long the rubber bullets last or how long the protesters put up with it. Jeeze its getting ugly fast.
    11 Jul 2012, 11:30 AM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
     
    Spanish domino is going... which means Italy is next unless France jumps the queue.

     

    How will they capture the feeling of this slowly unfolding disaster in history books in 50 years? Putting this blog in a time capsule would be a good start.
    11 Jul 2012, 11:43 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Maybe they will start going 2 at a time next with France and Italy going out together.
    11 Jul 2012, 11:49 AM Reply Like
  • Mayascribe
    , contributor
    Comments (11198) | Send Message
     
    Barclay's LIBOR rate fixing spreading fast like a plague. Lots of US banks, and EZ banks, will be affected, or rather, should be punished.

     

    -- Economists and analysts predict the LIBOR scandal could be one of the most expensive to hit the banking sector since the financial crisis, engulfing more multinational banks with fines that dwarf the one handed to Barclays and further eroding investor confidence in the banking sector.

     

    Jamie Dimon, when I have seen him interviewed lately, looks different, like a scared man about to get eaten alive by his own greed. I hope he get his due.

     

    Why in the world do I still own his stock? Shame on me.

     

    http://on-msn.com/MjKXIw
    11 Jul 2012, 09:16 PM Reply Like
  • Stilldazed
    , contributor
    Comments (3698) | Send Message
     
    Sounds like a man in freefall with a shredded golden parachute. Karma (the car and the concept) has a way of catching up with you when least expected.
    11 Jul 2012, 10:31 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    "and further eroding investor confidence in the banking sector."

     

    I can not envision what further erosion must look like?!! LOL

     

    Maybe a black and white striped suit, a small office with bars and guards and a warden.
    12 Jul 2012, 07:34 AM Reply Like
  • H. T. Love
    , contributor
    Comments (19488) | Send Message
     
    DG: Well they might then have some *effective* supervision and regulation.

     

    HardToLove
    12 Jul 2012, 07:46 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Step 1.) DO NOT LET THEM HAVE A COMPUTER!!!

     

    Step 2.) REVIEW STEP ONE.
    12 Jul 2012, 07:50 AM Reply Like
  • H. T. Love
    , contributor
    Comments (19488) | Send Message
     
    And give computers to those "supevising" and "regulating" and, mostly importantly, teach them how to effectively use them (improving software if needed too) for the tasks at hand.

     

    MHO,
    HardToLove
    12 Jul 2012, 08:45 AM Reply Like
  • magounsq
    , contributor
    Comments (958) | Send Message
     
    HTL

     

    You've hit the nail on the head..."teach them"...train them.
    They "supervise" bankers who makes millions of dollars.
    They are out manned, but their job can be done with much more success.
    12 Jul 2012, 11:26 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    Greetings all. I have a short break in negotiations and am playing catch up today. Nothing to add just thought I would drop by. Keep an eye on the news as things are not going well and a labor dispute is in the offing.
    17 Jul 2012, 02:41 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
     
    The wealthiest French continue to be motivated to scurry out of the country: http://bit.ly/Pf6LcB

     

    Mind you, IMHO it is easier to relocate away from French taxes than American taxes. And, the wealthy were already leaving France last year due to new estate tax laws - the tax hike is just an extra kick in the pants for those previously slow to get motivated.

     

    Lastly, another issue the EU creates is it gives the wealthy more mobility for changing the tax code they live under.

     

    Note to Greece: get rid of income taxes and make yourself a tax haven (its not like locals pay their taxes anyway).
    17 Jul 2012, 08:31 PM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2743) | Send Message
     
    Jon, that's actually brilliant! Greece is small enough that it wouldn't take very many rich French and German and etc. immigrants paying property taxes to give the country a nice stable income. Combine with tourists and legalized soft drugs and it's done!

     

    The state could set up a good fuel distribution system and tax the fuel by 30% of so for more income. Toll roads that were fast and well maintained would give another source of revenue. The welfare state shall rise again!

     

    Of course, only the NEW residents would have to pay. Old time citizens would get most of it rebated........if they registered and were identified. Notice I said "rebated". If they are "off the books" they wouldn't get anything back from all the fees.

     

    Probably wouldn't work. Too reasonable.
    18 Jul 2012, 01:14 AM Reply Like
  • Mayascribe
    , contributor
    Comments (11198) | Send Message
     
    SiliconHillbilly & JS:

     

    Let's get on it, and more. Add in the Hong Kong corporate tax: Free Trade! For all Greeks, and the whole planet; to all who comes.

     

    Believe it or not, I have read where Honduras is considering exactly this approach to global econ. The first western Free Trade country, all to be put on the Honduran isle of Roatan.
    18 Jul 2012, 03:01 AM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
     
    Athletes playing in France to be subject to 75% tax. French soccer fans give up hope of ever having a team that wins the Champions League.

     

    Tour de France to be renamed Tour d'Impots

     

    http://bloom.bg/OHfob8
    18 Jul 2012, 05:17 PM Reply Like
  • H. T. Love
    , contributor
    Comments (19488) | Send Message
     
    I had to chuckle that thye woulkd consider sports regulation as one of their pressing problems, all things considered.

     

    As to their tax, it's their (socialist) country and they can reap the rewards of their policies. I guess they aren't concerned about the capital flight reported in the EZ recently, nor with having a competitive "football" team either, as you mention.

     

    HardToLove.
    18 Jul 2012, 06:46 PM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    From an email blast I get. The Bavaria comment is a classic microcosm of the whole problem. Europe (and also the US) rest their basic economic philosophy on a belief that you can steal your way to growth, thus people justify their theft with the rationalization that they are entitled to other people's income.

     

    "In Today’s Headlines: ECB is increasingly supportive of bail-in losses for Irish and Spanish Senior Bank bond holders, Finland will receive collateral in exchange for supporting the Spanish bank bailout, Bavaria is tired paying to supporting Berlin, Sicily may need an Italian bailout, six northern European nations 2 year yields are now negative, and Portugal issues bills.

     

    • The odds of Senior Irish Bank bondholders being forced to share the burden with the Sovereign appear to be increasing, according to the WSJ. Ireland’s finance minister met with ECB president Mario Draghi yesterday. The ECB in a statement said that Draghi “noted that the question of burden-sharing with senior bond holders is evolving at the European level.” These comments follow reports that Draghi was pushing for senior bond holders to share in losses in Spain as well. Draghi’s stance is a shift from that of his predecessor, Trichet.

     

    • Finland will sign off on the Spanish bank bailout in exchange for €770 million in collateral. Finland will be the only country in the Eurozone to receive collateral. Finland also insisted on a similar deal when it agreed to support the second Greek bailout. The collateral is intended to represent 40% of Finland’s contribution to the €100 billion bailout. In exchange for the collateral, Finland forgoes any profits on the loans.

     

    • Bavaria, Germany’s richest state, is challenging Germany’s own internal system of revenue redistribution. Within Germany, the rich southern states of Bavaria, Baden-Wurttenburg and Hesse transferred €7.3 billion in 2011 to their poor cousins in Berlin, Bremen and the former East Germany. The complaint is similar to Germany’s own reluctance to support payments to peripheral Eurozone partners. The real risk to Germany appears limited however, as the Bavarian challenge is not likely to be heard and ruled on by Germany’s constitutional court for months, if not years.

     

    • Sicily may need to be bailed out by Italy, says the Financial Times. The regional government has been beset by corruption scandals and budget mismanagement. With only €5.3 billion of debt however, any bailout by Italy is not likely to impact the Nation’s credit profile.

     

    • Six European nations now have negative 2-year bond yields. The list includes Germany, Finland, Denmark, Switzerland, the Netherlands and Austria. Denmark and Switzerland are not part of the Euro, but are pegged to the common currency. Investors have flocked to their bonds both as a safe-haven and on the outside chance that capital flows will force their respective central banks to lift the peg.

     

    • Portugal sold 2.0 billion of 6- and 12-month bills at a yield of 2.292% and 3.505% respectively. Tomorrow, Spain plans to sell up to €3 billion in 2-, 5- and 7- year bonds. "
    18 Jul 2012, 08:33 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Finland forgoes any profits on the loans.

     

    Did not hear about this. Probably because NO ONE expects there to be a profit. Nada, zip, zilch chance of that happening. LOL
    18 Jul 2012, 08:40 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Germans back to using deutsche marks. $8.3 billion still in circulation.

     

    http://bit.ly/Nz3RMq
    18 Jul 2012, 12:07 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » I added the latest 10 year bond yield curves from various EU countries at the bottom of the Instablog... Spain is now well over 7%.
    20 Jul 2012, 03:09 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » According to information obtained by SPIEGEL, Senior IMF officials have told the Brussels EU leaders that the IMF was no longer willing to provide additional funds for Greece. http://tinyurl.com/ckq...
    ---
    Don’t know yet if this is just another pawn move...
    22 Jul 2012, 03:56 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    The question is who is willing or even able to fund the IMF!!! I think they are seeing the handwriting on the wall concerning new funds. There aint any. JMHO
    22 Jul 2012, 04:05 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Guns, what do you think gold will do on a Greek default? I would think the dollar will pop, but what about gold?
    22 Jul 2012, 04:10 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Dollar will pop and gold will probably remain flat for dollar but rise for other currencys but that is assuming a normal market. WE DONT HAVE THAT.....WE HAVE MANIPULATION!!!

     

    So who really knows what the hell will happen. Check out the investing for dummies on QC or ZH.
    22 Jul 2012, 04:47 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    OK, my take...

     

    Der Spiegel is a notoriously hard left rag (think "National Enquirer backs Voldermort"). The source is suspect, particularly since it has a spotty history with Brussels. With prospects of nailing the despised current center-right German government in the upcoming elections, der Spiegel is literally drooling at the prospect of anything which resembles bad news for Greece (as long as the situation can be spun to help "their" side in the elections).

     

    Plus the EU bureaucracy should NOT be confused with the folks calling the shots in the EZ, ie, Germany and France.

     

    Still...

     

    Assuming the IMF has issued such a cut and dried "NO!", which I find totally out of character, it won't be because they are tapped out.

     

    Finally, further currency juggling for Greece will occur within the current framework, which is all waiting on the Germans to sort out their position.
    22 Jul 2012, 08:44 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Germany is saying "no" also. Its looking like its time to get the fork ready.

     

    “If Greece doesn’t fulfill those conditions, then there can be no more payments,” German Vice Chancellor Philipp Roesler told broadcaster ARD yesterday, adding that he is “very skeptical” Greece can be rescued and that the prospect of its exit from the monetary union “has long ago lost its terror.”
    23 Jul 2012, 07:30 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » And...
    Bloomburg: The Balearic Islands and Catalonia are among six Spanish regions that may ask for aid from the central government after Valencia sought a bailout, El Pais reported.

     

    Castilla-La-Mancha, Murcia, the Canary Islands and possibly Andalusia are also having difficulty funding themselves and some of these regions are studying plans to tap the recently created emergency-loan fund that Valencia said it would use yesterday. Spain created the 18 billion-euro ($23 billion) bailout mechanism last week to help cash-strapped regions even as its own access to financial markets narrows.
    22 Jul 2012, 04:07 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    This is just starting.....I think its going to get interesting really fast.
    22 Jul 2012, 04:48 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Here is the article on why its going to get worse.

     

    http://bit.ly/MCVsvR
    22 Jul 2012, 04:56 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    04:25 am and the markets look bad this morning. Really bad. Here we go for the week possibly but the manipulators will be hard at work later today I am sure. Things get so comical once Washington wakes up.
    23 Jul 2012, 04:29 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    I am going to Germany later this year for a red stag hunt and trout fishing in Slovakia. It seems its getting cheaper by the day. I am just hoping that I do not have to fight my way to the stream and woods as things continue to fall apart over there.
    23 Jul 2012, 04:35 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Now that the IMF has said "NO MORE MONEY TO GREECE" August 20th is going to be a big event. I wonder how the leadership "All the useless idiots worldwide" are going to spin this. I am actually looking forward to seeing their response......errrr.... lies actually.

     

    Sick humor.......I know!!! I have become so jaded.......disgusted....
    23 Jul 2012, 04:50 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Italy is teed up and ready to follow Spain.

     

    http://bit.ly/OiZZ2T

     

    Banks Short selling ban re-instated.

     

    http://bit.ly/Oj01rv
    23 Jul 2012, 07:46 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » You beat me to it Guns!
    23 Jul 2012, 07:59 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Wasn't racing. Just could not pass on this news. Today/this week is not looking to good.
    23 Jul 2012, 08:14 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » The dominos are starting to bump into one another.
    23 Jul 2012, 08:19 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Isn't that what happens just before they fall.
    23 Jul 2012, 08:21 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Italy:
    La Stampa reports there are now ten major Italian cities at risk of an imminent financial collapse. Italian yields now at 6.34%.

     

    And... Italy stocks dive 5% while Italian Regulator Reintroduces Financial Stock Short Selling Ban

     

    From Consob: In view of recent trends in the market, Consob has reinstated the prohibition of short selling securities of the banking and insurance sectors listed in the annex.

     

    The measure takes effect from 13:30 pm today, July 23, 2012, and remains in force throughout the week until 18:00 pm Friday, July 27.
    ----
    Consob is Italy's equivalent of the SEC
    23 Jul 2012, 07:58 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Spain Follows Italy In Banning Short Selling.
    23 Jul 2012, 08:47 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    It will probably be EZ wide before long. Every bank will take a hit if any one defaults.
    23 Jul 2012, 08:52 AM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    The French will block shorts, too...

     

    The Germans?

     

    Not sure.
    23 Jul 2012, 09:11 AM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    In 1893 Richter predicted that Germany would one day be socialist, and they would have to build a wall to prevent people from escaping (Berlin wall anyone?).

     

    At any rate the principal is very simple, people try to escape the oppression that "experts" managing an economy always create. Capital is just stored labor. Labor is the only means you basic human capital (your body) can utilize to effect survival. Thus, if you think about it, the assets your body creates via the labor expended by your body, are just an extension of your body.
    23 Jul 2012, 10:30 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    So I might as well give up on trying to lose weight and save money at the same time?!
    23 Jul 2012, 12:38 PM Reply Like
  • optionsgirl
    , contributor
    Comments (5202) | Send Message
     
    Axel Merk on Spain:
    http://bit.ly/OjskG1
    23 Jul 2012, 01:23 PM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2743) | Send Message
     
    Thanks OG, a nice summary of Spain's slide down the "debt quality" hill. Next stop, the "pit of insolvency"? This is really depressing.
    23 Jul 2012, 02:47 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Moody's Changes Aaa-Rated Germany, Netherlands, Luxembourg Outlook To Negative.
    ---
    Moody's?? Their credibility is dead of course, but it's very unusual for Moody's to be first at anything. Perhaps the payoffs were not sent....
    23 Jul 2012, 05:22 PM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2743) | Send Message
     
    >FPA: More likely the players on the opposite side outbid those issuing bonds to get a lower rating. You can make money both ways, ya know ;-)
    23 Jul 2012, 08:22 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Or Moodys knows the terms of a pending bailout!!
    24 Jul 2012, 09:02 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » July 24, 2012 Greece seen missing eu/imf debt reduction targets, further debt restructuring necessary - eu officials.
    ---
    No kidding. The inclusion of imf may be a hidden clue. There is no way Greece can hit new targets by the time for the next tranche . There may not even be time to generate the new targets by that time. So is this a way to provide time, or is it what it seems?
    24 Jul 2012, 02:20 PM Reply Like
  • tripleblack
    , contributor
    Comments (13581) | Send Message
     
    I believe they will get more time, and in the end, easier targets to hit...

     

    Though the reason for this will lie with Spain and Italy rather than from an inherent desire to help Greece.

     

    Even with my loose estimate of things, the chance that Greece will simply start digging in and refusing to follow the guidelines is high.
    24 Jul 2012, 04:11 PM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    An item from my daily email blurb.

     

    "Greece will likely need more debt restructuring, EU officials visiting Greece tell Reuters. One anonymous official told the news service that "Greece is hugely off track" and "the debt sustainability analysis will be terrible." Greece appears to be contracting at 7%, not the 5% assumed. The statement should not come as a significant surprise, as it seems to simply confirm what everyone long expected. However, there does not appear to be the political will for another Greek bailout at the moment. With the next €31 billion tranche due in September and with Spain growing worse, the troika may not want to, or be able to, address the issues in Greece now."
    25 Jul 2012, 12:30 PM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    This one's my favorite.

     

    "Spanish bonds are rallying on speculation that the European Bailout funds will be granted bank licenses, which would increase their firepower by allowing them to access the ECB’s borrowing window. Earlier this morning, Spanish 2-year yields had spiked as high as 6.95%, raising concerns that Spain was essentially cut off from the bond market. The 2-year is now in 45 bps from its intra-day high to 6.50%."

     

    My take is. We won't print euros for the right pocket, but we will print them for the left pocket. Spanish yields go down, US treas yields go up, but the Euro vs the dollar goes down. Its like squeezing jello to reduce the size of the jello. It doesn't get smaller, it just leaks out somewhere else.

     

    Their problems won't be solved until the fixed costs their regulatory environments create are reduced to being commensurate with what their technological levels can support.
    25 Jul 2012, 12:34 PM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    The jello (debt) is constantly being added to as well. Squeezing will not work they need to start cutting. Problem is they can not decide who will not be paid since it results in a cascading event that eventually comes full circle bringing the suffering right back upon themselves. No one is going to walk away unschathed and they are reluctant to take their pain which means the pain level (citizen suffering) is going a lot higher. Fools in the EU look just like the ones in Washington.

     

    Obviously politicians all have the same slimy skin the world over.
    25 Jul 2012, 03:05 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Overnight, global July PMI data was released. Out of the 23 countries that have reported so far, sixteen of the PMIs indicate that their manufacturing sectors are contracting – indicated by a PMI reading below 50. Countries with contracting manufacturing sectors: Norway, Greece, Poland, Spain, Czech republic, Netherlands, Italy, Taiwan, France, Turkey, Germany, Japan, Korea, Austria, UK, Australia.
    1 Aug 2012, 11:57 AM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
     
    Thx FPA.

     

    Not a surprise.
    1 Aug 2012, 12:04 PM Reply Like
  • optionsgirl
    , contributor
    Comments (5202) | Send Message
     
    China too!
    1 Aug 2012, 02:11 PM Reply Like
  • jakurtz
    , contributor
    Comments (1960) | Send Message
     
    Frankly, with PMI data around the world where it is, job growth in the us for three months straight between 60-80k, and consumer spending dropping I am not sure how the data can get much worse before the Fed calls in the cavalry. They can't wait until the second recession hits (even though we are still in the first one).
    1 Aug 2012, 02:15 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
     
    Depends on who offers Bernanke a better deal (job security and benefits) going forward...

     

    Elections have swung on the economy for a long time. Bush the first lost to Clinton because the Fed waited to ease too long.

     

    Not sure which way Bernanke is feeling is better for him, but he gets a role in this election whatever action or inaction he takes.
    1 Aug 2012, 02:27 PM Reply Like
  • SMaturin
    , contributor
    Comments (2268) | Send Message
     
    The when may have something to do with the election. Do the banksters want four more years of hopium or do they want one of their own in the White House?

     

    The answer may be hidden in plain sight here, if you scroll down to top contributors and top industries: http://bit.ly/Nbd64I
    1 Aug 2012, 02:28 PM Reply Like
  • H. T. Love
    , contributor
    Comments (19488) | Send Message
     
    "Bush the first lost to Clinton because the Fed waited to ease too long".

     

    Correct me if I'm wrong, but I thought it was because he caved after saying "Read my lips - no new taxes".

     

    I remember it vividly and it was the only thing he did that I recall caused me to lose a certain amount of respect for him.

     

    HardToLove
    1 Aug 2012, 03:43 PM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    Raising taxes is like raising FF rates. Bush basically engaged in less accommodative action, thus causing the deflation of asset prices, and bringing on a recession as people pulled in their spending habits to compensate for the loss of wealth.

     

    BB is basically trying to do the reverse by getting the wealth factor up. The problem he has is Obamacaretax and Dodd Frank, etc, offset the wealth effect with the uncertainty of higher costs they create. So BB is trying to boost the wealth effect with monetary policy, and fiscal policy is negating his efforts. The result is the malaise we are seeing in all the economic and job data.
    1 Aug 2012, 03:53 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Could be fireworks tomorrow...
    Via Ruters - Draghi is planning concerted action using both the ECB and the future euro European Stability Mechanism (ESM) tomorrow to purchase sovereign debt from Spain or Italy in order to help push down borrowing rates for those two countries. The ECB's role would be a stopgap until the ESM is approved by the German constitutional court, which of course may never happen.
    There is one problem: its highly doubtful that the German government is going to agree with Draghi's approach. The Bundesbank also is likely to reject the idea.
    1 Aug 2012, 08:22 PM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    If it does play out that way, then I say we are looking at another LTRO effect (like a QE effect). It should produce a risk on effect (ie treasury yields back up and equities back up). Then when the German court doesn't deliver, fear sets back in, and it becomes risk off. The extent of the effect will depend on the size of the operation. 300 billion? 500 billion? 700 billion?
    1 Aug 2012, 08:33 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Hold on to your hat... the first LTRO was $1.3 trillion. Big money is needed here because this is to support Spain and Italy funding needs.
    There is also the subordination issue that is going to come up again in the absence of an explicit statement it will be assumed by private capital that ECB is senior.
    1 Aug 2012, 08:42 PM Reply Like
  • jhooper
    , contributor
    Comments (8059) | Send Message
     
    From what I see so far Draghi is turning out to be a real drag.

     

    I keep getting the picture that his early comments of "believe me it will be enough" was a guy at a dinner party that has gotten way too buzzed, and he keeps slurring all his words and when he finishes saying "believe me it will be enough" he collapases face down into his soup.

     

    Today, he has sobered up and he is all clean and pressed, and forgotten his words at the dinner party.

     

    Anyway, I will have to wait before I can make any more money off of ECB or the Fed.
    2 Aug 2012, 09:48 AM Reply Like
  • doubleguns
    , contributor
    Comments (9691) | Send Message
     
    Draghi turns out to be all talk no walk.
    2 Aug 2012, 10:51 AM Reply Like
  • DRich
    , contributor
    Comments (4819) | Send Message
     
    >doubleguns ... Judging by market action today, they believe the talk and aren't really interested in real movement. It's still early in the day ... but no sign that waiting for September is disappointing.
    2 Aug 2012, 10:58 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Draghi ... All hat no cattle.
    2 Aug 2012, 12:28 PM Reply Like
  • optionsgirl
    , contributor
    Comments (5202) | Send Message
     
    http://bit.ly/OIDk3y
    2 Aug 2012, 12:37 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » New concentrator: http://tinyurl.com/chs...
    2 Aug 2012, 08:47 PM Reply Like
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