Euro And Stocks Fall Lower On Fears Of European Sovereign Debt And Banking Collapse As Emergency Session Fails
Financial market report for June 15, 2011
1) … The Euro, and stocks fell lower on fears of European sovereign debt and banking, EUFN, collapse as Emergency Session of European Leaders fails to provide a seigniorage accord for Greece.
Bloomberg reports Euro-Area Accord on New Greek Aid May Be Delayed to July. Talks on a second Greek bailout may drag into July, casting doubt on a payment due early next month, as euro-area finance chiefs struggle to break a deadlock over how to enroll private investors in the rescue. The finance ministers failed to reconcile a German-led push for bondholders to shoulder part of the cost of a new Greek aid package with European Central Bank warnings that such a move might constitute a default. With consensus elusive before the target date of a June 23-24 leaders’ summit, finance ministers will convene again on June 19 in Luxembourg, a day earlier than planned. “We have to proceed very cautiously,” Luxembourg Finance Minister Luc Frieden told reporters after an emergency meeting in Brussels today, adding that “very clearly we have to go into that direction” of a delay to next month on a new aid package from the European Union and the International Monetary Fund. “Several options -- from the IMF, as well as from the European Central Bank and from the European Commission -- still have to be studied.” (Hat Tip to Between The Hedges which reports The Greece sovereign cds is soaring +9.65% to 1,761.32 bps, the Spain sovereign cds is rising +5.72% to 288.67 bps, the Italy sovereign cds is rising +6.46% to 180.0 bps, the Portugal sovereign cds is rising +7.78% to 794.17 bps, the Ireland sovereign cds is gaining +5.82% to 767.67 bps and the UK sovereign cds is gaining +4.46% to 65.81 bps. The Spain and UK sovereign cds have broken out technically. The Greece, Ireland and Portugal sovereign cds are hitting new record highs again today.)
Zero Hedge reports Greek Ruling Party Members Rebel: Another MP to Vote Against Bailout So "He Can Safely Walk The Streets" and Greece's Misery Index. (graph) Hat Tip To Between The Hedges
Stephen Castle of the New York Times reports Mario Draghi Holds ECB Line Against Restructuring For Greece
Yahoo Oil falls below $99 amid mixed US economic signals
Yahoo China increases holdings of US Treasury securities
Yahoo UK government to back separation of banks
Reuters EU Commission readies voluntary debt swap plan
EconomicPolicy Journal Moody's May Downgrade French Banks. Moody's announced late yesterday that it may downgrade France's BNP Paribas, Société Générale and Crédit Agricole due to their holdings of Greek. It also said it was looking at other banks for possible downgrades. debt and, the French want the IMF to bailout Greece and the other PIIGS for the benefit of their banks. Since the U.S. continues to be the largest contributor to the IMF (17.3%), an IMF bailout of the PIIGS means the largest portion of an IMF bailout will be borne by U.S taxpayers
SF Gate The risks of sovereign bonds; chart of world government bonds shows that sovereing debt has turned parabolically lower BWX
2) … Countries falling lower included
3) … Stocks falling lower included
EUFN … European Financials -4.3
COPX … Copper Mining -3.8
FLM … Design and Build -3.5
GEX … Alternative Energy -3.3
DOO … International Dividend -.3.3
VT … World Stocks -2.5
VSS …. World Small Cap Stocks -2.8
KOL … Coal -3.2
ALUM … Aluminum -3.7
XLE … Energy Producers -2.9
WOOD … Timber and Paper -2.9
KIE … Insurance -2.9
URA … Uranium -3.0
4) … The fall lower in the world banks reflects the failure of Neoliberalism’s seigniorage.
Emerging Market Financials, EFN
Brazil Financials, BRAF
Banco de Chile, BCH
South Korea Bank, KB Financial, KB
India Bank, HDFC Bank, HDB
5) … Inflation Destruction sent Commodities, DJP, falling lower included Oil, BNO, USO and DBC, Timber, CUT, Agricultural Commodities, JJA, and base metals DBB causing commodity currencies, CCX, to fall lower.
Bloomberg reports Crude Oil Falls on New York Manufacturing Slowdown and Europe Debt Crisis. Crude oil fell after manufacturing in New York unexpectedly contracted and concern grew that Europe’s debt crisis will deepen, reducing economic growth and fuel demand. “Crude oil is finding it hard to stay near $100 with all of the negative economic news,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. Crude oil for July delivery fell $1.60, or 1.6 percent, to $97.77 a barrel at 12:21 p.m. on the New York Mercantile Exchange. Prices are up 27 percent from a year ago. “We’ve had a slew of negative economic data, which is a bad signal for fuel demand in the months ahead,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The Greek crisis continues to overhang the market. This points to lower European demand and has triggered a flight to the dollar.” Demand for distillate fuel, a category that includes diesel and heating oil, tumbled 5.2 percent to 3.6 million barrels a day, the lowest level since January, the report showed.
6) … Gold, GLD, is continuing to be seen as as a safe haven investment. The chart of gold shows that it is in the middle of an Elliott Wave 3 up; notice how it broke out when the seigniorage of Neoliberalism failed on April 11, 2011.
7) ... As bond, BND, appear to be topping out 20 Yr Treasury Bull 3X Shares ---TMF, TMF, is an excellent short selling opportuntiy as in a bull market one buys one dips but in a bear market one sells on rises.
7) Between the Hedges reports DigiTimes relates DRAM Contract Prices Face Continuing Downward Pressure, Says DRAMeXchange. With PC end-user demand remaining weak and slow growth in DRAM content per PC, DRAM contract prices are likely to further slip in the second half of June 2011. DRAM Chip Manufacturer: Micron Technology, MU fell 3.9% lower today.
8) … Greek protests turned violent as people expressed anger over the loss of their sovereignty. Open Europe reports Greek protesters extend their repertoire: “Nothing can stop us – We will never pay!”.
The Greeks brought today on with electing a pure Socialist government in which most all jobs are government jobs. Greece before the Euro was a pony-and-cart economy. Then with the fall in its sovereign debt interest rates with the advent of the Euro, German and France banks loaded up on Greek sovereign debt and invested in Greek banks. The standard of living and disposable income rose dramatically, especially with the growth in “the government worker” under Socialism. Most every job was a government job, even those at the electric company and hospital. But few paid taxes, as it was the national pass-time to avoid taxes. And bills to international pharmaceutical companies have gone unpaid for years. So the bill for such extravagant living is now due; extreme austerity is at the door.
Out of the current political vacuum and a soon coming Götterdämmerung, that is an investment flameout, a Euorpean Chancellor, The Sovereign, and a Banker, The Seignior, will rise to power. The word will, and way of these two, plus strong economic governance provided by European Framework agreements will provide a new seigniorage to replace Neoliberalism’s failed seigniorage. The debt accumulated under Neoliberalism must and will be applied to every man, woman and child.
Socialism is a failed experiment. Greece having lost its debt sovereignty, is no longer a sovereign nation state. Those living in Greece are no longer residents of a nation; but rather citizens living in a continental trading group. Are not those living in Greece now beholding to others superior to them for their economic well being? Do the Greeks not have responsibilities to the sovereigns who provided them seigniorage?