Financial Market report for October 10, 2011
1) … Stocks rose today on rising currencies and a falling US Dollar.
Shares of Greek Banks plummeted in overnight trading on the growing awareness of Greek Default. Reuters reported today that Greece activates rescue fund to save Proton Bank. The Financial Mirror reported last week that National Bank of Greece, NBG, EFG Eurobank, EUROB.AT, Alpha Bank, ALPHA.AT, and Piraeus Bank, TPEIR.AT, “are exposed to significantly heightened risks as a result of deterioration in Greece's creditworthiness and Greek depositors' perceptions of a possible government debt restructuring. While European Financials, EUFN, rallied from its strongly oversold position, and
The World stocks, ACWI, and world small cap stocks, VSS, rose. as the risk trade was on today, as reflected in the US Dollar, $USD, falling from an overbought position to close at 77.50, as well as the currency demand curve, RZV:RZG, rising.
The risk trade took the commodities, DBC, higher, on rising commodity currencies, CCX. Timber, CUT, and Oil, USO, rose today, which caused wood products, WOOD, energy services, OIH, and IEZ, and wildcatters, WCAT, to move higher. Copper miners, COPX, Aluminum miners, ALUM, Uranium Miners, URA, Coal Producers, KOL, Metal Manufacturers, XME, Fertilizer producers, SOIL, Industrial Metal producers, CRBI, rose strongly. Base Metals, DBB, rose, on the higher commodity currencies, CCX. Natural Gas, GAZ, and UNG, finally rose a tiny amount. The ongoing Yahoo Finance chart of WCAT, URA, COPX, ALUM, KOL, XME, SOIL, CRBI, WOOD shows today’s risk trade. The chart of basic materials, relative to commodities, XLB:DBC, shows today’s currency rally drawing socks higher.
US stocks, VTI, continued rising from a technically oversold position with the Dow, DIA, Nasdaq 100, QTEC, and the S&P, SPY, rising. It was rising world currencies, DBV, that took world stocks, ACWI, and world small cap stocks, VSS, higher. Emerging market currencies, CEW, took emerging market stocks, EEM, Indonesia, IDX, and Thailand, THD, and emerging market bonds, EMB, higher.
Morgan Stanley, MS, Investment Bankers, KCE, Financials, XLF, European Financials, EUFN, Emerging Market Financials, EMFN, and Banks, KRE, were today’s leading sector, rising strongly from their oversold positions. A moneyness trade, that is a credit trade, is seen in credit provider America Express, AXP, education planning and financing services firm, Nelnet, NNI, credit provider Capitol One Finance, COF, student lender, SLM, debt collector, Encore Capital Group, ECPG, and the Russell 2000, IWM, rising today. The chart of KCE, AXP, NNI, COF, SLM, ECPG, shows today’s moneyness trade.
Greatly oversold stocks, the ones preferred by short sellers, rose strongly; these included solar, TAN, Canadian energy, ENY, high end dividend stocks ABCS, small cap real estate, ROOF, and homebuilders, ITB, gaming, BJK, leveraged buyouts, PSP, airlines, FAA, and shipping, SEA …The ongoing Yahoo Finance chart of TAN, ENY, ABCS, ROOF, ITB, BJK, PSP, FAA, SEA shows today’s rise in hot money stocks.
Italy, EWI, soared above its 200 day moving average. Germany, EWG, France, EWQ, and the European shares, VGK, rose to 200 day moving average. Sweden, EWD, rose to its 200 day moving average, on a rising Swedish Krona, FXS; likewise for the Nordic Countries, GXF, rising on their currencies. Russia, RSX, rose on a rising Ruble, FXRU. South Africa, EZA, rose on a rising South African Rand, SZR, Mexico, EWW, rose on a rising Mexico Peso, FXM. The UK, EWU, rose on a rising British Pound Sterling, FXB. Switzerland, EWL, rose on a rising Swiss Franc, FXF. Canada, EWC, rose on a rising Canadian Dollar, FXC. New Zealand, ENZL, rose on a rising New Zealand Dollar, BNZ. Rising currencies, constituted a yen carry trade rally, and sent small cap country shares soaring as is seen in the chart of EWI, HAO, EPOL, RSXJ, BRF, SCIN, SKOR, KROO, GERJ. And rising currencies drove the BRICS, EEB higher with with Brazil, EWZ, Russia, RSX, India, INDY, China Materials, CHIM, China Financials, CHIX, and China Industrials, CHXX, rising
The move in many currencies was quite strong; but the Brazilian Real, BNZ, turned slightly lower: FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, BZF, CEW, CCX , FXRU, all rose strongly
Apple, AAPL, rose after reporting that first-day orders for its new iPhone topped 1 million. The phone goes on sale Friday. Netflix, NFLX, rose as the NYT reports Netflix Abandons Plan to Rent DVDs on Qwikster. Alcoa, AA, will become the first major U.S. company to report third-quarter results after the closing bell Tuesday; the aluminum maker's stock rose. Reuters reports Sprint shares dive on cash worries. Build A Bear Workshop, BBW, rose strongly as the company announced Build-A-Bear Workshop Furry Friends is now available in Kinectimals Now with Bears Using Kinect for Xbox 360 .
A number of retailers rose strongly, these included COH, SBH, BBW, ANF, DSW, ANN, RL.
2) … The limits to complexity have been reached with the ongoing taxpayer funded bailouts.
The Automatic Earth describes the series of resorts use by European Investment Banking Behemoth. Dexia, the Belgian bank that scored highest on the EU "stress test" earlier in the year and was the first to implode, has once again reminded us that the banks' first resort is the same as their second resort and every other resort up until their last resort: taxpayer funded bailouts.
The problem for the panhandling elites is that these bailouts are not as simple and as much of a given as they used to be, which was evident in the decision over whether to bail out Dexia and to what extent. The bailout issue was finally “resolved” today as France and Belgium agreed to nationalize 100% of Dexia’s operations, which is 100% against the interests of Belgian and French taxpayers. The plan must still be submitted to Dexia’s Board of Directors, who are sure to approve of any public bailout they can get their greedy hands on. Reuters reports France, Belgium, Luxembourg agree to Dexia rescue.
It’s not that Belgium may be downgraded, but that it will be downgraded if the deal goes through, and France’s ratings may come under some pressure as well. No matter what happens, Dexia is just the first of many European banks to pass the faux “stress tests” with flying colors and subsequently implode within months, including major French banks. When those banks reach the edge of bankruptcy and need a public bailout, there is no way France will come out of that with their AAA bond rating intact, and a French downgrade will feed into the need for even more bailouts. Since the implosion of Bear Stearns and Lehman Brothers nearly three years ago, nothing has changed. The limits to complexity have been stretched out a bit, but now they are well poised to snap back even harder.
3) … The Automatic Earth rovides the following sovereign distress news items in its article Occupy Debit Card Fees.
3A) … YouTube relates IMF advisor says we face a worldwide banking meltdown.
3B) … Maria Marquart, of Spiegel quotes Richard Sulik as saying The greatest threat to Europe is the Bailout Fund.
Only two countries, Malta and Slovakia, have yet to ratify the expansion of the euro bailout fund. Its fate may be in the hands of a minor Slovak party headed by Richard Sulik. In an interview, the politician explains why he hopes the fund will fail and what he sees as the only way to save the euro.
Spiegel Online: Mr. Sulik, do you want to go down in European Union history as the man who destroyed the euro?
Richard Sulik : No. Where did you get that idea?
Spiegel Online: Slovakia has yet to approve the expansion of the euro backstop fund, the European Financial Stability Facility (EFSF), because your Freedom and Solidarity (SaS) party is blocking the reform. If a majority of Slovak parliamentarians don't support the EFSF expansion, it could ultimately mean the end of the common currency.
Sulik: The opposite is actually the case. The greatest threat to the euro is the bailout fund itself.
Spiegel Online: How so?
Sulik: It's an attempt to use fresh debt to solve the debt crisis. That will never work. But, for me, the main issue is protecting the money of Slovak taxpayers. We're supposed to contribute the largest share of the bailout fund measured in terms of economic strength. That's unacceptable.
Spiegel Online: That sounds almost nationalist. But, at the same time, you've had what might be considered an ideal European career. When you were 12, you came to Germany and attended school and university here. After the Cold War ended, you returned home to help build up your homeland. Do you care nothing about European solidarity?
Sulik: If we now choose to follow our own path, the solidarity of the others will also crumble. And that would be for the best. Once that happens, we would finally stop with all this debt nonsense. Continuously taking on more debts hurts the euro. Every country has to help itself. That's very easy; one just has to make it happen.
Spiegel Online: What will you do should the EFSF reform pass despite your opposition?
Sulik: For Slovakia, it would be best not to join the bailout fund. Our membership in the euro zone, after all, was not conditional on us becoming members of strange associations like the EFSF, which damage the currency.
Spiegel Online: If the euro only causes problems, why doesn't Slovakia's government just pull the country out of the euro zone?
Sulik: I don't see the euro as the problem. It's a good project. Everyone involved can benefit from it -- but only if they stick to the ground rules. And that's exactly what we're demanding.
Spiegel Online: Which ground rules should we be following?
Sulik: We have to observe three points: First, we have to strictly adhere to the existing rules, such as not being liable for others' debts, just as it's spelled out in Article 125 of the Lisbon Treaty. Second, we have to let Greece go bankrupt and have the banks involved in the debt-restructuring. The creditors will have to relinquish 50 to perhaps 70 percent of their claims. So far, the agreements on that have been a joke. Third, we have to be adamant about cost-cutting and manage budgets in a responsible way.
Spiegel Online: Many experts fear that a conflagration would break out across Europe should Greece go bankrupt and that the crisis will spill over into other countries, including Portugal, Spain and Italy.
Spiegel Online: You're not afraid that a Greek insolvency could mark the beginning of the crisis instead of the end?
Sulik: No. There's not going to be a domino effect along the lines of "first Greece, then Portugal and finally Italy." Just because one country goes broke doesn't mean the other ones automatically will.
Spiegel Online: Nevertheless, banks could run into significant problems should they be forced to write down billions in sovereign bond holdings.
Sulik: So what? They took on too much risk. That one might go broke as a consequence of bad decisions is just part of the market economy. Of course, states have to protect the savings of their populations. But that's much cheaper than bailing banks out. And that, in turn, is much cheaper than bailing entire states out.
Spiegel Online: Does one of your reasons for not wanting to help Greece have to do with the fact that Slovakia itself is one of the poorest countries in the EU?
Sulík: A few years back, we survived an economic crisis. With great effort and tough reforms, we put it behind us. Today, Slovakia has the lowest average salaries in the euro zone. How am I supposed to explain to people that they are going to have to pay a higher value-added tax (VAT) so that Greeks can get pensions three times as high as the ones in Slovakia?
Spiegel Online: What can the Greeks learn from the reforms carried out in Slovakia?
Sulik: They have to make cuts in the state apparatus. The Slovaks could also give them a few good ideas about the tax system. We have a flat tax when it comes to income taxes. Our tax system is simple and clear.
Spiegel Online: One last time: Do you honestly believe the euro has any future at all?
Sulík: I believe the euro has a future. But only if the rules are followed
3C) ,.. Spiegel reports The Ticking Euro Bomb: How a good Idea became a tragedy.
The Greek crisis has revealed why the euro is the world's most dangerous currency. The euro was built on a foundation of debt and trickery, where economic principles were sacrificed to romantic political visions. The history of the common currency is the story of a good idea that turned into a tragedy of epic proportions.
The true problems were not addressed in the wake of the Jan. 1, 2002 introduction of the euro. Despite all the declarations of intent in Maastricht, the 12 new euro countries drove up their debt by more than €600 billion in the five years of preparations for the introduction of the euro. By the end of 2002, they had a combined debt of €4.9 trillion, with Italy's debt alone amounting to €1.3 trillion.
When the euro became a real currency, Rogoff had just taken the position of chief economist at the International Monetary Fund (NYSE:IMF), and he was teaching at Princeton when the euro began to take shape in the 1990s. "It was something new at the time," says Rogoff. "It was a great insight." The only problem, as soon became apparent, was that the Europeans had a tendency to betray their own ideals.
Spiegel reports The Ticking Euro Bomb:- How the Eurozone ignored its own rules. After they joined the euro zone, the countries of southern Europe suddenly discovered they could borrow money at German-style rates, and any hope of sorting out their dodgy finances vanished. But it was France and Germany who set the worst example, when they broke the euro-zone rules they had forced on others.
4) … A two fold sovereign authority is coming to rule the EU.
Governments have been the largest borrowers. And under Neoliberalism they have been the safest originators of debt . The US Federal Reserve, the Central Bank of the United Kingdom, and other central banks, with the exception of the ECB, create money by issuing Government Treasury Notes and Bonds. The creation of government debt is one of the three attributes of sovereign authority, it being able to create money, levy taxes, and declare war. Hence the term sovereign debt.
Sovereign authority, many times comes from constitutional authority, yet sovereign authority to create money came to the US Federal Reserve through a 1913 coup d etat.
In much the same way, a European coup d etat, is being effected by Angela Merkel and Nicolas Sarkozy as they called for a true European economic government in their joint August 2011 communique; and their October 9, 2011 call for bank reorganization and announcement of a new vision for Europe. Such can only mean that banks will eventually be nationalized and that state corporatism, that is statism will rule the Eurozone. Between The Hedges relates Handelsblatt reports The German Free Democratic Party's finance spokesman, Frank Schaeffler, said the state shouldn't help to recapitalize struggling banks, citing an interview. Failing banks should be managed in an orderly insolvency procedure, Schaeffler said. The FDP is the coalition partner of Chancellor Angela Merkel's Christian Democrats.
Bloomberg reports Merkel, Sarkozy Pledge Bank Recapitalization. Angela Merkel and Nicolas Sarkozy, racing to stamp out the euro debt crisis threatening to engulf the financial system, gave themselves three weeks to devise a plan to recapitalize banks, get Greece on the right track and fix Europe’s economic governance. “By the end of the month, we will have responded to the crisis issue and to the vision issue,” the French president said in Berlin yesterday at a joint briefing with the German chancellor before they dined at her office. Under rising pressure to defuse turmoil that’s raged for 18 months, and facing growing concern Greece is headed to a default, Merkel said European leaders will do “everything necessary” to ensure that banks have enough capital. Sarkozy said they would deliver a plan by the Nov. 3 Group of 20 summit. “Maybe they’re still running one step behind, but they are at least discussing the right things,” Carsten Brzeski, an economist at ING Group in Brussels, said in a phone interview.
This ongoing coup d etat will effect two new sovereign authorities: a Federal Europe and a Federal President. This Federal Europe, will be more than a United States of Europe, it will eventually be a Fiscal Union, have a European Bank of sorts, and a Federal, that is common European Treasury, as well as a President of the EU, possibly Mr. Herman Van Rompuy. The Federal President will be accompanied by a Federal Banker. Between The Hedges relates that Frankfurter Allgemeine Sonntagszeitung reports German Finance Minister Wolfgang Schaeuble said the extent of the debt reduction Greece needs to make may have been underestimated, citing an interview. There's a high risk that the debt crisis will intensify and spread, Schaeuble said. He said euro area governments must ensure that banks have enough capital to withstand any losses they incur in the event of a Greek debt restructuring. Schaeuble also rejected the suggestion that the EFSF could be given a bank license so that it could borrow from the ECB, saying that would amount to the monetization of government debt.
The Sovereign’s and the Seignior’s power will be diktat and it will provide both a new moneyness, that is a new seigniorage, and credit. Whereas under Neoliberalism, seigniorage came via the securitization and financialization of debt, under Neoauthoritarianism, seigniorage, will come via the word, will and way of the Sovereign and the Seignior. Neoliberalism, featured wildcat finance, a Doug Noland term, neoauthoritarianism will feature wildcat governance, where leaders bite, rip and tear one another and the most fierce comes out on top. Neoliberalism provided prosperity for many, but Neoauthoritarianism will provide austerity measures and debt servitude for all.
Despite William Lyon Mackenzie King warning, published in BATR, Totalitarian Collectivism is the way of the future: Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of sovereignty of Parliament and of democracy is idle and futile ... Once a nation parts with control of its credit, it matters not who makes the nation’s laws. .. Usury once in control will wreck any nation.
There is a failure of credit generating infrastructure in the Eurozone as Reuters reports Dexia has a global credit risk exposure of $700 billion, more than twice Greece's GDP, and its rescue has stoked investors' concerns about where other trouble spots may lie. The lender faced significant losses on its Greek government debt holdings, but, more significantly, was shut out of wholesale funding markets, which it was highly reliant on to finance its long-term loans to municipal borrowers. European banks have faced a significant deterioration in access to wholesale funding markets, which is likely to continue to drag on bank earnings, said Huw van Steenis, analyst at Morgan Stanley.
Emirates reports CDS at 16-month high on global concerns.
The days of Greek Socialism with its state worker system are coming to an end. In Greece, most erery household has at least one worker employed by the government; and that one has received this unionized job through patronage. The result is that pork abounds as there is no meritocracy. Greek culture is marked by an ethic of entitlement as the Constitution prohibits one from being terminated in his state job. Between The Hedges relates Welt am Sonntag reports Greece must undertake deeper reforms for its bailout to work, citing representatives of the so-called troika that is assessing whether the government is meeting the conditions of its rescue. "Greece is standing at a crossroads," Poul Mathias Thomsen, head of the International Monetary Fund's delegation in Thomsen, head of the IMF's delegation in Athens, was quoted as saying. "It's obvious that the program won't work if authorities don't take the path that requires much tougher structural reforms than those we've seen so far." The European Commission's representative on the troika, Matthias Mors, criticized the Greek government for taking too long to implement planned reforms, according to the German newspaper.
Europeans will no longer be citizens of a sovereign nation state, rather residents living in the EU under regional economic governance, as a true European economic government will emerge. Business leaders and government ministers will promote the interests of state corporatism, as they work for the security and prosperity of the region.
Angela Merkel and Nicolas Sarkozy are ambassadors of the 1974 Clarion Call of the Club of Rome to establish regional economic government in all of the world’s ten regions. The emergence of a Ten Toed Kingdom of regional economic government is at hand. Eventually ten kings will rise to rule in each of the ten world regions. This is simply the effective working of fate. Mankind has only had brief interludes of freedom, for example in the America from 1776 to 1860 when the Federal Government came to power through a terrible civil war. Fate has operated to provide great kings and diktat as history has unfolded. These have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, and George Bush, The Decider, ruling America with Unilateral Authority. The coming President of the EU will be one knowledgeable with the scheme of framework agreements. A leading individual for this position is Herman Van Rompuy, as he orchestrated the original Greek bailout, and as who the Daily Mail reports as saying, the age of the nation state is over and the idea that countries can stand alone is an ‘illusion’ and a ‘lie’. Whoever the EU’s king will be, he will have, and must have the quality of fierceness, as he will have a whole spectrum of angry people to deal with.
A credit evaporation was one of the causes of the failure of Europe’s Bear Sterns, Dexia. Bloomberg reports Belgium to Buy Dexia's Consumer Unit for $5.4 Billion. Belgium agreed to buy the local consumer-lending unit of Dexia SA (DEXB), ending a 15-year cross-border experiment with France after the European debt crisis deepened. The Belgian federal government will pay 4 billion euros ($5.4 billion) for the division and guarantee 60 percent of a so-called bad bank to be set up for Dexia’s troubled assets, Finance Minister Didier Reynders said at a press conference today in Brussels. The dismantling of Dexia, once the world’s leading lender to municipalities, became inevitable after concern over European sovereign debt holdings caused its short-term funding to evaporate. Dexia’s breakup, three months after it got a clean bill of health in European Union stress tests, brought the region’s banking crisis from the continent’s periphery to its center. “Dexia is not an isolated problem,” said Cor Kluis, an Utrecht, Netherlands-based analyst at Rabobank International who rates Dexia “reduce.” “The question for all investors in Europe is how politicians are going to handle this, and what they want to see is a coordinated and professional solution. That would be a good opportunity to restore calm.”
Yes, a calm, one before the storm of Sovereign Armageddon, which may come out of the Freedom and Solidarity Party’s refusal to reject the EFSF Monetary Authority. Bloomberg reports Slovak SaS Party Won't Back EFSF After Compromise Rejected. Slovakia’s ruling Freedom and Solidarity party won’t back the overhaul of the European bailout mechanism after Prime Minister Iveta Radicova rejected the party’s conditions for approval, a lawmaker said. The party, known as SaS, insists its three coalition partners agree to two conditions before it will back the enhancement of the euro region’s bailout fund, the European Financial Stability Facility, in a parliamentary vote Oct. 11, said Jozef Kollar, head of SaS’s parliamentary caucus. “If the solutions we have put forward aren’t accepted then we will not vote for the EFSF,” Kollar said in a debate on state Slovak Radio today. Slovakia and Malta are the only countries that haven’t yet ratified the key element in the European Union’s plan to prevent the region’s debt crisis from spreading. The Slovak row risks sinking the EU plan, which needs the unanimous consent of all 17 euro members to come into force. SaS is calling for the creation of an inter-party committee that would have a right to veto individual EFSF disbursements. It is also demanding that Slovakia doesn’t participate in the European Stability Mechanism, a permanent rescue vehicle set to come into force in 2013. SaS will negotiate “until the last minute” with its coalition partners, according to a statement posted on the party’s web site today. Smer, the largest opposition party, has said it won’t support the EFSF overhaul unless the government steps down.
Bloomberg reports Short Selling Rise Most Since '06 as Stocks Erase $11 Trillion. Investors are increasing bearish trades around the world by the most in at least five years, convinced the lowest valuations since 2009 will prove no barrier to losses after $11 trillion was erased from equities. Borrowed shares, an indication of short selling, climbed to 11.6 percent of stock last month from 9.5 percent in July, the biggest increase since at least 2006, according to information compiled for Bloomberg by Data Explorers, a London-based research firm. Trades that profit when Chinese equities decline have reached a four-year high and bearish bets in the U.S. are the most since 2009, exchange data show. Slowing economies are spurring short sellers after indexes in 37 out of 45 major countries tumbled 20 percent, the common definition of a bear market.
Bloomberg reports Green Europe Imperiled as Debt Crisis Triggers 46% Carbon Market Collapse. The European sovereign debt crisis that’s spread from Greece to Italy and is roiling the region’s banks now has another potential victim: energy policy. European emissions permits, needed by polluters from utilities to cement makers for each ton of the carbon dioxide they put in the atmosphere, slumped to their lowest in 2 1/2 years on Oct 4. An auction of permits by Greece, trying to avoid the euro area’s first default, worsened a glut of permits, UBS AG analyst Per Lekander said last week. Lower carbon prices discourage European utilities including EON AG and GDF Suez SA from investing in wind farms and solar plants that don’t need permits.
Neoliberalism featured the Milton Friedman Free To Choose Floating Currency Regime where as Neoauthoritarianism features the Beast Regime of regional economic government ruling in all of mankind’s seven institutions and ten world regions. Mr Friedman provided the vision for floating currencies; it liberated bankers and investors. Angela Merkel and Nicolas Sarkozy are providing a new vision; it will likely empower stakeholders in regional economic government. Robert Wenzel relates that Libertarian Lew Rockwell says Fascism is the system of government that cartelizes the private sector, centrally plans the economy to subsidize producers, exalts the police state as the source of order, denies fundamental rights and liberties to individuals, and makes the executive State the unlimited master of society. This describes mainstream politics in America today. And not just in America. It’s true in Europe, too. It is so much part of the mainstream that it is hardly noticed any more. Fascism also thrives as a distinct style of social and economic management. And it is as much or more of a threat to civilization than full-blown socialism. This is because its traits are so much a part of life, and have been for so long, that they are nearly invisible to us. If fascism is invisible to us, it is truly the silent killer.
A currency deflation bear market is responsible for taking basic materials lower and a credit deflation bear market is responsible for taking financials lower. Bespoke Investment Blog reports materials S&P materials is down 18% and S&P financials is down 26%.
Carry traded investing is unwinding taking Global Green, GRN, and US Basic Materials, IYM, down. Quantitative easing is exhausting taking Alternative Energy, GEX, Shipping, SEA, and Airlines, FAA, down. Sovereign crisis is rising taking banking KRE, down. As of the close of trading on Friday October 7, 2011, for the last year losses are as follows FAA, 31% , SEA, 48%, KRE, 13%, IYM, 10%, GEX, 40%, GRN, 38% as is seen in ongoing Google Finance chart.
The European sovereign crisis is a growth terminator. Between The Hedges relates that the Financial Times reports Steel prices in Europe are at a disastrous level for some grades as buyers"stay out of the market and delay orders in anticipation of the prices going down even more" citing Bruno Bolfo, chairman of Duferco. The turmoil in the market will continue into 2012, which is likely to see short-term economic and financial issues impacting long-term economic sustainability" citing Sajjan Jindal, CEO of JSW. As of last Friday, Google Finance Chart shows SLX, -32%, MT, -51%, and AKS, -54% for the last year.
Volatility, VIIX, VXX, VIXY, as well as Double Long Volatility, TVIX, which have blasted higher on the rise in short selling fell strongly lower today.
Between The Hedges relates Wirtschaftswoche reports that World Bank President Robert Zoellick said Europe won't solve its debt crisis by ensuring banks have access to cash, citing an interview. "Thus far, the Europeans have tried to solve the problem through liquidity assistance," he was quoted as saying. "That won't solve the problem. It only gains time."
Bloomberg assures No recession for U.S. as forecasts improve. Yet, this technical economic report disregards systemic risk from the European sovereign debt crisis.
5) … Sovereign Armageddon, a Credit Bust and Global Financial Meltdown, is imminent.
It will come out of Gotterdammerung, the clash of the gods, that is the conflict between world leaders and investors. John Rubino writes in Dollar Collapse, One of the notable things about Doug Nolan's weekly Prudent Bear Credit Bubble Bulletin is his measured language. Noland will, like a lot of commentators these days, say apocalyptic things, but he usually makes his points with data rather than hyperbole. Mr Noland writes: It’s been my long-held view that, in the grand scheme of major Credit busts, calculations of necessary additions to depleted bank capital basically become meaningless. The critical issue is not some quantifiable (and “plugable”) hole in banking system capital but, instead, the overall Credit needs of maladjusted Bubble economic structures and inflated system-wide prices levels and spending patterns. This is a critical distinction. And it all seems to boil down to this: Credit cannot be stable within a backdrop of such extraordinary uncertainty. And, I would argue, no amount of central bank liquidity (“money”) and bank capital is going to engender sufficient certainty to stabilize global Credit, financial flows and asset markets. Not with the large number of dangerously maladjusted economies; not with such well-entrenched global economic and financial imbalances; and not with today’s unbelievable Credit, derivatives, and speculative leverage overhang. The issue is certainly not a lack of “money”, but rather a lack of confidence and trust, the bedrock of Credit.
24/7 Wall St. reports E.U. Bailout Promise Poses "AAA" Ratings Question for France & Germany.
I relate that out of chaos will come a new order and a new moneyness, that is a new seigniorage, as well as a new credit. These will not have a foundation of debt, where people place their faith in lending; but rather where people place their faith in the diktat of the Sovereign and the Segnior. With the traditional credit system gone, the people will be amazed, and having no freedom to choose, will be amazed by the diktat and follow after it, giving it their full allegiance.
The Daily Telegraph, noted in an editorial on October 7: “Little more than two years ago, global leaders were happily congratulating themselves on having avoided the mistakes of the 1930s, thereby averting a depression. But now it appears that the difficulties of 2008 were but a foretaste of what was to come. With the European banking system again on the verge of collapse, there is a sense that politicians and economists are out of options, that governments and central banks are powerless before events. The best of the cavalry has been sent into battle, and it has come back in tatters. The fiscal armoury has been exhausted, the support offered by the boom in emerging markets such as India and China over the past two years seems to be on its last legs, and there is but the small rifle fire of the central bank printing presses left to defend us.”
Nick Beams of WSWS relates The exhaustion of all economic means for overcoming the global crisis signifies that politics will now come increasingly to the fore
6) … The world is passing through peak credit as Bonds, BND, traded strongly lower, with the longer duration bonds falling more than the shorter duration as reflected in the steepner ETF, STPP, rising..
The US Soveign Debt is traded by TMF, LBND, ZROZ, EDV, TLT, and SHY. It had been rising as a safe haven from falling currency values, and the European sovereign debt crisis. But now, the interest rate on the ten year US Government Note, $TNX, and the interest rate on the 30 year US Government Bond, $TYX, has been increasing, turning US Government bonds lower. The 10 30 US Sovereign Debt Yield curve, $TNX:$TYX, is now steepening as is seen in the Steepner ETF, STPP, rising and the Flattner ETF, FLAT, falling. World government bonds, BWX, rose on the higher world currencies. Junk bonds, JNK, rose strongly on risk acceptance.
7) … The current age is characterized by the Spirit of Wilding.
Neoliberalism featured the Spirit of the Cat In The Hat which saw such things as the repeal of the Glass Steagall Act. Neoauthoritarianism features The Spirit of Wilding as Associated Press reports 19 Dead in Worst Cairo Riots Since Mubarak Ouster.
Stocks: WCAT, URA, COPX, ALUM, KOL, XME, SOIL, CRBI, WOOD, KCE, AXP, NNI, COF, SLM, ECPG, TAN, ENY, ABCS, ROOF, ITB, BJK, PSP, FAA, SEAGY, ACWI, VSS, DBC, CCX, CUT, USO, OIH, IEZ, CEW, CRB, DBB, VTI, DBV, IDX, EEM, THD, EMB, MS, XLF, EUFN, EMFN, AKS, STPP, FLAT, JNK, FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, BZF, FX