Economic Edge

Evening post - Take A gander At Belgium And Then Greece And Ask How Long Before Belgium Goes Boom ?

noreply@blogger.com (fredw) — Sat, 11 Feb 2012 01:39:00 +0000

Scenes From Belgium ! Yeah , Belgium , not Greece !

Many Occupy protesters who have been pepper sprayed or injured by police might be interested in what unfolded in Belgium as firefighters marched in opposition to proposed benefit cuts.
The Guardian and Russia Today have video footage of firemen soaking police officers with high-power hoses during a protest in Brussels. Russia Today's video shows police standing passively while their riot shields drip with water.
According to the Guardian, firefighters are upset over plans to raise their early retirement age.
The government's plans come as Press TV reportsthat economic data show Belgium was the first eurozone member to slip into recession in the second half of last year.
Belgium's planning bureau says the government must find 2.5 billion euros in either spending cuts or new revenue to close its current budget deficit, according to Bloomberg News.

Belgian Firefighters Hose Down Cops In Protest (VIDEO)

First Posted: 02/10/2012 4:04 pm Updated: 02/10/2012 5:49 pm

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_20135_10/02/2012_427224

Meanwhile in Greece..... laundry list for Parliament - by next Wednesday ?

The 30 measures Athens must pass

The interventions that form a condition for the first tranche of the new package

By Sotiris Nikas
Thirty tough legislative interventions affecting key sectors have to be rushed through Parliament for the government to secure the first tranche of the new bailout package. The measures are the following:
- Reductions in pharmaceutical spending by 1.076 billion euros, in defens by 300 million euros, in arms by 300 million euros and in doctors’ overtime by 50 million euros.
- The abolition of 550 deputy mayor posts, saving 30 million euros.
- Cuts in consumer spending and election allowances amounting to 270 million euros, in other allowances and grants by 190 million euros, and in the Public Investment Program by 400 million euros.
- Ministerial decisions for the application of objective criteria for the self-employed, for the full application of the single salary system for all state corporations, for the Public Power Corporation to pay its revenues from the special property tax paid through the electricity bills to the state within two days (instead of 20), and on the cost of permits for new trucks for public use.
- A 22 percent reduction of the minimum wage, with people below the age of 25 years taking a 32 percent cut.
- The suspension of the additional allowance for every two years of work that civil servants were paid.
- The maximum period for collective labor contracts to be set at three years, the duration of existing contracts to be up to one year, the extension of expired contracts to be by just three months. Other allowances for past experience, children etc will be maintained after contract expiry until a new contract is signed.
- An end to the unilateral resort to arbitration and to contracts with a specific time limit that expire with retirement.

- The reduction of social security contributions by 2 percent.
- The abolition of the organizations providing state-subsidized housing (OEK and OEE).
- The amendment of regulations for expired debts.
- The completion of inspections for value-added tax payment.
- A pension cut in healthy funds by 15 percent and by the same rate in auxiliary pensions, whose funds will also be reformed.
- A restructuring of the banking system and strengthening of the fund safeguarding bank deposits.
- A revision of the operation of the Credit Stability Fund.
- The deregulation of 17 closed-shop professions.

Friday Open thread - Scenes From Greece !

noreply@blogger.com (fredw) — Fri, 10 Feb 2012 13:38:00 +0000

Greece Reacts To the Games Played In Brussels !

Eurozone crisis live: Clashes as Greeks protest over bailout deal

• Tear gas fired during Athens protests
• Laos leader: Greece's dignity has been stolen
• Venizelos: Greece must decide whether to remain in the euro
• No disembursement without implementation
• Another MP resigns

Protesters are gathering outside the Greek Parliament in Athens. Photograph: Simela Pantzartzi/EPA

12.46pm: This second picture from Athens shows a petrol bomb exploding near riot police.

A petrol bomb explodes near riot police during protests against planned reforms by Greece's coalition government in Athens. Photograph: Yiorgos Karahalis/Reuters

We don't yet know whether there were any injuries.

12.42pm: We have more pictures from today's protests in Athens.

This image shows demonstrators who have been detained by riot police.

12.38pm: An independent MP named Milena Apostalaki (formerly of Pasok) has announced that she will not vote for the austerity measures when they come before the Greek parliament (probably on Sunday).

Apostalaki's move comes amid mounting speculation that MPs will be ordered to vote in favour of the package.

That, Helena Smith says, will be very unpopular -- many MPs want to vote against the deepy unpopular package.

12.26pm: The euro has fallen sharply since Karatzaferis began his press conference -- losing almost a cent against the US dollar to $1.3204.

LAOS leader says will not vote for debt deal

Karatzaferis calls on PM to replace PASOK MPs in Cabinet with technocrats

The leader of the rightwing Popular Orthodox Rally (LAOS), Georgios Karatzaferis, on Friday called on Prime Minister Lucas Papademos to reshuffle his government, installing technocrats in the place of Socialist PASOK ministers, adding that he would not approve a new debt deal agreed between the government and foreign creditors but neither would he withdraw from the coalition as he had threatened to do earlier this week.
"The creditors are asking for 40 years of submission,» Karatzaferis told a press conference. «Greece will not give itself up,» he said, adding that «Greece can survive outside the EU but cannot survive under a German boot.»
Insisting that the creditors' insistence on cuts to auxiliary pensions had been the last straw, he said that had the cuts passed, the leader of the mission of the International Monetary Fund in Greece, Poul Thomsen, would be 'persona non grata' in the country.
The rightwing leader accused the creditors of trying to «deprive Greece of the last trace of national sovereignty,» and said that the country should be given a five-year grace period to pay off its debts at a favorable interest rate.
karatzaferis did not determine whether his party's 16 MPs to approve new austerity measures in a parliamentary vote expected on Sunday or Monday. If his deputies vote down the bill, the government will retain a comfortable majority of 236 in the 300-seat House. But his party's votes would be useful as several coalition MPs in both PASOK and New Democracy have indicated that they object to certain measures and may vote against them.
Speaking an hour before a scheduled Cabinet meeting, Karatzaferis repeated an earlier demand for Papademos to replace ministers of PASOK with technocrats.

Good Morning ! After the games played By Germany , The EU , the IMF - are we shocked today that Greece is not reacting kindly to being toyed with ? No , the reaction should have ben expected - so let's assume that it was expected . Is this what Germany , the IMF and EU truly wanted - a greek revolt , the rejection of the ever changing bailout demands from the Troika , a reaction to the increasingly public humiliation ? And wait until Greece digests the German FM Schauble's sidebar discussion with FM Gaspar of Portugal ! That will go over as well as the cup of hemlock Socrates sipped ! Check the link - if you speak portuguese , you can follow the conversation by reading the original piece in Pais !

http://fredw-catharsisours.blogspot.com/2012/02/schauble-caught-on-video-promising.html

http://economia.publico.pt/Noticia/gaspar-agradece-disponibilidade-alema-para-flexibilizar-ajuda-a-portugal-1533079

Of course , why in the world would Gaspar believe , let alone trust FM Schauble ? After watching the treatment games played with the greeks , is he naive enough to believe Portugal will get a different deal ? What Gaspar should have taken from the Greece situation was that after negotiating endlessly with the Troika , the Troika let PM L-Pap and the greek party leaders batter themselves bloody , expend their political capital , exhaust the patience of their party MPs - and then after meeting the Troika terms , Juncker , Schauble and Lagarde in term tell Greece they haven't done enough , they will need to cut more , they will have to find spending cuts above the prioe Troika demands , they give them another deadline and three conditions to meet or else ? In short , the Troika totally shoved the deal up their..... nose ( or you pick another place if you care to do so ) . That is the lesson for Portugal , Ireland , Spain and Italy - no matter how much you play the lapdog role ( Ireland and Portugal ) , regardless of whether you silently standby and hope ( Spain ) or whether you think you're more important then you really are - even if you present still can schedule a meeting with Obama that actually occurs and he pats your head and smiles at you ( PM Monti and Italy ).

Meanwhile , today markets are shocked that bad news can actually make stocks in Europe and US Futures go down ( naturally the sill melt up since the end of the year has provided a nice cushion for whenever a meltdown occurs ) , the euro has shocked traders by actually showing it can go down on shocking bad news , gold has sold off as the hopium for Greece has met the light of day , amazing a two day strike is viewed as bad news today and bloody protest and fighting police isn't a cause for celebration ? who could have seen this coming ? Oh well , give things a few minutes - some joker will start pumping the notion a greek default is a good news as QE 3 will be just around the corner ! Lol - And on that note , what's on your mind today ?

Good Evening ! Something To Ponder on Greece , German Intentions and What Does The Troika Really Want ?

noreply@blogger.com (fredw) — Fri, 10 Feb 2012 01:06:00 +0000

Is A Deal With Greece Truly Sought By Germany and the IMF ?

In what would amount to an extraordinary extension of European Union control over a member state, the new commissioner would have the power to veto budget decisions taken by the Greek government if they were not in line with targets set by international lenders. The new administrator, appointed by other eurozone finance ministers, would take responsibility for overseeing “all major blocks of expenditure” by the Greek government.

Even before Germany circulated its proposal, the EU and International Monetary Fund had presented a 10-page list of “prior actions” Athens must implement before the new bail-out is agreed. According to a copy of the document, also obtained by the FT, Greece must cut an additional 150,000 government jobs within three years.

Then consider this item :

2 ) http://globaleconomicanalysis.blogspot.com/2012/02/new-merkozy-proposal-i-will-give-you.html

European officials are insisting any new Greek bail-out programme specifically earmark funds to pay off remaining holders of Greek debt, giving lenders the freedom to withhold aid to Athens without risking a messy default that could reignite panic in financial markets.Under a new Franco-German plan that senior European officials said is likely to be included in a new Greek rescue, eurozone officials would create an escrow account to accept new bail-out funding instead of paying it all directly to Athens as in the past.

The new fund would then ensure bondholders are paid off, while additional cash to run the Greek government could still be withheld if Athens did not live up to tough new reform demands.

Eurozone officials said they believed the escrow account would give European Union and International Monetary Fund lenders strong control over Greece’s use of bail-out funds without stripping Athens of its budgetary sovereignty

“This is a better idea than the proposal of a debt commissar,” said the senior French official. “It is more acceptable.”
That was followed by this move :

3 ) In addition to the Spaghetti-O loop, Eurointelligence discusses the "Salami Roadblock".

According to Financial Times Deutschland, Wolfgang Schäuble now wants the Bundestag to vote only on a fraction of €30bn out of the total cost of the second Greek rescue package of €130bn. He is supported by the finance ministers of the Netherlands and Finland who met as part of the secret meeting AAA-rated ministers. The reason for this unexpected move is that the coalition has reason to fear that the general exasperation about the lack of progress in Greece made it uncertain that it would be unable to get the necessary parliamentary for the whole package. Also the coalition wants to keep up maximum pressure on Greece. In Brussels the Berlin, the move was greeted with surprise and irritation, the paper reports.

And then this followed - note this followed items 1-3 above :

4 ) http://www.reuters.com/article/2012/02/07/us-merkel-euro-idUSTRE8161Z620120207

(Reuters) - German Chancellor Angela Merkel said on Tuesday she did not want to see Greece being forced out of the euro, warning that this would have "unforeseeable consequences."

"I will have no part in forcing Greece out of the euro," she said in response to a question from a Greek student at a meeting with young people in a Berlin museum.

Talking shortly after feuding Greek political leaders postponed a meeting scheduled for Tuesday on the conditions for a 130 billion euro second bailout package, the chancellor said there was no alternative for Greece to painful reforms.

"We don't do it to make things difficult for people, what would be our interest in doing that? But we want to reach a point where Greece can, with European help, live off its resources," said Merkel.

"Nobody wants to force reforms on them from outside," she said.

To be followed by these moves earlier today by Germany and the IMF working hand in hand :

5 ) Greek Deal Done?

Earlier today we heard Greece accepted a deal. Not so fast. The Washington Post reports German FinMin: Greek deal on spending cuts appears to not yet fulfill bailout conditions

That title was the entirety of the article.

IMF Says No Deal

Zero Hedge reports Greek Deal Done? Not So Fast Says IMF

IMF SAYS IT'S NOT FORCING AUSTERITY ON GREECE AS TALKS CONTINUE - BBG
RICE SAYS IMF "WELL AWARE HOW DIFFICULT' IT IS FOR GREECE - BBG
IMF'S RICE SAYS IMF MINDFUL OF `HARDSHIPS' IN GREEK PROGRAM - BBG
RICE DECLINES TO SAY WHAT IMF SHARE OF NEXT GREEK LOAN WILL BE - BBG
IMF SAYS 'PRIOR ACTIONS' LIKELY TO BE REQUIRED BEFORE FUND OK OF NEW GREEK LOAN PROGRAM - DOW JONES

and the pre- coup de grace :

6 ) : http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_27963_09/02/2012_427052

Eurogroup's turn to make Greece wait for bailout deal

Despite last-minute scrambling to secure a deal between the leaders of the three parties in the coalition government on the terms of a new bailout, Greece was given the cold shoulder on Thursday by its eurozone partners, who said Athens would have to wait to find out if it will receive at least 130 billion euros in new loans.
Prime Minister Lucas Papademos managed to secure an agreement between the party leaders at around 3 p.m. after deciding to bring forward some wage cuts at public enterprises and increase the reduction in defense spending in order to save 625 million euros, which would allow cuts to pensions to be limited to levels that were acceptable for all three leaders.
The agreement came a few hours before the Eurogroup meeting of finance ministers in Brussels by Greece’s representative, Evangelos Venizelos, who soon discovered that the rest of the eurozone was in no mood to give the green light for funding just yet.
“The agreement, as far as I understand, is not at a stage where it can be signed off,” said German Finance Minister Wolfgang Schaeuble. He said the talks were being held to “make clear to Greece and the partners in the negotiations what the conditions for a second agreement are.”
The head of the Eurogroup, Jean-Claude Juncker, said that there were still several points to clear up. “If it is not tonight, it will be done next week,” he said.
The tenuous deal reached in Athens followed a night of tense negotiations on Wednesday. Talks between Papademos and the heads of the three parties in his coalition government - PASOK leader George Papandreou, New Democracy’s Antonis Samaras and right-wing Popular Orthodox Rally (LAOS) chief Giorgos Karatzaferis - started at 5 p.m. on Wednesday and dragged on for seven hours due to objections over proposed cuts to auxiliary pensions. The most vehement in his opposition was Samaras, but it was Karatzaferis’s departure that caused waves as he indicated that he might withdraw from the government.

Papademos resumed talks with creditors, which continued into the early hours, and his office issued a statement in the early hours of Thursday morning, saying that a “broad agreement” had been reached with the exception of one issue, referring to the pensions cuts. Venizelos was forced to travel to Brussels with an incomplete deal but subsequent talks between Papademos and Samaras on Thursday morning fleshed out the agreement.

Followed by the coup de grace - after all of the wrangling , Juncker tells Greece find 325 million more in new spending cuts and find it by next Wednesday :

7 ) : http://www.bloomberg.com/news/2012-02-09/greece-rebuffed-on-aid-package-as-austerity-vote-raises-risk-of-euro-exit.html

European finance ministers held back a rescue package for Greece in a rebuff that left lawmakers in Athens under government pressure to endorse a newly minted austerity plan or exit the euro.

“In short: no disbursement without implementation,” Luxembourg Prime Minister Jean-Claude Juncker said in Brussels late yesterday after chairing emergency talks of euro-area policy makers. He set another extraordinary meeting for Feb. 15.

and.....

http://www.bloomberg.com/news/2012-02-09/greece-must-pass-austerity-plan-into-law-to-get-troika-aid-juncker-says.html

Greece must pass its latest austerity package into law and identify 325 million euros in spending cuts before euro-area governments endorse a second bailout for the country, Luxembourg Prime Minister Jean-Claude Juncker said.

“Despite the important progress achieved over the last days we didn’t yet have all necessary elements on the table to take decisions today,” Juncker said in Brussels after chairing an emergency meeting of euro-area finance ministers.

Greek politicial leaders must also back the pact and provide assurances it will be carried through after forthcoming elections, Juncker said. European finance ministers will meet again next week.

“In short: no disbursement before implementation,” Juncker said.

The finance ministers will meet again on Feb. 15, he said.

Reaction from greek pols and the greek street has been swift and predictable :

1 ) : http://www.athensnews.gr/portal/1/53189

Deputy Employment Minister Yiannis Koutsoukos has resigned over drastic new austerity measures agreed by the coalition government.

2 ) : http://www.athensnews.gr/portal/1/53180

Former New Democracy MP, Yiannis Manolis, and long-time party trade unionist, on Thursday morning tendered his resignation from the post of secretary of the ND division on trade union issues.

3 ) : http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_17836_09/02/2012_427026

Unions call two-day strike, announce protest rallies

Greece’s two main labor unions called a 48-hour strike on Thursday to protest the austerity measures in Greece’s potential loan agreement with the European Union and the International Monetary Fund.
The strike, which will affect public transport today and tomorrow, will be accompanied by three days of demonstrations.
Today and tomorrow, rallies will be held in central Athens from 11 a.m.
On Sunday, there are plans to hold a protest from 5 p.m., possibly to coincide with a vote on the terms of the loan agreement in Parliament.
Greece’s two largest unions -- GSEE, representing the private sector, and ADEDY, representing the public sector -- have backed the action.
There will be no public transport apart from the Kifissia-Piraeus electric railway (ISAP) between 10 a.m. and 5 p.m.
Ferries will also remain in port.

So I ask , does Germany really want Greece to stay or " Voluntarily " choose to leave ? You decide what seems to be the case......

Thursday Thought And Open Thread !

noreply@blogger.com (fredw) — Thu, 09 Feb 2012 14:12:00 +0000

Good morning ! As we wait for details on the Second Rescue Deal that the greek parties , PM L-Pap and the Troika have struck ( while we also wait to see whether the greek Parliament and the greek street will tolerate the latest assaults ) , let's look at other items coming down the line. As austerity has struck , unemployment has continued to ramp up faster than the lies out of politician's mouth - looking at the numbers from November , unemployment has now hit 20.9 percent , up from 18.2 a month earlier! Correspondingly , manufacturing output contracted by 15.5 percent in December ( year over year ) , Industrial output fell by 11.3 percent , compared to - 7.83 percent in November ! Does anyone realistically believe further harsh austerity measures will improve one bloody thing for Greece ? As Greece copes with depression , spain , Portugal and Italy have recession looming or underway - with further austerity coming down the line , we already hear cries for debt renegotiation coming from the Unions in Portugal ,as well as the Finance Minister of Ireland. spain and Italy have been silent for now , how long do we expect that to continue ? In light of the already fragile economic conditions in Greece , Italy and Spain - factor in the impact of the EU boycott on oil from Iran - how can this not totally scotch whatever carefully considered budgetary plans drawn up for these nations ? One that note , consider the following !

Spain pain: ‘Iran oil embargo to backfire on Madrid’

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Published: 09 February, 2012, 00:46

Madrid is becoming concerned at how it is going to compensate for the half of its oil imports which will be lost due to the EU embargo on Iranian oil. The economic crisis is only adding to Spain’s woes.

“Spain is suffering the greatest damage from the embargoes against Iran and has always expressed support for the resumption of talks,” said Pedro Antonio Villena Perez, Spain’s new ambassador to Iran on Tuesday in Tehran, as quoted by Iran’s Press TV.

Perez pointed out that Madrid is not among the countries supporting the ban on Iran’s oil and banking sector.

Spain, like Greece and Italy, is among the EU's biggest importers of Iranian oil. Under the embargo agreed on January 23, they only have until July 1st to find alternative crude supplies.

Madrid imports almost all the oil it consumes for its energy and manufacturing sectors. Before the Libyan political crisis, Iranian oil accounted for some 20 per cent of Spain’s supplies. But this last year this figure has grown to 50 per cent. Sanctions on Iran pose an explicit threat to Spain’s energy, 80 per cent of which comes from oil.

“Spain never wanted this embargo. This decision comes externally, through US pressure on the EU. It is not just a question of economy. It calls into question Spain’s autonomy in making foreign policy decisions,” Miguel-Anxo Murado, a Spanish journalist and writer, told RT.

Evening Posting ! What Does Farce Descend into After Its Phase Has Come And Gone ?

noreply@blogger.com (fredw) — Thu, 09 Feb 2012 01:03:00 +0000

History Repeats Itself , First As Tragedy , then as Farce ............And Then As Fricking Greece ?

Extending upon the classic and oft quoted observation of Marx (from " The Eighteenth Brumaire ' ) , note the second " then " and following commentary on modern Greece. Further observation apropos from Karl M include " Every giant...presupposes a dwarf , every genius a hidebound philistine ....The first are too great for this world, and so they are thrown out. But the latter strike root in it and remain.... Caesar the hero leaves behind him the play-acting Octavius, Emperor Napoleon the bourgeois king Louis Phillippe......( K.Marx - Scorpion and Felix ) .

I'll let you choose who plays the giant versus dwarf , genius versus philistine ... without further ado , here's today's stirring confusion from Greece ! By the way , did you notice the commentary from Ireland today ? Finance Minister specifically put the ECB and EU on notice they want the same treatment as Greece - and the deal hasn't even been completed yet ! Lol How long before Spain , Italy and Portugal say me too , guys ? My thought - not long at all. Of course , assuming a deal is reached with the greek political party chiefs and L-Pap - and accepted by the Troika , can it pass in Parliament ? I would say don't be sure of that , lots of rumblings go on there ( check the comments for related articles to come !

Greek Meeting Ends Without Conclusion: LAOS Head Refuses To Sign Deal

Submitted by Tyler Durden on 02/08/2012 17:50 -0500

Bloomberg reports that at almost 1 am local time, the Greek government meeting has broken up, and the head of LAOS is speaking, and by the looks of things, is not going along with the program:

KARATZAFERIS SAYS HE DID NOT HAVE ENOUGH TIME TO STUDY MEASURES

KARATZAFERIS SAYS HE NEEDS LEGAL ASSURANCES ON MEASURES

KARATZAFERIS SAYS HE MIGHT CONTINUE TO SUPPORT THE GOVERNMENT DESPITE NOT AGREEING TO DEAL

KARATZAFERIS SAYS HE MADE HIS POSITIONS CLEAR EARLY IN MEETING

KARATZAFERIS SAYS HE APPRECIATES THE PREMIER'S EFFORTS

KARATZAFERIS SUPPORTED ND LEADER ON ISSUE OF PENSIONS

Translation: no deal. And, dum dum dum, another headlines says that the Troika is now back in Papademos' office. The suspense builds.

In other rheotrical statements, got ink?

and also.....

Papademos Says Outstanding Issues Remain, EURUSD Slides

Submitted by Tyler Durden on 02/08/2012 18:09 -0500

Greece

Reality

Another day, another delay, and still nothing is done.

GREEK PREMIER SAYS OUTSTANDING ISSUE NEEDS FURTHER WORK

GREEK PREMIER SAYS DISCUSSION TO CONTINUE ON OUTSTANDING ISSUE

PAPDEMOS SAYS AIMS TO CONCLUDE LOAN TALKS AHEAD OF THURSDAY'S EUROGROUP MEETING

And on the off chance that Greece, gasp, does not actually get something done by the deadline, it means that at tomorrow's meeting the only topic of discussion will be the calorie content in the taxpayer funded pastries. In the meantime, some semblance of reality is creeping back into the EURUSD.

Morning Thoughts ! Wednesday Morning As We Wait For Godot !

noreply@blogger.com (fredw) — Wed, 08 Feb 2012 14:03:00 +0000

Bank Run Shown In One Graph ! Morning thoughts.....

European Bank Run Full Frontal

Submitted by Tyler Durden on 02/08/2012 08:23 -0500

This chart from Credit Suisse cuts through all the propaganda BS like a hot knife through butter.

Good morning ! This is certainly an eye-opening chart of the day ! You can see where deposits peak - around mid 2007 ( recall that was when Europe had its credit freeze up and Libor went totally batty shitte . Moving forward the declines in deposits continued from 2006 through 2010 - and then note the divergence between Europe broadly and Germany - France that began in 2011 ! What should be disturbing is the downward trend seen in Germany - France that began during the latter stages of 2011 ( as it became clear was not AAA and Germany was going to be off-loaded with more eurozone risk and obligations ( or else the whole grand euro experiment would just go bust ). As Greece suffers through a soft restructuring or a hard default , expect the trend to continue - w still have to follow the bouncing ball to see what Portugal , spain , Ireland and Italy do with their mountains of debt . Expect these countries to request a restructure as Greece as obtained or will obtain. What this chart represents is trust - or the lack thereof . No trust in the banks , no trust in the EU , no trust in the ECB , no trust that there are solutions. ECB printing does not and cannot trump runs on the banks . Banks can't lend on a fractional reserve basis when money is pulled - if approximately 350 billion has left the eurozone banks collectively since mid 2006 , then on a fractional reserve basis 3.5 trillion in lending power has evaporated ! And as european banks face demands to recapitalize and raise their reserves , further pressure on the banks will occur - putting more scrutiny and lack of trust in these banks. which means more money pulled out. The circular pattern facing the banks is similar to the circular problem facing Greece ( falling revenues beget austerity , causing revenues to further fall - resulting in further austerity which causes further revenue declines ... was , rinse , repeat . )

Expect a deal on Greece - probably later today. If this does come to pass , we should see the details of the second ( but not last ) Greece rescue plan floated out over the next couple of days , the details of the PSI float out a well. the pols will postsure , bicker , duck for cover - eventually this will go to Parliament and they either will vote yea or nay. Similarly , at some point a " deal " on the private debt swap will be put forth - the banks and other private investors will say yea or nay , the ECB will do what it chooses to do ( won't take any losses though - bet on that . ) and then the focus will shift to the other PIIGS and the near PIIGS ( Belgium , Austria , France ) The chart above reflecting the ongoing run on europe's banks ensures this is the course that will be run . and the reason is - lack of trust ! Be well , have a great day !

Evening Post ! What happens When The Car Stops Running On Fumes ?

noreply@blogger.com (fredw) — Wed, 08 Feb 2012 01:21:00 +0000

While hardly surprising to anyone who actually paid attention over the past two months to events in Greece (instead of just reacting to headlines) where among those on strike were the very tax collectors tasked with "fixing the problem", we now get a first glimpse of the sheer collapse in the Greek economy, which also confirms why Germany is now dying for Greece to pull its own Eurozone plug (predicated by a naive belief that Greece is firewalled as was discussed before . As a reminder Hank Paulson thought that Lehman, too, was firewalled on September 15, 2008). And what a collapse it is: according to just released data from Kathimerini, budget revenues lagged projections by €1 billion in the very first month of the year. "Revenues posted a 7 percent decline compared with January 2011, while the target that had been set in the budget provided for an 8.9 percent annual increase.Worse still, value-added tax receipts posted an 18.7 percent decrease last month from January 2011 as the economy continues to tread the path of recession: VAT receipts only amounted to 1.85 billion euros in January compared to 2.29 billion in the same month last year." This it the point where any referee would throw in the towel. But no: for Europe's bankers there apparently are still some leftover organs in the corpse worth harvesting. Unfortunately, at this point we fail to see how this setup ends with anything but civil war, as the April elections will merely once again reinstate the existing bloodsucking regime. We hope we are wrong. ( Source ZH )

When the car stops running on fumes , the car stops ! end of the story and sadly , that's what're seeing happen in Greece . but how could this be a shocker ? On an annual basis , revenues are on a pace to shrink by 12 billion euros - and keep in mind , this is before the further austerity measures which could include 15,000 jobs lost from the public sector , a cut of perhaps 20 percent to the minimum wage , basic and supplemental pension cuts and changes to the collective bargaining agreement ! Those further austerity measures will naturally provide additional downward pressure and of course more Troika demands for austerity - note that cuts to the minimum wage will by themselves lead to a 1.3 billion drop in tax revenues and a 2.4 drop in social security contributions ! . This will be a the cycle of misery until Greece finally explodes into mass protests and riots or Greece just says the heck with this and defaults . The one year greek bond purported yield of 528 percent is a flashing red light that a hard default is coming. So is the debt to GDP ratio hitting 159 percent - that ratio keeps heading the wrong way. Critical meeting supposedly set to finally resolve the PSI and Second Rescue deals over the weekend , have slipped from Saturday until now we see Wednesday is the latest date for PM L-Papa and his own Troika ( Pasok , New Democracy and Laos ) , to supposedly wrap up the Rescue talks. Meanwhile the March 20th 14.5 billion euro debt cliff approached. Even if or when these two sets of talks are concluded , will the MPs fro Greece approve the further harsh austerity ? Will the second rescue deal be 130 billion euros , 145 billion euros or some higher number yet presently unarticulated number ( 160 billion + euros if one takes the slipping revenue numbers in account ) ? Will the private investors accept a 70 percent ( or will if be 80 + percent ) haircut and if not , does Greece pass a Collective Action Clause to ram the deal down private investors throats ? Meanwhile , Ireland , Portugal , Spain and Italy watch and wait - how long before they line up to see 70 - 80 percent of their debt cut too ? Does the ECB foist onto the EFSF 25 billion in losses and how will the Japanese and Chinese buyers ( let alone any GCC buyers of this sucker debt ) react ? Will Wednesday's meeting slip to thursday - Is Bill Murray really living out day after day in Athens , learning out to play classical music and jazz on the piano ?

Meanwhile Spain joins Greece in protesting loudly against austerity and did you note the PM in Romania just stepped down as a result of huge protests against austerity there ? Taking note Greece and Spain ? To those fighting the good fight in Greece - hang in there , fight the powers that would crush you under their heels , throw out the bums who agree to these death dealing poverty measures and don't ever forget what has been done to your country ! To Ireland , Portugal , Spain and Italy - get off your arses and hit the streets - you should be able to figure out your next in line ! In France , the UK and US , don't get smug - what is happening in Europe is a prediction of the future played out in real time - wake up before it's too late ! Okay , got my rant off the chest - hope everyone had a great day , cue the Sonny and Cher song again .....

Daily Open Thread 2/7

noreply@blogger.com (Nathan A. Martin) — Tue, 07 Feb 2012 15:18:00 +0000

Good Morning,

Stocks are lower in early action, but the dollar and bonds are both down. None of it is real.

Please continue with the Open Thread today as I have business to attend all day today, thank you.

Monday Open thread !

noreply@blogger.com (fredw) — Mon, 06 Feb 2012 13:29:00 +0000

Items of interest culled from ZH - WSJ and NYT Times ...... Greece is still living Ground Hog Day - the Series ! Monday deadline to respond to the Troika demands , which may or may not have been a deadline ( depending upon whether you listen to Greece or the European Commission ) has come and gone. Further updates both sides say will come later today - yeah , book that Dano ! Progress was made or perhaps not made during weekend talks , the PSI talks may or may not be largely completed , Greek pols may or may not want PM L-Pap to stay in office and take the heat until the end of 2013 .... one thing we do know , the massive strikes will continue on Tuesday ! As Greece fires burn , stocks are modestly off as traders hold their fire , trying to figure out what may come to pass in Greece , Europe in general , what the weekend events mean for Syria and Iran - when does the next big bang occur ? As this was the Super Bowl weekend , how much attention did the average Joe and Jane pay to what happened or didn't happen this weekend anyway ? Who knows on that front - well that game is over but the other games are ongoing ! Have a great morning - and of course , what's on your mind today ?

Overnight Press Digest

WSJ

* Auto maker General Motors Co is expected to report net income of more than $8 billion for last year and has set a goal of making more than $10 billion a year.

* A financial turnaround at Las Vegas Sands Corp is beginning to pay off for chairman and CEO Sheldon Adelson, who during the financial crisis put $1 billion of his own money into the struggling casino operator.

* U.S. corporate profits are showing signs of flagging, even as share prices reach multiyear highs. Margins are slipping as already-lean firms find it harder to continue cutting costs.

* Greece's political party leaders will resume talks Monday after major differences on draconian reforms as part of an international aid package remained unresolved following a marathon meeting Sunday.

* Federal and state officials aim to wrap up this week a multibillion-dollar agreement with five major banks to settle probes of alleged foreclosure abuses.

* The White House plans to nominate former Bush administration official Jeremiah Norton to the Federal Deposit Insurance Corp, a key banking regulator.

* Farmers and analysts are expressing fresh skepticism about Agriculture Department data on the corn market in the wake of the latest figures, which stunned traders and sent prices on another wild ride.

* The Federal Reserve is presenting a broad swath of conservative investors, from retirees and college savers to banks and insurance companies, with a tough choice: move into riskier investments or continue coming up short from low-risk investments that aren't even keeping pace with inflation.

* State-run entities that expanded over the past decade to provide affordable homeowners insurance in hurricane-threatened Florida are in danger of becoming so big they threaten to wreak havoc on the local economy. Citizens Property Insurance Corp, already the state's largest home insurer, now has 1.5 million policyholders and a total exposure of $511 billion, about one-quarter of the market.

* After a spate of rocky debuts in the U.S., this week's slate of initial public offerings are going to be facing a tougher pricing environment. Of the eight IPOs that were expected to trade last week, three were postponed -- two for market reasons and one because the company is being acquired --and three ended their first days of trading down.

* PepsiCo Inc and Coca-Cola Co likely will show solid profit growth when they share their 2011 results this week, but this year could be tougher. Investors want more evidence U.S. consumers will swallow pricier soda and chips.

* Global private equity fund TPG Capital LP said Monday it has secured about 4 billion yuan ($634 million) so far as it continues to raise capital for China investments.

NYT

* Pushed against the wall by its foreign lenders, the Greek government agreed on Sunday to drastic new spending cuts but failed to complete an arrangement that would unlock the financing the country needs to prevent default. It agreed instead to resume talks on Monday.

* With a deadline looming on Monday for state officials to sign onto a landmark multibillion-dollar settlement to address foreclosure abuses, the Obama administration is close to winning support from a crucial state that would significantly expand the breadth of the deal.

* Sun Media Group is joining Harvest Fund Management to create Harvest Seven Stars Media Private Equity, which will back entertainment ventures in China and abroad.

* Estimates are that NBC has spent as much as $25 million in promoting its "Smash," a new series that the network hopes will be the hit it desperately needs. The promotion campaign includes things like billboards, print ads, taxicab spots and the lavish, laminated, 40-page Broadway-style program book that NBC sent to the press.

* Although more than half of its 845 million members log into Facebook on a mobile device, the company has not yet found a way to make real money from that use.

* The president of Memorial Sloan-Kettering Cancer Center in New York is in a billion-dollar dispute with his former workplace, a cancer institute at the University of Pennsylvania, over accusations that he walked away with groundbreaking research and used it to help start a valuable biotechnology company.

* The Human Rights Campaign, a national organization that promotes equal rights for gay, lesbian, bisexual and transgender people, has recruited Lloyd Blankfein, CEO of Goldman Sachs , to be its first national corporate spokesman for same-sex marriage; an issue that will come up for a legislative vote in several states this year, including Washington and Maryland.

Weekend Open Thread - Words of Wisdom From Doug Noland !

noreply@blogger.com (fredw) — Sat, 04 Feb 2012 13:03:00 +0000

Here is the pertinent points from Doug Noland's weekly commentary from the Prudent Beat site !

http://fredw-catharsisours.blogspot.com/2012/02/price-instability-by-doug-noland.html

Chairman Bernanke was forthcoming yesterday when he stated that loose monetary policy distorts the economy and leads to inflationary pressures. I’ll contend that the world would today be a safer place if “easy money” in fact always led to inflationary pressures. In reality, some of history’s most notorious Bubbles developed in an atypical environment comprising loose monetary policy and well-anchored consumer price inflation. One can look to the seemingly sanguine pricing backdrops in the U.S. during the “Roaring Twenties” and Japan in the eighties as cases in point. In both circumstances, a misdiagnosis of the Credit and financial backdrop was instrumental in policymakers remaining too loose for too long - and unwittingly accommodating precarious Bubble dynamics.

The U.S. economic recovery has achieved some momentum, risk markets are quite strong, the liquidity backdrop is amazingly robust, the banking system stable – and the Fed has nonetheless committed to sticking with near-zero rates for at least several more years. To be sure, market participants are anything but oblivious to the fact that they enjoy both ultra-loose liquidity conditions and a Federal Reserve eager to implement additional quantitative easing in the event of renewed economic weakness or market stress. It makes the old “Greenspan put” rather child’s playish.

In such a speculative marketplace, bubbling risk markets provide a powerful incentive that forces believers and non-believers alike to hop aboard. Increasingly, it’s a marketplace where everyone is being forced to become a trader with a short-term performance and trend-following focus. Attention to risk is proving too excruciating. For this phase of a historic Bubble cycle, it has been more a case of the Federal Reserve inciting rather than just accommodating Bubble Dynamics.

The Fed and global policymakers have fashioned a decidedly unlevel playing field. A distorted market incentive structure has fomented yet another bout of self-reinforcing risk-taking and speculation. Not all that many weeks ago, the global financial system was being rocked by de-risking and de-leveraging dynamics. Leveraged long positions were being reversed, which – in global markets dominated by leveraged speculation – was quickly leading to serious market liquidity issues. At the same time, markets were inundated with derivative-related selling, as players across the globe implemented strategies to hedge against various risk scenarios. With increasingly illiquid markets unable to withstand such selling pressure, global policymakers responded with resolve.

* * * *

It is understandable to be confused by such strong market performance in the face of major global structural issues and attendant risks. I would argue that markets have turned highly speculative specifically because of the deep structural issues confronting global policymakers. Last year the efficacy of policy measures notably dissipated (in Europe and here with QE2), provoking only more aggressive policy interventions. The markets are now responding to the unprecedented liquidity backdrop – and the reality that global policymakers have become hostage to the markets. Risk concerns have evaporated, and ebullient traders are referring to “the sweet spot.”

Not for a minute have I ever believed that the proliferation of derivative trading would end well. When a meaningful part of the marketplace moves to implement hedging strategies (as was the case again last year), the market will immediately find itself both prone to illiquidity and vulnerable to trend-following selling pressure. And, as we’ve seen, when policymakers then aggressively intervene to stem deepening market stress, markets abruptly become susceptible to a destabilizing reversal of hedging-related exposures. The unwind of both hedges and bearish short positions creates a powerful burst of (panic) buying power and marketplace liquidity. In short order, dangerously illiquid markets can be transformed into abundantly – I would argue, overly – liquid. And there is nothing like the specter of a buying panic associated with a major short squeeze to really empower the markets’ animal spirits. Nervousness and risk aversion are so second-half 2011.

The NYSE Financial Index is already up 13.6% year-to-date. Bank of America has gained 41%, Citigroup 27%, and JPMorgan 15%. Morgan Stanley and Goldman Sachs have jumped 34% and 30%, respectively. The S&P500 Homebuilding index has a 2012 gain of 20.9%. The Morgan Stanley Cyclical index is up 16.0%. The small cap Russell 2000 has gained 12.2% and the S&P400 MidCap Index has jumped 10.5%. The Morgan Stanley High Tech index is already up 14.0%, and the Nasdaq100 closed today at the highest level since early-2001.

* * * *

I’ve been at this for awhile, so you won’t hear me calling for the imminent demise of this Bubble. I will, however, continue to warn that when this one blows there will be hell to pay. And what a fascinating juncture for the marketplace to so emphatically embrace risk-taking. Especially with readily available derivative risk protection, it is indeed rational for players to aggressively play the (policy-induced) global risk market rally – with one eye on buying cheap risk insurance. And I will assume the sophisticated global speculators will play this for all its worth (multi-billions, literally) – with an eye on the exits in the event Europe begins to unravel. Policymaker efforts to avoid a system blowup have created a backdrop conducive to a destabilizing speculative blow-off. And the Fed can still somehow trumpet “stable prices.”

Ground Hog Day Continues !

noreply@blogger.com (fredw) — Fri, 03 Feb 2012 12:37:00 +0000

Now my alarm clock didn't blare Sonny and Cher singing " I got you babe " this morn , but i swear it's still Ground hog Day again ! First things first - didn't we go through the whole Greek Second Rescue Deal is just days away yesterday ? I mean the deal was going to be reached by Friday - yet now we see it's still in the just days away mode as we learn further details on the talks. for example , the Troika has told the finance and Labor Ministers that the country's labor system must be cut to the bone - to the tune of salaries and pensions being cut 25 percent ! Yup , those were the glad tidings the Troika dropped on temporary PM L-Pap , who then was given the joyful task of relaying that to the political party chiefs ! How might that be received by New Democracy , Pasok and Laos ? Well , i can't say for sure - but what I do know is that the critical meeting between L- Pap and the party chief ( which has slipped from Wednesday to Thursday , from Thursday to Friday , then from Friday to Saturday ! If you think that is a good sign of how the good news L-Pap has to share will be received by the major greek parties - i have a bridge for sale just for you ! Meanwhile the PSI talks are in suspended animation , no one has a clue what the official creditors such as the ECB will do ( if anything to ease Greece's pain ) and NOW the talk is that the ECB and IMF may have to give Greece a bridge loan to cover the March 20th bond payments of 14.5 billion euros. while today is Febuary 3rd , Greece is still living Ground hog Day all over again !

The tragic events in Egypt where at least 74 people were killed , many crushed to death in the panic surrounding a riot after a soccer match , underlines that Egypt has been in ground hog Day mode almost a year after their revolution began ! Police have been accused by one group of fans at the match of allowing rivals to attack them - allegedly due to the belief that the victims had supported the protests over the past year, first against former President Mubarak , now against the Military government ! The more things change , the more they stay the same ? Or is it the more things stay the same , the reality is that no change has occurred at all ? Or perhaps let's just say Egypt is living Ground Hog Day - for about a year and counting ! Cosmetic changes have been made ( Port Said's Security chiefs and Governor have bee suspended ) , but the deeply unpopular interior Minister remains in place - this won't appease those protesters , thus the fuzzy mammal has been brought out in full view. 6 more weeks of winter , death and bloodshed lie in wait for Egypt . Syria is living a Ground Hog Day existence - the Arab League and European resolution for Assad to step down lies in limbo. Homs remain under daily attack - a virtual war zone continues day after day. Life in Homs is beyond desperate - families hunker down , scramble out ( risking life and limb to find food ) , wondering if supply routes will be cutoff and all food and water removed from their grasp. Meanwhile , back at the UN , China and Russia black the resolution pushed by the Arab League. Naturally Russia wants to cut off any foreign military adventures from jumping of - as per Libya.

Iran is definitely living La Vida Ground Hog Day - ongoing threats of an attack of their nuclear facilities , which go back to the era of Bush - Cheyney continue. Most recently , Defense Secretary Panetta opined that an Israel attack could happen in April , May or June - again these ongoing threats have occurred off and on since 2007. Of course back in 2007 , there wan't an oil embargo in place nor were there sanctions directed against Iran's Central Bank - while time will tell how seriously those sanctions will be ( with signs of rebellion from India , Turkey , China and Russia to carrying the water for the West. Heck , even Iraq plans to seek a waiver from the US promulgated Iran sanctions ) , the fact that they will impact iran's economy to some degree is concerning sign of escalating tension in the Persian Gulf. A false step by any party in play here , a mistake in judgment , a false flag attack - just a spark is needed to se the region on fire. War in the Middle East , civilians killed by marching Armies - very much in tune with living La vida Ground hog Day. So as we head into the morning and US Non Farm Payroll data ( more questionable data to give CNBC something to cheerlead over ) , keep in mind things are in the same mode , but the promise of better days is just " days away " Cheers !

Ground Hog Day !

noreply@blogger.com (fredw) — Thu, 02 Feb 2012 13:08:00 +0000

Hey , where ole fuzzy Phil ? As best I can tell , today is a replay of yesterday - Olii Rehn is out declaring that the Greek debt swap should be concluded in " coming days " . Deutsche Bank chief Josef Ackermann is stating Greek aid is now less dependent on banks but on " others " ( translation - hedge funds ) but we already knew that ! Ackermann further added the "present " haircut on Greece is 70 percent or more - and that if the country fell then Portugal could be next..... again , nothing new here , been there , discussed that , same jibber jabber we've heard repeatedly. Speaking of jibber jabber , Jean - Claude Juncker ( head of the EuroGroup ) now believes the measures from the January 30th Summit are largely insufficient and the Greek PSI ( debt swap ) talks are ultra difficult - what can one say to that other than " No Shitte Sherlock ?But that statement from Juncker explains of course why EU officials have scheduled a meeting of the EuroGroup for Monday to - discuss the second bailout program for Greece . More largely insufficient measures on the way I'm sure....

Actually I'm surprised that equities in Europe aren't flying today. Merkel is stumping up money in china today - and Chinese Premier is making the right type of noises ( we've heard these noises before of course ) that it is important to resolve the eurozone debt crsis. and that his country is considering greater involvement in the EFSF and ESM ( what - DAX , CAC and FTSE aren't up a hundred points on those comments ? ) Of course Wen then added " Europe must rely on itself , reduce its debt load and introduce structural reform. " Hmm , purse strings still drawn shut as far as I can tell !

Greece' herd of kitties masquerading as a Government say they have completed the bulk of the talks with the Troika - just a few items left unresolved , just 3 or 4 sticking points left say government spokesman Kapsis - of course the problem is the " 3 or 4 sticking points " are the minimum wage , supplemental pensions and recapitalization of the Greek Banks ! those are kinda big problems that remain unresolved - and this is far along the road to see they're still unresloved. just another example of Ground Hog Day playing out. And of course , until the Greek Rescue talks are completed for 130 billion euros ( or is it 145 billion euros ) , we don't actually get the details on the alleged deal on the PSI ( is the haircut 70 , 72 or 79 percent and who is going to go along with the deal anyway ? )

Nigel Farage offers timely commentary - which of course the EU trolls don't want uttered publicly !

Happy Ground Hog Day !

Diplomacy at gunpoint

British Eurosceptic MEP Nigel Farage stormed out of a European Parliament session on Wednesday night after his speech was interrupted by the German chairman.

The rightwing UK Independence Party (UKIP) leader was cut off when he compared the leaked German plan for Greece’s finances to be managed by Brussels to being like the Second World War Nazi occupation of the country.

Farage said the plan would see “a European commissioner and his staff occupy a big building in Athens and take over the running of the country”.

This commissioner would be nothing more than a "Gauleiter", he added, referring to the regional Nazi party leaders of the Third Reich.

The comparison sparked outrage among German MEPs. A German Green Party lawmaker, Reinhard Buetikofer, accused Farage of spreading “hatred between European peoples”.

“Greece is not a failing subsidiary company where head office needs to come in and take control," Farage also said. "Greece is a nation with a soul, a nation with pride, with history."

He then turned his attentions to the Belgian head of the European Council, Herman Van Rompuy, accusing him of being responsible for the “misery in these countries”, referring to the so-called PIIGS countries, Portugal, Ireland, Italy Greece and Spain.

Wednesday Wake Up Call !

noreply@blogger.com (fredw) — Wed, 01 Feb 2012 13:32:00 +0000

Good morning ! Today is Wednesday and much of the new of the day reflects similar topics from tuesday. A greek private debt swap is still just days away , the second rescue is just days away - of course Friday is just away as well ! whether stocks flit up or sink down , the trend is that the greater issues of the day remain unresolved - day after day. A new normal ? A bad dream ? Or just the new human condition of imposed dread , fear mongered hysteria and general doldrums.

Considering Greece received a bailout in 2010 ( which was resolve everything but of course did not ) and has been attempting to receive its second dollop of rescue funds ( 130 billion or 145 billion euros worth of dollop ) , what has changed for the greek people ? Based on the data from yesterday , the greek people have a million reasons to be irate - that was the most recent number of unemployed greeks as per October data ! A 19.2 percent jobless rate , with more harsh austerity just around the corner. Considering the efforts and track record of the Troika to date to " save " Greece , thank God the idea of a Budget Commissioner has failed ( for now ) , as one could expect Greece to swiftly overtake Spain's jobless rate of 23 or 24 percent ( depending on which day of the week you listen to the Spanish Finance Minister .

After weekends of frenzied talks , the debt swap is supposed done , it just needs to be announced - so they say. A " voluntary " 70 ( or is it 80 percent ) haircut , which somehow is not a credit event is in the bag , as long as the greek political parties play ball with the Troika. Greece's Prime minister Lucas Papademos , setting up his second planned ( or is it an emergency ) meeting on Wednesday or Thursday with the three major parties , two of which are resistant to another round of the endless austerity. The battle line for now seems to be the Troika demand that the minimum wage be cut ( sweeteners to make this bitter medicine go down are Troika hints it will drop opposition to their present attacks on the summer and holiday bonus pay .) At present , New Democracy and Laos are strongly opposed to any reduction to the minimum wage - as are the Unions and even Employer Groups. Let's see how long the resistant stands - after all , once these rescue and debt swap talks are wrapped up , the parties can focus on the April elections - New Democracy if it wins may just dump various austerity measures anyway - the political calculus may be agree for now , get the Troika out of the hair for now , win the election - and then do what you plan to do anyway.

The troubles in Greece are just a precursor for what will come the way of Portugal ( next in line probably ) , Spain ( 23 or 24 percent unemployment and a massive real estate mess ) and Italy ( 120 percent debt to GDP and a so called plan to reduce debt 3 percent a a year to achieve 100 percent debt to GDP by 2020. Meanwhile , their debt issuance is third in the world , trailing only the US and Japan - borrow to reduce debt , sounds like a plan. ) Greece is a test run , as will be Portugal. Spain and Italy will be a greater experiment - might that be when we see fiscal union rammed down the throats of Europe ? And following in the same path , we can see France lurching toward a bailout of some form or fashion - 2013 perhaps ?

Overnite manufacturing data for January improved in China ( 50.5 as compared prediction of some shrinkage ) , the UK ( 52.1 as compared with expectations of 50 ) and Germany ( 51 as compared with 48.5 in December .) However , Greece manufacturing data was dreadful - 41 ( down from 42 in December ) , France dropped to 48.5 from 48.9 indicating contraction , Italy still showing a contraction level of 46.8 ( although up from 44 in December ) and spain shows a lousy 45.1 ( but better than 43.7 in December .) Switzerland and the Czech Republic also showed shrinkage For now the winners and losers in europe are clear - chinese data , believe what you choose to believe with their data ( kind of like US data. )

US dat today is the ADP report out shortly , ISM data ( should be interesting after Tuesday's mis on manufacturing and Auto sales data. US futures are higher , Europe Bourses are higher , commodities are higher. ADP just out , 170, 000 private jobs for January supposedly created - we shall see what NFP fiction we see Friday ( but watch out for the annual revisions - do we lose another 300,000 jobs allegedly created last year ? Very hard to believe small and medium businesses are leading the job creation brigade , not these days. As a contrary report to note , Trim Tabs predicts just 45,000 new jobs for Friday - we shall see how the prediction match up with the official data. As we head further into the political season , take all of the government data with a larger pinch of salt - a wide discrepancy between data and reality exists . That is likely to follow trend.

So , there we are , another day , another morning ramp. Tread lightly , it is very treacherous time to invest / speculate / trade as the markets are broken and understand who is the sucker at the proverbial poker table !

Highway to Hell ? Happy Tuesday Edition !

noreply@blogger.com (fredw) — Tue, 31 Jan 2012 11:15:00 +0000

European Bailout Infographic: Presenting The Truckloads Of Cash Needed To Rescue The Insolvent PIIGS

Submitted by Tyler Durden on 01/30/2012 21:36 -0500

Central Banks

... No, literally truckloads. Our friends at demonocracy.info have been kind enough to put together an infographic that explains the European bailout in simple, visual terms, that even the most innocent of FTL truckers can grasp without much exertion, for the simple reason that it shows all the bailouts amounts in terms of trucks of cash. And here is the kicker: one would need a 13 lane highway, filled with trucks bumper to bumper, stretching for about 3 kilometers to represent the €2.91 trillion in total amounts owed by the PIIGS and their citizens (Click the link above for great info graphics , not that we should worry about this , right ? )

Well , a brief rehash yesterday's Summit where nothing much got accomplished which wasn't already expected - the ESM got approved ( details to be supplied later ) , the fiscal compact was approved ( by 25 out of 27 countries - meaning its not legal under EU law as a binding treaty for the 27 country EU and naturally it has been watered down to boot ) , nothing has been accomplished with Greece ( second bailout and PSI deal coming in days , wait for Godot continues. ) Sarkozy continued to make a fool of himself ( starting a fresh row with the UK by saying at one point that the UK had lost its industry ) , vainly trying to convince voters in France he's worthy of a fresh term in office ( one knows a wrecking hates to stop swinging until the building is totally demolished .)

Speaking of Greece , allegedly , the long awaited debt swap supposedly is coming to a head - with a coupon perhaps as low as 3 percent ! Good for Greece , very tough for private investors - naturally the devils will be in the details. At 3 percent and depending on the duration of the payout , the haircut could hit 80 percent ! Which means some of the hedge funds likely will litigate. And of course since 100 percent participation is required , that means Greece will have to pass some type of Collective Action Law to cram down those unwilling to take the sledge hammer write down voluntarily ! Which means CDS finally get triggered - which benefit the basis traders ( traders holding Greek bonds bought fairly recently at cheap prices with greek CDS as a hedge ) And of course the battlefield for the hedgies will be those bonds maturing on March 20th , which allegedly is held by hedgies seeking full payment. Can you say massive game of chicken going on ? And the talk of the ECB and IMF taking a haircut - seems to have vaporized , I guess ( like that MF Global customer money ) Speaking of other fables , Greek PM L-Pap say not only must the PSI talks get wrapped up this week , but the overall greek bailout 2 talks must be completed as well ( 130 or 145 billion euros ? ) Wonder how that gets wrapped up when Germany has said no further sovereign contributions above the 130 billion mark will be forthcoming - I guess the details will be coming late , along with Godot.

One last item , a chart of the day . european unemployment . Good news for Germany , bad news for the eurozone and Italy. Germany sees its unemployment drop to 6.7 percent , a twenty year low. Meanwhile for Italy , the numbers has hit 8.9 and the eurozone at large - 10.4 percent . Youth employment remains staggeringly high across the Eurozone. Here is the chart , read it and weep . Happy Tuesday everyone :

Another Monday , Another Summit In Europe !

noreply@blogger.com (fredw) — Mon, 30 Jan 2012 13:52:00 +0000

Good morning ! Today is the latest chapter in the ongoing Summit saga for the slow burning Europe in Crisis soap opera. Coming on the heels of the last Summit in December , today we have the heads of the European Council meeting to once again attempt to fool markets that they are capable of solving a problem beyond their grasp - good luck to that ! In the run up to the Summit , activity was frantic - we saw the EU impose a oil embargo on Iran - not effective until July 1st for pending contracts ( so that the crumbling economies of Greece , Spain and Italy just didn't flatline immediately. It remains to be seen what retaliation , if any , comes from the Iranian threat to block exports to Europe or some countries in Europe ( probably Greece , Spain and Italy earlier than the EU plan .) Fitch downgraded various countries in the Eurozone on Friday - Italy , Spain Slovenia saw their credit ratings cut two levels , Cyprus and Belgium saw their credit ratings cut one level - the reaction in the euro was it actually rose as this was discounted by markets !

The private investor debt swap negotiations creep onward with imminent deal , good progress , close to a deal announcements predictably provided . as of this morning , no announcement has been made as to an actual deal being reached nor have any specific terms been announced - the imminent deal will imminent tuesday as well. Probably the biggest announcement was the leaked paper , attributed to Germany , that for Greece to get its second bailout of 130 billion euros ( or is it 145 billion euros ) , they must relinquish control over their budget to a Troika selected Budget Commissioner and pledge to repay debt first before any other governmental spending would be allowed. the predictable fire storm from Greece has threatened to overwhelm any productive outcome from the latest faux Summit. As it stands presented - no PSI deal , no Greek rescue deal . expect an announcement that the ESN has been agreed , expect an announcement that the idea of a Fiscal Compact has been agreed - details to be supplied later of course !

As one would expect , the uncertainty is somewhat reflected in stocks and commodities ( moderately lower for the major Bourse in Europe , notably lower for US Futures , gold and silver off so far ) , risk off is better expressed by looking at CDS in europe , as follows :

5Y 10Y 5/10's Rolls

ITALY          416/426 +21        393/413      -23/-13
SPAIN          368/378 +20       342/362       -20/-10
PORTUGAL    39/40.5 +0.5      41.5/44.5      2.5/5.5
IRELAND     610/640 +5          440/510     -180/-120
GREECE        62/64   0              63/67         0.5/3.5
BELGIUM     238/248 +8         226/246       -14/0
FRANCE      169/174 +6.5    190.5/198.5     19/23
AUSTRIA     170/176 +5      184.5/194.5     14/19
UK                77/81   +2           92/98          14/18
GERMANY      88/91   +4.5    107.5/113.5     18/22

Housing data from China was not encouraging , note the following :

New home transactions by area plunged 89% W/w in Jan. 23-Jan. 29 to 4,400 sq/m, Uwin says in e-mailed statement.
Sales during Chinese New Year holiday decline to lowest level since 2006 for same period; volume 36% of 7-yr avg. for CNY holiday
Avg. new home price down 41% W/w
New home supplies plunged 87% W/w
Property developers may have to continue price cuts for cashflow to survive, Uwin analyst Zhijian Huang says
China may remove or relax home purchase restrictions during June-Oct period: Huang
Policy turnaround may boost sales before home prices rebound moderately: Huang

Between disappointing news from Shanghai and the confusion from Europe , various Bourses saw red - Shanghai was off 1.47 percent , the Hang Seng was off 1.66 percent , the BSE was off 2.15 percent , Jakarta was off 1.79 percent , the Strait times was off 1.24 percent and Seoul was off 1.24 percent. The Lunar Holiday is over and Asian investor clearly had a tad of a hangover - Japan and Australia were not as gloomy , off just .54 and .32 percent respectively.

So , where are things presently ? Greece's Prime Minister is warning that the country is on the brink and faces the spectre of bankruptcy and all of the dire consequences that ensue - unless the country's international backers agree to a new bailout. Ireland is warning its votes that if a referendum is required on the new fiscal Compact and the voters vote no , Ireland might have to leave the Eurozone. meanwhile , German Finance Minister Schauble has confirmed that a bigger contribution from public sector creditors as part of any Greek debt deal is not up for discussion at the Summit. Sarkzozy has pledged to institute a Finance Transaction Tax in France ( conveniently set to start in August , after the French elections ) , the Spanish Prime Minister has pledged to pass a decree on further bank restructuring next month. So , in sum , we see promises , threats , decrees coming forth , austerity as high as an elephant's eye and taxes being imposed flying into a european recession . Great for confidence.

So , as we see another Summit come and go - have the caters started working on the menus for March yet - the next big summit , we grind to the eventual and inevitable default in Greece. Equities grind lower after personal spending was flat last month ( income allegedly up 0.5 ) Portugal is still grinding toward a second bailout as its debt continues to move wider day after day. And a third Aircraft Carrier has been deployed to the Persian Gulf. Stay tuned - will other events eclipse the eventual and inevitable blow ups of sovereigns states in Europe ? who really knows - just bukcle up , its going to be a bumpy ride !

Weekend Post - Open thread !

noreply@blogger.com (fredw) — Sat, 28 Jan 2012 15:58:00 +0000

Happy Saturday ! In light of the news item that Germany had proposed of Friday that Greece bow down to the EU and surrender budgetary control to Brussels , naturally the question was how would Greece respond ? Well , here is the Greek response !

Greece 'will not discuss' EU budget control

Greece will not cede control over its budget to the European Union as has been proposed by Germany as a condition for a second bailout, Greek government sources have said.

"There is effectively a 'non-paper' that was presented to the Eurogroup," one of the sources said on Saturday, referring to reports that Germany had submitted a proposal to have the eurozone assume control over the Greek budget before it receives a new bailout.
"Greece will not discuss such a possibility," said the source. "It is out of the question that we would accept it, these are matters of national sovereignty."
Al Jazeera’s Andrew Simmons, reporting from Davos, said the possibility of the EU having any oversight of a member-state's buget has huge implications for the future of the European bloc.
"Basically, the EU would be taking over the budget and telling the Greeks what they can do and they can't do," Simmons said.

"What their saying in Greece point blank is you can't do this," he added.

So , who is bluffing here - Greece or Germany ? Is surrendering sovereignty over their budget and pledging payment of debt before engaging in any other state spending pre-condition for bailout number 2 ? By the way , is the second bailout 130 billion or 145 billion - and what happens if Iran cuts off their oil to Europe ? Oil jumping to 140 or higher for Brent will blow up the budgets of Greece , Italy and Spain as surely as any bunker bomb ! Even if the Greek government chose to do , who believes this would go down quietly with the Greek people and what about the military - where do these vital interest groups stand on the latest Troika demands ? Watching this unfold , what must the people of Portugal , Spain and Italy think ? Do they hear the whistling of the executioner's blade coming down toward their necks as well ? Stay tuned - things are starting to move a bit faster......

Has It Comes Down To this - Is Greece About To Become The Eurozone's First Vassal State ?

noreply@blogger.com (fredw) — Sat, 28 Jan 2012 01:25:00 +0000

(Reuters) - Germany is pushing for Greece to relinquish control over its budget policy to European institutions as part of discussions over a second rescue package, a European source told Reuters on Friday.

"There are internal discussions within the Euro group and proposals, one of which comes from Germany, on how to constructively treat country aid programs that are continuously off track, whether this can simply be ignored or whether we say that's enough," the source said.

The source added that under the proposals European institutions already operating in Greece should be given "certain decision-making powers" over fiscal policy.

"This could be carried out even more stringently through external expertise," the source said.

The Financial Times said it had obtained a copy of the proposal showing Germany wants a new euro zone "budget commissioner" to have the power to veto budget decisions taken by the Greek government if they are not in line with targets set by international lenders.

"Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time," the document said.

So , what's involved here ? First , Understand unless Greece submits , there is NO second bailout ! Second , what must Greece submit to - a) they must submit legally to commit absolute priority to future debt ! Now we see why the Troika is seeking further guarantees from the political parties to kiss the Troika rings. Stat revenues first and foremost has to go to debt payment- only then can the poor Greeks spend money elsewhere ! 2) Greece must relinquish control over its national budget to a Troika selected stooge ! Unbelievable stuff. and when , not if the Greeks don't comply ( as judged by the Troika ) , the Budget Commissioner of Greece has the power to tommy hammer Greece silly - think Greece has seen austerity up to this point ? It's just getting started friends. and this is the path that Portugal , Ireland , Spain and Italy will travel in the fullness of time. After the PIIGS , the next group of vassal states will be identified ( you can see which ones have the bullseye on their backs already ) , until the Troika runs the entire show ! One by one - watch the countries drop , falling under the control of the Troika - until the dream of the EU Super State has been achieved !

Sadly , are the Greek political parties in a uproar over the Troika edicts ? Heck , you know lapdog PM L- Pap is part of the Troika plan. But what about the Pasok , New Democracy and LAOS parties - have we heard their loud and angry voices yet ? There has been a symbolic gesture ( the reform Article to deregulate the Pharmacies failed ) , we have seen the typical political blustering , but what will these pols do when it comes down to the rubber hitting the road ? Is saving Greece more important than winning the April 8th election ( assuming it occurs on that date anyway and have the parties considering what they might be presiding over anyway ) , what will these parties agree to for their hotly sought after election to be held on time ) but rest assured , L- Pap is about to crack heads to achieve his masters' mission ! As noted below :

Prime Minister Lucas Papademos is due to meet Saturday with the leaders of the three parties in his coalition government as he attempts to obtain agreement on the demands for reforms made by the European Commission, European Central Bank and International Monetary Fund, commonly known as the troika.
Papademos will attempt to obtain a clear commitment from PASOK’s George Papandreou, New Democracy’s Antonis Samaras and Popular Orthodox Rally (LAOS) chief Giorgos Karatzaferis on the measures requested by the troika.
The failure of some PASOK and ND deputies to fully back a reform bill earlier this week has caused concern that Papademos will have trouble passing the legislation the troika has requested. The 10-page document distributed on Thursday calls for extra cuts worth 2.2 billion euros, 150,000 firings in the civil service as well as a series of structural reforms.
Papademos is due to take part in the European Union leaders’ summit on Monday and wants to travel to Brussels convinced that he has the backing of all three party leaders. There is considerable pressure on Greece to show a clear commitment to the steps being requested so that Athens can receive a second bailout, currently slated to be 130 billion euros.
“Greece has not only to commit itself, Greece has to deliver. Not all of the commitments have been fulfilled. That is one of the critical issues to confidence,” German Finance Minister Wolfgang Schauble said at the annual World Economic Forum in Davos Friday.
However, there were signs Friday that Papademos could face a tough task in extracting support from all three party leaders. Speaking in Parliament, Karatzaferis made it clear that he would not sign any written commitments if they were requested.
Speaking to Reuters Friday, Papademos indicated he was hopeful that talks with the troika could be concluded soon. “The aim is to complete the discussion with the troika by the middle of next week at the latest,” he said, adding that Greece had made some positive steps. “Much more has been achieved than sometimes appears to the public. There is some slippage in the implementation of the fiscal adjustment program and the reforms but internal devaluation is already taking place.”
Papademos added that the 2011 budget deficit would come in at about 9.5 percent of GDP and that there might be modest growth next year.

Things that make you go Hmm....... And a a Break From Greece !

noreply@blogger.com (fredw) — Fri, 27 Jan 2012 12:39:00 +0000

Well , good morning All ! Just another day , waiting like Godot to see what Plan 12 from Outer Space gets put forth for Greece's neverending PSI debt swap and eternal bailout . A few hours to kill before US GDP - have to love a good piece of fiction , right ? Anyway , just as a open post , here are a few things that made me go hmm today ! First up , anyone buying the notion that 35 pounds of cocaine ( street value about $ 450,000 ) allegedly sent by a mexican drug cartel went to a dummy address .... did the wrong dummies screw up the intended transaction ? Nice bribe perhaps , hard to understand why send the dope to the UN rather than some other NYC address - last time I checked , there's much more security in place at the UN than a Brooklyn bodega.

1) Two forged diplomatic pouches containing a total of 35 pounds (16 kilos) of cocaine were delivered last week to the UN headquarters building in New York, according to a UN official speaking on condition of anonymity.

The packages, delivered to the mail room, were singled out Jan. 16 by security staff during a scan, according to the official, who was not authorized to discuss the matter publicly.

No recipient was identified on the shipment, which was sent from Mexico City, and the badly forged UN logo on the parcels was an effort to get the shipment across the border, the official said.

“Two suspicious mail bags were intercepted by the Security and Safety Service at United Nations headquarters in New York,” according to a statement released by the UN spokesman’s office, which declined to describe the contents.

“The United Nations nor anyone located in the United Nations was the intended recipient of this delivery and the bags were not UN bags, diplomatic or other,” according to the statement.

Well , I guess that's the story and the UN is just going to stick with that one - until someon figures how to get the coke from the NYPD ! Second item that made me go hmmm..... I see the UN Security Council is set to debate a draft resolution supporting the Arab League plan for Assad to relinquish power..... Russia still stands firmly against it for now. Say what you like about Syria , this appears to be the Libya movie all over again. Consider the state of Libya today after the power grab there.

Russia says it cannot support the current version of a joint Arab-Western draft U.N. resolution on Syria because it “does not take into account” Moscow's positions on how to end the 10-month-old political crisis.

2) U.N. Security Council to hold closed talks on Syria situation

By the CNN Wire Staff

updated 11:20 PM EST, Thu January 26, 2012

Pillay: Tracking Syrian deaths diffiicult

(CNN) -- The U.N. Security Council will hold closed-door talks Friday afternoon on the situation in Syria, the British and French delegations reported Thursday night on their respective Twitter feeds.

The discussion -- set to start at 3 p.m. -- comes as members weigh a draft U.N. resolution on Syria, obtained by CNN this week, that calls on "all states" to take steps similar to Arab League sanctions imposed in November.

Arab League Secretary-General Nabil el-Araby and Qatar's prime minister, Sheikh Hamad bin Jassim al-Thani, will travel to New York for talks with the United Nations on Monday, an Arab League official said Thursday. They will meet with the Security Council during the visit, said the official, who cannot be named because he is not authorized to speak to the media.

The 22-member Arab League has called on al-Assad's regime to stop violence against civilians, free political detainees, remove tanks and weapons from cities and allow outsiders -- including the international news media -- to travel freely in Syria. On Wednesday, Syria's government agreed to a one-month extension of the league's monitoring mission there.

The third item was a piece on Iran that struck me as just a tad too pat , smacking of hubris.....

3) Citing a number of officials and reports, the New York Times said that estimates that a strike on Iran’s nuclear facilities “would set off a catastrophic series of events” is considered by some to be “partly a bluff,” and that these estimates are accepted at the top levels of the Israeli government.

Israeli officials and academic experts think that Iran’s threats of retaliation to a possible strike against it are a bluff, the New York Times reported on Friday.

The newspaper said it had spoken with eight current and recent top Israeli officials, and that these conversations suggest that “since Israel has been demanding the new sanctions, including an oil embargo and seizure of Iran’s Central Bank assets, it will give the sanctions some months to work; the sanctions are viewed here as probably insufficient; a military attack remains a very real option; and postattack situations are considered less perilous than one in which Iran has nuclear weapons.”

One retired official told the New York Times that based on past scenarios including threats from Saddam Hussein to “burn half of Israel,” and threats from Hezbollah which resulted in limited harm to Israel, “If you put all those retaliations together and add in the terrorism of recent years, we are probably facing some multiple of that.”

Dear Mr. Secretary - You Have Been Invited To A Care To Explain Yourself Soiree !

noreply@blogger.com (fredw) — Fri, 27 Jan 2012 02:56:00 +0000

You Have Been Invited To A Soiree ! Happy Thursday !

noreply@blogger.com (fredw) — Thu, 26 Jan 2012 12:23:00 +0000

http://www.telegraph.co.uk/finance/debt-crisis-live/9040103/Debt-crisis-live.html

It's hard to separate all of the EuroGroup Fin min meetings from the other hastily scheduled EuroGroup meetings , which meetings are Super Summits versus Informal Summits . is today a Merkozy special meeting or teleconference or are we waiting for the while smoke to arise after a Merkel - Sarkozy - Monti meet and greet tomorrow ? Do any of these sessions produce anything other than the assurances more meetings will follow ? So let's just have a Soiree - after all , the host of all hosts ( Mr Rompuy ) , is pulling out all of the stops !

Well , Ben Bernanke had his two day regularly scheduled meet and greet with his Fed Reserve Comrades - and when the smoke cleared , what did we learn ? First , we learned ZIRP will now continue until the end of 2014 ( guess that's when the cows actually come home ) or maybe what the Fed meant we really aren't ever going to end ZIRP - why didn't they just say the end of 2020 ? In that way , we could have seen ZIRP end , Greece see its debt fall to 120 percent of GDP and Santa come down the chimney all in the same timeframe ! Second , we learned the Fed won't set specific long term goals for employment - well , that's good i guess after we saw how central planning worked out with the Soviets with their five year plans. By the way Ben , fixing the Fed Fund rate at artificially low levels for eternity doesn't lead to productive active , jobs or stability - just saying. Finally , the Fed says its not inflation targeting ( I guess some stuff just happens ) with its QE Lite or otherwise programs . On the otherhand , while not targeting inflation , 2 percent inflation is a " goal " Will the Fed shoot and so , will they score ? Just remember that we're only experiencing that 2 percent inflation consistent over the longer run when you fuel up or buy food !

And could we truly have a soiree without the latest Greek PSI rumor de jour ? Today " news " is the private investors will now accept a 3.75 coupon ( down from their no less than 4 percent demand ) all would be joyful - except the participation of the public sector creditor ( including the ECB ) seems to be a pre-condition. So while Germany and the UK Bourses are rip roaring presently , i expect this will be dashed as time goes on. Stay tuned and enjoy the show while it last ! One news item below and your invitation to Rompuy's Soiree set for below .....

09.58 Now I'm confused. After reports that the ESM won't be on the agenda at the upcoming EU summit, here is EC President Herman Van Rompuy's invitation letter to the event, which states that it is:

rompuy

The Edifice is Crumbling ! Greece version on Side A , European antics on Side B !

noreply@blogger.com (fredw) — Thu, 26 Jan 2012 01:40:00 +0000

Things fall apart - generally at the wrong times , perhaps they just fall apart when the supporting pillars no longer can withstand the load placed upon them ! Note the following news from Greece !

Employers and labor unions found some common ground during the first day of wage talks on Wednesday but it appears that neither side is willing to agree to Prime Minister Lucas Papademos’s suggestion that private sector workers’ salaries should be reduced.
Papademos had indicated that lower wages would help Greece become more competitive but union and employer representatives agreed that the minimum wage of 751 euros gross and the two extra monthly salaries that many private sector workers receive each year should not be reduced or scrapped.
“We are on the right track,” said Vassilis Korkidis, the head of the National Confederation of Greek Commerce (ESEE). “The social partners agree that the minimum wage is not to blame for the recession and businesses closing down.”
Yiannis Panagopoulos, the head of Greece’s private sector umbrella union GSEE, criticized the government for suggesting that it might force a law through Parliament that adjusts salaries if it is not happy with the outcome of union and employer talks.
“We cannot have a dialogue under the threat of decrees that are reminiscent of years gone by,” he said, adding that the apparent pressure from the European Union and the International Monetary Fund for wage reforms was not helping either.

http://ekathimerini.com/4dcgi/_w_articles_wsite1_31460_25/01/2012_424198

Apart from the Greek Commerce Organization and the GSEE Union finding common ground against the Troika demands on the minimum , did you see Merkel's sad face at Davos ? The dour warning ( shrilly warning the sky is falling once again ) from Lagarde , the usual Rehn and Barraso bleatings - this time for more guarantees from Greek pols who everyone knows have NO INTENTION of keeping them ! Missed the squawking , take a gander below :

In an interview with six European newspapers, Merkel expressed doubts about the outlook for Greece, which she called “a special case.” “Despite all the efforts that have been made, neither the Greeks themselves nor the international community have yet managed to stabilize the situation,” she said.
Lagarde, in comments to French radio station Europe 1, said the EU must build a fire wall to contain Greece’s crisis. “In case of contagion, one needs to be able to stop it. Greece, for example is in an extremely difficult situation, let’s be realistic,” she said.
In Brussels, European Economic and Monetary Affairs Commissioner Olli Rehn and EC President Jose Manuel Barroso joined the chorus, insisting that more rescue funding would not be released unless the leader of the two main parties in Greece’s coalition -- socialist PASOK and conservative New Democracy -- clearly commit to reforms.
Prime Minister Lucas Papademos is expected to seek such guarantees from party leaders ahead of Monday’s EU summit.

But how do we know the edifice has truly begun to crumble ? Dig the story below - everyone wants to play the role of the sharpie these days. Well , here we go :

Germany's Bild tabloid buys Greek debt

Germany’s Bild newspaper said on Wednesday that it has bought two Greek bonds.
Bild revealed that it invested just over 10,000 euros in Greek debt, buying the bonds at less than 50 percent of their face value.
One note matures on March 20, the other on May 20, 2013.
If Greece succeeds in agreeing on a voluntary haircut with its bondholders, then Bild could be among those who hold out and force Athens to pay the full value of the bonds.
This would mean the German daily could more than double its money.

ekathimerini.com , Wednesday Jan 25, 2012 (19:58)

Morning update - Wednesday Edition !

noreply@blogger.com (fredw) — Wed, 25 Jan 2012 12:41:00 +0000

Well , we have reached January 25th , the Eurogroup Fin min meeting has come and gone with no Greek PSI deal in sight ! What seems to be the case is that the so called private investors have dug the heels into the ground and are attempting to hold the haircut line at 50 percent - which would reflect the deal reached on the Greek haircut from way back in October. In contrast , the IMF and EU have pushed hard for a much deeper haircut - one which would require a haircut much closer to 75 - 80 , once the coupon on the bond and duration is taken into account. With time eroding away , a mexican standoff has been reached - of course until one side blinks. well , pit this in the category of a possible trial balloon , it seems the public sector creditors MAY be prepared to take part in the haircuts after all ! Consider the excerpt from Greece's Kathimerini below :

European economy and finance ministers continued to push for a compromise by private holders of Greek debt on Tuesday during the Ecofin meeting in Brussels, but it appears that the European Central Bank will have a key role in the restructuring process.
“The current state of the negotiations with the private creditors is that we are a bit short of where we want to be,” German Finance Minister Wolfgang Schaeuble told reporters after the Ecofin meeting. “As long as we do not have debt sustainability, there will not be a new program,” he added, effectively playing the Greek default card.
However Kathimerini understands that although no such decision has been made by the ECB yet, Monday’s Eurogroup meeting decided in favor of the lender’s participation in the haircut as the only way for talks on the debt restructuring not to fail.
An indication of this came in a statement by Finance Minister Evangelos Venizelos, who argued that among the topics discussed was the search for an indirect way of increasing the participation of the so-called “official” sector -- the Greek government, the European Union, International Monetary Fund and ECB -- in a way that would not entail an increase in loans to Greece.
Although he stopped short of saying it in clear terms, the only such way is the ECB’s participation in the 50 percent haircut. At the moment, the ECB holds 45-50 billion euros in Greek bonds and its participation in the haircut would signify a benefit of 10-12 billion euros for Greece.

Now the reason I describe this as a trial balloon is based on the report in today's The Telegraph live blog that the ECB remains opposed to losses on its Greek debt holding despite pressures to restructure them - might the position of the ECB just be another example of " comments in the bazaar " , to paraphrase German FM Schauble's apt description of negotiating positions subject to change ? In that regard ( and if one really , really wonders where the pressure might be coming - also consider which nations outside Europe hold the largest quotas at the IMF ) , note Christine Lagarde's comment / warning that if a haircut on private sector debt is not enough ( it isn't of course ) , public holders of debt will have to participate in renegotiation - adding that equilibrium between private and public sector in Greek debt renegotiation is a " concerning question ". Yes Christine , if one is a private investor , why the ECB gets a pass probably is a concerning question !

Meanwhile GDP in the Uk slipped 0.2 percent in Q4 2011 , construction sector output decreased 0.5 percent in Q 4 2011 and output of the production sector fell 1.2 percent in Q 4 2011 - this makes the call from the Bank of Canada governor that Europe is already in recession plausible , especially Europe Ex- Germany. The contraction of the UK economy follows yesterday's announcement that the debt of the UK exceeded one trillion for the first time ! The combination of expanding public debt and a contracting economy makes PM Cameron's position dicey regarding any expansion of doling taxpayer money to the IMF or agreeing to any Financial Transaction Tax which may further hamper a weakening UK economic picture.

The most important question up to this point has been will Germany continue to be the paymaster of the Eurozone ? A more subtle question is has Germany lost its sway of morale persuasion over the Eurozone and greater 27 Country European Union ? In that regard , consider the following commentary , sourced from Der Spiegel , The Guardian and Naked Capital - and wonder whether Germany has lost its perceived leadership role in guiding europe though the present dark days :

With Spain also struggling and Italy under increasing pressure, the continuation of contagion appears to be taking its toll on the politics of Europe with Germany’s ability to control the situation diminishing. As Spiegel reports:

Berlin has been unflinching it its efforts to both increase fiscal discipline in the euro zone and to avoid throwing more money at the European debt crisis. Increasingly, though, Germany’s EU partners are unwilling to play along. Chancellor Merkel now finds herself confronted with powerful opponents
….
A large alliance of the finance ministers, heads of government and central bankers from almost all of the 17 euro-zone member states has been calling for the European Stability Mechanism (ESM) to be enlarged — significantly. The permanent euro backstop fund, which will go into effect this year and will ultimately replace the temporary European Financial Stability Facility (EFSF), needs to encompass fully €1 trillion ($1.3 billion) instead of the planned €500 billion, Italian government officials have told their German counterparts.
At the same time, widespread resistance in Brussels to German plans for a new system of financial regulation within the EU is becoming more assertive. Merkel’s proposal for all EU member states to pass balanced budget initiatives — known in Germany as a “debt brake” — has been torpedoed as has the idea to allow the European Commission to bring countries that stubbornly violate deficit rules before the European Court of Justice.
…
Indeed, the balance of power in Europe has shifted. As long as Italy was ruled by a clown like Silvio Berlusconi, it hardly had any voice in efforts to save the euro. But ever since Monti, a respected financial expert, took over, the front of Merkel opponents is stronger than ever, all the more so because quite a few experts endorse Monti’s position.
….
Sarkozy is now getting the support of prominent economists from around the world. Christine Lagarde, the head of the International Monetary Fund (IWF) is calling for more money for the euro backstop fund as is Mario Draghi, the president of the European CentralBank (ECB), who has been in regular contact with his compatriot Monti. In a Monday appearance in Berlin, Lagarde said “we need a bigger firewall.”

Germany also appears to be losing support from even its strongest allies. Last week the Dutch central banker Klaas Knot gave an interview blaming Germany for the failure of the EFSF in which he stated:

The most important obstacle lies in Germany, not in the Netherlands, we haven’t moved in the right direction and it’s also clear that measures needed are happening too slowly and are too limited in size.

To add to that, Luxembourg’s new foreign minister gave an interview with German media yesterday in which he called the fiscal compact a ‘waste of time and energy’.

Is the failure of austerity-centric policy finally taking its toll on Germany’s ability to steer Europe’s response to the financial crisis? This would certainly explain why Mario Monti seems so sure that his country will be receiving the fiscal and monetary backstops. The outcomes from next week’s EU summit will provide more clues.

http://www.nakedcapitalism.com/2012/01/germany-loses-its-grip.html Germany loses its Grip

http://www.spiegel.de/international/europe/0,1518,811155,00.html Merkel's Fiscal Pact a Waste of Time and Energy

http://www.guardian.co.uk/world/2012/jan/25/angela-merkel-greece-financial-meltdown merkel cast doubt on saving Greece from financial meltdown

Morning Update - Tuesday Edition !

noreply@blogger.com (fredw) — Tue, 24 Jan 2012 13:28:00 +0000

Good morning all ! We 're seeing a risk off start - european Bourse are off notably , in particular CAC and DAX. Shanghai and Hong Kong closed for the Lunar holidays but Australia was open - and was off more than one percent and a quarter percent. US Futures off somewhat , US ten year bond three bps better , oil off mildly and gold off 12. Risk of is the word of the morn.Let's examine some reasons that may be the case today ! first item to consider , from ZH focuses on Greece , bit surprise that imminent deal is not exactly imminent after all

EURO ZONE FINANCE MINISTERS REJECT OFFER OF GREEK PSI REACHED WITH PRIVATE BONDHOLDERS, ASK NEGOTIATORS TO CONSIDER COUPON ON NEW GREEK BONDS BELOW 4 PCT-EURO ZONE SOURCES - RTRS

What should we take from this ? First , let's walk through the sequencing of events. The Greece PSI talks have been dragging on for months - recall the first " deal " was for a 21 percent haircut last July , which then changed to a need for a 50 percent haircut , then 50- 60 percent , now it is clear the private investors will have to accept a haircut closer to 80 percent. Last week , we heard the so called negotiator for the Banks , Charles Dallara say on Friday a deal was imminent , there was the predictable ramp up on the hopium or lies - pick your poison. then on saturday , good ole Charles suddenly flew out of town without a deal being reached ! Of course the spin was talks were continuing , a technical team remained in place , Charles was participating by phone - blah , blah , blah.

Now of course we find out a tentative deal was reached between Greece and Dallara , however , said deal was rejected out of hand by the EuroGroup Financial ministers as insufficient to reduce Greece's debt meaningfully by 2020. So , Dallara's position is that the the offer put forth last weekend ( 4.25 coupon was the offer , compared with EU's demand that any coupon over 3.5 percent would not be accepted ) represented the last opportunity to achieve a " voluntary " deal , the EU veto could set the stage for a Greece default on March 20th as paying the 14.5 billion euro debt maturing on that date simply isn't feasible. Speaking of deadlines , once again they're falling away - the final PSI deal was to be completed by January 30th , now we hear Greece hopes to present its best and final offer to private investors by Febuary 13th ! Any day now expect more rumbling of Collective Action clauses ! By saying an official offer won't be tabled until F

ebuary 13th ( if then ) , there simply won't be time to secure meaningful participation as the process to obtain participation by and between the various private holders of Greek debt is one which takes weeks. Get ready , a default ( most likely a hard one ) is coming.

PetroPlus, Largest European Refiner By Capacity, Files Bankruptcy

Another odd item , considering the timing of the oil embargo just announced , one would think Governments in Europe would have " encouraged " the banks who had cut of the credit lines of PetroPlus ( which just happens to be the largest refiner by capacity in europe ) , to find a way to resolve these credit line issues - after all , didn't the Banks receive about 600 billion in a three year LTRO and isn't lending actually what Banks are supposed to do ? Well , i guess the real name of the game still remains deleveraging and seizing assets if you're a bankster ! Of course , just looking at the European Banks involved ( BNP Paribas , Soc Gen , Natixis , Credit Suisse , Deutsche Bank , Rabobank, ING and Comerzbank - one understand the need to delever and seize assets as said banks are troubled , to be kind ! So at the end of the day , what's good for the banksters is good for europe , unless one works at the refineries closed or wants to buy liters of gasoline in Europe ! Final piece to ponder , check the item below ! Just simply wow !

India to pay gold instead of dollars for Iranian oil. Oil and gold markets stunned
DEBKAfile Exclusive Report January 23, 2012, 5:57 PM (GMT+02:00)

Tags: India China sanctions Iranian oil European Union

Iranian oil for India

India is the first buyer of Iranian oil to agree to pay for its purchases in gold instead of the US dollar, DEBKAfile's intelligence and Iranian sources report exclusively. Those sources expect China to follow suit. India and China take about one million barrels per day, or 40 percent of Iran's total exports of 2.5 million bpd. Both are superpowers in terms of gold assets.

By trading in gold, New Delhi and Beijing enable Tehran to bypass the upcoming freeze on its central bank's assets and the oil embargo which the European Union's foreign ministers agreed to impose Monday, Jan. 23. The EU currently buys around 20 percent of Iran's oil exports.

What else needs to be said other than China , India , Turkey are blowing off the Iran boycott and continuing to advance their national agendas - and India isn't being very shy or diplomatic in rebutting the desires of the US and EU. Russia and China continue to provide support and assistance to Iran , therefore other than crush the economies of Greece and Italy , the EU oil boycott of Iran has already been neutered - watch Japan and south korea also work around the embargo as they will take the position that their economies shouldn't suffer when other countries they compete with globally thumb their nose at the boycott . How long will Israel play the game of waiting and watching Iran proceed with it progress in the nuclear arena ? my fear is not too long. Can you say " Other Events " ? Good morning and God speed !

Morning Update/ Market Thread 1/23

noreply@blogger.com (Nathan A. Martin) — Mon, 23 Jan 2012 13:49:00 +0000

Good Morning,

Equity futures are close to even this morning despite failure once again for a Greece deal (default) to be consummated. The Euro is much higher, dollar lower, bonds rolling over like the Costa Concordia, oil higher, gold & silver higher, and food commodities continuing to strangle those on the margins.

Remember WHO the “private” bondholders are that will take the haircut on any Greek default… they are primarily the large banks who created the money they used to “buy” the bonds from nothing. Any “deal” will only cause a paper loss which will be immediately replenished by more money from nothing deals. A true default would wipe the slate clean, but not here, no, they are talking about only wiping the debt to the 120 laughable percent of GDP level – which means the country is still beyond the macroeconomic debt saturation level. So this will set precedent for the rest of the countries who will then also have to be defaulted down to 120% of their GDP. LOL, it’s all a joke meant only to enslave the majority of the nation, strip it of its assets, and keep the private bankers in power.

No meaningful economic data today, quite a bit later in the week though, with the first whack at deceiving the masses with 4th quarter GDP being the highlight of the week this Friday. The complicit expectation is for a whopping 3.1% growth, up from the current Q3 lie of 1.8%. Whatever the current lie, look for it to be subsequently lowered, and overstated by at least 40% in the real world.

I’ll be working two boat shows over the next two weeks, and therefore this will be my last post until the second week of February. Fred will be posting on occasion and will have an open thread posted each morning where I know you will update one another on the latest data and events, thank you for that.

The shows will be interesting as the Sportsman’s Show in Puyallup is supposed to begin setup today, but as of last night was still without electricity from the ice storms that devastated trees and power lines in that area. I understand it looks like a war zone, there was so much damage.

Speaking of war zones, the EU has just imposed more restrictions on Iran following the U.S. sailing an aircraft carrier up the Straight of Hormuz yesterday. This does sound like baiting to me… just remember that desperate people do desperate things, and those in power will do desperate things to hold onto that power – thus other events are coming.

Regarding what's left of the "market," the VIX closed below the lower Bollinger Band on Friday and it looks like it will close back above it today. If so, that is an entire market sell signal - for what it's worth in this manipulated, money from nothing, end of empire stage:

I hope everyone has a good couple of weeks, if you get the chance come visit me at the Seattle Boat Show, Century Link Field through February 5th.

I, Nathan Martin, no longer consent to the lies.

Looking At Public Debt in Europe , Understanding Why European Pols all Seem Like Jerry Lewis

noreply@blogger.com (fredw) — Mon, 23 Jan 2012 12:05:00 +0000

European public debt at a glance

July 21, 2011 -- Updated 1318 GMT (2118 HKT)