RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 13/02/12
Submitted by RANSquawk Video on 02/13/2012 - 05:12 ETC Morning Briefing RANSquawk
Guest Post: Charting The Federal Reserve's Assets - 1915-2012
Submitted by Tyler Durden on 02/12/2012 - 19:41 Commercial Paper Federal Reserve Guest Post
Here we present a history of the Fed in charts. As you’ll surely glean from the below — the Fed has degenerated from a by and large passive institution (dealing only in high-quality self-liquidating commercial paper and gold) to an active pursuant of junk, an enabler of wars, a ‘benevolent’ combatant of the depressions of its own creation, a central planner of employment & prices and of course a forgiving friend to inconvenient market follies.
Athens By Night
Submitted by Tyler Durden on 02/12/2012 - 18:16
The Troika went to bail out Europe's banks (for the nth time) and all we got was this postcard of night time Athens...
Greek Parliament Passes Latest Austerity Vote
Submitted by Tyler Durden on 02/12/2012 - 17:46 Germany Greece headlines Siesta
The Greek parliament just passed the latest proposed austerity plan with a majority voting Yes. Judging by the reaction of the EURUSD, which experienced a modest 40 pip short covering squeeze in the last few minutes, one would imagine that today's Greek vote outcome is surprising. It isn't: after all, all Greece has done is promise to do something it won't do in hope it can get another bailout package, this time amounting to €210 billion (of which its people will pocket a de minimis 19%). As we said earlier: "The only real questions are i) what the Greek population may do in response to this latest selling out of a population "led" by an unelected banker, which if history is any precedent, the answer is not much, and ii) how Germany will subvert this latest event, and put the bail [sic] back in Greece's court once again." Sure enough, to paraphrase what we said before, the question now is what the popular Greek response will be having learned its politicians sold it out yet again, which will likely be nothing much, as it is 1 am local time, and as everyone knows revolutions in heavily socialist countries only start between 9 am and 5 pm, with a 2 hour break for siesta. More importantly, keep a close eye on headlines out of Germany. That is all that matters now.
Average Gasoline Price Jumps To Highest In 5 Months
Submitted by Tyler Durden on 02/12/2012 - 17:21 200 DMA Bank of England Crude Crude Oil David Rosenberg Displaced Moving Average European Central Bank Germany Gross Domestic Product Middle East None Reuters Rosenberg
Stocks are not the only thing enjoying the ECB's $800 billion balance sheet expansion (and just announced additional Bank of England Quantiative Easing) over the past 6 months. Lately a new and unwelcome visitor has also figured out the Euroean Central Bank's sneaky motives. No, not Germany, they still are hopelessly confused and still believe the ECB is not "printing" money. Nor gold. It did long ago, just as Roubini was calling for an imminent crash following the 200 DMA breach - it is headed over $2000 in short order. No, this time it is that last entrant to any reliqufication party, who just happens to be the guaranteed party-pooper: gasoline.
Summary Of Key Events In The Coming Week
Submitted by Tyler Durden on 02/12/2012 - 15:43 Australia Bank of England Ben Bernanke BOE Consumer Sentiment CPI Czech European Central Bank Germany Greece Gross Domestic Product headlines Housing Starts Hungary India Initial Jobless Claims Italy Mexico Michigan Norway Poland Turkey Unemployment United KingdomLast week, there were relatively few US data releases, but Initial Jobless Claims continued to surprise on the positive side, while U of Michigan Consumer Sentiment saw a small decline. This week, the FOMC minutes on Wednesday with guidance on the Fed's balance sheet will be the key event. Aside from the Fed, there will be many key releases in the US with IP, CPI, and the regional business surveys. The market expects an increase of 0.6%mom in IP, 0.3%mom in CPI, and small gains in the surveys. ?In Greece, negative headlines over the new austerity package on Friday caused some reversal of the rally in the first part of the week, and as a result, we were stopped out of our short $/CAD recommendation (for a small potential gain). However, the Greek cabinet agreed on the new austerity measures late on Friday, and parliament appears to be on track for a positive vote. The Eurogroup meeting scheduled this coming week will be important to watch as well, and Greek GDP will give a sense of the cyclical damage caused by austerity.
Athens Burning As Police Runs Out Of Tear Gas
Submitted by Tyler Durden on 02/12/2012 - 14:19 Eurozone Gambling George Papandreou Greece Recession Reuters TwitterTonight's protest in Athens has all the makings of the vintage ones from May of 2010, and the nigh is still young. Here are some updates:
- FTW: Public order minister resigns in Greece as fires burn - BBC
- Rioting spreads across central Athens, at least 5 buildings set ablaze - AP
- 2:02PM EST: FIRES ARE BURNING SEVERAL SMALL BUSINESSES AROUND ATHENS AS PROTESTERS CLASH WITH POLICE NEAR GREEK PARLIAMENT
- 1:52 PM EST: POLICE ARE CLEARING PROTESTERS FROM OUT IN FRONT OF GREEK PARLIAMENT BUILDING
- 1:50 PM EST: ATMS ARE REPORTEDLY EMPTY AROUND ATHENS... STILL UNCONFIRMED WORKING TO CONFIRM THIS
- 1:48 PM EST: LARGE FIRES ARE REPORTED AROUND ATHENS... INCLUDING A BRANCH OF EUROBANK AND STARBUCKS
- Skai TV reports that police have run out of tear gas & have asked for more supplies to be brought
As a reminder, the final vote is not until midnight.
For Greece, Bailout Two Is Just The Beginning
Submitted by Tyler Durden on 02/12/2012 - 09:57 Greece Gross Domestic ProductIf one is wondering why Greece Finance Minister Venizelos is scrambling to pass the proposed bill which enacts Greek Bailout #2, without any debate or details, very much like the US Attorneys General passed the robosigning settlement without a robosigning settlement even having been inked, the following excerpt from Section E of the MoU between Greece and the Troika should explain it. Because heaven forbid someone actually ask for details as to just what '€[xxx]' of future funding needs over and above the €320 billion in committed funding means in practical terms, i.e., just how lower the minimum wage is going, how many million more jobs will be lost (in a population of just 11 million), and how soon until pension and retirement benefits go negative. Also, our German friends may be interested to know that funding 136% of Greek GDP in the form of endless "bailouts" (of which 81% goes to shore up bank balance sheets), is just the beginning. We are confident our German PM friend is more than aware of this exit clause which gives her the loophole to opt out of everything all over again.
Live Streams From Athens And Greek Parliament
Submitted by Tyler Durden on 02/12/2012 - 09:27 Germany Greece
Today at midnight local time, 5pm Eastern, the Greek parliament is expected to pass the latest bill finalizing the terms of the second Greek bailout, which as explained yesterday has quietly increased from €130 billion to €210 billion. Needless to say, it will pass, as the opportunity cost for Greece of "pledging" to achieve unattainable targets while doing absolutely nothing, as has been shown repeatedly over the past two years, is zero. The only real questions are i) what the Greek population may do in response to this latest selling out of a population "led" by an unelected banker, which if history is any precedent, the answer is not much, and ii) how Germany will subvert this latest event, and put the bail [sic] back in Greece's court once again.
A Greek Default Doesn't Need To Be Chaotic For Greece
Submitted by Tyler Durden on 02/12/2012 - 09:01 Bond Central Banks China Creditors default European Central Bank Fail fixed Greece Gross Domestic Product International Monetary Fund None Reality recovery United KingdomThe rhetoric coming out of Greece has reached a fever pitch. Papademos and Samaras are both out their creating dire images of a post apocalyptic Greek state if a default occurs. Maybe it is a good time to remember what Papademos’ job is. He wasn’t elected. He doesn’t represent the Greek people in a fashion that we are used to – running for election and winning the election. He was foisted on the Greek people by the EU – the very people he is going through the motions of negotiating with. His JOB was to get the Greeks to accept what the EU wants. If he isn’t the most conflicted politician of all time, he is right up there. Samaras may believe it, or may have decided this is his best route to power when the vote is passed and the Greek people decide to kick Papademos out (remember, he was never voted in). Either of them would be more credible if they made any attempt to explain why it would be so disastrous. So far, not one basic fact to support the chaos theory has been given. I will admit that if Greece defaults without any preparation, it would be extremely ugly, but there is no reason not to be prepared. So, if I was the Greek Finance Minister (I would probably have a longer last name, with more vowels) here is an outline of how I would prepare for default.
Whither Gold
Submitted by Tyler Durden on 02/11/2012 - 23:03 Bond Monetization Quantitative Easing
The prophetic words of Antal Fekete in his now infamous 'essay' on Gold are as relevant now (perhaps more so) as they were when he first wrote them 15 years ago - especially as the Euro-zone migrates from lossening fiat-money to quasi-money (greek pharma bonds for instance). While summarizing this must-read discussion of mainstream economic orthodoxy's mis-teachings is impractical, his initial introduction sets the stage for what is to come: "The year 1971 was a milestone in the history of money and credit. Previously, in the world's most developed countries, money (and hence credit) was tied to a positive value: the value of a well-defined quantity of a good of well-defined quality. In 1971 this tie was cut. Ever since, money has been tied not to positive but to negative values -- the value of debt instruments." After a brief, clarifying history of money, Fekete goes on to discuss the misnomers of currency depreciation, gold as wealth, the failings of kicking the can, quantitative easing, and finally in the misunderstanding of interest rates themselves - seeing them as nothing more than merely bribe-money, trying to persuade reluctant holders of irredeemable promises to hang on a while longer. Paradoxically, gold's importance is growing while its dispersal from official hoards and the mines continues apace. Dispersed gold represents latent power, far greater in scope than its nominal market value, as sound credit can be built only upon a gold base.
Europe: "The Flaw"
Submitted by Tyler Durden on 02/11/2012 - 20:05 Capital Markets Credit Suisse European Central Bank Fisher France Greece VolatilityWe have posted various extracts from this piece from Credit Suisse previously. We will post from it again, because, to loosely paraphrase Lewis Black, it bears reposting... especially in the context of the latest and greatest Greek "bailout" (of Europe's bankers), which incidentally, will achieve nothing and merely bring the country one step closer to a military coup and/or civil war.
This Time Next US Presidential Campaign: $24.1 Trillion In Debt, 138.9% Debt/GDP
Submitted by Tyler Durden on 02/11/2012 - 12:18 Central Banks China Gross Domestic Product LBO NASDAQ
While Obama may or may not be on the way to winning his reelection, courtesy of a GOP field that is, to say the least, limited, and where the only worthy candidate is more ostracized by the right than even anyone on the left, the bottom line is that whoever wins the presidency, it will matter precisely didley squat. As the US debt clock shows, fast forwarding 4 years, or to February 2016, when the next presidential race will be in its final stretch, America will have $24.1 trillion in debt, about $9 trillion more than it does, now on $17.4 trillion in GDP, for a gross debt to GDP ratio of 138.9% (and Apple's $1 trillion market cap will account for 150% of the Nasdaq... just as IBM is 125% of the DJIA). Needless to say, it will be long past game over at that point confirming that the current presidential race, with its exciting tangential detours into female fertility, moon bases, LBO IRR maximization courtesy of cost-cutting, is completely and utterly meaningless. Also, keep in mind, "at current rates" for an endspiel that has now entered the exponential phase in virtually every category, is to say the least, optimistic. Yes, interest rates may be negative in 2016, but that means that the liquidity trap endgame has not only begun, but is well on its way to ending, and mercifully putting an end to this whole Keynesian "sustainability" charade. Remember: Japan's debt-deflation lasted for 30 years only thanks to new pockets of incremental global leverage and inflation: China and the PIIGS. This time, absent the levering of the entire continent of Africa, there is noone who can take the releverage baton and run. Which means the only "buyers" will be the central banks. At least back in the day, Weimar just one nation. This time, it will be the "Weimar World."
The Cost Of The Combined Greek Bailout Just Rose To €320 Billion In Secured Debt, Or 136% Of Greek GDP
Submitted by Tyler Durden on 02/11/2012 - 11:02 Bad Bank Bond Central Banks Creditors default European Central Bank Germany Goldman Sachs goldman sachs Greece Gross Domestic Product International Monetary Fund Italy Secured Debt
Some of our German readers may be laboring under the impression that following the €110 billion first Greek bailout agreed upon and executed in May 2010, the second Greek bailout would cost a "mere" €130 billion. Alas we have news for you - as of this morning, the formal cost of rescuing Greece for the adjusted adjusted adjusted second time has just risen to €145 billion, €175 billion, a whopping €210 billion, bringing the total explicit cost of all Greek bailout funds to date (and many more in store) to €320 billion. Which incidentally is a little more than Greek GDP (which however is declining rapidly) at 310 billion, only in dollars. So as of today, merely the ratio of the Greek DIP loan (Debtor In Possession, because Greece is after all broke) has reached a whopping ratio of 136% Debt to GDP. This excludes any standing debt which is for all intents and purposes worthless. This is secured debt, which means that if every dollar in assets generating one dollar in GDP were to be liquidated and Greece sold off entirely in part or whole to Goldman Sachs et al, there would still be a 36% shortfall to the Troika, EFSF, ECB and whoever else funds the DIP loan (i.e., European and US taxpayers)! Another way of putting this disturbing fact is that global bankers now have a priming lien on 136% of Greek GDP - the entire country and then some now officially belongs to the world banking syndicate. Consider that when evaluating Greek promises of reducing total debt to GDP to 120% in 2020, as it would mean wiping all existing "pre-petition debt" and paying off some of the DIP. Also keep in mind that Greece has roughly €240 billion in existing pre-petition debt, of which much will remain untouched as it is not held in Private hands (this is the debt which will see a major "haircut" - or not: all depends on the holdout lawsuits, the local vs non-local bonds and various other nuances discussed here). If you said this is beyond idiotic, you are right. It is not the impairment on the Greek "pre-petition' debt that the market should be worried about - that clearly is 100% wiped out. It is how much the Troika DIP will have to charge off when the Greek 363 asset sale finally comes. This is also what Angela Merkel will say tomorrow when Greece shows up on its doorstep with the latest "revised" agreement from its parliament to take Europe's money ahead of the March 20 D-Day. Because finally, after months (and to think we did the math for Die Frau back in July) Germany has done the math, and has reached the conclusion that letting Greece go is now the cheaper option.
Guest Post: The DHS Defends Globalism, Not America
Submitted by Tyler Durden on 02/10/2012 - 17:20 Councils Davos default Global Economy Guest Post Japan Monsanto national security Reuters
Under any collectivist society, the act of non-participation is always painted as an attack on the group. In a fully interdependent system, refusing to contribute automatically hurts others, and therefore, makes you a criminal by default. These systems are built this way deliberately, in order to control a population by exploiting their sense of innate guilt. The DHS may claim a limited involvement in globalization, restricted to security issues, but the very process of integration with the international corporate framework as well as foreign institutions makes the agency a catalyst for forced collectivism. Bombs in shipping containers (the bombs we’re supposed to believe are everywhere), do not warrant the massive shift of our security apparatus into a policy of global centralization. In the end, this move on the part of the DHS has nothing to do with security, and everything to do with manipulating the attitude of the general public towards globalization. It is much more difficult to challenge a methodology when that methodology is suddenly treated as a national security issue, and is defended by an army of bureaucrats and blue-shirted thugs. When a world view is made violently essential to the very survival of a people, defiance is held tantamount to treason, and change, no matter how wise, becomes impossible.
