Uri Dadush Of The Carnegie Endowment: "It Is Virtually Inevitable That Greece Will Default Or Need A Bailout"

Some amusing headlines appearing elsewhere today, proclaiming the Greek crisis is over. Hardly: Uri Dadush of the Carnegie Endowment, and formerly of the World Bank says that "it is virtually inevitable that Greece will either default or need a bailout of some sort." Dadush, who a week ago wrote a provocative op-ed in the FT titled "End this inflation fundamentalism", in which he noted that "what happens in Greece will not stay in Greece" also says that "over and beyond the Greek bailout we have to do some thinking about our approach to overall fiscal and monetary approach in Europe." What? Visiting Ben Bernanke every 6 months is no longer sufficient? Oh wait, when everyone is undergoing austerity measures (now coming to Portugal, soon Italy, UK, Germany, Japan, and, lastly the, US), just who is it that will importeveryone else's exports? Why China of course. But hold on, isn't China a net exporter? Oh who cares about facts...The market's mind is already made up. Uri's conclusion will make Hugh Hendry proud: "I think under any circumstance we are going to see a significantly lower euro. I think we are going to see slower growth in Europe over several years, and I think there is a serious risk that the eurozone will implode unless there is a sea-change in the way fiscal and monetary policies are conducted."

Bob Janjuah - "Hopefully, For All Our Sakes, The Bubble Bursts Sooner Rather Than Later"

"At some point the bubble will burst. Hopefully for ALL our sakes its sooner rather than later. The longer we are forced to wait, the bigger the bubble will be and the more horribly damaging the bursting process will be. And if we are forced to wait and the bubble gets anywhere like the one that went pop in late 2007 I have ZERO idea who will credibly be able to bail us all out the next time round. Certainly not OUR governments." - Bob Janjuah

Daily Highlights: 3.8.10

• Asian share markets were higher Monday with the Nikkei up 1.4% as exporters gained.
• China pledged to keep prices stable this year, to rein in lending and manage consequences.
• China to nullify local governments' loan guarantees as credit risk grows.
• Fed is battling to keep Congress from cutting its supervisory power.
• India plans to accelerate sales of state assets to about one a month.
• Sarkozy says Europe ready to help Greece fund debt, fend off speculators.
• Oil prices rose to near $82 a barrel Monday in Asia.

The Imperialist Oscar Feed Must Be Down: North Korea Orders Army, People To Be Prepared For Warfare

Yawn, more "imminent warfare" out of North Korea. As the Kospi is up over 1%, South Korea is either engrossed by Ben Stiller's make up or giving this news the proper attention it deserves. The news comes from Xinhua via Dow Jones.

Joe Stiglitz Slaps The Invisible Hand

Love him or hate him (and based on some recent appearances, notably side by side Hugh Hendry, he hasn't left much room for amorous intentions), Joe Stiglitz once again takes center stage, this time in this appearance at the Commenwealth Club, in which he discusses various things (among which are his grading of Obama, which compared to Dubya' administration, he gives an A+, and since this is roughly in line with where the rating agencies rate the US, it should raise all sorts of red flags). One of the key topics of discussion is his claim that efficient markets are a myth, and that Adam Smith's "invisible hand" appears as such because it was never truly there. Joe's bashing of economists with their hollow goal-seeked theories is one thing we can certainly agree with, and as to the market being propped by visible hands and other means, well, that is beyond the scope of this post (unless Chairman Shalom decides to grace the comment stream with his presence).

Federal Reserve Accused Of Hubris By... The Federal Reserve

Looks like Tom Hoenig's dissension at the recent FOMC vote is starting to generate some serious traction. A paper just released by V.V. Chari of the Minneapolis Fed, "Thoughts on the Federal Reserve's exit strategy" goes so far as blasting the Fed for demonstrating Goldman Sachs-like "hubris" courtesy of the persistent lowest common denominator resolution to every crisis, namely Bernanke's redux of MLK "I have a dream" speech for the 21st century, in the Chairman's "we have a printing press" thesis. "...The Fed differs from private firms and emerging markets in that it can “create” money to finance its debts. And indeed, that ability may well lead to hubris on the part of policymakers—similar to that seen among financial managers in the current crisis who were clearly overconfident in their ability to obtain financing. Regardless of such self- assurance on the part of policymakers, if market participants lose confidence in the Fed’s ability to obtain funds from lenders, the Fed would have to pay very high interest rates to obtain short-term debt. A self-fulfilling, high-inflation equilibrium in which expectations that the Fed will pursue lax monetary policy because banks demand a high-inflation premium will lead banks to demand that high-inflation premium." - Minneapolis Fed

Goldman's Conviction Buy/Sell List And Other GS Rating Observations

Periodically we update readers on Goldman's conviction buy/sell list. Following up on our observations from yesterday in which the market melt-up is now taken for granted, we highlight the latest universe of 69 companies which comprise the most updated Goldman conviction list, of which 54 are buys and 20%, or 14, are sells. The empirical evidence seems to suggest that shorting the Buys and buying the Sells tends to generate the highest alpha over the next 6-12 months.