Making US and Greek economics fun and comprehensible...
At 10:00 AM Tim Geithner will take the podium to pretend he has some clue of how to reform the GSEs (which is funny, because he doesn't). Those who want to watch Geithner live and commercial free can do so here. As we posted yesterday, here is a copy of Tim Geithner's prepared remarks.
In the latest stellar analysis by Dylan Grice, the SocGen analyst discusses the reasons for not only owning gold (and
there really isn't a more profound one than taking a trip to the Marriner Eccles building and checking out what goes on in the first subbasement) but, more importantly to many, selling it. His summary view on owning Au79: "The reason I own gold is because I'm worried about the long-term solvency of developed market governments." We all know developed markets are now insolvent and merely exist due to the continued debasement of fiat paper. Period. As to when to sell: "Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability. Until it does, the temptation to inflate will remain, as will economists with spurious mathematical rationalisations as to why such inflation will make everything OK . Until it does, the outlook will remain favorable for gold. But eventually, majority opinion will accept the painful contractionary medicine because it will have to. That will be the time to sell gold." Courtesy of universal denial of our current predicament, we still have a long, long time before acceptance sets in.
Title of today's episode in the never ending soap opera: The Taking Of Stalingrad...er, Santorini - the Propaganda behind the scenes. From Goldman's Erik Nielsen (not his title - you see he would be fired for a joke as off-color as that).
- We couldn't agree more: Op-Ed from Greece: One surefire way for Greece to succeed in borrowing money at a lower
rate of interest is to prohibit, for a good long time, any statements
by Greek, as well as by European, officials regarding the Greek
economic crisis (Kathimerini)
- Euro Declines on Speculation Europe Won’t Agree on Greece Aid (Bloomberg)
- Greek tragicomedy part deux/zwei: In a bizarre twist
to the Greek debt crisis, France and Germany are pressing Greece to buy
their gunboats and warplanes, even as they urge it to cut public
spending and curb its deficit. (Reuters)
- U.K. to Expel Israeli Diplomat Over Dubai Passports, Sky Says (Bloomberg)
- Yuan may be less undervalued than it appears (Reuters)... amen
- States are the canary in the fiscal coal mine (RCM)
- Health-Care Cost Lies Make Us Sing the Blues (Bloomberg)
As we expected yesterday, when we pointed out that the CHF has hit a 10 year high against the euro, the Swiss National Bank confirmed that it was likely one step away from curbing "excessive appreciation" of its currency. SNB president Phillip Hildebrand said that “we can’t fully rule out deflation threats in the case of
renewed external shocks,” Hildebrand, who took over the helm of
the SNB in January, said at an event in St. Gallen, Switzerland,
today. “An excessive appreciation of the franc against the euro
would for example be such a shock.” Well, the appreciation can't really go much higher, as "the franc appreciated for an eighth day today and was 0.2
percent stronger at 1.4323 per euro as of 12:40 p.m. in Zurich.
It reached 1.4309 yesterday, the highest since the euro’s debut
in 1999." In the meantime, those buying straddles on the CHF is multiplying, with the expectation of repeating a little piece of Soros history.
- Asia stocks, copper rise on region's improving economic outlook; Yen falls.
- China may see March trade deficit, bolstering Yuan resistance.
- Dollar climbs versus Euro as concerns over Greece aid spurs safety demand.
- Greek impasse deepens as Trichet rejects loan subsidy.
- Greek crisis may provoke Fed-ECB split as Euro slides.
- Health bill will squeeze industry profits but holds promise for long-term gains.
- U.K. inflation slows to 3%, drops more than Economists forecast.
- Sales of existing US homes probably fell in February for a third month: survey.
RANsquawk 23rd March Morning Briefing - Stocks, Bonds, FX etc.
The Biggest Greek CDS Speculator Has Been Uncovered - Culprit Is... Greek State-Controlled Hellenic Post Bank!Submitted by Tyler Durden on 03/22/2010 - 22:27
We have officially moved from a Greek tragedy to a Greek surreal comedy. After nearly a month-long scapegoating campaign in which Greek PM G-Pap said he would spit in the faces and skullf#@* all those who dared to buy Greek CDS (because as we have all been lied to by everyone who doesn't know the first thing about CDS, it is CDS buying not bond selling that drives spreads), with the stupidity reaching as far and wide as the Spanish and German secret services, which said they would spy on CDS traders in London and New York, Greek daily Kathimerini has just uncovered that the biggest speculator, holding 15%, or $1.2 billion of the total $8 billion in Greek notional CDS, has been a firm that operates about 2 blocks away from the parliament building in Athens - the state-owned Hellenic Post Bank (TT)! Luckily poetic justice is about to be served, as every single media outlet tomorrow will apply the same circus monkey treatment to G-Pap and his clownshoes henchmen, not to mention the chorus of obese idiots over at the European Commission who fell for the ruse (speaking of EU idiots, has anyone heard of Jenny Craig relapse patient Joaquin Almunia in the past 2 months, with his "Greece will never demand a bailout" arrogance). While there had been speculation that Greek banks were selling Greek CDS to hedge funds, it had never crossed anyone's mind that a Greek bank could be betting on the collapse of its own sovereign host (especially one which does not own Bernanke's printing press), and that in such size! Frankly this beats even our very own AIG fiasco by orders of magnitude in stupidity.
Tim Geithner is supposed to discuss GSEs tomorrow before the House Committee on Financial Services: i.e., the government will tell the government all is good, and if it isn't, it can be promptly swept under the rug. In a 17-page speech, Tiny Tax-evading Tim provides the first insight into "fixing" the $6.4 trillion GSE problem. And yes, this is coming from the same government that on a congressional website does not know how to keep an embargoed speech under embargo until its required release time. Sigh... As the speech consists of the two funniest things in DC currently - Tim Geithner and GSE reform, it needs no introduction or commentary. Without having even read the paper, we are confident Geithner's presentation is replete with lies, innuendo, unbearable BS, scapegoating and fingerpointing to last a lifetime. We will provide a link to the congressional webcast tomorrow for the masochists among you. In the meantime, we expect the GSEs will implode spectacularly within the year once again, as neither Tim nor Congress end up doing anything whatsoever to "reform" the GSEs.
The silence out of E&Y over the past two weeks was very odd. Some speculated that just like corrupt Arthur Anderson, a disgraced E&Y was quietly folding its business now that the "independent auditor" is one only in name. Others believed that its was merely a smart media ploy to not touch the issue until everyone gets tired of discussing the endless criminality in our daily lives and be content with late night TV, as the middle class fights for whatever remaining scraps the Goldman bankers allow it to have, even as the kleptocracy knows all too well that behind the scenes, trillions of dollars are siphoned away from America's working class (because in ten years when the country is bankrupt, the only thing that matters is who has the biggest gun and can shoot the straightest). Anyway, E&Y surprised us all (and the holders of 5 Times Square paper: CMBX 4 deal WBCMT 07-C31 specifically, who were ecstatic they would be next in line for taxpayer bailouts) by releasing the following list of rebuttals on a point by point basis, first reported by our friends at re:The Auditors and followed up by Reuters.
Earlier today, John Mack was interviewed by Fox Business' latest addition Charlie Gasparino, as well as Brian Sullivan. And where we discussed in the prior post how absolutely nothing has changed between the days right before the credit bubble burst in 2006, as exemplified by the Bear Stearns Credit Conference notes, and today, John Mack is living proof that if left on their own, bankers would simply revert to the old failed model, keep getting paid tens of millions per year, and wait until the next taxpayer bailout some time in late 2010, early 2011 (we are now on an accelerated schedule - just as the bounce from the lows has been torrid, so the collapse will be amusingly fast), only to hit restart courtesy of whoever is Fed chairman at that point and do the rinse/repeat cycle one more time. In a nutshell, Mack sees no risk, not a hint of danger on the horizon. In fact, it was nobody's fault. And next time it will be nobody's fault all over again.
Ah, the halcyon days of 2006, when the bubble was cranking, rates were stable and rising, Bernanke was brand new and few realized he would was yet to become the destroyer of capitalism, when subprime was only known to a select few future billionaires, when Bear Stearns was alive and well and was organizing credit conference at the Waldorf Astoria (instead of arranging credit for itself in advance of going bankrupt in 2008) during which nobody said anything relevant (that includes Bear's then chief economist David Malpass) and where participants merely reinforced each other's fallacious groupthink, capped by Peyton Manning as keynote speaker of all people. Companies presenting were all the current and future LBO hits (which would soon undergo Chapter 22 and in some cases 33). We are only amazed that Bear hasn't risen from the dead to recreate the credit conference below, coupled with full bubble frothiness and all other bells and whistles.
Xinhua reports that Google has "violated its written promise" and is "totally wrong" by stopping censoring its Chinese language searching results and blaming China for alleged hacker attacks, a government official said early Tuesday morning. The official in charge of the Internet bureau under the State Council Information Office made the comments hours after the online search service provider announced it has stopped censoring its Chinese-language search engine Google.cn and is redirecting Chinese mainland users to a site in Hong Kong.
A must read presentation for the reflexive and reflective traders/investors in all of us. For the crux of the presentation please turn to slides 43-47 which provides a wonderful counterargument to why every time you hear some "expert" on CNBC say you should buy a stock because it is cheap, consider the following just as logical alternatives: 1) fraud, 2) value trap, and most relevantly for our current market situation 3) bubble market.At least $10 trillion in household wealth may have been saved if people followed these three simple observations at the peak of the last credit bubble in 2007. Of course, this time it is different.