Archive - Apr 28, 2010

It appears the impasse on the financial non-reform bill is over, and now that it has been stripped of anything and everything relevant (not much to begin with), the toothless product is about to be voted on by everyone. The "bill" as it now stands will do nothing but accelerate the collapse and the most spectacular banking system blow up in history. We will get you more as we see it.

There is no question now that the complacency about Greece and the peripheral European implosion is identical to the Bear->Lehman->Financial collapse pathway that the US experienced between March and September 2008. And just like back then Bear was small enough to bail out, soon we will hit a country that not even the IMF's half a trillion rescue facility will be sufficiently large to prevent from teetering over. At this point it is nothing but a waiting game. However, unlike the US, when after Lehman the Fed scrambled to throw $24 trillion of Fed signed paper at the fire, expecting a comparable coordinated and rapid response from the Eurozone is ludicrous, especially with Goldman shorting it. So those who believe they can time the market melt up until the next unsustainable sovereign blow up - good luck (of course here we refer to the daytraders who take their guidance from the Momo Money brigade, whose refrain for 60 minutes each day is "it will go up because it is going up." Brilliant). For everyone else, we present a short primer from UBS on how to play the sovereign crisis, at least until the point when playing anything is futile and the global scramble for cash crashes the Keynesian dream.

The third one is proof positive that all those in charge of anything during the great Keynesian unwind are clinically insane and live in a parallel universe:

04/28 02:29PM GREEK PM SAYS WE ASK FOR NO BAILOUT, JUST REASONABLE TERMS ON OUR LOANS

04/28 02:02PM GREEK PM SAYS WILL CUT BUDGET DEFICIT BY 4 PCT OF GDP IN 2010

04/28 02:23PM GREEK PM SAYS GREEK INTEREST RATES ILLOGICAL BASED ON MARKET FUNDAMENTALS

1. IMF is likely to reach agreement this coming weekend.  It'll then go to the Board for formal approval, which is a formality.
2. The program will NOT be 100-150bn.  Not realistic.  But it will probably include a year of full funding (55bn), and indications of a long term commitment to help Greece.
3. The program will not include a "private sector contribution", ie a demand for debt restructuring.
4. the first European money, including in Spain, will be approved on Friday; others including Germany will followed very shortly after.  It looks as if the European money will be disbursed in parallel with the IMF, with the first money going out before mid-May, safely in time for the May 19 "deadline".
5. The ECB is extremely unlikely to intervene in Greek sovereign debt (what would they want to achieve by doing so?).

Exceptional and Extended. Die dollar, Die. A few words more from Hoenig: "Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted it could lead to a build-up of future imbalances and increase risks to longer run macroeconomic and financial stability, while limiting the Committee’s flexibility to begin raising rates modestly."

The Mass legislator totally loses it after penning yet another angry letter (he is good at that; being unconflicted and actually passing sensible and Wall Street influence-free laws, not so much) in which he says that the $6 trillion extra toxic debt on the US Treasury's books from the GSEs (which the democrats refuse to recognize) is really the republicans' fault. The fact that Barney was instrumental to creating the parabolic phase of the housing bubble with his idiotic statements in 2005 that there is "no bubble", and that his commission currently refuses to deal with issues such as the GSEs and a repeat of the housing bubble is completely absent from his letter.

• Yield of 2.540% versus expectation of 2.532%, 2.568% previously
• Bid To Cover of 2.75, versus 2.55 previously and 2.7 average
• Indirect take down 48.92% versus Average 47.58 and 39.66 previously
• Directs come to the rescue again with a fresh record take down of 14.3%, 10.8% previously and 7.1% average
• Primary Dealer hit ratio at 2010 low of 20.26% after PDs bid $75.94 billion and were allotted $15.39 billion
• 90.56% allotted at high

Notice how many central bankers, analysts, pundits, banks and politicians said the debt problem was not only contained to Greece, but was also solved and all should move on. Uh huh...
I believe what we are seeing is just the beginning, and what the world saw with the collapse of Lehman was simply a microcosm of what happens when actual sovereign states threaten to fail!

Well, if the Senate can say it, so can we - this shit is now beyond ridiculous and has hit accelerated Goldman prop selling dimensions. Below is a joint press release by German Chancellor Angela Merkel, OECD Secretary-General Angel Gurria, WTO Director-General Pascal Lamy, ILO Director-General Juan Somavia, IMF Managing Director Dominique Strauss-Kahn and World Bank President Robert Zoellick. For the most this bureaucratic essay is worse even than overflowing fecal matter, but this particular statement from the pathological Keynesianites gets a 10 even from the French judgein both hypocrisy and braindeath: "Only a sustainable global economy can continue to guarantee growing wealth without jeopardizing the chance for future generations to meet their own needs." And how do we sustain it? Why, by having the developed world issue half a trillion in debt each and every month.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 28/04/10

Enough with the Federal Reserve mafia syndicate and its endless array of bailouts, under the table deals, cronyism, politicized monetary decisions, and rampant theft of America's wealth already. We endorse the Sanders-Feingold-DeMint-Leahy-McCain-Vitter-Brownback Federal Reserve Transparency Amendment to the Financial Reform Bill. If the Fed's clowns won't end their endless rape of America, it should at least be fully transparent for all to see.

Goldman scrambling to prevent Humpty Ponzi from falling of the well. The latest update from GS' Dirk Schumacher.

Not just Greece ...

Fiat down, gold up. Any questions? Algos finally found where Europe is on googlemaps. Europe closing so US is isolated in its schizobubble for the rest of the day.

"We continue to believe that the 2010 fiscal deficit will be broadly in line with the government's target of 9.8% of GDP. However, over the medium term we anticipate weaker revenue performance and higher spending pressures than what the government envisages, mainly due to our view of more subdued economic growth compared with the government's current estimates. As a result, Standard & Poor's projects that the general government deficit is likely to still exceed 5% of GDP by 2013, significantly higher than the government's official target of 3%. Consequently, we estimate that gross government debt is likely to rise above 85% of GDP in 2013 and continue to trend higher until the middle of the decade. Increases in Spain's borrowing costs, beyond what we factor into our base case, could, in our opinion, also reduce the government's ability to meet its fiscal targets this year and next."