Archive - Feb 18, 2012

testosteronepit's picture

Suddenly, a Sharp Deterioration in the Job Market





The BLS better have some tricks up its statistical sleeve.

 

williambanzai7's picture

SeX And PoLiTiCS, THe NeW NeW AMeRiCaN ReLiGioN





"The biggest threat to America...is moving toward a fascist theocracy...."--Frank Zappa

 

Tyler Durden's picture

Germany, Greece Quietly Prepare For "Plan D"





For several weeks now we have been warning that while the conventional wisdom is that Europe will never let Greece slide into default, Germany has been quietly preparing for just that. This culminated on Friday when the schism between Merkel, who is of the persuasion that Greece should remain in the Eurozone, and her Finmin, Wolfgang "Dr. Strangle Schauble" Schauble, who isn't, made Goldman Sachs itself observe that there is: "Growing dissent between Chancellor Merkel and finance minister Schäuble regarding Greece." We now learn, courtesy of the Telegraph's Bruno Waterfield, that Germany is far deeper in Greece insolvency preparations than conventional wisdom thought possible (if not Zero Hedge, where we have been actively warning for over two weeks that Germany is perfectly eager and ready to roll the dice on a Greek default). Yet it is not only Germany that is getting ready for the inevitable. So is Greece.

 

Tim Knight from Slope of Hope's picture

Losing Graciously





 

There's a very well-known publisher of market commentary which - like me - has been largely bearish over the past two and a half years. What is irksome to me is that, in the face of a market which has done little but push higher all this time, they keep pointing to a chart showing that in "real dollars" (in their view, gold) the market has indeed been crashing.

Ummm, that's stupid. Gold is an asset, but it isn't used as money in our society. Do you buy groceries with it? Pay your mortgage with it? Pay school tuition with it? I didn't think so.

I could make ANY prediction about ANY market and be correct if you allowed me to choose some kind of "currency" as a benchmark. Over any span of time, you can find something which has gone either up or down in value to support your claim, if that's what you're allowed to use as your divisor.

 

 

Tyler Durden's picture

A "Crystal Ball View Of Europe In 2022"





Zero Hedge has presented the work of Bulgarian modern artist Yanko Tsvetkov previously, both in 2010 and 2011. We are happy to see that his work which is meta irony on the weakest link of European culture: centuries worth of stereotype formation and development, has finally made its way into the mainstream media with the Guardian's "Stereotype maps: Is that what they think of us?" We are even happier to see that Tsvetkov has released a new one: a Crystal Ball view of Europe in 2022 which is his cartographic exercise in forecasting the political layout of Europe. While it is mostly an exercise in irony, we have to admit that the probability of him being spot on is high to quite high. We would however point out that by 2022 the "European (Dis)Union" will be a satellite region of Russia, or as it will be better known then, Gazpromia.

 

EB's picture

Santelli to Chilton: Will the SEC Serve Itself a Wells Notice Regarding an MF Global Bond Offering?





CFTC Comissioner Runs From Questions, Admits SEC Should be “Looked Into”

 

Tyler Durden's picture

Guest Post: When Debt Is More Important Than People, The System Is Evil





The ethics of debt, at least in the officially sanctioned media, boils down to: nobody made them borrow all those euros, and so their suffering is just desserts. What's lost in this subtext is the responsibility of the lender. Yes, nobody forced Greece to borrow 200 billion euros (or whatever the true total may be), but then nobody forced the lenders to extend the credit in the first place. Consider an individual who is a visibly poor credit risk. He would like to borrow money to blow on consumption and then stiff the lender, but since he cannot create credit, he has to live within his means. Now a lender comes along who can create credit out of thin air (via fractional reserve banking) and offers this poor credit risk $100,000 in collateral-free debt at low rates of interest. Who is responsible for the creation and extension of credit? The borrower or the lender? Answer: the lender. In other words, if the lender is foolish enough to extend huge quantities of credit to a poor credit risk, then it's the lender who should suffer the losses when the borrower defaults. This is the basis of bankruptcy laws--or used to be the basis. When an over-extended borrower defaults, the debt is cleared, the lender takes the loss/writedown, and the borrower loses whatever collateral was pledged. He is left with the basics to carry on: his auto, clothing, his job, and so on. His credit rating is impaired, and it is now his responsibility to earn back a credible credit rating....The potential for loss and actually bearing the consequences from irresponsible extensions of credit was unacceptable to the banking cartel, so they rewrote the laws. Now student loans in America cannot be discharged in bankruptcy court; they are permanent and must be carried and serviced until death. This is the acme of debt-serfdom.

 

Tyler Durden's picture

S&P500 Q4 Profit Margins Decline By 27 bps, 52 bps Excluding Apple





What a difference a quarter makes: back in Q4 2011, in light of the imploding global economic reality, the only recourse equity bulls had to was to point out that corporate profitability was still at all time highs, and to ignore the macro. Fast forward a few months, when Europe's economic situation continues to deteriorate with the recession now in its second quarter, China's home prices have just slumped for a 4th consecutive month (forcing the PBOC to do only its second RRR cute since November), Japan is, well, Japan, yet where the US economic decoupling miracle is now taken at face value following an abnormally high seasonal adjustment in the NFP establishment survey leading to a big beat in payrolls and setting the economic mood for the entire month (with flows into confidence-driven regional Fed indices and the PMI and ISM, not to mention the Consumer Confidence data) as one of ongoing economic improvement. That this "improvement" has been predicated upon another record liquidity tsunami unleashed by the world's central banks has been ignored: decoupling is as decoupling does damn it, truth be damned. Yet the bullish sentiment anchor has flip flopped: from corporate profitability it is now the US "golden age." How long said "golden age" (which is nothing but an attempt to sugar coat the headline reality for millions of jobless Americans in an election year) lasts is unclear: America's self-delusion skills are legendary. But when it comes to corporate profit margin math, things are all too clear: the corporate profitability boom is over. As Goldman points out: with the bulk of companies reporting, in Q4 corporate profits have now declined by a significant 27 bps sequentially, and an even more significant 52 bps excluding Apple.

 

Tyler Durden's picture

Chris Martenson Interviews Jim Rickards: Paper, Gold Or Chaos?





History is replete with the carcasses of failed currencies destroyed through misguided intentional debasement by governments looking for an easy escape from piling up too much debt. James Rickards, author of the recent bestseller Currency Wars: The Making of the Next Global Crisis, sees history repeating itself today - and warns we are in the escalating stage of a global currency war of the grandest scale. Whether it ends in hyperinflation, in the return to some form of gold standard, or in chaos - history is telling us we can have confidence it will end painfully.

 

Tyler Durden's picture

Ten Unanswered Questions About The Second Greek Bailout





Open Europe has published a briefing note outlining the ten questions and issues that still need to be resolved in the coming weeks in order for Greece to avoid a full and disorderly default on March 20. The briefing argues that, realistically, only a few of these issues are likely to be fully resolved before the deadline meaning that Greece’s future in the euro will come down to one question: whether Germany and other Triple A countries will deem this to be enough political cover to approve the second Greek bailout package. In particular, the briefing argues that recent analyses of Greece’s woes have underplayed the importance of the problems posed by the large amount of funding which needs to be released to ensure the voluntary Greek restructuring can work – almost €94bn – as well as the massive time constraints presented by issues such as getting parliamentary approval for the bailout deal in Germany and Finland. While the eurozone also continues to ignore or side-line questions over the whether a 120% debt-to-GDP ratio in 2020 would be sustainable and if, given the recent riots, Greece has come close to the social and political level of austerity which it can credibly enforce.

 

Tyler Durden's picture

China Cuts RRR By 50 bps Despite Latent Inflation To Cushion Housing Market Collapse





It was one short week ago that both Australia surprised with hotter than expected inflation (and no rate cut), and a Chinese CPI print that was far above expectations. Yet in confirmation of Dylan Grice's point that when it comes to "inflation targeting" central planners are merely the biggest "fools", this morning we woke to find that the PBOC has cut the Required Reserve Ratio (RRR) by another largely theatrical 50 bps. As a reminder, RRR cuts have very little if any impact, compared to the brute force adjustment that is the interest rate itself. As to what may have precipitated this, the answer is obvious - a collapsing housing market (which fell for the fourth month in a row) as the below chart from Michael McDonough shows, and a Shanghai Composite that just refuses to do anything (see China M1 Hits Bottom, Digs). What will this action do? Hardly much if anything, as this is purely a demonstrative attempt to rekindle animal spirits. However as was noted previously, "The last time they stimulated their CPI was close to 2%. It's 4.5% now, and blipping up." As such, expect the latent pockets of inflation where the fast money still has not even withdrawn from to bubble up promptly. That these "pockets" happen to be food and gold is not unexpected. And speaking of the latter, it is about time China got back into the gold trade prim and proper. At least China has stopped beating around the bush and has now joined the rest of the world in creating the world's biggest shadow liquidity tsunami.

 

MacroAndCheese's picture

LTRO and the Markets





QE 3?  Been there, done that

 
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