Archive - Feb 2015

If Greece gives in, Germany will have won, but its bully status will come to bite it in the face. European nations don’t accept bullying, and certainly not from Germany. It’ll be a Pyrrhic victory: the beginning of the end. If Greece however stands firm in its demands, it’s also curtains for the EU. If Greece leaves, it won’t leave alone. Only the third option, Germany caving to Greek demands, can save the EU. But Merkel and Schäuble have prepped their people to such an extent with the wasteful lazy Greeks narrative that they would have a hard time explaining why they want to give in. The EU may thus fall victim to its own propaganda

"Is it possible, in a global economy in which the United States' principal competitors are experiencing slow growth, disinflation or deflation, wage stagnation or slowing of wage growth, and slumping currencies relative to the US$, that the U.S. economy can be an island of relative prosperity unto itself?" (Spoiler Alert: No!)

It turns out that the next best thing to Greek contagion in this bizarro, centrally-planned world is... anti-contagion.

Here's a plan where the drachma will be more desirable than the euro after Greece defaults on anything euro denominated and backs its redeemable drachma with fractional gold. Upon default euros drop, drachma pops!

As leaked by Reuters moments ago, here is the text of a document that describes Germany's position on Greece's letter requesting an extension of its bailout facility as nothing short of a Trojan Horse.

The totalitarian arm of the ever-growing government appears to know no limit. In today's "oh no they didn't" moment, the US Government's diet panel has dictated proposed one more oppression of American's freedom to choose:

*GOV'T PANEL PROPOSES SUGARY-FOOD TAX TO FUND NUTRITION PROGRAMS, CURB OBESITY

On the bright side, the government approves of "lean meat" as compatible with healthy eating. The bill, introduced by Rep. Juan Candelaria, D-New Haven, would impose a tax of 1 cent per ounce on soft drinks - including sweetened teas, energy drinks and soda - and candies that are high in sugar and calories. So, expensive non-refined foods are good? And the poorist people - who can't afford to eat the way the government dictates - will pay all the taxes?

After spending the past year deteriorating with each passing month, as global acceleration dipped decidedly in the negative camp, the only thing that kept the Goldman Global Leading Indicator "swirlogram" somewhat buoyant was that "Growth" measured in absolute terms had remained slightly positive. Not any more: according to Goldman's latest global economic read, the world is now officially in contraction, following a sharp plunge in both acceleration and growth in February.

"We’re more leveraged today than in 2006-2007," warns Thomas von Koch - managing partner at EQT, the largest buyout fund in the Nordic region, adding that "there are financial bubbles being built up and how they’ll be solved, I don’t know." As Bloomberg reports, von Koch concludes, an unprecedented era of monetary stimulus is inflating asset prices across markets to extreme levels, with history offering little help in predicting how it will all end - "The problem is global, not just for Europe. It’s the asset bubbles in general that concern me. It’s wherever we look."

Back in January, the FOMC surprised many when in its statement is noted that in addition to financial it was also keeping tabs on "international developments" making many wonder just whose central bank the Fed is. Why Yellen's obsession with all things international? The answer may lie in Yellen's 2014 calendar, which the WSJ has parsed and found that of her 950 meetings from February to December (one wonders just when does the Fed chair actually do work outside of meeting rooms of course), the Fed chair spent more time conversing with foreign officials (68 meetings) than with members of the White House (51 meetings).

UPDATE: *GREEK GOVT WON'T ACCEPT ULTIMATUMS, WON'T GIVE ANY: OFFICIAL

After days of repeated ultimata from The Eurogroup, as Germany (bad cop) and the rest (good cop) make optimistic sounds, this morning's rejection of Greece's latest plan (following Greek comparisons of Germany to Nazi surrender demands) has prompted something new:

*EU HAS 2 CHOICES, APPROVE OR REJECT GREEK REQUEST; EUROGROUP MEETING TO SHOW WHO WANTS A SOLUTION: GREEK OFFICIAL

Markets are stumbling on this news as Germany and the rest come to terms with not just the billions in debt on ECB and various bank balance sheets but the 49 billion other reasons to avoid Grexit that have mounted in TARGET2 liabilities.

While one of the robbers distracted the 69-year old with paper work the other stole his gold - 13 bars, each weighing 1 kilogram or 32.15 ounces each with a total value of US$500,000.

A regular reader recently raised a subject (on our Forum) which should be a frequent topic of discussion in our ultra-corrupt societies, but isn’t: usury. Everyone knows the meaning of the word: lending money at “excessive” or “exorbitant” rates of interest. Yet few of us ever contemplate its significance.

Between European uncertainty and last night's massive API inventory build (14.3mm barrels), Brent and WTI crude was sliding into today's inventory data - well off the kneejerk highs at the US equity open (and back under $50). Market participants expected a US crude inventory build of around 3 million barrels but the number more than doubled that at 7.72 million barrels and production soared to new record highs. Idiot algos kneejerked higher (because 7.72 is lower than 14.3?) but that insanity is fading fast...

Earlier today, we got a glimpse of precisely how HFTs are now making a mockery of FX "price discovery" when completely independent of any newsflow, Canadian Dollar futures cratered on what is merely the latest of many flash crashes now coming to an FX market near you.