Archive - Jun 22, 2015

Whatever one wishes to believe about the veracity of BLS statistics, one thing is certain: for some US states, the ill effects of the crisis on employment still linger some seven years later.

Despite the market's exuberant hope that everything will be contained and business-as-usual will resume shortly in Europe, the message from the wealthiest Greeks is very different... As The FT reports, not since the nation's civil war has Greek society been riven by deep divisions between left and right as Greece's financial plight reopens old wounds. "The government are incompetent and are ruining the country because they are communists and do not understand reality," said Maria, a banker. "But there has to be a deal. The EU has to save us," she said, fingering her golden necklace. "Right?"

Just a few days after Jeb Hensarling accused The Fed of "willful obstruction" in the Congressional leak probe, demanding "immediate compliance" with the subpoena seeing "no legal basis to withhold records from Congress," Janet Yellen has responded in a letter: YELLEN REPEATS FED CAN'T PROVIDE DOCUMENTS ON LEAK PROBE. If this does not confirm The Fed is utterly above the law, we are not sure what it will take to convince skeptics of the need for an independent audit. As Hensarling previously noted, this appears to be "vigorous and coordinated obstruction.”

"Over the entire period from 1978 to 2014, CEO compensation increased about 997 percent," The Economic Policy Institute notes. Meanwhile, thanks in part to a stock market rally corporate management teams helped to engineer, the CEO-to-worker comp ratio is now back near its all-time high.

"YES to Europe, NO to Austerity". These days, Greeks aren't sure what they want...

Nobody can deny that the chances of war are increasing in the world.

Stock markets in the US and Europe are in for a correction, while the euro is set to rise, according to Saxo Bank’s Chief Economist Steen Jakobsen, nomatter what happens between Greece and its creditors. Steen also looks at the impact a rate hike from the US Federal Reserve would have on USD and what currencies could gain once the Fed decides to move on rates, noting that "the consensus has it wrong on the timing of US rate hike," as the credit cycle topped in June 2014. He believes that commodities and metals in particular offer opportunities for investors.

"... the immediate aftermath of such a non-payment will be to push bond yields up across the periphery. This rise in the fiscal risk premium (Exhibit 3) will of course be limited, because the ECB will likely accelerate QE, including via the Bundesbank. That will push rate differentials, especially longer-dated ones, against EUR/$. We estimate that the initial fiscal risk premium effect could be three big figures, while the subsequent QE effect could be worth around seven big figures"

Net of the latest ELA increase, when adding some €38 billion in collateralized EFSF bonds and other collateral usage, we find that we have not only reached parity but crossed it: as of this moment Greek deposits, which are generously estimated at €120 billion but in reality are lower, are less than the total ECB claims on Greek banks and the Bank of Greece, amounting to €126 billion. And with that the possibility of a Greek bail-in which could amount to up to 100% of total Greek deposits, becomes all too real.

The phenomenon of homeowners objecting to new development is called NIMBYism, which stands for "Not In My Back Yard." The premise behind this is that homeowners don't want to risk any changes that could adversely affect their living space or the value of their property. However, it's easy to see another motive behind NIMBYism: greed. As an investor of a highly leveraged asset, the average homeowner has every reason to inflate the price of their home as much as they can. NIMBYism also contributes to inequality... and perpetuates the two-class society that we see today.

Guess what?  You were never meant to get the job!

While the latest European FinMin summit desperately tried to put on a united facade when responding to the latest and greatest Greek proposal, which incidentally is so weak that the IMF will throw up all over it as shown below, the reality behind the scenes was anything but. In fact, Greece was this close to having capital controls forced on it earlier today, and would have, if the demand of not just its old "BFF", Germany's finmin Schauble, but Ireland's Noonan, had materialized.  As the FT reported moments ago, "Germany’s Wolfgang Schäuble and Michael Noonan, his Irish counterpart, pushed for curbs on emergency liquidity for Greek banks unless capital controls were imposed, one of the officials said.

All eyes on Greece...

"The estimated earnings decline for Q2 2015 is -4.7%. If this is the final earnings decline for the quarter, it will mark the first year-over-year decrease in earnings since Q3 2012 (-1.0%), and the largest year-overyear decline in earnings since Q3 2009 (-15.5%)."