Archive - Apr 29, 2010 - Story

With no risk left on the table courtesy of the long-suffering but consistently nonchalant US taxpayer, there is no surprise what is going on in the carry trades around the world. Everyone is shorting the Yen, the Euro is stronger pretty much across the board, and the dollar is slowly entering the third lap of the devaluation race, currently in last place but starting to really pick up speed (stronger only against the CNY today most amusingly).

From Reuters:

German Fin Min: Crisis Largely Over In Europe and Germany
German Fin Min: If Greek Budget Consolidation Succeeds, No Tax Money Will Be Lost
German Fin Min: Without Consolidation In Greece We Will Have Unforeseeable Market Consequences

German Fin Min: Failure With Greece Would Put Euro In Question
German Fin Min: Cannot Throw Greece Out Of Eurozone

It's over - the excess debt/GDP terrorists have won, and Moral Hazard is now a global phenomenon. There will be no more failures anywhere. In other words, all your stock profits will come straight from your taxes.

Good thing the ECB (and the IMF) no longer cares about what the Geiger counter reading on its collateralized assets is any longer. The rating agency which also has the last A-rated Greek rating is reviewing the Greek sovereign rating for further downgrades. Mortgage covered bonds of NBG, Alpha, Marfin and EFG Eurobank downgraded to A1. All on review for further possible downgrades.

Remember that bit about how the Fed only holds the highest quality debt (we forget if it was Tweedledum or Tweedledee who said it)? It appears that's just the latest lie in the Fed's endless catalog of misrepresentations. According to TREPP, 11 properties held by Red Roof Inn hotels saw foreclosure actions initiated on them by CMBS special servicers, and are now being sent to the auction block. Guess who is most impacted by this action? Why, the Federal Reserve of course.

Erik Nielsen said one week ago Greece would need €120 billion. Today the IMF announced it would provide €120 billion. Coincidence? Read all about it straight from the horse's mouth.

"Recently value has been more difficult to find, but not impossible. The run-up has left the S&P 500 with an expected return over the next 7-10 years in the 3-4% range. With that expectation, coupled with the issues discussed at the outset of this letter, we are being very discerning about when and how we add risk exposure."

Zero Hedge fully endorses David Rosenberg's latest call: Ban The Bailout

First we have governments bailing out banks (and auto companies and mortgage providers), homeowner debtors, and now we have governments bailing out governments. When does someone finally say — enough is enough!
Look, Greece is not going to “fail”. They are going to default. There will be a debt restructuring. And there will be some recovery. Bondholders will take a haircut — why shouldn’t they? Why should Angela Merkel care if German banks own Greek bonds? Greece has been in default in its recent 200-year history almost half the time. So has most of Latin America come to think of it. What about Russia?

• Must read: Lombard Street believes that the major if not only buyers of the current rally are investment banks themselves, perpetuating biggest "pulling oneself out by the bootstraps" con game in history (FT)
• As Basis Yield Alpha Fund seeks compensation over its Timberwolf losses, Goldman pressed for CDO settlemetn (FT)
• FTW: European confidence improves to two year high (Bloomberg) on what? Expectations of EMU unraveling
• Greenwich Street Capital refused to be "first" ACA, saw Paulson deal as too risky (WSJ)
• Already holding junk, Germany hesitates (NYT)
• Baidu says sales to beat estimates on Google China "semi exit" (Bloomberg)
• Simon Johnson: To save the Eurozone: $1 trillion, ECB reform, and a new head for the IMF (Baseline Scenario)
• Fed can't delay market storm (MarketWatch)
• So as expected it was all just a ploy to get more porn download bandwidth: SEC Schapiro touts Goldman suit while seeking funds (Bloomberg)

In breaking all ties with reality, the IMF has decided that not only will US taxpayer money be freely abused to rescue a profligate Greece, but that money will be effectively junior to existing claims, in essence making it some MC Escher DIP reverse DIP nightmare. Basically US taxpayers will be Last In, Last Out, and will recover any proceeds only after existing creditors get paid out. Pardon us, but this is bloody ridiculous. When will someone in the mainstream media start focusing on this??? Americans are getting the short end of the stick, and nobody in this country knows or cares about it.This is more billions that will be promptly paid and never recovered.

• Asian currencies gain, bond risk drops after Fed pledges to keep rates low.
• Asian stock markets little lower, on concerns of a spread of sovereign debt risk in Europe.
• Australia raises excise duty on tobacco by 25%, ends advertising.
• Australia poised to force tobacco companies to sell cigarettes in plain packs, a world first.
• Brazil lifts benchmark rate to 9.5% from 8.75%.
• European stocks rise after the IMF promises to increase the aid for Greece to 120B euros.
• Fed restated their intention to keep benchmark interest rate near zero for “extended period”.
• Global stock markets mixed as European debt crisis continues to unsettle investors.

RANsquawk European Morning Briefing - Stocks, Bonds, FX 29/04/10

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 29/04/10