Archive - Sep 25, 2012 - Story

Two weeks ago we showed the human aspect of the absolute economic collapse in Greece (because depression is too light a word to describe what is happening in this globalist vassal collony) when charting Greek unemployment surging by 1% in one month to 24.4%, and which as of September is likely nearly 30%. What this means in practical tax revenue terms (if the tax collectors were actually doing their job collecting taxes, instead of striking) is that there is nobody generating any economic products and services, and thus no state revenues. Today, Kathimerini confirms this, in a report that almost a third of all business in Athens have now shuttered: "The number of shuttered shops on the capital's busiest commercial streets, Panepistimiou and Stadiou, also hit a record high in August, reaching 34.7 percent on Panepistimiou and 42 percent on Akadimias, up 14 percent in the last six months." And so the close loop continues as fewer businesses are around to hire less people, generating less state revenue, encouraging less businesses to open and so on, until the entire country collapses in a heap of worthless debt.

• China carrier a show of force as Japan tension festers (Reuters)
• Draghi Rally Lets Skeptics Dump Spain for Bunds (Bloomberg)
• China’s Central Bank Injects Record Funds to Ease Cash Crunch (Bloomberg)
• Obama warns Iran on nuclear bid, containment 'no option' (Reuters)
• When Would Bernanke’s Successor Raise Rates? (WSJ) that's easy - never
• Italy's Monti Downplays Sovereignty Risk (WSJ)
• Portugal swaps pay cuts for tax rises (FT)
• Madrid faces regional funding backlash (FT)
• Berlin Seeks to Push Back New Euro-Crisis Aid Requests (WSJ)
• Race Focuses on Foreign Policy (WSJ)
• China Speeds Up Approvals of Foreigners’ Stock Investment (Bloomberg)

Hitting the tape are leaked detailes obtained by Bloomberg detailing what the ESM will focus on as it is unleashed on the world. From Bloomberg: Europe’s permanent rescue fund will invest the core of its assets in AA or higher-rated debt issued by governments, central banks, euro-area agencies and international institutions, with the power to diversify into bank debt as it grows, its draft investment guidelines say, Bloomberg’s Brian Parkin, Rebecca Christie and James G. Neuger report. The ESM will keep at least 15% of its maximum lending volume, or EU75b out of an ultimate EU500b, in “assets of the highest creditworthiness” as per guidelines obtained by Bloomberg News. Does that mean all countries rated AA or below are ineligible? Because that pretty much invalidates Spain and Italy? Or is the draft going to be releaked with the AA revised to A, then to B then to CCC until finally the EURUSD sustains an upward move for at least 10 pips? But the funniest headline of all:

• ESM PLANS `PLAIN VANILLA' BORROWING STRATEGY TO LURE INVESTORS 

Lure is truly such a great word here. After all nobody will ever get their money back.

After briefly attempting to stage a rise in the early overnight session, the EUR has since resumed its lower glidepath (something which Germany's export-focused economy and the only realy economic driver in Europe desperately needs: after all Europe is the only entity in the world whose central bank is working to promote a stronger currency) to the 1.2900 support, as once again Europe comes back into focus, exposing all its warts, scars and boils in perfect 1080HD resolution. Among the key events were a Spanish €4.00 billion bill sale as well as an Italian €3.94 billion 2 year bond sale, which despite selling at the maximum of the intended range, showed far less investor demand than on recent occasions, a development which Rabobank said is to be expected as the "Draghi effect" wanes, and once again Europe is left to its own devices. "The longer Spain delays on requesting bailout, the more the improvement in sentiment following Draghi’s pledge to save euro is likely to unwind" Richard McGuire, fixed income strategist at Rabobank, writes in client note. "Unraveling of “Draghi effect” may accelerate, with possible Moody’s downgrade this week and lack of progress at Oct. 8 Eurogroup summit." Other events out of Europe include the ongoing attempts in Spain to package lots of trash under the rug (see: Spanish Bad Bank Risks Investor Conflict With Stressed Lenders), the realization that the Swiss National Bank instead of continuing to exchange EUR for AUD, bought €80 billion of core debt according to S&P, the print of Italy's September consumer confidence which held near 15-Year lows, a French industrial sentiment which held near Two-Year lows, and so on. Greece too continues to make noises but it seems that the little country is being ignored by everyone. Catalonia's separatist tensions however are getting louder after the Barcelona province did not get the unconditional bailout it demanded (as we wrote yesterday).