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John Taylor Says That Despite Everything, Greece And Spain Will Default
John Taylor was on Bloomberg TV Friday, and in this extended version of his interview, the head of the world's largest currency hedge fund said that the euro will fall, equities could head lower, credit spreads will widen sharply and government bonds will rally.
Taylor discusses last week's NFP report, which he calls a "goldilocks" number as liquidity will be ample, gives his perspective on the upcoming Fed decision, which he agrees with Goldman will be just the MBS roll off proceeds reinvestment into treasuries (which he thinks is already priced in), but he considers it a very small amount of money in the big picture. The result would be a weaker dollar "but only for a number of weeks." The catalyst for the turnaround will be "things getting much worse." Taylor does not see any unintended side effects of a new monetization phase, because, once again, the total amount will likely be small (we are not sure we agree with this: with the amount of margin for OTC products, commodities will likely benefit materially from a new QE round). Taylor repeats the old mantra that unlike Europe, the US has control over its currency, and that Europe is certainlyl unhappy with a weak dollar (a trend we believe we will see a lot of increasingly shorter frequency, higher amplitude moves in over the next few quarters). Taylor concludes by discussing his current trade: the short EURUSD pair. He does not see the euro going far beyond 1.35, and his target of 1 to 1.10 he sees as very realistic. As pertains to Europe, he sees the ECB easing in Q4, and due to the FX mismatch in global assets mostly denominated in dollars, he anticipates a major short squeeze in USD positions in Q3 and Q4, when the "economy starts to roll over." He concludes by presenting his two sure bankruptcy candidates: Greece and Spain. We believe that with the European vacation season drawing to a close, the riotous festivities in the PIIGS may be upon us very shortly once again.
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Of course Greece will default. Did somebody really think that with some extra loans and austerity, the Greek would turn into Germans? Greece has outpriced herself from tourism; their shipping industry is good but does not pay taxes; their agricultural sector is inefficient and EU-subsidized. That's basically what they've got.
Greece shouldn't even be a EU member, and perhaps not (along with Turkey) even a Nato member. They would have a better future with a freely floating drachma.
Sh&t will hit the fan once Europeans are back from August vacation. Get your popcorn ready from the Fall fireworks in Europe.
It's not just August, but the Middle of June to the middle of August is when Europeans take vacations. Most have at least 6 to 8 weeks of vacation, that is why they say Europe seems to shutdown during the summer.
Sounds like heaven !!! america needs 6 to 8 weeks off every summer !!!!!!! take it out of the ceo pay !!!!!!!! p.s. Did you hear about mark hurd ????????? lol
Most have at least 6 to 8 weeks of vacation, that is why they say Europe seems to shutdown during the summer.
For 6 to 8 weeks of vacation, you'd have to work in the public sector. Mostly vacations in private sector in Europe are 4 to 5 weeks. http://en.wikipedia.org/wiki/List_of_statutory_minimum_employment_leave_...
You are totally correct, I've always said that Greece will go bankrupt regardless of the loans and austerity they said they would do. If Greece didn't have the money to refinance or pay the loans that they did owe, how are they going to pay for them now with more loans. Those austerity plans are a joke, they weren't ever going to truly attempt those things. Because if they did they would be having riots (oh they have been), and would face the possibility of having the govt. overthrown. What I have said and it came out in the news a month ago, is that Greece may sell some of their islands to pay debt. Just wiki Greece and you will see that they have 1150 islands that are uninhabited, and a country of only 11 million people. Those banks are looking at that real estate for the taking.
Spain will default for sure, all the've been doing is folding on bank into another into another to hide how bad the banking sector is. It's no wonder they have been sucking up to the first family as they went on that 5 day vacation in Spain. They are hopeing they can get a bailout via the US but in secret. This will definitely be the Winter of our discontent.
Not really. The world would be better off with a new Bretton Woods, which means worldwide FIXED currencies.
NO ONE will do good long term from floating exchange rates. The people that told us the lie of floating exchange rates, haven't seen 40 years of destruction like we have. When did our economy start to tank, and go into bizarro world...oh yeah when we STARTED floating exchange rates.
Carry trade has no use, it only siphons money, and we see in the end, or near it, what happens.
Let all the bad debt fail. If the idiots don't have the capital to weather that, then they are losers and will be bankrupt. It was their decision not to carry excess capital. Not our fault if they were idiots, and not our responsibility to bail the idiots out. Let the rich idiots become broke, they deserve it for running their businesses like Forrest Gump. Because that's the sad thing, you have a bunch of multi-millionaire Forrest Gump's running around thinking they are Albert Einstein. Sorry, you fucked up on everything, and lost, and should have seen it coming. You didn't, then you aren't as smart as you think you are, and reality must set in, and the reality is, you're broke and stupid.
Only after a few million people have that occur in reality will it sink in.
But that's what has to happen, especially when so many people still believe in the other side of the fuck-your-mother fantasy that also doesn't work, floating exchange rates. Whether it's derivatives, floating exchange rates, low taxes on the idiots, etc, etc, all of it goes together, and NONE of it WORKS.
It's just so sad to see people go, we'll quit smoking...phew...now this chewing tobacco won't cause any cancer.
Because if you still believe in floating exchange rates, and the other imperialist, corporatists, free-market ideology nonsense, you are basically saying you can switch to chewing tobacco and be safe. No you can't, and yes...it is akin to this.
So this guy likes the dead and rotting horse that can "control its currentsea" compared to the dead and rotting horse that does control its currentsea, but is not supposed to. Very well. No mention of FIAT, but a mentuion that the Fed will not ease anymore (HA!) and that $5 trill is not much (HA!), and a shortage of doelarrs (HA!), this every time there is a recession. Well guess what, this is not a recession, it is a depression.
And if Spain defaults, what happens to all those doelarrs that they have loaned out? I think that this depression is making people senile. How can someone even debate this crapshow anymore?
QE LIGHT like a Blaze of Glory for these dudes, bet your bottom doelarr.
I think that this depression is making people senile. How can someone even debate this crapshow anymore?
+1,000
LOL with Mr Lennox and Mr Richmond.
+e^x ln x
Most interesting misspelling of "currency" I, for one, have ever seen.
Thank you.
Did some one allude to (Mer)(chants)? Or maybe Admiralty Law? Or do we just have a fan of Jordan Maxwell? (omg!) All of the above!
If I wasn't me, and I wanted LH to write more, I would junk me......
QE LIGHT
Get ready for a monumental occasion, as the Fed capitulates on their effort to stay out of Treasuries and the morgage market. First, let us understand why this is so dangerous. First, the Fed did nothing to deserve the money that they print. They are IOUs indebted to the "taxpayers" or "servants" of the State. Second, they need to have the doelarr lesson in value, so they can pay their creditors accordingly. Third, and most importanly, they wish to destroy America, and to take the world into a New World Oder. The pace that you have witnissed of the depression is about to quicken double time. We reached the turning point today. With everyday AMericans not only become poorer, but bankrupt. With everyday Eurpeans lose their lifestyles, and they too will be part of a dependant people on a fascist system. So when people discuss 'this currentsea' or 'that currentsea' and compare them, remember, none of them have ANY VALUE. Not even stocks and bonds, which will be payed with the instruments of the debt will hold weight. The market, and this way of life is a giant scam.
Mr Lennon,
Yes, I believe as you do that our current Regime is deliberately making us poorer, destroy America, and bring us into NWO.
I concur with you and above posters re Europe first down the crapper. Then states & municipalities (careful with muni bonds!).
What to do? I am holding (& buying) gold and other PMs. I am also holding real FRNs for a possible deflation or smackdown in gold.
...
ZH Community. Please join us at the ATMs this Thursday to pull $500 out! This means YOU!
The idea here is that those of us who are mad as Hell about what .gov and the banksters are doing to us have a way to send a SIGNAL. A few hundred a few thousand (extra) of us pulling out the $500 (or your local currencies friends outside the USA) will not, of course, bring down any bank. But, they will pick up the SIGNAL.
Get there early, lines might be long! Hope to see you there!
Looking deeper into the historic signficance of the arrangement one finds a bankrupt Corporate Body, United States, in receivership to its owners. Those collecting the debt include all manner of plunderers: Law, Corporations, Banking, and Government. This is why none of this is "against US law." Because none of these folks are US citizens. They are agents of a foreign power, here to extract as much capital as possible and use the nation's assets (people, etc) for their amusement.
Its quite amusing and cruel at the same time.
A few items:
Well the FED does something for the money it receives for operating expenses. The question is do we get our moneys worth? No pun intended. The answer is, no. For several reasons. The fact is, we do not need the FED, and the costs.
The problem is politicians need the FED. Without the FED there is no easy way to separate fiscal and monetary finger pointing. The system we have is great at placing no blame, especially when we look at costs. We have the great misfortune of suffering from fiscal and monetary irresponsibility. The worst of both worlds. We have FED greed with Political corruption.
The only real nuts and bolts operation the FED does is oversee the Federal reserve banks. For a fiat based currency this oversight would be needed regardless if it was Treasury or the FED. So they do something beneficial.
In a sound non-fiat money system the FED would not exist. But we would still need a central bank of the United States.
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The key aspect to your statement is that taxpayers will pay. The observation is then don't be one. How you ask? Concentrate on minimizing tax paid.
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They do not wish to destroy America, they wish to keep it in perpetual debt servitude. The theft has already occured, now all that is needed is to buy up the most profitable assets with the proceeds. One example, cities selling parking meters revenue to JPM. Mission accomplished.
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Fiat dollars may be easily debassed but not assets. Gold is a good example. But also, key assets for the discovery of energy or the transportation of goods. So somethings will always have value. Even if the currency collapses around it.
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Many would say the FEDs future play book is largely preordained. Lets look at these steps.
1) Reroute MBS proceeds to Ts.
2) QE2 with asset purchases.
3) Bail out banks (once again).
4) Debase the currency.
But, the actions must be of a large enough magnitude to address the fundamental weaknesses. If they are not, the FED will fail. The danger for the FED is to do this outside of fiscal new large stimulus. Because this opens up the FED to scrutiny on its own.
Many would say that the Administrations play book is preordained. Lets look at these steps.
1) Increase taxes.
2) Reduce benefits.
3) Cut spending.
4) Debase the currency.
You can see at some point there are no easy solutions.
The problem for the Administration and the FED is the State's may collapse first. This would create a struggle for limited resources, which I think the state's will ultimately win.
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Side Note:
So Obama was in Detroit July 30 at Chrysler saying that the US automakers have returned to profitability. He stood at center of the plant and said this. Then this week we find out that Chrysler did not make a profit, but only narrowed their losses from last year. Obama WTF dude.
Mark Beck
Is the Fed set to downgrade outlook for US?
http://www.cnbc.com/id/38623480
Depression, bitchez!
I don't think Bernanke and Turbo Tim are on the same page.
How so? Both have been hyping a recovery/green chutes scenario. Don't they both read Alchemy for Dummies? ;)
The FT report above and Timmay's Op-Ed piece in the NYT didn't come from the same book.
http://www.nytimes.com/2010/08/03/opinion/03geithner.html?_r=1
Bitchez, Bitchez !
End of Bush tax cuts bitchez!
the US will default too and guess what - it won't matter
nothing matters to markets that are pure farce
reality is not relevant to a work of fiction
+
The US won't default, or so they will say. The US will play the role of the gate keeper when implementing the new world currency.
Default is a state of acceptance
That one cannot pay back debts that they have taken
Turns out that 'world' is the bigger fool as it is buying ever more dollars
Dollar Hegemony is finally complete.
Enforced austerity on Europe while encouraging never ending stimulus in US just proves that.
US and only US shall maintain high living standards
Dollar is the Gold of present age and Alchemy is here and now!!!
That would be awesome of Spain defaulted while Michelle was living high on the hog in the palace of the king.
I'm so bad.
Michelle leaves town and Streisand is nowhere to be seen.
Love shack or coincidence?
Is jeff Gannon in Dallas ???????????
B9K9 says that despite everything, the USA will default.
Regardless of our collective magical thinking in the "permanence" of institutional power, the USA is really just a collective agreement amongst the governed.
Break that bond, and I don't care how many jack-booted thugs you have on your team, you're still gonna lose.
The bond has been broken. We can all continue to attempt to live in denial, but at some point we're gonna have to get down & dirty and begin to clean up the pieces.
I might give those thugs a bit more credit, people listen to the man holding a gun. Also has the bond really been broken? Many are dependent on Uncle Sugar for either their main income or some form of subsidy. Seems to me that most are just fine with the current system, they are just jockeying for position for a bigger piece of the looter pie.
When it all goes down yeah then the bond will be broken because Uncle Sugar will not be able to loot fast enough to keep giving out the freebies to anyone but the oligarchs.
This guy just forgot that in this economic system everything is connected. So if spain and greece go down, everything else will go down too.
a hail to globalism!!!! :<
As Turd would say, 'this guy is a douche.'
Dollars, bitchez !
Yes.. long the dollar after tomorrow's FED meeting and keep averaging... Europe GDP numbers are due this Friday...
I wish I could have kids with Mr. John "FX" Taylor, he is so clever!
It's all one market, and it's rigged by the same elitist central bankers.
It's just a game they play. Right after the Fed meeting, "Tag, you're it USD!"
Long dollar.
As long as the world plays Monopoly with USD at any sign of trouble... USD is king
ANY bad news out of Europe, $USD bounces hard, to $82 easy.
http://quotes.ino.com/chart/index.html?s=NYBOT_DX&t=&a=&w=&v=d3
Found this link when trying to find out more information about the BIS. It is entertaining if nothing else.
http://www.publications.parliament.uk/pa/ld200102/ldselect/ldeconaf/143/1112705.htm
Silly me, thinking that there might be some actual "laws" involved. The BIS apparently works similar to the way the ruling class works here in the US. It is run as a club. If you obey the rules of the club, whether written or unwritten you remain a member of the club. If not, you get booted out of the club.
Evidence would suggest that in the US memership in the club provides immunity from prosecution and immunity from loss of wealth.
It explains why Dick Fuld, Jimmy Cayne, Sandy Weil, Hank Greenberg as well as many others, got to walk away with tons of money and no prosecution.
It is THE CLUB way of running a country.
This fake market is such a joke. We could have 50% unemployment. entire EU and Asia defaulting and it will still go up. RIGGED Game.
Then act! Join us at the ATMs on Thursday! Pull out $500 (or local currency, I one on our team is overseas, so will start the ball rolling on Thursday for us Americans).
This would be a SIGNAL that there is a VANGUARD of mad people here in the world who are prepared to ACT!
Do it! Hope to see you in line.
Normally I do not like to use vulgar language here at ZH, but today will be an exception:
Let's deflate the bitchez!
WTF is up with your idea to withdrawal $500 from ATMs? Just what do you think that will tell the government? Do you work for a bank? Do you lease ATM machines, and profit from withdrawal charges?
I quit using ATMs a long time ago. I'm not paying anyone to withdrawal cash. Furthermore, the maximum ATM withdrawal is usually around $300.00. Therefore, you want everyone to make two withdrawals?
I'm sorry, but this is one of the dumbest ideas I've heard in a while. Well, unless you're going to profit from said withdrawal fees.
1. Using your bank's ATM shouldn't cost you anything. (I.e., you already pay for it, so you might as well use it)
2. Do you know what a bank run is?
Nobody will default guys. You don't kill a cow that you can keep milking for many years.
Sounds like a pretty smart dude to me. Didn't even look that uncomfortable on that chair even though he may have needed a boost up to sit on it.
Risk on bitchez!
I expect a global default. A giant reset.
Yes, a global default appears inevitable. A planned default would actually take political courage to do. I'm afraid our current leaders don't have it. So, chaos possibly.
Yes, but that will take some time. Until then, the game is to prop up the market, or at least keep it fluctuating so that the average voter grows bored and turns back to American Idol.
I agree, but I still see things happening at warp speed when it starts.
If they forgive parts of mortgages, that might set off a chain of defaults.
I love this clown. He never fails to say something completely retarded, like this time when he says that US debts dont matter, because US can control its currency. Sure, dude, whatever ... let´s pile up a bit more, who cares ...
So everyone here is long dollars, hmmm.
Yeah, long dollar and short brain.
What's up with those chairs? It looks like everyone is about to slide off and land on their face.
Well if Spain defaults, I guess the spanish royal family will suffer a similar fate then that of the french royal family in 1791. Guillotine bitchez!!!!!!!!!!!!!!!! Oh and yes we will have deflationay forces later this year to the next. Anyone who owns PM will get killed next year just like Cheeky Bastard said. And if China blows well......Guillotine bithchez!!!!!!!!!!!
what's with you people and "bitchez" ... you sound like a bunch of fucking retarded 15 year olds. Go buy back your one lots in ES or go sell your 1oz of gold.... idiots.
Retardation, bitchez!
It's akin to the devolution in British idiomatic expressions with time. 20 years ago everything was "syoopa"; then came "brilliant", followed by "gobsmacked", liberally interspersed with "shite". Personally, I believe little can be done to improve upon "sod off tossers"...far more aesthetically pleasing than "bitchez", no matter what side of the Atlantic one is on.
Elvis was a hero to most......
How strange!
Here in Greece, Socialist Propaganda says that things are going so well.
Our PM is on holidays for about 15 days after declaring that he has no remorse for his holidays.
I have seen God
His name is Benjamin something
And tomorrow he says "I say Unto you........."
I tried to post this last week but the video only gave a clip about the dollar.
Thanks for finding the whole thing...
so did the DRAMA in Europe had a break just because people were on vacation .......so when is GREECE defaulting...does anybody know of a DATE when a huge percentage of Greek debt matures
I don't expect a Greek or a Spanish default before at least 3 to 4 years. Then when it happens, all the dominoes will fall within six months.
Yes, most probably Greece has three more years to go, if they manage to stick to the austerity requirements of the bailout package. If not, it'll happen a bit sooner, but certainly not this year. When the extra money is gone, Germans will NOT fund another round, and the party is over.
Regarding Spain, don't they have a bit more space to manouver, because of lower level of sovereign debt?