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Is The UK Preparing To Follow PIIGS Into The Abyss?
A chart comparing the UK "Spread of Spreads" (i.e., UK CDS - Germany CDS compared to Gilts over Bunds), indicates that the spread is now near record levels, and that the island nation may soon be dragged into the same vortex as the rest of the soon to be bailed out Club Med farm animals. As a reminder, this is comparable to the action seen before the cataclysm in Greece, and the blow outs in Portuguese and Spanish credit spreads. Also, as we pointed out on Tuesday (sorry can't find link right now and we are not big on slideshows), CDS traders moved to the UK en masse, with the country seeing the largest amount of derisking by a material amount. Add a historic election in the offing, and the risk for the UK may just supplant that of the much more manageable "2.7% of European GDP" Greece. Alas, the same excuse will not work with the UK.
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I'm not quite dead sir!
I'm sure it will all be fine, the IMF will just bail them out.
Once that sovereign bailout fest starts good luck getting that wild bronco back in the barn.
Sure from a basket of worthless currencys that nobody will accet as payment in another year because they all accounted to nothing?
QEII anyone?
+1.
Actually +II.
Looks like if you love in NC, time to vote out Kay Hagan. Fastest repsonse I ever got from a Senator, less than 6hrs. LOL Refusing Expanding Audit of FED. Gee wonder why?
April 29, 2010
Dear Friend,
Thank you for your message expressing support for the Federal Reserve Sunshine Act. I appreciate hearing your thoughts on this important issue.
The Federal Reserve Sunshine Act (S. 604 / H.R. 1207) was introduced in the Senate on March 16, 2009, and in the House of Representatives on February 26, 2009. The Senate bill was referred to the Committee on Banking, Housing, and Urban Affairs and the House bill was referred to the Committee on Financial Services. Both bills reform the manner in which the Board of Governors of the Federal Reserve System is audited by the General Accountability Office (GAO) and the manner in which such audits are reported.
Under the Federal Banking Agency Audit Act (PL 95-320), the GAO has the authority to conduct financial and performance audits of the Board of Governors, and the Federal Reserve banks and branches. However, such audits are limited, as the law stipulates that monetary policy operations, foreign transactions, and the Federal Open Market Committee operations are excluded from the scope of the GAO audits. The Federal Reserve Sunshine Act seeks to expand the GAO's authority by removing these limitations.
As the Federal Reserve Sunshine Act is currently written, I am opposed to the legislation. Under common usage of the term audit -- an examination of accounts and records -- there is already a 100 percent audit of the Federal Reserve. Furthermore, Congress already reviews semi-annual reports on monetary policy submitted by the Board of Governors as required under the Full Employment and Balanced Growth Act (PL 95-523).
When Congress passed the Federal Banking Agency Audit Act in 1978, the legislation attempted to balance the need for public accountability of the Federal Reserve with the need to insulate the Reserve's monetary policy function from political pressures. I believe this balance must be maintained going forward.
The formulation of monetary policy is a decision-making process that involves information gathering from a host of foreign governments and central banks. The information provided from those exchanges is critical and extremely sensitive. The immediate and broad disclosure that S. 604 would require could disrupt the financial markets, and jeopardize our country's international finance relationships. Ultimately, it would be taxpayers who would bear the brunt of any losses resulting from policies caused by untimely disclosure of sensitive information. Because of this, I do not believe the benefits of legislation like the Federal Reserve Sunshine Act outweigh the costs.
Again, thank you for contacting my office. It is truly an honor to represent North Carolina in the United States Senate, and I hope you will not hesitate to contact me in the future should you have any further questions or concerns.
Sincerely,
Kay R. Hagan
Please do not reply to this email. Instead, if you have further questions, please visit www.hagan.senate.gov and fill out my web form for your inquiry. Thank you.
NOTE** In the second to last paragraph, does that not spell out that the taxpayer is being used and they know it in Congress, and they also know the fraud and criminal activity exists and they must hide it? Sure sounds like that to me.
Actual disclosure would only expose the rampant criminality and treason.
I am sure glad Kay is having fun, but she won't be going back next time from my vote.
She is such an embarrassment to NC as well as being an out loud tool for the bankers.
Good. Cuz I've been short the pound. bitches.
Oh, man. It's coming. Short the GBP and the AUD over the USD. Soon to be the biggest payday in my life.
With those returns, I can get long USD on Japanese yen and set about designing my yacht.
Hmmm. GBP...
Short both the 2 last remaining housing bubbles.
Short a hung parliament full of financially clueless fuckwits.
Short a country living in its past as it breathes its last.
Short a currency that really believes its a reserve currency but isn't any more. GBP is a reserve currency.. really? I mean, when it comes down to it, ... really?
Short an ageing, increasingly intolerant, yet undereducated, lazy, overprivileged population.
Short an economy that survived the past 20 years on laissez faire economics applied to bankers and hedge funds while destroying its industry and education systems.
Short a country where people think they are rich because they have a big mortgage.
Yes... hmm... I am starting to see where the trade comes from...
1 question - buy USD?
Short where the premier calls its citizens "bigots". Quite the mess on Brown's hands there...haha
I have not a clue as to what you're talking about. But...
I will be shorting the GBP because the US Federal Reserve has propped up theirs and the European currency to the tune of half a trillion dollars. It was like morphine and the effects are wearing off pretty rapidly. After the British election, there will be some hell to pay vis-a-vis bond rates as Moody's and S & P are all but pre-announcing a downgrade.
I am shorting the Australian dollar because it has been basically a trade in commodities as being stock-piled by China. According to many accounts, this is also wearing off. The AUD is 4 Bollinger bands above its mean price and reversion to the mean is going to be swift and decisive, leaving the AUD in the dust.
I am getting long US Dollars because when the Ponzi scheme in propping up equity markets ends (2/2 rising bond yields...), then the safe-haven bet is to run to the American dollar.
Waxing poetic about what ought to be and lamenting fiscal emasculation and incompetence will only get you killed in the 4X market.
:D
I love it! Couldn't agree more.
thanks for the insight. i have too many GBP right now and am trying to figure out the best way to get rid of some as a hedge and stay mostly in cash for a while longer. it's been a headache.
was going to go for some AUD, but something wasn't sitting right, multi-decade highs for a starter. as much as i hate the fundamentals, USD will probably perform much better in a pound meltup than AUD from this point. i think we could easily take out the $1.37 low if things start to get messier in the EU region. curse that USD, but i sure as hell won't go long on it without buying more gold/silver too :)
Orly, you are singing like a JAAP (Just another American Polyanna).
After Nixon defaulted on the gold backing of the dollar and forced the world onto the dollar reserve currency system, the US government and it's citizens had the equivalent of a no limit credit card with 0% interest for 40 years. For the last 20 years they have been hiding those irritating monthly statements showing that SS is depleted and living high on the hog.
Now you think that the rest of the world is going to buy dollars and ignore gold as sovereign governments and their currencies implode around the world? What do you think happens to the dollar when JP Morgan, Goldman and HSBC show up at the fed for a bailout for all the gold they leased out?
Americans are enjoying the music on the top deck while trying to ignore the screams of panic while everyone else fights for a spot on a lifeboat.
I'm confused - it's almost as if you're describing the USA instead of the UK! ;)
It will be after another 1 trillion in treasury auctions.
You don't come across as rational and dispassionate as you imagine you do, aka GBP is going down mothafucka and this time it's personal. USD? Nope, only gold can save you now.
Gold bugs really got it in the head, don't they?
Well thats the problem, isnt it? They think they have solved the really tough problem.
What to short is usually easy - my point above is that there is a lot permanently wrong in the UK - more than is priced in, and the reckoning is soon. I think we agree on that.
But what to buy? thats the tough one. I have the GBP/USD trade on. And some PMs in GBP, which I am nervous about. I just cant find a long side of the trade that makes sense, nothing feels cheap.
I'm not worried that the GBP will become worth much less than it is now. I'm worried the USD will do the same thing. My consolation - I think it happens to the USD much later than everything else. After GBP,AUD,JPY, our last reserve currency, USD, will fail in the end, and then gold will have its day. But not yet.
So yes, gold bugs on this site are committed, or should be committed, haha. But I cant be one. I think they are eventually going to be proven right, and ZH is a great way for them to spend their time waiting... but personally I'd hate the volatility in the USD PnL on the way.
Good luck with the yacht.
Not all of us. Enjoyed your analysis above and agree
Sorry buddy that is the "go long recipe":)
You want to short something, short quality, short the "bailor".
Buy phisical gold and stock some food. One to consider, move to a agricultural village and get involved & useful in the local community.
Tyler, is there any new information regarding whistle blower Macguire's captured assailant. Has no name been released since this occurred over a month ago? I have been searching for information but I cannot locate any.
+ 1000
or even the name of the police station and i will call them myself.
The rating agencies have stated that they would
be waiting for the outcome of the elections, before
they review their ratings. Since none of the candidates
has a overview set of proposals to reduce their
abysmal deficit, at the current speed of the rating agencies,
I would expect them to 'hammer' their downgrade,
the week after the elections. Another triple A
to go..British QE has been a disaster in retrospect,
and as someone commented, given their figures,
not even the IMF could bail them out !
Totally agree. The ratings agencies don't want to meddle with the election outcome and if the truth were revealed the incumbents would be slung out on the street.
It's clear that the UK Economy has been driven off a cliff by the one eyed scotsman who sold our sovereign gold but claims it 'all started in America'. He neglects to mention that city of London's hand in all this insanity.
The UK economic show has been kept going for now but I suspect that come May 6th we'll see a hung parliament, a flight from the GBP and a downgrade all in short order.
Call me a gold bug but I'm hedging some of my cash in gold and silver. The dollar is as bad as all the rest but is backed up by the biggest military and intelligence apparatus on the planet so should be good for slightly longer. It's all in the timing. It's like that 80's frogger game, leaping from one sinking log onto another but the logs are currencies.
It will be fun to watch Gilt rates go parabolic after the election. As I've been saying, the crisis will just go straight to the core, ie the inbred US/UK Fed and BofE counterfeiting oligarchy.
Wow, I didn't expect this to happen so quickly. I wonder what they'll do to paper over this to buy themselves another year or two, then you've got Japan too.
Stealth devaluation of the GBP going on over there?
Where is our President For Life?
Why isn't he front and center and taking credit for his brilliantly executed and perfectly timed financial rescue plan? To quote the great one "We're only going to do what works."
Gotcha.
I like the sound of 'UPIIGS.'
I don't think you can top "PIIGSUK" for onomatopoeia.
Dont forget to shut off the microphone Brown.
Bigot
@ Mitchman
I wouldnt exactly call it "stealth", down from 1.45E to approaching 1-1 at times, in two and a bit years.
Previously mentioned EURO buying support has returned...
MARKET UPDATES:
http://www.zerohedge.com/forum/latest-market-outlook-0
PIIGS IN BULL RUN:
http://williambanzai7.blogspot.com/2010/04/piigs-and-bulls.html
Not sure that USD any better than GBP as a store of value.
The average maturity of uk gilts is 14 years - but T-Bonds 4 years and falling. Crunch time much closer for the US Treasury which will see either a massive spike in interest rate or inflation rate. Zimbabwe Ben speaks to his name on this choice...
In Belize, the local paper refers to him as "El Pupa",
the octopus.
http://www.mirror.co.uk/news/top-stories/2010/04/28/out-of-the-shadows-t...
the appelation reminded me a great deal of our best-loved investment house ....
Why does everyone think that the US $ is a fiat currency? The $ has been backed by the global supply of oil since 1973. Try and purchase oil in another currency. Better yet, try to refuse dollars for your oil exports. You might end up in a spiderhole with US Special Forces digging you out.