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Standard Chartered CEO Says Greek Default Inevitable

Since there is no point anymore in doing any analysis or wasting time thinking, here is the copy and paste of the relevant section from a just released piece in Bloomberg. "Greek Default, Euro Exit Inevitable, Std Chartered CEO Tells Sky. Default, euro exit won’t “necessarily” occur in next 1 or 2 mos., but “quite likely at some stage,” Standard Chartered CEO Gerard Lyons tells Sky News. Greece “not going to pull down Europe” or cause world recession." Actually, the last bit may be a rumor, at least if one remembers what happened to global banking after Lehman was taken down in a "controlled" Chapter 7. Anyway, Johnny 5: take it away.



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Rumor Fatigue - BRIC Buying Half-Life Under One Minute

While 30 minutes ago Brazil's Central Bank policy head Mendes spoke in Brasilia saying that the "Euro is less important in Brazil international reserves", and "Brazil seeks reserve currencies with solid fiscal positions", we are now supposed to believe a rumor cited by Reuters that BRICs are setting up for coordinated buying of European peripheral sovereign debt? It appears Rumor Fatigue has taken hold as the market rallied 6pts and then sold it all back within the same minute.



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Full Retard Rumormill Goes For The Trifecta As Brazil Joins China And Russia In Bailing Out The European Ponzi

Add this from Reuters to today's rumor trifecta to make the day RDA allowance of crazy pills complete:

  • BRICS COUNTRIES IN "VERY PRELIMINARY" TALKS TO COORDINATE PURCHASES OF EURO ZONE SOVEREIGN DEBT - BRAZIL GOV'T SOURCE

And so in one day we have heard rumors of China, Russia and Brazil (in this case"citing a monetary official"... sure beats "unidentified Italian government sources" ahem FT) all bail out Europe, none of which will inevitably happen mind you because these countries aren't governed by idiots, although "idiots" is precisely who trades this market. See the attached chart for the kneejerk reaction to this latest headline.



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Dutch Finance Ministry Says Greek Default Is Unavoidable, Immediately Retracts

Even though it has since provoked a firestorm of denials and refutations, the reality is that Dutch media RTLZ probably had some very good sources (certainly better than the FT's yesterday when China was supposed to LBO Italy for the 4th time in 2011) to release the following information, namely that according to the Finance Ministry, the bankruptcy of Greece is inevitable, and that the "question is no longer whether but how Greece goes bankrupt." Additionally, Reuters added that according to Jan Kees de Jager, "We are studying scenarios in secret together with the Dutch central bank (DNB) and also with other countries. We are looking at our own economy, our government finances, the financial sector and consequences for Europe," De Telegraaf added that the "other countries" also included Germany and Deutsche Bank. He said it was difficult to let a country go bankrupt in a controlled way. "Always, if something goes wrong there are effects on other countries, on central banks. So you will have to take into account side-effects. That is precisely the reason why we are looking at different scenarios behind closed doors." A ministry source later confirmed a report on Dutch broadcaster RTL that the scenarios being studied included default by Greece. Of course, in keeping with the European M.O. of spreading a rumor, gauging the market response, and if response is unpleasant, to immediately refute it, Dow Jones and everyone else has since reported  that the Dutch were only kidding and were not calling for an orderly default for Greece. Sure. Just preparing for one. Huge semantic difference there...



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Sgt Obama's Lonely Unemployed Record Poverty Club Is Back In Session

Heeeeere's the teleprompter again. Because it was at least 24 hours since he was on TV again spewing gripping rhetoric and doing his hypnotrance: "you must pass this bill...you must pass this bill...you must pass this bill...you must pass this bill..." PS - shot for every time Obama says, "you must pass this bill" or a version thereof.



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Stock Correlations Soar To 97.2%: Here's Why

One of the parallel consequences of the market plunging (although nowhere near as far as it would had central bankers not be ubiquitously present to cushion every blow) in the past month on fears of another Great Financial Crisis, coupled with concerns of global insolvency, has been a surge in stock correlations (if not so much between stocks and other risk assets such as bonds and gold), to the highest point since the Lehman collapse. Putting a number to the "point" - 97.2%. Here is how BNY Convergex' Nicholas Colas summarizes the recent surge in cross sector correlations: "Disparate markets – stocks, bonds, currencies, and the like – have a lot in common lately. Whether they want to or not. Average correlations between the 10 major sectors of the S&P 500 have reached 97.2%, from 82.1% just three months ago. That’s the highest level of such common price action since the Financial Crisis. Gold and silver have continued to provide actual diversification, and Investment Grade bonds are also holding their own in this regard. They are at least moving on their own, rather than lockstep with the rest of the world. The difference between investing in Emerging Markets equities, Developed Markets equities, and High Yield bonds is now effectively zero. We think these high correlations will plague markets through the end of the year, since they are fundamentally caused by worries over European financial market solvency. Those aren’t going away any times soon." Well, they might, if someone actually believes the lies spewed by European bankocrats, who have now reached new lows in dealing with information, by sicing regulators against those who write OpEds. Very soon the dissemination of facts will also be made illegal, but until then, we will likely see correlations continue to trade, and soon hit 1.000 as everything trades in perfect lockstep with every other robot traded "thing."



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10 Year Auction Prices At Record Low Yield, As Direct Bidders Plunge

The only notable thing about today's $21 billion 9-year 11-month reopening was the yield which at 2.00% was the lowest ever. Granted less than half was allocated at the high but obviously the interest was there, even with Direct Bidders tumbling from a record 31.7% take down in the last auction, to a perfectly average 11% today. In their place came Indirect Bidders, who saw their take down rise from 35.4% to 48.9%. And while the Bid To Cover dropped from 3.22 to 3.1, it was still just in line with the LTM average, and is not at all indicative of weakness as some speculated, especially with the WI trading at 1.99, just before the pricing, indicating the auction was in line with expectations, if maybe a tad on the weak side. Following tomorrow's final auction of the week, in which the Treasury sells 30 Year bonds, which may or may not be very well bid depending on Op Twist expectations (although if Gross' record duration extension is any indication, the copycats will be there in full force), total US debt will be knocking on $14.8 trillion's door once this week's auctions are settled.



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Because The First Amendment Does Not Reach Across The Atlantic...

The idiocy just hit record highs:

  • BNP PARIBAS SAYS IT ASKED AMF TO INVESTIGATE WSJ OPINION PIECE - BLOOMBERG

What next: the AMF dispatches black choppers to round up all those trop-beaucoup criminal bloggers?



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'Totally Ridiculous' Greece Should Default Big Or Go Home

In what seems like the first honest words from a central banker in months (albeit an ex-central banker), Mario Blejer (who presided over the post-default Argentina in 2001) has some first-rate advice for G-Pap and his fellow Greeks. From an interview in Buenos Aires, Bloomberg notes the following notable quotes:“Greece should default, and default big, you can’t jump over a chasm in two steps.”



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Tim Geithner Tells Germany It Has To Sacrifice More Taxpayer Money To Protect The Status Quo

Tim Geithner, in his third third annual pilgrimage to Europe, the first two of which concluded with one after another more discredited stress tests (because in Mark-To-Unicorn America they worked sooooo well), has a slightly different message to the locals on how to run their failed monetary union. From Reuters: "Treasury Secretary Timothy Geithner is likely to urge euro zone finance ministers on Friday to speed up ratification of changes to their bailout fund and consider boosting its size, an EU source said on Tuesday. The official said Washington was worried that the euro zone was not acting fast enough to enhance the EFSF fund and that the stability of the global financial system was at stake. He is likely to tell the ministers that they should consider increasing the size of the EFSF to equip it better for the needs of potential bank recapitalization. "He will probably tell Germany to give up its resistance to an increase in the size of the EFSF," the source said. A well connected fund source told Reuters Geithner had been pushing for a solution for European banks along the lines of the TARP program in the United States, but had not made much headway." Translation: Germany has to immediately throw billions more of taxpayer money into the insolvent bank pit (just like America did), or else Tiny Tim will get angry. Well, if Germany's ruling class was against pledging over 100% of its GDP to bailout Greece and the other insolvents, it will surely be persuaded to commit political suicide after the last man standing from Obama's administration, who still inexplicably has not been fired for gross incompetence (and also prosecuted for tax evasion), has his say. And just as the short selling ban lasted all of one week before Europe's banks tumbled, even a favorable uptake of the idiot's proposals will at best lead to a 24 hour spike in prices followed by what will likely be the terminal tumble into the abyss of failed Keynesian-Bernankian experimentation.



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Broken Market Chronicles: An Update

This market seems completely broken. The S&P could be at 1,300 or 1,000 in a week, and neither move would be a complete surprise. One way or the other, moving 1% on a headline that really didn't seem to add any new information is scary. The S&P now seems to move in 5 pt increments. Certainly when credit markets get that illiquid they have at least one good move wider before providing some big relief rallies. The market for SOVX started exhibiting severe lack of liquidity back in June. Since liquidity broke down, it has generally traded wider, with some big sharp rallies. Almost all the other credit indices followed the same pattern as their liquidity broke down. I don't see any reason for equities not to follow. Some might argue that we are at levels where we are due for the relief rally. I'm betting that we aren't. The manic nature of the stock market seems to have increased lately and we are too far off the lows to be comfortable that relief rally is ready.



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Morgan Stanley Slashes EURUSD Target To 1.30, Says EUR Attraction As An Alternative Reserve Currency Ending

While Goldman continues to resolutely predict that the EURUSD will any minute now go back to 1.50 (and 1.55 in 12 months or so), Morgan Stanley has for once decided not to ape its far more capable and client "fornicating" competitor Goldman and has thrown up all over the EUR, slashing its EURUSD forecast "significantly lower"  to 1.30 by year-end and 1.25 in Q1 2012, before stabilizing in the second half of next year because the now second rate bank believes that "economic, political, constitutional and monetary policy developments in Europe have now become more challenging for the EUR, while international support is likely to decline." Its conclusion: "As a result, the EUR's attraction as an alternative reserve currency is likely to be reduced." So, let's do the math: EUR: not a reserve currency? Check.  CHF: not a reserve currency? Check (and pegged to the former). USD: about to be gang banged by the windowless corner office at the Marriner Eccles building housing America's central planners? Check. So.... what is left if one is looking for a reserve currency?



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Median Male Worker Makes Less Now Than 43 Years Ago

While the fact that a record number of Americans are living in poverty should not surprise anyone at this point, what should surprise many is that according to Table P-5 of the Census report of (Lack of) Income, the median male is now worse on a gross, inflation adjusted basis, than he was in... 1968! While back then, the median income of male workers was $32,844, it has since risen declined to $32,137 as of 2010. And there is your lesson in inflation 101 (which we assume is driven by the CPI, which likely means that the actual inflation adjusted income decline is far worse than what is even reported). The only winner: women, whose median inflation adjusted income over the same period has increased by 188%. That said, it is still at 65% of what the median male makes. So injustice all around. And now, it is time to be patriotic again and buy a Pontiac Aztek.



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