Phoenix Capital Research's blog

Phoenix Capital Research's picture

On the Ground in Paris... It Ain't Euro Positive





 

 

By the look of things, French youth are celebrating Hollande’s victory by picking up all of their friends and then driving up and down the streets honking their horns incessantly. Most cars were packed to the brim with passengers hanging out of every window and even the sunroof waving French flags, singing, or simply yelling pro-Hollande slogans.

 
 
Phoenix Capital Research's picture

The Fed and the ECB’s Hands Are Politically Tied... Bye Bye Market Props





 

Remember, the core driving force in European policy-making is politics. Angela Merkel faces re-election in 2013. If inflation is already becoming a political issue in Germany now (though data shows that inflation actually slowed in April) Merkel is going to be highly incentivized to get it under control by appearing even more pro-austerity/ anti-monetization (more on this later). And if things get truly ugly she could even publicly threaten to pull out the Euro.

 

 

 
Phoenix Capital Research's picture

Merkel's in Hot Water... So All Future Backstops Will Be Even MORE "Strings Attached"





 

Spain, which is now at the forefront of the Great Western Debt Default Collapse, has opted to seek funding from the mega-bailout fund, the European Stability Mechanism (ESM) rather than going directly to the ECB or the IMF.

 
 
Phoenix Capital Research's picture

The Market Calls BS on Spain's Efforts to Cover Its Toxic Banking Debt





To give you an idea of how bad things are with the cajas, consider that in February 2011 the Spanish Government implemented legislation demanding all Spanish banks have equity equal to 8% of their “risk-weighted assets.” Those banks that failed to meet this requirement had to either merge with larger banks or face partial nationalization. The deadline for meeting this capital request was September 2011. Between February 2011 and September 2011, the number of cajas has in Spain has dropped from 45 to 17.

 
 
Phoenix Capital Research's picture

The Truth About the Spanish Banking System That 99% of Analysts Fail to Grasp





 

To give you an idea of how bad things are with the cajas, consider that in February 2011 the Spanish Government implemented legislation demanding all Spanish banks have equity equal to 8% of their “risk-weighted assets.” Those banks that failed to meet this requirement had to either merge with larger banks or face partial nationalization. The deadline for meeting this capital request was September 2011. Between February 2011 and September 2011, the number of cajas has in Spain has dropped from 45 to 17.

 
 
Phoenix Capital Research's picture

Are China and Russia Really Dumping the US Dollar?





I do not believe that China or Russia are in any position to dump the US dollar, at least not in the near-term. The US Dollar may one day no longer be the reserve currency of the world. But that day is years and possibly decades out. But the notion that China or Russia could just dump the Dollar and move around the US in terms of trade is unbelievably naïve and greatly underestimates the importance of the US to the global economy.

 
Phoenix Capital Research's picture

The Bundesbank's in Hot Water... Will It Take the Heat or Throw the ECB Under the Bus?





 

The ECB has found its hands tied: if it continues to monetize aggressively, inflation will surge and Germany will either leave the Euro or at the very least make life very, very difficult for the ECB and those EU members asking for bailouts.

After all, doing this would score MAJOR political points for both Merkel and Weidmann who have both come under fire for revelations that the Bundesbank has in fact put Germany on the hook for over €2 trillion via various back-door deals.

 
 
Phoenix Capital Research's picture

Merkel’s Back is Against the Wall… Time for Germany’s “Plan B”?





On that note, I fully believe the EU in its current form is in its final chapters. Whether it’s through Spain imploding or Germany ultimately pulling out of the Euro, we’ve now reached the point of no return: the problems facing the EU (Spain and Italy) are too large to be bailed out. There simply aren’t any funds or entities large enough to handle these issues.

 
Phoenix Capital Research's picture

Graham Summers’ Weekly Market Forecast (Here Comes Spain Edition)





This spells MAJOR trouble for Spain and the rest of the EU. Unlike Greece, (which has its own elections, which could go very wrong for the EU, on May 6th by the way), Spain is too big to bail out.  Indeed, the Spanish banking system is a toxic sewer of bad mortgage debt: over half of all mortgages were generated and owned by the unregulated cajas. If you're unfamiliar with the caja banking system, let me give you a little background...

 
Phoenix Capital Research's picture

Spain is About to Enter a Full-Scale Collapse





 

 

With Spain today, we have a virtually unregulated banking system sitting atop HALF of ALL Spanish mortgages after a housing bubble that makes the one that happened in the US look like a small bump.

 
 
Phoenix Capital Research's picture

The European Political Games Have Hit the Point of No Return





Germany’s campaign for austerity in the EU is about to lose its biggest ally. How exactly this will play out is unclear, but it will not be conducive to the Euro lasting in its current form much longer: aside from the fact that the EU banking system is on the verge of collapse and Spain (a country too large to bailout) has now stepped to the center stage of the EU crisis, Germany is finding itself increasingly alone in its moves to rein in the ECB’s monetary profligacy.

 
Phoenix Capital Research's picture

Spain is Greece… Only Bigger and Worse





In simple terms, Spain is like Greece, only bigger and worse. According to the Bank of International Settlements worldwide exposure to Spain is north of $1 TRILLION with Great Britain on the hook for $51 billion, the US on the hook for $187 billion, France on the hook for $224 billion and Germany on the hook for a whopping $244 billion.

 
Phoenix Capital Research's picture

Forget Today's Bond Auction, Spain is an Absolute Disaster





 

Case in point, if the Spanish auction went so well, why are Spanish Credit Default Swaps widening? Ditto for Spanish yields (the ten year is back closing in on 6%)? However, ultimately this auction means next to nothing. Spain is an absolute disaster on a level that few if any analysts can even grasp.

 
 
Phoenix Capital Research's picture

The Germany/ ECB Relationship is Approaching its Breaking Point... Right As Spain Starts imploding





 

The bailout gravy train is slowing and possibly even stopping right at the time when Spain (a REAL problem) is going to start looking for a bailout. So what do you think happens when the ECB chooses to print more and Germany threatens to pull out the Euro… OR the ECB tells Spain it can’t provide any additional funds?

 
 
Phoenix Capital Research's picture

We’ve Finished #1, We’ve Moving Into #2, Next Up is #3





Remember, the real European collapse will occur when the political landscape changes in Europe: when supporting the bailout madness becomes unpalatable for EU leaders due to its political consequences in their home countries.

 
Syndicate content
Do NOT follow this link or you will be banned from the site!