European Central Bank
The world economy stands on the brink of a second credit crisis as the vital transmission systems for lending between banks begin to seize up and the debt markets fall over. The latest round of quantitative easing from the European Central Bank will buy some time but it looks like too little too late.
While we are sure the spin from any and every talking head will be that Grexit is overall positive for the Eurozone (until they see Podemos in the lead in the Spanish polls and Italy's Beppe Grillo previous threasts to "leave the Euro and bring down this system of bankers, of scum"), the early pressure to sell Euros (and not in a 'great news we are devaluing our currency and exports will be awesome way' - more a Venezuela 'get my capital away from this hell-hole' way) has been v-shaped recovered as, without doubt every central bank from Switzerland to Swaziland will be buying Euros tonight to maintain the illusion but for how long... While 'they' tried to save EURUSD, US equity futures aren't buying it (giving up the late-Friday Ukraine-is-solved and Dow is gren YTD surge) - The Dow is down 65 points, S&P down 8 points, and Nasdaq down 14 points.
The cracks in the foundation, walls, and ceiling of the European Union are beginning to widen. During an interview with Italian State TV RAI3, Greek Finance Minister Yanis Varoufakis hinted at Greece's "New Deal for Europe" strategy (to be financed by the EIB) but it was the glimpse behind the curtain of EU solidarity that was most shocking as he explained, "Greeks don't have a monopoly on the truth. What we can do, for the rest of Europe, and for Italy in particular, is to open a small door to the truth," adding rather stunningly, that Italy "stands in solidarity with [Greece] but cannot tell the truth as they fear of possible consequences on behalf of Germany."
It took a while, but three months after we wrote "How The Petrodollar Quietly Died, And Nobody Noticed", someone finally noticed.
Needless to say, Greece is only the poster child. The McKinsey numbers above suggest that “peak debt” is becoming a universal condition, and that today’s Keynesian central bankers and policy apparatchiks are only pushing on a giant and dangerous global string. So now we get to ground zero of the global Ponzi. That is the monumental pile of construction and debt that is otherwise known on Wall Street as the miracle of “red capitalism”. In truth, however, China is not an economic miracle at all; its just a case of the above abandoned Athens stadium writ large.
The new Greek political party, known as Syriza, the Coalition of the Radical Left, has done the unthinkable: they've dared to speak the truth.
"Conditions in the global economy are clearly abnormal. The policymaker response to those conditions is extraordinary, with minimal focus on an all-out push for higher growth. Instead, the primary focus is on boosting “inflation” with repeated doses of bondbuying, stock-buying and super-low interest rates"
"A trait you'll see among the world's best investors is the willingness -- even desire -- to talk about their mistakes. They analyze what went wrong, why they were mistaken, and how they can learn from their errors so they don't repeat them. Everyone makes mistakes, but they seem to grasp what most of us have a hard time admitting: It's your (and my) fault."
What any student with an eye to getting on in the world should realize is the core truth underpinning right-minded economic analysis: the value of assets in a properly constituted economic system is a direct function of the money created by the central bank. All other knowledge is subsidiary to this key insight. I know this to be true because the great minds of Princeton declare it to be so, and who am I to argue? This insight results in the key truth that money equals value. It therefore follows that the more money that is created, the more value there is in the system. As the discoverer of these great truths, Lord Keynes has clearly shown this to be true... but there is another way.
S&P Downgrades Greece, Suggests Worst Case Scenario With Bank Runs And "Capital Controls": Full ReportSubmitted by Tyler Durden on 02/06/2015 14:14 -0400
And the hits keep coming. On the heels of a demand for repayment of ECB's profits from GGB bond gains and to extend the T-Bill limit to give the nation time to negotiate with EU leaders (i.e. a Bridge Loan) which Jeroen Dijsselbloem already dismissed earlier in the day, S&P just piled on...
GREECE RATINGS CUT TO B- FROM B BY S&P; MAY BE CUT FURTHER
This downgrade comes just 5 months after upgrading Greece because "risks to fiscal consolidation in Greece have abated." EURUSD is not moving much (having already cratered after US payrolls) but Greek stock ETFs are sliding once again.
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ECB putting interests of banks over those of people … again.
People versus the banks ... time to take a stand ...
Six years on from the financial crisis and central banks are still hacking away at interest rates. Australia and Romania's did this week and while Poland and India held off, both are expected to prune rates later in 2015.
When the illusion that the Status Quo can fulfill all its promises to everybody dies, the Status Quo starts the terminal slide to effective collapse.
The ECB kills the Troika!