European Union

Chopshop's picture

Phinance's phavorite political prisoner, Martin Armstrong, cautions that "the EU is in dire position", on the precipice of shattering. Since "debts will never be paid and interest expenditures are the greatest transfer of wealth in history ... Western society is falling apart ... If we do not act, civil unrest will explode. The current choice is DEFAULT or HIGHER TAXES & CIVIL UNREST ... Someone has to step forward to save us or we may be doomed. It's time to wake up for this is the future of our children and their children at stake. "

Greece Gives Germany And European Union One Week Ultimatum (No, You Are Not Dyslexic)

First 130 Congressmen, now Greece: the examples of people who have no idea what the definition of negotiating leverage means just don't stop. G-Pap has decided to go all in on 2-7off suit . The problem is everyone knows what his cards are, and his bluff is about to be promptly called by everyone; too bad the Cyclades are still not in the pot. Give them a few weeks... Bloomberg reports that: "Greek Prime Minister George Papandreou set a one-week deadline for the European Union to craft a financial aid mechanism for Greece, challenging Germany to give up its doubts about a rescue package." And here we were thinking only Bernanke was clinically insane. G-Pap, it turns out, is shocked that someone can just say no to his generous offer of allowing someone else to bail him out. Act now, or in one month when you can buy Greece (and its islands) in a 363 sale, it will be too late (to overpay).

What Bailout? IMF, aka American, Involvement Now Appears Certain As Europe Throws Greece To Lions

A smattering of the relevant headlines which are causing Greek spreads to widen as investors realize they have been lied to once again.

04:51 03/18 GREEK PM: GREECE WILL NOT DEFAULT
04:51 03/18 GREEK PM: NOT LOOKING FOR PARALLEL NATIONAL CURRENCY
04:50 03/18 GREEK PM: OFFER OF HELP ON TABLE WOULD HELP FIGHT SPECULATORS
04:50 03/18 GREEK PM: WOULD PREFER A EUROPEAN SOLUTION
04:49 03/18 GREEK PM: GREECE IS TALKING TO THE IMF
04:49 03/18 GREEK PM: MUST PURSUE REFORMS TO INCREASE COMPETITIVENESS
04:45 03/18 GREEK PM: IF NO SUCH PLAN IN PLACE, GREECE MAY NEED IMF HELP
04:44 03/18 GREEK PM: IMF-STYLE HELP COULD BE OFFERED ON "AD-HOC" BASIS
04:44 03/18 GREEK PM: EUROPE MUST BE PREPARED TO OFFER IMF-STYLE HELP
04:43 03/18 GREEK PM: GREEK NOT IN NEED OF IMF LOAN
04:32 03/18 GREEK 10-YR SPREADS WIDEN 6 BPS TO +306 BPS AS GREEK PM SPEAKS
05:40 03/18 GREECE PM:IMF SAYS OUR PLAN QUALIFIES US FOR IMF AID IF NEEDED

Morning Musings From Art Cashin - St. Patrick's Day Edition

Market pundits scrambled to fill up air time by attributing the market movement to this data or that comment. The market rally catalyst was quite singular however. As rumors spread of a firmed up Greek rescue package, and the S&P suggested it was shifting Greece out of ICU, the Euro soared. It spiked 0.7% which is a significant move in the currency arena. The result was immediately evident and dramatic. Gold spiked $20 and oil shot up over $2. Those moves came long before the FOMC statement. Those moves were not influenced by some piece of economic data. Those moves were not the result of some shift on the outlook for the President’s health plan. Those moves were the direct result of the jump in the Euro and the correspondent weakening of the dollar. We believe that the Euro/Dollar move was also the primary catalyst in the stock market. Given the action in gold and oil, the stock market’s reaction was rather mute. With such a strong tailwind, you might have expected something like a 100/150 point move in the Dow. The real question on stocks was what was holding stocks back given the currency boost.

European Commission To Back CDS Trading Ban As Second Round Of Strikes Cripples Greece; Greek GDP Now Expected To Miss Worst Case Scenario

The Washington Post reports that the next "Lehman-sized" event may be just around the corner, as the European Commission is now supporting a ban on trading sovereign CDS. While we are in process of tracking down whether this is actual news or just some exaggeration based on semantics, we will caution, once again, that the consequences of a CDS trading ban will be severe and very likely result in the opposite of what the EC intends on achieving. Keep in mind that everyone expected the Lehman bankruptcy to be contained as it was at best a fringe cog in the financial system. The result was a systemic collapse as one interlinked component of the financial fabric imploded after another. The rush to unwind CDS positions ahead of a ban will be massive and have unpredictable consequences. But the biggest threat is what happens to bond prices, which once basis trades are made impossible, will be promptly unwound, leading to pervasive selling of the cash leg not by speculators but by plain vanilla mutual fund idiot money. What scapegoaters seem to forget is that the vast majority of existing sovereign CDS notional is tied into perfectly boring insurance "basis" trades, in which the bond is held in combination with associated CDS. Once there is an inability to have hedged cash sovereign exposure, the demand for European sovereign paper will plummet, achieving precisely the opposite of what the CDS ban is attempting to accomplish.

smartknowledgeu's picture

If you think that the world of crime has to be shady and underhand, you are wrong. With the beginning of the fourth world war, organised crime has globalised its activities. In this new war, politics, as the organiser of the nation state, no longer exists. Now politics serves solely in order to manage the economy, and politicians are now merely company managers. An oft misunderstand leader, Subcomandante Marcos, now Delegado Zero, tried to warn us more than 12 years ago that "it takes no more than a few minutes for companies and states to be sunk", and that they would be sunk, not by military theater operations, but by hurricanes of finance. More than a decade later, with many of his predictions now coming true, perhaps it's finally time we started listening to him.

The US Leg Of The Blame [FX/CDS/Goatherding] Speculators World Tour Comes To An End In Front Of Tim Geithner's Office

The meeting between the Greek Minister Of Prime Scapegoating and the US Secretary of Treasury Defrauding ("I used TurboTax") has ended "satisfactorily": idiotic lunacy, which we are now convinced has mutated and gone airborne, has spread and now Geithner is very likely infected. According to preliminary reports president Obama may be contagious as well. G-Pap is quoted by Market News as saying that "President Barack Obama gave a positive response to the European efforts to combat some aspects of market speculation that could destabilize markets and the euro." Seriously, is this just some sick, perverted scheme to make going long the dollar (short the euro) illegal? Can we just make it so much easier and simply hand Benny and the Inkjets the constitution to use as 1-ply Treasury Paper one of these days?

And Now The Facts: German Regulator BaFin Sees "No Signs Of Massive CDS Speculation Against Greece"

Sorry, Merkel, Papanderou et al. BaFin finds that there is no sign that CDS speculation is involved when it comes to Greek government bonds, even as the volume in cash bonds has spiked. As a reminder - selling bonds has the same effect as buying CDS. And guess what: the real Greek cash-CDS basis is negative 112 bps (for "experts" this is swap-clean basis, i.e., Greek CDS minus German CDS compared to GGB minus Bunds). This means that cash bonds are far and ahead a leading indicator, and much more dominant when it comes to determining actual price/yield levels. So does this mean that GGB sellers will now be demonized with the same ferocity as those meddling CDS traders? Hopefully, this will finally be the end of the CDS as satan's spawn topic.

Full Speech By Greece PM Papandreou Before Brookings: "Speculators Now Threaten The Entire Global Economy"

To paraphrase the 20-page speech: it is still just the speculators' fault, who are now "threatening not only Greece, but the entire global economy" so burn them all post haste before they can read all the declassified GS prospectuses, and scour the footnotes thus uncovering the truly deplorable state of all European budgets, also please ignore this huge corruption problem we have, it's under control, oh, and it is time our globalization "partners" realize that we are critical in the future of the free world, and bail us out, even though we have repeatedly said we need no steenkin' bail out, or else global financial crisis v2 - here we come. Now show me where Ben Bernanke's office is.