Goldman, et. al. Suffer From The Same Malady That Collapsed Lehman and MF Global, Worlds 1st and 8th Largest Bankruptcies!Submitted by Reggie Middleton on 12/12/2011 13:48 -0400
There is NEVER just ONE roach!!!
"I went to Brussels with one objective: to protect Britain’s national interest. And that is what I did"
It’s time we admit the truth, the EU and its banking system are literally on the edge of collapse. Think 2008… for an entire region. And politicians are going to solve this mess with a March 2012 meeting!?!
Last week's biggest political shock was David Cameron telling Europe to shove its authoritarian ambitions and breaking away from the Group of 27, in effect killing any chance of a favorable summit outcome. Watch him live now as he explains why he did what he did.
There were only two questions that mattered, going into the EU summit.
- Would leaders at the summit come up with any actions of their own to help end the immediate crisis?
- Falling short of this, would any of their actions give enough confidence to the European Central Bank to allow it step up its role and be a lender of last resort to all troubled eurozone countries, but especially to wobbly Italy? In other words, could the conservative ECB now give itself the greenlight to print euros and buy up bonds from the world’s third largest issuer?
The answer to the first question is very clear: NO. The answer to the second question is, unfortunately, another question. “Who the heck knows?” Time to consider plan B.
With concerns about liquidity and solvency in the European banking system, there is lending and possibly even selling of gold by banks to raise much needed cash. This may be creating short term weakness in gold bit is bullish for gold in the long term. The FT reported last week that “gold dealers” said that banks – “primarily based in France and Italy – had been actively lending gold in the market in exchange for dollars.” The key question is who is lending and is their lending simply liquidity driven - to raise dollars or euros? John Dizard, who frequently comments on gold in the Financial Times wrote on Saturday that, “Gold market people say European commercial banks are being driven to lend gold for dollars at negative interest rates just to raise some extra cash for a few weeks. There’s not a lot of transparency about where the banks are getting the gold they are lending out, but it could be lent to them by either their national central banks, or by gold exchange traded funds.”
- Moody's said that the European crisis is still in a critical and volatile stage, adding that it will revisit ratings of all EU sovereigns in the first quarter of next year
- According to S&P, it wanted to send a strong signal that the Eurozone is facing risk of a major recession, and significant credit crunch
- The Italian/German 10-year government bond yield spread widened despite a successful T-Bill auction from Italy as well as market talk of the ECB buying Italian government paper
- Deutsche Bank cut its UK growth forecast for 2012 to zero, and said it now expects the BoE to buy a further GBP 75bln of Gilts in February, then a final GBP 50bln in May
A short piece that explains the moral dillemma the Germany faces with regards to the Eurozone.
The market rallied this past week, albeit in a very volatile manner, to end the week on a positive note as the hopes of a final resolution to the Euro crisis has been reached. In reality, today's announcement of the EU treaty is only the first step and there are many legal challenges that will still have to be resolved. While the reality is that there is still a very long road ahead before anything will actually be accomplished the implication that the with the ECB willing to buy bonds, at least for the moment, and the coordination of two bailout funds the Eurozone can play "kick the can" for a while longer. Those headlines, even without much substance were enough to drive return starved managers into the market for the year end rush.
Little bit of this and that - the economy, Michael Hudson on the warfare engulfing Europe, a Santa Clause rally (anyway?)
Neither Harry Porter nor the Twilight series felt that one movie could bring proper closure, so both did the “final movie” in 2 parts. The EU has adopted that tradition and is already pushing the focus to the next Summit in March which really will be the grand finale. They also seem to have stolen from the Twilight series and only work in the middle of the night and have to hold press conferences before the sun comes up. They haven’t yet taken to calling us muggles, but they themselves certainly seem to believe in magic words like IMF while shorts live in fear of the “bazooka” with many names. With the Summit having reached a conclusion, we now wait on a few final scenes to play out. The plot started falling apart on Thursday with Draghi’s testimony, but by forming a circle, holding hands, and chanting IMF and G-20 over and over, the market was placated, at least for a day.
Even as Eurozone leaders attempted to instill some meager sense of accomplishment following the latest (but certainly not last) Euro summit culminating with yet another 7-page term sheet which achieved absolutely nothing, and in fact succeeded in alienating the UK even more, the real game continues behind the scenes. And it is a game which the euro looks set to lose. As Bloomberg reports, in the aftermath of the Telegraph's latest report confirming what has been said here all about the collateral crunch in Europe, Europe's CEO are now actively preparing for the worst case outcome: the end of the Euro (despite UBS' and other banks' repeated calls that such an event would result in an end of the world). To wit: "Grupo Gowex (GOW), a Spanish provider of Wi-Fi wireless services, is moving funds to Germany because it expects Spain to exit the euro. German machinery maker GEA Group AG is setting maximum amounts held at any one bank. “I don’t trust Spain will remain in the euro zone,” said Jenaro Garcia, founder and chief executive officer of Madrid- based Grupo Gowex, which provides Wi-Fi access in 15 countries. “We moved our cash and deposits to Germany because Spain will come back to the peseta"... Contingency planning for an unraveling of the currency involves cutting investment, moving money to Germany, transferring headquarters to northern Europe from southern, and even going out of business." And to all the chatterboxes on CNBC repeating ad inf that a Eurozone collapse would be "manageable" here is a person who actually knows what he is talking about: "“How do you control an explosion in a controlled way?” Fiat SpA (F) Chief Executive Officer Sergio Marchionne told reporters in Brussels on Dec. 2. “That’s a contradiction in terms. This will be an implosion of some size with potentially disastrous consequences." He is right, and while the outcome is certain, it will not stop Europe's financial leader Germany from intervening in an attempt to prevent a surge in Deutsche Marks once the currency returns, and will likely set up capital control measures - that last bastion to every failing monetary system - to halt what is sure to be a record inflow of post-collapse DEM appreciating capital.
Goldman On Why Things Will Get Worse Before They Get Better And Gives An S&P Target If The Eurozone Breaks UpSubmitted by Tyler Durden on 12/10/2011 13:33 -0400
In his latest weekly chartology, Goldman's David Kostin takes a different route to recapping the week's events and instead of merely summarizing the market action, explains what the views of Goldman's clients are, especially the bulls among them ("Bullish investors hold more positive outlooks for margins and Europe, and argue that our target is too low. Some investors generally agree with our muted outlook for the economy and corporate earnings, but feel that an agreement to end Europe’s debt crisis will inevitably be reached next year. They argue that the stabilization of sovereign balance sheets, recapitalization of European banks, and clarity in the region’s future will cause a surge in investor confidence. Investors commonly quote 1400 as a target S&P 500 price level in this “risk-on” scenario of multiple-expansion.") and then juxtaposes to its why Goldman continues to be bearish: "We expect the situation to worsen before it gets better with market pressure necessary for progress. EU Summit demonstrates progress but lacked “regime change.” Overall, policymakers are making progress and signaled a commitment to address the twin sovereign and banking system crises. However, lack of clarity on the IMF’s role and no clear change in the ECB’s activities in sovereign debt markets will likely leave some investors disappointed." Which is precisely what we have been claiming for weeks - that unlike the other banks who are preaching rosy outlooks out of sheer terror for what a European crash would mean for them, Goldman is hoping it comes quickly, so that ostensibly several big banks can blow up, and the ECB steps in forceefully but not before Goldman's extended web of control in political Europe allows it to step into the void and become a major market presence on the continent.
Summary of the key bullish and bearish geopolitical, macroeconomic and financial events in the past week.
What Is More Valuable, The Opinion Of A Major Rating Agency Or The Opinion Of A Blog? Go Ahead, I DARE You To Answer!Submitted by Reggie Middleton on 12/09/2011 12:28 -0400
Follow Europe, banks or corporates? You're out of your damn mind if you subscribe to rating agencies over Blog based independent research!!! Don't believe me? I'll walk you through the evidence, step by step!