Greece

Can Ireland avoid another potato famine? Not if they listen to senior advisers who are urging the government to use state pension monies to shore up their fledgling debt markets..

The assault on the EUR by the Bears continued on Wednesday, which saw the pair end the session with almost 100pip losses. The sell off was prompted not only by a stronger USD but also on the back of renewed concerns over the peripheral Eurozone. Wednesday’s sell off by the GBPUSD was in part driven by a stronger greenback but also on touted profit taking following stellar gains post the release of better than expected GDP data on Tuesday. Renewed USD strength meant that the USDJPY was able to post further gains on Wednesday, albeit very modest ones. The focus now will turn to the BoJ rate decision which is due to take place on Thursday where it is expected that the central bank will cut its growth forecasts, reaffirm the pledge for low rates and indicate that core consumer price growth is expected to fall short of desirable levels

They call it "Doctor Copper" because copper pricing is a pretty good indicator of economic health. It's more of a demand metal than gold or silver and hard to fake and there aren't any silly ETFs stockpiling it although China has socked away a full-year's supply, which has given copper a very false sense of demand...

The most amusing email this morning sent around the trading desk community comes from the otherwise perpetually jovial Goldman Europe strategist Erik Nielsen. The email subject is simple enough: "Bad news out of Portugal." And the news is bad.

Greek 10-year government bond yields, after having graced 8.73% merely a good week ago, are back with a vengeance (9.67%). Where is the insatiable demand for Greek bonds from China? The Germans are suspiciously quiet. Could it be that Germany officially condemns the worst offender of the “stability treaty” of Maastricht, while at the same time still booking fat defense orders from the Greek army and navy? According to “Die Welt” Greece has spent some EUR 50bn over the last decade on defense. Per capita, it features Europe’s largest army. During the last five years, Greece has been among the top five purchasers of conventional weapons world-wide. No prize for guessing who builds those frigates and submarines.

It is settled: the only country that may have more pathological liars than the US, is Greece. Eurostat, whose revision of Greek GDP numbers in April was the catalyst that led to the country's insolvency and riots in early May, and subsequent bail out, is on the scene again, and has once again confirmed that Greek authorities can be relied on 100%... to lie. Reuters reports that Greece's much-revised 2009 budget deficit will be set "once and for all" by Eurostat at above 15 percent of GDP, the country's finance minister said on Wednesday. And the revision is certainly a little more than just "modest": "Remember the 2009 budget was projecting a deficit under 3 percent, then a few days before the (Oct. 4) election the reported deficit to the EU Commission was 6 percent," Finance Minister George Papaconstantinou told a conference in Cyprus. "We realised it was over 12 percent. And actually, even after the final revision by Eurostat ... which will validate Greek numbers for 2009 once and for all, it will be above 15 percent. We are talking about a five-fold difference." This is data fudging that will make not only China but the BLS blush with envy.

EUR posted broad based losses on Tuesday amid a stronger USD and following news that Citigroup has advised its clients to take profits on long EUR/USD positions. As a result, the pair fell below the 10DMA (1.3935), the 21DMA (1.3862) and looks set to make a test on 1.3800 in the coming days. Elsewhere, despite a stronger USD, the GBPUSD rallied and posted gains of over 100pips on Tuesday after the UK's Q3 advanced GDP data beat expectations by a impressive margin and S&P revised the UK's sovereign rating outlook to stable from negative, affirming the country's 'AAA' rating, having been satisfied with the coalition governments performance and budget plans outlined thus far. Finally, the USDJPY pair rose towards the mid-81.00 levels on Tuesday amid a stronger greenback, which gained following renewed concerns over the Eurozone and on the back of much better than expected UK GDP data which lifted GBP across the board.

The conference itself does not take itself too seriously. Even Nassim Taleb was able to make a few jokes while explaining to us why the financial system is irrevocably screwed up unless we give it a major overhaul.

• Fed's `Pit Bull' Takes on Bank of America in BuyBack Battle (Bloomberg) - "Kathy Patrick can be as frightening as a pit bull on steroids."
• High US Unemployment, Chinese Growth May Spur Trade War (WSJ)
• Japan's Igarashi Says Yen Sales Most Effective When 'Surprise' (BusinessWeek)
• Debt Sales Highlight Abnormal Conditions (FT)
• Asia's economic history foretells Chinese slowdown (Reuters), compare to Is China's Growth Rate Destined To Be Cut In Half? (Zero Hedge)
• End Bailouts—No Ifs, Ands, or Buts (BusinessWeek)
• Malcolm Gladwell: Who really rescued General Motors? (New Yorker)
• Meet the leading contender to manage Berkshire's billions (Fortune)
• Greece Likely to Default Within Three Years, El-Erian Says (WSJ)

Remember all those lies about how the Greek economy was going to grow and stuff? Here is the truth: the latest Bank of Greece report shows Greek GDP to shrink about 4% this year and unemployment to exceed 12%. And it is enough to blow Greek spreads out by 25 bps and growing. Below are the summary points from the report which is the first step to uncovering the true devastation sweeping the country. Elsewhere, Kathimerini reported that delays in the collection of taxes in Greece may cause a EUR 900mln shortfall in 2010 causing further widening in spreads.

Some headlines out of a freshly striking Greece, which is doing all it can to remind the world, suddenly, that things in Europe may go full circle back to the conditions from May:

• PAPANDREOU SAYS CONCERNED ABOUT GREECE GOING FORWARD
• GREECE IS STILL IN A STATE OF ALARM, PAPANDREOU SAYS

And here is G-Pap reprising in his role as the US president:

• PAPANDREOU ASKS GREEKS TO CAST A VOTE OF HOPE, CHANGE
• PAPANDREOU ASKS GREEKS TO REJECT CASTING VOTE OF PROTEST

Bob Janjuah, the only man who had anything remotely interesting to say at RBS, and luckily left, is now back at Nomura, and is a leaner, meaner, kool-aid debunking machine. His inaugural letter is attached below. One complaint: what happened to all the abrvtns? Bob, that was ur sgntre style. The English here is just 2... krct. The pipl dmnd abrvtns.

After major gains were seen in the USD on Tuesday following the surprise decision by the PBOC to hike rates the greenback staged a swift reversal and retraced nearly the entire move as investor focus returned to the potential for the Fed to embark on additional quantitative easing (QE). Sources indicated on Wednesday that a major US think-tank believes the Fed maybe be siding on the opinion of purchasing USD 500bln of treasuries over the next 3 to 6 months with the possibility of extending the program over the next 12 to 18 months depending on economic data. Although the analysis would be logical in its proposed method it will likely fuel expectations in the near-term that the Fed will pull the 'QE trigger' in November so the weakening trend looks set to continue. In sympathy with the USD move the commodity linked currencies such as the AUD and CAD have also staged an impressive rebound with AUD/USD reclaiming the 98.00 handle midway through the US trading day, a gain of over 100 pips on the session. - Talking Forex

I am what many here (most especially myself) and elsewhere love to make fun of. I am a true blue Digital Dickweed. A Digital Dickweed has been defined by others as someone that is genuinely unemployed, in my case a government pensioner, errr, freeloader (100% disabled veteran), non high school graduate who lives in the basement of their parents home (or the spare bedroom of a family member’s home in my case) blogging. In essence, the old war veteran that sits on his front porch and watches the world go by, aka JAFO (Just Another Fucking Observer). So, let’s take a look see at the talk from off South Main Street. - Miles Kendig

Bloomberg features what they consider to be the most successful and accurate financial analysts since 2008. Of course, the firm that "Does God's work" is the one that won! Reggie Middleton disagrees, and thinks a blog beat them all! I urge the mainstream media to look beyond the traditional banking centers of influence for analysis. Not only is it soooo old school in a new digital age, but they just might find comparable (of not superior) talent in the blogosphere.