Market Crash

Both the U.S. and China are now attempting to deflate asset bubbles. The former is likely to have second thoughts while the latter isn't.

Europe is a disaster-zone. Here’s the round-up of what’s going wrong right now. The longest day? It would have been a long day, whatever happened, so you might as well enjoy it.

As if the Greeks don’t have enough to deal with right now with their country cut off from the benefits of a national television and radio station. What is it they say in the UK? Something like ‘when it rains it pours’.

There was a time when portfolio insurance guaranteed that events like Black Monday would never happen. Then Black Monday happened precisely due to portfolio insurance. Some years later, the credit-driven housing boom made modeling of declining home prices at rating agencies (and everywhere else) redundant. Then the (first) housing and credit bubble popped leading to the biggest housing market crash in US history. Fast forward to today, when ETFs were supposed to be the "greatest thing since sliced bread" and providing an ultra-low cost alternative to mutual fund and other market exposure "for the people", were supposed to revolutionize investing. Until days like yesterday. To wit from the FT: "The losses for ETFs today were far beyond what the most sophisticated financial risk models could have predicated for worst-case scenarios," said Bryce James, president of Smart Portfolio, which provides ETF asset allocation models.

Dive! Take cover! Or, at least, hold on to your pants in the scramble. The Chinese bubble has just burst. It looks like the world is going to have egg on its face and elsewhere as Chinese banks are scrambling to get the hands on cash.

Some have been asking for quite a while now what Ben Bernanke will be up to when he finally gets to close his office door at the Federal Reserve for the last time? Will he be sunning it on some Cayman Island beach?

A month ago, when stock markets around the globe were hitting all time highs, we wrote "The Bronze Swan Arrives: Is The End Of Copper Financing China's "Lehman Event"?" which as so often happens, many read, but few appreciated for what it truly was - the end of a major shadow leverage conduit (one involving unlimited rehypothecation at that),and the collapse of a core source of shadow liquidity. One month later, China's "Lehman event" is on the verge of appearing, and with Overnight repo rates hitting 25% last night, coupled with rumors of bank bailouts rampant, it very well already may have but don't expect the secretive Chinese politburo and PBOC to disclose it any time soon. So now that the market has finally once again caught up with reality, for the benefit of all those who missed it the first time, here is, once again, a look at the arrival of China's Bronze Swan.

Murder, Death and Mobsters on Wall St....Who Knew?

Apparently, the highlight of the round-up of the G8 summit in Lough Erne might just have been that David Cameron went for a morning dip to swim a couple of lengths. That’s about as far as he might have got anyhow, considering that little all else was decided.

George Osborne is giving the Mansion-House (residence of the Lord Mayor of London) speech to the city tonight, an annual speech in which the Chancellor of the Exchequer traditionally gives his impression of the state of the British economy.

The 20th century could be categorized as THE century when communications took off and we started living in each other’s pockets. Lives had been ruined by war, trouble and strife. Wealth had been redistributed beyond belief. There were no longer just a few that were making the profits, but there were growing classes of people that wanted recognition.

President Barack Obama stated yesterday that Federal Reserve Chairman Ben Bernanke has stayed in his position “longer than he [Bernanke] wanted”. Some will be probably agreeing with Bernanke (and Obama) more than he might have expected after having said that. Although he should have stopped short of adding (for fear of hurting Helicopter Ben’s feelings?) that he has done an “outstanding job”.

China! Honestly, it comes to something when China jumps on the accusatory band-wagon asking the US administration to provide some comments about its monitoring programs and answer up to the international community.

Iran is a right old sorry state (of affairs).  Plunged into recession, inflationary pressure that Abenomics wouldn’t mind having a bit of and Bernanke might just be getting if he carries on printing the greenbacks at the rate they are churning out of the Federal Reserve faster than a Ford-T in 1908.

The summit opens today for two days of public display of back-slapping and hand holding, championing the things that the west does best. The summit was preceded yesterday by the parading of 8 life-size puppets with huge heads to draw attention to poverty levels in the world.