A Customer and Creditor's Guide to the MF Global Bankruptcy; Background & What Needs to Be Done, ProntoSubmitted by EB on 11/10/2011 09:37 -0500
Missing customer funds might be those of MF Global itself. Also, JPM gets to keep any and all collateral and cash it seized in return for $8 million?
European Central Bank policy makers said the bank can’t do much more to stem the region’s sovereign debt crisis, suggesting they are reluctant to significantly ramp up bond purchases to lower Italy’s borrowing costs.
- Former ECB vice president Papademos will be the interim Greek PM. Meanwhile, media reported that the Italian PM Berlusconi may step down by Sunday
- Market talk that the ECB is buying in the Italian and Spanish government bonds. Also, market talk that in an emergency meeting today, the ECB may decide to purchase the Italian government debt in unlimited amount
- News emerged that the ESM may not be operational in mid-2012 as Germany and France clashed on bond loss provisions
- ECB's Knot said that the ECB can keep buying bonds as long as sterilization works, adding that the central bank can speed up bond purchases. He further said that the ECB can keep purchased bonds until maturity. However, he also said that the ECB should only buy bonds when markets are panicking
Italian borrowing costs reached breaking point on Wednesday after Prime Minister Silvio Berlusconi's promise to resign failed to raise optimism about the country's ability to deliver on long-promised economic reforms.
Italian 10-year bond yields shot above the 7 percent level that is widely deemed unsustainable, reflecting investors' concerns that they may not get their money back, a fear that also showed up in a jump in the cost of insuring against Italian debt default.
ECB's Weidmann Spoils The Party: Says Leveraging EFSF Violation Of EU Treaty, Warns Of HyperinflationSubmitted by Tyler Durden on 11/08/2011 10:24 -0500
Trust the Germans in the ECB (those who have not yet resigned that is) in this case Jesn Weidmann, to come in and spoil the party:
- Weidmann, speaking in Berlin, says hyperinflation shows why monetizing debt wrong
- Prohibition on monetary financing an important achievement.
- Euro treaty rightly forbids monetary financing
- Stable prices should be key goal of ECB
- Leveraging EFSF with currency reserves prohibited
- Says monetary analysis may gain importance at ECB
And for all our MMT friends:
- "One of the severest forms of monetary policy being roped in for fiscal purposes is monetary financing, in colloquial terms also known as the financing of public debt via the money printing press:” Weidmann
- Pohibition of monetary financing in the euro area “is one of the most important achievements in central banking” and "specifically for Germany, it is also a key lesson from the experience of hyperinflation after World War I"
- Political and debt concerns pertaining to Italy remained the main focus in the market today. News that the Italian PM Berlusconi may resign soon strengthened appetite for risk, however the news was later denied by Berlusconi
- ECB's Mersch said that the ECB constantly discusses the possibility of ending bond-buys if Italy does not meet reform pledges
- Market talk of the ECB buying the Italian government debt helped the Italian/German 10-year government bond yield spread to come off its widest levels
- CHF came under pressure across the board following dovish comments from SNB's Hildebrand allied with an unexpected decline in the Swiss CPI data
Three of the smartest strategists at Goldman, Huw Pill, Francesco Garzarelli, and Peter Oppenheimer, have released what one could tentatively call a white paper on the "next steps" for Europe. Far from being the traditional permabullish sellside drivel, this is a must read note, as it cleanly lays out the risks for the Eurozone from this point. The note focuses on three key aces: 1) fiscal consolidation and the ongoing role of the ECB in the future of a Eurozone which still has no fiscal cohesion (which makes sense: just like in the US, the Fed is aggressively putting the ball in Congress' court, as neither the monetary nor fiscal apparatus has any interest in being blamed for ongoing economic deterioration, so in Europe the ECB wants a federal union, complete with Eurobond issuance powers, so it is not in the cross hairs: alas, European politicians realize this is career suicide and the question remains: when push comes to shove, and saving the Euro requires career harakiri from politicians, will they step up to the plate?); 2) Italy, of course, as the country under the spotlight now and going forward; and 3) what the above two mean for BTPs and thus the European (and Global) equity markets. The sense we get from the Goldman trio is that while the company which has just spawned Europe's latest central banking head, while cautiously neutral is pushing for a downside case: after all what better way to unlock the Heidelberger Druckmaschinen true potential, than with a full blown crisis...
The great sage Albert Einstein suggested that repeating something and expecting a different outcome is “insanity.” The NY Fed is repeating its reliance on primary dealers to be transparent and accurate and to do so voluntarily.
Jim Grant, whose Grant's Interest Rate Observer has been one the world's most informative premium newsletters since 1983, has long been one of Zero Hedge's favorite commentators, not least due to his convergent ideas on monetary policy and the role of central planning in the world, which as Arthemis Capital presented very vividly last week, is the sole marginal decider of risk in the world's capital markets (and thus the most critical shadow political force the world, or rather its bankers, has ever unleashed upon itself). So while we await any news out of Greece, however non-eventful they may be, and at best will see the placement of one Pap ("G"), with another Pap (the "L", who as we profiled is nothing but yet another puppet of the Federal Reserve), here is a compilation of James Grant's best moments on money, banking, central banking, gold and the Federal Reserve System, courtesy of Gresham's Law. It is no wonder that Ron Paul recently said that he would choose James Grant as Fed Chairman if elected.
They say a week is a long time in politics. Last week, quite frankly, a day seemed a long time with the rapidly unfolding events surrounding the European sovereign situation and the G20 summit generating a lot of market volatility. Greek PM Papandreou survived the vote of confidence on Friday with a majority of three and is now trying to form a government of National Unity. With opposition leader Samaras still calling for elections, this political impasse may well continue for the time being. Greece is widely considered to ‘run out of money’ in mid-December; while this may continue to unnerve the market over the possibility of a hard default, a month is probably an eon in politics and a lot could change very quickly. The same could be said for developments in Italy. PM Berlusconi remains under pressure and media reports suggest he has lost his parliamentary majority after a party rebellion on Friday. European and international policy makers continue to pressure Italy to undertake the necessary reforms to reduce the country’s debt level. The IMF will step in to monitor Italy’s efforts to implement austerity and growth-boosting measures, but the fund’s offer of a loan was rejected by the prime minister. Relatedly, over the weekend, ECB’s Mersch was quoted as saying that the ECB had debated whether to continue buying Italian debt if a step-up in the reform effort was not forthcoming.
Fall Of The House Of Money: Artemis Capital On How €entral Banking Took Over Capital Markets... And The WorldSubmitted by Tyler Durden on 11/04/2011 14:36 -0500
One of the long-term recurring themes both here and in other more objective media, has been the encroaching domination of the central planning regime, or monetary authorities, read central banks, in the domain of capital markets and overall broad sovereignty, to the point where there is neither technical nor fundamental analysis left, but merely the question of where is the next batch of excess liquidity going to come from. Welcome to the death throes of the fiat system. Artemis Capital has released an extended must read presentation that summarizes just how global changes in trade, currency exchange, global monetary excess liquidity in recent decades, and especially in the coming future, will increasingly determine and define risk, and more troubling, the centuries old anarchism of state sovereignty. Anarchism, because as Europe has demonstrated so very well, in the current world the only real actors are the central banks. And with each passing day they become ever more powerful players in the global capital markets arena, as confirmed by correlations that rise every higher, approaching 1.000 across all asset classes. Anyone wondering why the only fulcrum variable for the future of risk will be FX exchange rates, and why any and all wars in the future will be primarily in binary "currency" format, we urge a careful reading of the attached slideshow by Artemis Capital titled "Fall of the House Of Money: Changes in Global Trade and Currency Exchange."
We just need to find a new entity to bail out the markets and paper over our problems.
Four months ago we predicted that in response to the latest round of global economic deterioration, every central bank would very soon join the toner party. Since then we have seen the Fed commence Operation Twist and telegraph another episode of MBS asset purchases; a new QE episode at the Bank of England; a new round of covered bond purchases at the ECB, coupled with an interest rate cut by its latest Goldman Sachs-based president, not to mention the persistent attempts to generate a backstop central bank in the form the EFSF Frankenstein Swiss Army knife; a new round of asset purchases and a massive, several hundred billion snap FX intervention by the Bank of Japan; and last but not least, that stalwart of stability, the Swiss National Bank, went ahead and destroyed the Swiss Franc as the sanest among the fiats by pegging it to that most unstable of currencies, the Euro. In light of the above how gold is not trading north of $2000 is still beyond us, although whether by manipulation or market inefficiency, we can not complain: it is easier to buy gold at $1,750 than at $7,150. Yet not even we could possibly predict just how far the global ponzi cartel would fall to extend the status quo by a few extra months. Because according to Dow Jones, the latest and greatest purchaser of Heidelberg Mainstream 80 machines will be the, drum roll, the IMF! Yes, the same organization that DSK swore would never join the global central banking stupidity, since deposed with a false allegation, and now headed by the woman who brought France to the brink of ruin, will be the marginal printer, now that everyone else is "dodecatuple all in" and sitting all day on the Turbo Print button.
Greenspan Suggested Cutting Taxes on the Wealthy to Increase Debt so the Fed Wouldn't "Lose Control of Monetary Policy"Submitted by George Washington on 11/03/2011 19:09 -0500
What a guy ...