Explains the political motivation for slamming the account holders in Cypriot banks.
MERS: The Center of the Mortgage Scam
Presenting Brian Gross, Special Assistant to the Fed for Congressional Liaison, who as Bloomberg reveals, is the person who released the FOMC minutes at 2 pm yesterday. Amusingly, Brian worked as Chief Ethics Officer while he was a deputy staff direct on the Banking, Housing and Urban Affairs Committee. Just as amusing is that according to his LinkedIn profile, Brian is involved in virtually every governmental organization, up to an including the Securities and Exchange Commission Alumni Association.
France is engulfed by a political, economic and moral paralysis. The president has record low popularity, unemployment is making new highs and the tax czar of a supposedly left wing government just quit after repeatedly lying about a pile of cash he had stashed in a Swiss bank account. From such a sorry state of affairs, you might think that things could only get only get better. Unfortunately, economic cycles do not work this way and it is my contention that France is about to enter what was known during the gold standard era as a “secondary depression.” The rigid design of the euro system means the whole eurozone is prone to the kind of brutal cyclical adjustments seen in that hard money era of the 19th and early 20th centuries. But having reached the logical limits of its decades long experiment in state-run welfare-capitalism France is far more exposed than even its struggling neighbors. Until quite recently, our working assumption was that a full-blown French debt crisis would occur between 2014 and 2017. In light of the extraordinary malfeasance of the current government we have changed our mind and believe that France is now extremely near to that abyss. Fasten your seat belt in Europe - the world’s last truly Communist country is about to implode.
- JPMorgan Leads Job Cuts as Banks Seek to Bolster Profit (BBG)
- North Koreans don't show for work at Kaesong factory park (Reuters), as NK urges foreigners to leave South Korea (FT)
- Lisbon Struggles to Close New Budget Gap (WSJ)
- Portugal may face delay to bailout funds (FT)
- Putin Squeezing Out UBS to Deutsche Bank Using Oligarchs (BBG)
- China's Xi Says Fast Growth Over (WSJ)
- Spain’s PM wants more powers for ECB (FT)
- Bernanke Says Interest on Reserves Would Be Main Tightening Tool (BBG)
- Bird Flu Claims 7th Victim in China (WSJ)
- Texting While Flying Linked to Commercial Helicopter Crash (BBG)... No, Bernanke wasn't the pilot
We started off the overnight session with various pseudo-pundits doing the count-up to a 100 in the USDJPY. It was only logical then that moments before the 4 year old threshold was breached, the Yen resumed strengthening following comments from various Japanese politicians who made it appear that the recent weakening in the currency may suffice for now. This culminated moments ago when Koichi Hamada, a former Yale professor and adviser to Japanese Prime Minister Shinzo Abe, told Reuters that level of 100 yen to dollar is suitable level from the perspective of competitiveness. The result has been a nearly 100 pip move lower in the USDJPY which puts into question the sustainability of the recent equity rally now that the primary carry funding pair has resumed its downward trajectory. Another result is that the rally in the Nikkei225 was finally halted, closing trading unchanged, and bringing cumulative gains since the morning before the BoJ’s announcement last Thursday to 8.9%. Over that the same time period, the TOPIX Real Estate Index is up an incredible 24%, no doubt reflecting the prospect of renewed buying of REIT stocks from the BoJ’s asset purchasing program.
Austerity is under attack again, with Cyprus about to enter a program. Critics charge that austerity is self-defeating because it depresses growth, pushing up the debt/GDP ratio. However, austerity is a necessary (although far from sufficient) condition for countries with low national savings Indeed, there is some evidence that austerity is beginning to have positive effects. The only way to raise net savings is to cut consumption, which is much more difficult than cutting investment. Higher savings have improved market perceptions of debt sustainability, making countries more resilient to shocks (Cyprus, Italian politics). To be sure, European governments have been guilty of false advertising. They claimed that fiscal austerity would not hurt growth. But in order to raise savings, it is necessary to consume or invest less (unless a country is lucky enough to enjoy an export or productivity boom). As a result, growth will suffer as a country raises savings. But once savings begin to recover, elements of a "virtuous circle" begin to fall into place.
- Finally the MSM catches up to reality: Workers Stuck in Disability Stunt Economic Recovery (WSJ)
- China opens Aussie dollar direct trading (FT)
- National Bank and Eurobank Fall as Merger Halted (BBG)
- Why Making Europe German Won’t Fix the Crisis - The Bulgarian case study (BBG)
- Nikkei hits new highs as yen slides (FT)
- Housing Prices Are on a Tear, Thanks to the Fed (WSJ)
- Why is Moody's exempt from justice, or the "Big Question in U.S. vs. S&P" (WSJ)
- Central banks move into riskier assets (FT)
- N. Korea May Conduct Joint Missile-Nuclear Tests, South Says (BBG)
- North Korea Pulls Workers From Factories It Runs With South (NYT)
- Illinois pension fix faces political, legal hurdles (Reuters)
- IPO Bankers Become Frogs in Hot Water Amid China Market Halt (BBG)
- Portugal Seeks New Cuts to Stay on Course (WSJ)
There's never been coordinated global money printing of the scale of today and it's likely to end badly. Here's how you can protect your investment portoflios from what's to come.
There's never been coordinated global money printing of the scale of today. It will end badly and investors need to prepare accordingly.
Housing is recovering. The Fed has your back. The consumer is healthy. All things that would suggest the commercial-mortgage bond business should be on the cusp of a renaissance. So the question is - what did Brett Ersoff and John Herman see, seven short days after being promoted to run the UBS real-estate finance division, that made them depart the venerable Swiss firm with the paintball sized Stamford trading floor?
A trade is officially deemed "crowded" when everyone is rushing into the market with eyes only on the upside and little concern for the downside--for example, buying homes as rentals. Why could the buy-to-rent housing party be running out of air? The basic reason is the difference between buying real estate as rental housing, which is a speculative market, and the rental property market itself, which is grounded in real-world supply and demand. Simply put, if the supply of rental housing exceeds demand, rents (the cost of renting shelter) decline. That jeopardizes the fat returns the speculative buyer was counting on. Crowded trades are often described as boats with everyone on one side. Boats loaded in this fashion tend to capsize once exposed to the slightest volatility (wave action). The buy-to-rent boat is looking rather overloaded, and the bullish side's gunwales are only a few inches above the water for these six reasons.
Think only Cyprus is where the government goes after "evil", tax-evading oligarchs? Think again. Overnight news broke that the Italian police have seized a record $1.7 billion in cash and property from a single person, a Sicilian "alternative energy" entrepreneur alleged to have close ties to the Mafia. As Bloomberg reports, Italy's anti-Mafia investigators said in a statement today that Vito Nicastri, a 57-year-old native of Alcamo, near Trapani, was placed under surveillance and must remain in Alcamo for three years. He is accused of declaring for tax purposes a fraction of the value of his businesses. Italian media have dubbed Nicastri the "king of alternative energy" for his vast holdings in wind farms and photovoltaic cell companies. Police said the seizures include 43 companies; 98 pieces of real estate including buildings, homes, stores and land; 66 bank accounts, credit cards and investment funds. And so, in two brief weeks, cash-strapped European nations have declared war on both Russian billionaire oligarchs and the Sicilian mafia. One wonders how long until Swiss authorities follow suit and "impair" Triad and Yakuza savings in Zurich and Geneva, and sets off a global "us versus them" scorched earth war?
Over the past four years one of the dominant "deflationists" has been Gluskin Sheff's David Rosenberg. And, for the most part, his corresponding thesis - long bonds - has been a correct and lucrative one, if not so much for any inherent deflation in the system but because of the Fed's actual control of the entire bond curve and Bernanke's monetization of the primary deflationary signal the 10 and certainly the 30 Year bond. The endless purchases of these two security classes, coupled with periodic flights to safety into the bond complex have validated his call. Until now.
Infamous for little boys plugging holes with their fingers and grown-ups plugging their mouth with their foot (D-Boom), it seems Holland, Berlin's most important ally in the goal of greater fiscal discipline in Europe, has fallen into an economic crisis itself. As Spiegel reports, the once exemplary economy is suffering from huge debts and a burst real estate bubble, which has stalled growth and endangered jobs. The statistics make for some worrisome reading: no nation in the euro zone is as deeply in debt as the Netherlands, where banks have a total of about €650 billion in mortgage loans on their books; consumer debt amounts to about 250% of available income - by comparison, in 2011 even the Spaniards only reached a debt ratio of 125%; unemployment is on the rise; consumption is down; and growth has come to a standstill. The nationalization on SNS in February brought this reality home and as Spiegel reports, "there is no end to the crisis in sight."