- Greece should pay wages in drachmas - German MP (Reuters)
- Greece Seeks More Cuts as Deadlines Loom (WSJ)
- Greece Back at Center of Euro Crisis as Exit Talk Resurfaces (Bloomberg)
- Berlusconi seeks return to liberal roots (FT)
- For brokers like Peregrine, from bad times to worse (Reuters)
- Japan Sees More ‘Widespread’ Global Slowdown With China Cooling (Bloomberg)
- China Central Bank Adviser Forecasts Growth Slowdown to 7.4% (Bloomberg)
- London Out to Prove It's Still in the Game (WSJ)
- Stockton Reveals Bondholder Offers From Mediation (Bloomberg)
- US lawmakers propose greater SEC powers (FT)
For over four years, virtually everyone in the finance industry knew that Libor was manipulated. The stench of manipulation rose to the very top and thanks to a document release of formerly confidential information, we now know for a fact that even the Fed was in on it - recall that as part of production, the Fed provided a transcript of an April 2008 phone call between a Barclays trader in New York and Fed official Fabiola Ravazzolo, in which the unidentified trader said: "So, we know that we're not posting um, an honest LIBOR." And yet without any tangible, black on white evidence, there was no catalyst for pursuing legal action. That all changed when in a desperate attempt to protect its ass, Barclays decided to rat out everyone by settling with regulators, and "turn state" producing e-mail based evidence, most of it quite visual (after all what is more tangible to the common man that evil bankers sipping on Bollinger), which essentially threw years of quiet cartel cooperation under the bus. As a result, regulators, enforcers, and legal authorities, many of whom were in on this manipulation from the beginning, no longer had an excuse to not pursue civil and criminal charges against perpetrators, who until recently were footing the tabs at various gentlemen's venues and ultra expensive restaurants. And while the imminent waterfall of civil prosecution will force bank litigation reserves to go through the roof, here comes, with a very long delay, the criminal charges. As Reuters reports, here come the arrests.
Too Big Leads To Destruction of the Rule of Law
Corporations may or may not be people, but money has always talked, and the wealthy certainly do have a lot of excess cash lying around which they would rather prefer spending in hopes of generating the highest IRR possible by influencing the outcome of the presidential race. Below is a look of the uber-rich who have contributed at least $1 million to the major PACs as disclosed to the Federal Election Commission.
The World Gold Council have just published their commentary on gold’s price performance in various currencies, its volatility statistics and correlation to other assets in the quarter - Gold Q2, 2012 - Investment Statistics and Commentary. It provides macroeconomic context to the investment statistics published at the end of each quarter and highlights emerging themes relevant to gold’s future development. One of their key findings is that gold will act as hedge against possible coming dollar weakness and gold will act as a "currency hedge in the international monetary system." The key findings of the World Gold Council’s report are presented inside.
At least superficially, they appear to be coming more and more often.
Valencia Announces SOS, Needs To Tap Government LIquidity Support Just Eurogroup Accepts Spanish Bailout PlanSubmitted by Tyler Durden on 07/20/2012 08:06 -0400
UPDATE: It would appear the right hand has no idea what the left hand is doing in Spain, as via Bloomberg:
- *MONTORO SAYS VALENCIA HASN'T SOUGHT RESCUE
- *VALENCIA TO TAP SPAIN'S REGIONAL FINANCING FACILITY
- *VALENCIA GOVT COMMENTS IN STATEMENT ON WEBSITE TODAY
Just as today's largely expected announcement that the Eurogroup has formally agreed to accpet the Spanish bail out (details still lacking), the Spanish region of Valencia just became the second to officially demand a bailout following Catalunya's comparable announcement at the end of May, and has announced it will need to tap the government liquidity mechanism. Kneejerk reaction: EURUSD sharply lower and below 1.22 for the first time in days.
Just over a year after the tragic mass shooting in Norway which left 77 children dead, America has its own episode of senseless mass killing and violence: overnight, a mass shooting at a Aurora, CO movie theater during a Dark Knight screening has left at least 14 dead and 50 injured in one of America's most horrific mass execution-style events in recent history. As of right now, the FBI has said it does not believe the tragedy to be terrorism related.
- Gunman kills 14 in Denver shooting at "Batman" movie (Reuters)
- Full retard meets Math for Retards: Spain Insists $15 Billion Aid Need for Regions Won’t Swell Debt (Bloomberg)
- World braced for new food crisis (FT)
- Banks in Libor probe consider group settlement (Reuters)
- U.S. banks haunted by mortgage demons that won't go away (Reuters)
- Ireland Bulldozes Ghost Estate in Life After Real Estate Bubble (Bloomberg)
- China will not relax property control policies (China Daily)
- Russia, China veto U.N. Security Council resolution on Syria (Reuters)
- Kim to reform North Korean economy after purge (Reuters)
This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied - The SequelSubmitted by Tyler Durden on 07/19/2012 19:05 -0400
Two years ago, in January 2010, Zero Hedge wrote "This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied" which became one of our most read stories of the year. The reason? Perhaps something to do with an implicit attempt at capital controls by the government on one of the primary forms of cash aggregation available: $2.7 trillion in US money market funds. The proximal catalyst back then were new proposed regulations seeking to pull one of these three core pillars (these being no volatility, instantaneous liquidity, and redeemability) from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal would give money market fund managers the option to "suspend redemptions to allow for the orderly liquidation of fund assets." In other words: an attempt to prevent money market runs (the same thing that crushed Lehman when the Reserve Fund broke the buck). This idea, which previously had been implicitly backed by the all important Group of 30 which is basically the shadow central planners of the world (don't believe us? check out the roster of current members), did not get too far, and was quickly forgotten. Until today, when the New York Fed decided to bring it back from the dead by publishing "The Minimum Balance At Risk: A Proposal to Mitigate the Systemic Risks Posed by Money Market FUnds". Now it is well known that any attempt to prevent a bank runs achieves nothing but merely accelerating just that (as Europe recently learned). But this coming from central planners - who never can accurately predict a rational response - is not surprising. What is surprising is that this proposal is reincarnated now. The question becomes: why now? What does the Fed know about market liquidity conditions that it does not want to share, and more importantly, is the Fed seeing a rapid deterioration in liquidity conditions in the future, that may and/or will prompt retail investors to pull their money in another Lehman-like bank run repeat?
For investors, the continued increases in profitability, at the expense of wages, is very finite. It is revenue that matters in the long term - without subsequent increases at the top line; bottom line profitability is severely at risk. The stock market is not cheap, especially in an environment where interest rates are artificially suppressed and earnings are inflated due to "accounting magic." This increases the risk of a significant market correction particularly with a market driven by "hopes" of further central bank interventions. This reeks of a risky environment, which can remain irrational longer than expected, that will eventually revert when expectations and reality collide.
China has proposed to broaden trading of precious metals in its local market in order to help China become a "major gold trading centre" (see News). The Wall Street Journal was briefed about China's plans by "a person involved with the matter." The paper reports that "the move could increase liquidity and help Beijing gain stronger pricing power for key commodities like gold". China is the largest consumer and now the largest producer of gold in the world and has aspirations to become a major gold trading center on a par with London and New York. China is also the fifth largest holder of gold reserves in the world after the U.S., Germany, France, Italy. Chinese officials have spoken of China’s aspirations to have gold reserves as large as the U.S. in order to help position the yuan or renminbi as a global reserve currency. Indeed, it would be only natural for China to aspire to have their currency become the global reserve currency in the long term. In the longer term, being a major gold trading center would make China a more powerful financial and economic player and indeed could allow them to influence commodity and other important market prices. Indeed, Reuters reported that becoming a major gold trading center "would boost the country's clout in setting global prices".
- U.S drought wilts crops as officials pray for rain (Reuters)
- Obama backs aid for drought farmers (FT)
- Greek leaders identify two-thirds of spending cuts (FT)
- Central bankers eyeing whether Libor needs scrapping (Reuters)
- Markets Face a Life Sentence of Hard Libor (WSJ)
- World Bank chief warns no region immune to Europe crisis (Reuters)
- China big four banks' new loans double in early July (Reuters)
- Nokia Loss Widens as Smartphone Sales Slump (WSJ)
- Bundesbank Expected To Buy Australian Dollars In 3Q (WSJ)
Instead of sticking to selling short-term, LTRO covered debt, Spain was so desperate to show it has capital markets access that this morning it tried selling bond due 2014, 2017 and 2019 with a maximum issuance target of €3 billion. It failed to not only meet the target, but to price the €1.074 billion in bonds due 2017 at anything less than an all time high (6.459%) as a result sending the entire curve blowing out wider, and the 10 Year above the critical 7% threshold again, for the first time since the June Euro summit, whose only function was to give a positive return for the fiscal year to such US pension funds as Calpers and New Year. In summary: Spain sold 2.98 billion euros of short- to medium-term government bonds on Thursday in a sale at which borrowing costs rose and demand fell. The average yield at a sale of 1.07 billion euros of five-year bonds rose to 6.46 percent compared with 6.07 percent at the previous auction of the debt last month. Investors' bids were worth 2.1 times the amount offered for the five-year paper versus 3.4 times at the last auction, and 2.9 times for the seven-year bond. The average yield at the seven-year sale rose to 6.7 percent from 4.83 percent.
It's about time for Frances funding rate to feel a little pressure, no?