Iran Test Fires Two Long-Range Missiles Into Mouth Of Indian Ocean Where Two US Aircraft Carriers Are SituatedSubmitted by Tyler Durden on 07/09/2011 11:03 -0500
Today for the first time, Iran's IRNA news agency reported that the country had fired two missiles with a range of 1,900 km, coupled with TV coverage, into the mouth of the Indian Ocean. As PressTV reports, "Commander of the Aerospace Division of Iran's Islamic Revolution Guards Corps (IRGC) Brigadier General Ali Hajizadeh said that the long-range missiles were fired in the Iranian calendar month of Bahman (January 21 to February 20). He said that the missiles, fired from central Iran towards the Indian Ocean, successfully hit its designated targets, IRNA reported Saturday. Hajizadeh said that Iran's missiles have a range of up to 2,000 kilometers, adding that “Iran has the ability to produce longer-ranged ones (missiles) but presently there is no need to produce them." The purpose of the test firing was all too clear: "Our desired targets and the country's threatening us are located well within the reach [of our missiles]," he said. In other words: any US-based invasion of Iran will most certainly see prompt retaliation against US national-interests in the region. This is especially concerning since the US currently has two aircraft carriers, amusingly the Bush and the Reagan, both sitting side by side at the straits of Hormuz, with LHD 4 boxer backing up the rear in a zone that is now quite explosive. Had these test firings been perceived by a provocation, and lately it appears that the US is actively seeking one, it may have been quite a mess.
The IMF is delighted to announce that it just approved a €3.2 billion disbursement of cash for Greece, its fifth, as part of the €12 billion in money that Greece needs in order to continue operating in the months f July and August. And just for what purpose will this money be used, one may ask? Well, as explained a few weeks ago, in Greek Math: €12 Billion In, €18.2 Billion Out the entire amount will be promptly recycled by global financial institutions in the form of debt maturities and interest payments, which amount to €18.2 billion in the months of July and August. Simply said ECB, EU and IMF money in, money owed to bankers out. The kicker: 17.09% of the money coming from the IMF, comes from, that's right dear US taxpayer, you (and since 21% of the quota contributions allocated to the IMF are deemed "non-usable", the actual number funded by the US is likely much higher). But this plot has a bonus kicker: as we reported on Wednesday, the actual Greek debt is no longer owed by European banks to the extent it had been previously expected: a development that threatens to scuttle the entire second Greek bailout plan as currently proposed. So as the banks have been selling Greek debt, who has been buying? Mostly hedge funds, such as everyone's favorite John Paulson. So to recap: US taxpayers have just paid out about $780 million of the $4.6 billion in order to fund interest owed to... hedge funds.
Another day, another implosion in Italy, this time focusing on core bank UniCredit, which earlier dropped by 6.5% resulting in a stock halt, only to reopen just modestly higher. There was no immediate catalyst, just more of the same: rumors that FinMin Tremonti is resigning, especially following the arrest of Marco Milanese which indicates the fallout is imminent (see below), rumors that Italian banks are failing stress tests, rumors that Italy has the most exposure to Greece, and other generalized fears which today coalesced around the bank that was the most active today on the European version of Sigma X.In other news, 2 Year government spreads are once again surging as GDP-weighted EU sovereign risk is at fresh all time highs (probably to make company to the Dow Jones Transportation index).
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As DSK's Star Is Rising, Is Lagarde's About To Set? French Court To Decide Whether To Open Against Brand New IMF HeadSubmitted by Tyler Durden on 07/07/2011 18:55 -0500
The IMF soap opera just entered the twilight zone. Following the release of facts about DSK's accuser just two days after the swearing in of his replacement, Christine Lagarde, that could discredit her story and absolve the former IMF head of all wrongdoing, the current one may be about to experience amajor legal humiliation of her own. According to Reuters, a French court will decide on Friday whether to launch a legal inquiry into the role of IMF chief Christine Lagarde in a 2008 arbitration payout, a move that could cloud her debut at the international lender. To be sure this is the second time in the past two months that Lagarde's legal troubles have followed her: back in May we noted that the very same legal troubles could potentially delay her ascent to the head of the IMF. However, the French tribunal did not move fast enough, and thus Lagarde was elected without that major legal blemish being removed from her record. Thus it would be supremely ironic if tomorrow the Court Justice of the Republic were to pronounce that there just may be a case against Lagarde for abuse of authority. Coupled with DSK's probable imminent absolution of wrongdoing, in keeping with the Onionesque nature of reality, it would not surprise us if a year from now the IMF will have done a big switcheroo, and undone the whole thing, whereby DSK is back as head of the IMF.
America's toothless regulators strike again. JPM, which recently got away virtually scott free with an identical settlement on CDO security fraud that dragged Goldman stock for months back in 2010, has once again exposed its "most favored fraud" status with America's regulators after Reuters announced that the firm will settle a charges of a 6 year long bid-rigging fraud in municipal securities with the SEC... for the princely sum of $35 million.
And while Trichet is blatantly lying and making stuff up as he goes along, on line two we have Pimco's Mohamed El-Erian who has taken some time away from his daily blogging activity and is conducting a live Q&A on Reuters right now. Readers can follow his thoughts, which are hardly anything new as he has made his opinion known each and every day in at least one media venue, live at the link below.
UK Royal Mint Silver Production Surges 100% - Sovereign Edward Supply Tight But Bullion Premiums LowSubmitted by Tyler Durden on 07/07/2011 06:42 -0500
The U.K.’s Royal Mint said that first-half silver production in 2011 doubled, while gold production climbed 8.9% over 2010 levels. The Royal Mint, established in the 13th century, used 36,219 ounces of gold compared with 33,266 ounces the previous year, according to data obtained by Bloomberg News under a Freedom of Information Act request. Silver use more than doubled to 324,421 ounces in the period. The Royal Mint makes Britannia silver bullion coins and other collector silver coins. 324,421 ounces of silver at today’s prices ($36/oz) would be worth less than $12 million dollars. Mere chump change to many wealth investors and savers concerned about their investments and savings.
The cooling system at Fukushima's Daiichi sister plant was closed earlier today after Tepco announced that "sparks were detected". According to TEPCO this is no cause for alarm and the situation will be restored back to normal shortly. According to yet other news, after 4 months of lies, TEPCO has started telling the truth. From Reuters: "The operator of Japan's Fukushima Daini nuclear power plant, located near the tsunami-crippled Daiichi plant, on Thursday halted the cooling system at one of its reactors after electrical sparks were detected, Kyodo news agency reported. Tokyo Electric Power , the plant's operator, expects to be able to restore the cooling system at the Daini plant's No.1 reactor before the end of Thursday, Kyodo said." Fair enough. We will be sure to check in later today to validate this latest "fact."
Today, the ECB will probably raise the benchmark rate to 1.5 percent, while the Bank of England will leave rates and its bond purchase program unchanged, according to economists. Per Reuters, "concern about the pace of economic recovery looks set to persuade the Bank of England to keep interest rates at rock-bottom not just this week but for months to come. UK interest rates have stood at 0.5 percent since March 2009, when a deep recession and the threat of deflation prompted central banks around the world to slash rates to record lows. Since then, inflation in Britain has returned as a force to be reckoned with. Consumer prices are rising more than twice as fast as the BoE would like, but it has been reluctant to tighten monetary policy when the government's massive fiscal tightening is already crimping growth. "The Bank can do nothing about inflation over the next six months, and will not try to," said Paul Mortimer-Lee, chief global economist at BNP Paribas. While the European Central Bank looks set to raise rates this month -- its second move since April -- all 70 economists polled by Reuters last week predicted that the BoE's key rate would stay at 0.5 percent." So with inflation at 4.5%, double the target rate, there is speculation the BOE may even commence another round of QE: "Minutes to the meeting observed that "the current weakness of demand growth was likely to persist for longer than previously thought". And several policymakers -- not just arch-dove Adam Posen -- considered that more quantitative easing could be warranted in the future if growth remained weak. Most economists, however, believe printing more money is unlikely short of a disorderly Greek debt default or similar financial crisis. "Many investors remain wary about QE and the monetary policy committee might find it difficult to sell the idea to markets with the current rate of inflation so far above target," said Philip Shaw at Investec." There is no such fear at the ECB yet: after all that particular bank's monetizations occure via separate CDOs and SPVs. Yet if Trichet does not do the expected 0.25% hike, look for the EURUSD to tumble at least 150 pips.
The Economy Cannot Recover As Long As Inequality Continues to Skyrocket ... But Government Policy Is INCREASING InequalitySubmitted by George Washington on 07/06/2011 20:16 -0500
What do Hu Jintao, David Cameron, Warren Buffett, Dominique Strauss-Kahn, Alan Greenspan, Robert Shiller, Joseph Stiglitz, Robert Reich and Mark Thoma - and both conservatives and liberals - all agree on?
LPS, which together with MERS, has long been at the heart of the fraudclosure scandal courtesy of loan appraisals which even the FDIC claims were/are fraudulent, just fired a big red warning sign about its continued existence as a going concern after the CEO, Jeffrey Carbiener, just announced he is resigning "due to health concerns." Well, everyone knows what that means. From Reuters: "Lender Processing Services Inc (LPS.N) said its Chief Executive Jeffrey Carbiener resigned due to medical reasons and would be replaced in the interim by Lee Kennedy, its executive chairman. The mortgage processing services provider said its board had established a committee to search for a replacement. Kennedy, who was the executive chairman and CEO of LPS's former parent Fidelity National Information Services, will remain the executive chairman, the company said in a statement." Somehow we doubt the market will be too happy with this development, which could well be the beginning of the end for the $1.7 billion company.
By now we have heard every worthless Wall Street economist expound on the bull case for the economy courtesy of a ultrashort-term dip in oil and gas as a result of the moronic IEA decision to tap strategic reserves. And while short-term gyrations are largely irrelevant when as we presented yesterday, and as the FT confirmed, the bulk of volume and price formation comes from speculative daytraders, the longer-term dynamics for crude point in only one direction. Up. Here is UBS Andy Lees to explain why despite the brief jump in crude (which will likely never make it into the system courtesy of banks taking the purchased light sweet crude and storing it in tankers) supplies, we are facing a substantial supply-side crunch as soon as a few months from now.
Greek "Rollover" Bailout Proposal On Verge Of Collapse, After Germany Puts Bond Swap Idea "Back On The Table"Submitted by Tyler Durden on 07/06/2011 08:31 -0500
The much ridiculed "MLEC-type" bailout proposal of Greece, which contemplates the rolling of existing debt into a guaranteed SPV, and which was the European rescue deux ex machina for exactly two weeks, appears to have been pulled off the table, following the announcement by German Deputy Finance Minister Joerg Asmussen to Reuters Insider TV that "Germany has put a Greek bond swap back on the table as a model for private sector involvement in fresh aid for Athens." More: "The model put forward by some French banks is still a good base for discussions and we are currently working on this. But since rating agencies have signalled that they will consider modalities (such as) the French proposal as a selective default -- that means a rating event -- we can also put other options like a bond exchange on the table." he said, adding discussions would take place over the summer break. Translation: back to square minus one. And actually it is much worse, because if Asmussen is aware of rating agency policy, a debt exchange would most certainly qualify for an event of default. Which confirms our initial expectation from a month ago that there is nothing absent a complete loss of ECB credibility that can possibly transpire next, as the ECB realizes there is no way around accepting defaulted Greek bonds as collateral. The only question is what happens then: will the market, head currently deep in the sand, scramble upon the confirmation that the ECB emperor is naked, or will it continue acting as if nothing has changed yet again.