This page has been archived and commenting is disabled.
Beware The Day When The Bulging Bunds Go Bust From The Bullshit - Or Doesn't Anyone Use Math Anymore???
Bloomberg EU Eases Spain Debt Rules as Merkel Retreats and Euro Rises After EU Leaders Renounce Spain Loan Seniority
Euro-area leaders agreed to relax conditions on emergency loans for Spanish banks and possible help for Italy as an outflanked German Chancellor Angela Merkel gave in on expanded steps to stem the debt crisis.
After 13 1/2 hours of talks ending at 4:30 a.m. in Brussels today, chiefs of the 17 euro countries dropped the requirement that taxpayers get preferred creditor status on aid to Spain’s blighted banks and opened the way to recapitalizing lenders directly with bailout funds once Europe sets up a single banking supervisor. Stocks and bonds in Spain and Italy rallied and the euro posted its biggest gain this year.
Oh yeah, that's a damn good idea. Take a murky pool of depreciating, hard to value, illiquid assets and make them even murkier, harder to value, yet easier to pledge since it's now acceptable to look in the other direction as you receive said "trash assets". To make matters even worse, the Europeans are now attempting to perfect their method of throwing good money after bad by denying preferential status to the only money that can save (or at least buoy) these zombie banks. Of course, no lender will want to go in knowing that they can be instantly subordinated, but then again when the only lender that can realy make a difference goes in, why should it take a bow to anyone else. Trust me on this one... Taxpayers will offer loans and see that money disappear... Poooffff!!! Don't believe me? Reference CNBC Asks, "So Why Are Spanish Bond Yields Falling?" I Ask The Better Question, "Why Are Spanish Banks Considered Solvent?"
Bloomberg also reports Spain Gets Relief as Europe Leaders Outflank Merkel in Bid to Blunt Crisis. Listen, pressuring Germany, the one remaining relatively stable/robust large economy in the union is a recipe for disaster. There's no wonder why 16 or so failing economies are in opposition to the wants and desires of the 1 or so successful economies. See any common threads here? Germany is far from bulletproof, as the same MSM page sports this headline...
German Retail Sales Unexpectedly Fell for a Second Month in May on Crisis
German retail sales unexpectedly fell for a second month in May as the sovereign debt crisis worsened, damping the economic outlook.
Germany is a net export nation whose primary trading partners range from extremely hard landing to recessionary to outright depression. Exactly where is all of the economic growth going to come from to fund the world, or at least the European version of the world. I have written extensively on this... Sophisticated Ignorance Part 2: Pressuring Germany To Do The Wrong Thing Is A Short Seller's Dream
Things are so predictably dead beat that I don't even have to write new material anymore. Seriously! Let's just cut and paste from the BoomBustBlog archives: Dead Bank Deja Vu? How The Sovereigns Killed Their Banks & Why Nobody Realizes They're Dead
I have broached the argument in the past that the ECB is not god, or even close to it, and that it can only play the bond buying ponzi for but so long before negative consequences occur. Reference:
- ECB As European Lender Of Last Resort = Institutional Purveryor Of A Pan-European Ponzi Scheme
- Over A Year After Being Dismissed As Sensationalist For Questioning the ECB's Continued Solvency After Sovereign Debt Buying Binge, Guess What!
How much damage is being inflicted upon the ECB, and how? Well simply read How Greece Killed Its Own Banks! and remember that this article was written in the beginning of 2010, when the bonds were trading for much more then they were right before they defaulted! then reference Greece Reports: "Circular Reasoning Works Because Circular Reasoning Works" - Or - Here Comes That Default!!!
The ECB's balance sheet bloat doesn't begin or end with Greece. I excerpt "The Bull Argument For Europe Is Credible, Except For The Circular Argument: You Can't Solve Debt Problems With More Debt!!!"
Below is my mini-debate with Doug Kass on Twitter. Let it be known that I have respect for Doug, for he called the market turn in 2009 with precision, an did it publicly. Of course, I can't agree with him on this latest proclamation though...
Douglas Kass @DougKass
The EU initiatives reduce tail risk (a crash) but dont address the deep structural issues - buy the rumor, sell the news. What I will do.
ReggieMiddleton @ReggieMiddleton
@DougKass How does the EUinitiative reduce risk/crash? Still not funded? Simply shifts dirt from 1 hole to the next, much dirt still missing
Douglas Kass @DougKass
@ReggieMiddleton yes reggie... and it worked in the U.S. four years ago. Dont be dogmatic.
ReggieMiddleton @ReggieMiddleton
@DougKass Stocks did double, though. Unfortunately neither economic output or asset quality nor true economic profit bothered to follow suit
ReggieMiddleton @ReggieMiddleton
@DougKass It all depends on how you define "worked". US banking system is still a mess. Lending is sparse. We never really left recession..
ReggieMiddleton @ReggieMiddleton
@DougKass ex. of how well it worked for banks: BAC,/C/MS/Manfinancial, soon GS, JPM, et. al. Its anathema to say, prices aren't everything.
ReggieMiddleton @ReggieMiddleton
@DougKass In essences, that means that stock prices went one way, and actual value failed to follow.
ReggieMiddleton @ReggieMiddleton
@DougKass Stocks did double, though. Unfortunately neither economic output or asset quality nor true economic profit bothered to follow suit
ReggieMiddleton @ReggieMiddleton
@DougKass It all depends on how you define "worked". US banking system is still a mess. Lending is sparse. We never really left recession..
ReggieMiddleton @ReggieMiddleton
@DougKass Taxpayers will offer loans without which banks will fail, yet don't get preferential status. that money will disappear
And a supplementary tweet from Tyler: Last Night's Critical Phrase "No Extra Bailout Funds" tinyurl.com/7nstlg2
Anyway, back to the Bloomberg story. So, now taxpayers will cough up and additional several hundred billion euro to be absolutely incinerated and vaporized once it hits that gaping oven of insolvency needing at least 500 billion euro to make a difference. Translation: Central banks will take another very big hit and not get paid for it.
Speculators should have alreday started selling French and German bonds because they are the major contributors to the ECB. I've discussed France in detail earlier this week in Now Is The Time To Prepare For The (Next) French Bailout Of Their Banking System & Potential Bailout Of France. The French are not particularly well situated. I also took a find toothed comb to Germany as well, as archived... The Biggest Threat To The 2012 Economy Is??? Not What Wall Street Is Telling You... You see, as you read through this last link, if Germany's Bunds so much as return to trendline, it absolutely wrecks EU insurance, bank HTM and pension portfolios. I mean negative equity everywhere.
Finally, check this out. If you don't want to watch the whole thing then start at 2:38...
- advertisements -
Farage, "..the EU isn't just un-democratic, it is fundamentally anti-democratic.."
Nigel, have you met 'democratic Govt" yet?
..an institution designed to monopolise power in/over society/individuals ..it's job discription is the enemy of personal freedom ...what will the penny drop mate?
Neti pot helping to get rid of mucous and dirt from the nose, it is beneficial for people, who are sick and tired of sinus problems, which frequently include facial pain, headache and blocked nasal passages. Such neti pots are available at many drug, health food and online stores.
EU just following the American leadership as yesterday the largest entitlement ever was blessed by the courts which will lead even larger deficits and debt in the USA. Why get upset with the EU, American leads as the most irresponsible.
Everybody was focused on the individual mandate, but the real killer in this thing is the requirement to take on pre-existing condition people. The fine for individuals choosing not to get insurance is a pittance, whereas the law holds insurance companies have to pay up for someone who applies for insurance AFTER having the insured castastrophic medical problem befall them.
I.E. this bill is a plan to DESTROY private health insurance in the United States.
It will also create an instant jump in voluntary non-participation in the labor force, because loads of workers work mainly for the health benefits they currently get. They will lose those in large quantities as they personally choose to rely on the pre-existing condition mandate, and another large chunk will lose their insurance but not their jobs as employers dump them on the crap public system.
This type of crap in Europe is part of their existing low participation rate in the productive economies there.
Reggie, exactly what good does math do in this politicized scenario? It's really hard to quantify guns, let alone the people behind them.
Its not north or south, it is taxpayers and productive workers who have no more say in how the value of their labour, innovation and risk is to be applied to increase their own standard of living. These value added surplusses and resources are being sunk into the quicksand of unproductive debt and debt servicing, loss coverage and exponential deficit creation.
Here we are, and we cannot change or control where we see we are going.
And that is the problem - we cannot choose, those who can choose are neither elected, nor hold offices that are in the reach of the judiciary. They are the executive created by legislature to shelter each other for the benefit of the 1%.
I feel like I am in the Twilight Zone. Politicians spend like drunken sailors, Central Banks print and lend worthless money, governments keep regulating, etc. It is pure madness!
http://confoundedinterest.wordpress.com/2012/06/29/consumer-confidence-wanes-spending-grows-at-0-say-hello-to-my-little-friend/
Dear RM:
Although you may be right about bond, bund, gilt or muni busts eventually,
MUB targeting 153, TYX targeting 1.7%, TNX targeting 0.5% say otherwise in the meantime,
for a possible 39% capital gain plus deflation-adjusted current income approaching 3%.
ZH commenters and MHFT used to scoff at USB target of 150 when it traded at 118.
It recently hit 152.56.
Slightly off-topic:
Just took windfall profits on SPY Jul 131 Calls and averaging into QQQ Jul 64 puts:
http://richcash8tradeblog.blogspot.com/
Cheers for financial independence...
Reg...you took a fine-toothed comb to Germany, not a find toothed comb. The comb has fine teeth.
This site is a market unto itself. Best post to date Reggie. Growth can only come from risk TAKERS (not "taking"....as too often blindly stated) and as such we must first concern ourselves with the difference between a "bid and an ask." people take the equity guys for granted but they truly to "make the market"! Right now the only game in town is Wall Street...and I HiGHLY doubt any of them made it by buying product "sight unseen." So I put it to you in as basic and simple a form as I know: "how can I determine price if I can't be shown a difference between a bid and an ask?" I submit for the whole world to hear (if it so pleases them) that it CAN'T BE DONE.
All owners of canines are kindly requested to provide their pets' excrement to the ECB for urgent use as collateral. Postage / freight charges paid.
So I suppose next week the Greeks will return all the money they withdrew from the banks back to the banks, the houses in Spain will miraculously find buyers, the French and Germans will discover heaps of buried treasure to pay off the PIGGS debt, the US manufacturing base will suddenly start to expand, the Iranians will arrange for the Americans to build another nuclear power plant, the Greeks and the Turks will start drilling for oil in the Aegean as joint partners, the Israeli's will open a consulate in the Gaza Strip, the Chinese will appoint the Dalai Lama as a special envoy to the UN, food stamp usage in the USA will plummet to the lowest levels ever, Greeks will start paying their income tax in advance, the Irish will give up drinking and the Europeans will crown Merkel as the first empress of Europe.
Good to see the Europeans have finally solved their problems. Now let's just hope the masses don't realise it's all a practical joke.
Life is a relative game especially in wartime. Ask yourself who is the most indebted in ponzi scam. Then we can talk debt deleveraging in private banks. Its a WS GS squid ink disease that has spread to surrogate UK and Euroland. They may fall first but all roads lead to Rome in the end.
Perhaps equally significant is that Lauren "Legs" Lyster didn' t show them until 27 minutes in.
Lauren Lyster is the hottest babe in the finance TV business.
Hot in that she's smart.
Hot in that she's hot.
Hot in that she's single (and I bet gets more action than a betting window at Churchill pre-derby)
Europe? It's fucked.
you can bet the program manager puts an occasional deposit in her capital account...
And turned her desk around to keep her from watching the Ops bay windows fog up from the panting.
When they show Lauren's legs I have a fat finger episode.
The camera operator managed to keep his nose away from her pussy only for so long....
Makers VS takers. North EU and South EU. Seems the problems are the same everywhere.
Excuse the language but the world is full of suckers and fuckers.
That pretty much tells the real story.