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Why Italian Bonds Have A Long Way Down To Go
As we hinted last night, and as the market is starting to realize, one of the bigger downstream casualties of the first rumblings that Abenomics is starting to crack, have been peripheral bond yields, with Spanish, Italian and Portuguese yields all wider by 10 bps and rising: after all who will buy this worthless garbage (in which Spain's pension fund has gone all in) if the Japan hot money flows stop or even reverse?
However, that is only half the story. The other half is that, with its usual 6-8 week delay, the market is finally grasping the biggest danger in Europe - one which we have been pounding the table on week after week after week (most recently here): the soaring non-performing loans held by European banks. In fact, it took the FT to confirm what we have been warning about all along. And just so the market has a sense of how much downside may be imminent if indeed reality reasserts itself and frontrunning the Japanese carry trade both occur at the same time, here is a rather unpleasant chart courtesy of Diapason, of what expects all those who bought up Italian bonds in the recent dash-for-trash, oblivious of the collapsing fundamentals, and driven purely by FOMO. The downside could be big to quite big.
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Euro is doomed.. writing is all over the wall.
Yeah, and all sorts of Dollars and the Yen are looking soo healthy. Mene mene tekel u-parsin ...
It's all Bullshit!!!
Romanus eunt domus?
Romani ite domum. now write it a hundred times
meanwhile the OMT threat has not passed away. financial kneecaps of shorters, beware of retailiation
The OMT threat? LOL.
Every decent ZHer lost PMs in a boating accident.
I for one welcome unlimited OMT.
On top of that I'd short PIIGS and go long German bonds.
unlimited OMT? then imho you have not understood the psychology of the 17 cbs that form the ECB. I'm talking about short, "spiky" interventions (you know, to "teach a lesson") not the wasteful barrage over the years that the FED is engaging into. your remark about gold further highlights that you might not have understood that it ain't the FED. feel free to engage an alien-to-you group of central banks in their own territory, ain't my business and (thankfully) ain't my book - I, for example, don't have any grasp of the "psychology of the shorter" and still think that this go-long-and-go-short biz is insane and unsustainable
Anyone know an ETF for this?
RAGU?
I actually looked that up, better have more coffee!
Time for another EU/Eurozone summit that craps out another great plan to plan and assures the mainstream media that countries in a program and other problem children have made huge progress.
Ah, starting the day in Rome with a cappuchino!
The EU is in better shape than the US. All they need to do is create a Euro B currency for the PIGS and France and some of the significant issues will be solved. A migration of young workers from the troubled parts of the EU has already begun and that will help ease some of the imbalances. I'm more optimistic on EU that US and China right now. The biggest risk they face is from the Sheeple electing ultra right or left parties.
Didn't you hear Draghi saying that there is a very strong political support for this currency. I'm pretty sure that there is enough madness (read billions from the north and unemployment close to 100 percent in the south) in Bruxelles to make this €uro work. Rational decisions (= career risk for aparatschiks) are just not en vogue, so delay and pray is the way to go in Europe until something breaks.
Draghi actually talked about political capital being invested in the EUR, which imho it's a different thing. I don't know if the term "political capital" is ever used in the US/UK, but the best traduction I can give is "political commitment" - and I have to say for good or bad he's right on this
meanwhile if you talk about political support, the eurozone (actually the whole EU) is the only area I know where citizens are regularly polled about their currency. and when asked about the EUR, support is around 60% (with the UK exception of 14%)
Well, yeah, sure - "political support" is code name for the cocksuckers' careers and pensions.
Fuck 'em all.
The EU is not in better shape.
Eurosheeple is conditioned to endless socialism.
There's no way in hell that place can prosper.
I totally agree - the first thing they'd have to do is admit that Keynesian economics and quasi-socialism do NOT work and always fail, but there is no chance of that...
Spain or France will provide the Arch Duke trigger.
Bad debts?
Are bad debts allowed anymore?
Seems that debts do matter still in some places:
DIA's art collection at risk amid Detroit's financial woes"Officials say the Detroit Institute of Arts' collection could be sold to help satisfy creditors if the financially troubled city of Detroit seeks bankruptcy protection.
Bill Knowling, a spokesman for state-appointed emergency manager says Kevyn Orr, says Orr is considering whether the collection should be considered city assets that could be sold to cover Detroit's long-term debt. The debt is estimated at more than $14 billion.
...when the DIA was still a city department, valued the collection at more than $1 billion."
http://www.myfoxdetroit.com/story/22413980/dias-art-collection-at-risk-a...
More signs of the fake economy (or the "Fake It Till You Make It") and hidden inflation:
Scores of TGI Fridays in New Jersey 'busted for selling caramel-colored rubbing alcohol as top-shelf scotch' in statewide crackdown dubbed Operation Swill"Twenty-nine New Jersey bars and restaurants, including 13 TGI Fridays, were accused of substituting cheap booze - or worse - for top-shelf brands while charging premium prices."
http://www.dailymail.co.uk/news/article-2330116/Scores-TGI-Fridays-New-J...
Hey, it's Joisey. Fugeddaboudit.
That's AMOARayyyy.....
Someone should ask Blackrock as to the true NPLs held by Greek Banks. Of course, now is not the right time to do that, with all this huge recapitalization business (and fees) due to be completed within the next month.
Apropos, funny how rating agencies and investment banks change their view overnight, from zero to infinity, when they smell big commission generation around the corner.
With an Italian heading the ECB, I would not place my bet on FBTP's going down. That's like a modern Don Quichotte with a limited margin account fighting a printing press...