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The Biggest Issue Now Is "The Math"
Some quick pre-market observations from Bloomberg's Richard Breslow
Just Don’t Nip Out for a Haircut
The Greek citizenry voted and the handicappers got it very wrong. The result of the vote was called much earlier than anyone expected. It wasn’t close.
Much was made last week of the abrogating of responsibility by PM Tsipras by allowing the referendum. How can mere citizens be trusted with understanding such difficult issues? Issues that the technocratic experts got nowhere with. No one expected the result. No one was set up for the result. Chaos will ensue. But here we are, admittedly early the next morning and the markets are remarkably calm
Merkel and Hollande will meet. The ECB will meet. The Greek cabinet will meet. Cool heads will prevail. The unpopular Varoufakis is not gloating, he is resigning. The base case remains that a deal will happen because it must happen. The Greek people may have gotten us closer to a deal than all of the summits ever could
EUR/USD has held inside last Monday’s range. Two Mondays in a row, the pair has traded below 1.1000 and quickly rejected those lower prices. The 100-DMA (1.1057) is looking more like a pivot than a line in the sand. USD/JPY has bent, but not broken; 122.00 continues to be an important level and is holding. Watch the JPY as a measure of safe-haven demand
I remain a USD bull and still think EUR/USD will go lower, but its resilience in light of all the news is impressive.
Bund futures are higher, but holding well below the 55-DMA (153.61). U.S. 10-yr futures are holding below the important 127-00 level. Watch 126-16 as interesting support. Below there we are back into familiar territory
Equity futures have repriced lower, but haven’t collapsed. To be fair, they have been meandering at best for most of June. What makes them an outlier here is that both E-Mini and Euro Stoxx 50 futures earlier broke below their 200-DMA. Technically this is not a small deal. Both futures have re-tested those levels and they are good levels to watch on the day and, especially on the close
Analyst after analyst has used the “no” vote to push back the timing of the long-awaited Fed rate hike. Shame on the Fed if they have come to any such conclusion so soon after the announcement. But the market doesn’t trade like it believes it either. They are meant to be data dependent, remember. The roof hasn’t caved in and nothing has been resolved. Central bankers need to take off their sovereign wealth fund hats and separate the S&P from the real economy. Most observers believe that financial stability already is the implicit third mandate and will be looking for the morphine drip. At this point that would be micromanaging at its worst
So what are the immediate risks to the markets? The ECB doesn’t allow the Greek banks to re-open, for one. That the periphery-to-core bond spreads prove to have been too optimistic and the market can’t provide the liquidity for them to move to more realistic levels. I never thought the economic “miracles” in Spain and Italy were as impressive as advertised, anyway, with unemployment rates threatening a lost generation.
But the big risk and one to watch out for is haircuts. Once the reality of debt write-offs and who lent how much and what that means at home, the real fireworks could start. Can Italy, Spain or Austria afford to write-off 1/3 or 1/2 or more of what they lent to Greece? How about the EFSF or ECB? How will depositors feel if they get a quick 30% off the top? That is the biggest issue. The math as they say. And it is what we should be watching for.
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Curious for more? Read The Greek Bluff In All Its Glory: Presenting The Grexit "Falling Dominoes"
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Math hasn't mattered for a long time, why start now?
Global Economic And Financial System On The Verge Of Total Collapse
Send lawyers, guns, and money......dad get me out of this.
https://www.youtube.com/watch?v=QPlMmwOq7U8
Mathematics, the great equilizer of economic linear thinkers, bitches!
let's not forget about the ticking bomb in Porto Rico BITCHEZ
Precisely, this debt bubble has always just needed a pin and once debt defaults reach critical mass the contagion can’t be stopped. Critical mass of defaults is simply the point at which default on certain debt causes the creditors of that debt to not be able to service larger amounts of their own debt. How many debt repayments are dependent on the repayment of Puerto Rican and Greek debt. It may not be enough to reach that ‘critical mass’ but it will happen at some point. Debt that can’t be repaid won’t be repaid.
Dear Baby Jeezus, please prompt the Fed to raise rates 50 bps this summer, just so I can hear the banksters squeal.
Geeze people, just have the BLS use Common Core Math and all will be fine.
It's the new math
No Shit Sherlock. Just keep using Banker math, everything is fine.
Math is all that ever mattered. Thet's why we are where we are with iur debt drenched world. It can't be wished away.
Greek debt write-off will have to be followed by debt write-offs for Portugal, Spain, Ireland, Italy and France. Then we are talking trillions in debt write-offs. It can easily burst the global bond bubble.
Greek debt is about $350 billion or $65,000 per taxpayer. So a debt write-off of about 50% is perhaps sustainable. So that is a write-off of about $175 billion for Greece alone.
Global Economic & Financial System will collapse
Laurence Kotlikoff: U S Treasury Bonds One of the Riskiest Securities in the World, Financial System Will Collapse Just a Matter of WhenWhere can you get a safe investment? Boston University Economics Professor Laurence Kotlikoff says, forget U.S. Treasury bonds. “I think they are one of the riskiest securities in the world because interest rates are likely to go up. I think the Fed is going to have to keep printing money because Congress isn’t paying our bills, and that’s going to lead to inflation eventually. So, I think long term Treasuries are extremely risky and they can drop 5%, 10% or 20% overnight.
http://investmentwatchblog.com/laurence-kotlikoff-u-s-treasury-bonds-one...
Greek debt is $65,000 per person and all of this fuss????
They've got nothing on US debt. The only difference is is that our lying, cheating, and thieving bankers would NEVER allow the US citizens to vote on ANY type of debt referendum
Greece doesn't hold the world at the barrel of a gun. We do. Force and security have trumped consensual exchange since the beginning of time. When voluntary trading systems wane, it comes down to who is in power. And nothing is going to change the fact that the US has the morket cornered on force.
A mere 50% default is how Greece ended up in this situation in the first place:
http://www.zerohedge.com/news/adolf-merkel-presenting-greek-gratitude-50...
What makes you think it would work this time?
Game theory? GAME OVER!
I saw a bus filled with hairdressers heading to Greece this morning.
Average age on the bus: fifty four and a half.
Paging Mario Draghi; Mario Draghi, please pick up the red courtesy phone in the lobby...and oh, yes bring the ECB "checkbook" (read Western "Developed" nations tax donkeys...)
"The ECB doesn’t allow the Greek banks to re-open, for one." WTF does the ECB have to say about the Greeks opening their banks?
The Greeks can open the branches, but pointless action if no EUR inside the branch.
Netted down, looking through the 'smoke and mirrors' (and a lot of National Pride), any new EUR's in Greece basically come from Germany...and they may not be arriving so easily now.
Merkel is obsessed with the United States of Europe, so used to be easy for her to grant new credits, but now looks like choice for her between her political career, and her obsession with United States of Europe.
This time, maybe her political career wins...
Watson
I can't believe the Troika et al "loaned" Greece all that money and put the "loans" on their books as if they would be paid back at a profit.
Over the years the Tippy houshold has "loaned" my fiscally irresponsible brother-in-law at least $10K. We've "loaned" him money in times of crisis so he didn't have a total meltdown. Eyeglasses (twice), security deposits and first-month rent (twice), chef's uniform and fancy kitchen knife set for a new job in a real restaurant (he's a cook), traffic tickets and driver license reinstatement fees, car repairs, divorce costs, utility bills, etc.
We never expected any of these "loans" to be paid back. We're realistic. The Troika et al are not fools - they knew Greece could never repay hundreds of billions of euros in "loans". Yet they put the loans on the books and acted as if they were viable assets. It's criminal.
" It's criminal." Just about summarizes it, ya.
what was your first clue? " It's criminal." the whole fucking international finance and mega bank game is crime and nothing else.
Gifts and loans are often very similar.
In fact many politicians receive loans that are "forgiven" turning them into gifts.
The one that gives the loan bears responsibility for the losses.
That is the ONLY mechanism that makes sure the loans that are made are evaluated properly.
The rules are different for the pleebs. Based upon the rules dictated to us, no, it doesnt make sense. But to their rules, is a no-brainer.
they will print moar, what else can they do? ecb print a coming, direct transfer to majority backstopper-germany; you say what? merkeir than what? some pain coming for the euro cabel of banksters headed by none other than a former goldman sacker. bagholders united? oxi bitcheez...
This is easy, just send Paulson over to there get on his knees and tell um how it's done.
Lots of Laughing emanating from Iceland today.
http://www.forsaetisraduneyti.is/media/Skyrslur/monetary-reform.pdf
sovereign money is a no-brainer.
I'm watching for this to come into play again:
while its not mentioned in the US/UK led controlled MSMedia, the issue re: WWII Reparations is still alive. I'll leave a link to what was said from the West, since the Greek & East version is more pro-Greece. Basically Greece's Claim, on the low end, is more than enough to payoff the entire claim. Key clip/quotes in paste, but read it all: http://www.marketwatch.com/story/why-greek-demands-for-war-reparations-from-germany-make-sense-2015-04-16Why a Greek call for war reparations from Germany might actually make sense
Published: Apr 16, 2015
Germany fought the claims, bringing the case in 2012 all the way to the International Court of The Hague, where the Greek side scored a hollow victory.
The Hague ruled that the Greek party’s right for reparations remains intact but the capacity to execute that right against German property was rejected, due to a legal principle called “sovereign immunity,” which protects one sovereign country from being sued before the court of another country.
The fact that the Greek Supreme Court in 2000, the Italian Supreme Court in 2008 and the International Court three years ago all recognized the right for reparations shows that the issue may be more than a tactic for Greece to wiggle out of its debt obligations.
Germany's counter argument is that Greece's claim is "dumb", that's it
=========================================================
"loan" extracted by force from the Bank of Greece
Germany says that it made good on the Nazi damage done to Greece with a payment in 1960 of 115 million Deutschmarks (roughly $23 million in 2014 dollars), while Greece counters that it was never compensated for wrecked infrastructure or a "loan" extracted by force from the Bank of Greece.
Using World War II reparations from Germany to wipe out Greece's debt is not a new concept: A Greek survivor of the Nazi occupation, who became a leader in the anti-austerity party that propelled the current prime minister into office, floated the idea back in 2012.
Speaking in the midst of a "charm offensive" in Moscow, Tsipras refrained from bringing up the possibility of giving Merkel a discount on Germany's alleged Nazi occupation debt, saying instead that an "honorable compromise" is necessary to assure Greece has access to the bailout funds it needs to keep functioning.
Bad idea.
"Wartime reparations" is how we ended up with Nazi Germany in the first place.
It's not because the Troïka (or whatever it's called now) are idiots that Greeks have to get down to their level.
Here's the biggest news. China warns Russia that it is now at war with the US. China's market crash due to US banks causing it.
http://www.eutimes.net/2015/07/china-warns-russia-that-state-of-war-now-...
The article goes on to say that China will probably win.
Would'nt that be informed? Or are they going to war with Russia soon too??
You like semantics. There are other ways to interpret than yours.
If Hillary says China is culprit in cyber attacks on US; forgetting that US is champion player like its female soccer team in sticking Stuknext and other toxic cyber babies up anybody's and everybody's ass; you can be sure a lot is going on behind the tinsel curtain we call "HFT market plays" and then hidden under the carpet of Media hype.
The Math of Reserve Currency is a Math that is like no other; "our money your problem" is on a Cloud all on its own.
The ECB and EZ know that all too well.
But when Oligarchs fall out then the Titanic becomes a hot spot for people drilling holes in each other's life boats; cutting their own noses to spite their own faces.
You can hear the Gods laff and laff on Varoufakis's game of thrones geopolitical model : Its the Math stupid!
How long will it take for average German taxpayer:
1. To realise how much this is going to cost him?
2. How much that cost been increased over the last few years by Merkel's obsession with the United States of Europe?
And, bearing in mind 2. above:
How long before Merkel (to keep her political career alive), holds a referendum herself (upon which she guarantees to act), topic of referendum 'Does Germany return to the DEM'?
German citizens were never given a choice over EUR...
Watson
.
Anyone know about the derivatives contracts tied to Greece? What will happen with those?
The counter parties will promptly cover all derivative losses with more derivatives.
{SARC ! }
Credit Default Swaps is the answer. We just know that Goldman is up to their eye-balls in CDS's.
When do the U.S. citizens get their referendum?
Correction: "The Biggest Issue Now Is "The Myth"
A 1/3rd haircut on Greek debt is NOT the problem - that's chicken feed. The problem is whether you give into the Greeks and get Spain and other countries queuing up for their own debt relief. Suddenly - all EU debt comes into question and ZIRP is gone forever.
So what happened after the 50% Greek debt haircut in 2011?
http://www.zerohedge.com/news/adolf-merkel-presenting-greek-gratitude-50...
IIIRC, Spain and Italy's economic situation was way worse back then?