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Is Germany's CDS Pricing A 6% EUR Devaluation?
Whether the market is expecting more significant deterioration with the European debacle or somewhat perversely a rapid-response by the ECB (with its flood of EUR overwhelming USD), it appears the USD-denominated Germany CDS spreads are once again pricing in notable devaluation in the EURUSD exchange rate. Given the US and (almost explicitly given its dominance) Germany are more currency issuer than user, default risk is not the main driver of the CDS spread but currency devaluation (some might call it inflation) is much more of a factor. After EURUSD and German CDS being tightly coupled for months, last summer-to-fall's Eurocalypse disconnected them as the CDS market led exchange-rate lower. It seems with the current dislocation that USD-denominated (and EUR paying) German CDS are expecting EURUSD at around 1.1750 - or a 6% devaluation of the EUR. With today's dismal confidence data seeming enough bad data to spark QE3 hopes over here, we can only imagine the relative size of print-fest the two central banks will need to create in order for CDS to be correct.
The post LTRO2 few weeks seemed to bring CDS and FX rates back into a calm place together (similar to the first half of 2011) but the escalation of Greece (elections) and Spain (banking reality) seems to have forced CDS to price in more devaluation (printing) risk once again...
An alternative perspective is that of Germany's real risk of being overwhelmed by its TARGET2 demands and real default risk rising for the heart of Europe as it bears the load.
Chart: Bloomberg
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Chairsatan won't be able to print fast enough at 1.17....like free booze and hookers.
Who has the bigger printing press and the most ink?
The Squid and the Whale are pricing in Target2 risk. A few Muppets on the other side of the trade. Nothing to see here. Move on.
I'm hearing whispers of mid June...
Which coincides with what I have been saying about a summer time Grexit so the tourists can return in July/August
Grexit will be the excuse, not until then.... And we all know the Grexit is Bushes fault.
Pricing in. FTFY
not according to the central bank junkies...
When the printing starts my guess is the fed needs to print about 2 trillion to support these levels and the ECB will have to print about 3.5 trillion.
I've estimated the Fed needs about $3.5-$4.0 Trillion in add'l ponzi to keep the house going for a few more months...
The ECB will respond with $5+ T, followed by Japan with $2T, China with $3T. We're talking about $14 T in total add'l global ponzi money which once it becomes monetized-notmonetized (LMAO) will bring gold to $4000/oz real quick...
It was Germany that took huge loans from the American FED. It was Germany that put the markets up to buying ownership shares of the European Central Bank, which has burdened the States with sins. It was this State that lured the rest of the Europeans into a dissolute life so that it can pass the burden of its debts, hence its own sin to them. The current epidemic of debt crisis has begun from Germany, it is just that it kept its disease a secret and at the expense of everybody else, and now that it is in a better shape, it has gone hunting in order to take advantage of the disease it itself had created. The first State to have sickened has gone hunting for the one who was most weak in dealing with the disease, and that was Greece. If Germany had not been over-indebted, the European states would have never been vulnerable to the markets’ attacks. If Germany had not been over-indebted the European states would have never been forced to mortgage their existence so that Germany’s bosses can get their money.
These hypocrites know the truth and still attack everybody else. This attack, though, is not an easy task. It requires a specific manipulation but mostly it requires specific leadership which will be able to see this through; a leadership of brutes who will restore the nightmare of previous Nazis; a leadership of the driving force of collective responsibility who led to all kinds of Holocausts. The Germans had to put new life into this nightmare anew, and collective responsibility was that nightmare.
Things are simple. German leaders could not set in course the German policy unless they had been chosen according to the special criteria such a homicidal mission required. An ordinary person cannot start a witch hunt game. An everyday person who has a family, friends and social sensitivities cannot play this game and survive a clear conscience. He cannot do it if he is a person who loves his companion, children, friends or neighbors; if he is a person who knows that the powers he turns against States are considerable enough to literary destroy people.
The Chancellor has been that kind of loveless and sex-starved living creature for decades. Ageing is on her side because it puts her in the same place with the rest of the women, who tend towards their biological death. This creature is aware of the fact that she only exists because powerful people allow it. Ever since she has chosen to become a Stasi mole she is willing to do anything she is asked so that her life continues to have meaning. This so called woman has wanted to hurt the Greece of Aphrodite.
Schäuble is her close associate and second in command of the German leadership. He is a crippled man who obviously hates humans. He is a crippled misanthropist. Why are we being so cruel to a crippled man? Why don’t we respect and fear what it means to be a crippled, since it concerns all of us equally? The answer is simple. A handicap is the most tragic thing that can happen to an ordinary person. It is the ultimate unfortunate life event. On the contrary, it is a fortunate event for Schäuble. He should have been dead and he is lucky to be crippled. He should be melting among worms but instead he still wanders about among us, even in a wheelchair. A fellow man has paid the price so that Schäuble ends up dead but he is still alive, even if handicapped.
Vestervele is third in command of the German leadership and he is a screaming queen, certain to be completely controlled and to need power so that his life continues to have meaning. He is among the most famous regulars in Berlin gay bars, to say the least. It is certain that many of the DVDs with his sexual stunts have a special place on some selves in the Secret Service. We really relished the moment when he attacked the President of Bellorusia and the latter made him eat his words when he answered that: “It is better to be a fascist than a faggot.” Berlin was left fully exposed.
The Eastern gates of Europe at risk: How Northern Europe shoots itself in the leg
http://eamb-ydrohoos.blogspot.com/2012/05/greece-among-salem-witches.html
Authored by Panagiotis Traianou
No the problem is that Greeks are lazy and don't pay taxes. Thought this was generally accepted knowledge.
Well yes, you are absolutely wrong.
This is what mass media tell you.
How about all IMF "slaves" that give orders
To the Greek people? Do they pay taxes? Does C. Lagarde pays any taxes?
How about companies in The Netherlands? Do they pay taxes? Or because tax evasion there is legalized (like hash and prostitution) does not count?
Get better informed please.
Via Ha Joon Chang's Bad Samaritans:
Nice reading!...I wonder if one day.... The Germánicos will came back to Greece, at least for a nice cup of coffee?....Saludos
I believe we are about to see a Major Occurance, Globally. Seeing an article appear in China's news adds weight. Plus, its what we aren't told that usually matters most. I'll paste 2 pieces and add my comment. I don't know how to start a write-up, but if someone could about this, please do. Its importance underlined by it not being in the MSM:
http://www.chinadaily.com.cn/china/2012-05/29/content_15415934.htm
China to start direct yuan-yen tradingUpdated: 2012-05-29 16:01
BEIJING - China on Tuesday announced that direct trading of its currency against the Japanese yen will begin later this week, bringing the yuan one step closer to becoming a truly global currency.
Authorized by the country's central bank, the trading marks the first time for China to allow a major currency other than the US dollar to be traded directly against the Chinese currency RMB, or the yuan.
As part of the efforts between China and Japan to strengthen cooperation in developing the financial market, the move serves as an important means of promoting direct yuan-yen trading, the People's Bank of China said in a statement on its website.
Yuan-yen trading will start on China's interbank foreign exchange market on Friday, according to the China Foreign Exchange Trade System, the market operator.
The central parity rate of the yuan against the yen will be based on the average price of offers made by registered dealers before the opening of the market each business day.
With the greenback as an intermediate currency, the yuan is currently allowed to be traded against eight other currencies on the market, including the euro, British pound, Hong Kong dollar, Japanese yen, Malaysian ringgit, Russian ruble, Australian dollar and Canadian dollar.
As China overtook Japan as the world's second-largest economy in 2010, the move is expected to boost trade between the two leading economies in the wake of the eurozone's economic downturns, and more importantly, promote greater internationalization of the yuan, analysts said.
"A directly-formed yuan-yen exchange rate will help enterprises mitigate risks brought by a fluctuating US dollar and reduce exchange losses for Chinese and Japanese companies," said Ding Zhijie, dean of the School of Banking and Finance with the University of International Business and Economics.
Liu Dongliang, an analyst with the China Merchants Bank, said although the new system doesn't allow free convertibility, it makes way for simplified transactions and lower transaction costs.
Japan ranks the fourth among China's trading partners after the European Union, the United States and the Association of Southeast Asian Nations, while China has been Japan's largest trading partner for the past three consecutive years. Bilateral trade rose 14.3 percent year-on-year to reach $344.9 billion in 2011.
"It is also a crucial step in the drive to make the yuan 'go-global,' which indicates China is trying to cut the yuan's reliance on the greenback while making it a presence in the international currency market," said Zhang Bin, a researcher at the Institute of Finance and Trade Economics under the Chinese Academy of Social Sciences.
The announced introduction of direct yuan-yen trading shows the important role of the offshore RMB market in Tokyo, moving the yuan closer to a global currency, Liu Dongliang said, expecting the system to be expanded to more currencies, including the euro and British pound.
China has been taking steps to open its financial market and internationalize the yuan at the same time.
To promote the use of the yuan, the government this year has raised the investment quotas for its Qualified Foreign Institutional Investors scheme and RMB Qualified Foreign Institutional Investors pilot program, both targeted to widen investment channels for overseas capital on the Chinese mainland as capital accounts are still controlled in the country.
Since the onset of the 2008 global financial crisis, China has signed currency swap agreements worth more than 1.5 trillion yuan ($238 billion) with a dozen of countries, including the Republic of Korea and Malaysia.
[[[ I think a big part of the reason for Japan and the YEN is to help Japan more easily remove the West [US control] Uniform they've worn ]]]
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On this one, of course they wouldn't want the American People to know that such Wage Increases happen, have been happening year afteryear, plus The People were assured that their wages could even get mid-year Increases, always above the Inflation rate. Its not just China, its Asia, most all S. America [you would have to gogle [search] it specifically. For example Venezuela got a 25% boost this year, Bolivia, Chile, etc...an estimate was for about 140 countries. The potential for this group to begin Trading bypasing the USD is getting nearer. Check Regional Groups like ASEAN 3+10, MERCOSUR, etc.
http://www.chinadaily.com.cn/china/2012-05/29/content_15416788.htm
Home / China / Economy Chinese wages see double-digit growthUpdated: 2012-05-29 17:11
BEIJING - The average annual salaries of urban Chinese workers at non-private companies hit 42,452 yuan ($6,717) in 2011, up 14.3 percent year on year, statistical authorities announced Tuesday.
After taking inflation into account, wages actually grew by about 8.5 percent, according to data from the National Bureau of Statistics (NBS).
Meanwhile, the annual salaries of workers at privately-owned businesses in urban regions grew 12.3 percent (after deducting factor of inflation) to 24,556 yuan in 2011, NBS data showed.
The data was based on a survey of 1.48 million non-privately owned organizations and 620,000 private companies, the NBS said.
Wages for workers in the nation's more developed eastern regions and major cities were the highest, while the central provinces of Anhui, Henan and Hubei ranked lowest, according to the NBS.
The finance, telecommunication, computer service and software development sectors offered the highest salaries, the NBS said.
Feng Nailin, director of the population and employment statistics department under the NBS, said last year's stable and rapid economic growth helped buoy wages.
Preliminary data showed that the country's economic output expanded 9.2 percent in 2011 to 47.16 trillion yuan.
The salary increase came after more than two-thirds of provincial governments hiked their minimum wages by an average of 22 percent last year, Feng said.
Too many short positions for a softer EURUSD.
I hear ya, and I would generally agree, but today should have been the mother of euro short squeezes, they dont get it today, than its headed lower....
6% is not enough...they need at least a 29% devaluation...
to parity and beyond.....
Euro is in dive mode! as I type.............
http://www.nsefx.com/real-time-forex-charts/eur-usd-chart.html
Voyage to the bottom of the chart...
when considerind EUR devaluuation this info might help
Forex4you Technical Analysis http://www.traddr.com/profiles/blogs/forex4you-technical-analysis-29-may-2012
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