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Italy-Bund Spread Passes 450 bps
While we have commented on the technical minutia of the LCH's margining rules and their blended AA benchmark, 450bps over Bunds remains a clear line in the sand in the market's mind. With Italy ever so graciously accepting (and if we believe the headlines - requesting!!) IMF's observation/supervision, it seems real money continues to leave the country's bonds in droves. With 10Y BTP yields breaking 6.3% today, the spread over Bunds just passed 450bps once again - will Draghi step up to the plate?
Chart: Bloomberg
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It's just a liquidity problem compounded by a confidence issue due to those nasty speculators. Other than that, nothing to see here either....:)
The Careless Whisper Morning Wake-Up Call
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Got Spaghetti?
this should be the only issue that cnbc, cnn, the guardian, the telegrapg, wsj, etc are talking about at this moment, but as usual zerohedge is well ahead of the curve.
there is no agreement on an spiv or even an increase in imf funds; so much for 1 trillion in efsf funds.
back to reality
and how is the dow not at or below 10600 where it was a month ago when there was the prospect for some kind of legitimate can kicking action. now theres nothing... and were over 12000.
2.5% GDP print
Now that sov CDSs got "de-flowered," the vigilantes have only the Bund spreads and the raw bases to fuck.
Doesn't matter, all paper is going to zero and no one is going to pay out anything. At some point some one needs to let those vigilantes know that they might want to try and fuck a real women.
theres 2 reasons why all paper isn't going to zero.
1st all currencies are priced relative to eachother. all currencies are being devalued, except the remnimbi, but people will continue to flock between them for some time. this is why the euro and dollar are still within a several year trading band, but gold is regularily setting new record highs.
2nd its not possible for everyone on earth to own silver and gold and use it for exchange, nor is a barter system possible in a modern economy with such a variety of goods and services. thus, there will at some point be a return to a gold standard, but you'll still be trading paper.
that being said gold will outperform all other assets classes for some time to come
Maybe the suckers realized there's only one exit and the theatre was beginning to smell funny?
Bartender! Better make that bailout a double!
The Bailout:
2 Parts Goldschlager
1 Part Cyanide
Served as a suppository.
Strain out the gold and add a few torn up 100 trillion Zimbabwe dollar bills.
Can he spend european money to save his own country?
Gold is money.
It only just occurred to you?
Maybe he wanted to say: GOLD IS CURRENCY, and you can still buy it with "money"
followed up with a slight pause, a deep breath and a thoughtful forefinger to the chin..."even with our money" comment even though no one even asked that question.
Gold is wealth.
Damn impractical as currency for now.
No, gold is a CLAIM on wealth. Claims on wealth are never impractical currency, so long as the issuer has not defaulted (hard for all of humanity to default at once--only reasonable way is for everyone to die, rendering money worthless).
No it's not. Ben said so,and I believe in everything Ben says because he promised to throw money out of helicopters to me some day.
Oh yeah the great pumpkin forgot to leave me any candy this year. Must have been an oversight.
Bullish
Draghi will step up of course, after all, it's his team. The Squid is hungry.
And now back to our main story, the weather in Athens today should be mostly cloudy with a high of 80 degrees.
Nice gap fill yesterday on the DAX chart.
Slightly OT (not really since everyone here, me included, loves PMs), but I've been wondering.
Let's say gold and silver take off, margins hikes no longer work, so the gov't decides to "outlaw" PMs or puts a 50%+ tax on all gold/silver sales. What would happen in that case? Would local coin dealers close up shop? Would gold and silver become extremely scarce?
The one thing I hate about owning physical PMs is that the gov't still has too much say in the price, and if 90%+ of people who are invested in the status quo (obviously includes politicians, but also ppl collecting benefits and most random idiots) adopt the next fiat currency after the USD fails, gold and silver still won't reflect their "true" value. Who knows how long this game can continue, it may last another 40, 50, 75, 100 years (not the USD per se, but the fiat system itself.) Thoughts?
Unless 90% of the population own physical PMs in a form that can be easily spent as currency, PMs will not recirculate.
Instead the 90% will make sure those with PMs have their wealth socialized.
What you want is stable but high inflation, with fiat still circulating.
Too much risk in hyperinflation scenarios, social breakdown sucks for everyone.
And that's the reason I hate the gov't and their bullshit fiat system. Part of the value in PMs is that they make great money, a great medium of exchange, are highly divisible, recognizable, store of value, etc. If everyone is just holding their gold, it might be worth a lot, but you also might risk a lot by trying to cash it in, which you may need to do to convert it to fiat and pay a bill/buy food or something if things get really bad. If the local grocer doesn't take silver/gold, it certainly doesn't make PMs worthless, but it does make them worth less.
Think about marijuana. It will always have some value, but there is also a risk every time you buy/sell (grow) it of government intervention and possible fines/jail time. Do we really want gold/silver becoming the next pot? Maybe, maybe not. I'd rather just have it trade freely and see who will accept my gold and who won't.
Socialize that which is already socialized--the central bank reserves.
We are probably heading either for a nasty but short war, or a new world order with a new currency backed by real things. In first case gold will not help you much, in other it may help a lot as long as you get to keep it.
sell all your gold and buy canadian real estate, it only goes up!
FTW bitchez!
Especially in Vancouver, Toronto and Calgary, those places can never go down... never... and I really really mean never...
I mean who doesn't want to pay two million for a hundred year old condemned house?
+1
But I'm still 100% into PMs.
Its the 401K I worry most about...I'd take the extra 10% tax when/if necessary to go physical/storage.
Um.... by the time that is obvious, it will be far too late.
we barter until we restore our constitutional republic?
You could make that same argument for just about anything. The Government can do whatever it deems necessary for its own preservation until it can't. That's why complex societies ALWAYS collapse.
Must read book: The Collapse of Complex Societies by Joseph Tainter
i'm not sure creating a black market in silver and gold is a good idea. would it include jewelry? how about flatware? it definitely would be "causii bellum" for Europe if it were to happen there. and just as obviously the price would soar...as well as the value. it is one way of creating a gold standard of course...unofficial...of course.
What a freaking circus this all is. And people still think we have honest markets.
Ouch; Fake Toilet Paper, Made In China:
the sequel: fingers run through it!
Oh well, you might as well enjoy the feeling. Just don't smell you finger or poke your nose with it...
At least they use paper.
In some parts of south east asia, you dont shake, eat or serve food with your left.
No...A River Runs Through It...
But, but, but ...
http://silverdoctors.blogspot.com/2011/11/major-pm-smash-imminent-cme-pr...
This doesnt tell me whether its going to be a +2% equities day or a -2% day...its all that really matters after all.
Crooks control the Govt's
Crooks are the bankers.
Take your money out of the banks while you can.
Yes Gold n Silver will have value because they are always welcome in Asia, anytime. Value cannot go away.
Umm, not to rain on the parade but... from the chart the spread has been over 450 bp three times this month.
Why is this time more significant than the last two? Or is this third time demonstrating that there is no going back and there needs to be a downgrade?
So many cluster fucks, so few logical market actions...
We are in the stocks are the safe haven meme now, didnt you get the memo?
Wonder when the media shifts back to USTs or else.
Hmmmmm, how much in USTs to be sold when?
it's significant because yields are once again hitting the threshold where the ECB would have to step in...Judging by Draghi's conference yesterday he basically said buying bonds is a waste of time and won't solve anything, which is very true. BUt if things get out of hand quickly they won't have a choice. you can't(not at this point anyways) enact structural reforms in Italy in a few days, so the ECB will as ZH says have to step up to the plate. will they? watch the yield.
http://www.bloomberg.com/quote/GBTPGR10:IND
I believe Tyler was predicting the next intervention... There seems to be a pattern with 450 as a ceiling.... The ECB will eventually learn you can't fight Mother Nature indefinitely... One of these days it'll bust through the ceiling and all hell will break loose...
Margin calls were supposed to be triggered if it CLOSED above 450bps. But now the benchmark has been changed.
just noticed this too...been checking the 10Yr yield here and there and seems like it's jumping this morning. Banks have to raise capital somehow right? ha
http://www.bloomberg.com/quote/GBTPGR10:IND
Yep, that is going to cause some problems. I am sure TPTB will beat the yield back down with some back-door bullshit printing or mark to fantasy accounting.
Fuck it, I am waiting for 500bp before I call disaster.
666 for me. If it is not the number of the beast it is not a disaster.
http://www.youtube.com/watch?v=7-iRf9AWoyE
Wait until Draghi and his Qtr point rate cut kick in.. just wait. Like a BB fired from a cannon.
Lot's of off topic links here. How about a more relevant one:
G20 Proposes "Special Currency" for EU Bailouthttp://wallstcheatsheet.com/breaking-news/wall-street-watch-us-unemployment-falls-g20-proposes-special-currency-for-eu-bailout.html
debunked by TD already.
Well Mr. Draghi did predict a "mild recession"...we'll see just how "mild" it is. Awful cranky "center" all of a sudden. "Temper, temper mon capitain" as Q would say.