Italy Votes, IMF Gives, And EFSF Yields Increase

Tyler Durden's picture

A quick update from Peter Tchir

Italy Votes, IMF Gives, And EFSF Yields Increase

Italy rejected the budget today.  I can't imagine that it is because the opposition wanted more austerity.  That must make the Slovakians even more eager to provide the EFSF with money to buy Italian bonds.

The IMF has declared that they went to Greece (because they had purchased non-refundable tickets) but are going to give our money to Greece even though none of the alleged criteria were met.  How long are countries going to let IMF control their money so whimsically?

Since EFSF will likely be approved, I wanted to see what the Eurozone was going to do with all that "cheap" money.  As you can see clearly from the graph, French bond spreads are widening relative to Germany, and EFSF spreads are widening slightly faster than that.  The EFSF trades as a blended yield of the best guarantors.  That makes sense and is what we have said all along.  As the EFSF issues more debt, I would expect it to trade even wider than the weighted average of the guarantors, because collecting on a guarantee is not always that easy and the weaker countries are getting weaker and and likely to create real losses in the underlying portfolio.

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hambone's picture

We need more cowbell (free money) all around.  Brief appearance of truth and logic are causing gears to stick...more lubrication needed.

BTW - curious the backup in the US long bonds yields...Twisting to higher yields?

falga's picture

Happy Euro bankers buying commodities already

The4thStooge's picture

good for another 2% melt up tomorrow

Ancona's picture

Why do all the posturing and theater if you're not going to hold Greece to teh previous targets? I say fuck it and let them go bankrupt. Same for the rest of them.

NotApplicable's picture

Because, posturing and theater is all that there is. Bankruptcy will not be allowed, as there will be ho clean slates, but instead debt slaves.

fajensen's picture

Maybe because the charletanism that is neoclassical economics cannot contemplate fraud and gaming witout breaking the framework? The Greeks can, Oh Yes - they are going to be all over this show of weakness, they will be bilking it for everything it is worth, and more.

As they well should, because we know that only after every option and evasion has run out, the correct action will be taken: Banks will be killed, the survivors regulated.

Hansel's picture

"How long are countries going to let IMF control their money so whimsically?"

Until the cost of production of "money" exceeds the cost of the bailouts.  It's the free market at work.

unionbroker's picture

if this was the Titanic the passengers would have died of starvation or old age before they drowned

disabledvet's picture

"Saigon. Shit. And everyday...Charlie's in the jungle. Gettin' STRONGER."

alien-IQ's picture

oh happy day. I guess this means it's time to go John Holmes balls deep long?

fajensen's picture

Hmm - This market doesn't looks as good as Seka!

slewie the pi-rat's picture

in unrelated pricing newz:  corn is up 6% on the day; soybeans, 5%;  wheat only 3%

coffee is down 15%, and 20% on the week. 

we cut tyler off coffee and the fuking market crashed, BiCheZ!

Ray745's picture

Italy actually voted down the 2010 budget, which is hysterical, because it is simply a record of what was spent and received, it is facts and can't be changed, and yet they voted it down haha.


fajensen's picture

Italians invented accounting - you can bet it can be changed, and it was, which is why the Italian parliamentarians don't want any part of it (Well, the ones that did not get a cut, anyway)

PulauHantu29's picture

Slovakains are smarter then you think.

Where did you say Slovakia is? Is it a country now?

Dick Darlington's picture

S&P clearly setting up to downgrade Spain. It has dg'd some of the autonomous communities recently, some of the "stronger" cajas and has the sovereign rating on watch neg since april. Spain is a big contributor to the "bail out machinery" which is supposed to bail out Spain itself, just like Italy. The circular nature of the ridiculous "perception management monster CDO" is so obvious that i don't know whether to laugh or cry watching the "investors" and bankers pricing the bonds issued so far, esp when there's shitload of bonds to be issued in the future. I have only one thing to say to the eurofanatics in charge of the Titanic: FUBAR!!!

10-11 13:06: S&P says Spain's economy growth prospects are increasingly...

10-11 13:06: S&P downgrades Banco de Sabadell to A- from A; Outlook negative

10-11 13:06: Banco Popolar Espanol on watch negative by S&P

10-11 13:39: Spain won't create net employment in Q4 according to a minister

10-11 14:45: Banco Popular Espanol cut to BBB+ from A- by Fitch

10-11 14:45: Fitch cuts Banco Santander long-term issuer default rating to AA-...

Black Forest's picture

Did anyone notice this ECB announcement I just read on a German news channel? "Extraordinarily voluminous Gold sale by a central bank of the Euro zone". Greece? Portugal? Belgium?




mn1's picture

dont fight it just buy euro and the market, no point in being negative

andyupnorth's picture

Debt = Profit (from the cartoon movie "The American Dream")

Banks (including the European Central Bank) is stuck with that ideology, even if it drives them and everyone around them off a cliff!

Central Banks will NEVER say no to lending more to Greece or anyone else because their casino is rigged... until things get unhinged.

SheepDog-One's picture

So whats the point of the article and graph, that nothing much happened at all?

tekhneek's picture

Point of graph: does not matter what happens from here on out. Markets will melt up.

Move along, nothing to see here...

Big Ben's picture

The IMF and World Bank are basically ways to bail out bankers after their loans go bad. Banding a bunch of countries together and spewing a lot of high-minded talk about "promoting international development" helps to disguise their true function.

Bankers make risky loans to countries at relatively high interest rates, then book big profits and pay themselves huge bonuses until the debtor countries are unable to make the interest payments. Then the IMF comes in and bails out the bankers out while forcing draconian austerity measures on the victim countries.

The IMF and World Bank are just one of the methods that bankers use to milk the taxpayers. If the taxpayers of the US had any sense, they would demand that we withdraw from both organizations.

silverserfer's picture

Next years running of the bulls will be replaced by grizzly bears imported from alaska in order to discourage short selling and to instill fear in the angry youth before they implement austerity measures.

topshelfstuff's picture

The of the IMF riding to the resuue with bags filled with SDR's may play in the US/UK led WestBloc nations, but the EastBloc isn't falling for it. No coincidenc that an SDR is comprised of the USD, YEN, EURO, BritPound, the same 4 doing all the high-speed non-stop Printing and Digital Money out of thin air.

<<< The SDR is based on a basket of international currencies comprising the U.S. dollar, Japanese yen, euro and pound sterling. It is not a currency, nor a claim on the IMF, but is potentially a claim on freely usable currencies of IMF members. The value of the SDR is not directly determined by supply and demand in the market, but is set daily by the IMF on the basis of market exchange rates between the currencies included in the SDR basket.>>>

America and Europe: Saving the Rich and Losing the Economy by Dr. Paul Craig Roberts ............

............In other words, Europe under the EU and Jean-Claude Trichet is a return to the most extreme form of feudalism in which a handful of rich are pampered at the expense of everyone else.

This is what economic policy in the West has become--a tool of the wealthy used to enrich themselves by spreading poverty among the rest of the population.

On September 21 the Federal Reserve announced a modified QE 3.


and I might as well toss this one in too, just some of the various types of QE, some under an alias, and just those acknowledged, basically Monopoy Money


8:39PM BST 06 Oct 2011

The Bank of England has done more QE, implying that it thinks the banking sector may be about to collapse, inducing money stock contraction.

If the banks do fail this time, there is (mercifully) virtually no chance of the Government recapitalizing them yet again (on top of the bail-outs of 2008, 2009, and the four, 4, "sovereign debt" bailouts of 2010 and 2011).

[ QE/3 under an Alias ]

The US form has come to be called "credit easing", because its function was to intervene in specific credit markets – believed to be causing blockages in the monetary transmission mechanism arising from market failures – and reduce interest rates.

Credit easing was regarded as a failure in the US. So the "QE2" programme switched instead to the buying of government bonds, just like British QE.

Buck Johnson's picture

When this ends, it will truly end badly for everybody.  I really can't wait for the system to go down.

Dailo's picture

There we go guys! As I said before: Look for a Bear market! That honeys good, bears all the way biatchess.

Schmuck Raker's picture

Wat tiz deec teen: "Real Losses"?