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The Real Dark Horse - S&P's Mass Downgrade FAQ May Have Just Hobbled The European Sovereign Debt Market
All your questions about the historic European downgrade should be answered after reading the following FAQ. Or so S&P believes. Ironically, it does an admirable job, because the following presentation successfully manages to negate years of endless lies and propaganda by Europe's incompetent and corrupt klepocrarts, and lays out the true terrifying perspective currently splayed out before the eurozone better than most analyses we have seen to date. Namely that the failed experiment is coming to an end. And since the Eurozone's idiotic foundation was laid out by the same breed of central planning academic wizards who thought that Keynesianism was a great idea (and continue to determine the fate of the world out of their small corner office in the Marriner Eccles building), the imminent downfall of Europe will only precipitate the final unraveling of the shaman "economic" religion that has taken the world to the brink of utter financial collapse and, gradually, world war.
Here are the key take home messages from the FAQ (source):
- We believe that as long as uncertainty about the bond buyers at primary auctions remains, the risk of a deepening of the crisis remains a real one. These risks could be exacerbated should renewed policy disagreements among European policymakers emerge or the Greek debt restructuring lead to an outcome that further discourages financial investors to add to their positions in peripheral sovereign securities.
- The outcomes from the EU summit on Dec. 9, 2011, and subsequent statements from policymakers, lead us to believe that the agreement reached has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems. According to our assessment, the political agreement reached at the summit did not contain significant new initiatives to address the near-term funding challenges that have engulfed the eurozone.
- Instead, it focuses on what we consider to be a one-sided approach by emphasizing fiscal austerity without a strong and consistent program to raise the growth potential of the economies in the eurozone.
- Financial solidarity among member states appears to us to be insufficient to prevent prolonged funding uncertainties. Specifically, we believe that the current crisis management tools may not be adequate to restore lasting confidence in the creditworthiness of large eurozone members such as Italy and Spain. Nor do we think they are likely to instill sufficient confidence in these sovereigns' ability to address potential financial system stresses in their jurisdiction. In such a setting, the prospects of effectively intervening in the feedback loop between sovereign and financial sector risk are in our opinion weak.
- Despite these encouraging developments on domestic policy, we downgraded both sovereigns by two notches. This is due to our opinion that Italy and Spain are particularly prone to the risk of a sudden deterioration in market conditions.
- While we see a lack of fiscal prudence as having been a major contributing factor to high public debt levels in some countries, such as Greece, we believe that the key underlying issue for the eurozone as a whole is one of a growing divergence in competitiveness between the core and the so-called "periphery."
- We believe that the risk of a credit crunch remains real in a number of countries as economic conditions weaken and banks continue to consolidate their balance sheets in light of tighter capital requirements and poor market conditions in which to raise additional equity
- We estimate a 40% probability that a deeper and more prolonged recession could hit the eurozone, with a likely reduction of economic activity of 1.5% in 2012.
- We believe an even deeper and more prolonged slump cannot be entirely excluded. We expect this weak macroeconomic outlook if realized would complicate the implementation of budget plans, with slippages to be expected, which would likely further dampen confidence and potentially deepen the recession, as funding and credit is curtailed and the private sector increases precautionary savings.
- Reports indicate that many investors had hoped that a breakthrough at the December summit would have enticed the ECB to step up its direct government bond purchases in the secondary market through its Security Market Program (SMP). However, these hopes were quickly deflated as it became clearer that the ECB would prefer to provide banks with unlimited funding, partly with the expectation that those liquid funds in banks' balance sheets would find their way into primary sovereign bond auctions. This indirect way of supporting the sovereign bond market may yet be successful, but we believe that banks may remain cautious when being faced with primary sovereign offerings, as most financial institutions have aimed at shrinking their balance sheets by running down security portfolios in order to comply with higher capital requirements, which become effective in 2012.
Shockingly, S&P dares to challenge not only the status quo, but "powerful national interest groups" - easily the first time we have seen something like this out of a "status quo" organization, let alone a rating agency.
- Governments are also aiming to put greater focus on growth-enhancing structural measures. While these may contribute positively to a lasting solution of the current crisis, we believe they could also run counter to powerful national interest groups, whose resistance could potentially jeopardize the reform momentum and impede the recovery of market confidence.
Why it is all a Catch 22 and why the LTRO "carry trade" has failed:
- Recent Italian and other primary auctions suggest to us, however, that banks and other investors may still only be willing to lend longer term to governments facing market pressure if they are offered interest rates that, all other things being equal, will make fiscal consolidation harder to achieve.
Let's not forget the EFSF:
- We are currently assessing the credit implications of today's eurozone sovereign downgrades on those institutions and will publish our updated credit view in the coming days.
And probably the most important observation of the night:
- As we noted previously, we expect eurozone policymakers will accord ESM de-facto preferred creditor status in the event of a eurozone sovereign default. We believe that the prospect of subordination to a large creditor, which would have a key role in any future debt rescheduling, would make a lasting contribution to the rise in long-term government bond yields of lower-rated eurozone sovereigns and may reduce their future market access.
The S&P itself warns that the entire basis of the European bailout will create a split market in sovereign bonds, in which pari passu treatment will be a thing of the past, and in which buyers will have no clue what treatment awaits them in a worst case scenario. If anyone thought that ISDA's idiotic attempt to kill the CDS market caused a collapse in demand for sovereign paper, just wait until potential buyers comprehend they could be primed every step of the way and the market is effectively two tier.
S&P may have just killed the European sovereign market by saying out loud what only "fringe bloggers" dared suggest in the past.
From S&P
FRANKFURT (Standard & Poor's) Jan. 13, 2012--Standard & Poor's Ratings Services today completed its review of its ratings on 16 eurozone sovereigns, resulting in downgrades for nine eurozone sovereigns and affirmations of the ratings on seven others.
We have lowered the long-term ratings on Cyprus, Italy, Portugal, and Spain by two notches; lowered the long-term ratings on Austria, France, Malta, the Slovak Republic, and Slovenia, by one notch; and affirmed the long-term ratings on Belgium, Estonia, Finland, Germany, Ireland, Luxembourg, and the Netherlands. All ratings on the 16 sovereigns have been removed from CreditWatch where they were placed with negative implications on Dec. 5, 2011 (except for Cyprus, which was first placed on CreditWatch on Aug. 12, 2011).
The outlooks on our long-term ratings on all but two of the 16 eurozone sovereigns are negative; the outlooks on the long-term ratings on Germany and Slovakia are stable. See "Standard & Poor's Takes Various Rating Actions On 16 Eurozone Sovereign Governments," published today for full details.
This report addresses questions that we anticipate market participants might ask in connection with our rating actions today.
WHAT HAS PROMPTED THE DOWNGRADES?
Today's rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone. In our view, these stresses include: (1) tightening credit conditions, (2) an increase in risk premiums for a widening group of eurozone issuers, (3) a simultaneous attempt to delever by governments and households, (4) weakening economic growth prospects, and (5) an open and prolonged dispute among European policymakers over the proper approach to address challenges.
The outcomes from the EU summit on Dec. 9, 2011, and subsequent statements from policymakers lead us to believe that the agreement reached has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems. In our opinion, the political agreement does not supply sufficient additional resources or operational flexibility to bolster European rescue operations, or extend enough support for those eurozone sovereigns subjected to heightened market pressures.
We also believe that the agreement is predicated on only a partial recognition of the source of the crisis: that the current financial turmoil stems primarily from fiscal profligacy at the periphery of the eurozone. In our view, however, the financial problems facing the eurozone are as much a consequence of rising external imbalances and divergences in competitiveness between the EMU's core and the so-called "periphery". As such, we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating, as domestic demand falls in line with consumers' rising concerns about job security and disposable incomes, eroding national tax revenues.
Accordingly, in line with our published sovereign criteria, we have adjusted downward our political scores (one of the five key factors in our criteria) for those eurozone sovereigns we had previously scored in our two highest categories. This reflects our view that the effectiveness, stability, and predictability of European policymaking and political institutions have not been as strong as we believe are called for by the severity of a broadening and deepening financial crisis in the eurozone.
In addition to our assessment of the policy response to the crisis, downgrades in some countries have also been triggered by external risks. In our view, it is increasingly likely that refinancing costs for certain countries may remain elevated, that credit availability and economic growth may further decelerate, and that pressure on financing conditions may persist. Accordingly, for those sovereigns we consider most at risk of an economic downturn and deteriorating funding conditions, for example due to their large cross-border financing needs, we have adjusted our external score downward.
WHY WERE SOME EUROZONE SOVEREIGNS DOWNGRADED BY TWO NOTCHES AND OTHERS BY ONE NOTCH?
We believe that not all sovereigns are equally vulnerable to the possible extension and intensification of the financial crisis. Those we consider most at risk of an economic downturn and deteriorating funding conditions, for example due to the large cross-border financing needs of its governments or financial sectors, have been downgraded by two notches, as we lowered the political score and/or the external score reflecting our view of the risk of a marked deterioration in the country's external financing.
On the other hand, we affirmed the ratings of sovereigns which we believe are likely to be more resilient at their current rating level in light of their relatively strong external positions and less leveraged public and private sectors. These credit strengths remain robust enough, in our opinion, to neutralize the potential ratings impact from the lowering of our political score.
In this context, we would note that the ratings on the eurozone sovereigns remain at comparatively high levels, with only three below investment grade (Portugal, Cyprus, and Greece). Historically, investment-grade rated sovereigns have experienced very low default rates. From 1975 to 2010, the 15-year cumulative default rate for sovereigns rated in investment grades was 1.02%, and 0.00% for sovereigns rated in the 'A' category or higher.
WHY DO THE RATINGS ON MOST OF THESE SOVEREIGNS HAVE NEGATIVE OUTLOOKS?
For those sovereigns with negative outlooks, we believe that downside risks persist and that a more adverse economic and financial environment could erode their relative strengths within the next year or two to a degree that in our view could warrant a further downward revision of their long-term ratings. We believe that the main downside risks that could affect eurozone sovereigns to various degrees are related to the possibility of further significant fiscal deterioration as a consequence of a more recessionary macroeconomic environment and/or vulnerabilities to further intensification and broadening of risk aversion among investors, jeopardizing funding access at sustainable rates. A more severe financial and economic downturn than we currently envisage (see "Sovereign Risk Indicators," published Dec. 28, 2011) could also lead to rising stress levels in the European banking system, potentially leading to additional fiscal costs for the sovereigns through various bank workout or recapitalization programs. Furthermore, we believe that there is a risk that reform fatigue could be mounting, especially in those countries that have experienced deep recessions and where growth prospects remain bleak, which could eventually lead to lower levels of predictability of policy orientation, potentially leading to another downward adjustment of the political score, which might lead to lower ratings.
We believe that important risks related to potential near-term deterioration of credit conditions remain for a number of sovereigns. This belief is based on what we see as the sovereigns' very substantial financing needs in early 2012, the risk of further downward revisions of economic growth expectations, and the challenge to maintain political support for unpopular and possibly more severe austerity measures, as fiscal targets are endangered by macroeconomic headwinds. Governments are also aiming to put greater focus on growth-enhancing structural measures. While these may contribute positively to a lasting solution of the current crisis, we believe they could also run counter to powerful national interest groups, whose resistance could potentially jeopardize the reform momentum and impede the recovery of market confidence. In our view, it also remains to be seen whether European banks will indeed use the ample term funding provided by the ECB (see below) to purchase newly issued sovereign bonds of governments under financial stress. We believe that as long as uncertainty about the bond buyers at primary auctions remains, the risk of a deepening of the crisis remains a real one. These risks could be exacerbated should renewed policy disagreements among European policymakers emerge or the Greek debt restructuring lead to an outcome that further discourages financial investors to add to their positions in peripheral sovereign securities.
For two sovereigns, Germany and Slovakia, we concluded that downside scenarios that could lead to a lowering of the relevant credit scores and the sovereign ratings carry a likelihood of less than one-in-three during 2012 or 2013. Accordingly we have assigned a stable outlook.
HOW DO WE INTERPRET THE CONCLUSIONS OF THE DECEMBER EUROPEAN SUMMIT?
We have previously stated our belief that an effective strategy that would buoy confidence and lower the currently elevated borrowing costs for European sovereigns could include, for example, a greater pooling of fiscal resources and obligations as well as enhanced mutual budgetary oversight. We have also stated that we believe that a reform process based on a pillar of fiscal austerity alone would risk becoming self-defeating, as domestic demand falls in line with consumer's rising concerns about job security and disposable incomes, eroding national tax revenues.
The outcomes from the EU summit on Dec. 9, 2011, and subsequent statements from policymakers, lead us to believe that the agreement reached has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems. In our opinion, the political agreement does not supply sufficient additional resources or operational flexibility to bolster European rescue operations, or extend enough support for those eurozone sovereigns subjected to heightened market pressures. Instead, it focuses on what we consider to be a one-sided approach by emphasizing fiscal austerity without a strong and consistent program to raise the growth potential of the economies in the eurozone. While some member states have implemented measures on the national level to deregulate internal labor markets, and improve the flexibility of domestic services sectors, these reforms do not appear to us to be coordinated at the supra-national level; as evidence, we would note large and widening discrepancies in activity and unemployment levels among the 17 eurozone member states.
Regarding additional resources, the main enhancement we see has been to bring forward to mid-2012 the start date of the European Stability Mechanism (ESM), the successor vehicle to the European Financial Stability Fund (EFSF). This will marginally increase these official sources' lending capacity from currently €440bn to €500bn. As we noted previously, we expect eurozone policymakers will accord ESM de-facto preferred creditor status in the event of a eurozone sovereign default. We believe that the prospect of subordination to a large creditor, which would have a key role in any future debt rescheduling, would make a lasting contribution to the rise in long-term government bond yields of lower-rated eurozone sovereigns and may reduce their future market access.
We also believe that the agreement is predicated on only a partial recognition of the source of the crisis: that the current financial turmoil stems primarily from fiscal profligacy at the periphery of the eurozone. In our view, however, the financial problems facing the eurozone are as much a consequence of rising external imbalances and divergences in competitiveness between the EMU's core and the so-called "periphery." In our opinion, the eurozone periphery has only been able to bear its underperformance on competitiveness (manifest in sizeable external deficits) because of funding by the banking systems of the more competitive northern eurozone economies. According to our assessment, the political agreement reached at the summit did not contain significant new initiatives to address the near-term funding challenges that have engulfed the eurozone.
The summit focused primarily on a long-term plan to reverse fiscal imbalances. It proposed to enshrine into national legislation requirements for structurally balanced budgets. Certain institutional enhancements have been introduced to strengthen the enforceability of the fiscal rules compared to the Stability and Growth Pact, such as reverse qualified majority voting required to overturn sanctions proposed by the European Commission in case of violations of the broadly balanced budget rules. Notwithstanding this progress, we believe that the enforcement of these measures is far from certain, even if all member states eventually passed respective legislation by parliaments (and by referendum, where this is required). Our assessment is based on several factors, including:
- The difficulty of forecasting reliably and precisely structural deficits, which we expect will likely be at the center of any decision on whether to impose sanctions;
- The ability of individual member states' elected governments to extricate themselves from the external control of the European Commission by withdrawing from the intergovernmental agreement, which will not be part of an EU-wide Treaty; and
- The possibility that the appropriateness of these fiscal rules may come under scrutiny when a recession may, in the eyes of policymakers, call for fiscal stimulus in order to stabilize demand, which could be precluded by the need to adhere to the requirement to balance budgets.
Details on the exact content and operational procedures of the rules are still to emerge and -- depending on the stringency of the rules -- the process of passing national legislation may run into opposition in some signatory states, which in turn could lower the confidence of investors and the credibility of the agreed policies.
More fundamentally, we believe that the proposed measures do not directly address the core underlying factors that have contributed to the market stress. It is our view that the currently experienced financial stress does not in the first instance result from fiscal mismanagement. This to us is supported by the examples of Spain and Ireland, which ran an average fiscal deficit of 0.4% of GDP and a surplus of 1.6% of GDP, respectively, during the period 1999-2007 (versus a deficit of 2.3% of GDP in the case of Germany), while reducing significantly their public debt ratio during that period. The policies and rules agreed at the summit would not have indicated that the boom-time developments in those countries contained the seeds of the current market turmoil.
While we see a lack of fiscal prudence as having been a major contributing factor to high public debt levels in some countries, such as Greece, we believe that the key underlying issue for the eurozone as a whole is one of a growing divergence in competitiveness between the core and the so-called "periphery." Exacerbated by the rapid expansion of European banks' balance sheets, this has led to large and growing external imbalances, evident in the size of financial sector claims of net capital-exporting banking systems on net importing countries. When the financial markets deteriorated and risk aversion increased, the financing needs of both the public and financial sectors in the "periphery" had to be covered to varying degrees by official funding, including European Central Bank (ECB) liquidity as well as intergovernmental, EFSF, and IMF loans.
HOW HAS THE EUROPEAN POLICY RESPONSE AFFECTED THE RATINGS?
We have generally adjusted downward our political scores (one of the five key factors in our published sovereign ratings criteria) for those eurozone sovereigns we had previously scored in our two highest categories. This score change has been a contributing factor to the rating actions on the relevant sovereigns cited above. Under the political score, we assess how a government's institutions and policymaking affect a sovereign's credit fundamentals by delivering sustainable public finances, promoting balanced growth, and responding to economic or political shocks. Our political score also captures the potential effect of external organizations on policy settings.
It is our view that the limitations on monetary flexibility imposed by membership in the eurozone are not adequately counterbalanced by other eurozone economic policies to avoid the negative impact on creditworthiness that the eurozone members are in opinion view currently facing. Financial solidarity among member states appears to us to be insufficient to prevent prolonged funding uncertainties. Specifically, we believe that the current crisis management tools may not be adequate to restore lasting confidence in the creditworthiness of large eurozone members such as Italy and Spain. Nor do we think they are likely to instill sufficient confidence in these sovereigns' ability to address potential financial system stresses in their jurisdiction. In such a setting, the prospects of effectively intervening in the feedback loop between sovereign and financial sector risk are in our opinion weak.
HOW DO YOU EXPECT MACROECONOMIC DEVELOPMENTS WILL AFFECT THE REFORM AGENDA?
We believe that the elusiveness of an effective policy response is likely to add to caution among households and investors alike, weighing on the growth outlook for all eurozone members. Our base case still assumes that the eurozone will record moderate growth in 2012 and 2013, i.e. 0.2% and 1%, respectively -- down from 0.4% and 1.2% according to our early December forecast, with a relatively mild recession in the first half of 2012. Nevertheless, we estimate a 40% probability that a deeper and more prolonged recession could hit the eurozone, with a likely reduction of economic activity of 1.5% in 2012. Furthermore, we believe an even deeper and more prolonged slump cannot be entirely excluded. We expect this weak macroeconomic outlook if realized would complicate the implementation of budget plans, with slippages to be expected, which would likely further dampen confidence and potentially deepen the recession, as funding and credit is curtailed and the private sector increases precautionary savings.
WHAT IS YOUR VIEW OF THE LATEST DEVELOPMENTS IN GREECE AND WHAT IMPACT DO THEY HAVE YOUR ANALYSIS?
We did not change the rating on Greece, which had been downgraded to 'CC' in July 2011, indicating our view of the risk of imminent default. Negotiations with bondholders have taken longer than originally anticipated and we believe may now run close to a large redemption of €14.5 billion on March 20, 2012, raising the specter of a disorderly default. Such an event would in our view further complicate the restoration of affordable market access for other sovereigns experiencing market stress. We understand that the main unresolved issues are related to the treatment of holdouts, the participation of official creditors, and the coupon of the new bonds that will be offered (which partly determine the effective recovery, which we continue to expect to lie between 30% and 50%). We do not believe that private-sector involvement will necessarily be a one-off event in the case of the Greek restructuring and would not be sought in possible future bail-out packages in a future case of sovereign insolvency or prolonged loss of market access. All the more so as official lenders are less likely to bear any future losses as their lending will be channeled through the ESM, a privileged creditor that is expected to be senior to bondholders in any future restructuring.
HOW DOES STANDARD & POOR'S VIEW THE ECB's RESPONSE TO DATE?
In our view, the actions of the ECB have been instrumental in averting a collapse of market confidence. We see that the ECB has eased its eligibility criteria, allowing an ever-expanding pool of assets to be used as collateral for its funding operations, and has lowered the fixed rate on its main refinancing operation to 1%, an all-time low. Most importantly in our view, it has engaged in unprecedented repurchase operations for financial institutions. In December 2011, it lent financial institutions almost €500 billion over three years and announced further unlimited long-term funding auctions for early 2012. This has greatly relieved the funding pressure for banks, which will have to redeem over €200 billion of bonded debt (excluding in some jurisdictions sizeable private placements) in the first quarter alone. By lowering the ECB deposit rate to 0.25%, we believe that the central bank has implicitly tried to encourage financial institutions to engage in a carry trade of borrowing up to three-year funds cheaply from the central bank and purchasing high-yielding government bonds. Recent Italian and other primary auctions suggest to us, however, that banks and other investors may still only be willing to lend longer term to governments facing market pressure if they are offered interest rates that, all other things being equal, will make fiscal consolidation harder to achieve.
Reports indicate that many investors had hoped that a breakthrough at the December summit would have enticed the ECB to step up its direct government bond purchases in the secondary market through its Security Market Program (SMP). However, these hopes were quickly deflated as it became clearer that the ECB would prefer to provide banks with unlimited funding, partly with the expectation that those liquid funds in banks' balance sheets would find their way into primary sovereign bond auctions. This indirect way of supporting the sovereign bond market may yet be successful, but we believe that banks may remain cautious when being faced with primary sovereign offerings, as most financial institutions have aimed at shrinking their balance sheets by running down security portfolios in order to comply with higher capital requirements, which become effective in 2012. We believe that the ECB has not entirely closed the door to expanding its involvement in the sovereign bond market but remains reluctant to do so except in more dramatic circumstances. In our view, this reluctance is likely prompted by concerns about moral hazard, the ECB's own credibility (particularly should losses mount), and potential inflation pressures in the longer term. We think it may also be the case that the ECB (as well as some eurozone governments) is concerned that governments' reform efforts would falter prematurely if market pressure subsides.
We believe that the risk of a credit crunch remains real in a number of countries as economic conditions weaken and banks continue to consolidate their balance sheets in light of tighter capital requirements and poor market conditions in which to raise additional equity. However, the monetary policy actions described above may mitigate the risk of a more extreme tightening of credit conditions, which, if it were to come to pass, could put further pressure on economic activity and employment.
In summary, while the monetary policy reaction has not been as accommodating as many investors may have anticipated or hoped for, we believe that it has nevertheless provided significant breathing space during which progress on policy reform can be made. Furthermore, the ECB may yet engage in additional supporting steps should the sovereign and bank funding crises intensify further. Therefore, we have not changed our monetary score on eurozone sovereigns.
HOW DOES STANDARD & POOR'S ASSESS THE REFORM EFFORTS OF THE NEW GOVERNMENTS IN ITALY AND SPAIN?
In our view, the governments of Mario Monti and Mariano Rajoy have stepped up initiatives to modernize their economies and secure the sustainability of public finances over the long term. We consider that the domestic political management of the crisis has improved markedly in Italy. Therefore, we have not changed our political risk score for Italy because we are of the opinion that the weakening policy environment at the European level is to a sufficient degree offset by Italy's stronger domestic capacity to formulate and implement crisis-mitigating economic policies.
Despite these encouraging developments on domestic policy, we downgraded both sovereigns by two notches. This is due to our opinion that Italy and Spain are particularly prone to the risk of a sudden deterioration in market conditions. Thus, we believe that, as far as sovereign creditworthiness is concerned, the deepening of the crisis and the risks of further market dislocation that could accompany an inconclusive European crisis management strategy more than offset our view of the enhanced national policy orientation.
WHY WAS IRELAND THE ONLY SOVEREIGN AMONG THE SO-CALLED "PERIPHERY" NOT
DOWNGRADED?
We have not adjusted our political score backing the rating on Ireland. This reflects our view that the Irish government's response to the significant deterioration in its public finances and the recent crisis in the Irish financial sector has been proactive and substantive. This offsets our view that the effectiveness, stability, and predictability of European policymaking as a whole remains insufficient in addressing the deepening financial crisis in the eurozone. Excluding government-funded banking sector recapitalization payments, the authorities have adjusted Ireland's budget by almost 13% of estimated 2012 GDP since 2008 and plan additional fiscal savings of close to 8% of GDP for 2012-2015. All other things being equal, we view the government's fiscal consolidation plan as sufficient to achieve a general government deficit of about 3% of GDP in 2015. In our view, there is currently a strong political consensus behind the fiscal consolidation program and policy implementation so far has been extremely strong.
In our view, Ireland has the most flexible and open economy among the "periphery" sovereigns. We believe that Ireland's economic adjustment process is further advanced than in the other sovereigns currently experiencing market pressures. This is illustrated by the 25% depreciation in the trade-weighted exchange rate since May 2008 and Irish exports growth contributed positively to the muted Irish economic recovery in 2011. However, in our view this also leaves the Irish economy and, ultimately, the Irish government's fiscal consolidation program susceptible to worsening external economic conditions, which is reflected in our negative outlook on the rating.
WHAT ARE THE IMPLICATIONS FOR THE EFSF AND OTHER EUROPEAN MULTILATERAL LENDING INSTITUTIONS?
Following our placement of the ratings on the eurozone sovereigns on CreditWatch in December, we also placed a number of supranational entities on CreditWatch with negative implications. These included, among others, the European Financial Stability Fund (EFSF), the European Investment Bank (EIB), and the European Union's own funding program. We are currently assessing the credit implications of today's eurozone sovereign downgrades on those institutions and will publish our updated credit view in the coming days.
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Vic, empathy is great, but don't ever let it drag you down to the level of of the victim. As Thunder Ranch teaches, "Make them advance through a hail of bullets. You may be killed by your gun, but they will have to beat you to death with it, because it will be empty". This philosophy not only applies when TSHTF, but, should, metaphorically, apply to your interaction with people (especially TPTB) every day. Never let up until you are past empty and in restraint.
(H/T for the CFR link, BTW, I sent that to a few people)
Darn! Guess that means I am not an "Aluminum Pop Top" level member.
Lo and behold: my date stood me up, I'm here with my dick in my hand, you are making worthless comments and I post this link:
http://www.ae911truth.org/
We really aren't getting anywhere as a free people, are we?
The strangest thing about the follow-up email is
other free user features in the future
Premium features to come also?
>>>REPORT SPAM
L0L!!! vic! i just could not resisit!
the devil made slewie do it!
WOT? Iv'e not been promoted? that's bloody Sacrilege.....!
Same here CClarity, copper,silver, gold
They will probably need a "poop" level for some members, prone to asinine commentary.
PsychicWebbah said:
Agreed. Below that will be the "fiat" level and, underneath that, "sovereign bond" level.
S&P had a plan, but clearly Eurozone did not take it. For once, I liked what the December 9, 2011 EU summit accomplished: no (direct) QE, no Eurobonds, but two moves:
(1) Firepower from EU-wide up to €200 million IMF contributions. These included €150 billion from Eurozone and potentially also UK, Sweden, Denmark, Poland
(2) Budget balancing rules, or Fiscal Compact
S&P seemed to want either joint and several debt for Eurozone only. And was disappointed. With this announcement, they ironically make joint and several eurodebt even harder to accomplish.
I love this Friday the 13th announcement. I especially like the fact that this killled significantly the chances of all current EU plans to succeed. Now they need to rethink.
However, I think that is probably beyond the EU politicians. Luckily, we have the markets.
My take on this is that the market has no other way to stabilise Eurozone than to sell down Euro, and the Euro will continue to weaken, until the budgets start to balance accross Eurozone and wider EU which seems to be tied to Euro with fairly high currency correlations. This will take time.
yes and things are going along perfectly
They won't be able to if their oil supply is shut the fuck off.
You may be right. Will there be a video released shortly after on youporn and xvideos??????
bullish on euro butt floss beatchez .soon to be exported to former republic aka the US
Be glad that it (the train wreck) is taking as long as it is. It is giving you more time to prepare, because it is going to get ugly with a capital UG!
The longer the better for TPTB.
It DOES look like a movie in slow motion. All those predicting a quick end are wrong. Modern states have tremendous tools for kicking the can down the road, namely printing, borrowing (repeat). Perhaps the worst aspect is that when Europe is "resolved" the focus will turn (at last) to Japan and the US. Still can't figure how interest rates will ever rise since the interest on the debt will immediately explode. Hey the FED can simply buy more bonds for a "loan" to the government.
future tense, good article...thank you!
“Developers are now beginning to miss payments on borrowed money from the banks and many will soon walk away from these debt obligations. This will bring strain on their banking system.
The Chinese real estate market has reached the point where prices are beginning to fall in many major cities. Falling prices will cause new investors to back away from the market and recent investors to become underwater on their loans (sound familiar?). Falling prices in the real estate market is the psychological trigger, the snowflake landing on the slope, that triggers the downward spiral that is extremely difficult to reverse.”
http://www.ftense.com/2012/01/2012-outlook-global-butterly-effect.html
very worrisome.
I'm not sure i agree with your conclusions but your spirited view is duly noted.
do i need to mentione how pathetic a loser you are? i guess you pass a reminder, or do you?
I'm a loser, baby, so why don't you kill me ...
http://www.youtube.com/watch?v=YgSPaXgAdzE&feature=related
Gettin' crazy with the Cheez Whiz!
http://www.youtube.com/watch?v=Z33CocoMNn8
The USA financial condition appears to the same as the EU but in reality very different. The USA has a very, very powerful central government and near dictator running all fiscal and taxing. In 2013, we will see this power put in first gear with "means testing" for ss and medicare as well as a graduated tax on all retirement assets, higher tax rates and carbon fees on breathing and christmas trees. IMO, the death of the euro and EU strengthens the USA and may be plotted and carried out by the CIA through GS.
ha ha, bomb bomb iran
http://www.youtube.com/watch?v=Jb6nR_kdk9w&feature=related
navy, please, there are enough posts about war, and I fear they will increase, keep a bit more focused, eh?
is the picture a man or a woman? can't see it properly...
-Slovenia
-Portugal
-France
-Austria
-Spain
-Cyprus
-Italy
-Slovakia
-Malta
I wanna get this straight, the nine countries spell out
SP FASCISM
WTF?
I've got T shirts that lasted longer than the Euro.
Navy......I doubt it! What a putz!!!
This market is a joke....and since it's a Friday the 13th here's another joke -
How do you get an 80 year old lady to say "Fuck"?
Get another 80 year old lady to yell "Bingo".
Cute joke. Have a better one, Barrack Obama may get reelected.
Want to hear a real joke. In November Americans will get to choose between Obama and Romney. The joke is "You call that a choice?"
Two war mongers, two whores to wall-street, two whores to the bankers, two 1% ers, two military industrial complex stooges, two slaves to Israeli interests, two politicians who do not give a flying fuck about America or it's 99% ers, two useless greedy pricks serving the world banker elites and the end of timer Christian fundamentalist crusader wackos.
but one believes jesus came to america, he has to be the Right choice
Wait until the media opens that can of worms. But not until after Twitt is nominated, when it helps Obama.
The can of worms about Mormons believing that American Indians are cursed Jews.
I kid you not - The Book of Mormon tells of a group of Jews who escaped Babylonian exile (around 590 b.c.e). Anyhow a bunch of these jews turned bad bad bad .. bad Jews .. and God cursed them and turned their skin dark to make them a source of shame and display their cursing.
And this, says Joe Smith is how the American Indian came to be.
Bear in mind I'm not picking on this belief per se. Let them think Indians spawned from English Sheep Dogs if they want.
My point is watch the media discover this and then proclaim it "fair game" to question how The Twitt will deal with the Indian tribes.
Belive me, this whole "Mormonism is off limits" is pure malarkey - Mormonism will very much be on limits as soon as it comes time to help Obama.
You are spot on as usual Quacker! The MSM already have the "Talking Points". Tom Cruise and his fellow believers who think we are all infested with Thetan remnants will seem conservative, prudent and sane in comparison. Just exposing the basics will be vicious as so far most only think the Mormons odd because of polygamy. The Mormons have succeed in hiding the most bizarre elements of thier mission statement and beliefs as instructed but all the "underwear" will be exposed if Romney wins the nomination. I don't look forward to it at all as most are nice people who have strange ideas and I know lots of people with strange ideas. This particular group will be savaged by Obama's minions and the MSM...for sure, and the minions won't need to make stuff up at all which will confuse them...
Even worse, I don't think the strangest elements are told to the kids and teenagers until after their temple initiation as young adults. Please correct me if I am wrong here. The attack will leave a lot of Momron kids open for ridicule by thier peers...the adults should get them ready.
Gasp! Obama is a dark Jew!!
The black Jews of Africa are one of the scandals about Israel ... Israel won't let them in to Israel because they have the 'wrong' skin colour, even though the black Jews of Africa are often deeply religious and have followed Jewish religious observances since ancient times, whereas many of the white Zionists and leaders of Israel, are complete non-believing atheists.
Tribes in Africa like the Lemba - Remba, stretching across many African countries ... are actually descended from ancient Jews who went to Africa and intermarried so much they became black in skin colour, though their genetics and observances make them fully Jewish.
But there is no 'Law of Return' for these black African Jews ... who are real authentic Jews ...
Meanwhile, the white 'Jews' descended from Europe, who maybe are total atheists, and who maybe are descended from mediaeval Khazars who only converted to Judaism in the middle ages, or descended from Eastern European Protestants who were given the Vatican Inquisition choice between being Catholics or Jews or being killed ... meanwhile these white non-believing Jews are welcome in Israel, because they are white-skin-colour Zionists.
We have lots of Jews in Antwerp, Belgium who oppose Israel, i.e., they are non-Zionist, and they consider the Israeli racism against black African Jews, one of the many scandals proving Israel is a moral disaster.
He already said he was a mohammedan.
http://www.youtube.com/watch?v=bMUgNg7aD8M
When "some rogue employee" at the TSA releases footage of Romney's airport X-ray scan that shows him to be wearing "The Garment", we'll know it is game on.
'Game on' means Obama is attacking Romney? Who cares about Mitt's magic undies.
Mitt = Obama.
Shitty post, chindit13. You are better than this.
The tone of modern info-glut politics was set by the late Lee Atwater. Everyone from Karl Rove to David Axelrod is cut from the same cloth, though some are slightly better at hiding it. They are well aware of what buttons to push to gain the attention---or in this case raise the suspicions---of the average American voter. Perhaps my cynicism shows, but I suspect there is no level to which these "advisors" would not sink if it contributes to "four more years". Axelrod hung the one-heartbeat-from-the-President VP candidate Palin---and the "aged cancer survivor" McCain---in 2008, though admittedly she supplied the rope.
Comments on the peculiarities of Mormonism, relative to the more widely accepted peculiarities of other faiths, are already hitting the press, source unknown. If it resonates, it will be used again...all the way into November if Romney is the GOP choice. If it surfaces directly from the Obama camp, it will be via a junior aide who gets air time on a major network, and he'll say something to the effect of "the President does not think it is either relevant or appropriate to discuss things such as the different undergarments worn by those practicing the same faith as the President's opponent".
If only Smith hadn't lost those gold plates...
So the question that comes to mind is whether if Romney is elected that the Patriot Act is then modified to exclude having 7 plus days of food storage as an indicator of terrorist intentions?
Damn Vic, I heard that bitch slap from over here....ouch. Who 's got the shitty post now. Come on, Your better than that.
Hey VicV...
Your frustrations as to lack of choice between party candidates and your position that all candidates are essentially equal are valid, but you are far too nasty to chindit13 and his intelligent, funny, probably prescient joke about Mitt's underwear/garmet being "exposed" and distributed by a TSA minion being the "Game On" tipping-point-signal to start the anti-Mormon info dump. This garmet/underwear issued during a temple initation even though minor in comparison to the remaining rituals and bizarro happenings will be the titillating focus of the dump targeted toward adult yet juvinelle American voter who will certainly joke most about the underwearall adult Mormons must wear 24/7. If you read review all the cult blogs and even scholarly discussions...the underwear issue is (unfathomably) the HOT topic. Sigh...sad to say, it will matter.
Chindit13: Never fear...sadly, your joke may prove presciently accurate...
@DWT:
Among numerous additional beliefs, that person also wears and sleeps in special underwear approved by his temple...constantly, and truly believes he will rule a planet someplace in space. The belief used to specify that the angel Maroni promised that that the man and all his wives would rule said planet, but the multiple wives part was redacted as per a "timely" vision by the head prophet guy. I don't think those beliefs are held by many ID'd as Right Wing politically. Have you read about the Temple initiations? No Right wing consertative would swing that way unless freely joining that regilious idology. I'm not trying to pick a fight as to which religion had the loopiest beliefs, but to encourage you to educate yourself before equating ALL right wing political conservative thought with a bizarre religious group.
Don't forget the white salamander Joe spoke with!
i think there is a white salamander action figure in utah macdonald's happy meals, get em while there hot!
Good point I think people who say "All religions are nutty .. is Mormonism any nuttier than traditional Christianity?" - miss some key points:
You can go back and look at very old Christian and Jewsih texts of their scriptures and find them essentially identical to the modern. Mormons, ever since they discovered that each new leader has "spiritual authority" to alter the texts, has literally been crossing out nutty Joseph Smith beliefs for 150 years now to keep Mormonism viable within the system and not looking nuttier than Scientology. They scratched out literally dozens of major teachings by Joe Smith, with the problem being that Joe Smith was such a fountain of lunacy, dozens remain.
They also forget that Mormonism piggy backs on Chritianity, even using Jesus in a New New Testament - but then has that Jesus teach a message that from a theological perspective turns Christianity on it's ear.
Mormonism is actually one of those "progression to godhood" theologies that frankly is not even a Christian theology. This is why Mormonism rubs many Christians the wrong way - it bastardizes Christianity only to then use the central character of Christianity to essentially turn Christian theology upside down.
Does any of this have any bearing under our Constitution for qualificantions to be president? No, of course not.
But many people don't want to see ANYTHING happen that lends any credence to what they see as theological bastardization of their deepest beliefs.
Almost no clarity to be found ANYWHERE on exactly what it is about Mormonism that rubs peple wrong.
http://www.byroncrawford.com/2012/01/newt-gingrich-refuses-to-dish-on-illuminati-teh-ghey-sex-rituals.html
The only thing that rubs me wrong about Mormons is when they wake me up on a Sunday afternoon by ringing the doorbell. A big, easily legible sign on the front door took care of that, though.
All things considered, and after knowing many of them, I'd prefer Mormon neighbors to traditional "Christian" ones. They're nice people, and aren't hurting anyone.
As an aside, I'll also note that there is a more relevent reason to support the Mormons (without having to join their church, of course.) The US was founded as a Masonic nation, and the Mormons are far more compatable with that than the Christian church. I'll grant that the average American is nominally Christian, and that's fine with me- but look at where that has brought us. I'm willing to give Brigham Young's folk the opportunity to keep the hoi polloi in line. It can't hurt anything, and it's more in line with the original intent of this country than neo-Christian values are these days.
Gotta back some horse in the end, and Mormon isn't so terrible. That being said, I'm not interesting in seeing the "Mitt" take control.
@P418 ~ A clarification, but first:
Bravo to you as few know that most of our early Presidents were 32nd (?) highest degree Masons. One may view massive portraits of all of them at the Masonic museum in Alexendria VA. Anyway, you do miss the important point that they all stated that they were Christians. The Masonic order has members from many faiths. Yes, good old Joe used a lot of the Masonic rituals as a basis for the temple iniations followers must endure, but the Mormons are not Masons and Masons are not necessarily unless they choose to join. Salamander Joe was just making it up as he went. He really liked adding the Masonic gesture of running the thumb under the throat (with fingers pointing down) in a throat slitting action to signify throat cutting permitted if secret stuff revealed which all Mormons must perform to ensure silence. Will arterial blood flow freely when the Obamaites and MSM start the information dump?
really enjoying your posts here DDH, hoping you continue as we get deeper into the electioneering farce of 2012. . .
an interesting read, "No Man Knows My History: The life of Joseph Smith"
http://www.amazon.com/No-Man-Knows-My-History/dp/0679730540#_
also, Mark Twain's book "Roughing It" has an interesting section on his experience with the Mormons on the way to Nevada.
and don't forget the Mormon's massacre on Mountain Meadows
http://www.youtube.com/watch?v=E0qxsaBkAiU
it [mormonism] bastardizes Christianity only to then use the central character of Christianity to essentially turn Christian theology upside down.
Hell, even christianity does that ...uses the central character but completely ignores what he said ...or twists it to mean the exact opposite of what he said.
I can't think of one single "christian" belief that agrees with Christ's teaching. Every single one of them contradicts Christ's teaching.
That's why all "christians" are lost. They won't make it.
the Reformation
http://www.prca.org/
If, for the sake of polygamy, Mormon Mitt Romney would bring back the old States' Rights and human rights of the old American Constitution and America's Bill of Rights ...
With the by-product of bringing back polygamy to Utah as one of the States' Rights privileges ...
My guess is, Americans generally would go for it, just to end the fascism of the federal government and have the rights of its old Constitution and Bill of Rights back in force.
But certainly the odds are that Romney is another Tool of the Evil System ... rather than a Member of the Secret Mormon Cabal to Restore US States' Rights.
@Brussels Bank Guy: While I suspect one of the outcomes of the upcoming crumbling of the global economy, soverign failures, and the resulting anarchy will be the reemergence of local governmental bodies as a means to restore trade and other life necessities. Your post got me thinking. Although I want to get back to the days of limited Federal Power such as designed by our founders. The journey back will be a bloody ride. Has anybody planned for this, I wonder? Will some places kick all people of color from schools...will people who have Tarot cards be burned at the stake...will one need to move near those with similar religious beliefs to be safe?...I think the ride will be uncomfortable for even the most ardent State rights advocates if not handled correctly. It must happen, but considering many porn addicted morally corrupt Americans, it could get dicey in some locals.
not sure how you've managed a post with replies threaded from yesterday - ha - but I wanted to reply even if it goes somewhere odd downthread. . .
you say the "journey back" to the old days "will be a bloody ride" - I doubt there is a way-back machine (nor do I think that was your intended notion) but you do make good points about how people will enFORCE their realities on others if/when the threads of a civilised culture are slashed through.
or find those who eschew the need for "religion" in their lives, whose morality derives from simply respecting the inherent rights of others.
ahh yes, and then there are the righteous hypocrites who hide behind the robes of their gods, trumpeting morality whilst imbibing that which their gods would see as the most profane, never equating their RIGHT to view while removing the human rights from others deemed less worthy.
edit: damn, now I have taken on the role of post replied to yesterday. . . and what a post to have under foot.
why slow a fuck when it's a rape? never voted but i think i will this time. if rp doesn't get the nomination and doesn't go third party i'm balls deep obama. maybe he'll sprinkle some student loan forgiveness on us since 2 trilly mortgage refi is a bit brazen.look at it this way, education can't be reposessed but the heads it's in can! sorry jesus, i am sure your north american tour was badass.
such a pretty face you have.
Jack has many pretty faces to off yourself with.
+++ Yep. Two sides, one coin.
Hey Jack,
Mormons are not Christians, fundamentalists or otherwise.
Not to be too crude with the ultra sensitive Zh crew, but when my wife yells "Fuck you mister". I always respond with," Do we have the time". And then the process repeats itself.
She made a statement , you offered a question. But we're still not sure who's getting laid.
neither. ther're married!
welcome to zH!
"neither. ther're married!" I respectfully disagree. Welcome to z worldy hood.
gee! thxz!
Or as my girl like's to refer it as...zerohead
Great article, what took S&P so long?
optimism containment problems?
lQQK!!!
we have lift-0ff!
Theft, RICO lawsuit targets MF Global, CME Group, The Morgue | Gold Anti-Trust Action Committee
gimme an "R"!...
...gimme a "I"!...
...gimme a "C"!...
...gimme a "0"!...
Goooo0000....BiCheZ!!!
This is about the 502nd time on ZeroHedge, someone expecting or hoping some US judges will do something honest, just because there is a court filing or 'lawsuit' telling the truth, a RICO 'racketeering' or other claim.
When actually the US judges are the key criminal insiders who make the whole criminal arrangement possible. The US oligarchs must laugh and laugh over the naive American people still going back 'to Court', humbly and respectfully asking for justice, and getting sh*t.
US judges don't give a sh*t about anyone except the oligarchs who pay them.
These lawsuits nearly always get 'dismissed' on technical grounds, after the lawyers picked up some fees. We Europeans have been finding this out too.
Take it 'all the way to the US Supreme Court' maybe? ... Hah! ... Those 9 US high judges are just criminals who have authorised and approved mass violation of the US Constitution for many years now.
The US courts are even more bullsh*t than the US Congress or its political parties.
Europeans have been deceived by this too, often finding out the hard way, losing everything in a wasted effort in an American courtroom, which they thought would be like in the Hollywood movies.
Some European web pages which Google Inc censors and blocks from search results, as part of Google's own seeking favours from US bribed judges ...
Articles by a political refugee from the US in Belgium ... I know him, I use his photo for my avatar ... he is educating EU officials on how the bribed judges of America are attacking and defrauding Europeans:
Live Photo: Google Inc. Caught Censoring EU Search Results
Google Internet Censorship - Censure d'Internet par Google - Internet censuur door Google
http://www.flickr.com/photos/22325431@N05/6100668211/in/photostream
Foreign Companies Face Risk of US Court Corruption:
Doing Business in the Big Bribery Nation
http://www.banned-in-america.net/us-court-big-bribery-nation.html
America's Corrupt Legal System -
A Danger to Visitors, Travellers as Well as USA Residents
http://www.banned-in-america.net/us-corrupt-legal-system.html
Americans Murdering Their Judges, and the US Crisis of Judicial Corruption
http://www.banned-in-america.net/americans-murdering-judges.html
i see this may be one of your pet peeves
btw, i did not mention judges...
neither does the article i linked to, except for this (paste): (Maybe the lawsuit can determine where MorganChase put Judge Crater.) [crater disappeared in 1930]
you write: Articles by a political refugee from the US in Belgium ... I know him, I use his photo for my avatar ...
so, i followed your stuff, here, and see where your "guy" grew up in the chicago area and his mother was from europe (polish) and his dad was canadian. do you know where he was born? in over an hour i've been unable to "discover" if your "guy" is an american citizen or not. however, one site says he is a polish citizen. his own bio does not state his place of birth or his citizenship
my "point" is simply that he may have been asked or forced to leave the US and return "home" after accusing another detective writer of plagiarizing him. he accused her, did he not? and apparently she thought he might be a danger to her and received court protections, while cross-accusing him of libel or slander. it appears he may have failed to show up at a courthouse or two on the required dates for the hearings, possibly after he "discovered" that his lawyer(s) was working against him and may have been "compromised" by his adversary. slewie knows that this is not impossible, in any court proceeding, btw, and will not even pass thru the shadow of a courthouse with a lawyer unless everybody knows that the mouthpiece is there to advise slewie, who insists on always designing his own cases & strategies, no matter how many fuking lawyers get saddled for the heavy lifting
so, when your legal strategy = no-show, you lose by default. invariably. and, the court may issue an "order" or "injunction" which appears to have happened here, to wit, he was told to pay her ~~$35K, stop putting the "plagiarized" stickers on her books, and stop publishing "facts" about what she has done to him, even on the internet
it appears such an order was issued
and, that it is being enforced; even in the EU; by googleTM, as you mention...
whether your guy was deported or fled to avoid arrest for violating this order is my only question; it appears he fled, but if he is not a US citizen, he may have been one step ahead of the boot...
even such a shoddy collection of legalese as the new testament points out: if you and your adversary don't come to terms before you get to the ("all-powerful") magistrate, somebody is gonna wish s/he'd remembered to bring the vaselineTM!
we learn from our mistakes and many of us know from painful experience that the first time or two in the courthouse is a learning experience. once/if your friend completely recovers, he will not need a degree, certificate, award, or plaque to attest that he learned something of real significance <insert "serenity prayer" here>
Here's one judge going against the system. It'll be interesting to see whether he can go the distance though.
http://cowboybyte.com/3293/atlanta-court-date-set-for-obama-eligibility-hearing-public-invited/
"A hearing has been set for January 26, 2012 for the purpose of hearing the complaint of David Weldon, a citizen living in Georgia, where he questioned the Constitutionality of President Obama being allowed on the Georgia presidential ballot.
The hearing here in Atlanta will be on January 26th at 9 am. Since this is a public hearing, the public can attend. The location is the Justice Center Building, 160 Pryor St, Atlanta, GA – Courtroom G40 on the ground floor.
On January 3, 2012, Judge Malihi denied the request from Mr. Obama’s attorneys to dismiss the case accusing him of not being qualified to be on the ballot; and therefore, ineligible to run for President this year in Georgia. They contend that since both of his parents were not citizens, that makes him ineligible."
BTW, a separate article indicates that Obama's Long form BC, College transcripts and other records have been subpoenaed by the judge. You may recall that the first act of Obama as president was to seal his records, so this will be interesting to see if he complies. I say he won't and will claim presidential immunity or some such nonsense because clearly this idiot is guilty of something he desparately wants to hide.
One of the head mucketys of Austria said that he was perplexed, how unfair it is that all the AAA's are not treadted equally.
Well Bozo, lemme tell ya' under the socialist system, everybody is relegated to the same ultimate level out of "fairness". Soon, there will not be a AAA left on Continental Europe. Period.
Hah.
Dipshit
Knuks! How goes it? Interesting week, eh? Nothing but bad news and the market levitates. I think next week we see some reality.
Hey Dawg! We be fine here, and you?
Our week was one of great turmoil, of matters weighty and unpleasant. But maintenance of that special condition allowed the waters to be navigated properly. Bone tired, emotionally wrung. Tired, but whole. And happy for the opportunity to have been present. (As life's ticket has printed upon it; "Must be present to win." ....snickers)
Yes, the week was one of continued surrealism.
My guess is that we're observing the Lehman2.0+ moment. The calm before the real shitstorm. You know, the period where the conspiracy thoery becomes fact and everybody wonders from where it came.... Oh, I remember the last one well.
And this time around, it ain't merely just a first tier broker leading the parade of financial demise, its a whole bloody continent, a bazillion banks, brokerages, insurance companies, pension schemes, wrapped in a common ineffective pseudo-supra-government with no financial expertise facing one of the great financial collapses of all time, the vaccum of leadership being filled by professional technocratic politicians with little grasp of weighty financial metters, attempting to sell their way out of a problem whcih they themselves have created and have yet to address.
Yep, at some point, this week or soon, whenever, the "barbarians" will appear breaching the gates of whatever it is "they" are trying to protect which is no longer entirely clear anymore to anyone, only to find the enemy has been within the whole time.
T'will not be pretty. My main theme of bad economic times (I can no longer play games of syntax, for it's so far beyond, it mystifies me how anything other than just plain disaster is suggested, financially.) immediate deflationary pressures and greatly expanding risk premia continue to beg for a highly secure investment theme.
Bonds and bullion.
In the spirit, Knuks.
"Bring out your debt! Bring out your debt!"
Greek CDS: "But I'm not quite debt yet"
"Your not fooling anyone you know."
"I'm getting better!"
"No you're not!"
Like a drunk giving up the devil whiskey, S &P have are approaching ratings with a newfound religion.
If you think I'm reading all that again...
Boo!
Dark Horse...Black Swan....?
Economists are a bunch of racists.
Ace Ventura "for President"...
Circa The Pet Detective Series/
I think that's the nicest thing I have heard about economists. Thank you.
History must repeat. Why shouldn't what happened in Rome happen globally?
It will, but considering the Roman Empire lasted about 500 years, our popcorn might get cold while we wait for this one to play out.
I have to agree with Bumblebee - This isn't meant as a slam to anyone on these boards, but I don't think any of us, no matter how much we said it, realized the extent TPTB will go to inrease their wealth at our expense. Example: would you have said three months ago that someone as big a name as John Corzine could walk off with $1.2 billion and absolutely NONE of our political leadership have made a move to have him imprisoned yet? THAT is how bad things have gotten. So yes, this could very well play out a little longer. Personally I think TPTB will let it go just past Obama losing the election and then dump it in Romney's lap to watch him and all the rest of us collapse.
I've already collapsed. I'm at the "now what" phase.
Rome wasn't reliant on oil production.
Scary that they can keep making the ultimate collapse worse but guess they can :(
perfectly put. but also remember we ain't Rome. Lately the empire crumble rate has gotten a lot faster
This one is for you C/E! You are 100% correct! http://www.youtube.com/watch?v=Ez-lRQAklV4
Always liked that one
People have to remember though, that things happen at a faster pace today. They didn't have 24/7 news and blogs pressing the situations.
Hense the speed of this. I still think this could take a while to unravel.
Traveling 25 miles in a day was a lot. Everything was slower and more gradual. Except aging. That happened quickly. Yet maybe this makes us a little slower. When you've been around 70 years I am sure you don't think the end of the economy is near. I mean, why would it be? Dancing with the Stars is on!
Let's see.... choices... fix the economic recession or see who gets the disco ball trophy.... Decisions, Decisions!
ECRI, Empire Crumble Rate Index.
I'd say it's right about at 42.
Anyone?
Good One CE.
ori
Welp, the more I read, the more silver I'm buying. Anyone got anything against Canadian maple leafs versus American eagles?
One ounce silver denominated in CAD versus one ounce silver denominated in USD. Pretty much the same thing, innit?
One ounce = one ounce
(ahhh, good times… when math made sense.)
An ounce of silver is heavier than an ounce of feathers.
Rodney Copperbottom: This is our moment to shine, to show them what we're made of.
Fender: In my case it's a rare metal called afraidium. It's yellow, tastes like chicken... Buck-ah!
I clicked on the APMEX add today which is always next to the comments when I read ZH...
While there (and talking on the phone) I absent mindedly purchased a monster box...
Now I have to check and see if it was Maples or Eagles... I honestly don't know.
Guess that answers your quesiton.
Hell yes, your brain was running the show!
Do what I did when I couldn't decide -- buy 'em both!
true, an ounce is an ounce, unlike, what the fuck is a dollar? (so many yen, which is so many euros, which is... circle jerk time) but, the cdn coin with the old hag is ugly. it would be nice if they would change the design of that coin. hey cdn mint, give it a new look. so, the eagle is nicer looking. will it matter? probably not, but aesthetics are important.
Yeah, screw the hag. Put a man in a wig like money is supposed to.
A dollar is 371 grains of silver and change (right around .77 oz.)
Federal Reserve Notes are another matter entirely- be careful not to confuse the two.
and to think i was sweating bullets when i bought gold at 650+ and it retraced to a high 5, thought i got bitch slapped.lolz!
And the folks who bought at $1800 then watched it retrace to mid $1500s will have the same epiphany next year, rinse & repeat until this monetary system is finally put to rest.
ah the beauty of real money. An ounce of silver is an ounce of silver anywhere. They should be the same as they have no numismatic (bs) value.
99.99% vs 99.9% -- who's gonna quibble?
The .09%ers?
ECB lending rule change could make an extra €10 trillion available to banks
The European Central Bank is considering a major easing in the rules on the assets it will accept from struggling lenders in return for loans that could expand by more than €10 trillion (£8.3 trillion).
http://www.telegraph.co.uk/finance/financialcrisis/9011021/ECB-lending-r...
They are planning on printing to INFINITY. They'll destroy the life savings of the masses in the process. Legally, of course!
What life savings? Counting mortgages the masses are in debt.
The savings of those who actually showed financial responsibility. Basically, they are stealing from them to pay the debt.
They are planning on printing to INFINITY.
Correct.
Currency printing (and its digital equivalent) is the ONLY way to keep the sovereign debt ponzi scheme going now, both in the EU and USA.
ECB will do exactly what Fed has to do, print and print and print till the currency is worthless.
They'll destroy the life savings of the masses in the process. Legally, of course!
Correct again.
Fiat currencies are the best possible vehicle for stealing everybody's wealth, silently, secretly.
And sovereign debt is the best possible cover story for stealing everybody's wealth.
"We're stealing everything you have for national security reasons."
There are terrorists everywhere, so be afraid. We don't like what He is saying. He must be a terrorist. Weapons of mass destruction. Are you afraid yet?
That wealth looks heavy, here let me help you out.
put a T in front of the reasons
"Analysts at Citigroup said allowing eurozone banks to use outstanding loans as collateral to borrow money from the ECB would increase the pool of available collateral by €11.7 trillion."
Use of outstanding loan's? Can kicking mfer's man.
We need sound money now!!!
Ron Paul 2012!!
We already use loans as collateral for loans. It is called money. It is the reason why central bankers are afraid of deflation. Oh they will print. No doubt. The real question is will it do the trick this time and inflate or will it fail and deflate. Inflate will steal wealth from savers. Deflate will collapse monetary system to say the least.
What is money? In my opinion, it's a way to steal the land, labor and resources of a country. Fiat always loses value. Always.
So, in this tragedy of errors, it will be the man and woman at the end of the line who has everything taken from them through inflation. Inflation always hurts the person who gets the paper at the end of the day.
Count on it, and plan accordingly
Fiat isn't monie, it's currencie.
Or "currentsea" as it used to be called here a while ago.
WTF is with your ill-substituted 'ie' in place of the correct 'ey'? I enjoy reading most of your posts as they often contain valuable insight, but FFS, these repetitive mistakes are unnecessary distractions which detract from the overall statement.
Inflation and taxes. The two destroyers of wealth and spirit.
And infomercials. The three destroyers of wealth and spirit. Inflation, taxes and infomercials.
And the Kardashians. The three, no, four destroyers....
Aw, fuck it.
lol and Rush Hour traffic too.
I posted this in another thread here: but it is highly relevant (i think) spam spam
HFT programmers need ot recalc the parameters on this one, so itll take the weekend for people to work out.
The market just got its head around LTRO = Euro QE and now think that was the fix,
and the downgrade of sov debt doesnt change ECB collateral ratings so QE parameters are still intact there.
BUT they havent factored in the RWA changes to banks, insurers, and the coming ratings changes there and...... the EFSF.
A quick out of the air number:
+ 50 to 100bn core 1 EU capitalisation for eurobanks (now that was what LTRO was for and those banks not borrowing were not the same as the ones depositing)
Interesting other news: but related: EBA "delays stress tests" ..... (waiting for LTRO 2?....)
+ 300bn Germany/France/Finland/Netherlands/Austria/Italy money for EFSF "leveraged" to 1trn is now....
+ 250 bn pledged to "leverage" 1.1-1.2 trn. which will make it unlikely to get the AAA rating it needs so more must be done at the EU level. I'm trying to be conservative in my estimates
Merkel pledged more cash, and will give it, but with more terms attached. That Jan 30 meeting not looking like EU plain sailing to fiscal compact anymore.
so we have a funding gap of +250bn which is going to get covered with ... LTRO 2?
This excludes any additional funding for Greece in the new bailout scenario + additional funding for Spain with the newly exposed "bigger deficit than we thought".
All these have some impact on US bank exposure to Europe as well.
In summary: right now market is underestimating the impact of the downgrade, once they do the maths on the linkages, it should be sharp risk off, until the anticipation sets in that europe will pull another rabbit out of the hat on Jan 30th.
It seems to me the anticipation or belief that all will be all right because of additional printing is already calculated in. Just look how relaxed everyone is. It's not that different from the period after the US was downgraded. I said here that it's a non-event and so it was. I think this is a repeat of the US event.
I hate to sound like Robo Trader, but that's what I see now.
Long PMs, short $SPX.
i agree that people think its fine: the market is very skewed atm with big net long ES plus big net short EUR$, thats an "LTRO = QE" bias.
Only, LTRO is a liquidity fix for banks short of capital and its a good one, but it has its limits.
three new risk factors:
polls in france could show sarkozy losing support->press are out now hunting for anti EU sentiment in france -> merkozy/EU fix in jeapordy... it only takes one credible opposition politician in France to say "Greece should leave the EU" and they have every incentive to say "we will do things differently from sarkozy" so the gap between the two isnt so great in media sound bites
IIF/Greece negotations are taking a break as each party recalcs their outside options to their negotiating game. Up to now it looked like 50/50 split reflecting both valuing the outside option as equivalently bad. Hedgies have a different valuation on this one so the split has to readjust. Plus any impact on EFSF from the rating changes Greece's game as well.
Existing rating changes -> sov credit spreads leaking upwards (tyler reported this) with ECB intervention operating only on the margin at flashpoints. The downgrade triggers contagion wider - > spreads rise->bank risks increase (+reratings likely as explained above)
As for long PMs the price spike hasnt happend partly coz they're all priced in $. some people waiting for US QE3 but that isnt going to happen in the current economy, only rebalancing towards support for MBS; there is more than enough liquidity to prevent another meltdown.
as this article notes the downgrade could lead to another freeze in the sov debt market PLUS a refreeze in the subordinated credit/collateralization markets in europe and rising yields which leak into the real economy, returns and equity asset valuations, first of the banks and then the rest of the shares
these factors could wobble the "long ES" part of the trade; HFT params need to be reset to reflect that.
Tyler has been reporting the differential between equity/credit spreads and there is an increased chance of correction favouring ES down not EU$ up; an ES correction to the downside, given the size of long/short positions there could turn into a rapid ES squeeze.
There are two kinds of central planning: the Keynesian kind and the zig heil kind. The alternative to global planning is not inevitably libertarian utopia
cue music....
Pete Townsend
Eminence Front
About (preserving your) wealth: Short trust & you should be (make out) OK.
People forget
Forget they're hiding.
Or
The percentage you're paying is too high-priced
While you're living beyond all your means
And the man in the suit has just bought a new car
From the profit he's made on your dreams
But today you just read that the man was shot dead
By a gun that didn't make any noise
Traffic
Low Spark of High Heeled Boys
+1 Props to you for that classical tune.
Love that tune. Haven't heard it in a while but listening now, thanks.
"Heaven is in Your Mind."
Earth to Google Maps? Corzine?... Corzine?...Corzine?... Apparently the " untouchables live in the Senate Gym " locker room"!
Who woulda figured?
What ... the UK is still AAA? I can see why the frogs might be a bit miffed.
Expect Fitch to put the US on negative watch or downgrade a notch or two in the next few days.
Printing press. It's not on hot standby in the Eurozone unlike UK and USA.
Euro Bonds comith
Yes but not after fiscal compact rules are signed, Merkel was clear about that.
Who needs Eurobonds now when you can re-fi at lower rates via LTRO?
Well at least they did it before the market closed this time. @ Tyler - I'm impressed you got the word out way before the WSJ or the NYT. Keep kicking ass and taking names.
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