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Spain Reminds Us What The Main Problem With Blank Checks Is: Says Q2 GDP Will Be Worse Than Q1
Even as Spain, Italy and soon France are scrambling to break the link between sovereigns and banks, an unpopular move that until recently Germany was very much against as it permitted the culture of endless unsupervised bank bailouts on taxpayer dimes to continue, we get a fresh reminder of why any unconditional aid, entitlement, or backstop guarantees funded by "other people's money" is always inevitably a bad idea. Case in point: Spain, which just said that its economy will contract in Q2 even more than in Q1. This reminds us why any claims of "austerity" are a total mockery: only Keynesian priests seem unable to grasp that countries gain much more upside from pushing their economies to the brink only to be bailed out, than from engaging in real economic viability and sustainability programs: i.e., living within your means (something we proved empirically before). Finally, this is also a stark reminder that when one removes out all the bailout noise and the daily high-beta gyrations of sovereign debt, the real reason why sovereign bondholders should be buying Spanish debt - an actual improvement in its economy- continues to not only be absent, but by the very nature of endless now-monthly bailouts, becomes impossible as debt never fixed more debt.
Here is the latest steaming pile of reality just served from from Spain, via Bloomberg:
- Data for 2Q show contraction was “slightly superior” to that of 1Q, Spain’s economy minister said today during a conference in Navacerrada, near Madrid.
- The deterioration is "not very significant" says Guindos
- Spain is “totally committed” to austerity: Guindos
- Says EU summit “intensified” European project, sent message of solidarity
- Says Spain must show public finances, services are sustainable
No they're not. It's ok though: the government did not cut more spending than necessary
in order to live within its means, because it knows that if things get
bad enough, and yields on debt soar, someone, somewhere will step in and make the price of debt, so critical to plug the ever grown deficit hole, sustainable for just a little longer, even as deficits accumulate to a level that is simply ridiculous, at least until the next risk flaring crisis.
This is precisely what Monti and Rajoy showed at last week's Eurosummit: every time things get worse, someone who has done the right thing, has to fold to keep the party going for all the crack addicts.
The problem with this approach, and it applies to the US entitlement state underfunded by about $100 trillion just as much as it does to Europe, is that at the end of the day only math matters. One can push for artificially lower yields to keep the game of musical chairs going longer, but not even naive children believe that there could be a happy ending to a farce in which one time bailouts continue to enable self-destructive behavior, which in turn becomes a Mutually Assured Destruction gambit to the worst offenders.
In the mean time Spain's already deep recession is about to become even worse, to be followed by Italy, France, and soon, Germany too, now that it has decided to spread the wealth.
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Don't stop printing.
Or stimulatin'. 50 bps rate cuts and Chinese stimulus on the way...
I was "told" the Law of Dwindling Returns is for us muppets.
So, it applies to sovereigns too?
There's no such thing as a free lunch.
Marc Faber on the perils of money printing's unintended consequences:
http://www.planbeconomics.com/2012/03/17/marc-faber-the-perils-of-money-printings-unintended-consequences/
"One can push for artificially lower yields to keep the game of musical chairs going longer..." Bernank is ready to play ad infinitum, or at least decades like Japan. Game is rigged and fucked.
Send the bill to the Germans
The Germans have always been the victims of their leadership and their willingness to obey it.
What the fuck is "slightly superior"? ... Who the fuck are these turds... oh never mind.
'Slightly superior' means that by making things seem worse now to get a bailout, when the gravy train finally comes off the rails they will be able to claim a better and stronger 'recovery' through austerity' in the aftermath in the hope that stock markets will soar, I think...
I'm sure there's some logic in there somewhere...
Did he say slightly superior? Even George Orwell couldn't come up with something like that in his masterpiece 1984,
For in a single hour all this wealth has been laid waste.”
And all shipmasters and seafaring men, sailors and all whose trade is on the sea, stood far off and cried out as they saw the smoke of her burning,
“What city was like the great city?”
And they threw dust on their heads as they wept and mourned, crying out,
“Alas, alas, for the great city
where all who had ships at sea
grew rich by her wealth!
For in a single hour she has been laid waste.
Rejoice over her, O heaven,
and you saints and apostles and prophets,
for God has given judgment for you against her!”
(Revelation 18:17-20 ESV)
When this thing finally blows, the columns of smoke will be visible for miles....
You'll hear the bang on the other side of Saturn...
For all intents and purposes when this thing goes it will be a global event. This means everyone has the best seat in the house.
Except for those who are more equal than others....the 1%ers if I'm not mistaken. They get front row center seats.....right where they can be splashed with their fellow 1%ers blood and guts.
They don't care; they gulp down their own kind.
1%'er hunters will be the Nazi hunters of the 21st century!
bring it
When this thing finally blows, the columns of smoke will be visible for miles....
Dont hold your breath... You would'nt even know what happened and when.
math
...and stuff.
This line:
works better in the voice of a whiny teenage girl, and if you add the words "like" and "and stuff" - and sounds more believable as well!
wait for Q3/Q4 and... like for the sunday golfer, 2013 will be really downwhill.
Is that like saying my dick is slightly superior in shortness than the average American weiner?
Always can put a positive spin on anything I guess.
In Q3 it will be "even more superior"
You can bitch about the situation all day long but the bottom line is how do you use this knowledge to your advantage? How long will the market levitate on the hopes and aspirations of a political class desperate to keep the status quo alive? If you can answer that quesion, then maybe one can position themselves to survive and prosper.
Buying rental properties near universities, PM's, and shorting XIV everytime the VIX is below 17.
me, i have the locations of all the fools, who were on episodes of "Doomsday Preppers." if you're stupid enough to appear on that show, you deserve to be seperated from your stash!
Haha... Smart ones will always survive, even without any stockpiles.
I sometimes think to myself as well, that these guys with big caravan or mobile units with big solar panels on top. When the TEOTWAWKI is here, and there is lawlessnes, these guys driving these mini motorcades will be like those flashing targets in video games, whom you can shoot for multiple bonus points.
Good idea for making (zombie) friends.
When TSHTF those places will be zombie magnets.
I've been pondering the rental properties near universities myself. However, there is a huge bubble in student debt, and like other bubbles, this one is unsustainable. I wonder what will happen to university enrollment when that bubble pops. Tuition costs will likely drop, but so may enrollment once this ridiculoous monetization of education ends. So is there a bubble in university area rental property and will it pop?
In a chaotic and dysfunctional world there is no such thing as perfect wealth whether it's called guns, gold, food or whatever. Perhaps only a sense of community can come close to riding out the approaching tsunami.
Been buying domains with names similar to famous e-learning sites... Universities are overrated. I expect formal education to last shorter and become cheaper.
wait and watch. student loans dry up and mommy and daddy watch their 401k's drop like their home value, and they ain't paying for billie and sallie to hook up at college in a $1,000/month rental.
how is this even possible?
Cheers!
http://www.youtube.com/watch?v=rUQT4hykPd0
In the old days and even now, cattle ranchers brand their cattle so they know which ones belong to who.
In this high tech world, the same is done to people in a different sense.
Everything is now recorded, rightly or wrongly, in a digital format, matched to "social security" numbers, fingerprints, eye scans and photographs and kept for a digital eternity.
There is no "forgive" or "forgetting".
A person receiving a DUI thirty years ago will still be a "drunk driver", even if he or she no longer drinks. Someone who was arrested and never charged will always have the arrest shown, regardless whether guilty or innocent, as the arrest in and of itself implies where there is smoke there is fire.
This applies to everyone of course, except for those responsible for implementing and maintaining the digital "big bro".
If we object to the continuous debt cycle, we will be branded.
I think this place we live in is akin to a couch potato hell.
One day people will figure out how to end this madness. Even the ones who say "You have nothing to worry about if you have nothing to hide."
Nothing to hide, huh? Then WHY are YOU wearing clothes?
EVERYONE has something to hide.
Consumer consumption is consent for the big bro state. Cut your consumption in half and help accelerate the crash of a broken system.
Now... now... dont be talkin' bout doin' summit practical. Diss-cussin is our way of tellin 'em to fuck off.
FAIL. Comments like that just perpetuate status quo stupidity..
Only if the rebellion fails.
Of course the real agenda is never mentioned; that of incremental (and truly insidious) total control over all of the sovereign states with unelected technocrats in charge of the debt enslaved sheeple throughout the Eurozone. Goebbels would be laughing at this continuous proaganda dog and pony show. The only question remaining is who becomes the new Hitler?
Exactly; and November isn't too far off.
Nothing happens in November, or even after. Just the carrot for the "awake sheeple" to look forward to for now. And then there will be something else.
I hope you are correct.
LOL :
Sort of contradictory .. and then this :
Like ... we'll all go down together
... Baghdad Bob in Spain ?
But the sovereign's credit is never questioned.
And the bank will hold assets guaranteed by the sovereign.
So all is well.
IBEX 35 made another new high for the move on Friday.
http://www.euroinvestor.com/stock/chart.aspx?id=555407#InstrumentId=5554...
The lows in Europe are in.
I'm not sure how well you know the components and weightings for the IBEX, but it is basically three main subsectors:
Banks/ finance - the big question is what hit to equity will the conditional aid create. The idea that the other European partners are going to inject capital but leave equity unscathed is pretty remote.
Utilities - the price fixing mechanism means these are bleeding cash. There is a capital shortfall of around €27bn needs to be addressed. The consumer cannot pay more, the government is broke and therefore there is no immediate solution.
Construction - nuff said
It may be that the lows are in - the low being around 6,000, but we are up 20% from there on the back of some pretty vague agreements and there is still plenty of hidden nasties.
Anyway, given the 6% rally on Friday (which continued after hourse) that was not matched by the bond market, I have gone short as I expect the market to sell off this week as PMI data shows there is no light on the horizon.
You are wasting your time. He will be posting the same shit again tomorrow, if not today.
Please make it default!!! I cant take it anymore!!!
A contraction being "superior", does this mean you're losing or gaining capital?
Damn politicians should talk straight.
money, money...
http://www.youtube.com/watch?v=E5RSrNFj_is
Send obamacare over. That will fix their debt problem.
DYLAN GRICE: The Next Crisis Will Be Born Out Of The US Treasury Market
http://www.businessinsider.com/dylan-grice-next-crisis-treasuries-2012-7...
Downhill from here on Jul 1, 9:37 AM said:
How long can the Fed artificially keep interest rates on treasuries low through their endless gimmicks without creating inflation? And, how will the Fed react when it becomes apparent that the US will be unable to pay off its debts without serious inflation? In other words, what happens when the solution to a fiscal crisis conflicts with monetary policy objectives? I guess we stay tuned to find out.
The US stock market algos absolutely love this shit. As long as the banksters have this perpetual can kick going on, nothing is going to happen.
We all know that a crash will happen, we pretty much all know why it will happen, but none of us know when it will happen. It's futile to prognosticate about it day after day after day.
Everybody ask if ESM is next TARP or not.......Sure it is ! A new "Too Big To fail" !
See here whats happened with markets after Bush sign TARP in 03 October 2008: crash:
http://pracompraroupravender.blogspot.com.br/2012/06/mais-um-too-big-to-fail-volatilidade.html
debt never fixed more debt.
The only thing everyone needs to understand about debt is:
Strong owes money to strong (among peers): Debt is forgiven or one will offer one's slaves labour (tax) to the other.
Strong owes money to weak: Fuck off, debt settled.
Weak owes money to strong: "You, your wife, your kids and all your property belongs to us."
This is the basis of all the summits and debt negotiations. Rest is just BS to feed the sheeple to make it look like something credible and sincere.
weak totals billions of us, with rope.
strong rope around strong necks.
strong turned into lamppost windchimes.
time for lunch, it's the weak-end you know!
People have been taken into slavery physically and forcefully, Africans as of late, and how many hanged their massa's despite the advantage of numbers?
It doesnt work that way.
Follow the yellow brick road and drive a dump truck...
The plan is possibly to incrementally impoverish the population and to break its will. At that point the populace will embrace any plan put forward by the controllers in return for a piece of bread.
We therefore run the risk of having electronic only money, internet controls, possibly an implanted RFID chip that can monitor our movements, compulsory public service, compulsory death rather than treatment at a certain age, humungous death duties, and much more including compulsory surrender of gold, silver and guns.
The American dream has gone from dream to illusion and is well on its way to nightmare.
Goodnight America
doubt it! the seventh trumpet is about to blow!
If only it would. But somehow I think there is still much suffering to come.
It is ALWAYS and FOREVER in the power of The Peoples of countries everywhere on the planet and throughout all time ... to trade through media of their private choice. If that media has universally rational valuation with all other goods-at-market (and bears absolutely no nexus to third-party right of interposition, like raw copper, silver and gold), then they have IMMEDIATE recourse and respite from the woes of the elites.
If more debt never solved the problem of indebtedness, then why do we tolerate a monetary scheme that automatically co-generates inflation and interest obligation, each by the other?
The world's banknote scheme structurally lends currency into existence as principal at interest, with NO WAY to obtain the interest servicing funds but to borrow THAT into existence ALSO, as NEW principal at interest.
The problem has NOTHING to do with people! It has EVERYTHING to do with the basic system they're perpetuating. The REAL SOLUTION is to chuck out the 'system' and reinstitute the poly-metallic scheme it supplanted. Not the mono-metallic gold boondoggle, either! Because that's every bit as susseptible to the idiotic central control of elitists! The poly-metallic scheme sheppherds gold into appropriate valuations and distributes independent economic empowerment throughout societies.
And when you re-institute metals make sure that fractional reserve banking and bankers bonuses are also trashed.
That will be largely neutralized by re-institution of self-liquidating Real Bill clearance in private distribution.
That will be largely neutralized by re-institution of self-liquidating Real Bill clearance in private distribution.
Everyone should start looking beyond Germany. In Germany there is simply no political alternative to the ongoing madness but in the Netherlands and Finland there are in fact opposition parties who offer an alternative approach to this mess. So keep an eye on the upcoming elections in the Netherlands in September where the gubmint broke down because one party refused to continue to spread the wealth and where anti-euro parties achieve approx. 40 percent in recent polls.
More Equity Rally Expected.
Any traders predicting a multi month equity rally apart from me ?
As of June 30th I am.
Last week was the turning point.
Further equity upside and USDX weakness expected this year according to my analysis.
However the SPX big picture remains very bearish and unfortunately this will not change.
http://www.zerohedge.com/news/2012-12-24/market-analysis
Spain 2 Italy zero!!! Viva Espana!!!!!!!!!!!!!!!