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1914 Deja Vu: Draghi's Cap On ELA Is Today's Czar Nicholas Troop Mobilization





It’s all so very 1914-ish. Draghi’s cap on bank-supporting Emergency Liquidity Assistance (ELA) is the modern day equivalent of Czar Nicholas II’s troop mobilization. Good luck walking that back.

 
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Puerto Rico Announces Bond Payment "Moratorium"





Having concluded last night that Puerto Rico debt is "unpayable," and that his government could not continue to borrow money to address budget deficits while asking its residents, already struggling with high rates of poverty and crime, to shoulder most of the burden through tax increases and pension cuts, Padilla confirmed tonight that: PUERTO RICO TO SEEK "NEGOTIATED MORATORIUM", 'YEARS' OF POSTPONEMENT IN DEBT PAYMENTS. Likening his state's situation to that of Detroit and New York City (though not Greece), Padilla concluded, the economic situation is "extremely difficult," which is odd because just a few years ago when they issued that bond - everything was awesome?

 
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Greece Threatens 'Unprecedented' Injunction Against EU To Block Grexit





Having told the citizens of Greece that the European leaders will not kick them out of Europe because "the cost of throwing them out is too high, enormous," it appears Greek PM Tspiras has another plan to ensure - no matter what the outcome of the forthcoming referendum - that there is no actual Grexit. As The Telegraph reports, Greece has threatened to seek a court injunction against the EU institutions, saying "we are taking advice and will certainly consider an injunction at the European Court of Justice. The EU treaties make no provision for euro exit and we refuse to accept it. Our membership is not negotiable."

 
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A Wall Street Crash Course: How To Sell $1 For $100





On Wall Street, a vital skill is the ability to sell something that you know is completely worthless. Goldman Sachs did it when it sold ABACUS 2007-AC1 to investors while hedge fund manager John Paulson was betting against it. Paulson paid Goldman $15 million to peddle this junk, which was a collateralized debt obligation that would make money when millions of people lost their homes. The SEC charged Goldman with fraud, and they eventually settled for $550 million. If you're an enterprising Wall Streeter who wants to make a name for himself without breaking the rules, you can operate a tantalizing scheme that investors can't resist. It's called Shubik's Dollar Auction.

 
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"Retired" Dallas Fed Chief Joins Barclays As "Senior Advisor"





Spin revolving door, spin...

 
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Technically Speaking - Bears Are Winning





Whether, or not, a Greek exit from the Eurozone or a potential debt default is "the thing" that sparks the next major correction in the markets is unknown. Historically, such a widely "known" event is generally already factored into the markets and has much less of an impact when that event eventually comes to fruition. As Art Cashin suggested this morning: "I think China may be more important than Greece. Stick with the drill – stay wary, alert and very, very nimble."

 
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ECB Says "Grexit Can No Longer Be Excluded", Hints At More QE





It seems Goldman Sachs' conspiracy theory was right all along...

ECB'S COEURE SAYS ECB IS EVEN READY TO USE NEW INSTRUMENTS, WITHIN ITS MANDATE
GREECE COULD EXIT EURO, COEURE SAYS IN LES ECHOS INTERVIEW

This is exactly what The ECB wanted all along (and their leaders overlords) - all they needed was an 'excuse'. Or, in the parlance of Rahm Emanuel's times, "Let no Greek default crisis go to QE waste."

 
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This Insane Debt Chart Explains Why Chinese QE Is Inevitable





Because the central government is ultimately responsible for guaranteeing local government debt, and because yields on the new muni bonds are so close to those on treasurys, the newly issued local government bonds are really just treasury bonds, meaning that, in essence, the supply of Chinese government bonds is set to jump by CNY2 trillion in the coming months. If all of the local government debt ends up being refinanced, the end result will be the equivalent on CNY20 trillion in additional treasury supply.

 
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SocGen Says "Raise Cash" As Volatility, Turbulence Ahead





The unanticipated recent Greek political news flow and consequent market stress are addressed in our portfolio construction by the resilience we built into higher volatility scenarios and unexpected sources of turbulence. Indeed, the risk is not so much Greece but the structural illiquidity of the market which will exacerbate any moves up or down which should be part of the equation.

 
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Greece, Democracy, And Magical Thinking





Regardless of what the Greek people choose, at least the choice will be theirs, along with the consequences.

 
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"Unleash The Bullard": S&P 500 Plunges To 3-Month Lows, Nears Red For 2015





Not "off the lows"...

 
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"Of What Use Is A Gun With No Bullets?", BIS Says Central Banks Defenseless Against Coming Crisis





Risk-taking in financial markets has gone on for too long. And the illusion that markets will remain liquid under stress has been too pervasive. But the likelihood of turbulence will increase further if current extraordinary conditions are spun out. The more one stretches an elastic band, the more violently it snaps back. Restoring more normal conditions will also be essential for facing the next recession, which will no doubt materialise at some point. Of what use is a gun with no bullets left?

 
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Dow Tumbles To Overnight Lows, Down 650 Points From "Greece Is Rescued" Highs





But risk was contained? Greece didn't matter... Once Europe was closed the selling would stop?

 
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Massive Greek "No" Protest In Front Of Parliament - Live Feed





With the ATMs running dry and lines forming at gas stations and grocery stores, Greeks are understandably restless and have once again gathered en masse in Syntagma Square.

 
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VIX Bursts Above 17.5 As Sleep-Walking Markets Awake





Mainstream media-ites continue to believe that a long period of low volatility is a sign of market health. In fact it is quite the opposite. A sleep-walking market is a reflection of complete disregard as to risk. Markets enter such periods of complacency when there has been a long uptrend, with periods of very low volatility reflecting where the market has come from, not where it is going. Such periods are far more likely to be a sign of an impending trend reversal than of a continued uptrend.

 
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