The Tumblin' Default [8]
From Tumblin’ Tuesday – Keep on Rolling [9]
By Phil of Phil's Stock World [10]
Got to roll debt baby, call it the tumblin' default [11].
That's the theme for the week as Greece gets yet another final deadline extension to come up with more and more concessions so it can borrow even more money that it will never be able to pay back. "Honey, got no money" is the line that should be obvious to EU Stones fans as the IMF's chief economist insisted that Greece must cut wages to boost competitiveness and pull the country out of its economic quagmire. "Either you basically increase productivity growth a lot and quickly, and you keep wage growth moderate, or you decrease wages," said Olivier Blanchard.
"It is a pretence that the measures are taken to forestall bankruptcy," Communist party leader Aleka Papariga told the gathering crowds at today's National Strike [12]. "On the contrary, they will lead the people to misery to benefit the plutocracy and capital," she said.
Sadly, only the Communists are telling the people the truth in Greece - the people are being sold into decades of wage slavery as a population that has already voluntarily accepted 25% wage cuts is now being forced to accept additional 30% wage cuts while the ECB and IMF shove another $192Bn worth of debt down their throats that is ONLY to be used to pay off bondholders who took advantage of them in their time of weakness to force them to roll over their debt at record high rates.
Sacrifices MUST be made, says the former VP of the ECB - who is now the Prime Minister of Greece (unelected as Papandreou was forced out) - but he's not talking to the creditors, but the Greek people, who will still, even if they work for 1/2 wages for the rest of the decade, be 120% of their GDP in debt by 2020 (down from 160% today). So the Greek people are being asked to sacrifice their own retirement and their children's future rather than telling the Banksters to take a hike.
And people wonder why we can't get a deal passed? As I said in yesterday's post [13], either Greece passes a debt deal and Athens will be in flames (strike began at midnight) or Greece will not pass a debt deal and Europe will be in flames (DAX down 1% at 8:05). That simple logic allowed us to go short on the Futures in Member Chat this morning as the Dollar tested 79 and my 4am comment to Members was:
Dollar bouncing off 79 is going to be bad for the indexes. Looks like fake pumping to me and Greece not even fixed yet. I am literally scared to short these days but 2,525 is a good line to watch on the Nas (NQ) and 825 on the RUT (/TF) and $1,725 on gold (/YG) should be good for a little ride down if the Dollar can get over 79.15 (now 79.12) so let's call that the bear line with 79.20 confirming Dollar strength although not meaningful until over 79.50.
Already the Nasdaq is down to 2,517 and, at $20 per point, that's a quick $160 per contract. The Russell is down to 822 but that one pays $100 per point so $300 per contract there and gold is our star, with a drop to $1,715 at $33.20 per contact, edging out the RUT shorts with gains of $332 per contract - not bad for a morning's work, just in time to pay for 200 Egg McMuffins.
Percentage-wise, we did better with our TLT trade, also detailed in the morning post as I said there (also in conjunction with my prediction of strife in Greece: "I am liking those TLT longs (we picked up the weekly $115 calls for $2)!"
As you can see from our chart on the left, even those late to the party in the morning were able to get in on the fun as TLT dropped down to $1.85 and didn't get back over $2 until after 10 and continued on to our initial $2.50 target (up 25%) and made it all the way past $2.80, for a 40% gain in a day. This was a great start for our new virtual $5,000 portfolio as we picked up an aggressive TLT spread in the morning.
As long as we can keep making quick, little, hit and run trades like this - we really don't care which way the market goes, nor do we care if the VIX wants to pretend that this market isn't volatile. In fact, in this trade, we took advantage of the low VIX to buy a relatively low-premium call (the $115 for $2) which gave us tremendous leverage on this 10% move in TLT. Generally, we prefer to be sellers of premium but, when the premium is so cheap it's not attractive for us to sell - we know how to climb over to the other side of the table and make a few bets for ourselves.
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If all goes well, we'll get a chance to reload on TLT this morning as we get the usual Dollar dump into the morning's open as they pump up the Futures to bring in the next round of suckers. Of course, we are now those suckers as well as we're doing our best to be more bullish as long as the technicals hold up and this morning's little dip is NOT capitulation by the bulls.
Both of our other trade ideas were bullish ones yesterday, one on CSTR and one on AMX. The CSTR trade was at 9:27 [14], just ahead of the bell and made for an easy entry as the stock traded to lows of $48.66 at 10:20. My trade idea was just to sell the Jan $42.50 puts for $6 and we also discussed adding the Jan $45/60 bull call spread for $6 as well as a riskier way to go for a $15 profit, rather than $6 but we felt the numbers justified $60 ahead of earnings. It seems the markets already agree with our assessment as CSTR is already at $60 this morning.
We're trying to ignore the news but: "You could sell your home, owe nothing more on your mortgage and get $30K," goes a letter from JPMorgan to a delinquent homeowner. With the foreclosure process gummed up, banks are finding it less expensive [15] to allow short sales, forgo their right to pursue unpaid debt, and even offer cash. This should really piss you off if you're paying your mortgage like a good little drone but the same bank (Chase) won't refinance you at 4% because - for whatever ridiculous excuse - "you don't qualify."
What we need in this country is for some Communists to come over and teach the people how to organize themselves to stand up to these Corporate Monsters but, oh yeah - just the mention of the word Communist puts most of you into a Pavlovian frenzy as you've been conditioned your whole life to think anything Communist (ie. anti-Capitalist) is somehow evil. I guess bending over and taking it IS our only option - Yay Capitalism!
If the people in this country had any balls (or actual leaders of their own and not just the Corporate puppets we're allowed to vote for), we'd have a mortgage strike and simply not pay this month. That would choke off about $200Bn in monthly mortgage revenue from the Banks and I'm pretty sure it would only take one month before the banks capitulate and come back to the table with a reasonable way to share the 0.25% borrowing rate they get from the Government with those of us they are currently squeezing for 5% and higher loan payments.
Ireland is currently trying to organize a Mortgage Strike [16]: "The nuclear weapon is for borrowers acting in concert and to say that unless proper and sustainable solutions are put in place which are fair and reasonable, then we should not continue to pay under these current conditions," says Ross Maguire, of the New Beginning Trade Union. "It is radical but it is where we are going if things don't change. It's the last option but it is better that people like us have control over it because the danger is that if that kind of people power was misdirected it could wreck the financial system. New Beginning doesn't want to smash the financial system; we merely want to reform it and re-balance power between banks and borrowers."
This is the tightrope being walked in Europe, and this is the fire that may fan the flames of Global revolution. What's going on in Greece is a practice run by the power elite to see how far they can push the masses into servitude before they show a little backbone and rise up.
So far, the Greek people have been surprisingly docile as their retirement programs, health care, current wages and Government Services have been slashed, even as their tax rates have risen by over 30%. In the US, the middle class sheeple are also dying the death of 1,000 cuts with thousand more yet to come.
Should this make us bearish? Of course, not - it's a huge victory for Capitalism as getting back to free labor has been our goal ever since Lincoln screwed it up in 1863. This time, there won't be a war to defend the Capitalist's right to own slaves - this time we will get the people of nation after nation to "volunteer" to spend the rest of their lives living in squalor and servitude as our children and our grandchildren will pay for our excesses.
Because, after all, it was our own fault for buying that couch on layaway, right?