Warren Buffett's “financial weapons of mass destruction” - how are you?
The computerisation of European jobs - who will win and who will lose from the impact of new technology onto old areas of employment?
After all 31 banks passed Dodd-Frank's "stress"-test with flying colors and awaited The Fed's CCAR blessing to spread the wealth to shareholders, we thought ironic that The Fed's Tarullo had previously commented that "we don't want banks to know the stress-test scenarios and tailor their portfolios to meet our goals," because that would never happen. The CCAR results are now out and 28 of 31 passed. Deutsche Bank, Santander failed for "qualitative" reasons (with significant and widespreasd deficiencies in risk management) and Bank of America will need to resubmit their proposal.
"Neither Central Bankers Nor Market Participants Can Extract Any Information From Current Bond Valuations"Submitted by Tyler Durden on 03/11/2015 09:46 -0400
All is not what it seems. Markets are upside down. Some ‘risk?free’ assets can be purchased for a guaranteed loss. EU asset markets (ex?Greece) are soaring at the same time that EU disunity is rising. An interest rate hike by the Fed is likely to cause a rally in Treasury bonds and a steep correction in US equities.
Earlier today, Greek Prime Minister Tsipras was busy not making German friends, following the latest Greek overture to confiscate German assets in response for allegedly unpaid German WWII reparations. “After the reunification of Germany in 1990, the legal and political conditions were created for this issue to be solved. But since then, German governments chose silence, legal tricks and delay. And I wonder, because there is a lot of talk at the European level these days about moral issues: is this stance moral?” Tsipras said and added that "despite the crimes of the Third Reich and Hitler’s hordes, the German debt was written off." As a result Greece is now seeking to recoup German WWII reparations which may amount to as much as 80% of Greek GDP!
The entire formerly rich world is addicted to debt, and it is not capable of shaking that addiction. Not until the whole facade that was built to hide this addiction must and will come crashing down along with the corpus itself. Central banks are a huge part of keeping the disease going, instead of helping the patient quit and regain health, which arguably should be their function. In other words, central banks are not doctors, they’re crack dealers and faith healers. Why anyone would ever agree to that role for some of the world’s economically most powerful entities is a question that surely deserves and demands an answer.
Having been shamed what seems like numerous times now by the Eurogroup in recent weeks, Greece suffered its greatest humiliation today. First, the farcical renaming of 'Troika' to 'Institutions' was summarily dismissed as "semantics," as France played good cop (asking for the group not to call it Troika) while Germany's bad-cop Schaeuble used the T-word four times in one interview. And second, Eurogroup chairman Dijsselbloem stated that "technical teams will begin considering Greek reform plans on Wednesday," adding that some of the negotiations will have to take place "in situ in Athens." So instead of discussing reforms with institutions in Brussels, the Varoufakis-defined "cabal of technocrats" Troika will be back on Greek soil to straighten out the nation.
We already know that the Bank of Japan will monetize 100% or just over of all Japanese gross sovereign bond issuance (source). As for Germany, on a run-rate basis, and assuming allocation based on the abovementioned capital key, it means that for the next 12 month period, assuming no major funding changes in Germany, the ECB will swallow more than a whopping 140% of gross German issuance! Or, said otherwise, the entities who will buy more than all gross German and Japanese issuance for the next 12 months, are the ECB and the Bank of Japan, respectively.
As Mario Draghi unleashes his trillion euro bond buying program - aimed from what we are told, at lowering risk premia in credit markets to stimulate the eurozone's economy from utter stagnation - things are not going according to plan. Away from Greece, peripheral bond spreads are all up 8bps on the day and stock indices are mixed on this first day of DOMO (Draghi Open Market Operations) Of course, the other reason for Q€ is to implicitly (because one would never explicitly admit to joining the currency wars) devalue the currency - thus improving competitiveness and exports for the EU; but that's not working out so well as Germany's exports dropped and missed by the most since August... this was not supposed to happen.
To some (mostly those in the 1-10% wealth bucket) the main event today is the iWatch unveiling. To others (mostly those not in the 1-10% wealth bucket) it is the Eurogroup meeting in which the fate of Greece will be discussed and perhaps decided. One thing is certain: virtually nobody will care when the Fed's Mester and Kocherlakota speak later today as the Fed is now - supposedly - set to hike no matter what. Here is what the other main events are for the balance of the week.
It was not all smiles and jokes as Mario Draghi's European QE officially launched in Europe, with Greece leaving the proverbial turd in the monetary punch bowl.
A Black Swan Lands In Southern Austria: The Ripple Effects Of "Mini-Greece Going Off In The Heartland Of Europe"Submitted by Tyler Durden on 03/08/2015 23:48 -0400
Austria’s decision to wind down Heta Asset Resolution AG sent ripples through the financial system, causing credit rating downgrades in Austria and bank losses in Germany: "It’s a mini-Greece going off in the heartlands of Europe." Here are some of the consequences, and delightful ironies, of a completely unexpected black swan landing in the south of Austria.
People think history is not repeating itself because a loaf of bread does not cost 10 million Deutsche Marks...
Back in 2009, the United Nations Statistical Commission endorsed a revision to the System of National Accounts (SNA), which sets the international standards for the compilation of national accounts. As a consequence, Eurostat has amended the European equivalent of the SNA, the European System of Accounts (ESA) leading to a revision of GDP figures. Out of nothing but accounting smoke and mirrors, the reclassification has had a positive effect on GDP, increasing it on average by 3.5 percentage points for the EU and the Euro area as whole.
While Russia's envoy to NATO notes that statements by the deputy head of NATO testify to the fact that the leaders of the bloc want to intervene in Russia’s internal politics, and are "dreaming of Russian Maidan," Washington has a bigger problem... Germany. As Der Spiegel reports, while US President Obama 'supports' Chancellor Merkel's efforts at finding a diplomatic solution to the Ukraine crisis, hawks in Washington seem determined to torpedo Berlin's approach. And NATO's top commander in Europe hasn't been helping either with sources in the Chancellery have referred to Breedlove's comments as "dangerous propaganda."