Illinois on the Brink of Financial Disaster

posted by Eric De Groot at Eric De Groot - 3 hours ago

Illinois, California, Wisconsin, New Jersey, New York, etc. are all near brink of financial disaster. Cutting spending as the economy rolls over is political suicide. This means the economic can will be ki.

Jean-Claude Juncker - Europe Is Doing God's Work By Lying About Greek Insolvency, And Keeping EURUSD Longs Profitable 

Submitted by Tyler Durden on 05/23/2011 08:51 -0400

A few weeks ago, the entire world was made aware that nobody in Europe is to be trusted any longer after Jean Claude Jun(c)ker admitted he lied to the media ahead of what Spiegel had leaked earlier was a "secret" meeting to kick Greece out of the eurozone (turned out to be only half true - Greece was not and will not be kicked out... voluntarily). The purpose for the lie: "self-preservation." Today, in a much anticipated showdown between the magazine (which Greece said would sue for spreading salacious, yet true, rumors), and the bureaucrat, we learn that it is not Goldman, but Europe, that is doing God's work by lying on a daily basis about the Greek insolvency: "The most important commandment is not to inflict harm on others. Although it isn't stated quite that way in the Ten Commandments, it follows from them. The finance ministers of several Euro Group nations had agreed to meet on Friday with the president of the European Central Bank (ECB), Jean-Claude Trichet. Because the financial markets in Europe were still open and trading was still underway on Wall Street, we had to deny the existence of the meeting. Otherwise the course of the euro against the dollar, which had already fallen as a result of your report, would have plunged disastrously." Ah yes, doing God's will by focusing on the greater good, which is making sure those EURUSD longs are not impaired. If this is not confirmation that Europe is run by sociopaths, then nothing is. All this, and much more, including such pearls as "If the donkey were a cat it could climb a tree. But it is not a cat" read the full surreal interview below.

Eurozone Debt Crisis Deepens Sending Euro Lower And Gold To New Record At EUR 1,080/oz 

Submitted by Tyler Durden on 05/23/2011 07:53 -0400

The euro, global equities and bonds in peripheral Eurozone countries are all lower this morning on heightened concerns about the debt crisis in the Eurozone. The euro has fallen against all currencies and is now at a record low against gold at EUR 1,080.21/oz. Silver is lower against most currencies but is higher against the Australian dollar and the euro ( EUR 24.80/oz). Greece’s 10 year government debt has surged to 16.98%, Portugal’s to 9.6% and Ireland’s to a new record at 10.76%. The yield on Italian 10-year government debt is up 9bp to 4.85% after S&P cuts its rating outlook on Italy’s sovereign debt to “negative” from “stable”. The Spanish 10 year bond has risen 11 basis points to 5.57%. Besides sovereign debt risk, gold is also being supported by geopolitical risk as seen in the increasingly unstable nuclear armed Pakistan where armed militants attempted to take over Pakistan’s naval air force headquarters. There is increasing tension between the U.S. and Pakistan after what the U.S regards as Pakistan’s failure or collusion regarding Osama Bin Laden. China has increasing economic and military ties and interests in Pakistan and has vowed to standby Pakistan and has called on the world to respect Pakistan’s sovereignty. Separately, in an interview with the Financial Times on Saturday, Henry Kissinger has warned of a world war involving Pakistan and India. 

 

 

 

 

 

Complaining About High Taxes? Don't Tell France And Germany... 

Submitted by Tyler Durden on 05/23/2011 07:50 -0400

To all Americans complaining about high taxes, better keep your beef on this side of the Atlantic. According to a recent OECD report, captured by the Economist, when it comes to total taxes paid out by both employees and employers, the US doesn't even come close to its just slightly more socialist European cousins. In fact, while total taxation as a % labor costs is about 30% in the US, comparable with Japan and Ireland, in France and Germany this number is nearly half of the total. Which explains why there is no greater threat to these two countries than the perpetuation of the status quo welfare state. Should Greece file Chapter, who knows what will happen to the Bismarckian ideal. Incidentally, on the other end: Chile, which pays out just 7% of labor costs to taxes. Per the article: "The report splits out the tax burden on employment which is paid by employers (in the form of social-security payments) and employees (as income tax and more social security). France and Germany have some of the most costly tax regimes—with people who earn the average wage taking home just over 50% of their total labour cost. The effect of fiscal austerity, particularly across Europe, has meant that the tax burden rose in 22 out of the 34 countries in the OECD from 2009 to 2010. Meanwhile real incomes for average-wages earners fell in 15 OECD countries. As the second chart shows, these reduced earnings caused by the world recession and subsequent inflation tend to have a much larger impact on incomes." 

 

 

 

 

Greek CDS-Buying Villain Hellenic Postbank To Be First Casuality Of Hellenic "No Bid" Privatization Reality ^new

Submitted by Tyler Durden on 05/23/2011 09:56 -0400

• George Papandreou
• Greece
• Reality
• Reuters
• SWIFT

A little over a year ago, when the Greek CDS scapegoating campaign was in full swing (you see, the reason why the first $1 trillion Greek bailout failed is because of those evil, evil CDS traders: it had nothing to do with Greece being, well, bankrupt), one of the most hilarious discoveries was that among the chief speculative villains was none other than the state-owned Hellenic Postbank. That's right: the government of Greece was profiting by betting on its own demise even as it was making a stink about others doing the same. Well, justice for the insolvent is short, swift and quite poetic. According to Reuters, the first entity to fall to Greece's privatization ambitions will be the very same bank. (Granted, this is not really news: Greek Reporter noted this some time ago, see below). What will be funny is when Greece puts up its insolvent banks on the block and discovers that nobody wants to come within 10 feet of them, unless, of course, it is JP Morgan buying it up with the assistance of Maiden Lane IV, also known as My Big Fat Greek Bailout Taxpayer Funded Conduit, for 2 drachmas per share.

Attention Shifts To Rip Van Eric Holder, Who Contrary To Conventional Wisdom, Is Not Frozen In Carbonite 

Submitted by Tyler Durden on 05/23/2011 10:28 -0400

Finally, with about a two year delay, popular opinion has finally caught up with the fact that America has an Attorney General, and that Attorney General is not getting paid $186,600 a year merely to conduct medical research on the dangers of carbonite freezing. In its headline article "Prosecutors Faulted for Not Catching Credit-Crunch ‘Bandits’" Bloomberg has done what every other media was supposed to do years ago, namely ask the well-rested Eric Holder what the hell is the reason that not a single criminal investigation being launched against an entire generation of criminal and corrupt bankers (granted, not all of them....just the multi-millionaires). "In November 2009, Attorney General Eric Holder vowed before television cameras to prosecute those responsible for the market collapse a year earlier, saying the U.S. would be “relentless” in pursuing corporate criminals. In the 18 months since, no senior Wall Street executive has been criminally charged, and some lawmakers are questioning whether the U.S. Justice Department has been aggressive enough after declining to bring cases against officials at American International Group Inc. (AIG) and Countrywide Financial Corp." It is stunning that this is only the first time someone in the mainstream media has had the temerity to actually wonder why nobody had previously thawed Holder from his resting place deep in the nether regions of Jaba's barge where his carbonite statue is publicly presented for all to enjoy.

2, 5-Year Spec Treasury Long Positions Surge, 10 Year Shorts Highest Since August: Is Major Curve Flattening Next? 

Submitted by Tyler Durden on 05/23/2011 11:47 -0400

Back on March 18, Goldman Sachs advised clients to do an outright shirt on the 5 Year treasury (with a 2.3% target). And while our skeptical approach to Goldman recommendations has been no secret for a while (as in do the opposite), little did we realize just how pervasive the counter-squid trade has become. Amusingly, since Goldman recommended putting the trade on, net non-commercial speculative contracts (longs minus shorts) have surged to a multi-year high of 265,550 as of May 17. This is nearly double the 137,765 in net contract positioning when Goldman put its recommendation on. While it is unclear how much of a factor, if at all, Goldman's reco has been in this inverse trade recommendation (it appears even the dumb money among Goldman's clients is doing what the smart money and its prop desk is engaging in: namely doing the opposite of what the sell-side recommends), it is very clear that traders have congregated in the short end of the curve, with both 2 and 5 year net exposure near multi year highs, even as the 10 Year, which has seen a rise in yield over the past month, has just tumbled to the highest short exposure since August 2010. That said, will specs again be carted out head first as they were recently in the EUR and USD mauling? And if so, will the ensuing curve flattening result in another major leg down for the financials. The answer is certainly yes, as soon as pain thresholds on either side are breached and the profit taking begins (or the CME hikes Treasury margins).