We The Sheeplez- The Coming Economic Collapse.."A Nation Of Sheep Ruled By Wolves" Thomas Jefferson

Tuesday, June 28, 2011

No Recovery - Next up, Resession or Collapse?

Posted by: ilene

Post date: 06/28/2011 - 21:57

Recession and/or brink of collapse?

Why GDP Is Useless and Deceptive: There Was No Recovery

Posted by: Econophile

Post date: 06/28/2011 - 18:50

We have not recovered from the Great Recession and thus our current economic stagnation is less a new event than a continuation of the original collapse. The basis for the so-called “recovery” was a rise in GDP, that measure of what we have spent in the economy. It’s a fairly useless bit of data.

BIS warn of Higher Interest Rates

Posted by: thetrader

Post date: 06/28/2011 - 19:06

BIS is warning of higher rates to come. "All financial crises, especially those generated by a credit-fuelled property price boom, leave long-lasting wreckage” Bank for International Settlements

Three senators propose eliminating capital gains taxes on gold, silver coins

Is An Options-Based Market Flash Crash Imminent?

If it had not been for Nanex's stellar forensic analysis of last year's flash crash, the SEC would still have no idea who to scapegoat for the unprecedented HFT quote stuffing incursion that cost the Dow 1,000 points in a matter of minutes, when virtually everything that could go wrong for broken market structure, did go wrong. Yet for all its fantastic insight, Nanex has traditionally been a post-facto, and at best concurrent, warning indicator. Until now. If Nanex is correct, and if tomorrow's trading session is as volatile as many expect, which will likely occur at a time of complete market illiquidity (the vote is expected to take place at 1pm Greek time, so 6 am EDT), we may well see the next culprit in the broken market structure rear its head. And no, it's not shares or ETFs this time. In fact, it's a long lost friend of major market crashes... Options.

Former Goldman Trader Blows Up Morgan Stanley Rates Desk With Breakevens Bet Gone Horribly Wrong

About a year ago, Goldman Sachs experienced an unprecedented P&L wipe out after in Q2 it bet on a decline in volatility, only to be caught offguard by the first Greek bailout which in turn cost the firm's prop desk hundreds of millions in losses. Now, about a year later, it is again the same sellside hubris and pretty much the same players that make a repeat appearance, after Bloomberg just disclosed that a very wrong way bet on 5 and 30 year TIPS breakevens has cost the interest-rates trading group "at least tens of millions of dollars." And while Jim Caron's traditionally wrong rates call has up to now only cost his clients money, this time it is his own trading desk that may be left collecting the shrapnel. But topping off the irony is that it is once again an ex-Goldmanite who is responsible for the actual trade. Per Bloomberg, "The interest-rate group is run by Glenn Hadden, who Morgan Stanley hired from New York-based Goldman Sachs in January." News of the loss made their way through the trading community earlier and was manifested in the weakness of the "hedge fund" banks: the Goldmans, the JPMs and, of course, the Morgan Stanleys of the world. As a result, MS is now forced to unwind the trade at a major loss (at least for the current quarter, we have to ask John Paulson if the trade is profitable on a cost basis), which will likely have substantial repercussions for the short and long breakeven curve for days, if not weeks.

Guest Post: Greek Debt Rollover - Who Is Getting Rolled Over?

Submitted by Tyler Durden on 06/28/2011 21:52 -0400

Over the weekend the French announced the outlines of a rollover plan to “help” Greece. This morning the German banks seem to be on board with the plan. According to the headlines, this should be good news for Greece. But is it? Working through the details as best possible shows it strengthens the positions of the banks and weakens the IMF/EU/ECB (“Troika”) and is expensive for Greece. The consequences of the rollover plan are that:

The Troika has to provide more money up-front without being able to enforce austerity compliance
The Troika is more likely to continue to fund Greece longer than it would otherwise because of the additional up-front payment and the moral suasion the banks will use to encourage further use of public funds
Greek interest payments will go up, and with the GDP kicker, will be almost 2.5 times what they are currently scheduled to be and are in line with existing Greek long bond yields

The analysis clearly demonstrates that the Troika is put into more risk sooner, and with less control than it would be without the rollover.

What The First Greek Bailout Can Predict About Market's Direction Over The Next Few Days

Submitted by Tyler Durden on 06/28/2011 19:36 -0400

In days when vacuum tubes control the market with a sub-millisecond attention span, and contextual memory is irrelevant, the speculative audience may be forgiven if it has forgotten that the foregone conclusion of tomorrow's second Greek bailout (which will pass) is in any way unique. It isn't: it was just over a year ago today, on May 9, 2010 that Europe's Finance Ministers approved a trillion dollar rescue package aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility. As part of the first bailout Greece got a €110 billion loan. One year later, and about 50% lower on Greek bonds, we are back, with Greece about to get a second, €120 billion+ (does anyone even know how big it is?) bailout, and there is not even one person alive who believes that within a year the third bailout of the insolvent Greek country (with even more stringent austerity measures) won't be on the table (even as the rating agencies are defending themselves in the Hague tribunal for crimes against humanity for their decision to proclaim the Greek bankruptcy as an "Event of Default'). But by then everyone will have printed another cool trillion or two, so who cares. It is all about the short-term. The expectation there is that the market will surge, surge, surge, once the event that has been priced in, gets repriced in over and over again, or something. Well, if history is any indication, as the chart below shows, those hoping for protracted market jump on tomorrow's vote will be disappointed.

News from Australia: Royal Mint wants 5¢ coins scrapped.
Yes, when inflation embarrassingly gives coins a base metal value that exceeds their face value, governments make they conveniently declare them a "nuisance" or "too expensive". You can either look at it as a function of "rising commodities prices" as the media suggests, or more accurately as a declining Oz Dollar.

Total Investor: Rich Dad, Poor Dad, Prepper Dad? Even Robert Kiyosaki Is Warning That An Economic Collapse Is Coming

Martin Weiss warns of derivatives doom: Government lying about debt crisis! What to do …

Moody's Warns of "Severe Greek Bank Cash Shortage" Due to Accelerating Deposit Flight

The US Monetary System and Descent into Fascism

Monetary Revolution and Alternative Money

Deutsche Mark "Set For Comeback" As German Euro Crisis Deepens

Soros Says A Euro Exit Mechanism Is "Probably Inevitable" Amid Debt Crisis