The Final Value Of The Dollar Is Zero

Marc Faber Blog - 1 hour ago

I have always believed that the final value of the dollar is zero, because the government, the Treasury and the Federal Reserve have no interest in keeping a strong dollar. - *in Expatica* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*

Bank of America Defaults Risk Soars To Highest Since June 2009, Jumps By 10% Overnight

Last week, when discussing the ongoing collapse in the house of cards that Ken Lewis built and which Brian Moynihan is helping bring down, we asked readers if they "Got Bank Of America CDS?" both in general, and in the aftermath of the disclosure that "New York AG Says BAC's $8.5 Billion Settlement Is "Unfair and Misleading"." We hope the answer was yes for most, as BAC CDS just jumped to the highest since June 2009, hitting 235 bps after exploding by almost 10% overnight. And with the stock now trading with a $7 handle, we are very much concerned TARP 2 is coming soon, only this time BAC will be formally split up, for no other reason than to spin Countrywide off and most  likely see it end up with Fed funding. Wherein lies the rub: what will end up happening when BAC loses its TBTF status is that CDS referencing CFC will grind tighter to a spread pari with the US, while those referencing BAC (and/or MER) will initially tighten only to surge on the realization that BAC will have lost its government backstopped status (courtesy of the "conservatorship" of its most atrocious division).

Bears 7 video comes 3/4 circle, BAC News on ZH

silvergoldsilver at silvergoldsilver - 14 minutes ago

Read it and weep. From ZH: Wherein lies the rub: what will end up happening when BAC loses its TBTF status is that CDS referencing CFC will grind tighter to a spread pari with the US, while those referencing BAC (and/or MER) will initially tighten only to surge on the realization that BAC will have lost its government backstopped status (courtesy of the "conservatorship" of its most atrocious division). Click here 

Morgan Stanley Discloses $8.5 Billion In Europe Exposure, 8 Trading Day Losses, Lists Impacts Of US Downgrade On Market And Its Business

Some very interesting data points were disclosed in Morgan Stanley's just released 10Q. First, we learn that in the last quarter, the company which had "blow out" earnings, at least compared to expectations and Goldman, actually was not much to write home about by typical Wall Street standards, with a whopping 8 days of trading losses in Q2. Considering that most Wall Street firms had quarters in a row with no daily trading losses, this is, sadly, quite disappointing. Next, and more important, is that MS has disclosed it has a rather substantial $5 billion in gross exposure to the PIIGS, as well as another $3.5 billion in funding exposure to Europe. Considering that most European banks had already offloaded their PIIGS exposure, at least we now know who they were offloading risk to. Lastly, from the risk factors we read that a US downgrade will likley not be beneficial to Morgan Stanley or the stock market, to wit: "[a downgrade] could disrupt payment systems, money markets, long-term or short-term fixed income markets, foreign exchange markets, commodities markets and equity markets and adversely affect the cost and availability of funding and certain impacts, such as increased spreads in money market and other short term rates, have been experienced already as the market anticipated the downgrade. In addition, it could adversely affect our credit ratings, as well as those of our clients and/or counterparties and could require us to post additional collateral on loans collateralized by U.S. Treasury securities."





Don’t Miss Out on One of the Best Investments of a Lifetime Due to Banker Propaganda

Posted by : smartknowledgeu

Post date: 08/08/2011 - 07:05

First, concentration does not equal risk though the commercial investment industry really wants all their clients to believe this rubbish concept. Second, corrections in gold and silver, though they...

Soft Patch Delusion Is Dashed, Recession on the Way: Roubini

Influential economist Nouriel Roubini has warned hopes that the recent slowdown was temporary have been dashed and predicted the US and other advanced economies will have a second “severe recession”.

U.S. Debt Crisis: Deal Wasn't Enough

Bill Gross Tells The Truth: "S&P Finally Got It Right. They Are Enforcing Some Discipline. My Hat Is Off To Them"

After all the hollow rhetoric and scapegoating over the past few days about S&Ps "treasonous act" from Friday, we were delighted to finally hear one person say the truth. "I have been criticizing them and Moody's and Fitch for a long time. Moody's and Fitch are on the "S" list. I think S&P finally demonstrated some spin. S&P finally got it right. They spoke to a dysfunctional political system and deficits as far as the eye can see. They are enforcing some discipline. My hat is off to them." The person in question: PIMCO's Bill Gross, who says what everyone is thinking but afraid to say it for fear it would insult our oh so sensitive, and so incompetent, administration. Because if criticizing S&P over being far too late to the subprime party is justified, at least they have the guts (unlike those tapeworms from Moody's) to finally step against the tide of conventional sycophantic wisdom and tell everyone even a modest part of the whole truth. If that is not the first step toward penitence, then nothing is. And yes, America's real credit rating at the current level of deficit accumulation most certainly does not begin with the letter A, or B or even C for that matter. Because what America is doing is heading straight for default, however not by officially filing in the Southern District of New York, but by terminally hobbling its own currency in hopes of stimulating rampant inflation thereby cutting its debt load through devaluation. A sad side effect of that of course is the wipe out of its own middle class as well. But all is fair in love and preserving the wealth of the status quo.

Gold And Silver Higher As ECB Intervenes In Markets – Currency And Euro Debasement Accelerates

Is this intervention another short term panacea in a long line of short term panaceas?  It certainly looks like it. Piling more debt on top of already humungous debt levels will prolong and likely deepen the global debt crisis. It makes contagion more likely as the balance sheet of the ECB is now being infected by the peripheral European countries. The electronic creation of hundreds of billions of euros to bail out bankrupt countries is currency debasement which has a long history of not working out to well. What is needed is debt forgiveness and debt restructuring and a gradual deleveraging and downsizing of the balance sheets in the banking sector and financial system. Taxpayers should not be further burdened. This is unjust and will inevitably prolong and delay a recovery. Those with little or no knowledge of financial, economic and most importantly monetary history continue to warn that gold is or may be a bubble. They should be urging diversification but alas do not understand diversification or gold.

The G7/20 Spent Trillions On Its Latest Global Bailout And All I Got Was This Lousy 2 Hour Jump In Futures

Following the latest global bailout/intervention/rescue by the G-7/20/Earth+1, in which the ECB mostly bought bonds of yet two more insolvent European nations, futures did indeed spike from overnight lows... for about 3 hours. As the chart below shows, the nearly 30 point ES jump coincided with the moment the ECB started buying up billions in Italian and Spanish bonds, only to be prompted and very aggressively faded away. Yes, Italian and Spanish spreads and CDS all tightened substantially, but at the expense of Bunds, Gilts and French bonds, so the whole exercise is nothing but yet another risk transfer, not elimination. It took an increasingly more sophisticated market about two hours to fade the entire run up of futures into the overnight highs. And unfortunately, the G-7 has just used up yet another "get out of jail" card. So as we predicted, the latest ECB intervention will merely buy Italian and Spanish spreads at most a week if not a few short days before the push wider resumes, only this time with a new and improved wider baseline in the risk-free Bunds. But first: we prepare for the imminent downgrade of up to 7,000 muni entities, as S&P warned on Friday night. Somehow we get the feeling this move will be anything but market positive.

SocGen, Unicredit On "Brink Of Disaster"?

Over the past 48 hours we had heard pervasive rumors that at least one, maybe more, banks in Europe are on the verge of collapse. Our thought was, naturally, Dexia, which is the modern equivalent of AIG, not to mention the bank most rescued by none other than the Federal Reserve. Well, we were wrong. And if the Daily Mail is correct, the two banks about to kick the bucket are French SocGen and Italy's UniCredit. While the fact that these two banks are in trouble has not been lost on the market, which has been sending their CDS to near record highs, the speculation that they are far closer to implosion likely means that the equity value of the European banking sector is about to be decimated. As the News reports: "The merest hint a major bank might fall is likely to reignite panic tomorrow in the stock market, which is already feared to react badly to the credit downgrade of the U.S. by rating agency Standard & Poor’s." Well, it's now tomorrow.

The First Euro Bond Prints Are In, And The Loser Is...

On Friday, when we discussed that the EFSF could potentially be expanded to a ridiculous E3.5 trillion, we made the following observation in advance of the prediction that Germany would eventually throw up all over the creeping euro bailout proposal, we said:  "In the meantime, short Bunds (or to borrow a Gartmanism, go long gold in Bund terms) ahead of the market's realization that peak risk transfer from the periphery to the core is now in process." Well, the first eurobond prints are in (we already know where gold is trading), and the losers (and winners) are...

HFT Firms At Long Last Subpoenaed

And they thought they would get away with it... Over a year after HFT firms succeeded in crashing the stock market following an unprecedented spike in churn which eliminated all market liquidity in non-rebate providing stocks, followed by an across the board HFT STOP move which sent the Dow down 1000 points literally in seconds, the same HFT parasites that do nothing to provide liquidity but merely collect rebates in a low price, few high volume stocks as Zero Hedge has been warning since the summer of 2009, are finally getting the regulators to act and not to pull an Obama and blame it all on Waddell and Reed. Reuters reports: "The U.S. securities regulator has sent subpoenas to high-frequency trading firms in relation to last year's "flash crash" probe, the Wall Street Journal reported, citing people familiar with the matter. The Securities and Exchange Commission (SEC) is also examining whether these firms further exacerbated the panic on May 6, 2010, when U.S. stock markets suffered a record fall within minutes, the Journal said. Some of the subpoenas have been sent since the start of the summer, the people told the Journal. The paper did not name the firms involved. [coughgetcocough] It is not known whether the subpoenas will result in any enforcement actions, the paper said. A subpoena does not necessarily reflect a suspicion of wrongdoing." Well, it is known that no enforcement actions will result if the SEC wants to retain its invisible low volume melt up bid which has pushed the market ever higher on 98% of the trading days in the past 2.5 years. If however, the SEC is willing to pull and S&P and finally do the right now, then all the 19 year olf math wizards who control 70% of the S&P churn should be worried. Very worried. As should all the momos whose only strategy for the past two years been BTFD.

Daily US Opening News And Market Re-Cap: August 8

Late last Friday, S&P downgraded long-term sovereign rating of the US to AA+ from AAA, and assigned a negative outlook, which weighed on WTI and Brent crude futures and in turn led commodity-linked currencies to trade lower. In early European trade, some appetite for riskier assets emerged after the ECB said that it will actively implement its SMP bond buying programme. The news was followed by market talk of the central bank buying in the Italian and Spanish government debt, which was also noted by traders. This resulted in European equities to come off their earlier lows, led by financials, and witnessed aggressive tightening in the Italian/German and Spanish/German 10-year government bond yield spreads. However, as the session progressed, Bunds regained strength partly on the back of market talk of asset re-allocation from equities into bonds, which weighed upon equities and dented risk-appetite. Comments from a German finance ministry spokesman highlighting Germany’s reluctance to further enhance the size of the EFSF also weighed upon sentiment. Moving into the North American open, the economic calendar remains thin, however markets will keep a close eye on any new developments in the Eurozone, together with any potential downgrade of US financial institutions by S&P following their rating action on the country. In fixed income, there is another Fed’s Outright TIPS Purchase operation in the maturity range of Apr’13-Feb’41, with a purchase target of USD 0.25-0.50bln.

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