In The Meantime, European Liquidity Conditions Continue To Deteriorate With An Emphasis On SocGen And Barclays
Submitted by Tyler Durden on 08/31/2011 - 10:28 Barclays headlines LIBOR Shadow Banking SocGen
While
there are those financial publications who have realized that reliance
on shadow markets for unsecured repo and otherwise lending may be
troublesome in the short-, medium- and long-run, something we warned back in March 2010, a far more tangible threat is not what is happening in the already largely contracting shadow banking realm,
but in real, non-shadow markets. Because for shadow to be impaired,
these traditional liquidity conduits would have to be shut down first.
Alas, while stocks resolutely continue to ignore anything but both good
and bad headlines, all of which justify either QE3 or a surging economy
(nothing new - as we have said this will occur most likely through the
end of the year in a carbon copy of 2010), liquidity in non-shadow
markets is the most impaired it has been in a long time, with 3M USD
Libor rising again to 0.327% from 0.326%, although the story as usual
lying below the headlines. As the charts below show not only are
European banks seeing their LIBOR rates increasing (in as much as any of
this is even remotely credible), with SocGen and Barclays the two most
troubled banks from a self-reported liquidity standpoint, but
also that the spread between the lowest and highest reported LIBOR is
now the widest it has been in all of 2011. A few more days in which
European funding markets completely ignore what is going on with US
stocks (the same as US bonds incidentally), and the time to talk about
shadow banking repo halts may indeed be nigh.Joel Salatin: How to Prepare for A Future Increasingly Defined By Localized Food & Energy
"What we view today as "normal" I argue is simply not normal. Just think about if you wanted to go to town 120 years ago. If you wanted to go to town you actually had to go out and hook up a horse. That horse had to eat something, which means you had to have a patch of grass somewhere to feed that horse which meant you had to take care of some perennial in order to feed that horse in order to go to town. And so throughout history, you had these kinds of what I call ‘inherent boundaries’ or brakes on how much a single human could abuse the ecology. And today, during this period of cheap energy, we’ve been able to extricate ourselves from that entire umbilical, if you will, and just run willy-nilly as if there is no constraint or restraint. And now we are starting to see some of the outcome of that boundless, untied progression. And so the chances are, the way to bet, is that in the future we are going to see more food localization, we are going to see more energy localization, we are going to see more personal responsibility in ecological lifestyle decisions because it's going to be forced on us to survive economically. We are going to have to start taking some accounting of these ecological principles."Germany, France Repeat Tobin Tax Threat
Two weeks ago when expanding its debt monetizing vehicle, the SMP, to include the debt of Spain and Italy, one of the few appeasements offered to the public by "Europe" was the resolute demand that a transaction tax, aka Tobin, be enacted immediately if not sooner. Today, about two weeks later, the same behemoths of European structural stability, Germany and France, hoping the general public has largely forgotten all that was said in mid-August, has come out with the generous announcement that... they will propose a financial transaction tax. It is unclear if sometime between the first proposal and today's, Merkozy dropped the demand for Tobin Taxation, in order for it to be priced in once again as an indication of the fiscal prudence of the European leaders. And if so, will the market respond like it did last time around and plunge by 5-10%?Guest Post: Marx, Labor's Dwindling Share Of The Economy And The Crisis Of Advanced Capitalism
Marx predicted a crisis of advanced Capitalism based on the rising imbalance of capital and labor in finance-dominated Capitalism. The basic Marxist context is history, not morality, and so the Marxist critique is light on blaming the rich for Capitalism's core ills and heavy on the inevitability of larger historic forces. In other words, what's wrong with advanced Capitalism cannot be fixed by taxing the super-wealthy at the same rate we self-employed pay (40% basic Federal rate), though that would certainly be a fair and just step in the right direction. Advanced Capitalism's ills run much deeper than superficial "class warfare" models in which the "solution" is to redistribute wealth from the top down the pyramid. This redistributive "socialist" flavor of advanced Capitalism has bought time--the crisis of the 1930s was staved off for 70 years--but now redistribution as a saving strategy has reached its limits... That gambit has run out of steam as the labor force is now shrinking for structural reasons. Though the system is eager to put Grandpa to work as a Wal-Mart greeter and Grandma to work as a retail clerk, the total number of jobs is declining, and so older workers are simply displacing younger workers. The gambit of expanding the workforce to keep finance-based Capitalism going has entered the final end-game. Moving the pawns of tax rates and fiscal stimulus around may be distracting, but neither will fix advanced finance-based Capitalism's basic ills.We’ve Seen How These Trader Games End Before: BADLY
08/31/2011 - 12:03
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