Moody's Downgrade Of French Banks Imminent, Risk Waterfall To Follow?

As regular readers may recall, back on June 14, before it became an even bigger pariah in the thoroughly discredited rating agency space due to its refusal to downgrade the US, Moody's placed French megabanks SocGen, BNP and Credit Agricole on downgrade review, which means that at some point in the future the rating agency would have to cut the banks' rating from its existing Aa1-2, to Aa3 or even a single A. It is true that when it comes to downgrade reviews the rating agencies are notorious for being as unpredictable in their timing as they are conflicted in their rating: for example even though Belgium was supposed to be downgraded months ago due to the fact that it continues to be the longest running modern anarchy, nothing has occurred, as political interests are obviously pushing the raters to do as paying clients request, not as reality demands. Alas, for France, which is very sensitive to any inkling it may have a less than sterling rating (due to its sovereign AAA requirement without which the EFSF/ESM falls apart), the luck may have run out. Bloomberg reports that the abovementioned banks "may have their credit ratings cut by Moody’s Investors Service as soon as next week because of their Greek holdings, two people with knowledge of the matter said.

 

 

Guest Post: Credit Versus Equity The War Is Waged

Bull versus bear. Greed versus fear. Smart money versus dumb money. Depression versus transitory soft patch. Credit versus equity. In one corner is the credit market, a rather mighty opponent where $1 million defines an odd lot. Credit has spoken loudly. They have priced in a severe recession, depression whatever you want to call it. In the other corner stands the equity market and although fierce is smaller than its opponent where 100 shares defines an odd lot (a mere $700 in the case of BAC). Also known as the contrarian equity has priced in a transitory soft patch, the opposite of credit. Equity hopes to bounce back from a recent loss where they completely failed to price in the 2008 Great Recession. We are now on the eve of yet another showdown. Both corners are far apart and yet only one can be proven correct. The other must accept defeat. The stakes are large and the reward to those on the right side even larger. History will be the judge and time is all it asks.

 

 

Broken Markets (by Intervention and Manipulation) 

Posted by : thetrader

Post date: 09/10/2011 - 16:18

Is the Market about to break down totally as Intervention and Manipulation destroy Market Mechanisms?

Economic Roadkill

Posted by: ilene

Post date: 09/10/2011 - 15:05

The uptick in credit spending is entirely attributable to subprime auto loans and government-backed student loans, both of which are a mere extension of the same Ponzi-finance scam that put the...

 

 

KWN Weekly Metals Wrap

September 10, 2011, at 1:27 pm
by Dan Norcini in the category King World News, Trader Dan Norcini |  Print This Post |  Email This Post

Dear CIGAs,

Please click the link below to listen to this week’s metals wrap up from King World News, featuring our very own Trader Dan Norcini.

Click here to listen to the weekly metals wrap up…

 

 

In The News Today

September 10, 2011, at 1:24 pm
by Jim Sinclair in the category In The News |  Print This Post |  Email This Post

Jim Sinclair’s Commentary

Celebrated by Financial TV as the spontaneous outbreak of democracy, it is anything but.

Note the media covering this.

Three dead, 1,049 injured in Israeli embassy protests in Cairo
CAIRO, Sept. 10 (Xinhua) — Three died and 1,049 others were injured during protests at the Israeli embassy on Friday night, Egypt’s health ministry said on Saturday.
One death was because of a heart attack. 262 of the injured were rushed to different hospitals in Cairo while the others got medical treatment at the scene.
Clashes between protestors and police forces were blamed for the casualties. Police used tear gas to disperse the crowds.
On Friday night, some Egyptian protestors broke into a building which houses the Israeli embassy in Cairo. They destroyed a newly- built concrete wall outside the embassy building and lowered the Israeli flag and threw documents out of the windows.
Israeli ambassador to Egypt and most of embassy staff were carried back home by an Israeli plane early Saturday.
More…





Jim Sinclair’s Commentary

This hiring plan is dead upon arrival.

Employers Say Jobs Plan Won’t Lead to Hiring Spur By MOTOKO RICH
Published: September 9, 2011
The dismal state of the economy is the main reason many companies are reluctant to hire workers, and few executives are saying that President Obama’s jobs plan — while welcome — will change their minds any time soon.
That sentiment was echoed across numerous industries by executives in companies big and small on Friday, underscoring the challenge for the Obama administration as it tries to encourage hiring and perk up the moribund economy.
The plan failed to generate any optimism on Wall Street as the Standard & Poor’s 500-stock index and the Dow Jones industrial average each fell about 2.7 percent.
As President Obama faced an uphill battle in Congress to win support even for portions of the plan, many employers dismissed the notion that any particular tax break or incentive would be persuasive. Instead, they said they tended to hire more workers or expand when the economy improved.  
Companies are focused on jittery consumer confidence, an unstable stock market, perceived obstacles to business expansion like government regulation and, above all, swings in demand for their products.
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Jim Sinclair’s Commentary

After all the drama it is QE to infinity.

Stark Steps Down From European Central Bank By William L. Watts
Published September 09, 2011
FRANKFURT — The European Central Bank on Friday said Juergen Stark, a member of the Executive Board and the Governing Council, will step down, leaving his post by the end of the year for "personal reasons." Earlier Friday, news reports said Stark would step down due to disagreements over the ECB’s bond-buying program. Stark was reportedly opposed to the reactiviation of bond purchases through the ECB’s Securities Market Program last month. In a news release, the ECB said Stark would remain in his current position until a successor is appointed, which would be by the end of the year. Stark’s term was set to expire in May 2014. ECB President Jean-Claude Trichet thanked Stark "wholeheartedly for his outstanding contribution to European unity over many years," the ECB said. News of Stark’s resignation put added pressure on the euro and European and U.S. equities, analysts said. The euro was down 1.2% versus the dollar at $1.3726 in recent action, while U.S. equities opened with heavy losses.
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'Buy All the Euro You Can' If Greece Defaults: Jim Rogers

The Failure of the Government Employment Meme

Saturday, September 10, 2011 – by Anthony Wile

Anthony Wile I've noticed that an old and misleading dominant social theme has taken center stage in America, lately. It's the idea that politicians and the political process itself can create jobs.
Of course, government can't create jobs. Government can make things worse, but it can rarely if ever make things better.
While this may not be understood by many in America, or in the West for that matter, there is some good news regarding this misleading theme of government and jobs.
I'll get to that at the end of this editorial.
Certainly, you could see the meme on display at the GOP presidential debates where Texas Governor Rick Perry and former Massachusetts Governor Mitt Romney argued over whose regime had produced the "most jobs" with nary a peep from the moderators on the impossibility of this concept.
And then there has been the reaction to the nationally televised speech by President Barack Obama explaining his newly created "American Jobs Act." The analysis has been positively breathtaking in terms of economic illiteracy.
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Liberty: Both Radical & Traditional

Saturday, September 10, 2011 – by Tibor Machan

Dr. Tibor Machan At times libertarian or classical liberal – or, in yet other words, pure laissez faire capitalist – ideas are dismissed as part of a misguided modernity that's lacking proper pedigree. But this is all wrong. Already back in circa 600 B.C.E. the Chinese sage Lao Tzu had weighed in with libertarian ideas, writing:
Why are people starving?
Because the rulers eat up the money in taxes.
Therefore the people are starving.

Why are the people rebellious?Because the rulers interfere too much.Therefore they are rebellious....
And in ancient Greece, Xenophon records an exchange between Pericles and Alcibiades in which the latter dismisses all government edicts that are coercive as plainly unlawful. As he put it, "It would seem to follow that if a tyrant, without persuading the citizens, drives them by enactment to do certain things – that is lawlessness."
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The Campaign Speech

Saturday, September 10, 2011 – by Adrian Krieg

Dr. Adrian Krieg The president's speech on the evening of September 8 was without question not a speech about the economy or how to fix it; it was another campaign speech for Obama's reelection. The plan as announced is called "The American Jobs Act" – very long on vocalization and very short on substance. The same old class warfare of "tax the rich" was repeated often. I lost count on, "You Must Pass This Bill." There are, according to White House sources, $447 billion required for implementation of this Act (Stimulus 4, one would suspect), although the president never once mentioned any dollar amount.
The true definition of insanity is to do the same thing over and over again, that has repeatedly failed before, expecting different results. (Thank you, Mr. Einstein.)
There are to be lots of tax credits, even more unemployment compensation extensions – 12 months more to be exact – reduction in payroll taxes, tax credits of $4,000 for a company that hires a worker longer than six months unemployed, more hiring of union positions – SEIU, AFL/CIO and Teamsters, school teachers, police and firefighters – the usual infrastructure fairy tale. At least we were spared the "shovel ready" line. Last but not least a $1,500 tax credit will be made available to the middle class.
"It's all paid for," he said. Well, not really. It is to be paid for out of cuts in increases of various unnamed government agencies' budgets over the next decade. In fact, we've all heard this speech many times before, several times.
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