David Rosenberg: "It's Time To Start Calling This For What It Is: A Modern Day Depression"

By now only the cream of the naive, Kool-Aid intoxicated crop believes that the US is not in either a deep recession, or, realistically, depression. For anyone who may still be on the fence, here is David Rosenberg's latest letter which will seal any doubts for good. It will also make it clear what the fair value of the stock market is assuming QE3 fails, which it will, and the market reverts to trading to fair value as predicated by bond spreads. To wit: "If the Treasury market is correct in its implicit assumption of a renewed contraction in the economy, then we could well be talking about corporate earnings being closer to $75 in 2011 as opposed to the current consensus view of over $110. In other words, we may wake up to find out a year from now that whoever was buying the market today under an illusion of a forward multiple of 10x was actually buying the market with a 15x multiple." And since we are in the throes of a deep depression and a 10x multiple is more than generous, applying that to $75 in S&P earnings, means that the fair value of the S&P is... we'll leave that to our readers.

Here Come The Statements Following Greece-Merkozy Three Way: Europe Agrees To Not Blow Itself Up

Reuters is reporting that according to a press report released to reporters in Athens, a Greek government spokesman has said that despite rumors, all have agreed that Greece will remain part of the Eurozone. And from Bloomberg: "Greece is an integral part of the euro area and recent decisions to meet budget targets will help shield the economy, the Greek government said in a statement today following a call between Greek Prime Minister George Papandreou, German Chancellor Angela Merkel and French President Nicolas Sarkozy." Well, at least Greece has agreed to not blow itself up. Now... if only enacting this theory into practice was as easy as releasing a statement.

Guest Post: Secret EU Plans To Create EuroTeams Leaked

In conjunction with Eurobonds, EU officials have been working on plans to create Euroteams for the Olympics, World Cup, and the Eurovision Song Test. Officially, the effort is supposed to solidify the fiscal union that will have to occur to make Eurobonds the success the market has already decided they would be. Off the record, at least one official felt that letting Brussels be in charge of the Euroteams would make their jobs more important. Reaction so far has been swift and vehement. One London Olympic Organizer was heard to say "We finally invite them to invade us, and they can't even get that right!" Trading floors across the city and the rest of Europe are in a state of pandemonium. "Utter Rubbish" says one British trader. "They are just doing it so we won't ever win the world cup again, they just never got over that we kept our own currency" lamented another. French traders were dumbfounded, yet adamant that Les Bleus would never agree to a combined team. Spanish traders have attacked the plan, saying "it is one thing for you to give us money and support our caja's, but to try and steal our glory as World Cup Champions, well that is another thing entirely!" German traders put it more succinctly "Nein". Dutch citizens took it all in stride, while enjoying a leisurely smoke at a coffee house, one supporter mentioned, "We never win it on our own, so maybe this is a chance for us".

Excerpts From EU Report Stating Euro Crisis Contagion Has Spread And Is Now Systemic

The latest headline is in, and judging by the swoon in the EURUSD it is not pretty. Sure enough, this one has nothing to do with the Coneheads coming to rescue the world, and everything to do with an EU document which says that the shit is about to hit the fan. Yep: the EU is now holding the gun against its head and threatening to shoot. Furthermore, the document warns ministers this week about the threat of a renewed credit crunch as a "systemic" crisis in sovereign debt spills over to banks, according to EU documents. In one a series of bluntly worded reports prepared by officials for a meeting of EU ministers on Sep. 16 and 17, they warn: "While tensions in sovereign debt markets have intensified and bank funding risks have increased over the summer, contagion has spread across markets and countries and the crisis has become systemic."

As China Prepares To Bail Out Europe, Who Is Preparing To Bail Out China?

In the past week, any and every move higher in the market, which is a direct consequence of the EURUSD seeing an uptick, has been as a consequence of rumor or statement or outright innuendo that China may either buy European bonds or European assets, but generally bail out the now ridiculously insolvent continent (and with Greek 1 Years at 150%, it is pretty clear what will happen). Yet, once again the conventional wisdom leaves much to be desired. Such as the answer to one very simple question: China just may buy up a whole lot of Greek and Italian bonds, and even EFSF issuance, but... who will bailout China. Wait, China is in trouble? Why yes: from Marketwatch: " China’s real-estate market may face an escalating credit crisis, with industry data for August providing clues that big developers are running short of cash, according to Credit Suisse analysts. The unfolding situation heralds a perfect storm for China’s home-building industry, and China’s deteriorating credit backdrop should be viewed by investors with alarm, the Credit Suisse analysts said." That's ok, by the time China is insolvent, Chinese stabilization of Europe will be complete, and Europe can boldly step up and rescue China in turn. And so on... And so on... In the wacky, wonderful, ponzi world of ours.

And Then There Were Four...

We are delighted to bring to you this wonderful news:
DAVID BIANCO NO LONGER WORKS AT BOFA, SPOKESWOMAN SAYS
Which means that in the pantheon of brain dead, lemming, Koolaid Permabulls, there are now just four. It probably also means that the latest paperweight to come out of Bianco, his upgrade to the S&P from 1,400 to 1,450 has been retracted. In other news, we are confident Bianco will find the economy far less hospitable from the wrong side of the unemployment line.

Getting Uglier For El Hefe

Dave in Denver at The Golden Truth - 1 hour ago

A new poll conducted by Bloomberg shows that Obama's approval rating plummeted to a new low after his big prime-time rollout of his "I'm coming down from the Hill to save America" jobs/economic stimulation proposal last Thursday. Opps - guess that idea backfired. And now Solargate is heating up even more. I see Fox News finally grabbed hold of this story - about 10 days after the fact. But that should be good for roiling up the network's millions of slavish followers. More interestingly, the Washington Post has uncovered some emails which further reinforce the allegation that he... more » 

 

I Am Short Stocks In Europe, America & Emerging Markets

Admin at Jim Rogers Blog - 2 hours ago

I am short stocks, I am short stocks in Europe, I am short stocks in America (related tickers: SPDR S&P 500 ETF SPY) and I am short emerging markets (Related ticker: iShares MSCI Emerging Markets Indx ETF EEM). - *in CNBC* *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.*

Barack "You Must Pass This Bill" Obama Speaks (Again), Threatens Middle Class With Tax Hikes

You know it: the chief Nobel prize winner in Oration and Teleprompting is out and about and has already threatened that unless Congress acts, the middle class will see a tax hike. And by act he means "passing this bill." That's right: after half our readers were hospitalized with alcohol poisoning yesterday, the challenge is back for the second day in a row. The rules are known: a shot must be taken every time Obama says "You must pass this bill."






David Kotok | Policy Madness in Muniland

Posted by: rcwhalen

Post date: 09/14/2011 - 09:25

Policy Madness (inconsistency) in Muniland.  Some bullets.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 14/09/11

Submitted by RANSquawk Video on 09/14/2011 - 12:19 ETC RANSquawk  

Guest Post: Marked and Unmarked Bonds

Every "solution" to the European debt crisis, whether it is ECB purchase, EFSF, Eurobonds, or BRIC's, fails to account for the fact there are really two types of bonds out there.  There are those that are trading and marked, and those that remain on some bank balance sheet unmarked. That is a key distinction.  If all Greek bonds were marked at 45 (or even had 55 points of reserves held against them) then there would be a lot of potential solutions.

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