Greece Default Risk Jumps to 98%

 

 

Another Massive Raid as Europe Burns to the Ground/Greek 1 yr bonds 110% interest

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 35 minutes ago

Good evening Ladies and Gentlemen: Today's commentary will be rather on the short side. Gold closed today down $46.50 courtesy of a massive raid by head banker JPMorgan.  The comex closing price was $1809.80.  The silver price followed suit falling by $1.41 to $40.16.  Today we woke up with all of Europe's bourses in the red: German Dax:  down 117.60 or 2.27% London FTSE: down 74.17  or 2.70%

 

 

 

Dangerous New Phase

September 12, 2011, at 1:14 pm
by Greg Hunter in the category USAWatchdog.com |  Print This Post |  Email This Post

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

The head of the International Monetary Fund, Christine Largarde, said Friday the world economy is entering a “dangerous new phase.”  Lagarde is referring to a debt bubble, the likes of which the planet has never seen before, and the possibility that it could all unravel at any moment.  Uncertainty over the debt crisis in Europe is what caused the Dow to crash more than 300 points at the end of last week.   What is Lagarde going to do about the debt problem?  A CNBC story reported, “She warned that both advanced and emerging economies faced key economic challenges, and that governments must ‘act now’ to stop further contagion.  ‘Policymakers should stand ready, as needed, to take more action to support the recovery, including through unconventional measures,’ Lagarde said.”  (Click here to read the complete CNBC story.)  Lagarde is surely talking about revving up the global printing presses for more bailouts.
Meanwhile, the Germans are talking about letting countries like Greece go bankrupt.  Another CNBC story yesterday said, “Even senior figures in Merkel’s conservative Christian Democrats (CDU) are leaving open the possibility of default.  ‘The way things are looking, you can no longer rule out a possible Greek restructuring,’ CDU budget expert Norbert Barthle told Reuters, when asked about a default or euro zone exit.” (Click here for more on this CNBC story.)  So which is it?  Will it be bailout or default?  Who knows, maybe a little of both before it is all over.
A post on Zerohedge.com Friday may give the answer.  It reported, “Wondering what is next for Europe? Don’t be. With Jurgen Stark, aka the last real hawk at the ECB, gone, here comes “the printing.” SocGen’s (Societe Generale) Dylan Grice explains.  From SocGen:  Suppose that Italy or Spain get caught up in the whirlwind like Greece, Ireland and Portugal, as threatened to happen last month. Maybe the Italian political situation deteriorates, maybe Ireland defaults, maybe Greece will go revolutionary, or maybe an ill-advised wayward comment from an influential European politician will spook markets and send them into renewed tailspin. We don’t know which of these will happen, if any. All we know is that these are some of the many plausible triggers for a further deterioration in this fragile situation.”  (Click here for the complete post from Zerohedge.com.)
That “fragile situation” would mean a panic set off by an impending debt implosion, but SocGen’s Grice says the powers will not allow it to happen.  In the end, there will be a burst of money printing to stave off insolvency that has already infected many European banks.
More…

 

Duration In Pimco's Total Return Fund Soars To Near Record, Highest Since 2007 In Anticipation Of QE3

Bill Gross came, saw, and i) stopped shorting govvies, and ii) doubled down on QE3, after, as he himself said, he did not anticipate how bad the US economy would get. As the just released latest monthly Total Return Fund data indicates, PIMCO now has a substantial net long position in Government Related securities, at $51.5 billion (net of swaps), a more than 100% increase from the $22.1 billion in July (and a far cry from the $9.6 billion short in April). As a reminder, Gross skepticism was predicated by the concern of who would buy bonds in an inflationary environment coupled with the end of QE2. Well, since then the bottom fell out of the market, and the Fed is about to re-enter the securities market to prevent the latest re-depression with Operation Twist if not much more. So while it no longer makes sense to be short bonds (as Gross has figured out the hard way), what makes sense is to be very, very long duration, since this is what the Fed will be buying in Operation Twist/Torque. Enter Exhibit A - the chart of maturity/distribution of PIMCO holdings, of which most notable is the explosion in average holding duration, which from 4.56 in July, has soared to 6.27 in August, the highest since 6.23 in October, and possibly the highest on record (that said our records only go back to 2007). As part of this expansion, Gross has seen his Mortgage Securities soar to $78.5 billion, the highest since February, when Gross was actively reducing his MBS holding profile, and now is doing the opposite, and is accumulating Agency paper hand over fist in an attempt to extend duration. Bottom line: Pimco is now balls to the wall in the QE3 camp, first to be manifested by Operation Twist, and then, likely by outright Large Scale Asset Purchases. Look for numerous other copycat investors to expand the duration of their fixed income holdings from 4-5 to over 6.





Social Security a Ponzi? – I think so

Posted by : Bruce Krasting

Post date: 09/12/2011 - 15:17

If it walks, swims and quacks like a duck, it's probably a duck. 

In The News Today

September 12, 2011, at 1:18 pm
by Jim Sinclair in the category In The News |  Print This Post |  Email This Post

" The recklessness is breath-taking," but has anyone ever considered that these decisions makers may well be simply stupid in a practical sense."

Germany and Greece flirt with mutual assured destruction
Bild Zeitung populism has prevailed. Germany is pushing Greece towards a hard default, risking the uncontrollable chain reaction so long feared by markets. By Ambrose Evans-Pritchard, International Business Editor
First we learn from planted leaks that Germany is activating "Plan B", telling banks and insurance companies to prepare for 50pc haircuts on Greek debt; then that Germany is “studying” options that include Greece’s return to the drachma.
German finance minister Wolfgang Schauble has chosen to do this at a moment when the global economy is already flirting with double-dip recession, bank shares are crashing, and global credit strains are testing Lehman levels. The recklessness is breath-taking.
If it is a pressure tactic to force Greece to submit to EU-IMF demands of yet further austerity, it may instead bring mutual assured destruction.
"Whoever thinks that Greece is an easy scapegoat, will find that this eventually turns against them, against the hard core of the eurozone," said Greek finance minister Evangelos Venizelos.
Greece can, if provoked, pull the pin on the European banking system and inflict huge damage on Germany itself, and Greece has certainly been provoked.
More…





Jim Sinclair’s Commentary

Greek debt may be the Achilles heel of European banks, but Moody’s is certainly the seed sower and Grim Reaper

Biggest French Banks May Have Ratings Cut by Moody’s on Greek Holdings By Helene Fouquet – Sep 10, 2011 11:27 PM MT
BNP Paribas (BNP) SA, Societe Generale SA and Credit Agricole SA (ACA), France’s largest banks by market value, may have their credit ratings cut by Moody’s Investors Service as soon as this week because of their Greek holdings, two people with knowledge of the matter said.
Moody’s placed the three banks’ ratings on review in June to examine “the potential for inconsistency between the impact of a possible Greek default or restructuring and current rating levels,” the rating company said at the time. Cuts are likely as the review period concludes, said the people, who declined to be identified because the matter is confidential.
Group of Seven finance chiefs vowed on Sept. 9 to support banks and buoy slowing economic growth as Europe’s debt crisis roiled financial markets and threatened a global recession. Renewed fears that European policy makers are failing to prevent a Greek default and contain their debt woes prompted investors to sell stocks and push the euro to a six-month low against the dollar. European bank and sovereign credit risk reached all-time highs as 10-year Treasury and German bund yields fell to record lows on demand for a haven.
“We will take all necessary actions to ensure the resilience of banking systems and financial markets,” G-7 finance ministers and central bankers said in a statement released during talks in Marseille, France.
Moody’s currently rates BNP Paribas’ long-term debt at Aa2, the third-highest investment grade. Credit Agricole is rated Aa1, the second highest, while Societe Generale (GLE) is Aa2.
Stocks Decline
Credit Agricole spokeswoman Anne-Sophie Gentil declined to comment late yesterday, as did BNP Paribas spokesman Antoine Sire. Societe Generale spokeswoman Laetitia Maurel said she couldn’t immediately comment. Voicemail messages left on the mobile and office lines of Moody’s chief European spokesman Daniel Piels yesterday, outside of working hours, weren’t immediately answered.
More…





Two-Year Treasury May Hit 0%, S&P Fall Another 20%: Analyst

Rising risk aversion, a surging U.S. dollar and a climb in bonds could send the the two-year Treasury yield to zero and the S&P 500 down another 20 percent, widely followed BofA/Merrill Lynch analyst Mary Ann Bartels said.

Unexpectedly Managed Expectations

Have the central bankers and politicians run to the rescue so often that no investor is willing to bet that they won't bail the market out again? Does everyone now fully expect a bailout at every sign of weakness?  Bernanke in particular had been a fan of managing expectations. But has he managed them so much that all that is left is disappointment when he underestimates how much is already built in? You know the first time someone plays poker they are afraid to bluff. The second time they decide bluffing is great. By the third time they are so confused about who is bluffing and when that they might as well just hand their chips to the best player at the table and save everyone the time and effort or taking the chips.  I think the central bankers and governments have gotten so confused they are bluffing with a few low off suit cards and don't even realize the cards are face up.  A few polite people are choosing to ignore the cards. The governments and central bankers may still win but it will all come down to the luck of the draw since the odds are stacked against them.

 

Please consider making a small donation, to help cover some of the labor and cost for this blog.

Thank You

I'm PayPal Verified