What Happens When A Nation Goes Bankrupt

Three years ago today, my best friend called me and told me to turn on my television. I remember the way he described it– “Lehman is finished.”  The TV showed guys packing up their desks on Sunday afternoon, moving out of their offices forever. That was the precipice from which financial markets plunged the following day, taking the global economy along for the next three years. We appear to be at that moment once more. Greece is out of cash. Again. The Greek Deputy Finance Minister said on Monday that his country only has enough cash to operate for a few more weeks. As I write this note, French, German, and Greek politicians are all on a conference call, feverishly trying to figure out a way to avoid default.  Everyone seems to understand the consequences at stake… given the chain of derivatives out there, a Greek default will completely dwarf the Lehman collapse. Unfortunately for the bureaucrats, dissent against the Greek bailout plan is spreading across Europe… and leaders can no longer ignore the growing wave of opposition in Finland, the Netherlands, Austria, and Germany.

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.

The Biggest EURUSD Bull, Goldman's Thomas Stolper, Throws In The Towel, Cuts His Forecast Across The Board

Three things are sure in life: death, taxes, and betting against the calls of Goldman's Thomas Stolper. Sure enough:

• We lower our EUR/$ forecast path slightly but keep the same upward-sloping trajectory.
• Our new EUR/$ trajectory is 1.40, 1.45 and 1.50 in 3, 6 and 12 months, from 1.45, 1.50, 1.55 previously.
• The recent increase in the Euro area’s fiscal risk premium is likely to persist.
• Very large short EUR/$ positioning is likely to last in the near future.
• But the underlying Dollar downtrend should drive EUR/$ higher over time.
• We discuss the CHF and safe-haven currencies after the SNB’s commitment to intervene.
• Our new EUR/CHF forecasts are 1.21 flat in 3, 6 and 12 months.

Gold Stock Train

Eric De Groot at Eric De Groot - 36 minutes ago

Anyone still waiting for a bullish signal/sign from the gold stocks is doing one or more of the following: (1) Not looking, (2) Have the chart upside down, (3) Not listening to the message of the market. The red arrow represents the next stop for the gold stock train. The train will be reaching maximum capacity as it approaches. Right now, good seats are readily available. Amex Gold Bugs Index... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

 



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Consolidation Within A Secular Trend Cannot Be Problem Solved

Eric De Groot at Eric De Groot - 1 hour ago

Another consolidation within a secular down trend of the US Federal budget (i.e. Jim's Formula) cannot be embraced as problem solved. Why do you think gold is rallying? It's all about confidence. Confidence already weak and teetering on the edge will be tested again once the consolidation pattern breaks to the downside. The previous break in early 2008 foreshadowed the onset of the sovereign debt... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Credit Is From Mars, Stocks Are From Venus, Or Another Reason Why This Market Looks Increasingly Like 2008

The fact that stocks keep reacting more positively to Greek news, than Greek bonds is scary.  It is somewhat reminiscent of 2008 when stocks kept rallying on allegedly good news even when debt struggled to perform on the news that was supposed to impact it most.  And for all the talk that Greece is priced in, the reaction after the erroneous headline about Austria approving EFSF shows that is unlikely true.  Stocks hit 1163 on that news and the decline only stopped because the correction was printed.  That is over 2.5% lower than we are right now, so I don't think Greek default is priced in.  Stock futures are up a full 3% from their overnight lows.  Crazy and broken moves.  The truly scary thing is we haven't even had the full "Eurobonds announced" rally.  Where does that take SPX?  1230 again?  I just can't convince myself that long is the right trade right now.  Ironically, strong stocks may be their own worst enemy, as they give some European politicians the strength to do what they want - and not provide more funds to bailouts.  Now I'm clutching at straws, but hey, what else to do as stocks march higher.  I have checked the newswire several times while writing this.  Expecting to see some new comments or twist on the comments that justifies this push in stocks, and I just can't see it.  And I really don't see a strong reaction in the credit markets either. Even BAC cannot seem to rally back to Warren's strike price, let alone where they got in the immediate aftermath of his headline grabbing, stock spiking, investment.

UPDATE: Another Way Of Visualizing Today's Raging Unipolar Stock Behavior

A little bit earlier, Peter Tchir was lamenting the latest market breakage courtesy of stocks once again being on their own, and ignoring all the clear macro risks, proceeding to melt up on nothing but a massive short squeeze, precisely as we warned yesterday. For those scratching their heads, below is a great way of visualizing how in the past hour stocks have completely broken away from credit in the form of IG and HY, and are now raging ever higher a solid 13 point rich to correlation fair value. One day, maybe, stocks will prove to be correct over credit... for the first time in history that is. Or, then again, they won't.

Bank Of America To Pay $930,000 Restitution To Whistleblower Who Was Fired For Reporting Fraud At Countrywide

We hardly needed confirmation that a) Bank of America is a den of criminals and thieves, that b) its toxic $1.3 trillion mortgage division, better known as Countrywide, is an even scarier and more putrid den of criminals and thieves, and that c) it retaliates against anyone who dares to remind the bank that there are such things as laws, and the aforementioned criminals and thieves actually have to follow these. Yet this is precisely what we just got after the Department of Labor said that it must pay $930,000 to an employee who led internal probes of abuses at its Countrywide Financial unit and was fired in violation of whistleblower protections.  Bloomberg reports "the employee, who also must be reinstated, had claimed that people who tried to report fraud to Countrywide’s employee- relations department suffered persistent retaliation, the agency said today in a statement. He was fired after Charlotte, North Carolina-based Bank of America’s 2008 purchase of Countrywide, according to the statement." So is it possible that the general public can now get the documentation that said whistleblower was fired for attempting to bring to his retaliating superiors' attention? And just how damaging will this development be to a bank which is already embroiled in litigation with virtually every single entity that has every transacted in mortgages both in America, and now abroad?





Trump, Apmex, and Goldilocks

Posted by : Michael Victory

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

  The Donald takes delivery of 3 Kilos.  

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Deposits draining from European banks; China sets high price for bailout