Saturday, October 15, 2011

Any Greek Restructuring Should Be Designed To Trigger A Credit Event
As talk about an actual restructuring of Greek debt increases, the EU continues to think avoiding a CDS Credit Event is a good thing. More and more stories and leaks indicate that a real restructuring of Greek debt is on the table, with write-offs of as much as 50%. Whether it will be real, permanent reductions in principle this time, or some other form of principle protected rollover with a subjective NPV calculation like the 21% haircut, remains to be seen. In any case, the EU continues to head down the path of bending over backwards to avoid trigger a CDS Credit Event. They are wrong to be avoiding a Credit Event on the Hellenic Republic. If they are really pushing for a true restructuring where banks and insurance companies are for all intents and purposes forced to accept a big haircut, they should want to trigger a CDS Credit Event. They are allegedly avoiding a credit event because it “could unleash a cascade of losses” according to a bloomberg article. That just makes no sense. It also seems that pride plays a role as the EU doesn’t want to be impacted by the stigma of a default – a 50% write-off is even, but they don’t want to be called defaulters. That is plain silly. They also seem to want to punish speculators, and this is where they really have it wrong, not only are few hedge funds short Greece via CDS at this time, the problems this creates for bank risk management desks is big and will have long term negative consequences for sovereign debt demand.

Steve Keen On Keynes And The Failings Of The Neoclassical School

When it comes to economics, our ridicule of the underpinnings of the dismal voodoo science are well known. Only Ivy league professors can profess to predict the future based on special case equations that isolate a system in vacuum, completely oblivious of the fact that nothing in the world is linear and if anything, a system based on Lorenz attractors and Mandelbrott theory would be far better suited to demonstrate that as far as predicting the future is concerned, it is nothing short of an exercise in futility. That said, we do appreciate the work of those economists who are first to admit not only their own limitations but the limits of the art, not science, that they engage in. Chief among them is Australian Steve Keen, whose work and analysis we always enjoy. For those unfamiliar with Keen, we have attached the following just released interview with Ross Ashcroft of The Renegade Economist in which he deconstructs the failings of contemporary interpretations of Keynesianism (in essence the usurpation of theory by those in power to perpetuate their own greedy practical pursuits), and exposes the core of neoclassical economics that guide every day macroeconomics for the sham it is: "fundamentally neoclassical economists are the priests of Capitalism, but the priests don't necessarily know there is god. They have this model of god and ditto with neoclassical economics: they have a model of capitalism which is almost but not quite, completely unlike actual capitalism. And they don't even realize that they have erected a smokescreen behind which if people want to rip the system off, then there is plenty of avenues created by these guys." Just a thought, but perhaps it is time for #OccupyWallStreet to pay a visit and #OccupyNYUEconomicsDepartment...

Who Are The 1%?
Stone Street Ad...
10/15/2011 - 12:30
Who are all of these people in the top 1% of earners in the U.S? What occupations do they hold?  The answer may surprise you.

Did You BTFD ? 
The U.S. Mint had another sales report. They sold 2,000 ounces of gold eagles, another 1,000 one-ounce 24K gold buffaloes...and 50,000 silver eagles. For the first two weeks of October, gold eagles sales totaled 29, 24K gold buffaloes are at 9,500...and silver eagles sales total 1,930,000 month-to-date.

More Americans than Chinese can’t put food on the table

The link is here.





My Advice to the Occupy Wall Street Protesters...hit bankers where it hurts: Matt Taibbi

The link is here.





Art Cashin Offers A Huge Lesson On Weimar Hyperinflation

the link is here.





EU May Impose Limits on Commodity Swaps, High-Frequency Trading

link is here.





EU Said to Consider 50% Greek Write-down

the link is here.





Deutsche Bank Downgrade? - Pressure Is Rising in the Search for a Euro Solution






G-20 Said to Weigh Boosting IMF Lending Power to Aid Europe

The link is here.





US "Pours Cold Water" On IMF Expansion Plans, Leaves European Bailout To Europeans

the link is here.





The Perth Mint - Annual Report

Most annual reports are pretty dry reading...but this 79-page 2011 annual report is an exception. There's lots of good background information in here...and since it's the weekend, I hope you can find the time to skim some it.
The link to the pdf file is here.

Saturday, October 15, 2011 – by Anthony Wile

Anthony Wile
Slovakia has now approved the European debt-crisis bailout fund, but the problems Europe is experiencing are similar to those faced by America in the grip of the Fed's immense bailouts of the past two years.
Increasingly, these are seen as morally repugnant by citizens throughout the West. And this has significant consequences that the mainstream press declines to report. Dominant social themes work by omission as well as commission. In this column, I'll examine their immorality and potentially ruinous ramifications.
Money continues to flood Western regimes and financial institutions with billions and billions that they don't deserve and cannot properly apply. Surely, the top elites driving this insanity are aware that the bailouts are only aggravating the situation and leading to the potential for an even bigger crash.
Perhaps there is no alternative but to "kick the can down the road." On the other hand, perhaps the bailouts are part of a wider destabilization effort, one intended to generate chaos and misery that will pave the way for global governance and maybe a new world currency. This is the view of the more conspiratorially-minded among the alternative media.
For whatever reasons, the bailouts, against all logic, continue apace. They began in the US with TARP and then continued with US$16 trillion-plus (probably more) in short-term loans extended by the US Federal Reserve to financial institutions – not just in America but around the world.
Read More
Saturday, October 15, 2011 – by Tibor Machan

Dr. Tibor Machan
So Elizabeth Warren, Massachusetts candidate for the US Senate, says "there is nobody in this country who got rich on his own. Nobody." And so she is said to reject that it is possible for Americans to become wealthy "in isolation." (As if someone defended that silly idea!)
So she sounds off about this, with evident righteousness, as follows:
"You built a factory out there? Good for you,... But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did." And she goes on to declare, "Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along."
First of all, nothing at all follows from any of this about how Ms. Warrant has any authority at all to rearrange the world her way. My nose and ears and kidneys and eyes weren't created on my own but none of that implies for a second that Elizabeth Warren is entitled to start invading my body and decide how its parts ought to be used. Nor even that my parents actually own me!
Of course, property rights start simple enough and then become complex. But that is just why a free country has a law of property instead of Ms. Warren as a tyrant who orders us all to do as she wishes.
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