Tuesday, November 1, 2011

Former PBoC Monetary Policy Committee Member: "Beijing Will Not Ride To Eurozone’s Rescue"

Yu Yongding: "Europe’s courtship of Beijing is moving to a more intense level. Klaus Regling, the chief of the eurozone bail-out fund, is in Beijing discussing possible support. Just a few days ago French President Nicolas Sarkozy conferred with Hu Jintao, his Chinese counterpart, to win Beijing’s support. They should not hold out their hopes too high. The two will have had a courteous hearing: China is willing and able to help. Since the beginning of Europe’s sovereign debt crisis, Beijing has repeatedly expressed its wish to offer “a helping hand” to Europe. Eurozone countries, however, have to understand that they will have to save themselves. Expectations of a “red knight” riding to the rescue are sorely misplaced."



Europe On The Verge Of A Political Crisis

And the hits just keep on coming, with the Greek government now just one vote away from total collapse
As a reminder 151 votes are needed to pass a vote. But that's not all:
  • Senior member of Italian opposition says party has asked president Giorgio Napolitano to form new government before G20 summit in Cannes
Oh yes, Italy, the one place everyone was terrified about before Greece stormed back to center stage with a bang. Result:



Greece Sends Global Markets Into Tailspin Again: European CDS Spreads Demand Another Bailout

The futures are tumbling with U.S. futures falling in sympathy with plunge in European stocks; Italy’s FTSEMIB index down 5.3%, DAX down 4.4%, CAC down 4.3%, Spain’s Ibex down 4.1%, FTSE down 2.9%. But here is the true reason why Europe already needs another bailout, or the promises thereof, courtesy of those so vile CDS which no matter how hard it tries, Europe just can't kill:

    * Italy CDS Rise 45.5 bps to 491; update +53 495/505
    * France CDSs rise 14 bps to 190; update + 17 191/196
    * Spain CDSs rise 33.5 bps to 374.5; update + 41 375/385
    * Portugal CDSs rise 57 bps to 1,028; update + 71 1015/1055

The reason? Why Greece of course: the same referendum decision that it took the market yesterday 45 minutes to process before the sell off began.

Guest Post: Increasing Volatility: Prelude To a Crash?

Market observers have long noted that increasing volatility presages market crashes. If you glance at a chart of September-October 1929, just before the crash that started the Great Depression, you will note the same sort of manic swings of euphoria and fear that have characterized the U.S. stock market over the past few months. Not only are the swings increasing in amplitude, the time between each move up or down is decreasing. Think of a series of wind storms that grow increasingly more violent even as the time between storms diminishes.

Inflation Accounts For Most Of The Supposed Growth In The U.S.

Admin at Marc Faber Blog - 1 hour ago
The inflation in the system is accounting for most of the supposed "growth" in the US economy. - *in Bloomberg* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

Stay Calm In Times Of Turmoil

Admin at Jim Rogers Blog - 2 hours ago
“Learn to stay calm especially in times of pressure or turmoil. You will make much better decisions.” - *in a Gift To My Children* *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.* 

The Surging U.S. Federal Debt

Admin at Marc Faber Blog - 2 hours ago
It took the United States 200 years to get to a federal debt of 1 trillion dollars in 1980, another six years to get to 2 trillion dollars, and now it’s north of $15 trillion. - *in WSJ Blog* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

Futures drop on Greek referendum, Asian growth

Eric De Groot at Eric De Groot - 2 hours ago

Social unrest throughout Europe (Greece, Spain, Italy, etc) will be the wild card not easily placated by financial bailouts. Headline: Futures drop on Greek referendum, Asian growth NEW YORK (Reuters) - Stock index futures tumbled on Tuesday as the deal to rescue Greece and prevent a wider sovereign debt crisis faced a new hurdle and as Asian economic data reignited fears of a slowdown in... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Spiegel's Reaction To G-Pap's Referendum Announcement

Manufacturing ISM Follows Chicago PMI With A Miss; Declines To 50.8 On Expectations Of Rise

Yesterday, the Chicago PMI miss led us to suggest that the ISM is next. Sure enough, today this other metric that had consistently beaten the negative HF economic data in the late summer was the latest to hit an inflection point, and miss substantially, with expectations of an improvement in the September number of 51.6 to 52.0 trounced, following an index print of 50.8. And while there was no major moves in the bulk of the index components, the Prices subcomponent saw an epic collapse, tumbling from 56 to 41. What does this imply for the S&P? Nothing good. But remember: correlation is not causation, a fact the Fed loves to abuse without pause.

Independent Strategy On "Greece The Ungovernable" - "Go short the euro and PIIGS debt — and hold on to your seats!"

The decision by Greek PM Papandreou to call for a referendum on the latest Greek bailout deal shows that Greece is becoming ungovernable. The PASOK leader made this decision because riots in the streets, increasing refusal by civil servants to implement the austerity measures and the likely loss of his majority in parliament made the survival of the government unlikely within weeks or months. So Papandreou has gone for broke. He hopes that by winning a vote on the bailout plan he can shut up the opposition both in parliament and on the streets. But this high-risk strategy threatens to bring the whole house of Euro cards down.

There Goes The Greek Majority

Just out from Reuters:
And with that the PASOK majority is history.

Emergency Greek Cabinet Meeting At 4 pm Local - Early Elections, Referendum To Be Discussed

News is now coming fast and furious, with the latest locus of activity once again Greece, where we learn that there will be an emergency meeting in minutes, at 4 pm local. Dow Jones reports that early elections, and the referendum, will be discussed by the Greek cabinet, according to a government official. Supposedly G-Pap is trying to control the revolt in the socialist party. We fail to see how this is remotely good news, as early elections are merely another form of popular referendum which will simply delay the final outcome of the prevailing hatred toward the bailout, only with it it risks esclating the country closer to outright civil conflict.

Will Italy Re-Denominate Back Into Lire?

We have discussed this a few times over the last year and as Greece begins to show signs of defection, it is perhaps worth considering what a spoiled and chided sovereign might do in a temper tantrum. Peter Tchir, of TF Market Advisors, puts it best this morning: "Everything I have read over the past couple of weeks coming out of Italy, tells me that if there was one country prepared to "screw" the Euro and go it alone, it would be Italy.  They don't like Merkozy treating them like children, and they have a big enough economy that a dirt cheap Lire would make exports possible".

European CDS Rerack: Mamma Mia

The horror...The horror

10Y Bund Yield Drops 5 Standard Deviations, Most Ever

As EFSF spreads widen and Greek CDS-Cash basis implodes, the flight to safety bid in Bunds is incredible. The largest single-day move in Bund yields ever, at over 5 standard deviations, is very noteworthy and the last hour or so has seen Bunds dislocated (lower in yield) from French debt also as OATs move to record 123bps (+15bps today). Bunds also outperforming TSYs by 9bps today (so far) and interestingly, given the Bund bid, German CDS is popping 13bps to 97.5bps (which seems like a cheap bet on Euro break-up now).

Mutiny On The Acropolis

Oh this is getting good.
  • Greek Health Minister Says Referendum Won’t Happen: Proto Thema
Next up: the army arrives in full party regalia to pay the capital a visit.

Goodbye 9 Handle: BTP Collapses To 89.5, Down 4.3% On The Day; Next: Bidless?

Did we miss the announcement from Italy where it said it is following Netflix into full business plan suicide? Because the 10 Year just imploded. It is now time to panic.

Russia Halted

Another Defection- Greek Ruling Party "Majority" Down To 151

Margin of error: zero
  • Greek Ruling Pasok Party Majority Falls to 151, Kerdos Reports - BBG
Intessa Sanpaolo celebrates by being halted down over 14%..... and Banco Popolare.

G-Pap's Referendum Bomb Was Secret Even From His Finance Minister

Things in Greece are becoming absolutely surreal after Reuters has disclosed that G-Pap did not even tell his FinMin Venizelos (who earlier was hospitalized with stomach pains... yes, we know) that he was about to announce a referendum. From Reuters: "Greek Prime Minister George Papandreou had not informed his Finance Minister, Evangelos Venizelos, he was going to announce a referendum on the latest EU aid deal, a Greek government official said on Tuesday. "Venizelos had no idea about the referendum. All he knew about was the vote of confidence," a government official told Reuters on condition of anonymity. "He told Papandreou he should inform foreign partners and a letter was drafted in the early morning hours." What can one say but "coordinated decision-making."

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