This Is Europe's Scariest Chart
Surging
Greek and Portuguese bond yields? Plunging Italian bank stocks? The
projected GDP of the Eurozone? In the grand scheme of things, while
certainly disturbing, none of these data points actually tell us much
about the secular shift within European society, and certainly are
nothing that couldn't be fixed if the ECB were to gamble with
hyperinflation and print an inordinate amount of fiat units diluting the
capital base even further. No: the one chart that truly captures the
latent fear behind the scenes in Europe is that showing youth
unemployment in the continent's troubled countries (and frankly
everywhere else). Because the last thing Europe needs is a discontented,
disenfranchised, and devoid of hope youth roving the streets with
nothing to do, easily susceptible to extremist and xenophobic
tendencies: after all, it must be "someone's" fault that there are no
job opportunities for anyone. Below we present the youth (16-24)
unemployment in three select European countries (and the general
Eurozone as a reference point). Some may be surprised to learn
that while Portugal, and Greece, are quite bad, at 30.7% and 46.6%
respectively, it is Spain where the youth unemployment pain is most
acute: at 51.4%, more than half of the youth eligible for work does not have a job!
Because the real question is if there is no hope for tomorrow, what is
the opportunity cost of doing something stupid and quite irrational
today?Europe Has Worst Day In Six Weeks
The
divergence between credit and equity marksts that we noted into the
European close on Friday closed and markets sold off significantly.
European sovereigns especially were weak with our GDP-weighted Eurozone credit risk index rising the most in six weeks.
High beta assets underperformed (as one would expect obviously) as
what goes up, comes down quicker. Stocks, Crossover (high-yield)
credit, and subordinated financials were dramatically wider. Senior
financials and investment grade credit modestly outperformed their
peers but also saw one of the largest decompressions in over a month
(+5.5bps today alone in the latter) as indices widen back towards their
fair-values. The 'small moderation' of the last few weeks has
given way once again to the reality of the Knightian uncertainty
Europeans face as obviously Portugal heads squarely into the
cross-hairs of real-money accounts looking to derisk (10Y Portugal bond spreads +224bps) and differentiate local vs non-local law bonds. While EURUSD hovered either side of 1.31, it was JPY strength
that drove derisking pressure (implicitly carry unwinds) as JPYUSD
rose 0.5% on the day (back to 10/31 intervention levels). EURCHF also hit a four-month low. Treasuries and Bunds moved in sync largely with Treasuries rallying hard (30Y <3% once again) and curves flattening rapidly. Commodities bounced
off early Europe lows, rallied into the European close and are now
giving back some of those gains (as the USD starts to rally post
Europe). Oil and Gold are in sync with USD strength as Silver and Copper
underperform - though all are down from Friday's close.As Europe Goes (Deep In Recession), So Does Half The World's Trade
Following
the Fed's somewhat downbeat perspective on growth, confidence in
investors' minds that the US can decouple has been temporarily jilted
back to reality. It is of course no surprise and as the World Bank points out half of the world's approximately $15 trillion trade in goods and services involves Europe. So the next time some talking head uses the word decoupling (ignoring
8.5 sigma Dallas Fed prints for the statistical folly that they are),
perhaps pointing them to the facts of explicit (US-Europe) and implicit
(Europe-Asia-US) trade flow impact of a deepening European
recession/depression will reign in their exuberance.
from GoldMoney.com:
Markets
have been hit by another bout of selling this morning as Europe
prepares for what could be a crunch week in terms of the continent’s
debt crisis. As reported at The Telegraph,
Greece’s prime minister Lucas Papademos warned last night that his
country faced “the spectre of bankruptcy and all the dire consequences
that entails”, while the weekend also saw calls from German economy
minister Philipp Rösler for stronger “monitoring” of the Greek
government’s finances. Unsurprisingly, Greece’s Finance Minister has
rejected this, describing it as undermining his nation’s “national
identity and dignity”.
European Union heads of government are due to meet in Brussels later today for more discussions on a new fiscal compact for the eurozone. Such a treaty will not be signed by participants until March, but is expected to empower the European Court of Justice to “verify the transposition of the balanced budget rule at national level.” This comes on a day when credit default swaps on Portuguese government debt have hit a record high, while the yield on that country’s 10-year government bond has hit 14.4%.
Read More @ GoldMoney.com
Markets
have been hit by another bout of selling this morning as Europe
prepares for what could be a crunch week in terms of the continent’s
debt crisis. As reported at The Telegraph,
Greece’s prime minister Lucas Papademos warned last night that his
country faced “the spectre of bankruptcy and all the dire consequences
that entails”, while the weekend also saw calls from German economy
minister Philipp Rösler for stronger “monitoring” of the Greek
government’s finances. Unsurprisingly, Greece’s Finance Minister has
rejected this, describing it as undermining his nation’s “national
identity and dignity”.European Union heads of government are due to meet in Brussels later today for more discussions on a new fiscal compact for the eurozone. Such a treaty will not be signed by participants until March, but is expected to empower the European Court of Justice to “verify the transposition of the balanced budget rule at national level.” This comes on a day when credit default swaps on Portuguese government debt have hit a record high, while the yield on that country’s 10-year government bond has hit 14.4%.
Read More @ GoldMoney.com
by Stephen Lendman:
Partnering with America has consequences. Europe’s paying by shooting itself in the foot.
On January 23, EU representative for foreign and security affairs, Catherine Ashton, broke the news. She announced an “unprecedented” anti-Iranian oil embargo, effective July 1 and immediately from new contracts.
The ban covers crude oil, petroleum and petrochemical products, oil related business, equipment and technology, selling Tehran refined products, new investments, and dealing with its central bank.
Europe buys up to 20% of its oil from Iran. Ending it means greater strain on economically stressed countries. Making up lost volume won’t be easy. Putting lipstick on this pig doesn’t wash.
Read More @ SJLendman.Blogspot.com
Partnering with America has consequences. Europe’s paying by shooting itself in the foot.On January 23, EU representative for foreign and security affairs, Catherine Ashton, broke the news. She announced an “unprecedented” anti-Iranian oil embargo, effective July 1 and immediately from new contracts.
The ban covers crude oil, petroleum and petrochemical products, oil related business, equipment and technology, selling Tehran refined products, new investments, and dealing with its central bank.
Europe buys up to 20% of its oil from Iran. Ending it means greater strain on economically stressed countries. Making up lost volume won’t be easy. Putting lipstick on this pig doesn’t wash.
Read More @ SJLendman.Blogspot.com
by David Knox Barker, GoldSeek.com:
The
U.S. Federal Reserve policy announcement on Tuesday, January 25, 2012
marks an important moment in monetary history. The forecast by a
majority of the members of the FOMC for interest rates to hug zero until
late 2014 was of interest and points to the FOMC conviction extended
global economic stagnation at best, reflecting the long wave forces at
work in the global economy. However, more importantly, it was the first
time that the U.S. Federal Reserve has clarified its interpretation of
its mandate for price stability, i.e. the target for inflation.
This announcement is preparing global markets for the primetime monetary super bowl of inflation vs. deflation, aka U.S. Federal Reserve quantitative easing (QE) driven inflation efforts vs. a Kondratieff long wave debt deflation depression. Since bad debt is the problem in a long wave debt deflation, the Fed plans to buy all the bad debt required to hit their inflation target and put it in on their balance sheet until it matures and repaid or is written off. The Fed only has two mandates; maximum employment and stable prices. These objectives are a bit sketchy and have not been specific targets historically, so an actual inflation target sends a clear message.
Read More @ GoldSeek.com
The
U.S. Federal Reserve policy announcement on Tuesday, January 25, 2012
marks an important moment in monetary history. The forecast by a
majority of the members of the FOMC for interest rates to hug zero until
late 2014 was of interest and points to the FOMC conviction extended
global economic stagnation at best, reflecting the long wave forces at
work in the global economy. However, more importantly, it was the first
time that the U.S. Federal Reserve has clarified its interpretation of
its mandate for price stability, i.e. the target for inflation.This announcement is preparing global markets for the primetime monetary super bowl of inflation vs. deflation, aka U.S. Federal Reserve quantitative easing (QE) driven inflation efforts vs. a Kondratieff long wave debt deflation depression. Since bad debt is the problem in a long wave debt deflation, the Fed plans to buy all the bad debt required to hit their inflation target and put it in on their balance sheet until it matures and repaid or is written off. The Fed only has two mandates; maximum employment and stable prices. These objectives are a bit sketchy and have not been specific targets historically, so an actual inflation target sends a clear message.
Read More @ GoldSeek.com
Growing body of opinion suggests that Iranian response to an attack would be muted
by Kim Sengupta, Independent.co.uk:
Economic sanctions by the European Union and the United States can only be allowed a limited time period to prevent Iran from attempting to acquire a nuclear arsenal before a military strike must be contemplated, Israeli leaders have declared.
The tough public stance from Tel Aviv comes amid conflicting reports on the readiness of the Israeli military establishment to carry out an attack on Iran.
One account claims that Israel’s security agencies have concluded that the turmoil predicted from a strike, and the likely response from Tehran, has been widely exaggerated. However, a senior British official told The Independent that the hierarchy of the intelligence service, Mossad, and the armed forces continued to have deep trepidation about conflict in the region.
Read More @ Independent.co.uk
by Kim Sengupta, Independent.co.uk:
Economic sanctions by the European Union and the United States can only be allowed a limited time period to prevent Iran from attempting to acquire a nuclear arsenal before a military strike must be contemplated, Israeli leaders have declared.
The tough public stance from Tel Aviv comes amid conflicting reports on the readiness of the Israeli military establishment to carry out an attack on Iran.
One account claims that Israel’s security agencies have concluded that the turmoil predicted from a strike, and the likely response from Tehran, has been widely exaggerated. However, a senior British official told The Independent that the hierarchy of the intelligence service, Mossad, and the armed forces continued to have deep trepidation about conflict in the region.
Read More @ Independent.co.uk
Green Light to WW3? ‘US Needs Human Face for Iran Invasion’
from Greg Hunter’s USAWatchdog.com:
The world economy is in the tank, and the Federal Reserve’s decision to extend its zero interest rate policy to, at least, the end of 2014 proves it. What will happen if the fragile world economy also has to deal with a war with Iran? That should have been the big headline coming out of the World Economic Forum in Davos, Switzerland, but what was reported was concern over slow or no growth in the world. All the signs are that the West is careening towards war with Iran, and there is not a peep about it from world leaders. Are they in a state of denial in a coming war catastrophe? I say yes.
One of the first shots fired by the EU was in the form of increased sanctions to boycott Iranian oil in about five months. The second shot looks like it will be fired by the Iranians who won’t wait for sanctions to kick in and will move to cut off oil exports of around 600,000 barrels a day to the Eurozone. (Click here for more on this story.) The Iranians have not yet cut off the oil. MSNBC reported yesterday, “The Islamic Republic declared itself optimistic about a visit by U.N. nuclear experts that began on Sunday but also warned the inspectors to be “professional” or see Tehran reducing cooperation with the world body on atomic matters. The International Atomic Energy Agency (IAEA) inspection delegation will seek to advance efforts to resolve a row about nuclear work which Iran says is for making electricity but the West suspects is aimed at seeking a nuclear weapon.” (Click here to read the latest CNBC story.)
Read More @ USAWatchdog.com
The world economy is in the tank, and the Federal Reserve’s decision to extend its zero interest rate policy to, at least, the end of 2014 proves it. What will happen if the fragile world economy also has to deal with a war with Iran? That should have been the big headline coming out of the World Economic Forum in Davos, Switzerland, but what was reported was concern over slow or no growth in the world. All the signs are that the West is careening towards war with Iran, and there is not a peep about it from world leaders. Are they in a state of denial in a coming war catastrophe? I say yes.
One of the first shots fired by the EU was in the form of increased sanctions to boycott Iranian oil in about five months. The second shot looks like it will be fired by the Iranians who won’t wait for sanctions to kick in and will move to cut off oil exports of around 600,000 barrels a day to the Eurozone. (Click here for more on this story.) The Iranians have not yet cut off the oil. MSNBC reported yesterday, “The Islamic Republic declared itself optimistic about a visit by U.N. nuclear experts that began on Sunday but also warned the inspectors to be “professional” or see Tehran reducing cooperation with the world body on atomic matters. The International Atomic Energy Agency (IAEA) inspection delegation will seek to advance efforts to resolve a row about nuclear work which Iran says is for making electricity but the West suspects is aimed at seeking a nuclear weapon.” (Click here to read the latest CNBC story.)
Read More @ USAWatchdog.com
Question to the Bank of Japan - How's that intervention been workin' out for ya?
Trader Dan at Trader Dan's Market Views - 9 minutes ago
Talk about a collosal waste of money...
Some of the more industrious among us might want to tally up the total sum
of money used to shove the Yen lower on the foreign exchange markets by the
Bank of Japan as well as the ECB and the Fed. As stated many times,
intervention can NEVER reverse a market trend; it can only postpone it.
As a point of reference, the continued strength in the Yen is tending to
keep Yen-gold on the defensive, in contrast to gold priced in terms of most
of the other world major currencies.
Gold firm in spite of Stronger Dollar
Trader Dan at Trader Dan's Market Views - 56 minutes ago
Gold is coming under a bit of selling pressure in New York after opening
higher in Asia alongside of silver last evening. Both markets then saw
selling originating in the form of both profit taking and new short
positions (from top pickers) after traders' attentions turned back to the
sovereign debt woes in Euroland, particularly Greece.
Also there was a bit of news that China was not going to be in a hurry to
loosen the monetary strings as quickly as some were anticipating.
Either way, it led to a reversal of the recent risk trades in favor of the
safe havens once again with the ... more »
Greeks Reject German Plan for EU Budget Commissioner
http://www.bbc.co.uk/news/world-europe-16777322
http://www.bbc.co.uk/news/world-europe-16777322
These Major U.S. Companies On Verge Of Collapse
http://www.munknee.com/2012/01/these-major-u-s-companies-on-verge-of-collapse/
NJ Assembly Committee To Consider Ammo Ban In The Name Of Police Safety
http://www.ammoland.com/2012/01/27/nj-assembly-committee-to-consider-ammo-ban...
2011 GDP: 1.7%
http://www.businessinsider.com/2011-gdp-2012-1
Must Watch...
Ron Paul and the Pink Slip that Could Decide the Election Thanks David
http://www.reuters.com/video/2012/01/26/ron-paul-and-the-pink-slip-that-could...
Mystery Illness Leaves Upstate N.Y. Teens With Twitches, Spasms And No Answers
http://newyork.cbslocal.com/2012/01/27/mystery-illness-leaves-teens-with-twit...
2012 Is the Year for a Gold Plank in GOP Platform
by Lewis Lehrman, NYSun.com:
At
a recent Presidential debate, the Republican candidates discussed a new
Gold Commission much like the one to which President Reagan appointed
Ron Paul and me in 1981. When asked, Jim Grant and I agreed to serve as
co-chairmen of a new gold commission — proposed by Newt Gingrich if he
were elected. Just weeks prior, Senator Paul was reported by the Weekly
Standard as having called for just such a commission. We said at the
time that we would serve on a gold commission established by any
president seriously interested in monetary and Federal Reserve reform.
The next gold commission, however, must be different from the Reagan Gold Commission, the majority of which endorsed the managed paper dollar and floating exchange rates. As the two dissenting minority members of the 1981 commission Ron Paul and I filed a minority report. We called for the restoration of the gold standard — that is, a stable dollar defined by law as a certain weight of gold. The minority report, entitled “The Case for Gold,” was later republished in book form.
Read More @ NYSun.com
by Lewis Lehrman, NYSun.com:
At
a recent Presidential debate, the Republican candidates discussed a new
Gold Commission much like the one to which President Reagan appointed
Ron Paul and me in 1981. When asked, Jim Grant and I agreed to serve as
co-chairmen of a new gold commission — proposed by Newt Gingrich if he
were elected. Just weeks prior, Senator Paul was reported by the Weekly
Standard as having called for just such a commission. We said at the
time that we would serve on a gold commission established by any
president seriously interested in monetary and Federal Reserve reform.The next gold commission, however, must be different from the Reagan Gold Commission, the majority of which endorsed the managed paper dollar and floating exchange rates. As the two dissenting minority members of the 1981 commission Ron Paul and I filed a minority report. We called for the restoration of the gold standard — that is, a stable dollar defined by law as a certain weight of gold. The minority report, entitled “The Case for Gold,” was later republished in book form.
Read More @ NYSun.com
by Gary North, LewRockwell.com:
It happened again on Wednesday, January 25. Gold shot up by $50.
Across the nation, a band of perpetual procrastinators thought to themselves: “I knew! I knew! Why didn’t I buy?”
This is the never-ending cry of the perpetual gold procrastinator, year after year. “I knew! I knew!”
It is immediately followed with: “I’ve learned my lesson this time! The next time gold’s price falls, I’ll buy.”
No, he won’t.
Why not? Because, when gold falls, he’ll say this: “The decline is just getting started. It will fall even more. I’ll wait.”
He will wait patiently until gold’s fall reverses. He will then say to himself: “This is temporary. It will fall back.” Then comes the explosive move upward. Then he will say: “I knew! I knew! The next time gold’s price falls, I will buy. I mean it this time. I really mean it.”
Year after year after year, this is the pattern.
Read More @ LewRockwell.com
It happened again on Wednesday, January 25. Gold shot up by $50.Across the nation, a band of perpetual procrastinators thought to themselves: “I knew! I knew! Why didn’t I buy?”
This is the never-ending cry of the perpetual gold procrastinator, year after year. “I knew! I knew!”
It is immediately followed with: “I’ve learned my lesson this time! The next time gold’s price falls, I’ll buy.”
No, he won’t.
Why not? Because, when gold falls, he’ll say this: “The decline is just getting started. It will fall even more. I’ll wait.”
He will wait patiently until gold’s fall reverses. He will then say to himself: “This is temporary. It will fall back.” Then comes the explosive move upward. Then he will say: “I knew! I knew! The next time gold’s price falls, I will buy. I mean it this time. I really mean it.”
Year after year after year, this is the pattern.
Read More @ LewRockwell.com
Bernanke decided to help the US Dollar along last week by extending a monetary policy of insanity, approved by Keynesian clowns everywhere, namely that of further destroying the value of savings and the average person’s ability to keep up with the costs of living. In the absence of reason or checks on the power of centralized monetary authorities, debasement of currency can always be achieved in a paper monetary system. And a Gold standard simply means that the Gold standard can be suspended in times of trouble. Easy money, baby. It’s almost as old as the concept of money itself.
Read More @ GoldSeek.com
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