Believe In A Return To The Gold Standard? You Are Now Officially An Extremist According To The FBI
Just when we thought the US could not sink any further in its usurpation of civil rights, here comes the FBI to advise all those who tend to think that the broken economic model of the past century is the cause for the global insolvency, that wanton fiat diluation and reckless debt issuance does not 'fix' the problem of uber-leverage, and that the gold standard is the proper way to return to monetary stability, will henceforth be considered extremists. From Reuters: "Anti-government extremists opposed to taxes and regulations pose a growing threat to local law enforcement officers in the United States, the FBI warned on Monday. These extremists, sometimes known as "sovereign citizens," believe they can live outside any type of government authority, FBI agents said at a news conference." And the most epic line ever written: "The extremists may refuse to pay taxes, defy government environmental regulations and believe the United States went bankrupt by going off the gold standard." So... the US did not go bankrupt by going off the gold standard? But why did the US "go bankrupt" then? We are confused.
Greek Economy Implodes: Budget Revenues Tumble 7% In January On Expectation Of 9% Rise
While hardly surprising to anyone who actually paid attention over the past two months to events in Greece (instead of just reacting to headlines) where among those on strike were the very tax collectors tasked with "fixing the problem", we now get a first glimpse of the sheer collapse in the Greek economy, which also confirms why Germany is now dying for Greece to pull its own Eurozone plug (predicated by a naive belief that Greece is firewalled as was discussed before. As a reminder Hank Paulson thought that Lehman, too, was firewalled on September 15, 2008). And what a collapse it is: according to just released data from Kathimerini, budget revenues lagged projections by €1 billion in the very first month of the year. "Revenues posted a 7 percent decline compared with January 2011, while the target that had been set in the budget provided for an 8.9 percent annual increase. Worse still, value-added tax receipts posted an 18.7 percent decrease last month from January 2011 as the economy continues to tread the path of recession: VAT receipts only amounted to 1.85 billion euros in January compared to 2.29 billion in the same month last year." This it the point where any referee would throw in the towel. But no: for Europe's bankers there apparently are still some leftover organs in the corpse worth harvesting. Unfortunately, at this point we fail to see how this setup ends with anything but civil war, as the April elections will merely once again reinstate the existing bloodsucking regime. We hope we are wrong.France/Greek rescue Attempts/Bernanke speaks:Gold and Silver rises/Manufacturing Leaving Japan
Good
evening Ladies and Gentlemen:
The bankers decided in the wee hours of the morning that it was
necessary to raid silver and gold However as soon as Bernanke spoke
this morning, the metals skyrocketed when the world realized that we are
going to have zero interest rates to infinity. Gold finished the comex
session up 23.60 dollars to $1746.40 and silver rose by 45 cents to
$34.17. Gold
Silver Chart notes
Silver is responding to the "Free Money" environment being maintained by
the Fed to keep the US economy limping along as it shot higher when the
Dollar dropped lower and fell below the 79 level on the USDX chart.
It is once again knocking on the door of a heretofore very stubborn level
of chart resistance that begins at today's high and extends into the region
just north of $35. If silver is going to mount a breakout move and start a
trend higher, the bulls must beat back the selling that is going to come in
at this level. If they do, they have a very good shot at a rather quick
mov... more »
Bernanke Is Destroying The Savings Class
As far as the zero interest rate policy, it's a disaster for most people in
the world. You're destroying the whole class of people in america who save
and invest, and if you destroy your savings class, you really build up huge
problems for the future. - *in CNBC*
*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.*
Chairman Bernanke off the Administration Reservation
Someone needs to inform Ben Bernanke that he is not reading from the proper
script. After all, he is employed there as head of the Federal Reserve
courtesy of his boss, the President. One would think that he would get the
memo to "help re-elect Obama" by spinning last week's fabrication, aka, the
payrolls report, and spelling out in glowing detail how the President's
policies are taking us all in the right direction and "not to muck things
up".
Whoops - Bernanke went and did the exact opposite by basically confirming
100% what many of us have been saying about last week's government... more »
Rumors That ECB Will Transfer Greek Bonds To EFSF
It has been rumored before, but allegedly the potential for the ECB to transfer bonds to EFSF is back on the table. The ECB would transfer the bonds at cost to the EFSF (net of interest earned?) and the EFSF would participate in the PSI. There are some positives in this. Greece would get additional savings and that ECB bonds are nto subordinating other bond holders. There are also some definitive negatives. If the Troika will just use the EFSF as a way to bury losses they don’t want to take directly, no one will lend to EFSF on a leveraged basis. Furthermore, this could highlight the ECB's unwillingness to print to meet its shortfall and impact sentiment that way. It will get very interesting if some countries actually come out against this. If the EFSF was going to use guarantees to issue debt and then buy bonds of the PIIGS, that was one thing. Now they are going to borrow money so they can hand it to the ECB. That is different and may annoy some of the more prudent countriesEquities And EURUSD Outperform As Divergences Increase
Somehow,
once again, we managed to rally EURUSD (to 2 month highs) on the back
of Greek deal hopes (even as Merkel stomped her feet, Hollande flexed
his muscles, and Dallara/Venizelos had nothing to report) which
maintained a modicum of support for equity markets (which also got a
little late day push from another record-breaking Consumer-Credit
expansion) as cash S&P made it to early July 2011 levels.
Unfortunately, with Utilities leading S&P sectors,
credit diverging wider in investment grade and high-yield, Copper
underperforming (post overnight China reality checks), WTI's exuberance
(relative to Brent at least), and implied correlation diverging bearishly from VIX,
we can't say this was a wholly supported rally. Broad risk-asset proxy
(CONTEXT) did stay in sync with ES (the e-mini S&P 500 futures
contract) after the European close as Treasuries held up near the day's
high yields and FX carry stabilized. Financials lagged
with the majors actually underperforming for a change as we note the
late-day surge in ES to new highs saw significant average trade size
suggesting more professionals covering longs into strength rather than
adding at the top. Volume was above yesterday's dismal performance but
remained below the year's average so far. Credit and equity vol
are back in line and credit has now been flat and underperforming for
the last three days (even as HY issuance has been high).Unadjusted Consumer Credit Soars By Most Since Peak Of Credit Bubble In August 2007, Third Highest Ever
As
some may remember those long ago days of January, when the market was
not still lost in the latest bout of QE-hopium induced euphoria,
December sales missed expectations, following even more disappointing
November sales, despite propaganda channel promises that the 2011
shopping season was the "strongest ever"... and yet, many were wondering
where did the already cash-strapped US consumer procure the cash to
shop as much as they did, even if it was well below a record level. Now
we know: it was on credit. As the chart below shows, Non
Seasonally Adjusted Credit in December 2011 exploded by $33 billion
sequentially In December compared to November: the third highest in the past 18 years, and only second to August 2007,
which just so happens was both the peak of the market, and the peak of
the credit bubble. The SA chart shows pretty much the same: a surge in
consumer credit in December, even if the bulk of it was non-revolving,
or used for such purchases as offloading some of that GM channel
stuffing, and paying for one's college education. What does this mean?
Well, with at least 2 more years of ZIRP, the credit bubble is already
back, and it is only uphill from here. US consumers will get
increasingly more and more in debt as they use more debt to pay of
credit card interest, leading to ever further cash injections to keep
asset prices higher to give US consumers the illusion that they are
wealthy, so they spend even more, and so on. Just as Bernanke is talking
about QE, the US consumer is actually saying it is time to tightening.
Needless to say, good luck with that. Congratulations Ben - by
exterminating US savers, you have managed to reflate the consumer credit
bubble as for the 4th month in a row, nobody is deleveraging, even as
the US government continues to add about $140 billion in debt each
month. The most epic credit bubble collapse ever is coming
fast, and this one will be at ZIRP, which means that even the smallest
rise in interest rates will finally and mercifully end it all. Yet an
even more epic surge in prices may precede it as banks slowly but surely
are forced to push excess reserves into circulation. All $1.6 trillion
of them... compared to the $1 trillion of currency in circulation.Full Scenario Analysis Of LTRO 2.0 Size Implications
Credit
Suisse believes LTRO 2.0 will see a gross uptake of EUR500-650bn,
notably above current consensus around EUR325bn. The math is
straightforward and does not exaggerate too much for the speculative
demand which they (like UBS) do not expect to be as significant as many
happy-talkers. Between existing LTROs rolling off, rotation from
the MRO, Emergency Liquidity Assistance financing, deposit flight, and
reserve requirement reduction they arrive at around EUR300bn and
believe a further EUR200-350bn in covering private debt refinancings
(and perhaps some speculative activity though as we already noted the
economics are nothing like as attractive anymore), their estimate is around twice the initial LTRO net increase which could take the ECB balance sheet to over 35% of GDP, dramatically above the US and UK, and the following scenario analysis sets out the short- and long-term implications of varying gross uptakes for LTRO 2.0.Frau Merkel Summarizes The Situation
Thank you Angie for confirming what we all knew: that absent the help of the 950% debt-to-GDP levered UK, the European experiement is over.- MERKEL SAYS 'WE NEED GREAT BRITAIN IN THE EUROPEAN UNION'
Headline Of The Day: "Funds Found To Help Greece's Homeless"
Forget
farce. Forget tragicomedy. Frankly, we are out of words to describe
what is happening in Greece, Europe, and, actually - the world.
Luckily, Kathimerini has
just the headline, and associated story, to help us through this
moment of verbal crisis. In one year this headline will be appearing in
all insolvent countries (pretty much all of them), who will have
pledged all of their sovereign assets as cash
collateral, promptly used up by creditors to pay their interest
payments using "escrow accounts" which make the debtor nation merely a
fund flow intermediary with a seasonally unadjusted
beggar-to-population ratio of 100%.Spiegel: "It's Time To End The Greek Rescue Farce"
Back in July of 2011, when we first predicted the demise of the second Greek bailout package, even before the details were fully known in "The Fatal Flaw In Europe's Second "Bazooka" Bailout: 82 Million Soon To Be Very Angry Germans, Or How Euro Bailout #2 Could Cost Up To 56% Of German GDP" we asked, "what happens tomorrow when every German (in a population of 82 very efficient million) wakes up to newspaper headlines screaming that their country is now on the hook to 32% of its GDP in order to keep insolvent Greece, with its 50-some year old retirement age, not to mention Ireland, Portugal, and soon Italy and Spain, as part of the Eurozone? What happens when these same 82 million realize that they are on the hook to sacrificing hundreds of years of welfare state entitlements (recall that Otto von Bismark was the original welfare state progentior) just so a few peripheral national can continue to lie about their deficits (the 6 month Greek deficit already is missing Its full year benchmark target by about 20%) and enjoy generous socialist benefits up to an including guaranteed pensions? What happens when an already mortally wounded in the polls Angela Merkel finds herself in the next general election and experiences an epic electoral loss? We will find out very, very shortly." Alas, it has not been all that very "shortly", as once again we underestimated people's stupidity and willingness to pay the piper of a crumbling economic and monetary system. But our prediction is finally starting to come true. Spiegel has just released an article, which encapsulates what well over 50% of Germans think, who say that the time to let Greece loose, has come.
3 Year Bond Prices As Bid To Cover Slides, Directs Take Down Most In 3 Years, Indirects Flee
While it is hard to call that any 3 year paper issuance, which prices at 0.347%, or the second lowest in history, and just wide of the When Issued, a weak auction, this is precisely what happened, as today's $32 billion 3 Year Notes saw a big drop in the Bid To Cover to 3.302 from 3.729 previously, but more importantly saw Direct Bidders account for nearly two thirds of the total takedown, responsible for 63.8% of the entire allotment. This was the highest Primary Dealer allocation in three years, since January 2009, when the PDs were parking cash in the short end in droves as the equity market was imploding. Troubling was that Indirects took down just 27.7%, or tied with the lowest since 2006. And as a reminder, the PDs will take any and all paper they receive, and promptly flip it in the back hole of the shadow market's repo engine for something close to 100 cents on the dollar. Which means the real interest from end buyers for ZIRP-covered paper is getting less and less. Just as Bill Gross predicted. In other news, the US liquidity trap is alive and well.
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