Oops: ECB Says Greek PSI Participation May Fall Short, As Troika Expects Third Greek Bailout

Following up on Peter's summary of the if-then conditional analyses to be conducted concurrently by various classes of Greek bondholders ahead of Thursday's PSI deadline (even as Bingham is rapidly organizing a Greek ad hoc 'holdout' committee to stop the PSI), here is some news that may obviate pretty much everything, and goes back to our warning from January, namely that despite all the sturm und drang, media fanfare, and threats from former Goldman-cum-JPM bankers, the hedge funds will 'just say no' and courtesy of basis packages (yes, the fact that Greek CDS soared to a record 76 pts upfront on Friday indicates more buyers than sellers) hold out for par recoveries in court: they would be idiots (or have a gun at their head) not to do so. To wit from Bloomberg: "Greece may fail to garner enough investors to participate in a voluntary writedown of its debt, Der Spiegel magazine reported, citing unnamed officials at the European Central Bank. A second Greek bailout is partly tied to investors’ agreeing to the writedown by a March 8 deadline." Remember that Germany has made it very, very, very explicit that if the PSI fails, the bailout is off... just as they have planned from the get go.

My Big Fat Greek Restructuring - The Week Ahead

The situation in Greece should create some big headlines this week. The bond exchange “invitation” is set to expire at 3pm EST on Thursday March 8th. This is the so-called Private Sector Involvement or PSI. Greece has other steps to take during the week, and ultimately the Troika will determine how to proceed with the bailout, but not until the results of the PSI are known. It could be a week of confusing, misleading, and market moving headlines. Figuring out the “proper” reaction to each bit of news will require understanding the terms, and hoping the headlines are accurate – which given how confusing the situation is, cannot be fully counted on. Remember, the original “invitation” from the Greek government was for an amortizing bond, which was then changed to a series of 20 “bullet” bonds, so the level of confusion remains high.

JP Morgan's Blythe Masters Is the 2011 Queen of Commodities - Sharkboy and LavaGirl

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US Dollar compared to Comex Gold Chart

Trader Dan at Trader Dan's Market Views - 9 hours ago

The chart I am presenting is due to a special request from a reader that I put one together. It is an interesting method of seeing in visual form the steady decline in the value of the US Dollar against Gold. A careful inspection of the chart will reveal that there are certain periods during which the price of gold has moved higher while at the same time the US Dollar index was moving higher. It is during those intervals when the gold price has risen strongly when priced in terms of the various major world currencies that comprise the USDX. The following chart is a picture of Am... more » 

 

 

"An Inconvenient Tax"

With April 15 rapidly approaching, it is time to start thinking taxes once again. Yet do people actually stop to think about what the US tax system really is? And, as shown yesterday, does it even matter any more? After all as was just demonstrated based on cold, hard numbers, the US government has in fiscal 2012 funded deficit spending with 15% more debt (which will sooner or later be monetized by the Fed, as China just sold $100 billion TSYs in December in a harbinger of things to come) than with net tax revenues: should it not just drop the pretense of taxes altogether and fund the entire deficit with debt? After all it is not like it will slow down debt issuance any time in the next 4 years (when it will have $24.1 trillion in debt). For a 90 minute review of all that we take for granted as we sit down with our tax accountants, or with that copy of TurboTax (and in the case of Tim Geithner, push F1 repeatedly), various economists, politicians and industrialists weigh in on the U.S. income tax system in this hour and a half documentary showing how the tax code has grown and changed in response to military conflicts, economic changes and an ever-evolving political climate.

Here Are The Winners In An Oil Price Shock

On Friday, we quantified the biggest losers in the case of a sustained oil price shock, and were not surprised to find that the US leads the way with about a 0.9% hit to GDP for every $10 rise in crude prices (compared to about 0.4% for the entire world). Today, via Goldman we look at the flipside and while acknowledging that in absolute terms the world will suffer should crude prices sustain their move higher, there will be relative winners. From GS' David Kostin: "Our oil convergence monitor tracks the relative performance of the Energy sector vs. S&P 500 against the price of oil (measured by the 2-year oil swap). Currently, Energy equities are about 1.5 standard deviations cheaper then the oil price would suggest (based the relationship over the past three years (see Exhibit 4). The divergence has remained stable during the last two weeks although the Energy sector outpaced the S&P 500 by 160 bp during February (5.9% vs. 4.3%). Outside Energy, the Metals & Mining and Engineering & Construction industries show the highest sensitivity to oil prices." What is strange is that the biggest loser by far to an oil shock is the Consumer Discretionary sector, which continues to plough on, completely oblivious of absolutely everything, even as the Dow Transports have decoupled from the broader market, purely in hope that the iRally will continue and lift all boats with it, when in reality every incremental dollar spent for iTrinkets saps the already tapped out US iConsumer even more, with less marginal purchasing power left for other discretionary purchases. Then again, good luck trying to talk any sense into the central bank playground known as the stock market, which will do whatever it wants for as long as it wants, until it doesn't.

Guest Post: The Exter Pyramid And The Renminbi

The pyramid is the strongest structure known to Man. The weakest structure is the inverted pyramid. There is an economic theory called the Exter Pyramid to describe the financial system. It is an inverted pyramid ranking assets by risk. Gold, the safest asset, holds its place at the tip of the pyramid. Riskier assets, such as cash, deposits, bonds, stocks, real estate, non-monetary commodities, etc., take their respective place above gold. When the pyramid gets top-heavy, it has to re-adjust itself by reducing the value of the riskier assets and increasing the value of gold and other less risky assets. Although finding the true value of the total Exter Pyramid for a country is extremely difficult, we can use readily available data from a few asset classes to understand a basic structure.America's basic Exter Pyramid was worth USD 28.4 trillion (CNY 178.92 trillion), including gold. China's basic Exter Pyramid was worth CNY 126.1 trillion (USD 20.02 trillion) including gold. (In the charts above, gold was shown as a negative number for visual effect. The value of gold is based on the official holdings at that time multiplied by the current market price.) If you factor in GDP, the closeness of those numbers seems very odd.






WTF...

According To Reuters, Soaring Energy Prices Are A Good Thing

When it comes to reporting the news, Reuters ability to get the scoop first may only be rivaled by its ability to "spin" analysis in a way that will make a normal thinking person's head spin.  Such as the following piece of unrivaled headscrathing titled "The good news behind oil prices" whose conclusion, as some may have already guessed, is that "the surge in crude oil is looking more like a harbinger of better days." Let's go through the arguments.







Next Phase in Merkel’s Desperate and Risky Gamble

Posted by : testosteronepit

Post date: 03/04/2012 - 19:21

Gang of Four against François Hollande. The Eurozone is becoming brittle.

Robert Fitzwilson: The Roman Empire & The Power of Money

from King World News:
40 year market veteran, Robert Fitzwilson, writes for King World News discussing the fact that it has become popular to compare the Roman Empire to what is taking place in the modern world. He also believes many of these comparisons are historically inaccurate. Robert is the founder of The Portola Group, one of the premier boutique firms in the Unites States, and today King World News was given exclusive distribution rights to the following extraordinary piece:
“Nova Roma”
by Robert Fitzwilson, President & Founder of The Portola Group
Read the Article @ KingWorldNews.com

The Demonic Reality of Fukushima

by Cindy Folkers, CounterPunch.org:
In the days following the March 11, 2011 beginning of the Fukushima Nuclear Catastrophe, chief cabinet secretary Yukio Edano repeatedly reassured the Japanese public, news media, and world community that there was “no immediate health risk” from mounting radioactive releases from the Fukushima Daiichi nuclear power plant. His choice of words was very similar to the U.S. nuclear power establishment’s during the Three Mile Island melt down of 1979, as captured by Rosalie Bertell’s classic anti-nuclear primer No Immediate Danger? Prognosis for a Radioactive Earth.
However, as the New York Times revealed Monday, Edano and his colleagues at the highest levels of the Japanese federal government were actually worried about a worst-case scenario, a “demonic chain reaction” of atomic reactor meltdowns spreading catastrophic amounts of deadly radioactivity from the three operating units at Fukushima Daiichi (as well as multiple high-level radioactive waste storage pools there), to the four operating reactors and pools at Fukushima Daini (just 7 miles south, which itself avoided catastrophe thanks to a single surviving offsite power line; several offsite power lines were lost to the earthquake, and all diesel generators were lost to the tsunami), to the operating reactor and pool at Tokai (much closer to Tokyo). Regarding such a nightmare scenario, eerily similar to what Japanese filmmaker Akira Kurosawa depicted in Dreams, the New York Times reported:
Read More @ CounterPunch.org

WA Election Fraud: Almost 1000 People Not Allowed to Vote in Caucus

from LeakSourceArchive:
[Ed. Note: And THIS is how the Establishment fascists keep Dr. Paul out of the Oval office. As we've stated before, the 'Ron Paul Fix' is in. The obvious question is, how many of the people who were not allowed to vote were there to support Ron Paul? If we had to venture a guess, probably at least 50% of them.]

Admitted GOP Election Fraud in Washington GOP Caucus 3/3/12

In The News Today

March 4, 2012, at 3:30 pm
by Jim Sinclair 

Jim Sinclair’s Commentary

This looks more like borrowing to fill the gap caused by losses on sovereign losses.

Barclays borrows 8.2bn euros from ECB 2 March 2012 Last updated at 10:34 ET
Barclays has confirmed that it borrowed 8.2bn euros (£6.7bn) from the European Central Bank’s (ECB’s) latest long-term refinancing operation (LTRO).
It is the fourth British bank to reveal that it accessed the low-interest three-year loans.
It said it would use the money to manage the risk associated with funding gaps in Spain and Portugal.
Barclays did not take any cash from the ECB’s previous offer of such loans in December.
The BBC’s business editor, Robert Peston, says that given the cheap interest rate at which the money is offer these loans are arguably a susbsidy by eurozone taxpayers for UK financial institutions.
On Wednesday the ECB said that 800 banks across the European Union had accessed 530bn euros through its LTRO.
In December, more than 500 banks borrowed 489bn euros.
Of the other big four British banks, Lloyds borrowed 13.6bn euros in the latest auction, HSBC borrowed 5.6bn euros, most of it in the first auction, and RBS borrowed 10bn euros across both auctions.
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Jim Sinclair’s Commentary

Of course they will miss it. They never studied the Formula of 2006.

Spain to miss 2012 budget deficit target, says Rajoy 2 March 2012 Last updated at 09:00 ET
Spanish Prime Minister Mariano Rajoy has said his country will miss its budget deficit target for this year, just as EU leaders agree a new treaty to enforce budget discipline.
Mr Rajoy said Spain’s deficit would be 5.8% of total economic output in 2012, higher than its agreed target of 4.4%.
He said the higher target still represented "significant austerity".
The Netherlands also said it would miss its budget target for this year, with a deficit of 4.5%.
The Dutch target was 4.1%.
‘Difficult objective’
"I’m backing austerity and aim to reduce the deficit from 8.5% [in 2011] to 5.8%," said Mr Rajoy.
In January, he outlined 8.9bn euros ($11.8bn; £7.4bn) in new budget cuts, as well as tax increases designed to raise 6.3bn euros.
But analysts said even hitting the new deficit target would not be easy.
"It’s still a difficult objective in the absence of any traction in external demand," said Emilio Ontiveros at Analistas Financieros Internacionales in Madrid.
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Jim Sinclair’s Commentary

This was a bomb when it came out.
It was MOPEd to be GM’s savior and bombed all on its own without MSM’s help.

GM laying off 1300 due to low Volt sales by Joel Gehrke
General Motors Co. announced the temporary suspension of Chevrolet Volt production and the layoffs of 1300 employees, as the company is cutting Volt manufacturing to meet lower-than-expected demand for the electric cars.
"Even with sales up in February over January, we are still seeking to align our production with demand," GM spokesman Chris Lee said. The car company had hoped to sell 45,000 Chevy Volts in America this year, according to the Detroit News, but has only sold about 1,626 over the first two months of 2012.
"GM blamed the lack of sales in January on “exaggerated” media reports and the federal government’s investigation into Volt batteries catching fire, which officially began in November and ended Jan. 21," the Ann Arbor (Mich.) News reported.
The laid-off employees will be rehired April 23rd, when GM resumes production of the Volt.
More…





Jim Sinclair’s Commentary

The Chinese certainly are consistent once they make up their minds.

China reduces holdings of US govt bonds Updated: 2012-03-03 09:11
By Wei Tian (China Daily)
BEIJING – China has made the first annual reduction in its holdings of US Treasury bonds in a decade. Experts are viewing the move as a sign that the country is accelerating the move away from dollar assets in search of more diversified investment channels.
According to the latest monthly figures from the US Treasury Department, China’s holdings of US Treasury bonds dropped for a fifth consecutive month in Dec to $1.15 trillion.
The number was an update of a figure released in February, after the US department adjusted its method of collecting data on foreign holdings of US government bonds, a move aimed at obtaining more information about the use of proxies buying and holding US securities.
As a result, China’s June holdings of US Treasury securities have been amended to $1.31 trillion instead of $1.17 trillion. The figure at the end of 2011 was $51 billion higher than the previous calculation.
According to the revised data, China cut its holdings of US debt by $8.2 billion in 2011 compared with the previous year. It was the first time that the country had reduced its yearly holdings since 2001.
The country remains the largest foreign holder of US treasuries, but analysts suggest that China’s $3.2 trillion in foreign-exchange reserves means that the country is beginning to rapidly diversify its portfolio of foreign currencies.
More…




Jim Sinclair’s Commentary

The horror those I care a great deal about have experienced through the loss of lifelong trading winnings delivered to them by MF must be adjudicated

CME Subpoenaed By Federal Grand Jury, CFTC in Probes of MF Global Collapse By Lisa Abramowicz and Matthew Leising – Feb 28, 2012 9:49 AM MT
CME Group Inc. (CME), the world’s largest futures exchange, said it received a subpoena from a federal grand jury investigating the October collapse of MF Global Holdings Ltd.
CME Group, which had auditing authority over the failed futures broker, has been asked to produce information and witnesses in connection with the investigation by a grand jury in the Northern District of Illinois, the Chicago-based company said in a regulatory filing today. The company also received a subpoena from the U.S. Commodity Futures Trading Commission and a document request from the Securities Investor Protection Corp. trustee handling MF Global’s liquidation, it said.
The CFTC is reviewing CME Group’s audit of MF Global before the broker’s Oct. 31 bankruptcy, when as much as $1.6 billion in client funds went missing, a person familiar with the matter said last month. The CFTC, Securities and Exchange Commission, Justice Department and bankruptcy trustees overseeing MF Global’s liquidation are investigating the possible misuse of client funds.
“We believe that we carried out our duties and responsibilities in accordance with these standards and procedures,” CME said in the filing.
More…

 

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