Be Afaird Europe, Be Very Afraid - Tim Geithner Is Now "Helping" You
If there was one piece of news that could force an all out panic in a market already on the edge, it is that outgoing (as in finally departing) US Treasury Secretary, Tim Geithner, was getting involved in the European Crisis. Sadly, this is precisely what happened.- SPAIN DEPUTY PM: US TREASURY'S GEITHNER AGREES TO WORK WITH SPAIN TO RESOLVE BANK CRISIS - DJ
- SAENZ DE SANTAMARIA SAYS GEITHNER URGES SPAIN BANK SOLUTION
- SPAIN'S SAENZ DE SANTAMARIA TOLD GEITHNER OF REFORM EFFORTS
- GEITHNER DISCUSSED SPAIN'S PLANS TO STRENGTHEN FINANCE SECTOR
- SPAIN'S SAENZ DE SANTAMARIA TOLD GEITHNER OF REFORM EFFORTS
Sorry, Europe, you are now doomed...
from ETFDailyNews.com:
Today’s investment outlook entry at PIMCO is a great read. Bill Gross, perhaps as much as anyone in the world, has benefited by the incredible performance of fixed income (relative to equities) over the past 30 years. So when he questions the future efficacy of investment in sovereign fixed income–and even mentions the term “hard 
Read More @ ETFDailyNews.com
Biderman: "Everyone Is Now A Seller Of US Stocks"
Focusing
on his supply-demand perspective of what drives stock prices and the
heavy volume of corporate selling combined with mutual fund outflows
that we have been so vociferous about, Charles Biderman of TrimTabs
provides color on why, just like in 2010 and 2011, markets sold off in
May. Whether you believe it is explicitly the angst-inspiring European
malaise, Facebook's flop, or US macro deterioration and a pending fiscal
cliff - the real driver is more shares chasing less cash as he puts it and reflexively the news exaggerates it or stalls it. Stock prices are likely to keep dropping,
no matter what, until the Fed announces the next stimulus/easing (as we
all know) but unfortunately this will have no impact on the real
economy (though stocks will pop). Biderman berates the Fed for its constant insistence that this time is different and as far as the election 'our policies will bring about sustainable recovery and jobs' promises we will hear from both candidates, he succinctly summarizes thus: "What Bullshit! Where we are now as a world is: it's ok for government to lie for their own benefit".Uncle Sam Admits Monitoring You For These 377 Words
One
of breakout standup routines from the late, great George Carlin
was his 1972 monologue “Seven Words You Can Never Say on Television.” In
the presence of polite company, I shall not repeat them… but rest
assured, the routine is still hilarious to this day. I wish I could say
the same about the Department of Homeland Security… I wish I could say
this is all a big joke… that the government’s “377 words you can never
use online” is just some stupid comedy routine. But it’s not. And you
just can’t make this stuff. After vigorous resistance, the Department
of Homeland Security was finally forced into releasing it’s 2011
Analyst’s Desktop Binder. It’s a manual of sorts, teaching all the
storm troopers who monitor our Internet activity all day which key
words to look for.Busting The "Core" European Myth
Everyone knows that Europe is divided into the Periphery (aka the PIIGS), and the Core (aka the countries that are supposed to be safe). What everyone also knows, is that the core, naively represented by Germany and France, supposedly has homogeneous distribution of economic growth and prospects. That all changed last year, when France moved from being a AAA-rated country, to a fallen superduper angel following the Moody's downgrade to AA+. Yet nowhere is the glaring divergence between these two formerly comparable economies than in the two articles cited below, both from the same publication, and both from today.Market Fails To Zucker In Gullible Traders With End Of Day Stop Hunt
Well,
they sold in May but did they go away? If today is any guide, they did
as the swings across asset classes intraday were very reminiscent of 'death rattles'
with trading scenarios becoming more and more binary and more and more
extreme. Into the US macro data this morning risk assets in general
were behaving in a synchronized manner. As the dismal data hit, it got
wild with gold and stocks gapping down and Treasury yields crashing
lower (10Y 1.53 handle!) only to be saved around the European close by
chatter of IMF aid for Spain (funded by the selling of unicorn tears)
at which stocks erupted (and while bonds, the USD, and Gold also
reacted - they were far more muted). The afternoon was quiet until stocks
had a mind of their own and went on a stop-hunt up to yesterday's late
day highs (and that magical 1315 level) - pulling well away from any
other asset-class reality - only to fail dismally, ending with an
abrupt tumble back to sanity (just slightly in the red for the day)
grabbing VWAP into the close. The signals were everywhere that risk was not 'on' no matter how hard stocks tried with high-yield credit (most notably the ETFs) surging and purging ending with a terrible dive (after popping up to VWAP after our earlier note) on heavy volume.Facebook & the Bubble Mentality
So Facebook keeps falling, and is now floating around the $27 mark. We’re a third of the way down to my IPO valuation
of FB as worth roughly $2-4 a share (or 5-10 times earnings), although
I wouldn’t be surprised for the market to stabilise at a higher price
(at least until the next earnings figures come out and reveal — shock
horror — that Facebook is terrible at making money). The really stunning
thing is that even after all these falls, FB is still trading at 86
times earnings. What the hell did Morgan Stanley think they were doing
valuing an IPO without any viable profit model at over 100 times
earnings? The answer is that this was an exit strategy. This IPO was
about the people who got in early passing on a stick of dynamite to a
greater fool which incidentally is precisely the same bubble mentality
business model as bond investors who are currently buying
negative-real-yielding treasuries at 1.6% hoping to pass them onto a
greater fool at 0.5% (good luck with that).What Does High Yield Credit Know That Stocks Don't?
While
stocks, gold, and the dollar are generally in sync, Treasuries appear
modestly more bearish now (for stocks) but it is the high-yield bond ETFs that is making a few people nervous as they plunge on heavy volume
(and well below their intrinsic value). Obviously no-one really knows
what i going on at JPM, but fort some more color we note that IG9 10Y is
trading wider once again offered at 169bps - so one wonders if the
liquidity in HYG is allowing some unwinds (or more hedges to be laid
out). Certainly stocks remain ignorant of it for now - though month-end
may be impacting both. 
Monthly Gold Charts for May 2012
Trader Dan at Trader Dan's Market Views - 2 hours ago
I do want to note that since we are facing a very similar set of
deflationary factors at the current time as we did back in 2008 when the
credit crisis first erupted, that time frame is an analogous year and for
that reason provides at least some sort of frame of reference for a guide
to price action.
Using MONTHLY CLOSING PRICES only, gold fell from a peak of $975 down to a
low of $715 or a drop of 26.5% from it best monthly closing price BEFORE
THE FED made clear that a round of Quantitative Easing would commence. You
will recall that the purchases consisted mainly of Mortga... more »
Goldman Slashes Treasury Yield Forecasts
If it appears like it was only yesterday that Goldman was advising clients to short the 10 Year Treasury, it is because it was... give or take a few months: From January: "Since the end of last August, we have argued that 10-yr US Treasury yields would not be able to sustain levels much below 2% in this cycle. Yields have traded in a tight range around an average 2% since September, including so far into 2012. We are now of the view that a break to the upside, to 2.25-2.50%, is likely and recommend going tactically short. Using Mar-12 futures contracts, which closed on Friday at 130-08, we would aim for a target of 126-00 and stops on a close above 132-00." We added the following: "As a reminder, don't do what Goldman says, do what it does, especially when one looks the firm's Top 6 trades for 2012, of which 5 are losing money, and 2 have been stopped out less than a month into the year." Sure enough, as we tabulated last night, those who had listened to this call, and also gone long stocks as Goldman urged on March 21, have lost nearly 30% in about 2 months. Those who listened to us and did the opposite, well, didn't. Which is why the just released note from the very same Garzarelli who 4 months ago was so gung ho on shorting bonds, just cut his bond yield forecast for the entire world, US Treasurys included: "We now see 10-year US Treasuries ending this year at 2.00% (from 2.50% previously, and 30bp above current forwards), rising to 2.50% (previously 3.25%, and 60bp above the forwards) by December 2013. The corresponding numbers for German Bunds are 1.75% and 2.25%." In other words, it is now that Doug Kass should have made his short bonds call: not when he did it, a month ago and got his face bathsalted right off. For those asking - yes: Goldman is now selling bonds to clients.Santelli On Capital Flight And Bond Contagion
While
it will be no surprise to any ZH reader (with our attention to Swiss
2Y rates) the world is undergoing a massive capital flight to safety.
Rick Santelli gave this topic his special treatment today, pointing out
that "capital is detouring - to avoid risk", and
outlining just how big a 'crash' lower in yields we have seen among
many of the supposedly safest sovereigns as money floods to safe-havens
(including UK, US, Japan, Germany, and Holland). What is most important
is that Rick outlines why we should care - when all around are yawning
on about how cheap 'dividend' stocks must be given low interest rates -
since it changes the nature of capital (the life-blood of our markets)
from risk-taking to absolute safety-seeking - as he points out that "it isn't necessarily about our own economy's numbers,
it isn't even about who we export to; it's the fact that if capital
continues to get somewhat impaired, you'll have more data points as
investors not only rethink about their capital but everybody rethinks everything in the capital structure that makes business go round."
by Andrew Hoffman, MilesFranklin.com:
As I write Wednesday at 12:05 PM EST, gold has rocketed from a $20/oz loss to a $5/oz gain while the “DOW JONES PROPAGANDA AVERAGE” remains at its lows, the fifth such
occasion this year that “Cartel Rule #1” will be broken if this
relationship holds through the NYSE close – i.e. “thou shalt not let PMs
rise when the Dow plunges.” Moreover, the Euro is in FREEFALL as
genuine fear of what I have SCREAMED OF FROM THE RAFTERS FOR MONTHS appears highly likely – that is, the upcoming fragmentation – and possibly complete dissolution – of the ill-fated, 13-year-old Euro currency.
Given all the recent speculation of the Euro’s fate – short- and long-term – as well as Jim Sinclair’s baffling insistence that the “dollar index” will fall from its present level of 82.9 to the low 50s, I thought I’d “re-pen” what I have been writing for the past decade – i.e., the dollar index is meaningless. Today, I’m going to highlight a piece I wrote on this topic a year ago, which you can read in its entirety below. Remember, it was written just after the “SUNDAY NIGHT PAPER SILVER MASSACRE,” and just before the commencement of Global Meltdown II, the U.S. debt ceiling debacle, and ultimately, ALL-TIME HIGH gold prices…
Read more @ MilesFranklin.com
As I write Wednesday at 12:05 PM EST, gold has rocketed from a $20/oz loss to a $5/oz gain while the “DOW JONES PROPAGANDA AVERAGE” remains at its lows, the fifth such
occasion this year that “Cartel Rule #1” will be broken if this
relationship holds through the NYSE close – i.e. “thou shalt not let PMs
rise when the Dow plunges.” Moreover, the Euro is in FREEFALL as
genuine fear of what I have SCREAMED OF FROM THE RAFTERS FOR MONTHS appears highly likely – that is, the upcoming fragmentation – and possibly complete dissolution – of the ill-fated, 13-year-old Euro currency.Given all the recent speculation of the Euro’s fate – short- and long-term – as well as Jim Sinclair’s baffling insistence that the “dollar index” will fall from its present level of 82.9 to the low 50s, I thought I’d “re-pen” what I have been writing for the past decade – i.e., the dollar index is meaningless. Today, I’m going to highlight a piece I wrote on this topic a year ago, which you can read in its entirety below. Remember, it was written just after the “SUNDAY NIGHT PAPER SILVER MASSACRE,” and just before the commencement of Global Meltdown II, the U.S. debt ceiling debacle, and ultimately, ALL-TIME HIGH gold prices…
Read more @ MilesFranklin.com
from LaRoucheyouth:
The incredible moment of revelation starts at 1:15.
Q: Conflict of interest?
A: Yeah. ahhh…
from WeAreChange:
Jim Sinclair’s Commentary
IMF looking at Spain bailout: report By William Spain
CHICAGO (MarketWatch) — The European division of the International Monetary Fund is looking at possible plans for a rescue loan to Spain if that country can’t find the cash to bail out its third-largest bank by assets, the Wall Street Journal reported Thursday, citing unnamed sources. Spain is reportedly short 10 billion euros needed to save Bankia S.A.ES:BKIA +0.19% ; the total tab will run to 19 billion euros, but Spain’s bank bailout fund has 9 billion euros left, the newspaper noted. A bailout would essentially nationalize the bank, which got caught short as s result of a crash in the real-estate market and general economic downturn.
More…
Jim Sinclair’s Commentary
Einhorn Trashes Buffett And Cash, But Loves Gold 5/31/2012 @ 2:18PM
Hedge fund manager David Einhorn, well known for his persuasive belittling of companies he has shorted–a recent successful target was Green Mountain Coffee Roasters (GMCR)– has slyly taken on a sturdier target in his May 29 letter to holders in his Greenlight Capital funds: Warren Buffett.
Buffett, you’ll recall, devoted ten paragraphs of his latest letter to Berkshire Hathaway (BRK.A) shareholders to mocking Gold Bugs. It’s a tour de force by the Old Man, and we highly recommend reading the passage.
In it, Buffett figuratively stacks up all the world’s gold and compares it to assets he views as more productive:
“Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce–gold’s price as I write this–its value would be $9.6 trillion. Call this cube pile A.”
“Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?”
More…
Jim Sinclair’s Commentary
Euro Leaders May Need to Ease Deficit Plans, IMF’s Shafik Says By Scott Hamilton – May 31, 2012 9:30 AM GMT-0300
European authorities should consider relaxing fiscal consolidation targets for some euro-area countries as they may exacerbate economic slumps and undermine public support, International Monetary Fund Deputy Managing Director Nemat Shafik said.
“Fiscal adjustment plans for this year are broadly appropriate in Europe,” Shafik said in prepared remarks for a speech at the Brussels Economic Forum in the Belgium capital today. “In a few euro-area countries, however, the nominal fiscal targets for 2013 agreed before the current slowdown in growth may prove too pro-cyclical and may need to be adjusted or at least expressed in structural terms.”
Shafik also said the European Central Bank could loosen policy further to keep inflation from slipping too far below its goal of just under 2 percent. Data today showed euro-area price growth eased more than economists forecast in May to 2.4 percent. As well as pushing back deficit deadlines for some euro members, leaders should also look at increasing financial integration to ease market pressures, she said.
“Greater fiscal integration would contribute to lowering sovereign yields and would likely improve the ability of countries to access markets to finance their debt,” Shafik said. “Such steps would involve providing banking support from a common resource pool independent from national sources, sooner rather than later.”
While a common backstop would entail “some fiscal risk- sharing,” Shafik said restoring stability will require “additional pooling of sovereignty.”
More…
Jim Sinclair’s Commentary
Money flies out of Spain, regions pressured By Sonya Dowsett and Sarah White
MADRID | Thu May 31, 2012 10:49am EDT
(Reuters) – Spaniards alarmed by the dire state of their banks are squirreling money abroad at the fastest rate since records began, figures showed on Thursday, and the credit ratings of eight regions were cut.
Spain is the next country in the firing line of the euro zone’s debt crisis, with spendthrift regions and shaky banks threatening to blow a hole in state finances and pushing funding costs towards levels that signal the need for a bailout.
The European Commission gave new help on Wednesday, offering direct aid from a euro zone rescue fund to recapitalize Spanish banks and more time for Madrid to reduce its budget deficit.
That helped lower the risk premium investors demand to hold Spanish 10-year debt rather than the German benchmark on Thursday, but it remained close to the euro-era record, at 520 basis points.
Bank of Spain data showed a net 66.2 billion euros ($82.0 billion) was sent abroad last month, the most since records began in 1990. The figure compares to a 5.4 billion net entry of funds during the same month one year ago.
More…
Jim Sinclair’s Commentary
Wells Fargo Seizes Stockton, California City Hall Thursday, May 31, 2012
The Stockton City Council announced Wednesday that they will look at bankruptcy contingency plans after Wells Fargo seized the new city hall building.
The city paid $35 million to buy the 8-story building, but was not able to move in because of its money problems, and recently stopped making debt payments all together. This is the fourth building that was repossessed by Wells Fargo; the bank seized three city parking garages for the same reason.
Just wait to financial problems start to put a squeeze on state governments. California and Illinois are high up on the list. They might be able to scrape by for another year or two, but that’s it.
More…
Jim Sinclair’s Commentary
Rupee rescue: Is RBI now gearing up for gold bonds? Updated at Mon, May 14, 2012 at 12:31
Saikat Das
Speculation in the currency market is that the Reserve Bank of India (RBI) may issue government gold bonds to attract dollar inflows and stabilize the rupee which is in danger of slipping to a record low.
Earlier in the day, the RBI tightened rules for exporters, asking them to convert 50% of their dollar holdings into rupee and to access the forex market only after using up their existing balance.
"There is strong talk that RBI may issue sovereign gold bonds with interest rate in the range of 7-8%," a market participant with a private sector bank told Moneycontrol.com on condition of anonymity.
"Gold bonds would be issued to both resident and non-resident Indians against deposit of gold. Source (of gold) will not be questioned. Simple tax could be levied at the rate of 15%. Tenure is likely to be 10 years. Gold collected will be pledged with foreign lenders and funds will be availed at 3 to 4%. The proceeds are likely to be used in infrastructure sector."
This news could not be confirmed, although a few currency dealers are endorsing the concept. A senior RBI official told Moneycontrol.com that gold bonds is one of the options.
More…
Jim Sinclair’s Commentary
Japan and China to start direct currency trading on Friday Business May. 29, 2012 – 02:35PM JST
Japan and China will start direct currency trading this week, Tokyo said Tuesday, the first time Beijing has let a major unit other than the dollar swap with the Yuan.
The move, which will scrap the greenback as an intermediary unit, comes as China introduces measures as part of a long-term goal of internationalizing its currency to rival the dollar.
The two-way trade will also be allowed to move in a wider range than the narrow band at which the dollar and Yuan change hands, Dow Jones Newswires and the Nikkei business daily reported.
China will set a daily rate based on dealer quotes with trade allowed to move within a 3% band above or below that rate, the reports said, compared with a 1% band fixed to Yuan-dollar trading.
The Chinese central bank earlier Tuesday introduced a rate of 7.9480 Yuan for every 100 yen, Dow Jones said.
More…
CIGA Ian,
Announced U.S. Job Cuts Jump 67% From Year Ago, Challenger Says CIGA Eric
The public is beginning to realize what Insights readers already know, the labor market is weak and the economy is slowing. The slow uptick in the announced layoffs since 2010 illustrates this point (chart).
Chart: Challenger, Gray, and Christmas Announced Layoffs (ALO) And YOY Change
Headline: Announced U.S. Job Cuts Jump 67% From Year Ago, Challenger Says
Job cuts announced in the U.S. jumped in May by the most in eight months, led by computer companies. Planned firings surged 67 percent from May 2011 to 61,887, according to figures released today by Chicago-based Challenger, Gray & Christmas Inc. It marked the fourth year-over-year increase so far in 2012. Employers have announced 245,540 reductions since Jan. 1, 20 percent more than a year earlier, the report said. Hewlett- Packard Co. (HPQ) (HPQ) accounted for almost half the announcements this month, making the computer industry the top job-cutter of the year. Firings may also occur in the food industry as Hostess Brands Inc. restructures following its filing for bankruptcy protection, the report said. “While consumers and businesses are spending more on technology, the spending appears to favor a handful of companies,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “Those that are struggling to keep up with the rapidly changing trends and consumer tastes are shuffling workers to new projects or laying them off, altogether.”
Source: businessweek.com
More…
Hi Jim,
As you have said over and over since early 2002, the derivatives will be the global financial system’s downfall. Seeing all of this is unreal. All paper will go POOF!
CIGA Ian
Dear Ian,
Jim,
I just left a meeting where a money manager that has $62 billion in one fund is calling for par on the US dollar to the Euro.
Given our fiscal outlook, does that seem probable considering the rush to the false safe haven dollar?
Thank You,
CIGA Ted
Dear CIGA Ted,
Jim
One way or another we are close to the end of this chapter of the Euro Crisis.
CIGA Christopher
Central Bank Chief Says Euro Needs Changes to Stay Viable By JACK EWING
Published: May 31, 2012 Comment
FRANKFURT — Mario Draghi, president of the European Central Bank, warned Thursday that the structure of the euro zone had become “unsustainable” and criticized political leaders he said have been slow to respond to the sovereign debt crisis.
“The configuration we had for 10 years, which was considered sustainable, has been shown now to be unsustainable unless further steps are undertaken,” Mr. Draghi told a committee of the European Parliament in Brussels.
In what may have been his bluntest criticism of political leaders since taking office in November, Mr. Draghi said that half-measures and delays by political leaders have made the euro zone crisis worse. He said they need to decide what kind of euro zone they want.
“The next step is for our leaders to clarify what is the vision for a certain number of years from now,” he said. “The sooner this has been specified, the better. Dispel this fog.”
Mr. Draghi, appearing before the Economic and Monetary Affairs Committee of the European Parliament, also delivered a bit of good news. He said that the E.C.B. has resumed normal lending to Greece’s four largest banks after they received fresh capital, easing fears of bank failures in the country that is at the center of the euro zone crisis.
More…
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Q: Conflict of interest?
A: Yeah. ahhh…
from WeAreChange:
Jim Sinclair’s Commentary
Face it, everything that is required in Euroland will be provided.
Anything required that is not immediately available there will be provided by the Fed via swaps.
QE to Infinity is as sure as death and taxes
IMF looking at Spain bailout: report By William Spain
CHICAGO (MarketWatch) — The European division of the International Monetary Fund is looking at possible plans for a rescue loan to Spain if that country can’t find the cash to bail out its third-largest bank by assets, the Wall Street Journal reported Thursday, citing unnamed sources. Spain is reportedly short 10 billion euros needed to save Bankia S.A.ES:BKIA +0.19% ; the total tab will run to 19 billion euros, but Spain’s bank bailout fund has 9 billion euros left, the newspaper noted. A bailout would essentially nationalize the bank, which got caught short as s result of a crash in the real-estate market and general economic downturn.
More…
Jim Sinclair’s Commentary
Well now there are two of us that love gold and look for higher prices now.
Einhorn Trashes Buffett And Cash, But Loves Gold 5/31/2012 @ 2:18PM
Hedge fund manager David Einhorn, well known for his persuasive belittling of companies he has shorted–a recent successful target was Green Mountain Coffee Roasters (GMCR)– has slyly taken on a sturdier target in his May 29 letter to holders in his Greenlight Capital funds: Warren Buffett.
Buffett, you’ll recall, devoted ten paragraphs of his latest letter to Berkshire Hathaway (BRK.A) shareholders to mocking Gold Bugs. It’s a tour de force by the Old Man, and we highly recommend reading the passage.
In it, Buffett figuratively stacks up all the world’s gold and compares it to assets he views as more productive:
“Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce–gold’s price as I write this–its value would be $9.6 trillion. Call this cube pile A.”
“Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?”
More…
Jim Sinclair’s Commentary
Of course as QE prepares to go to infinity here and there.
Euro Leaders May Need to Ease Deficit Plans, IMF’s Shafik Says By Scott Hamilton – May 31, 2012 9:30 AM GMT-0300
European authorities should consider relaxing fiscal consolidation targets for some euro-area countries as they may exacerbate economic slumps and undermine public support, International Monetary Fund Deputy Managing Director Nemat Shafik said.
“Fiscal adjustment plans for this year are broadly appropriate in Europe,” Shafik said in prepared remarks for a speech at the Brussels Economic Forum in the Belgium capital today. “In a few euro-area countries, however, the nominal fiscal targets for 2013 agreed before the current slowdown in growth may prove too pro-cyclical and may need to be adjusted or at least expressed in structural terms.”
Shafik also said the European Central Bank could loosen policy further to keep inflation from slipping too far below its goal of just under 2 percent. Data today showed euro-area price growth eased more than economists forecast in May to 2.4 percent. As well as pushing back deficit deadlines for some euro members, leaders should also look at increasing financial integration to ease market pressures, she said.
“Greater fiscal integration would contribute to lowering sovereign yields and would likely improve the ability of countries to access markets to finance their debt,” Shafik said. “Such steps would involve providing banking support from a common resource pool independent from national sources, sooner rather than later.”
While a common backstop would entail “some fiscal risk- sharing,” Shafik said restoring stability will require “additional pooling of sovereignty.”
More…
Jim Sinclair’s Commentary
This situation is moving towards a conclusion fast.
Money flies out of Spain, regions pressured By Sonya Dowsett and Sarah White
MADRID | Thu May 31, 2012 10:49am EDT
(Reuters) – Spaniards alarmed by the dire state of their banks are squirreling money abroad at the fastest rate since records began, figures showed on Thursday, and the credit ratings of eight regions were cut.
Spain is the next country in the firing line of the euro zone’s debt crisis, with spendthrift regions and shaky banks threatening to blow a hole in state finances and pushing funding costs towards levels that signal the need for a bailout.
The European Commission gave new help on Wednesday, offering direct aid from a euro zone rescue fund to recapitalize Spanish banks and more time for Madrid to reduce its budget deficit.
That helped lower the risk premium investors demand to hold Spanish 10-year debt rather than the German benchmark on Thursday, but it remained close to the euro-era record, at 520 basis points.
Bank of Spain data showed a net 66.2 billion euros ($82.0 billion) was sent abroad last month, the most since records began in 1990. The figure compares to a 5.4 billion net entry of funds during the same month one year ago.
More…
Jim Sinclair’s Commentary
The sign carried by the sage that the end is near is wrong. The end is here now!
Wells Fargo Seizes Stockton, California City Hall Thursday, May 31, 2012
The Stockton City Council announced Wednesday that they will look at bankruptcy contingency plans after Wells Fargo seized the new city hall building.
The city paid $35 million to buy the 8-story building, but was not able to move in because of its money problems, and recently stopped making debt payments all together. This is the fourth building that was repossessed by Wells Fargo; the bank seized three city parking garages for the same reason.
Just wait to financial problems start to put a squeeze on state governments. California and Illinois are high up on the list. They might be able to scrape by for another year or two, but that’s it.
More…
Jim Sinclair’s Commentary
Gold is being monetized everywhere. This is monetization even though it will be denied to be so by MSM.
Rupee rescue: Is RBI now gearing up for gold bonds? Updated at Mon, May 14, 2012 at 12:31
Saikat Das
Speculation in the currency market is that the Reserve Bank of India (RBI) may issue government gold bonds to attract dollar inflows and stabilize the rupee which is in danger of slipping to a record low.
Earlier in the day, the RBI tightened rules for exporters, asking them to convert 50% of their dollar holdings into rupee and to access the forex market only after using up their existing balance.
"There is strong talk that RBI may issue sovereign gold bonds with interest rate in the range of 7-8%," a market participant with a private sector bank told Moneycontrol.com on condition of anonymity.
"Gold bonds would be issued to both resident and non-resident Indians against deposit of gold. Source (of gold) will not be questioned. Simple tax could be levied at the rate of 15%. Tenure is likely to be 10 years. Gold collected will be pledged with foreign lenders and funds will be availed at 3 to 4%. The proceeds are likely to be used in infrastructure sector."
This news could not be confirmed, although a few currency dealers are endorsing the concept. A senior RBI official told Moneycontrol.com that gold bonds is one of the options.
More…
Jim Sinclair’s Commentary
This is not dollar positive. The mirror image dollar rally is limited in time.
Japan and China to start direct currency trading on Friday Business May. 29, 2012 – 02:35PM JST
Japan and China will start direct currency trading this week, Tokyo said Tuesday, the first time Beijing has let a major unit other than the dollar swap with the Yuan.
The move, which will scrap the greenback as an intermediary unit, comes as China introduces measures as part of a long-term goal of internationalizing its currency to rival the dollar.
The two-way trade will also be allowed to move in a wider range than the narrow band at which the dollar and Yuan change hands, Dow Jones Newswires and the Nikkei business daily reported.
China will set a daily rate based on dealer quotes with trade allowed to move within a 3% band above or below that rate, the reports said, compared with a 1% band fixed to Yuan-dollar trading.
The Chinese central bank earlier Tuesday introduced a rate of 7.9480 Yuan for every 100 yen, Dow Jones said.
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CIGA Ian,
Truth be known, it has already collapsed.
The day they flushed Lehman the system was finished. The MSM via MOPE
is trying to hide a train wreck just as they have hidden the nuclear
accident of the century in Japan.
Jim
Announced U.S. Job Cuts Jump 67% From Year Ago, Challenger Says CIGA Eric
The public is beginning to realize what Insights readers already know, the labor market is weak and the economy is slowing. The slow uptick in the announced layoffs since 2010 illustrates this point (chart).
Chart: Challenger, Gray, and Christmas Announced Layoffs (ALO) And YOY Change
Headline: Announced U.S. Job Cuts Jump 67% From Year Ago, Challenger Says
Job cuts announced in the U.S. jumped in May by the most in eight months, led by computer companies. Planned firings surged 67 percent from May 2011 to 61,887, according to figures released today by Chicago-based Challenger, Gray & Christmas Inc. It marked the fourth year-over-year increase so far in 2012. Employers have announced 245,540 reductions since Jan. 1, 20 percent more than a year earlier, the report said. Hewlett- Packard Co. (HPQ) (HPQ) accounted for almost half the announcements this month, making the computer industry the top job-cutter of the year. Firings may also occur in the food industry as Hostess Brands Inc. restructures following its filing for bankruptcy protection, the report said. “While consumers and businesses are spending more on technology, the spending appears to favor a handful of companies,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “Those that are struggling to keep up with the rapidly changing trends and consumer tastes are shuffling workers to new projects or laying them off, altogether.”
Source: businessweek.com
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Hi Jim,
As you have said over and over since early 2002, the derivatives will be the global financial system’s downfall. Seeing all of this is unreal. All paper will go POOF!
CIGA Ian
Dear Ian,
Absolutely correct.
Jim
Jim,
I just left a meeting where a money manager that has $62 billion in one fund is calling for par on the US dollar to the Euro.
Given our fiscal outlook, does that seem probable considering the rush to the false safe haven dollar?
Thank You,
CIGA Ted
Dear CIGA Ted,
That is the MSM-MOPE party line simply regurgitated.
I doubt it. I believe you will see the euro back in the 1.40 -1.60
range after all the dust settles. If you read JSMineset you already know
so why bother me?
I make up my mind and stay with my conclusion unless a fundamental event changes it.
This is JSMineSET, not JSMine-wander and change opinions daily.
Trading is an entirely different thing.
JimJim
One way or another we are close to the end of this chapter of the Euro Crisis.
CIGA Christopher
Central Bank Chief Says Euro Needs Changes to Stay Viable By JACK EWING
Published: May 31, 2012 Comment
FRANKFURT — Mario Draghi, president of the European Central Bank, warned Thursday that the structure of the euro zone had become “unsustainable” and criticized political leaders he said have been slow to respond to the sovereign debt crisis.
“The configuration we had for 10 years, which was considered sustainable, has been shown now to be unsustainable unless further steps are undertaken,” Mr. Draghi told a committee of the European Parliament in Brussels.
In what may have been his bluntest criticism of political leaders since taking office in November, Mr. Draghi said that half-measures and delays by political leaders have made the euro zone crisis worse. He said they need to decide what kind of euro zone they want.
“The next step is for our leaders to clarify what is the vision for a certain number of years from now,” he said. “The sooner this has been specified, the better. Dispel this fog.”
Mr. Draghi, appearing before the Economic and Monetary Affairs Committee of the European Parliament, also delivered a bit of good news. He said that the E.C.B. has resumed normal lending to Greece’s four largest banks after they received fresh capital, easing fears of bank failures in the country that is at the center of the euro zone crisis.
More…
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