Farage: "The Euro Titanic Has Now Hit The Iceberg"

In an epic rant, trumping Biderman, UKIP's Nigel Farage appears to have reached the limit of his frustration with his 'peers' in the European Parliament after the Spanish bailout. Rajoy's proclamation that this bailout shows what a success the euro-zone has been, sends Farage over the edge as he sees the Spaniard as just about the most incompetent leader in the whole of Europe (up there with favorites like Van Rompuy and Barroso). The erudite Englishman notes that by any objective criteria "The Euro Has Failed" expanding on the insane farce of Italy funding Spain's banking bailout at a loss (borrowing at 6% to fund a loan at 3% as we discussed here). "This 'genius' deal makes things worse not better" as it merely drives other nations towards needing bailouts themselves and while his socialist colleagues in the room are mumbling and checking their blackberries, he reminds them that Spanish national debt will surge and that 100 billion does not solve the problem, and that if Greece leaves, the ECB is failed, is gone, and to rectify this there will be a cash call from the very same PIIS (Ex-G) that are tumbling towards the abyss. Blood pressure surges as he screams "you couldn't make this up" concluding that "the Euro Titanic has now hit the Iceberg and sadly there simply aren't enough lifeboats."

Forget Three Months: Italy May Have Two Weeks Tops, As "It Already Is Where Spain Is Heading"

Submitted by Tyler Durden on 06/13/2012 - 08:05 Bond Budget Deficit Greece International Monetary Fund Italy Real estate Somalia Sovereign Debt
Yesterday, Austrian finance minister Maria Fekter ruffled the unelected Italian PM's feather by saying "forget Spain, Italy is next in the bailout line" - a statement which as expected was promptly loudly refuted, mocked, and scorned by everyone possible: the type of reaction that only the truth can possibly generate in Europe. So far so good: after all the typical European reaction to any instance of the truth is loud screams of "lies, lies" and promptly sticking your head deep in the sand. However, this time around Italy may not have the benefit of the doubt, nor the benefit of some sacrificial replacement of a prime minister: Silvio is long gone, and at this point switching one banker figurehead with another will do precisely nothing. Which is why this morning's assessment from Bloomberg economist David Powell is spot on: "Italy would probably be forced into receiving a bailout if it were to face another two weeks like the last seven days." But the punchline: "The bad news for Italy is the country’s stock of debt is already as large as Spain’s may become after years of fiscal turmoil. In other words, Italy already is where Spain may be heading."

The Cost Of Doing Business

Dave in Denver at The Golden Truth - 13 minutes ago

*JPMorgan is Banking Committee Chairman Tim Johnson's second-largest contributor over the last two-plus decades, according to the Center for Responsive Politics, which analyzes campaign giving from companies' employees and their political action committees since 1989. The same is true for the committee's top Republican, Sen. Richard Shelby, and its second-ranking Democrat, Sen. Jack Reed. *(link below) I have been arguing since way before it has become vogue in the media that the economy is a lot weaker than the Fed/Obama people would have us believe. Especially when measured on... more »

 

 

Central Bank Money-Printing: $6 Trillion...and Counting

Eric De Groot at Eric De Groot - 1 hour ago

Any long-time reader that's still shocked by this headline is likely surprised by the fact that the sky is blue. Jim uses the ski jump recovery illustration to hammer the point home. Perhaps if I put yodeling mountain climber from Cliffhangers on the growing debt pile, more readers would appreciate the severity of the economic mess brewing. Chart: Federal Debt Held by Foreign &... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

 

 

Acemoglu and Robinson: Why Nations Fail

Oil Prices Outlook

Admin at Jim Rogers Blog - 3 hours ago

The price of oil may well go down for a while. China is slowing down, India is slowing down, a lot of places are slowing down. But over a decade the price of oil is going to go through the roof. The surprise is going to be how high the price of oil stays and how high it goes. That doesn’t mean it cannot go to $70 in the meantime. But if it does, you should buy a lot of oil. - *in CNBC * * * *Related: United States Oil Fund ETF (USO), Exxon Mobil (XOM), Conoco Phillips (COP), Marathon Oil (MRO)* *Jim Rogers is an author, financial commentator and successful international investor. He... more »

 

 

Retail sales post biggest fall in two years

Eric De Groot at Eric De Groot - 3 hours ago

The concept of surge in physics, the rate of change of acceleration, the derivative of acceleration with respect to time, the second derivative of velocity, or the third derivative of position is an important concept in pragmatic economics. Surge or marginal economic activity is either rising or falling at an increasing rate. Real or CPI-adjusted retail stales implies that... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

 

 

The Case For Shorting Stocks

Admin at Jim Rogers Blog - 4 hours ago

I’m not advocating because I’m short, but I’m short because I think there are going to be more problems in the world economy in the next year or two. That’s how you protect yourself in times like this. What they’re doing is they’re making this situation worse. - in CNBC Related: SPDR S&P 500 Index ETF (SPY), Ishares MSCI Emerging Markets ETF (EEM) *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 g... more »

 

 

Opinions or "Signs" Often Mislead

Eric De Groot at Eric De Groot - 5 hours ago

Signs indicating that US Treasuries could be a bubble about to burst have existed for months if not years. Investors, however, cannot be blinded by headlines and/or opinions. Secular trends are determined by capital flows rather than signs. As the periphery of the sovereign debt crisis continues to implode, money will flee to the safety of the center. This center is populated by US... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

 

 

Video Interview With RTS Info

Admin at Marc Faber Blog - 5 hours ago

Latest video interview with RTS Info (in French) *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*

 

 

Let Them Go Bankrupt.

Admin at Jim Rogers Blog - 6 hours ago

New York City went bankrupt, the world didn’t come to an end. Mississippi went bankrupt once, the world hasn’t come to an end. Detroit’s bankrupt, the world hasn’t ended. So if banks in ailing Spain and Greece go bankrupt, bondholders and bankers will lose money. What happens is you reorganize and you start over. It’s been happening for a few thousand years. There’s nothing new about it. - 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 Str... more »

 

 

Charles Ferguson: Predator Nation, Global Predator Class

 

 

More Gruel, More Gruel

It is really rather pathetic. The Prime Minister of Spain today called for a deposit guarantee fund, pleaded for the EU to take over the budget of Spain and said Spain would cede its sovereignty over its banks. This is all just one thing; a cry for money and money at any cost. The poor fellow has obviously lost whatever self-respect that he had and is behaving no differently than some street urchin begging for alms. What can be seen from this kind of behavior is the desperate state that Spain is in and it is reflected in his desperate pleas for help. I would speculate that so much has been hidden and so many balance sheets falsified that Spain has suddenly found itself in a sea of their own making which could be termed, “Dire Straits.” When Rajoy termed the bailout for Spain as a “Victory for Europe” I knew that he had left “sense and sensibility” behind and headed into the land of Don Quixote where windmills were imagined to be giants and fantasy had replaced reality. The problem is, unlike the creation of Miguel Cervantes, this guy is the Prime Minister of Spain and not some aged senior chasing after the Knights Templar in his later years.

JPMorgan Explains Why There Is No Deus (gr)Ex Machina For Europe

Just because there aren't enough traumatizing events in the next week to look forward to, the market has already set its sights on the next "big" (let down) event in Europe - the EU summit on June 28/29, which will only benefit just one class - Belgian caterers. But for some odd reason there is hope that Europe will, miraculously and magically, after years of failing at this, come to some understanding over either Eurobonds, a fiscal union, a deposit insurance, banking union, or some or all of the above (expect many daily rumors regarding any of the above to incite small but violent EUR and ES short covering rallies). However, as we have been observing for the past 3 years, and as David Einhorn summarized visually, nothing will come out of this latest summit. JPM explains why the one thing that can save Europe is a non-starter, and will be for years.

Germany Pulls The Punchbowl As Usual

If yesterday was a repeat of the market action from that day three weeks ago before the last FinMin conference, when everyone expected Germany to announce it had agreed to a bank deposit guarantee, then today is, logically, day after. Because just like back then, so now, Germany has once again made it clear that it will first see the EUR crushed, and all off Europe begging for a bailout (as in the case of Spain - when presented with reality, they all will beg the one with the cash to come to the rescue). To wit from the German Finance Minister, via Stern magazine:

• Schaeuble Rejects European Redemption Fund: Stern Magazine
• German finance minister says redemption fund would violate EU treaties, in interview with Stern magazine

 

Do The Parasitic Elite Pay Any Taxes?

If we understand the difference between parasitic wealth and real value/wealth creation, we can properly align the tax structure to reality: the tax on authentic wealth creation should be low, to encourage wealth creation and the employment (broad-based wealth creation) generated by legitimate value creation. We must also understand that the Central State now protects and enables parasitic skimming as the primary function of the nation's financial system. Thus the entire financial system is parasitic on the wealth of the nation. Financial parasitic incomes should be taxed at 99%. If Mitt Romney reshuffles assets created by others and skims $100 million, 99% of that parasitic wealth should be returned to the nation via taxes. The parasite still gets to keep $1 million, more than enough to live well but not enough to buy the presidency, the Congress and the regulatory machinery of the Central State.

10 Year Prices At New Record Low Yield

With the Fed buying up billions of 10 year paper 2 hours ago as we observed earlier, it was only logical that the $4.8 billion gap created by the Fed's desire to monetize would be promptly closed. Sure enough, the $21 billion 10 Year reopening just priced at a new all time record yield of 1.622%, but also priced well inside the When Issued which had been trading at 1.635%: an indication of major pent up demand heading into the auction. The Bid To Cover rose from April's 2.90 to 3.06, but the most notable number was the drop in the Primary Dealer take down which only accounted for 37.2% of the auction, the lowest since December, while Indirects and Directs received 42.0% and 20.8%, the direct number being the highest since August 2011, and only the third highest in history. Pimco's fingerprints are all over this. And maybe China's as well: recall it is now a Direct bidder too, and can bypass the Primary Dealers. All in all, a scorcher of an auction. Then again, when considering the same-day round trip already observed, perhaps this is hardly too surprising.

SocGen's Albert Edwards On Spain: "A Bailout Will Solve Nothing"

SocGen's Albert Edwards reflects that we have a lot to learn from Japan's Lost Decade as a prequel to the current chaos the global macro-economy is undergoing. Drawing on work by Peter Tasker, Edwards notes the similar-to-current-Euro-thinking consensus view in Japan was that their banks were at the center of the economic woes and hence bank recaps were the turning point. Critically Tasker and Edwards disagreed, as "although the banking sector was indeed damaging the economy via a credit crunch, the banks were not the problem but a symptom of the problem: the true problem was deflation and the lack of stimulative policies. Indeed, Japanese banks did not start underperforming the overall market until 1997 as they became the victims of the economic weakness; they were not the origin of that malaise. And so it is in the eurozone. The Spanish banking sector is a victim of deflationary policies enacted at the behest of German economic orthodoxy. A bailout will solve nothing."

Treasury To Sell 10 Year Bonds At Record Low Yield Two Hours After Fed Buys... 10 Year Bonds

A month after the US Treasury sold $24 billion in 10 Year bonds at what was then a record low yield of 1.86%, the US government once again approaches that mysterious primary dealer-repo nexus with the latest offer US banks can't refuse: a $21 billion reopening. What is notable about today's auction is that in about 40 minutes, the auction will price at a record low yield of just about 1.63%, or 23 bps lower to the last record yield. So far so good: after all the global economy is once again collapsing (but don't look at US stocks for validation: they only indicate whatever Brian Sack wants them to indicate). Where things get patently surreal, however, is when one takes a look at today's POMO operation conducted by the Fed (remember those). Because as can be seen on the table below from the NY Fed, at 11 am today, so precisely 2 hours before when the Treasury will complete its own sale, bought $4.8 billion of... wait for it... 10 Year bonds.

With Greece Back Down To Just €2 Billion In Cash, Zeit Suggests A Third Greek Bailout May Be Coming

Shifting away from the theatrical travesty for a moment, we move to the other such travesty: Europe, where while nothing has been fixed, despite what the BIS is trying to do with the EURUSD which is now up 100 pips in a straight line since the Dimon testimony started, we find that while the world is concerned about Greek elections, the real gamechanger may be the old and known one: Greek cash, or the lack thereof, and more specifically yet another bailout for the country. RTE reports that as of today Greece has about €2 billion in cash left, pro forma for the recent cliffhanger cash infusion from Europe which almost did not come, which is expected to last the country for just about one more month.

Inflationeering

While a welcome development (and probably even more welcome on the other side of the Atlantic) it doesn’t make up for the fact that the explosive price increases during the boom years were never included. And it isn’t just real estate — equities was another market that massively inflated without being counted in official inflation statistics. It would have been simple at the time to calculate the effective inflation rate with these components included. A wiser economist than Greenspan might have at least paid attention to such information and tightened monetary policy to prevent the incipient bubbles from overheating. Of course, with inflation statistics calculated in the way they are (price changes to an overall basket of retail goods) there will always be a fight over what to include and what not to include. A better approach is to include everything.

Dimon Is A Market's Best Friend

Since the all-powerful JPMorgan CIO began talking at 10ET, markets have levitated. EURUSD and WTI stand out as the most impressive turnarounds but the Too-Big-To-Fails are all rallying in sync on the basis, we assume, that they have once again been proven impregnable. It seems very clear that correlation is being used to levitate markets here as the instantaneous jump in CONTEXT dragging stocks higher just as Dimon began to speak is so very reminiscent of the magical fairy that decided to buy Facebook shares as Gorman began his interview on CNBC last week. Maybe we should have Jamie speak every morning - the New QE?

Europe Bailout #5 Is In The Books

After Greece, Ireland, Portugal, and Spain, we just got domino #5. They are falling real fast now:
CYPRUS LIKELY TO HAVE TO SUPPORT ONE OF ITS BANKS, SHIARLY SAYS
CYPRUS GOVERNMENT IN CLOSE CONTACT WITH EU ON BANKS: SHIARLY
CYPRUS'S BANKING SYSTEM AT CRITICAL TURN, SHIARLY SAYS
CYPRUS PREFERS PRIVATE SOLUTION TO EU BAILOUT FOR BANKS:SHIARLY
And now just the fulcrum domino is left. The boot-shaped one.

Italian Bonds Back In The Crosshairs

10Y Italian bond spreads are surging wider intraday as it appears Europe's bond vigilantes (otherwise known as portfolio managers executing some level of due diligence to cover their fiduciary duty) have rotated their attention to Italy. After a few days in a row of Italian bank stock halts, the implicit LTRO-driven relationship between banks and sovereign is snapping 10Y yields above their Aug 2011 crisis peaks - at almost 5 month highs. A 20bps jump from the intraday lows this morning in spreads, underperforming any other European sovereign, seems to reflect our earlier concerns of Italy's lifeline running short. 5Y CDS are also pushing higher - near record wides but do not forget Spain which is also now legging higher in yield and wider in spread after some relief earlier in the day.

Art Cashin Previews Jamie Dimon's Senatorial "Minuet"

It appears that more and more people are finally waking up to the sheer farce that calling a kleptofascist crony capitalist system with socialist overtones because "deficits don't matter", a democracy, has become.

The Cost Of The Best Senate Banking Committee JP Morgan Can Buy: $877,798 In Bribes

In about an hour's time, Jamie Dimon will sit down before the Senate Banking Committee and prove, once again, not only who is smarter and calls the shots in the great Wall Street-D.C. soap opera, but that when it comes to purchasing a room full of senators (not to mention the script for today's "hearing"), JP Morgan is always at the top. Because as the following table compiled using OpenSecrets data, it cost JP Morgan just under $1 million, or $877,798.00 to be precise in lifetime campaign contributions, to buy itself precisely one Senate Banking Committee. And where it gets really fun is that between the Chairman, Tim Johnson (D - SD), and the ranking member Richard Shelby (R - AL), JP Morgan has been the top and second biggest campaign contributor, respectively. Also, 9 (at least) of the total 22 members of the committee have received some form of bribe from JPM over the years.

Retail Sales Miss Ex-Autos, PPI Misses; Gold Soars On More QE Expectations

Two more data points, two more disappointments: retail sales declined in May by 0.2%, in line with expectations, and unchanged from the April revision from 0.1% to -0.2%. Worse however were retail sales ex autos which had the biggest drop in 2 years, sliding by 0.4%, on expectations of an unchanged print. And so the retrenchment of the US consumer arrives. But at least "housing has bottomed." And in further 'NEW QE is coming' news, PPI also missed for the nth month in a row, printing at -1.0% on expectations of -0.6%, with foods dropping -0.6%, but energy collapsing by a massive 4.3%. PPI ex food and energy (so the items everyone uses, but nobody ever really counts) was up 0.2%. Gold, however, appears to be ignoring the core items, and has soared by $10 since the report, as today's data screams MOAR NEW QE.

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