The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs! 

Posted by: Reggie Middleton

Post date: 07/23/2011 - 11:29

A European Bank Run: Step-by-Step. I outline the problems of a single bank that, unfortunately, is shared by many. This time next year, never let anybody tell you that this couldn't be seen coming as I illustrate how it will happen, and in detail!

 

 

 

 

 

Guest Post: Trouble Brewing In Credit Markets 

Credit markets continue to signal either a weakening economy or outright recession yet equities refuse to pay attention. With daily market volume dominated by intraday traders with no concern about macro data this comes as no surprise. The danger becomes that equity markets have no ability at forecasting any longer. The Great Recession saw equities peak just two months before contraction began. We may in fact be watching the same horrific forecasting ability play out if the credit markets are accurate. Below are three charts signaling trouble ahead for both the economy and the equity market. Equities have diverged from almost any correlation that existed for years. With a divergence you never know who is wrong. When countless relationships breakdown though and equities are always involved it becomes easier to say truly that "it's not you it's me." 

 

 

 

 

 

Bob Janjuah: Euphoric In The Short-Term, Apocalyptic In The Longer 

Nomura's Bob Janjuah has released his latest Bob's World macro observations which won't come as a big surprise to most. As per the last time he forecast the future, Bob has a very bullish outlook on the short-term, where he sees the market potentially jumping into the 1400s, however turning very bearish into the longer-term: "In this risk-off phase I expect to see, as a proxy, the S&P down in the low 1000s by year-end/early 2012, and of course weaker credit spreads (Crossover over 500), weaker commodities, a stronger USD (DXY Index up at 77.5/80) and lower government bond yields/flatter curves (10 year USTs at 2.5%). In response to this risk-off move, as well as a move in the US unemployment rate to/above 10% by/around year-end, I expect to see policy responses  in the form of QE2 in the UK, QE3 in the US, and in the euro zone deep and meaningful (orderly) debt restructuring for Greece, Ireland and Portugal." As for the catalyst for the transition from the "short" to "long-term" Bob sees the following trigger: "Weak Trend Growth" - "Most policymakers and many in the market are still desperately hanging on to the view that trend growth rates in DM (and EM too) have not been impacted materially as a result of the financial crisis. To me the evidence is clearly ‘in’. The only way DM (and EM) policymakers have been able to deliver even barely acceptable trend growth has been through the use of unsustainable policies which put short-term gains first but which clearly create huge longer term risks to sovereign credit quality and which leave a deeply negative scar in the minds of the private sector, which is attempting to de-lever and which knows it is facing the mother of all tax liabilities going forward." Simply said: no more debt, no more growth: "The reality is that absent a private sector debt binge (the private sector is not that stupid) and assuming we are coming to or are at the end of the line with respect to policy, then DM trend growth over the next 3/5 years will be in the 1-1.5% range." Keep an eye out for ongoing debt trends at the private sector: according to Bob, this will be the key leading indicator for whether the trend at the DM, especially America, which has already been cut by the consensus from 4% to around 3%, is sustainable.

"Down To The Wire": Oakree's Howard Marks Takes On The US Debt Ceiling 

While it is always good to hear grizzled veterans explain what we all know, namely that the US debt situation is untenable and America will eventually collapse under the weight of its obligations, we wonder: where were these same people while the debt was being accumulated and everyone was shiny and happy (there is a reason why the correlation between US GDP and debt is about as close to 1 as they come) and without a care in the world about America's long term solvency?  Yes: we do enjoy the writings of Oaktree's Howard Marks who has chosen to dissect the US debt ceiling and more specifically America's untenable deficit spending as the topic of his latest letter, although we can't help but wonder: why now? Why not a year ago? Or, better yet, a decade ago? Furthermore, as last night's explosive announcements by the president and Boehner demonstrated the debt hike story has so many moving parts that staying on top of it is virtually meaningless. Indeed, it would have been much more useful for America if financial luminaries as Marks had actually spoken up while the US Treasury was accumulating trillions in debt, instead of all the Monday Morning quarterbacking we seem to be getting each and every day from all the "fiscally prudent" ones who rode the train of America's "great moderation" runaway debt to stratospheric wealth and were all very silent then...

Boehner Issues Interim Statement As Debt Ceiling Talks Continue 

Following a resumption of the "failed" debt ceiling discussion at 11 am this morning, John Boehner has just released the following broad statement: “As I said last night, over this weekend Congress will forge a responsible path forward. House and Senate leaders will be working to find a bipartisan solution to significantly reduce Washington spending and preserve the full faith and credit of the United States." So much for the debt talks breaking down. And with so many "deficit-cutting" loose ends, all of which will eventually be resolved, probably by the time Asia opens tomorrow, here is Bloomberg's latest attempt at summarizing what is currently going on and why for Obama getting a solution before the market opens bidless on Monday is the most important thing right now. 

 

 

 

 

 

The Debt Ceiling Debate Goes Gossip Girl: Obama Tweets That Boehner Is Now His BFF 

I am not sure when U.S. politicians changed from being elitist, self-serving, perk enjoying, hypocrites, to teenage girls, but it has happened. Boehner sends a Dear John letter. Obama complains that phone calls aren't being returned. Reid is pulling petals from a flower repeating, 'he loves me', 'he loves me not'. We have had to listen to stories about getting homework done on time and eating our peas. I have seen this story before, actually multiple times a day, just turn on Disney network and you can watch the same story unfold over and over. We all know how those shows end, everyone agrees that the other side wasn't totally wrong, there is an awkward group hug, and everyone is happy, until the next episode. 

 

 

 

 

 

Chinese Bullet Trains Collide, At Least 11 Killed, Hundreds Injured 

It was only a matter of time before China's pursuit of infrastructure perfection for the sake of merely recycling trade surplus dollars ended up in casualties. And while its now innumerable ghost cities are unlikely to hurt anyone since they are, well, vacant, the same can not be said about its infrastructure. Earlier today, China's D-Train, a first generation of its bullet train, travelling the Hangzhou to Wenzhou route derailed, with two of its carriages falling off a bridge. The precise number of casualties is as of this moment unknown, although the latest report from Reuters is of 11 killed and 89 injured. We expect the number to be far higher in the end. Just like in the US where none of the massive infrastructure spending as part of ARRA actually went to infrastructure, so China is about to realize that mixing unprecedented corruption and ultra high speeds usually results in very catastrophic consequences. 

 

 

 

 

 

First Video Report Of China's Bullet Train Collision 

CNTV has released the first video of the horrific crash in which two bullet trains collided and 4 train cars fell from viaducts. The full clip can be seen below.

 

 

 

 

 

 

 

 

Corporate Tax Avoidance

Posted by: ilene

Post date: 07/23/2011 - 12:04

Today MSFT is effectively a 68% foreign operation. In return they get all the benefits of stimulus and minimize the costs of supporting the US system... One of the big economic winners, Apple Computer, is even worse...

 

 

 

 

 

Mainstream Media: Presstitutes for the Rich and Powerful

Posted by: George Washington

Post date: 07/23/2011 - 12:48

"Professional" journalists ...

 

 

 

 

 

Layoffs, Layoffs, Everywhere You Look There Are Layoffs

Posted by: ilene

Post date: 07/23/2011 - 15:50

What is worse is that it looks like the pace of layoffs is going to keep increasing.

 

 

 

 

 

 

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