ECB's Stability Review: Seven Charts Of The Sovereign SNAFU

It is no surprise that the ECB has been less than overwhelming in its optimism, unlike Messers Barroso, Van Rompuy et al. when discussing the current and future state of the union that is Europe. While not pessimistic per se, the focus on zee stabilitee and lack of bazooka (no we don't see the 3Y LTROs as a magic bullet) is perhaps related to their view of the difficulties faced in addressing the needs of an increasingly disparate gaggle of countries. In their December Financial Stability Review, the ECB points to four key risks: (contagion, funding, macroeconomy, and trade imbalances), they fear "euro area financial stability increased considerably in the second half of 2011, as the sovereign risk crisis and its interplay with the banking sector worsened in an environment of weakening macroeconomic growth prospects". Summarizing into seven charts, the ECB provides a quick-and-dirty perspective on what is increasingly becoming obvious as capital flows and funding needs interplay with one another (for worse rather than better).

Moody's On Systematic Bank Downgrades

The financial crisis of the last few years has created not just a perceived shift in the creditworthiness of our financial entities but a real crack in the foundation of their business model and more importantly any explicit or implicit supports or guarantees. Moody's, in a special report on credit post crisis "The Great Credit Shift" look at the impact of the crisis on every major asset class within the credit space from sovereigns to corporates to structured finance. Noting that this crisis has profoundly changed the credit picture for sovereigns and financials, Moody's note there is some dispersion in the latter as banks have seen systematic downgrades while insurers (for now) remain on par with pre-crisis levels. More interestingly, large US regional banks represent an exception to this broad downgrade but we suspect that the continued low interest rate, low NIM, and high volatility spread environment will cause both insurers (we have long considered proxies for HY portfolios, no matter how well cushioned from vol their business models may be) and US regionals (consolidation will have the opposite effect of TBTF in our view as it will lead to more comfort with more risk-taking and expose them to more current-bank-like volatility) to face more pressure going forward (despite their lower apparent sovereign risk exposure). As BofA and Morgan Stanley trade at extreme 'crisis' levels in both CDS and equity markets, we suspect the raters have further to go and while the systemic shifts are apparent, we would expect less and not more differentiation going forward - especially if we sink into another solvency crisis.

 

 

Bureau Of Labor Statistics Caught Red Handed Leaking Confidential Employment Data

While this will hardly come as a surprise to any of our regular readers, occasional visitors may be confused to learn that according to a discovery by the Carolina Journal, North Carolina "Gov. Bev Perdue’s press office has received access to confidential employment data from the U.S. Bureau of Labor Statistics hours if not days before its scheduled release, quite likely in violation of federal law." Once again the rabbit hole, which these days is pretty much everywhere, emerges: "Documents and correspondence obtained by Carolina Journal show that the Division of Employment Security, formerly known as the Employment Security Commission, sent a draft of the press release each month to Perdue’s press office. The governor’s spokesmen typically rewrote the text and added a positive spin, even if the data did not support Perdue’s talking points." And while one may say this is a perfectly innocuous leak of otherwise embargoed data, others may highlight the following facts: "While the operation may sound like a harmless effort to add political spin to the release of jobs data, sharing confidential BLS estimates while they are protected by an embargo violates a federal law barring the early release of employment data. This is no small matter: A conviction for breaching the Confidential Information Protection and Statistical Efficiency Act of 2002 carries a fine of up to $250,000, up to five years in prison, or both." Of course, when it comes to breaking the law, both members of the US banking class, as well as America's politicians, are perfectly immune from any repercussions. But at least the next time the market does its usual pre-NFP acrobats, the only question will be: which particular US politicians i) traded in advance of the embargo lift, and ii) leaked the information to ten of their closest friends, who did the same, who did the same, etc. 

Bank of America Lists The "Other" Risks For 2012

While not quite a "jarring" as the Saxo Bank "outrageous predictions", Bank of America has also put together yet another list of "other" risks for 2012, which as BofA's Martin Mauro says, "have persisted or become worse over the course of the year, but have escaped market attention due to the spotlight on Europe." The risks are as follows: i) Hard landing in China; ii) Currency wars (competitive currency devaluation); iii) Middle East oil supply shock and iv) Municipal default fears. The only thing we would add is that these are not really risks, as the are all developing processes in some stage of deterioration. And, as usually happens, they will likely all strike at the same time, just when the world is most vulnerable, likely minutes after Greece announces it has left the Eurozone, and the Euro is in legal and structural limbo. But luckily we have at least a few weeks to months before that happens. So here is Bank of America's predictive prowess in all its rhetorical glory.

“Ron Paul Has a Legitimate Chance of Winning Iowa”

[Ed. Note: The Ron Paul discussion finally begins at 10:25.]
from MOXNEWSd0tC0M:
“The fact that he is in the running and leading in some of the polls in Iowa is remarkable, and a testament to his consistency.“

Bob Chapman “The U.S. Is Doomed If We Don’t Elect Ron Paul”

MSM: Ron Paul’s Iowa Lead Downplayed – Here Are the Facts

A new poll from Public Policy Polling, taken from December 16 to 18th shows Ron Paul is now in the number one spot in Iowa with 23% of likely Republican caucus voters behind him. And the mainstream media either glazes over it and then moves on to the other candidates and what this means for their campaigns, or they just don’t even mention Paul and instead only talk about Gingrich and Romney!




Mainstream Media Discover Ron Paul

Posted by : testosteronepit

Post date: 12/19/2011 - 19:46

If you haven’t looked at The New York Times recently, you missed something BIG.

MUST LISTEN: Jim Willie [SGTreport Exclusive]

 

 

MUST WATCH: The Shocking Truth About the European Stability Mechanism

MUST WATCH video on the ESM (European Stability Mechanism), which shows how the European bailout fund (unlike TARP which was a measly $700 Billion)….IS UNLIMITED.
Can you say QE TO INFINITY… AND BEYOND?!

More Deficits, More Debt

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Hyperinflation Watch – December 19, 2011
by James Turk, fgmr.com:
December 19, 2011 – In the first two months of the current fiscal year that began on October 1st, the US national debt has grown $320 billion. That is $21 billion more than the same 2-month period last year, which illustrates that the growth of the national debt continues to accelerate. The reason of course is the federal government’s huge operating deficit, which is not getting any smaller. This point is illustrated in the following chart.
Hyperinflation is always the outcome of unchecked government spending. The spending leads to ever greater deficits, which requires the government to borrow ever greater amounts of money. Eventually a point is reached when the government needs to borrow more money than lenders have the capacity – or willingness – to lend. Thereafter the government can take either of two alternative paths.
Read More @ FGMR.com

British Prepare Evacuation Plans Ahead of Spain and Portugal Collapse

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by Mac Slavo, SHTFPlan.com:

British Foreign Office personnel have proposed emergency evacuation plans for their citizens living throughout Europe, especially in Spain and Portugal. As tensions over the survivability of the Euro mount, the government warns that a collapse of the banking sector and the European monetary unit may make it impossible for those with assets in affected countries, including bank deposit accounts and homes, to access their funds and evacuate to Britain.

The drastic proposals emerged as a former Security Minister warned expats could be left stranded and destitute by the break-up of the single currency.

Brits who invested their savings in their adopted countries may not be able to withdraw cash and could even lose their homes if banks call in loans, worried ministers are warning.

The Foreign Office is preparing to bring them back from Spain and Portugal if the two countries are forced out of the euro, triggering a banking collapse.

Read More @ SHTFPlan.com

First Amendment Under Attack: 18 Examples Of How They Are Coming For Our Free Speech

from End of The American Dream:
In the United States today, the First Amendment is under attack like never before. Technological innovations such as the Internet have made it possible for average Americans to communicate directly with one another in ways that completely bypass the mainstream media, and this is making the elite very uncomfortable. They have decided that they better come after our free speech before it is too late. Right now, free speech in America is being chipped away at it in thousands of different ways. On the one hand, you have the disciples of “political correctness” that want to make all forms of speech that are “offensive” to anyone against the law. On the other hand, you have those that are obsessed with “national security” that want to ban all speech that is critical of the U.S. government or the U.S. military. These twin forces are constantly seeking to push the First Amendment into a smaller and smaller box. If you say the wrong thing in America today, your website might be shut down, you could be suspended from school, you may find yourself out of a job and there is now even a possibility that you could be arrested and shipped off to Guantanamo Bay without a trial.
Read More @ EndOfTheAmericanDream.com

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