Inevitable Spiral Equity Collapse, Biderman's 'Better Early Than Late' Call To Sell Into Strength
It's the end of deficit spending in Europe as we know it.
That's how Charles Biderman, of TrimTabs, rightly describes the
unwilling-to-compromise German's (perhaps heroic) attitude to their
fellow European sovereigns. From his perspective, this forced austerity
will mean slower growth and with that all chance that the European
nations can 'grow/tax' their way out of this charade. He notes there is
simply no way they can grow fast enough to be able to kick the can far
enough down the road for it to matter. Pointing to his 'better early than late' calls on markets over the last 40 years, the man from Sausalito sees it as inevitable that
the practical insistence on the elimination of deficit spending will
force banks into bankruptcy, leading, as asset values are marked down,
to a spiral collapse in equities. He then dismisses the simple-minded decoupling perspective as if no new Keynesian-inspired 'technology shift' occurs, US growth will be in the doldrums as European deleveraging drags global growth down with it. It's not all doom-and-gloom though as he ends on the upbeat notion that this
collapse won't happen tomorrow, given balance sheet strength, although
selling into rallies is the clear picture he is painting.Swiss, Germans Set To Unleash Capital Controls As European Companies Prepare For Euro End
Even as Eurozone leaders attempted to instill some meager sense of accomplishment following the latest (but certainly not last) Euro summit culminating with yet another 7-page term sheet which achieved absolutely nothing, and in fact succeeded in alienating the UK even more, the real game continues behind the scenes. And it is a game which the euro looks set to lose. As Bloomberg reports, in the aftermath of the Telegraph's latest report confirming what has been said here all about the collateral crunch in Europe, Europe's CEO are now actively preparing for the worst case outcome: the end of the Euro (despite UBS' and other banks' repeated calls that such an event would result in an end of the world). To wit: "Grupo Gowex (GOW), a Spanish provider of Wi-Fi wireless services, is moving funds to Germany because it expects Spain to exit the euro. German machinery maker GEA Group AG is setting maximum amounts held at any one bank. “I don’t trust Spain will remain in the euro zone,” said Jenaro Garcia, founder and chief executive officer of Madrid- based Grupo Gowex, which provides Wi-Fi access in 15 countries. “We moved our cash and deposits to Germany because Spain will come back to the peseta"... Contingency planning for an unraveling of the currency involves cutting investment, moving money to Germany, transferring headquarters to northern Europe from southern, and even going out of business." And to all the chatterboxes on CNBC repeating ad inf that a Eurozone collapse would be "manageable" here is a person who actually knows what he is talking about: "“How do you control an explosion in a controlled way?” Fiat SpA (F) Chief Executive Officer Sergio Marchionne told reporters in Brussels on Dec. 2. “That’s a contradiction in terms. This will be an implosion of some size with potentially disastrous consequences." He is right, and while the outcome is certain, it will not stop Europe's financial leader Germany from intervening in an attempt to prevent a surge in Deutsche Marks once the currency returns, and will likely set up capital control measures - that last bastion to every failing monetary system - to halt what is sure to be a record inflow of post-collapse DEM appreciating capital.Trader Dan on King World News Weekly Metals Wrap
Please click on the following link to listen to my regular weekly radio interview with Eric King on the KWN Weekly Metals Wrap. *http://tinyurl.com/bpc7y5j* I also want to note here that I am not posting any silver, gold or HUI charts for Friday seeing that all remain mired within very broad consolidation patterns but are constricting in range. Until something changes in that regards, there is not much worth commenting on as far as the price action goes. We are waiting for something to trigger a resolving of this sideways ranging trade.
Coming Collateral Crunch Charted
To
better comprehend the chaos that is currently viciously circling in
European funding markets, its critical to understand the difference
between 'linear' collateral needs and the highly non-linear
self-destroying re-pledging collateral crunch that is about to occur. Perry Mehrling, of INETeconomics,
does a good job of explaining, in his chalkboard-style video, the
three lending-based demands for collateral among the European banks and
their central banks (Interbank, National Central Bank, and TARGET-2).
He notes the IMF's proposed interjection might help to relieve the
collateral crunch that we have been so actively discussing. However,
these are all lending channels that rely simply on haircuts and specific
collateral needs, what is being missed here is the much bigger problem
of re-hypothecation (or re-pledging) of the collateral which leaves
the considerably larger shadow-banking system facing a run on
ever-decreasing piles of assets. So simply put we have a crunch in
credit as increasing needs for collateral for 'pure' lending will be
greatly exaggerated by the shrinking 'net' availability of collateral
(as risk manager after risk manager tightens up their systemic risk
criteria and reduce availability of funds for re-pledging). Put
another way, while policy-makers focus on the big bazooka top-down, it
is the smallest fund manager 'cog' in the chain of re-pledged
collateral that will inevitably bring the system down.
The
EU treaty agreement reached by eurozone leaders last week isolated
Britain and proposed a new ‘fiscal compact’, but in reality it looks
like just a ‘lousy compromise’.
from Telegraph.co.uk:
If
in doubt, ask a bookmaker. So much noise has accompanied the latest EU
crisis summit that it’s easy to miss the main point. Is a eurozone
break-up now more or less likely?
Prior to the bad-tempered Brussels meeting, William Hill had priced up the collapse of the eurozone before 2013 at 3/1. The odds post the summit? Also 3/1.
“We can’t see it’s really changed anything,” is spokesman Graham Sharpe’s verdict on a conflab that produced a more isolationist Britain and a potential two-tier EU – but failed to convince anyone, least of all the markets, that monetary union at last had some durable political oomph behind it.
Simon Smith, chief economist at FxPro, says the fate of the eurozone has now become “binary”: “Either one or more of the countries will leave or you’ll see an accelerated path to fiscal union. But what has been agreed at this summit doesn’t go far enough towards fiscal union. The momentum on that is too slow. I’m less optimistic than I was a couple of months ago.”
Read More
from Telegraph.co.uk:
If
in doubt, ask a bookmaker. So much noise has accompanied the latest EU
crisis summit that it’s easy to miss the main point. Is a eurozone
break-up now more or less likely?Prior to the bad-tempered Brussels meeting, William Hill had priced up the collapse of the eurozone before 2013 at 3/1. The odds post the summit? Also 3/1.
“We can’t see it’s really changed anything,” is spokesman Graham Sharpe’s verdict on a conflab that produced a more isolationist Britain and a potential two-tier EU – but failed to convince anyone, least of all the markets, that monetary union at last had some durable political oomph behind it.
Simon Smith, chief economist at FxPro, says the fate of the eurozone has now become “binary”: “Either one or more of the countries will leave or you’ll see an accelerated path to fiscal union. But what has been agreed at this summit doesn’t go far enough towards fiscal union. The momentum on that is too slow. I’m less optimistic than I was a couple of months ago.”
Read More
by Ethan A. Huff, NaturalNews.com:
As was the plan all along, the so-called “War on Terror” has officially devolved into a war on the American people (http://www.naturalnews.com/034321_w…).
This was clearly illustrated by the recent traitorous passage of the egregious National Defense Authorization Act by the US Congress (http://www.naturalnews.com/034302_i…). But in order to fully implement the ultimate goal of total control and tyranny, the federal government is now actively collecting the names of individuals that are preparing for the future by buying and storing emergency food supplies.
Oath Keepers, an association of active servicemen devoted to upholding their oath of guarding the republic and protecting individual liberty, has reported that federal agents recently paid a visit to a Latter Day Saints food storage cannery in Tennessee. Though they had no reason to be there, these agents allegedly interrogated the facility’s manager and demanded to see a list of customers that had purchased, and were storing, food there.
Read More @ NaturalNews.com
As was the plan all along, the so-called “War on Terror” has officially devolved into a war on the American people (http://www.naturalnews.com/034321_w…).
This was clearly illustrated by the recent traitorous passage of the egregious National Defense Authorization Act by the US Congress (http://www.naturalnews.com/034302_i…). But in order to fully implement the ultimate goal of total control and tyranny, the federal government is now actively collecting the names of individuals that are preparing for the future by buying and storing emergency food supplies.
Oath Keepers, an association of active servicemen devoted to upholding their oath of guarding the republic and protecting individual liberty, has reported that federal agents recently paid a visit to a Latter Day Saints food storage cannery in Tennessee. Though they had no reason to be there, these agents allegedly interrogated the facility’s manager and demanded to see a list of customers that had purchased, and were storing, food there.
Read More @ NaturalNews.com
by Frank Holmes, GoldSeek.com:
What do you get when you mix negative real interest rates with stimulative money supply efforts by global central banks?
An exceptionally potent formula for higher gold prices that could send gold to the unimaginable level of $10,000 an ounce. Negative real interest rates and strong money supply growth are two key factors of what I refer to as the Fear Trade.
Negative real interest rates occur when the inflationary rate, or CPI, is greater than the current interest rate. A quick account of the G-7 and E-7 countries shows that the majority have negative real interest rates.
Across the developed G-7 countries, British citizens are the worst off with real interest rates in the U.K. sitting at negative 4.5 percent. U.S investors aren’t doing much better with rates at negative 3.25 percent and the Fed has all but guaranteed rates will remain there. Only Japan has a positive real interest rate among the G-7 and that rate is barely above zero.
Read More @ GoldSeek.com
What do you get when you mix negative real interest rates with stimulative money supply efforts by global central banks?An exceptionally potent formula for higher gold prices that could send gold to the unimaginable level of $10,000 an ounce. Negative real interest rates and strong money supply growth are two key factors of what I refer to as the Fear Trade.
Negative real interest rates occur when the inflationary rate, or CPI, is greater than the current interest rate. A quick account of the G-7 and E-7 countries shows that the majority have negative real interest rates.
Across the developed G-7 countries, British citizens are the worst off with real interest rates in the U.K. sitting at negative 4.5 percent. U.S investors aren’t doing much better with rates at negative 3.25 percent and the Fed has all but guaranteed rates will remain there. Only Japan has a positive real interest rate among the G-7 and that rate is barely above zero.
Read More @ GoldSeek.com
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