"Lehman 2.0" Imminent Warns John Taylor

Hubris is at the heart of this. Everyone says this cannot happen – we won’t allow it. Says who? The EU says: if it is written in an agreement, it must be totally correct, unchangeable, and followed at all costs. New realities can’t intervene and no slippage is allowed. Why the Germans are so sure that they know the future is beyond me. They are fallible too, but they won’t admit it, and the Greeks can’t make them budge. Haven’t they looked around? Santorini has a different economic and social cost structure than Wiesbaden. Humanity (and common sense) seems totally lacking in the negotiations with the Greeks and a violent backlash would be totally understandable. Why the countries that have been fattening up their current account surpluses selling products to Greeks, whom they should have known were basically broke – just as they always have been – should be paid 100% on the euro is beyond me. Major losses should apply not only to sovereign borrowings but also to accounts receivable for cars, electronics, and other consumer goods. The market has not opened its eyes to the impact this Greek unraveling will have. The Eurozone will be mortally wounded and the world will suffer a significant recession – maybe as deep as 2008. European banks will lose much of their capital base and many should be bankrupt, but just as in the Lehman aftermath, the governments will try to save the banks and the banks’ bondholders, solvent or not. As the bank appetite for Eurozone sovereign paper will be decimated, austerity will probably follow shortly, followed by deflation and uncontrollable money creation. The European recession should be one for the record books. 

Pardon The Interruption, "Debt Crisis To Resume Shorty" Says Deutsche Bank

While many will point to the drop in front-end Italian bond yields as proof positive that all is well in the still-peripheral nation, we note that today saw 10Y Italian bond (BTP) spreads crack back above 400bps for the first time in 3 weeks and nervously remind readers of the stock market reaction in Eastman Kodak a week or two before its death. Of course, Italy is perhaps not quite as imminently terminal as EK was (thanks to the ECB reacharound) but the excitement about BTP's 'optical' improvement will be starting to fade as banks are underperforming dramatically, we have exposed the sad reality of the LTRO, and now even the short-dated BTP yields are now over 40bps off their tights from last week. Why? Deutsche Bank's Jim Reid may have the answer that Italy has now been in recession four times in the last decade and while hope is high that the new austere budget will take the nation to debt sustainability, he notes that the cumulative forecast miss since 2003 on GDP estimates is approaching an incredible 20%. As Reid notes, "When debt sustainability arguments are finely balanced and very dependent on future growth the question we'd ask is how confident can we be that economists’ forecasts are correct that Italy will pull itself out of the perpetual weak and disappointing growth cycle seen over the last decade or so." As we (ZH) have been vociferously noting, LTRO did nothing but solve a very short-term liquidity crisis in bank funding, and the reality of insolvent sovereign and now more encumbered-bank balance sheets is starting the vicious circles up again. Deutsche's base case remains that peripheral growth will disappoint and the sovereign crisis will re-emerge shortly - we tend to agree.








Hillary Clinton In Talks To Head World Bank
http://pilot.us.reuters.com/article/2011/06/09/us-obama-clinton-worldbank-idU...
http://www.commodex.com/Hot_Story/Hillary.htm

America's Homeless Resort to Tent Cities
http://news.bbc.co.uk/panorama/hi/front_page/newsid_9694000/9694094.stm

China Trims Holdings of Treasuries
http://www.bloomberg.com/news/2012-02-15/china-trims-holdings-of-treasuries-t...
http://www.ft.com/intl/cms/s/0/d9dc3d98-57ed-11e1-ae89-00144feabdc0.html

Driving Greece Towards Violent Revolution
http://www.youtube.com/watch?v=-6_de_qKoLE

Social Security Is Failing Even Faster Than We Thought
http://www.dailyfinance.com/2012/02/14/social-security-is-failing-even-faster...

The Hidden Taxes In Obama's Budget
http://www.zerohedge.com/news/hidden-taxes-obamas-budget

Federal Funds Flow to Clean-Energy Firms with Obama Administration Ties
http://www.washingtonpost.com/politics/venture-capitalists-play-key-role-in-o...
http://www.flickr.com/photos/ct4o/2936978948/

 

S&P 500 once again bumping up against 1350

Trader Dan at Trader Dan's Market Views - 1 minute ago

The 1350 level in the S&P 500 is becoming a rather significant resistance level on the technical price chart as the market has rallied to this point several times over the last two weeks and stalled out. Bulls are counting on further liquidity blasts from the Central Banks to provide them with enough ammunition to dislodge the selling originating at this zone. I find it rather odd to see how the broader market is apparently ignoring the surge in gasoline prices as if soaring energy costs are not going to have the least impact on consumer spending in terms of disposable income or ... more »

 

 

 Keeping The High Dividend Asian Shares

Admin at Marc Faber Blog - 2 hours ago

Well I bought some shares in November and December of last year, and I’m not going to sell them because they are high dividend shares in Asia, and I quite like the Asian markets. - *in FBN* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* more »

 

 

The Bernank: Weak housing has hurt consumer spending

Eric De Groot at Eric De Groot - 3 hours ago

Bernanke suggests that the largely consumption-driven US economy needs rising home prices to support it. Cheap and easy credit, in turn, is needed to support rising home prices. While credit is cheap, table below suggests that it’s not easy. Real estate loans have become increasingly restrictive since the financial crisis in 2008. Real estate loans as a percentage of total bank credit has... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] more »

 

 

The Situation Is Getting Much Worse

Admin at Jim Rogers Blog - 4 hours ago

Overall, the situation is getting much worse. They’re spending other peoples’ money, they’re printing money, so overall, I’d be very worried about 2013-2014, and maybe even later in 2012 if it becomes clear that 2013 is not going to be fun. - *in the money man report* *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 guest on Bloomberg and CNBC.* more »

 

 

Central Banks Trying To Keep Gold From Rising Violently

Eric De Groot at Eric De Groot - 4 hours ago

Listen to Jim’s interview. The invisible hand has been working hard to keep a lid on gold and silver since April 2011. The hand is far more influential when it follows the direction of the cycles. For example, heavy paper selling works best during the D- and B-wave declines. The recent cycle transition from D-wave decline to A-wave advance means the invisible hand’s ability to control the... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

The Deflationary Undertow Before The Inflationary Wave

by Gonzalo Lira:
War between Israel and Iran now seems inevitable. Leon Panetta claimed that it would be this coming spring—and I see no reason to doubt him.
How an Israeli-Iranian war will play out—that is, whether it will draw in more geopolitical actors (such as the U.S.), or if it will be a series of limited attacks, counter-attacks, and then stalemate—is impossible to predict. War tends to take on a life of its own.
But we can predict how it will affect the global markets.
Read More @ GonzaloLira.Blogspot.com

Fair is Fair

In December, I made public an article discussing the short position in the big silver ETF, SLV. At that time, the short position in SLV shares was in excess of 25 million shares and would run up to 26.6 million shares by mid-January. I hold that the shorting of shares in SLV is both fraudulent to shareholders of SLV and is manipulative to the price of silver. That’s because shorted shares of SLV do not result in physical silver being deposited into the Trust and leave the Trust, effectively, with shares not backed by metal to the extent of the short interest. (There is supposed to be one ounce of silver deposited for every share issued according to the prospectus and short selling circumvents that requirement.) Because physical silver is not bought and deposited on shorted SLV shares, the normal price impact of more demand on the physical silver market is also circumvented. That constitutes price manipulation.
Read More @ SilverSeek.com

Free Syrian Arms: US Gives Guns to Al-Qaeda Protege

The conflict in Syria is intensifying and the UN is unable to agree on a solution to end the bloodshed. Meanwhile, US politicians are calling to arm opposition forces, amid suspicions the US may already be supplying weapons through its Arab allies.
In spite of the fears that providing anti-governmental rebels in Syria could lead to an irreversible escalation of the conflict and descent into civil war, US politicians are starting to put pressure on Washington.

Greece is Not Lehman 2.0… As I’ll Show You, It’s Far Far Worse…

by Graham Summers, GainsPainsCapital.com:
Investors simply do not understand the significance of Greece. Comparisons are being made to Lehman, but these comparisons are moot for the following reason: Greece is a country not a private institution.
This is not a subtle difference. True, Lehman’s derivatives were spread throughout the global financial system just as Greek sovereign debt is. However, investors are missing the true scope of the fall-out a Greek default would create.
First, let’s think about Lehman. When Lehman went under, half of the other institutions that were in trouble had already been merged with larger entities (Bear Stearns, Merrill Lynch) or had been nationalized (Fannie and Freddie). Those that were still standing after Lehman went under, changed to bank holding companies (Morgan Stanley, Goldman Sachs) in order to receive special access to Fed lending or were nationalized (AIG).
Read More @ GainsPainsCapital.com

Gold, Silver Heading Up: Roger Wiegand

Roger Wiegand, editor of Trader Tracks, says cycles will bring gold and silver higher in the first half of 2012: gold up to $2,050/oz and silver up to $44/oz or even $50/oz. He sees plenty of opportunities for volatility given the political and economic situation in the U.S. and the EU. In this exclusive Gold Report interview, Wiegand reveals names of mining companies poised to profit. The Gold Report: Roger, you attributed the recent uptick in the gold price in part to large funds bidding up the price. But these funds have also shown their willingness to sell their gold positions to cover their short positions. Can gold investors look forward to more volatility this year?
Roger Wiegand: Gold is coming back very strongly right now. People in India, China, Japan and Canada are buying lots of physical gold. In addition, some central banks that were selling gold are now buyers.
Read More @ TheAUReport.com

Global Gold Demand in 2011 Rises 0.4% To $200 Billion – Central Banks, Asia and Europe Diversifying Into Gold

from GoldCore:
Gold’s London AM fix this morning was USD 1,716.00, EUR 1,320.51, and GBP 1,094.74 per ounce.
Yesterday’s AM fix was USD 1,725.50, EUR 1,309.88, and GBP 1,099.33 per ounce.
The World Gold Council released its comprehensive report today, “Gold Demand Trends Q4 and Full Year 2011” looking at demand in gold demand in full year 2011 and the 4th quarter of 2011.
Read More @ GoldCore.com

The Grand Game of Perception Management

by Charles Hugh Smith, OfTwoMinds.com:
The economy will expand if you believe it is expanding–because you’ll be “animal spirited” into buying a lot of stuff on credit that you can’t afford.
It all boils down to perception–that’s the insight at the heart of the Grand Game of Perception Management. Economists speak of magical “animal spirits” that fuel economic expansion, but this is simply a colorful term for perception management: when people perceive others reaping outsized gains in profits or pleasure from taking risky bets and freely spending borrowed money, then they will feel an overpowering urge to follow the herd and leverage their capital (if any) and disposable income (if any) into risky bets and zealous over-consumption, i.e. “animal spirits.”
Conversely, when said risky bets blow up and participants have lost their ever-loving derrieres by following the herd, then “animal spirits” quickly dissipate as the herd thunders off a cliff to its financial demise.
Read More @ OfTwoMinds.com

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