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The Stock Is Dead, Long-Live The Flow: Perpetual QE Has Arrived

Two months ago, as we were carefully reading the latest Goldman explanation of how the firm had completely missed something Zero Hedge predicted back in January, namely the record warm winter's impact on skewing seasonal adjustments for payroll data (which has since validated our day 1 of 2012 predication that 2012 will be a carbon-copy replica of 2011, and which has made the comedy value of another Goldman masterpiece, that of Jim O'Neill's idiotic "2012: Not a Repeat of 2010 or 2011" soar through the roof) we stumbled upon something we knew was about to get much, much more airplay: Goldman's quiet and out of place admission that what matters for a country's central bank is the flow of its purchases, not the stock (another massive economic misconception we have been trying to debunk since the beginning). Recall these words: "...we have found some evidence that at the very long end of the yield curve, where Operation Twist is concentrated, it may be not just the stock of securities held by the Fed but also the ongoing flow of purchases that matters for yields..." This is how we summarized this observation two months ago (pardon the all caps): "UNLESS THE FED IS ACTIVELY ENGAGING IN MONETIZATION AT EVERY GIVEN MOMENT, THE IMPACT FROM EASING DIMINISHES PROGRESSIVELY, ULTIMATELY APPROACHING ZERO AND SUBSEQUENTLY BECOMING NEGATIVE!"

There Is Now Massive Pressure On The Fed & ECB To Print

from KingWorldNews:

With most major indexes around the world trading in the red, today King World News interviewed 25 year veteran Caesar Bryan. Gabelli & Company has over $31 billion under management and Caesar Bryan has managed the gold fund since its inception in 1994. Caesar told KWN that there is now massive pressure on the Fed and the ECB to print money. Here is what Ceasar had to say about the situation: “Here we are in the post-Spanish bailout period, and now we are waiting, in terms of Europe, for the Greek election. But the larger issue is that there has been no permanent solution put in place for the European debt crisis. The steps that have been taken so far are sort of Band-Aids.”
Read More from Bryan at KingWorldNews:

Spanish 10 yr yield over 6.7%/ Italian 10 yr yield 6.22%/

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 5 hours ago

Good evening Ladies and Gentlemen: Gold closed up today to the tune of $5.40 to finish the comex session at $1618.10 Silver fell by  1 cent to $28.94. Today the Spanish 10 yr bond yield started a touch lower but then resumed resumed its northern trajectory to 6.71%.  Italy has its 10 yr yield at 6.22%. We heard from two rating agencies today: Egan Jones lowers the credit rating of Spain to

David Rosenberg Channels Felix Zulauf

"We are witnessing the biggest financial-market manipulation of all time. The authorities have intervened more and more, and thereby created this monster. They might change the rules when the game goes against their own interests. We are in a severe credit crunch. It starts when the weakest links in the system can't finance their activities. Then you have a flight to safety into Treasuries and German bunds, compounded by a quasi-shortage of good collateral. That's why bond yields have fallen so low. This isn't an inflationary environment but a deflationary one."

What Does The Fed Do?

A simple enough question it would seem. As Jim Grant so eloquently begins his oratory (describing how the Fed operates in contrast to how it was meant to operate per its founders) at Ron Paul's Fed Lecture Series from earlier in the year: "If one reads the Federal Reserve Act, you will be struck by how little the 21st Century model resembles the projected central bank - as in fact the founders advocated for a De-Centralized system." Note the specific wording at the end of the Act: "...to establish more effective supervision of banking in the United States; AND for other purposes." It is the 'other purposes' that provide the jumping off point for everything that has come since...

Goldman's Humorous Summary Of Today's Market Action

"Stocks off just shy of 1%, which erases most of yesterday’s gains, which erased most of Monday’s losses. After tomorrow, will you be able to say that Thursday’s gains erased most of Wednesday’s losses, which erased most of Tuesday’s gains, which had erased most of Monday’s losses? With apathy running high and conviction low, that sounds just as reasonable as anything else."

Hannan: "The Euro Is The Problem, Not The Solution"

72 seconds of crystal-clear thought from English MEP Daniel Hannan as he rather poignantly questions European leaders on the results of last July's European Stress Tests (and the Spanish banks passing with flying colors). In one of the more colorful analogies of the European cataclysm, Hannan describes Europe's self-dealing bailouts as "a transfusion, taking blood from one arm and pumping it into the other arm" noting that unfortunately, there is also a hole in the tube. You simply don't solve a debt problem with more debt; as he concludes "the Euro is the problem not the solution".

These Three Spanish Banks Will Be Downgraded Tomorrow

As is well-known in the ratings world, sovereign downgrades never come alone: first the sovereign is cut, then sovereign-supported domestic banks (the sovereign is the threshold rating), then general financial companies like insurance firms and specialty fins. Such downgrades are particularly painful when they go through a major threshold such from A to B as they spring various collateral and margin calls into action. One thing we do know is that the last thing undercapitalized Spanish banks can afford now is even more margin calls, and even greater collateral haircuts. However, this is precisely what will happen for the following 3 banks tomorrow: Banco Popular Espanol, Banco Santander and BBVA, all of which are currently at the old sovereign rating of A3 and tomorrow will see their rating cut to Baa3, and we fully expect the other three Moody's rated banks: Caixa, Banco Financiero y de Ahorros and Sabadell to be cut anywhere between 1 and 3 more notches, sending them into junk territory. We can only hope that the ESM or whatever Spanish bank bailout scheme is operational tomorrow as suddenly all of the banks below will find themselves without any willing counterparties around the world.

Biderman & Santschi On "Why Germany Should Leave The Euro"

While some have discussed the game-theoretic dilemma that Germany faces relative to the 'rest' of Europe, David Santschi of TrimTabs (Biderman's balder buddy) digs into the details of a potential solution (hard as it may be) as Europe's fatal flaw (the currency unionization - but not fiscal or banking union -  of a group of nations with strong sovereign identities) becomes all too real. The imbalances are so great right now that the only solution David sees is to breakup the Euro-zone, and simply put the best way to achieve a break up would be for Germany to leave voluntarily - establishing a strong currency and in turn saving itself financially. While not minimizing this as a 'good' or 'easy' solution - many people would lose their livelihoods and many would lose a lot of money - it is the only practical solution that he sees (as Eurobonds, banking unions, and fiscal unions are simply impractical in terms of both effect and timeliness). Quoting W.C.Fields with regard the European press' and politicians' efforts towards investors: "If you can't dazzle them with brilliance, baffle them with bullshit!", they correctly explain that Europe is a solvency problem and not a currency problem. In one of the sanest (and least hyperbolic) discussions of the reality in Europe, Bidermantschi note that it appears investors have finally wised up to the fact that "bailout loans are nothing but a shell game replacing old debt with new debt" and the heretical proposition that central banks perhaps cannot solve all the world's problems.

Spain Loses Final A Rating With Moodys Downgrade To Baa3, May Downgrade Further - Full Text

The most effective response for Spain would be to de-link sovereigns and their banks, following recent steady accumulation of sovereign debt by peripheral banks, in our view. Reducing the link between Spanish banks and the sovereign remains one of the key aspects for relieving pressure on Spain, whether this be by removing sovereign debt from balance sheets or ensuring sufficient capitalization to absorb losses. Unemployment out this morning at 24.4% shows the fragile state the economy is in, which is likely to keep pressure on Spanish yields. Against this backdrop the effect on the asset side of balance sheets is concerning, with expected weakness in non-core government bond prices coupled with a weak economy decreasing individuals' and corporates' ability to repay

Market Shrugs Off Dimon Premium As Treasuries Lead Risk Lower

It seems our warning of yesterday's perfect algo-driven retracement in Treasuries and stocks was spot on. The dead cat bounced just too perfectly for our liking and despite an early attempt to ramp markets on Dimon's testimony (which worked at first and then faded all the way into the close), broad risk assets led equities lower with a horrible close. It appears the 10Y auction was today's catalyst and it is clear from the charts that TSYs indeed turned lower (in yield) before equities woke up. The 1315 level (in September S&P 500 futures) was a stumbling point all day as decent sized blocks were dumped each time we moved above it until the market finally gave in and fell. WTI gave all its Dimon-spike gains back. Gold, Silver, and Copper wriggled along sideways (also giving back all the Dimon-Spike gains) but while the USD retraced higher into the close (-0.3% on the week now), Gold and Silver remain up around 1.5% on the week (with gold the outperformer on the day). VIX pushed dramatically higher to 24.5% (+2.3vols) and as stocks tumbled so equity correlation to risk-assets picked up (with notably stocks finding support as they converged with CONTEXT near the close). A last minute pop into the day-session close took us back to Thursday's close of last week but IG credit continues to point to lower risk appetites.

Twitter Wars: The German Empire Strikes Back: From #StopMerkel To #StoppESM

It was only a matter of time before the stoic Germans, long abused as the piggy bank pinatas of Europe's monetary experiment, said something. And after last week's confused Spanish campaign demanding that Merkel stop (what exactly - bailing out the Spanish banks? Funding Spanish current account deficits?), Germany has found its retort. As of a few hours ago, the German empire has decided to strike back using the #StoppESM hashtag on twitter. Are we about to have our first European twitter war? And while we know what the hashtag for Greece wil be (#StopTaxes), and Ireland (#StopSobriety), we have yet to figure out the appropriate terms for all the other insolvent European countries. There are many.

Egan Who Just Gave Spain The Triple Hooks

And so, the little rating agency that could, just gave Spain the triple hooks, downgrading the country from B to CCC+, negative outlook. As a reminder, the Uganda credit rating is B: it sure is no Spain.




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Silver Update 6/13/12 Bank Runs

from BrotherJohnF:

Giant nuclear cover-up? Explosions, military helicopters filmed near elevated radiation zone at border of Indiana and Michigan

by Ethan A. Huff, Natural News:
June 6, 2012, was a very strange day for northern Indiana and southern Michigan, where a series of strange explosions and a subsequent nuclear radiation spike left local residents combing for answers. And though there are still many missing pieces to the puzzle, it has become clear that some type of nuclear cover-up is taking place in the region, which is further evidenced by numerous eyewitness accounts of intense shaking and loud booms, audio recordings of inexplicable explosions, and pictures of unmarked aircraft flying during and after the incident.
It all began when separate radiation monitoring stations — a privately-owned Radiation Network station near South Bend, Ind., and a U.S. Environmental Protection Agency (EPA) RadNet station near Fort Wayne, Ind. — detected extremely high levels of nuclear radiation around the same time between June 6 and June 7. Both stations reportedly began to give radiation readings ranging as high as 7,139 counts per minute (CPM), when a normal reading is typically between five and 60 CPM.
You can view a screenshot of the Radiation Network reading, which was later pulled, here: http://www.naturalnews.com/images/Map-US-Radiation-Meters.jpg
Read More @ NaturalNews.com

Why Own Silver? THIS IS WHY: BANK RUN 2012 Italy – Bank Stops Payments

Network Bank stopped payments, customers furious – All transactions stopped until July for the crisis of the institution.
from Banka Network via, Google:

Network Investment Bank has suspended payments, causing great inconvenience to customers (see article on the blocking of ATM) .
STOP FOR A MONTH. The institute, in receivership since last November, announced that on May 31, the commissioners, “with the approval of the Monitoring Committee and with the approval of the Bank of Italy, have approved the suspension of payment of liabilities of any kind ‘for a month.
The stop, communicated through the website of the bank, does not include client financial instruments.

It was emphasized that “the measure was necessary to face the difficult situation of the bank.
Angry depositors. To the rescue – in the few lines we read online – have stepped forward and the group Sim Consultinvest Savings Bank of Ravenna, but in the meantime, depositors are furious.
For all spoke Massimo, police in Milan with his wife and two daughters in Messina: “Nobody told me anything and when I went to pay the mechanic, the ATM was not working. Even the credit can do. ”
“MI HAVE REMOVED THE MONEY.” “Actually,” he added, “I have taken my money. In the book I have only 20 euros in cash and the escrow account where the salary is credited to me, how do I make ends meet? ‘.
And to say that Bank Investment Network has as shareholders the names of the first floor of the financial world: Aviva, Banco Popolare, De Agostini and Sopaf.
Read More @ Google.com

Italy Trembling on the Brink

from Testosterone Pit.com:
“I believe, no,” is how Italian Prime Minister Mario Monti answered the question if Italy would seek a bailout—lacking the bravado and vehemence with which Spanish Prime Minister Mariano Rajoy had claimed for the longest time that Spain wouldn’t need one. Until it needed one. The question was hot. It followed the kerfuffle that ensued when Austrian Finance Minister Maria Fekter had let it slip Monday that Italy, given the high rates it has to pay on its debt, might also need “support.”
Monti was addressing restive German taxpayers on Bavarian public radio: He understood that Germans were looking at Italy as “a merry and undisciplined country,” but Italy was much more disciplined than other countries, he said, and wasn’t all that merry.
Italy is paying twice, he said: for the bailouts of other countries and very high rates for its own sovereign debt. Germany pays only once, namely for the bailouts, because it pays practically no interest on its debt. But he promised his German listeners: “The budget deficit this year will be low, only 2%.” And next year, a surplus is scheduled. “The country is changing,” he said.
Read More @ TestosteronePit.com

SBSS 37. Blood On The Street

from TruthNeverTold :

It starts: the government’s plan to steal your money.

by Simon Black, Sovereign Man :
There are consequences to being flat broke.
There are consequences to investing any level of confidence in a financial system underpinned by debt and the creation of paper currency.
There are consequences for ignoring reality and pretending that everything is normal.
This is one of them: European officials yesterday flat out admitted that they were discussing rolling out a series of harsh capital controls across the continent, including bank withdrawal limits and closing down Europe’s borderless Schengen area.
Some of these measures have already been implemented sporadically; customers of Italian bank BNI, for example, were all frozen out of their accounts starting May 31st upon the recommendation and approval of Italy’s bank regulator. No ATM withdrawls, no bill payments, nothing. Just locked out overnight.
Read More @ SovereignMan.com

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