Eurogroup Head Confirms "It Has Become Serious", As He Is Back To Lying

The insolvent banana continent is back. Recall back in May 2011:

“When it becomes serious, you have to lie." -Jean Claude Juncker

Ergo, things in Europe are very serious again because the Eurogroup's head, who until recently promised he was quitting his post because "he had gotten tired of the Franco-German interference in managing the region's debt crisis", only to spoil the fun and say he was lying about that too, is back to doing what he does best - lying. To wit: "the euro countries are preparing together with the bailout fund EFSF and the European Central Bank to buy government bonds if necessary clip euro countries." And now cue Schauble: "Federal Finance Minister Wolfgang Schaeuble has rejected speculation about impending purchases of government bonds by Spanish EFSF and ECB."

View From The Bridge: Going For Gold

So we have two weeks of sport to take our minds off the global financial malaise. The EU commissars have all gone on holiday, but not before Mario Draghi (ECB Chairman) announced that he will do whatever it takes to save the euro. Really? His statement did knock the Spanish 10 year bond yield back below 7%, but this had become a one way and illiquid trade that was due for break. We have seen it all before with Greece. Denial, denial, denial all the way until days before default restructuring. Talking of which, the Greeks think they are in line for a further handout. Those whirring sounds you can hear in the distance are printing presses knocking out “new” drachma.

Biggest EPS Miss Since Lehman, And This Time It's Not The Tsunami's Fault

Yes, we know it doesn't matter because Ben & Mario have got our backs at whatever multiple is required to levitate the economy market, but as Citi's credit desk points out; despite the constant chatter about EPS beats (despite top-line misses), the trick is that analysts have been dragging down expectations since the earnings-cycle began and so judging 'misses' must be done against a 'frozen' pre-earnings number. If we do this 'fair' approach to considering expectations, the percentage miss in the S&P 500's EPS for Q2 2012 is as bad as the Q2/Q3 2011 Tsunami-driven miss - and the worst we have seen since Lehman Brothers shuffled off this mortal coil. So as usual, be careful what truth you believe and consider just how much more 'hope' is now in this market given this reality.

September: Crunchtime For Europe And Germany

"September will undoubtedly be the crunch time," one senior euro zone policymaker said. "In nearly 20 years of dealing with EU issues, I've never known a state of affairs like we are in now," one euro zone diplomat said this week. "It really is a very, very difficult fix and it's far from certain that we'll be able to find the right way out of it."

HORRIBLE Policy, Ripe With False Flag Potentials: Private Firm to Look After Trident Nuclear Deterrent

Private contractors are to take over the role of looking after the UK’s nuclear weapons in Scotland.
from The Telegraph:
The MoD has signed a 15-year contract with ABL Alliance to provide support for the Trident weapons system at HM Naval Base Clyde.
Under the new contract 149 MoD civilian posts will transfer to the alliance.
The jobs are in industrial and technical grades, warehousing and logistic support services, while supervisors and managers are also transferring.
Thirty-nine Royal Navy posts will also be seconded to the alliance, which comprises AWE plc, Babcock and Lockheed Martin UK Strategic Systems (LMUKSS).
The MoD said it decided in May 2011 that the most effective way to sustain the workforce in the future was to use an experienced supplier within the private sector.
ABL Alliance will provide support to the Trident Strategic Weapon System at the Royal Naval Armament Depot (RNAD) Coulport and the Strategic Weapon Support Building (SWSB) Faslane.
Read More @ Telegraph.co.uk

Jeff Berwick on Dollar Vigilantes, Inflation Protection and the Profitable Allure of Permanent Tourism

by Anthony Wile, The Daily Bell:
The Daily Bell is pleased to present this exlusive interview with Jeff Berwick (left).
Introduction: Mr. Berwick is an anarchist, libertarian and freedom fighter against mankind’s two biggest enemies, the state and the central banks. Jeff is chief editor of The Dollar Vigilante, an anarcho-capitalist, Austrian economics based newsletter focused on surviving The End Of The Monetary System As We Know It (TEOTMSAWKI) and CEO of TDV Media and Services, which provides internationalization information and solutions for yourself and your wealth. He is also host of Anarchast, an anarchist video podcast, and is a contributing editor at many of the world’s largest financial and precious metals related websites. In 1994, Jeff Berwick founded Canada’s largest financial website, Stockhouse.com.
Daily Bell: Great to interview you again, Jeff. When we talked with you this past October 2011, the world was a crazy place but it seems to be getting crazier. As an experienced observer of the financial scene, can you give us your take on the biggest problem the Western world is currently facing? Is it economics? Militarism? Growing authoritarianism? Or all three?
Jeff Berwick: Where to begin? When I first began discussing The Dollar Vigilante in 2008 I remember thinking to myself, “How will I find enough stuff to write about?” Now, in 2012, I can’t possibly even comment on all the events happening daily. As one example of the escalation of what I see as the ongoing symptoms of The End Of The Monetary System As We Know It (TEOTMSAWKI), since we last spoke less than a year ago Barack Obomber has declared the Bill of Rights null and void. With his signing of the National Defense Authorization Act on New Year’s Eve, he’s also declared that he can kill any American, or anyone in the world, just by adding them to his kill list.
Read More @ TheDailyBell.com

Monetary Madness

by Doug Noland, PrudentBear.com:
In commemoration of M2 surpassing $10.0 TN for the first time – not to mention the unfolding confrontation between ECB President Draghi and Germany’s Bundesbank – this week’s CBB will focus on Monetary Analysis. It is worth noting that M2, the Fed’s narrow measure of “money” supply, surpassed $1 TN for the first time in 1975. It made it past $2 TN in 1983, $4TN in 1997, $8 TN in 2008 and $9 TN in April 2011. M2 has inflated another Trillion during the past 15 months.
To set the backdrop, it is worth noting that early economic thinkers were obsessed with money. These days, monetary analysis is little more than a footnote in contemporary economic doctrine. Generations ago, great minds were trying to come to grips with monetary phenomena. They came to appreciate that money and Credit had profound impacts on economies and societies, although throughout history even the most astute struggled with the complexity of it all. These days, “monetary stimulus” is seen as good for the markets and, yes, good again for GDP. Inflation, if it ever were to return, is not so good. Today’s monetary analysis is not good but it is shallow.
Thinkers of things economic long ago appreciated that the functioning of economies was literally transformed by the introduction of money.
Read More @ PrudentBear.com

CIA “Manages” Drug Trade, Mexican Official Says

by Alex Newman, The New American:
The Central Intelligence Agency’s involvement in drug trafficking is back in the media spotlight after a spokesman for the violence-plagued Mexican state of Chihuahua became the latest high-profile individual to accuse the CIA, which has been linked to narcotics trafficking for decades, of ongoing efforts to “manage the drug trade.” The infamous American spy agency refused to comment.
In a recent interview, Chihuahua state spokesman Guillermo Terrazas Villanueva told Al Jazeera that the CIA and other international “security” outfits “don’t fight drug traffickers.” Instead, Villanueva argued, they try to control and manage the illegal drug market for their own benefit.
“It’s like pest control companies, they only control,” Villanueva told the Qatar-based media outlet last month at his office in Juarez. “If you finish off the pests, you are out of a job. If they finish the drug business, they finish their jobs.”
Another Mexican official, apparently a mid-level officer with Mexico’s equivalent of the U.S. Department of “Homeland Security,” echoed those remarks, saying he knew that the allegations against the CIA were correct based on talks with American agents in Mexico. “It’s true, they want to control it,” the official told Al Jazeera on condition of anonymity.
Read More @ TheNewAmerican.com

Douglas Keenan: My thwarted attempt to tell of LIBOR shenanigans

by Douglas Keenan, Financial Times, GATA:
In 1991, I began trading for Morgan Stanley, the investment bank, in London. I was trading bonds, derivatives, and related securities. One of those securities was based on the three-month Libor rate: the interest rate at which banks can borrow money for three months from each other. Morgan Stanley does not trade on the interbank market so I could not directly borrow or loan money at Libor rates. What I could do, however, was trade a futures contract on the three-month Libor rate.
As an example of how a futures contract works, consider the following. Suppose that we are concerned about three-month Libor rates increasing in the future; in particular, we are concerned about what the three-month rate will be in September. If that rate is, say, 1 per cent, we can agree today to effectively lock it in. If, come September, the actual three-month rate is 2 per cent, then our contract will ensure we can still borrow at 1 per cent. Futures contracts on three-month Libor were — and are — traded on the London International Financial Futures Exchange (Liffe, now part of NYSE Euronext). There was a standard contract for the month of September. That contract had its rate settled on the third Wednesday of the month, at 11 o’clock.
Read More @ GATA.org

Breakdown of trust at the heart of euro crisis

from David McWilliams:
Where has all the optimism gone? A few weeks ago, the EU seemed to be back in the driving seat. The Council, driven by Italy and Spain, had extracted a major concession out of Germany and there was a sense that the interest of the European Union as a whole had been put for once to the fore.
Now this all looks like old history. Spain, the country with the worst unemployment — apart from Greece — looks to be shut out of the bond markets completely in the days or weeks ahead. This means another massive injection of troika funds, but more worryingly will also put Italy under the spotlight again, and so we will be back to square one.
Recent data indicated that Europe is heading into recession, quickly. For example, yesterday’s survey data on France showed that manufacturing was at its weakest since 2009. As the economies of Europe contract, something odd is happening. Despite all the deficit-tightening going on around the eurozone which is aimed at bringing down the overall debt levels of the member countries, the actual debt/GDP ratios are going the opposite way. Latest numbers show that the actual debt-to-GDP ratio in the EU went up this year to 88pc from 86pc a year earlier. The economies are slowing quicker than governments can cut back.
Read More @ DavidMcWilliams.ie

The Latest Ploy to End the Financial Crisis

By Nickolai Hubble, Daily Reckoning.com.au:

Global markets took off on Thursday and Australia duly followed in Friday’s trade. Perhaps because economic growth returned to Europe? Or maybe America discovered the new internet? Nope, all it took was a carefully worded comment from the European Central Bank’s President:

‘Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough. To the extent that the size of the sovereign premia (borrowing costs) hamper the functioning of the monetary policy transmission channels, they come within our mandate.’

Translated, that means, ‘We’re going to do something.’
But central banks were designed to prevent financial crises, not economic ones. There’s a crucial difference. One that is coming to the fore right now all around the world. Because world economies are slowing again. It’s not a shock this time around. It wasn’t really a shock in 2008 either, if you knew where to look. But this time around, even the mainstream indicators are flashing red.
We won’t go into what those indicators are. Mostly because they are a bit dodgy anyway. Instead let’s focus on whether the same duct tape fixes that worked last time will work again this time. Can a recession and financial crisis be averted around the world? Or will markets melt down even worse than last time?
Read More @ DailyReckoning.com.au

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