Financial Crisis

[flying]

Looks a gloomy 2010. As well as the Euro continuing to crumble -

1. China property bubble

2. Iran nuke facilities bombed / their anti-Israel proxies starting new ME war.

Good chance for all three....

Euro is toast

China is in fact having their property bubble as we speak

That Iran bombing will be a BIG mistake if carried out & could be the start of WWIII & not just another ME war

Although a distraction like a world war could be just what TPTB actually want

[Naam]

opinions and comments:

As we started writing our weekly commentary on the markets, EU leaders have

agreed to set up a so-called bailout or stabilization fund to prevent the crisis

to spill-over to other countries such as Portugal and into the European banking

system. European Commission President Jose Barroso said they will defend the

Euro, whatever it takes, as EU's monetary union were put into question with its

most serious test since its establishment in 1999. The announcement will be

ready before markets in Asia open on Monday. So far, the attempts at rescue -

including last Sunday’s dramatic EUR 110 billion announcement - have have been

incomplete with respect to both design and implementation. They were thus viewed

as insufficient and not credible by analysts and markets. As a result, the Greek crisis

morphed in the following days into something much more sinister for Europe and the global

economy. This explains this weekend’s shift in the EU to a “whatever it takes” mindset.

We are seeing evidence of a significant step-up in crisis management. Yet the

question is not whether a step-up is required - it clearly is. The question is

whether the strengthened rescue attempt will prove sufficient. It is too early

to make this call with a sufficient degree of foundation and conviction. At the

very minimum, we have to wait for tomorrow’s operational details. Even with this

critical uncertainty, we should not underestimate the historical relevance of

what is happening this weekend; and the stakes for Europe and the global economy

are huge.If this rescue attempt does not work, there will be a material

acceleration in the process of change to Europe’s economic, financial, and

institutional landscape; and the reality of the debt explosion in industrial

economies will become even more of a destabilizing factor for the world economy.

However, the initial reaction of the markets should be a rebound, following last

week's carnage.

Last week

It was a week of utter panic, a dark reminder of what we went through in the

fall of 2008, as after the collapse of Lehman, markets spiraled down with the

loss of confidence in the health of the global financial system. All asset

classes crashed without much control, most of the gains for 2010 were erased and

fear once again ruled the markets. Europe’s failure to contain Greece’s fiscal

crisis triggered a 4.3% drop in the euro last week causing it to slide to

$1.2715 from $1.3293 during the week(it is down 15% since late November)

European stocks sank the most in 18 months, with the Stoxx Europe 600 Index

crashing 8.8% to 237.18. The extra yield that investors demand to hold Greek,

Portuguese and Spanish debt instead of benchmark German bonds rose to euro-era

highs. The premium on 10-year government bonds jumped as high as 973 basis

points for Greece, 354 basis points for Portugal and 173 basis points for Spain.

The week ahead

Unlike the last few weeks when the market’s focus was on evidences of the

economic recovery from data releases, the week ahead will be dictated by the

evolution of trust and confidence in the bail-out plan European policy makers

communicated to the press over the weekend. The key for financial markets next

week – and probably for the next couple of weeks - will be how the market

participants will react to the bail-out announcement on Monday morning.

What deems us hopeful that markets will show a positive reaction is the fact

that the superfluous discussions about the legal basis of a bail-out plan and

rescue mechanism has become secondary. Angela Merkel has silently accepted her

defeat in the debate and gave way to Nicholas Sarkozy and to what is probably

the beginning of a french-inspired transfer-union, which will undermine the ”no

country will be responsible for anothers debt” principle set out by the founders

of the monetary union

[Naam]

TOPWRAP 2-EU, IMF agree $1 trillion emergency fund

Sun May 9, 2010 11:36pm EDT

* Deal includes 600 bln euros from euro area, 250 bln IMF

* EU emergency measures its largest move yet

* ECB to buy government, private debt

* Euro rises, stocks firm

By Julien Toyer and Ilona Wissenbach

BRUSSELS, May 10 (Reuters) - Global policymakers unleashed an emergency rescue package worth about $1 trillion to stabilise world financial markets and prevent the Greek debt crisis from destroying the euro currency.

The rescue, hammered out by European Union finance ministers, central bankers and the International Monetary Fund in marathon talks at the weekend, was the largest package in over two years since G20 leaders threw money at the global economy following the collapse of Lehman Brothers.

The size of the package surprised financial analysts and the euro EUR= rose close to 2 percent while stocks in Asia firmed.

The U.S. Federal Reserve reopened currency swap lines with several central banks and Group of Seven and Group of 20 finance ministers weighed in with their backing for the measures.

EU Monetary Affairs Commissioner Olli Rehn told a news conference the package of measures "proves we shall defend the euro whatever it takes".

The emergency measures are worth much more than any previous attempts by the 27-country EU or the 16-state single-currency group to calm markets. [iD:nLDE64900T]

They come after the Greek crisis drove sovereign debt yields and insurance on this debt to record levels.

Financial markets had started to punish other euro zone debt of members with bloated budgets such as Portugal, Spain and Ireland, in what Sweden's finance minister described as "wolfpack behaviours".

The $1 trillion package consists of 440 billion euros in guarantees from euro area states, plus 60 billion euros in a European instrument.

EU finance ministers said the International Monetary Fund was expected to contribute 250 billion euros, taking the total to 750 billion euros, or around $1 trillion.

However, IMF head Dominique Strauss-Kahn did not offer any specifics but said said any IMF action would be on a "country-by-country basis".

The European Central Bank said it will buy euro zone government bonds to help support fractured markets, abandoning its resistance to full-scale asset purchases.

The ECB said in a statement that the step, dubbed the "nuclear option" by many economists, was justified because of government promises to meet strict budget targets and step up consolidation efforts.

The euro currency, which last week sank to a 14-month low against the dollar, rose as high as $1.2950 before slipping back on the ECB decision to buy debt. EUR= By mid-morning it was changing hands at $1.2930.

"Getting them to agree on a number is crucial," said Tony Morriss, market strategist at ANZ in Sydney. "But to me what appears more important is the establishment of swap lines and quantitative easing (QE). And while QE may weigh in the longer term, the euro seems to be stabilising, at least in the near term," Morriss said.

The ECB said the scope of the purchases was yet to be determined, but added they would be offset by liquidity-absorbing operations so that the stance of monetary policy is unaffected.

The ECB last year announced a 60 billion programme to buy covered bonds but this would be its first move into buying government debt.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For an overview of stories on the crisis [nTOPNOW2]

Graphic on euro's performance r.reuters.com/vyh72k

Euro zone crisis in graphics r.reuters.com/fyw72j ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Gold prices, considered a safe haven investment, fell as much as 1.5 percent after touching near record highs last week.

EASE FEARS

The central bank swap facility is meant to ease fears of a dollar shortage as investors dump riskier assets and move back into the U.S. dollar. The cost of interbank three-month U.S. dollar funds saw its largest rise in 16 months on Friday. [iD:nN0799836]

The move is designed to ensure there is enough money and confidence in the global financial system to stave off 2008-style credit crunch.

Ministers from Spain and Germany said euro zone countries would speed up their efforts to tackle their fiscal problems.

Jitters over euro zone finances have set global markets on edge and created the conditions for a nearly 1,000-point drop in the Dow Jones industrial average .DJI on Thursday. Authorities are investigating what triggered the dramatic move. [iD:nN09274100]

Both the EU and the IMF has already approved a 100 billion euro package to support Greece, whose budget deficit blew out last year to 13.6 percent of GDP.

To secure the funds, Greece has committed to deep budget cuts that have already caused violent public protests in the country as it moves to get the deficit back down to the EU limit of 3 percent.

"WOLFPACK"

Policymakers around the globe are worried the crisis in Greece could spread to other countries, fears compounded by the unexplained shock plunge in U.S. stocks on Thursday.

In Europe, officials said they would fight speculative investors they blame for aggravating the public debt crisis.

"We now see ... wolfpack behaviours, and if we will not stop these packs, even if it is self-inflicted weakness, they will tear the weaker countries apart," Swedish Finance Minister Anders Borg told reporters in Brussels before the EU meeting.

Economists estimate that if Portugal, Ireland and Spain eventually come to require bailouts similar to Greece's, the total cost could be some 500 billion euros. ($1=.7453 Euro) (Additional reporting by Jan Strupczewski, John O'Donnell and David Brunnstrom in BRUSSELS and Lesley Wroughton in WASHINGTON; Writing by Paul Tait; Editing by Neil Fullick)

[badge]

[...]Europe's failure to contain Greece's fiscal

crisis triggered a 4.3% drop in the euro last week causing it to slide to

$1.2715 from $1.3293 during the week(it is down 15% since late November)

European stocks sank the most in 18 months, with the Stoxx Europe 600 Index

crashing 8.8% to 237.18. [...]

EURUSD slid to 1.2510 infact

[Naam]

[...]Europe's failure to contain Greece's fiscal

crisis triggered a 4.3% drop in the euro last week causing it to slide to

$1.2715 from $1.3293 during the week(it is down 15% since late November)

European stocks sank the most in 18 months, with the Stoxx Europe 600 Index

crashing 8.8% to 237.18. [...]

EURUSD slid to 1.2510 infact

but recovered at friday close to >1.27. but whatever, i closed my forwards and made a little money. big speculative exposures are too dangerous for us little people in these times.

[BlackJack]

print more money

live in Thailand

enjoy

[Naam]

[...]Europe's failure to contain Greece's fiscal

crisis triggered a 4.3% drop in the euro last week causing it to slide to

$1.2715 from $1.3293 during the week(it is down 15% since late November)

European stocks sank the most in 18 months, with the Stoxx Europe 600 Index

crashing 8.8% to 237.18. [...]

EURUSD slid to 1.2510 infact

but recovered at friday close to >1.27. but whatever, i closed my forwards and made a little money. big speculative exposures are too dangerous for us little people in these times.

and trades now above 1.30

[churchill]

So the politicians bail out the French and German Banks / Taking care of their jobs /

Did tax payers in Europe have any say - I think there will be an ugly end when people know how much their pensions and lives will be effected by the dreams of a few

[churchill]

Euro zone rescue may only work in short term

http://www.reuters.com/article/idUSTRE6490JF20100510

[midas]

To diverge from the Eurozone for a moment................this is funny ( its better to laugh than cry )

President Obama needs a new Supreme Court Justice ..........so who does he nominate.............?

Elena Kagan

what do you need to know about her independent "allegiance" ?

From 2005 to 2008, Ms. Kagan was a paid member of the Research Advisory Council of Goldman Sachs Global Markets Institute, according to financial-disclosure reports she filed after being appointed to her current job.

The Securities and Exchange Commission has accused Goldman in a civil suit of failing to disclose to clients in a deal involving mortgage-related securities that a hedge fund betting on the mortgages to fail helped design the product. Goldman denies the charges.

Mr. Gibbs said the group Ms. Kagan advised had nothing to do with the activities in the SEC's case. "This is a panel that had absolutely nothing to do with the decisions that Goldman has made that they're now being investigated for," he said. Asked if there was a concern that this issue could be used against Ms. Kagan, should she be nominated, Mr. Gibbs said, "No."

So there goes the integrity and so called independence of the Judicial branch of the US government

[Jake1]

Who is going to buy German debt now that Germany and others are guaranteeing higher yielding debt?

[teletiger]

It must be remembered that at the moment this bailout is still only a proposal. Looking back over the last month at all the Greek bailouts.....

Euro starting to roll over as I type. 1.29.

The dodgy DoJ? I'll get my coat.

Regards.

[badge]

[...]Europe's failure to contain Greece's fiscal

crisis triggered a 4.3% drop in the euro last week causing it to slide to

$1.2715 from $1.3293 during the week(it is down 15% since late November)

European stocks sank the most in 18 months, with the Stoxx Europe 600 Index

crashing 8.8% to 237.18. [...]

EURUSD slid to 1.2510 infact

but recovered at friday close to >1.27. but whatever, i closed my forwards and made a little money. big speculative exposures are too dangerous for us little people in these times.

and trades now above 1.30

Im sure thats all very interesting for you.

I pointed out the highlighted text did not detail the precise Low made Friday.

[teletiger]

Euro/usd now at 1.2826.

"Amazing. Who'd have thought that a bunch of insolvent countries offering to guarantee each other's debt would not be a winning strategy?"

Hat tip Zerohedge.com.

Regards

[Naam]

Who is going to buy German debt now that Germany and others are guaranteeing higher yielding debt?

wrong assumption. the debt of Greece is NOT guaranteed.

[Naam]

It must be remembered that at the moment this bailout is still only a proposal. Looking back over the last month at all the Greek bailouts..... Euro starting to roll over as I type. 1.29. The dodgy DoJ? I'll get my coat. Regards.

another wrong assumption.

[Gambles]

Euro/usd now at 1.2826.

"Amazing. Who'd have thought that a bunch of insolvent countries offering to guarantee each other's debt would not be a winning strategy?"

Hat tip Zerohedge.com.

Regards

This is just the thin end of a very fat wedge.....UK may have somehow become the leats ugly European economy despite the political shenanigans

There's huge fat tail risk in EVERY EU economy whether it's yet obvious

Greece = Sovereign Bear Stearns but will there be an equivalent Lehman Brothers event? Or several?

[Naam]

Euro/usd now at 1.2826. "Amazing. Who'd have thought that a bunch of insolvent countries offering to guarantee each other's debt would not be a winning strategy?" Hat tip Zerohedge.com. Regards

This is just the thin end of a very fat wedge.....UK may have somehow become the leats ugly European economy despite the political shenanigans

There's huge fat tail risk in EVERY EU economy whether it's yet obvious

Greece = Sovereign Bear Stearns but will there be an equivalent Lehman Brothers event? Or several?

[BlackJack]

this thread is starting to understand the big picture now

trillions are being sucked up into this massive global restructuring.

run a country into debt and then service that debt (at a price)

what we are seeing is whole countries effectively being bought and sold

the bottom line is that these derivatives cannot be repaid

printing more money to try and service them is creating a bigger problem

1 dollar of paper or

1 dollar in gold

its your future

[AlexLah]

It looks like a conspiracy to me.

Meh!

[Naam]

It looks like a conspiracy to me. Meh!

Kim Jong-il or CIA?

[midas]

It looks like a conspiracy to me. Meh!

Kim Jong-il or CIA?

the Bildbergs of course

[lannarebirth]

Euro/usd now at 1.2826. "Amazing. Who'd have thought that a bunch of insolvent countries offering to guarantee each other's debt would not be a winning strategy?" Hat tip Zerohedge.com. Regards

This is just the thin end of a very fat wedge.....UK may have somehow become the leats ugly European economy despite the political shenanigans

There's huge fat tail risk in EVERY EU economy whether it's yet obvious

Greece = Sovereign Bear Stearns but will there be an equivalent Lehman Brothers event? Or several?

Admittedly I haven't spent a lot of time following the machinations of the British political/financial mess but from what I do see it looks like it is sliding closer to the abyss rather than pulling back. I wouldn't touch the GBP, gilts, UK equities with a bargepole right now. Maybe I'm selling the bottom (figuratively) but that's the way it looks to a fairly disinterested observer.

[sokal]

Euro zone rescue may only work in short term

http://www.reuters.com/article/idUSTRE6490JF20100510

its funny how the ya-hoo's only realize the problems with stupid policies when its anything but the dollar. How many mainstream ya-hoo articles did we see after Bernanke printed a trillion dollars ? None, they all said he saved the world and he made it onto the cover of Time magazine.

[flying]

Well the scurvy dogs have slithered out from under once again.

We will have no transparency ...We will not know what the private institution that creates US dollars does with those dollars they create & we pay for...one way or another.

Watered-Down Fed Audit Amendment Passes the Senate

May 11 2010, 2:50 PM ET

How do you get legislation to pass in the Senate by a robust bipartisan tally? Easy, just make it uncontroversial. That was the key to the success of Bernie Sanders' (I-VT) revised amendment (.pdf) to audit the Federal Reserve. It passed the Senate today 96 to 0.

Sanders' original amendment (.pdf) mimicked that passed (.pdf) for the House's version of financial reform, sponsored by Rep. Ron Paul (R-TX). Sanders was forced to revise his legislation when it became clear that a Senate majority had no intention of increasing the ongoing oversight of the Fed. Instead, the new amendment would just require an audit of the Fed's activities taken during the financial crisis.

Those who wanted Congress to have greater ongoing oversight of the Fed, including Paul, were disappointed with this move. In fact, Sen. David Vitter (R-LA) sponsored a separate amendment that would have essentially restored Sanders' original language allowing future audits. It was voted on after Sanders' amendment passed. Vitter's measure failed, however, by a vote of 37 to 62. Most yea-votes came from Republicans, along with six Democrats and Sanders.

Edited May 11, 2010 by flying

[AlexLah]

Rep. Mike Pence (R-Ind.), who is working on the GOP legislation, said Tuesday that the U.S. doesn’t have the money to bail out the European Union. He estimated the U.S. share of loan guarantees from the IMF is at least $6 billion.

“Those are American dollars being put at risk as part of a global TARP, all with the ascent, the support and encouragement of this administration,” the number three ranking House Republican said.

He said the GOP bill would force Geithner to vote against any proposed IMF “loans to any nation using the Euro as its primary currency.”

Pence also said that many members of the EU are “outright socialist countries.”

http://thehill.com/homenews/house/97341-go...g-for-imf-loans

[badge]

Euro zone rescue may only work in short term

http://www.reuters.com/article/idUSTRE6490JF20100510

its funny how the ya-hoo's only realize the problems with stupid policies when its anything but the dollar. How many mainstream ya-hoo articles did we see after Bernanke printed a trillion dollars ? None, they all said he saved the world and he made it onto the cover of Time magazine.

Sokal my dear goldbug, the price of Gold is doing famously, of that there is no denying, but when you say "Bernanke printed a trillion dollars" you are aware that no money was ever printed are'nt you?

Awfully simply put, the trillions then, and the trillions now, are put into the system electronically, to offset the deletion of electronic trillions through essentially asset devaluation. Thus no net change. Please see M supply.

The price of Gold is not linked to inflation. It is not linked to anything, other than buy and sell orders.

It can be said that Golds price moves are linked to sentiment of future inflation, as it can be said Equity markets price moves are linked to sentiment of future earnings.

Sometimes a prevailing sentiment of the future turns out to be wrong.

Just a thought

[midas]

so Naam, do you agree or not with this perspective regarding Germany's intervention ?

We are the schmucks of Europe yet again!

http://www.bild.de/BILD/news/bild-english/...ucks-again.html

[sokal]

Euro zone rescue may only work in short term

http://www.reuters.com/article/idUSTRE6490JF20100510

its funny how the ya-hoo's only realize the problems with stupid policies when its anything but the dollar. How many mainstream ya-hoo articles did we see after Bernanke printed a trillion dollars ? None, they all said he saved the world and he made it onto the cover of Time magazine.

Sokal my dear goldbug, the price of Gold is doing famously, of that there is no denying, but when you say "Bernanke printed a trillion dollars" you are aware that no money was ever printed are'nt you?

Awfully simply put, the trillions then, and the trillions now, are put into the system electronically, to offset the deletion of electronic trillions through essentially asset devaluation. Thus no net change. Please see M supply.

The price of Gold is not linked to inflation. It is not linked to anything, other than buy and sell orders.

It can be said that Golds price moves are linked to sentiment of future inflation, as it can be said Equity markets price moves are linked to sentiment of future earnings.

Sometimes a prevailing sentiment of the future turns out to be wrong.

Just a thought

My dear keynesian, you do not know how a market works. The Fed is buying US bonds and MBS, that is money printing. Is that you Paul Krugman ? Do you think that there is no difference between having legit buyers for US bonds ?

You think that China buying bonds with real production is no different then the FED buying bonds with a computer ?

[teletiger]

It must be remembered that at the moment this bailout is still only a proposal. Looking back over the last month at all the Greek bailouts..... Euro starting to roll over as I type. 1.29. The dodgy DoJ? I'll get my coat. Regards.

another wrong assumption.

Hmmm. What is the wrong assumption? Euro did turn over, with a 1.25 handle as I type. The dodgy DoJ is a given. Did you check your facts Herr Naam?

The ECB spouts a figure (from a German proposal?) and we swallow it and go home? Hahaha.

Here's John Lipsky. No2 at the IMF:

"The package consists of a loan facility and loan guarantees as well as possible help from the IMF that could reach 250 billion euros."

"We haven't made any blanket commitments,"

While an EU statement said the IMF would make available 250 billion euros, Lipsky said the institution had not earmarked any money for euro zone countries and financial help would be provided on a case-by-case basis.

http://uk.reuters.com/article/idUKTRE64A06F20100511

Isn't the devil always in the detail?

Regards.