Infinite Unknown

- Why The Euro Is So Strong, Or Why The Market Expects $700bn Of Fed QE3 (ZeroHedge, April 27, 2012)

Tags: Bonds, Debt, Dollar, ECB, Economy, EU, Euro, Europe, Fed, Federal Reserve, Global News, Government, Politics, U.S.

Related info:

- Europe’s Scariest Chart Just Got Scarier

This is not a recession. This is the Greatest Depression.

- Spanish unemployment hits record 5.64 million (BBC News, April 27, 2012):

Spanish unemployment has hit a new record high, official figures have shown.

The number of unemployed people reached 5,639,500 at the end of March, with the unemployment rate hitting 24.4%, the national statistics agency said.

The figures came hours after rating agency Standard & Poor’s downgraded Spanish sovereign debt.

Official figures due out on Monday are expected to confirm that Spain has fallen back into recession.

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Tags: Banking, Bonds, Debt, Economy, EU, Europe, Global News, Government, Politics, Spain, Standard & Poor's, Unemployment

- Germany Folding? Europe’s Insolvent Banks To Get Direct Funding From ESM (ZeroHedge, April 26, 2012):

We start today’s story of the day by pointing out that Deutsche Bank – easily Europe’s most critical financial institution – reported results that were far worse than expected, following a decline in equity and debt trading revenues of 23% and 8%, but primarily due to Europe simply “not being fixed yet” despite what its various politicians tell us. And if DB is still impaired, then something else will have to give. Next, we go to none other than Deutsche Bank strategist Jim Reid, who in his daily Morning Reid piece, reminds the world that with austerity still the primary driver in a double dipping Europe (luckily… at least for now, because no matter how many economists repeat the dogmatic mantra, more debt will never fix an excess debt problem, and in reality austerity is the wrong word – the right one is deleveraging) to wit: “an unconditional ECB is probably what Europe needs now given the austerity drive.” However, as German taxpayers who will never fall for unconditional money printing by the ECB (at least someone remembers the Weimar case), the ECB will likely have to keep coming up with creative solutions. Which bring us to the story du jour brought by Suddeutsche Zeitung, according to which the ECB and countries that use the euro are working on an initiative to allow cash-strapped banks direct access to funding from the European Stability Mechanism. As a reminder, both Germany and the ECB have been against this kind of direct uncollateralized, unsterilized injections, so this move is likely a precursor to even more pervasive easing by the European central bank, with the only question being how many headlines of denials by Schauble will hit the tape before this plan is approved. And if all eyes are again back on the ECB, does it mean that the recent distraction face by the IMF can now be forgotten, and more importantly, if the ECB is once again prepping to reliquify, just how bad are things again in Europe? And what happens if this time around the plan to fix a solvency problem with more electronic 1s and 0s does not work?

Here is Deutsche Bank’s Jim Reid redirecting attention back to where it was all throughout the summer and fall of 2011, until the new Goldman-based head of the ECB relented days after his appointment: Continue reading »

Tags: Banking, Belgium, Ben Bernanke, Bonds, Czech Republic, Debt, Deutsche Bank, ECB, Economy, ESM, EU, Euro, Europe, Fed, Federal Reserve, Finland, France, GDP, Germany, Global News, Greece, IMF, Ireland, Italy, Politics, Portugal, Society, Spain

- German 30 Year Bund Auction “Unsubscribed” (ZeroHedge, April 25, 2012):

Earlier today, the Bundesbank tried to sneak through some EUR3 billion in long-dated (30Y) paper. It didn’t quite succeed, because if one excludes the retention by the German bank which already has its hands full with TARGET2, the auction was technically a failure. As Newedge points out, without Buba retention, the launch of new 30-yr bund would have been undersubscribed which is just a polite way of saying the above. What happened is that the German debt agency sold EUR2.405b of new 2.5% 30Y Jul-44 Bund, at an average Price 101.93 and average yield of 2.41%. Of this, the Bundesbank retained 595 million as the total target was for EUR3 billion in issuance; Total non-Buba based bids were a “weak” EUR 2.747 billion. The bid/cover was modest 1.142x; with the auction tail 18 cents “further underpinning the weakness of demand.” Finally, per Newedge, the new paper looked rich vs previous rolls ahead of today’s auction, “explains the sluggishness of today’s demand.” Of course, with the now daily bipolar market, had this auction taken place on Monday when Europe was again imploding, it would have been a stunning success. Instead, today is one of those risk on days. But for anyone who bought into the “safety” of German paper 48 hours ago, today they are being carted out legs first. Until, of course, the attention shifts to the disaster that is the PIIGS, and as of earlier today, the UK once more.

Tags: Bonds, Bundesbank, Debt, Economy, EU, Europe, Germany, Global News, Government, Politics

- Italian Police Seize $1.5 Billion U.S. Securities From Man’s Car (Bloomberg, April 21, 2012):

Italy’s financial police seized U.S. government securities with a nominal value of $1.5 billion from an unidentified man in his 70s, they said in an e-mailed statement.

The police said they also took certificates of deposit for about 1,000 tons of gold, which together with the U.S. bonds are worth more than 3 billion euros ($4 billion). The assets were found in a briefcase in the man’s car in Viterbo near Rome because of their “doubtful origin,” according to the statement.

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Tags: Bonds, Debt, Economy, EU, Europe, Global News, Gold, Government, Italy, Police, Politics, U.S.

- Who Is Lying: The Federal Reserve Or… The Federal Reserve? And Why Stalin “Lost” (ZeroHedge, April 21, 2012):

When one thinks of the early 1950′s, things that often come to mind are fries and milkshake, muscle cars, Little Richard, and greased hair. Things that rarely come to mind are that the US and China were openly at war over a little piece of land called Korea, that the Treasury market did not exist, that short and long end rates were “fixed” by the Fed at 0.125% and 2.5% respectively, even as inflation was at the highest it has ever been in the post war period at over 20%. What absolutely never comes to mind, is that on March 3, 1951, the world as we know it changed forever, after a little noted event known as the Fed-Treasury Accord of March 3, 1951 took place, and mutated the role of the Federal Reserve, which set off on a path that would ultimately lead to the disastrous economic state the world finds itself in today.

Oh and another thing that never comes to mind, is that while the current iteration of the Fed, various recent voodoo economic theories, and assorted blogs, all claim that excess bank reserves are never an inflationary threat, it is precisely two Federal Reserve chairmen’s heretic claims that reserves will light an inflationary conflagration, that forced then president Truman to eliminate not one but two Fed Chairmen, and nearly result in the “independent” Federal Reserve being subsumed by the Treasury to do its monetization and market manipulation/intervention bidding. Which then begs the question: who is telling the truth about the linkage of reserve accumulation to inflation – the Fed of 1951, or every other Fed since, now firmly under the control of the Treasury-banker syndicate. Because they can not both be right.
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Tags: Ben Bernanke, Bonds, Congress, Debt, Economy, Fed, Federal Reserve, Global News, Government, Hyperinflation, Keynesianism, Politics, Quantitative Easing, U.S.

Watch the video here:

- The Implications Of A Failed Monetary System (ZeroHedge, April 16, 2012):

Santiago Capital has put together a concise and highly informative 10 minutes video, which explains in the amount of time that a traditional economics professor takes to prepare their coffee, virtually everything that is at risk, and fundamentally flawed, with the current monetary system. While this presentation will not be news to regular readers, we suggest it is watched with recent revelations elsewhere (certainly not here: this has been the default assumption here since day one), that it is flow, not stock that matters to price formation. Which means the exponential curve discussed below will only get ever steeper to asymptote, if the true purpose of the Fed is simply to ramp stocks come hell or high water, in its artificial pursuit of “price stability.”

Tags: Banking, Ben Bernanke, Bonds, Debt, Economy, Fed, Federal Reserve, Global News, Gold, Government, Politics, U.S.

We never left crisis mode. Everything just got much worse.

See also:

- How The ECB Is Turning Spain Into Greece

- Spain CDS Surges Just Shy Of Record As Spanish Bank ECB Borrowings Go Parabolic

- Spain: The Ultimate Doomsday Presentation

- Next Up Spain: OpenEurope Looks At Spanish Banks’ Underprovisioned 20% In Toxic Loans

- Spain Has ‘Worse Problems Than Greece’: Analyst

- EU: EFSF & ESM … A Whole Lot Of Nothing!

- EURO GOVT-Spanish yields top 6 pct as debt crisis flares (Reuters, April 16, 2012):

* Spanish 10-year yields top 6 percent, contagion fears rise

* German 10-year Bund yields hit record lows

* Markets speculate ECB may resume bond-buying programme

LONDON, April 16 (Reuters) – Spanish 10-year government bond yields broke above 6 percent for the first time this year on Monday as concerns over the country’s ability to keep its finances under control pushed debt markets back into “crisis mode”.

Spanish yields were expected to rise further towards the panic-triggering 7 percent level beyond which debt costs are widely seen as unsustainable unless the European Central Bank resumes its bond purchases after a two-month break.

Yields on Germany’s benchmark 10-year Bund, viewed as the euro zone’s safest debt, hit a record low of 1.628 percent. The previous record was established in November 2011, at the height of the debt crisis before the ECB injected around 1 trillion euros of cheap three-year funds into the banking system.

“We’re back in full crisis mode,” Rabobank rate strategist Lyn Graham-Taylor said.

“It is looking more and more likely that Spain is going to have some form of a bailout. Assuming there is not an (ECB) intervention you would not see a cap on Spanish yields, they would just keep increasing.”

The latest blow to Spanish markets followed data on Friday that showed record borrowing by its banks from the ECB. Investors’ main fear is that banks parked most of the funds in domestic government debt, making them more vulnerable to sovereign stress.

Spain faces a test of investor confidence this week with an auction of two- and 10-year bonds on Thursday.

Spanish 10-year yields rose 16 basis points at 6.15 percent, five-year yields topped 5 percent, while two-year yields spiked to 3.70 percent, all 2012 highs.

Six percent is psychologically important for markets as the pace at which yields rise has accelerated on previous occasions when that level was broken. Beyond 7 percent, Greece, Portugal and Ireland struggled to raise cash in the market and were forced to seek financial aid.

Underlining investor fears, the cost of insuring Spanish debt against default hit a record high of $520,000 a year to buy $10 million of protection.

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Tags: Bailout, Bonds, Debt, ECB, Economy, EU, Euro, Europe, Global News, Government, Politics

- How The ECB Is Turning Spain Into Greece (ZeroHedge, April 13, 2012)

Tags: Banking, Bonds, Debt, ECB, Economy, EU, Europe, Global News, Government, Greece, Politics, Spain

- Egan Jones Downgrades JPMorgan (ZeroHedge, April 13, 2012):

The iconoclastic rating agency, and fully recognized NRSRO to the dismay of some tabloids, which just refuses to play by the status quo rules, and which downgraded the US for the second time last Friday, to be followed soon by other rating agencies as soon as US debt crosses the $16.4 trillion threshold in a few short months, has just done the even more unthinkable and downgraded Fed boss JPMorgan from AA- to A+.

Synopsis: Reliance on prop trading and inv bkg income remain. LLR declines (down $1.7B QoQ and $3.87B YoY) offset DVA losses in the investment bank. Wholesale loans were up 23% YoY and 2% QoQ. Middle Mkt, Cmml Term, Corp Client and Cmml Real Estate lending increased by 9%, 2%, 16% and 19% YoY. Middle Mkt and Corp lending was up 2% and 3% QoQ respectively, while Cmml Term, and Cmml Real Estate lending were down 2%, and 9% respectively. Card and consumer loans were down 2% and 5% YoY respectively (down 5% and 1% QoQ respectively). Non accruals are up 14% QoQ due to weakness in JPM’s student loan portfolio. Reserve coverage is good and capital is adequate. We believe JPM will experience further weakness in its retail portfolio due to a softening economy. We are downgrading.

Full report here.

Tags: Banking, Barack Obama, Bonds, Debt, Economy, Egan-Jones, Global News, Government, JPMorgan, Obama administration, Politics, Rating, Real Estate, U.S.