You can’t make this stuff up!
- Friday Humor Part Dois – Banco de Portugal “Wink Wink” Edition (ZeroHedge, Feb. 3, 2012):
… the following seminar announcement from the Banco de Portugal, of all places, is truly priceless…
Source: Banco de Portugal
Tags: Banco de Portugal, Banking, Bonds, Debt, Economy, EU, Europe, Global News, Portugal
- ‘King Of Bonds‘ Bill Gross Explains Why “We Are Witnessing The Death Of Abundance” And Why Gold Is Becoming The Default “Store Of Value” (ZeroHedge, Feb. 1, 2012):
While sounding just a tad preachy in his February newsletter, Bill Gross’ latest summary piece on the economy, on the Fed’s forray into infinite ZIRP, into maturity transformation, and the lack thereof, on the Fed’s massive blunder in treating the liquidity trap, but most importantly on what the transition from a levering to delevering global economy means, is a must read. First: on the fatal flaw in the Fed’s plan: “when rational or irrational fear persuades an investor to be more concerned about the return of her money than on her money then liquidity can be trapped in a mattress, a bank account or a five basis point Treasury bill. But that commonsensical observation is well known to Fed policymakers, economic historians and certainly citizens on Main Street.” And secondly, here is why the party is over: “Where does credit go when it dies? It goes back to where it came from. It delevers, it slows and inhibits economic growth, and it turns economic theory upside down, ultimately challenging the wisdom of policymakers. We’ll all be making this up as we go along for what may seem like an eternity. A 30-50 year virtuous cycle of credit expansion which has produced outsize paranormal returns for financial assets – bonds, stocks, real estate and commodities alike – is now delevering because of excessive “risk” and the “price” of money at the zero-bound. We are witnessing the death of abundance and the borning of austerity, for what may be a long, long time.” Yet most troubling is that even Gross, a long-time member of the status quo, now sees what has been obvious only to fringe blogs for years: “ Recent central bank behavior, including that of the U.S. Fed, provides assurances that short and intermediate yields will not change, and therefore bond prices are not likely threatened on the downside. Still, zero-bound money may kill as opposed to create credit. Developed economies where these low yields reside may suffer accordingly. It may as well, induce inflationary distortions that give a rise to commodities and gold as store of value alternatives when there is little value left in paper.” Let that sink in for a second, and let it further sink in what happens when $1.3 trillion Pimco decides to open a gold fund. Physical preferably…
From PIMCO’s Bill Gross:
Life – and Death Proposition
- Recent central bank behavior, including that of the U.S. Fed, provides assurances that short and intermediate yields will not change, and therefore bond prices are not likely threatened on the downside.
- Most short to intermediate Treasury yields are dangerously close to the zero-bound which imply limited potential room, if any, for price appreciation.
- We can’t put $100 trillion of credit in a system-wide mattress, but we can move in that direction by delevering and refusing to extend maturities and duration. Continue reading »
Tags: Bill Gross, Bonds, Debt, Economy, Global News, Gold, Government, Obama administration, PIMCO, Politics, U.S.
You can’t make this stuff up!
One of the laments of the uberdoves in the world over the past several years has naturally been the fact that interest rates are bound by Zero on the lower side, and that the lowest possible rate on new paper is, by definition, 0.000%. Which is what led to the advent of QE in the first place: in lieu of negative rates, the Fed was forced to actively purchase securities to catch up to a negative Taylor implied rate. This may be about to change, because as the just released letter from the Treasury Borrowing Advisory Committee, or as we affectionately called the JPMorgan/ Goldman Sachs Chaired committee, the “Supercommittee That Runs America”, simply because it alone makes up Tim Geithner’s mind on what America needs to do funding wise, demand, “It was broadly agreed that flooring interest rates at zero, or capping issuance proceeds at par, was prohibiting proper market function. The Committee unanimously recommended that the Treasury Department allow for negative yield auction results as soon as logistically practical.” And what JP Morgan and Goldman Sachs want, JP Morgan and Goldman Sachs get. And once we get the green light on negative yields at auction, next up will be the push for the Fed to impose negative rates on all standing securities, which means that coming soon savers will be literally paying to hold cash. And that will be the final straw.
Not only that, but beginning in just 4 short months, the Treasury may launch a brand new product: a Floating Rate Bond. From the TBAC: Continue reading »
Tags: Barack Obama, Bonds, Debt, Dictatorship, Dollar, Global News, Goldman Sachs, Government, JPMorgan, New World Order, Obama administration, Politics, Timothy Geithner, U.S.
Message to the people of Greece:
Got physical gold and silver? Protect yourself from any devaluation threat NOW.
Flashback:
- Belarus Devalues Its Currency By 56% Overnight, Against Every Currency Out There:
Luckily for those who held their “money” in the form of gold and silver, they just got an instantaneous 56% value preservation and a relative boost in their purchasing power with just one central bank announcement.
- Commerzbank’s Mueller Recommends Greece Exit Euro Zone – Report (FOX Business/Dow Jones Newswires, Jan. 31, 2012):
FRANKFURT – The Supervisory Board Chairman of Germany’s Commerzbank (CBK.XE) said he recommends that Greece leaves the euro zone, according to a pre-release of an interview by TV broadcaster Deutsches Anleger Fernsehen.
“I am strongly convinced that Greece needs a massive devaluation which it can’t carry out within the euro,” Mueller is quoted as saying, and “we can’t compensate for this with transfer payments.”
“Despite being a hurting process, I think Greece would be better advised to declare its exit,” as “Greece can’t be rescued within the euro,” Mueller said, according to the German broadcaster.
“Markets will understand, that, if Greece exits, this doesn’t mean who is next,” so he doesn’t expect contagion, Mueller is quoted as saying.
Banks could write down their entire exposure to Greece immediately, Mueller said, according to DAF.
“When you are at 70% or 80% and you’ll likely have to add to it, you can ask if you won’t stop it immediately, meaning write down entirely,” he is quoted as saying.
- Commerzbank CEO Says Greece Should Exit Eurozone (ZeroHedge, Jan. 30, 2012):
As if Merkel did not make it all too clear over the weekend that Germany no longer wishes Greece to be part of the Eurozone, and that the ball is now in Athens’ court to accept what is a glaringly unfeasible demand, i.e., to hand over fiscal sovereignty over to “Europe” with Merkel having the cover of saying it did everything in its power to keep Greece in the union, here comes Commerzbank’s CEO Mueller to pick up where Merkel left off:
- COMMERZBANK’S MUELLER SAYS GREECE SHOULD EXIT EURO ZONE
- COMMERZBANK’S MUELLER SPOKE TO DEUTSCHES ANLEGER FERNSEHEN
Presumably this means that German banks have sold off all their Greek bond exposure, and believe that the Eurozone would be better off without Greece in it. However, that Commerzbank, or one of the most insolvent banks in Europe, and only in line with Dexia, is confident that it can withstand the contagtion that would follow, only makes us even more skeptical that a Greek default and Eurozone departure will be contained, and in all likelihood will have scary implications for all European banks, not only German ones. Just ask DB’s Ackermann…
Tags: Banking, Commerzbank, Debt, Economy, EU, Europe, Global News, Government, Greece, Politics
See also:
- Germany Formally Requests That Greece Hand Over Its Fiscal Independence!
Got gold and silver?
- Endgame Begins – UK “Foreign Office Sources Say Merkel Now Thinks Greece Will Default” (ZeroHedge, Jan. 27, 2012):
Courtesy of the BBC’s Andrew Neil, on the back of the previously noted formal annexation demand of Greece by Germany:
Of course, this is what we, and everyone else whose frontal lobe has not bee hijacked by the status quo, said back in January 2010…
JP Morgan and Morgan Stanley better pray they are right when they say they are 100% insulated from contagion, because we are all about to find out.
Tags: Angela Merkel, Debt, Economy, EU, Europe, Germany, Global News, Government, Greece, Politics, Society, U.K.
Related info:
- US Treasury Raids Federal Pension Funds To Cover Debts
Bankrupting America, destroying the US dollar and turning the US into a Third World country.
Prepare for the greatest financial collapse in world history.
- Update: America Has A $16.4 Trillion Debt Ceiling In 52-44 Senate Vote (ZeroHedge, Jan. 26, 2012):
Update: the Senate has failed to reject a bid to stop the debt ceiling hike with a simple 52 vote majority all of it along party lines. The US now has $16.4 trillion in debt capacity as of Friday. Since roughly $100 billion was plundered from Pension Funds in the past month, The US will have about $15.4 trillion in debt with the Monday DTS. The question then is how long will the $1 trillion in debt capacity last: at $125 billion/month it won’t be enough to carry the US past the election without another massive debt ceiling spectacle.
While Congress recently voted down the increase in the US debt ceiling, that vote was largely irrelevant. And all that matters is how the Senate will vote. Watch it live in progress below. It is virtually unlikely that the process of debt ceiling increase will be overturned so within minutes the US should have a brand spaking new debt ceiling of $16.4 trillion.
- Senate Fails to Advance Resolution Blocking Debt Limit Increase (C-Span, Jan. 26, 2012)
Tags: Barack Obama, Debt, Economy, Global News, Government, Obama administration, Politics, U.S.
- U.S. treasury raids federal employee pension funds to cover debts (Natural News, Jan. 25, 2012):
There is a saying, “Desperate times call for desperate measures.” Roughly, it’s an expression that’s meant to be reassuring, conjuring up an image of a true statesman-like leader who is preparing to do whatever is necessary to lead the masses out of danger.
Of course, the expression doesn’t have the same connotation when applied to the Obama administration in its futile struggle to balance the nation’s books. Left to fend for itself by a hapless Congress that couldn’t agree on the color of red bricks, let alone pass a budget that actually curbed spending and lowered the national debt, the administration has taken to theft as a way to pay the country’s bills. Specifically, the Treasury Department is stealing cash from federal employees pension funds so the government can obtain more credit to pay its debts.
Tags: Barack Obama, Debt, Global News, Government, Obama administration, Pension, Politics, Timothy Geithner, Treasury, U.S.
YouTube Added: 17.01.2012
Description:
Press TV interviews Max Keiser, journalist and broadcaster in Paris about the credit rating agency’s role in having nations impose austerity measures on the people of Europe and the damage this is causing to sovereign nations.
Tags: Banking, Bonds, Debt, Dollar, Economy, EU, Euro, Europe, Germany, Global News, Gold, Government, Max Keiser, Politics, Quantitative Easing, Rating, U.S.
- No One Knows Truth About $300 Billion Bonds From Alleged ’34 Plane Crash (Bloomberg, Jan. 18, 2012):
Chris Estrella, a Filipino social worker, says he led a troop of five porters out of a Mindanao jungle in January 2000 with a weather-beaten iron and leather box crammed with $25 billion of U.S. government bearer bonds.
“The elders of the Umayamnon tribe told me an American plane crashed in their river in the 1930s,” Estrella, 47, says by mobile phone from a footpath between the tribal village and Davao, the largest city on the Philippine island. “The river dried up in the 1990s, and the natives went into the plane and found 12 boxes that contained $300 billion in bonds.”
Each box, emblazoned with the Great Seal of the United States and the words “Federal Reserved Bond,” held five gold coins struck with a portrait of George Washington on one side, Estrella says. They rested atop stacks of certificates purporting to have been issued by the Federal Reserve Bank of Atlanta in 1934 and redeemable in gold bullion. The notes bore the signature of then Treasury Secretary Henry Morgenthau Jr.
Such fixed-income instruments, also known as coupon bonds, belong to whoever holds them, rather than to a registered owner. Vouchers representing interest payments were attached to the 30- year bonds that were denominated in amounts of as much as $100 million. Estrella says he later brought three other similarly filled chests out of the jungle. Continue reading »
Tags: Bonds, Debt, Economy, Fed, Federal Reserve, Global News, Government, Philippines, Politics, U.S.
- Egan Jones Downgrades Germany From AA To AA- (ZeroHedge, Jan. 18, 2012):
Sean Egan strikes again, this time downgrading Germany from AA to AA-.
Germany maintains its position as the European Union’s top economy. However, Germany has been shouldering the burdens of other EU countries via its exposure to the EFSF and indirectly via the ECB’s hefty exposure to the weaker banks and the weaker sovereign credits. The country’s debt to GDP of 83% as of 2010 (expect near 86% for 2011) and a deficit to GDP of 4.6% is weak (and getting weaker) for a top-tier country. On the positive side, unemployment was only 6.8% but will probably increase as many EU countries implement austerity measures. Other positives were the positive (EUR133B) balance of trade and the positive (EUR193B) current account as of the end of 2010. Inflation has been fairly moderate at 2%, but we expect an increase as a result of the decline in the euro relative to the dollar.
German chancellor Angela Merkel continues to create tension with EU member states by pushing for ratification of changes to the Lisbon Treaty. The government insists that private investors bear more of the costs of further European bailouts. Note, the cost of the bailouts is likely to be absorbed via increased support for the EFSF, the ESM, the ECB and a rise in the number of euros. The fallout from a likely Greek default needs to be monitored.
via Egan-Jones
- Time To Cut Germany’s Credit Rating? Egan-Jones Downgrades To AA- (Forbes, Jan. 18, 2012):
Prone to controversial actions, ratings agency Egan-Jones axed Germany’s sovereign rating from AA to AA- and kept it on negative credit watch. While remaining the Eurozone’s strongest economy, German tax payers will be footing a significant portion of the bill for the different bailout mechanisms in place, from the EFSF to the ECB and even the IMF’s funding facilities.
Speaking with Forbes, Egan-Jones co-founder Sean Egan said “[Germany’s] credit quality has slipped and its debt-to-GDP ratio is increasing.” In the report, the analysts noted the Eurozone’s top dog has debt exceeding €2 trillion ($2.6 trillion) and cash of about €235 billion ($301 billion). Debt-to-GDP levels hit 83% in 2010, will probably hit 92% in 2011 and could reach 116.7% by 2013.
“Germany does benefit from flight to quality flows,” explained Egan, adding that mathematics doesn’t lie, and eventually, someone will have to pay the bill. “The major positive German has realized over the past year has been the significant decline in its funding costs, […] the two-year debt yield has declined from 2% to near 0 while the 10-year has declined from above 3% to below 2%,” read the report.
Tags: Bonds, Debt, Economy, Egan-Jones, EU, Europe, GDP, Germany, Global News, Government, Politics, Rating
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