A Crisis in Full Flight

"For a while, it looked as if the European Central Bank’s €1 trillion credit program to pump liquidity into Europe’s banking system had calmed global financial markets. But now interest rates for Italian and Spanish government bonds are on the rise again, closing in on about 6%..."


at http://www.project-syndicate.org/commentary/a-crisis-in-full-flight

22 Red Flags That Indicate That Very Serious Doom Is Coming For Global Financial Markets

"The following are 22 red flags that indicate that very serious doom is coming for global financial markets....

#1 According to CNN, the level of selling by insiders at corporations listed on the S&P 500 is the highest that it has been in almost a decade.  Do those insiders know something that the rest of us do not?

#2 Home prices in the United States have fallen for six months in a row and are now down 35 percent from the peak of the housing market.  The last time that home prices in the U.S. were this low was back in 2002.

#3 It is now being projected that the Greek economy will shrink by another 5 percent this year.

#4 Despite wave after wave of austerity measures, Greece is still going to have a budget deficit equivalent to about 7 percent of GDP in 2012.

#5 Interest rates on Italian and Spanish sovereign debt are rapidly rising.  The following is from a recent RTE article...."

at http://theeconomiccollapseblog.com/archives/22-red-flags-that-indicate-that-very-serious-doom-is-coming-for-global-financial-markets

Campbell Asks: Can Italy Be Far Behind Spain?

"About three months ago, shortly before Greece’s sovereign debt was
restructured, I began to warn about Spain as the next Eurozone country to focus on. That has, indeed, turned out to be ‘all the news’ with reports every day on Spain’s deteriorating financial condition. Given the ongoing world economic uncertainty and volatility, however, I suggest you now begin to pay very careful attention to Italy going forward, but doing so without losing sight of what is transpiring in Spain..."

at http://www.munknee.com/2012/04/campbell-asks-can-italy-be-far-behind-spain/

Nigel Farage: There Are Going to Be Serious Banking Collapses

“Therefore, what is likely, is that at some point, the markets will just overwhelm and engulf the whole thing and short-term, that will lead to chaos. The whole central banking, International Monetary Fund banking system, I mean it just begins to look more and more like the biggest Ponzi scheme we’ve ever seen on earth.

There are going to be some serious banking collapses and the impact of that on some sovereign states, will be serious. I’m afraid we’ve gotten to a point where we really can’t stop this now. We’re beginning to reach a stage where however much false money you create, the problem becomes bigger than the people trying to solve it. We are very close to that point.

When I talk about the threats and the risk that this thing could wind up in some kind of rebellion, some sort of awful social cataclysm, they (other European politicians) are now very worried indeed. They will talk to you in private, but in public, nobody dares utter a word.

I think the deterioration, in the last two or three weeks, in the eurozone is very serious indeed. It’s the bond spreads in Italy and Spain. It’s the fact that youth unemployment is now over 50% in some of these Mediterranean countries. 

It’s riot and disorder on the streets. And yet a month ago I was here and there was Herman Van Rumpuy telling us, ‘We’ve turned the corner. Everything is solved. There are no more problems with the eurozone.’ What a pack of jokers they look like.”

Farage also had this to say about the Italian movement of gold: “It was interesting to see massive bullion movements last month, out of Italian banks and into Swiss banks. So, people who have purchased gold for protection and have kept the gold in Italian bank vaults, now their trust in Italian banks is so bad they have physically moved the bullion to Switzerland. I’m still a believer, buy gold on dips.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/18_Nigel_Farage__There_Are_Going_to_Be_Serious_Banking_Collapses.html

Ongoing European Crisis to Result in Higher Inflation and Higher Gold Prices – Here’s Why

"On the surface things may appear to be calm, but I don’t think the European crisis is anywhere near its conclusion. Losses still have to be taken from Ireland, Spain, Portugal and possibly even Italy…There are a number of ways out of Europe’s problems. One of them is higher inflation…[which] is going to be very positive for gold… because the central banks will be under pressure to print..."

at http://www.munknee.com/2012/04/ongoing-european-crisis-to-result-in-higher-inflation-and-higher-gold-prices-heres-why/

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Another Failed Grand Plan In Europe

"European Sovereign Yields have been under pressure for most of the last month...seems the market doesn't buy the firewall idea...



The EFSF has committed €200 billion. Depending on how you viewed EFSF, the maximum was €440 billion of funding at the AAA level (which it still has from Moody’s and Fitch). It could have been as much as €500 billion if it wasn’t focused on that maximum rating.

So how did we get a headline of €800 billion?

€200 billion of EFSF money that has already been committed got counted. They can’t commit it again. Yes this is money Europe has committed (more on how they fund it, later) which helped, but it cannot be committed again.

They also included €49 billion and €53 billion of loans already made to Greece under other EU programs as part of the firewall. Again, that €100 billion has already been spent, so it doesn’t really add anything.

Prior to today, the EU had €300 billion of remaining capacity and had spent or committed €300 billion. Now they have €500 billion of free capacity.

Let’s take a deeper look:

Last fall, Greece, Ireland, and Portugal had just over €600 billion of admitted debt (not the guaranteed hidden kind). So far, they have received €300 of EU commitments. Can we assume that a “bailout” is about 50% of a countries debt? Probably not, but it seems that the first round is less than 50%, but as it goes on, the amount grows beyond 50%, but it is eye opening, that 3 countries, with a total of €600 billion of debt, have needed €300 billion of support already – and look likely to need more. Ireland is getting a new extended payment plan. Portugal seems likely to need more. Greece may need more already to deal with the English law bonds, but in any case will likely draw down more.

So this €500 billion that is remaining, has to not only continue to support the existing countries, but in theory needs to deal with Spain and Italy. With €700 billion and €1.6 trillion, that seems dubious, especially once the mechanics are understood, but before we get to that, let’s look at what the EFSF has already done..."

at http://www.zerohedge.com/news/another-failed-grand-plan-europe

European Weakness Spreads And Accelerates

"European equity prices fell for the third day in a row and pulled back near six week lows, breaking below the 50DMA for the first time since it crossed above on 1/16. Today's drop was the largest in three weeks as Italian banks were halted (and Spanish banks sold hard), plunging their most in over three months and back at levels not seen since mid January. Most Italian banks are down 9-11% in March but BMPS is down over 24% as Italian sovereign yields start to come unhinged again (ironically a day after Monti announced the crisis was over). 10Y BTPs broke back below last Friday's lows (the moment the ECB stepped in last time to save the day) up over 5.2% yield - catching up to CDS levels (and ITA spreads are +23bps on the week). Spain is also weak (+15bps on the week) and heading for 3 month highs in its yields. Since the CDS roll (March 20th), the sell-off has accelerated with equity and credit markets tracking lower together (as opposed to the last few months where credit underperforms and then snaps back higher). We discussed the LTRO Stigma trade earlier and that has continued sliding notably wider today as LTRO-encumbered banks hugely underperform. We suspect hedges (sovereign credit, financial credit, and equity) placed early in the year for the 3/20 Greece event (among other things) have run off and now managers are reducing risk in real terms (selling) as opposed to replacing hedges which is why the uber-supported markets of Italy and Spain are losing the battle now. Lastly, Europe's VIX is its richest relative to US VIX since the rally began, jumping dramatically today.
The BE500 (Bloomberg's broad European equity index) dropped for 3 days in a row and the most today in 3 weeks - near 2 month lows..."

at http://www.zerohedge.com/news/european-weakness-spreads-and-accelerates

The Rejection of Austerity Begins

"With national elections in Greece only a few weeks away, the coalition that rules the nation finds itself in trouble. Politicians who supported austerity measures as a means to get a bailout of the country’s finances face challenges from candidates who say the government went too far. The reaction is only natural. Many voters have been stripped of benefits, had salaries cut or have lost some form or another of their social safety nets. The upcoming election could sweep new members into parliament, and these new members may try to repeal or modify austerity agreements.
Greece is not the only nation that faces angry voters. Similar circumstances could affect elections in Portugal, Spain and even Italy. A referendum will be held in Ireland to seek support for the nation’s treaty with the European Union, a treaty that is the basis of Ireland’s bailout.
The rounds of national elections could be a year off or more, but this may make it more difficult for current leaders to keep their positions. Austerity’s bite could be felt the most in a few more quarters as governments cut expenses, which may push some nations into recessions, increase unemployment and cut the social services to the elderly..."

at http://247wallst.com/2012/03/28/the-rejection-of-austerity-begins/#ixzz1qQJlF5hd

Ugly European Sovereign CDS Rerack

"An ugly day all around as European sovereign CDS jump the most in three weeks...

5Y 10Y 5/10's
ITALY 374/382 +15 365/385 -10/0
SPAIN 432/440 +15 426/446 -5/5
PORTUGAL 34.5/35.5 0 37.75/40.75 3.5/6.5
IRELAND 608/620 +6.5 529/599 -90/-10
GREECE 66%/76% 0 66%/79% 0%/3%
BELGIUM 225/235 +7 213/233 2/14
FRANCE 174/178 +9 198/206 22/26
AUSTRIA 164/170 +9 182.5/192.5 18/23
UK 63.5/66.5 +2.5 81/87 17/21
GERMANY 74/77 +5.5 97.5/103.5 22/26

Italy, Spain, Ireland, and Belgium remain inverted - i.e. not bullish!





Note Spain is now getting back close to record wides again...

Charts: Bloomberg"

at http://www.zerohedge.com/news/ugly-european-sovereign-cds-rerack

Special Series: European Economies At Risk - Italy

"After a turbulent 2011, Italy regained some financial stability when the technocratic government of Prime Minister Mario Monti came to power. Monti's government introduced a rapid series of economic reforms that, along with the purchase of government bonds by the European Central Bank (ECB), temporarily took Italy away from the center of the European crisis. The government also benefits from a political environment in which the main parties want to preserve the status quo. However, Italy has economic, social and political issues that are far from resolved. Slow economic growth, a large public debt, high levels of tax evasion and persistent illegal activities undermine Italy's chances to exit the current crisis..."

at http://www.stratfor.com/analysis/special-series-european-economies-risk-italy

Europe's Economic Crisis: Portugal, Ireland, Spain, Italy and Belgium Following Greece

"It isn’t over until it is over. Of course, we are referring to Europe and its version of 1984. We find it profound that the bankers, politicians and bureaucrats of Europe can do what they have done with a straight face. Investor had a haircut shoved down their throats and the ECB, the European Central Bank and the IMF were exempt.    
How does that work? That is because some are more equal than others. There is no question this will be a defining event for the European and world financial system. We did see a partial default, but only because the derivative creators, the ISDA, had to make one, otherwise their derivative business would have collapsed. No one will deal with an insurer or a bookmaking operation that doesn’t pay off and constantly arbitrary changes the rules. Needless to say, such machinations are out of sight of the public, because 99% of them certainly do not understand derivatives.
Greece is on its way to its next crisis whether it be via austerity, demonstrations or a military coup. In all likelihood Greece will be followed by Ireland, Portugal, Belgium, Spain and Italy..."

at http://www.marketoracle.co.uk/Article33614.html