"In a surprising development, the most bearish, and easily most comprehensive, report that we have read in a long time on the broader markets, comes from Canada of all places, via BMO's Quant/Tech desk. The report's title is simple enough: Go To Cash - In Plain English. Not much clarification needed. Here is the gist: "We advocate switching out of equity positions and going to cash. The European sovereign debt crisis appears to be nowhere near over. The global credit environment is worsening. Cost of capital is going up and availability is going down. There are large gaps between where the credit market prices risk and where the equity market is priced. Equity is lagging the deterioration in credit conditions. Moves in currency, equity and commodity markets are mirroring the moves in the credit market. Global growth, in a credit-constrained environment, will slow. Profits will be squeezed by the higher cost of capital...We advocate a zero weight toward equity, and that investors convert their equity positions to cash."
at http://www.zerohedge.com/article/bmo-has-simple-message-its-clients-go-cash-now?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
Tuesday, June 8, 2010
The Dominant Force In World Financial Markets In 2010 Is Fear
"Extreme volatility is not a sign of health for financial markets. But in 2010 financial markets around the globe are experiencing unprecented volatility. Why? It is because the entire world financial system has been gripped by fear. In today's crazed environment, it seems like just about anything can set off a major panic. "
at http://theeconomiccollapseblog.com/archives/the-dominant-force-in-world-financial-markets-in-2010-is-fear
at http://theeconomiccollapseblog.com/archives/the-dominant-force-in-world-financial-markets-in-2010-is-fear
Monday, June 7, 2010
UK Prime Minister Warns "Years of pain ahead, No Trampoline Recovery"
"DAVID CAMERON has warned that the economy is in a far worse state than previously thought and signalled that Britain faces years of “pain” as the spending axe falls.
The prime minister indicated a sharp downgrade in official growth forecasts and revealed that welfare and public sector pay would bear the brunt of budget cuts."
at http://globaleconomicanalysis.blogspot.com/2010/06/uk-prime-minister-warns-years-of-pain.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29
The prime minister indicated a sharp downgrade in official growth forecasts and revealed that welfare and public sector pay would bear the brunt of budget cuts."
at http://globaleconomicanalysis.blogspot.com/2010/06/uk-prime-minister-warns-years-of-pain.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29
Europe is Headed For a Mini Economic Depression
Despite a nearly-$1 trillion rescue operation, financial conditions in the eurozone continue to deteriorate. All the gauges of market stress are edging upwards and credit default swaps (CDS) spreads have widened to levels not seen since the weekend of the emergency euro-summit.
Libor is on the rise and liquidity is draining from the commercial paper (CP) and money markets. According to the Federal Reserve, the total amount of (foreign banks) CP has shrunk 15 percent or $32 billion since late April. Central bank officials insist that there's no chance of another Lehman-type meltdown, but their actions don't match their words. Apart from the massive $920 billion EU Stabilization Fund, the ECB has beefed-up its liquidity facilities and is aggressively purchasing state bonds from struggling countries in the south. Without the ECB's assistance, the slow-motion slide into recession could turn into a full-blown market crash. Brussels has every reason to be worried.
From the Wall Street Journal:
"In the latest indication that European banks are in ill health, the European Central Bank warned late Monday that euro-zone banks face €195 billion ($239.26 billion) in write-downs this year and the next due to an economic outlook that remained "clouded by uncertainty....Europe's intertwined banking system remains stressed. Investors have hammered the sector, banks are stashing near-record amounts of deposits at the ECB—€305 billion as of Friday—instead of lending the funds to other institutions, risk-wary U.S. financial institutions are reducing their exposure to euro-zone banks." ("ECB Warns Write-Downs Could Reach $239 Billion" David Enrich and Stephen Fidler, Wall Street Journal)
German and French banks have vast exposure to public and private debt in Club Med countries; Spain, Greece, Portugal and Italy. When those countries finances begin to teeter, it's harder for the banks to exchange assets in the repo market where they get the bulk of their funding. They are forced to take a "haircut" on the value of their collateral which erodes their capital cushion and pushes them closer to default. This is what happened in the US when the French Bank Paribas started listing in late 2007. PIMCO's Paul McCulley explains the origins of the financial crisis in a speech he gave at the Fed’s annual symposium in Jackson Hole. Here's an excerpt:
"If you have to pick a day for the Minsky Moment, it was August 9. And, actually, it didn’t happen here in the United States. It happened in France, when Paribas Bank (BNP) said that it could not value the toxic mortgage assets in three of its off-balance sheet vehicles, and that, therefore, the liability holders, who thought they could get out at any time, were frozen. I remember the day like my son’s birthday. And that happens every year. Because the unraveling started on that day. In fact, it was later that month that I actually coined the term "Shadow Banking System"....
..."What’s going on is really simple. We’re having a run on the Shadow Banking System and the only question is how intensely it will self-feed as its assets and liabilities are put back onto the balance sheet of the conventional banking system."....It was pretty much an orderly run up until September 15, 2008. (Lehman Bros default) And it was orderly primarily because the Fed...evoked Section 13-3 of the Federal Reserve Act in March of 2008 in order to facilitate the merger of under-a-run Bear Stearns into JPMorgan. Concurrently, the Fed opened its balance sheet to the biggest shadow banks of all, the investment banks that were primary dealers, including most important, the big five. It was called the Primary Dealer Credit Facility." ("McCulley: After the Crisis, Planning a New Financial Structure", Credit Writedowns)
So when Paribas made its announcement on August 9, the collateral (mainly mortgage-backed securities) that the banks had been using in exchange for funding in the repo market, was called into question. No one really knew what MBS were worth, because many were comprised of subprime loans that would never be repaid. Thus, repo transactions slowed to a crawl, interbank lending collapsed, libor spiked to record highs, and the banking system suffered a major heart attack.
Now it's Europe's turn. But don't expect a repeat of the Fed's strategy. The member states won't allow the ECB to dictate policy without deliberation. Germany has already forbidden quantitative easing (QE) unless the funds that are used to purchase state bonds are sterilized, that is, unless the ECB soaks up the extra liquidity via some other offsetting transaction.
Officials with the Bundesbank say that ECB head Jean Claude Trichet has launched a "stealth bailout" of the eurozone banks holding Greek debt. The facts appear to support the claims. Greece has already received the $135 billion bailout, enough to meet its funding needs until 2012. But the ECB has purchased an additional $25 billion in Greek debt in the last three weeks. That means the debt must have been purchased from French or German banks. It looks like Trichet is trying to pull a fast-one on Germany by secretly diverting money to underwater banks. "
at http://www.marketoracle.co.uk/Article20074.html
Libor is on the rise and liquidity is draining from the commercial paper (CP) and money markets. According to the Federal Reserve, the total amount of (foreign banks) CP has shrunk 15 percent or $32 billion since late April. Central bank officials insist that there's no chance of another Lehman-type meltdown, but their actions don't match their words. Apart from the massive $920 billion EU Stabilization Fund, the ECB has beefed-up its liquidity facilities and is aggressively purchasing state bonds from struggling countries in the south. Without the ECB's assistance, the slow-motion slide into recession could turn into a full-blown market crash. Brussels has every reason to be worried.
From the Wall Street Journal:
"In the latest indication that European banks are in ill health, the European Central Bank warned late Monday that euro-zone banks face €195 billion ($239.26 billion) in write-downs this year and the next due to an economic outlook that remained "clouded by uncertainty....Europe's intertwined banking system remains stressed. Investors have hammered the sector, banks are stashing near-record amounts of deposits at the ECB—€305 billion as of Friday—instead of lending the funds to other institutions, risk-wary U.S. financial institutions are reducing their exposure to euro-zone banks." ("ECB Warns Write-Downs Could Reach $239 Billion" David Enrich and Stephen Fidler, Wall Street Journal)
German and French banks have vast exposure to public and private debt in Club Med countries; Spain, Greece, Portugal and Italy. When those countries finances begin to teeter, it's harder for the banks to exchange assets in the repo market where they get the bulk of their funding. They are forced to take a "haircut" on the value of their collateral which erodes their capital cushion and pushes them closer to default. This is what happened in the US when the French Bank Paribas started listing in late 2007. PIMCO's Paul McCulley explains the origins of the financial crisis in a speech he gave at the Fed’s annual symposium in Jackson Hole. Here's an excerpt:
"If you have to pick a day for the Minsky Moment, it was August 9. And, actually, it didn’t happen here in the United States. It happened in France, when Paribas Bank (BNP) said that it could not value the toxic mortgage assets in three of its off-balance sheet vehicles, and that, therefore, the liability holders, who thought they could get out at any time, were frozen. I remember the day like my son’s birthday. And that happens every year. Because the unraveling started on that day. In fact, it was later that month that I actually coined the term "Shadow Banking System"....
..."What’s going on is really simple. We’re having a run on the Shadow Banking System and the only question is how intensely it will self-feed as its assets and liabilities are put back onto the balance sheet of the conventional banking system."....It was pretty much an orderly run up until September 15, 2008. (Lehman Bros default) And it was orderly primarily because the Fed...evoked Section 13-3 of the Federal Reserve Act in March of 2008 in order to facilitate the merger of under-a-run Bear Stearns into JPMorgan. Concurrently, the Fed opened its balance sheet to the biggest shadow banks of all, the investment banks that were primary dealers, including most important, the big five. It was called the Primary Dealer Credit Facility." ("McCulley: After the Crisis, Planning a New Financial Structure", Credit Writedowns)
So when Paribas made its announcement on August 9, the collateral (mainly mortgage-backed securities) that the banks had been using in exchange for funding in the repo market, was called into question. No one really knew what MBS were worth, because many were comprised of subprime loans that would never be repaid. Thus, repo transactions slowed to a crawl, interbank lending collapsed, libor spiked to record highs, and the banking system suffered a major heart attack.
Now it's Europe's turn. But don't expect a repeat of the Fed's strategy. The member states won't allow the ECB to dictate policy without deliberation. Germany has already forbidden quantitative easing (QE) unless the funds that are used to purchase state bonds are sterilized, that is, unless the ECB soaks up the extra liquidity via some other offsetting transaction.
Officials with the Bundesbank say that ECB head Jean Claude Trichet has launched a "stealth bailout" of the eurozone banks holding Greek debt. The facts appear to support the claims. Greece has already received the $135 billion bailout, enough to meet its funding needs until 2012. But the ECB has purchased an additional $25 billion in Greek debt in the last three weeks. That means the debt must have been purchased from French or German banks. It looks like Trichet is trying to pull a fast-one on Germany by secretly diverting money to underwater banks. "
at http://www.marketoracle.co.uk/Article20074.html
U.S. Federal Debt Hits $13 Trillion Record, As Congress Passes Emergency Spending Bills
"The federal government is now $13 trillion in the red, the Treasury Department announced Wednesday. This is the first time the government has fallen so far into debt. Lawmakers and staffers on Capitol Hill have been awaiting the milestone with fascination for more than a week, and its arrival is likely to complicate efforts for Democrats as they try to pass several emergency spending bills this month."
at http://www.marketoracle.co.uk/Article20081.html
at http://www.marketoracle.co.uk/Article20081.html
Sunday, June 6, 2010
Japan May Spark Next Sovereign Debt Crisis, Kusano Global Says
"Japan may spark the next global debt crisis unless the nation’s new leader addresses its widening fiscal deficit, Kusano Global Frontier Co. said. "
at http://www.bloomberg.com/apps/news?pid=20601087&sid=azo8REkdtnv0&pos=7
at http://www.bloomberg.com/apps/news?pid=20601087&sid=azo8REkdtnv0&pos=7
No Cheer For Housing Bulls From Goldman Which Goes Negative On House Prices
"Goldman recently confirmed it has lost the magic touch when it joined the momentum brigade in anticipating a blow out 600,000 NFP number, revising its prior estimate by +100,000 on Thursday, even as the real NFP came out as a miserable dud 24 hours later. Which is why we urge readers to take the following note from Goldman's Sven Jari Stehn, even though conceptually we are in full agreement with its message, with a big grain of salt: "Despite normalization of valuations, we expect excess supply, high delinquencies and the fading boost from housing policies to push down house prices somewhat further in 2010 and 2011." And just like earlier we pointed out the discrepancy between the opinions of two BofA strategists on the EURUSD, and the huge implications from this divergence, so here we observe the inconsistency between Sven's bearish view on the oh so critical to the US economy housing segment, and David Kostin's hope for an S&P at 1,250 by the end of the year (and 1,300 by June 30). "
at http://www.zerohedge.com/article/no-cheer-housing-bulls-goldman-which-goes-negative-house-prices
at http://www.zerohedge.com/article/no-cheer-housing-bulls-goldman-which-goes-negative-house-prices
Paul Krugman: Lost Decade, Here We Come
"Paul Krugman continues to argue that a return to "austerity"--an effort by world governments to reduce the massive deficits that have followed the financial crisis--will bury the global economy.
Just as bad, Krugman says, austerity will cause deficits and debt to balloon even more, because tax receipts will plummet.
Thus, Krugman views the G20's new focus on reducing deficits as a disaster:"
at http://www.businessinsider.com/paul-krugman-lost-decade-here-we-come-2010-6?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29
Just as bad, Krugman says, austerity will cause deficits and debt to balloon even more, because tax receipts will plummet.
Thus, Krugman views the G20's new focus on reducing deficits as a disaster:"
at http://www.businessinsider.com/paul-krugman-lost-decade-here-we-come-2010-6?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29
Roubini: Europe, You Have Zero Growth To Look Forward To
"Nouriel Roubini has issued a stark warning for the eurozone, calling for no growth in the region and perhaps even recession as it comes to grips with its various sovereign debt crises.
The real problem, according to Roubini, is a premature withdrawal from stimulus measures. That move, while motivated by a desire to curtail deficits, would also hurt growth and damage the recovery. Roubini said that the biggest threat from these measures would be Japanese-style deflation, not inflation.
The comments come just hours after the G20 decided to end coordinated global stimulus measures meant to prop up the world's economy, and instead focus on reducing deficits."
at http://www.businessinsider.com/roubini-europe-growth-2010-6?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29
The real problem, according to Roubini, is a premature withdrawal from stimulus measures. That move, while motivated by a desire to curtail deficits, would also hurt growth and damage the recovery. Roubini said that the biggest threat from these measures would be Japanese-style deflation, not inflation.
The comments come just hours after the G20 decided to end coordinated global stimulus measures meant to prop up the world's economy, and instead focus on reducing deficits."
at http://www.businessinsider.com/roubini-europe-growth-2010-6?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29
Saturday, June 5, 2010
Radio Zero: Lies, Damn Lies and Hungarian Economic Statistics
"It's not like anyone believed the data anyhow, right? I mean, seriously. Everyone was doing it. Greece... Hungary... several other unindicted co-conspiring jurisdictions. Punishment by the market will be swift and merciless now that the open secret that governments outright lie about their economic data on a routine basis is out. (That is, unless a short selling ban is instituted to protect the lying liars who lied about lying). We ask you. What is there to have confidence in anymore if even the Hungarian government is full of it?"
at http://www.zerohedge.com/article/radio-zero-lies-damn-lies-and-hungarian-economic-statistics
at http://www.zerohedge.com/article/radio-zero-lies-damn-lies-and-hungarian-economic-statistics
Foreclosed Properties Held by Banks Up 12.4% in Q110: SNL Financial
"Foreclosed properties held by US banks reached $41.5bn in Q110, a 12.4% increase from the previous quarter, according to data analysis firm SNL Financial.
The amount of foreclosed properties jumped from $36.9bn at the end of 2009. At the end of the first quarter in 2008, that number was $11.7bn. Andrew Schukman, an analyst at SNL Financial said that the amount of one-to-four family properties in some stage of the foreclosure process (and not yet an REO) reached $78.6bn in Q110, up 9.1% from the end of last year.
The amount of REO property held by the banks is also known as the “shadow inventory” of foreclosures. According to Morgan Stanley, it would take 47 months for the market to clear the roughly 7.5m first-lien mortgages in danger or already in foreclosure."
at http://www.housingwire.com/2010/06/04/foreclosed-properties-held-by-banks-up-12-4-in-q110-snl-financial?utm_source=rss&utm_medium=rss&utm_campaign=foreclosed-properties-held-by-banks-up-12-4-in-q110-snl-financial
The amount of foreclosed properties jumped from $36.9bn at the end of 2009. At the end of the first quarter in 2008, that number was $11.7bn. Andrew Schukman, an analyst at SNL Financial said that the amount of one-to-four family properties in some stage of the foreclosure process (and not yet an REO) reached $78.6bn in Q110, up 9.1% from the end of last year.
The amount of REO property held by the banks is also known as the “shadow inventory” of foreclosures. According to Morgan Stanley, it would take 47 months for the market to clear the roughly 7.5m first-lien mortgages in danger or already in foreclosure."
at http://www.housingwire.com/2010/06/04/foreclosed-properties-held-by-banks-up-12-4-in-q110-snl-financial?utm_source=rss&utm_medium=rss&utm_campaign=foreclosed-properties-held-by-banks-up-12-4-in-q110-snl-financial
Whatever You Do, Don't Tell The Truth!
"The situation in Europe is taking a turn for the worse as the Prime Minister of Hungary says Hungarian economy is in a "very grave situation and talk of a default is not an exaggeration"...
...Whatever You Do, Don't Tell The Truth!
Here is an interesting quote from the article.
“The new government needs to think a bit more clearly about communication with the market. You simply cannot talk like this in these markets” said Timothy Ash, head of emerging-market research at Royal Bank of Scotland Group Plc, in an e-mailed comment.
Translation "No matter what the problem is ... please don't tell the truth!"
at http://www.marketoracle.co.uk/Article20057.html
...Whatever You Do, Don't Tell The Truth!
Here is an interesting quote from the article.
“The new government needs to think a bit more clearly about communication with the market. You simply cannot talk like this in these markets” said Timothy Ash, head of emerging-market research at Royal Bank of Scotland Group Plc, in an e-mailed comment.
Translation "No matter what the problem is ... please don't tell the truth!"
at http://www.marketoracle.co.uk/Article20057.html
Navigating the Other Side of the Debt Storm
"By Doug Hornig, Editor, Casey Research : The trillions in U.S. federal debt now exceed 85% of gross domestic product – and that’s not counting unfunded liabilities. Unemployment is breaking 20% as the government used to calculate it. The Federal Reserve is printing money like the paper it is. And the supposedly recovering housing market sees as many foreclosures in a month as new builds.
Few would argue that a major storm is on the horizon. But it’s hard to know how to batten down the hatches. No wonder so many investors are simply giving up, taking the term “bear market” to heart and heading for hibernation."
at http://www.marketoracle.co.uk/Article20058.html
Few would argue that a major storm is on the horizon. But it’s hard to know how to batten down the hatches. No wonder so many investors are simply giving up, taking the term “bear market” to heart and heading for hibernation."
at http://www.marketoracle.co.uk/Article20058.html
Friday, June 4, 2010
What happened to the global economy and what we can do about it
"The big news is France. With sentiment worsening across Europe, France has lost its relative safe haven status – credit default swap spreads on French government debt were up sharply today.
The trigger – oddly enough – was Hungary’s announcement that its budget is worse than expected (blaming the previous government; this is starting to become the European pattern) and in the current fragile environment discussed yesterday, this relatively small piece of news spooked investors. But these developments only reinforced a trend that was already in place.
It did not help that the Irish Minister of Finance announced Ireland has 74.2bn euros of guaranteed bank loans, bonds, and systemic support falling due between now and Oct 1. This is around 55% of GNP. It sounds like everyone backed by the Irish government had the “clever” idea to roll over their debts to just before the guarantees expire.
The big losers are Portugal-Ireland-Italy-Greece-and-Spain as always, but Belgium is now in the line of fire, and France is clearly under pressure. The spread between French and German credit default swaps (measuring the relative probability of default) is up – yesterday this was 40 basis points, today it stands at 44 (up from just 5 basis points at the end of 2009; most of the increase is since mid-March, with a sharp acceleration recently). French bonds have become illiquid, with wide bid-ask spreads; not what is supposed to happen in a safe haven. This is going to make the French angry – watch for more market slanders from top French politicians over the weekend; you know they would just love to ban trading in something."
at http://baselinescenario.com/2010/06/04/french-connection-the-eurozone-crisis-worsens-sharply/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BaselineScenario+%28The+Baseline+Scenario%29
The trigger – oddly enough – was Hungary’s announcement that its budget is worse than expected (blaming the previous government; this is starting to become the European pattern) and in the current fragile environment discussed yesterday, this relatively small piece of news spooked investors. But these developments only reinforced a trend that was already in place.
It did not help that the Irish Minister of Finance announced Ireland has 74.2bn euros of guaranteed bank loans, bonds, and systemic support falling due between now and Oct 1. This is around 55% of GNP. It sounds like everyone backed by the Irish government had the “clever” idea to roll over their debts to just before the guarantees expire.
The big losers are Portugal-Ireland-Italy-Greece-and-Spain as always, but Belgium is now in the line of fire, and France is clearly under pressure. The spread between French and German credit default swaps (measuring the relative probability of default) is up – yesterday this was 40 basis points, today it stands at 44 (up from just 5 basis points at the end of 2009; most of the increase is since mid-March, with a sharp acceleration recently). French bonds have become illiquid, with wide bid-ask spreads; not what is supposed to happen in a safe haven. This is going to make the French angry – watch for more market slanders from top French politicians over the weekend; you know they would just love to ban trading in something."
at http://baselinescenario.com/2010/06/04/french-connection-the-eurozone-crisis-worsens-sharply/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BaselineScenario+%28The+Baseline+Scenario%29
Debt maturities by yr end 2010 for key European countries
"To quantify the now weekly concerns with European sovereign credit and the exposure the European banking system has to it, here is the amount of certain sovereign debt that matures by year end that must be rolled over and thus doesn’t account for new debt that will be added on top of it: Italy, 208b euros, Spain 68b euros, Portugal 12b euros, Ireland 4.5b euros, France 215b euros, and Germany 255b euros. Also competing for investor capital, the UK needs to rollover 89b pounds and the US $2 trillion. Greece of course is covered with their maturities for the next few years due to the bailout plan implemented for them. I bring this up to highlight the weekly focus we must have on European bond auctions. Next week, Belgium, Netherlands, France, Austria, Germany, Portugal, and Spain will issue paper. The concern is that all this supply crowds out the need of the private sector and why its imperative that sovereign debt is cut."
at http://www.ritholtz.com/blog/2010/06/debt-maturities-by-yr-end-2010-for-key-european-countries/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29
at http://www.ritholtz.com/blog/2010/06/debt-maturities-by-yr-end-2010-for-key-european-countries/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29
Thursday, June 3, 2010
This Map Will Help You Figure Out If The Euro Is Going To Blow Up
"Right now, there's no clear way to calculate the likelihood of a euro default, but Independent Strategy claim to have some sort of idea. They rate the risk of the euro's demise at 20%.
Here's there map of the possible solutions to the euro crisis, via FT Alphaville."
at http://www.businessinsider.com/euro-guide-2010-6
Here's there map of the possible solutions to the euro crisis, via FT Alphaville."
at http://www.businessinsider.com/euro-guide-2010-6
Wednesday, June 2, 2010
Pending Home Sales "Surge" in April?
"Once again this is no surprise - the tax credit has pulled demand forward, and existing home sales will decline after June (existing home sales are counted when the contract closes).
I suspect a number of these homes will never close. I've heard stories of buyers entering into two deals at the end of April, intending to cancel one. Also some short sales will probably not close on time because of the lengthy process."
at http://www.calculatedriskblog.com/2010/06/pending-home-sales-surge-in-april.html
I suspect a number of these homes will never close. I've heard stories of buyers entering into two deals at the end of April, intending to cancel one. Also some short sales will probably not close on time because of the lengthy process."
at http://www.calculatedriskblog.com/2010/06/pending-home-sales-surge-in-april.html
US Mint Out Of Not Only Silver But Gold American Eagles As Well
"Update: After following up with the Mint, any shipments and deliveries of American Eagle 2010 edition both gold and silver are TBD and the mint has no idea on when these will be received if at all this year. A small shipment of American Buffalo gold coins will go on sale on June 3 at noon. The mint expects these to sell out promptly.
Earlier we reported that the US Mint has run out of American Eagle silver coins. It turns out the Mint is also out of gold American Eagles. "
at http://www.zerohedge.com/article/us-mint-out-not-only-silver-gold-american-eagles-well
Earlier we reported that the US Mint has run out of American Eagle silver coins. It turns out the Mint is also out of gold American Eagles. "
at http://www.zerohedge.com/article/us-mint-out-not-only-silver-gold-american-eagles-well
The Euro Zone Has Failed, Czech Republic President
"Has the Euro Zone "project" been a success or a failure? Václav Klaus, president of Czech Republic makes a solid case 'The Euro Zone Has Failed':
Even the enthusiastic propagandists of the euro suddenly speak about the potential collapse of the whole project now, and it is us critics who say we have to look at it in a more structured way.
Extensive studies published prior to the launch of the European single currency promised that the euro would help to accelerate economic growth and reduce inflation and stressed, in particular, that the member states of the euro zone would be protected against all kinds of external economic disruptions (the so-called exogenous shocks).
This has not happened. Economic growth in Europe has been slowing down since the 1960s, thanks to the increasingly damaging economic and social system which started dominating Europe at that time.
The European "soziale Marktwirtschaft" is an unproductive variant of a welfare state, of state paternalism, of "leisure" society, of high taxes and low motivation to work. The existence of the euro has not reversed that trend. According to the European Central Bank, the average annual rate of growth in the euro-zone countries was 3.4% in the 1970s, 2.4% in the 1980s, 2.2% in the 1990s and only 1.1% from 2001 to 2009 (the decade of the euro). A similar slowdown has not occurred anywhere else in the world (speaking about "normal" countries, e.g. countries without wars or revolutions).
Not even the expected convergence of inflation rates has taken place. Two distinct groups have formed within the euro zone -- one (including most of the countries of western and northern Europe) with a low inflation rate and one (including Greece, Spain, Portugal and Ireland) with a higher inflation rate. We have also seen an increase in long-term trade imbalances. There are countries where exports exceed imports and countries that lastingly import more than they export. It is no coincidence that the latter countries also have higher inflation. It has no connection with the world-wide crisis. This crisis "only" escalated and exposed longtime hidden economic problems; it did not cause them.
Even Otmar Issing, the former member of the Executive Board and chief economist of the European Central Bank, has repeatedly pointed out (most recently in a speech in Prague in December 2009) that the establishment of the euro zone was primarily a political, not an economic, decision. In such a situation, it is inevitable that the costs of establishing and maintaining it exceed its benefits.
It is evident that the euro -- the European single currency -- and the currently proposed measures to save the euro do not represent any "salvation" for the European economy. In the long run, it can be saved only by a radical restructuring of the European economic and social system."
at http://www.marketoracle.co.uk/Article19976.html
Even the enthusiastic propagandists of the euro suddenly speak about the potential collapse of the whole project now, and it is us critics who say we have to look at it in a more structured way.
Extensive studies published prior to the launch of the European single currency promised that the euro would help to accelerate economic growth and reduce inflation and stressed, in particular, that the member states of the euro zone would be protected against all kinds of external economic disruptions (the so-called exogenous shocks).
This has not happened. Economic growth in Europe has been slowing down since the 1960s, thanks to the increasingly damaging economic and social system which started dominating Europe at that time.
The European "soziale Marktwirtschaft" is an unproductive variant of a welfare state, of state paternalism, of "leisure" society, of high taxes and low motivation to work. The existence of the euro has not reversed that trend. According to the European Central Bank, the average annual rate of growth in the euro-zone countries was 3.4% in the 1970s, 2.4% in the 1980s, 2.2% in the 1990s and only 1.1% from 2001 to 2009 (the decade of the euro). A similar slowdown has not occurred anywhere else in the world (speaking about "normal" countries, e.g. countries without wars or revolutions).
Not even the expected convergence of inflation rates has taken place. Two distinct groups have formed within the euro zone -- one (including most of the countries of western and northern Europe) with a low inflation rate and one (including Greece, Spain, Portugal and Ireland) with a higher inflation rate. We have also seen an increase in long-term trade imbalances. There are countries where exports exceed imports and countries that lastingly import more than they export. It is no coincidence that the latter countries also have higher inflation. It has no connection with the world-wide crisis. This crisis "only" escalated and exposed longtime hidden economic problems; it did not cause them.
Even Otmar Issing, the former member of the Executive Board and chief economist of the European Central Bank, has repeatedly pointed out (most recently in a speech in Prague in December 2009) that the establishment of the euro zone was primarily a political, not an economic, decision. In such a situation, it is inevitable that the costs of establishing and maintaining it exceed its benefits.
It is evident that the euro -- the European single currency -- and the currently proposed measures to save the euro do not represent any "salvation" for the European economy. In the long run, it can be saved only by a radical restructuring of the European economic and social system."
at http://www.marketoracle.co.uk/Article19976.html
Tuesday, June 1, 2010
The Depression Of 2011? 23 Economic Warning Signs From Financial Authorities All Over The Globe
"#1) Economist Nouriel Roubini:
"We are still in the middle of this crisis and there is more trouble ahead of us, even if there is a recovery. During the great depression the economy contracted between 1929 and 1933, there was the beginning of a recovery, but then a second recession from 1937 to 1939. If you don't address the issues, you risk having a double-dip recession and one which is at least as severe as the first one."
#2) Bank of England Governor Mervyn King:
"Dealing with a banking crisis was difficult enough, but at least there were public-sector balance sheets on to which the problems could be moved. Once you move into sovereign debt, there is no answer; there's no backstop."
#3) German Chancellor Angela Merkel:
"The current crisis facing the euro is the biggest test Europe has faced for decades, even since the Treaty of Rome was signed in 1957."
#4) Paul Donovan, the Senior Economist at UBS:
"Now people are questioning if the euro will even exist in three years."
#5) Michael Pento, Chief Economist at Delta Global Advisors:
"The crisis in Greece is going to spread to Spain and it’s going to be very difficult to deal with. They are bailing out debt with more debt and it isn’t sustainable. It’s a wonderful scenario for gold."
#6) LEAP/E2020:
"LEAP/E2020 believes that the global systemic crisis will experience a new tipping point from Spring 2010. Indeed, at that time, the public finances of the major Western countries are going to become unmanageable, as it will simultaneously become clear that new support measures for the economy are needed because of the failure of the various stimuli in 2009, and that the size of budget deficits preclude any significant new expenditures."
#7) Telegraph Columnist Edmund Conway:
"Whatever yardstick you care to choose – share-price moves, the rates at which banks lend to each other, measures of volatility – we are now in a similar position to 2008."
#8) Peter Morici, an Economics Professor at the University of Maryland:
"The next financial tsunami is emerging and will ripple to America."
#9) Bob Chapman of the International Forecaster:
"The green shoots of recovery have now turned into poison ivy. The abyss has again been filled with more debt and more fiat currency. In the process the Fed and now the ECB have lost all credibility."
#10) Telegraph Columnist Ambrose Evans-Pritchard:
"The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history."
#11) Professor Tim Congdon from International Monetary Research:
"The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly."
#12) Reuters Columnist Iliana Jonas:
"The default rate for commercial mortgages held by banks in the first quarter hit its highest level since at least 1992 and is expected to surpass that by year-end and peak in 2011, according to a study by Real Capital Analytics."
#13) Paul Krugman, a Nobel Prize-winning Economist:
"It's not hard to see Japan-style deflation emerging if the economy stays weak."
#14) Stan Humphries, Chief Economist for Zillow.com:
"Anyone expecting a robust rebound in the housing market ... will be sorely disappointed."
#15) Fox News:
"As the national debt clock ticked past the ignominious $13 trillion mark overnight, Congress pressed to pass a host of supplemental spending bills."
#16) Bloomberg:
"The U.S. government’s Aaa bond rating will come under pressure in the future unless additional measures are taken to reduce projected record budget deficits, according to Moody’s Investors Service Inc."
#17) Peter Schiff:
"When creditors ultimately decide to curtail loans to America, U.S. interest rates will finally spike, and we will be confronted with even more difficult choices than those now facing Greece. Given the short maturity of our national debt, a jump in short-term rates would either result in default or massive austerity. If we choose neither, and opt to print money instead, the run-a-way inflation that will ensue will produce an even greater austerity than the one our leaders lacked the courage to impose. Those who believe rates will never rise as long as the Fed remains accommodative, or that inflation will not flare up as long as unemployment remains high, are just as foolish as those who assured us that the mortgage market was sound because national real estate prices could never fall."
#18) The National League of Cities:
"City budget shortfalls will become more severe over the next two years as tax collections catch up with economic conditions. These will inevitably result in new rounds of layoffs, service cuts, and canceled projects and contracts."
#19) Dan Domenech, Executive Director of the American Association of School Administrators:
"Faced with continued budgetary constraints, school leaders across the nation are forced to consider an unprecedented level of layoffs that would negatively impact economic recovery and deal a devastating blow to public education."
#20) Mike Whitney:
"Without another boost of stimulus, the economy will lapse back into recession sometime by the end of 2010."
#21) Kevin Giddis, Managing Director of Fixed Income at Morgan Keegan:
"There is big money making big bets that at a minimum we we'll have a recession if not a depression that could last for years."
#22) John P. Hussman, Ph.D.:
"In my estimation, there is still close to an 80% probability (Bayes' Rule) that a second market plunge and economic downturn will unfold during the coming year. This is not certainty, but the evidence that we've observed in the equity market, labor market, and credit markets to-date is simply much more consistent with the recent advance being a component of a more drawn-out and painful deleveraging cycle."
#23) Richard Russell, the Famous Author of the Dow Theory Letters:
"Do your friends a favor. Tell them to "batten down the hatches" because there's a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don't need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won't recognize the country. They'll retort, "How the dickens does Russell know -- who told him?" Tell them the stock market told him."
at http://theeconomiccollapseblog.com/archives/the-depression-of-2011-23-economic-warning-signs-from-financial-authorities-all-over-the-globe
"We are still in the middle of this crisis and there is more trouble ahead of us, even if there is a recovery. During the great depression the economy contracted between 1929 and 1933, there was the beginning of a recovery, but then a second recession from 1937 to 1939. If you don't address the issues, you risk having a double-dip recession and one which is at least as severe as the first one."
#2) Bank of England Governor Mervyn King:
"Dealing with a banking crisis was difficult enough, but at least there were public-sector balance sheets on to which the problems could be moved. Once you move into sovereign debt, there is no answer; there's no backstop."
#3) German Chancellor Angela Merkel:
"The current crisis facing the euro is the biggest test Europe has faced for decades, even since the Treaty of Rome was signed in 1957."
#4) Paul Donovan, the Senior Economist at UBS:
"Now people are questioning if the euro will even exist in three years."
#5) Michael Pento, Chief Economist at Delta Global Advisors:
"The crisis in Greece is going to spread to Spain and it’s going to be very difficult to deal with. They are bailing out debt with more debt and it isn’t sustainable. It’s a wonderful scenario for gold."
#6) LEAP/E2020:
"LEAP/E2020 believes that the global systemic crisis will experience a new tipping point from Spring 2010. Indeed, at that time, the public finances of the major Western countries are going to become unmanageable, as it will simultaneously become clear that new support measures for the economy are needed because of the failure of the various stimuli in 2009, and that the size of budget deficits preclude any significant new expenditures."
#7) Telegraph Columnist Edmund Conway:
"Whatever yardstick you care to choose – share-price moves, the rates at which banks lend to each other, measures of volatility – we are now in a similar position to 2008."
#8) Peter Morici, an Economics Professor at the University of Maryland:
"The next financial tsunami is emerging and will ripple to America."
#9) Bob Chapman of the International Forecaster:
"The green shoots of recovery have now turned into poison ivy. The abyss has again been filled with more debt and more fiat currency. In the process the Fed and now the ECB have lost all credibility."
#10) Telegraph Columnist Ambrose Evans-Pritchard:
"The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history."
#11) Professor Tim Congdon from International Monetary Research:
"The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly."
#12) Reuters Columnist Iliana Jonas:
"The default rate for commercial mortgages held by banks in the first quarter hit its highest level since at least 1992 and is expected to surpass that by year-end and peak in 2011, according to a study by Real Capital Analytics."
#13) Paul Krugman, a Nobel Prize-winning Economist:
"It's not hard to see Japan-style deflation emerging if the economy stays weak."
#14) Stan Humphries, Chief Economist for Zillow.com:
"Anyone expecting a robust rebound in the housing market ... will be sorely disappointed."
#15) Fox News:
"As the national debt clock ticked past the ignominious $13 trillion mark overnight, Congress pressed to pass a host of supplemental spending bills."
#16) Bloomberg:
"The U.S. government’s Aaa bond rating will come under pressure in the future unless additional measures are taken to reduce projected record budget deficits, according to Moody’s Investors Service Inc."
#17) Peter Schiff:
"When creditors ultimately decide to curtail loans to America, U.S. interest rates will finally spike, and we will be confronted with even more difficult choices than those now facing Greece. Given the short maturity of our national debt, a jump in short-term rates would either result in default or massive austerity. If we choose neither, and opt to print money instead, the run-a-way inflation that will ensue will produce an even greater austerity than the one our leaders lacked the courage to impose. Those who believe rates will never rise as long as the Fed remains accommodative, or that inflation will not flare up as long as unemployment remains high, are just as foolish as those who assured us that the mortgage market was sound because national real estate prices could never fall."
#18) The National League of Cities:
"City budget shortfalls will become more severe over the next two years as tax collections catch up with economic conditions. These will inevitably result in new rounds of layoffs, service cuts, and canceled projects and contracts."
#19) Dan Domenech, Executive Director of the American Association of School Administrators:
"Faced with continued budgetary constraints, school leaders across the nation are forced to consider an unprecedented level of layoffs that would negatively impact economic recovery and deal a devastating blow to public education."
#20) Mike Whitney:
"Without another boost of stimulus, the economy will lapse back into recession sometime by the end of 2010."
#21) Kevin Giddis, Managing Director of Fixed Income at Morgan Keegan:
"There is big money making big bets that at a minimum we we'll have a recession if not a depression that could last for years."
#22) John P. Hussman, Ph.D.:
"In my estimation, there is still close to an 80% probability (Bayes' Rule) that a second market plunge and economic downturn will unfold during the coming year. This is not certainty, but the evidence that we've observed in the equity market, labor market, and credit markets to-date is simply much more consistent with the recent advance being a component of a more drawn-out and painful deleveraging cycle."
#23) Richard Russell, the Famous Author of the Dow Theory Letters:
"Do your friends a favor. Tell them to "batten down the hatches" because there's a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don't need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won't recognize the country. They'll retort, "How the dickens does Russell know -- who told him?" Tell them the stock market told him."
at http://theeconomiccollapseblog.com/archives/the-depression-of-2011-23-economic-warning-signs-from-financial-authorities-all-over-the-globe
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