It is always nice to be able to see the train coming and not have to suffer a blind side crash. In this case that light at the end of the tunnel (no, don't go towards it) is the global financial default coming on the express route to a country near you.
I suggest you watch Mob Madness - Greece on YouTube to get a glimpse of one reporter's views and opinions of the troubles they face and the building anarchy on the streets there. This country is being ripped apart from core. They are so far in debt that even if bailed out they could not pay that off. This is what the EU knows. This is why they have not spent a penny on solving the problem. Finally, the situation may be clear to the lords of finance. The monster of debt created by the beast of cheap credit, corruption and extremely loose global liquidity can not be fed anymore. We are out of food and have one hungry monster (the banks) that want to be fed.
Here is a glimpse of why our nation is enacting the unthinkable limits on demand deposits (see Citigroup can limit demand deposit withdrawals and money funds can too). You see. it is not such A Wonderful Life. We have taken the red pill and are stuck on a bad trip to Pottersville. The big bad bankers have looted all your money and now the sumbitches don't want to give it back in the form of credit or in the form of cash. In a rare glimpse of what will (not may) be coming our way in the near future is Greeks Scramble To Pull Out €8 Billion From Local Banks As Greece Responds With Money Control Measures. "This represents over a quarter of the money held by private banks in the country. This also represents about €400 billion in total money leaving the system courtesy of fractional reserve banking and the money multiplier. Yet the worst news for Greeks: money controls are coming". If you need to read that two or three times to get it to sink in go ahead.
How can I so boldly say this is coming our way? Cause we are now in full debt monetization mode. In ZH's Charting The Indrect Bidder Hit Ratio After Today's 100% Result, And Anticipating A Surge In Brand New SFP Issuance you get, "This SFP news is relevant because today's Indirect Hit Ratio demonstrates that the "sales" of $195 billion in new SFP bills will merely go to Primary Dealers and whoever the increasingly less mysterious Direct Bidder is, as Indirects phase out all Bill interest altogether." Monetization of debt. We are printing money to support out debt payments. Whooo Whooo - hear that train whistle. It is calling. It is empty now. All the passengers got off. We are the only ones buying our debt now. How long till the big money grab starts and countries (well, China already is) start cashing out? Uh, folks, the system was not designed nor ever intended to experience a cashing out. That is where global default comes into play. Anyone care to take a peek at the National Debt Clock?
It wont be long till the PIIGS all start falling apart (really every debtor nation globally). They will all topple one by one from the overload of debt created by zero regulation and a corrupt and greedy banking system. It is surreal cause you are able to see it all happening in slow motion in real time. Denial is not a river in Egypt. Denial is the state that most of us are living in. This can't be happening. This is not real. It can not happen here. Sorry folks, it is real and that train is coming. It is big, heavy and at this point futile to try and stop. It will rip its way across the globe causing all sorts of devastation and destruction. Not until that train is derailed will we have any sort of recovery.
Maybe we are not in denial. If the Consumer Confidence Survey is accurate at all maybe we are waking up. Mish does a nice job with Consumer Confidence Plunges To 46, Lowest Since April; Current Conditions Lowest Since 1983 "Housing has stalled with another leg down coming, jobs are pathetic, taxes are headed higher, and debt levels are unsustainably high. Pray tell what is there for consumers to be optimistic about?" (What is really funny is at the beginning of all this mess in 2007 I used to read Mish and get depressed. Glad I don't have to read my own stuff LOL.) And from Rasmussen Reports 73% Agree That Washington Is “Broken” and Obama's approval rating is .... -19. That is really, really bad for the man from HOPE and CHANGE.
Wake up people. Get involved. Force the issues. We need massive amounts of regulation first and foremost. Then all you will be able to do is hang on till that train has done all the damage. We'll come out of the rubble and rebuild. What America will look like will be anyone's guess? We'll be OK in the long run as we always are, but some really tough times are ahead. Whooo Whooo.
Take care.
Showing posts with label credit writedowns. Show all posts
Showing posts with label credit writedowns. Show all posts
Tuesday, February 23, 2010
Thursday, February 11, 2010
Confusion Reigns
I'm not sure which way is up anymore. As global turmoil and confusion reigns down on all of us, you have to wonder how they will wiggle their way out of this mess and find some reason to pump the markets full of eternal optimism that the reflation trade will work, the recession is over and all is well. You knew we'd be the ones on the white horse to save the day with the Greece issue (American taxpayer via the IMF). I guess we'll be financing the other PIIGS in the months to come. All is well. You should be superoverallocated in equities. Have no fear the great backstop is here.
Looking behind the curtain you will notice that our 30 year auctions are not doing so hot. Even Santelli said it failed although you would not know this by looking at the numbers. It all sold right? Not so fast my friend. In Putting Today's Record 30 Year Direct Take Down In Perspective ZH points out that, "Today, we saw a record explosion in the Direct take down for the longest bond purchasable. Just who are the Direct bidders? Whose orders are they executing? Are these merely a proxy for China or the Fed? What happens when that "mysterious" demand disappears? Nobody knows. Which is why Rick Santelli called this a failed auction." Funding our own debt is like a drug dealer dipping into his own stash. This is not a good combination, especially when the rate of the take down is increasing. Monetization is bad. Denninger echoes the sentiment in 30 Year Auction: A Solid "F".
Mish brings the swift changes to corporate bond yields to the table in Corporate Bond Yields Offer Hint Party Is Over. "I do not think that treasury yields break to the upside. However, they could. And if they do alongside corporate bond yields, there is a distinct possibility, and one that I have pointed out before, that there may be no places to hide in 2010 other than perhaps the much despised US dollar." You see they held rates artificially low as long as they could to make the market the only game in town. When the mass exit from the bond market commences, look out below. (I will take this moment to warn you about the possibilities of what I see as the many dangers in the muni markets as well.)
Denninger continues harping on the MTM issues for a good reason in Whistling Past The Graveyard We Be....., no one is listening or seems to care that assets held on balance sheets are marked to the most bogus amounts they can imagine. You would know why this is legal (cause the O allows it) if you read Yes, America is Still in an Official State of Emergency from my post the other night. Karl has, "Even companies that are allegedly "Strong" and have "No material exposure" are doing tricky things - witness CISCO's recent disclosure that it is funding customer financing at below-market interest rates (zero!) with off-balance sheet vehicles." This is the first I heard of CISCO's fiasco and am quite pleased to hear the sham has spread beyond the financials.
Ed Harrison with Credit Writedowns has penned Chandler: Uncertainty and contagion at work with Greece. Ed comes at the crisis from a good angle allowing you to see the full contagion that exists no matter how you try to fix the issue. "Now, if you were a Greek resident, you have to feel a bit panicky about the safety of your hard-earned savings given this scenario (see Guardian article). So, we could easily see the sovereign debt crisis spill over into bank runs. And if Greek banks implode, there is going to be a knock-on effect for other weak bankingsectors
like the Austrian or Irish. This is how contagion works." The maggots will consume the body from inside out and you will not see the damage till it is to late.
Investor psychology has been rapidly gaining ground as a scientific way to predict market moves. We are predictable and like to herd. ZH has a lengthly read on this subject that is well worth the read. In Just How Ugly Is The Sovereign Default Truth? How Self Delusions Prevent Recognition Of Reality you get "At that point the financial oligarchy will very much wish the Methadone had been administered sooner (roughly about March 2009, when we first suggested it). It will however be far too late, and the decades of self delusion will finally end." It is truly only a matter of time.
Sorry for missing this mornings post.
GL out there and have a great evening.
Looking behind the curtain you will notice that our 30 year auctions are not doing so hot. Even Santelli said it failed although you would not know this by looking at the numbers. It all sold right? Not so fast my friend. In Putting Today's Record 30 Year Direct Take Down In Perspective ZH points out that, "Today, we saw a record explosion in the Direct take down for the longest bond purchasable. Just who are the Direct bidders? Whose orders are they executing? Are these merely a proxy for China or the Fed? What happens when that "mysterious" demand disappears? Nobody knows. Which is why Rick Santelli called this a failed auction." Funding our own debt is like a drug dealer dipping into his own stash. This is not a good combination, especially when the rate of the take down is increasing. Monetization is bad. Denninger echoes the sentiment in 30 Year Auction: A Solid "F".
Mish brings the swift changes to corporate bond yields to the table in Corporate Bond Yields Offer Hint Party Is Over. "I do not think that treasury yields break to the upside. However, they could. And if they do alongside corporate bond yields, there is a distinct possibility, and one that I have pointed out before, that there may be no places to hide in 2010 other than perhaps the much despised US dollar." You see they held rates artificially low as long as they could to make the market the only game in town. When the mass exit from the bond market commences, look out below. (I will take this moment to warn you about the possibilities of what I see as the many dangers in the muni markets as well.)
Denninger continues harping on the MTM issues for a good reason in Whistling Past The Graveyard We Be....., no one is listening or seems to care that assets held on balance sheets are marked to the most bogus amounts they can imagine. You would know why this is legal (cause the O allows it) if you read Yes, America is Still in an Official State of Emergency from my post the other night. Karl has, "Even companies that are allegedly "Strong" and have "No material exposure" are doing tricky things - witness CISCO's recent disclosure that it is funding customer financing at below-market interest rates (zero!) with off-balance sheet vehicles." This is the first I heard of CISCO's fiasco and am quite pleased to hear the sham has spread beyond the financials.
Ed Harrison with Credit Writedowns has penned Chandler: Uncertainty and contagion at work with Greece. Ed comes at the crisis from a good angle allowing you to see the full contagion that exists no matter how you try to fix the issue. "Now, if you were a Greek resident, you have to feel a bit panicky about the safety of your hard-earned savings given this scenario (see Guardian article). So, we could easily see the sovereign debt crisis spill over into bank runs. And if Greek banks implode, there is going to be a knock-on effect for other weak banking
Investor psychology has been rapidly gaining ground as a scientific way to predict market moves. We are predictable and like to herd. ZH has a lengthly read on this subject that is well worth the read. In Just How Ugly Is The Sovereign Default Truth? How Self Delusions Prevent Recognition Of Reality you get "At that point the financial oligarchy will very much wish the Methadone had been administered sooner (roughly about March 2009, when we first suggested it). It will however be far too late, and the decades of self delusion will finally end." It is truly only a matter of time.
Sorry for missing this mornings post.
GL out there and have a great evening.
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