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Archive for the ‘Lehman Brothers’ Category

Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!

If this article goes viral around the web, I wouldn’t be surprised if the euro tanks and several European sovereign states’ spreads blow out. I have busted several of them in another of a long series of “creative” economic forecasting schemes to fudge the appearance of “austerity”. 

Well, its official (sort of). Greece, a Greek Crisis Is Over, Region Safe”, Prodi Says – I say Liar, Liar, Pants on Fire!member of the European Union, will probably join the ranks of countries like Latvia (where policies are limited by the choice of the currency regime), Iceland (where the crisis has resulted in a very heavy external debt burden), the Ukraine (which is still affected by financial and political fragility) and a bevy of third world and emerging market countries in distress from the (not very) esteemed club of IMF financial aid recipients. What does this portend for the Euro? Well, I have blogged earlier in the year that the Euro’s credibility is now highly suspect and those pundits who dared contemplate the Euro potentially replacing the dollar as the global reserve currency now see the folly of their ways. The chances of a break-up are significantly higher and quite realistic. Credit Agricole’s currency strategist puts it succinctly:

“If Greece goes with the IMF, that says something terrible about the political process within Europe,” said Stuart Bennett, a senior foreign-exchange strategist at Credit Agricole Corporate and Investment Bank in London. “This undermines any confidence in the currency.”

Greece will probably end up defaulting on their debt, with or without the aid of the IMF, and they will probably have good company with several other EU members. I say so, and so does UBS Economist Donovan.

“I think it’s in an impossible situation,” said Donovan, who is based in London, in an interview with Bloomberg Radio today. “Europe has failed to clear its first serious hurdle. If Europe can’t solve a small problem like this, how on earth is it going to solve the larger problem, which is the euro doesn’t work. It’s a bad idea.”

How dare I make such a proclamation? Well, because I am telling the truth based upon facts and the many forecasts from the various sovereign nations are basically based upon lies, fiction and farce! As it is look at how the market is viewing the Greek tragedy:

European governments have yet to agree on how to fund any rescue for Greece, which says it will struggle to pay its debts at current market interest rates. While Prime Minister George Papandreou announced a 4.8 billion euro ($6.4 billion) austerity package on March 3, the extra yield that investors demand to hold Greek debt over German counterparts has since risen.

The spread was at 324 basis points today compared with 316 points at the start of the month. The euro fell 1 percent today to $1.3358, extending its decline this year to 6.7 percent.

I am willing to bet the “market” has not taken a strong, hard, objective look at those proposed austerity measures and uncovered the secrets that I am about to reveal. If they have, these spreads would have been blown out much wider. 

A German finance official said yesterday that both countries may agree to involve the IMF. Papandreou said March 19 that Greece, which needs to sell about 10 billion euros ($13.4 billion) of bonds in coming weeks, is a step away from not being able to borrow and may need to turn to the IMF if European aid isn’t forthcoming.

Europe’s fiscal crisis shows the need for the euro region to create a common fiscal policy, former U.K. Chancellor of the Exchequer Norman Lamont said in an interview in London today.

“That would be the logical step,” Lamont said. “I don’t think they are prepared to do that, and without doing that I think the euro is a contradiction, a currency without a state.”

Bingo! The man hit the point right on the head. There are too many chiefs and not enough Indians.

I want to visually and verbally demonstrate what an absolute joke European economic estimates have been throughout this crisis, and more importantly how politicians and sovereign states are interpreting this joke in such a way that can deliver a punch line that can most assuredly end in sever global recession, or worse. This document/blog post alone should serve to sink the Euro and blow out CDS spreads for several European sovereign. Why? Because the truth hurts and the truth is not what has been coming from European sovereign states as of late.

The IMF and the EU have been consistently and overtly optimistic from the very beginning of this crisis. Their numbers have been dramatically over the top on the super bright, this will end pretty, rosy scenario side – and that is after multiple revisions to the downside!!! We can visit the US concept of regulatory capture (see How Regulatory Capture Turns Doo Doo Deadly  and Lehman Brothers Dies While Getting Away with Murder: Regulatory Capture at its Best) for the EU, but due to time constraints we will save that topic for a later date. To make matters even worse, the sovereign states have taken these dramatically optimistic and proven unrealistic projections and have made even more optimistic and dramatically unrealistic projections on top of those in order to create the illusion of a workable “austerity” plan when in reality there is no way in hell the stated and published plans will come anywhere near reducing the debts and deficits as advertised – No Way in Hell (Hades/Tartarus/Anao/Uffern/Peklo/Niffliehem – just to cover some of the Euro states caught fudging the numbers)!

Let’s take a visual perusal of what I am talking about, focusing on those sovereign nations that I have covered thus far.


Notice how dramatically off the market the IMF has been, skewered HEAVILY to the optimistic side.  Now, notice how aggressively the IMF has downwardly revsied their forecasts to still end up widlly optimistic.

Ever since the beginning of this crisis, IMF estimates of government balance have been just as bad…


The EU/EC has proven to be no better, and if anything is arguably worse!

 
 

 

Revisions-R-US!


and the EU on goverment balance??? Way, way, way off. 


If the IMF was wrong, what in the world does that make the EC/EU?

The EC forecasts have been just as bad, if not much, much worse in nearly all of the forecasting scenarios we presented. Hey, if you think tha’s bad, try taking a look at what the govenment of Greece has done with these fairy tale forecasts, as excerpted from the blog post


Think about it! With a .5% revisions, the EC was still 3 full points to the optimistic side on GDP, that puts the possibility of Greek  government forecasts, which are much more optimistic than both the EU and the slightly more stringent but still mostly erroneous IMF numbers, being anywhere near realistic somewhere between zero and no way in hell (tartarus, hades, purgatory…).

Now, if the Greek government’s macroeconomic assumptions are overstated when compared with EU estimates, and the EU estimates are overstated when compared to the IMF estimates, and the IMF estimates are overstated when compared to reality…. Just who the hell can you trust these days???

 source link http://boombustblog.com/reggie-middleton/2010/03/14/qgreek-crisis-is-over-region-safeq-prodi-says-i-say-liar-liar-pants-on-fire/
 

Tell the people the truth about the Markets & NAMA

Do you really want to know what is really going on in the market place?
Ever heard of the “Rigged Market capitalists system”
Are you ready for this news??
Ernst & Young auditors of Anglo Irish Bank now working for NAMA ,
The same auditors for Lehman Brothers .
This is criminal , allowing this to go on, they should all be in Jail !
We must have a new Irish people’s political party that will stop this fraud in its tracks.
A political party that will prosecute all the individuals responsible for this criminal conspiracy
They must be brought to justice
We the people must have our pound of flesh!

Market Notes (March2010)

 

March 9th, marked the one-year anniversary of the elusive bottom of the most brutal bear market since the 1930’s. At the time, job losses were running in excess of 700,000 /month, and fear was rife that the US-banking system was on the verge of being nationalized. American factories and miners were using 68% of industrial capacity, the lowest level since records began in 1948. Corporate profits fell sharply for the seventh consecutive quarter, the longest losing streak since the 1930’s. The second coming of the “Great Depression” looked imminent.

In a final act of desperation to stop the carnage, the infamous “Plunge Protection Team,” (PPT) unleashed the most powerful weapons in its arsenal, resorting to accounting gimmickry, and nuclear-QE, – injecting $1.75-trillion into the coffers of the Wall Street Oligarchs, in order to turn the bearish tide. Bankers were set free of mark-to-market accounting, and instead, were allowed to value their toxic assets at “mark-to-make-believe” prices, leading to a strong recovery in the financial sector.

Over the course of the next four-weeks, the Dow Jones Industrials climbed 1,500-points to close at 8,083 on April 9th, 2009. Still, there was great skepticism about the sustainability of the so-called “green-shoots” rally, – the third such rally since the horrific crash of Sept-October 2008 that followed the default of Lehman Brothers and the bailout of American International Group (AIG).

Before hitting the ultimate bottom at 6,500, previous Dow rallies ended-up as “bear traps,” that fizzled out, before the market turned sharply lower again. There was a 1,500-point run-up during the week that culminated in the election of Barack Obama as US president, after which the Dow lost 2,000-points over the next-three weeks. The Dow Industrials staged another 1,500-point gain in December, triggered by Obama’s selection of Wall Street favorite Timothy Geithner as Treasury chief, before plunging 2,500-points during the first two-months of 2009.


However, since the Dow Industrials hit rock-bottom, US-stocks have staged a $5.3-trillion recovery, amid the biggest percentage gain since the Great Depression. Yet when viewed through the prism of Gold, measured in “hard money” terms, one can see that the performance of the Dow Jones Industrials was less than stellar. The blue-chip indicator has been locked within a narrow trading band for the past 11-months, fluctuating on both sides of 9.5-ounces of gold since April 2009.  

The “green shoots” rally is therefore, an Optical Illusion, simply reflecting the side-effects of the Fed’s hallucinogenic “quantitative easing” QE-drug. Utilizing the chart above, one could argue that the value of the Dow Industrials is artificially inflated by about 2,500-points, engineered by the Fed’s monetization scheme, and ultra-low interest rates. An ocean of liquidity is buoying the Dow Industrials above the 10,000-level, designed by the PPT to bolster household confidence, since the valuations of 401-k’s and investor portfolios can influence the propensity to spend.

Still, there are huge worries about unrelenting job losses, multi-trillion dollar budget deficits for years to come, and the “Volcker rule,” which could put the shackles on the Wall Street’s Oligarchs, and force the liquidation of widely held stocks and commodities. But for now, the market’s climb above the 10,000-level, means the possibility of a “double-dip” recession is more remote, and instead, trying to short-sell stock indexes, is like trying to push a helium balloon under water.


The S&P-500 Index has rocketed +62% higher over the past year, a gain that would normally take five-years to realize. The speed and strength of the stock market’s recovery caught many bond traders off-guard, and knocked US-Treasuries for their worst annual losses since 1978. Most notably, the yield curve, – the spread between short-term interest rates and government bond yields, rose to its widest level ever. The yield on the Treasury’s 30-year bond compared to the one-year T-bill rate hit +440-basis points in December, the widest in history.

Traders reckon that the size of the US-national debt, now exceeding $12.3-trillion, is weighing on bond prices, and a huge avalanche of debt still lies ahead. The Treasury is expected to issue $1.6-trillion in new debt in 2010, and $1.3-trillion the following year. Chinese central banker Zhu Min has warned it would become more difficult for foreigners to buy Treasuries, when the US-government has to fund its deficit by printing more dollars. China slashed its holdings of Treasury securities by $34.2-billion in December, after months of complaining about the Fed’s QE scheme.

full article link http://www.financialsense.com/fsu/editorials/dorsch/2010/0311.html

By Gary Dorsch

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