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Wednesday, February 10, 2010 7:42:05 PM
ZH: Coming To America: The Greek Sovereign Debt Crisis
Submitted by Tyler Durden on 02/10/2010 19:14 -0500
Yesterday we presented our views on why Europe's decision to tip over the first of the bailout dominoes will be inherently a catastrophic one in the long term, and will ultimately transfer the peripheral liquidity risk into funding, and ultimately, solvency (and once again, liquidity) risk to the very core. Today, Niall Ferguson joins in, in this latest Op-Ed in the Financial Times. "It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate." In other words, Marc Faber 1, CNBC talking heads, 0... as usual.
Ferguson lists the current dead ends presented before the EU:
The options are no surprise to anyone who has followed this drama as it has unfolded over the past two months, starting with the Dubai implosion in late November (whose CDS, incidentally, is almost back to all time wides). It is certainly no surprise to anyone who, like us, has been concerned about the sovereign implosion almost a year ago.
To be sure, Keynesianism is starting to unravel. The greatest failed experiment in economic history could only have been propped up for so long, courtesy of its core beneficiaries: the very oligarchs and financiers who transferred wealth over the ages from the working class to the "financially creative" product class (i.e., those that "packaged" and managed risk...look where they got us, but don't look how much they got paid for it).
This is where shades or Reinhart and Rogoff emerge.
As we approach the proverbial endgame, the biggest supporter and enactor of flawed Keynesian policy, the Fed, is fast running out of bullets. Simply without the consumer becoming once again intimiately involved with the lie, the game can not continue.
The conclusion, knowing all too well that our political and financial leaders will do everything in their power, even sacrifice the population, to prevent the collapse of the system, can only be a rhetorical one.
America no longer has the luxury of expecting that shoving its head in the sand long enough will fix everything. Indeed, we now live in a world where whole developed countries are being bailed out. A mere 3 years ago this would have sounded ludicrous and deranged, and now it causes a flurry of buying excitement in the stock market. Unfortunately, a repeat of the days of September 2008 is fast approaching, only this time absent Marsians coming to bail out the world, we are on our own.
http://www.zerohedge.com/article/coming-america-greek-sovereign-debt-crisis
by RobotTrader
on Wed, 02/10/2010 - 19:27
#225902
Meanwhile, Riverboaters are starting to "front run" a positive resolution to this mess by buying junker stocks like this:
by RobotTrader
on Wed, 02/10/2010 - 19:36
#225925
And my buddy Rasputin throws in his 2 cents:
..............................
Youza! Denninger reveals the true extent of EU scroomage.
Rasputin - Wed, Feb 10, 2010 - 07:18 AM
In a missive found here:
http://market-ticker.org
...Karl Denninger reveals just how much debt the EU idiots have run up.
Here is an excerpt:
"Yet unlike Greece, which has a GDP of EUR $261 billion, Spain's is EUR 1.134 trillion and Italy's EUR 1.406 trillion. Portugal and Ireland's economies are smaller, but they belie big problems, with the "best" indication being the external debt to GDP ratio.
Italy's is 127% (the US is running close to 100% at present), while Greece's is 161%. Spain's, on the other hand, is 171%. Germany, for all of its vaunted "strength", runs 178% of GDP, Portugal is at 214% and Ireland is running an unbelievable 1267%.
That's right - tiny Ireland with EUR 144 billion in GDP has well north of a trillion Euros outstanding in external debt."
(Ras):And he doesn't even discuss Japan, which I understand is also over 100% debt-to-GDP.
So, it is truly "Inflate or Die" time for the world's economies.
Which one will they choose?
And by the way, all of these fiatscos the Fed is flinging go to fund Uncle Gorilla who is the:
1. Employer
2. Mortgage provider
3. Entitlement disburser
4. Buyer
5. Seller
...of first, last and ONLY resort and is able to impose his will on the entire economy, distorting markets and sectors as he sees fit.
Sheesh, just look at the hiring boom in D.C. and the continued housing bubble there for all you need to know regarding Uncle's ability to spend our way out of this little recession.
Bernanke says "any minute now...we're gonna raise rates and also hand back all that toxic trash to Wall Street".
Here's the link to his testimony:
http://federalreserve.gov/newsevents/testimony/bernanke20100210a.htm
So, if the Fed isserious, and follows through, then it's right back to "Great Disintegration I".
But as Mike Tyson used to say:
"Everybody's gotta plan, until they get hit in the face".
Let's see how tough Big Boy Bernanke is when he gets smacked with the upper-cut of McStucco prices crashing another twenty-percent because no one will touch a Fannie/Freddie MBS.
Or when he takes a right-cross on the chin from the liquidity-driven stock market dead cat bounce ending and everyone's 401(k)/IRA/mutual fund re-collapses.
Or, when he feels the pressure of Congress telling him to take a dive and implement "QuantSleaze 2.0".
Then we'll see who's woofin' and who came to fight.
LOL...
by Landrew
on Wed, 02/10/2010 - 19:36
#225927
Tyler, I do not understand your Keynes reference to all of the debt expenditures. I have never read where Keynes thought bailing out banks, ins, autos, etc. was a good thing. In fact reading his work points more towards tax cuts with a combination of work programs like the WPA. Can you point me to what you mean buy Keynes bailout spending?
reply
Submitted by Tyler Durden on 02/10/2010 19:14 -0500
Yesterday we presented our views on why Europe's decision to tip over the first of the bailout dominoes will be inherently a catastrophic one in the long term, and will ultimately transfer the peripheral liquidity risk into funding, and ultimately, solvency (and once again, liquidity) risk to the very core. Today, Niall Ferguson joins in, in this latest Op-Ed in the Financial Times. "It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate." In other words, Marc Faber 1, CNBC talking heads, 0... as usual.
Ferguson lists the current dead ends presented before the EU:
The options are no surprise to anyone who has followed this drama as it has unfolded over the past two months, starting with the Dubai implosion in late November (whose CDS, incidentally, is almost back to all time wides). It is certainly no surprise to anyone who, like us, has been concerned about the sovereign implosion almost a year ago.
To be sure, Keynesianism is starting to unravel. The greatest failed experiment in economic history could only have been propped up for so long, courtesy of its core beneficiaries: the very oligarchs and financiers who transferred wealth over the ages from the working class to the "financially creative" product class (i.e., those that "packaged" and managed risk...look where they got us, but don't look how much they got paid for it).
This is where shades or Reinhart and Rogoff emerge.
As we approach the proverbial endgame, the biggest supporter and enactor of flawed Keynesian policy, the Fed, is fast running out of bullets. Simply without the consumer becoming once again intimiately involved with the lie, the game can not continue.
The conclusion, knowing all too well that our political and financial leaders will do everything in their power, even sacrifice the population, to prevent the collapse of the system, can only be a rhetorical one.
America no longer has the luxury of expecting that shoving its head in the sand long enough will fix everything. Indeed, we now live in a world where whole developed countries are being bailed out. A mere 3 years ago this would have sounded ludicrous and deranged, and now it causes a flurry of buying excitement in the stock market. Unfortunately, a repeat of the days of September 2008 is fast approaching, only this time absent Marsians coming to bail out the world, we are on our own.
http://www.zerohedge.com/article/coming-america-greek-sovereign-debt-crisis
by RobotTrader
on Wed, 02/10/2010 - 19:27
#225902
Meanwhile, Riverboaters are starting to "front run" a positive resolution to this mess by buying junker stocks like this:
by RobotTrader
on Wed, 02/10/2010 - 19:36
#225925
And my buddy Rasputin throws in his 2 cents:
..............................
Youza! Denninger reveals the true extent of EU scroomage.
Rasputin - Wed, Feb 10, 2010 - 07:18 AM
In a missive found here:
http://market-ticker.org
...Karl Denninger reveals just how much debt the EU idiots have run up.
Here is an excerpt:
"Yet unlike Greece, which has a GDP of EUR $261 billion, Spain's is EUR 1.134 trillion and Italy's EUR 1.406 trillion. Portugal and Ireland's economies are smaller, but they belie big problems, with the "best" indication being the external debt to GDP ratio.
Italy's is 127% (the US is running close to 100% at present), while Greece's is 161%. Spain's, on the other hand, is 171%. Germany, for all of its vaunted "strength", runs 178% of GDP, Portugal is at 214% and Ireland is running an unbelievable 1267%.
That's right - tiny Ireland with EUR 144 billion in GDP has well north of a trillion Euros outstanding in external debt."
(Ras):And he doesn't even discuss Japan, which I understand is also over 100% debt-to-GDP.
So, it is truly "Inflate or Die" time for the world's economies.
Which one will they choose?
And by the way, all of these fiatscos the Fed is flinging go to fund Uncle Gorilla who is the:
1. Employer
2. Mortgage provider
3. Entitlement disburser
4. Buyer
5. Seller
...of first, last and ONLY resort and is able to impose his will on the entire economy, distorting markets and sectors as he sees fit.
Sheesh, just look at the hiring boom in D.C. and the continued housing bubble there for all you need to know regarding Uncle's ability to spend our way out of this little recession.
Bernanke says "any minute now...we're gonna raise rates and also hand back all that toxic trash to Wall Street".
Here's the link to his testimony:
http://federalreserve.gov/newsevents/testimony/bernanke20100210a.htm
So, if the Fed isserious, and follows through, then it's right back to "Great Disintegration I".
But as Mike Tyson used to say:
"Everybody's gotta plan, until they get hit in the face".
Let's see how tough Big Boy Bernanke is when he gets smacked with the upper-cut of McStucco prices crashing another twenty-percent because no one will touch a Fannie/Freddie MBS.
Or when he takes a right-cross on the chin from the liquidity-driven stock market dead cat bounce ending and everyone's 401(k)/IRA/mutual fund re-collapses.
Or, when he feels the pressure of Congress telling him to take a dive and implement "QuantSleaze 2.0".
Then we'll see who's woofin' and who came to fight.
LOL...
by Landrew
on Wed, 02/10/2010 - 19:36
#225927
Tyler, I do not understand your Keynes reference to all of the debt expenditures. I have never read where Keynes thought bailing out banks, ins, autos, etc. was a good thing. In fact reading his work points more towards tax cuts with a combination of work programs like the WPA. Can you point me to what you mean buy Keynes bailout spending?
reply
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