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“If there isn’t a solution by Sunday, everything is going to collapse”
Italy needs to borrow €250bn next year just to refinance its existing debts that are coming due for repayment - and not including the new money it will need to borrow.
The dominoes of debt are toppling in Europe, and there is no way to stop the forces of financial gravity.
After 19 months of denial, propaganda and phony fixes, the political and finance leaders of the European Union are claiming a "comprehensive solution" will be presented by Wednesday, October 26-- or maybe by the G20 meeting on November 3, or maybe on Christmas, when Santa Claus delivers the gift global markets are demanding: a "solution" that actually pencils out and that forces monumental writeoffs of debt and thus equally monumental losses on European banks and bondholders.
I have summarized the fundamentals in this one graphic: the European dominoes of debt. Simply put, there is no way the EU authorities can stop the first domino--Greek default or equivalent writedown of its impossible debt load--from toppling the over-leveraged banks which will be rendered insolvent when forced to recognize their losses.
In any event, the last domino, the artifice of a single currency, will fall one way or another.
For over a year, our premise #1 in interpreting the newsflow out of Europe has been that in the absence of actual practical ideas, and the continent's glaring inability to do simple math, the only option left to bEURaucrats has been to literally baffle people with so much endless bull# that the general audience would be simply stunned by the possibility of an alternative that the union's leaders were all talk and absolutely no action, let alone analysis. As of today, we now know that that is precisely the case: for over a year Europe has been mouthing off hollow rhetoric in hopes that the market would just leave it alone, and that promises of promises and plans of plans would be sufficient. That plan (pardon the pun) has now failed. And so behind the scenes chaos turns into fully public panic. As the FT's Brussels blog summarizes, the only game left in town for Europe now is to push off D-Day, but not to some indefinite point in the future, like the US, but to tomorrow, and tomorrow and tomorrow, to channel the bard here. And nothing confirms better that it is all over for Europe, than the following summation of the terror and utter cluelessness gripping Europe, than the following sentence from the FT: "Just to recap, by Wednesday night there will have been nine meetings of ministers or national leaders in five days."
Originally posted by DangerDeath
The introduction of computer trading created a situation where historical events of crashing markets can happen and last only few seconds. We cannot follow this by observing traditional graphs which resolution is like million times lower than reality of such manipulation. Earning a buck each nanosecond means billions in minutes.
I think this new technology enables molding markets, at the end of session, as if they were made of wax. If someone can enlighten me on this, I'll be grateful.
High- frequency traders may help facilitate order execution, but make no mistake, they don’t provide true liquidity to the market place.
Read more: articles.businessinsider.com... Ln
High-frequency traders are extremely secretive about how their proprietary systems work. It’s ironic that the regulatory changes that swept in the era of high-frequency trading were chiefly driven by large mutual funds that claimed that the NYSE specialist system was unfair and not transparent. Fidelity Investments’ Edward “Ned” Johnson was one of the most vocal critics of the NYSE specialist system (at the time of the changes Fidelity accounted for about 3-5% of NYSE trading volume).
SFAS No. 159, a new accounting rule that enables banks to artificially boost earnings. As if the earnings picture for banks needed to get any cloudier. In short, this accounting loophole permits an entity to realize gains when the value of its debt drops because of deterioration in its creditworthiness. That’s right, banks realize gains when their credit quality declines. Brilliant!
Banks are not afraid of taking advantage. Here is a quick summary of how SFAS No. 159 has “smoothed” third quarter earnings:
•JPMorgan Chase (JPM – neutral rating) realized a $1.9 billion (pre-tax) “adjustment” for an extra $0.29 per share
•Bank of America (BAC – dangerous rating) enjoyed $4.5 billion of SFAS NO. 159 mush to push their 3rd–quarter pre-tax profit to $4.2 billion
•Citigroup (C – very dangerous rating) used the accounting loophole to boost earnings by $1.9 billion, 50% of its $3.8 billion Q3 net income.
This loophole is just one in a long line of tricks that have enabled some of the major banks to mislead investors. Click here for my article on Citigroup’s earnings manipulations and here for my article on Morgan Stanley’s accounting shenanigans.
Originally posted by marg6043
reply to post by DangerDeath
Exactly, who needs real paper money when we got cybernetic make believe monopoly money anybody can become rich!!!!!!!!!!!! (I mean if you are in the elite few castes)
As Reuters concludes: "The euro zone's debt crisis might already have pushed the bloc's economy back into recession, according to business surveys that showed China's economy taking a stride forward in October." So why is this an issue? Simple - as a reminder in a little noticed statement last week, S&P said it "would likely downgrade the credit ratings of France, Spain, Italy, Ireland and Portugal if the euro zone slips into another recession." Well there's you recession confirmation. So: where is the European bailout killing downgrade of France?
German government source says full parliamentary session to vote on EFSF leverage models on Wednesday
Did you know that most of them, who were beeing interviewed after that Farce, didn´t even know how much Money the EFSF costs us?
The European farce descends into surrealism and gortesque tragicomedy. Just out of the FT's Brussels Blog which discussed what appears to be an early cancellation of the critical EcoFin (not to be confused with Euro Coffin) meeting: "A letter sent last night by Jacek Rostowski, the Polish finance minister, makes an [EcoFin meeting doubtful]. Since Poland currently holds the European Union’s rotating presidency, Rostowski is charged with convening a meeting of all 27 EU finance ministers tomorrow ahead of the big summit to lay the groundwork for a final agreement. But officials tell Brussels Blog the so-called “Ecofin” council meeting is now likely off, and in a letter to Jean-Claude Juncker, the Luxembourg prime minister who chairs the group of 17 eurozone finance ministers, Rostowski makes it appear the cancellation is due to a failure to agree on outstanding issues." No.... they couldn't agree???Nobody could have possibly foreseen this. Nobody.
What this means is that as we get closer with each day to a "free fall" Greek bankruptcy, the only weapon left for the global central bankers will be the bazooka option: namely wanton, gratuitous printing of money, Weimar republic flashbacks be damned. Which is why, for once, Gartman's bullish sentiment on gold may actually not be a contrarian indicator...
British lawmakers on Monday overwhelmingly rejected a motion to hold a national referendum on leaving the European Union, but Prime Minister David Cameron suffered a bruising as several Conservative Party lawmakers rebelled against his orders and supported the bid.
The revolt within the ruling Conservative Party ranks underscored discontent with Cameron's stewardship — an unhappiness that has grown following his handling of riots that gripped the nation in August and his decision to hire a suspect in Britain's phone-hacking scandal.
The government had ordered its lawmakers to vote against the referendum on whether Britain should remain in the EU, leave it, or re-negotiate membership, and said those who backed it would face disciplinary action.
Gold finger? Or did the market just get it through its greasy, vacuum-tubed head that the only option for the status quo cabal to preserve said status quo is to print, print, print? Or, perhaps this headline from the FT is finally getting some play: "Italian government on brink of collapse." Or, perhaps this one: "Eurozone crisis fund ‘may be weeks away’." Or, has the break out, predicted yesterday, commenced? Stay tuned to find out.
Certainly not helping European sentiment is the report from the FT that "Silvio Berlusconi’s centre-right coalition government in Italy appears in danger of collapsing over European Union demands for a demonstration of concrete action on economic reform by Wednesday’s summit of eurozone leaders. The EU ultimatum delivered to Mr Berlusconi in Brussels on Sunday risks breaking his coalition instead of giving it an external impetus to move ahead on measures to cut Italy’s debt and promote economic growth."
In other news, it appears that the spin which is so far keeping the Euro from collapsing on tomorrow's now disclosed EcoFin meeting cancellation is that even though Europe's finance ministers can not agree, 24 hours ahead of the deadline, on the formulation of the most complex SPV ever conceived, somehow the Eurozone leaders will succeed...
Originally posted by marg6043
reply to post by Shenon
I don't get it the nations in question including the US wants austerity to fix the financial problems but what has this nations done with the wealth of the nation?, they have gamble the wealth away and now they want the people to keep bending over and nothing else.