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The US Great Depression was so bad NOT because of the stock market crash, but (1) the sovereign debt crisis that wiped out savings and reduced capital in the USA contributing to over 3000 bank failures, and (2) the Dust Bowl that eliminated agrarian jobs when agriculture accounted for 40% of the civil work force resulting in the “hobo” lifestyle. It was WWII that provided the “transition” reducing unemployment and transformed farmers into skilled labor. The Great Depression after the Panic of 1857 was followed 4 years later by the US Civil War, which was also the “transition” at that time relieving unemployment.
Today, there is no plan. There is no transition, only austerity. The politicians are doing NOTHING whatsoever for any reforms they reject because it would change the way they have been doing business since WWII. Italy’s debt is bigger than Spain, Portugal, and Greece combined. It is too big to be bailed out and there is no PLAN B to even address what happens if sitting on their hands blows up in everyone’s face? Stay away from ALL government debt! This is a wave of Creative Destruction. We are
in a transition to a completely new world ahead.
Spears and swords are Das Kapital, not gold.
The new Greek government, led by ex-ECB vice president Papademos, is expected to be sworn in at 1400GMT today
The Italian Senate approves budget measures. According to the PM’s office, Italy’s cabinet will meet on Saturday evening at around 1700GMT, after the lower house votes on a financial stability law
Market talk that the ECB is buying the Italian and Spanish government debt
Merkel's CDU party's general secretary said that the party is poised to back a motion at its annual party congress on November 13th-15th to offer states a "voluntary" means of leaving the Eurozone
With Italian bonds giddy at the prospect of changing one worthless political muppet with another, if only for a few hours, and especially with the stern and long overdue assistance of the ECB (we will find out how many bonds Mario Draghi bought this week to preserve the price stabeeleetee next Monday - we expect the SMP cumulative total to pass €200 billion, a number which will delight Germany), it is becoming increasingly clear that France needs to be urgently added to the list of countries eligible for ECB secondary market "sponsorship", because while Italy yields are gapping in, Franch Bund spreads have since blown out back to record levels, following some modest tightening earlier in the morning.
SLOVAKIA'S PRIME MINISTER SAYS EURO ZONE SPLIT MAY BE NECESSARY, DE FACTO SPLIT ALREADY EXISTS
As Reuters reports, "political turmoil in Italy and Greece is complicating efforts to increase the firepower of the euro zone's bailout vehicle to 1 trillion euros, an official at the European Financial Stability Facility said on Friday. Euro zone countries had hoped to increase the EFSF's lending capacity by December, combining bond insurance with investment vehicles. But after the government in Athens fell and bond markets pushed Rome to the brink of a bailout that the euro zone cannot afford to give, the Luxembourg-based EFSF thinks it may be more realistic to aim for less leverage." In other words: kiss the full capacity bailout goodbye.
*STARK SAYS ECB WILL NEVER BECOME LENDER OF LAST RESORT: NZZ
Forbes took a look at US corporate exposure to Europe. GE is on top of their list. They conclude that those companies with high exposure AND a leveraged balance sheet are the most at risk. Well, 27% of GE’s top line comes from Europe. Their debt to capital is 75%.
"every $1 per barrel rise in oil decreases U.S. GDP by $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year."
Recovery remains in low gear in major advanced economies with elevated risk of falling back into recession.
Are people really that short sided and cant see the train coming for them? I mean really?
Based on the excellent long lasting contacts between the People´s Bank of China (PBC) and the Austrian central bank (OeNB), the Governors of the two central banks, Mr. ZHOU Xiaochuan and Mr. NOWOTNY Ewald, today signed an important agreement in Beijing. This agreement enables the OeNB to invest via the PBC in Renminbi-denominated assets.
This is the first agreement of this kind signed by the PBC with a non-Asian central bank, and can be seen as an important step in the good relationship between the PBC and the OeNB.
If you were a medium-term investor, where would you put your money: In a country that hopes things will miraculously improve on its own, or in a country that has realized that reforms are needed and that has shown the willingness to take the painful steps in the right direction?
Greece is relying on Iran for most of its oil as traders pull the plug on supplies and banks refuse to provide financing for fear that Athens will default on its debt.
The near paralysis of oil dealings with Greece, which has four refineries, shows how trade in Europe could stall due to a breakdown in trust caused by the euro zone debt crisis, which is threatening to spread to further countries.
Iran's Parliament moved against President Mahmoud Ahmadinejad's economy minister over a banking-fraud case, only to back off, in a roller-coaster session that showcased the battle between the president and the country's political establishment.
The $2.6 billion fraud case, the largest in Iran's history, has become a powerful vehicle for rivals of Mr. Ahmadinejad to attack his administration.
As IFR reports, "European banks are planning to dump more of the €300bn they own in Italian government debt, as they seek to pre-empt a worsening of the region’s debt crisis and avoid crippling writedowns – a move that could scupper the European Central Bank’s efforts to bring down soaring yields.
Volontary uh? Everybody should leave then...
Italy’s highest bond yields since the birth of the euro are reverberating through the financial system of Europe’s biggest debt issuer, driving lenders to seek record amounts of central bank financing.,,,
The crisis that’s engulfing Italy and other so-called peripheral countries is also spreading to Europe’s richer economies. Credit-default swaps protecting against a French default jumped to a record 203 basis points yesterday, before falling back to 201, according to CMA prices. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments was at 336 basis points, compared with an all-time high 358 on Sept. 23.
Spotlight China: Shipping Downturn; Hong Kong Recession; Credit Squeeze Prompts Suicides; HK Home Sales Fall Over 50%; Factory Closure Wave Looms
A massive spike in Exports to - drum roll please - Hong Kong!!A 76% rise in exports to this once glorious colony. The US trade deficit fell by $1.8bn thanks to a $2.5bn rise in exports (of which $2.03bn was to Hong Kong). Has Hong Kong become the channel-stuffing center of the world? It appears so since China's exports to Hong Kong have remained extremely high.
Channel stuffing is the business practice where a company, or a sales force within a company, inflates its sales figures by forcing more products through a distribution channel than the channel is capable of selling to the world at large. Also known as "trade loading", this can be the result of a company attempting to inflate its sales figures. Corporations have been known to engage in channel stuffing and hide such activities from their investors.
and when it's in Hong Kong, it's given to people or just stored in warehouses...
Alabama's Jefferson County filed for bankruptcy protection on Wednesday, making it the largest municipal bankruptcy in U.S. history.
But believe it or not, that's not the biggest story here.
The big story is how JPMorgan Chase & Co. (NYSE: JPM) - specifically, JPMorgan's Securities arm - has a filthy hand in the whole Jefferson County saga.
I'm not going to get into how Goldman Sachs Group Inc. (NYSE: GS) got involved in 2002 and ended up being paid some $3 million (some of which it passed along to "consultants") to get in on the deal - which incidentally it ended up doing nothing on, other than participating in a back-door swap arrangement with JPMorgan Securities. Nor am I going to get into Bear Stearns' dealings, nor the small securities dealers who acted as conduits for money being exchanged between JPMorgan and others.
Instead, I'm going to focus on JPMorgan, which ended up constructing the finance arrangements and doing most of bond deals that served to finance the building of the new sewer system - because that's where the story takes a truly ugly turn.
You see, JPMorgan overcharged Jefferson County by some $100 million in fees (according to an advisor subsequently hired by the county) and jointly with its co-conspirators paid out some $8.2 million in bribes.
But what's truly appalling is that JPMorgan actually imbedded the cost of the bribes it paid into the finance deal it constructed.
In other words, taxpayers and bondholders paid the bribes JPMorgan conveyed to get to run the county's financing of the sewer system.
It doesn't end there, either. Before JPMorgan came to run things, some 95% of Jefferson County's debt was in fixed rate obligations. JPMorgan turned that around to the point that the County ended up with some 93% of its outstanding debt being variable and floating rate debt, subject to interest rate hikes.
Then JPMorgan created a neat little swap deal so the county was "protected." It didn't work out that way, and interest costs on the county's debts rose as high as 10%.
In the end, JPMorgan admitted no wrongdoing. Yet, amazingly - considering it did nothing wrong - the firm paid some $75 million in penalties to settle a fraud complaint with the Securities and Exchange Commission (SEC).
JPMorgan paid $25 million in penalties to the SEC and $50 million to Jefferson County. It also agreed to decline a $648 million "termination fee" that it was due when the county backed out of the swap deal that helped bankrupt it.
No one at JPMorgan went to jail - although others were convicted of conspiracy and fraud, with some folks going to jail for 48 months, 52 months and even15 years.