Crash 2 The Sequel!

[Malcolm Robinson]

Talk is that Italy are looking to get out of the latest Greek bailout package. If that happens Spain will probably want the same treatment ........... That leaves Germany, France and the Nordics but the last lot are just about to pull the plug anyway.

French banks are huffing and puffing about the latest stress tests coz they will fail having not recapitalized and even some German ones are refusing the take part.

The Eurozone is about to light up................

[Malcolm Robinson]

Debt clocks...........

http://www.usdebtclock.org/world-debt-clock.html

[Malcolm Robinson]

The Footsie has paused for breath but the fundamental problems remain. Seems the mainstream media has at last caught on, there is a distinct lack of ideas within the political class on how to tackle this prolonged financial crisis.

Given the need for all politicians to present things in the ‘glossiest’ of terms some of the latest utterings should be worrying everyone!

GGG’s financial pin up gal seems to have had a Road to Damascus experience since taking up her leading IMF role! Now preaching that debt is bad seems a diametrically opposed view from her time in the French Government, only a few months ago!

Instead of playing up to the big boys on the block Dave should be instigating deep and fundamental changes within our own country, but he doesn’t have the maracas never mind anything else to do that. So we will drift along on the back draft of good old Uncle Sam, the EU and the Asian economies, each of which have their own systemic problems.

This could get very nasty very quickly as GGG’s prediction of a deep depression becomes more and more likely.

[Malcolm Robinson]

Footsie is now below 5000, not much of a breather there then!

Interestingly it seems the EBC has bought 4X’s more gold in the last 3 months than it did in the whole of 2010! Once central banks have filled their socks watch for a FDR’like emergency gold act 1933! Looks like they are starting to put barriers up to retail investors now trying to limit hedging using gold.

If only we had taken the bust instead of allowing half-baked politicians to interfere we could have been building our way out by now!

[Malcolm Robinson]

Seems we are still in la La Land with the recent £75B of new Quantative Easing agreed by the BoE.

Whilst the Government are telling people to take their personal debt seriously, if not pay it down, the BoE has just signed up to a new credit card with a £75B limit! Talk about hypocritical!

The markets have shot up even though all the evidence points to a flat recovery at best and considering all the problems across the water in every direction the correction will be harsher when it comes.

The lunatics really are running the asylum!

[Malcolm Robinson]

Reform bank tax!

http://www.robinhood...en/public/7120/

[threegee]

It's down into the bunkers for the euro-politicos!

"Bank President Jean-Claude Trichet said Thursday the ECB would offer an unlimited amount of 12-month and 13-month credits." Isn't this fait currency thing all about credibility and confidence?

And, take a look at the 30 day gold price. As I pointed out earlier: you can't preserve wealth by following a herd mentality.

Merv seldom says much of significance - well that's his job - but he's determined not to be on the wrong side of history.

http://www.bbc.co.uk/news/business-15210112

Will more QE work though? Well, if I was being compulsory purchased and found my fund in possession of oodles of QE funny money I'd be tempted to move it to more stable climes, and not do what he hopes I'd do with it. The only real term "benefit" will likely be stir up a bit more inflation. Why doesn't he come clean and bury the 2% inflation target nonsense for good?!

[Malcolm Robinson]

I think they are targetting the wrong stuff. We need bold and systemic change not a reliance on past failed policies.

Hasn't JCT held his hands up and admitted its the Fed who are lenders of last resort for the Euro?

[threegee]

Reform bank tax!

http://www.robinhood...en/public/7120/

It's not rational. It assumes that the Banks exist in the same world of accountability as their customers. What is rational - and would have prevented the current credit free-for-all - is a levy on fractional reserve lending. You or I expect to have to pay for a licence to do this or that, but the banks get a licence to create money for free.

[Malcolm Robinson]

It's not rational.

Its a start and if it gets people looking a bit closer at how the financials are stacked up so much the better.

[Malcolm Robinson]

!

[Malcolm Robinson]

Slovakia's parliament has said no to an expansion of the 440-billion-euro bailout fund so what happens now, they will probably have another vote once arms have been twisted up backs! Their PM made it a vote of confidence so effectively she is now unseated and there should be a national election.

Trichet must be spitting feathers, Sarko must be weak at the knees wondering how he can get the rest of the Eurozone to bailout French banks and Merkel probably has the presses primed for issuing a new Deutsche Mark!

I would think the ‘worst’ bank in the Eurozone must be the ECB considering all the worthless paper it has accepted now! Course the way its accounting works everything is assessed at full repaid value, even the Greek stuff??????

All this uncertainly and the bourses are going up, looks like a sucker play to me with the big boys trying to draw in the small guys so they can liquidate their positions.

[threegee]

All this uncertainly and the bourses are going up, looks like a sucker play to me with the big boys trying to draw in the small guys so they can liquidate their positions.

The big boys often have less of a clue than the small guys. There's actually nowhere much to go if you are an investor, though anything (save Govt promises) beats bank/BS deposits. In inflationary times investments in good companies with real earnings and with pricing power is the way to go. If you can pick them up during the inevitable blood-on-the-screens days then so much the better. This is why the markets are turbulent yet resilient.

The big losers will inevitably be people on fixed incomes, and people who refuse to take multiple small risks. And, if you are Joe Average Worker with no savings, your problem is being caught in the vice of price inflation without the usual corresponding wage inflation. This is the paradox of the markets: by far the bigger risk is to convince yourself that you aren't running any!

As for the general situation - well, yes - we are all supremely &*&&*&*'d!

[Malcolm Robinson]

Not being a fan of QE Mk1 or Mk2, in reality the way it was used but that’s another story, let’s look at what has happened since the MK2 variety has been opened up.

The reason we were told why QE2 was needed was to keep long term interest rates down. A continual reference in these posts has been the fact that the real financial story can seen in our 10 year bench rate. Before QE2 our 10yr rate was 2.36% and the 30yr rate 2.39% since the presses have been turned on again this week the rates are now 2.58% for the 10yr and 3.5% for the 30yr! Or exactly the opposite of what was supposed to happen. The same thing has happened in the States with their operation Twist. It takes a particular sort of mindless idiots to repeatedly hit themselves in the eye when trying to hit a nail into a block of wood, unless blindness was the real intent!

If we believe our political class then they are wrong and their policies are wrong too! If we keep going down the present path we must end up in a depression and these halfwits are acting like King Canute. I would rather go down fighting than suffer death by a thousand cuts but with the intelligence on display at all national levels that’s all that’s on offer!

[threegee]

http://www.bbc.co.uk/news/business-15344297

Graph says it all. Double digit at some point in the coming years - the natural consequence of printing money!

[Malcolm Robinson]

Funnily enough GGG just had an argument with a leading figure about county not including anything into their equations for inflation. Tried to get him to see if they didn’t then the inflation figure has to eat into their headline budget figures and compromise what was supposed to be available. Course it could be a way of trimming budgets without calling it cut backs?

[Malcolm Robinson]

This week saw a national strike in Greece, hardly inspiring for a county which has been rescued by the Troika, and the government saying their fiscal plans were well underway and working. Looking a bit closer we see youth unemployment at around 42.5%, that's nearly every other young person, 15-24yrs old, not in work. Unemployment as a whole is rising and it now looks like less than half the population has a job. As ever look at bond yields for the true picture and see Greek 1 yr. bonds yielding a staggering 185%. Compare them with say Germany at 0.47% and you start to see the true picture emerge! Anyone buying into a Greek recovery and these fantastic bond yields, no only the ECB! Even her 10yr yields are now 24.5% and remember the rest of the PIGS were being considered for rerating once their bonds hit 5+%!

Once again the EU great and good have come up with a plan, not sure if plan is the right word, but they are going to 'bazooka' the Euro fiscal crisis with a new fund EFSF. I won't go into details why this is yet another crock but they have included leverage into the mix this time and what got us into the mess in the first place, oh yes pass the parcel with financial derivatives! Someone needs to line these people up against a wall or at least give them back to their villages which are missing their idiots!

As for the UK it looks like we are coming out of the woods according to some articles I read. The ONS has reported a £12+billion reduction in public sector net borrowing for this financial year to date. Great anyone might think but how much PSBR has been raised with increased taxation such as a 20% VAT rate? Also included in the ONS figures is the public sector net debt which to the end of September was £2278 Billion. 12 months ago at the same time it was £2230 billion so what we are really talking about is climbing costs during a prolonged recession. Having said that a recent report showed the UK economy grew by 0.5% for the last 3 months so officially ''No recession here matey boy, move along now!''

[Malcolm Robinson]

Like it...........

[threegee]

Consumer prices rose 6.1% last month, compared with the same month last year, the National Bureau of Statistics said.

Nope, we are not talking some debt-laden Western nation here; we are talking the one with the mind boggling current account surplus (and the one we buy all our ultra cheap goods from).

http://www.bbc.co.uk/news/business-15425390

There's nothing a government can do about imported inflation; it's plain silly to pretend we can and maintain impossible targets.

[Malcolm Robinson]

There is, you can devalue your currency and import even more of it……….

[Malcolm Robinson]

If the current gossip about the IMF refusing anymore Greek bailouts is true, and by association that would mean Italy will have to fend for itself, then we are about to enter the endgame for the Euro. I can't see Germany being willing to take on wholesale bailouts for every other Euro member even if Sarko would like them to recapitalise the French banking sector!

As for Sarko and Dave's tif……in the immortal words of Harry Hill, ''there's only one way to sort this out……..FIGHT, FIGHT!''

[threegee]

Italy could easily have avoided meltdown, but it's now past the point of no return. The difference between the way we went (including all the painful things which the dumb lefties are protesting about) and the Balls - too deep too soon, max-out the credit cards - stupidity!

Failing to get on top of their debt means that the cost of servicing it has spiralled and there is now no chance of continuing to fund it into next year. Silvio doesn't actually give a damn here, as it's a poisoned pill for his rivals to have to swallow.

Up until a few months back the Euro could have survived if they'd cut-loose Greece and made the necessary moves. Now, as we are agreed, it's just a matter of time. All of which highlights the historic differences between our nations: Germany consistently gets the detail right, but gets the really big issues very wrong (nuclear power being just one recent example). The UK muddles on, but on the really big matters we always manage to scrape it together in the end, though often it's "the nearest run thing you ever saw"! Which I suppose touches on the parallels being currently drawn between Sarko and Napoleon!

[Malcolm Robinson]

Not sure Italy could have avoided a meltdown given its propensity for devaluing out of crisis and German 'oversight' of the Euro project. I have always thought Italy would be caught in a pincer movement outside its control.

As I said many months ago Greece should have negotiated a withdrawal from the Euro and I would have thought they would have been given very attractive terms at the time. That would have left them to introduce a currency which would have given them a cost advantage in trading terms. They would still also have had to rationalise their public sector though!

I do believe it's those very 'differences between nations' which make the Euro problem insoluble. Without a tight political union there is no chance of a fiscal union working. There are too many differences both in mind-sets and working practices.

The UK referendum vote last night is remarkable; not for the result but for the way it unfolded. At its very core is a populist petition which our elected leaders have ridden rough shod over and none more so than William Hague. Having to impose a 3 line whip only to see so many rebels would seem to question Dave's continued leadership of a clearly split party. One name for a successor keeps cropping up in conversations I have, Georgie Boy, flipping heck I need to go and lie down in a dark room!

[Malcolm Robinson]

Love these guys...................

[Malcolm Robinson]

Well thats a big relief......................

http://uk.news.yahoo...-022151156.html

Any bets on how long it will take to unravel?