Global Economy Bursting?

[Randolph Kinney]

Fiscal woes in Europe bring Wall St. layoffs

http://www.nypost.com/p/news/business/european_import_g5eYXrJULCeSXkb0g3xdaL

As embattled banks across Europe scramble to cut costs and meet tougher capital requirements, sources said financial firms with a sizable presence here will have to follow in the footsteps of their US counterparts by slashing thousands of workers.

Sources believe that Europe’s banking giants, including Deutsche Bank, UBS and Credit Suisse, along with Societe Generale and Dexia, are preparing to wield the ax in a way not witnessed since the depths of the financial crisis in 2008.

 

[Randolph Kinney]

Gold surges $48 to one-month high over $1,700/oz

Gold and silver futures rallied to a one-month high Tuesday as expectations about Europe's debt-crisis plans gave investors enough reasons to buy, triggering further gains as the December gold contract broke out of a recent trading range. Gold for December delivery GC1Z +3.26% ended up $48.10, or 2.9%, at $1,700.40 an ounce on the Comex division of the New York Mercantile Exchange. The close was the highest for a most-active contract since Sept. 22. The contract had been bumping up against a ceiling of about $1,683 since then. "Gold has kind of been like a sleeping giant for the last month or so," said Richard Ross, chief technical strategist at Auerbach Grayson & Co. Once prices intraday moved above that level, people realized a new short-term floor had likely been established, he said. December silver SI1Z +5.00% rose 4.5% to $33.05 an ounce. The dollar rose and stocks fell.

 

[Randolph Kinney]

Greeks Plunder their Accounts in Fear of Debt Cuts

http://translate.google.com/transla...endern-ihre-konten-20624790.bild.html&act=url

Monday morning, 7.40 clock in the district of Athens, "Agia Paraskevi". We, the BILD reporters are witnesses, of a queue in front of a branch of the "National Bank of Greece" right after the opening at 8:00.

"I come here to immediately pick up my pension € 300. Who knows what else happened today. My money is safe only when it is at home" said Pensioners Evagelos Dimitros age 73.

The head of an Athens bank branch told BILD: "More and more Greeks who still have some money come to get it from the bank. In my office there are a total of 5,000 customers, 2,500 of which either have their money transferred abroad or hoard it at home. If this continues, there will soon be no more money."

 

[Randolph Kinney]

Tick-Tock Goes the Developed World's Debt and Derivatives Clock

http://www.huffingtonpost.com/lydia-fisher/ticktock-goes-the-develop_b_1029759.html

French megabanks own Greek debt, Italian and Spanish debt too. The French government can't really afford to bail out its French megabanks, if and when a Greek default occurs. It would put its AAA rating at risk. The AAA rating is crucial for France's role in the EU.

Chancellor Merkel, on the other hand, faces a dilemma. Can you blame the German people for not wanting to bail out the French banks -- where does it end if the Eurozone debt crisis cascades?

Or, will the European Central Bank (ECB) step in to print money to save the Euro and determine which countries, in effect, are to be bailed out. Some note that the ECB life support action would go beyond its purview.

Not only do U.S. banks have direct exposure to the Eurozone, it's the indirect exposure by U.S. banks via derivatives that's difficult to quantify. How grave? Depends upon who's doing the talking.

Can we wager how a European cascade would unfold? How fast will it travel to derivatives laden "Too Big Too Fails?" Where does that then put the taxpayers as "Too Big To Fails" imply a government guarantee as they are too big to fail. Actually, the notional value of derivatives has grown rather significantly since the 2008 crisis.

The developed world is awash in debt. And, maybe short-term ways to grow economies, like financial speculative bubbles and credit based consumption no longer work. Compare it to squeezing a lemon. Just maybe we are at the inflection point. With housing, finance and credit creation in a funk, where will the growth come to support debt, to support jobs? And then how do we as a society deal with the job-eliminating trends of technological automation.

Meanwhile the U.S. national debt clock ticks towards 15 trillion. We've added nearly half a trillion in just a few short months since the national debt ceiling debate. For every dollar we spend, we now borrow $.50. U.S. States face 4 trillion in debts.

News from the Super Committee charged with coming up with 1.2 trillion in savings before Thanksgiving doesn't look promising. We're not even talking about a 1.2 trillion reduction in debt, but a reduction in spending. Already talk of another US downgrade has surfaced.

Will "QE-ing" the economy help? Too much debt relative to revenue intake for individuals and governments in the developed world is the conundrum. How long can developed nations throw more debt after more debt, without reigniting growth and creating jobs? We've Greece as an example of what happens when Debt to GDP exceeds way beyond 100%.

 

[Randolph Kinney]

After the Haircut, What Next for Greece?

http://greece.greekreporter.com/2011/10/25/after-the-haircut-what-next-for-greece/

ATHENS - The signs are all there that investors have really given up on Greece: analysts no longer say “if” when talking about the prospect of a default, but “when,” and Luxembourg’s Prime Minister Jean-Claude Juncker, the head of the Eurozone, the 17 countries who use the euro as a currency has acknowledged that losses for banks and institutions who’ve put their money into Greece could be as high as 60 percent.

Greek banks have a 30 percent exposure to Greek bonds and debts, and face possible collapse or nationalization under the worst case scenario as the Eurozone scrambles to see whether to give Greece a second bailout of $157 billion, in which investors agreed to take a 21 percent buzz cut. The first bailout, for $152 billion, failed because the pay cuts, tax hikes, slashed pensions, and layoffs demanded by the Troika of the European Union-International Monetary Fund-European Central Bank created a deep recession of 16 percent unemployment and the closing of 100,000 businesses as Greeks, scared out of their socks, stopped spending.

Without at least a 50 percent haircut, the second bailout could swell to as much as $350 billion or even an astronomical $600 billion, more than the total reserves of the European Financial Stability Facility (EFSF), leading Jans Weidmann, President of Germany’s Bundesbank, to say even if investors write off half their losses or more it would not help Greece and could even be dangerous if the country stopped trying to reduce its $460 billion – and climbing – debt. “A haircut is not an cure-all,” Weidmann told Sunday’s Bild am Sonntag newspaper. “If it were to lead to a reduction in the readiness to implement structural reforms, it could even be dangerous.”

The big problem for Greece is that the haircut has to be voluntarily accepted by banks and investors or ratings agencies will declare a default. The country is already bankrupt as it’s depending on the bailouts to keep paying its workers and pensioners but a default caused by an involuntary haircut could make it nearly impossible to borrow money in the open markets. Even now, Greek two-year bonds are requiring the state to pay as much as usurious 70 percent interest rates. The country could get a better deal from the Mafia.

Under the radar in Greece there are already building fears of a bank collapse that could be caused by what the haircut would do to Greek banks and some people are shifting their money to banks outside the country while others are quietly buying up non-perishables in supermarkets, fearful of a food shortage.

 

[Workbox]

Germany has already ordered the ink to begin printing the Mark. They have also hired firms to help them get ready to leave the Euro.

We are having a retraction on the SPX due to the low volume on the Banks and Semi-conductors and fear from Europe. The next test is the 50 day moving average when going down. If it breaks when testing the 50 DMA then we could go further down. But I think they might do a dead cat bounce off of it and still try for the 200 DMA test. Once the earnings season is over then we could start retracing downward. All the dominoes are set, some thing has to give it a nudge. Bernanke might come to the rescue at the height of fear and could drive the market sideways with ups and downs till election time. Maybe.

The last weeks the money was flowing to the Semi-conductors and now are being cycled to the metals and oil companies. If any one want to get into a good stock that is setting up is Halliburton, but you have to take your own responsibility on maintaining it. It is just starting it upward cycle.

 

[coolhandluke]

Warren Buffets plan

This is bipartisan in nature and is going to both Democrat and Republican. We should all seriously consider helping with the change suggested below. This is something I will fight for and I hope you will too. This is short so please read it all the way through and then forward. You will be glad you did.
The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people demanded it. That was in 1971...before computers, before e-mail, before cell phones, etc.

Of the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the land...all because of public pressure.

I'm asking each addressee to forward this email to a minimum of twenty people on their address list; in turn ask each of those to do likewise.

In three days, most people in The United States of America will have the message. This is one idea that really should be passed around.

Congressional Reform Act of 2011

1. No Tenure / No Pension.
A Congressman collects a salary while in office and receives no pay when they are out of office.

2. Congress (past, present & future) participates in Social Security. All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system and Congress participates with the American people. It may not be used for any other purpose.

3. Congress can purchase their own retirement plan, just as all Americans do.

4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

5. Congress loses their current health care system and participates in the same health care system as the American people.

6. Congress must equally abide by all laws they impose on the American people.

7. All contracts with past and present Congressmen are void effective 1/1/12. The American people did not make this contract with Congressmen. Congressmen made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.

If each person contacts a minimum of twenty people then it will only take three days for most people (in the U.S.) to receive the message. Maybe it is time.
THIS IS HOW YOU FIX CONGRESS!!!!!

 

[Randolph Kinney]

The Truth About California's Prop. 13

Before voters limited property taxes, they say, California was a paradise of well-financed public services, but since then has evolved into something like Mississippi, in which a tiny, selfish overclass oppresses a burgeoning, mostly nonwhite underclass.

Indeed, one leftish critic titled his book, "Paradise Lost."

The anti-Proposition 13 propaganda always becomes louder when the economy is in recession and government budgets face big deficits, as they are now.

The problem with the anti-Proposition 13 hypothesis, however, is that financial facts don't support it.

In 1977-78, according to the state Board of Equalization, schools and local governments collected $10.3 billion in property taxes. The amount plummeted to $4.9 billion in 1978-79 as Proposition 13 cut the average property tax rate by more than half.

By 2010-11, however, property tax collections had risen to precisely 10 times as much – $49 billion per year – due to new construction and re-evaluation of existing property, even though the property tax rate was fixed at slightly over 1%.

During that same 33-year period, state general fund revenue, principally sales and income taxes, increased seven-fold – scarcely two-thirds the property tax revenue growth rate.

Incidentally, inflation and population growth combined were about 400% during that same period, less than half of the 1,000% expansion in property taxes.
Obviously, the assertion that Proposition 13 has been an unconscionable barrier to revenue growth doesn't hold up. But what about the oft-voiced argument that our property taxes are out of whack with those of other states?

According to Tax Foundation data, California's property tax burden is the nation's 15th highest as a proportion of homeowners' personal income at 3.59%, well above the national average of 3.03%. The reason: California's below-average property tax rate is more than offset by its above-average property values.

It's logically impossible to assert that public budgets are in disarray because Californians are undertaxed. Political dysfunction and overspending are more likely culprits.

 

[Randolph Kinney]

Congressional Democrats offer $3 trillion debt deal

http://www.washingtonpost.com/busin...0/26/gIQAhgvMJM_story.html?wpisrc=al_comboPNE

 

[Randolph Kinney]

No deal on 'any element' of Greek writedowns

There is no agreement between euro-zone governments and international banks on the size of losses banks and other private bond holders should take on Greek government debt, the head of a trade group representing the banking industry said Wednesday night. "There has been no agreement on any Greek deal or a specific 'haircut,'" said Institute of International Finance Managing Director Charles Dallara, in a statement. "We remain open to a dialogue in search of a voluntary agreement. There is no agreement on any element of a deal," he said. European leaders are meeting in Brussels in an effort to complete a wide-ranging plan to deal with the euro-zone debt crisis. European governments are seeking writedowns of 50% or more on Greek debt. A July agreement had envisioned a 21% voluntary writedown in the value of Greek debt held by private bondholders.