Archive for the ‘Portugal’ Category

Notes From Underground: Month-End, Quarter-End and Oh Yes, a New Fiscal Year in the U.S.

September 30, 2013

Tonight’s agenda brings an announcement from Australia as the RBA meets to decide its forward monetary policy. Interest rates are currently at 2.5% on the overnight cash rate (OCR). Consensus is for no change and I would agree with that for the Aussie dollar has been stable and the 2/10 yield curve is a healthy 135 basis points positive slope. Confusion reigns around the world as politics is causing uncertainty in much of the developed world’s economies. Expect the RBA Governor to note risks to global growth and that the Aussie bank will remain vigilant. Also, with a new government elected in early September the bank will want to see what types of fiscal policy will be enacted before embarking on a change in current monetary policy.

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Notes From Underground: Greece Becomes A Trust Fund Nation

February 21, 2012

The discussion is over–ha, ha, ha–and another 3 a.m. decision is made. The Greeks will get their funding and the banks are off the hook for another short period of time. There are so many stipulations involved that it will take time to understand what really took place in the wee hours of another EUROPEAN meeting. It seems certain thought the Greeks will deposit money in escrow to assure all the “DONATING” parties that the CITIZENS OF GREECE WILL ADHERE TO THE FISCAL AUSTERITY TO WHICH THE GREEK TECHNOCRATS AND POLITICIANS HAVE AGREED. THIS IS SIMILAR TO A YOUNG ADULT HAVING TO AGREE TO CERTAIN STIPULATIONS IN ORDER TO RECEIVE THEIR TRUST FUND CHECK, or what is known as a TRUSTAFARIAN.

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Notes From Underground: One Month Down, Only Eleven to Go … Whew

January 31, 2012

The month of January was kind to equity investors, metals and other commodities. The star performers of last year, U.S. Treasuries, had a quiet month as the FED‘s latest policy statement provided a month-end boost to the long end of the market. I have argued that the BOND markets are badly broken because of the continued intervention of several of the world’s central banks into the sovereign debt markets via QE PROGRAMS of various sorts.

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Notes From Underground: When Irish Eyes Are Smiling, It Must Mean the World’s Focus Is Elsewhere

January 30, 2012

Greece is balking at surrendering its sovereignty as the Merkel-led European elite is shouting for more austerity from the “profligates” in an effort to insure the large continental banks against the ravages of default. As one reader e-mailed today, IT IS AS IF THE GERMANS ARE PLACING THE ENTIRE NATION OF GREECE INTO DEBTORS PRISON. Life was much easier when a country could send in its gunboats to collect its loans.

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Notes From Underground: Lies, Damned Lies and SADISTICS

June 27, 2011

The news out of Europe continues to create volatility as EUROCRATS vacillate between defaults and bailouts. It seems that the Greeks will vote on a “new and improved” austerity package that, if accepted, will allow the EMU,IMF and ECB to provide the needed funds to get Greece through the immediate crisis.

Lies compounded by lies has made the situation much more difficult to comprehend. The problem is one of insolvency but because of the opaqueness of the entire EU, it is very difficult to ascertain who is in fact insolvent. Even though the European Union ran bank stress tests, very little is known about which banks will be insolvent in the event of a sovereign default. The biggest fear is that a Greek default will become contagious to the other peripheries and several of the large banks in France and Germany.

Another lie is that the EUROCRATS do not want the “EMPTY CREDITORS” [read speculators] to be paid out on a default so the Orwellian nature of Brussels is trying to manufacture a default by any other name. Today, the French government persuaded the large French banks to accept a type of BRADY BOND solution, which would extend the maturities of Greek debt in order to buy time for the credit hit to be spread out over time–deemed by the politicians to be a non-default. However, the ratings agencies have opined that any extension of duration would result in a DEFAULT.

The battle lines are being drawn between the nation-states and rating agencies. Interestingly, Frankfurt was looking into certifying a new European ratings group so the pressure will continue to build against S&P, Fitch and Moody’s. All the talk out of Brussels is totally devoid of the impact of domestic politics. It is the Greek Parliament who now holds Europe’s immediate financial fate in the raised hands of 151 Greek members of Parliament.

Democracy is still the prevailing means of political decision making and if the Greek politicos listen to the voices of dissent in Greece, the Parliament may well vote NO just to get Europe to raise the ante–sounds similar to the rejection of the first TARP vote in the U.S. HOUSE. The Greek nation has more to gain by pushing the DEFAULT game a bit further to maybe get some modicum of relief from the coming ravages of austerity.

The NEGATIVE FEDBACK LOOP that is perpetuated by an austere budget in a declining economy with no ability to devalue its currency may be too sadistic for a Greek populace staring into the abyss of financial contagion. Sadists of economic rectitude and the lies they promote have placed an already fragile global financial system into a very precarious predicament. Oh well, WEN will we have some certainty?!?!

For a quick update on the impact of austerity budgets:

Portugal 2/10: -260 basis points
Ireland 2/10: -135 basis points
Greece 2/10: -1114 basis points

These are the inverted curves of economies attempting to ring out the excesses of inflation. Unfortunately, economies in question do not have the problem of excess inflation but rather excess debt, which would normally call for negative real rates of return an steep curves.

As Brussels has dithered and deceived, the markets have exacted a price,a very high price. Where it all ends it is impossible to know but Athens will be the first test of the people versus the political elite of Brussels. Will Sisyphus roll the rock further or will the Greeks call the existential question for the EU???

Notes From Underground: Unemployment in the U.S.–Does Slowing Jobs Provide the FED With a Pause That Refreshes?

June 5, 2011

The U.S. jobs report provided great support to the bears on Wall Street as the 54,000 nonfarm payroll number led to a sell off in the DOLLAR and another drop in the Dow, S&Ps and all other equity indexes. For all the equity down/dollar up analysts, last week was a breakdown of that temporary correlation. U.S. equities were down more than 2% for the week while the EURO was up 2.5%. It seems that the global financial community is becoming more concerned about a softening U.S. economy and what it will mean for the budget discussions and FED policy.

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Notes From Underground: The Irish Government loses power as the GREENS pull the plug

January 23, 2011

The weekend brought some political news from the EU. Brian Cowen gave up his leadership of the Fianna Fail Party but vowed to stay on as prime minister. However, the GREEN PARTY, who is the junior partner in the coalition, balked at the uncertainty caused by PM Cowen and pulled their support, which would force the dissolution of Parliament after this week’s vote on important budgetary matters. It is not as significant as it could be for elections were scheduled for March and the ruling party has been expected to suffer a total defeat. The most important outcome is that some of the leadership challenging Cowen within Fianna Fail will lose some precious time to secure their support within the party.

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