Greeks Bearing Gifts....

[JayB]

Glad that all blew over. Phew!

 

"Italian Yields Reach 7%, French Debt Slides as Bond Rout Deepens

 

Nov. 15 (Bloomberg) -- Italian bonds led a slump in euro- area government debt as investors abandoned all but the safest assets amid rising borrowing costs at auctions and concern the region’s financial woes are deepening.

 

“It’s a confidence crisis,” said Elwin de Groot, a senior market economist at Rabobank Nederland in Utrecht, Netherlands. “Investors have no confidence that the euro zone can solve its problems. They will look for the most safe place they can store their money, which is Germany. Everything else is suffering.”

 

German two-year rates dropped below 0.3 percent for the first time, while the extra yield investors demand to hold 10- year bonds from France, Belgium, Spain and Austria instead of bunds all climbed to euro-era records. Italy’s 10-year yield rose above 7 percent as prime minister-in-waiting Mario Monti wrapped up talks on forming a new government. Spain and Belgium sold less than the maximum target of bills at auctions today as financing costs increased.

 

Italy’s 10-year yield climbed 37 basis points, or 0.37 percentage point, to 7.07 percent at 5 p.m. in London. It rose to a euro-era record 7.48 percent on Nov. 9. The 4.75 percent bond due September 2021 slid 2.285, or 22.85 euros per 1,000- euro face amount ($1,351), to 84.57.

 

The spread investors demand to hold 10-year French debt instead of German bunds widened 26 basis points, the most since the euro started in 1999, based on closing-market rates, to 190 basis points. It touched 191 basis points, also the most since the common currency was introduced. The yield on the 10-year bund fell one basis point to 1.77 percent, less than half France’s 3.67 percent rate."

 

http://www.businessweek.com/news/2011-11-15/italian-yields-reach-7-french-debt-slides-as-bond-rout-deepens.html

 

MF Global is not available for comment.

[j_b]

We could dispense with electing representatives and have bankers and the rating agencies run the show in the open. We could then all come to term with what western democracies have become.

[j_b]

“It’s a confidence crisis,”

 

Right, French borrowing costs doubled after Moody's made a "mistake" in their press communique announcing the country had lost its AAA rating. The news was retracted after markets had already reacted to the initial announcement. These people must think the peons are morons.

[rob]

We could dispense with electing representatives and have bankers and the rating agencies run the show in the open. We could then all come to term with what western democracies have become.

 

 

Yeah, I love how pissed off the bankers and European elite were when they thought the people of Greece would actually be allowed to choose their fate. I mean, can you even imagine???????? Good thing THAT wasn't allowed to happen!!

[tvashtarkatena]

What should, and probably will happen eventually, is that Greece will fundamentally restructure its obviously unpayable debt and its creditors will get screwed. The idea that creditors should be completely immune from pain in situations where they bear a significant responsibility is standard asset stripper bullshit.

[j_b]

Probably, but in the meantime, austerity measures are destroying what's left of the Greek economy.

[rob]

hey, as long as the rich don't have to deal with austerity!

[tvashtarkatena]

Butt fuck economics. That shit is a bore hole.

 

Plus, I have no fucking clue what's going in Europe right now. Italy's ass ramming the EC or some shit. Somebody made the mistake of trusting those gumbahz...UH-GAIN.

 

Then there's Zorba.

 

"Gee, we gave this skeezy Greek guy a shitload of money and he hasn't paid us back."

 

NO SHIT? Screwed by the gypsies? Go Figure.

 

Fuck you and eat it, dumbshit.

 

 

 

 

Edited November 15, 2011 by tvashtarkatena

[Jim]

What should, and probably will happen eventually, is that Greece will fundamentally restructure its obviously unpayable debt and its creditors will get screwed. The idea that creditors should be completely immune from pain in situations where they bear a significant responsibility is standard asset stripper bullshit.

 

The latest EU agreement has the banks taking a 40% haircut. Ouch! I suspect it is going to get more like a Marine buzz shortly, there is no choice, even with the austerity plans.

[G-spotter]

BUNGA BUNGA

[j_b]

We could dispense with electing representatives and have bankers and the rating agencies run the show in the open. We could then all come to term with what western democracies have become.

 

Yeah, I love how pissed off the bankers and European elite were when they thought the people of Greece would actually be allowed to choose their fate. I mean, can you even imagine???????? Good thing THAT wasn't allowed to happen!!

 

Yes, the dressing down by Merkel and Sarkozy against a Greek referendum was for posterity. As if it were per chance there is one year till the French presidential elections and the Socialist Party candidate is way ahead of Sarkozy in the polls. Nearly a month ago, S&P said they were reassessing the French debt exactly one day after the socialist primaries. Since then, Sarkozy must have said "national debt" 10^nth times, just like some other people we know.

[tvashtarkatena]

I'm just cryin' my heart out over here. Poor bankers!

[rob]

I think it's awesome that bankers can make a bunch of bad bets and still get the governments to subsidize their losses.

 

TOO BIG TO FAIL!!!!!

[billcoe]

Jay, thanks for the posting of real info throughout this thread. It is clearly distinguished as it stands out dramatically from the significant amounts of drivel on the rest of the thread:-)

 

[rob]

Jay, thanks for the posting of real info throughout this thread. It is clearly distinguished as it stands out dramatically from the significant amounts of drivel on the rest of the thread:-)

 

Yeah, all he's missing is a couple of pics of dead kids! You're above it all, aren't you bill?

[tvashtarkatena]

Didja ever manage to score any strange offa that tranny? Cuz she seems pretty gone after you took an interest....

[prole]

I think it's awesome that bankers can make a bunch of bad bets and still get the governments to subsidize their losses.

 

I KNOW, RIGHT!?!!? JUST AWESOME!

 

Lending a Hand to Banks, but Not to Nations

NYT 11/14/11

 

FRANKFURT — Is it time for the European Central Bank to be as generous to countries as it is to banks?

 

Since the beginning of the financial crisis, the central bank has been lending euro area banks as much money as they want, trying to maintain the liquidity — or continual flow of money — that is the lifeblood of the global financial system.

 

But because the central bank has refused to offer the same easy lending service to countries like Italy and Spain, it is not confronting the euro area’s most fundamental problem — a sell-off of debt from the troubled countries that is pushing their borrowing costs to dangerous levels.

 

Investors pushed up interest rates on Italy’s debt to record-high levels last week during the political crisis there. And even Monday, after the supposedly calming effect of a new, technocratic prime minister in Rome, lenders were demanding that Italy pay interest rates at levels high enough to eventually bankrupt the country.

 

In an auction of five-year bonds, Italy had to pay a rate of 6.29 percent, compared with 5.32 percent at a similar auction a month ago.

 

And Italy’s 10-year bonds, which crested well above 7 percent last week in the secondary market, were still dangerously high on Monday, at 6.77 percent — more than three times what Germany must pay on comparable bonds. In a further sign of investor anxiety about the weaker links in the euro chain, Spanish 10-year bond yields rose above 6 percent for the first time since August.

 

It is an atmosphere of mistrust reminiscent of the aftermath of the Lehman Brothers collapse in 2008. European banks are demanding higher interest rates for the overnight lending to one another that is essential to keep money circulating.

 

Still, banks are feeling the pressure to reduce costs and raise capital in the face of Europe’s sovereign debt crisis. UniCredit, the largest Italian bank, said on Monday that it would raise $10.3 billion and eliminate 5,200 jobs in Italy over the next few years as part of a strategic overhaul.

 

Some banks have even gone so far as to refuse to make overnight loans to other banks at all, fearing others’ vulnerability to the debt of Italy, Spain and other beleaguered countries. For that reason, the central bank has been willing to lend to the banks as needed.

 

But the biggest fear — the one implicit in all the talk of “contagion” and a potential “Lehman moment” — is not that any one bank will succumb to a liquidity crisis. It is that an entire country might do so, if it can no longer obtain the credit it requires to stay in business.

 

And at least so far, the central bank has not done the one thing that could help calm that fear: declare that it stands ready to be the de facto lender of last resort to national governments.

 

If the fear that sent Italy’s borrowing costs to record highs last week becomes a chronic condition, the country could lose the liquidity it needs to keep paying the holders of its 1.9 trillion euro ($2.6 trillion) debt. That would be the Italy Moment — the point at which Rome’s liquidity problem would quickly become everyone else’s.

 

“We are approaching the point where the E.C.B. has to show its hand and accept its role as a lender of last resort,” analysts at Credit Suisse said in a note to clients Friday. “The question is how much further turmoil is required for it to do so.”

 

Mario Draghi, the new president of the European Central Bank, which is based here in Frankfurt, has insisted that countries must help themselves by cutting spending and taking steps to make their economies more competitive.

 

Jens Weidmann, president of the German Bundesbank and an influential member of the central bank’s governing council, went further Monday, saying it would be illegal to use the central bank to solve government budget problems.

 

“The increasing demand being placed on monetary policy is dangerous,” Mr. Weidmann told an audience of bankers in Frankfurt. “Monetary policy cannot and may not solve the solvency problems of governments and banks.”

 

What the markets want to hear, though, is not only prescriptions for long-term overhauls but also assurances that the central bank will do whatever it takes to prevent a near-term panic.

 

Italy, unlike Greece, is solvent, in that it has the economic resources to manage its debts. That is why many economists say it makes sense to protect Italy from a temporary inability to meet its cash-flow obligations. And with marketplace trust being a top component of getting access to money, the reassurance that the central bank stood ready to step in as a lender to governments might be enough to keep the central bank from having to actually take that action.

 

But as long as worry continues that Italy may not be able to service its debt, Italian bonds are losing value as interbank currency — a big disadvantage for banks in Italy or France that own tens of billions in Italian debt. Last Tuesday, LCH Clearnet, a company that acts as an intermediary in bond and other trading, said it would impose a steeper discount on Italian bonds used as collateral.

 

As a central bank, the E.C.B. could theoretically use its ability to print money to buy huge amounts of debt from Italy and other countries. That would drive down their borrowing costs and ensure that they could continue to service their debts — that they would remain liquid, in other words.

 

The central bank’s charter does not allow it to buy bonds directly from national treasuries. And yet, the central bank can and does do essentially the same thing, by buying government bonds on the open market.

 

Since last year, the bank has spent 187 billion euros intervening in bond markets. But the relatively modest sums, less than 10 percent of the central bank’s total balance sheet, have not been enough to prevent yields on Italian bonds from rising.

 

If the interest rates that Italy must pay to borrow remain at their current levels, the government could eventually go bankrupt.

 

The only limit to the central bank’s ability to create money is a psychological one — the fear of setting off too much inflation. Mainstream economists, though, do not see any risk of significant inflation under current circumstances. The euro area is headed for recession, unemployment is rising and factories are not producing as much as they could. That is why economists tend to encourage the bank to put more money into circulation.

 

Mr. Draghi seems to be in agreement on at least the point that inflation is not a big threat right now, which is why his first act as the bank’s president was to announce a cut in short-term interest rates.

 

But if the central bank were to step up its bond buying, it would continue to encounter the shrill opposition of Germany, which has a fear of inflation steeped in history. And Berlin’s voice on such matters is hard for Mr. Draghi to ignore, as German financial support is essential to the survival of the euro area.

 

This article has been revised to reflect the following correction:

 

Correction: November 15, 2011

 

An earlier version of this article mischaracterized the practices of the United States Federal Reserve. It does not buy government bonds directly from the United States Treasury; it does so on the open market.

 

 

 

 

[JayB]

What should, and probably will happen eventually, is that Greece will fundamentally restructure its obviously unpayable debt and its creditors will get screwed. The idea that creditors should be completely immune from pain in situations where they bear a significant responsibility is standard asset stripper bullshit.

 

Totally agree with that. Part of the deal with lending money used to be taking big losses when you made bad loans.

 

I'm not sure if anyone is certain that the Eurozone will still be solvent when and if that happens, but debts that can't possibly be repaid, won't be repaid so it's probably best to default now instead of forcing taxpayers to endure many years of pointless debt-bondage coupled with default-by-inflation as a prelude to the inevitable default.

 

Repost for old times sake:

 

[video:youtube]

 

 

[JayB]

BUNGA BUNGA

 

Sole verbal response from Italy's secretary of the treasury to bondholders on the on the last conference call, if I remember correctly.

 

 

 

 

 

 

 

 

[j_b]

The role of ideology in this crisis

 

In sum, ideology drives bad central banking and crisis response. The evidence is overwhelming that the ECB has not (despite recent expert commentary to the contrary) shied away from its role as lender of last resort and even as market maker of last resort in a wide array of markets and asset classes. Already in 2007, when the US Fed and the Bank of England dithered, the ECB shocked the world with unprecedented liquidity injections, which were only a harbinger of what was to come. But the approach to the sovereign debt market has been markedly different. Apart from the deep and longstanding ideological roots of this position, it appears that the point of such an approach to sovereign debt is to bring pressure to bear on European governments to inflict a partisan political agenda upon their citizens, outside the ordinary rules of democratic procedure. Economically, this "expansionary austerity" has produced two full years of failure, to the point where the survival of the Eurozone itself is in question.

 

The recent intervention of the Swiss Central Bank in the Swiss Franc's exchange rate provides an illustration of how the mere statement of intent to enforce a lower bound on asset prices, and a token show of force, are enough to cheaply stabilize a market. Perhaps it is time for the ECB to abandon its ideological distinction between public and private assets and engage in proper central banking across all markets.

[JayB]

 

 

Eurozone bond yields rise again despite ECB buying

November 16, 2011 | 11:37 am

 

European government bond yields mostly continued to rise Wednesday, even as the European Central Bank apparently ramped up purchases to try to calm investors.

 

The jump in interest rates in recent days signals a further spreading of the debt-crisis contagion from Italy to other countries, as investors grow increasingly fearful about governments' abilities to pay their debts.

 

The ECB’s purchases did help push Italian bond yields modestly lower. The 10-year Italian bond slipped to 7.00% from 7.07% on Tuesday.

 

But 10-year bond yields rose in France, Spain, Austria and Finland. The French 10-year yield edged up to 3.71%, the highest since April, from 3.68% on Tuesday.

Can't help but wonder what kind of exposure US banks have to Eurodebt via CDS contracts...

 

"Market yields rise as bond prices fall. Over the last week, nervous investors have been dumping Eurozone bonds, even those of countries still rated AAA, such as France and Austria.

 

Financial markets have been looking to the European Central Bank to halt the contagion. In theory, the ECB could commit to buying unlimited quantities of bonds to try to hold down rates. But the bank has seemed reluctant to act aggressively, and Germany and France apparently are clashing over how big a role the ECB should play."

[billcoe]

What does your crystal ball say about US rates Jay?

[j_b]

The invisible hand says that only bail out for banks, tax cuts for the wealthy and benefit cuts for the peons would keep US rates low. I wonder what the catfood commission II is going to do.

[billcoe]

The invisible hand says that only bail out for banks, tax cuts for the wealthy and benefit cuts for the peons would keep US rates low. I wonder what the catfood commission II is going to do.

Catfood commission. LOL! They'll have to do something other than the current Clusterfrikkagegridlok©. Hopefully they balance cuts and tax increases and come out soon with something the rest of the congress can choke down. We've been spending like drunken sailors, and it the Iran war sparks up we're in deep yogurt. The bus is almost heading off the cliff and these folks seem to arguing over the radio station that's playing.

 

rock

 

No country

 

rock

 

NO country

 

ROCK!!!! COUNTRY!!!!

[prole]

The invisible hand says that only bail out for banks, tax cuts for the wealthy and benefit cuts for the peons would keep US rates low. I wonder what the catfood commission II is going to do.

 

I think the hardcore invisible handjobbers would recommend the let it burn and build the new utopia from our ashes approach. Jay?