By John Galt July 29, 2011 A fascinating Reuters story crossed the wires this morning raising the very question of the title of this particular piece. According to the article, Italy was supposed to offer a portion of the key tranche from the European Union crisis designed bailout recently constructed for the nation of Greece. The problem with this theory is that one of the “I’s” in the PIIGS does not have an economic structure much healthier than Greece and thus the question arises as…
By John Galt July 27, 2011 And for tonight’s edition from Ambrose Evans-Pritchard, an almost perfect summary and follow up to the articles I posted earlier about Cyprus joining the PIIGS(c) and Italy’s banking issues causing a nasty equity sell off today. Click on the headline below from the U.K. Telegraph to read the entire story: Europe’s hot summer as Italy and Cyprus join sick list Fears of recession in Italy and the Germans’ reluctance to back the EU’s bail-out fund with real muscle have…
By John Galt July 27, 2011 Translation: Greece is in default and might as well plan on being Europe’s first financial leper colony of many to come. Via from ForexLive.com: Greece cut to CC from CCC by S&P, negative outlook; amounts to a selective default By Jamie Coleman || July 27, 2011 at 16:32 GMT Not much reaction. When ratings are that low, doesn’t much matter…. Debt restructuring plan amounts to a selective default S&P views the EU’s debt restructuring proposal as a “distressed debt…
By John Galt July 27, 2011 Despite the proclamations of a miracle solution of paying off old debt by creating new debt for the PIIGS, it would appear that the entire European Union is heading for the ultimate destination that the U.S. is on: Mega-Downgrades to Credit Hell Cyprus becomes the latest member of the credit downgrade express and here is part of what Moody’s said in their statement this morning (Click on the title for the full statement): Moody’s downgrades Cyprus to Baa1 from…
By John Galt July 27, 2011 Now off 2.01% or -401.80 as of 0630 ET. The story which is triggering the slump (From CNBC): Italian Banks Slump After Bond Purchase Report By: Antonia van de Velde CNBC Associate Web Producer Italian bank shares were sharply lower in Wednesday morning trade after Reuters reported German Finance Minister Wolfgang Schaeuble said the euro zone’s rescue fund should only purchase bonds on the secondary market in exceptional circumstances. And you thought the bailout meant that it really, honestly,…
By John Galt July 25, 2011 There are two very bad outcomes for the E.U. if AEP is right and Merkel falls hard due to the multiple bailouts: 1. The Leftists take over and institute a move towards a fiscal union of all of Europe. 2. The ultra-Nationalists gain a foothold and push for withdrawal from the Union. In the end, this deal if passed makes Germany a slave to world politics as much as it does to the unemployed cobbler or fisherman in Greece.…
By John Galt July 25, 2011 Meanwhile in another insolvent nation: Yes, that’s right boys and girls, that is the Italian FTSE MIB Boursa and it’s down 1.27% or 246 points as I type this thanks to the realization by the world that the ECB bailout by creating more debt to pay off more debt doesn’t actually pay off the debt owed. As a result the Italian banking sector is getting whacked again and I doubt that anyone in the U.S. will be paying attention…
By John Galt July 25, 2011 This morning Moody’s made the decision to downgrade Greece again, this time to just one step above outright default (statement can be found at this link), and the key phrase from this downgrade is obviously going to anger the European Central Bank and their minions: The announced EU programme along with the Institute of International Finance’s (IIF’s) statement (representing major financial institutions) implies that the probability of a distressed exchange, and hence a default, on Greek government bonds is…
By John Galt July 24, 2011 This one is a miss in my humble opinion. While it is true that the “ideologues” took Europe to the brink, there is no solution to a problem which has not been solved. The ideas that at some point in time that Europe can grow out of its disaster is as laughable as presuming America can grow its economy fast enough to meet the $114 trillion in obligations it currently has. However, Evans-Pritchard’s opinion is always worth a read…
By John Galt July 24, 2011 While the world sighed relief with the temporary resolution of the crisis in Greece by permitting an actual temporary default which is not a default according to the banksters, the European Union is far from out of the woods as trouble lurks in nation after nation and the myth that debt monetization was forbidden by the structure of the European Central Bank (ECB) has been shattered forever. In fact if one takes a moment to reflect on the growth…
By John Galt July 21, 2011 Sadly this latest missive sounds like a victory lap for the banksters. However, here is the U.K. Telegraph’s own Ambrose Evans-Pritchard and a brief extract from the article to give you a taste. Click on the headline below to read the remainder of the story. Europe steps up to the plate The three rescued countries of Greece, Ireland and Portugal have in turn been offered a lifeline out of crippling debt-deflation. The tetchy negotiations dragged on for hours, with…
By John Galt July 21, 2011 The only thing my readers need to know today is this headline (with link to story) and the graph which follows of the Euro versus the Yen. If we see the Euro break 111 then 110, it is game over once again and massive stock corrections as well as currency market shifts will happen rapidly. From Reuters: New Greek Bailout Can’t Rule Out Default: Juncker Jean-Claude Juncker, chairman of the group of euro-zone finance ministers, said that a selective…
By John Galt July 20, 2011 But don’t worry, they won’t default according to the cheerleaders. From Bloomberg:
By John Galt July 19, 2011 I think based on this story, the sense of urgency ignored by U.S. markets is not so much the case in the U.K. or based on Ambrose Evans-Pritchard’s latest missive a serious case of panic is beginning to spread across Euroland. Read more at the link at the headline from the U.K. Telegraph: Only Germany can save EMU as contagion turns systemic Europe’s leaders have finally run out of time. If they fail to agree on some form of…
By John Galt July 17, 2011 Right out of the gates, everyone seems to be fleeing for a flight to safety with the FOREX open (Quotes from NetDania) and into the Swiss Franc out of Euros and Dollars: Down over 1% on the open and as much as 1.23% into the 113 range. Against the dollar it has been down over 0.8% and the gap down is somewhat disturbing: These types of moves usually are precursors to some sort of major financial event as the…
By John Galt July 13, 2011 A very interesting thing happened on the way to gold $1600, which I said on Monday we would probably witness this week: The very thing all of us so-called “goldbugs” were deeply concerned about turned out to be the trigger event for a stampede into the safety of the world’s only universal currency. As the Eurozone collapsed into outright panic over the very idea of shattering the illusion of their unity and fiat currency, world powers had the revelation…
By John Galt July 11, 2011 From the U.K. Guardian 7/12 print edition: Greece set to default on massive debt burden, European leaders concede Uh, there are consequences to this. The insane idea is highlighted here: They also abruptly shifted tack in the eurozone debt crisis by raising the possibility of using the eurozone’s bailout fund to buy back Greek debt on the markets, meaning sizeable losses for Greece’s private investors and reduced debt levels for Athens. Following 12 hours of fraught negotiations in Brussels…
By John Galt July 11, 2011 I think this sucker could be going DOWNTOWN! This isn’t going to end well….
By John Galt July 10, 2011 In a print story by Arthur Beesley from the Irish Times on July 11: European leaders to consider default as part of Greek rescue It has to be a joke right? The Greek people were told repeatedly to “have faith in the European Union and the Euro currency” and now after all that, they are about to be ejected and tossed on the dustbin of globalist history because they banksters realized that all in all, there really weren’t any…
By John Galt July 4, 2011 The headline this morning at the Wall Street Journal screams it out: S&P: Greece Debt Plan Is a Default The key sentences from the story create a picture of what happens when a rating agency refuses to play along (or is forced to) with the extend and pretend central bankers: “The S&P statement that the model would constitute a “selective default” will take banks and officials back to the drawing board,” interest rate strategists at Commerzbank said. The…
By John Galt June 20, 2011 IF this story from Der Spiegel is not a direct hint that Germany and perhaps some other Northern European nations are ready to kick out the weak sisters of the European Union and move forward without their participation, I do not know what is. Sentiment has been building in Germany, France, and other nations to get rid of the deadbeats and maintain the EU as a purely economic juggernaut without their drag. Read the article linked below to…
By John Galt June 20, 2011 The crisis in Greece is accelerating at a pace where after tomorrow the European Union’s very survival could well be determined. The Mayor of London, Boris Johnson, called for Greece to leave the EU and return to the drachma yesterday. Then tonight this headline on the front page of Tuesday morning’s U.K. Telegraph: Treasury plans for Greece to go bust The former foreign minister from the Labour party said it best in the article: a “quick” end to the…
By John Galt June 19, 2011 Game over for now. From the Bloomberg flash: Ministers Fail to Agree on Greek Aid: Reynders By Jonathan Stearns – Jun 19, 2011 7:54 PM ET Belgian Finance Minister Didier Reynders said euro-area finance ministers reached no agreement on a scheduled aid payment to Greece. He spoke to reporters in Luxembourg after talks today. As a result the Euro has started it’s scheduled slow descent into the side of the mountain: (chart from INO.com) UPDATED STORY AT 2028…
By John Galt June 19, 2011 I leave the house for a while and the world blows up. Per AFP: Germany ‘dismisses Greek debt compromise plan’ With that being established, the prime comment from the article drives the point home as to the severity of this crisis now: Der Spiegel had reported ahead of its Monday issue that the German finance ministry called for a beefed-up version of Europe’s temporary bailout mechanism lending to Greek banks to insure they have adequate collateral with the…
By John Galt June 19, 2011 Greece expected to default even after a second IMF/EU bailout That is the headline from the Sunday June 19, 2011 U.K. Independent’s financial news section and despite the slight improvement in the Greek CDS based on Merkel’s announcement last Friday, the reality is that if replacing a cabinet and demanding a national political leader resign would make a nation solvent, the United States public would have demanded Obama resign six months ago. Many European economists recognize the fallacy…
By John Galt June 18, 2011 There is now some strong evidence to validate the headline as reported in the financial section of the Sunday June 19th edition of the U.K. Telegraph: UK banks abandon eurozone over Greek default fears Tyler Durden at Zero Hedge hinted as to the liquidity issues in a piece on the 16th titled Ice-9 Sightings: (Blank)-OIS Spreads Confirm Liquidity Freeze Spreading but until the story was published in the Telegraph the source of the drain on liquidity was difficult…
By John Galt June 6, 2011 The Dollar-Yen chart this morning is sending a new warning as the JCB/Federal Reserve/ECB intervention is going down in flames and the 80 level is once again on the verge of being broken: (from INO.com) The Euro-Yen exchange is following a similar pattern but is not in danger of re-testing the all time lows: This is clearly a warning signal that the financial system is under stress, probably from the European Union’s flailing PIIGS and hints that there are…
By John Galt May 25, 2011 Gee, is China trying to pump up precious metals prices or screw the Eurozone? This story from Bloomberg tonight: Euro Advances on Report China Interested in Buying European Bailout Bonds is an indication of the desperation of the world’s central banksters to keep the fiat merry-go-round going one more day, week, or month. The Euro did advance nicely as you can see in the chart below, but is China going to be there to bail our all of the…
By John Galt May 25, 2011 From FinViz.com: The key numbers to watch are 76.60 and 75.70ish as the battle for 76 is enjoined by the JCB which wants a stronger dollar and the ECB which wants a weaker Euro to aid their exports and enable their weak institutions to borrow on the cheap. The battler for fiat insanity is being fought this summer and once the Euro breaks 1.40 with authority they will hold the lead in the devaluation sweepstakes.
By John Galt May 23, 2011 The results from the elections in Spain were pretty much as expected but now the concerns over the Eurozone are front and center once again. Italy’s downgrade by S&P, Greece agreeing not to restructure their debts (which means eventual default, IMHO), and the worries over the real condition of the municipal budgets in numerous cities in Spain have all created the perfect Forex storm to sell the Euro. Chart from FinViz.com: After testing the 1.39 level again it…
By John Galt May 18, 2011 Read it at Bloomberg: ECB Rejects Greek Restructuring in Policy Clash Can you say Greek Drachma?
By John Galt May 15, 2011 Tonight’s action in the Euro is psychologically and technically not very reassuring as the currency appears poised to shatter the 140 level and proceed to test the 200 DMA. On the chart below of the Euro ETF proxy (FXE), I’ve outlined the “failsafe” region (technically) in my opinion that must hold between 134 to 136 or this sucker will break down to 126 then retest the 2009 lows around 120. All of which should happen in the June to…
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