Mish's Global Economic Trend Analysis |
- Germany's Top Judge Throws Major Monkey Wrench Into Leveraged EFSF Machinery, Demands New Constitution and Popular Referendum for Further Powers
- Germany Central Bank President Slams Debt Crisis Steps; Europe Goes All In; S&P Says Larger Europe Bailout Fund Could Weigh on Ratings
- Barclays Capital Changes Stance, Now Sees Additional UK Quantitative Easing
- Australian Mortgage Stress Climbs; Reflections on Obama's Streamlined Proposal to Fix US Housing
- International Tensions Soar: Jamie Dimon, CEO of JP Morgan, Accuses Bank of Canada Governor Mark Carney of "Juvenile Delinquency"
Posted: 26 Sep 2011 05:36 PM PDT The major story of the day is the leveraged EFSF is dead without a popular referendum and a new German constitution says Germany's top judge. Please consider German turmoil over EU bail-outs as top judge calls for referendum Germany's top judge has issued a blunt warning that no further fiscal powers may be surrendered to Europe without a new constitution and a popular referendum, vastly complicating plans to boost the EU's rescue machinery to €2 trillion (£1.7 trillion).The German court has already killed eurobonds. Now, if the top judge's call stands, leveraged EFSF just bit the dust as well. Clearly the German court has had enough of Chancellor Angela Merkel, her cronies, and all the politicians who want to rob German taxpayers for their own agenda. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 26 Sep 2011 02:03 PM PDT The open feud between the German Central Bank and the ECB widened significantly. Making matters even worse Chancellor Angela Merkel is also in an open feud with the Bundesbank. Please consider, Top German central banker slams debt crisis steps Germany's top central banker warns that efforts to halt the debt crisis in Europe could give countries incentives to run up deficits in the future.Europe Goes All In Peter Tchir of TF Market Advisors writes EU Goes From Monetary Union To Suicide Pact As alleged details are leaked about an alleged proposal to leverage the EFSF all I can do is cringe. I'm waiting for some actual details, but as far as I can tell, Europe is attempting go all in. It is going to make leveraged bets on itself. If it doesn't work, the senior debt holders will own Europe if the BRICs buy the senior tranche and will end in a fast and furious death spiral if the senior tranche is owned by the ECB or European banks. We may get a lift on the news. We are trying to rally on the back of the news right now. But if this plan goes ahead, even the slightest cold in the future will turn into the plague. There will be no strong countries left as they will have tied themselves to the PIIGS anchor with a Gordion Knot that will never be untied in time.Schaeuble a "Cool Head" or a "Clueless Minister"? I agree with Tchir this has the makings of an epic disaster. However, I disagree that Schaeuble is a "cooler head". Please consider this snip from a Eurointelligence Daily Briefing, September 22, 2011. Mass circulation tabloid Bild launches a campaign against Wolfgang Schäuble accusing him that he has been systematically misleading the German public on Greece and the euro crisis in the 18 months. In a scathing article it presents a long list with dates and contradictory statements on the need for a rescue program for Greece and the conditions attached to it.Please consider these Schäuble Flip-Flops courtesy of Google Translate. 21st December 2009Unless the definition of "cool head" encompasses "clueless political hacks", Schäuble is not a "cool head". Larger Europe Bailout Fund Could Weigh on Ratings Reuters reports Larger Europe Bailout Fund Could Weigh on Ratings David Beers, the head of S&P's sovereign rating group, said it is still too soon to know how European policymakers will boost the European Financial Stability Facility, how effective that will be and its possible credit implications.Today, fueled by rumors of still more bailouts, the market rallied for umpteenth time, as if use of leverage to bail out Greece is a good idea. It isn't and just a week ago, the ECB was against the idea. Desperation has set in. If the ECB agrees to do this, Peter Tchir is correct: Europe essentially went "All In". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Barclays Capital Changes Stance, Now Sees Additional UK Quantitative Easing Posted: 26 Sep 2011 10:03 AM PDT Damn the price inflation, the massive UK housing bubble, and the fact that previous rounds of Quantitative Easing did not do the US or UK any good, expect more QE says Barclays Capital Research. Via Email, Barclays says Monetary Policy Committee set for November QE boost We are changing our UK monetary policy forecast, and now expect the MPC to announce an expansion of QE at its November meeting. We think additional asset purchases of £75bn will be announced within an overall additional facility of £150bn. As a consequence of this change, we have pushed back our forecast for the first rise in Bank Rate into 2013.Whatever the reason, more QE cannot possibly do the UK any good. It will not help growth or hiring any more than it did in the US, which is to say none. In fact, global QE exacerbated a bubble in the stock market and commodities. Bernanke since abandoned QE in favor of "Operation Twist" and that policy has failed already as well. Central bankers never learn on their own accord, from others, or from history. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Australian Mortgage Stress Climbs; Reflections on Obama's Streamlined Proposal to Fix US Housing Posted: 26 Sep 2011 09:34 AM PDT Bloomberg notes that Australian Mortgage Stress Climbs, Rental Vacancies Decline A quarter of Australian homeowners are experiencing mortgage stress and rental vacancies remain "tight," driven by higher interest rates, rising costs and a shortage of rental properties in some cities.Here is the link for the 7th Annual Demographia International Housing Affordability Survey cited by Bloomberg. Additional information specific to Australia and New Zealand can be found at Performance Urban Planning I list links for completeness. I do not agree with all positions stated by either organization. What's Obama Up To? Inquiring minds are reading an article on Ml-Implode by Patrick Pulatie. Please consider Analysis of Obama's Proposed Fannie/Freddie "Streamline Refi" Program. The Real Objectives and OutcomesLooking Beyond the Obvious Pulatie wants to look beyond the obvious. However, it's obvious is this is an election ploy, and a case can be made there is little reason to look beyond the obvious other than to determine exact winners and losers. Given there is no agreed specifics as to exactly how the program would work, it is difficult to ascertain who the winners are. However, losers are easy enough to ascertain (US Taxpayers). Will bondholders lose? What bondholders? If banks get to dump crappy mortgages on Fannie and Freddie for a lousy fee of .4%, banks will jump at the opportunity, as will bank bondholders. Will Fannie and Freddie bondholders take a hit? That all depends on government guarantees. Regardless, taxpayers are 100% guaranteed to get screwed by the plan. The question is to what degree. Until we have more specifics, it is tough to say whether any bondholders take a hit or not. I suspect they would not. If I am correct, then the losses borne by taxpayers will be all the greater. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 26 Sep 2011 12:03 AM PDT In case you mistakenly thought there was some semblance of a chance of international accord to address the global financial crisis, please consider Dimon in attack on Canada's bank chief Jamie Dimon of JPMorgan Chase launched a tirade at Mark Carney, Bank of Canada governor, in a closed-door meeting in front of more than two dozen bankers and finance officials, underscoring mounting tensions between bankers and officials over financial regulation.Exclusive Response from JP Morgan The dispute was over rules agreed by the Basel group of international regulators that would force all banks to hold 7 per cent core capital against risk-weighted assets. The biggest face an additional surcharge of up to 2.5 per cent. Financial Times did not capture a response from Jamie Dimon but I managed to do so. Please consider this exclusive video straight from the closed door meeting at the Institute of International Finance. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
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