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08-31-10
GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN
KOREA
US steps up N Korea sanctions FT
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1-
SOVEREIGN DEBT & CREDIT CRISIS |
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GREECE
Greeks "In Over Their Heads In Debt" Means Non Performing Loans
Poised To Surge ZH
| A Bloomberg TV report looks at a troubling and all too
expected trend developing currently in Greece: namely the
overabundance of easy credit provided to Greek consumers
to fund unprofitable business, and which loans the
recipients have no intention of every paying back.
Sounds familiar - the ECB has now directly taken a page
from the official PBOC playbook on how to keep the ponzi
dreams alive for one more day. As the narrators points out
simply: "more and more Greeks are finding
themselves unable to pay back their loans." The
surge in NPLs is demonstrated by the chart of loan
performance over the past two years, comparing the 5% in
NPLs in 2008, jumping to 7.7% in 2009, and hitting 8.2% at
Q1 2010. And since banks are all about hiding the true
impact of deteriorating assets, one can bet the true level
of NPLs is will in the double digit range. And guess what
- all these eventual charge offs will have to be funded by
the ECB-IMF rescue mechanism, which means that sooner or
later America, via its primary contribution to the IMF's
various rescue facilities, will end up having to bail out
the Greek debtor class. And as austerity is only expected
to make things worse, the only possible (flawed)
resolution is to do what the Cajas in Spain did: a massive
wave of consolidation, so that those bigger banks provide
some capitalization buffer for the smaller insolvent
firms, until such time as the entire market is comprised
of just a few TBTFs, which will nonetheless still be in
need of bailing out. |
SPAIN
GERMANY
FRANCE
UK
Osborne plans 25% Treasury staff cuts
FT
Chancellor to scale back department’s role
IRELAND
Eurozone test over €25bn repayment
FT
Ireland’s banks braced for debt settlement
Euro Shoots Straight Down, Anglo Irish Bank Set To Report
Gigantic Loss BI
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The Irish Times: STATE-OWNED ANGLO Irish Bank is expected today to report a loss for the first
half of this year well in excess of the previous six-month deficit of €4.1
billion posted last year.This would lead to Anglo setting a new Irish corporate record for a loss in a
six-month period.The bank will report the losses incurred on the transfer of the first €9.25
billion in loans sold to the National Asset Management Agency, and further
losses on non-Nama loans and investments.
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JAPAN
Japanese 10-Year Yield Falls Below 1%
BI
CHINA
Is Low-Wage China Disappearing?
Project-Syndicate
Yuan Set for Biggest Monthly Drop Since '94 as Economy
Slows, Dollar Gains BL
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4- STATE
& LOCAL GOVERNMENT |
Bankrupt Miami in Fiscal Emergency, Breaks Employee Contracts, Hikes
Property Taxes Mish
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5-
CENTRAL & EASTERN EUROPE |
Banks Recruit Investors to Oppose Honest Valuation of Assets
Mish
Bargains on Failed Banks Over WSJ
IMF Expands Loan Options WSJ
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The International Monetary Fund said Monday it would broaden
the kinds of loans it offers to encourage a large swath of
developing countries to get financial help before they are
engulfed in crisis.
Under a new "precautionary credit line," the IMF said it would
lend a substantial amount of money to countries whose policies it
generally endorses, before those nations run into trouble. The
loan would operate like a line of credit, so a country wouldn't
have to use the money, and rack up interest charges, unless it
needed the financing.
The program would offer loans of as much as five times a
country's quota, meaning its financial stake in the IMF, with the
possibility of doubling that after a year. Indonesia, for
instance, has a $3.1 billion quota, so it could be eligible for a
credit line of up to $31 billion.
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8-
COMMERCIAL REAL ESTATE |
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9-RESIDENTIAL REAL ESTATE - PHASE II |
Housing bubble 'an accident waiting to happen': report
Montreal Gazette
| “Canada is experiencing for the first time in the last 30 years, a synchronized
housing bubble across the six largest residential real-estate markets in
Canada.” The report traces the trend in large part to low mortgage rates and access to
easy credit, which can encourage buyers to purchase homes they might not
otherwise be able to afford. |
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10- EXPIRATION FINANCIAL CRISIS PROGRAM
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11- PENSION & ENTITLEMENTS CRISIS
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13- GOVERNMENT BACKSTOP INSURANCE |
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14- CORPORATE BANKRUPTCIES |
OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE
19-US PUBLIC POLICY MISCUES
Dodd-Frank presents a PR minefield FT
US pay law branded ‘logistical nightmare’ FT
24-RETAIL SALES
26-GLOBAL OUTPUT GAP
The conservative counter-revolution FT Martin Wolf
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First, the expansion of the financial sector and associated
leveraging of the household sector played a big part in the growth
of the economies of the US and UK. The question is how far growth
driven by these two linked developments will turn out to have been
a mirage. It is not difficult to see why that might be the case.
The financial sector creates money and credit not only used to pay
fees to itself and to a host of brokers and agents, but also to
finance construction booms. Furthermore, the next decade is likely
to see deleveraging in the US and UK, in both household and
financial sectors, while the willingness to leverage up the
government sector seems set to hit political or economic limits.
This combination of factors might make these countries’
performance look a little like that of Japan in the 1990s, with
chronically weak aggregate demand.
Second, the US and UK have run substantial current account
deficits in recent decades. Andrew Smithers of London-based
Smithers & Co argues that
this has allowed the relative shrinkage of manufacturing, a
capital-intensive sector. That, in turn, has permitted the two
economies to grow quite fast, despite relatively low rates of
investment in physical capital. In the coming decade, this process
is likely to be reversed. Savings and investment would then have
to rise substantially to sustain given rates of overall economic
growth. Should this not happen, growth would slow further.
Bubbles induce severe over-estimates of underlying economic
performance. Will the same prove true of the US and UK? I would
guess so. Might the next decade belong to Germany or Japan,
instead? That would not surprise me either. Expect the unexpected.
It is a good rule.
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31-FOOD PRICE PRESSURES
32-US STOCK MARKET VALUATIONS
The P/E Ratio's Sinking -- and So Is Its Prominence
WSJ
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The stock market's average price/earnings ratio, meanwhile, is
in free fall, having plunged about 36% during the past year, the
largest 12-month decline since 2003. It now stands at about 14.9,
compared with 23.1 last September, based on trailing 12-month
earnings results. Based on profit expectations over the next 12
months, the P/E ratio has fallen to 12.2 from about 14.5 in May.
So what explains the contraction? In short, economic
uncertainty. A steady procession of bad news, from the European
financial crisis to fears of deflation in the U.S., has prompted
analysts to cut profit forecasts for 2011.
Three months ago, analysts expected the companies in the
Standard & Poor's 500-stock index to boost profits 18% in 2011.
Now, they predict 15%. Mutual-fund, hedge-fund and other money
managers put the increase at closer to 9%, according to a recent
Citigroup survey, while Mr. Levkovich's estimate is for 7% growth.
"The sustainability of earnings is in doubt," said Howard
Silverblatt, an index analyst at S&P in New York. "Estimates are
still optimistic."
Equally troublesome, analysts' forecasts are becoming
scattered. In May, the range between the highest and lowest
analyst forecasts of S&P 500 earnings per share in 2011 was $12.
Morgan Stanley predicted $85 per share, while UBS predicted $97
per share. Now, the spread is $15. Barclays said $80 per share;
Deutsche Bank predicts $95.
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The Deteriorating Macro Picture Pragmatic Capitalist
What makes the current environment particularly alarming is
the increasing divergence between the macro outlook and the
earnings picture. The market has remained relatively robust
in recent months despite an onslaught of negative news, however,
any signs of weakness in corporate earnings will likely change
that. The corporate earnings picture is looking increasingly
precarious.
Over the last 18 months we have seen a moderate
recovery in corporate revenues as government spending picked up
the slack and confidence surged from the lows. As the
government stimulus ends the modest revenue recovery is at risk of
running into a wall. More alarming is the likelihood of a
stall in corporate profit margins.
This leaves the equity
markets in a precarious situation. The macro outlook appears
to be deteriorating in recent months, however, the private sector
is in no place to maintain the necessary level of aggregate demand
that can sustain the recovery in corporate revenues. With
revenues likely to slow and margin expansion likely peaking there
is increasing risk of further defensive posturing from
corporations. If the macro outlook deteriorates further
(none of this even considers the very serious exogenous risks from
China and Europe) the private sector balance sheet will
further deteriorate as layoffs ensue. Assuming no
further government intervention the balance sheet recession is
likely to persist well into 2011. If the divergence in
earnings materializes equity markets will remain under pressure.
If an exogenous event shocks the markets (Eurozone sovereign debt
concerns for example) the equity markets could deteriorate
substantially. |
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 BP - British
Petroleum
SULTANS OF SWAP: BP Potentially More Devastating then Lehman!
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Gulf Blue Plague Part II- Corexit+Bacteria=Mutated Viruses
World Vision Portal
| The Gulf of Mexico is a breeding ground for a pandemic
viral plague primarily because of the chemical mutagens
being dumped into the water in vast quantities that we may
never be able to properly verify. The use of Corexit is no
different than adding gasoline to a small fire. The
explosive result is the same. The Blue Plague may not just
be evolving any longer. It may have already started to
mature and replicate in immeasurable amounts. All it takes
for the Blue Plague to become a worldwide epidemic is for
a minuscule cluster of viral infected bacteria to be
immersed in a chemical mutagen, such as Corexit. The
potential results could easily make the 1918 Spanish Flu
look minor in comparison. While those of us living on the
Gulf Coast go about our daily lives, a time bomb is
ticking louder and louder in the Gulf of Mexico. It’s not
a matter of if there are mutant viruses present: It’s a
matter of when that first cluster will spread – if it
hasn’t started to already - and how fast it will become a
pandemic of astronomical proportions. We have sent our
research and findings to private biology and virology
experts for further verification. Water samples have been
sent to a university laboratory outside of North America.
All additional results will be published as soon as they
are received. |
Slow Violence in the Gulf and the BP Coverups
Counterpunch
| Three vanishing acts are being played out in the Gulf:
the disappearing of the oil from the ocean surface by
Corexit, the disappearing of the story by the media
blockade, and the disappearing from view of the shadowy
private contractors who are making a mint helping BP and
the Coast Guard keep a cover on the clean-up. This triple
vanishing trick, collectively choreographed by BP and
sundry federal agencies, culminated on August 4th in a
report released by NOAA that claimed 75% of the oil spill
had been captured, burned, evaporated or broken down. The
White House hailed the report as something to celebrate.
Energy advisor Carol Browne announced: “the vast majority
of the oil is gone.” |
America's Gulf: Updating the Greatest Ever Environmental Crime
WIAC.org
| For months, US media reports distorted and lied about
its severity, running cover for BP and the Obama
administration, now practically avoiding the crisis
altogether as it worsens. An August 20 Inter Press Service
report is revealing, quoting Biloxi, MS fisherman Danny
Ross saying hypoxia (depleted oxygen) is driving horseshoe
crabs, stingrays, flounder, dolphins, and other sea life
"out of the water" to escape. Another area fisherman,
David Wallis said he's "seen crabs crawling out of the
water in the middle of the day." |
Fish Kills Worry Gulf Scientists, Fishers, Environmentalists
IPS News
"As a scientist, my belief is
that this fish kill is 75 percent likely due to hypoxic
conditions, not enough oxygen in the water to sustain
life," Dr. Cake said. "Because it was both bottom dwelling
fish and crab, and other fish from the middle of the water
column, whatever caused this covered the entire water
column. That gives me great concern. The scientist in me
says there was some other triggering mechanism."
Dr. Cake believes the "triggering mechanism" is likely oil
and toxic dispersants from the BP oil disaster.
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Louisiana Air tests reveal Health Threats from Oil Disaster
Institute for Southern Studies
| The media coverage of the BP oil disaster to date has
focused largely on the threats to wildlife, but the latest
evaluation of air monitoring data shows a serious threat
to human health from airborne chemicals emitted by the
ongoing deepwater gusher. |
BP Said to Fault Own Engineers for Misinterpreting Well Data
BL
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GENERAL INTEREST
The Age of Mammon The Burning Platform
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The Wall Street oligarchs were able to accumulate an ever
increasing portion of corporate profits by inventing
securitization, interest-rate swaps, and credit-default swaps
which swelled the volume of transactions that bankers could make
money on. These products were originally introduced as a means for
corporations to hedge their risks. Wall Street shysters chose to
use their “creative” financial products to build the biggest
gambling casino in the history of the world. They functioned as
the house, siphoning off billions in profits, but then got caught
up in the hysteria and placed billions of bets themselves. This
resulted in the financial industry generating 41% of all business
profits in 2007. From World War II through 1980, financial
industry profits ranged between 10% and 15%. Simon
Johnson explains the despicable hijacking that has taken place
since then.
From 1973 to 1985, the financial sector never earned more
than 16 percent of domestic corporate profits. In 1986, that
figure reached 19 percent. In the 1990s, it oscillated between 21
percent and 30 percent, higher than it had ever been in the
postwar period. This decade, it reached 41 percent. Pay rose just
as dramatically. From 1948 to 1982, average compensation in the
financial sector ranged between 99 percent and 108 percent of the
average for all domestic private industries. From 1983, it shot
upward, reaching 181 percent in 2007.
The original robber barons amassed huge personal fortunes,
typically through the use of anti-competitive business practices.
These well known titans of industry included Henry Ford, Andrew
Carnage, John D. Rockefeller, and JP Morgan. They may have
practiced questionable business ethics, but they did create wealth
while benefitting the country as a whole. They introduced the
automobile, provided the nation with steel, produced the oil that
powered our economy, and brought order to industrial chaos of the
day. It seems their fortunes were built by creating rather than
destroying.
The disgustingly rich Wall Street wheeler dealers who live in
Greenwich CT and NYC and summer in the Hamptons have created
nothing. Their immense wealth has been created through draining
the economic system of its lifeblood. Their financial
innovations have created no lasting benefit for our society. Wall
Street knowingly created no documentation (liar loans) mortgage
loans, Option ARM loans, and subprime loans. You do not
create products that beg for fraud unless you want fraud. The
packaging of these fraudulent mortgages into CDOs and CDSs by Wall
Street’s crime machine benefitted Wall Street only. Those who got
the loans defaulted, lost the homes, and had their credit ruined.
Wall Street financiers have lured the American public into debt
with easy credit and a marketing machine geared to convince the
average Joe that he could live just like the rich. Simon
Johnson explained the phenomena in a recent article.
“Excessive consumer debt is an outcome of prolonged inequality
– in trying to remain middle class, too many people borrowed too
much, while unscrupulous lenders were only too willing to take
advantage of such people.”
Capitalism is supposed to
be an economic system in which the means of production and
distribution are privately owned and operated for profit;
decisions regarding supply, demand, price, distribution, and
investments are not made by the government; Profit is distributed
to owners who invest in businesses, and wages are paid to workers
employed by businesses. The American economy is in no way a free
market capitalistic system. It has become a oligarchic consumer
capitalist society that is manipulated, in a deliberate and
coordinated way, on a very large scale, through mass-marketing
techniques, to the advantage of Wall Street and mega-corporations.
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FLASH CRASH - HFT - DARK POOLS
MARKET WARNINGS
Titan Capital Joins Black Swan's Taleb in Increasing Bets on Extreme Moves
BL
GOLD MANIPULATION
Gold Reaching $1,500 for Analysts in Any Economy as Soros Bubble Inflates
BL
VIDEO TO WATCH
QUOTE OF THE WEEK
To paraphrase Oscar Wilde
Investors
know the price of everything but the value of nothing.
Author Unknown
I therapy, you have to accept a mistake to move on.
At times, this realization will be painful but in the end
it is better for you. Right now Wall Street is in
complete denial and trying to pretend all is well.
Their profits are up but all that is happening is a wealth
transfer from taxpayers to this unproductive group.
Jim Quinn - Burning Platform
Never
have so few, done so little, and made so much, while
screwing so many.
Mobs, Messiahs and Markets
“On the Forbes list
of rich people, you will find hedge fund managers in
droves, but no one who made his money as a hedge fund
client.”
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