11-23-10

GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN

Why North Korea Attacked BI

North Korea Nuclear Fears Grow WSJ

North Korea Shells South Korea Island  WSJ

S. Korea Scrambles Jets, Returns Fire After North Shells Island BL

 

SOVEREIGNS

 

SPAIN/PORTUGAL Portugal next as EMU's Máquina Infernal keeps ticking Pritchard   Portugal will have a current account deficit of 10.3pc of GDP this year, 8.8pc in 2011, and 8.0pc in 2012, according to the OECD. That is to say, Portugal will be unable to pay its way in the world by a huge margin even after draconian austerity.   Portugal has the eurozone’s most rigid labour markets, and that social transfer costs have risen to 22pc of GDP from 18.5pc in 2005. Productivity is stuck at 64pc of the eurozone average, unchanged since the early 1990s. The promised EMU catch-up effect never occurred.   The origins of this crisis go back to Portugal’s fateful decision to push for euro membership at least 20 years before it was ready. Lisbon then failed to tighten fiscal and credit policy enough to offset a fall in interest rates from 16pc to 3pc as Portugal prepared to join in the 1990s – if it is possible to offset monetary error on such a scale.   Portugal saw its competitiveness destroyed by the boom, and has never been able to get it back. The country has been in perma-slump ever since with a Teutonic currency that raises the bar ever higher.   CDS chart of the day, Portugal edition Salmon   The CDS curve for Portugal has changed this year from a normal slope (the black line), to a an inverted slope (green line), meaning imminent default, to the current square-root shaped slope (the red line).   What's it mean? It means the market is confident Europe can prevent a Portugal default... for now. But all it will succeed in doing is kick the can down the road and push a default a few years back.     Spain and Portugal reject talk of bail-outs  FT   After Ireland, spotlight on Portugal, Spain MW Lisbon vulnerable to vigilantes, but Madrid may put up a fight   If Portugal is small enough to rescue, Spain may be "too big to save" Independent IRELAND Deal will have conditions RTE Ireland The financial rescue package is estimated to be worth in the region of €80-90 billion and its terms will be negotiated over the coming weeks.   Meanwhile, RTÉ News understands that the Minister for Finance Brian Lenihan thanked the German and French finance ministers for softening their stance on Ireland's low rate of corporate tax during last night's teleconference between euro zone finance ministers which approved Ireland's request for a bail-out. The €15 billion adjustment will consist of €10 billion of spending cuts and €5 billion of tax increases. Mr Lenihan told RTÉ this morning that there was no question of changing the 2011 Budget, which will frontload much of the cuts.   European Commissioner for Economic and Monetary Affairs Olli Rehn this morning repeated his earlier comments that Ireland would no longer be a low tax economy.   The Government's plan would meet the target of reducing the budget deficit to 3% of GDP by 2014. Public and private in the Ireland bailout   FT From a fundamental macro perspective, we would stress that Ireland and Greece are in a very different solvency boat to Portugal and Spain. Irish PM defiant as coalition cracks  FT Anger grows at EU-IMF plan as contagion fears spread Q+A: How will Ireland's bailout work? Reuters Ireland Is Second Euro Nation to Seek Aid as Banks Wobble BL Irish Banks Need $6.8 Billion in Cash Immediately, Analysts Say BL  Anglo Irish chairman says more nationalisations likely Reuters Ireland’s Lehman moment Elliott  Ireland’s Paradise Lost NYT Ireland's just an inevitable victim of the euro project Bootle JAPAN

The Beginning Of The Ponzi End- As Of Today, The Biggest Holder Of US Debt Is Ben Bernanke  ZH

 

Well, folks, it's official - mark November 22, 2021 in your calendars - today is the day the Ponzi starts in earnest. With today's $8.3 billion POMO monetization, the Fed's official holdings of US Treasury securities now amount to $891.3 billion, which is higher than the second largest holder of US debt: China, which as of September 30 held $884 billion, and Japan, with $864 billion. The purists will claim that the TIC data is as of September 30, and that as the weekly custodial account shows UST buying continues the data is likely not correct. They will be wrong: with the Fed now buying about $30 billion per week, or about $120 billion per month, for the foreseeable future and beyond, it would mean that China would need to buy a comparable amount to be in the standing. It won't. In other words, the Ponzi operation is now complete, and the Fed's monetization of US debt has made it not only the largest holder of such debt, but made external funding checks and balances in the guise of indirect auction bidding, irrelevant. For what tends to happen next in comparable case studies, please read the Dying of Money. And congratulations to China for finally not being the one having the most to lose on a DV01 basis on that day when the inevitable surge in interest rates finally happens. That honor is now strictly reserved for America's taxpayers.

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9-RESIDENTIAL REAL ESTATE - PHASE II

Australian Housing Slump Gathers Pace Money Morning

14- CORPORATE BANKRUPTCIES

Our burgeoning budget and the politics of avoidance Samuelson

America's budget deficit: Speak softly and carry a big chainsaw Economist

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