"If you're going to panic, do it fast and beat the crowd." ~ Jesse Livermore

Monday, October 24, 2011

Historic Reckoning and Grim Euro Thoughts

A Week Of Historic Reckoning
Seeking Alpha
Dealing with the effect of a Greek default on bank balance sheets is a huge waste of time and capital unless the risk of other PIIGS default is taken off the table. Leveraging of EFSF. To take the risk of further PIIGS default off the table the EFSF ...
More Grim Euro Thoughts It now appears that as of today European leaders have boldly agreed to … announce something or other later in the week. Meanwhile, a couple of thoughts. First, the grim news from Greece is, as many commentators are pointing out, a big refutation for the doctrine of “expansionary austerity.”. . . . Meanwhile, I see that Wolfgang Munchau is appropriately horrified by what he hears about the plans for a rescue fund. As he says, the notion of leveraging up funds from the remaining AAA Europeans amounts to creating either a super-AIG or a super-CDO — basically trading off the AAA rating of those countries to make private investors feel safe. The problem is that taking on that commitment could very quickly push France into non-AAA status, collapsing the whole thing. http://krugman.blogs.nytimes.com/2011/10/23/more-grim-euro-thoughts/


The Verboten Story of Argentina's Post-Default Economic Success
EconoMonitor (blog)
The default and devaluation contributed to a severe financial crisis and a sharp economic contraction, with GDP shrinking by about 5 percent in the first quarter of 2002 and nearly 11% for the full year. However, recovery began after that one quarter ...
Developing countries express concerns about financial crisis' impact on ...
Vereinte Nationen (UNO)
World economic difficulties are not an excuse for reneging on development cooperation commitments – but much rather a reason to step up efforts to help the poorest countries – said participants in a two-day United Nations Symposium hosted by the ...
Swan Says Europe's Sovereign Crisis Shouldn't Damp Confidence in Australia
Bloomberg
European leaders have set a deadline of Oct. 26 to complete a plan to beef up the euro bailout fund, cut Greece's debt without triggering a default, shield banks from the fallout and ensure Italy and Spain don't succumb to the contagion...
Credit Default Swaps: Reform needed?
Caffeinated Thoughts
Ever since the financial crisis began there has been talk about the need for financial reform. In particular, a certain kind of financial instruments called derivatives have been attacked as too risky; a plaything for risk-loving speculators who are ...
Kenny adamant State will honour rescue plan
Irish Times
CONTAGION: THE GOVERNMENT is campaigning to avoid any pressure from markets to follow an imminent sovereign default by Greece. Although EU leaders are advancing a plan to impose a loss of 50 per cent or more on the value of the Greek national debt, ...
Pernod Rise From Junk Cuts Rate to Record Low: Corporate Finance
BusinessWeek
Credit-default swaps tied to Paris-based Pernod declined 13 percent in the past month, the only French consumer non-cyclical company to drop, according to data compiled by Bloomberg. The contracts tumbled 30 percent from a two-year high reached Sept. ...
Global Financial Crisis II: Why capitalism is doomed
The Scavenger
Global Financial Crisis I was no aberration, and GFC II is also predestined. The ultimate, underlying cause of all economic downturns (recessions-cum-depressions) in free market capitalist economies is “overproduction” (whose obverse is ...
Today's Wall Street Not Much Different From 2008
NPR
Though banks have recovered slightly since the 2008 financial crisis, the echoes of the crisis still resonate in a struggling US economy. A sign for Wall Street is seen before the opening bell of the New York Stock Exchange. Though banks have recovered ...
FED Outgunned, EMU Outflanked
EconoMonitor (blog)
Even if Merkel and Sarkozy, and rightly so, appear most concerned with putting pressure on Italy, the most significant issue remains Greece which is now in default a fact that was un-sanctimoniously confirmed by the leaked bailout document which has ...
Argentina: Cristina cruising for victory – then what?
Financial Times (blog)
Scarily, the market is betting that the default risk of Latin America's third biggest economy is nearly as high. Back in May 2007 (Fern├índez took office in December that year), five-year credit default swaps on Argentine bonds were trading at 176.3 ...
Why the housing burden stalls America's economic recovery
Financial Times
By Lawrence Summers The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, ...
Andrew Alexander Believes the Euro Is a Conspiracy!
Business Insider
Are the PIIGS going to trust that alliance of Germany and France? I can tell you this, the British are thanking their lucky stars that they don't have to share their nukes with Germany! No stinkin' Euro for them! Andrew Alexander believes that this ...
Greece in debtor's prison
Credit Writedowns
The question is who defaults, how much of a haircut bondholders have to take, and whether thedefault occurs before or after contagion has made the situation considerably worse. Everyone is still trying to act as if Greece is different and that even ...
For profit colleges: Do your homework, says attorney general
Alexandria Echo Press
If students default on federal loans, taxpayers--not the for-profit colleges--pick up the tab. In other words, taxpayers subsidize the private equity funds and investors who own the for-profit colleges when students who attend them default on their ...
Insurers unlikely to recover funds from al-Qaida
Business Insurance
AP A federal magistrate has recommended that insurers recover $9.35 billion based on a 2006default judgment against al-Qaida for the 2001 World Trade Center attack. NEW YORK—Experts are doubtful that insurers will recover much if any of $9.35 billion ...
The ECB's monetary policy during the crisis
IEWY News
I wish I could talk about the financial crisis in the past tense. The last time I had the opportunity to talk about these issues in Malaga was, when I had the honour of receiving the title of Doctor Honoris Causa from this prestigious university in ...
The Eurozone Wags the Gold & Silver Dog
International Business Times
It would not make sense for market participants to buy Euro's during a default regardless of whether the default it structured or not. In fact, it is more likely that European central banks and businesses would be looking to either hedge their Euro ...
Hedge Funds Face Investor Pruning
Wall Street Journal
The hedge-fund industry sees the next two months as the most critical redemption period since the dark days of the financial crisis. Some underperforming funds, both large and small, expect to hear from investors soon. Those funds' managers "will be ...
Barracking for US, berating Europe: Gillard picks her side of economic divide
The Australian
ON the eve of a series of global economic talks, Julia Gillard says Barack Obama has "the right strategy" but that Europe has been "living beyond its means" and its leaders must fix their fiscal crisis. Interviewed by The Australian at The Lodge ...
Driving a Volvo? Not for These Swedes
Wall Street Journal
And while fans kept a tight hold on their wallets during the recent financial crisis, a stronger economy and a resilient local currency got them buying again. "This has been the best year ever," says Kjell Gustafson, who runs Sweden's Power Big Meet, ...
(Unofficial) Political Bestsellers — October 23, 2011
Washington Post (blog)
Primarily, it's a rehashing of titles past — with Michael Lewis's concise take on the financial crisis leaping to the top spot, as it does on the general nonfiction list. The new entries come toward the end of the list, and one falls squarely in the ...
Movers & Shakers: Academic gives the skinny on trading models
Crain's New York Business
New book from Columbia University's Emanuel Derman explores how Wall Street's faith in formulas worsened the financial crisis. By Aaron Elstein @InTheMkts In the mid-1980s, theoretical physicist Emanuel Derman went to work at Goldman Sachs, ...
Engineering the Financial Crisis, Arnold Kling | EconLog | Library of ...
By Arnold Kling
That is the title of the new book by Jeffrey Friedman and Wladimir Klaus. I have just started to read it. Their view is very close to mine in several ways. First, they emphasize the role of capital regulations in steering banks toward holding ...
EconLog
The Verboten Story of Argentina's Post-Default Economic Success ...
By Yves Smith
The default and devaluation contributed to a severe financial crisis and a sharp economic contraction, with GDP shrinking by about 5 percent in the first quarter of 2002 and nearly 11% for the full year. However, recovery began after that one ...
naked capitalism
EU Leaders Discuss Overcoming Financial Crisis
By KUNA
A summit meeting of the 27 European Union (EU) leaders opened Sunday with general and often-heard calls for serious steps to be taken to deal with the de.
Eurasia Review
Europe's leaders threaten Greek default if banks won't take haircut ...
By RSS Feed
The “haircut” would be accompanied by details of plans to recapitalise the banks and reinforce the European Financial Stability Facility (EFSF), the €440bn bail-out mechanism. If the banks called the EU-ECB-IMF troika's bluff, they would ...
Clearing and Settlement — Clearing...
The European Financial Crisis in One Graphic: The Dominoes of Debt
By Stephanie
Simply put, there is no way the EU authorities can stop the first domino–Greek default or equivalent writedown of its impossible debt load–from toppling the over-leveraged banks which will be rendered insolvent when forced to recognize their ...
FedUpUSA
Reserve Bank of India warns of another global financial crisis - The ...
RBI has warned of another financial crisis brewing, as global liquidity becomes a concern amidst central banks pegging their lending rates at near zero levels.
timesofindia.indiatimes.com/business/.../10424979.cms

Greek Collateral Key to Averting Default in Swap: Euro Credit
BusinessWeek
European Union officials are seeking deeper cuts to improve Greece's finances and to equip the European Financial Stability Facility with enough firepower to halt contagion that drove Italy's 10-year borrowing cost above 6 percent last week. ...
Financial crisis has echo in brokers' suit against ANZ
Sydney Morning Herald
Primebroker's former principals are going to court to try to turn back the clock, writes Leonie Wood. IN THE heady days of late 2007, when Australian share prices seemed to rise relentlessly against an emerging tide of naysayers, the marquees of ...
Mortgage Insurer Wilts
Wall Street Journal
PMI Group Inc.'s mortgage-insurance unit had been paying about $1.5 billion a year in claims to reimburse lenders and mortgage investors such as Fannie Mae, Freddie Mac and Wells Fargo & Co. for some of their losses when homeowners default...
Cameron joins EU financial crisis talks in Brussels
AngolaPress
London - European leaders have begun a day of talks aimed at resolving the region's debt crisis and keeping another recession at bay. UK Prime Minister David Cameron has joined 26 leaders in Brussels amid fears that problems in Greece threaten to ...
SB County bests state in 3Q home default notices
Santa Maria Times
The number of default notices sent by banks to California homeowners statewide jumped nearly 26 percent in the third quarter of this year, but Santa Barbara County fared somewhat better, according to recent data. In April, May and June, there were 487 ...
Chinese Ministry Saved from Default
Forbes
Last week, the powerful National Development and Reform Commission saved the country's Ministry of Railways from default by announcing that the bonds of the troubled agency have “government support.” The announcement followed a decision earlier this ...

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