Meltdown

[ezodisy]

Economist David McWilliams: "If Ireland continues hurtling down this road which is close to default, the whole of Europe will be badly affected. The credibility of the euro will be badly affected. Then Spain might default, Italy and Greece ..."

some more on this topic

"A eurozone member state faced with the prospect of sovereign default, or just having suffered the indignity of sovereign default, would be immensely relieved to be a member of the eurozone. The last thing it would want to do is give up the financial shelter provided by membership in the eurozone to try and emulate Iceland, New Zealand or the UK."


Sovereign default in the eurozone and the breakup of the eurozone: Sloppy Thinking 101

[ezodisy]

another crazy day

RBS -- 11.6p (down 66.6%) mwuahaha
Lloyds - 65p (down 33.9%)
Barclays -- 88p (down 10.2%)
HSBC - 501p (down 6.5%)

Some Irish banks were slaughtered too

The £ scenario has not yet played out. The £ is down against everything, as is the Euro, except against the £ 

PIGS to S&P slaughter

"In fact, Spain's looking to be the worst economy in the eurozone.....Spain's own government is now forecasting a 1.6 per cent fall in GDP in 2009 — driven by a 9 per cent slump in investment and a subsequent 3.9 per cent dip in employment. Inflation meanwhile, stood at 1.4 per cent at the end of 2008, compared to 4.2 per cent in 2007 — raising the prospect of a deflationary spiral."

Eurozone economy to shrink 1.9% this year

"The European Commission's forecast for this year was somewhat less pessimistic than that of many private sector economists. Analysts at Deutsche Bank, for example, predict a 2.5 per cent fall in eurozone GDP this year before a return to 1.0 per cent growth in 2010."

and finally some info about Poland

Another Eastern European meltdown?

Forex failure begins in Poland

About the zloty and RBC capital saying:

"The timetable for Euro membership by January 2012 is simply too tight. The PLN needs to enter ERM2 by mid-2009, at the latest; but this looks extremely unlikely. First, Euro membership requires support from the main opposition parties and/or the president, but this is conditional on the outcome of a proposed public referendum. Second, a referendum will not be held before June (to coincide with the European Elections). Third, even with a positive public vote the Polish constitution must then be changed to remove the stipulation that the national currency can only be issued within Poland.

On top of all this, there is no guarantee that Poland will meet the five Maastricht convergence criteria. Holding the PLN stable within the ERM2 bands for two years may prove to be a tall order while the budget deficit, which has been squeezed lower purely as a result of recent strong economic growth, will widen sharply as the economy slows, breeching (SIC) the 3%/GDP limit and disqualifying Poland from Euro entry. The best way to play the likely Euro delay is to be a payer of the 5y5y forward spread (targeting 120bp). At just 31bp at present, this is ignoring all the pitfalls along the way."

[ezodisy]

Bank of China VP warns of fresh financial crisis

A top Bank of China official warned the world should brace for "a second round of financial crisis" due to rising bad loans as the real economy falls into recession, in remarks published Thursday.

Efforts by governments around the world to bail out markets have so far failed to solve the deep-rooted problems behind the current crisis, Zhu Min, a vice president for the bank, wrote in the China Securities Journal.

"The real estate market will continue to see corrections and the stock prices of financial institutions will continue to see wide swings," he said.

Banks will remain reluctant to lend and currencies will continue to fluctuate as funds are reallocated around the world, he wrote.

"Rising defaults of industrial loans and personal loans caused by a recession in the real economy could lead to a second round in the financial crisis," Zhu wrote in the full page commentary.

The scale and nature of the crisis had been misjudged, and the lack of structure and vision in government efforts to stabilise the markets could lead to unforeseen pitfalls, he warned.

"We think the government decisions during the global financial crisis were full of contradictions and mistakes," he said.

In the next one or two years, big financial institutions previously bailed out by governments could fall into trouble again, he predicted, while smaller banks could go bankrupt and hedge funds could collapse.

Governments have injected billions of dollars into financial institutions and made concerted interest rates cuts after the crisis deepened in September with the collapse of US bank Lehman Brothers.

[ezodisy]

Ruble Drops to Pre-1998 Crisis Low on 6th Devaluation This Year

Unemployment rose to 6.6 percent last year.

[BachQ]

but as ever the US has its faithful ally for company

Jan. 19 (Bloomberg) -- Prime Minister Gordon Brown's government tightened its grip on Britain's financial system, guaranteeing toxic assets and giving the Bank of England unprecedented power to buy securities.

The plan will increase the cost of bailing out the nation's banks by at least 100 billion pounds ($147 billion), the Treasury said in a statement today. The government raised its stake in Royal Bank of Scotland Group Plc to 70 percent and said it would use Northern Rock Plc to spur mortgage lending.

this just shows that all those people who say "great minds think alike" don't know wtf they're talking about

LOL    We have a race to the bottom, folks!  It seems that both the US and UK are outta control, and one step closer to full-blown nationalization. "I will not sit idly by and let people and businesses go to the wall."  Why don't they admit that they're clueless and desperate!

[BachQ]

Ruble Drops to Pre-1998 Crisis Low on 6th Devaluation This Year

Unemployment rose to 6.6 percent last year.

Only 6 devaluations in 7 days! 

[BachQ]

"In fact, Spain's looking to be the worst economy in the eurozone.....Spain's own government is now forecasting a 1.6 per cent fall in GDP in 2009 — driven by a 9 per cent slump in investment and a subsequent 3.9 per cent dip in employment. Inflation meanwhile, stood at 1.4 per cent at the end of 2008, compared to 4.2 per cent in 2007 — raising the prospect of a deflationary spiral."

Spain vs. Ireland: which will be the first to fall? 

[BachQ]

"We think the government decisions during the global financial crisis were full of contradictions and mistakes," he said.

Bingo!

[BachQ]

another crazy day

RBS -- 11.6p (down 66.6%) mwuahaha
Lloyds - 65p (down 33.9%)
Barclays -- 88p (down 10.2%)
HSBC - 501p (down 6.5%)

"Nationalization at zero value is implicit in the price," said Derek Chambers, an analyst at Standard & Poor's Equity Research Ltd. who has a "hold" rating on the stock. The stock price "is an option on the vague chance that it doesn't get nationalized." ... "The market is pricing in the risk of full nationalization for RBS," said Sandy Chen, an analyst at Panmure Gordon & Co. who has a "sell" rating on the stock. "It's not an RBS-specific issue. The mixture of deflation and de-leveraging is toxic for bank shares."

http://www.bloomberg.com/apps/news?pid=20601087&sid=auq0PJ4wSOsg&refer=home

[BachQ]

as my good American friend says when he's drunk: "f*ck Russia, f*ck the US" We go to Panama.

BTW, there's a silver lining to California's foreclosure boom:  Southern California home sales rose by 51% in December amid a surge in foreclosures which pushed home prices down 35% from a year earlier.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a9tuBSHCY5JM&refer=home

[ezodisy]

U.S. stimulus not enough, TARP bailout misused: Soros

"The economies of the world are falling off a cliff. This is a situation that is comparable to the 1930s. And once you recognize it, you have to recognize the size of the problem is much bigger," he said.

Soros said the United States needed "radical and unorthodox policy measures" to prevent a repeat of the Great Depression of the early 20th century that include recapitalizing banks and writing down the country's accumulated debt.

Also, he said, it should create more money to offset the collapse of credit and then rapidly pull that cash out of the system when inflation emerges. The government would have to be very nimble in the timing of such moves, he said.

"If they are successful...the deflationary pressures will be replaced by the specter of inflation and the authorities will have to drain the excess money from the economy almost as quickly as they pumped it in. Of the two operations the second one is going to be, politically, even more difficult than the first," he said.

[BachQ]

speaking of Dubya, the BBC's collection of Bushisms: http://news.bbc.co.uk/1/hi/world/americas/7809160.stm

last one's a beauty

On the eve of Bush's final day in office, Reuters has collected some editorials to bid former President Bush a "farewell:"

"Goodbye to the worst president ever," declared the Toronto Sun's editorial page. "Bush was an unmitigated disaster, failing on the big issues from the invasion of Iraq to global warming, Hurricane Katrina and the worst economic crisis since the Great Depression."

"Bush leaves a country and an economy in tatters," wrote the Sunday Times in London. It said America's national debt and unemployment nearly doubled on his watch. Britain's Daily Mail said he entered office with a budget surplus of $128 billion but exits with a $482 billion deficit. "He leaves the world facing its biggest crisis since the Depression, the Middle East in flames and U.S. standing at an all-time low."

The Scottish Daily Record observed: "America is now hated in many parts of the world. Bush leaves a legacy of wars and the world economy in meltdown. He has been dismissed as a buffoon and a war-monger, a man who made the world a more dangerous place while sending it to the brink of economic collapse."

"It's hard to find a historian who won't say that Bush was the most catastrophic leader the U.S. has ever known," the French daily Le Monde wrote. "One success: since September 11, 2001, there was no attack on U.S. soil. But this sits alongside an interminable list of failures, starting with the war in Iraq."

Stern magazine said: "Bush led the world's most powerful nation to ruin. He lied to the world, tortured in the name of freedom and caused lasting damage to America's standing."

http://www.reuters.com/article/newsOne/idUSTRE50I2OV20090119?sp=true

[ezodisy]

and for good measure:

U.S.-installed Iraqi ex-PM says Bush "utter failure"

[ezodisy]

Jim Rogers, chairman of Singapore-based Rogers Holdings, said the "U.K. is finished" and investors should sell the currency. Commonwealth Bank of Australia said there was a high risk of a cut to the country's credit rating outlook and lowered its pound forecast. Prime Minister Gordon Brown authorized a 100 billion pound ($142 billion) bailout for banks.

"I would urge you to sell any sterling you might have," said Rogers. "It's finished. I hate to say it, but I would not put any money in the U.K." Rogers correctly predicted the start of the commodities rally in 1999.

Nice little "reminder" at the bottom there that he's usually correct. Bugger 

[arkiv]

You must be shielded from the beginning:

   

[ezodisy]

You must be shielded from the beginning:

is that a sort of pre-emptive green strike?

I looked at its current position, seems to be holding up quite well. Can't say I'm too surprised though.

cable is getting hammered

[Archaic Torso of Apollo]

On the eve of Bush's final day in office, Reuters has collected some editorials to bid former President Bush a "farewell:"

To the above, I would like to add this piquant characterization of W's time in office, by a writer of paleoconservative-Catholic tendency, John Zmirak. As you would expect from a conservative, he is fairly moderate and forgiving in his view of Bush 

"George Bush is not simply a failed president, but a disgrace to the citizenship he enjoys, to the Faith he pretends to hold. There should be no place in this country where he can retire peacefully. He should be pelted with dung wherever he goes, and hounded into exile like Idi Amin."

http://www.takimag.com/blogs/article/cut_the_pentagon_till_its_a_triangle_part_i

[ezodisy]

where cable rests today on a long-term chart. Screw you JR

[ezodisy]

something for the "rebound in 2009" chaps

Roubini: Not even halfway there

[ezodisy]

LOL    We have a race to the bottom, folks!  It seems that both the US and UK are outta control, and one step closer to full-blown nationalization. "I will not sit idly by and let people and businesses go to the wall."  Why don't they admit that they're clueless and desperate!

basically the yanks, limies and PIIGS are fucked for years to come. It's no wonder you get Faber, Schiff and Rogers going on and on about investment opportunities in the far east. You can't prevent the Kondratieff wave baby, just got to ride it