Euro will collapse, 'Pig States' to bring EU down

[bashi]

"[15]The G20 communique" :

"We view with concern, and a minor amount of schadenfreude, the situation in Ireland and urge the Irish government to move toward a quick resolution of its unresolvable financial mess. We note as a form of encouragement that Argentina is a member of the G20, so nothing is hopeless."

http://www.ctv.ca/generic/generated/...le1797633.html

[MorningSong]

Bashi, I read that CTV article too, but isn't it a satiric/comical joke? (I thought it was quite funny, either way....hehehe)

[bashi]

Posted by MorningSong (here)
Bashi, I read that CTV article too, but isn't it a satiric/comical joke? (I thought it was quite funny, either way....hehehe)

yes, it's a cynic joke. thats why the is at the end.

The whole situation is a joke:
They are trying to cool the market by saying:"You can invest into bonds until 2013 with no risc or "haircut" for the investor. Whatever comes, the taxpayer will bear it...
( but still you have to pay premium insurances in case of default)
Two years ago, if this would be advocated by ANYONE, then that person would have been burried till kingdom comes.
But today it's necessary, just to buy some more time...

[Etherios]

is it to just buy more time ...?? I think what they are trying to do is steal as much as they can from EU citizens. Money and freedoms ... all they have time to steal they will...so they are dragging the sinking ship using our tax money and pushing us under the boat till they are sure we will go under with it.

I really feel that they dont just want to buy some time ... remember they want a CONTROLLED demolition of money. THEY want us to suffer...

[bashi]

Posted by Etherios (here)
is it to just buy more time ...?? I think what they are trying to do is steal as much as they can from EU citizens. Money and freedoms ... all they have time to steal they will...so they are dragging the sinking ship using our tax money and pushing us under the boat till they are sure we will go under with it.

I really feel that they dont just want to buy some time ... remember they want a CONTROLLED demolition of money. THEY want us to suffer...

Who is THEY?
Who is stealing from whom if the Irish Gov takes EU tax money for a loan which will most likely never be payed back?

[Luke]

Posted by bashi (here)
Who is THEY?
Who is stealing from whom if the Irish Gov takes EU tax money for a loan which will most likely never be payed back?

But isn't that a point in the first place?
After all, how you make slaves?
Remember, there was the time when debtor could be put in prison. For me, only thing that changed is scale of such prison.
Show me a person without a debt? (personal OR taken in his name by his "servants")
When you count all this, there are some folks out there that , given rules we believe in, literally OWN us.

[MariaDine]

http://www.bloomberg.com/video/64454776/

......about the Dollar, news from 11 November 2010


http://www.carbonated.tv/news/Obama+Arrives+In+South

http://www.guardian.co.uk/business/2...tion-full-text

[lightblue]

.
luke:

When you count all this, there are some folks out there that , given rules we believe in, literally OWN us.

think it's best you spoke for yourself... i don't beleive the rules you are on about.. l


.

[Swami]

Posted by MariaDine (here)
http://www.bloomberg.com/video/64454776/

......about the Dollar, news from 11 November 2010


http://www.carbonated.tv/news/Obama+Arrives+In+South

http://www.guardian.co.uk/business/2...tion-full-text

Completely

[bashi]

Posted by Luke (here)
After all, how you make slaves?

Lure someone to buy something without having the means. Entice until he/she falls for it.

Posted by Luke (here)
Remember, there was the time when debtor could be put in prison.

Don't you think that, if that would be implemented again, the dept level would shrink drastically?

Posted by Luke (here)
Show me a person without a debt?

My parents are dept free; i dont have depts ...

Posted by Luke (here)
When you count all this, there are some folks out there that , given rules we believe in, literally OWN us.

You are being owned because you allow yourself to go into the trap; because its soooo easy.
There are always two to Tango: One leads and the other follows.
"THEY" despise you for that lack of discipline and "THEY" feel you deserve to be in prison...

[bashi]

"RELIEF on the bond markets gave way to confusion and conspiracy theory last night"

"Unicredit analyst Luca Cazzulani said: "The statement at the G20 tries to convince people that only new debt will be affected by risk sharing after 2013.

"But in order to have new debt the country has to first repay all of the existing debt.

"You still have a problem because new debt still has to be issued at a high rate. I'm not convinced this is a final solution."

http://www.independent.ie/business/e...l-2418396.html
.

[Swami]

The Nazi Roots of the ‘Brussels EU’



http://www.relay-of-life.org/nazi-roots/chapter.html

[bashi]

More info on Ireland's brutal bankruptcy reality:

http://www.businessspectator.com.au/...F?OpenDocument

[MorningSong]

I hope this info isn't premature, but the Italian gov't has been risking to fail since this summer.... maybe it will soon... What noone is saying is why Fini et al don't go along with the party anymore...does it have to do with the new budget/finance laws???

And, just a ps anticipated... the minister who picked up the "girl" (Ruby) from the jail did not get legal papers signed to get her out of jail...just went and got her before the media could talk to her. Hot water there, too.

Berlusconi Ministers Quit to Force Government Collapse

November 15, 2010, 9:27 AM EST
More From Businessweek

* Fini’s Ministers Send Letter of Resignation to Berlusconi

* Berlusconi Hobbled as Fini Demands Resignation
* Berlusconi Ally Bossi Says Italy Can Avoid Crisis, Ansa Reports

By Lorenzo Totaro

(Updates with Berlusconi meets League, president calls talks with parliament speakers in fourth, eighth paragraphs.)

Nov. 15 (Bloomberg) -- Four top officials from Italian Prime Minister Silvio Berlusconi’s government, including a Cabinet member, resigned today in a move designed to bring down his administration and possibly trigger early elections.

Four members of the new Future and Liberty for Italy party formed by Chamber of Deputies Speaker Gianfranco Fini sent their letters of resignation to the premier, a spokesman for Deputy Industry Minister Adolfo Urso said. Urso was among those who stepped down.

Fini, who broke with Berlusconi in July, called for the premier’s resignation earlier this month after media reports that Berlusconi helped secure the release from police custody of a 17-year-old nightclub dancer. The rupture with Fini, who co- founded the premier’s People of Liberty party, comes as parliament prepares to vote on the government’s 2011 budget.

Berlusconi acknowledged the defection of Fini’s allies in a Nov. 13 statement and said he would call confidence votes in both houses of parliament after the budget is passed to see if he has sufficient support to govern. The government’s future will be at the center of a meeting today between the premier and his ally Umberto Bossi, leader of the Northern League.

Berlusconi’s Decision

“There are so many possibilities, so many hypotheses,” said Roberto Maroni, Interior Minister and a leading politician of the League. “The final decision is in the hands of the prime minister.”

Berlusconi, 74, may have enough backing in the upper house, the Senate, to survive a confidence vote. In the Chamber of Deputies, Fini has the votes to deny Berlusconi a majority and topple the government. Even if the government falls, early elections are not a certainty.

President Giorgio Napolitano would first consult the parties to see if another government might be formed with or without Berlusconi as its head, before calling for a vote. While Berlusconi’s popularity has declined to near-record lows since his 2008 re-election, polls indicate that he might win a vote without Fini and secure a majority in at least one house of parliament.

Napolitano will meet tomorrow with Fini and Senate Speaker Renato Schifani for an unscheduled update on the parliamentary agenda, the Chamber of Deputies said in a statement today.

Early Voting?

“The likelihood of new elections in the near future is now pretty high,” Natacha Valla, an economist at Goldman Sachs in Paris, wrote in a note to investors. “Yet, in a general move of wisdom, the entire political class agreed to postpone any formal step that would precipitate early elections until after the finance law has been passed, showing full awareness of the fact that an open political crisis before securing the 2011 budget would be utmost unwelcome in the context of heightened market anxiety regarding public finances in the euro zone.”

The yield premium investors demand to hold Italian 10-year bonds over similar-maturity German bonds rose to a euro-era record of 180.9 basis points on Nov. 11 as concern that Ireland and Portugal may follow Greece in having to seek a European Union-led bailout hurt bonds of other so-called peripheral countries. The spread fell less than 1 basis point today to 164.

Budget Passage

“We expect the budget law to be approved within four to six weeks,” Fabio Fois, an economist at Barclays Capital in London, said in an e-mailed note today. “Should the Senate approve the budget without amendments, we think a confidence vote could be triggered in mid-December.”

The confidence votes may coincide with a decision by Italy’s Constitutional Court set for Dec. 14 on the validity of a law passed by the government granting Berlusconi and other top officials immunity from prosecution while in office. Should the court rule against the premier, pending corruption trials against him could resume.

The biggest legal threat to Berlusconi comes from a Milan court that has already convicted his co-defendant in the case. The court is trying Berlusconi for allegedly paying $600,000 to U.K. lawyer David Mills to lie under oath on his behalf.

The criminal charges against Mills were thrown out in February because the statute of limitations had expired. Civil charges against Mills were upheld along with a 250,000-euro damage payment. Berlusconi denies any wrongdoing in the case and has said that judges are trying to destroy him politically.

‘Ruby’

The political crisis has accelerated after the revelations that Berlusconi contacted police in Milan after they arrested a woman known as “Ruby heart stealer” on suspicion of theft. Maroni, testifying on the incident in parliament last week, said that Berlusconi had called police to inquire about the girl, whom he referred to as a relative of Egyptian President Hosni Mubarak. The woman, who turned 18 this month, is Moroccan and not related to the Egyptian leader.

Berlusconi admitted helping the girl, who had attended a party at his Milan villa months earlier. The premier said he sent his former dental hygienist, a one-time television showgirl and now a regional politician for his party, to take custody of the girl upon her release from jail.

--Editors: Jeffrey Donovan, Andrew Davis

http://www.businessweek.com/news/201...-collapse.html

[bashi]

It looks like as if the storm is not developing:

"The Irish spread over German bunds was at 537 basis points today, down from 563 basis points on Nov. 12. Portugal’s spread was at 414 basis points, down from 423 basis points. "

http://www.bloomberg.com/news/2010-1...ested-aid.html

[witchy1]

I get a daily email from some "left of centre" financial gurus. Heres what they said today re BB and the bonds. Also an explanation of how the bonds work for those interested in the markets. (Sorry in advance for the length.)

(Source : http://www.moneymorning.com.au/20101...html#more-4144)

How Ben tried to break the Market

“I can’t believe it, he’s broken it!” said Slipstream Trader Murray Dawes to your editor last week.

“Who’s broken what?” we replied.

“Bernanke. He’s broken the market”, Murray responded with a look of disbelief on his face.

It takes a lot to drag Murray away from his charts. But for a veteran who’s been trading financial markets for twenty years, to suddenly see what he thought he’d never see… well, it has even taken him by surprise.

Exactly what was it that caused our reclusive trader to ark up suddenly? I’ll get to that very shortly, but before I do…

There’s an old saying on Wall Street that goes something like this:

“Don’t bet against the Fed because the Fed has more liquidity than you do.”

It’s a saying many investors have embraced over the last couple of years. Especially the big investment banks that have been making money hand over fist, front-running the Fed – buying bonds in anticipation of the Fed later buying those bonds on the market and pushing up the price.

Well, your little ole editor has some free advice for Federal Reserve chairman Ben Bernanke… and it goes like this:

“Don’t bet against the market, because the market has more liquidity than the Fed.”

It’s a message Bernanke and his chums would do well to remember.

They shouldn’t forget that for every dollar the Fed creates with its quantitative easing (money printing) programme, the market – thanks to leverage – can create ten, twenty or even one-hundred times that amount.

It can use that leverage to either back the Fed – as it has done for the last couple of years, or it can use that leverage to oppose the Fed… as it seems to be doing now.

Anyway, let me show you in chart form what it is that has had the editorial office here on Fitzroy Street in a buzz:

Interest rates climb

Source: Yahoo! Finance

The chart shows you the yield on US 10-Year Treasury Note over the past six months.

As you can see, during that time the yield has slumped from around 3.5% in May to less than 2.4% in early October.

Today, only a month after hitting that low, the yield has soared to 2.95% - higher than the chart actually shows, but where I’ve indicated with the red dot. In fact, the yield has increased by nearly 0.5% in just the last week or so.

While that may not seem like a big move, in interest rate markets it is. Certainly over such a short period of time.

But importantly, remember the purpose of the Fed’s USD$600 billion bond-buying spree.

The idea was that the Fed needed to keep interest rates low for two reasons. First, so that businesses would be more inclined to borrow and invest in their businesses and therefore invest in the economy.

And second, lower interest rates would force investors to take more risks. If you’re a long term investor you’re not going to get much joy from parking your cash in a US government bond for ten years, just to get a 2.4% income.

Bernanke confirmed this was the intention in an op-ed he wrote for the Washington Post:

“The FOMC intends to buy an additional $600 billion of longer-term Treasury securities by mid-2011 and will continue to reinvest repayments of principal on its holdings of securities, as it has been doing since August.

“This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.”

Then there was the punchline:

“Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

A “virtuous circle” eh? The next thing we’ll hear from him is that he’s doing “God’s work”!

Bernanke is often claimed to have studied the Great Depression. If he did, then he can be no better than an F-grade student.

Let’s see the impact of artificially low interest rates.

The result is something we’ve written about before, investors are forcibly shifted along the risk curve. If you’re struggling to understand what I mean, let me pictorialize it for you.

This is what your editor scrubbed together using the high-tech Microsoft Paint software package:

Source: Money Morning

If you can imagine that before the Fed fiddled around with the first round of money printing in 2008/2009, the X% return was giving investor A a 5% yield and the Y% was giving investor B an 8% yield.

However, you can also see that the 8% yield doesn’t come for free compared to the 5% yield. To get 8% investor B needs to take a greater risk. That risk could involve investing in shares rather than government bonds.

But with the Fed in the market buying up all the supposedly low risk assets – government bonds – which has driven up the price while at the same time driving down the yield (remember that the yield moves in the opposite direction to the price), investors are now forced to take more risks.

So that now the X% return is only offering, say, a 3% yield. If investor A wants to maintain the same income stream they’ll now have to buy the investment that’s yielding 5%. Only that’s now at Y%, which is a higher risk investment.

And because investor B wants an 8% return not 5%, they’ll have to shift even further along the risk curve to take a bigger risk too.

You’re seeing in action the impact of interest rate manipulation. Interest rates are supposed to provide investors and business people and consumers with an indication of how risky an investment or a purchase is.

But when you’ve got the Federal Reserve and other central banks manipulating the interest rate it creates false signals in the market.

Investments and business decisions are made that otherwise wouldn’t be made.

Let me give you another example. The Daily Reckoning weekend editor, and our resident German, Nick Hubble sent us this analogy which he’d heard from Austrian School economist, Roger Garrison:

“In a soviet economy, Ivan’s job is to tell the central planners how much resources they have to build houses. To please his superiors, he often overestimates. That causes too many houses to begin being constructed. By the time everyone realises that resources aren’t gonna make it, they have gone so far that some of the resources aren’t recoverable. So they end up with fewer houses than they could have had if Ivan hadn’t lied.”

That’s what has happened in economies globally, not just in the US.

But now the market is starting to turn against Bernanke. If the goal of the Fed is to keep interest rates low, how will it respond to the sudden and rapid increase in interest rates?

Maybe it will print even more money. Remember that no sooner had the Fed announced the QE2 policy than investors were talking up the idea of QE3 or even QE4…

Interest rates have been pushed low due to speculation on the Fed’s actions. No investor in their right mind would lock their money away for 10 years just to get a 2.4% return.

The only reason investors were buying US government bonds was because they knew the Fed would buy them from them. Some investors perhaps expected too much, and that’s why the yield has increased.

The problem for the Fed now is how it plans on manipulating the interest rate lower again.

Billions of dollars was invested in US Treasuries purely so they could front-run the Fed. But now, with the yield climbing back to 3%, will investors still be attracted enough by the potential capital gain?

Maybe Bernanke is happy with the 10-year note at 3%. But if he is then that cuts out the majority of punters who were buying bonds over the past six months.

Punters were only buying in on the expectation the price would be pushed higher – greater fool theory. If those same investors get the idea that Bernanke is happy with a 3% yield then what’s the incentive for these punters to keep buying?

They won’t, and that’ll push rates higher still.

And don’t forget that most of these positions are leveraged too. Even retail investors in the US can get 10:1 leverage on bonds, so imagine the size of the leverage taken out by the institutional investors.

Therefore, the natural outcome for interest rates is that the market will try to push them higher in defiance of the Fed. Now that the big speculative money is clearly leaving the market after making a killing, it’s being replaced by the longer term investor.

But the longer term investor will be more interested in yield than capital growth. In order for them to buy into bonds they’ll want to see yields rise and not only that, be confident that the yield isn’t going to rise much further.

That means they’ll be in no rush to buy in just yet.

In a nutshell the demand for US government bonds by the private sector is likely to be much less in the coming months as bond funds hold on to their higher yielding corporate debt or stocks.

That can only mean one of two things. Either the Fed will allow interest rates to drift higher as the market clearly wants it to, or more likely, the Fed will have to place an even bigger bet against the market and unleash a third, fourth and even fifth round of quantitative easing.

If low interests rates are the goal then that’s the only option.

On reflection it seems as though it’s not Ben Bernanke who has broken the market, but rather the market that’s about to break Ben Bernanke.

[bashi]

and here we go again:

Contagion fears loom over EU meeting

48 HOURS TO SAVE THE EURO

"The interest rate, or yield, on Irish bonds inched up again Tuesday, suggesting greater worries among traders even though Dublin repeatedly rejected reports that it would need to tap the eurozone's euro750 billion ($1 trillion) financial backstop. In early afternoon trading, the yield on Ireland's 10-year bonds reached 8.14 percent, up from 7.98 percent at the open."


http://www.baynews9.com/article/news...eeting?cid=rss

[bashi]

"The market thinks there is going to be some sort of deal and it's just a matter of time before it's announced," a trader said.

The Irish bond yield spread over 10-year Bunds was at 562 basis points, flat against levels seen around Monday's settlement. Similarly, the Portuguese spread was little changed at 434 bps.

http://www.bestgrowthstock.com/stock...land-in-focus/

[bashi]

"Financial markets appeared unimpressed by Dublin's decision to reject assistance, with the premium investors charge for holding Irish 10-year bonds rather than German Bunds rising to a near-record 595 basis points."

http://www.foxbusiness.com/markets/2...-crisis-steps/

[bashi]

Trying to extinguish the fire...

ECB Buys Portuguese, Greek Government Bonds

http://www.bloomberg.com/news/2010-1...aders-say.html