Tuesday, March 23, 2010

So, Who Is spinning

Angela MerkelThe stage is set for a showdown between Angela Merkel (left) and Jose Manuel Barroso, the European commission president, after the German chancellor said a bailout for Greece should not be on the agenda of this week's EU summit in Brussels. Barroso had called for the eurozone countries to use the two-day meeting to agree to a co-ordinated package of loans that could be quickly put in place if the Greek government decided it needed help to reduce its ballooning budget deficit. He warned that the financial markets were being unsettled by the lack of clarity. But Merkel said in a radio interview that Greece was not in danger of default and aid for the country would not be a topic at the summit, which starts on Thursday. "There's no looming insolvency," Merkel told Deutschlandfunk. "I don't believe that Greece has any acute financial needs from the European community and that's what the Greek prime minister keeps telling me." She said it was the persistent speculation about a possible bailout that was creating the volatility in the financial markets and warned against raising "false expectations" that other eurozone economies would come to Greece's rescue. The euro took a tumble last week, dropping to $1.35, amid all the talk about a possible bailout. "I don't see that Greece needs money at the moment and the Greek government has confirmed that. That's why I'd urge us not to stir up turbulence in the markets by raising false expectations for Thursday's council meeting," Merkel said. – UK Guardian
So, who is spinning here, Goldmen or Merkel or both?

58 comments:

Ivan said...

John Mauldin's Outside the Box E-Letter:

...I was reading an interview with Germany's most-quoted economist and then, all of a sudden, his face pops up on a TV show (a panel discussion on Germany's version of Fox Business News) at the same time, so I paid close attention. Hans-Werner Sinn's remarks are apparently listened to as closely as are the Federal Reserve Chairman's remarks in the US. He said:

The Greek drama will have a 'frightful' ('schreklich') ending no matter which course of action is taken. The objective is to avoid having a Greek default trigger another banking crisis across the EU.


The EU member states are too financially fragile to take on any flaky Greek debt. The actual Greek deficit is running at 16% of GDP, not 12% as previously reported. Greece is in a deepening retraction, not a recovery, as previously claimed. [Germany's social security, welfare, unemployment, and health care entitlement programs are all running cash-negative or soon will be, but that is another subject entirely. Angela Merkel has a committee established to work on tax reform, meaning tax rate reductions - Steve].


There are three bad alternatives. He recommends #3 (effectively, default):
A Franco-German bailout. Dr. Sinn believes this is impractical and the worst of the three alternatives because the amounts required for an effective bailout are so large that it would trigger a jump in yields on French and German sovereign debt which would result in a Euro-wide financial crisis. In addition, Angela Merkel said 'no,' and so did Guido Westerwelle (her coalition partner and foreign minister).


IMF loans. Dr. Sinn believes that this would accelerate the Greek economic contraction with a dramatic deflation of wages and prices, which could lead to civil war, revolution and a political destabilization of the area.


Exit the Euro zone, revive the Drachma, re-denominate the sovereign bonds in Drachma, let the Drachma collapse, and rebuild after the collapse, largely on tourist remittances Assuming a small amount of domestic (internal) default, this would be the least-painful to the Greek populace, but German banks and investors would lose approximately $38 Bn in bond investments +/- what can be recovered after the Greek economy recovers. Eventually, Greece would be allowed to re-join the EU.
Formation of an EU monetary fund is out of the question, he believes, because it requires treaty modifications that might take many years to pass.


As an aside, he said that if German tax rates are not lowered, that Germany will slide back into recession.
...

xerxes said...

Belgium total debt to gdp 103% ...

Italian Debt to roll worth 9% of total economy in next 12 months ...

xerxes said...

Dear Ivan, I would never argue with somebody named Guido :-)

xerxes said...

What happens when the euro goes to parity against the dollar (and it will!) because the Europeans are having trouble getting their act together?

John Mauldin, March 20, in 'The Threat To Muddle Through'.

So Dear Ivan, we need to ask Dear Boris what he thinks about the likelihood of EURUSD parity, during my lifetime :-)

xerxes said...

What I found interesting, as well, Dear Ivan, is the serious discussion amongst the German plutocracy, to reduce their taxation levels while Barak just passed a humongous, job-destroying tax measure ...

xerxes said...

China erwartet Exportdefizit
Das Land ist die verlängerte Werkbank der Welt. Das führte in der Vergangenheit zu riesigen Überschüssen in der Handelsbilanz. Im laufenden Monat soll es dagegen angeblich ein Defizit werden. Renminbi-Spekulanten reagieren verschreckt. von Tobias Bayer Frankfurt .....

It says [I think] that China is to announce a monthly trade deficit and currency speculators long the RMB are in panic mode

boris said...

emini284
both
at
Market Report
and
Services->files->ofiles->Emini284

boris said...

China expected to announce export deficit The country is the extended workbench of the world. This resulted in the past, a large surplus in the trade balance. In the current month, however, it is supposed to be a deficit. Renminbi has speculators scared. by Tobias Bayer Frankfurt ...

xerxes said...

I see that understanding German is another of your many talents Dear Boris; perhaps you can provide analysis of the DAX as you do the SPX :-)

boris said...

Update
On DotOrg

boris said...

hahahaha

Dear Xerxes!(:-

xerxes said...

There's a little inverted H&S formed in the SPX as part of the small descending expansive wedge so perhaps today we sing 'Sky Pilot' (How High Can You Fly) instead of the 'Limbo Rock' (How Low Can You Go) :-)

boris said...

See update
on
Dotorg
the statement about 10:45 is not timely any more

xerxes said...

Greece likely to pay 6.5% on debt rollovers per B-berg & ECB

xerxes said...

Nomura says long-term players are liquidating euros Dear Boris with long-term implications for stocks and bonds...Target per Nomura 1.2500

First lets see if eurusd can stay under 1.35 for more than a few minutes :-)

boris said...

Only, when Dear Obama
and Merkel will say the EURO is going lower the EURO starts going higher!

Just wait(:-
They used every Ballistic to cause EURO go lower. Every investment house and their grandma came out with forecasts to that cause, but Yes, EURO still above 1.35
Amazing?

xerxes said...

Remember last year in March, Obama told us to buy stocks; With that kind of perspicacity, he should be top dog over at Goldman Sachs :-)

Mike Truong said...

this market really wants you to continue to chase it instead of giving you decent long entries. Very frustrating...

Mike Truong said...

Well I think the market can start heading down now that I threw in the towel and went long...Can't find any decent entry so just bit the bullet. Yesterday high was today's low and the beat march on...Very frustrating...

john said...

Patience

old john

boris said...

Dear Michael,
I am not getting good entry point
so I stay out.
No need to chase things

Dear John is right
Patience

At the same time, if you got small position and do not get scared, chances are you will make money as market moves at least somewhat higher

Good Trading Dear Michael
Use, what you learned
Do not chase ,especially with large position

Good Trading Dear Friend Michael

jimww said...

Hi boris , old john and all the others , just wanted to say hi and thank you for the dates.

xerxes said...

The Brits have done raids on hedge funds today making arrests, per B-berg ....

Jon Corzine, loses the governorship of NJ and now is chief of MF Global ... MF Global stock up nearly 10% on the news. per B-berg

boris said...

Dear Jim
Enjoy

Good Trading Dear friend

boris said...

Goldmen never lose
They always win
Dear Xerxes

xerxes said...

Well Dear Boris, the Sky Pilot plan is in progress with the SPX up over 20 points since yesterday; Inverted H&S in play and the ascending wedgie breaking out north ... You know the target :-) .... Dear Mike will get rich here ... Hope he buys us dinner on our next trip to lalaland :-)

xerxes said...

B-berg is talking about the 'economics of happiness' being jobs, jobs, jobs .... Well Corzine has his and he's giving the 20% of U6 the single finger salute ....

xerxes said...

British Chancellor of the Exchequer said that the banker bonus tax has taken in 5 times expected revenues ... B-berg

xerxes said...

Mr. Yen was just interviewed on B-berg and he said USDJPY was heading towards 85 and EURUSD has a lot more to fall and he also noted that GBPUSD is a loser as well as the UK is no better than Greece ....
Despite deflation, he says, Japan doing well .... RMB is undervalued now and becoming more so, 'every day' Dear Boris

xerxes said...

Looks like Mr. Yen's prediction is not for today Dear Boris ... A heady day for dollar bulls

boris said...

Dear Xerxes
Prediction without the date
is
NOT A PREDICTION

Sorry Mr. Yen(:-

Go back to drawing board

xerxes said...

Fitch downgrades Portugal with negative outlook

xerxes said...

Looks like surging tax receipts from banker bonuses is lending support to sterling today Dear Boris :-)

xerxes said...

B-berg tells us that Portuguese CDS's are surging on the Fitch press release Dear Boris ...

Are there any skeletons in the alpine closets Dear Boris that could cause the franc to wobble :-)

xerxes said...

9.3% of GDP is Portugal's deficit ... Fitch says that Portugal has the worst prospects for improving public finances of all other euro zone countries, hence the downgrade ...

xerxes said...

H&S in play with the relic ... Sayonara time Dear Boris? :-)

xerxes said...

Portugal downgrade to herald more sovereign downgrades to come? B-berg suggests yes, with the UK on deck, Dear Boris ....

xerxes said...

Gary Schilling says Spain is the next debacle in Euroland as the banks are in a big pile of scat; But the real problem for Spain is not its outsized gov't debt but the enormous private debt load ... Housing prices rose 268% and have only declined 10% so far, whereas in USA homes rose 250% and have declined 30% so far ....

xerxes said...

Schilling is bullish on USD's and US Treasuries .... He says parity coming for EURUSD .... 30 year Treasuries to 3% he says ...

With housing starts low, consumers not spending and unemployment stubbornly high, he thinks his long USD & UST's will provide handsome returns ....

Looks like B-berg is going for broke today with the buckeroo, Dear Boris

boris said...

Stay Calm
Dear Xerxes, You/We know better
(:-
Good Trading Dear Friend

john said...

Boris

I like the little modification on the file site with the big picture separate. A little thing but makes it easier

off for a jog


old john

xerxes said...

I'm kool here Dear Boris .... just reporting here :-)

boris said...

Dear John,
Enjoy Dear Friend
good Jogging
Good Trading Dearest Friend

Wanderer said...

Dear Boris,
Good morning.
Thanks and good trading.

Bert

boris said...

emini285
at
DotOrg ( files, Market Report)

boris said...

Dear Bert
Good Morning
and Good Trading Dearest Friend

xerxes said...

John Taylor of FX Concepts, the world's largest hedge fund says that EURUSD will be 1.20xx by August ...

xerxes said...

UBS says that Greece will ultimately default

boris said...

SO FAR
Entire Day Within the Trading Area we designated with Yellow on the graph!

Good Trading All

john said...

xerxes

opah

old john

I was reading an article about "dangerous professions "that were deemed by the greek government. Those who were employed retired at 50 with full benefits.
One of the professions was hair dresser /stylist because of the " toxic" chemicals that were used by hair salons.

One of the funniest things I have seen/heard in weeks.

boris said...

Market Update
On
DOtOrg
Good Trading

xerxes said...

It is sad Dear John ... During the debacle that inflicted Argentina during the unfolding of their debt default back in 2001, I had read an article that claimed that certain Argentinians that worked for the central government became eligible for a lifetime pension after working only a single day .... The Greeks are pikers (and suckers) in comparison :-)

john said...

xerxes

I guess that is the definition of " dangerous"--- hair stylist

old john

xerxes said...

Good Morning Dear Boris .... Greece needs only 20 billion euros to get thru the year ... Chump Change Dear Boris; What kind of crisis are they talking about? :-)

xerxes said...

The 16-nation euro area may be “at the early stages of what may prove to be” a breakup, according to Roger Bootle, a former U.K. Treasury adviser. The currency may weaken to $1.25 by year-end ....

Soon Dear Boris they'll be talking about reconstituting the Holy Roman Empire :-)

xerxes said...

B-berg guest says EURUSD to 1.25 is a no-brainer Dear Boris and likely to go far lower

Ivan said...

There are rumours doing the round of an annoucement re Greece today. Talk is that they are going to receive 10bn from the IMF.

Dear Xerxes, if this will be true, the final bump for eur is comming.

boris said...

new post
Please