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As
Greek CDS Hit Record, German Economy Minister Accuses Greece Of Reneging
Durden
3-2-12 , Guest
Post: If This Is Such a Strong Economy, Why Does This Chart Look Recessionary? Durden 3-2-12 , Art
Cashin On Why The "Economy Is Weaker Than It Has
Been In 21 Months" Durden 3-2-12 The key focus of Cashin's daily letter today has to do with the steadfast
resilience of the ECRI's Lakshman
Achuthan, who called for a recession back in September,
and when asked yesterday if he reaffirms his call, he says "Consider it
reaffirmed." He then proceeds to list out the "key, hard facts"
summarizing the litany of truth as follows: "The economy is weaker
today than it has been in 21 months." … , Warm
Weather Did Boost Economy Goldman Finds, Will Now Be A Drag Durden 3-2-12 While
last winter every downtick in corporate earnings was promptly "explained
away" by executives using the harsh
weather excuse, one has heard not a peep from companies on the
topic of an abnormally accommodative climate over the past 4 months. And why
would they - after all it would mean that any gains, not that there have been
many as most companies have reported below average results, have been
artificially boosted by one-time events. Needless to say, the mainstream media
would rather not touch this topic with a ten foot pole: there is an election to
be won and the public can not be disturbed with facts (heaven forbid someone
should mention seasonal adjustments - that's a death sentence). Which is why
ironically we have to go to Goldman, which as noted recently, has once again
turned bearish on the economy for one reason or another… , Who Is
Most Exposed To The Oil Price Shock? Durden 3-2-12 Over the past 5 months, the only
reason the US market, and this economy has outperformed the world (or
"decoupled" in the case of so-called US fundamentals) is because the
trillions in incremental liquidity from generous central planners have homed in
on US equities like a heat seeker, in the process boosting confidence, and in a
reflexive fashion, making consumers believe that things are getting better (for
producers of printer cartridge maybe, everyone else just keeps getting worse
off in real, not nominal, terms). Paradoxically, the trillion plus injected into the system from the
ECB, ended up helping not Europe, but the US. However, as every action
ultimately has an equal an opposite reaction, the recent US "renaissance" has also
sown the seeds of its own destruction, because one of the side effects of a massive liquidity reflation is
what has happened in the energy markets where the crude complex trades at all
or near all time highs. However, as the following chart from UBS shows, it is
the US
which has the most exposure to that other side effect of soaring liquidity:
surging prices. While the number is fluid (economist humor), every $10 increase in
crude prices, cuts US GDP by
1%, and less than that in Europe and the ROW. As noted yesterday and today, "strategists"
have already started trimming their GDP forecasts. How long before we end up
seeing already weak growth turn negative as a result of the most recent central
planning reliquification experiment? Because it will
- central intervention always leads to adverse consequences in due course. Only
this time, corporate profits will not allow the economy (read the markets) to
pull itself up by the bootstrap, as they have topped and are now sliding lower.
, Geithner Pens Another Ridiculous Op-Ed Durden 3-2-12 Nearly two years after his catastrophic
foray into Op-Ed writing, here is Tim Geithner's
latest, this time making the hypocritical case to "not forget the lesson
from the financial crisis"... which he himself ushered on America as head
of the New York Fed. Frankly we
are quite sure it is not even worth reading this drivel: the unemployed man walking has been a total
disaster during his entire tenure (at both the New York Fed where he supervised all the
banks that subsequently fell,
and the Treasury), and we are fairly confident that reading anything written by
this pathological failure will cost collective IQs to drop by 10 points at a
minimum. Hey Tim: is there
a risk the US can get downgraded? Any risk? , Bank
Of America Joins Goldman In Cutting Its Q1 GDP Forecast Durden 3-2-12 , Spain
Forecasts 24.3% Unemployment In 2012, 1.7% GDP Contraction Durden 3-2-12 , What
Carry Trade? Euro Banks Deposit Entire LTRO 2 At ECB, Bring Total To Over $1
Trillion Durden 3-2-12 When
explaining the practical effect of Wednesday's second and certainly not last
LTRO, we
said that "when it comes to explaining why Europe's banks are not only
not deleveraging but increasing leverage while paying an incremental 75 bps on up to €700 billion in
deposits soon to be handed over
to the ECB, one needs all the favorable spin one can muster." We also
estimated that net of rollovers and other tangents, the true net liquidity add
would be €311 billion and
"the
final number by which the ECB's deposit account will
increase will be about €210 billion less than the overhead number" of €529.5 billion. Sure enough, as of this morning , A
default that isn’t a default and a sale that isn’t a sale : Bruce
Krasting : 03/02/2012
Deception. , If
The Guilty Are Never Punished, Housing Will Never
Recover : ilene : 03/02/2012
Less risk, maybe, but that's a long way from a sustained recovery.
, CDS,
Huh. What It Is Good For? Absolutely Nothin? The Wall Street Journal ,
- WLI is 124.2 up from the prior
week’s reading of 123.1.
- The lowest reading for WLI on
record was 105.3 for the week ending March 6, 2009.
- WLI growth rose to a negative
3.0%, up from last week’s reading of negative 3.5%
- The lowest reading for WLI growth
on record was -29.9% on December 5, 2008. It turned higher months before
the stock market [S&P 500 (SPY)] bottomed on March 6, 2009, at
666.79.
WLI
made a 28 week high. It has not been this high since August 12, 2011, when it
was 124.7. WLI growth made a 27-week high. It has not been this high since
August 19, 2011, when it was a negative 1.0…Last week in the article "ECRI
Remains Bearish on US Economy - Recession Still Expected" ECRI
reiterated their call for a recession this year with these key points:
Since
September Recession Call, ALL of the data used to define recessions is slowing.
- Year-over-year GDP Growth peaked
in Q3 2010, fell to 1.5% in Q2 2011 and has been flat-line since then.
(Annualized quarterly GDP growth for Q4-2011 was 2.8% but the
year-over-year growth was only 1.6%)
- Personal Income Growth and Broad
Sales Growth see Same kind of pattern
- Industrial production at 22 month
low
Put those into a
COINCIDENT INDEX then it shows the growth has been slowing. We have not had a
decline like that in the Coincident Index without a recession in the last 50
years. ECRI's Co-Founder & Chief Operations
Officer, Lakshman Achuthan,
said recession should begin by mid year 2012. He says revisions in the data
might say a recession has already started just like the last recession. If the
recession is starting now, then the consensus should figure it out in about six
months (August.)…’ , Moody's
Cuts Greece to Lowest Debt Rating TheStreet , Despite Recent Gains, S&P is Still Stuck in Bear Market
, Housing Still Drowning in Underwater Mortgages By Kathleen Madigan , Half
a million UK retirement plans shattered overnight as pensions plunge , 30
Stupid Things The Government Is Spending Money On The
American Dream March 2, 2012 http://albertpeia.com/30stupidgovtspendings.htm , "How
Did You Not Notice 24-Year-Olds Were Being Paid $2 Million A Year Who Clearly
Didn’t Know Anything?” Durden 3-2-12 Michael Lewis' scathing, aphoristic, uber-sarcastic style need no
introduction. As such we will leave this brief clip from Slate, in which The
Big Short author is asked how to avoid a new financial crisis, without much
commentary (the answer is that under the current status quo system it is
impossible to guarantee no more financial collapses, even if Glass-Steagall
were to be unwound, but that is the topic for another story), suffice to point
out the punchline: "future generations will
wonder, “How did you not notice
24-year-olds were being paid $2 million a year who clearly didn’t know
anything?” That pretty much sums it up right there. , Erik
Townsend: Expect a US Price Shock as Black Swans Come Home to Roost Durden
3-2-12 American investor (and longtime CM.com
member) Erik Townsend has spent the past several years living
internationally, with an eye to which countries may be good alternatives if
economic crisis and/or Peak Oil start to materially impact life in the
US. His main observation as an expat? Through
its misguided policies, the US has been exporting inflation to the rest of the
world, raising prices all over the globe (as an example, he cites a $57 chicken
pot pie from the menu at a 'working class' restaurant in Australia). This
inflation is affecting the rest of the world harshly, but is not yet being felt
in the US
due to our ability to export it as the issuer of the world's reserve currency.
Our immunity will not last forever though, and when it ends, a massive upwards
spike in prices is going to hit US markets. , We Were Off By Two
Months Durden
3-2-12 Back on May 25 2010, just as the Greek fiests was starting to unravel, we
wrote the following: "Total US debt per today's Daily Treasury
Statement was $12,989,095 million. Also today, the US Treasury auctioned off $42
billion in 2 Year debt. This means that as of this moment, assuming the new
debt were to settle today, the US
has $13,031,095 billion in debt: congratulation America - you have now passed lucky
$13 trillion in total debt. But don't worry, we won't
stay here for long. At the current rate of issuance, $14 trillion will be
passed in 8 months, and $15 trillion in another 7. By the end of 2011, we estimate total US
sovereign debt to be about $15.5 trillion. For some recent
vivid examples of prosperity courtesy of runaway debt issuance, please see Argentina, Japan
and Greece."
We apologize profusely, as we were off by two
months. , European
Solidarity - "Everybody Knows The Spanish Are Lying About The Figures” Durden
3-2-12 Back in October, when Greece was rewarded with
further bond haircuts for progressively missing its economic targets, even
after having gotten caught on at least one occasion making its economy appear
worse than it was, we said
that it is only a matter of time before "Portugal, Ireland, Spain and Italy will promptly
commence sabotaging their economies (just like Greece) simply to get the same debt Blue Light special as
Greece." In the aftermath of this statement, we got the Irish and
the Portuguese
proceeding to slowly but surely do just that. Today, it was Spain's turn to
make it 3 out of 4 after as Reuters noted so appropriately, "Spain defies
Brussels on deficit target" clarifying that "Spain set itself a
softer budget target for 2012 on Friday than originally agreed under the euro
zone's austerity drive, putting a question mark over the credibility of the
European Union's new fiscal pact. Prime Minister Mariano Rajoy
insisted he was acting within EU guidelines because the plan was still to hit
the European Union public deficit goal of 3 percent of gross domestic product
(GDP) in 2013." That Italy is sure to follow is absolutely guaranteed,
however just because the ECB is now indirectly monetizing BTPs
the true impact will be delayed far more, and instead of taking prompt steps to
remedy the situation, the European complacency will be accentuated by the fact
that bond yields are very low, and supposedly indicates the true state of the
economy. No. All
it indicates is the conversion of future inflation (courtesy of €1 trillion in
new money in the past 3 months) for a very temporary respite before all hell
ultimately breaks loose as countries pretend everything is ok as bond yields
are pushed artificially low. And in doing nothing, the
fundamentals in the economy only get worse and worse. Germany knows this
very well, and the Economist
explains the reaction to Spain's surprising statement today perfectly... , Mike
Krieger Asks Whether September 11, 2001 Is Our Big Lie Durden
3-2-12 [ There are just too many ‘big lies’
so as to make counting same an almost futile and unending task.