Moody’s Downgrades Top 5 Greek Banks By One Notch
by Zero Hedge - March 31st, 2010 3:02 pm
Courtesy of Tyler Durden
Full Moody’s Press release.
Remaining four Moody’s-rated banks unaffected
Limassol, March 31, 2010 — Moody’s Investors Service has today downgraded the deposit and debt ratings of five of the nine Moody’s-rated Greek banks due to a weakening in the banks’ stand-alone financial strength and anticipated additional pressures stemming from the country’s challenging economic prospects in the foreseeable future.
The affected banks are: National Bank of Greece (to A2 from A1), EFG Eurobank Ergasias SA (to A3/Prime-2 from A2/Prime-1), Alpha Bank AE (to A3/Prime-2 from A2/Prime-1), and Piraeus Bank (to Baa1/Prime-2 from A2/Prime-1). Moody’s has also downgraded the deposit and debt ratings of Emporiki Bank of Greece SA (to A3/Prime-2 from A2/Prime-1), but as a result of a reassessment of the credit enhancement associated with systemic support for this institution. The outlook on all five banks’ ratings remains negative. This action concludes the review of these banks initiated on 3 March 2010.
Today’s rating actions were prompted by the country’s weakening macroeconomic outlook and its expected impact on these banks’ asset quality and earnings-generating capacity. Pressures on the macroeconomic fundamentals have been evident for the past year and are expected to intensify as the year unfolds, said Moody’s.
Although additional measures taken to address fiscal imbalances at the national level may have a positive impact over the longer term, Greece’s fiscal challenges will weigh negatively on economic growth over the short to medium term. As recently noted by the Bank of Greece, the magnitude of the economic contraction this year is likely to be more pronounced than was anticipated at the beginning of the year. Negative growth will give rise to unemployment, lower consumer disposable income and reduced profitability in the small- and medium-sized enterprise (SME) and corporate sectors. Moody’s expects the upward trend in non-performing loans, which began in 2008, to continue in 2010 and, possibly, 2011. Combined, these factors will place additional pressure on the banking sector’s already weakened asset quality and profitability.
Over the past year, Greek banks have increased their dependence on short-term market funding as access to the wholesale capital markets has been limited due to the global financial crisis. This, in turn, has led to a rise in maturity mismatches. In recent months, negative market sentiment towards Greece has further constrained the banks’…
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DiggPIIGS Claims On European Banks: $1.5 Trillion; France Most On Hook In PIIGS Implosion
by Zero Hedge - March 31st, 2010 2:56 pm
Courtesy of Tyler Durden
Here is one reason why Europe, while doing everything it can to make it seem (politically) like a bailout of Greece is out of the question, is and will continue to do all in its power to prevent a domino effect within the PIIGS countries: actually make that 1.5 trillion reasons. According to the IMF, the total amount of foreign claims, in this case focusing on Southern Europe countries, better known as PIIGS, on European international banks is $1.54 trillion. And while many have claimed that Germany would stand to lose the most from an implosion in the European periphery, that is in fact not true true: with $781 billion, France has much more at stake than Germany, whose banks have “just” $522 billion in “Southern European” claims. And while the IMF cut German GDP forecasts in large part due to the country’s exposure to Southern Europe, it appears that France is next on the chopping block.
This is shown in the chart below:
The source of the above data is IMF report titled: “Germany: 2010 Article IV Consultation—Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Germany” in which the Greek rescue ranger (funded to a great part by the US) decided to cut Germany’s 2010 GDP forecast from 1.5% to 1.2%, and 2011 from 1.9% to 1.7%. In the report, the IMF notes:
“Simulation exercises suggest that German banks could suffer significant losses from commercial real estate investments in the U.S. and Spain, and more generally from exposures to Southern Europe. The simulations also suggest that a reassessment of risks associated with claims on Southern Europe could have a large impact on capital flows within Europe, as German (and also French) banks would significantly reduce their foreign claims to restore capital ratios.”
One observation from the above chart is that the US at least will not be majorly impacted in a worst case scenario as it has the least amount of exposure, with just $118 billion. The same can not be said for France, Germany or the UK, which as we pointed out earlier, have a combined of over $1.5 trillion in net exposure.
What is sure, however, is that since IMF has just cut German GDP forecasts, using the same…
News Coverage of the Maguire ‘Whistleblower’ Car Accident in the States
by ilene - March 31st, 2010 2:51 pm
News Coverage of the Maguire ‘Whistleblower’ Car Accident in the States
Courtesy of JESSE’S CAFÉ AMÉRICAIN
I received this news story from an astute reader.
I also asked a GATA news source why Mr. Maguire had not discussed the accident in his interview with King World News. He is reported to be ‘very concerned’ for his safety and is reluctant to discuss this aspect of his coming forward. I think this is understandable. It must be very hard to do this sort of thing.
The mainstream media in the US is very slow to pursue investigative pieces, with a few notable exceptions. It has in too many cases become an extension of the corporations that own the once proud newsrooms.
Here also is a new interview by Eric King of King World News with Chris Powell, Adrian Douglas, and Bill Murphy on this and related topics.
NYPost
JPMorgan ‘chase’ story in UK
By MICHAEL GRAY
March 29, 2010
A London-based precious-metals trader who had accused JPMorgan Chase of manipulating the gold and silver markets was involved in a bizarre weekend car accident that triggered a police chase before the suspect was nabbed.
Andrew Maguire, a metals trader at the London Bullion Market Association, and his wife were traveling in their car when a second car coming out of a side street struck their vehicle. That car then hit two more vehicles before fleeing.
London cops using helicopters and patrol cars chased the hit-and-run driver before nabbing that person, whose name has not been released by authorities.
Maguire and his wife were released from the hospital yesterday. London police would not comment on the accident investigation.
The hit and run occurred after Maguire’s name came to light Thursday during a US Commodities Futures Trading Commission hearing on limiting gold and silver positions held by large market participants in order to prevent manipulation.
During the hearing, Maguire was identified as having sent e-mails to Bart Chilton, a CFTC commissioner, and Eliud Ramirez, head of the commission’s enforcement division, alleging that JPMorgan had used its massive metals positions to manipulate the commodities markets.
In one e-mail, Maguire wrote, "It is common knowledge here in London among the metals traders that it is JPM’s intent to flush out and cover as many shorts as possible prior to any discussion in March about position limits," referring to last week’s CFTC hearings.
JPMorgan inherited…
Eric King Follow Up Interview With GATA On The Trail Of The Biggest Gold Manipulation Story Disclosed
by ilene - March 31st, 2010 2:45 pm
More on the Andrew Maguire Whistleblowing Story from Zero Hedge. See also articles by JESSE’S CAFÉ AMÉRICAIN, such as King World Interview with Andrew Maguire ‘the Silver Market Whistleblower’, and News Coverage of the Maguire ‘Whistleblower’ Car Accident in the States.
Eric King Follow Up Interview With GATA On The Trail Of The Biggest Gold Manipulation Story Disclosed
Courtesy of Tyler Durden
The Andrew Maguire LBMA whistleblower story just refuses to go away, and it is about time someone from the mainstream media (yes, we know you read us constantly) finally picked up on this massive expose about the decades of fraud and manipulation in the commodities market, with a focus on gold and silver. Don’t worry, the Wall Street ad revenue sources you may lose from highlighting this "must read" story will be more than offset by the increased readership you will gain.
Today we have the latest segment in this saga, courtesy once again of Eric King who interviews GATA members Bill Murphy, Chris Powell and Adrian Douglas. As is pointed out in the interview, "The CFTC, on the public record, has been shown to have known in advance of massive market manipulation, and have done nothing." Isn’t this the same reason why Markopolos called SEC the biggest bunch of idiots in existence vis-a-vis their performance in the Madoff debacle? It is time someone big blew this up finally. Perhaps this will explain why it never gets mainstream attention: "JPMorgan chase is an agency of the US government, rigs the markets, and undertakes market manipulation." To all our readers: this is yet another "must hear" interview.
From King World News:
In this interview with GATA we continue the saga after just having interviewed Andrew Maguire, the whistleblower out of London. This gives a short and long-term view down the rabbit hole through the eyes of 3 of the GATA board members. GATA was so heavily involved not only in breaking the news at the CFTC meeting about the the metals manipulation but also at the same time quite possibly uncovering the largest fraud in history. The Gold Anti-Trust Action Committee was organized in January 1999 to advocate and undertake litigation against illegal collusion to control the price and supply of gold and related financial securities. The committee arose from essays by Bill Murphy, a financial commentator, and by Chris Powell, a
…
Global Macro Update
by Zero Hedge - March 31st, 2010 2:06 pm
Courtesy of Tyler Durden
Submitted by Nic Lenoir of ICAP
We start in Fixed Income, the long bond future broke out the 115-19 resistance level yesterday late in the session, and gapped up this morning. Here technically as long as the gap is not filled and the bond does not trade below 115-21, the market should rally toward the channel resistance at 117-27/28. This is technically our preferred scenario following our buy recommendation last Friday. Conversely, should we be wrong and the market breaks below 115-21, the 115-00/114-19 should be a huge support zone (if 115 is convincingly broken on a daily close the next support is 111-25!).
We recommend taking profit on the ED/L Z0/H1 (Eurodollar/Short-Sterling box trade) selling at +7. We had initially recommended buying the structure at -2. The ER/ES Z0/H1 (Euribor/Euroswiss box trade) is currently at +0.5, and we recommended buying around -4/-6. We would possibly take partial profit but the trade should have more upside potential. Finally the BAM0/U0/Z0 butterfly is trading -4/-2. We recommended selling at 0. Keep in mind the BAH0/M0/U0 fly rolled out at -28.5, so the carry selling BAM0/U0/Z0 is very positive. Sadly I must say hardly any of our clients put the positions on. I am still absolutely convinced that the current environment in Fixed Income is not one in which traders should chase home runs and an ever elusive secular bond bear market (at least not until we trade under 111-25 in 30Y future), but instead one where money will be made extracting carry and avoiding the choppy outright price action.
In FX we note a very interesting reversal in AUDCAD right on the 50/100-dma bearish cross. There is a key support at 0.9260 (a break below would be resolutely bearish). In the meantime, we await to see if the market remains under the 0.9476 resistance, which if broken will confirm upside towards parity, and even possibly 1.0680/1.0840. In parallel, we note that gold has just hit the short-term channel resistance at 1,118. The key medium term resistance remains 1,135, a break of which would confirm a move towards new highs. We stick to our buy recommendation initiated at 1,080/1,090 but would clearly be weary of a break back below 1,100.
Good luck trading,
Nic
Ken Lewis Won’t Settle Civil Charges With Cuomo, Bernanke And Paulson Will Likely Appear As Defense Witnesses In Trial
by Zero Hedge - March 31st, 2010 2:01 pm
Courtesy of Tyler Durden
Yet another development in the saga of Ken Lewis, which everyone seems to have mostly forgotten now, who as a reminder is being sued by NY AG Andrew Cuomo, was just broken by Charlie Gasparino who claims that the former head of BofA is refusing to settle and will instead likely go to trial. In his lawsuit Cuomo alleges that Lewis violated civil securities laws by not alerting shareholders to the enormity of the losses prior to their vote. The cherry on top: Bernanke and Paulson will likely end up as defense witnesses – we wonder if the two will invoke the 5th against self-incrimination.
From Fox Business:
Former Bank of America CEO Kenneth Lewis has told his attorneys that he doesn’t want to settle civil charges brought by the New York Attorney General’s office that he failed to properly alert shareholders about upcoming losses in order to complete an ill-fated purchase of Merrill Lynch at the height of the financial crisis, FBN has learned.
Lewis has made his intentions clear to his legal team, headed by former U.S. Attorney for the Southern District, Mary Jo White, after Andrew Cuomo’s office offered to start settlement negotiations with the former CEO. Lewis left Bank of America at the beginning of the year amid various probes into the big bank’s purchase of struggling brokerage firm Merrill Lynch in the fall of 2008. BofA agreed to purchase Merrill the same weekend that Lehman fell into bankruptcy and sparked the most critical phase of the financial meltdown, leading the massive government bailout of the financial system.
…
FBN has learned that both Paulson and Bernanke may be called as witnesses by White if the case goes to trial, as Lewis now wants. That is, of course, unless the case gets dismissed, which White plans to file for at some point. No court date has been set.
Vodafone; Russia; Randoms
by Zero Hedge - March 31st, 2010 1:59 pm
Courtesy of Vitaliy Katsenelson
Vodafone
Vodafone (VOD) stock is finally starting to show signs of life. I’ve discussed it a few times in the past (in these interviews with TechTicker and Barron’s); also here is a one page summary of our thinking on the company. In short, Verizon (VZ) has two businesses – a wireline business and Verizon Wireless. Verizon owns 55% of Verizon Wireless and Vodafone owns 45%. Verizon Wireless has not paid dividends to Vodafone since 2005 and thus the street puts almost zero value on Vodafone’s stake in Verizon Wireless. There is the misperception that Verizon, the majority shareholder, is trying to royally screw a minority shareholder. This perception is utterly wrong.
Verizon Wireless was building out its network aggressively since 2005, thus tens of billions in cash flow were reinvested back into the wireless business for which it is reaping rewards today. Also, a few years ago Verizon Wireless bought Alltel and borrowed around $30 billion to finance it, a good chunk of which came from the Verizon in intercompany loans. Verizon Wireless did not pay dividends to Vodafone because it was paying down debt, which will be done within a year or so.
The street is missing a very important factor: VOD has a veto power over Verizon/Verizon Wireless intercompany loans and large acquisitions; thus Vodafone’s acquisition of Alltel and the intercompany loan that followed to finance acquisition were approved by Vodafone, and were in Vodafone’s best interests.
But even if “evil” Verizon wanted to screw minority shareholder Vodafone and hoard the dividend forever, it could not. After the Alltel intercompany loan is paid off, the only way for Verizon to get a hold of Verizon Wireless cash flows is for Verizon Wireless to pay a dividend to Verizon and Vodafone.
Verizon does need the dividend from Verizon Wireless, as Verizon’s wireline business doesn’t generate enough free cashflow to cover Verizon’s (the public company) dividend payments. Verizon Wireless is the cash cow, generating about $10 billion of free cashflow a year, and is responsible for a large portion of Verizon’s free cashflow.
VOD’s stock came to life yesterday after it was reported that Vodafone was putting pressure on Verizon to either pay out a dividend, merge with Vodafone, or spin off Verizon Wireless. Every one of these scenarios would put appropriate value on…
Blogs: Crucial or a Waste of Time?
by Zero Hedge - March 31st, 2010 1:56 pm
Courtesy of George Washington
Preface: Everyone who is not employed by the giant banks or their government enablers knows that the economy cannot stabilize unless they are broken up. Bloggers have been saying this ad nauseum, but nothing is changing.
So we’ve got to ask the question: is blogging crucial or a waste of time?
Crucial for Spreading Accurate Information
We’ve all seen it.
A story that bloggers have bird-dogged for many months, gaining so much traction that the mainstream media is finally forced to cover it. [Note to ZH readers: as one example, Tyler Durden has broken many such stories, that the msm finally was forced to cover].
David Steele – former 20-year Marine Corps infantry and intelligence officer, the second-ranking civilian in U.S. Marine Corps Intelligence, and former CIA clandestine services case officer – says that blogging is crucial for saving our country.
Dan Rather points out that “roughly 80 percent” of the media is controlled by no more than six, and possibly as few as four, corporations. As I wrote in July:
This fact has been documented for years, as shown by the following must-see charts prepared by:
***
This image gives a sense of the decline in diversity in media ownership over the last couple of decades:
The mainstream media are rabidly pro-war and refuse to disclose that many of the “independent” pundits they interview are actually lobbyists. The mainstream press has become lazy, and most of the stories are fed to them by PR firms.
People want change – that’s why we voted for Obama. But as Newsweek’s Evan Thomas admitted:
By definition, establishments believe in propping up the existing order. Members of the ruling class have a vested interest in keeping things pretty much the way they are. Safeguarding the status quo, protecting traditional institutions, can be healthy and useful, stabilizing and reassuring….
“If you are of the establishment persuasion (and I am). . . .”
In other words, many editors, publishers, producers and reporters think of themselves as being part of the establishment class, and so do everything…
Eric King Follow Up Interview With GATA On The Trail Of The Biggest Gold Manipulation Story Disclosed
by Zero Hedge - March 31st, 2010 1:22 pm
Courtesy of Tyler Durden
The Andrew Maguire LBMA whistleblower story just refuses to go away, and it is about time someone from the mainstream media (yes, we know you read us constantly) finally picked up on this massive expose about the decades of fraud and manipulation in the commodities market, with a focus on gold and silver. Don’t worry, the Wall Street ad revenue sources you may lose from highlighting this “must read” story will be more than offset by the increased readership you will gain. Today we have the latest segment in this saga, courtesy once again of Eric King who interviews GATA members Bill Murphy, Chris Powell and Adrian Douglas.As is pointed out in the interview, “The CFTC, on the public record, has been shown to have known in advance of massive market manipulation, and have done nothing.” Isn’t this the same reason why Markopolos called SEC the biggest bunch of idiots in existence vis-a-vis their performance in the Madoff debacle? It is time someone big blew this up finally. Perhaps this will explain why it never get mainstream attention: “JPMorgan chase is an agency of the US government, rigs the markets, and undertakes market manipulation.” To all our readers: this is yet another “must hear” interview.
From King World News:
In this interview with GATA we continue the saga after just having interviewed Andrew Maguire, the whistleblower out of London. This gives a short and long-term view down the rabbit hole through the eyes of 3 of the GATA board members. GATA was so heavily involved not only in breaking the news at the CFTC meeting about the the metals manipulation but also at the same time quite possibly uncovering the largest fraud in history. The Gold Anti-Trust Action Committee was organized in January 1999 to advocate and undertake litigation against illegal collusion to control the price and supply of gold and related financial securities. The committee arose from essays by Bill Murphy, a financial commentator, and by Chris Powell, a newspaper editor in Connecticut, published at Murphy’s Internet site, lemetropolecafe.com. In this GATA Roundtable we will have Bill Murphy, Chris Powell and Adrian Douglas.
Link to King World News and full interview.
Irish Banks Need $43 Billion in New Capital as “Worst Fears Have Been Surpassed”
by ilene - March 31st, 2010 1:20 pm
Irish Banks Need $43 Billion in New Capital as "Worst Fears Have Been Surpassed”
Courtesy of Mish
Inquiring minds note Ireland’s finance minister is shocked to discover Irish Banks Need $43 Billion in New Capital on account of ‘Appalling’ Lending.
Ireland’s banks need $43 billion in new capital after “appalling” lending decisions left the country’s financial system on the brink of collapse.
“Our worst fears have been surpassed,” Finance Minister Brian Lenihan said in the parliament in Dublin yesterday. “Irish banking made appalling lending decisions that will cost the taxpayer dearly for years to come.”
The agency aims to cleanse banks of toxic loans, the legacy of plunging real-estate prices and the country’s deepest ever recession. In all, it will buy loans with a book value of 80 billion euros ($107 billion), about half the size of the economy.
“The information that has emerged from the banks in the course of the NAMA process is truly shocking,” Lenihan said.
Dublin-based Allied Irish needs to raise 7.4 billion euros to meet the capital targets, while cross-town rival Bank of Ireland will need 2.66 billion euros. Anglo Irish Bank Corp., nationalized last year, may need as much 18.3 billion euros. Customer-owned lenders Irish Nationwide and EBS will need 2.6 billion euros and 875 million euros, respectively.
“The regulator is taking the bank system by the scruff of the neck,” said James Forbes, senior equity strategist at Irish Life Investment Managers in Dublin. “Allied Irish has a lot of work to do to avoid majority state ownership, Bank of Ireland less so.”
Ireland may not be able to afford to pump more money into the banks. The budget deficit widened to 11.7 percent of gross domestic product last year, almost four times the European Union limit, and the government spent the past year trying to convince investors the state is in control of its finances.
“The bank losses, awful as they are, represent a one-off hit. It’s water under the bridge,” said Ciaran O’Hagan, a Paris-based fixed-income strategist at Societe Generale SA. “What’s of more concern for investors in government bonds is the budget deficit. Slashing the chronic overspending and raising taxation by the Irish state is vital.”
Economic Hit Parade
US: States have $5.17 Trillion in Pension Obligations, Gap is $3.23 Trillion; State Debt as Share of GDP
China: 10 Signs of Speculative Mania
Spain, UK, Japan,…
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Spanish
French
Italian
Portuguese
Japanese
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