Ovebanked, Underfunded, and Overly Optimistic: The New Face of Sovereign Europe
by Zero Hedge - March 31st, 2010 6:38 am
Courtesy of Reggie Middleton
Ireland has finally admitted the horrendous condition of its banking system. I actually give the government kudos for this, and await the moment when the US, China and the UK come forth with such frankness. That being said, things are a mess, I have forewarned of this mess for some time now. First, the lastest from Bloomberg: Ireland’s Banks Will Need $43 Billion in Capital After `Appalling’ Lending
March 31 (Bloomberg) — Ireland’s banks need $43 billion in new capital after “appalling” lending decisions left the country’s financial system on the brink of collapse. The fund-raising requirement was announced after the National Asset Management Agency said it will apply an average discount of 47 percent on the first block of loans it is buying from lenders as part of a plan to revive the financial system. The central bank set new capital buffers for Allied Irish Banks Plc and Bank of Ireland Plc and gave them 30 days to say how they will raise the funds.
“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.”
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.
‘Truly Shocking’
The asset agency aims to cleanse banks of toxic loans, the legacy of plungingreal-estate prices and the country’s deepest recession. In all, it will buy loans with a book value of 80 billion euros ($107 billion), about half the size of the economy. Lenihan said the information from NAMA on the banks was “truly shocking.”
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Capital Target
Lenders must have an 8 percent core Tier 1 capital ratio, a key measure of financial strength, by the end of the year, according to the regulator. The equity core Tier 1 capital must increase to 7 percent.
AIB’s equity core tier 1 ratio stood at 5 percent at the end of 2009 and Bank of Ireland’s at 5.3 percent. Those ratios exclude a government investment of 3.5 billion euros in each bank, made at
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DiggRANsquawk 31st March Morning Briefing – Stocks, Bonds, FX etc.
by Zero Hedge - March 31st, 2010 3:22 am
Courtesy of RANSquawk Video
The Big Apple
by ilene - March 31st, 2010 2:42 am
The Big Apple
Courtesy of Joshua M Brown, The Reformed Broker
Apple ($AAPL) now has a market cap of around $215 billion. Incredible, and it couldn’t have happened to a more deserving company – they’ve changed the world.
More astonishing than the number itself is the list of companies whose market caps have been eclipsed by the tech king…
Apple is now bigger than Berkshire Hathaway, General Electric, Proctor & Gamble, Johnson & Johnson, Google and JPMorgan Chase.
The only companies larger right now are Microsoft, ExxonMobil and Wal-Mart.
One other thing to consider – it all started with a device shaped like a deck of cards that was created to compete with the Sony Walkman - The iPod. Think of how many millions of devices sold as a direct consequence of the triumph and mass adoption of iTunes and the iPod. The dollar value created on the back of that product pairing is absolutely mindboggling.
For the details of who stands where by market cap, click the link below.
Source:
The Most Valuable Companies in America (Fortune)
Court rules against patenting human genes
by ilene - March 31st, 2010 2:22 am
Not having read the 152 page decision, I’m still happy with the outcome--if DNA is not patentable, then the argument that the "process of isolating genes makes them patentable" makes no sense. – Ilene
Court rules against patenting human genes
By TIFFANY O’CALLAGHAN, Courtesy of TIME
© Michael Rosenfeld/Science Faction/Corbis
In a decision that could have broad ramifications for future genetic research and medical practice, United States District Court Judge Robert W. Sweet ruled Monday that patents on two genes linked to ovarian and breast cancer, BRCA-1 and BRCA-2, were invalid. The case brought by a group including the American Civil Liberties Union, the Public Patent Foundation at the Benjamin N. Cardozo School of Law in New York and several medical institutions and individual patients, argued that, because genes are products of nature, they cannot be patented, The New York Times reports. Sweet ultimately agreed with this argument, dismissing claims from Myriad Genetics, which holds the contested gene patents, that the process of isolating genes makes them patentable. (Drawing on a 1980 Supreme Court decision in favor of patents on living organisms, many expected the federal judge to rule in favor of the patent holder, the New York Times reports.) Yet, ultimately, Sweet found the patents to be in violation of a "law of nature," and openly condemned the argument that gene isolation should influence patentability, calling it "“a ‘lawyer’s trick’ that circumvents the prohibition on the direct patenting of the DNA in our bodies but which, in practice, reaches the same result.”
The ruling from the U.S. Court for the Southern District of New York state, has two major implications. First, if it withstands appeal, "it should greatly widen access to BRCA testing in the US, where Myriad’s patent has inflated the cost," according to the Times of London. Currently, women have to pay Myriad Genetics some $3,000 in order to get tested for BRCA-1 or BRCA-2, NPR reports. In Europe, where patents on the two genes are either limited or shared with cancer research organizations, there is already wider access to the tests, according…
Stock Market Commentary: More Indecision
by Chart School - March 31st, 2010 2:07 am
Stock Market Commentary: More Indecision
Courtesy of Fallond Stock Picks
The Nasdaq 100 continued its run of doji; note the two bearish distribution days stuck amongst the low volume buying.
The semiconductor was a little more proactive and mounted a defense at support. If Tuesday’s gain can follow through it will help the Nasdaq and Nasdaq 100.
Market Sentiment as measured by the Bullish Percents are showing some contradictions; new highs as part of a breakout in the indicator, but the CCI is on a ‘sell’ and there is a bearish shift relative to the Percentage of Nasdaq stocks above the 50-day MA.
Can action in the semiconductors convert to a positive Wednesday for the Nasdaq and Nasdaq 100?
Stock Breakouts
There were 24 breakouts in total; four were of interest but six were low-grade penny stocks. Not much cream left to skim?
Here Is Why Greece’s 12 Year Reopening Earlier Was A Failure
by Zero Hedge - March 30th, 2010 11:46 pm
Courtesy of Tyler Durden
Call it poetic justice. In its pursuit to kill CDS “speculators”, Greece has shot itself in the foot, and potentially hit a major artery. Earlier today Greece tried to do a quick drive by with a €1 billion in a reopening of a 12 Year auction. Instead, it barely managed to get €390 million off: a miss by 61%, which anywhere else would have caused the organizers to scrap the auction and never mention it again (but not here). The lack of demand for the remarkably stupid surprise auction, orchestrated by former Goldmanite Petros Christodoulou, achieved no incremental funding for Greece but merely spooked the entire curve, and forced buyers of yesterday’s 7 Year auction to take immediate losses, as the bond traded down from 6% to 6.27% (not to mention a move wider in CDS). This is the third sequential auction in which primary buyers have taken post break losses. At this rate of disappointment (yesterday the 7 Year had a meager 1.4 Bid To Cover ratio), soon Greece will be unable to pull anything issuance off. Yet the bigger reason for the lack of demand is even simpler: the hounding of all those who hedge exposure with CDS. It doesn’t matter if one has naked or hedged positions – any purchase of Greek protection is enough to get the European secret services scouring through your garbage. And this is precisely what Zero Hedge and many others have been warning about for weeks. And just in case we might not have been clear enough, here is Deutsche Bank explaining once again, just how negative for primary issuance and for sovereign borrowers, the escalation in the anti-CDS rhetoric is.
Speculators are said to have been involved in the escalation of the Greek crisis. For this reason, politicians want to ban the purchase of naked credit default swaps (CDSs). This would not be of any help to sovereign borrowers, however.
A financial-market segment hitherto considered exotic has received broad attention in the last few weeks. There has been intense debate among politicians and the media on a ban on credit default swaps (CDSs). These derivatives which were invented, inter alia, to insure credit risks are said to have been used by speculators and thought to have been among the major factors for the
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King World Interview with Andrew Maguire the Silver Market ‘Whistleblower’
by ilene - March 30th, 2010 11:30 pm
King World Interview with Andrew Maguire the Silver Market ‘Whistleblower’
Courtesy of JESSE’S CAFÉ AMÉRICAIN
"The Biggest Fraud in the World"
I do not know what to think about this, except to just offer it up to you for your own information.
I am disappointed, however, that only the blogs, and almost no one in the mainstream media, have bothered to cover this story and to speak to the principals, and to either debunk them, support them, or even consider what they have to say.
This really is like the Harry Markopolos story, trying to get a hearing on the Madoff ponzi scheme, and being repeatedly ignored, intimidated, and discouraged in every way possible by the establishment, and even fearing for his life.
Even if this is a mistake, a hoax, some conspiracy, it deserves a proper hearing and an airing in the public. Ignoring it raises even more questions, and serious concerns about the integrity of the US markets. If instead of a proper airing there are only the smears, and disinformation, and the usual sly ad hominem attacks, or even worse, I will begin to believe that it is true.
King World News Interview with Andrew Maguire and Adrian Douglas
I cannot believe that testimony is being completely ignored. I do not understand why this is a ‘national security’ issue. It seems just too bizarre to me.
Do people inside the trade know something that we don’t know? Are these fellows frauds or just mistaken? Is this a hoax? Part of some conspiracy?
Or is this something coming right at us, that will end up hurting the public once again, as the rampant fraud in the financial markets has done so thoroughly.
Is there is something going on then it is time to bring it out into the open. If it is national security concern, or more properly the national interest, because it involves the US banking industry, how long do they think they can keep this sort of thing quiet?
If this is something else, why is it not aired, investigated, and nipped in the bud?
I am trying to keep an open mind on this, but it is not being made any easier by what looks like a curtain of silence while the stories and counter-moves are prepared.
I was disappointed that in the interview they never seemed to discuss the hit and run car incident.
I…
States have $5.17 Trillion in Pension Obligations, Gap is $3.23 Trillion; State Debt as Share of GDP
by ilene - March 30th, 2010 11:23 pm
States have $5.17 Trillion in Pension Obligations, Gap is $3.23 Trillion; State Debt as Share of GDP
Courtesy of Mish
As the jobless yet supposedly nascent recovery plods on, states are finding it increasingly difficult to ignore their fiscal woes and pension deficits. The New York Times has some details in State Debt Woes Grow Too Big to Camouflage.
California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.
California’s stated debt — the value of all its bonds outstanding — looks manageable, at just 8 percent of its total economy. But California has big unstated debts, too. If the fair value of the shortfall in California’s big pension fund is counted, for instance, the state’s debt burden more than quadruples, to 37 percent of its economic output, according to one calculation.
Unstated debts pose a bigger problem to states with smaller economies. If Rhode Island were a country, the fair value of its pension debt would push it outside the maximum permitted by the euro zone, which tries to limit government debt to 60 percent of gross domestic product, according to Andrew Biggs, an economist with the American Enterprise Institute who has been analyzing state debt. Alaska would not qualify either.
Professor Rogoff, who has spent most of his career studying global debt crises, has combed through several centuries’ worth of records with a fellow economist, Carmen M. Reinhart of the University of Maryland, looking for signs that a country was about to default.
“When an accident is waiting to happen, it eventually does,” the two economists wrote in their book, titled “This Time Is Different” — the words often on the lips of policy makers just before a debt bomb exploded. “But the exact timing can be very difficult to guess, and a crisis that seems imminent can sometimes take years to ignite.”
Some economists think the last straw for states and cities will be debt hidden in their pension obligations.
Joshua Rauh, an economist at Northwestern University, and Robert Novy-Marx of the University of Chicago, recently recalculated the value of the 50 states’ pension
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Your Cheatin’ Chart Will Tell On You
by Chart School - March 30th, 2010 11:11 pm
How the Dow Has Really Performed When Measured in Gold?
Courtesy of Elliott Wave International
"Your cheating chart will tell on you."
Hank Williams may not have known about Elliott waves, but he did know when a story doesn’t add up.
Such is the case with the nominal rise of the Dow Jones Industrials from 2000 to 2007. In the language of country music, this stock index has a "Cheatin’ Chart" — it doesn’t tell the real story.
A simple price chart of the Dow is, well, a bit too simple. Robert Prechter explains that pricing via fiat currency is not the same as pricing the Dow in terms of real money (namely gold). Then he shows the difference.
For six long years, we’ve had declining real values in stocks. Since the 2002 bottom, we’ve had rising values in nominal terms. This is the same set-up that we saw in the early ’70s except for one thing: it’s bigger. Ultimately, real prices are leading dollar prices, and we’re going to see a tremendous drop in the dollar price of the Dow as well, because I’m making a case that this is a much bigger top.Elliott Wave Theorist, December 2006
If gold were our money, the major stock market indexes would have declined relentlessly from 2000 to the present, with a muted bounce in 2003. There would be no arguing the point of whether a bull or bear market was in force.Elliott Wave Theorist, March 2006
This "oh-so-true" chart of the DJIA priced in gold showed the path that the "cheatin’" nominal Dow would eventually follow. Our forecast was that it’s just a matter of time. This analysis has played out as expected several times since the 1999 high in the Dow Jones Industrials.
The monthly Elliott Wave Financial Forecast keeps an eye on stocks, real estate, commodities and more. Download Robert Prechter’s FREE 40-Page Gold and Silver eBook, an ebook exploring the role of gold in today’s markets. You will get more than Prechter’s long-term outlook on gold and silver; you’ll also learn how gold still plays an important role in determining the real value behind nominal share prices. Learn more, and download your Gold and Silver eBook here.
China Considering Expanding Yuan Trading Band
by Zero Hedge - March 30th, 2010 11:09 pm
Courtesy of Tyler Durden
In what could be a first step to appeasing the US and its requests for CNY revaluation, Caijing has reported that China may be considering expanding the daily yuan trading band. The yuan currently fluctuates up to 0.5% around the central CNYUSD parity set by the PBoC – today, for example, the CNY was stronger by 1 pip from 6.8264 to 6.8263. As reported by Market News, citing an unidentified Chinese government source, “If the central bank does not want to see a quick rate hike, a better way to fight inflation would be to expand the daily yuan trading band to allow the yuan to appreciate properly.” One interpretation of this development is that China, anticipating a delay of the Treasury report widely expected to brand China a currency manipulator, will placate the US just marginally and split the baby in the middle, by allowing a trading band expansion. Of course, this will do nothing to actually revalue the Yuan, devalue the dollar and boost US exports, but it will allow the Obama administration to save face and say “look, China made a concession” which the teleprompter will explain is an indication that the Obama administration now has the upper hand in Sino-US negotiations, followed by a round of applause from yet more to be soon unemployed people.
More from Market News:
The idea, if approved by the State council, could take effect in April, which is seen by officials as a key time for “perfecting” the Chinese foreign exchange regime as it is almost five years since the initial Chinese foreign exchange reform in July 2005, the magazine said.
Mid-April will be a key time for the debate on the yuan exchange rate, as the U.S. Treasury is due to issue a report on whether China manipulates its currency. A finding that it does could open the way for trade sanctions. However, there have been rumors that the Treasury report will be postponed until after the next round of the Sino-U.S. Strategic and Economic Dialogue scheduled for May.
China is under increasing pressure to allow the yuan to resume appreciating against the dollar, with critics charging it gives Chinese exporters an unfair competitive advantage. China has effectively repegged the yuan to the dollar since mid-2008 to
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