EU Buys Ireland on Cyber Monday, Comes with Free Shipping, 6 Pack of Guinness, and Plenty of Broken Dreams
by Zero Hedge - November 29th, 2010 11:44 pm
Courtesy of MoneyMcbags
Hells yeah, Money McBags is back from his Thanksgiving break where he basted some turkeys, watched consumers run up more debt during Black Friday sales that they won’t be able to pay off until the dollar hyperinflates to whatever is just below infinity (perhaps Bernankity), and furiously read Wikileaks to learn that the US had a nuclear fuel standoff with Pakistan, was weary of Chinese computer hacking, and never puts the toilet seat back down after using it.
The big news on the Street today was that the market faltered despite strong holiday sales on everything from computers, to cars, to Ireland. Black Friday sales were up 6.4% and the market hopes consumers build on that with Cyber Monday, Five Finger Discount Tuesday, and “Oh Shit What are We Going to Do with All of this Inventory” Wednesday. As mentioned, the market failed to rally on this because congress returned to work (which means the economy is that much closer to combusting) and Ireland’s bailout became official for the 3rd time. Ireland will be getting 85B Euro under the conditions that they don’t spend it all in one place, stop giving loans to people who can’t pay them back (other than themselves, which is weird logic there, but the EU must know what they are doing, right?), and lend Jill Kelly to the IMF for just one night so the IMF can conclude their proper due diligence.
Of the 85B euro, 17.5B will be coming from the Irish government through money it has already raised by selling bonds and as proceeds from the pride of Limerick Tanya Trianta‘s car wash and Irish bagpipe booth. Of the rest, 22.5B will come from the IMF and 45B will come from bilateral loans from European nations (and the loans are so bilateral that they love other loans of the same denomination) and from two rescue funds set up by the EU in the Spring for either a rainy day or when shit is blowing up.
The debt will come with interest rates ~6% (or 0% once Ireland’s economy doesn’t recover and they can’t afford to pay interest) and Ireland has said they will try to cut the budget deficit from 32% of GDP to 3% of GDP by 2014 and hopes like the Special Olympics,…
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Digg11/29/10 Midnight Report: EU Buys Ireland on Cyber Monday, Comes with Free Shipping, 6 Pack of Guinness, and Plenty of Broken Dreams
by Zero Hedge - November 29th, 2010 11:44 pm
Courtesy of MoneyMcbags
Hells yeah, Money McBags is back from his Thanksgiving break where he basted some turkeys, watched consumers run up more debt during Black Friday sales that they won’t be able to pay off until the dollar hyperinflates to whatever is just below infinity (perhaps Bernankity), and furiously read Wikileaks to learn that the US had a nuclear fuel standoff with Pakistan, was weary of Chinese computer hacking, and never puts the toilet seat back down after using it.
The big news on the Street today was that the market faltered despite strong holiday sales on everything from computers, to cars, to Ireland. Black Friday sales were up 6.4% and the market hopes consumers build on that with Cyber Monday, Five Finger Discount Tuesday, and “Oh Shit What are We Going to Do with All of this Inventory” Wednesday. As mentioned, the market failed to rally on this because congress returned to work (which means the economy is that much closer to combusting) and Ireland’s bailout became official for the 3rd time. Ireland will be getting 85B Euro under the conditions that they don’t spend it all in one place, stop giving loans to people who can’t pay them back (other than themselves, which is weird logic there, but the EU must know what they are doing, right?), and lend Jill Kelly to the IMF for just one night so the IMF can conclude their proper due diligence.
Of the 85B euro, 17.5B will be coming from the Irish government through money it has already raised by selling bonds and as proceeds from the pride of Limerick Tanya Trianta‘s car wash and Irish bagpipe booth. Of the rest, 22.5B will come from the IMF and 45B will come from bilateral loans from European nations (and the loans are so bilateral that they love other loans of the same denomination) and from two rescue funds set up by the EU in the Spring for either a rainy day or when shit is blowing up.
The debt will come with interest rates ~6% (or 0% once Ireland’s economy doesn’t recover and they can’t afford to pay interest) and Ireland has said they will try to cut the budget deficit from 32% of GDP to 3% of GDP by 2014 and hopes like the Special Olympics,…
Next Stop On Shanghai Composite: 2719; Subsequent Supports At 2574 And 2320
by Zero Hedge - November 29th, 2010 11:30 pm
Courtesy of Tyler Durden
The beating in Shanghai is getting serious. Here are some technical levels from Credit Suisse, which sees 2719 on the SHCOMP as the next support. If taken out: whoosh (which is a technical name for a drop all the way to 2320).
Per CS:
The Shanghai Composite looks to be heading for a test of 2719, where the neckline to the Q2/Q3 base is expected to offer support.
The Shanghai Composite has already completed a minor top below 2932, and looks to be heading towards 2719, where the neckline to the Q2/Q3 base should elicit renewed buying interest. We would look for a recovery attempt to emerge from this area, expecting the 2932 level to initially prompt hesitation. Extension through 2932 should set a better tone, with the index then needing to remove resistance at 3160/87 to re-energise upward momentum and target 3361 next.
Below 2719 should see congestion extending down to 2574/64 contain further weakness. Below this latter area would warn of a more significant bearish failure, warning of further weakness to 2389, maybe even the 2320 low.
Hammering Ireland
by ilene - November 29th, 2010 11:16 pm
Thoughts on the Ireland bailout, courtesy of MIKE WHITNEY, originally published at CounterPunch. Mike explains why it’s a bad deal. It gives more money to bankers for speculation, while leaving the Irish people with greater poverty and higher unemployment. – Ilene
Hammering Ireland
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The terms of the EU/IMF’s €85 billion ($113 billion) bailout for Ireland are much worse than analysts had anticipated. Ireland will be required to use its National Pension Reserve Fund (NPRF) to shore up its insolvent banks and to maintain government operations. At the same time, senior debt-holders will not share any of the losses brought on by the banks reckless lending. According to Bloomberg News, "Prime Minister Brian Cowen told reporters there had been no support in talks to ask senior bondholders to lose part of their stake on loans made to Ireland’s debt-crippled banks." Thus, 100 percent of the EU/IMF’s €85 billion "Financial Rescue Package" will be paid for by Irish taxpayers.
This is a very bad deal. Irish workers have already endured nearly 3 years of depression-type conditions with shrinking wages, soaring unemployment and dwindling home equity. Now Brussels is taking aim at pensioners to save bondholders in Berlin and Paris from any losses on their bad bets. And that’s not all. Here’s an excerpt from the government’s statement:
"The facility will include up to €35 billion to support the banking system; €10 billion for the immediate recapitalisation and the remaining €25 billion will be provided on a contingency basis. Up to €50 billion to cover the financing of the State…..If drawn down in total today, the combined annual average interest rate would be of the order of 5.8% per annum."
This is nothing but extortion. If Ireland wants to put its banks on solid footing, there’s a way to do it that doesn’t involve years of debt-slavery for its people. The government can underwrite the banks with a €10 billion loan from the Pension Reserve Fund that will guarantee deposits while the banks are nationalized and restructured. It is an excruciating process, but it’s been done many times before. Ireland does not have to accept indentured servitude if it chooses not to.
And why would the government even consider paying an interest rate of 5.8% per annum? Interest rates should be the same as they are for the banks; 1 percent. Should a sovereign nation get a…
Chinese Selloff Intensifies As Traders Expect Imminent Rate Hike Following China State Council Comments
by Zero Hedge - November 29th, 2010 10:38 pm
Courtesy of Tyler Durden
In a surprising reversal, the Shanghai Composite has dropped 3% in early trading following a statement by the China State Council which on Monday said it will revise penalties to crack down on price violations to tackle inflation, which has been interpreted by traders as an imminent December rate hike. Per Dow Jones: “Shanghai Composite Index down 2.5%3.0% at 2793.95, faces immediate support at 2750 level. “There has been heightened expectations for an interest rate hike soon, which exacerbated earlier weakness in the index from sovereign debt concerns from Europe as well as a stronger U.S. dollar,” says Wang Junqing, analyst from Guosen Securities.” More importantly key stat arb pairs such as the AUDJPY and the ESZ/NDZ are being dragged below the surface. On an indexed basis, the ES will soon take out the intraday lows per the AUDJPY. For Brian Sack’s sake, we hope the Fed has its midnight crew in tow as this could get ugly fast. We will be following.
Elsewhere a former PBoC head published comments calling for faster cooling, and for the government to begin fighting runaway inflation. One of the mechanisms proposed is CNY reval. Of course, with all the pressure from DC on the CNY, China is far more likely to hike the deposit rate before it actually is seen as acceding to Schumer’s demands (to wit: Tuesday CNYUSD fixing at 6.6762 compared to 6.6700 on Monday).
From Market News:
China should shift back to a prudent monetary policy stance to fight inflation because rising prices have become the key threat to the economy, a former People’s Bank of China branch head said in comments published Tuesday.
Sheng Songcheng, who was formerly director of the central bank branch in Shenyang, in China’s northeast, said that there is more room for the PBOC to raise the reserve requirement, and that deposit interest rates should be increased in order to tame inflation.
Consumer price inflation, which hit a 25-month high of 4.4% y/y in October, is likely to have hit a fresh multi-year high this month, Sheng warned in the Financial News.
“The government should officially announce a shift to a prudent monetary policy to manage inflation expectations…the normalization of monetary and credit conditions is actually a
…
What the Market Wants: Doom & Gloom . . . or a QE2 Boom?
by Sabrient - November 29th, 2010 10:34 pm
Courtesy of David Brown of Sabrient Systems
The market continues the decline that we talked about last week, with the S&P 500 losing nearly 1% for the week. Today, it was down quite a lot early on, but recovered enough to close at 1187.76, down just -0.14%). Near-term support for the S&P 500 is 1180, but we breached that for a while today, and also breached the 50-day moving average most of the day. The next support level is at 1150.
It’s a matter of perspective, whether you see doom and gloom on the horizon or a possible boom from the QE2 infusion.
It’s easy to feel gloomy when we reflect on our country’s unemployment, our weak banks, and the massive insider trading investigation that was announced last week. Last week’s economic releases did little to lift the gloom. Durable goods orders were much weaker than expected and so were new home sales (no surprise there). But the gloom increases when we look at the rest of the world.
Ireland was bailed out with 113 billion dollars this morning, but it is likely that the rest of the PIIGS will come to the trough and the euro will drop more than it already has. North Korea continues its saber-rattling, though the Wikileaks disclosures hint of China abandoning North Korea which could change that whole picture. Those (possibly criminal) leaks are shocking, to say the least. They give our voyeuristic side a glimpse of some revealing diplomatic shenanigans, some of which may be good for the world, but some disclosures are very, very scary, with the image of missiles flying everywhere.
If that isn’t enough to make you pull the covers over your head, think about the specter of inflation in China and that country’s rising interest rates. In our shrunken global economy, what happens in China doesn’t stay in China any more.
Little wonder that the VIX—the so-called “fear index”—rose last week and for the greater part of today.
But wait . . . if you’re standing on the ledge ready to jump, let me tell you a couple of good things.
Our dollar has strengthened over the past several weeks, amazingly, as the euro plummeted. This is quite interesting in light of the QE2’s infusions of $8-9 billion a day, which should be good news because that money is supposed to re-employ our workers. And…
Guest Post: Some Observations on Austerity
by Zero Hedge - November 29th, 2010 10:24 pm
Courtesy of Tyler Durden
By JM
Some Observations on Austerity (pdf)
I’m at the Omni Shoreham on business the next few days, and all I’m hearing about is salary freezes here, and bank debt conditionality programs in Europe. “Austerity” seems to be all the rage. Problem is we don’t even know the meaning of the word. Let’s face it: most of us are pretty coddled when it comes to belt tightening.
Austerity is not flashy. Nor is it fun. And it isn’t hopeless. It is characterized by:
- Ambiguous property rights
- Extreme income inequality
- And often enough, violence
So I found some data long forgotten and collecting dust to shed some light on the subject. The data comes from a survey of 2,910 households, randomly chosen in clusters of 30 households, stratified across 32 of the 39 provinces in 1964. The only region of this country not included in the survey was the Central Highlands, because the surveyors would surely have been killed as soon as night fell. Half of the hamlets surveyed were “secure”, meaning that it was reasonably safe to travel there in daylight hours. Whether or not the hamlets surveyed were under tight Viet Cong control is unknown, but they averaged around 16 miles from the nearest provincial town. It covered all rice growing areas and most areas of commercial activity. The country was South Vietnam.
What clarity does this data provide? It gives you glimpse of a world where people live without safety nets. How similar economic life is a broad class of settings. More importantly, it shows that austerity does not mean hopelessness. Life goes on after a debt binge.
In terms of income distribution, it is not much different than the United States… except that it is more egalitarian. Richer people live in urban areas, and the poorest live out in the sticks.
There was a heavier reliance on agriculture, of course. But the majority of income came from wages and salaries, business income (entrepreneurship), and return on capital.
Even in a politically unstable, poverty-stricken, and violent environment… life goes on. Even the poorest people spend money, some even sacrifice (7% of income), to educate their children. Most Americans do this mostly through indirect subsidies via tax policy. People buy big things even when ownership rights are tenuous. But the take-away message is that austerity…
Universities Sinking in Pension Abyss?
by Zero Hedge - November 29th, 2010 9:21 pm
Courtesy of Leo Kolivakis
James Bradshaw of the Globe & Mail reports, Universities facing service cuts to climb out of ‘pension abyss’:
Canadian university pension plans have fallen into a collective $2.6-billion hole, and may have no choice but to cut services to begin climbing back out of it.
Most faculty and staff have defined benefit pensions, which promise a set retirement income based on service and salary. But those funds suddenly cratered when markets crashed in 2008, most losing 15 to 30 per cent of their value.
Now, provincial laws will force schools to find money to plug those holes – sometimes tens of millions of dollars a year – an untimely headache for institutions already warning of cuts to come due to static government grants, limits on tuition hikes and shaky endowment returns.
A Globe and Mail survey of more than 20 Canadian universities shows a combined pension plan solvency deficit of at least $2.59-billion, and since some schools last crunched their numbers before 2008, that figure could still grow.
Pension investments rebounded somewhat in 2009, but the long-term horizon is hardly any brighter. With a large proportion of long-serving faculty members across Canada nearing retirement, keeping plans fully funded costs more. Meanwhile, longer average lifespans have combined with rising wages and low interest rates to impose structural strains.
“I think [defined benefit] plans are suddenly going to cost more than they historically did,” said Virendra Gupta, executive director of the Universities Academic Pension Plan (UAPP), which manages pensions for all Alberta universities.
Two years ago, Dalhousie University’s $726-million pension plan lost 16 per cent of its value, leaving a $129-million solvency deficit – the amount that needs to be added so that if the university suddenly folded, it could honour the plan.
To comply with Nova Scotia law, Dalhousie would need to pump $12-million into its plan on top of regular contributions in 2011. That prompted university and faculty leaders to jointly ask for an exemption from solvency rules earlier this year. The province said no, instead granting a payment-free 2011 and ten years to make up the deficit, instead of the usual five years.
That still means some cuts are likely unavoidable, said
…
Wikileaks: It Could Take Down a Bank Or Two
by ilene - November 29th, 2010 8:57 pm
Courtesy of Karl Denninger, The Market Ticker
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Pic credit: William Banzai7′s Bankster Doomsday Kit
Oh oh… now we know why everyone’s calling for the government to try to arrest Assange:
So do you have very high impact corporate stuff to release then?
Yes, but maybe not as high impact…I mean, it could take down a bank or two.
…
Will we?
Yes. We have one related to a bank coming up, that’s a megaleak. It’s not as big a scale as the Iraq material, but it’s either tens or hundreds of thousands of documents depending on how you define it.
Is it a U.S. bank?
Yes, it’s a U.S. bank.
One that still exists?
Yes, a big U.S. bank.
The biggest U.S. bank?
No comment.
When will it happen?
Early next year. I won’t say more.
What do you want to be the result of this release?
[Pauses] I’m not sure.
It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume. Usually when you get leaks at this level, it’s about one particular case or one particular violation.
For this, there’s only one similar example. It’s like the Enron emails. Why were these so valuable? When Enron collapsed, through court processes, thousands and thousands of emails came out that were internal, and it provided a window into how the whole company was managed. It was all the little decisions that supported the flagrant violations.
This will be like that. Yes, there will be some flagrant violations, unethical practices that will be revealed, but it will also be all the supporting decision-making structures and the internal executive ethos that cames out, and that’s tremendously valuable. Like the Iraq War Logs, yes there were mass casualty incidents that were very newsworthy, but the great value is seeing the full spectrum of the war.
You could call it the ecosystem of corruption. But it’s also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that’s not done, the priorities of executives, how they think they’re fulfilling their own self-interest. The way they talk about it.
If you were wondering why there’s a sudden desire to shut these guys down, after they "leaked" all sorts of information…
Remember My Discussion on Pensions?
by ilene - November 29th, 2010 8:18 pm
Courtesy of Karl Denninger at The Market Ticker
And how you were going to get screwed?
Feel free to use the search bar and type in "Pension", then have a read.
You’re hosed America. Severely. Far worse than you think. And there’s nothing you can do about it.
I wish it wasn’t true, but it will be, because you refuse to stand up and put a stop to this crap.
France is the latest to seize pension assets. They follow Hungary and Ireland. There will be more. And eventually, it will come here – and when it does, you will get hosed.
There is only one way to stop it.
You, the American people, must demand that all of the bad loans that were made by banks be forced back onto them and defaulted. At the same time the government must stand back and let the adjustment take place.
Yes, this will detonate the banks. Yes, this will result in huge losses. Yes, this will result in a short-term dislocation in the economy – a really, really bad one. Yes, it will result in the collapse of home prices, bankruptcy of tens of millions of people and even more unemployment in the short term.
Again, government must do nothing more than providing emergency shelter and food to those who need it in this regard.
Government must also, at the same time, put an immediate stop to the offshoring monster through wage and environmental-parity tariffs.
If, as is often claimed, the reason for firms to offshore production is because people are willing to work harder or smarter than they are in the US, all fine and well. But if they’re doing it because they have effective slave labor or can pollute with impunity, thereby having dramatically lower costs through poisoning the earth, that has to stop because those firms are then creating an economic imbalance that not only cannot be maintained but if not stopped will destroy our nation’s economy and funding mechanisms.
We all want certain services from our government. We claim we want social services of various sorts, including social security, medicare, welfare and more. But we have to be able to pay for those services, and we can’t when the tax base is destroyed by sending our labor overseas in search of slave-like conditions and the ability to poison the planet instead of keeping it, and the tax base it generates, here in this nation.
We have avoided the truth…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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