LIeBOR is all over the MSM today...

I wonder how many realize how deadly this is to big western banks workwide. I have commented on this in detail in my most recent Max Keiser interview, which aired last night. Download the Barclays Submission, aka the "Smoking Gun".pdf for more insight to what happened. Here's a taste...

barclays email header

barclays email

Quick translation...

BOE inquires why Barclay's LIBOR rate was always so high,  realistic...

Barclay's asks BOE reps to brand the liars as liars...

BOE says, "are you out of your fucking mind???"

BOE rep says, this is coming from on top, lose the truth, or lose your ass! But you didn't hear that from me...

Of course the most daming part of this email is this "I asked [Tucker] if he could relay the reality, that not all banks were providing quotes at the levels that represented real transaction". This clearly shows that the BOE was on alert (as if they didn't already know, and probably orchestrated) of the fact that most banks were outright lying.

See my extensive comments on Max Keiser's show earlier this week, starting at 12:48 in the following video...

Additional (in depth) commentary can be found starting at 3:10 in this video with Lauren Lyster...

So, who are these other banks???

From Matt Taibbi's blog:

 The Royal Bank of Scotland is about to be fined $233 million (£150 million pounds) for its role in the Libor-rigging scandal. It joins Barclays as the first banks to walk the plank in what should be, but so far is not, the most sensational financial corruption story since the crash of 2008.

Many of the banks implicated in the Libor mess have also been targeted in the various municipal bond bid-rigging investigations, and RBS is no different – its subsidiary Natwest is also a defendant in the major civil lawsuit in the bid-rigging case. The cases aren't related, except in the sense that they both involve manipulation and anticompetitive cooperation. It's going to be harder and harder to make the case that the major banks do not routinely cooperate at the expense of the public when it serves their purposes to do so.

The news that RBS is involved comes with a perverse twist. This is from the Times UK:

The bank, which is 82 per cent owned by the taxpayer, is preparing for a political firestorm over the affair because it believes that it has no power to claw back bonuses from the traders responsible. Instead, the expected fines would be borne by the shareholders — largely the Government.

Libor manipulation is a crime that already robs the public to create bonuses for bankers. By artificially lowering interest rates, the banks caused cities, towns, countries, and other public entities to receive smaller returns on their variable-rate investment holdings. If it turns out that taxpayers end up paying the fine for RBS's crime of robbing taxpayers, how perfect would that be?

More importantly Matt, synthetically depressed LIeBOR rates artificially lowers the bar for economic profit, in layman's terms it makes the bank look more profitable and less risky than they actually are. As you stated, this leads to bigger bonuses funded by bigger taxes borne by financially smaller taxpayers. Hmmmm....

Who else is in the sights of the upcoming truth? Citbank, Bank of Lynch (robbing) America Coutrywide and JP Morgan! Have I commented on these big banks' risks ad nauseum? The litigation risks in these institutions are enormous, and are not discounted in their pricing - Banks face crippling Libor litigation costs

Not only do the share prices of these banks fail to reflect the true litigation risks, the bank management themselves are failing to come clean, despite astute BoomBustBlog analysis....

There's imprudent risk management litigation stemming from JP Morgan's massive derivative's exposure, first brought to light in 2009 by yours truly...

Listen Carefully and You Can Hear the Crumbling ....May 11, 2012 – First, pardon my tardy response to this JP Morgan news. ... Equity segment, net income (excluding Private Equity results and litigation expense) ...



In 2009 I noticed that JPM's exposure to Fraudclosure-gate and to a greater extent, mortgage putbacks, was much, much more than what was being reported by managment. There's much more, see:

JP Morgan & Other Banks Legal Costs Spike, Many Should Ask If It Was Not Obvious Years Ago That This Industry May Become The "New" Tobacco Companies

JP Morgan Purposely Downplayed Litigation Risk That Spiked 5,000% Last Year & Is Still Severely Under Reserved By Over $4 Billion!!! Shareholder Lawyers Should Be Scrambling Now Mar 2, 2011 – JP Morgan Purposely Downplayed Litigation Risk That Spiked 5000% Last Year & Is Still Severely Under Reserved By Over $4 Billion!

The Rating Agency Endorsed BoomBustBlog Big Bank Bash Off ... Feb 16, 2012 – JP Morgan (as well as Bank of America) is literally a litigation sinkhole. See JP Morgan Purposely Downplayed Litigation Risk That Spiked ...

You see, what many believe to be a UK bank thing can drag these big American banks deeper, much deeper, into the quagmire. Beware, the F.I.R.E.! The F.I.R.E. Is Set To Blaze! Focus On Banks, part 1

Published in BoomBustBlog

In today's MSM front pages:

EU Seen Agreeing on Project Bonds—Not Eurobonds - of course not! 17 different nations, 17 different cultures, 17 different sets of federal laws (not to mention local municipality legislation), 17 different economies, 17 different banking systems... It's this lack of homogeneity that brought the Euro concept to its knees in the first place. Why throw good money (what would have went into Eurobonds) after bad (what went into a flawed Euro concept) to justify flushing it with awful (the multiple bailout mechanisms/default losses, ECB balance sheet bloat)? Reference A Summary and Related Thoughts on the IMF’s “Strategies for Fiscal Consolidation in the Post-Crisis 

Germany Sells 2-Year, 0% Bonds Amid Greek Anxiety - Bubble, bubble, toil and trouble! It's as simple as that. Why lend money at risk for no return? Reference The Biggest Threat To The 2012 Economy Is??? Not What Wall Street Is Telling You... where I explained in explicit detail the risk this view of Germany causes the entire European continent and the UK! As a matter of fact, a follow up opinion of the subscription research illustrated subject company (an insurer) in this write-up will be the topic of my next post. After all, we can't let GS and JPM blow up the world by themselves, can we?

Roubini Strategist: High Yields Are Europe's New Normal This is a no brainer. How about high rate volatility as well as all of the financial entity fun that that will ensue? Here's a better question. What happens to real estate values as interest rates increase? Yep! You heard it here first... Watch As Near Free Money To Banks Fails To Prevent Nuclear Winter In European Real Estate. As a matter of fact, We're At Step 2 Of The Global Real Estate Compression!

Of course, after pondering that query, must become more investigatory - What happens to bank mortgages as CRE values plunge? So, Can Europe Nationalize All Of Its Troubled Banks? 

CNBC reports Banks No Longer 'Float Above Their Countries': Deutsche Banks' countries of origin have become important again. No shit, Sherlock!!!

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I warned heavily last year about the connection between higher interest rates and falling real estate in Europe...

Reggie Middleton as the Keynote Speaker at the ING Real Estate Valuation Seminar in Amsterdam

 

Bank of England to Print Money if Economy Worsens - Well, you know I've always said The UK Can't Be In A Double Dip Recession If It Never Truly Left The First Recession, Can It?

As we clearly articulated two years ago, when it was alleged that recession was over, in the subscriber (click here to subscribe) document  UK Public Finances March 2010:

 UK_Public_Finance_Analysis_2.0_Page_01_copyUK_Public_Finance_Analysis_2.0_Page_01_copy

UK_Public_Finance_Analysis_2.0_Page_02UK_Public_Finance_Analysis_2.0_Page_02

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UK Retail Sales Slide at Fastest Pace in 2 Years in April - Well of course. Don't these guys read the BoomBust??? The Greatest Risk To Retail Commercial Real Estate Is? Sovereign Debt! Macro Headwinds! Popping Bubbles! Busted Banks! No, It's The Internet! and Prepare For CRE Crash And Burn Marks At A Shopping Mall Near You

 

'Nuff said! Subscribers, as (not if, but as) this breaks, these are the companies trading at the valuations that are most shortable/profitable in my opinion... Relevant downloads for subscribers only! Click here to subscribe...

US CRE

European Insurance

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Vulture_Fights_Jackle_in_bubbleBelieve it or not, we actually have a mini-bubble within this bubble crash as vulture investors fight for the scraps disgorged by indebted sovereigns and over-leveraged banks. The time is not ripe just yet and I plan to allow the carrion feeders to price destruct amongst themselves as I await the coming interest rate storm which will truly bring about a once in a lifetime wealth creation opportunity.

Arguably, more millionaire money was made during the Great Depression than at any time in history. Well, if that's true then it looks as if history may be poised to repeat itself. The question is, who will be ready? I will discuss this live on RT's Capital Account show today at 4:30. 

Executive Summary

Asset sales by European sovereign nations, central and private banks have made global investors and speculators scour for cheap assets that have the potential to yield higher than average risk adjusted. However, the search process is not that easy, as sellers are adopting a ‘wait and see’ policy assisted by the European Central Bank’s facilitation of (extremely) cheap financing and liquidity measures. The market now witnesses by too many buyers chasing too few distressed assets. Hence the speculation about future returns has actually caused a mini-bubble in distressed asset prices. Professional subscribers should download the full version 

Asset sale by sovereigns is can be seen in the sale of stakes in government owned infrastructure assets and corporations. However, the approach adopted to dispose of these assets is to make partial sales in tranches in order to participate in any benefits of valuation recovery.

Professional and institutional subscribers should download the full version of this document (File Icon The BoomBustBlog Pan-European Distressed Asset Acquisition Initiative) which outlines investment opportunities in the following nation/banks: UK, Portugal, Italy, Cyprus, Greece, Ireland and Spain.  Our initiative runs the gamut from whole companies and equities, to real estate, infrastructure assets, rare earth and hard tangible assets to IP.

Dispositions by Europeans banks have consisted mostly of foreign assets outside of Europe. Most of these assets had the potential for high returns but are being offered at prices reflecting the perception that future investment performance would be robust. This is why there is so much interest in the private equity and asset management space in scanning for strong deals among those assets. However, the competition among these entities to buy quality assets at reasonable valuations has created a micro bubble of sorts, the type that make profitable vulture investing a very difficult proposition.

Sale of Sovereign Assets

Faced with mounting debt burdens, many European nations are under tremendous pressure to cut fiscal deficits

Related research…

File Icon A Review of the Spanish Banks from a Sovereign Risk Perspective – retail.pdf

File Icon A Review of the Spanish Banks from a Sovereign Risk Perspective – professional

File Icon Ireland public finances projections

File Icon Spain public finances projections_033010

File Icon UK Public Finances March 2010

File Icon Italy public finances projection

File Icon Greece Public Finances Projections

File Icon Banks exposed to Central and Eastern Europe

File Icon Greek Banking Fundamental Tear Sheet

File Icon Italian Banking Macro-Fundamental Discussion Note 
File Icon Spanish Banking Macro Discussion Note



by establishing and expanding austerity measures and reducing interest expenses. These nations include not only those faced with accelerating debt repayment obligations such as Greece, Italy, Spain, etc., but also some of the relatively better positioned countries – namely the United Kingdom and France.

In a bid to reduce accelerating debt burdens, many of these nations are selling their sovereign assets. We will probably see an even greater pool of sovereign asset sales as the futility of serially forced austerity drives the EU into a deep recession.

Even the Greek situation is just getting started, contrary to popular belief and the upcoming distress is not just CRE and RE assets that are available via fire sale, as clearly outlined two years ago in our subscriber (click here to subscribe) report 

File Icon Greece Public Finances Projections see pages 5 and 6 following... (click to enlarge)

 

thumb_Greece_public_finances_projections1_Page_05

 

thumb_Greece_public_finances_projections1_Page_06

 

As a matter of fact, I warn those who do not subscribe to the BoomBust, this song is far, far from over... Beware The Overly Optimistic Greek Speculators As Icarus Comes Crashing Down To Earth!

Greece_Primary_balance

Greece is virtually guaranteed to re-default, with a structural imbalance that literally forbids the country from being able to service its debt, thereby chasing investors and bondholders with even remote access to a spreadsheet or calculator into the hills… Ne’er to return before the 720th fortnight!

It’s not just in the periphery either. The core states have some stress coming their way.


Slide21

Investors seeking safety in Germany, the UK and France may truly be in for a rude awakening!

Slide22

Interest rate volatility, at a bare minimum, is a given – with the potential for stagflation being the base case scenario…

 

Those who wish to download the full article in PDF format can do so here: Reggie Middleton on Stagflation, Sovereign Debt and the Potential for bank Failure at the ING ACADEMY-v2.

Interestingly, Chinese corporations are increasingly interested in European assets. There have already been a number of indicators to prove that while China is not as attracted to European sovereign bonds, there’s material interest in buying infrastructure assets; and interest in perceived attractively valued corporations has increased over the recent past. Seeing profitable investment opportunities, private equity firms and global leading funds have also joined in. This has created a kind of rush to search for attractively valued assets that could yield attractive returns in the years ahead. The current scenarios, as such, have been of  a kind wherein too many buyers are chasing too few assets up for sale, particularly in view of the fact that countries like Italy, the United Kingdom and to a lesser extent Spain, can bargain with time - unlike Greece, to wait for fair valuation of assets before their disposal. This has created a market of buyers and sellers wherein prices for distressed assets are not being determined by fundamental valuation, but are influenced by speculation and demand-supply gap. In essence, what we have amidst this bursting of the sovereign credit bubble is a mini-distressed asset bubble.

Professional and institutional subscibers should download the full version of this document (File Icon The BoomBustBlog Pan-European Distressed Asset Acquisition Initiative) which outlines investment opportunities in the following nation/banks: UK, Portigal, Italy, Cyprus, Greece, Ireland and Spain.  Our initiative runs the gamut from whole companies and eqiuities, to real estate, infrastructure assets, rare earth and hard tangible assets to IP.

Any who are interested in hearing more about this initiative can reach me via email or phone. All others are urged to follow me through my various social media assets:

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Published in BoomBustBlog

As global equity markets gap downward the trading day after I suggested Watch The Pandemic Bank Flu Spread, can kicking will get progressively harder from this point on. As I have said in my many interviews, the only way out of this is debt destruction, which will crush big European banks leveraged up on debt marked at par of close enough to it.

reggie_on_RT

 

Having made clear that default was the only way out, Iceland has once again proven me correct. And just to jog the memory, I made it clear that default was the only way out nearly two years ago...

Online Spreadsheets (professional and institutional subscribers only)

Bloomberg reports: Iceland May Hold Krona Auctions Within Weeks

The island, whose banks defaulted on $85 billion in 2008, is moving into the final stages of its resurrection plan as the last vestiges of crisis management are gradually removed. Iceland’s decision, taken together with the International Monetary Fund, to impose capital controls three years ago was key to surviving the bleakest moments of the crisis and helped prevent an all-out run on the island’s assets, Gudmundsson said.

“Without the capital controls it would have been much more difficult to ensure stability in the exchange rate, calling for much higher interest rates and an inability to shelter the domestic economy as well as we did,” he said. “With the turbulence in the international markets lately, the capital controls have sheltered Iceland considerably, since there’s no way of doing a run on the financing of the Icelandic state or the financing of the Icelandic banks.”

It is clear that capital controls are coming to the EU, and I'm sure there already in place in some form or fashion. It is quite ironic how the so-called "in the know" pundits alleged that Iceland would be osctrazied from the captial markets for defaulting when they are the ones actually returning to the markets as the TPTB in the EU are being shunned. Just default already and get it over with, or you just may find yourself working for an Icelandic boss momentarily... You can try to save all of your banks and end up saving no banks at all, or you can go the logical route - the route that Iceland democratically allowed their populace to choose, which also so happened to be the right way. Hmmm... Democaracy! Capitalism! We just don't seem to be seeing those concepts in the Euro area much these days...

Outperforming Euro Area

Iceland’s economy will grow faster than the euro-area average this year and next, the IMF estimated in September. The cost of insuring against an Icelandic default, using credit default swaps, is lower than the average for the euro area.

Iceland’s economy will grow 2.5 percent this year and next, versus 1.6 percent in the euro area this year and 1.1 percent in 2012, the IMF said Sept. 20. Next year, Iceland’s current account surplus will widen to 3.2 percent of the economy and unemployment will be 6 percent, versus 9.9 percent joblessness in the euro area, the fund said.

The stabilization of the island’s economy has allowed the central bank to press ahead with capital liberalizations that the government estimates won't be fully dropped until 2013. The approach allows foreign investors eager to offload their krona holdings to transfer them to foreign or local investors willing to commit long-term to the island, according to the central bank.

'Nuff said. Now, on to my other premonitions, predilections and predictions for which my subscribers pay me so dearly for... CNBC reports Moody's Warns On French Rating Outlook

A rise in interest rates on French government debt and weaker growth prospects could be negative for the outlook on France's credit rating, Moody's warned in a report on Monday, adding to pressure on European debt markets.

Worries that France has the weakest economic fundamentals among the euro's six AAA-rated countries have drawn the euro zone's second largest economy into the firing line in the debt crisis this month.

The rating agency said the deteriorating market climate was a threat to the country's credit outlook, though not at this stage to its actual rating.

"Elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications," Senior Credit Officer Alexander Kockerbeck said in Moody's Weekly Credit Outlook dated Nov.21.

"As we noted in recent publications, the deterioration in debt metrics and the potential for further liabilities to emerge are exerting pressure on France's creditworthiness and the stable outlook (though not at this stage the level) of the government's Aaa debt rating," the Moody's note read.

The yield differential between French and German 10-year government bonds rose above 200 basis points last week, a new euro-era high.

Moody's said that at that spread level, France pays nearly twice as much as Germany for long-term funding, adding that a 100 basis point increase in yields roughly equates to an additional three billion euros in yearly funding costs.

In early Monday trade, the French 10-year spread was up about 20 basis points at 167 bps following publication of Moody's report but remained well short of the 202 bps hit last week.

The CAC 40 index, which was down 1.7 percent in opening trade, was down 2.2 percent after an hour of trade.

"With the government's forecast for real GDP growth of a mere one percent in 2012, a higher interest burden will make achieving targeted fiscal deficit reduction more difficult," Moody's said.

On Oct 17, Moody's said it could place France on negative outlook in the next three months if the costs for helping to bail out banks and other euro zone members overstretched its budget.

"The French social model cannot be financed if the French economy's potential is not preserved.

... The stress on banks' balance sheets can lead to further increases of liabilities on the government's balance sheet when further state support to banks is needed, it added.

The events are unfolding like clockwork. Just go back a few months - or a year - or two years - in the BoomBustBlog archives for the Eurozone topic...

Italy’s Woes Spell ‘Nightmare’ for BNP - Just As I Predicted But Everybody Is Missing The Point!!!

BNP, the Fastest Running Bank In Europe? Banque BNP Exécuter

When French bankers gorge on roasting PIIGS - OR - Can You Fool Everybody All Of The Time?

So, does BNP have a funding problem, or is it at risk of the same?

BoomBustBlog subscribers know full well the answer to this question. I'm also going to be unusually generous this morning being that our prime French bank run candidate has approached my "crisis" scenario valuation band. So, as to answer the question as to BNP, let's reference File Icon Bank Run Liquidity Candidate Forensic Opinion - A full forensic note for professional and institutional subscribers, and otherwise known as BNP Paribas, First Thoughts...

The WSJ article excerpted above quotes BNP management as saying: "The bank has €135 billion in "unencumbered assets after haircuts" that are eligible to central banks."

OK, I'll bite. Excactly how did BNP get to this €135 billion figure? Was it by using Lehman math? Methinks so, as clearly delineated in my resarch report on the very first page:

BNP_Paribus_First_Thoughts_4_Page_01 

The following two pages of this report go on to reveal the games being played to potentially come up with a figure such as the 135 billion quoted above. Boys and girls, I fear those may be Lehman bucks! 

For those not familiar with the banking book vs trading book markdown game, I urge you to review this keynote presentation given in Amsterdam which predicted this very scenario, and reference the blog post and research of the same:

CNBC and Bloomberg report S&P to Update Bank Credit Ratings Within 3 Weeks. You know that means (or at least should mean)... Next stop of the bank flu express... Germany!

I may post an update on German banks in a week, but I want subscribers to remember that if when things really kick off, this is going to be an explosion that no one said they expected but will blow everybody's ears out - posted behind the paywall well over a month ago and still priced inexpensively relative to those other banks: Blowup Bank - Haircuts, Derivative Risks and Valuation

Published in BoomBustBlog

From CNBC: UK 'Vindicated' for Refusing Euro: Chancellor Osborne

Britain's decision of not joining the euro was vindicated by the crisis in the euro zone, as the countries in the single monetary union have lost control of their monetary policy, UK Chancellor of the Exchequer George Osborne told CNBC.

The UK did not join the euro because that would have meant giving up decision over interest rates and removing exchange rate flexibility, Osborne said in an interview late Tuesday.

"And, you know, I feel that our view has been vindicated by recent events, and I'm very pleased the UK's not part of the euro," he said.

Whaaaattt????!!!! That's not the way I remembered it. As I recall, a man with a proprietary investment style very similar to my own (see "The Great Global Macro Experiment, Revisited") George Soros warned the UK officials not to join the Euro and they ignored his advice.

[caption id="" align="alignnone" width="680" caption="From a Global Macro perspective, it is actually quite profitable taking the opposing side of Central Bank trades. They are inevitably always wrong! If one were to look at the track record of my public calls via BoomBustBlog over the last 4 years, this assertion is proven true without a shadow of a doubt."][/caption]

He then levered up against the pound as the UK tried to manipulate its currency to fit within the EMU's mandated band. The man reportedly made $1 billion off of that trade (which was a lot of money for a trade back in the '90s) and was labeled a villain. Methinks they should erect a shrine in homage of Soros in Trafalgar Square instead. It appears quite obvious that Soros was right and the UK government was wrong. Here's how Wikipedia puts it:

Published in BoomBustBlog

Quick Asian and European Recap, taking it in baby steps...

  1. Reggie Middleton warns that the UK prospects for recovery are dramatically over-hyped and optimistic (March 2010): See
  2. Bank of England warns UK recovery will be weaker than hoped (Telegraph)
  3. Bank of England Cuts Growth Outlook, Sees Inflation Undershoot (Bloomberg)

The non-sense that passes as the financial reporting from these sovereign entities should be ridiculed. I’d like to take this time to share page 4 of our subscription-based analysis of the UK’s predicament (subscribers, see File Icon UK Public Finances March 2010)…

Published in BoomBustBlog

From Reuters, by way of CNBC:UK Economic Slump Deeper than Thought

Britain's record recession was just as deep as we conservatively estimated it using realistic metrics even deeper than previously thought, and the economy could still have contracted in the first quarter of this year were it not for hefty government spending, official data showed on Monday.

The Office for National Statistics left its earlier estimate of first-quarter growth unrevised at 0.3 percent, giving an unchanged annual decline of 0.2 percent.

Britain faces mixed prospects for the second quarter, after data released at the same time showed that services output contracted 0.3 percent in April, the biggest fall since January.

During the first quarter, the biggest rise in government spending since the fourth quarter 2008 added 0.4 percent to GDP growth, alongside a 0.9 percent contribution from gross capital formation, which helped offset a drag of 0.9 percent from net trade. Imports rose and exports fell in roughly equal measure.

The figures suggest a major rebound in British exports will be needed to maintain growth when planned government spending cuts take effect from later this year.

...

Published in BoomBustBlog

In the British chapter of our tome on the Pan-European Sovereign Debt Crisis, the UK is going according to plan. Subscribers should feel pride (and hopefully profit) in having read about these actions months before they occurred.

From Bloomberg: Osborne’s U.K. Deficit Cuts May Rattle Coalition

June 22 (Bloomberg) -- U.K. Chancellor of the Exchequer George Osborne’s plans to cut spending by the most since the 1980s in an emergency budget today may test the durability of the six-week old coalition and the strength of union opposition. The prospect of an increase in value-added tax may lead some Liberal Democrat lawmakers to rebel against the Conservative led-coalition, as unions oppose steps to cut jobs, public workers’ pay and welfare. The spending reductions and tax increases also risk tipping the economy back into recession.

Published in BoomBustBlog

Anybody who has been following for the last fiscal quarter or so (or has seen my Spanish bank work in 2009) knows that I believe that the EMU as it stood in 2009 would probably be non-existent by the end of 2010. All of the pundits who proclaimed that the European debt crisis was over with the mere declaration that Greece may receive some additional debt either were abjectly lying or truly didn't understand the gravity of the situation. To be honest, there are a lot (and I mean a whole lot) of data points, angles and contingencies to grasp thus it is not necessarily easy. Then again, isn't that what these market professionals get paid for.

Very early in the year, I virtually guaranteed that the Greek banks would fall, or at least have to be rescued (a 2nd time) before they fell. I practically promised it. In the news today...

Lagarde to discuss Greece support with banks: French Finance Minister Christine Lagarde will meet with bank leaders on Wednesday to discuss how its banks could participate in the Greek rescue package. Lagarde told the French parliament the country's banks will reiterate their support for the rescue process on Wednesday but she said tomorrow's meeting could lead to them taking on a more active role, along the lines of what German banks have done. French banks have so far not been asked by the government to participate directly in the Greek rescue package, two sources in France's banking sector said earlier on Tuesday. They have only been asked to maintain their exposure to Greece and have agreed to do this, the sources said. "Nothing beyond this has been requested by the government," one of the sources told Reuters. France has overall the highest exposure to Greek debt, with about $75.2 billion worth of assets in total, according to Bank of International data as at end-2009. Germany's top banks and insurers offered support on Tuesday mainly by keeping open credit lines to banks and by agreeing not to sell Greek bonds for the duration of a wider IMF-led bailout. Germany's Finance Minister Wolfgang Schaeuble said that German financial firms had agreed to buy bonds issued by state controlled bank KfW as a way to help finance the bailout. Deutsche Bank Chief Executive Josef Ackermann said it was important to extinguish the fire in Greece and pledged to help the country. Ackermann is helping to coordinate efforts by the private sector to support the Greek rescue package.

I suggest one references my post, How Greece Killed Its Own Banks!.

Published in BoomBustBlog

I will start posting more news topics of interest and welcome readers to forward research and investment ideas at will. Here is the crop from last week. I will post topics from the weekend later on today, and as usual will randomly comment on daily news events.

From Alliance Bernstein:

  • Core Intermediate Producer Prices have taken 6 months to rise 5.2% annualized, recession of 2002 took 2 years to reach same level
  • Operating Rate hit low of 65.4% last year and has only risen to 69.4%, still short of historical threshold causing rise in raw material prices (74%)
  • Increases in foreign operating rates have started to indicate US may now be a price follower instead of price leader
  • The Fed cited lack of resource utilization as reasoning for maintaining record low rates, as these concerns begin to wane Alliance Bernstein sees easing of emergency Fed policy

Bloomberg.com:

  • Christina Romer, Peter Orszag, and Tim Geithner have predicted unemployment will settle in 2010 at around 9.7%, citing poor job conditions
  • Federal deficit projections for 2011 & 2015 are $1.5 trillion & $751 billion respectively, White House officials cite Bush's medicare and income tax cuts for allowing deficit insanity
Published in BoomBustBlog
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