Monday, 26 April 2010 17:36

Reggie Middleton's Weekend Review: 4/25/2010

Relevant News Items from the Weekend Past

China Keeps Monetary Policy Loose: Bloomberg

  • People’s Bank of China officials elected to keep monetary policy loose and “proactive” in the wake of growing inflation and further growth expectations
  • Exports grew slower than expected, prompting officials to relax rates for now (newsflash: the lower rates are not fueling export growth, they are going directly toward flipping houses and 4th investment properties)
  • Canada’s Financial Minister Jim Flaherty called for China to revalue the Yuan in the wake of a stabilizing global recovery

Relevant subscription research:

Greece Requests Hypothetical Aid Package: WSJ

  • Greek PM George Papandreou has called for the activation of the verbal bailout proposed by the EMU and the IMF a few weeks ago
  • Greece may need an additional 10 billion Euros to finance its way through May
  • Have fun activating the German European bailout package, just make sure the German’s don’t back out at the last minute

Germany Still May Back Out of Greek Aid: Business Week

  • Finance Minister Wolfgang Schaeuble has stated Germany has still not decided whether to support Greek aid, and neither has the rest of the EU, as fears about austerity measures loom
  • Greek government spokesperson Giorgos Petalotis stated, "From now on, it is up to implement the (austerity measures) and show we are worthy of this momentous responsibility" (How can the world take this seriously?)

If it keeps on Raining, the Contagion is going to Spread: WSJ

  • Spanish and Portuguese banking stocks fell hard Friday, as fears over the bond vigilantes broadening their horizons to other PIIGS will spread
  • Costs to insure both nations’ sovereign debt have reached record highs in the past week
  • As output continues to underperform compared to EU and IMF expectations, debt deflation fears will continue to haunt PIIGS

Relevant Blog Posts and Subscription Research

Actionable Intelligence Note For All Paying Subscibers on European Bank Research

As I Explicitly Forwarned, Greece Is Well On Its Way To Default, and Previously Published Numbers Were Waaaayyy Too Optimistic!

The Pan-European Sovereign Debt Crisis, to date:

  1. The Coming Pan-European Sovereign Debt Crisis – introduces the crisis and identified it as a pan-European problem, not a localized one.
  2. What Country is Next in the Coming Pan-European Sovereign Debt Crisis? – illustrates the potential for the domino effect
  3. The Pan-European Sovereign Debt Crisis: If I Were to Short Any Country, What Country Would That Be.. – attempts to illustrate the highly interdependent weaknesses in Europe’s sovereign nations can effect even the perceived “stronger” nations.
  4. The Coming Pan-European Soverign Debt Crisis, Pt 4: The Spread to Western European Countries
  5. The Depression is Already Here for Some Members of Europe, and It Just Might Be Contagious!
  6. The Beginning of the Endgame is Coming???
  7. I Think It’s Confirmed, Greece Will Be the First Domino to Fall
  8. Smoking Swap Guns Are Beginning to Litter EuroLand, Sovereign Debt Buyer Beware!
  9. Financial Contagion vs. Economic Contagion: Does the Market Underestimate the Effects of the Latter?
  10. Greek Crisis Is Over, Region Safe”, Prodi Says – I say Liar, Liar, Pants on Fire!
  11. Germany Finally Comes Out and Says, “We’re Not Touching Greece” – Well, Sort of…
  12. The Greece and the Greek Banks Get the Word “First” Etched on the Side of Their Domino
  13. As I Warned Earlier, Latvian Government Collapses Exacerbating Financial Crisis
  14. Once You Catch a Few EU Countries “Stretching the Truth”, Why Should You Trust the Rest?
  15. Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!
  16. Ovebanked, Underfunded, and Overly Optimistic: The New Face of Sovereign Europe
  17. Moody’s Follows Suit Behind Our Analysis and Downgrades 4 Greek Banks
  18. The EU Has Rescued Greece From the Bond Vigilantes,,, April Fools!!!
  19. How BoomBustBlog Research Intersects with That of the IMF: Greece in the Spotlight
  20. Grecian News and its Relevance to My Analysis
  21. A Summary and Related Thoughts on the IMF’s “Strategies for Fiscal Consolidation in the Post-Crisis
  22. Euro-Gossip Debunked, Courtesy of Trichet and the IMF!
  23. Greek Soap Opera Update: Back to the Bailout That Was Never Needed?
  24. Many Institutions Believe Ireland To Be A Model of Austerity Implementation But the Facts Beg to Differ!

Moody’s Admits Fault: FT

  • Moody’s executives admitting in Washington, DC that it did make mistakes grading housing market products
  • Speakers described relationships with investment banks where they were pressured to make AAA rated securities for banks to sell, regardless of whether they were backed by Las Vegas strippers with 5 mortgages and minimal money down
  • When can we start comparing this to Arthur Andersen and Enron?

Watch out for Japanese Complacency: FT

  • In the midst of the beginning of a sovereign debt crisis, the ultimate sovereign debtor, Japan, has remained unscathed
  • Even as deficits stay at 10% of GDP, and net public deficits have passed 110%, JGB yields have remained steady thanks to an aging Japanese population seeking low risk
  • An upcoming IMF paper by economist Kiichi Tokuoka discusses the nasty times ahead for JGBs after demographics change, and younger investors stop investing in Japan’s incredible sovereign debt load to seek higher yields
  • It would be wise to anticipate market complacency instead of radical action regarding sovereign debt, and funding public obligations

If Mortgages were Marked to Market, Commercial Bankruptcies would fall like Dominos: Nomura

  • Bernanke has sounded far more cautious than Wall Street about a recovery, carefully selecting words (on the contrary, one would say this is because he does not want to interrupt Operation S&P 360,000, but Nomura’s Richard Koo does not fall into that camp)
  • Without credit, the recovery is doomed, and consumers do not want credit
  • The rock and hard place are here: without stimulus, the private recovery is doomed, and with stimulus, the possibility of medium term defaults on sovereign debt will rise considerably
  • US Commercial banks are still in hot water, and they would have drowned without relaxed FASB rules
Last modified on Monday, 26 April 2010 17:36