Daily Digest

Daily Digest 3/9 - Wall St.'s Broken Windows, Bernanke Spooks Gold, Massive Take-Up Of Greece Bond Swap Offer

Friday, March 9, 2012, 11:48 AM
  • Stockton's Pension Struggles An Ominous Signal
  • China Moves To Further Marginalize Dollar: Offers CNY-Denominated BRIC Loans
  • Bernanke Spooks Gold
  • MF Global Parent Can Restrict Some Information, Judge Says
  • Panetta: 'International Permission’ Trumps Congressional Permission For Military Actions
  • Massive take-up of Greece bond swap offer
  • Wall Street’s Broken Windows
  • The Real China Story: It’s What Premier Wen Didn’t Say That Matters
  • US Budget Deficit Hits All Time High In February
  • Has Japan Run Out Of Cans To Kick?
  • Western Civilisation: Slow Decline or Fast Fall?
  • The Booms and Busts of the Electric Power Industry
  • Global Indium Supplies Could Be Exhausted By 2017

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Economy

Stockton's Pension Struggles An Ominous Signal (Saxplayer00o1)

When real estate was booming in the '90s, the city made long-term decisions based on what proved to be a short-term tax revenue windfall. It borrowed to construct a waterfront arena, a ballpark, a hotel and a convention center it opened in 2005. It promised lifetime health benefits to city retirees and their spouses with as little as one month of employment, and then never funded the plan. It contracted with CalPERS for a generous pension plan for its retirees....

Stockton's predicament varies only in degree from the woes faced by many other local governments in the state that acted as if the good times would last forever. It may be the largest to face bankruptcy, but it likely won't be the last.

China Moves To Further Marginalize Dollar: Offers CNY-Denominated BRIC Loans (pinecarr)

Today we observed how as the US is considering releasing crude from its Political, pardon Strategic Petroleum Reserve, China was doing just the opposite. Now, in a further step confirming that China is acting as a much more rational capitalist power, and is rapidly encroaching on the "reserve" status of the sacrosanct USD, the FT writes that China intends to extend renminbi loans to other BRIC nations in "another step toward the internationalisation of its currency." To those following the stealthy Chinese incursion into currency markets as a dollar alternative, this is not news: already we know that China and Japan have bypassed the dollar entirely and now engage in direct bilateral trade using JPY and CNY (even as most other nations in Asia have developed bilateral agreements to transact in a non dollar basis). This is merely the latest incremental step which will see China become the dominant player in the currency arena, and further puts to doubt the fate of the US Dollar as the default currency.

Bernanke Spooks Gold (pinecarr)

Bernanke's failure to telegraph more printing means nothing. Investors are craving a return to normalcy, which means more prudent monetary policy. As a result, many are grasping at straws. But I believe these hopes are premature, and that gold will be buoyed by easy money for quite some time.

MF Global Parent Can Restrict Some Information, Judge Says (June C.)

U.S. Bankruptcy Judge Martin Glenn approved rules proposed by Louis Freeh, the trustee acting for the parent’s estate and its creditors, according to court papers filed today in Manhattan. The first proposal, which limits how a committee of creditors will share information with customers, drew objections from customers who questioned JPMorgan Chase & Co. (JPM)’s role in deciding whether they can access information about missing customer funds.

Panetta: 'International Permission’ Trumps Congressional Permission For Military Actions (June C.)

Defense Secretary Leon Panetta appeared at a Senate Armed Services Committee congressional hearing, where he said “legal basis” was needed to initiate a no-fly zone over Syria.

Massive take-up of Greece bond swap offer (ewilkerson)

The biggest sovereign debt restructuring in history will see bond holders accept losses of some 74 percent on the value of their investments in a deal that will cut more than 100 billion euros from Greece's crippling public debt.

Preliminary results from the offer are expected to be announced officially at 0600 GMT on Friday and Finance Minister Evangelos Venizelos will hold a news conference before a call with euro zone finance ministers in the afternoon.

Wall Street’s Broken Windows (Davos)

I listened in stunned amazement to the presentations of law professors who specialize in white collar crime and securities law at the two annual meetings that followed the ongoing financial crisis. Virtually every speaker in these sections presented arguments calling for reducing white collar criminal liability and liability for securities fraud. At the time they were speaking, the Justice Department had already ceased prosecuting major firms and the SEC brought a pathetically high percentage of its small number of enforcement actions against tiny firms with fewer than 10 employees.

The Real China Story: It’s What Premier Wen Didn’t Say That Matters (David B.)

Having spent more than 20 years doing business in Asia, I’ve learned that Chinese leaders almost never say anything in public they haven’t already baked into the cake.

This stands in stark contrast to our own politicians who frequently write checks with their mouths that they can’t possibly cash.

US Budget Deficit Hits All Time High In February (Davos)

February the US will report its largest budget deficit in history, as the Keynesian floodgates open full bore, and as Zero Hedge has noted repeatedly, tax revenues just refuse to come in at anything close to the pace of accelerated spending, forcing the US to borrow 54 cents for every dollar it spends.

Has Japan Run Out Of Cans To Kick? (pinecarr)

Japan's Trade and Current Account imbalances appear to be hitting some kind of terminal velocity and while neither JGBs nor CDS seem to reflect the ensuing chaotic recognition that perhaps the can that has been so faithfully kicked down the "Nishi-no-michi" or the West Road may have plunged over the lip of Mount Fuji (conjuring images of Mordor), FX markets recent and abrupt weakness brought on by yet more printing (a topic we discussed in great detail recently as the chosen heretical method du decade) may well be coming face to face with reality.

Western Civilisation: Slow Decline or Fast Fall? (pinecarr)

But leave it to a Harvard history professor to break out of the box and go tilting at the big picture. And when you think of it, we're all pretty concerned at this point, however we frame the issues. Everywhere we turn, it seems, we find the forces of polarization and dissolution gnawing at our social fabric, and Yeats' fateful line about the center not holding starts to feel uncomfortably prophetic. Maybe it's about time we all thought bigger and worked harder at getting along, while we still can.

Energy

The Booms and Busts of the Electric Power Industry (James S.)

The long lead time needed to build new power generation or transmission combined with tightening reserve margins is a signal of change in the power business cycle. The Nuclear Regulatory Commission recently approved the construction of two new base load nuclear power plants in Georgia. These are the first new nukes since 1978. The process of getting to this NRC approval began more than a decade ago. And even now it will take another 3-5 years, if Southern Company is lucky, to complete the construction of these new units and put them into service. Building a new nuclear power plant is a career not an assignment. But think of all that has changed in the electric power markets in the US since 1978—or even since 2004 when Southern became a founding member of NuStart, a consortium of utilities hoping to restart the nuclear renaissance.

Environment

Global Indium Supplies Could Be Exhausted By 2017 (Ivo M.)

There is a problem looming on the horizon for fans of the latest tablet computers, not to mention smart phones and flatscreen TVs. Whether it is on the shiny new iPad, computer or phone, the chances are that you are reading this article through a screen laced with one of the rarest metals on Earth: indium. And analysts are warning that global supplies of indium could be exhausted as soon as 2017. So how will we live without the gadgets that we have come to depend on?

Article suggestions for the Daily Digest can be sent to dd@PeakProsperity.com. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

6 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 2472
saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 2472
MF Global executives

Please read here and here.

At least the good news for the day is that the government has helped us consumers get a new  "affordable" and "green" light bulb.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Approved from Above

.............Don't be too upset with these church foreclosures. They were all approved from above.

Hysterical, I read that and this image popped into my head.  Llyod-Doing God's Work-Blankfein

nickbert's picture
nickbert
Status: Diamond Member (Offline)
Joined: Jan 14 2009
Posts: 1106
ISDA CDS Trigger Decision Is Unanimous

http://www.zerohedge.com/news/isda-cds-trigger-decision-unanimous

March 9, 2012

In light of today’s EMEA Determinations Committee (the EMEA DC) unanimous decision in respect of the potential Credit Event question relating to The Hellenic Republic (DC Issue 2012030901), the EMEA DC has agreed to publish the following statement:

The EMEA DC resolved that a Restructuring Credit Event has occurred under Section 4.7 of the ISDA 2003 Credit Derivatives Definitions (as amended by the July 2009 Supplement) (the 2003 Definitions) following the exercise by The Hellenic Republic of collective action clauses to amend the terms of Greek law governed bonds issued by The Hellenic Republic (the Affected Bonds) such that the right of all holders of the Affected Bonds to receive payments has been reduced.

The EMEA DC has resolved to hold an auction with respect to the settlement of standard credit default swaps for which The Hellenic Republic is the reference entity. To maximise the range of obligations that market participants may deliver in settlement of any such credit default swaps, the EMEA DC  has agreed to run an expedited auction process such that the auction itself will take place on March 19, 2012. In light of this expedited auction process, market participants should submit any obligations that they would like to include on the list of deliverable obligations to ISDA as soon as possible.

Is it just me, or does it seem a little worrying that this is being announced near the end of the day just before the weekend?  My hunch is that there's been enough time for TPTB to have prepared for this likely eventuality and that they will continue to abuse the rule of law to keep things limping along in some semblance of "normal", but who can say if they will have accounted for all the angles? 

Anyway, I expect IF this is truly going to be a big development, Chris will probably write something about it in the next couple days.  He's pretty good about that 

- Nick

nickbert's picture
nickbert
Status: Diamond Member (Offline)
Joined: Jan 14 2009
Posts: 1106
Re: ISDA CDS Trigger Decision Is Unanimous

nickbert wrote:

Is it just me, or does it seem a little worrying that this is being announced near the end of the day just before the weekend?  My hunch is that there's been enough time for TPTB to have prepared for this likely eventuality and that they will continue to abuse the rule of law to keep things limping along in some semblance of "normal", but who can say if they will have accounted for all the angles? 

Anyway, I expect IF this is truly going to be a big development, Chris will probably write something about it in the next couple days.  He's pretty good about that 

- Nick

Well whaddaya know?  Ask and though shall receive... 

http://www.peakprosperity.com/martensoninsider/greek-cds-triggered

- Nick

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