Daily Digest

Daily Digest 5/19 - Global Banks Rally On Greek Exit, The Canary In The Gold Mine, Apocalypse Fairly Soon

Saturday, May 19, 2012, 9:28 AM
  • Global Banks See Market Rally On Greek Exit
  • John Williams: The Recovery Is An Illusion
  • The Canary in the Gold Mine
  • 18 Signs That The Banking Crisis In Europe Has Just Gone From Bad To Worse
  • Apocalypse Fairly Soon
  • Tokyo: The Biggest City in World History Faces Down Its Ultimate Nemesis
  • Harper Government Funded Study On 'Dutch Disease'

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Economy

Global Banks See Market Rally On Greek Exit (pinecarr)

Gary Jenkins from the bond advisers Swordfish said those betting on a market crash should be careful. "The global central banks are going to respond with the biggest flood of liquidity the world has ever seen. It will make the LTRO (the ECB's €1 trillion lending to banks) look like small change," he said.

John Williams: The Recovery Is An Illusion (David B.)

Reported GDP activity for Q3/11, Q4/11 and Q1/12 was above where it had been going into the recession. Formally, that is a recovery. The problem is that no other major economic series shows that same pattern, which is a physical impossibility if the GDP numbers are accurate.

The Canary in the Gold Mine (pinecarr)

A recent study by Fitch ratings calculated that banks need to raise $566bn of Tier1 capital, a 23% increase. That implies much potential selling of liquid, non-Tier1 assets. At first glance, this would appear to be negative for gold. But in fact it is not that simple.

As it happens, given that so many banks are desperate to raise their capital ratios, there is in fact a discussion underway regarding whether or not gold should, in fact, be designated as Tier1 capital. In a recent articlein the Financial Times, it was reported that, “The Basel Committee for Bank Supervision, the maker of global capital requirements is studying making gold a bank capital Tier 1 asset.”

18 Signs That The Banking Crisis In Europe Has Just Gone From Bad To Worse (David B.)

#10 According to a recent German documentary, financial records at the Ministry of Finance in Athens are being stored in garbage bags and shopping carts.

Apocalypse Fairly Soon (jdargis)

The story so far: When the euro came into existence, there was a great wave of optimism in Europe — and that, it turned out, was the worst thing that could have happened. Money poured into Spain and other nations, which were now seen as safe investments; this flood of capital fueled huge housing bubbles and huge trade deficits. Then, with the financial crisis of 2008, the flood dried up, causing severe slumps in the very nations that had boomed before.

Tokyo: The Biggest City in World History Faces Down Its Ultimate Nemesis (guardia)

Despite leading the world in Fortune 500 companies, the majority of Tokyo establishments are small -- with four or fewer employees -- and concentrated on local services that aren't internationally tradable. That looks more like a model for post-growth happiness than pro-growth dynamism.

Harper Government Funded Study On 'Dutch Disease' (guardia)

The Harper government has funded research that argues Canada's economy suffers from so-called Dutch Disease, an economic theory the prime minister and other senior officials ridiculed when raised recently by NDP Leader Tom Mulcair. Study for Industry Canada found a third of manufacturing job losses due to inflated currency.

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12 Comments

DavidC's picture
DavidC
Status: Silver Member (Offline)
Joined: Sep 29 2008
Posts: 243
Grexit - or not?

Interesting that two of the articles today take polar views, a rally on a Greek Euro exit and Apocalypse Fairly Soon!

The Euro is more a political construct than a true economic/financial construct for the Eurozone. However, I think Germany needs the Euro as much as anyone. If Greece exits then I think the Euro could rally (as a weaker member has left), which would affect Germany's exports negatively. Likewise, if Germany exits the Deutschemark would rise, again causing problems for Germany's exports.

Therefore it's as much in Germany's interest as anyone's to keep the Euro going as it is now.

There was a very interesting programme on the UK's BBC2 earlier this week. Michael Portillo went to Greece (and other countries) and spoke with a wide range of different people from its Finance Minister Lucas Papademos to a builder and people preparing free food - he presented them with a Drachma and Euro note, asking which they would prefer. They all said the Euro.

(Available until Monday - not sure if it's viewable outside the UK)

www.bbc.co.uk/iplayer/episode/b01hllyd/This_World_Michael_Portillos_Great_Euro_Crisis/

Ultimately I think we will see the markets fall to a fraction of where they are now, but I don't think it's going to happen immediately - the Central Banks and politicians are scared out of their wits. However, if they'd let the Too Big To Fails go under in 2008 (smaller, more responsible banks in the US have suffered as much as anyone because of  the TBTFs and their Fed Discount Window access) the system would be cleaner and the crisis healing rather than lurching into greater and greater problems.

DavidC

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
You Know That TED Talk You Weren't Supposed To See?

BREAKING: You Know That TED Talk You Weren't Supposed To See? Here It Is.

Nick Hanauer, self-described "super-rich" entrepreneur, gave a pretty compelling TED Talk about how the middle class—not the super-rich—are the real job creators. But TED, which has released over 100 different political videos in the past, thought this one was too partisan and chose not to release it. We didn't notice any flaming partisanship in it. We normally love TED, and were surprised they didn't think this talk was TEDworthy.

Under pressure from the Internets, TED finally relented and released the video. Watch it and decide for yourself if it's really all that controversial to say that the "super-rich are not job creators." Then share it like crazy.

 

http://www.upworthy.com/breaking-you-know-that-nick-hanauer-ted-talk-you...

DavidC's picture
DavidC
Status: Silver Member (Offline)
Joined: Sep 29 2008
Posts: 243
You Know That TED Talk You Weren't Supposed To See?

Damnthematrix,

Thanks for your posting. Funnily enough I was having a discussion with someone the other day on something very similar, saying that it's the small and mid sized businesses who create the jobs, and which are being strangled by rules and regulations that large corporations are able to cope with because of their size - I'm thinking of (lack of) HR departments, for example, which small businesses simply cannot afford.

DavidC

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4060
Europe's governments, banks perilously entwined

Europe's governments, banks perilously entwined

Peter Smith's picture
Peter Smith
Status: Bronze Member (Offline)
Joined: Mar 28 2009
Posts: 41
Greek Exit, Eurozone

The "crisis" in Europe is intentionally created along the model of the "panics" in the US at the turn of the last century.  Just at the panics cused by JP resulted in the 1913 creation of the Fed, the EU crisis will result in further monetary union....the goal of the owners of the central banks.  Only when the Europeans have suffered will they consent to loss of soverinty (sp?) so...they will have to suffer first and then we will see a Europe further dominated from behind the scenes.  GET IT!  This crisis is no accident!

woomera's picture
woomera
Status: Bronze Member (Offline)
Joined: Nov 8 2008
Posts: 44
Major Oil Discovery in the Caspian Sea

G'Day,  Just when I think you're in a 'peak oil mental depression', a good news story comes up.

http://english.farsnews.com/newstext.php?nn=9102112669

" 'Thar' she blows! "  The numbers are phenomenal.
To have a well blow out during drill operations is really scary...especially offshore.  Bet it made for some tight cheeks.

Regards,

Woomera

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Woot, Woomera!

Woomera

Very nice! If extracted all at once, that would power the world for about 120 days (assuming 10 billion barrels used up at 83 million barrels per day). Over a 40-year extraction cycle, it would provide about 3 days of world usage per year for 40 years (if drawn out steadily, rather than in a realistic  bell-curve-shaped distribution, and if world oil consumption does not increase in rate by the historical compound growth rate of 7% per year).

I don't know whether the Iranians are exaggerating or not, though.

Poet

woomera wrote:

G'Day,  Just when I think you're in a 'peak oil mental depression', a good news story comes up.

http://english.farsnews.com/newstext.php?nn=9102112669

" 'Thar' she blows! "  The numbers are phenomenal.
To have a well blow out during drill operations is really scary...especially offshore.  Bet it made for some tight cheeks.

Regards,

Woomera

woomera's picture
woomera
Status: Bronze Member (Offline)
Joined: Nov 8 2008
Posts: 44
That was oil. This is gas.

G'Day,  At least there is good news stories on this web site:

http://english.farsnews.com/newstext.php?nn=8101301669

This was last month on google news.  Gotta love good news.  Not enough of it these days.

Regards,

Woomera

 

 

 

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Spiked.

I am puzzled by this crazy spike that I found on the Perth mint website. It is not on any of the other charts that I have seen.

Wierd.

DavidC's picture
DavidC
Status: Silver Member (Offline)
Joined: Sep 29 2008
Posts: 243
Spiked.

Artur,

I'm guessing, as you provided no information, that this is a Gold lates week chart priced in dollars. I've just taken a look and can see no spoke.

DavidC

DavidC's picture
DavidC
Status: Silver Member (Offline)
Joined: Sep 29 2008
Posts: 243
Spiked.

Sorry, it's a Sunday morning and my brain isn't working - spike, not spoke!

DavidC

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Mystery.

The chart that I provided vanished. Perhapsthe chart is adjusted for your region's currency. The spike might represent an $A dip. It's still there for me.

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