Forum
Posts by "stationdealer"
750 Posts Total by "stationdealer":
84
Posts by Anonymous "stationdealer":
Greece sneezes and Portugal catches a cold. Portugal coughs and Spain falls ill. Spain runs a fever and Italy comes down with the flu.
Contagion, or contagion theory, is sweeping the euro zone, where Greeces debt crisis is infecting neighboring countries and threatening to make its way across the Atlantic to U.S. shores.
At least thats what were told on a daily basis. European Central Bank council member Axel Weber warned last week of grave contagion effects for countries that have adopted the euro. Greece Fuels Fears of Contagion in the U.S., trumpeted a May 6 Wall Street Journal headline.
I hate to pour cold water on that theory, but healthy countries arent susceptible to Greeces disease. The sick ones, already plagued with high debt levels and bloated state budgets, dont need a carrier. Capital flight from these countries is not evidence of contagion, said economist and author Anna Schwartz.
Of course, Schwartz said that in 1998 following the Asian financial crisis. In International Financial Crises: Myths and Realities (the Cato Journal, Vol. 17 No. 3), Schwartz punctured the notion that financial crises spread from the initial source to innocent victims. Nations are vulnerable because of their home grown economic problems, she said.
....
There is no question we live in an interconnected world. Subprime mortgage defaults by homeowners in Irvine, California, infected banks in Europe and Asia, thanks to the miracle of securitization.
So yes, European banks that hold Greek debt are vulnerable to losses. The interbank lending market is showing signs of stress. And the austerity measures required in Europes peripheral countries may spill over into reduced U.S. exports. Thats not the kind of contagion we keep hearing about.
On the other hand, it would be a mistake to interpret the flight-to-quality into U.S. Treasuries last week as a sign of immunity. The U.S. is already infected with the debt virus. Its still in its incubation period.
Sovereigns out in force. Middle Eastern sovereigns joining their Asian counterparts buying EUR/USD. Were back above 1.2700, presently at 1.2710.
Middle Eastern sovereigns also buying cable. Having been down to 1.4766 the pairing has shot back up to 1.4820 at writing.
ECBs Nowotny: I Dont See Inflationary Risks From Bond Buying Measures
*Main problem for euro zone is weak demand, slow growth
*Euro/Dollar rate always fluctuates historically, no reason for concern
Well that last comment doesnt sound like someone readying for offical intervention, I have to say.
None the less Fed to rule the world, Central Bank lending is nothing less of money laundering. Its worth something that's created through ex nihilo (out of nothing).
Gov's CB squeezing more money out of the state thus we are emptying our pockets to feed all these puppeteers who say they are helping us but instead they are making sure they leave you with nothing. I tell you we wont be able to leave anything to our next generations to come, i fear they all will be governmental socialist slaves. Going back to the dark days are we not?
Read and learn more about Feds Credit and Liquidity Programs and the Balance Sheet
http://www.federalreserve.gov/monetarypolicy/bst_liquidityswaps.htm
and also
Open market operations
http://en.wikipedia.org/wiki/Open_market_operations
Free markets my arse........................ fuck it im buying gold long term ;)
What's Next?
To defend the Euro, the ECB now is committed to throw up to $1 trillion at interventions in public and private debt.
What's next? Direct intervention in the stock market?
Bear in mind if this fails, these clowns will think the reason was they did not throw enough firepower at it.
Step back for a second. The problems are too much debt, too much government spending, and a massively unbalanced global economy. None of these actions address any of the fundamental issues.
Short Squeeze Coming
Judging from the action in futures this evening, shorts are going to be forcibly ejected Monday, perhaps for several days.
This will create a huge air pocket underneath. We saw this action once before, in Fannie Mae and financials.
Flashback Wednesday, July 16, 2008: SEC Restricts Shorting 19 Financial Stocks
Big brother has now decided to step in and force the price of all financial stocks up with this SEC short sale order.
So now the SEC is issuing short sale restrictions on financials because Bernanke says it's important for them to rise.
I have news for Bernanke and the SEC. This won't work. China had short sale restrictions on and it did not stop the Shanghai index from falling over 50%. Insolvency cannot be cured by short sale restrictions and many of those companies are insolvent.
All these short sale restrictions are going to do is create a vacuum. Once the shorts are driven out these shares will plunge. And who wants to buy a bond or provide capital knowing or even thinking share prices were artificially inflated.
Flashback Friday, July 18, 2008: Short Squeeze In Financials Continues
Fannie Mae is up another 25% today to $13.66 in the wake of Selective Enforcement of Regulation SHO and Bernanke's statement: "It's important for Fannie Mae and Freddie Mac bonds and stocks to rise so they can keep raising capital and aid the mortgage market."
This move in financials is going to fail spectacularly once the panic buying ends, but for now the bulls are having a bit of fun.
That short squeeze was the beginning of a violent end. It is a serious mistake to drive shorts from the market. Oh, it can work for a while. In the case of Fannie Mae for a week. Then what?
The hubris this weekend by central bankers is nothing short of amazing.
While the timeframe is unknown, these attempts to "defend the Euro" are highly likely to hasten its demise.
The ECB, IMF, and now the Fed have come out with bazookas blazing in all hands. The amount of ammunition the fools are willing to throw at "Defending the Euro" is now up to $962 billion.
Please consider EU Crafts $962 Billion Show of Force to Halt Euro Crisis.
European policy makers unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases as they spearheaded a global drive to stop a sovereign-debt crisis that threatened to shatter confidence in the euro.
Jolted into action by last weeks slide in the currency and soaring bond yields in Portugal and Spain, the 16 euro nations agreed to offer financial assistance worth as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank will counter severe tensions in certain markets by purchasing government and private debt.
The message has gotten through: the euro zone will defend its money, French Finance Minister Christine Lagarde told reporters in Brussels early today after the 14-hour meeting.
This is Shock and Awe, Part II and in 3-D, Marco Annunziata, chief economist at UniCredit Group in London, said in an e-mailed note. This truly is overwhelming force, and should be more than sufficient to stabilize markets in the near term, prevent panic and contain the risk of contagion.
World Needs Dollars To Defend The Euro
Inquiring minds note Fed to reopen dollar swap program
The Federal Reserve is going to reopen a program set up during the financial crisis, to make sure foreign banks have the dollars they need, the European Central Bank announced late Sunday. The Fed will ship dollars overseas through the Bank of Canada, the Bank of England, the ECB and the Swiss National Bank. The Bank of Japan will be considering similar measures soon, the ECB said. The facilities are designed to help improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and other financial centers, the ECB said in a statement on its web site. The ECB said the first repurchase operations for dollars against ECB-eligible collateral would be carried out on Tuesday.
Gee, fancy that. The world needs more dollars to defend the Euro.
Credit Lines Will Expand Fed's Balance Sheet
Inquiring minds note Federal Reserve opens credit line to Europe
The Federal Reserve late Sunday opened a program to ship U.S. dollars to Europe in a move to head off a broader financial crisis on the continent.
Other central banks, including the Bank of Canada, the Bank of England, the European Central Bank, the Swiss National Bank and the Bank of Japan also are involved in the dollar swap effort.
The move comes after the European Union and International Monetary Fund pledged a nearly $1 trillion defense package for the embattled euro, hoping to calm jittery markets and halt attacks on the eurozone's weakest members. The ECB also jumped into the bond market Sunday night, saying it is ready to buy eurozone bonds to shore up liquidity in "dysfunctional" markets.
The Fed's action reopens a program put in place during the 2008 global financial crisis under which dollars are shipped overseas through the foreign central banks. In turn, these central banks can lend the dollars out to banks in their home countries that are in need of dollar funding to prevent the European crisis from spreading further.
The program reopened on Sunday will expand the Fed's balance sheet, economists say. However, the program poses little credit risk to the Fed because the arrangements are with other central banks, they added.
Hallelujah, All Praise the "Riskless" Transaction
Economists claim and the Fed appears to believe there is no risk because the arrangements are with other central banks. Hey, why not lend an unlimited amount if it's risk free?
That may be coming down the road.
ECB Press Release
Inquiring minds are reading the ECB's press release on measures to address severe tensions in financial markets.
In view of the current exceptional circumstances prevailing in the market, the Governing Council decided:
1. To conduct interventions in the euro area public and private debt securities markets (Securities Markets Programme) to ensure depth and liquidity in those market segments which are dysfunctional. ...
2. To adopt a fixed-rate tender procedure with full allotment in the regular 3-month longer-term refinancing operations (LTROs) to be allotted on 26 May and on 30 June 2010.
3. To conduct a 6-month LTRO with full allotment on 12 May 2010, at a rate which will be fixed at the average minimum bid rate of the main refinancing operations (MROs) over the life of this operation.
4.To reactivate, in coordination with other central banks, the temporary liquidity swap lines with the Fed
A rally that lasted less than half a day. A Trillion dollars aint what it used to be.
There has got to be fully-fledged panic in Berlin right now as Germany thought it had gone all-in and it appears not to have worked. Hope (but doubt) they have a plan B...
EUR/USD trades at 1.2799.
i better go buy some cat food
The Fed also stressed it isn't exposed to any foreign exchange or private bank risks through the dollar swap facilities that were revived Sunday to help prevent Europe's debt woes from spreading to global financial markets.
The Fed's rescue program has come under attack by some lawmakers in Congress, who say it amounts to a secretive U.S. central bank bailing out foreigners. The U.S. central bank is at the centre of a regulatory overhaul that could reshape its powers.
In a frequently-asked-questions statement accompanying confirmation the Bank of Japan would also re-open the swap lines, the Fed said the "underlying legal agreements with foreign central banks" would be released shortly. It added swap activity will be published weekly and that the facilities don't carry risks.
"Dollars provided through the reciprocal currency swaps are provided by the Federal Reserve to foreign central banks, not to the institutions obtaining the funding in these operations," the Fed said.
The U.S. central bank Sunday said it would re-open the emergency lending tool used during the 2008 financial crisis which allowed it to ship billions of dollars to the European Central Bank and central banks in Japan, Switzerland, the U.K. and Canada.
The ECB, Bank of England and the Swiss National Bank plan to use the swap lines this week, the Fed said. The central banks of Japan and Canada haven't yet scheduled any use of the swap lines.
The Fed is aiming to further boost its transparency and image with the public. The U.S. Congress is rewriting a financial regulatory overhaul that could rein in the Fed amid sharp criticism of its actions before and during the financial crisis.
-By Luca Di Leo, Dow Jones Newswires; 202 862 6682; luca.dileo@dowjones.com
Last week the euro traced out a range between Y125.49 and Y110.67, the week's low being the current low for the euro's downtrend from the July 2008 high of Y170.02. As the last bar on the weekly chart shows the euro, trading now at Y119.80, is still trading within last week's range and so its upside momentum is slight. See chart at
http://www.dowjoneswebservices.com/chart/view/3944
The euro wouldn't have broken out of its current downtrend against the yen this week unless it took out downtrend channel resistance at Y125.16. On the other hand, that channel resistance is falling, to the advantage of the euro bulls, of course. Resistance next week will fall to Y124.52.
But if the euro turns down and takes out Y116.94 support, then traders would have the technical signal for a move down to Y113.75. In that case take profit in the Y115.02-Y114.38 support band.
Decisive trading below Y113.75 would probably imply that the euro's current downtrend against the yen was about to be extended.
If the medium term means 1 year 2 year then why should they be concerned when there's funding available for the next three years to Greece.