SwamyG wrote:Ladies and gentlemen, I saw Bloomberg TV moving on to discuss Italy. They were talking about how Italy is better than Greece. If Italy was not like Greece, why even bring it up, huhAre they comparing Greece with Australia. No it is with Italy. So there is smoke saar log. Portugal and Spain are going to be spared for the moment now.
The new exonomic theory is every one in then industrialized world now works for Goldman Sachs but just dont know it.Tanaji wrote:I am beginning to think economics theory is on the same lines of Scientology or homeopathy. Both require suspension of rational belief to make it work.
Adams = Xenu.
Traditional family businesses, which shared labor, risk and capital by blood ties, were no longer sufficient to the task. New kinds of laws, contracts, and standardized currencies would be required to extend these agreements to people of different families and regions. Florence, with its key location on the Mediterranean (as well as it is widely accepted currency, the gold florin), became the birthplace of the first "limited partnership" firms. The precursors to full-fledged corporations, they distinguished between the liability of the firm's directors and of those who merely contributed capital, who would only be responsible for the amount of their contribution. Furthermore, contributors were not subject to being listed among the business partners, allowing noblemen, and even monarchs, to hide their commercial interests. The concept of the limited partnership quickly spread throughout Europe, funding daring investments from mines and plantations to colonialist adventures. Through this new opportunity for quiet and passive participation, the nobility became mad for investing.
As the operators of these huge projects sought to secure even more capital from a wider range of regions and social classes, they formed a more advanced form of limited partnership called the join stock company, which could generate investment from shareholders on an open market. This broke business open, allowing for the creation of businesses by virtually anyone capable of getting investors. It almost heralded an era of business meritocracy, which would have generated unprecedented churn in the class structure. The wealthiest merchants were now as vulnerable to upstarts as the aristocracy.
Finally, the monarchy had something it could offer the bourgeoisie who threatened to unseat them.
It was remarkable seeing those two call Papandreou over like an errant schoolboy about to be laid over their lap and caned.http://www.economist.com/blogs/freeexch ... _economist
SILVIO BERLUSCONI'S promise to resign has done nothing to calm European bond markets. Italian bond yields are soaring today; both the two-year and the ten-year are above 7%. There are rumours that the ECB is in the market and buying heavily. If so, it's not having the desired effect. The ECB can't hope to keep yields reasonable through brute force. It will need to make an expectations-changing announcement. Will it? Italy's yields aren't the only ones rising. Markets are ditching Irish, Spanish, Belgian, and French debt too. The ten-year Treasury is back below 2%.
Yesterday, I wondered why equities weren't falling. Today, they are. But I think Tim Duy is on to something here:
“
All I can say is that we have been here before. Recall 2007...
By the middle of 2007 the TED spread was exploding, signaling enormous financial turmoil. Yet equities kept heading upward, fueled by data that was just not that bad coupled with ongoing expectations that a solution was just around the corner. And now we find ourselves in almost the exact same position...the news out of Europe is abysmal...There is no solution, no magic summit at hand. At this point, it is a choice between severe recession and depression. There is no happy ending to this story.”
That's what Greece is hoping will happen.Hari Seldon wrote:Sounds far-fetched I know, for oirostani TFTAs to go Icelandic right now, I know, but I'd say give it a few months/yrs and we'll see how much assterity they can take. Only.
Hari Seldon wrote:If Italy is really in such deep trouble, who knows perhaps a certain family there with filial connections to the real powercenter in India's biggest parliamentary party might wanna move their India-derived monies out of there in a hurry, eh? No wonder GoI reports total ignorance about the destinations and itineraries of certain medical trips of late only....
Yeah, they should be able to spare a couple of hundred billions.Singha wrote:now is the time for GOI to act strategically and try to pick up stakes in strategic industries there with lots of technology which might go under due to slacking spending like defence, machine tools, electrical parts, optronics and aerospace cos. any large deal we do should be tied to picking up stakes also. loss of 'control' for the goras but it can only help them survive and grow with access to the vast indian market.
But they are not the reason for the systemic failure of the European financial system. Overwhelmingly, this failure has been caused by the policy choices of one of the few European institutions that has the capacity to act unilaterally and decisively: the European Central Bank.
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And this brings us to the most crucial recent event: not the drama in Greece but the departure of Jean-Claude Trichet as the central bank’s president on Nov. 1. More than any other single person, Mr. Trichet has embodied the systemic failure of European financial institutions.
Having failed to predict or resolve the crisis, Mr. Trichet has compounded his errors by denying them. Rather, he pronounced his own performance as “impeccable,” because inflation rates had been kept at or below the target level.
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Mr. Trichet’s replacement, Mario Draghi, has shown no particular signs of independent or creative thinking. Nevertheless, he has one great asset: he is not Mr. Trichet.
Neshant wrote: The Question(s) Of Italy's 2451.8 Tons Of Gold
http://www.zerohedge.com/news/questions ... -tons-gold
We need to model the last comment...Greece: Update. Papandreou resigned but progress towards forming a new government has been slow.
Italy: Either a new Italian government will be formed or parliament will be dissolved, Italian President Giorgio Napolitano said on 9 November. An electoral campaign will be carried out in a brief time span, Napolitano said. It is certain that Italian Prime Minister Silvio Berlusconi has decided to resign, and the stability law will be approved in the next few days, Napolitano added. Italian lower house speaker Gianfranco Fini is trying to have the Italian financial stability package approved by 12 November, a parliamentary source said.
Comment: The high yield on Italian bonds is an indicator of threat to the financial system. The crisis has moved beyond assessments of risk. A Bloomberg analysis suggested Italy is too big to fail, but also to big to save.
European Union: French and German officials have discussed the EU overhaul to reorganize the European Union into a smaller eurozone, an unnamed senior EU source on 9 November. Brussels, Paris and Berlin policymakers suggest the smaller eurozone work toward deeper economic integration regarding fiscal policy, EU sources said.However, a French Finance Ministry spokesman denied plans to reduce membership. French President Nicolas Sarkozy said the eurozone would move forward more quickly than the 27 EU members and that the "two-speed" Europe is the model that should be followed. The plan has not been put into action yet, another EU official said.
Comment: The gravity of the financial crisis and the threat of a ripple effect are highlighted by the occurrence of even informal discussions about shrinking the European Union. In studying violent political instability, living systems under stress always contract. The government reduces the volume, quality and frequency of services it provides and the geographic area over which it provides them in order to reach a sustainable position short of collapsing. It tries to find a set of lines it can hold to avoid collapse and to prepare for returning to normality.Contraction may be understood as the first step in a process whose ultimate end state is organizational or systemic collapse. Collapse is not inevitable, but more frequent than recovery in instability case studies. Recovery almost always requires significant outside intervention of some sort, such as a surge, and even that might only provide temporary relief from the stress that caused the shrinking.A contraction of the EU in this financial crisis would parallel the behavior of governments experiencing violent internal instability, such the insurgency in Afghanistan or the opposition uprising in Syria. In both countries, the government's ability to provide public services has contracted under violent stress. In Afghanistan the US troop surge has provided temporary relief in some areas, but is not a permanent solution.The Greek bailout is a surge that has proved inadequate to stop the financial crisis or keep it from spreading. The increase in bond yields represents one aspect of shrinkage, of credit worthiness.This is not a prediction of EU collapse or Italian collapse, but it is a warning that long experience shows that once living systems begin to contract they seldom recover on their own and might not even with outside help. Financial systems also are living systems.
So Altair-saab, what were you expecting to happen? Now we know that the specific information you had is not correct.Altair wrote:Folks, I have very very specific information. I cannot say anything more.
Neshant wrote:Bewarned. By emerging economies the US mostly means China. They want to get China onboard a global IMF led SDR type currency and once that happens, US debts will be free to inflated away its debts. Probably Arabs and others including perhaps Americans savers will take it up the &&&. The federal reserve knows the dollar ponzi scheme is eroding and wants to move important creditors to a new system while screwing all other dollar denominated debt holders.
In time, the new SDR paper game will surely prove just as worthless as the federal reserve ponzi scheme.
Jim Rickards Interview from June 14th with Eric King
http://www.kingworldnews.com/kingworldn ... 3A2010.mp3
So seems like bond yield are set to keep rising and Italian govt. debt bond holders are looking at 20/30% hair cut?By Gareth Gore and Spencer Anderson
Fri Nov 11, 2011 6:33pm EST
LONDON, Nov 11 (IFR) - European banks are planning to dump more of the 300 billion euros they own in Italian government debt, as they seek to pre-empt a worsening of the region's debt crisis and avoid crippling write downs - a move that could scupper the European Central Bank's efforts to bring down soaring yields.
Still reeling from heavy losses on money they lent to Greece, lenders are keen not to make the same mistake twice. Then, under the pressure of governments and a hope that credit default swaps would protect them against heavy losses, they held on until it was too late to sell.
With the ECB providing a bid for Italian bonds that might not otherwise exist, board members at some of Europe's largest bank say now is the time to accelerate disposals. Many are also reversing long-standing policies of buying into new Italian bond issues, denying Rome an important base of support.
"Our traditional buying days are no longer," said one board member at a European bank, one of Italy's 10 biggest creditors, who added that the bank has also sold off previous bond purchases. "Unless there is more certainty on Italians changing direction, it will be very tough for them to find buyers."
Banks are important creditors to Rome, having bought about 40 percent of the 22 billion euros Italy issued in euro-denominated syndicated bonds since 2009. According to the European Banking Authority, the region's biggest 90 banks held 326 billion euros of Italian debt at the end of last year.
Many banks have since reduced their holdings, although the EBA numbers - released in July - are the most up-to-date cross-industry figures on nominal holdings. Italy's debt load totals around 1.7 trillion euros, with more than 300 billion due to mature next year alone.
NO POINT WAITING
"You're better off doing it now rather than waiting," said one investment banker who is currently working on plans for bank clients to further sell down their Italian bond holdings. "It's better to take the losses now when everyone is expecting it rather than wait around for a default."
The ECB has been buying Italian bonds to keep down yields since August. Since then, the institution has bought about ?110bn of European government debt, some of which traders say is Italian debt. Most sales have been and will be on the open market.
"The market is still as liquid as hell for those that want to sell," added a senior banker at one non-European bank. "We managed to sell off half of our holdings in one morning."
The sheer volume of such sales will make it increasingly difficult for the ECB to keep Italian bond yields down. The yield on 10-year governments bonds surged as high as 7.5 percent this week, the most in the history of the eurozone and the highest for Italy since 1997. Selling intensified after LCH.Clearnet lifted its margin requirements on Italian debt. The 10-year Italian bonds currently trade at 85 cents on the euro.
Foreign banks are likely to be the biggest sellers, say bankers advising on the holdings. EBA stress tests showed that in December half of Italy's 10 biggest European bank creditors were foreign: BNP Paribas held 28 billion euros in bonds, Dexia 15.8 billion euros, Commerzbank 11.7 billion euros, Credit Agricole 10.8 billion euros and HSBC 9.9 billion euros.
Most of those banks have since reduced their exposure - either through outright sales, short positions or hedges - although direct comparisons are difficult because most banks only detail their net exposures. Still, in the four months to the end of October, BNP Paribas cut its Italian exposure by 8.3 billion euros, while Commerzbank cut its exposure by 1.8 billion euros in the first nine months of the year.
"I think what you are seeing right now is a lot of the short-dated stuff is being sold," said Eric Strutz, chief financial officer at Commerzbank, on a recent call with analysts. "Do we expect another 2 billion euro reduction in Q4? Right now, we're looking into that."
Other sellers include Societe Generale, which this week said it had halved its Italian net exposure since June to 2.5 billion euros. Barclays, meanwhile, has reduced its net exposure to Italy by more than 1 billion euros during the same three month period.
According to people close to some of the bank disposals, the efforts of the European authorities to ensure that a Greek debt restructuring would not trigger CDS payouts has driven much of the bond selling. Unable to confidently hedge their exposures, many are choosing to sell - even at a loss.
SUPPORT
Italian bonds still have one support bloc. Domestic banks appear to be holding on to their much larger holdings. As of last December, EBA stress tests showed Intesa Sanpaolo held 60 billion euros of Italian debt. UniCredit and Banca Monte dei Paschi di Siena held 49 billion euros and 32 billion euros respectively. Recent results indicate that those holdings have changed little.
"We will keep investing the largest part of our liquidity in Italian government bonds," said Corrado Passera, chief executive officer at Intesa Sanpaolo, in a call with analysts this week. "We believe they provide the right yields vis-à-vis the cost. So no policy change on our side."
Still, according to the investment banker advising firms on their Italian holdings, the domestic banks' decisions to hold on could have more to do with their inability to offload such large amounts quickly and without deep losses. Indeed, some Italian bankers seem resigned to the situation.
"We feel that fears of a default are greatly overdone, but the market psychology is what it is," added an executive board member at another large Italian bank, which is also holding onto its bonds. "Lots of players do not want to buy them. They think it is better to sell if you have the opportunity to."
Capital concerns are also preventing them from selling. "The key issue is on solvency and I think they made a mistake in requiring us to hold more capital," said the chief executive of a mid-sized Italian bank. "To meet these levels we cannot sell too much of our sovereign debt." (This story is to appear in the November 12 print edition of the International Financing Review - www.ifre.com)
Neshant, I think you should move out of this business of predictions. Had people followed your "Advice" they would have missed the best October in stock market in years!Neshant wrote:I too think all you scrawny beggars should be out of the market in October. My spidey senses say the market will crash mid to late October. Sell all your stocks and move into cash 100% if you have not already.
yogi wrote: Neshant, I think you should move out of this business of predictions. Had people followed your "Advice" they would have missed the best October in stock market in years!
If you keep shouting "Its Midnight" every second, you will be true once, but spectacularly wrong way too many times. State your opinions, but keep away from predictions and giving advice.
Read Gerald Celente's take somewhere, along the following lines:SwamyG wrote:Hmmm...so America creates an international economic crisis; and its effect is regime changes across the planet. Africa and West Asia expends blood doing so, and Europe fares slightly better - not much blood. One could say Republicans lost because of Economy.
So only India and China withstand the E-Khan-Mic Toofan? Life went about as (almost) usual.
Any parallels with WWII ? The West - notably Europe was wasted and spent. Lots of countries saw independence from Europe. America rose. After this WWIV (economic crisis), Europe and America are wasted and spent too. Despots in Africa and Asia fall because of lack of support. People in these countries get more freedom? Let us forget about the Islamic revolution waiting to happen in some countries.
I think the big 'perspective' to me is the hold of West (IMF and WB) on the rest of the World, and how their grip has been relaxed. Hope some scholars study and get some PHd veeHd.