CNBC Has A Truthful Headline

If you’re really wondering why the stock market is doing so well, I believe the headline from the following story pretty much sums it up.

Fed to Remain Wall Street’s Sugar Daddy: CNBC Survey

Yeah it’s pretty undignified but really, the market keeps going up because the market knows Helicopter Ben will take care of them and support them.

Every time there’s even a hint that the money train is slowing down causes a down day and then immediately the next day the cavalry comes out to reassure the market that Helicopter Ben isn’t going to act like an adult and cut off the purse strings.

And I Thought Greece Was The Broken Link

It turns out it all goes down the tubes on Cyprus of all places.

And really, let’s be honest, no one would have guessed Cyprus if you’d ask them last year. Everyone and their brother would have put the end of the Eurozone due to Greece, Spain or possibly even Italy.

But not Cyprus.

And now the EC is going to screw this up even more, which is truly impressive if you think about it.

From the FT: “a revised deal being discussed in Nicosia, with the blessing of the European Commission, would shift more of the burden on to deposits larger than €100,000, according to officials involved in the talks. Under a controversial deal struck with international bailout lenders in the early hours on Saturday, a 6.75 per cent levy would be imposed on all deposits under €100,000 while accounts over that threshold would be hit with a 9.9 per cent levy. The depositor levy was demanded by a German-led group of creditor countries to bring down the bailout’s price tag from €17bn…. Officials involved in last night’s talks said the changes in the levy’s rates were in flux, but they could see the higher rate increase to as much as 12.5 per cent while the smaller deposits could be about 3.5 per cent.”

Ah yes, let’s back up a step.

It was announced over the weekend that as part of getting “saved” by the EC, Cyprus would get some cash. Oh and they would have to go back on their promise of making depositors whole by “taxing”, ie stealing, various amounts depending on the amount in the bank at the time.

As various pundits here in the US have said, the markets don’t like uncertainty. So that is exactly what the geniuses in Brussels have decided to do.

They’ve bolloxed the situation by showing that no depositor is safe in the EU. No one. Not anywhere. They claimed this is a one time emergency but really, when it comes to money grubbing pols, there’s never just one time. There’s just the first time.

And to make things worse, after rightfully getting pummeled this way to next Tuesday, it seems they’re going to adjust the amount they take. Please don’t. Now you’re just going to confuse the situation. It’s a bad situation. I’m amazed that they’re going to make it worse by muddling what’s going on by changing how much they steal.

Really, these guys in the EC make the keystone cops and the Washington Generals look world class. Can’t wait to see the flight to treasuries and how everyone leaps out of the Euro. At least it’ll make Monday interesting.

Why Do You Trust Greece Now?

As you may have heard, the Greeks are holding the EU hostage for some coin to pay off their debts. It’s been down to the wire now for, oh the past 20 years, or so it seems.

As one deadline after another has come and gone, leaders of the three parties in the coalition of Prime Minister Lucas Papademos postponed what was supposed to have been a crunch meeting on Tuesday until the following day.

Here’s the thing though. The Greeks lied before about their budget.

One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.

In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

The current Prime Minister Lucas Papademos, brought in to save the day for the EuroZone was Governor of the Bank of Greece while the lying was going on.

His reward for lying to the EuroZone ministers was a promotion to become Prime Minister.

Tell me again, since the people that did the lying are still in office now, why anyone in the world expects the behavior of the Greek government to change? They won’t. And yet the usual suspects will proclaim how shocked they are when it happens again.

It’s obvious that of all the poor choices available, they Greeks should leave the Euro and return to the Drachma. It is not a good choice, but it is, regrettably the only rational choice. Unless the Germans intend to keep Greece on life support forever.

Fannie Mae Losses In An Ugly Chart

Take a look at the following chart. It shows the cumulative profits and losses of Fannie Mae.
Cumulative financial losses for Fannie Mae

Note that it was essentially flat a year ago and then there is that huge & massive spike in losses. Unfortunately, I don’t think you’ll see anything but red for the next few years. That’s unfortunate because you and I will be paying for those losses.

(h/t The Atlantic)

US Is Greece… Blah Blah…

I always love it when central bankers try to wax poetic. Oh yeah, usually they don’t which is why this one is supposed to be interesting, but really, he’s not saying anything really new.

Mervyn King, Governor of the Bank of England, fears that America shares many of the same fiscal problems currently haunting Europe.

No shit. Really. How much money do you get paid to figure that one out? Hell, I could have told you that for free. Of course I don’t have any political power or any money to buy political power but really, would it have been that hard to look around and see that all the developed countries have been promising too much for too long and the bill is finally coming due?

And being the Euro type, he then promptly falls into the typical pol mode by wanting to raise taxes.

within the Euro Area it’s become very clear that there is a need for a fiscal union to make the Monetary Union work. But if that is to happen there needs to be also a mechanism to enable other countries that have lost competitiveness to regain competitiveness. That requires actions, probably structural reforms, changes in wages and prices, in the countries that need to regain competitiveness. But it also needs a solid and expansionary state of domestic demand in the stronger economies in Europe.

Dude, it’s not the income side of the ledger that’s the problem, it’s the expense side. Stop spending so much money. It’s really not rocket science.

And that of course is my biggest problem with the US. Most pols, and that includes quite a few republicans, believe that if we raised taxes we’d be all set. From where I sit, having watched government program after governmet program always get larger, the problem is all the programs to begin with. If you create a new program, I’m looking at you health care reform, then we will always have a spending problem.

Always remember, you can raise income, ie taxes, or cut spending, to get a balanced budget. 99% of all politicians, would rather try to increase taxes than be responsible and cut spending.

All in all, a rather unremarkable interview with a central banker. Hell, he could have been any moderate/liberal US politicians by his stands. A pox on all their houses. Now then, where’s the beer.

So Far The Market Likes It

So far the Street likes what it sees.

Stocks rocketed higher and bond prices fell Monday after investors were reassured by a nearly $1 trillion plan to avoid a European debt crisis.

The Dow Jones industrial average rose about 390 points. The Dow and broader stock indexes rose more than 3 percent. Markets also barreled higher in Europe.

At this point it’s up 414 and change. We’ll see whether this will last thru the day and how the market closes. If the Europeans were trying to goose the market, they’ve certainly done that and more. We’ll see whether it really fixes the underlying problems.

And The Americans Get Involved Saving The Euro

The Fed has decided it too wants in on saving the Euro.

The U.S. Federal Reserve will restart its emergency currency-swap tool by providing as many dollars as needed to European central banks to keep the continent’s sovereign-debt crisis from spreading.

The swaps with the European Central Bank, Bank of England and Swiss central bank will allow them to provide the “full allotment” of U.S. dollars as needed, the Fed said late yesterday in a statement in Washington.

Not sure if it’ll all help, but it’s obvious that everyone thinks there’s a problem in Europe. Of course they are again not fixing the underlying problems…

Greece Needs Cash Now

Which is really what they’re saying now that they’ve activated their “lifeline”.

Prime Minister George Papandreou asked for the 45 billion euro ($60.5 billion) package put together by the European Union and International Monetary Fund to be activated after months of markets pushing Greek borrowing costs ever higher, undermining the country’s efforts to cut its 300 billion euro debt load.

“It is imperative that we ask for the activation of the mechanism,” Papandreou said on live national television and radio from the remote Aegean island of Kastellorizo.

As a side note, of course he made the announcement from a remote island, that way he can dodge the protesters.

My issue is that the IMF is funded by me. As I said previously on the issue, I am a bit concerned.

And here’s where I become mildly concerned about my ass being on the line for the money. While the IMF is technically independent, if there’s a problem, you know they’re coming back to the US for cash.

I hope the technocrats at the IMF have at least given a heads up to Treasury and the President that this is an issue that may come up. Hey, it’s one thing for the US to save the sorry ass of GM, but how will the voters respond to knowing they’re also bailing out the sorry ass of the Greek government?

Greece Gets A Bailtout

Greece finally got it’s bailout. Thankfully I’m not directly on the hook for any of the cash.

Euro zone finance ministers unanimously approved a detailed 30 billion euro ($40.5 billion) emergency aid mechanism for debt-plagued Greece on Sunday but stressed it had not requested that the plan be activated now.

Right. Does anyone really believe it wasn’t requested? I mean, why bother going through the process of creating a bailout if Greece didn’t want it. Everyone knows that’s a lie, so why bother repeating it?

“If the mechanism had to be activated, it would not be a violation of the no-bailout clause (in the European Union treaty) since the loans are repayable and contain no element of subsidy,” Eurogroup chairman Jean-Claude Juncker told a news conference in Brussels after the meeting.

And if they happen to forgive the loan? Does it then become a bailout an violate the no-bailout clause? I’m just askin…

The size of the International Monetary Fund’s contribution to any package was not disclosed but it would come on top of the euro zone amount.

And here’s where I become mildly concerned about my ass being on the line for the money. While the IMF is technically independent, if there’s a problem, you know they’re coming back to the US for cash. Hopefully they’ll be able to stick the Europeans with the losses when they happen.

And losses will happen on this bailout. It’s painfully obvious to anyone with a working set of eyes that Greece is nowhere’s even close to getting their house in order. Yes I know, like the US should be talking… 😉