http://www.zerohedge.com/news/gathering-storm
Submitted by Tyler Durden on 08/22/2012 08:10 -0400
They are not long, the days of wine and roses:
Out of a misty dream
Our path emerges for a while, then closes
Within a dream.
-Ernest Dowson
It is no wonder then that so many in Europe cannot imagine any change of significance. It is almost culturally impossible and it would be such a striking blow to the shared consciousness that it would be the ultimate disaster of having to turn to the Queen and ask for cake; not even la gateau St. Tropez, but actual cake. Sacre Bleu!
In fact the more thoughtful here speak in hushed tones, wonder aloud but quietly, if the dream is not going to turn from angelic floating near the gates of Heaven and be forced down to some darker place. The questions come slowly, “What does Hell look like, when might we arrive there, how hot does it get and is one likely to meet the Devil himself?” After thirty-eight years in the financial markets I can report that have seen the rascal more than once, that he is not a pleasant being and that the heat can be far hotter than what is experienced on these fabled beaches of France. “Will Greece be saved or tossed back into the cauldron, will Frau Merkel pay the ultimate political price for either playing the Savior or refusing to do so, will Spain and Italy begin the trek down the road of good intentions to finally meet Dante who awaits them at the end of the path and will the noble lands of the Sacred Kingdom stand or be split asunder once again in this European Game of Empires?”I sit, like some mental practitioner of the Martial Arts, and wait. The ship upon which we sail is about to get battered because it must now, I am afraid. We can tack left or we can tack right but we are about to sail into the belly of it. The consequences of saving Greece and the addition of $50 billion in shared debt to rescue her comes with consequences that will either loudly echo within the walls of Berlin or within the walls of Athens but this is a Trojan horse than cannot be avoided no matter what path is chosen. Spain is preparing to beg because she must and it is only a question of on which street she stands and which corner will produce a larger or smaller amount of benefactors. Italy is pondering a similar fateand while not down to her last mouthful of sautéed calamari the pot is running thin.
The easy choices are now behind us and the hard choices are in front of us and wild speculations hanging upon the syllables uttered by Mr. Draghi may bring disastrous results. In a very real sense Ms. Merkel is going to be hanged if she does and hanged if she doesn’t and it is quite difficult to find a safe place to stand when on the platform where the noose and executioner resides. The present situation has one certainty, one block of bedrock upon which you may plant your feet and that is that a storm is coming; of that you may be sure. It may be Hell to pay with Greece or Hell to pay in the governing chambers of Berlin or Hell to pay with the other troubled nations of Europe but the storm, the Hellions at the gates, will be arriving in the next thirty to sixty days because real choices must now be made and real consequences will leap like Cerberus from those choices.
“Hell isn't merely paved with good intentions; it is walled and roofed with them.” -Aldous Huxley
and part of the storm will be the realization that Spain doesn't have its act together....
http://www.bloomberg.com/news/2012-08-21/spain-deficit-goals-at-risk-as-cuts-consensus-fades-euro-credit.html
part of the gathering storm is gold being confirmed as real money - note moves of LH Clearnet and CME....
http://www.zerohedge.com/news/lchclearnet-accepts-%E2%80%98loco-london%E2%80%99-gold-collateral-next-tuesday
***
and dollar shortages becoming more acute for banks in europe......
http://www.zerohedge.com/news/dollar-shortage-hits-highest-number-european-banks-six-months
Submitted by Tyler Durden on 08/22/2012 08:53 -0400
and please don't believe the FDIC has any bullets left in its pop gun , not when you consider the big banks and their gigantic assets / outrageous derivative exposures....
http://barnhardt.biz/
The Gathering Storm
Via Mark J. Grant, author of Out of the Box,
“In old days there were angels who came and took men by the hand and led them away from the city of destruction. We see no white-winged angels now.”
-George Elliot, Silas Marner
In the raging battle taking place in Europe between the haves and the have nots, the North and the South, those with money and those that are begging for it; there are moments when the calm sets in before the lightning strikes and the thunder booms. The silence is almost eerie and the air resonates with a certain kind of vibrant electricity that is somewhat reminiscent of Dickens and his Great Expectations which is what really seems to be driving the markets these days.
“Take nothing on its looks; take everything on evidence. There's no better rule.”
-Charles Dickens, Great ExpectationsI happen to be in St. Tropez at the moment and I find myself in a similar state; a land of dreams where everything is bigger, grander and worth more than can possibly be imagined or counted. It is not just the cost of things but some inherent belief that more and more and more is coming and it is without limit forever and for always and to the end of time. Let France meander, let Europe dissolve; the property values will increase without limit and the Champagne will flow at Les Caves du Roy and Chateau Petrus will be available at every small café and each barge sailing up the Mediterranean contains Beluga caviar of such copious quantity that to even discuss a shortage would be blasphemy and a sin against God and no one engaging in polite conversation ever mentions some secret hesitation that it may, one day, run out.
-George Elliot, Silas Marner
In the raging battle taking place in Europe between the haves and the have nots, the North and the South, those with money and those that are begging for it; there are moments when the calm sets in before the lightning strikes and the thunder booms. The silence is almost eerie and the air resonates with a certain kind of vibrant electricity that is somewhat reminiscent of Dickens and his Great Expectations which is what really seems to be driving the markets these days.
“Take nothing on its looks; take everything on evidence. There's no better rule.”
-Charles Dickens, Great ExpectationsI happen to be in St. Tropez at the moment and I find myself in a similar state; a land of dreams where everything is bigger, grander and worth more than can possibly be imagined or counted. It is not just the cost of things but some inherent belief that more and more and more is coming and it is without limit forever and for always and to the end of time. Let France meander, let Europe dissolve; the property values will increase without limit and the Champagne will flow at Les Caves du Roy and Chateau Petrus will be available at every small café and each barge sailing up the Mediterranean contains Beluga caviar of such copious quantity that to even discuss a shortage would be blasphemy and a sin against God and no one engaging in polite conversation ever mentions some secret hesitation that it may, one day, run out.
They are not long, the days of wine and roses:
Out of a misty dream
Our path emerges for a while, then closes
Within a dream.
-Ernest Dowson
It is no wonder then that so many in Europe cannot imagine any change of significance. It is almost culturally impossible and it would be such a striking blow to the shared consciousness that it would be the ultimate disaster of having to turn to the Queen and ask for cake; not even la gateau St. Tropez, but actual cake. Sacre Bleu!
In fact the more thoughtful here speak in hushed tones, wonder aloud but quietly, if the dream is not going to turn from angelic floating near the gates of Heaven and be forced down to some darker place. The questions come slowly, “What does Hell look like, when might we arrive there, how hot does it get and is one likely to meet the Devil himself?” After thirty-eight years in the financial markets I can report that have seen the rascal more than once, that he is not a pleasant being and that the heat can be far hotter than what is experienced on these fabled beaches of France. “Will Greece be saved or tossed back into the cauldron, will Frau Merkel pay the ultimate political price for either playing the Savior or refusing to do so, will Spain and Italy begin the trek down the road of good intentions to finally meet Dante who awaits them at the end of the path and will the noble lands of the Sacred Kingdom stand or be split asunder once again in this European Game of Empires?”I sit, like some mental practitioner of the Martial Arts, and wait. The ship upon which we sail is about to get battered because it must now, I am afraid. We can tack left or we can tack right but we are about to sail into the belly of it. The consequences of saving Greece and the addition of $50 billion in shared debt to rescue her comes with consequences that will either loudly echo within the walls of Berlin or within the walls of Athens but this is a Trojan horse than cannot be avoided no matter what path is chosen. Spain is preparing to beg because she must and it is only a question of on which street she stands and which corner will produce a larger or smaller amount of benefactors. Italy is pondering a similar fateand while not down to her last mouthful of sautéed calamari the pot is running thin.
The easy choices are now behind us and the hard choices are in front of us and wild speculations hanging upon the syllables uttered by Mr. Draghi may bring disastrous results. In a very real sense Ms. Merkel is going to be hanged if she does and hanged if she doesn’t and it is quite difficult to find a safe place to stand when on the platform where the noose and executioner resides. The present situation has one certainty, one block of bedrock upon which you may plant your feet and that is that a storm is coming; of that you may be sure. It may be Hell to pay with Greece or Hell to pay in the governing chambers of Berlin or Hell to pay with the other troubled nations of Europe but the storm, the Hellions at the gates, will be arriving in the next thirty to sixty days because real choices must now be made and real consequences will leap like Cerberus from those choices.
“Hell isn't merely paved with good intentions; it is walled and roofed with them.” -Aldous Huxley
and part of the storm will be the realization that Spain doesn't have its act together....
http://www.bloomberg.com/news/2012-08-21/spain-deficit-goals-at-risk-as-cuts-consensus-fades-euro-credit.html
Spain Deficit Goals At Risk As Cuts Consensus Fades: Euro Credit
By Angeline Benoit - Aug 22, 2012 3:23 AM ET
Quarrels over who bears the brunt of cuts worth more than 10 percent of Spain’s annual gross domestic product threaten Prime Minister Mariano Rajoy’s plan to tackle the euro area’s third-largest deficit as a second bailout looms.
A seven-day rally that has driven Spain’s 10-year yield to 6.2 percent at 9:05 a.m. inMadrid from 6.9 percent may falter as squabbles between the government, regions and towns about spending and tax receipt allocations hobble deficit reduction. Spain will miss its targets for budget gaps of 6.3 percent of GDP this year and 4.5 percent in 2013 as the nation’s recession worsens, according to the median forecast of 12 analysts surveyed byBloomberg News.
Mariano Rajoy, Spain's prime minister. Photographer: Angel Navarrete/Bloomberg
Aug. 21 (Bloomberg) -- Peter Schaffrik , head of European interest-rate strategy at Royal Bank of Canada, talks about today's auction of Spanish 12-month bills and the prospect of a cap on bond yields. He speaks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Aug. 21 (Bloomberg) -- Fitch Ratings Managing Director David Riley talks about his expectations for renewed pressure on euro-area sovereign ratings. He speaks with Francine Lacqua on Bloomberg Television's "On the Move." (Source: Bloomberg)
“As budget deficit targets look unachievable, the risk of a potential full bailout of the Spanish economy is still there,” Jaime Becerril and Axel J. Finsterbusch, analysts at JPMorgan Chase & Co. in London, wrote in a note. “Further measures must be taken to restore market confidence.”
Five regions will boycott rules depriving illegal immigrants of free health care, while towns such as Hospital de Orbigo and Cartagena are trying to alleviate the austerity burden on families, one by paying for school books, the other by compensating civil servants for wage cuts.
Rescue Funds
Spain signed off July 24 on as much as 100 billion euros ($125 billion) of aid from European rescue funds to shore up banks burdened with bad loans. Rajoy, who broke his first election pledge after nine days of office, is weighing a second bailout as he struggles to implement his fourth round of tax increases and spending cuts in eight months to preserve market access for the euro area’s fourth-biggest economy.
Town halls are asking to share regions’ incomes and suggesting that responsibilities including paying for school maintenance might be reassigned. Madrid has discussed cutting back on its civic duties while criticizing that 83 percent of the taxes it collects go to poorer regions. Valencia, the second-most indebted region, said its debt load would be 60 percent smaller if it had received funding in proportion to its population.
“The problem is that each one is trying to save time by blaming someone else,” said Jose Antonio Herce, a public administrations consultant in Madrid with Analistas Financieros Internacionales. “No one wants to tell voters they have to meet the targets with the resources they have because there simply isn’t more money.”
Spending Limits
Economists are predicting overspending may remain close to 8.9 percent of GDP for a second year. The central government exceeded in June its limit for the whole year as it bailed out the regions, town halls and the welfare system amid the second recession since 2009.
Rajoy has assigned 73 percent of the nation’s 2012 deficit- reduction effort on the regions and municipalities, forcing them to reduce shortfalls by respectively more than half and a quarter while continuing to fund public services such as health care and education amid a tax-receipts drought.
“It is difficult because the measures that need to be taken are very harsh,” said Leandro Esteban, a spokesman for Castilla-La Mancha, which had the highest regional deficit in 2011 at 6.07 percent of GDP. About 40 percent of temporary civil servants will be dismissed to cope with the previous government’s mismanagement, he said, citing the construction of an airport where grass now covers an unused runway.
Economic Promises
The Socialist president of the northern Basque Country Patxi Lopez today told Cadena Ser radio he is moving local elections initially scheduled for March 2013 forward to Oct. 21 in order for Basques to choose how to deal with the crisis. “There is a lot of uncertainty about the future and our economic model is what counts,” he said.
The Andalusia region said Aug. 1 it will take the state to court on 2012 debt ceilings. It should be allowed to borrow more as its burden is 10.6 percent of its GDP compared with a 13.5 percent regional average, it said.
The 17 semi-autonomous governments won’t keep their economic promises this year, according to a report released this week by the Fedea research institute in Madrid. It forecast overspending for the regions may reach 4 percent of GDP, compared with 3.3 percent last year and a target of 1.5 percent.
‘Political Damage’
The government has ruled out cutting pensions next year and extended a temporary benefit for long-term jobless people to stem growing discontent, Afi’s Herce said. “Rajoy’s strategy is to wait and say little to avoid political damage in the short term.”
Overhauling pensions, which account for 32 percent of government spending, is one of the European Commission and International Monetary Fund recommendations Rajoy hasn’t yet introduced. Retirement pay has been his only spending increase, ending a freeze imposed in 2010 by his Socialist predecessors.
Support for Rajoy’s PP has slipped 8 percentage points since it won 40.6 percent of votes in a landslide in November. Since then, Rajoy has announced more than 100 billion euros of budget cuts, raising income and value-added tax, scrapping a tax break for home owners and cutting civil servants’ wages, unemployment benefits and health care and education spending against his word.
“We believe the Spanish bond market is in a perilous halfway house,” Nicholas Spiro, managing director of Spiro Sovereign Strategy Ltd. in London, said in an e-mailed comment. “Germany is unwilling to sanction unlimited and unconditional support while Madrid is reluctant to cede more fiscal and economic sovereignty.”
http://www.zerohedge.com/news/lchclearnet-accepts-%E2%80%98loco-london%E2%80%99-gold-collateral-next-tuesday
***
Gold’s remonetisation in the international financial and monetary system continues.
LCH.Clearnet, the world's leading independent clearing house, said yesterday that it will accept gold as collateral for margin cover purposes starting in just one week - next Tuesday August 28th.
LCH.Clearnet is a clearing house for major international exchanges and platforms, as well as a range of OTC markets. As recently as 9 months ago, figures showed that they clear approximately 50% of the $348 trillion global interest rate swap market and are the second largest clearer of bonds and repos in the world. In addition, they clear a broad range of asset classes including commodities, securities, exchange traded derivatives, CDS, energy and freight.
The development follows the same significant policy change from CME Clearing Europe, the London-based clearinghouse of CME Group Inc. (CME), announced last Friday that it planned to accept gold bullion as collateral for margin requirements on over-the-counter commodities derivatives.
It is interesting that both CME and now LCH.Clearnet Group have both decided to allow use of gold as collateral next Tuesday - August 28th. It suggests that there were high level discussions between the world’s leading clearing houses and they both decided to enact the measures next Tuesday.
It is likely that they are concerned about ‘event’ risk, systemic and monetary risk and about a Lehman Brothers style crisis enveloping the massive, opaque and unregulated shadow banking system.
****
LCH.Clearnet Group Ltd. said it will accept loco London gold as collateral for margin-cover requirements on OTC precious-metals forward contracts and on Hong Kong Mercantile Exchange precious-metals contracts starting Aug. 28. Loco London gold are London Good Delivery Bars (roughly 400-ounce or 12.5 kilograms gold bar) held with LBMA members within the London bullion clearing system.
The clearing house has already been using gold bullion as collateral since 2011 but now will accept loco London gold as collateral.
The push to use gold as collateral follows similar steps from a growing number of exchanges and banks to increase the use of gold as an acceptable deposit and collateral reinforcing gold's renewed status as a safe haven currency.
Intercontinental Exchange Inc. (ICE) also has allowed the use of gold as collateral.
LCH.Clearnet limited the amount of gold that could be used as collateral to no more than 40% of the total margin cover requirement for a member across all products and at a maximum of $200 million, or roughly 130,000 troy ounces, per member group.
The move follows the initiative of the World Gold Council, who last year submitted evidence to the Basel Committee for gold to be included in banks’ ‘Tier 1’ assets by European banking regulators, recognising gold’s growing relevance as a high quality liquid asset.
David Farrar, Director, LCH.Clearnet said at the time that “market participants want greater choice when it comes to assets that can be used as collateral. Gold is ideal; as an asset it typically performs well in times of financial stress, remains liquid and has a well established pricing mechanism.”
****
http://www.zerohedge.com/news/dollar-shortage-hits-highest-number-european-banks-six-months
Dollar Shortage Hits Highest Number Of European Banks In Six Months
This morning's update on the ECB's FX swap usage confirmed what those who care about this kind of stuff already know: the USD shortage in Europe, all Libor and other manipulated and fraudulent signs to the contrary, is getting worse: in the week starting August 23, the number of banks demanding a 7 day USD swap with the NY Fed, and intermediated by the ECB, rose to 12, or the highest since February, while the amount requested was $8.5 billion - the second highest in 2012 so far. In other words, while everyone knows the EUR interbank market in Europe is slammed shut, most likely in perpetuity, courtesy of the trillions in EURs raining from the ECB, it is now once again time for the USD market to implode, something it last did in the beginning of 2012 when the advent of the short-term benefit from LTRO 1 and 2 fixed the funding situation, albeit briefly.
http://barnhardt.biz/
FDIC STATISTICS: READ 'EM AND WEEP
POSTED BY ANN BARNHARDT - AUGUST 22, AD 2012 10:49 AM MST
Just following up with citations and illumination on the whole propaganda meme that is the FDIC, because, as far as I can tell, the vast majority of people think that the FDIC is a magical, omnipotent entity that has infinite resources and will magically swoop in to "take care of them" like a magic flying unicorn.This is what happens when you have a civilization filled with emotional children with exactly ZERO critical thinking skills. You have to hand it to the Communist infiltrators. They did a damn good job of brainwashing and psychologically destroying four generations of human beings.
Per the Q4 2011 FDIC Chief Financial Officer's report to the Board, published on March 30, 2012, the FDIC's Deposit Insurance Fund had a balance of $11.8 billion dollars.
HERE'S THE LINK.
Bank deposits in the United States at the same time are estimated to be between $8 TRILLION and $10 TRILLION. Let's be conservative and say the number is $8TTT.
11,800,000,000 divided by 8,000,000,000,000 equals 0.001475, which I will round UP to 0.0015.
That is read as "fifteen hundredths of one percent". It isn't one percent, it is fifteen hundredths of one percent. That is how much the FDIC is carrying to back all of those little signs on the teller windows that say "Each Depositor insured to at least $250,000. Backed by the full faith and credit of the United States government."
But hey! It could be worse! Back in 2009 the FDIC was completely insolvent - IN THE HOLE. So what they did was to force all of the banks to pay three years worth of premiums upfront in one year, in order to replenish the fund.
Now, let's review some other statistics as of June 30, 2011:
JP Morgan:
Total Assets $1.8 TTT
Total Derivatives Exposure: $78 TTT
Citibank:
Total Assets: $1.2 TTT
Total Derivatives Exposure: $56 TTT
Bank of America:
Total Assets: $1.4 TTT
Total Derivatives Exposure: $53 TTT
Top 25 commercial banks:
Total Assets: $8.3 TTT
Total Derivatives exposure: $249 TTT
Per the Q4 2011 FDIC Chief Financial Officer's report to the Board, published on March 30, 2012, the FDIC's Deposit Insurance Fund had a balance of $11.8 billion dollars.
HERE'S THE LINK.
Bank deposits in the United States at the same time are estimated to be between $8 TRILLION and $10 TRILLION. Let's be conservative and say the number is $8TTT.
11,800,000,000 divided by 8,000,000,000,000 equals 0.001475, which I will round UP to 0.0015.
That is read as "fifteen hundredths of one percent". It isn't one percent, it is fifteen hundredths of one percent. That is how much the FDIC is carrying to back all of those little signs on the teller windows that say "Each Depositor insured to at least $250,000. Backed by the full faith and credit of the United States government."
But hey! It could be worse! Back in 2009 the FDIC was completely insolvent - IN THE HOLE. So what they did was to force all of the banks to pay three years worth of premiums upfront in one year, in order to replenish the fund.
Now, let's review some other statistics as of June 30, 2011:
JP Morgan:
Total Assets $1.8 TTT
Total Derivatives Exposure: $78 TTT
Citibank:
Total Assets: $1.2 TTT
Total Derivatives Exposure: $56 TTT
Bank of America:
Total Assets: $1.4 TTT
Total Derivatives Exposure: $53 TTT
Top 25 commercial banks:
Total Assets: $8.3 TTT
Total Derivatives exposure: $249 TTT
And the FDIC has . . . $11.8 billion.
I'm sorry, what were you saying about how I'm full of crap because it says right there on the sign at your bank that your deposits are guaranteed by the FDIC?
If you believe that, you are stupid. Period. End of story. And at a certain point, you are responsible for your stupidity, and thus if you wallow in your stupidity, you will deserve whatever calamity befalls you as a result.
I'm sorry, what were you saying about how I'm full of crap because it says right there on the sign at your bank that your deposits are guaranteed by the FDIC?
If you believe that, you are stupid. Period. End of story. And at a certain point, you are responsible for your stupidity, and thus if you wallow in your stupidity, you will deserve whatever calamity befalls you as a result.
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