Greece Bailout

Very good Bloomberg article explaining what went down & ideas about impact/future Eurozone fun (pullouts after the jump). Graphic from France 24 (along with another good article)

Germany to the rescue again? Telegraph UK editorial & BBC Article

Only Germany can save EMU as contagion turns systemic

Europe's leaders have finally run out of time. If they fail to agree on some form of debt pooling and shared fiscal destiny at Thursday's emergency summit, they risk a full-fledged run on South Europe's bond markets and a disorderly collapse of monetary union.

Although it seems like Germany has no interest in taking on more responsibility (BBC article)
(i.e. creating Eurobonds, bailouts, whatever) & maybe if Merkel's hands are tied then the Euro experiment is reaching an unfortunate conclusion?

check it:

UK hit by Eurozone Crisis

UK banks dragged into eurozone crisis as global markets take fright

Lloyds, RBS and Barclays take £5bn hit as stock and commodity prices plummet, while US urges Europe to be more decisive

Interesting b/c two days ago, zerohedge posted the Sigma X screen showing major action on Lloyds indicating a shift from Eurozone wackiness from Italy to UK.  Sigma X is the Goldman dark pool trading center.  Dark pools are trading centers where buyers/sellers are anonymously paired up & action happens outside the trading markets.  More info on this zerohedge post.

"Pointless Piece of Crap Story"

from wikipedia

debt ceiling graph

from the economist

...Congress has acted a total of 91 times since June 1940 to either raise, extend or alter the definition of the debt limit—36 times under Democratic presidents. And they have done so with some 300 days to spare on average...

Israel / Iran / U.S. Navy

CVN 77 G.H.W. Bush Enters Persian Gulf As CIA Veteran Robert Baer Predicts September Israel-Iran War

the naval update per Stratfor:

and here's the post from zerohedge:


As the most recently updated naval map from Stratfor demonstrates, the CVN 77 G.H.W. Bush has just entered the Persian Gulf, the first time a US aircraft carrier has passed through the Straits of Hormuz in months.

Gold matches record winning run on debt talk fear

Gains in crude oil, a plunge in U.S. consumer confidence and concerns about euro zone debt contagion also helped the metal to its largest two-week gain in over two years, rising more than 7 percent since the start of July.

Gold should rise to record highs above $1,700 an ounce in the next few months, based on technical charts. One analyst said that in theory, it could reach a shocking $5,000 an ounce should equity markets correct sharply. 

Unemployment

Last week, I talked about Interest Rates and Inflation in my kinda weekly cobbled together informational post.


This week, I'm going to do a two-parter on Unemployment.  (Charts from my post last week) So here's the first part.  Definition, numbers from the disastrous announcement from last week, and reflections from various sources.  The add on will be a broader look at unemployment and why it's an important metric.

US local debt problems

• Democrats Warn Aid Cuts Will Devastate New Jersey’s Cities
• Budget cuts force high schools to trim down athletics (Syracuse)
• Minnesota credit rating downgraded amid budget crisis
• First 328 Layoff Notices for State Employees Reported, Thousands More Expected (CT)
• Pa. Budget Cuts Economic Development By 35 Percent
• Union: Conn. prison cuts will result in riots
• Oregon agency to close 3 sex offender units
• Budget cuts hit Louisiana state parks, museums
• Updated: County Taxes Head Up 26 Percent (DeKalb, GA)
• Cal State Hikes Tuition 12 Percent
• Minnesota shutdown stirs debate over who gets paid
• Seattle May Fix Battered Streets With Big Increase In Car Tab Fees
• Kane tacks $10 onto traffic fines  to fund child center (IL)

Debt Ceiling

From a speech on the Senate floor from March, 2006:

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.

Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion.That is “trillion” with a “T.” That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion.

Numbers that large are sometimes hard to understand. Some people may wonder why they matter. Here is why: This year, the Federal Government will spend $220 billion on interest. That is more money to pay interest on our national debt than we’ll spend on Medicaid and the State Children’s Health Insurance Program. That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation, and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America.

And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on.

Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities.

Senator Barack Obama
Senate Floor Speech on Public Debt
March 16, 2006

Today, it's the same speech, just bigger numbers and the other party.

unemployment

source

Comparing unemployment from different Recessions (2 charts)

source  Horizontal axis shows months. Vertical axis shows the ratio of that month’s nonfarm payrolls to the nonfarm payrolls at the start of recession. Note: Because employment is a lagging indicator, the dates for these employment trends are not exactly synchronized with National Bureau of Economic Research’s official business cycle dates.

Average (Mean) Duration of Unemployment

GDP forecast

Italy

more posts from the NYT, and the Guardian, and a Bloomberg article about concerns in the Eurozone (Greece, Italy, Debt, etc).

From the Economist:

...But the inability of euro-area policymakers to resolve Greece’s debt crisis, and this week’s Moody’s downgrade of Portugal, have not helped. Spreads between Italian ten-year bonds and German Bunds have today hit another euro-era record. Domestic financial institutions have been hit, too: shares in Unicredit, a big bank, were suspended today after a sharp fall, and credit-default-swap spreads on Generali, an insurer, have surged as well...

Unemployment Charts

very solid posts here and here -- both with more charts that are really great (and sobering)

2 charts

Economist Overheating Economies Index (interactive chart)

Full Article
More info on this chart

click on tabs:

Greece, Portugal / Germany, France

articles, news & charts

Headlines

Treasuries Decline on Concern Inflation Will Quicken; Two-10 Spread Widens -- great read!



The Political DynastiesThat Destroyed Greece, And The Real Reason The Country Is Such A Mess

So, with good reason, Greek's simply don't have faith that their fellow citizens are contributing and they don't trust the system. This distrust is cultural, pervasive and has infected the entire economy- Transparency International recently rated Greece the most corrupt country in Europe (along with Bulgaria and Romania).

The Dow-Gold Ratio

For some perspective on the long-term performance of the stock market, today's chart presents the Dow priced in another global currency – gold (i.e. the Dow / gold ratio). For example, it currently takes less than a mere eight ounces of gold to 'buy the Dow' which is considerably less than the 44.8 ounces it took back in 1999. Priced in gold, the Dow has been in a massive 11-year bear market. Recently, the Dow (priced in gold) stopped declining for long enough to break above its six-year, accelerated downtrend channel. However, shortly after the break out, the Dow (priced in gold) pulled back to post-crisis lows.

America needs to worry about the contrast between its attitude to China and Europe’s

A report by the Asia Society in Washington, DC, says that scaremongering about China could lead America to forfeit a share of $1 trillion-worth of outward Chinese direct investment by 2020.

More of that cash is instead heading to Europe. Investment bankers there are now sure to dial Chinese clients if they hear that a firm is a possible bid target. Chinese banks are rapidly increasing their presence in Europe. Mainlanders are snapping up central London residences. Chinese direct investment abroad has increased faster in Europe than in any other region.

Why There's A 97% Chance Of A Big Market Rally (click for chart)

Indeed, the model fell into “panic” territory a week ago and continued to be in panic this week despite the market’s rally (see Figure 1), which statistically argues that there is a roughly 90% probability share prices are higher in six months and a 97% chance of gains in 12 months. On average, stocks appreciate 8.9% in six months and about 17.3% in a year when reviewing data looking back about 25 years versus random outcomes of market gains in the 75% range of likelihoods when studying the same time period. Note that this proprietary metric fell into panic late in 2008 and again in the summertime last year both in front of healthy market moves to the upside. Conversely, it surged into euphoria in both 2007 and 2008, implying forward equity market weakness as well.

Not really sure about this one (plus, read the comments on the post) and compare to Buffet's #1 metric

US Home Prices poised to climb

“It’s very unlikely that we will see a significant further decline,” Donovan said yesterday on CNN. “The real question is when will we start to see sustainable increases. Some think it will be as early as the end of this summer or this fall.”

I've heard that one before 

Global "train wreck" coming

Professor McKibbin told the Melbourne Institute conference dozens of European countries now had gross government debts on track to exceed 60 per cent of GDP. ''Japan is forecast to be 200 per cent of GDP, the US is forecast to be over 100 per cent of GDP,'' he said.

''At zero interest rates that can be sustained, but at 5 per cent interest rates countries have to put aside 5 per cent of their GDP every year just to service the debt. That is not sustainable.  ''Already consumers aren't spending and investors aren't spending because of the tax increases that are in prospect.

New Armstrong Essay

Fantastic.  A must read!  Link

Deficit, Debt, Interest Rates, and Inflation

Here is a post I've cobbled together from a wide variety of sources about the relationship between the federal deficit, debt, interest rates, and inflation...

Headlines

Big Congrats to the new head of the IMF!  Good luck:

Debt-laden Greece finds no buyers in 'fire sale' of national assets (Guardian UK)
Report Predicts Chaos If U.S. Prioritizes Payments (newsmax.com)
Moody's warns over Spanish regional debt (expatica.com)
Berlusconi ally warns of government fall over austerity (reuters)
Portugal Deficit Much Higher Than Forecast (wsj)
Chile May Hold Back on Bond Sale Amid European Debt Crisis (Bloomberg)
European June Economic Confidence Declines to Its Lowest in Eight Months (Bloomberg)

Weekly U.S. unemployment numbers released and the Reuters article has attempts by apparent experts trying to come up with something cogent.

Also stories about Florida, Connecticut, and lots of stories about the California Budget (oh, and Stockton's credit rating has been reduced)

Finally, the South Carolina Budget Crisis May Force State To Cancel Republican Primary.  I don't even know where to begin with that one.

UBS Central Banker Survey re. $ as default reserve currency

The U.S. dollar is poised to lose its status as the global reserve currency during the next 25 years, according to a UBS survey of central bank reserve managers.

“Right now there is great concern out there around the financial trajectory that the US is on,” said Larry Hatheway, chief economist at UBS, told the Financial Times, because the dollar has dropped 5 percent so far this year, and is trading close to its lowest ever level against a basket of the world’s major currencies.

From this place, but it's all over the place

Silver shortage?

Post today from Jesse's Cafe Americain has doomsday scenario about physical silver shortage.  Good technical charts on Gold, Silver, and the Dollar.

Economagic

Added a new section to the right for metric portals.  Economagic is ridiculous.  Mouse over links for the chart; click links for the data.

Case-Shiller April Numbers

link to post from Seeking Alpha, image from Blytic.

Basically, prices are (kinda) going up, but year-over-year declines. (click image to enlarge)

the original Shiller 100 year chart:

China / Europe

China to Bail out Insolvent European Currencies via Zero Hedge (found @ Martenson's blog)

DANG!  Hard Core article about August, 2011 financial crisis from the Global Europe Anticipation Bulletin:

In this issue, we discuss the two most dangerous aspects of the Autumn 2011 shock, namely: . the detonating mechanism of European government debt . the explosion process of the US bomb in terms of government debts  

At the same time, in the context of the acceleration of the rebalancing of global power relationships, we introduce the anticipation of a fundamental geopolitical process for the holding of a Euro-BRICS summit by 2014.  

Finally, we focus our recommendations on the means of avoiding being part of the 15 trillion USD in ghost assets that will go up in smoke in the coming months, with a special mention for developments in real estate in Europe whose collapse we used to anticipate for 2015 will start in fact as early as 2012. 

So it's easy to put 2 and 2 together and assume that come 2012, China (with it's 2011 pullout of US debt), will start its European takeover.  Good times.

Ben Graham

Graham Investor's review of the 10 Golden Rules of investing through current lens. Always good to go back to the basics.

New Armstrong Essay

Armstrong Economics: Presidential Elections: 2016 the Year from Hell? (Martin Armstrong, 06/25/11)

Political Instability's affect on markets. As always, full of typos and interesting ideas


some key pullouts: 

Welcome

Portal / Blog about Macroeconomic trends and financial markets. This is basically for me, but if you want to use this information, go for it!