Financial News

[NorthSideSox72]

There's a real good chance that they're going to wind up with the shockwave anyway.

During the cold war, with the US and USSR seemingly on the brink numerous times... were you in favor of just having a nuclear war? Since there was a good chance it would happen anyway?

 

How can you say that it is better to take a 100% chance of massive financial shock, than a 50% chance? Or 20%? Or 80%? And the 100% chance of shock also has all that clumsy stuff about Greece then losing all their tourism dollars and any ability to climb out of the hole.

 

What possible thing do you see as being BETTER about NOT taking this deal?

 

[Balta1701]

I'd bet that the longer you paper over the fact that the shock is coming, the worse its going to be when it hits. The Italian, spanish, Portugese, and French employment and debt positions seem likely to continue to erode barring strong action from the ECB. If that is the case, then that will require the ECB to take even stronger actions to stem the shock if and when it does occur, and the stronger the actions need to be, the less likely the ECB is to do them.

[Balta1701]

If Greece leaves...it's still possible that aggressive action from the ECB might be able to stop it at Italy, by doing what the Fed did in 08.

 

If Italy is in a worse position a year from now and Greece goes...then the hole that needs to be filled in Italy will be even larger.

[NorthSideSox72]

I'd bet that the longer you paper over the fact that the shock is coming, the worse its going to be when it hits. The Italian, spanish, Portugese, and French employment and debt positions seem likely to continue to erode barring strong action from the ECB. If that is the case, then that will require the ECB to take even stronger actions to stem the shock if and when it does occur, and the stronger the actions need to be, the less likely the ECB is to do them.

So, you prefer waiting for it all to go badly at once? Again, I fail to see what you are saying is BETTER about Greece not taking the deal.

 

If you think other countries are going to have a major shock, then all the more reason to make strong attempts to stabilize things over time. If you simply let Greece fail, not only is that worse for Greece, but it dramatically INCREASES the chances of this sort of thing happening to those other countries.

 

[Balta1701]

So, you prefer waiting for it all to go badly at once? Again, I fail to see what you are saying is BETTER about Greece not taking the deal.

 

If you think other countries are going to have a major shock, then all the more reason to make strong attempts to stabilize things over time. If you simply let Greece fail, not only is that worse for Greece, but it dramatically INCREASES the chances of this sort of thing happening to those other countries.

If you conclude that Greece breaking is inevitable without actions that the ECB is unwilling to (or maybe legally forbiddein from) do...then the question becomes "What is the least damaging way for that to happen."

[NorthSideSox72]

If you conclude that Greece breaking is inevitable without actions that the ECB is unwilling to (or maybe legally forbiddein from) do...then the question becomes "What is the least damaging way for that to happen."

No... if I conclude that them breaking is inevitable without ECB action, then I want to see what can be done WITH ECB action to help possibly prevent it. Look, there are two scenarios here...

 

1. Greece decides not to take the deal, and breaks off from the EZ. In this scenario, Greece fails almost assuredly. Their economy collapses, their government collapses. Tourism dollars dry up. Foreign investment dries up. Currency is worthless. You are now rebuilding a nation from the bottom up, which will take decades to be successful. The rest of Europe sees the chances of further complete failures rise significantly, and a major financial shockwave rides across the globe.

 

2. Greece takes the deal. In this scenario, Greece MIGHT still fail, and other countries MIGHT still fail, but the risk level of that event is significantly less. Meanwhile, Greece still in the EZ with a semi-stable government means that tourism continues, and the country actually starts to look pretty damn good for certain types of foreign investment of capital. They therefore have avenues by which they can recover.

 

You want scenario 1, which as far as I can tell, is worse in EVERY WAY than scenario 2.

 

[Balta1701]

You judge that Scenario 1 is worse in every way than Scenario 2 because of 1 clause which I reject..."The risk level of that event is significantly less."

 

Greece accepting a totally inadequate "Bailout" which still leaves them with a debt that can never possibly be repaid does not reduce the risk of default from absolute certainty, it leaves it there.

[NorthSideSox72]

You judge that Scenario 1 is worse in every way than Scenario 2 because of 1 clause which I reject..."The risk level of that event is significantly less."

 

Greece accepting a totally inadequate "Bailout" which still leaves them with a debt that can never possibly be repaid does not reduce the risk of default from absolute certainty, it leaves it there.

It leaves it there? Seriously? You think it makes no difference? Then why do YOU think they are bothering to do it at all? Why would Germany give up its own money if it knows with certainty they will lose it anyway? That makes no sense.

 

[Balta1701]

It leaves it there? Seriously? You think it makes no difference? Then why do YOU think they are bothering to do it at all? Why would Germany give up its own money if it knows with certainty they will lose it anyway? That makes no sense.

Because every option involves Germany losing money...and thus, the farther Germany can kick the can down the road, the better it is in the short term for Germany...they sustain higher employment and their politicians don't have to deal with making the hard choices.

[bmags]

So they kick the can down the road, hoping that growth will catch up...sounds familiar.

[StrangeSox]

Interesting graphic of the history of the big banks:

 

[NorthSideSox72]

So they kick the can down the road, hoping that growth will catch up...sounds familiar.

Which they wouldn't do if they thought there was no chance of it happening. I understand that we're all pretty jaded about political motives, but try to use some logic here... if this were truly inevitable, Germany would be better served NOT offering the money, and deal with the shock wave by itself, instead of a shock wave AND the extra money gone. The motive Balta is applying to Germany is completely ridiculous.

 

[caulfield12]

The likelihood of default and NOT getting even 50% on those bonds back is still very high.

 

It's just that by punting it down the road, there's the "hope and a prayer" that somehow the Greek economic system will miraculously recover by buying everyone (especially the German banks and Greek politicians) more time.

 

The whole argument is it what point does it make more sense for the Greek government to default and the German banks to absorb those losses?

 

Has there been one single optimistic sign or indicator the Greek government, from the beginning of this situation over a year and 1/2 ago, has started (or is even capable of) getting their economic house in order?

 

Why throw good money after bad when the situation...with the logjam occuring between the ECB, IMF and the European Commission, the counter-argument is simply that buying more times allows the politicians to find a better solution. But the odds of the Greeks ever paying those loans off at even a 50% haircut have to be around 10-15%, probably less.

 

Even if the Greek situation is pushed back six months, you still have Italy, Spain and maybe Belgium to deal with.

 

The Italian dilemma's likely to be even more intractable.

Edited November 4, 2011 by caulfield12

[Balta1701]

Keep in mind, the "50% haircut" is only a 50% haircut in name only. There are behind the scenes maneuvers going on by the banks to alter the payment schedule and the interest rates to make sure they get a lot more than 50%. The ECB and the IMF currently hold about 1/3 of Greece's debt, and they expect to be paid in full. Greece's pension funds and banks hold a good chunk of that debt as well, and the pension fund expects to be paid in full. Greece's banks aren't in position to absorb those losses without going belly up, so they're not going to take a 50% haircut either.

 

We'll be right back here in a few months.

[Balta1701]

80k jobs last month, 104,000 private sector and -24k public sector, so yet another crappy month made crappier by the shrinking public sector.

 

August and September revised upwards somewhat, which is positive.

[NorthSideSox72]

80k jobs last month, 104,000 private sector and -24k public sector, so yet another crappy month made crappier by the shrinking public sector.

 

August and September revised upwards somewhat, which is positive.

And UE rate falls to 9.0.

 

Been a strange year in the jobs market. Things were starting to look pretty decent in the early months of the year, then things fell back a bit, now picking up a little steam again... but none of it nearly enough to really up the curve. Need like 150k job add numbers, and 375k or less new filiings, consistently for at least a few months, to start really picking up steam.

 

[Rex Kickass]

And UE rate falls to 9.0.

 

Been a strange year in the jobs market. Things were starting to look pretty decent in the early months of the year, then things fell back a bit, now picking up a little steam again... but none of it nearly enough to really up the curve. Need like 150k job add numbers, and 375k or less new filiings, consistently for at least a few months, to start really picking up steam.

 

Behind the numbers, things look better. I think they "found" another 100+K jobs in August and September, so this report was actually a net gain of 200K. Also to be noted, the bigger U6 number dropped to 16.2 from 16.5, still really high - but a nice uptick.

[NorthSideSox72]

Behind the numbers, things look better. I think they "found" another 100+K jobs in August and September, so this report was actually a net gain of 200K. Also to be noted, the bigger U6 number dropped to 16.2 from 16.5, still really high - but a nice uptick.

At the very least, we seem to be avoiding a double-dip. But we still need to see slightly better gains, and for a few more months, before it is time to say the recovery is truly gaining steam.

 

[Rex Kickass]

At the very least, we seem to be avoiding a double-dip. But we still need to see slightly better gains, and for a few more months, before it is time to say the recovery is truly gaining steam.

 

Agreed. But my sense of it, through my job at least, is that I feel that the economy has actually been a little better than the numbers say for quite a while now.

[southsider2k5]

Groupon finally IPO'd today at 20. Its been up over $31, trading in the middle 28's now.

[NorthSideSox72]

Groupon finally IPO'd today at 20. Its been up over $31, trading in the middle 28's now.

I'm highly skeptical of Groupon's value. Not as skeptical as I was about LinkedIn, which was laughable... but there is a disturbing trend in Groupon's performance. Specifically, companies that use Groupon don't tend to stick around long and do more deals. They don't see the value in it. That seems like a huge red flag to me, and brings into question their ability to keep growing. Instead of growing then leveling, they may grow then drop off a cliff.

 

 

[southsider2k5]

I'm highly skeptical of Groupon's value. Not as skeptical as I was about LinkedIn, which was laughable... but there is a disturbing trend in Groupon's performance. Specifically, companies that use Groupon don't tend to stick around long and do more deals. They don't see the value in it. That seems like a huge red flag to me, and brings into question their ability to keep growing. Instead of growing then leveling, they may grow then drop off a cliff.

 

Both are garbage when compared to their valuations. I can't believe people are buying into Groupon after all of their problems though. Wow.

[southsider2k5]

http://www.businessinsider.com/found-the-m...-morgan-2011-11

 

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inShare3

 

JP Morgan ChaseBloomberg is reporting that missing money from MF Global's customer accounts have been found in a custodial account at JP Morgan - approximately $658.8 million.

 

This is certainly an interesting turn of events. Earlier this week, an MF Global executive admitted to a federal official that they had used customers' money.

 

The missing funds was originally discovered during the due diligence process over the weekend when Interactive Brokers was in discussions to buy the now-bankrupt firm, and the discovery promptly cut off the deal. DealBook first reported on the missing funds Monday.

 

At first, the amount missing was estimated to be at around a billion dollars, but the figure got narrowed down to between $600 million to $700 million.

 

The Commodity Futures Trading Commission, one of the regulators of MF Global, has been scrambling to find the funds ever since it was reported missing. Two days ago, CFTC sent subpoenas to PricewaterhouseCoopers, MF Global's accountant, for data on brokerage's clients' accounts in a further escalation of the investigation.

 

Yesterday, CNBC reported that a source close to the company had said all of MF Global's funds were there - but had gotten mixed up in a speedy liquidation process.

 

Read more: http://www.businessinsider.com/found-the-m...1#ixzz1clJI6n00

[StrangeSox]

There's a whole bunch of various refutations of the myth that Fannie, Freddie and/or the CRA caused the financial crisis here

[Balta1701]

Before I take off, figured I'd note...the Italian government debt has not responded positively at all to the supposed improvement in the Greece situation.

 

Since Italy has exposure to Greece, I'd say that's a pretty clear statement that the people owning that debt do not believe this Greece deal has solved anything.