World economy talk

[Monseratto]

Oil prices collapsing...!

Pre-market crude oil futures plunged nearly 4 percent Friday on this morning's catastrophic nonfarm payrolls figure.

July Brent contracts were down -3.81 percent to $98, while WTI declined as much as -4.55 percent to $82 — an eight-month low.

Meanwhile, gold futures spiked as much as 1.19 percent to hit $1,581.45.

Natural gas, too, is getting beaten up — down -2.79 percent to $2.36.

London - Brent oil prices sank under $100 a barrel on Friday for the first time in eight months, hit by weak Chinese data and eurozone debt tensions centred on Spain, and ahead of more key US data.

Brent North Sea crude for delivery in July tumbled to $99.60 a barrel in early London deals, which was the lowest level since October 4, 2011.

New York's main contract, West Texas Intermediate crude for July dived to $84.52 a barrel - the lowest level since October 20.

"Oil prices have dipped below the psychological $100-per-barrel with the focus turning away from the Iran situation and onto the state of the global economy after a raft of poor economic results over recent days," said Gary Hornby, an analyst at energy consultants Inenco.

"Concerns over Spain have resurfaced after the country's 10-year bond yields nudged close to 7.0%, a level seen as unsustainable and continuing uncertainty over the upcoming Greek elections in mid-June."

Adding to the sense of panic, latest figures showed a net €97bn of investor money fled Spain in the first three months of the year - the highest on record.

[Monseratto]

hey Fed time for QE3

Any prediction for the DOW's opening?

[uls]

market just opened

earlier dow futures was down 200

[uls]

guess i'm not the only one thinking QE3 after the jobs report

Forex: EUR/USD soars above 1.2450 on QE3 speculation
Fri, Jun 01 2012, 13:36 GMT | FXstreet.com

FXstreet.com (Córdoba) - The dollar initially strengthened on the back of disappointing nonfarm payrolls, but as participants consider the risks of the Fed launching another round of bond purchasing (QE3), the US currency lost momentum and reversed gains.

look at the euro spike

[Monseratto]

Ahhh...the sky is falling!!! Any news from the Feds?

[Monseratto]

All gains of 2012 for the DOW has been wiped out...But gold is a darling again with speculation of QE3.

[safeorigin]

[ame="http://www.youtube.com/watch?v=Bx5Sc3vWefE"]Victoria Grant - YouTube[/ame]

[uls]

La Unión Europea anima a España al rescate financiero | Economía | EL PAÍS

El gran tabú se ha roto. Lo innombrable ya está aquí. El rescate de uno de los cuatro grandes de la eurozona ya no parece el pronóstico de los señores de las tinieblas. La mezcla letal de una recesión que promete alargarse con la enorme factura que ha dejado el agujero de la banca empuja a España cada vez más cerca de Grecia, Irlanda o Portugal.

Es difícil encontrar estos días en Bruselas un alto funcionario o un responsable político que, siempre bajo el anonimato, no dé por hecho que España acabará pidiendo ayuda externa para no caer en la insolvencia. “Basta con hacer números. ¿De dónde van a llegar las decenas de miles de millones que necesita el sistema financiero español para recapitalizarse? Las actuales condiciones del mercado hacen que sea prácticamente imposible obtenerlos allí”, señalan fuentes comunitarias.

translation:

The great taboo is broken. The unnameable is here. The rescue of one of the four largest euro zone no longer seems the prognosis of the lords of darkness. The lethal mix of a recession that promises to lengthen with the huge bill that has left the hole in the banking Spain pushes ever closer to Greece, Ireland or Portugal.

It is hard to find these days in Brussels, a senior official or a responsible politician, always anonymous, do not assume that Spain will end up asking for outside help to avoid falling into insolvency. "Just numbers. Where will reach tens of billions needed for the Spanish financial system to recapitalize? Current market conditions make it virtually impossible to get there, "EU sources say.

the EU tells Spain that it need a bailout

"The great taboo is broken. The unnameable is here."

[Monseratto]

Leftist are idiots, regardless from what part of the world they come from...how will they fund their "plans" when there's nothing left in the banks? Hope markets won't react because of this stupidity...

The Greek economy, according to leftists
by Agence France-Presse Posted on 06/03/2012 12:59 PM | Updated 06/03/2012 2:56 PM

ATHENS, Greece - No debt repayments, higher salaries and freedom from EU-IMF tutelage: Greece under the radical leftists, who are poised to win a June 17 election, seems a world removed from its current recession nightmare.

The Syriza party has pledged to tear up Greece's loan agreement with the EU and the IMF, which is currently keeping the country on its feet but at the cost of an unprecedented wave of austerity cuts and structural reforms.

If implemented, such a program, which would also mean the nationalization of banks and a halt to privatization, could well mean Greece's ejection from the eurozone, potentially sending shockwaves through the global economy.

Fed up with two years of salary and pension cuts, Greek voters on May 6 punished larger parties associated with the bailout and catapulted Syriza to second place, within striking distance of the top.

Opinion polls show that the radical leftists, only the fifth party in 2009, could even emerge as the victors in this month's repeat ballot.

The condensed program of the loosely-knit coalition of moderate Communists, Trotskyists, ecologists and other leftist groups was announced on June 1.

In it, the party's leading minds set out their vision for a more equitable Greece, liberated from the excesses of capitalism, heavy industry and political corruption.

Under Syriza's blueprint, state loan repayments to service a debt of over 350 billion euros ($433 billion) are to be frozen to free funds for social support programmes.

The privatization of major public companies -- a key condition of the EU-IMF bailout deal -- is to be suspended as well.

Greek banks that draw on European support funds to recapitalize themselves after a landmark state debt cut brokered by the previous government in March will be "nationalized and socialized."

And the EU-IMF bailout deal, dubbed here the "memorandum," which the leftists say has brought only recession and misery to Greece, is to be rejected and redrawn from scratch.

"The first act of the government of the Left will be to annul the memorandum and its application laws," Syriza's 37-year-old leader Alexis Tsipras said on Friday.

"We will seek a new renegotiation of the debt at European level, aiming to drastically reduce it, or a debt moratorium and a suspension of interest payments until conditions for the stabilization and recovery of the economy are created," Tsipras said during a presentation of the party's revised program.

A previous version of Syriza's platform, drawn up in April, had pledged to outlaw offshore company dealings and shut down NATO bases in Greece.

The revised version released on Friday plans a withdrawal from NATO operations, starting from Greece's mission to Afghanistan, and a future "disengagement" from the military alliance altogether.

"At a time when the international balance shifts and US hegemony increasingly comes into question, the policy of Euro-Atlanticism and complying with NATO war plans has no future," said senior party member Thodoris Dritsas.

The older parties Syriza decimated on May 6, the socialist Pasok and the New Democracy conservatives, have dismissed its program as unrealistic and Tsipras as an arrogant demagogue still wet behind the ears.

"Those who speak of a one-sided rejection of the bailout are like children playing with matches inside an armory," New Democracy leader Antonis Samaras said during a presentation of his party's own program on May 31.

Syriza's leading economist Yiannis Dragasakis, a former junior finance minister in 1990, believes Greece could take a political decision to reject the loan agreement and dump unwanted labour reforms yet still retain vital EU-IMF loans.

"Some elements of the bailout deal can be rejected unilaterally. Others require cooperation to do so," he said in a recent televised interview.

Even European MP Daniel Cohn-Bendit -- a left-wing icon and staunch critic of Greece's bailout terms -- recently dismissed Syriza's plans to reverse wage cuts as "idiotic".

"Europe will give no more money, Greek coffers are empty," he told a Greens news conference on May 23, after Tsipras had visited Paris and Berlin.

"It's like asking someone 'how would you like to commit suicide, with a gun or an axe?'" he said.

In March, Syriza sued Germany's Bild newspaper for a million euros ($1.26 million) after it allegedly portrayed Tsipras as a "half-criminal" who "openly supports violent anarchists."

"Will these radicals soon be governing Greece?," the tabloid asked its readers. - Agence France-Presse

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Heineken Moved Excess Cash From Greece, Financieele Dagblad Says - Bloomberg

Heineken NV (HEIA) moved excess cash from Greece as a preparation for a possible exit of the country from the euro, Het Financieele Dagblad reported today, citing an unidentified spokesman.

Heineken transfers the money from euros into U.S. dollars or pounds when possible, the Dutch newspaper reported.

[uls]

either the EU breaks apart or move towards fiscal integration -- meaning countries give up sovereignty

"master plan"

News Headlines

Over the weekend, reports indicated that Germany is now willing to consider greater fiscal union if euro members agree to hand over power on government spending and structural reform of their economies. Officials in Brussels, Frankfurt, and Berlin are said to be working on a “master plan” that could see Germany agree to underwrite the euro if everyone falls into line on German demands for fiscal responsibility.

[uls]

friday's jobs report sign of US economic slowdown

another sign:

April factory orders down -0.6% expected +0.2%

previous month revised from -1.5% to -2.1%

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think positive... facebook is not myspace. facebook is not myspace. facebook is not myspace

hehehe

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"HELP!"

http://online.wsj.com/article/SB1000...082690142.html

Spain's Budget Minister:

"What this premium tells us is that the state, and Spain as a whole, has a problem when it comes to accessing markets, when we need to refinance our debt," Mr. Montoro said in a radio interview. "What that premium says is that Spain doesn't have the market's door open, as such, the challenge is to open that door and regain the confidence of those markets, our creditors."

[uls]

WSJ's Jon Hilsenrath (the guy known as Fedwire) said the Fed is considering taking further action... including QE3

Fed Debate Builds as Outlook Dims - WSJ.com

[wowiesy]

June 30, 2012: Look For It

By John Mangun

YOU are intelligent, educated, and keep up with current events. Yet all of your experience does not help in genuinely understanding what explains the global crisis. June 30, 2012, is another turning point as was June 1st.

You go to the bank and borrow money to buy a condominium. If you do not pay the loan, the bank takes the property and sells it to someone else to repay the loan. Simple.

A bank borrows money from depositors and loans the money to other people. If the other people do not pay the loans, the bank may not have enough cash, liquidity, to pay depositors’ withdrawals. Another bank must come in with cash, assume the loans and assume the responsibility of paying the depositors. Also simple.

There are constant “debt crises” of this type but they are always resolved. In extreme cases, government or private deposit insurance protects the depositors. The bank dies when its assets, the loans, become worthless and no one wants to buy them.

Historically, governments (mainly monarchies) borrowed money from banks to fund wars or economic exploration. Win the war, take the other king’s money and the loans were paid off. Find a new, rich country like the Philippines, set up trade, make money, and pay the loans back.

Financial crises, on the other hand, are always the result of governments devaluing the currency. Borrow a coin made of 100 percent gold and try to pay it back with a coin made of 50 percent gold, the lender now wants two of the less-valued coins. What used to cost one coin now costs two; it is called currency induced cost-push inflation.

On August 30, 2008, the US Federal Reserve had assets of $870 billion. On May 30, 2012, its assets were $2.870 trillion. The increase of $2 trillion came from just adding $2 trillion to the Fed’s Assets Column on its balance sheet, sort of like if there was a special button on your ATM machine that let you set your balance at whatever amount you desired.

Whenever a bank needed extra money because its loans were bad like in the housing sector, the Fed loaned them the money and, therefore, put all that $2 trillion into the economy. It was supposed to get economic activity going again. Except, because the US government has a huge budget deficit, the banks loaned the money they borrowed back the government.

June 1st was the wake-up call that the policy was a failure. By June 30th, the central banks will either walk away, letting dozens of major banks and a couple of countries go out of business, or they will put more money into the system.

Between now and June 30th, the government of Greece will run out of money. Spain’s banks and governments will by then need at least $500 billion to survive. Both the European Central Bank and the Federal Reserve will meet and decide what to do.

There is very little major global economic activity. This new round of money infusion will not create economic activity any more than it did between 2009 and 2012. June 30th will mark the day the global economy starts going into a recession with nations seeing economic activity shrinking. This is because of three years of population growth and three years of increasing government deficits. Governments have no monetary power nor can afford to “stimulate.”

That June 30th date will also mark the beginning of major price inflation although the inflation will not start becoming apparent for 12 to 18 months.

The reason there has been low inflation for three years was the belief that increased economic activity could soak up all the excess cheap money. In a year, that belief will be totally destroyed. Commodity prices will go up. Stock markets will rally and emerging-market currencies will go to levels not seen since 1997.

This will all become clear by June 30th. Mark your calendar.

Quite scary... anybody care to expand further?

May mga points na di ko gano ma gets...

[uls]

^^

the global financial system works like a ponzi scheme

to keep it working properly ever greater amounts of money has to be created to service the previous amounts created

by creating money meaning money has to be borrowed into existence

so as more and more money is created you need more and more money to pay back the amount previously created (coz there's interest attached to all that money)

the system works fine as long as there's an ever greater amount of money created (or borrowed into existence) to service the previous amount created

BUT when borrowing slows down (coz borrowers can no longer take on more debt) the system gets screwed

where will the money come from to service the previously created debt?

like what happened when the US housing boom collapsed (also happening in Spain)

so when that happens central banks lower interest rates to encourage borrowing

the US central bank has kept rates at ZERO for a number of years na but it isnt working

i'll be back may gagawin lang ako

[uls]

Whenever a bank needed extra money because its loans were bad like in the housing sector, the Fed loaned them the money and, therefore, put all that $2 trillion into the economy. It was supposed to get economic activity going again. Except, because the US government has a huge budget deficit, the banks loaned the money they borrowed back the government.

coz the USG is the only creditworthy borrower. after getting burned banks didnt wanna take risk lending to ordinary folks and businesses

[Monseratto]

Japan has been doing that for decades, and it got them nowhere. So how can the US succeed?

[uls]

Between now and June 30th, the government of Greece will run out of money. Spain’s banks and governments will by then need at least $500 billion to survive. Both the European Central Bank and the Federal Reserve will meet and decide what to do.

the Greece govt only has enough money to last the month

as we all know Greece has been surviving on money lent to it by the troika (installment not lump sum)

Greece has to meet certain conditions to get more money

but since those conditions are not being met Greece might not get more money

so Greece could fail and exit the euro

--

Spain naman is experiencing what the US experienced a few years ago

Spain had a housing bubble

the banks now have tons of bad loans

they have to be bailed out