Euro

Looking ahead September 12th could be pivotal day for two reasons

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One thing we talk about in our Investment Survival Workshops is learning to develop a horizon further out than tomorrow.  I know that sounds obvious but it’s harder to do than you think.  Most people including myself, hesitate for a moment to recall what they did yesterday and most of us wake up and think about what we are going to do that day, not the next day or the following week.  When I moved from Eastern Standard time to Mountain Standard time zone, I dreaded getting up two hours earlier in the predawn to read the papers and analyst … Read more

”s Summer not Fall.

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Everyone is nervous about Europe.  Me too.  I have no way of knowing how much of this is already priced in the market.  You’d have to say a lot based on the violent reaction in the oil patch, some European markets but  I don’t see any positive outcome from this weekend vote in Greece.  If they vote to  keep the austerity demands in place, brief rally and the market will soon say the economy is just going to at best muddle along and at worse, be right back at the  bread line. On the other hand if they abandon austerity, … Read more

‘s too expensive to leave

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I’ve been struggling with a metaphor to describe the state of affairs in Europe.  I’ve got it now.  It’s a bad marriage .  All parties now realize they’d be better off ending it except they can’t afford the divorce.  At some point, my guess is that Germany answers the question, “Why are euro divorces so expensive?  Because they’re worth it.” or do they just learn to live together and make the best of it.  I don’t know the German psyche well enough to answer that one.  Perhaps one of our readers will hazard a guess?

Soros says Europe has three months to avoid catastrophe

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I don’t pretend to know what’s going to happen but I’ve said many times, the world would be much better off without the euro.  For reasons beyond my comprehension, the Europeans seem hell bent on keeping it.  Perhaps this speech from George Soros will make it clearer to you. Remarks at the Festival of Economics, Trento Italy June 2nd  

Japan Is Never Going To Default, And The Kyle Bass Trade Will Be A Disaster – Business Insider

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Kyle Bass’s Most Famous Trade Is A Disaster, And It Is Never Going To Work Out Joe Weisenthal | May 20, 2012, 6:42 AM | 23,775 |   Kyle Bass was one of the handful of hedge funders who made a fortune betting against housing during the subprime bust, and since then hes been stalking his next big “career trade.”For years now, his big target has been Japan, a country with a debt-to-GDP ratio of over 200% and a shrinking/aging population. Hes convinced that its only a matter of time before the country implodes in a massive sovereign debt crisis … Read more

Spain’s Banking Rescue Should Become Example for Europe – Bloomberg

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Spain’s Banking Rescue Should Become Example for Europe   Europe’s leaders can’t save their currency union without figuring out a way to salvage the region’s banks. Spain is a perfect place to start.Perhaps no country better illustrates the mutually reinforcing links among the euro area’s banking, sovereign-debt and economic crises than Spain. Its banks are largely paralyzed amid concerns about heavy losses on real estate loans that, by various estimates, could require as much as 120 billion euros $150 billion in fresh capital to offset. Tight bank credit has in turn deepened the country’s economic slump, increasing banks’ potential losses … Read more

Who Lost the Euro? – Businessweek

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Opening Remarks Who Lost the Euro? By Clive Crook on May 24, 2012 Tweet Facebook LinkedIn Google Plus 19 Comments   The arc of Europe’s postwar history is turning toward tragedy. It isn’t just that much of the Continent has fallen into a new Great Depression, or that in some countries things will get worse before they get better. It isn’t even that the whole mess was avoidable in the first place. It’s that the crisis is dividing Europe along the very lines the European project was intended to erase. Decades of clichés about European “solidarity” and “the European idea” … Read more

European Banks Unprepared for Greek Exit From Euro – Yahoo! Finance

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European Banks Unprepared for Greek Exit From EuroBy Elena Logutenkova, Liam Vaughan and Gavin Finch | Bloomberg – 1 hour 27 minutes ago Europe’s banks, sitting on $1.19 trillion of debt to Spain, Portugal, Italy and Ireland, are facing a wave of losses if Greece abandons the euro. While lenders have increased capital buffers, written down Greek bonds and used central-bank loans to help refinance units in southern Europe, they remain vulnerable to the contagion that might follow a withdrawal, investors say. Even with more than two years of preparation, banks still are at risk of deposit flight and rising … Read more

Greece A Result Of A Greedy Goldman? Nahhhh…

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Back in 2001, Greece had a problem.  The struggling country’s debt levels were simply too high to qualify for admittance to the European Union.  While these regulations were in place to protect the structure of the European economy, Goldman Sachs was more than willing to step in with a timely loan which provided the necessary liquidity to hide the nation’s accumulated debt load.  Essentially a perfect solution for both Greece and Goldman, here is the situation illustrated by Bloomberg: “The Goldman Sachs transaction swapped debt issued by Greece in dollars and yen for euros using an historical exchange rate, a mechanism … Read more

Paulson Calling For A Greek Default

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According to Paulson & Co., a hard default by Greece could spell economic disaster of unprecedented proportion along with the breakup of the Euro.  In his 2011 recap letter to clients, he estimates $117 billion will be needed to recapitalize banks and satisfy other monetary needs. Paulson & Co.: “We believe a Greek payment default could be a greater shock to the system than Lehman’s failure, immediately causing global economies to contract and markets to decline,” the hedge fund said in the letter, a copy of which was obtained by Bloomberg News. The euro is “structurally flawed and will likely eventually … Read more

Six Reasons to Avoid Japan In 2012

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Guest post: Ron Rowland One of the best ways to make money in ETFs is to not lose money.  I know it sounds obvious, but I can assure you that many people don’t get this key point.  So if I can help you do that, then I count it as a success.  And today I’ll talk about an ETF category I think you should avoid in 2012: Japan. What’s Wrong with Japan? I’ve been to Japan many times.  I love the country and the people.  Yet I have to tell you that now is not the time to invest in … Read more

ECB Won’t Step Up Bond Purchases: Draghi – Bloomberg

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This is really pretty incredible.  It’s surprising to me that more people  are not talking about this.  While the headline reads all doom and gloom, if you read the article, the ECB just provided unlimited loans to banks and without question many of these if not all will be buyers of their country’s soverign debt.  This is the defacto unlmiited support peple are calling for.  I guess they may have to spell it out better.   The ECB is resisting pressure to increase its bond buying, saying governments need to find a lasting solution to the debt crisis. The central … Read more

For Europe, Only Way Out Is to Break Up: Kyle Bass – Yahoo! Finance

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For Europe, Only Way Out Is to Break Up: Kyle Bass CNBC – 47 minutes ago   With no workable solutions in sight and a sovereign debt crisis only likely to get worse, the European Union is likely to see an ultimate breakup, widely followed hedge fund executive Kyle Bass told CNBC. Bass, the managing partner at Hayman Capital Management famous for making huge sums from the collapse of the subprime mortgage industry, said last week’s EU summit produced “a blank piece of paper” on which “there are no details,” causing him to conclude, “It won’t work.” via For Europe, Only Way … Read more

Short euro a very crowded trade

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Perhaps one of the reasons the euro is holding up so well is that there are so many speculators like myself betting against it that it has become the contrarian play.  After all why would anyone want to own a currency that is the daily speculation of whether it will survive? Wouldn’t it be much easier to just sell your euros for dollars.  This is the nature of bear markets.  They are very subject to vicious bear market rallies that test the resolve and conviction of the holder.  In that sense owning put options on the FXE or call options … Read more

Please somebody burn this Euro

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As far as the end game goes, it’s clearly the Euro.  When they get rid of that darn thing or finally get the will to issue Eurobonds, recapitalize all the major banks with fresh effusions of Eurobond debt or make-believe money, it will end.  Who knows when and if that will happen.  One thing is for sure, Europe can do just fine without the Euro.  Probably a lot better.  Get rid of it, is my preference. The problem as I and many others have written is simple.  The EU should have come up with a common government before a common … Read more

Beyond the European Debt Crisis?

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I’ve found some interesting reading material on the European debt crisis.  The markets are completely obsessed with this rightly or not.  I’m equally obsessed, I have to admit so enjoy these musings by Pension Pulse   FRIDAY, SEPTEMBER 16, 2011 Beyond the European Debt Crisis?George Soros wrote an excellent comment asking, Does the euro have a future?HT: Steve:The euro crisis is a direct consequence of the crash of 2008. When Lehman Brothers failed, the entire financial system started to collapse and had to be put on artificial life support. This took the form of substituting the sovereign credit of governments … Read more

U.S. Stocks Little Changed Amid Economic Concern; Oil, Euro Rise

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Aug. 19 (Bloomberg) — U.S. stocks fluctuated between gains and losses as investors weighed growing concern over the global economy and Europe’s debt crisis against valuations near the cheapest level since 2009. Crude oil and the euro rose. The Standard & Poor’s 500 Index rose 0.2 percent at 11:59 a.m. in New York after rising as much as 1.2 percent and falling 0.9 percent. The Stoxx Europe 600 Index slipped 1.6 percent after dropping as much as 3.6 percent. Oil rose 1 percent as it also swung from losses to gains. Gold futures topped $1,880 an ounce for the first … Read more

Euro Rises to Two-Week High as Bailout Terms for Greece May Ease

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By Catarina Saraiva and Allison Bennett July 21 (Bloomberg) — The euro advanced to the highest in two weeks against the dollar as officials said European governments may expand the region’s bailout fund and accept a temporary Greek default, reducing contagion concern. The dollar briefly pared its drop versus the yen on a New York Times report that President Barack Obama and House Speaker John Boehner have reached a budget pact. The Canadian dollar rose to a three-year high versus the greenback and the Norwegian krone advanced as crude oil gained. The Swiss franc fell against most of its major … Read more

Weekend Read with an Eye to Profits

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One reason I’m a news addict is that I like to game the news. What I mean is can you make money off a headline, can you get insight into a macro trend? So here are my eye catching reads of the weekend and a way to profit from it. I’d love to hear your comments. Number of the Week: Class of 2011 most indebted ever. WSJ May 7th : The article states, “The Class of 2011 will graduate this spring from America’s colleges and universities with a dubious distinction: the most indebted ever.”.    The reason the class of 2011 … Read more

Weekend Reading Links

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The weekend is always a great time to catch up on some of the week’s reading you missed… Markets have gotten conditioned to central bankers flooding the market with money every time something goes wrong. [The Psy-Fi Blog] A profile of Jonathan Ive the “design genius” behind the rise of Apple. [I Heart Wall Street] Market bubbles and investor psychology.  [Vanguard Group] Buffett’s worst investment ever (and its not what you think) and7 other unusual things I learned about Warren Buffett. [The Altucher Confidential] Why are some cities happier than others?  [The Atlantic] Sirius is Clearning up its balance sheet. [Sirius Buzz] The frequency … Read more