I woke up this morning South African time with the news that the EU leaders has reached a deal on the EU debt crisis. I had a look at the world markets and lo and behold, everything looks so good. The markets are rising. In Asia all the markets are up over 2%. The European markets all started good with the DAX leading the way rising over 3%. And the whole time I am thinking how foolish and gullible the human race are. The crisis is far from over. It has only begun. As I am no expert on world finance, I went to the experts online to see what they have to say. Here is what they have to say:
The most important news of the night is not that the Greek haircut will be 50%, which is still insufficient as it excludes ECB Greek debt holdings, plus as the IMF noted, a 60% NPV haircut on all bonds is needed for Greece to return to viability, but that the EFSF will be just €1 trillion. Unfortunately, the EU Council and its advisor, JPM, refused to read the Zero Hedge analysis on whyanything less than €2.4 trillion is insufficient (not to mention assumes no French AAA-downgrade… ever). Which is why we repost it for whatever sentient carbon-based life forms are left to realize why tonight’s Euro TARP should be promptly faded until it is at least doubled to well €2 trillion, which, alas is impossible: absent Uncle Sam footing €250 billion solely to bailout French banks, this will not work!
Read the rest HERE
We have noted again and again that the seemingly single-minded effort to avoid a credit-event or involuntary restructuring is yet another one of the actions of an ignorant and ill-informed elite who simply do not understand the unintended consequences of any and everything they do to calm a desperate banking system. Today saw Willem Buiter, of Citigroup, agree with our perspective in terms of both the realistic lack of impact from a CDS event on Greece (per se) and moreover his perspective that the lack of a credit event could throw bond markets into a chaotic state as seemingly worthless CDS contracts and CTD bonds are tossed like hot potatoes from one smart banker to another smart hedge fund.
Read the rest HERE
The EU leaders are grasping at straws. This may help the Greece problem for a short time, but what about Italy and Spain? How will this deal influence them? Will they also get a 50% haircut from their debt in the future? It will not be possible.
Europe stays balanced on a knifes edge. According to Revelation 6 there will be war and unrest before the big collapse. of the 3rd seal. Keep watching, we may soon see it unfold.