This week’s report deals with multiple issues. Among those; Lybian Oil, the strange intraday patterns in Gold and some of Europe’s problems.
…and for some insight into the Gold price pattern on a intraday basis. Note how Gold “collapses” into the two biggest price fixes on a daily basis? Window dressing redefined?
…and those problems in Europe;
Pythagorean theorem: 24 words
Lord’s prayer: 66 words
Archimedes’ Principle: 67 words
Ten Commandments: 179 words
Gettysburg address: 286 words
US Declaration of Independence : 1,300 words
US Constitution with all 27 Amendments: 7,818 words
EU regulations on the sale of cabbage: 26,911 words
– Europe ’s Problems Summed Up
This week’s full report, Hmmm Sep 04 2011
Despite the Euro Crisis, the Euro has been relatively stabile during the past months. Even as Equities markets trade in “panic” mood, the currency World has digested the problems in a controlled fashion. The question is though, will the Euro survive, and at what cost will the politicians hang on to saving the Euro. As we have argued, the Euro is just a political project, with no real benefits to society. Europe is too heterogenous in order to have one currency. Interview with historian Hans Joachim-Voth on Euro disappearing in it’s present form within five years;
SPIEGEL: Why do you think the euro was a dumb idea?
Voth: Because, at its core, it is a bad solution for a nonexistent problem — a political object of prestige with massive economic disadvantages. Everyone thought the common currency would cause all of the structural differences in the euro-zone countries to automatically disappear. But, after 2000, the low interest rates in the euro zone artificially fuelled growth in the weaker countries and caused real estate prices to skyrocket. This kind of speculative bubble is fun while it lasts. But every party comes to an end eventually. And then comes the rude awakening: Growth slows down, and unemployment rises. Since the banks have given out too many loans, they become a brake on growth. This causes an increase in the structural divergences that were actually supposed to decrease. The euro can’t survive for long without having much more redistribution between richer and poorer member countries or much more flexible economies. And neither of those things is politically feasible.
Remember how Greece was fixed a week ago, and Athens index rallied the most in decades. That was then, now is different, and the Athens index has retreated to the lows. The chaotic situation in Greece, is out of control, as nobody has any credibility left. The trader has argued for a long time now. Greece has debt problems, but that is not the biggest problem. The country lacks competitive advantage, and needs to exit the Euro, in order to restart the Economy. Bail outs are just prolonging the pain, and will never fix the problems of Greece. More insight from WSJ;
Talks over new bailout funds for Greece were suspended Friday amid disagreements over how to fill a government-deficit gap that once again is veering off track, raising doubts about the country’s future access to finance and triggering renewed nervousness in financial markets across Europe.
The suspension pushed yields on Greek government debt to levels indicating that investors see a default by Athens soon as a near certainty: Interest rates on one-year paper blew out past 70% and two-year yields rose close to 50%.
The suspension of the talks in Athens between the government and a group of officials representing the providers of Greece’s bailout cash came, officials said, amid a dispute about how to address new gaps opening up in the government budget deficit.
“The Greek side insisted the missed targets are the result of the recession. The troika said recession played a part, but Greece basically didn’t keep up with its commitments, so more measures will be needed to make up for the lost ground,” said a person with direct knowledge of the talks.
“There is a clear disagreement that can’t be bridged today,” the person added.
With interest rates hitting abnormal levels, Greece is practically speaking in Default.