Papademos talks…market falls
PM Papademos: Preaparations For Greece Euro Exit Are Being Considered; Risk Of Leaving Euro Is Real [DJ]
and the reaction is…
George W. Bush’s “Growth” Strategy
Guest post by Azizonomics.
George W. Bush is back. And he’s got a plan!
From the NYT:
Two months from now, he plans to publish a book outlining strategies for economic growth. And on Tuesday, he made a rare return to Washington to promote freedom overseas.
Freedom overseas? Yes — it would be nice to be free of George W. Bush’s destructive and costly neocon agenda (and I know many people overseas agree) but sadly the current White House occupant seems to be following the same authoritarian script; Bush hit Iraq and Afghanistan, and Obama seems intent to continue expanding the wars into Pakistan and Yemen.
On the economy, let’s judge him on his record:
The Face of Facebook
With FB on investors lips, here is a piece on Mr Zuckerberg. The article starts with “Mark Zuckerberg opens up”. At least we know by now he opened up the IPO and people stuffed at 38 feel rather pissed off. By The New Yorker (2010).
Mark Zuckerberg founded Facebook in his college dorm room six years ago. Five hundred million people have joined since, and eight hundred and seventy-nine of them are his friends. The site is a directory of the world’s people, and a place for private citizens to create public identities. You sign up and start posting information about yourself: photographs, employment history, why you are peeved right now with the gummy-bear selection at Rite Aid or bullish about prospects for peace in the Middle East. Some of the information can be seen only by your friends; some is available to friends of friends; some is available to anyone. Facebook’s privacy policies are confusing to many people, and the company has changed them frequently, almost always allowing more information to be exposed in more ways.
According to his Facebook profile, Zuckerberg has three sisters (Randi, Donna, and Arielle), all of whom he’s friends with. He’s friends with his parents, Karen and Edward Zuckerberg. He graduated from Phillips Exeter Academy and attended Harvard University. He’s a fan of the comedian Andy Samberg and counts among his favorite musicians Green Day, Jay-Z, Taylor Swift, and Shakira. He is twenty-six years old.
Tsipras the great?
The Greek drama has been unfolding over the past year(s). We have read of corruption, to much debt, creative accounting, riots and much more. During the past weeks, the extreme parties have gained a lot of popularity, and of the main questions Mr Alexis Tsipras is asking goes; “Is this debt legal”? You can’t really blame the guy. After all, Alexis means “defender (and warrior)”. Tsipras is probably just warming up. From Golem.
Predictably the bully-boy chorus, shouting insults and threats at the Greek people, has begun to swell. One of the UKs best known Tory Bully-boys, Ken Clark, Justice Secretary(!), recently described those Greek politicians who are opposed to the terms of the EU enforced austerity measures, as “cranky extremists”.
The object of this jibe was, of course, Alexis Tsipras, whom even The Guardian newspaper described as
…leader of the radical left Syriza party, [who] is demanding a renegotiation of Greece’s bailout package.
What is it that Syriza and Mr Tsipras have actually said they want, which qualifies them for being described as ‘radical’ and ‘cranky’?
Well Mr Tsipras is on record as saying that if given a mandate to set up a government, he would set up a Debt Commission to investigate the legality of the various debts the Greek Nation and its banking system have accumulated. Is this radical and cranky?
E´s
Market comments by Peter Tchir of TF Market Advisors.
E’s
The ECB will be the driver as it is the only entity in Europe that can make money appear and lend to “banking” entities with wide latitude. The EIB is suddenly stepping up its involvement. Look for “infrastructure” projects to be announced throughout Europe. There will be a focus on the countries in trouble, but also project given to the smaller countries that have been taken along for the ride. It won’t be a big amount, but it will be targeted to create immediate jobs and economic activity – ie, growth. The EIB can borrow from the ECB as far as I can tell and has the added advantage that figuring out who is on the hook for EIB losses, if any, is even more difficult than some of the other programs.
The EFSF may or may not get a banking license, but the ESM definitely will. This negates the need to tap the bond market for money, which is good, because that does cannibalize funds that could otherwise go to sovereign and corporate bond purchases. It also makes it easier to leverage. It ensures that the ECB will be the fulcrum of any future problem, as it is the mechanism that losses spread from the weakest countries to the strongest. But arguing that it won’t really work and that it causes more problems down the road than it resolves won’t stop the market from being happy, at least for a little while, especially in combination with other projects.
A lot of this is being done to prepare for a possible Greek exit. It is clear that Europe now realizes exactly what we have been saying since the elections – that Europe is not ready for a Greek exit in any shape of form at this stage, and Europe would be hurt more than Greece because all of the interconnectivity of commerce and more importantly, lending to Greece.
The ECB is also working on some form of deposit insurance. If that has some form of conversion protection, it would be truly useful, and shocking. If it only protects against default, it is less useful as depositors are pulling money from banks out of fear of conversion more than fear of default. The EU was fighting a solvency issue with liquidity and now runs the risk of fighting a forced conversion risk with solvency measures. Any form of deposit insurance would be beneficial, but to be truly long term meaningful, it has to protect against redenomination.
Facebook IPO glitch affected other stocks as well
The Facebook IPO “glitch” didn’t affect only the Facebook stock. Nanex presents some charts of other stocks probably affected by the FB “glitch”.
During the FaceBook’s failed IPO pre-opening period and extending through the first 20 minutes or so of trading (11:00 through 11:50 Eastern), bad prices (spikes) appeared in other stocks such as AAPL, SPY, VXX, NFLX, INTU, and QCOM (see list below). Price spikes also occurred in Facebook during this time(see Chart 4 on this page). There are likely other stocks that were affected. In nearly all of these cases the price spikes were executing against quotes that were far outside the NBBO and most of these trades occurred on the CBOE, and a few on Chicago and AMEX. Fortunately, by chance, the prices were not wide enough to trigger circuit breakers in these stocks. A similar thing happened during BATS failed IPO in AAPL and other stocks.
List of Symbols found (so far) with price spikes related to Facebook IPO:
| AAPL | INTU | PJP | ROM | FB |
| DBS | KED | PRFZ | SAM | VXX |
| EEV | MOO | QCOM | SPLK | ZNGA |
| FXA | NFLX | QLD | SQQQ | |
| IBB | PDCO | RFG | UST |
Spain and the path towards stability and growth
The Trader has written extensive articles on the problems Spain is facing. We have covered the imploding property sector, the hidden regional debt, the ever increasing unemployment and much more. In order to provide our readers objectivity, here is the latest presentation on Spain’s path toward stability, via Ministerio de Economia. The main points “responsible” for the build up of imbalances are;
News That Matters
Ft.com
JPMorgan Chase’s shareholders suffered a further blow on Monday when the bank suspended its $15bn share buy back programme to preserve capital following the $2bn trading loss. With the embattled bank’s shares falling another 2 per cent on the news, investors have seen $30bn wiped off the bank’s market value since the losses in its chief investment office were revealed 10 days ago. http://www.ft.com/intl/cms/s/0/4c678268-a349-11e1-ab98-00144feabdc0.html?ftcamp=published_links%2Frss%2Fhome_asia%2Ffeed%2F%2Fproduct#axzz1vTdMAajU
Facebook shares fell on Monday below the price at which they floated, inflaming a debate about who was to blame for the stock’s failure to “pop” after the social network’s keenly watched initial public offering. Some investors accused Facebook of taking advantage of enormous demand to sell at an inflated price, while other market participants pointed to a glitch in Nasdaq OMX’s IPO software as the reason that potential buyers fled. http://www.ft.com/intl/cms/s/0/9b7a360c-a33f-11e1-8f34-00144feabdc0.html#axzz1vTdMAajU
Europe’s top antitrust enforcer on Monday delivered an ultimatum to Google to put its house in order or risk hefty fines, in the most significant transatlantic competition spat since Brussels waged its legal war with Microsoft a decade ago. The US search giant now has “a matter of weeks” to make a decision on whether to change its business voluntarily to address serious competition concerns even though it says they are unjustified. http://www.ft.com/intl/cms/s/0/564a284a-a334-11e1-8f34-00144feabdc0.html#axzz1vTdMAajU
France is determined to push the idea of jointly guaranteed bonds as a new form of borrowing for eurozone countries despite Germany’s opposition, Pierre Moscovici, finance minister, said in Berlin on Monday. Speaking after a first intensive meeting with Wolfgang Schäuble, his German counterpart, Mr Moscovici confirmed that François Hollande, the newly elected French president, would include the concept as part of a package of growth measures to be debated by European leaders at an informal summit on Wednesday. http://www.ft.com/intl/cms/s/0/f9876df6-a366-11e1-988e-00144feabdc0.html#axzz1vTdMAajU
Banks are braced for a fresh attack on their profit margins, if Moody’s presses ahead shortly with plans to downgrade short-term funding ratings sectorwide. Investors see UK lenders, in particular Lloyds Banking Group and Royal Bank of Scotland, as most exposed to the risk of rating downgrades in coming weeks, with a combined £110bn of funding in short-term money markets.http://www.ft.com/intl/cms/s/0/d182b7b4-a368-11e1-ab98-00144feabdc0.html#axzz1vTdMAajU
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