Facebook, IPO and Panic
Investors have been swamped with Greek polls and Spanish Bank(ia) imploding, so we feel many might just be forgetting about the hottest IPO in recent years, namely Facebook. The IPO has been a rather pathetic show, where investors now are suing Facebook, Morgan Stanley etc. What if Facebook screwed up “solo”? From Washingtonm Post.
There’s been a ton of coverage about the Facebook IPO disaster, but very little of it looks at the crucial point two weeks ago where things went terribly wrong. It’s becoming increasingly clear that Facebook itself messed up at that juncture.
The screw-up resulted in a major disappointment in Facebook’s stock debut: The stock’s 15 percent decline since the IPO last Friday may not in itself be tragic. But worse, lawsuits are flying saying that legal guidelines weren’t followed. And there’s the sad fact that regular mom-and-pop investors were apparently left with the more losses on average than large institutions who got privileged information. This all was aggravated by a separate annoyance: glitches in the Nasdaq stock market trading process, which caused delays in trade and cancel confirmations, among other things.
However, based on a number of interviews VentureBeat has had with observers and other sources close to the process, it’s apparent that Facebook itself may be most to blame for the fallout. Facebook chose to be more furtive in public announcements about its business than it was in private talks with large investors.
Long term Med investing….
On the fallacy of long term “long” investing, at least in some of the Med countries.
Charts below.
Heading for the Grexit?
Greece is still the talk of the town. Pundits talk of the Grexit across media. Below are some great charts by Thomson Reuters describing the Grexit dilemma.
In the wake of Greece’s inconclusive elections, a caretaker government has stepped in to run the country until a new round of voting can take place and – hopefully – a coalition of some sorts can be cobbled together that is able to formulate some kind of coherent policy response toward the Greek economic malaise and reduce the political turmoil. Meanwhile, those same Greek politicians that must find a way to appeal to an angry and disaffected electorate also must combat pressure from outside the country. The president of the European Commission, José Manuel Barroso, simply stated bluntly what many pundits have been saying quietly since the elections early this month revealed the magnitude of the challenges confronting any new Greek government when he took to the Italian airwaves recently. “If a member of a club does not respect the rules,” he proclaimed, “it’s better than he leaves the club.”
Spain-Is Rajoy improvising?
Rajoy inherited Zapatero’s mess, but what is Rajoy’s plan to save Spain from the abyss? The day to day job seems to be concentrated around bringing the risk premium down, providing promises with regards to the banking sector, bringing down unemployment and much more. The real problem is,all of the above are actually going the totally opposite direction. Risk premium is spiking higher, the arguments “our banks are fine” are breached s few days later (Bankia needs more…) and the unemployment is breaking further into uncharted territory. Rajoy is trapped in a vicious circle, as the Spaniards are starting to lose their temper. From El Pais.
If there was ever a plan, there’s no trace of it left. All of the government’s forecasts have come up short. Just a few weeks ago Prime Minister Mariano Rajoy, of the Popular Party (PP), was promising that there would be no public money for the banks. But Bankia alone will now be receiving 23.5 billion euros in public funding to save it from disaster. That’s after Economy Minister Luis de Guindos said on Monday that the amount would be no more than seven billion. On Friday, Deputy Prime Minister Soraya Sáenz de Santamaría was calling it a loan. On Saturday, Bankia’s new chairman, José Ignacio Goirigolzarri, explained that it is a capital injection, not a loan. In other words, the state is investing in Bankia, and only if things go really well will it recover its money — that is to say, the taxpayers’ money.
Euro shorts at record levels
Suddenly the crowd is “all in” on the right trade?
Chart Scott Barber.
News That Matters
Ft.com
The technocratic government of Mario Monti has made significant progress towards overhauling Italy’s economy since it came to office last year, but has not done enough to combat tax evasion and the country’s sizeable black economy, an EU finding to be released this week has determined. The European Commission report, which is still in draft form and was obtained by the Financial Times before its publication on Wednesday, carries significant weight under new EU rules that give Brussels the right to fine and sanction eurozone countries that do not follow its recommendations.http://www.ft.com/intl/cms/s/0/960e4250-a7f2-11e1-b8a9-00144feabdc0.html#axzz1w8XyzKzt
In a country where wealth matters more than most – if only because of its extreme shortage – being a teacher once meant making a decent living. However, as salaries for corporates ector jobs have soared and those for professors have stagnated, the respect afforded to academics – and the subsequent desire of students to become them – seems to have done the same. A government panel said recently that India’s shortage of faculty staff could be “significantly higher” than the 40 per cent widely estimated. While the prestigious Indian Institutes of Management and Indian Institutes of Technology – which cater to less than 40,000 of India’s roughly 16m college students – are largely immune to the overall shortage, even they have come under fire for lacking top-quality professors.http://www.ft.com/intl/cms/s/2/6e5725ee-7cd0-11e1-9d8f-00144feab49a.html#axzz1w8XyzKzt
Newedge, a leading broker, is abandoning the Greek stock market in a sign of mounting concern over the country’s future in the eurozone. The broker has told clients that it will process only sell orders, and stop extending margin loans for existing positions in Greek securities, according to a memo obtained by the Financial Times. A list of securities subject to the new restrictions include foreign-listed shares and American depositary receipts for Greek companies including Alpha Bank, Coca-Cola Hellenic Bottling and Paragon Shipping, a New York-listed shipowner that is headquartered in Greece. http://www.ft.com/intl/cms/s/0/a2123114-a690-11e1-aef2-00144feabdc0.html#axzz1w8XyzKzt
The National Attack Authorization Act?
Guest post by Azizonomics.
We all know that the National Defense Authorization Act (NDAA) signed by President Obama on New Year’s Eve contained a now-struck-down provision to authorise the indefinite detention of American citizens on US soil.
But did you know that the NDAA also paves the way for war with Iran?
From Dennis Kucinich:
Section (6) rejects any United States policy that would rely on efforts to contain a nuclear weapons-capable Iran. Section (7) urges the President to reaffirm the unacceptability of an Iran with nuclear-weapons capability and opposition to any policy that would rely on containment as an option in response to Iranian enrichment.
This language represents a significant shift in U.S. policy and would guarantee that talks with Iran, currently scheduled for May 23, would fail. Current U.S. policy is that Iran cannot acquire nuclear weapons. Instead, H. Res. 568 draws the “redline” for military action at Iran achieving a nuclear weapons “capability,” a nebulous and undefined term that could include a civilian nuclear program. Indeed, it is likely that a negotiated deal to prevent a nuclear-armed Iran and to prevent war would provide for Iranian enrichment for peaceful purposes under the framework of the Non-Proliferation of Nuclear Weapons Treaty with strict safeguards and inspections. This language makes such a negotiated solution impossible.
At the same time, the language lowers the threshold for attacking Iran. Countries with nuclear weapons “capability” could include many other countries like Japan or Brazil. It is an unrealistic threshold.
The Former Chief of Staff of Secretary of State Colin Powell has stated that this resolution “reads like the same sheet of music that got us into the Iraq war.”
Europe Fighting the Wrong Battles Again with Dangerous Consequences
As we have been arguing for over a year, a Greek default is inevitable. The question is how to perform it. With the Troika, IMF, ECB, EFSF etc involved, things are rather complex. Peter Tchir gives some color on the subject.
Europe continues to fight the wrong battle, and continues to spread contagion risk.
It is clear that Greece has had a solvency issue now for over 2 years. The ECB and Troika chose to treat it as a liquidity problem. Maybe, they could have argued that in early 2010, but by the summer of 2011 it was obvious to any credit observer that the problem was solvency, yet they continued to treat it as one of liquidity. That is scary because if they feel to see the problem correctly now, they will fail miserably. Not only is the problem clearly solvency, but now forced currency conversion has been added to the mix. Any “solution” from the EU must now address that risk, and it is not the same as solvency. Programs that can protect against solvency may do nothing for the redenomination risk.
Not only did Europe fail to address the problems, but in spite of convincing themselves that all these programs prevented contagion risk, they actually ensured contagion risk. That contagion risk, that they forced on themselves is now coming back to haunt them, and must be carefully addressed in any policy “solutions”.
Two Years of Bad Policy Have Created a Situation Like No Other
There is a lot of talk about what a Greek exit would or wouldn’t look like. People are comparing it to other defaults and currency devaluations. They are wrong. Greece is now unique in that almost all of the debt is owed to institutions that normally step in after devaluation. Greece is also unique in that it is leaving a currency union that is already fragile, and being the first to leave will open the floodgate of speculation as to what other countries will leave.
The Eastern gates of Europe at Risk?
Guest post by one of our readers, Greg.
Α country in the outmost Southeastern part of the EU has grasped the headlines for quite some time. With only 2% of the EU’s economy and just 2.5% of its debt it became the “Witch” that is haunted by puritan Northern Europeans. It is claimed as the epicenter of laziness, lust and unproductively for the whole of the Continent, a bad example that pious Northerns should be feared and loath at the same time.
This country is Greece and it must be punished! But is it really the witch hunt that has started in 2009 the most stupid move ever made in the entire European history? Is it worth to blame Greeks for the lonely dark winters up in the North and for the depression syndrome that cripples the lives of dozens of millions northern Europeans, as if Greece makes the weather?
In reality the Northern Europeans risk of pushing Greece into the broader global community where it is going to be free from investing heavily in its defense of the Eastern gates of Europe and it will bring about the greatest change in the balance of powers that Europe has felt since the collapse of the Berlin war. This time Germany will not be re-united, rather it will has to pay a dear price for its energy security. Netherlands will not become richer; rather it will have to pay from its own pocket in order to save itself from the flood of narcotics and Asian immigrants.
Austria will not be greater, rather it will have to deal with powder-keg named “Balkans” that has markets Vienna’s history.
How Northern Europe shoot its leg, in order to satisfy the populist sentiments of an electorate being used to the fairy tales of “bad witches and pious farmers”.
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