Monday, May 28, 2012
I guess I?m nuts: I bought no tickets for the $640M lottery
No doubt there are three highly ecstatic people in this country: the three people who chose the magic numbers on the record-breaking $640 million Mega Millions lottery.� Let’s hope that they haven’t gone through all of the money within the next few years, as they’re likely to do.� (The US Government, of course, will burn [...]
Sunday, May 27, 2012
"ECB Will be Insolvent and Costs May Exceed 1 Trillion Euros" Says IIF Director; If the ECB Prints, Would Germany Exit the Euro?
According to IIF director Charles Dallara in a Bloomberg interview, "ECB will be insolvent if Greece were to exit the euro. Europe would have to first and foremost recapitalize its central bank."
Excuse me for asking but how would they attempt to do that? Print Euros?
Please consider Dallara Says Greek Euro Exit May Exceed 1 Trillion Euros
Since it is perfectly clear that Spain is an untenable situation, and since it is equally clear that unification is not going to happen and would not solve numerous problems, one has to wonder about the rest of his analysis as well.
However, Dallara's statements regarding ECB exposure to Greek liabilities rings true, so let's assume the trillion+ euro figure is correct.
Just where is Europe to get that?
Greece Exit Manageable?
One needs to balance Dallara's statements with statements from Germany that a Greece exit is manageable. For example The Telegraph reports Bundesbank says Greek euro exit would be 'manageable'
Bloomberg reports Greek Euro Exit ?Manageable? for Markets, BdB German Banks Say
The question is: who is bluffing whom or do they all believe these contradictory statements?
In response to What if Tsipras is Not Bluffing? Who Holds the Upper hand? What is Troika's Biggest Fear? Can Greece Possibly Stay in the Eurozone After Default? my friend Pater Tenebrarum pinged me via email with this set of statements.
Whether they are or are not right about this, the Germans now believe that the euro area can survive a Greek exit. Tsipras can really threaten them with nothing. It's a miscalculation, he underestimates how desperate the political mood in Germany and elsewhere has become.
If Tsipras goes through with his threat, Greece will be cut off from ELA and TARGET-2 and that will be that. Check my Catch 22 Revisited post.
The Germans have had enough, and so have many others - primarily Portugal and Ireland, who are furious that the Greeks are threatening to drag them down with them.
The chances of Greece getting kicked out have risen to 85% in my opinion.
Desperate Political Mood
Perhaps Germany misunderstands the desperate political mood in Greece. More importantly, given the politically charged emotions, does anyone understand anything or is it all a pack of lies and suppositions everywhere?
If the ECB Prints, Would Germany Exit the Euro?
If Tsipras wins the June 17th election (I think it is a 60+% chance) then if the ECB would be made insolvent as Dallara suggests, what would Germany do? What would the ECB to do?
If the ECB prints, would Germany leave?
Thus it is not so simple as to say "Germans have had enough" given that Mario Draghi sits as ECB president. Would Germany exit the euro if Draghi takes a course of action Germany does not agree with?
Those are the questions at hand now. Clearly the questions have escalated in significance.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Excuse me for asking but how would they attempt to do that? Print Euros?
Please consider Dallara Says Greek Euro Exit May Exceed 1 Trillion Euros
The cost of Greece exiting the euro would be unmanageable and probably exceed the 1 trillion euros ($1.25 trillion) previously estimated by the Institute of International Finance, the group?s managing director said.Suspect Thinking or Purposeful Fear-mongering?
The Washington-based IIF?s projection from earlier this year is ?a bit dated now? and ?probably on the low side,? Charles Dallara said in an interview in Rome today. ?Those who think that Europe, and more broadly the global economy, are really prepared for a Greek exit should think again.?
The European Central Bank?s exposure to Greek liabilities is more than twice as big as the ECB?s capital, said Dallara, who represented banks in their negotiations with the Greek government on its debt restructuring. As a result, he predicted the bank would be unable to provide liquidity and stabilize the euro-area financial sector.
?The ECB will be insolvent? if Greece were to exit the euro, Dallara said. ?Europe would have to first and foremost recapitalize its central bank.?
In February, the IIF estimated that Greece?s liabilities, in the event of a euro exit, could be crippling. ?It is hard to see how they would not exceed 1 trillion euros,? the group said in an internal Feb. 18 report that hasn?t been made public.
It?s not clear whether Spain will need a bailout as it seeks to help its banks weather the euro crisis, he said.
?The only way to help markets see past that obscurity is to remove the cloud of uncertainties of national fiscal position and move toward unification,? Dallara said.
Since it is perfectly clear that Spain is an untenable situation, and since it is equally clear that unification is not going to happen and would not solve numerous problems, one has to wonder about the rest of his analysis as well.
However, Dallara's statements regarding ECB exposure to Greek liabilities rings true, so let's assume the trillion+ euro figure is correct.
Just where is Europe to get that?
Greece Exit Manageable?
One needs to balance Dallara's statements with statements from Germany that a Greece exit is manageable. For example The Telegraph reports Bundesbank says Greek euro exit would be 'manageable'
The impact of a Greek exit from the eurozone would be substantial but "manageable", Germany's Bundesbank said, raising pressure on Athens to keep its painful economic reforms on track.Counterbluff?
Echoing German political leaders, the Bundesbank warned against Europe easing the conditions for Greece to access aid.
"Attempting to kick-start the economy in the short term and putting off consolidation efforts in the long term are not conducive to regaining lost confidence."
Bloomberg reports Greek Euro Exit ?Manageable? for Markets, BdB German Banks Say
A German banking association that represents Deutsche Bank AG (DBK), Commerzbank AG (CBK) and more than 200 other lenders said investors are prepared should Greece leave the euro area.Priced In? Who is Bluffing Whom?
?It would be manageable for markets,? Andreas Schmitz, president of the BdB Association of German Banks told reporters in Frankfurt yesterday. ?The risks have largely been priced in. A Greek exit would bring lower risks than two years ago but is not to be underestimated.?
The question is: who is bluffing whom or do they all believe these contradictory statements?
In response to What if Tsipras is Not Bluffing? Who Holds the Upper hand? What is Troika's Biggest Fear? Can Greece Possibly Stay in the Eurozone After Default? my friend Pater Tenebrarum pinged me via email with this set of statements.
Whether they are or are not right about this, the Germans now believe that the euro area can survive a Greek exit. Tsipras can really threaten them with nothing. It's a miscalculation, he underestimates how desperate the political mood in Germany and elsewhere has become.
If Tsipras goes through with his threat, Greece will be cut off from ELA and TARGET-2 and that will be that. Check my Catch 22 Revisited post.
The Germans have had enough, and so have many others - primarily Portugal and Ireland, who are furious that the Greeks are threatening to drag them down with them.
The chances of Greece getting kicked out have risen to 85% in my opinion.
Desperate Political Mood
Perhaps Germany misunderstands the desperate political mood in Greece. More importantly, given the politically charged emotions, does anyone understand anything or is it all a pack of lies and suppositions everywhere?
If the ECB Prints, Would Germany Exit the Euro?
If Tsipras wins the June 17th election (I think it is a 60+% chance) then if the ECB would be made insolvent as Dallara suggests, what would Germany do? What would the ECB to do?
If the ECB prints, would Germany leave?
Thus it is not so simple as to say "Germans have had enough" given that Mario Draghi sits as ECB president. Would Germany exit the euro if Draghi takes a course of action Germany does not agree with?
Those are the questions at hand now. Clearly the questions have escalated in significance.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Time is not money
I’m sure you’ve heard the expression “time is money.” Time is related to money, for sure: People exchange their time for money at their jobs. People choose to pay others to do tasks that will take time away from something they’d rather be doing. People take time to make lunches, change their own oil, mow [...]
Policies for Economic Growth
A discussion of policies that can be used to promote economic growth (increase real GDP). Essentially policies to increase economic growth involve either an increase in aggregate demand or aggregate supply. Demand side policies become important during a recession or period of economic stagnation. Supply side policies are important for determining long run growth in [...]
Sales Performance Management Market Heats Up
For many organizations sales performance management (SPM) means customer relationship management (CRM). Others simply ignore SPM, offering little in the way of sales productivity beyond basic contact management tools. Ventana Research, however, insists that SPM systems can help the organization understand how to get full value from the talent of its sales force. [...]
Cash Crunch Hits Greece, Government Stops Paying Pharmacies, In Turn Pharmacies Make Patients Pay Full Cost
The Troika wants Greece to make another cut in health-care spending including drugs. However, the government is already not paying pharmacies. In turn pharmacies demand 100% payment or patients do not get drugs.
Please consider Greeks pay full price for medicines
Greece is going to miss its next budget targets and in response will have to hike taxes or cut more spending. More tax hikes will mean more business failures and still lower revenues.
Just what does it take for the idiots in Brussels to see that Greece is insolvent and the current plan to extract more blood from turnips cannot possibly ever work?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Please consider Greeks pay full price for medicines
Millions of Greeks are being forced to pay full price for essential medicines because the state health system has run out of cash to pay pharmacies for supplying prescriptions, health officials said on Wednesday.More Blood From Turnips
Pharmacy owners staged a 24-hour nationwide strike to press the government to start paying arrears of ?250m for prescriptions issued in March and April after last-minute talks on Tuesday between Panagiotis Pikrammenos, the prime minister, and union officials broke down.
The dispute highlights Greece?s mounting cash flow problems amid recent political turmoil. While the finance ministry achieved spending targets agreed with international lenders, social insurance funds used up half their annual budget allocations in the first four months, according to official figures.
?There is a cash crunch. ? The state has stopped funding [the National Organisation for Health Care Provision] EOPPY, and they have stopped paying us,? said an official from the PanHellenic Pharmaceutical Association. ?We cannot continue to subsidise the health service out of our pockets.?
The move to make patients pay the full cost of prescription medicines started last month when state payments were suspended as Greece headed for elections. Pharmacies are owed a total of ?520m by EOPPY and other social insurance funds for prescriptions supplied in the past year, the same official said.
Patients who previously paid prescription charges of between 10 and 25 per cent are now having to pay the full price for medicines, including those used to treat cancer and heart conditions, and seek refunds from social insurance funds that are members of EOPPY.
Greece is going to miss its next budget targets and in response will have to hike taxes or cut more spending. More tax hikes will mean more business failures and still lower revenues.
Just what does it take for the idiots in Brussels to see that Greece is insolvent and the current plan to extract more blood from turnips cannot possibly ever work?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Discrimination or Prudent Hiring Practice?
Many employers will not consider applicants who have been unemployed for long periods of time. This has always been the case of course, but in the boom years with unemployment rates at rock bottom, there was good reason to be wary of anybody who hadn't managed to keep or get a job for years on end.
Now that unemployment rates have been hovering just under 10% for the third year in a row, though, more and more "normal" people are finding themselves out of work for months, even years. Still, employers seek to fill positions with those who already have jobs most of the time - or at least with those who haven't been unemployed for long.
Millions of disgruntled unemployed would-be workers are now crying "discrimination," and more than a few states have now introduced legislation to try to curb the most blatant displays of this hiring bias. Specifically, the new laws are designed to prohibit employers from openly discriminating against the unemployed in help-wanted ads or in direct hiring or in screenings by employment agencies.
Unemployed people aren't a federally protected group like homosexuals or those with disabilities; therefore the laws can't prevent employers from refusing to hire somebody who has been unemployed for X number of months. However lawmakers don't want employers openly advertising the fact that they won't consider those applicants, for some reason. That seems kind of pointless to me since those companies are likely to continue not to hire employees for whatever reason they want.
Do you think it's a bad thing that some companies are refusing to consider applicants with more than 6 or 12 months of an employment gap? Recruiters are arguing that they are plagued with thousands of applications for every opening and have to narrow the field somehow. Isn't that just as good of a metric to use as anything on a resume? Or do you think it's wrong in this economy to evaluate people based on their work history (or lack thereof)?
Now that unemployment rates have been hovering just under 10% for the third year in a row, though, more and more "normal" people are finding themselves out of work for months, even years. Still, employers seek to fill positions with those who already have jobs most of the time - or at least with those who haven't been unemployed for long.
Millions of disgruntled unemployed would-be workers are now crying "discrimination," and more than a few states have now introduced legislation to try to curb the most blatant displays of this hiring bias. Specifically, the new laws are designed to prohibit employers from openly discriminating against the unemployed in help-wanted ads or in direct hiring or in screenings by employment agencies.
Unemployed people aren't a federally protected group like homosexuals or those with disabilities; therefore the laws can't prevent employers from refusing to hire somebody who has been unemployed for X number of months. However lawmakers don't want employers openly advertising the fact that they won't consider those applicants, for some reason. That seems kind of pointless to me since those companies are likely to continue not to hire employees for whatever reason they want.
Do you think it's a bad thing that some companies are refusing to consider applicants with more than 6 or 12 months of an employment gap? Recruiters are arguing that they are plagued with thousands of applications for every opening and have to narrow the field somehow. Isn't that just as good of a metric to use as anything on a resume? Or do you think it's wrong in this economy to evaluate people based on their work history (or lack thereof)?
Pay off credit cards first, or pay off student loan first?
One of my Yakezie friends Fiscal Phoenix got some advice from a financial planner about paying off debt.� The choice was between paying down student loans and paying down credit cards.� The credit cards had a lower average balance and a higher average interest rate than the student loans.� Given these pieces of information, it [...]
Eurozone PMI Disaster - Worst Downturn Since Mid-2009, Manufacturing and Composite at 35-Month Low; Expect Numerous GDP Downgrades, Missed Budget Targets
Markit Reports Eurozone PMI Suffers Worst Downturn Since Mid-2009
Europe is in a full-blown recession and for the first time in about a year we did not see any Pollyanna comments from Markit economists.
Perhaps the news has sunk in that as I have repeatedly said, this recession will be long and deep and Germany would not escape.
Expect Numerous GDP Downgrades, Missed Budget Targets
All GDP estimates from the Eurozone to-date have been pure bunk. Expect numerous downgrades after this disastrous report. If countries are to meet debt-to-GDP targets still more austerity measures will be forthcoming which will mean more layoffs, higher unemployment, and lower revenues.
In short, Spain, France, Italy will find it impossible to meet budget targets as the recession picks up steam.
Containment Theory Blows Sky High
For a look at just released PMI reports from Germany and France, please see Containment Theory Blows Sky High: German Manufacturing PMI Plunges to 45; French Manufacturing PMI Plunges to 44.4, Sharpest Contraction in 3 Years
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Flash Eurozone PMIFull-Blown Recession
- Composite Output Index at 45.9 (46.7 in April). 35-month low.
- Flash Eurozone Services PMI Activity Index at 46.5 (46.9 in April). 7-month low.
- Flash Eurozone Manufacturing PMI at 45.0 (45.9 in April). 35-month low.
- Flash Eurozone Manufacturing PMI Output Indexat 44.7 (46.1 in April). 35-month low.
The Markit Eurozone PMI� Composite Output Index fell to a near three-year low in May, according to the preliminary ?flash? reading which is based on around 85% of usual monthly replies. The index fell for the fourth month in a row to 45.9, down from 46.7 in April, to signal the fastest rate of decline of private sector economic activity since June 2009. Output has fallen eight times in the past nine months
Activity fell at the fastest rates for seven months in services (and the second-fastest in 34 months), while manufacturing production dropped at the steepest rate since June 2009. The goods-producing sector posted the stronger overall rate of contraction.
Incoming new business in the Eurozone private sector declined for the tenth successive month in May. Moreover, the pace of contraction was the fastest over this sequence, and the strongest since June 2009. Manufacturers continued to post a steeper drop in new orders than their service sector counterparts. France posted a steeper drop in new business than Germany, while the rest of the Eurozone continued to see a stronger average rate of decline than the ?big-two?.
Reflective of the sustained fall in new workloads, private sector firms in the Eurozone continued to post declining outstanding business mid-way through Q2. The rate of decline was little-changed from April?s 33-month record. By sector, manufacturing and services registered broadly similar rates of contraction. The ?big-two? both posted weaker falls in backlogs than the rest of the Eurozone.
Private sector employment in the Eurozone declined for the fifth successive month in May. The rate of job shedding was close to April?s 26-month record, but modest overall. This reflected a return to workforce growth in Germany, albeit at a marginal rate. Jobs were cut for the third month running in France, and for the twelfth consecutive month outside the ?big-two? on average.
Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said: ?The flash PMI indicated that the Eurozone downturn gathered further momentum in May, with business activity and new orders both falling at the fastest rates for just under three years. ?The survey is broadly consistent with gross domestic product falling by at least 0.5% across the region in the second quarter, as an increasingly steep downturn in the periphery infects both France and Germany.
Europe is in a full-blown recession and for the first time in about a year we did not see any Pollyanna comments from Markit economists.
Perhaps the news has sunk in that as I have repeatedly said, this recession will be long and deep and Germany would not escape.
Expect Numerous GDP Downgrades, Missed Budget Targets
All GDP estimates from the Eurozone to-date have been pure bunk. Expect numerous downgrades after this disastrous report. If countries are to meet debt-to-GDP targets still more austerity measures will be forthcoming which will mean more layoffs, higher unemployment, and lower revenues.
In short, Spain, France, Italy will find it impossible to meet budget targets as the recession picks up steam.
Containment Theory Blows Sky High
For a look at just released PMI reports from Germany and France, please see Containment Theory Blows Sky High: German Manufacturing PMI Plunges to 45; French Manufacturing PMI Plunges to 44.4, Sharpest Contraction in 3 Years
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Saturday, May 26, 2012
Forecasters Flying Blind When Predicting Repercussions of Greek Exit
Economic computer models typically depend on the past to forecast the future. The possibility of Greece leaving the euro zone is an exception to the rule because no nation has exited before.
What Happens if Greece Leaves the Euro?
The BBC have this infographic about what happens if Greece leaves the Euro. Source: BBC But, when I look at this. Everything has already happened. Greece is already in recession. It has been in recession for past 5 years. Greece already has bank runs. Multinationals are not keeping money in Greek banks Due to unemployment [...]
18 Signs That The Banking Crisis In Europe Has Just Gone From Bad To Worse
With each passing day, the banking crisis in Europe escalates.� European banks are having their credit ratings downgraded in waves, bond yields are soaring and billions of euros are being pulled out of banks all across the eurozone.� The situation in Europe is rapidly going from bad to worse.� It is almost like watching air [...]
Whose Goodwill Is It?
The IRS takes a dim view of transactions where the claim of a personal goodwill sale produces a tax result too good to be true.
Increasing numbers of baby boomers will be looking to retire in the near future. This includes entrepreneurs who have developed successful businesses or professional practices. Many of them will pass their [...]
Increasing numbers of baby boomers will be looking to retire in the near future. This includes entrepreneurs who have developed successful businesses or professional practices. Many of them will pass their [...]
kredyt hipoteczny najtanszy kredyt hipoteczny kredyt budowlany
Futures Lower (Superstock Investor Market Matters)
US futures (S&P -3.00, DJI -25, NDX -6.00) Asia higher with Europe mixed. Copper and gold lower with WTI Crude Futures lower. $ is higher vs euro, higher vs. pound and higher vs. yen. US ten-year Treasury Yield -.005.
How Much Do You Pay for Birth Control?
There have been a lot of headlines swirling lately about the cost of birth control, government regulation, and whether employers and/or insurance companies should foot the entire bill for contraceptions like they do for annual physicals or other preventative care.
For the record, I don't think that insurance or anybody else should have to pay for something medical or cosmetic that I elect to do. Insurance should be purchased for things that we do not expect to encounter, like a brain tumor or broken bone. However, insurance companies and the government have taken it upon themselves to act a lot more like healthcare providers than insurers, and they now cover all manner of elective drugs, treatments and "diseases" along with lots of preventative care items like annual physicals and screenings. So as long as they are covering viagra I don't see why covering birth control is controversial - especially since it would save everybody a lot of money to have fewer unwanted babies in the system.
Anyway, this article addresses the issue and asks the question: What Does Birth Control Really Cost Anyway?
I thought it was interesting and never realized there was so much variety. I used to get my Yasmin for free because my old insurance plan was Consumer Driven and covered $750 in care before the deductible and copays kicked in (annual physicals were free and not included in the $750). Since I never used up that money I never got to where I paid for my prescription. But when I was uninsured for a month my Yasmin cost me $100 for a 28 day pill pack. Now that I'm on my new insurance plan I pay $60 a month for it - the full rate negotiated by the insurer.
I contribute to a health savings account at work so that I can use pre-tax dollars for my medical costs, so effectively I'm now paying around $45 for my birth control. For the record Yasmin is not a generic brand and so I pay top dollar.
What do you pay?
For the record, I don't think that insurance or anybody else should have to pay for something medical or cosmetic that I elect to do. Insurance should be purchased for things that we do not expect to encounter, like a brain tumor or broken bone. However, insurance companies and the government have taken it upon themselves to act a lot more like healthcare providers than insurers, and they now cover all manner of elective drugs, treatments and "diseases" along with lots of preventative care items like annual physicals and screenings. So as long as they are covering viagra I don't see why covering birth control is controversial - especially since it would save everybody a lot of money to have fewer unwanted babies in the system.
Anyway, this article addresses the issue and asks the question: What Does Birth Control Really Cost Anyway?
I thought it was interesting and never realized there was so much variety. I used to get my Yasmin for free because my old insurance plan was Consumer Driven and covered $750 in care before the deductible and copays kicked in (annual physicals were free and not included in the $750). Since I never used up that money I never got to where I paid for my prescription. But when I was uninsured for a month my Yasmin cost me $100 for a 28 day pill pack. Now that I'm on my new insurance plan I pay $60 a month for it - the full rate negotiated by the insurer.
I contribute to a health savings account at work so that I can use pre-tax dollars for my medical costs, so effectively I'm now paying around $45 for my birth control. For the record Yasmin is not a generic brand and so I pay top dollar.
What do you pay?
kredyt hipoteczny pko najtanszy kredyt gotówkowy kredyt gotówkowy kalkulator
Spanish Bad-Loans Ratio at 8.37 Percent, a 17-Year High; CDS at Record High; Bankia Suffers Huge Losses Purchasing 15.5 Million Its Own Shares to Stabilize Price; Spain Hires Goldman Sachs to Value Bankia
It's time for another roundup on Spain. Every day is time for another roundup on Spain. Today's report is on bad loans, and complete foolishness at Bankia buying its own shares hoping to stabilize its price.
Spanish Bad-Loans Ratio Hits 8.37 Percent
The Wall Street Journal reports Spanish Bad-Loans Ratio Hits 17-Year High
For the "oops" file, courtesy of Google translate please note Bankia bought 15.5 million shares to try to stop its collapse
Today's rally looks pretty good but here is a little perspective on Bankia Share Prices.
Union Silliness
For the "where there's public unions, there's stupidity file" Unions urge Employees to buy shares in Bankia to prevent the collapse of the price.
Meanwhile, Bankia bleeds cash and will not respond to questions.
El Economista reports Bankia has lost 1 billion euros in deposits in one week.
Please consider Spain Hires Goldman Sachs to Value Bankia
We will find out soon enough because no one can possibly determine "Bankia is a solvent entity". In fact, the entire Spanish banking system is clearly insolvent.
Here's the question of the day: Is there any reason Bankia shares will not or should not trade for pennies at some time in the near future?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Spanish Bad-Loans Ratio Hits 8.37 Percent
The Wall Street Journal reports Spanish Bad-Loans Ratio Hits 17-Year High
Bad debts held by Spanish banks rose to a 17-year high in March and the cost of insuring the debt of two major Spanish banks against default hit a record Friday a day after the sector was hit by a downgrade, underscoring the continuing challenges posed by the country's five-year property slump.Bankia Suffers Huge Losses Purchasing 15.5 Million Its Own Shares
The central bank said that 8.37% of the loans held by banks, or ?147.97 billion ($188 billion), were more than three months overdue for repayment in March, up from 8.3% in February and the highest since September 1994. The total number of non-performing loans is now almost 10 times higher than the level reported in 2007, just as Spain's decade-high property boom peaked.
The rapid deterioration of the loan books was one of four reasons cited by Moody's Investors Service for its downgrade of the credit ratings of Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA and 14 other banks in the country late Thursday.
"Moody's announcement will increase speculation that the Iberian state will be forced to ask for external support in order to effectively tackle its banking crisis," said interest rates strategists at Lloyds Bank WBM.
At 0956 GMT, Spain's IBEX-35 blue-chip index was up 0.5%, following a negative start. Bankia's shares gained 19% after they fell 14% Thursday and had suffered 10 straight days of declines, while those of other banks including also bounced after deep losses earlier in the week.
For the "oops" file, courtesy of Google translate please note Bankia bought 15.5 million shares to try to stop its collapse
May 17, 2012Bankia Share Prices
Bankia tried unsuccessfully to halt the collapse of its stock market price in the days when the crisis broke out of the entity. The bank bought 15.55 million of shares for 33,250,000 euros between 7 and 10 May, as has been reported to the National Securities Market. The result now is that accumulates heavy losses on these securities, which subtracts capital at a time when the bank is in need of them.
In the previous 30 days, Bankia just had bought just over 5 million shares, according to El Confidential, which was published this morning purchases of shares of the entity.
Bankia has failed in the attempt to halt the collapse, which today continues to fall that have become over 17% to 1.37 euros per share. At these prices, only purchases made ??during those four days, Bankia suffer losses of about 12 million euros.
But the losses are even greater in the previously performed operations to try to sustain the price at which the entity has accumulated treasury of 86.124 million shares, 4.319% of its own capital. In total, the bank has more than 100 million in losses to the treasury share transactions.
Today's rally looks pretty good but here is a little perspective on Bankia Share Prices.
Union Silliness
For the "where there's public unions, there's stupidity file" Unions urge Employees to buy shares in Bankia to prevent the collapse of the price.
Bankia unions urge their employees and clients to buy shares in the company to prevent the collapse of its stock market price and help ensure its future, according to a statement of the Boards and Professional Association (CACAM).Bankia Bleeds Cash
Under the slogan 'I buy Bankia. Do you? Are we united? ', These professionals Bankia broadcast a statement following an email I have received, the undersigned, with whom they want to send a message of confidence in the project entity.
Meanwhile, Bankia bleeds cash and will not respond to questions.
El Economista reports Bankia has lost 1 billion euros in deposits in one week.
Bankia customers have withdrawn deposits worth over 1,000 million euros since the government announced its intervention last week, according to data presented suggest the board meeting yesterday.Goldman Sachs Hired to Value Bankia
On Wednesday, Bankia not respond to Reuters requests asking whether there were bank runs Thursday and no one has commented on the information published by the newspaper El Mundo in its paper edition.
Please consider Spain Hires Goldman Sachs to Value Bankia
The Spanish government has hired Goldman Sachs to carry out an independent valuation of Bankia, the ailing bank taken over by the state last week, Spanish newspaper Expansion said on Friday.Is this one of those deals where a consultant is hired to give give a predetermined opinion?
The U.S. bank will review Bankia's and its parent company BFA's books and determine within a month how much the state should inject to refloat the lender, which had to be rescued after its auditor, Deloitte, identified several gaps in last year's accounts.
Expansion said without citing sources that Bankia's financial hole may reach 8 billion euros on top of the 10 billion euros it needs to set aside to cover potential losses on real estate assets, as required by two financial reforms passed by the government in February and last week.
We will find out soon enough because no one can possibly determine "Bankia is a solvent entity". In fact, the entire Spanish banking system is clearly insolvent.
Here's the question of the day: Is there any reason Bankia shares will not or should not trade for pennies at some time in the near future?
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Discrimination or Prudent Hiring Practice?
Many employers will not consider applicants who have been unemployed for long periods of time. This has always been the case of course, but in the boom years with unemployment rates at rock bottom, there was good reason to be wary of anybody who hadn't managed to keep or get a job for years on end.
Now that unemployment rates have been hovering just under 10% for the third year in a row, though, more and more "normal" people are finding themselves out of work for months, even years. Still, employers seek to fill positions with those who already have jobs most of the time - or at least with those who haven't been unemployed for long.
Millions of disgruntled unemployed would-be workers are now crying "discrimination," and more than a few states have now introduced legislation to try to curb the most blatant displays of this hiring bias. Specifically, the new laws are designed to prohibit employers from openly discriminating against the unemployed in help-wanted ads or in direct hiring or in screenings by employment agencies.
Unemployed people aren't a federally protected group like homosexuals or those with disabilities; therefore the laws can't prevent employers from refusing to hire somebody who has been unemployed for X number of months. However lawmakers don't want employers openly advertising the fact that they won't consider those applicants, for some reason. That seems kind of pointless to me since those companies are likely to continue not to hire employees for whatever reason they want.
Do you think it's a bad thing that some companies are refusing to consider applicants with more than 6 or 12 months of an employment gap? Recruiters are arguing that they are plagued with thousands of applications for every opening and have to narrow the field somehow. Isn't that just as good of a metric to use as anything on a resume? Or do you think it's wrong in this economy to evaluate people based on their work history (or lack thereof)?
Now that unemployment rates have been hovering just under 10% for the third year in a row, though, more and more "normal" people are finding themselves out of work for months, even years. Still, employers seek to fill positions with those who already have jobs most of the time - or at least with those who haven't been unemployed for long.
Millions of disgruntled unemployed would-be workers are now crying "discrimination," and more than a few states have now introduced legislation to try to curb the most blatant displays of this hiring bias. Specifically, the new laws are designed to prohibit employers from openly discriminating against the unemployed in help-wanted ads or in direct hiring or in screenings by employment agencies.
Unemployed people aren't a federally protected group like homosexuals or those with disabilities; therefore the laws can't prevent employers from refusing to hire somebody who has been unemployed for X number of months. However lawmakers don't want employers openly advertising the fact that they won't consider those applicants, for some reason. That seems kind of pointless to me since those companies are likely to continue not to hire employees for whatever reason they want.
Do you think it's a bad thing that some companies are refusing to consider applicants with more than 6 or 12 months of an employment gap? Recruiters are arguing that they are plagued with thousands of applications for every opening and have to narrow the field somehow. Isn't that just as good of a metric to use as anything on a resume? Or do you think it's wrong in this economy to evaluate people based on their work history (or lack thereof)?
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Friday, May 25, 2012
Recession Deeper than Expected
UK GDP growth was downgraded to -0.3% in Q1. With concerns over Greek exit and slowdown in Eurozone, this bodes ill for future recovery prospects. It is ironic that amidst all the talk of austerity, the ONS state. “The decline would have been steeper were it not for a 1.6pc quarterly rise in government spending, [...]
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Tips to Enhance Your Curb Appeal
You only get once shot to make a good first impression and that includes the exterior of your home. Here are some tips from home stagers and curb appeal experts on how to best showcase your home.
Could The French Elections Be A Good Thing? (Articles That Matter)
Will austerity lose out to growth?
kredyt konsolidacyjny hipoteczny kredyt firmowy kredyt bez poreczycieli
Recession Deeper than Expected
UK GDP growth was downgraded to -0.3% in Q1. With concerns over Greek exit and slowdown in Eurozone, this bodes ill for future recovery prospects. It is ironic that amidst all the talk of austerity, the ONS state. “The decline would have been steeper were it not for a 1.6pc quarterly rise in government spending, [...]
Tips to Enhance Your Curb Appeal
You only get once shot to make a good first impression and that includes the exterior of your home. Here are some tips from home stagers and curb appeal experts on how to best showcase your home.
How Much Do You Pay for Birth Control?
There have been a lot of headlines swirling lately about the cost of birth control, government regulation, and whether employers and/or insurance companies should foot the entire bill for contraceptions like they do for annual physicals or other preventative care.
For the record, I don't think that insurance or anybody else should have to pay for something medical or cosmetic that I elect to do. Insurance should be purchased for things that we do not expect to encounter, like a brain tumor or broken bone. However, insurance companies and the government have taken it upon themselves to act a lot more like healthcare providers than insurers, and they now cover all manner of elective drugs, treatments and "diseases" along with lots of preventative care items like annual physicals and screenings. So as long as they are covering viagra I don't see why covering birth control is controversial - especially since it would save everybody a lot of money to have fewer unwanted babies in the system.
Anyway, this article addresses the issue and asks the question: What Does Birth Control Really Cost Anyway?
I thought it was interesting and never realized there was so much variety. I used to get my Yasmin for free because my old insurance plan was Consumer Driven and covered $750 in care before the deductible and copays kicked in (annual physicals were free and not included in the $750). Since I never used up that money I never got to where I paid for my prescription. But when I was uninsured for a month my Yasmin cost me $100 for a 28 day pill pack. Now that I'm on my new insurance plan I pay $60 a month for it - the full rate negotiated by the insurer.
I contribute to a health savings account at work so that I can use pre-tax dollars for my medical costs, so effectively I'm now paying around $45 for my birth control. For the record Yasmin is not a generic brand and so I pay top dollar.
What do you pay?
For the record, I don't think that insurance or anybody else should have to pay for something medical or cosmetic that I elect to do. Insurance should be purchased for things that we do not expect to encounter, like a brain tumor or broken bone. However, insurance companies and the government have taken it upon themselves to act a lot more like healthcare providers than insurers, and they now cover all manner of elective drugs, treatments and "diseases" along with lots of preventative care items like annual physicals and screenings. So as long as they are covering viagra I don't see why covering birth control is controversial - especially since it would save everybody a lot of money to have fewer unwanted babies in the system.
Anyway, this article addresses the issue and asks the question: What Does Birth Control Really Cost Anyway?
I thought it was interesting and never realized there was so much variety. I used to get my Yasmin for free because my old insurance plan was Consumer Driven and covered $750 in care before the deductible and copays kicked in (annual physicals were free and not included in the $750). Since I never used up that money I never got to where I paid for my prescription. But when I was uninsured for a month my Yasmin cost me $100 for a 28 day pill pack. Now that I'm on my new insurance plan I pay $60 a month for it - the full rate negotiated by the insurer.
I contribute to a health savings account at work so that I can use pre-tax dollars for my medical costs, so effectively I'm now paying around $45 for my birth control. For the record Yasmin is not a generic brand and so I pay top dollar.
What do you pay?
Flight to Safety: German 2-Year Bonds Yield Hits Zero; Eurozone Officials Tell Countries to Prepare for Greece Exit
The once taboo subject of a Greek departure from the eurozone cracked in the past couple of weeks, primarily with threats to Greece.
Today the exit discussion dam broke wide open as Eurozone tells members to make contingencies for "Grexit"
Dutch Prime Minister Mark Rutte said "The hard truth is that there are no magic solutions to solving this crisis. We will all have to keep our spending in check, pay off our debts and swiftly introduce healthy reforms. This is what will kickstart growth."
The one major thing missing is that bondholders, not taxpayers need to take a substantial hit. Only after equity holders and bondholders are 100% wiped out should any public funds come into play.
Addendum:
Reader Donn replies "public pensioners should take a haircut before taxpayers in general", an idea of considerable merit.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Today the exit discussion dam broke wide open as Eurozone tells members to make contingencies for "Grexit"
Euro zone officials have told members of the currency area to prepare contingency plans in case Greece decides to quit the bloc, an eventuality which Germany's central bank said would be "manageable".Here is one for the surprising candor and honesty department:
Three officials told Reuters that the instruction was agreed on Monday by a teleconference of the Eurogroup Working Group (EWG) - experts who work on behalf of the bloc's finance ministers.
"The EWG agreed that each euro zone country should prepare a contingency plan, individually, for the potential consequences of a Greek exit from the euro," said one euro zone official familiar with what was discussed.
For the first time in more than two years of debt-crisis meetings, the leaders of France and Germany have not huddled beforehand to agree positions, marking a significant shift in the Franco-German axis which has traditionally driven European policymaking.
Instead, new French President Francois Hollande met Spanish Prime Minister Mariano Rajoy in Paris to discuss policy, before the pair travel to Brussels for the 1800 GMT summit.
A German two-year debt auction gave a stark illustration of how money is dashing for safe havens. Investors snapped up the 4.5 billion euros of paper on offer even though it came with a zero coupon - offering no return at all.
One proposal on the table is for the euro zone's rescue funds to be allowed to recapitalize banks directly, rather than having to lend to countries for on-lending to the banks.
But that is another idea with which Germany is uncomfortable, even though Merkel said on Tuesday a way should be found to dismantle banks across borders, a possible nod to a pan-euro-zone bank restructuring scheme
Dutch Prime Minister Mark Rutte said "The hard truth is that there are no magic solutions to solving this crisis. We will all have to keep our spending in check, pay off our debts and swiftly introduce healthy reforms. This is what will kickstart growth."
The one major thing missing is that bondholders, not taxpayers need to take a substantial hit. Only after equity holders and bondholders are 100% wiped out should any public funds come into play.
Addendum:
Reader Donn replies "public pensioners should take a haircut before taxpayers in general", an idea of considerable merit.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
What Happens if Greece Leaves the Euro?
The BBC have this infographic about what happens if Greece leaves the Euro. Source: BBC But, when I look at this. Everything has already happened. Greece is already in recession. It has been in recession for past 5 years. Greece already has bank runs. Multinationals are not keeping money in Greek banks Due to unemployment [...]
Thursday, May 24, 2012
EXPRESS SCRIPTS HOLDING CO (ESRX) (Superstock Investor Stock Scorecard)
Express Scripts (ESRX) will report earnings after the close. Estimates are $0.77 versus $0.66. There is some nice upside to this name as it pulled back with the market.
Are you a Dalbar Statistic?
It is common knowledge that the vast majority of actively managed funds underperform their respective benchmarks. Unfortunately, most investors compound this ?underperformance? shortfall by switching from fund to fund at an alarmingly high rate. On the one hand we have Warren Buffett who says that his favorite holding period is ?forever.? On the other hand [...]
Profit v Revenue Objectives for Firms
Readers Question: Is it better to sell more services/products with less profit, than sell less with high profits? What are the pros and cons to the employer, worker, and customer? i.e high revenue low profit, vs low revenue high profit. Classical economic theory suggests firms will seek to maximise profits. The benefits of maximising profit [...]
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I guess I?m nuts: I bought no tickets for the $640M lottery
No doubt there are three highly ecstatic people in this country: the three people who chose the magic numbers on the record-breaking $640 million Mega Millions lottery.� Let’s hope that they haven’t gone through all of the money within the next few years, as they’re likely to do.� (The US Government, of course, will burn [...]
Tuesday, May 22, 2012
Apparel Sales by Price and Volume Provide Interesting Viewpoint
Reader Tim Wallace provides an interesting chart of apparel sales in the US by price and by unit volume. In this case, volume is likely the more telling statistic.
Tim writes ...
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click on chart for sharper image
Tim writes ...
Hi MishMike "Mish" Shedlock
As always, I am watching imports, especially with fascination the apparel imports. In the attached graph we see that dollars and units run mostly in slope lock-step until the crash of apparel demand in 2009.
In 2010 we see a significant "recovery". One thing about apparel is it does wear out, so a year like 2009 will cause pent-up demand in a following year. Price did not recover as much however.
2011 and the 12 month historical rolling numbers ended in March of 2012 (government data lags two months) is more interesting.
Dollar amounts continue to "recover" but the units measure has turned well downward again, in fact off 6% from 2010.
Looking at the monthly data from this time last year we see a continued degradation of the units amount every month, while the dollars amount trends up.
This is in effect apparel inflation, caused partially by raw materials. Cotton has been replaced in a significant percentage of products, stripping out demand and lowering that cost.
China lost some market share due to labor cost competition with Vietnam. However, China still dominates with 41.2% of market share, Vietnam second at 8.5%, then Bangladesh at 6.4% and Indonesia at 5.4%.
Thus 61.5% of all apparel imports come from only 4 countries.
Regards,
Tim
http://globaleconomicanalysis.blogspot.com
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Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Jim Cramer Is Predicting Bank Runs In Spain And Italy And Financial Anarchy Throughout Europe
During an appearance on Meet The Press on Sunday, Jim Cramer of CNBC boldly predicted that "financial anarchy" is coming to Europe and that there will be "bank runs" in Spain and Italy in the next few weeks.� This is very strong language for the most famous personality on the most watched financial news channel [...]
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Euro area official sector exposures to Greece in excess of EUR 290bn Total; EUR 84bn Germany, EUR 63bn France, EUR 55bn Italy, EUR 37bn Spain
Via email I received an interesting set of facts from Barclays regarding banking exposures to Greece.
Greece: Euro area official sector exposures in excess of EUR290bn
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Greece: Euro area official sector exposures in excess of EUR290bn
Euro area official sector exposureLooking for a reason for all the pressure on Greece to stay in the Eurozone? There it is. Pray tell where is Spain going to come up with 37 billion euros?
According to the French Finance Minister, F. Baroin, Greece's exit from the euro area "would cost France EUR50bn net, in addition to the securities held by banks and insurers in their portfolios." In the German press, it is reported that a Greek exit would cost approximately EUR80bn (EUR16bn from bilateral KfW loans, EUR20bn from the EFSF, EUR12bn from the SMP and EUR30bn from Target 2, based on December 2012 data, source: FAZ).
Here, we estimate the euro area's official sector exposure to Greece (bilateral loans, EFSF guarantees and Eurosystem) and show that the cost estimations mentioned in the press match the exposure if you consider a 20% recovery rate on Greek holdings. 20% is rather low, but not unrealistic given the outcome of the PSI and devaluation of the new Greek currency in the event of an exit. However, because of the accounting treatment of the different exposures and the presence of some financial buffers within the Eurosystem, the one-off, year-end shock on public accounts will be much smaller, probably around EUR100bn (1% of GDP).
Euro area exposure via bilateral loans and EFSF guarantees:
As part of the first Greek bailout package (May 2010), EUR53bn has been disbursed by member states out of the EUR80bn committed over a three-year period. These disbursements are in the form of bilateral loans between Greece and the other member states. In February 2012, a second bailout package was signed, but this time funds would be transferred to Greece by the EFSF and the guarantees passed on to member states according to (adjusted) ECB capital key allocation. This second package has taken over the unused funds from the first package and no further bilateral loans have been made since then. To date, the EFSF has issued EUR73bn out of the EUR145bn committed by member states. Altogether, the euro area states currently have a total exposure of EUR126bn, representing 1.3% of GDP.
Euro area exposure via the Eurosystem's refinancing operations and interventions:
In a Greek exit scenario, the Eurosystem faces losses stemming from either direct holdings of Greek bonds in the SMP portfolio1 or from Target 2 claims on the Greek central bank. Based on anecdotal evidence and central banks' balance sheet movements, we estimate that the Greek SMP exposure is approximately EUR35bn and that Target 2 claims on the Greek central bank are around EUR130bn.
Indirect exposure via the IMF:
Even though the IMF prides itself on never having made any losses on a programme, a Greek exit would certainly challenge this record. Potential losses would be redistributed to IMF members according to their quota. With 20% of the quota (link) the euro area would be exposed to a further EUR4.4bn.
Altogether, we estimate that the total official sector exposure to Greece is somewhere in excess of EUR290bn (see table below), representing 3.1% of (nominal) GDP. Because ECB capital keys do not exactly match GDP weights, the exposure in GDP terms varies from one country to the other, between 1.8% (Luxemburg, excluding programme countries) up to 4.5% (Malta, Estonia, see table and chart below).
Total Exposures to Greece
click on chart for sharper image
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
The Facebook IPO: The Last Great Wall Street Party
The Facebook IPO is kind of like a graduation party - everybody comes together for one huge blowout to celebrate the end of an era before going their separate ways.� Unfortunately, most people on Wall Street do not understand how bittersweet this moment really is.� A tremendous amount of pain is ahead for Wall Street [...]
URBAN OUTFITTERS INC (URBN) (Superstock Investor Stock Scorecard)
Urban Outfitters (URBN) will report after the close. Estimates are $0.20 versus $0.23. This stock constantly misses estimates. If it were to beat, then it could see some nice upside as it is far away from our price target.
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Mr. "Lie When It's Serious" Juncker Tells Another Whopper: "I Don?t Envisage, Not Even for One Second, Greece Leaving the Euro Area"; Two More Days of Hopefully Futile Coalition Talks on a "Government of Personalities"
Those looking for a bit of humor in the European debacle can find it in statements from Jean-Claude Juncker, head of the eurozone finance ministers.
Juncker says "I don?t envisage, not even for one second, Greece leaving the euro area. This is nonsense. This is propaganda. We have to respect Greek democracy."
Bear in mind this statement comes from the same man who said "When it becomes serious, you have to lie."
Also bear in mind Juncker's support for a Troika installed puppet government in Greece, after Greek Prime Minister George Papandreou proposed putting bailout measures to a vote.
Notice that bailout measures went to a vote anyway.
Two More Days of Hopefully Futile Greek Negotiations
The Financial Times reports Greece set for further coalition talks
Junker's statement about willingness to negotiate changes in bailout terms is of course a blatant lie aimed at keeping Greece in the Eurozone.
Also note the lie from Maria Fekter about Greece having to leave the EU if it exits the eurozone. Given that numerous countries are in the EU without being in the Eurozone, the UK is a prime example, Fekter's statement is complete nonsense.
That said, perhaps Greece is better of not being in the EU as well. Certainly the UK would be better off telling the EU where to go.
"When it becomes serious, you have to lie."
Indeed Juncker and and others have proven lies are the norm.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Juncker says "I don?t envisage, not even for one second, Greece leaving the euro area. This is nonsense. This is propaganda. We have to respect Greek democracy."
Bear in mind this statement comes from the same man who said "When it becomes serious, you have to lie."
Also bear in mind Juncker's support for a Troika installed puppet government in Greece, after Greek Prime Minister George Papandreou proposed putting bailout measures to a vote.
Notice that bailout measures went to a vote anyway.
Two More Days of Hopefully Futile Greek Negotiations
The Financial Times reports Greece set for further coalition talks
Greece?s president is set to resume coalition talks on Tuesday with the country?s political leaders in another attempt to avoid a fresh general election after a meeting on Monday evening ended without agreement.Lies Everywhere
President Karolos Papoulias has another 48 hours to persuade politicians to join a national unity government according to the constitution or face having to call another election.
Mr Venizelos said after the meeting he had supported the president?s proposal for a ?government of personalities? with backing ?from as many political parties as possible? to implement further reforms agreed in return for a second ?174bn bailout.
?The situation is very difficult and I?m not optimistic, but we must try every possible solution,? Mr Venizelos said.
Alexis Tsipras, the leader of Syriza, the radical leftwing coalition that rejects the terms of Greece?s international bailout, refused to participate in Monday?s talks. ?We?re not going to join in selective meetings of political leaders?...?The circle of contacts provided for by the constitution has been completed,? he said.
Jean-Claude Juncker, the Luxembourg prime minister who heads the group of eurozone finance ministers, sharply criticised other EU leaders for ?threatening? Greece with expulsion from the single currency, saying the will of Greek voters must be respected.
?I don?t envisage, not even for one second, Greece leaving the euro area. This is nonsense. This is propaganda,? Mr Juncker said angrily at a news conference. ?We have to respect Greek democracy.?
He added he would be open to debating easing terms of the ?174bn bailout, including extending dates to hit fiscal and economic reform targets by a year, something that has been anathema to several leaders in Germany, the European Central Bank and the European Commission.
Maria Fekter, the outspoken Austrian finance minister, went so far as to suggest Greece may have to leave the EU, since there is no legal provision for leaving the euro without exiting the union.
?Greece would have to reapply and then we would have membership negotiations and look very closely whether Greece would be able to become a member at all,? said Ms Fekter. ?We look much more closely than when they joined the euro.?make full repayment on the bond, which was issued under UK law, to avoid future legal action by holdout investors, the official said.
Junker's statement about willingness to negotiate changes in bailout terms is of course a blatant lie aimed at keeping Greece in the Eurozone.
Also note the lie from Maria Fekter about Greece having to leave the EU if it exits the eurozone. Given that numerous countries are in the EU without being in the Eurozone, the UK is a prime example, Fekter's statement is complete nonsense.
That said, perhaps Greece is better of not being in the EU as well. Certainly the UK would be better off telling the EU where to go.
"When it becomes serious, you have to lie."
Indeed Juncker and and others have proven lies are the norm.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Monday, May 21, 2012
We Are Watching The Greek Banking System Die Right In Front Of Our Eyes
Money is being pulled out of Greek banks at an alarming rate, and if something dramatic is not done quickly Greek banks are going to start dropping like flies.� As I detailed yesterday, people do not want to be stuck with euros in Greek banks when Greece leaves the euro and converts back to the [...]
Is The Food We Eat Killing Us?
Are we digging our own graves with our teeth?� Is the food that we eat every day slowly killing us?� When I was growing up, I just assumed that everything in the grocery store was perfectly safe and perfectly healthy.� I just assumed that the government and the big corporations were watching out for us [...]
How to Become an Accredited Investor
My sisters and I have some money to in an LLC, and we have encountered a problem with a few of the investment opportunities we've seen: only Accredited Investors can take part in them. Our LLC is not Accredited, so we've had to pass on some of those investments - or approach them in a different way (as debt partners instead of equity partners, for instance).
One of our goals as a company is to become an Accredited Investor so that we can take part in equity offerings that may arise. To that end, I sent my sisters/fellow shareholders the following email the other day:
One of our goals as a company is to become an Accredited Investor so that we can take part in equity offerings that may arise. To that end, I sent my sisters/fellow shareholders the following email the other day:
Here?s the deal on being an Accredited Investor. The SEC (Securities and Exchange Commission) regulates the exchange of securities in the US, and so in order for a company to sell equity shares of itself, it has to register with the SEC ? which is super expensive and difficult and requires a ton of documentation and disclosures and ongoing auditing and so on. In order to allow smaller companies who can?t afford that to also sell shares of themselves, the SEC allows several exceptions to that rule.
One exception is that companies don?t have to register IF all the shares are sold to Accredited Investors only. Presumably, these are sophisticated people who need less protection from the SEC and/or who have enough wealth that they can afford to take on risky investments which likely do not comply with all the standards set forth by the SEC in order to be registered.
In short, that is why any ?Average Joe? can purchase equity in a company which is listed on a stock exchange, but to invest in a private equity deal generally you have to be Accredited. It?s to protect the investor. Thanks, SEC.
SO, in order for an entity to be considered an Accredited investor it has to meet one of the following three tests:
- It has ?assets exceeding $5,000,000,? OR
- ?All the equity owners? of that business are Accredited OR
- The entity is a general partner of the company selling the securities (i.e. we are part owners of the investment opportunity already).
With a current value of $301,329 it?ll take the LLC 37 years to be worth $5MM, assuming an annual return of 8% and that we make no contributions or withdrawals along the way. If we each put in $100K right now, making the current value 701,329, then it will only take 26 years for the company to be worth $5MM. [On the bright side, holy crap it looks like by the time we retire the company will be worth five million dollars!]
But as far as qualifying as an Accredited Investor, our best bet seems to be via #2 ? for each one of US to qualify as accredited as individuals. That means that each of us would simultaneously have to meet one of the following tests:
- Have an individual net worth, or joint net worth with a spouse, that exceeds $1 million - excluding the value of the primary residence (an important recent update), OR
- Have individual income exceeding $200,000 or joint income with a spouse exceeding $300,000 in each of the two most recent years ? plus a reasonable expectation of the same income level in the current year, OR
- Be a director, executive officer, or general partner of the company selling the securities.
Clearly we each have a better chance of building a net worth of $1MM than of generating three consecutive years of income in the $200K range. SO start saving ladies! As soon as we each have a net worth of $1,000,000, we will each be Accredited Investors and therefore our LLC will be Accredited as well. Then we can start investing in private equity offerings and start ups and other projects which typically pay much more than the 8% we are getting by lending money instead of investing it in these project (of course buying equity is also much riskier).
Becoming a Millionaire
Whether or not we all make it to this level depends a lot more on who we marry than any single other factor. Marrying somebody with significant assets or earning potential will obviously help, but the key will be key to marry someone who also values saving and becoming a millionaire one day. If you marry somebody who will be pressuring you to spend your joint income rather than save a lot of it, this will be harder to attain.
The other big factor will be how much of our assets we decide to put into our homes. Since home equity doesn?t count toward the calculation, it?s important to note that paying off a mortgage should NOT be a priority for us. If you have excess cash, pour it into savings, retirement accounts, stocks, gold, rental properties, other business interests or whatever else you like. But don?t rush to pay off that mortgage or buy a huge house that you don?t need unless there are other considerations at work. This realization has changed my decision regarding future home purchases at least until I hit the million dollar mark. It?s better that my home equity be lower ? and therefore that my home is less expensive ? until I reach that milestone. So I?m not going to buy a big expensive town home after all.
Of course, becoming an Accredited Investor may not be or may not always be the biggest priority in your life, and that is FINE. If you start a family and want a big house and have to put down a huge down payment to afford it well then it is completely your right to do that! Or if you choose a career that pays lower on average and makes a million in the bank a far off dream, then that is your prerogative. No one should worry that the rest of us will be muttering about how you?re keeping our company from Accredited Status. But just be aware that unless you do have a higher priority, having a net worth of a million would ultimately really help all of us out as a group. And there is really NO reason we can?t all get there sooner or later.
For the record, I could be there in less than 10 years, if all goes according to plan ? and that?s if I don?t marry or if I marry somebody will have no effect on my savings ability. Our individual interests in the LLC and also in our trusts should count toward our personal net worth calculation, by the way, so we don?t have to worry about moving money between those entities.
Happy Saving!
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