When will our creditors come knocking

[Pete]

Greece Cut to Junk at S&P as Contagion Spreads

http://www.bloomberg.com/apps/news?p...VNxY7eto&pos=1

"April 27 (Bloomberg) -- Greece’s credit rating was cut three steps to junk by Standard and Poor’s, the first time a euro member has lost its investment grade since the currency’s 1999 debut. The euro weakened and stock markets throughout the region plunged................"

[GratefulCitizen]

Signs of China cooling?

http://www.businessweek.com/news/201...-concerns.html

How would the fed/feds respond to the deflation which could be caused by China cooling too quickly?

[Paslode]

Originally Posted by Pete

Greece Cut to Junk at S&P as Contagion Spreads

http://www.bloomberg.com/apps/news?p...VNxY7eto&pos=1

"April 27 (Bloomberg) -- Greece’s credit rating was cut three steps to junk by Standard and Poor’s, the first time a euro member has lost its investment grade since the currency’s 1999 debut. The euro weakened and stock markets throughout the region plunged................"

Nmap is on a roll, Portugal and Spain got thumped as well.

[nmap]

Originally Posted by GratefulCitizen

How would the fed/feds respond to the deflation which could be caused by China cooling too quickly?

Deflation represents a mortal threat to the U.S. economy - as it does to any entity (individual, organization, or nation) that is heavily indebted. The Fed must inflate or the burden of our existing debt will become unsustainable, with default as the ultimate outcome.

In such a situation, expect novel approaches - these could include negative interest rates on savings (in order to stimulate spending), stimulus payments of every sort, or even Helicopter Ben's signature idea of dropping money from helicopters.

[The Reaper]

Precious metals are looking better and better.

TR

[GratefulCitizen]

Originally Posted by nmap

Deflation represents a mortal threat to the U.S. economy - as it does to any entity (individual, organization, or nation) that is heavily indebted. The Fed must inflate or the burden of our existing debt will become unsustainable, with default as the ultimate outcome.

In such a situation, expect novel approaches - these could include negative interest rates on savings (in order to stimulate spending), stimulus payments of every sort, or even Helicopter Ben's signature idea of dropping money from helicopters.

Cheap money raises commodity prices.
High commodity prices stifle economic growth.
Low economic growth is deflationary.

Damned if you do, damned if you don't.
We may be heading towards an involuntary "Shmita".

(FWIW, the last "Shmita" year in Israel started in Sept/Oct 2007...that's when the fed funds rate started dropping )

[6.8SPC_DUMP]

Originally Posted by nmap

Deflation represents a mortal threat to the U.S. economy - as it does to any entity (individual, organization, or nation) that is heavily indebted. The Fed must inflate or the burden of our existing debt will become unsustainable, with default as the ultimate outcome.

In such a situation, expect novel approaches - these could include negative interest rates on savings (in order to stimulate spending), stimulus payments of every sort, or even Helicopter Ben's signature idea of dropping money from helicopters.

Isn't the impending wealth of a country determined by its productive dominance - giving the ability to control money flow and dictate the rules?

I think the rating agencies will be more hated than GS if they downgrade us.

The Bank for International Settlements (BIS) put out an interesting short paper on - The future of public debt: prospects and implications.

Their public debt/GDP projections are sobering (Graph 4, (p.14/26)). At the rate of current fiscal polices “gross debt/GDP ratios rise rapidly in the next decade, exceeding 300% of GDP in Japan; 200% in the United Kingdom; and 150% in Belgium, France, Ireland, Greece, Italy and the United States.” By 2030 the US will be at 300% of gross debt/GDP and over 425% by 2040.

BIS estimates the cost in interest as a percentage of our GDP (Graph 5) to increase by about 0.5% a year during that time.

Even with BIS saying our aim is “to bring the total federal budget deficit down from 11% to 4% of GDP by 2015”, - “consolidations along the lines currently being discussed will not be sufficient to ensure that debt levels remain within reasonable bounds over the next several decades.”

Even if we do that and also cap the yearly amount spent on social services at today's level - we will still be at 200% gross debt/GDP by 2040.

Our gross debt (short term + long term) doesn't include the value of government assets. However, our total debt adds house hold, corporate and financial-sector (privately owned Federal Reserve banks) debt and that increases the sum by more than we know. In 2009 the national debt amounted to 22% of what is “on the books” for the total credit market debt.

I don't go by the accuracy of long-term projections, like BIS did here, but the current path isn't sustainable. They are talking as if SDR's will replace the USD - who else well be doing all that lending?

I wonder if it would be worth it to try and persuade the world to wipe the slate clean by readjusting the IMF calculations of individual nation’s wealth (with a favorable total not just for us) and establishing central banking systems that increase the money supply of the country based solely on a fixed percentage of that countries' GDP, with a universal reserve currency owing interest rates to no private or public institutions.

[nmap]

Looks as if the stock market isn't happy.

Copper LINK suggests declining economic activity - globally.

Is Greece the problem? Or is the market looking at something else? I suspect the latter.

Time to be cautious.

If this develops into a substantial decline, the effect on pension funds and other institutional accounts is likely to be substantial. In addition, if economic activity declines, tax revenues are likely to do the same. I doubt this will lead to congenial politics anywhere in the world.

[Utah Bob]

Originally Posted by nmap

Looks as if the stock market isn't happy.

Copper LINK suggests declining economic activity - globally.

Is Greece the problem? Or is the market looking at something else? I suspect the latter.

Time to be cautious.

If this develops into a substantial decline, the effect on pension funds and other institutional accounts is likely to be substantial. In addition, if economic activity declines, tax revenues are likely to do the same. I doubt this will lead to congenial politics anywhere in the world.

They were blaming a bad P&G sale (Glitch or Human Error?) + the Greek thing.

And the unemployment figures were better than expected!
The market is ridiculously volatile right now!

I'm buyin tin foil and ammo.

[Paslode]

It might be a bad time to have your shelves stocked with copper fitting and tube, if it continues downward there will be a new price sheet out shortly

[Ret10Echo]

The herd is nervous and looking for a reason to spook.

Keystroke, oil leak, meteor shower...whatever...the propping up of what should have fallen is a delay in what is most likely an inevitable correction.

Time will tell.

"keep your head and don't get rattled under fire"

[6.8SPC_DUMP]

On 1/6/10 the CFA Institute warned SEC Director of Division of Trading and Markets Robert W. Cook of the:

Potential to Loss of Liquidity Providers

Equally disconcerting is the potential that sub-penny trades are discouraging liquidity providers. While entities benefiting from such trading may argue that volume from high-frequency trading (“HFT”) will replace volume from departing liquidity providers, CFA Institute is not reassured.

In particular, HFT firms are in the business of trading for their own purposes. They are not there to provide a service to the market. Liquidity providers, such as traditional market makers, on the other hand, supply a much-needed service, in particular during circumstances such as those seen in late 2008 when markets were highly volatile and, at times, in a near freefall. If those liquidity providers ultimately leave the market because of the disparity in trading rules, it could have very serious consequences for market order in future sell-offs. At such times, HFT firms can remove their liquidity by quickly changing their algorithms’ parameters, and rather than supporting the market with liquidity could join others by selling into the market. Such a circumstance would leave no one to provide a cushion for freefalling share prices. The effects could be devastating for millions of small and institutional investors, alike.

A blogging site forecasted it in April of ’09: Link

That a 20% P&G drop would cause a 700 billion drop in 15 min across the board for DOW, S&P, Nasdaq, with a put-call ratio of 1.42 doesn’t make sense in the time frame that it occurred IMHO. There were multiple erroneous trades though to be through the Chicago Mercantile Exchange.

"It validates the decision to offer a hybrid market (based on Genetic Algorithm and Support Vector Machines) here where there's a human component married with the electronic," Louis Pastina, executive vice president of NYSE Operations, told Reuters in an interview.

"Before things get too out of hand, there's the opportunity to slow things down and allow common sense to be inserted into the process."

During the midafternoon sell-off, stocks fell precipitously and inexplicably. For example, shares in consumer products maker Procter & Gamble, which would normally be regarded as one of the safer, less volatile stocks to own, plummeted 37 percent within minutes. Consultancy Accenture PLC, which would also be seen as relatively conservative, saw its shares sink from around $41 to just a penny.

In contrast to the Big Board, all-electronic counterparts such as Nasdaq Stock Market, run by Nasdaq OMX Group Inc, BATS, Direct Edge and Archipelago, the New York Stock Exchange has a system built-in that includes human intervention when there are unusual share price and volume shifts.
Both NYSE and Archipelago, which Pastina acknowledged does not offer the same safeguards as the NYSE, are operated by NYSE Euronext

"We have an auction component which is built into our market that allows for physical auctions to be conducted to discover the correct price at any time during the day," Pastina said.

When the safety measures -- called liquidity replenishment points -- are triggered, NYSE sends out a message to traders and the public saying it is looking for buyers or sellers in an effort to discover the stock's correct price.
Pastina said that if the exchange receives an order that looks unusually large or is at a price that is nonsensical, it will often track down the investor or trader to make sure it wasn't the result of a typing error or some other mishap.

In contrast, he said, most electronic markets continue to trade electronically until there are no more buyers.

In 2007, new market rules allowed for trading to take place around any market that says it is conducting an auction.Link

May 6, 2010 (GLOBE NEWSWIRE) -- The, NASDAQ OMX Group Inc. (Nasdaq:NDAQ), the world's largest exchange company, announced that The NASDAQ Stock Market had no technology or system issues associated with the trading that occurred between 2:00 and 3:00 p.m. ET today. The NASDAQ Stock Market operated continuously and its close process ran successfully.

In addition, there is no indication at this time that a NASDAQ market participant experienced a technological failure in connection with this event. NASDAQ has coordinated a process among U.S. Exchanges and therefore, pursuant to rule 11890(b) , NASDAQ, on its own motion, will cancel all trades executed between 14:40:00 and 15:00:00 greater than or less than 60% away from the consolidated last print in that security at 14:40:00 or immediately prior. This decision cannot be appealed. NASDAQ has coordinated this decision with all other UTP Exchanges. NASDAQ will be canceling trades on the participant's behalf.

The stocks affected and the break points are posted on the following website: Link

But HFT is the reason the markets have rebounded so much so fast IMHO and it’s hard to believe this isn’t done under national security conditions.

The line drawn for the quant traders to sell was just under 1100 on the S&P this time (May 6th).

[GratefulCitizen]

Originally Posted by nmap

Looks as if the stock market isn't happy.

Copper LINK suggests declining economic activity - globally.

Is Greece the problem? Or is the market looking at something else? I suspect the latter.

Time to be cautious.

If this develops into a substantial decline, the effect on pension funds and other institutional accounts is likely to be substantial. In addition, if economic activity declines, tax revenues are likely to do the same. I doubt this will lead to congenial politics anywhere in the world.

China seems to be cooling.
Commodities will likely fall.

http://www.businessweek.com/news/201...rb-demand.html

[Sten]

Originally Posted by nmap

Copper LINK suggests declining economic activity - globally.

.

The Steel mills here are running flat out pulling back all lay offs and the overtime taps are wide open.

The boilermakers hall is empty and they are putting all apprentices on a full work week.

[GratefulCitizen]

Interesting chart:
http://online.wsj.com/article/SB1000...728420184.html

Increase tax rates, lower revenue.

Can't squeeze blood from a turnip.