Billionaire John Paulson has bet big on Gold, raising his firms investment in the metal to 44%. He has been big on gold since 2009 but his luck has not been so hot for the past 2 years with record losses.
He is betting that gold will remain a great hedge against currency debasement, rising inflation and the possible break up of the euro. All things that everyone of us should be concerned about! He must be really concerned with a bet that size.
Seriously folks, while this guy’s recent track record isn’t the best his long term record is pretty dang good! For those of us out there that continue to hold gold and silver we can take comfort in the knowledge that some very sophisticated investors are feeling the same way as we are and doing the same thing..buying gold and silver.
The prices are down and the macro economic situation hasn’t changed at all, in fact in my view it is even worse. Now you have the Israelis talking about bombing Iran again. Syria is falling apart and the news on the Euro, Spain and Greece is just not improving. Added to all this is the threat of a world wide food shortage and I have not listed all the bad stuff out there either!
Time to get prepared? I would think so in spades! Food, water, gold and silver make up a really great starter kit!
As if the European issues weren’t bad enough…Moodys is set to downgrade the Spanish bonds to junk status. This after downgrading all the Spanish banks by several notches. I suspect that this will not end well as Germany, the ‘giver’ of cash becomes more and more reluctant to dish it out to everyone that comes begging.
We still wait to see how all this will affect Italy and France while poor Portugal remains in the dumpster. All the ‘southern’ european countries are in big trouble, led of course by Greece!
Just wait there will be more news coming. Consider what might happen if there is some major catastrophe to add to the woes!
Spain Poised for Downgrade to Junk as Default Swaps Near Records
Spain is poised for a downgrade to junk by Moody’s Investors Service, according to investors who sent the cost of default insurance for the nation’s biggest banks and companies close to record highs.
Enlarge image Spain Poised for a Cut to Junk as Default Swaps Near Records (
Credit-default swaps on Banco Santander SA (SAN), the country’s biggest bank, jumped 23 percent this quarter to 454 basis points, compared with an all-time high of 474 in November. Banco Bilbao Vizcaya Argentaria SA (BBVA) rose 26 percent to 477, approaching May’s record 516, while phone company Telefonica SA (TEF) surged 70 percent to a record 540 basis points.
Moody’s downgraded 28 Spanish banks yesterday including a two-step cut for Banco Santander and a three-level reduction for BBVA, a week after it lowered Spain’s rating to Baa3, on the cusp of junk. The country remains on review for another cut by New York-based Moody’s after it sought a 100 billion-euro ($125 billion) international bailout for its banks and on speculation losses from its real estate industry will worsen.
“There’s more to come if Moody’s downgrades the sovereign as we expect in the next few weeks,” said Suki Mann, a credit analyst at Societe Generale SA in London. “A one-notch move to Ba1 will likely see all the country’s banking system in junk territory, with the possible exception of Santander.”
Spanish bank bonds are the worst performing among European financial companies this month, losing 0.75 percent on average, according to Bank of America Merrill Lynch’s Euro Corporates Banking index of 742 securities. Debt tracked by the gauge returned 0.53 percent overall, with Italian bank bonds earning 0.27 percent and German securities making 0.19 percent.
Santander’s credit-default swaps declined two basis points to 451 basis points today, and BBVA’s fell three basis points to 478 basis points.
Bond spreads are widening, signaling potentially higher borrowing cost for the country’s largest lenders. Santander’s 1 billion euros of 4 percent notes due 2017 are quoted at 559 basis points above the safest government bonds compared with a 553 basis-point spread yesterday, according to Bloomberg Bond Trader bid prices. BBVA’s 500 million euros of 4.875 percent bonds due 2016 are quoted at 578 basis points from 567 basis points yesterday.
The yield premium on Spanish bank bonds jumped to 648 basis points, or 6.48 percentage points, relative to German government debt, from 433 basis points at the end of the March, the Bank of America Merrill Lynch data show. That compares with 291 basis points on average for debt tracked by the bank bond index.
Moody’s cut at least a dozen Spanish lenders to junk status, and in all cases the ratings remained under review for further downgrades, the ratings company said yesterday in a statement. Junk debt is graded below Baa3 by Moody’s and BBB- by Standard & Poor’s and Fitch Ratings.
The latest downgrades reflect the government’s reduced creditworthiness, which lessens its ability to support the lenders, as well as Moody’s expectation that losses linked to commercial property will keep rising, according to yesterday’s statement.
“We suspect that the sovereign will itself require a bailout, not just the Spanish banks,” said Olly Burrows, a London-based credit analyst at Rabobank International.
To contact the reporter on this story: Esteban Duarte in Madrid at firstname.lastname@example.org
Now we have the beginnings of the ‘Perfect Storm’ economically speaking if you ask me. What can you do to Prepare for the ‘new’ economy that might unfold?
Just a day after Greece voted to ‘stay in’ the EC, Spain’s bond yields hit Euro record highs, saying the markets are not at all convinced that this crisis is over-not by a long shot!
We will continue to see deterioration in the public markets as yields in Europe rise predicting more bailouts, read more money/liquidity injected into markets. I think this will eventually hit the U.S., may take a few more months but same result.
Europe’s economic crisis will not go away easily. The heads of the various countries there appear to be completely confounded as to a workable solution. The austerity programs that Germany wants to impose are really hurting the domestic markets where imposed and the people are not going to go along with these measures for long.
Spain, even without the terrible measures imposed on Greece, already has 50% unemployment in the under 35 age group. Where there is no hope there will always be unrest. Just look at the Mid East, unemployment and poor economies have created an explosive situation in many countries.
Already we are seeing the signs of unrest, first in Greece (which of course main stream media didn’t cover) with all the rioting that has been going on and now we begin to see these confrontations cropping out all over Europe.
Are we headed for a complete and total meltdown, the arrival of anarchy? Is there a way to be prepared for the arrival of this event?
Oanda, which offers ‘after market’ trading will not accept trades this Sunday due to the potential for wild volatility as Greece election results come in. The ‘Forex’ market will open as usual Monday morning.
This is huge folks. I can’t remember a single instance of this occurring and I have been in the business since 1985. There are also rumors that the Central Banks will be doing something very big soon. Perhaps as early as this weekend depending on the way things go in Greece.
I suspect that if Greece votes to exit the European Community that there will be complete and total havoc in the markets, all of them-stocks, bonds, currencies, gold you name it and there will be some volatility. Only the very strongest will survive such swings in the market.
If we do see this sort of volatility I think you will see the Central Banks in Europe and the U.S. act ‘in concert’ to try and avert a major meltdown in the markets. Greece adopted capital controls last week to limit the amount of money the citizens can withdraw. I suspect that we will see this in Spain next, that is if we get to Tuesday without some catastrophic events occurring on Monday!
Be vigilant here, this could be a major swing point…in my opinion.
In yet another move to consolidate their (the money elite/global cabal) power over the Greek currency, the demands are for cuts in minimum wage among other conditions. This on top of having had to already collateralize their national monuments, islands etc.
The Greek people are understandably ticked off, and plan some pretty big demonstrations as the government (it is a stretch to refer to it as ‘theirs’) continues to negotiate with the powers that be in the EC.
Why don’t they look at the Icelandic method? Just tell the international banksters to go fly a kite. Sure things can be hard for a couple of years but then they get better and without compromising the future of every single citizen.
Papademos Meets Creditors as ‘Sacrifice’ Looms
by Maria Petrakis, Marcus Bensasson and Natalie Weeks – Feb 6, 2012 4:15 PM MT
Greek Prime Minister Lucas Papademos began a second round of negotiations with international creditors in Athens to stave off default as political leaders waver on budget measures and unions call their first general strike of the year.
Papademos met with representatives from the European Commission, the European Central Bank and the International Monetary Fund to continue talks on possible spending cuts that Finance Minister Evangelos Venizelos said would determine whether Greece can stick to its plan to remain in the euro area.
“The salvation of the country, remaining in the euro, means great sacrifices,” Venizelos told reporters in Athens late yesterday after meeting with the so-called troika of representatives. “Failure of these talks, failure of the plan, the country’s bankruptcy, means even greater sacrifice.”
With Greece’s stability at stake and the country set to pay a 14.5 billion-euro ($19 billion) bond due on March 20, Papademos will bring the leaders of the three parties supporting him back to the table later today in a bid to forge agreement on terms for a second aid package to prevent the country’s collapse.
European leaders stepped up pressure on Greek politicians to meet the conditions of the 130 billion-euro bailout yesterday as Papademos delayed the meeting with party leaders a day. In Paris, German Chancellor Angela Merkel said time is running out. French President Nicolas Sarkozy said there could be no funds without reforms.
Allowing Greece to go bankrupt “isn’t an option,” he said.
U.S. and European stocks fell yesterday, driving the Dow Jones Industrial Average down from an almost four-year high, and the euro declined the most in three weeks. German bonds rose, and commodities dropped.
Greece’s efforts to win a second bailout from the troika have hung in the balance over the past four days as negotiations in Athens failed to clinch an agreement on measures demanded by lenders, which could include a cut in the minimum wage, lower pensions and immediate layoffs for state employees.
The country will sell 625 million euros of 26-week Treasury bills today, a week earlier than usually scheduled to allow for the rollover of 26-week bills due on the Feb. 10. Short-term debt sales like those are the only source of market financing available for the nation. Bonds repayable in 2022 are worth about a third of their face value.
Euro-area finance chiefs told Venizelos on Feb. 4 that an increase in the bailout package wasn’t forthcoming, underscoring their frustration at a lack of progress on fixing the economy. Keeping Greece from tumbling into default presents what Deutsche Bank AG Chief Executive Officer Josef Ackermann calls a “make or break” moment.
Venizelos described the talks in Athens as a “Hydra’s head”, a reference to the monster in Greek mythology that grew back more heads than the one cut off.
Citigroup Inc. raised the probability that Greece will be forced to leave the euro area in the next 18 months to 50 percent from 25 percent to 30 percent previously.
“To remain in the euro area, the Greek government needs to exhibit a minimum degree of compliance with the fiscal and structural conditions of the bail-out program,” Chief Economist Willem Buiter said in an e-mailed note. “The hurdles for Greece set by euro area negotiators to receive the second bail-out are high.”
Adding to pressure on Papademos and political leaders, the biggest public-sector and private-sector union groups, ADEDY and GSEE, hold a 24-hour general strike today, shutting down government services, courts, schools and ferry services. Dockworkers and bank employees will also walk off the job while a walkout by culture ministry workers will force the closure of museums and other tourist attractions.
Public transport in Athens will operate during the day to bring protestors to the city center. Workers from the state-run Hellenic Railways Organization, one of the biggest loss-making state-owned companies, will shut down rail service across the country.
“What is taking place isn’t a negotiation,” GSEE president Yannis Panagopoulos said in an e-mailed statement. “It’s raw, cynical blackmail against a whole people.”
Administration Minister Dimitris Reppas said the troika asked for 15,000 state jobs to be cut this year, part of plans by Greece to gradually phase out 150,000 employees by the end of 2015. He told Athens-based Mega TV he was opposed to “blind firings”.
Papademos and the party leaders agreed in a five-hour meeting two days earlier to make additional reductions this year equal to 1.5 percent of gross domestic product.
They have yet to iron out differences over policy measures demanded by lenders on recapitalizing banks, ensuring the viability of pension funds and reducing wages and non-wage costs to boost competitiveness.
Greece still needs to agree on 600 million euros of fiscal measures for 2012, a government official told reporters in Athens yesterday.
The troika argues that lower wage costs is among reforms necessary to boost competitiveness in the country. Those opposed say the cuts would deepen the country’s recession, now in its fifth year.
Antonis Samaras, the head of the second-biggest party, New Democracy, has indicated he will oppose measures that will deepen the country’s downturn.
Guarantees from Greek political leaders such as Samaras, who leads in opinion polls, are key to securing the funds from the EU and IMF. International lenders want assurances that whoever wins the next election will stick to pledges made now to receive financing.
George Papandreou, the former prime minister who leads the Pasok socialist party, the biggest in the Greek parliament, proposed that Papademos’s mandate be extended to boost confidence among lenders the pledges will be implemented.
That is an option likely to be opposed by Samaras, who has called for elections as soon as the new financing is agreed.
Open questions involve how much more aid Greece needs, how much more austerity is required, and how to involve the ECB in the private-sector creditor debt swap.
The rescue blueprint includes a loss of more than 70 percent for bondholders in a voluntary debt exchange that will slice 100 billion euros off 200 billion euros of privately-held Greek debt and loans that will probably exceed the 130 billion euros now on the table. A formal offer for the debt swap must be made by Feb. 13 to allow all procedures to be completed before the March 20 bond comes due.
Creditors are prepared to accept an average coupon of as low as 3.6 percent on new 30-year bonds in the exchange, said a person familiar with the talks, who declined to be identified because a final deal hasn’t been struck yet.
Greece has lagged behind budget targets set when it won an initial, taxpayer-funded rescue of 110 billion euros in May 2010, prompting euro-area threats to cut off aid. The country’s economy shrank 6 percent last year, according to the most recent IMF estimates, the budget deficit is still close to 10 percent of GDP and unemployment is about 18 percent.
Even after a second bailout, Greece may be saddled with too much debt, too little growth and too large a budget hole to do without even more money, which euro nations led by Germany are increasingly reluctant to offer.
The only way out for Greece is “a reduction in debt, progress on wages, on labor costs and the commitment by the Europeans to extend funds for as long as it’s needed,” International Monetary Fund chief economist Olivier Blanchard said in Washington yesterday. “Under these three conditions it’s still a terribly ugly and unpleasant path but it is at least one which can be tried.”
To contact the reporters on this story: Maria Petrakis in Athens at email@example.com; Natalie Weeks in Athens at firstname.lastname@example.org; Marcus Bensasson in Athens at email@example.com
I wonder why people wonder why Occupy Wall street and other groups throughout the world are protesting. This global financial catastrophe has affected virtually everyone on the planet. A few for the better, the majority for the worse!
As the world economy continues to take a beating, we add Japan now to the list of listing economies. Japan reports a huge downtick in GDP of 3.7%, almost double the estimates. This is very serious, perhaps even more so than any problems the EU might have with the PIGS.
Japan is the 3rd largest economy in the world and when they have troubles all of us worldwide will also have troubles to varying extents. As the U.S. can ‘export’ both prosperity and recession so can the Japanese. Believe me this is going to be a terrible time economically for the global community.
Added to this piece of bad news is the continuing saga of Ireland and Greece. The former can’t sell it’s sovereign debt, click here to read more. Greece’s debt ratings were down graded not 1 not 2 but 3 classes as Finch decided that even ‘putting off’ the maturity dates on their bonds coming due would be a technical default,click here for the story!
So the race to the bottom of the pile of worthless currencies continues with the added participant-Japanese Yen! Who will bottom out first is the question, will it be the U.S. Dollar, the Euro or the Yen? Only time will tell.
Unfortunately, this sort of reaction might become the norm as people push back against the banking oligarchy. Something the leaders will not do, talk about complicity!
I am hopeful that here in the U.S. we are able to avoid such violence and rely instead on civil disobedience. To do this effectively we must be organized and organized very well. Our elected officials are counting on us to never get organized.
If you have a great idea, form a meet up group. Email us and we will try to get it out.
Greek Protests Leave 3 Dead, Buildings Burning (Update1)
By Maria Petrakis and Natalie Weeks
May 5 (Bloomberg) — Greek demonstrations against government austerity measures turned deadly when three people were killed after protesters set fire to a bank in central Athens.
Fire officials at the scene said they discovered three bodies in the building, according to a fire-department statement sent by text message today. The building, located near the Greek parliament, housed a branch of Marfin Egnatia Bank SA. At least three more buildings were set on fire and 30 fire trucks and 80 firefighters battled the blazes, fire officials said.
Marfin spokesman Serapheim Konstantinidis said that the bank was trying to identify the three victims and couldn’t confirm whether they were employees. A bank worker who escaped the blaze said the fire spread very quickly and it was hard to tell how it started.
Today’s general strike, the third this year, follows Greek Prime Minister George Papandreou’s announcement of a second set of wage cuts for public workers, a three-year freeze on pensions and a second increase this year in sales taxes and the price of fuel, alcohol and tobacco in return for a bailout from the European Union and the International Monetary Fund. Trade union groups have called the austerity measures “savage.”
“These measures are unjust and should be paid for by those politicians over the past 30 years who have led us here,” said Barbara Tzerbou, 37, a lawyer who traveled to central Athens with her brother to participate in her first-ever protest. Papandreou “had choices; we didn’t need to get as far as the IMF,” she said.
Tensions escalated as marchers approached the Parliament building where they clashed with helmeted riot police, throwing sticks and stones and chanting slogans before being repulsed. Police shot tear gas at other protesters who lobbed rocks and set trashcans on fire at the central bank building near the parliament.
A group of self-styled anarchists, many with their heads wrapped in black scarves, broke off from the main march and started attacking buildings and starting fires.
The news of the fatal turn in the Greek protests extended declines in stocks and bonds today. The country’s benchmark ASE Index declined 5 percent, bringing the year-to-date drop to 25 percent, the largest in the euro region. The yield premium investors demand to buy Greek 10-year bonds over comparable German debt, reached 699 basis points.
“The demonstrations in Athens are another factor that must be scaring off, turning the mood of credit markets even more against Athens,” Nobel prize-winning economist Edmund Phelps said in an interview on Bloomberg Television before the violence broke out.
Elected in October on pledges to raise wages for public workers and step up stimulus spending, Papandreou revised up the 2009 budget deficit to more than 12 percent of gross domestic product, four times the EU limit, and twice the previous government’s estimate. EU officials revised the deficit further on April 22, to 13.6 percent of GDP.
The surge in the budget gap as the economy contracted fueled investor concern about Greece’s ability to finance the deficit and sent borrowing costs to the highest since before the start of the euro in 1999. Papandreou has pledged to lower the shortfall to within the EU limit of 3 percent of GDP in 2014.
With reductions in wages and increases in taxes, the Greek economy is forecast to shrink 4 percent this year and 2.6 percent in 2011. Unemployment has risen to 11.3 percent, a six- year high.
Unions and some employer and industry groups argue that Papandreou’s terms are designed solely to make savings for the budget rather than setting the bases for growth and fear they will drive the country deeper into a recession, hurting any chances of recovery.
To contact the reporter on this story: Maria Petrakis in Athens at firstname.lastname@example.orgNatalie Weeks in Athens email@example.com
Last Updated: May 5, 2010 09:38 EDT
Again, form a meet up and send out invitations. Post your idea on your facebook get some feedback. Start today!
Folks, get used to this one…the people not happy with austerity measures imposed by IMF or anyone for that matter.
Remember we are in some way responsible for this mess we find ourselves in and we will be responsible for extracting ourselves from it in the end. Big Brother will not do this for you…he (they) are interested in the status quo and their own financial/power gain.
Papandreou Makes Austerity Pitch as Unions Slam ‘Unjust’ Cuts
By Maria Petrakis and Natalie Weeks
April 30 (Bloomberg) — Prime Minister George Papandreou is starting his sales pitch to the Greek people as unions denounce as “unjust” budget cuts linked to a potential $159 billion European Union bailout.
“We find ourselves before the most savage, unprovoked and unjust attack,” said Spyros Papaspyros, head of the ADEDY civil servants union, in Athens late yesterday after meeting Papandreou. “The answer will be given in the street.”
Greek officials will reach agreement with the EU and the International Monetary Fund in the next days on budget cuts that may be worth 24 billion euros ($32 billion). While signs of an accord ended a bond market selloff in Europe yesterday, Moody’s Investors Service warned that Greece could be vulnerable to a “multi-notch” downgrade if measures don’t go far enough.
Steps may include a three-year wage freeze for public workers and cutting two of the 14 salary payments that they receive annually, the ADEDY union said. Greece’s NET Radio said yesterday that cuts could amount to 10 percentage points of gross domestic product. The deficit was 13.6 percent in 2009.
“It’s a tall order to assume that Greeks will be convinced because for years they have been used to getting a different type of treatment from their governments,” said Michael Massourakis, chief economist at Alpha Bank, the country’s third largest, in a telephone interview. “Papandreou doesn’t have the luxury of choosing the context or pace of the adjustment.”
Retailers plan to shut their stores on May 5, joining a strike organized by the GSEE union, the country’s largest.
Greece’s credit rating was cut to junk this week by S&P and Moody’s Investors Service, which currently has an A3 rating on the country, said its decision will depend on the measures announced by the EU and the IMF.
Other deficit-cutting steps include increasing sales tax and raising the cap on the number of workers who can be fired to 4 percent from 2 percent, Kathimerini newspaper said, citing no one.
“We will do what is needed for the salvation of the country,” Papandreou said, according to the e-mailed transcript of his comments to union and business representatives. It didn’t give details of the austerity measures.
The yield on the Greek 10-year government bond, which surged to 11.406 percent on April 28, fell 91 basis points to 9.04 percent yesterday as officials speed up efforts to finalize a rescue package. The ASE benchmark general index, which has lost nearly a fifth of its value this year, jumped 7 percent, the most since December. National Bank of Greece SA soared 18 percent.
“The financial support will give Greece sufficient breathing space from pressures of financial markets,” EU Monetary Affairs Commissioner Olli Rehn said yesterday.
Papandreou is stuck between investors, who want faster deficit cuts, and voters and unions, who are already chafing from existing austerity measures. Elected in October on pledges to raise wages for public workers, Papandreou has been forced to cut salaries, curb spending and raise taxes to reduce a deficit that was more than four times the EU’s limit last year.
“We were and are the champions of change,” Papandreou said April 28. “We know we must put our economy in order if we are to survive.” The time has come to move on from “watching the spreads go up and down, usually more up than down.”
“I got a taste of a very tough package,” Yannis Panagopoulos, head of the GSEE union, said after meeting Papandreou. He described it as “arbitrary and unjust.”
Voters’ anger has been partly focused on the IMF and the political risks facing Papandreou are highlighted by the IMF’s most recent involvement in Europe.
In Hungary, the first EU member to turn to the Washington- based lender, voters this month ousted the ruling Socialist party two years after they accepted a bailout. Fiscal conditions attached to the $27 billion loan exacerbated the country’s recession as unemployment soared to a record, souring support for the government.
Sixty-five percent of Greek voters polled by researcher Alco for the Proto Thema newspaper last week said Papandreou must reject any measures that lead to more wage and pension cuts.
Europe’s fiscal crisis worsened this week after Germany’s reluctance to approve emergency funds sparked a drop in Greek bonds and S&P followed its Greek downgrade with cuts of Portugal and Spain.
Papandreou, who said last week that his country faces a “new Odyssey,” will now have to convince to voters that they don’t have a choice, said Alpha Bank’s Massourakis. Even after yesterday’s bond market rally, Greece must pay 12.57 percent to borrow for two years. Germany pays 0.79 percent.
“It’ll be difficult, but at end of the day people will realize that these are necessary because the country doesn’t have access to borrowing any more,” he said.
To contact the reporters on this story: Maria Petrakis in Athens at firstname.lastname@example.orgNatalie Weeks in Athens at email@example.com.
Last Updated: April 29, 2010 17:49 EDT
Revolution is coming to a location near you!