Central Banks’ Coordinated Liquidity Intervention: Cut Rates on Dollar Swap Lines; European Stocks Rally

From Bloomberg:

European stocks rallied for their longest stretch of gains in seven weeks as the Federal Reserve and five other central banks lowered the cost of dollar funding and China cut its reserve ratio for banks.

The Fed, Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank agreed to reduce the interest rate on dollar liquidity swap lines by 50 basis points and extend their authorization through Feb. 1, 2013.

Finance ministers of the 27-nation European Union are meeting in Brussels today to seek agreement on how to temporarily guarantee banks’ bond issuance in order to improve funding conditions for lending. EU leaders agreed last month to provide the guarantees to restore investor confidence in banks.

http://www.bloomberg.com/news/2011-11-30/european-stock-index-futures-decline-on-s-p-downgrades-of-global-banks.html

China Starts Monetary Easing: Cut Reserve Ratio by 50 Basis Points

From Reuters:

China's central bank cut the reserve requirement ratio for its commercial lenders on Wednesday for the first time in nearly three years to ease credit strains and shore up an economy running at its weakest pace since 2009.

Purchasing managers' data on Thursday could confirm the pressure on China's manufacturers from the global slowdown after a flash PMI from HSBC last week suggested the sector was shrinking.

As recently as the middle of 2011, China was still tightening monetary policy to combat stubbornly high inflation, which rose in July to a three-year high of 6.5 percent.

However, as the economy felt the chill of a slowdown in global activity and inflation eased, Beijing adopted a policy of "fine tuning," which targeted parts of the economy, such as loosening credit for cash-starved small firms.

The cut in the reserve ratio was the first since December 2008 and marks a monetary policy shift to an easing bias.

http://www.reuters.com/article/2011/11/30/us-china-economy-rrr-idUSTRE7AT0TK20111130?feedType=RSS&feedName=businessNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=56943

Korean Big Listed Firms’ Q3 Net Drops Nearly 40 Percent

From Yonhap:

Consolidated earnings for South Korean listed companies fell nearly 40 percent on-year in the third quarter of the year amid unstable economic conditions and slowing exports, a report showed Wednesday.

The combined net profit of 147 big firms with assets over 2 trillion won (US$1.8 billion), such as Samsung Electronics Co. and Hyundai Motor Co., totaled 14.2 trillion won in the July-September period, compared with 22.6 trillion won a year earlier, according to the report by the Korea Exchange and the Korea Listed Companies Association.

The report said the weaker bottom line came as companies' profitability slipped amid global uncertainties stemming from the eurozone debt crisis and a slowing U.S. economic growth. Declining demand for South Korean information technology (IT) products as well as a rise in commodity and oil prices also ate into their earnings, it added.

Tech heavyweight Samsung Electronics topped the list of profitable firms, followed by industry leaders SK Innovation Co., Hyundai Motor, LG Chem Co. and Hyundai Heavy Industries Co.

The average debt ratio of the tallied big firms came to 133.84 percent as of end-September, growing from 131.48 percent from the end of last year, according to the report.

http://english.yonhapnews.co.kr/business/2011/11/30/24/0501000000AEN20111130004851320F.HTML

BOJ Chief: Japan Facing Severe Situation

Regardless of what the BOJ governor warns, the bottom line is Japan can no longer fund itself.

From Japan Today:

Bank of Japan governor Masaaki Shirakawa warned Monday that the country would continue to face a “severe situation” as Europe’s debt crisis and a strong yen weigh on its post-quake economic recovery.

“Japan’s economy is likely to continue to face a severe situation for the time being, especially with respect to exports,” he said in a speech to business leaders in the central city of Nagoya.

Japan fell into a trade deficit in October, reversing a year-earlier surplus, with record flooding in Thailand pounding the operations of Japanese automakers and electronics firms that have plants in the country.

Toyota and others withdrew earnings forecasts as they assess the scale of disruption, which came as Japanese firms were near to restoring output to normal levels at home after the March earthquake and tsunami shattered component supply chains.

Japan’s economy has “recovered faster than expected” following the natural disasters and a subsequent nuclear crisis, Shirakawa said, but added Europe’s fiscal woes and a strong currency would continue to dent Japanese exports.

Earlier this month, Japan’s central bank left its key interest rate unchanged at between zero and 0.1%, while in October it announced further easing measures to help safeguard a fragile economic recovery.

The bank said it would boost its asset buying program by 5 trillion yen to 55 trillion yen, with the extra money earmarked for the purchase of Japanese government bonds.

By pouring liquidity into the market, the BOJ hopes to improve flows to help encourage investment and boost business.

http://www.japantoday.com/category/business/view/japan-economy-faces-severe-situation-warns-boj-chief

Is It Finally Japan’s Turn?

Data points indicate that the Japanese economy is unraveling while this process takes time. And yet, Japan has a cohesive culture and identity, which will be a plus over the coming years.

From Zero Hedge:

Japan is starting to heat up a little in terms of risk and we hope that Noda is watching carefully. While the strengthening trend in USDJPY and JGBs has been a long one, the last few days are starting to worry some traders and most notably, Bloomberg points out that not only are FX options the most USD bullish-biased (JPY-bearish) in seven years, swaptions (bearish rate bets) have screamed to their highest in over seven months at 54bps. The growing concern that the European crisis will spread to Japan is extremely evident in these option bets, supporting the sentiment of S&P's recent 'downgrade' chatter, Bass's grave concerns, and the IMF's decidely negative perspective on fiscal sustainability as Japan's 'savior' trade-surplus is expected to drop significantly. Perhaps the sad inevitability of the real endgame of Richard Koo's balance sheet-recessionary view of Keynesianism is closer than many believe.

http://www.zerohedge.com/news/it-finally-japans-turn

S&P Downgrades 37 Global Banks

From the Wall Street Journal:

Standard & Poor's Ratings Services on Tuesday downgraded dozens of large financial institutions, including Bank of America Corp., Barclays PLC and Citigroup Inc., citing a new methodology that reflects weaker confidence in governments' willingness and ability to bail out banks in trouble.

The widely expected move didn't signal a change of any of the banks' individual credit metrics as much as a revision to the assumptions that had previously bolstered them. The new criteria affected 37 banks, most of which were immediately downgraded if not put on negative credit watch.

S&P earlier in November had promised to revise many financial institutions' ratings to better reflect how banks' creditworthiness is linked to the health of the economies in which they operate.

http://online.wsj.com/article/SB10001424052970204262304577068692845236780.html

Jim Quinn: Comfortably Numb

Many of us have found maintaining intellectual honesty not that easy. Regardless of whether one agrees with Quinn’s argument, some data points he is presenting are compelling (although many of us have already known).

From the Burning Platform:

As I observe the zombie like reactions of Americans to our catastrophic economic highway to collapse, the continued plundering and pillaging of the national treasury by criminal Wall Street bankers, non-enforcement of existing laws against those who committed the largest crime in history, and reaction to young people across the country getting beaten, bludgeoned, shot with tear gas and pepper sprayed by police, I can’t help but wonder whether there is anyone home. Why are most Americans so passively accepting of these calamitous conditions? How did we become so comfortably numb? I’ve concluded Americans have chosen willful ignorance over thoughtful critical thinking due to their own intellectual laziness and overpowering mind manipulation by the elite through their propaganda emitting media machines. Some people are awaking from their trance, but the vast majority is still slumbering or fuming at erroneous perpetrators.

The American people are paying the price for allowing a few evil men to gain control of our government….The State grows ever more powerful.

The young people leading the protests across this land are showing tremendous courage and a tenacity of spirit that has been dormant for decades among the lethargic, distracted, over-medicated public. Despite being subjected to government education conditioning, these young people have zeroed in on the enemy. They may not have all the solutions, but they have correctly identified the corrupt banking system as the central nervous system of this vampire squid sucking the life out of our nation. I will support any effort to shine a light on our crooked system. My three young sons deserve a chance at a better life than they will get under the thumb of this oligarchic criminal enterprise. As a child I caught a fleeting glimpse of the American Dream. I turned to look, but it was gone. I choose not to become comfortably numb. I choose to do whatever it will take to renew the opportunity for my sons to achieve the American Dream.

http://www.theburningplatform.com/?p=25234

Bank of France’s Noyer: Europe Is in a "True Financial Crisis"

From Zero Hedge:

In case anyone was wondering why the EURUSD is back to levels from several hours ago and well off the ramp highs (with ES continuing to pretend nothing matters), it is due to Bank of France Governor Christian Noyer who speak the following bullet points at a forum in Tokyo:

• Crisis Has Worsened Significantly
• Market stress has intensified and Europe is in a “true financial crisis,”

In other words precisely what Zero Hedge readers have known all along, the same as this article from the FT which shows what we presented to readers last week. As for those who like listening to the French grovel here is you desert:

• Markets and some governments think the ECB should buy more govt debt

Because €1 trillion is never enough...

http://www.zerohedge.com/news/bank-frances-noyer-speaks-says-europe-true-financial-crisis?page=1

“Now the dwelling of God is with men, and he will live among them. They are his people, and the Lord is their God. He will wipe every tear from their eyes. There will be no more death or mourning or pain, for the old order of things has passed away. And a voice from heaven said, ‘Behold, I make all things new.’”
Revelation 21:3-5

The Basis of Economic Growth: Free Enterprise System and Honest Regulation Are the Key

When a nation’s growth has been fuelled by deficit/credit binge, not organic spending, that is an illusionary growth. As some pointed out, currency devaluation and debt monetization compounded by asset bubbles have created the illusion of economic growth.

If there had not been bailouts, stimulus, and capital inflows as well as global boom and bubbles, Korea wouldn’t have recovered quickly.

While maintaining a robust trade balance, a zombie economy has taken hold. The Korean government has propped up the financial system without overhauling it.

The Korean policy framework predicated on the state-led economic development model imposed both benefits and disadvantages on the economic landscape of Korea. As Korea couldn’t compete based on cost advantage any longer, the Korean government’s excessive interventions have done more harm than good. Yet, those have continued, causing capital misallocation…

Korea has to allow a free enterprise system to efficiently allocate resources in productive capacity. The Korean government has to limit its role to providing a structure and social culture in which entrepreneurship and innovation can flourish on a level playing field, as noted on more than a few occasions. Of course, it has to engage in the honest regulation of the markets given a persistent rogue element in any market.

Meanwhile, it has to realize that the global business model is broken and clear a zombie economy.

Only then can the basis of economic growth come from organic growth. This may be the only way to secure long term sustainability, promoting the ordinary citizen’s wellbeing.

(A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.)

ECB’s Paramo: Europe Must Be Prepared to Give Up Significant Sovereignty

Zero Hedge posted a full speech by José Manuel González-Páramo, member of the Executive Board of the ECB, at the Oxford University European affairs society, on November 24, 2011 at the below link.

From Zero Hedge:

The only quote worth noting from the just delivered speech by ECB executive board member José Manuel González-Páramo is the following: "We cannot completely delegate governance to financial markets. The euro area is the world’s second largest monetary area. It cannot depend solely on the opinions of ratings agencies and markets. It needs economic governance arrangements that are preventive and linear. This underscores my central point that a much more comprehensive approach to economic governance is now the priority for the euro area. And this means more economic and financial integration for the euro area, with a significant transfer of sovereignty to the EMU level over fiscal, structural and financial policies." In other words, in order to protect people from the "stupidity" of rating agencies which after years of lying have finally started telling the truth, and the market which does what it always does, and punishes those who fail, Europe must be prepared to give up "significant sovereignty" (sounds better than Anschluss) to Europe's "betters" which is another way of saying 'he who pays the piper calls the tune." And "he" in this case is, of course, Germany. In other words, courtesy of one failed monetary experiment Germany will succeed, without sheeding one drop of blood, where it failed rather historically some 70 years ago.

http://www.zerohedge.com/news/behold-new-anschluss-ecbs-paramo-prepare-give-significant-sovereignty?page=1

Hungary Is Junked by Moody’s

From Zero Hedge:

Citing uncertainty over the country's ability to meet 'austerity' targets and its rising susceptibility to external shocks - given its heavy reliance on external investors - Moody's just downgraded Hungary to Junk Ba1 (with a negative outlook).

Moody's Statement Summary:

The key drivers for the downgrade and negative outlook are as follows:

1.) The rising uncertainty surrounding the country's ability to meet its medium-term targets for fiscal consolidation and public sector debt reduction, particularly given Hungary's increasingly constrained medium-term growth prospects.

2.) The increased susceptibility to event risk stemming from the government's high debt burden, heavy reliance on external investors and large financing needs as the country enters a period of heightened external market volatility.

Moody's believes that the combined impact of these factors will adversely impact the government's financial strength and erode its shock-absorption capacity. The rating agency's decision to maintain a negative outlook on Hungary's ratings is driven by the uncertainty surrounding the country's ability to withstand potential event risks emanating from the European sovereign debt crisis.

Moody's has also downgraded by one notch to Ba1 from Baa3 the foreign-currency debt rating of the National Bank of Hungary (NBH) given that the Republic of Hungary is legally responsible for the payments on NBH's bonds.

http://www.zerohedge.com/news/hungary-junked-moodys

Andre Bailey: U.K. Banks Must Brace for Euro Break-Up

From the Telegraph:

Andrew Bailey, deputy head of the Prudential Business Unit at the Financial Services Authority (FSA), noted that British banks are not heavily exposed to the eurozone, but said they must prepare for some countries to exit the single currency – or a complete break up.

"We cannot be, and are not, complacent on this front," Mr Bailey said. "As you would expect, as supervisors we are very keen to see the banks plan for any disorderly consequence of the euro area crisis.

"Good risk management means planning for unlikely but severe scenarios and this means that we must not ignore the prospect of a disorderly departure of some countries from the eurozone.

"I offer no view on whether it will happen, but it must be within the realm of contingency planning," he added. Failure to plan for the exit of a country from the euro would be "unsound risk management", Mr Bailey said.

"The eurozone was designed without an exit mechanism and so working out how this may happen is difficult," Mr Bailey said.

Last week, Japanese bank Nomura said a euro break-up is a "very real risk" and advised bond holders to check whether they are likely to be repaid in other, reinstated European currencies if the euro crumbles. Other economists and bankers have issued warnings that financial companies need to prepare for the worst.

http://www.telegraph.co.uk/finance/financialcrisis/8914192/Andrew-Bailey-UK-banks-must-brace-themselves-for-euro-break-up.html

북한 탈출 여성: 북 실상 못 믿는 사람들 답답

이번 달만해도 방문해 주시는 분들 중 미국에서 들어와 주시는 분들이 가장 많은데 미국은 추수감사절을 보내고 계실 것이다. 이날의 큰 의미는 감사(gratitude)에 있을진대 다음의 기사는 다시금 삶과 감사의 뜻을 반추하게 한다.

중앙일보로부터:

"한국에서 만난 사람들 중에서 북한의 실상을 얘기해도 믿지 않는 이들이 더러 있는데 그럴 때마다 정말 답답합니다."

지난 2008년 6월 두만강을 건너 북한을 탈출한 뒤 중국과 라오스, 태국을 거쳐 한국에 정착한 김혜숙(50.여)씨는 23일 오후(현지시간) 제네바에서 연합뉴스와 가진 인터뷰에서 "배고픔의 고통이 어떤 건지 겪어보지 못한 사람은 모른다"면서 정치범수용소에서 보낸 28년의 세월과 목숨을 건 북한 탈출기를 풀어놓았다.

김씨는 수용소에 있을 때 "할머니가 강냉이 가루를 빻으면 봉지 30개에 조금씩 나눠서 매일 풀을 섞어 죽을 끓여 먹으며 한 달을 살았다"며 "배가 고파 대동강 건너에 있는 14호 관리소에서 곡식과 야채를 훔치다 잡혀서 공개처형을 당하는 사람들을 어릴 때부터 숱하게 봤다"고 전했다.

북한에서 돼지를 사오라는 중국인 식당 주인의 지시에 다시 북한에 들어간 김씨는 2007년 10월에 검문에 걸려 붙잡혔고, 6개월 노동단련형을 선고받고 18호 관리소에 재수용됐다가 이듬해 3월 양말만 신은 채 수용소를 탈출해 석달 후 또 한 번 두만강을 넘었다.

16살때부터 30살이 될 때까지 탄광에서 일했다는 김씨는 "진폐증이 심해서 말을 할 때도 숨이 가쁘다"며 "그래도 중국을 거쳐 한국에 온 뒤로 먹는 게 좋아지니 짐승이 털갈이하는 것처럼 온 몸의 껍질이 세 번 벗겨지면서 새 피부가 나오더라"며 수줍게 웃었다.

http://joongang.joinsmsn.com/article/aid/2011/11/24/6383102.html?cloc=nnc

Zero Hedge: Russia Retaliates against the U.S.

From Zero Hedge:

Earlier today, we presented the latest developments in the escalating possibility of an imminent air (and potentially land) campaign targeting Syria by the "western world", a move that would infuriate not only Iran, but also Russia and China, both of which have made it clear they would not sit idly by and let such an "aggression" stand. Now it is Russia's turn to retaliate. Cutting straight to the chase - in a nationally televized appearance by Russian president Dmitry Medvedev: in response to what the Russian believes is an active incursion and a potential act of eventual aggression on behalf of NATO countries in Eastern Europe (and hence the US), he said the following (7 minutes in): "First, I am instructing the Defense Ministry to immediately put the missile attack early warning radar station in Kaliningrad on combat alert. Second, protective cover of Russia's strategic nuclear weapons, will be reinforced as a priority measure under the programme to develop out air and space defenses. Third, the new strategic ballistic missiles commissioned by the Strategic Missile Forces and the Navy will be equipped with advanced missile defense penetration systems and new highly-effective warheads. Fourth, I have instructed the Armed Forces to draw up measures for disabling missile defense system data and guidance systems if need be... Fifth, if the above measures prove insufficient, the Russian Federation will deploy modern offensive weapon systems in the west and south of the country, ensuring our ability to take out any part of the US missile defense system, in Europe. One step in this process will be to deploy Iskander missiles in Kaliningrad Region"

http://www.zerohedge.com/news/russia-retaliates-against-us-puts-radar-station-combat-alert-prepares-take-out-european-missile

IMF: Japan Debt Could Quickly Become Unsustainable; S&P: Japan May Be Close To a Downgrade

From GoldCore:

Geopolitical risk remains elevated and Middle East tensions are escalating globally with Russia appearing to be prepared to risk conflict over Syria with NATO and the US. Yesterday, Russian President Dmitry Medvedev threatened to target and, if necessary, destroy the U.S. missile defence shield in Europe once it is built.

A marked deterioration in US–Russian relations and concerns of a new ‘Cold War’ may support gold prices.

While all the focus has been on Europe, and to a lesser degree the US in recent months, two of the other largest debtor nations in the world, Japan and the UK (including corporate and bank debt), have been under the market's radar.

This will change soon and will likely lead to the next phase of the global financial crisis. The fact that we have a global debt crisis which will almost inevitably lead to an international monetary crisis is as of yet not acknowledged or realized by the markets and the media.

Today, the IMF warned in a new report that market concerns over fiscal sustainability could trigger a "sudden spike" in Japanese government bond yields that could "quickly" render the nation's debt unsustainable as well as shake the
global economy.

Japan's public liabilities amount to roughly twice annual economic output - a ratio worse than any other industrialized economy, including turmoil hit Spain or Italy.

Separately, Standard and Poor's says it's likely that it will cut Japan's sovereign rating again, as the government hasn't made progress in tackling its public debt burden. The agency cut the country's rating to double-A minus in January, and has had a negative outlook on the rating since April.

Japan is forecasting that its debt will exceed a staggering US$13-trillion during the fiscal year ending in March next year. S&P's Japanese director said the public finances were getting "worse and worse every day".

The ‘Land of the Rising Sun' may soon see its economic sun set as the great global rebalancing unfolds.

http://www.goldcore.com/goldcore_blog/gold-gbp-1092oz-jpy-130890oz-%E2%80%93-imf-japan-debt-could-quickly-become-unsustainable

From Bloomberg:

Standard & Poor’s said Japanese Prime Minister Yoshihiko Noda’s administration hasn’t made progress in tackling the public debt burden, an indication it may be preparing to lower the nation’s sovereign grade.

“Japan’s finances are getting worse and worse every day, every second,” Takahira Ogawa, director of sovereign ratings at S&P in Singapore, said in an interview. Asked if that means he’s closer to cutting Japan, he said it “may be right in saying that we’re closer to a downgrade. But the deterioration has been gradual so far, and it’s not like we’re going to move today.”

While Japan has enjoyed borrowing costs at global lows for its debt, the International Monetary Fund said in a report released on its website yesterday there’s a risk of a “sudden spike” in yields that could make the debt level unsustainable. Japanese government bonds fell after Ogawa’s remarks, sending 10-year yields to the highest level in three weeks.

http://www.bloomberg.com/news/2011-11-24/s-p-says-may-be-right-it-s-closer-to-japan-downgrade-as-finances-worsen.html

The U.K. Has the Biggest Combined Debt to GDP in the World; Korea, the 6th

As one can see in the below chart, the U.K. has the greatest debt (government, business and bank, and household debt combined) to GDP in the world. Korea comes in sixth. Yes, Korea hasn’t recovered from the 1997 financial crisis in a genuine sense.

From Zero Hedge:



http://www.zerohedge.com/news/goldmans-sigma-x-hints-who-next-contagion-target

HSBC Chinese PMI Fell to a 32-month Low in November

From MarketWatch:

HSBC’s preliminary China manufacturing survey fell to a 32-month low in November, well below analysts’ forecasts, with the reading signaling the sector is now contracting.

The Purchasing Managers Index printed at 48.0 on a 100 point scale, reversing from a mildly expansionary reading of 51.0 in October, HSBC reported Wednesday.

Consensus forecasts for had called for a 50.1 result, just above the 50 level that separates expansion from contraction, according to CNBC.

“As inflation is likely to decelerate at a faster-than-expected pace, it will leave more room for Beijing to step up selective easing measures, which should gradually filter through to keep China on track for a soft landing,” HSBC economist Hongbin Qu said in comments accompanying the flash PMI release.

http://www.marketwatch.com/story/china-manufacturing-gauge-shows-contraction-2011-11-22

Uncle Sam to the Rescue: IMF Creates New European Bailout Facility

From Zero Hedge:

And here comes Uncle Sam:

• IMF APPROVES CREDIT LINE PROGRAM CHANGES TO PROVIDE LIQUIDITY
• IMF CREDIT LINE CREATES NEW SOURCE OF FUNDS FOR MEMBER NATIONS
• IMF ADDS EMERGENCY FUNDING TOOL TO ASSIST COUNTRIES IN CRISIS
• IMF NEW CREDIT LINE AVAILABLE FOR SIX MONTHS TO TWO YEARS
• IMF CREATES PRECAUTIONARY AND LIQUIDITY LINE
• IMF SAYS ACCESS UNDER 6-MONTH LIQUIDITY LINE COULD BE UP TO 500% OF MEMBERS QUOTA

And here is the math: Italy's quota is 7,882.3SDR; Spain is 4,023.4 SDR. Multiply by 5 and you get 40 Billion and 20 billion SDRs respectively, which translates to $61 billion and $31 billion. A total of $91 billion in additional capacity? And that's it: enough to fund Italy and Spain for... two months. This is the best the regime can come up with?

Good thing America can get its own house in order so it can go out and fix the world next, not with one, but two credit lines. Incidentally, absent the US ratifying these two credit lines they are as good as useless because with 17.7% of the total allocation, the US is the defacto lender of only resort (since this is used to bail out Europe, which effectively means Europe will not be lending into these credit lines). And good luck passing a global bail out vehicle through the Frankenstein monster that is the US legislative body.

http://www.zerohedge.com/news/uncle-sam-rescue-imf-creates-new-european-bail-out-facility

From Bloomberg:

The Washington-based IMF today said the new instrument, the Precautionary and Liquidity Line, can be tapped by countries with strong economies currently facing short-term liquidity needs. Countries with potential needs can also apply, as they did in the past under the Precautionary Credit Line that the new instrument replaces.

“The reform enhances the Fund’s ability to provide financing for crisis prevention and resolution,” IMF Managing Director Christine Lagarde said in an e-mailed statement. “This is another step toward creating an effective global financial safety net to deal with increased global interconnectedness.”

The changes, which enable countries that pre-qualify to request IMF funds without having to make as many policy changes as with traditional loans, come as Europe’s crisis threatens to spread to Spain and France. The IMF is co-financing bailouts in Greece, Portugal and Ireland and is preparing to send a team to Italy for an unprecedented audit of the country’s efforts to cut its debt.

The Standard and Poor’s 500 Index pared losses after the report.

http://mobile.bloomberg.com/news/2011-11-22/imf-revamps-credit-lines-for-nations-facing-shocks-on-europe-debt-turmoil

Bruce Krasting: Capital Flight and Forced Repatriation in Europe

From Zero Hedge:

Put yourself in the mind of a Greek who had some savings in a local bank. What would you do? You would do whatever you could to get your money to high ground. It would be perfectly reasonable for you to do that. And that is exactly what the Greeks have done. They’ve moved billions of Euros to Swiss banks in an effort to preserve their wealth. In the process they have crippled the Greek banks and have added to the downward spiral in Greece and the rest of the EU.

There was (IMHO) a very significant development on this front last week. A move is being made in Brussels to “force” the Swiss government/banks to transfer all of the assets of Greek citizens back to the Greek banks. For a Greek this means that your money is hostage. It has been functionally expropriated. It will be transferred into a banking system that is fraught with risk. Some portion of the money that goes back to Greece will certainly be lost.

I have talked with some who I know in Athens. They are out of their minds with this development.

BRUSSELS — The European Commission is helping Greece negotiate an agreement with Switzerland to repatriate as much as $81 billion believed to be hidden in Swiss bank accounts, a high level European Union executive body official said Nov. 17.

$81 billion? That’s massive. This is not the shopkeeper or pensioner. This is big bucks and that means the Greek shippers. It is a fact that the Greek government doesn’t tax the foreign earnings of the shippers. Call that a mistake, but that is the law. As a result, the shippers have held huge bucks in Switzerland. It’s not dirty money. Right or wrong, there was no legal tax on this.

The European Commission is working with Switzerland and Greece stop what it believes is an ongoing exodus of money from Greek bank accounts into Swiss and other offshore banking centers, the EU official said.

The only way to stop capital flight is to address the underlying causes of the flight. That can’t happen in Greece for years. The alternative is to trap the money, force it to go where it is at most risk. The owner of the money will have no choice. Any rights they might have to preserve their assets will be abrogated.

I’m amazed at this development. The Swiss government/banks are obligated to cooperate with EU tax authorities when there is evidence of tax fraud. But that is not what this is about. The people in Brussels and Bern know that. The fact is that the Greek tax system is so screwed up that there simply are no taxes levied on certain types of income/capital (the shippers). No doubt, some of the Greek cash that is in Switzerland is there because of tax avoidance. But the vast majority is simply safe haven money.

The word “Repatriation” sounds nice enough but really it means “Theft and expropriation”. There will be nothing voluntary about this. There will be little (if any) due process.
http://www.zerohedge.com/contributed/capital-flight-and-forced-repatriation

Another Excellent Interview with Kyle Bass by the University of Virginia Professor

No matter who gets elected next year, the next president of Korea needs to understand Kyle’s take on the big picture.

From Zero Hedge:

Another noteworthy Kyle Bass moment as he discusses debt sustainability among major global sovereign nations. Simply and proficiently, the hedge fund manager describes how a dwindling current account surplus in Japan, US welfare economics, and the peripheral-to-core European stressors are all Madoff-like and unsustainable. Switching from broad-brush terms to the idiosyncratic complexities of each region, Bass offers his inimitable take - in a mere six minutes - on how the status quo is quivering under its own self-deception. His rightful conclusions remain extremely worrisome and should be required reading/watching for every central banker and politician trying to keep the dream alive.

http://www.zerohedge.com/news/kyle-bass-destroys-ponzi-prone-debt-sustainability-arguments-status-quoand-why-germany-cant-sav?page=1

“Where there is no vision, the people perish.”
Proverbs 29:18

Kyle Bass: BBC Interview on the U.S., Europe, Japan, Gold and Tearing of Social Fabric

An excellent interview with Kyle Bass, founder of Hayman Capital Hedge Fund, on his take on “global debt scenario and what’s likely to happen going forward.” He made highly profitable asymmetric bets on the U.S. subprime mortgage crisis and Greek default.

He calls for “massive debt restructuring” in Europe. He’s saying “you have to have atonement for the ridiculous levels of spending both the U.S. and Europe have gone through. The spending idiocy of the world is going to catch up to itself.”

He is bearish on Japan, making his next asymmetric bet on Japan.

"Buying gold is just buying a put against the idiocy of the political cycle. It's that simple"

His Interview on BBC:

http://www.bbc.co.uk/iplayer/console/p00lh2jc

His points in his letter to investors back in May 2010 have been proven to be correct.

From his letter:

This weekend, the EU and the IMF effectively went all in with a bad hand in the highest stakes game of financial poker ever played with the world. We believe the agreement released was nothing more than a Potemkin agreement in order to placate bond investors. In the end (and there will be a reckoning for many countries) nations, including the United States, need to dramatically cut spending and get their fiscal balances in order. Unfortunately, our elected officials are on the hamster wheel of electoral cycles and are not able to make tough decisions like this as they would likely not be reelected without a “sea change” in public opinion towards government spending and deficits. We are therefore on the path to significant currency devaluation around the world that will likely result in significant inflation. We increased our holdings of gold on Monday morning as well as taking other steps to position ourselves for the most likely outcome over the next few years. Interestingly enough, based upon the market reaction in the last 36 hours, it seems the law of diminishing returns applies to bailouts as well.

http://www.zerohedge.com/news/blast-past-kyle-bass-was-right-about-everything-again

The Middle Class Is the Backbone of a Nation, Yet Continues to Shrink

It is critical for the middle class to be solid and prosperous. The strong middle class base with more equitable income distribution will make a society civil and fair without participating in bribery and corruption. That is what the U.S. used to enjoy with its free enterprise system.

The middle class drives consumption, which will put economy back on track.

And yet, Korea seems to be migrating toward a two-tiered society, as has been the case of the U.S. The middle class has been taking the biggest hits, as they get squeezed from the top and the bottom.

Korea’s deindustrialization process started in the late 1980s…Several factors have covered up the effect of deindustrialization…This process has profound impact on the Korean middle class...

The Korean middle class has been put into a consumption game by the internal and external forces… The middle class has been drowning in debt. The recent developments like the minuscule returns on fixed incomes and high inflation in essentials like food will stifle buying power of the middle class.

Moreover, the U.S. Fed’s policy and Korea’s monetary policy are giving SMEs an unfair disadvantage by making them get the margin squeezed out of them. They are the engine of hiring. The continuous rise in running business will crush purchasing power of the middle class as well.

Those developments would lead to a tearing of the social fabric, with the middle class consolidating into the poorer ones.

One of the ways to preserve the middle class is to overhaul the broken system including the financial system and chaebol-centered skewed industrial structure…

There seem to be no big productive jobs producers on the horizon.

The Korean power elite has to look out for their own people, preserving the wealth of the Korean people. They should be mindful of the damage the demise of the middle class does to broader society.

Again, policy choice should be closely aligned with the nature of the society it wishes to encourage.

(A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.)

Germany Raises Orderly Defaults

From the FT:

Our friends and rivals over at The Daily Telegraph have gotten their hands on an interesting document from the German government detailing its proposals for EU treaty change, and have helpfully posted it online (with an English translation by the Open Europe think thank).

Although the Telegraph focuses on its implications for Britain, there is a significant amount of detail on how Berlin would like to change eurozone economic governance, including yet another stab at enshrining bondholder “haircuts” in the EU treaties.

For those who haven’t followed the debate closely, there is now a closed-door fight going on about whether Greece really will be the only country that sees its bondholders pushed into losses – as the eurozone’s leaders have repeatedly insisted in their summit conclusions – or whether the bloc’s new €500bn rescue fund, which could come into place as early as next year, should allow for organised defaults.

When broader default powers were mooted for the ESM at this time last year in a much-discussed agreement between France’s Nicolas Sarkozy and Germany’s Angela Merkel in the French seaside town of Deauville, bond markets swooned, sending Ireland and then Portugal into bail-outs. Days later, during a G20 meeting in Seoul, Merkel was forced to back down. But the issue clearly hasn’t died.

http://blogs.ft.com/brusselsblog/2011/11/germany-raises-orderly-defaults-again/#axzz1dzjA69x1

Nigel Farage: By Any Objective Measure, the Euro Is a Failure

Video from Nigel Farage speaking to European parliament.

YouTube video:

http://www.youtube.com/watch?feature=player_embedded&v=bdob6QRLRJU#t=35s

China’s Forex May Be Weaker Than Perceived

The following article explains why China can’t sell the U.S. treasuries.

From the China Post:

Europeans searching for a bazooka to blast away eurozone debt problems might well eye China's US$3.2 trillion foreign exchange arsenal with envy, but Beijing has far less firepower available than many assume.

Most of money in the world's biggest store of foreign exchange reserves is prudently kept in near-cash instruments to fund import and debt service bills in the event of an unforeseen domestic emergency, or invested in long-term assets that, if sold in size to help Europe, would spark panic on global financial markets.

In fact, analysts reckon China's armory has only about US$100 billion to spare.

“The sheer size of China's foreign exchange reserves is massive, but the actual amount of money available for investing in Europe each year isn't that big,” said Wang Jun, an economist at CCIEE, a top government think tank in Beijing.

A crucial constraint is China's existing holdings of U.S. Treasury securities. Beijing is by far the biggest foreign owner, with an estimated 70 percent of the nation's reserves held in U.S. government bills, bonds and other dollar assets.

Turn outright seller and the market value of the remaining holdings is likely to plunge.

That's not a great investment strategy given the Chinese public's unhappiness about the roughly 38 percent decline in the nominal value of the dollar in the last 10 years.

The government also may have to set aside some foreign exchange reserves to bailout the banking system if piles of loans to local governments and the property sector turn sour.

China injected nearly US$80 billion in reserves into its big state banks from 2003 to 2008 to help them clean up their balance sheets so they could float shares.

Meanwhile, China's trade surplus, essentially the money it has to invest overseas, is shrinking as Beijing does what critics in the developed world have been urging for years and rebalances its economy away from exports.

Imports surged 28.7 percent year on year in October and the surplus of US$17 billion was well short of the US$24.9 billion forecast by economists.

China recycles foreign exchange assets into overseas investments so outflows of cash roughly track inflows.

The build-up in FX reserves, a result of the central bank's intervention to limit the yuan's appreciation, tends to fuel inflation pressures even as the central bank issues bills to mop up the amount of local currency it pumps into the economy.

And it explains why foreign reserves cannot easily be used for domestic spending on infrastructure or shoring up pension systems, since simply converting the cash risks driving up both inflation and the value of the yuan currency.

http://www.chinapost.com.tw/commentary/reuters/2011/11/18/323278/Analysts-suspect.htm

Italy Protest against Banker’s Government

From Reuters:

Thousands of Italians took to the streets in several cities on Thursday to protest against what they called a "bankers' government" led by economist Mario Monti, and there were clashes with police.

Students in Italy's financial capital Milan threw firecrackers at police trying to prevent them approaching the Bocconi university, which is chaired by Monti and has become a symbol for the new executive of technocrats he has formed to tackle Italy's debt crisis.

The students also threw eggs and fake dollar banknotes at the building of the Italian banking association. "We don't want the banks to rule" and "Monti's government is not the solution", the students chanted.

Police said several people had been injured, including a policeman. Some of the protesters chanted: "Smell of austerity" and "Monti will all make us beggars."

A collapse of market confidence has pushed Italy to the brink of financial disaster and driven up its borrowing costs to unsustainable levels.

Monti's cabinet is made up of a mix of academic specialists and experienced administrators and includes Corrado Passera, the chief executive of Italy's biggest retail bank, Intesa Sanpaolo, as industry minister.

http://www.reuters.com/article/2011/11/17/italy-protests-idUSL5E7MH1YU20111117

Total U.S. Debt Passes $15 Trillion

From Zero Hedge:

…total US debt has increased by 41.5%, or $4.4 trillion, from $10,626,877,048,913 on January 20, to $15,033,607,255,920, under Obama as president.

http://www.zerohedge.com/news/its-official-total-us-debt-passes-15-trillion

California Is So Broke It May Shorten School Year

From Zero Hedge:

This is just getting ridiculous:

• CALIFORNIA REVENUE MAY TRAIL FORECAST BY $3.7 BLN, ANALYST SAYS
• CALIFORNIA REVENUE SHORTFALL MAY MEAN SHORTER SCHOOL YEAR

Who needs to go to school anyway: all we need to know we learn from The Situation and Pauly-D. But yes, M-Dub is off by a month or two on the upcoming tsunami default wave: pesudo-sophist muni experts rejoice! Also rejoice because this news is somehow bullish - probably the EFSF will be expanded to include California, or the FT will break a story at 3 pm that China is about to buy CA, sending the S&P to Uranus.

http://www.zerohedge.com/news/school-children-rejoice-california-so-broke-it-will-shorten-school-year

Samsung Acquires U.S. Medical Equipment Firm, Nexus

Samsung seems to know which industry would be less affected by the global economic slowdown. Samsung bought a Korean medical equipment company, Medison last year. Medison was an entrepreneurial company, which I discussed on a previous post. All in all, Samsung is becoming more like a Korea-based platform company, seeking the highest return worldwide.

From MarketWatch:

Continuing its push to seek acquisitions as part of its growth strategy, Samsung Electronics Co. (005390.SE) said Wednesday it acquired U.S. healthcare equipment maker Nexus for an undisclosed amount.

The latest acquisition, which came nearly a year after Samsung bought a South Korean medical equipment maker last year, will help the world's biggest technology company by revenue push into the healthcare segment, an area where the electronics giant is investing heavily to grow. It also underscores Samsung's strategy to shift from organic growth to buy companies overseas in new areas in its bid to compete with the likes of General Electric Co. Samsung is the world's biggest maker of semiconductors, liquid crystal displays and the world's second-largest mobile handset maker by shipments behind Nokia Corp.

As part of its long-term plans to develop new engines for growth, Samsung announced last year that it aims to invest KRW1.2 trillion through 2020 in the healthcare sector.

http://www.marketwatch.com/story/samsung-buys-us-medical-equipment-firm-nexus-2011-11-15-2318490?reflink=MW_news_stmp

ECB’s Yves Mersch: Monetizing Government Debts Is Not Feasible

Many governments around the globe including the U.S., Japan, and Korea have monetized their debts.

From Zero Hedge:

ECB Governing Council member Yves Mersch said that monetizing government debts "is tantamount to inflation" and "not feasible." To use inflation to lower the fiscal burden "would reduce incentives for governments" to tackle their debt burdens and "would raise the risks of even higher future inflation and greater output volatility. Uncontrollable wage-price spirals would be likely." Mersch said in a speech in Frankfurt today. He also added that you can not make the ECB as a "lender of last resort for governments" and that governments must live up to own responsibilities.

http://www.zerohedge.com/news/ecb-member-tells-truth-debt-monetization-beginning-end

UBS: The Rise of the State

From UBS Report:

Governments are encroaching into more and more areas of the world economy. This is not just through political drama (as we have seen in the Euro area), nor even through the conventional mechanisms of foreign exchange intervention. Regulation (and regulatory uncertainty), sovereign wealth funds, bond market manipulation and default risks all play a role in financial markets, and all are intensely political in their nature.

A more politically nuanced world raises an interesting unintended consequence for global financial markets. Directly, as a result of increased regulation, or indirectly, as a result of increased costs associated with assessing foreign political risk, investors may feel that the rise of the state will increase the home country bias of capital flows - exactly as leaders look for global burden sharing.

http://www.scribd.com/doc/72763988/UBS-The-Rise-of-the-State

China’s Xinhua: Scapegoating China No Answer to U.S. Economic Woes

We understand the peculiar relationship between the U.S. and China, the so-called Chimerica. They seem to be going over the cliff together.

From Xinhua:

In a replay of scapegoating China for the economic woes of America's own making, U.S. President Barack Obama claimed Sunday that Beijing has "still not done enough" to revalue its currency.

"There has been slight improvement over the last year but it hasn't been enough," he commented on the exchange rate of the yuan against the U.S. dollar at a news conference after the Asia-Pacific Economic Cooperation (APEC) economic leaders' meeting in Honolulu, Hawaii.

But he failed to mention the fact that the yuan has already appreciated by about 30 percent against the greenback in the past six years.

For the United States, it should put its house in order before chiding others.

Since the onset of U.S. subprime crisis in 2007, it was the country's domestic economic problems that triggered a disastrous financial crisis that swept the world.

Excessive spending for many years has added up debts. Meanwhile, traditional strong industries such as finance and auto were devastated by the crisis, pushing up unemployment.

In face of such serious domestic problems which probably could trigger a new global economic tsunami, many U.S. politicians seemed only to care about how many votes they could get, without having a single thought about what kind of the global responsibilities the country should take.

Thus it should come as no surprise that the angry "Occupy Wall Street" protesters are calling for an end to the political tricks in Washington.

Squeezing China, especially on the yuan, is an old trick in the run-up to U.S. presidential election. Such a tactic of scapegoating others may attract some voters' attention, but is definitely no answer to America's real problems.

http://news.xinhuanet.com/english2010/indepth/2011-11/14/c_131246493.htm

Ron Paul: US Banks Having over a Trillion Dollars Tied Up in At-Risk German and French Banks

From Ron Paul:

The global economic situation is becoming more dire every day. Approximately half of all US banks have significant exposure to the debt crisis in Europe. Much more dangerous for the US taxpayer is the dollar's status as reserve currency for the world, and the US Federal Reserve's status as the lender of last resort. As we've learned in recent disclosures, this has not only benefitted companies like AIG, the auto industry and various US banks, but multiple foreign central banks as they have run into trouble. Nothing has been solved, however, by offering up the productivity of Americans as a sacrificial lamb. Greece is set to be the first domino to fall in the string of European economies at risk. Rather than learning from Greece's terrible example of an over-consuming public sector and drowning private sector, what is more likely from our politicians is an eventual bailout of European investors.

The US has a relatively small exposure to overwhelmed Greek banks, but much larger economies in Europe are set to follow and that will have serious implications for US banks. Greece is technically small enough to bail out. Italy is not. Germany is not. France is not. It is estimated that US banks have over a trillion dollars tied up in at-risk German and French banks. Because the urge to paper over the debt with more credit is so strong, the collapse of the Euro is imminent. Will the Fed be held responsible if the Euro brings the US dollar down with it?

Unfortunately when politicians try to monopolize currency with legal tender laws, the people find it harder and harder to survive the inflation and taxation to which they are subjected. Bankers should take their dreaded haircut rather than making innocent people pay for their mistakes. The losses should be limited and liquidated, rather than perpetuated and rewarded. This is the only way we can recover.

If we continue to bail out banks and bankers so they can continue to lose money, if we cavalierly put this burden on the taxpayer, it is all too predictable what will happen here.

http://paul.house.gov/index.php?option=com_content&view=article&id=1927:european-debt-crisis-threatens-the-dollar&catid=62:texas-straight-talk&Itemid=1&Itemid=69

U.S. Fed Opens New FX Swap Line with BOJ

If one reads the following post and the comments, one can understand how the economies of Japan, Korea, and China are intertwined with the U.S.’

It’s appalling to see Japan with a culture of saving weakening its currency for the benefit of its financial institutions.

From Zero Hedge:

Today, for the first time in months, the New York Fed disclosed that in addition to its outstanding $1.9 billion in swap lines with the ECB, it had opened for the first time since the swap line reopening, two new USD liquidity lines with the Bank of Japan, a 7 day and an 83 day one, for 1.1%, or just modestly more than what the 7 Day Drawn line with the ECB costs. The combined is for $102 million which brings up two questions: how much longer will the BBA pretend its LIBOR quotations are even remotely useful: after all today, according to the daily bank matrix, the most expensive 3 Month unsecured USD loan in the interbank market was 0.575% (courtesy of Credit Agricole). Yet the BOJ had to borrow from the 100x levered FRBNY at double that? Amusing. And also, just what the hell is the BOJ doing: after all in the past week the bank supposedly bought over $200 billion worth of dollars (and sold Yen) in order to weaken its currency. Where did all this money go if the bank was forced to serve as a conduit for a meager $102 million. We are sure the explanations will be fast and furious, and none of them will be right.

http://www.zerohedge.com/news/fed-opens-new-fx-swap-line-bank-japan-second-after-ecb

Decision Time for Europe: Two Options

From Zero Hedge:

When dealing with the daily barrage of headlines from Europe, it is easy to get lost in the trees and forget what the forest looks like. That's perfectly understandable - after all, it is precisely the intention of the Eurocrats to confound everyone with noise, so any track of the fact that the big picture is unfixable is if not lost then promptly forgotten, with reactionary newsflow dominating the flawed decision-making process. Luckily, the fact remains that no matter what, no matter the scale of lies out of Europe, the problem still remains: the math just does not make any sense. Conveniently reminding us precisely of this, we present to our readers the must read presentation by Swiss private bank Pictet titled "Decision time for monetary union" which puts the forest right back into focus, and explains why all attempts to kick the can down the street will be met with a prompt and furious response by the bond vigilante crowd, which has now officially been thawed out of cryogenic stasis. Because, all noise aside, the Eurozone has two options - continue the current course which is catastrophic: "Current response to the crisis has created conditions leading the euro area towards depression" or accept the reality and do something about it, yet "things are going to get worse before European authorities decide to wheel out their heavy artillery." Said otherwise: lose-lose. So without further ado, let's dig in...

http://www.zerohedge.com/news/decision-time-europe-definitive-presentation-future-or-lack-thereof-eurozone

“Therefore keep watch, for you know neither the day nor the hour.”
Matthew 25: 13

Italian PM Berlusconi Has Resigned

From the WSJ:

Italian Prime Minister Silvio Berlusconi resigned on Saturday, bringing down the curtain on one of the most brash and controversial leaderships of the western world and ushering in a season of austerity for one of Europe's biggest economies.

http://online.wsj.com/article/SB10001424052970204358004577033703085619754.html


From the NYT:

His exit, a sudden fall after months of political stalemate, paves the way for a new government of technocrats led by Mario Monti, a former member of the European Commission. Mr. Monti is likely to be installed early next week, following the apparent consent of key blocs of Mr. Berlusconi’s center-right coalition.

After borrowing rates on Italian bonds soared last week to levels that have required other euro zone countries to seek bailouts, Mr. Berlusconi pledged to step down after the Italian Parliament approved austerity measures sought by the European Union.

Mr. Monti met on Saturday with Mr. Berlusconi and earlier in the day with Mario Draghi, the recently installed president of the European Central Bank, reinforcing the notion that financial and European institutions supported Mr. Monti’s appointment.

The mandate of the next government will be to push through measures to help reduce Italy’s $2.6 trillion public debt and increase growth to keep the country competitive.

The austerity measures approved by lawmakers include selling state assets and increasing the retirement age to 67 from 65 by 2026. They would also decrease the power of professional guilds, privatize municipal services and offer tax breaks to companies that hire young workers.

http://www.nytimes.com/2011/11/13/world/europe/silvio-berlusconi-resign-italy-austerity-measures.html?_r=1

가벼운 이야기: 천일의 약속

요즘 한국에선 김수현씨가 쓴 한 멜로드라마가 인기다. 그녀의 드라마를 이전에도 가끔 보곤 했는데, 이 드라마는 지난 주 화요일에 보고 재미있어서 이번 주는 본방 사수를 했다. 특히 5회가 재미 있었다. 여자 주인공이 알츠하이머 병을 앓고 있다는 것을 안 남자주인공이 결혼을 하루 앞두고 파혼을 선언한 것을 알게 되자 당신의 삶까지 삼켜버릴 수는 없다라고 진심을 다해 마음을 전하는 장면이 심금을 울렸다. 그녀로서는 최선의 배려라 생각했기 때문이라. 남자 주인공이 약혼녀는 모든 것을 갖추고 있지만 그녀는 아무것도 없기 때문에 자기가 지켜줘야 한다는 얘기를 신파조로 흐르지 않게 잘 묘사한 작가의 역량도 좋았다. 일흔을 바라보는 김수현 작가는 이 작품이 그녀의 마지막 멜로드라마라고 하는데 그래서 그런지 대사 한 줄, 장면 하나 하나가 영화를 보듯이 완성도를 높이려는 그녀의 노력이 돋보인다.

한 기자도 지적했지만 지극히 통속적인 뻔한 내용의 드라마를 섬세한 심리 묘사와 빠른 극 전개로 몰입하게 만든다. 다음의 글을 쓴 이도 지적했듯이 이 드라마가 결국 표현하고 있는 것은 인간이 느끼는 보편적인 기억과 추억에 대한 단면을 풀어가고 있기 때문에 공감을 얻고 있는 듯 하다. 또한 이 드라마는 기억을 서서히 잃어가고 있는 (망가져 가는) 한 여자의 여정을 그리고 있지만, 유럽, 미국, 중국, 일본, 한국 등에서 일어나고 있는 일들이 서서히 그 수순을 밟아 가고 있고(큰 변화가 오리라 본다), 아마도 우리는 이 과정의 끝을 보지 못하고 생을 마감할 지도 모르는데, 그런 가운데에서도 어떻게 우리가 삶을 살아가고 마감할 것인가도 되돌아보게끔 한다. 특히, 사랑이라는 큰 틀 안에서 말이다.

엔터미디어로부터:

상투적으로 들리겠지만 삶의 기억으로 남는 것은 결국 '사랑'이다. 그래서 '천일의 약속'은 그 상투적일 수 있는 사랑이야기를 다룬다. 하지만 사랑을 표피적으로 바라보는 것이 아니라, '기억'이라는 삶의 잣대로 바라본다는 것이 큰 차이다. 삶이 결국 하나의 짧은 기억에 불과한 것이라면, 그 기억을 누구와 함께 나누고 누구의 기억으로 채우며 누구의 기억 속에 남게 되는가는 실로 중대한 문제가 아닐 수 없다.

그래서 이 결혼식을 이틀 앞두고 갑자기 파혼선언을 해버리는 남자 박지형을 이해할 수가 있다. 박지형의 선택은 결혼식이라는 그 짧은 순간을 염두에 두고 바라보면 양가 가족들이 입을 모아 말하듯 '미친 짓'으로밖에 보이지 않지만, 인생 전체를 두고 바라본다면 충분히 그럴 수 있는 일이다. 자신의 삶의 기억일 수 있는 여자의 마지막 기억 속에 남고 싶고, 그녀의 마지막을 자신의 기억 속에 남기고 싶은 그 삶의 욕망.

'천일의 약속'은 제목처럼 시간(천일)과 기억(약속)에 관한 김수현 작가의 진중한 시선이 돋보이는 작품이다. 그와 함께 피자를 먹고, 콜라를 마시고, 트림을 하며 밀어를 나누던 이서연의 그 일상적인 기억들은 지극히 소소한 것들이지만, 그녀의 기억이 점점 사라져가고 있는 현 시점에서 되돌아보면 아련하고 슬프면서도 아름다운 한 장면으로 그려진다. 그녀의 직업이 책을 만드는 출판이라는 사실은 이 지극히 한 개인의 이야기를 우리네 삶의 이야기로 확장시킨다. 그 기억을 잡고 싶고 남기고 싶은 욕망. 책이라는 인간의 욕구.

"나는 고장 나고 있어." 그녀는 자신을 이렇게 말한다. 이미 '고장 난' 것도 아니고. 아직 멀쩡하지만 '고장 날' 것도 아닌, 현재 '고장 나고' 있는 상황. 이 한 줄의 대사는 우리네 삶을 그대로 드러내준다. 서연은 알츠하이머라는 특수한 상황을 통해 기억의 관점에서 이 '고장 나고' 있는 인생을 깨달았던 것뿐이다. 사실 그 누구도 '고장 나고' 있지 않은 인생은 없지 않은가. '천일의 약속'이 보여주려는 건 바로 그 '고장 나고' 있는 우리네 삶의 운명 속에서 우리가 어떻게 삶을 받아들일 것인가 하는 것이다. 그리고 사랑을, 기억을, 추억을.

http://www.entermedia.co.kr/news/news_view.html?idx=786&bc=03&mc=02

Has Korea Liberalized its Economy in the Wake of the 1997 Financial Crisis?

In the wake of the 1997 financial crisis, Korea was pressed to liberalize its economy by the IMF. Has this liberalized Korea’s economy?; or state capitalism and crony Western capitalism have been wedded under the pretense of liberalizing its economy?...

It Korea had truly intended to liberalize its economy, they shouldn’t have employed excessive government interventions. As pointed out, a considerable portion of Korea’s policy actions has fuelled the misallocation of capital and induced pain for the middle class in the long haul…

Of course, liberalizing an economy involves proper regulation…

The very economic strategy Korea has pursued to achieve its rapid economic growth has the fundamental flaws and is bound to hit the wall. This holds true for Japan and China. Its growth model has been at the mercy of consumers. That’s why Japan, whose economy inspired Korea, had to agree on the Plaza Accord and has never recovered since then. In a way, the U.S. has indirectly controlled the monetary policy of Japan, Korea, and China since they have maintained the dollar peg…

We understand Korea’s needs to balance its economic concern with international politics concern. Even so, its excessive policy apparatus has done more harm than good for the overall well-being of a country…

Liberalizing Korea’s economy in a genuine sense would lead to a fairer economic system and more democratic society with more opportunity and liberty.

Toward this, its political system may have to agree on fair burden-sharing. Politics has overridden economics, regardless of which party is in power. The power elite’s values, virtues and moral fiber don’t seem to have changed much since the 1997 financial crisis.

(A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.)

Is France Another Elephant in the Room?

From LA Times:

The European debt crisis has gone from bad to worse as Italian government bond yields have soared, threatening the solvency of the Eurozone’s third-largest economy.

But things could go from worse to worst if bond yields keep rising in France, the continent’s No. 2 economy after Germany.

The French government knows it can’t afford for the bond market to turn on it. Paris announced a new round of spending cuts last week aimed at ensuring that the country holds on to its coveted AAA credit rating.

Moody’s Investors Service warned last month that it might put a negative outlook on France’s top-rung rating if Paris made too many commitments to back up its banks or other Eurozone states with tax dollars.

But France’s need to protect itself also raises doubts about its ability to extend help to Italy as Rome’s debt nightmare worsens.

http://latimesblogs.latimes.com/money_co/2011/11/italy-debt-crisis-france-bond-yields-paris-austerity-aaa-rating.html

Charles Hugh Smith: Some Things You Should Know about China

From Of Two Minds:

If all you know about China comes from PBoC and Central Government reports and analysts' financial statements, then you know very little about China or how it actually works.

I know it's tough to think about anything but the fast-melting ice cream cone that is Europe, but there are some things you should know about China. All the reassurances you've been reading about China's "soft landing" and its "they know what they're doing" central government are probably false. Here's why: very little in China is as it seems on the surface, or as it's presented to the Big Noses (Westerners). There are three reasons for this.

Before I explain, let me stipulate that I am not passing judgment on what's "good" or "bad" about China, or any other nation. Each country functions in its own peculiar way, and there are always productive and counterproductive elements to each nation's way of doing things. But it is important not to gloss over reality and accept illusion as truth.

The only sources who actually know what's going on in China are in local government. Another fantasy Westerners lap up is that the central government actually knows what's going on, and even more laughable, knows how to "fix" everything. If you don't even know what's happening, how can you fix the problem?

Westerners also don't understand "corruption." They think in terms of bribes that could be suppressed by some new rules. That is beyond laughable, for corruption isn't bribes, it's the warp and woof of how things work in China. They don't understand that pirated goods are crushed by bulldozers for a show of face; nothing changes behind the facade presented for show.

There is a lot of anger and resentment in China, especially among young people. This will not go away because some new railway is built, or a new mall opens.

http://www.oftwominds.com/blognov11/things-about-china11-11.html

John Daly: Central Asian Setback for the U.S. Military

From OilPrice.com:

The last few weeks have seen the U.S. Department of Defense suffer a number of setbacks in its effort to retain military influence overseas.

First came the startling announcement on 21 October, when President Obama announced that all American troops would be withdrawing from Iraq by 31 December under the terms of the Status of Forces Agreement. Accordingly, 39,000 U.S. soldiers will leave Iraq by the end of the year.

The deal breaker?

Washington’s demand for continued immunity for any remaining U.S. troops, and the Iraqi government of President Jalal Talibani couldn’t, or wouldn’t, deliver.

Now the handwriting’s apparently on the wall further east, as Kyrgyz president-elect Almazbek Atambaev firmly told the United States on 1 November to leave its Manas military air base outside the capital Bishkek when its lease expires in 2014.

http://oilprice.com/Geo-Politics/Asia/Central-Asian-Setback-for-the-U.S.-Military.html

Wall Street Journal: Merkel and Sarkozy Have Lost Credibility

From the WSJ:

The United States fought a bloody civil war in the nineteenth century to stop states seceding from the union. Yet the German and French leaders have decided the euro zone will be a voluntary union, not because of an attachment to the principle of national self-determination but to protect the principle that euro-zone countries should not become liable for each other's debts.

The significance of Ms. Merkel and Mr. Sarkozy's Cannes declaration is immense. At a stroke, they have introduced foreign-exchange risk into a sovereign-debt market still grappling with the realization that euro-zone government bonds contain unexpected credit risk. Worse, throughout the crisis, the two leaders said they will do whatever it takes to save the euro. Yet the assurances they've given haven't been worth the paper they were written on: First, there were to be no sovereign defaults; then the first Greek haircut was a "unique situation;" the second Greek haircut followed 12 weeks later; now euro-zone exits are possible. No wonder the markets won't lend and China won't invest in Europe's bailout funds. Nothing these leaders say any longer carries any credibility.

http://online.wsj.com/article/SB10001424052970204554204577022222367756042.html?mod=rss_europe_whats_news

When Offshoring Backfires

I have discussed the importance of sustaining a manufacturing base, which is one of the main themes of this blog. I have stressed why it is the backbone of a nation’s well-being both in economic and social sense. When we lose it, the zombication of the economy gets accelerated as history has shown. Korea’s manufacturing jobs have been exported to overseas since the 1990s due to several factors (e.g., wage arbitrage and U.S. monetary policy) as noted. Chaebols have continuously outsourced/offshored to maximize profits after receiving all the subsidies and tax breaks from the Korean government. The Korean government has employed excessive interventions to grow and sustain the chaebol system. Further, it has heavily intervened in markets in nurturing specific sectors and businesses. What has driven this line of policy thinking? Who has been the ultimate beneficiary of this approach?

The following article points out the tradeoffs between cost benefits and customer responsiveness.

From VoxEU

As the global economic downturn grinds on, more companies are acknowledging that labour costs aren’t always the most important factor when deciding where to build their next factory. This column argues that, in times of recession, some companies find that bringing their business home can give them a competitive edge.

http://www.voxeu.org/index.php?q=node/7226

Artemis Capital: Changes in Global Trade and Currency Exchange

From Zero Hedge:

One of the long-term recurring themes both here and in other more objective media, has been the encroaching domination of the central planning regime, or monetary authorities, read central banks, in the domain of capital markets and overall broad sovereignty, to the point where there is neither technical nor fundamental analysis left, but merely the question of where is the next batch of excess liquidity going to come from. Welcome to the death throes of the fiat system. Artemis Capital has released an extended must read presentation that summarizes just how global changes in trade, currency exchange, global monetary excess liquidity in recent decades, and especially in the coming future, will increasingly determine and define risk, and more troubling, the centuries old anarchism of state sovereignty. Anarchism, because as Europe has demonstrated so very well, in the current world the only real actors are the central banks. And with each passing day they become ever more powerful players in the global capital markets arena, as confirmed by correlations that rise every higher, approaching 1.000 across all asset classes. Anyone wondering why the only fulcrum variable for the future of risk will be FX exchange rates, and why any and all wars in the future will be primarily in binary "currency" format, we urge a careful reading of the attached slideshow by Artemis Capital titled "Fall of the House Of Money: Changes in Global Trade and Currency Exchange."

Countries are artificially devaluing their currencies to generate competitive trade advantages or to finance deficits

United States
• Ultra-loose monetary policy (ZIRP & Quantitative Easing)
• Massive government deficits and high debt levels
• Unsustainable fiscal spending and entitlements

Japan
• ZIRP and debt-GDP-ratios above 200%+
• Japanese government intervened in foreign exchange markets for the 4th time in over a year (selling yen and buying dollars & euros)

China
• Yuan is pegged to the dollar and estimated to be as much as 40% undervalued against the US dollar
• China keeps buying dollars and “printing” Yuan to maintain this peg
Switzerland
• Swiss Franc was a popular safe haven appreciating +28% against the Euro and +50% against the dollar since 2003
• SNB devalued Franc in September pegging it at 1.20x to the Euro

Brazil
• Central bank cuts interest rates twice in the last quarter despite highest inflation in six years

At its core, the primary source of tension, volatility and margina price influence is the relationship between the developed (debtor) and emerging (Creditor) nation.

Naturally, the next point of debat is an observation of the biggest transgressor of all: the United States, and its central bank, whose sole purpose for its existence, has been to slowly devalue the dollar thus creating stealth inflation, and inflating the debt which not only in America, but across the entire developed world is now at an all time high. Alas, with ZIRP in place, and negative rates impossible, the only other option is to print ever more.

Nothing new there.

Yet the question remains: can currency devaluation be the basis of economic growth? The answer: it can create the illusion of economic growth... and that's it.

So what is the conclusion:
1. Global currency regime will face significant changes in the ensuing decade
2. Self-reinforcing cycle between Debtor-Developed and Emerging-Creditor nations likely to unravel – perhaps violently
3. European crisis may tip us into a second global recession
4. Global policy makers are out of stimulus options
5. Dollar hegemony may be challenged in the future

And some advice from Artemis:
1. Prepare your business for the potential of a second global recession
2. USD is historically strong when the economy is weak – watch for reversal
3. Evaluate portfolio returns against a global basket of currencies and commodities
4. Diversify exposure during periods of dollar strength and deleveraging

http://www.zerohedge.com/news/fall-house-money-artemis-capital-how-%E2%82%ACentral-banking-took-over-capital-markets-and-world

Charles Hugh Smith: The Collapse of Our Corrupt, Predatory, Pathological Financial System Is Necessary and Positive

From Of Two Minds:

I was recently challenged by a contributor to write something positive, and so I decided to write about the single most positive outcome of the current financial crisis in Europe: the complete collapse of the corrupt, predatory, pathological global banking sector and its dealers, the central banks. Exploring why this is so reveals the insurmountable internal conflicts in our current financial system, and also illuminates the systemic political propaganda which is deployed daily to prop up a parasitic, corrupting, pathologically destructive financial system.

Our first stop is modern finance itself. Modern financial "products" and "instruments" are often highly complex and abstract, but the entire edifice can be distilled down to this: the system is based on the assumption that all risk can be hedged, and the difference between the initial position's yield/gain (i..e. placement of capital at risk for a gain) and the cost of hedging the risk of the wager to zero can be skimmed from the system risk-free.

That is the entire system in a nutshell, and we can immediately see the advantages of this system over traditional Capitalism, where risk can be hedged but never to zero, and the return is correlated to the risk taken on.

http://www.oftwominds.com/blognov11/collapse-of-corrupt11-11.html

“Be strong in the Lord and the power of his might. Put on the full armor of God and take your stand against evil. For our struggle is not against flesh and blood, but against principalities and powers, against the rulers of the darkness of this world, against spiritual wickedness in high places. Use all that God has given, so you may hold your ground, and after all is done, remain standing. Stand with truth and goodness, and the confidence that comes from the gospel of peace.”
Ephesians 6: 10-15

Charting the End of the German Manufacturing Miracle: Falling at a 28% Annualized Decline

From Zero Hedge:

Slowly, but surely, the global economic growth dynamo is growing ever dimmer and dimmer. Two days ago we reported that that relentless driver of global growth - exports - finally succumbed to reality, as slowly but surely the paradigm of everyone exporting to someone else with magically nobody importing, logically collapsed. This is now followed by German manufacturing, that traditional and only source of strength in Europe, which half an hour ago was reported to drop 4.3%, compared to an expectation of a 0.1% gain. In other words, as the chart below shows German factory orders have just suffered their worst three, post-Reunification months outside of the late crash itself, falling at a 28% annualized rate, to take the total back to where it first stood over five years ago. Reaction is swift: Italian and Spanish bonds immediately drop, with the yield returning to 6.23% and 5.52%, forcing the ECB's monetization actions to have to fight not only "speculators" but also reality.

http://www.zerohedge.com/news/not-bang-28-annualized-decline-charting-end-german-manufacturing-miracle

Hugh Hendry on His Latest Financial Outlook

From Zero Hedge:

Why China is Not 19th Century America

While many economic observers have drawn an analogy between China's ongoing industrialization and that of America’s, Hendry sees a critical difference.
In the US, he says, capital has always been allocated where it could achieve the highest return. In the 19th century, when America was the economic upstart on the block, it was also on the gold standard. Which is very important, according to Hendry, because it allotted entrepreneurs one – and only one – chance to succeed. It was not a time of bailouts and multiple bankruptcies!

China is different, he believes, because it is industrializing with a fiat currency. Thus they fall into the trap of misallocating capital – building bridges to nowhere, towers for nobody, and so on. China’s goal is similar to that of 1980’s Japan in his opinion – full employment, rather than maximizing return on capital. A critical, and even fatal, difference, in his mind.

The New Model for the Global Economy

You know the old drill – China and Asia produce, the US consumes. They cycle their greenbacks back over this way, finance our debt, we buy more of their stuff, and the beat goes on.

This model officially stopped with the launch of QE2, Hendry says, as the US officially started rejecting the globalization that had made the global economy hum (perhaps largely at the expense of US employment and manufacturing). With QE2, dollars were printed and exported – along with inflation – to Asia.

This led to the countries in Asia – and Europe, too – raising rates to combat inflation. The result, he says, is that global economic growth has essentially ground to a halt.

So what’s next?

A crash, of course.

http://www.zerohedge.com/news/hugh-hendry-channels-irony-and-paradox-his-latest-financial-outlook

G-20 Will Ask IMF to Print Reserve Currency Because Central Banks Aren’t Enough

From Zero Hedge:

Four months ago we predicted that in response to the latest round of global economic deterioration, every central bank would very soon join the toner party. Since then we have seen the Fed commence Operation Twist and telegraph another episode of MBS asset purchases; a new QE episode at the Bank of England; a new round of covered bond purchases at the ECB, coupled with an interest rate cut by its latest Goldman Sachs-based president, not to mention the persistent attempts to generate a backstop central bank in the form the EFSF Frankenstein Swiss Army knife; a new round of asset purchases and a massive, several hundred billion snap FX intervention by the Bank of Japan; and last but not least, that stalwart of stability, the Swiss National Bank, went ahead and destroyed the Swiss Franc as the sanest among the fiats by pegging it to that most unstable of currencies, the Euro. In light of the above how gold is not trading north of $2000 is still beyond us, although whether by manipulation or market inefficiency, we can not complain: it is easier to buy gold at $1,750 than at $7,150. Yet not even we could possibly predict just how far the global ponzi cartel would fall to extend the status quo by a few extra months. Because according to Dow Jones, the latest and greatest purchaser of Heidelberg Mainstream 80 machines will be the, drum roll, the IMF! Yes, the same organization that DSK swore would never join the global central banking stupidity, since deposed with a false allegation, and now headed by the woman who brought France to the brink of ruin, will be the marginal printer, now that everyone else is "dodecatuple all in" and sitting all day on the Turbo Print button.

http://www.zerohedge.com/news/because-central-banks-just-arent-enough-g-20-will-ask-imf-print-reserve-currency

Steve Keen: Harvard Starts Its Own PAECON against Mankiw

From Steve Keen’s Debtwatch:

Several correspondents have just told me that some of Greg Mankiw’s students at Harvard are staging a walkout from his first year class. They’ve written an open letter to Mankiw to explain why:

An Open Letter to Greg Mankiw (http://hpronline.org/campus/an-open-letter-to-greg-mankiw/)

I applaud them for this move. Mankiw’s various economics texts are among the most simplistic of the many neoclassical textbooks that parade this flawed paradigm as a flawless jewel of human reasoning. I’m delighted that his students have taken the rebellion against this paradigm to one of its key promulgators.

I did likewise forty years ago–against far less well-known advocates of neoclassicism. At the time, I probably knew as much as these students do today of the enormous literature that establishes how fallacious neoclassical theory is, and which of course neoclassical texts like Mankiw’s completely ignore.

http://www.debtdeflation.com/blogs/2011/11/03/harvard-starts-its-own-paecon-against-mankiw/

End “Extend and Pretend” and Confront a Fake Recovery

Korea went through the 1997 financial crisis, which devastated the entire nation.

On the surface, Korea has recovered.

Its recovery and prosperity have been based on debt leverage and robust trade balance.

Korea’s export machine has been working, but it is in trouble. Korea’s major trading partners, China, the U.S. and Europe, all have serious problems of their own.

Korea has been outsourcing its industrial base since the 1990s. As a result, its manufacturing jobs have disappeared.

Korea hasn’t really tackled its structural problems on many fronts (e.g., zombie banking sector, skewed industrial structure, too much dependence on exports, increasing income disparity, and bloated public sector). It has not really got it over with its financial crisis.

All in all, it would be fair to say it has been a fake recovery, engaging in the extend and pretend game, although this is not limited to Korea. The U.S., China and Japan have pursued the extend and pretend approach as well, as discussed. Again, who has been the beneficiary of this approach?

The consequences of this approach would impact a way of life for many generations. This is most disheartening.

New International Report Shreds Japan’s Carefully Constructed Fukushima Scenario

From OilPrice.com:

Japan’s six reactor Fukushima Daichi nuclear complex has inadvertently become the world’s bell-weather poster child for the inherent risks of nuclear power ever since the 11 March Tohoku offshore earthquake, measuring 9.0 on the Richter scale, triggered a devastating tsunami that effectively destroyed the complex.

Ever since, specialists have wrangled about how damaging the consequences of the earthquake and subsequent tsunami actually were, not only for the facility but the rest of the world.

The Fukushima Daichi complex was one of the 25 largest nuclear power stations in the world and the Fukushima I reactor was the first GE designed nuclear plant to be constructed and run entirely by the Tokyo Electric Power Company, or TEPCO.

Needless to say, in the aftermath of the disaster, both TEPCO and the Japanese government were at pains to minimize the disaster’s consequences, hardly surprising given the country’s densely populated regions.

But now, an independent study has effectively demolished TEPCO and the Japanese government’s carefully constructed minimalist scenario. Mainichi news agency reported that France’s l’Institut de Radioprotection et de Surete Nucleaire (Institute for Radiological Protection and Nuclear Safety, or IRSN) has issued a recent report stating that the amount of radioactive cesium-137 that entered the Pacific after 11 March was probably nearly 30 times the amount stated by Tokyo Electric Power Co. in May.

http://oilprice.com/Alternative-Energy/Nuclear-Power/New-International-Report-Shreds-Japan-s-Carefully-Constructed-Fukushima-Scenario.html

Global Manufacturing PMI Data Suggest Export Miracle Over

From Zero Hedge:

We have discussed the 'field-of-dreams'-like dreamscape that manufacturers have been living in for the last year at length as 'if-we-build-it' inventories are stacked to the ceiling relative to sales. Today's Global PMI data from Markit Economics provides confirming evidence that the miracle of self-fulfilling exporting is rapidly coming to an end.

From their report: "Conditions in the global manufacturing sector remained broadly stagnant in October. Levels of production and new orders fell slightly over the month, while new export orders declined at the quickest pace for almost two-and-a-half years."

And drilling down into individual country export orders, it seems clear that supply-siders the world over will be scrambling to adjust forecasts:

It seems that the rolling over of forward EPS estimates for S&P 500 companies is starting to get fundamental backing from macro-based forecasts also - hardly the setting for multiple-expansion in an equity market facing so many unknown unknowns.

http://www.zerohedge.com/news/export-miracle-over

German Manufacturing PMI Contracts for First Time in Two Years

From Reuters:

Germany's manufacturing sector contracted in October for the first time in more than two years as new orders fell for a fourth month in a row, data showed on Wednesday in the latest sign Europe's bulwark economy is set for a sharp slowdown.
Markit's Purchasing Managers' Index (PMI) fell for a sixth consecutive month in October to hit 49.1 -- just above an initial estimate of 48.9 but below the key 50
line that divides growth from contraction.

It was the first time activity had shrunk since September 2009 and it was the lowest PMI reading since July 2009.

The reading for export orders fell even further in a fresh sign that weakness in key markets abroad and uncertainty due to the euro zone debt crisis is hurting German trade.

Berlin last month nearly halved its forecast for 2012 growth to 1 percent due to weaker expectations for exports.

Recent data shows the pace of expansion is easing. Industry orders and output are slumping, and business sentiment slid for the fourth month in a row in October, dipping to its lowest level since mid-2010.

http://www.reuters.com/article/2011/11/02/us-germanymanufacturing-idUSTRE7A11JA20111102

How U.S. Banks Are Lying about Their European Exposure

From Zero Hedge:

A little over a month ago, Zero Hedge started an avalanche in the financial sector, and an unprecedented defense thereof by the "independent" financial media and conflicted sell side, by being simply the messenger in pointing out that the gross exposure of one Morgan Stanley to the French banking sector is $39 billion. The firestorm of protests, which naturally focused on the messenger, and not the message, attempted to refute the claims that Morgan Stanley (and many others) are overexposed to Europe (both banks and countries) by stating that gross is not net, and that when one nets out "hedges" the real exposure is far, far lower. The logic is that bilateral netting, as the principle behind this argument is called, should always work - no matter the market, and that counterparty risk, especially when it comes to hedges, should always be ignored because banks will always honor their own derivative exposure. Obviously that this failed massively when AIG had to be bailed out, to preserve precisely the tortured and failed logic of bilateral netting was completely ignored, after all things will never get that bad again, right? Well, wrong. Because the argument here is precisely what the exposure is when the chain of netting breaks, when one or more counterparties go under (such as MF Global for example, which filed bankruptcy precisely due to its hedged (?) European exposure - luckily MF was not in the business of writing CDS on European banks or else all hell would be breaking loose right now). So little by little the story was forgotten: after all when everyone says gross is not net, contrary to what history shows us all too often, everyone must be right. Today it is time to refresh this story, as none other than Bloomberg pulls the scab right off and while confirming our observations, also goes further: yes, banks are not only massively exposed to Europe, but they are in essence misrepresenting this exposure to the public by a factor of well over ten!

http://www.zerohedge.com/news/how-us-banks-are-lying-about-their-european-exposure-or-how-bilateral-netting-ends-bang-not-whi

Fukushima Saga Continues: TEPCO Finds Sign of Fresh Nuclear Fission

From Kyodo:

Tokyo Electric Power Co. said Wednesday that it has detected signs of a recent nuclear fission in the No. 2 reactor at the crippled Fukushima Daiichi power plant, but ruled out the possibility that a major criticality accident had occurred.

The plant operator injected early Wednesday water containing boric acid to control a possible nuclear reaction at the reactor, where nuclear fuel is believed to have melted when the cooling system failed following the devastating March 11 earthquake and tsunami.

http://english.kyodonews.jp/news/2011/11/123813.html

Charles Hugh Smith: Increasing Volatility: Prelude to a Crash?

From Of Two Minds:

The megaphone pattern in the U.S. stock market typically presages a major decline or full-blown crash.

Market observers have long noted that increasing volatility presages market crashes. If you glance at a chart of September-October 1929, just before the crash that started the Great Depression, you will note the same sort of manic swings of euphoria and fear that have characterized the U.S. stock market over the past few months.

Not only are the swings increasing in amplitude, the time between each move up or down is decreasing. Think of a series of wind storms that grow increasingly more violent even as the time between storms diminishes.

http://www.oftwominds.com/blognov11/volatility-crash11-11.html

U.S. Food Stamp Usage Hits New Record

From Zero Hedge:

As the European news flow overflow continues, it is useful to occasionally look at how America's own economy is doing. After all remember that the latest paradigm is that the US will decouple from everyone (as is always foolishly and erroneously assumed whenever the ROW turns lower) and carry the weight of the global economy on its own shoulders. So here is this month's refresh from the Supplemental Nutrition Assistance Program, which informs us that in August, a new all time record number of Americans, or 45.8 million, relied on food stamps for sustenance. So for those who are looking for those up and coming states where the population has decided that slowly but surely work of any kind is an anachronism we suggest you move to Alabama, Delaware, Utah, or Washington: all states that have seen at least a 3% sequential increase in food stamp usage. And, tangentially, confirming that this country's economy is headed straight to hell and won't pass go is the latest news from LPS according to which nearly 40% of loans in foreclosure have not made a payment in two years, and 72% have not made a payment in the past 12 month. Bullish for iPad purchases.

http://www.zerohedge.com/news/us-food-stamp-usage-hits-new-record

Chinese Manufacturing PMI Drops to Lowest in 32 Months; Korea’s Weakest Export Growth Since 2009; Chinese Premier Wen Pledges to Maintain Curbs

From Bloomberg:

A Chinese manufacturing index dropped to the lowest level since February 2009, bolstering the case for fiscal or monetary loosening to support the expansion of the world’s second-biggest economy.

The Purchasing Managers’ Index fell to 50.4 in October from 51.2 in September, the China Federation of Logistics and Purchasing said in a statement today. That was lower than any of 16 economist estimates in a Bloomberg News survey that had a median forecast of 51.8. A reading above 50 indicates expansion.

An index of export orders contracted for the second time in three months as Europe’s failure to resolve its debt crisis dims the outlook for shipments to China’s biggest market.

South Korea reported today the weakest export growth since 2009 and Taiwan’s government said yesterday that the island’s economy expanded by the least in two years.

http://www.bloomberg.com/news/2011-11-01/china-pmi-drops-for-first-time-in-3-months.html

From Bloomberg:

China property stocks fell for the first time in six days in Shanghai trading after Premier Wen Jiabao doused speculation the government will ease curbs on the industry.

The government will “firmly” maintain restrictions on real estate and local authorities should continue to strictly implement its policies, Wen said according to a statement following a State Council meeting.

China is on “a bigger and faster treadmill” than ever as property sales slow, Jim Chanos, president and founder of $6 billion hedge fund Kynikos Associates Ltd., said in a Bloomberg Television interview from Singapore on Oct. 28.

Chanos has forecast since at least February 2010 that the property market will slump, saying that China is Dubai times a thousand and on a “treadmill to hell” because of its reliance on real estate. Property transactions in the past two months in so-called tier one, two and three cities his firm tracks are down 40 percent to 60 percent year on year, said Chanos, who predicts “the property slowdown or worse has started.”

The hedge-fund manager’s views are at odds with those of Stephen Roach, non-executive chairman of Morgan Stanley Asia, who said in New York last week that the government has had some success in deflating a housing bubble and that concerns of a hard landing are “overblown.”

http://www.bloomberg.com/news/2011-10-30/china-to-firmly-maintain-property-curbs-premier-wen-says.html

Samsung Overtakes Apple as World’s Top Smartphone Seller

From Bloomberg:

Samsung Electronics Co. overtook Apple Inc. (AAPL) in the last quarter to become the world’s largest smartphone vendor amid a widening technology and legal battle between the two companies.

Samsung shipped 27.8 million smartphones in the last quarter, taking 23.8 percent of the market, Milton Keynes, U.K.- based Strategy Analytics said in an e-mailed statement today. Apple’s 17.1 million shipments, comprising 14.6 percent of the market, pushed the Cupertino, California-based company to second place. Nokia Oyj (NOK1V) maintained its third position, it said.

Apple, which released its iPhone 4S this month, held the top spot for only one quarter after dislodging Espoo, Finland- based Nokia earlier this year. Samsung, based in Suwon, South Korea, has turned to Google Inc. (GOOG)’s Android software to boost sales of its Galaxy smartphones and tablet computers.

“Samsung has come out with products that appeal to all the different form factors and specifications out there,” said T.Z. Wong, a Beijing-based analyst at researcher IDC. “That is a strategy they have executed very well.”

“Samsung’s rise has been driven by a blend of elegant hardware designs, popular Android services, memorable sub-brands and extensive global distribution,” Strategy Analytics wrote. “Samsung has demonstrated that it is possible, at least in the short term, to differentiate and grow by using the Android ecosystem.”

http://www.bloomberg.com/news/2011-10-28/samsung-beats-apple-as-no-1-smartphone-vendor.html