Jim Sinclair’s Commentary
A run when it focuses on financial entities can only be stopped by QE. There is no other tool in any central bank toolbox that is effective.
For actions there are consequences.
The Run On Europe Begins, As Global Investors Head For The Hills…
Henry Blodget | Nov. 20, 2011, 9:11 AM
Until recently, the concern about Europe was mostly theoretical–a potential train-wreck that would occur if/when the world’s lenders decided that the continent’s problems extended beyond the basket case known as Greece to Europe’s "core."
Well, that concern is no longer theoretical.
It’s happening.
The world’s lenders are increasingly deciding that it’s better to be safe than sorry, and they’re pulling their money out of Europe.
As a result, the borrowing costs of many European countries are rising fast. And so are inter-bank lending rates, because the second huge problem with the Euro-train-wreck is that Europe’s banks have Euro debts coming out of their ears.
(When bond yields rise, the market value of existing bonds drops, so any bank that owns the debt of any European country is suffering huge embedded losses. The banks don’t mark these losses to market, so you can’t see them on the balance sheet, but they’re there.)
Last week, Italian borrowing costs soared over 7%, which has been viewed as a sort of Rubicon level. Spanish yields hit nearly 7%. And French "spreads" over German bonds expanded sharply.
Jim Sinclair’s Commentary
Arab Spring has many more surprises for the MOPE media commentators.
Violent Protests in Egypt Pit Thousands Against Police
By DAVID D. KIRKPATRICK and LIAM STACK
Published: November 19, 2011
CAIRO — A police action to roust a few hundred protesters out of Tahrir Square on Saturday instead drew thousands of people from across Egyptian society into the streets, where they battled riot police officers for hours in the most violent manifestation yet of growing anger at the military-led interim government.
Jim Sinclair’s Commentary
Coming soon to the scene of Western finance.
Lawmakers Trade Blame as Deficit Talks Crumble
By ERIC LIPTON
Published: November 20, 2011
WASHINGTON — With the hours ticking away toward a self-imposed deadline, Congressional leaders conceded Sunday that talks on a sweeping deficit agreement were near failure and braced for recriminations over their inability to reach a deal.
The stalemate was the latest sign of partisan deadlock in Washington, which members of both parties do not expect to lift until the 2012 election has clarified which party has the upper hand.
Barring an unexpected turnaround before Monday’s deadline, the failure of the special Congressional deficit committee will be the third high-profile effort to fall short of a deal in the last 12 months, including a bipartisan deficit commission and talks last summer between President Obama and Speaker John A. Boehner.
By law, the special Congressional committee’s inability to reach an agreement will trigger $1.2 trillion in automatic spending cuts over 10 years to the military and domestic programs, to start in 2013.
As time wound down to a Monday night deadline for an agreement, Capitol Hill lacked the frenzied negotiation typical of a Congressional race to beat the clock. Instead, many members — well aware that Congressional approval ratings are near historic lows in polls — seemed resigned to the fact that Democrats and Republicans remained far apart on major budget issues, especially tax increases on the affluent, which Democrats insist must be part of any deficit solution and which Republicans oppose.
