Global insights audio-slides-11-07-11
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  • GREECEGeorge Papandreou, Greece's prime minister, cleared the way for his resignation by scheduling a meeting with opposition leader Antonis Samaras and the president to overcome sticking points over the leadership and the duration of a unity government. A seven point plan for the new government was thrashed out at a cabinet meeting, including a deadline for parliament to ratify the eurozone bail-out before the end of December. Greece's finance minister, Evangelos Venizelos, will lead the Greek delegation to Brussels, where he is expected to outline the national consensus platform on implementing the bail-out deal. Olli Rehn, the EU Economic and Monetary Affairs Commissioner, told Reuters that they needed a "convincing" report from Mr Venizelos. Calling on Greece to establish a national unity government, he added that Athens' European partners "faced last week a breach of confidence by Greece which meant that Greece took itself on a course that would lead it outside the euro zone. "We do not want that but we must be prepared for every scenario, including that one, for the sake of safeguarding financial stability and saving the euro," he said.
  • Old Debts Dog Europe's Banks Lenders Slower Than Their U.S. Counterparts to Shed Risky Mortgage Assets Toxic Debt: CDO (Collateralized Debt Obligations)CMBS (Commercial Mortgage Backed Securities)MBS (Sub-Prime) Banks in the U.K., France and Germany are the biggest holders of such assets, even after chipping away at their exposures. The four biggest British banks reduced their holdings by more than half since 2007, while four French banks trimmed theirs by less than 30%. "European banks, on average, have roughly halved their stockpiles of the legacy assets since 2007, the Credit Suisse analysts found. Meanwhile, the top three U.S. banks—Bank of America Corp., Citigroup Inc. and J.P. Morgan Chase & Co.—have slashed such assets by well over 80% over a similar period. "It's a very cultural difference," said Mr. Abouhossein, the J.P. Morgan analyst. "In the U.S., you take the hits, raise equity, and move on…In Europe, it's more, 'Let's see more normalized pricing and then let's get rid of it.'"There's been very much a pattern of just holding them," said Carla Antunes-Silva, head of European banks research at Credit Suisse. "It will be another drag" on the banks' capital and returns on equity.
  • EFSF FUNDING: In the world of “Contingent Liabilities” we move from “Guarantees” to “Pledges” - Guarantees with real teeth!TheG20 leaders in Cannes discussed the idea that the European System of Central Banks could pawn their total foreign exchange reserves of 50-60 billion euros to a trust of the European crisis fund. They would do this in the form of special drawing rights (SDR’s) from the International Monetary Fund (IMF).The European Central Bank (ECB) would own the reserves.Bundesbank reserves -- including foreign currency and gold -- would be used to increase Germany's contribution to the crisis fund, the European Financial Stability Facility (EFSF) by more than 15 billion euros ($20 billion).If France and Italy want to expand the EFSF, why don't they pledge their own gold rather than asking Germany to pledge its gold?One possible answer is that any country dumb enough to pledge its gold will very quickly lose its AAA rating. However, the Euro-nanny finance minister clowns are probably not bright enough to figure that out.THIS IS DESPERATION SIMILAR TO A CRACKHEAD NEEDING A FIX – Will do or consider anything!!!!
  • ITALIAN NUMBERSItaly needs to refinance about 310b euros of debt in 2012. The average interest rate they are paying on this maturing debt is 2.7% (short term rates collapsed in ’09-’10). With an average debt maturity of 7 years, Italy may be paying 6%+ on the refinancing. Assuming a 350 bps additional cost times the 310b euros of maturing debt, this adds 10.9b euros of interest expense to the 54b euros of interest payments scheduled to be made in 2012. At the same time, Italy’s 2T economy is expected to grow REAL GDP.1% in 2012 and nominal around 3%. Thus, nominally 60b euros will be added to their economy with all of the incremental gain thus going to service interest expense. This also doesn’t take into account any new debt Italy has to take on over and above what is maturing. Over time, just to tread water, any country needs to generate nominal GDP growth equal to its financing costs. In the 10 years prior to the sharp ’08-’09 economic contraction, Italy saw nominal GDP growth of 3.7% (REAL averaged 1.3%), near its financing costs over that time period. A continuation of nominal GDP growth of 3.5-4% (now mostly consisting of inflation) will no longer cut it for Italy with funding costs at current levels.”The implications of a eurozone double-dip are dreadful for Italy, already grappling with: a chronic loss of 40pc in labour competitiveness against Germany and a 70pc collapse in foreign direct investment since 2007. A report by Italian consultants REF Ricerche warns that Italy will remain trapped in recession through 2012 and 2013. The slump itself is causing fiscal slippage, not lack of budget rigour. “What is sapping the credibility of Italy’s public accounts over the medium term is lack of growth prospects,” it said.ITALY SHOULDN’T BE IN THE EURO!Angela Merkel and Nicolas Sarkozy continue to order Italy to undertake further fiscal belt-tightening into the accelerating downturn, even though it is one of the few countries in the OECD club with a primary budget surplus and even though its combined public and private debt is just 250pc of GDP – well below that of Holland, France, the UK, the US, or Japan. The EU policy dictates have become unhinged. Mr Berlusconi invited much ridicule in Cannes by blurting out that the “restaurants are still full”. Less reported was his comment that the country’s exchange rate is misaligned within EMU and that this has been “paralyzing for Italy”. This is the elemental point. Italy is in the wrong currency. It should not be in Germany’s monetary union at all.

Global insights audio-slides-11-07-11 Global insights audio-slides-11-07-11 Presentation Transcript

  • This chart accompanies the podcast recorded November 7th, 2011 MERKEL SAYS NO! Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
  • This chart accompanies the podcast recorded November 7th, 2011 TOXIC DEBT STILL THERE Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
  • This chart accompanies the podcast recorded November 7th, 2011 WHERE IS THE GOLD? Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document. View slide
  • This chart accompanies the podcast recorded November 7th, 2011 MODERN DAY ALCHEMY Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document. View slide
  • This chart accompanies the podcast recorded November 7th, 2011 ITALY IS IN A DEATH SPIRAL Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
  • This chart accompanies the podcast recorded November 7th, 2011 ONLY A MATTER OF TIME! Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
  • This chart accompanies the podcast recorded November 7th, 2011 MERKEL SAYS NO! DISCLOSURE STATEMENT AND TERMS OF USE THE CONTENT OF THIS SLIDE PRESENTATION AND ITS ACCOMPANYING RECORDED AUDIO DISCUSSION ARE INTENDED FOR EDUCATIONAL PURPOSES ONLY. This slide presentation and its accompanying recorded audio discussion are not a solicitation to trade or invest, and any analysis is the opinion of the author and is not to be used or relied upon as investment advice. Trading and investing can involve substantial risk of loss. Past performance is no guarantee of future returns/results. Commentary is only the opinions of the authors and should not to be used for investment decisions. You must carefully examine the risks associated with investing of any sort and whether investment programs are suitable for you. You should never invest or consider investments without a complete set of disclosure documents, and should consider the risks prior to investing. This slide presentation and its accompanying recorded audio discussion are not in any way a substitution for disclosure. Suitability of investing decisions rests solely with the investor. Your acknowledgement of this Disclosure and Term of Use Statement is a condition of access to it. Furthermore, any investments you may make are your sole responsibility. THERE IS RISK OF LOSS IN TRADING AND INVESTING OF ANY KIND. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsights