The BillyB, Aster & JR8 roundtable!

[BillyB]

I reckon the below story is going to have legs...

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'11.00 [London]
Reaction is coming through on that German bond auction - Neil Hume of the Financial Times says its a disaster. Via Twitter:

@humenm.
I cannot recall a worse auction, only EUR 3.889 Bln of bids in total for a EUR 6.0 Bln auction, and this is the new 10yr benchmark, and that is a cover of 0.65x.

If Germany can only manage this sort of participation, what hope for the rest. Yields are at completely the wrong level.
http://www.telegraph.co.uk/finance/debt ... -live.html

Real yield is negative, that's probably why. Plus no-one seems to know, including the policy makers, whats going on in Europe.

France is nicely poised to induce panic shortly with spreads increasing and no takers.

[JR8]

Yeah, good point.

Surely if they can't get a Bund float away (because the yield is not high enough), that is going to ratchet up yields on every euro-zone country. Though I suppose that assumes some kind of pan euro-zone 'Xbps over Bunds' pricing model (and I'm not close enough to know how much that idea holds)...

p.s. You know all of this talk of euro-bonds, er, I mean 'stability bonds'. Er, well, hate to ask, but where are the Germans meant to get the money to rescue everyone else from?

pps Expect Sarkozy is doing his funky clucking chicken dance again right now lol (per pic above).

[BillyB]

Yeah, good point.

Surely if they can't get a Bund float away (because the yield is not high enough), that is going to ratchet up yields on every euro-zone country. Though I suppose that assumes some kind of pan euro-zone 'Xbps over Bunds' pricing model (and I'm not close enough to know how much that idea holds)...

p.s. You know all of this talk of euro-bonds, er, I mean 'stability bonds'. Er, well, hate to ask, but where are the Germans meant to get the money to rescue everyone else from?

pps Expect Sarkozy is doing his funky clucking chicken dance again right now lol (per pic above).

Bang-on - that's the unofficial benchmark.

Germany are playing a balancing act to be fair to Merkel. And for once I agree with that French tw*t finance minister Boring or whatever he is called. The ECB should be a lender of last resort. But then I guess the question is who funds the ECB - most of it will be from Germany.

[JR8]

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12.25 [London]
... in Brussels, Jose Manuel Barroso, is introducing his green paper on eurobonds - and he has remembered to call them "stability bonds", the renaming process started by his colleague Olli Rehn yesterday.

Bruno Waterfield keeps us abreast of what he's saying via Twitter:

@BrunoBrussels EC can override a country to call for it to be put in EU austerity programme
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Wow.... I think we are witnessing the formalisation of the death of democracy in Europe. Can you name anyone other than Barrosso who is in the EC (European Commission), as I can't? They are anonymous, unelected, unaccountable, and yet the focus of huge power - precisely like the Soviet politburo.

And this month having already taken over Greece and Italy with unelected placemen (or the entire unelected government in the case of Italy), now they are trying to formalise a mechanism whereby this group of unelected officials in Brussels can take over other countries' economies. It's like a bunch of self-appointed anonymous people in DC proposing that they have license to decide which US states they are going to take control of in coming months. But, it's worse than that still, the EU is not federal, these 'invisible men' are proposing to take over sovereign nations.

And no one seems to be noticing.

There are more than a couple of parallels with the 1930s. Here's one that the polite media seem embarrassed to mention!

[JR8]

I'm increasingly paying attention to what Nigel Farage (A UK member of the European Parliament, he is head of an EU-phobic party called UKIP) has to say. Given how PM Cameron is so wet, and prone to U-turn or roll-over on any substantive reforms Farage gets more and more appealing. They seem to be spoken of more and more as the 'Real Conservatives'. Either way, nice to hear a politician who is willing to tell it like it is...

'UKIP Nigel Farage - How dare you tell the Italian and Greek people what to do !!! Nov 2011'
http://www.youtube.com/watch?v=ULns-cSUeVs

[JR8]

'How Brussels Stifles Democracy in Europe
DANIEL HANNAN
December 2011
http://www.standpointmag.co.uk/node/4208/full


If you want a complete primer on how the EU got to where it is on the euro, the above article is excellent.

(It is long too, but worth it for those with an interest and bit of time).

[BillyB]

Where is Aster these days?

[BillyB]

http://www.youtube.com/watch?v=t3HapmpEEZM

So true!

[JR8]

http://www.youtube.com/watch?v=t3HapmpEEZM

So true!

'See you on the other side of your trades'

[JR8]

The only McDonald's in Rochdale has closed.

Jeez, things must be bad!

[Strong Eagle]

Where's the money to be made in all of this?

[JR8]

Where's the money to be made in all of this?

Hmmm... maybe more a case of where might money not be lost?

Safe havens?

Canada, Switzerland, Israel and Australia were highlighted in the OECD report that came out today.

[Strong Eagle]

Where's the money to be made in all of this?

Hmmm... maybe more a case of where might money not be lost?

Safe havens?

Canada, Switzerland, Israel and Australia were highlighted in the OECD report that came out today.

No CDS a small investor could buy into? Although, from what I've seen, nothing technically defaults right now. And possibly, those selling CDS's couldn't back them anyway if things went totally turtle.

[JR8]

No CDS a small investor could buy into? Although, from what I've seen, nothing technically defaults right now. And possibly, those selling CDS's couldn't back them anyway if things went totally turtle.

If you have US$10m, sure More seriously Bunter might know, but AFAIK things like CDS are not available to the retail market, even via retail funds.

Your follow up points are spot on. Nothing defaults these days, it is not allowed to. Hence one might ask, why buy CDS?

Funny old world eh!

[JR8]

Eagle, this is what I mentioned in passing yesterday. Copied below in case you want a closer look.

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15.16 If the British economy does become grim, to where should one head?

The OECD report reveals the safe-haven economies expected to come through the global downturn, short of a deep global recession. Handy, should that remote Scottish island favoured by Daniel Knowles become crowded.

Canada's economy is expected to grow at 2.2pc in 2011, 1.9pc in 2012 and 2.5pc in 2013. Inflation should remain subdued and business investment is 'robust', although household debts at chipping at consumer confidence.

Israel will enjou 4.7pc growth in 2011, 2.9 in 2012 and 3.9 in 2013, although external demand will slow growth (particularly in its booming microchip and telecoms industry). Unemployment will peak at a digestible 6pc in 2012.

Growth in Switzerland will shudder to 0.8pc in 2012 - but unemployment is forecast not to push above 4.3pc, less than half that of the UK.

Australian growth was slowed by flooding in early 2011 to 1.8pc, but will bounce back to 4pc in 2012 buoyed by the mining boom and high trade. Unemployment is low at 5.3pc, inflation is 2.8pc and the national deficit is forecast to be trimmed to just 0.3pc by 2013.
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http://www.telegraph.co.uk/finance/debt ... -2011.html



The article contains an embedded link to OECD country summaries upon which the above highlights are drawn:
http://www.oecd.org/document/52/0,3746, ... _1,00.html


I had been thinking that SG/ASEAN would be a good long term bet, but right now I'd be hesitant to open a long position. I recall how the SG economy went through crazily wild gyrations back in 2008/2009. Not exactly a recipe for sleeping soundly! Based on the above article though, I'd be having a closer look at Australia...