Steen
Writes ... Two
Trillion Fantasy
This
week-end's G-20 came and went without any real new information. Yes, the policy
makers wants us to believe ultimately IMF will have 2 trillion US dollars at
its disposal.
No,
the US, UK and rest of non-Europe is not really interested before we all get
more clarification on how Europe will ring fence the debt crisis.
This
is more and more Wall Street vs. Main Street: Underfunded banks buys
underfunded government bonds and underfunded governments guarantees underfunded
banks.
The
real loser being the unemployed - Edward Heath put it more elegantly:
Unemployment is of vital importance, particularly to the unemployed.
Meanwhile
the real economy and unemployment is exploding higher adding further burdens to
already stretched government deficits.
The
new EU forecast for GDP growth in 2012 of minus .3% from this past Friday down
from plus .05% is great example of how EU and the debt crisis non-solutions
continues to lack behind fundamentals. Soon the rising disconnect will hit the
politicians games of buying time.
Capital
Flight
Merkel
Weaker Every Week
Chancellor
Merkel is weaker, week after week. She soon will have to rely on SPD votes if she
continues down this path. 62 percent polled over weekend are against giving
more money to Greece and 2/3 don't believe Greece can be saved according to
German newspaper Bild.
Finland
will have an interesting vote this week. Follow it closely.
The
G20 did not give more credibility to more funds but they sure talked the talk
of extend-and-pretend dogma.
Geopolitical
Risks
Crude:
We are potentially a few weeks from some sort of confrontation unfortunately.
IEA report from Iran is due this week. Israel's time window is closing if you
believe the media coming out of Israel. Iran's finances are running out of time
as well. Iran failed to pay for Indian rice last week.
High
energy prices will soon spill-over into gasoline and survey data and will start
to impact data and sentiment negatively.
Greece
Controlled Default: Greece will have a controlled default and a vacation from
Europe.
Portugal
CDS Spreads: Portugal is the real issue and containment is almost impossible.
CDS spreads suggest the probability of default within five years is about 65
percent.
Nice
money printing week,
Steen
Jakobsen
Mike
"Mish" Shedlock
http://globaleconomicanalysis.blogspot.com