I am very busy this morning, so I shall cut this as short as possible.
First, to the announcement of a BRIC nation sponsored euro bailout. If it had turned out to be true, I would have busted out of my hedge so fast it would make your head spin. Such an event would stem the bleeding in the euro, shore up the balance sheets of European countries, and instill confidence in the credit markets. All of those developments would have naturally rushed back to the dollar, much like a leaking roof eventually floods your basement, and the dollar would soon thereafter have resumed its plunge.
Thankfully, for me, those rumors turned out to be fabricated, a.k.a. lies.
But I will still be on my toes in the event that the BRIC’s should ever rally to Europe’s aid.
Second, the ECB has been reduced to loaning its own U.S. dollar reserves directly to member countries, as they are incapable of finding any on their own. A month or two ago, I mentioned an offer I received from JP Morgan, soliciting a real interest rate of around 4% annual if I would agree to commit deposits with them for at least 90 days. Now the USD is spiking.
It is obvious that despite the Fed’s absurd level of printing, the real value of the dollar is still substantially higher than the interest rates in this country suggest and our national currency is still “scarce.”
Expect the dollar index to catapult above 80, and soon.
Third, Greece is now officially fucked, thanks to the large gonads of the people of Austria, who have put their collective foot down. I’d guess the new EFSF plan can still be approved without Austria, but if Austria is refusing to pony up cash, how many other similar countries will refuse alongside them. The more that do, the bigger the bill gets for Germany, which is already extremely reluctant to go through with this.
Greece will default before the end of next year, for sure. They may even default before Christmas.
Fourth, many thanks to those who have been keeping an eye on student loan default rates. I had let that issue fade to the back of my mind after my most brutal and demoralizing loss, but you have pointed out the blood in the water to me. It is the perfect time to strike, as global credit dries up and Sallie Mae’s options dwindle away. I will be pouring over old notes later, refreshing my mind and filling in the old cracks with new information.
Albert Lord shall get what is coming to him, shortly.
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1. Greece CDS have been getting hit hard this past month. They are going for the kill and soon.
2. I read a report that showed consumer debt excluding credit card debt is way up.
Meaning auto, student loans ect.
I forget which bank released the report though.
It also showed the huge gap between consumer spending vs. consumer sentiment. ie. consumers feel like crap but they continue to spend.
Too true with the consumer sentiment vs. real world remark.
Sentiment is a useless “measurement.”
AWK is having a great day. Pushing back towards $30. Utilities are still in big demand.
Holy shit was any of the news feed from this morning real?