Chart Blog

Dearth of Good Money Assets Signal End Is Near

The European Commission, a group self-tasked with herding cats, has proclaimed the end of “austerity” in the Eurozone for governments, granted citizens will surely continue to feel quite austere. But what does this mean for Europeans and their economy moving forward?

Before we dive into it, we would add that absolutely no austerity was obtained in any EZ national budget, except perhaps where it was forced by plummeting tax receipts as a result of all-out economic collapse (Greece). See: What Austerity Measures?

Here were the Commission’s proclamations on deficits:

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2012 in Review Shows Recession Still Holds US Economy in Grip

As we close on the end of the year, it is time to look back at the big picture 2012 painted.

With 2012 culminating 32 years of rising bond prices, following decades during which U.S. investors had taken to calling bonds “certificates of confiscation,” many asked if the U.S. is turning Japanese. We at WealthCycles, of course, really think so…

WealthCycles wrote on Valentine’s Day 2012 that the U.S. was experiencing economic contraction—that is to say, the U.S. is producing less and less as time progresses, what we labeled then as a “double dip.”

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Halloween Video Guide to Exchanging Candy

Candy Candy Candy: The Halloween Video Guide to Exchanging and Trading Candy

Kid-safe Version of Buzzfeed's Halloween Guide to Trading Candy.

Credit for the original video: Buzzfeed.com

We did remove a few frames for our family readership.

Yes, as the Halloween video states, “unfortunately, Butterfinger, Almond Joy, and Mounds [bars] should be set aside for the mom-and-dad tax,” because parents will be needing the calories due to rationing groceries as a result of rampant unemployment. Because, for all of the Americans who thought they actually had jobs this Halloween, thanks to the figures from ADP payroll service, sorry, you are still unemployed.

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Germany Brings it Home - Gold Repatriation as Stocks Scare

The German Bundesbank is now concerned with acquiring their physical gold, while other central banks are busily investing the cash they create into stocks (see the Banks of Japan, Israel, and the indirectly Federal Reserve-funded plunge protection team). Meanwhile, risk appetite in markets has reached extreme levels, according to the Barclays chart below.

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Spain to Default - Spanish Bonds to be Restructured like Greek PSI

Readers following the news know that as of quite recent, a total of seven Spanish provinces have now checked in to alert all that they are insolvent and will need Spanish government bailouts. The trouble is that Spain itself will be out of cash by August, and as viewed by the market, will need public sector involvement in restructuring, also known as defaulting on, its own debt. As the assets lose value, the implications are broad - bank runs and big inflation.

Public sector involvement (PSI) in Greece amounted to bondholders getting their investment replaced with new debt on different terms, which summarily sank to pennies on the dollar.

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Hypothecation of the London Whale - JP Morgan’s Dimon Testifies

Nobody watched yesterday’s political court of grandstanding kangaroos, where JP Morgan Chase CEO Jamie Dimon addressed paid politicians on the subject of the failed London whale trades centered in the city of re-hypothecation.

But for those still glutton for punishment, hold JP Morgan’s Jamie Dimon in contempt for his statement made in response to Jeff Merkley, after the Senator reminded the “audience” that Fed money saved JP Morgan from insolvency in 2008. Dimon got defensive:

Derivatives are contracts or securities that derive their value from other assets. In other words, derivatives don’t have value in and of themselves; they get their value from something else—an index, a commodity, or anything else of value. This gives derivatives an interesting characteristic: an infinite number of them can be created.

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