The Cardinal T-Square Crisis:
Start Emergency Preparedness:
Astrological Transits Tending Strong
I am issuing an astrological alert for seismic activity affecting the U.S. west coast. Global transits show transiting Mars, and Saturn are on the nadir of the west coast of North America through the month of June, and July 2010.
The angles relative to southern California, and Mexico, from the cardinal transits involve Mars, Saturn, and Pluto, in that order, with Pluto descending on solar charts to the west of southern California, Saturn transiting towards the nadir, and square to Pluto.
It is my astrological forecast for this region, especially for southern California, for residents to take the proper precautions for a large magnitude earthquake to potentially strike in the month of June, and July 2010.
Astrologically Seismic Sensitive Dates are:
- June 17,18,19,20
- June 24,25,26, 27
- June 29-30
- July 3,4,5
- July 8,9,10,11
The Earth is nearing aphelion, its furthest approach from the Sun, as the planets continue to form their T-square alignment relative to the Earth over the summer months in the northern hemisphere. There are strong stellar forces about.
The electromagnetic energies released by the aspects of planetary cardinal sign alignments, which are astrophysical, along with Earth's aphelion to the Sun, and the Moon's transits, have geophysical effects ~ such as potentially large magnitude earthquakes with powerful aftershocks along the US west coast and elsewhere.
We've seen these seismic events earlier this year. We've also witnessed the eruption of two volcanoes in Central and South America on the same day in May as Uranus entered Aries.
A month before, plumes of thick ash from Iceland's Eyjafjallajokull Volcano shut down Europe, affecting millions of travelers around the world, as some government agencies and airlines clashed over the strict flight bans.
Swarming Earthquakes Reported Early June 2010: The USGS has recorded a series of at least 29 seismic events for southern California as of June 9, 2010.
The planetary inclinations, along with the position of transiting Saturn, indicate a magnitude 7+ or greater seismic event in California, with effects along the coastal regions of the US west.
Saturn's angle is as such relative to the other planets and the earth that a strong series of earthquakes, usually preceded by smaller magnitude "swarms" offshore earthquakes, are indicators of increasing seismic activity.
Saturn, now direct in motion, will come to square Pluto in Capricorn, as Cancer is rising along with the stars Castor and Pollux, over the US west coast. Both stars are associated in mundane astrology with powerful quakes, most recently seen in Haiti in January 2010.
The solar-earth-lunar-planetary alignments can cause weaken structures to give way. This is the cause of all seismic events on Earth.
Moreover, the transiting Lunar Nodes will be along the east/west axis of most regions of the world, including California, within orb, in late June, and conjunct by early July 2010.
Caution is urged.
I strongly advise residents of the US west coast update their emergency earthquake plans, and for those living and working in high-rise buildings to take extra care in updating your exit and evacuation plans along with updating your emergency preparedness procedures.
This is a good time to do just that. There's a New Moon in Gemini that arrives Saturday, June 12. If you start soon, use that weekend's new moon, into next week, and be a very busy bee if you live in southern California.
Go shopping, water, canned food, lots of energy & power bars. Dig out and freshen up that camping gear, clean the tent, pack some supplies. Buy new batteries. Get better communications and cellphone gear.
Take the time to update all your family's emergency and "what-to-do" procedures. Include all family members in the act. Do not take "no" for an answer.
Talk to everyone, and also to your neighbors to see who is ready and who may not be. Form up some quick networking community teams just in case. Be ready like Freddy.
Take a tip from a former explorer boy scout: Be prepared, not scared.
Watch this Eagle Scout video of what to do in an earthquake. Scouts are trained to save lives with easy to use info that is practical. Our Motto was: "Be Prepared." That's sums it all up. That's how lives are saved.
Here's a link for California Earthquake Preparedness Resources.
Earthquakes appearing on graphic map above, with the most recent on top:
1.8 2010/06/08 02:11:04 33.703N 117.471W 13.2 14 km ( 8 mi) WNW of Lake Elsinore, CA
1.6 2010/06/07 20:20:01 34.948N 117.293W 7.7 26 km (16 mi) WNW of Barstow, CA
1.8 2010/06/07 17:53:07 33.849N 118.456W 13.6 6 km ( 4 mi) SW of Manhattan Beach
1.6 2010/06/07 17:43:50 33.846N 118.444W 16.8 5 km ( 3 mi) SW of Manhattan Beach
2.7 2010/06/07 17:17:05 33.854N 118.463W 12.2 6 km ( 4 mi) SW of Manhattan Beach
1.8 2010/06/07 17:13:30 33.853N 118.439W 12.6 4 km ( 3 mi) SW of Manhattan Beach
3.7 2010/06/07 16:59:27 33.857N 118.458W 11.2 6 km ( 3 mi) SW of Manhattan Beach
2.3 2010/06/07 16:59:19 33.831N 118.468W 18.3 7 km ( 5 mi) NNW of Palos Verdes Point
1.8 2010/06/07 15:53:57 33.856N 118.460W 13.5 6 km ( 4 mi) SW of Manhattan Beach
1.4 2010/06/07 13:49:58 33.840N 117.498W 0.0 7 km ( 5 mi) ESE of Corona
2.3 2010/06/07 11:17:48 33.860N 118.446W 12.3 4 km ( 3 mi) SW of Manhattan Beach
1.7 2010/06/07 05:16:29 33.835N 118.470W 19.1 8 km ( 5 mi) NNW of Palos Verdes Point
2.1 2010/06/07 04:51:39 33.849N 118.464W 14.1 7 km ( 4 mi) SW of Manhattan Beach
1.5 2010/06/07 04:11:29 33.854N 118.439W 14.2 4 km ( 3 mi) SW of Manhattan Beach
3.5 2010/06/07 02:17:11 33.859N 118.444W 14.1 4 km ( 3 mi) SW of Manhattan Beach
1.2 2010/06/07 00:45:52 34.014N 117.201W 12.5 5 km ( 3 mi) SSW of Redlands, CA
0.9 2010/06/06 11:21:22 34.214N 117.522W 7.9 11 km ( 7 mi) W of Devore, CA
1.8 2010/06/06 08:12:44 33.778N 118.365W 9.0 6 km ( 3 mi) E of Palos Verdes Point, CA
1.3 2010/06/05 01:42:19 34.000N 117.157W 9.5 6 km ( 4 mi) SSE of Redlands, CA
1.6 2010/06/05 00:14:03 34.100N 118.247W 7.6 2 km ( 1 mi) ENE of Silver Lake, CA
1.5 2010/06/04 23:20:35 34.200N 117.586W 7.8 10 km ( 6 mi) N of Rancho Cucamonga, CA
2.4 2010/06/04 20:07:15 34.219N 117.526W 11.4 11 km ( 7 mi) W of Devore, CA
1.4 2010/06/03 19:07:37 34.066N 117.320W 17.5 5 km ( 3 mi) SSW of San Bernardino, CA
1.9 2010/06/03 13:34:30 34.321N 117.399W 29.0 11 km ( 7 mi) N of Devore, CA
1.6 2010/06/03 13:27:30 33.959N 117.715W 3.7 7 km ( 4 mi) SSW of Chino, CA
1.3 2010/06/03 02:02:23 33.906N 117.967W 6.5 3 km ( 2 mi) SSW of La Habra, CA
1.0 2010/06/03 00:52:37 34.042N 117.251W 16.6 1 km ( 0 mi) SSE of Loma Linda, CA
1.6 2010/06/02 18:51:49 34.505N 118.109W 14.0 8 km ( 5 mi) S of Palmdale, CA
~ The Cardinal Crisis
Have Some Swiss Francs With Your Euros?
NEW YORK -- "U.S. stocks lost their gains Wednesday as Wall Street lapsed in another display of uncertainty after Federal Reserve Chairman Ben Bernanke voiced cautious optimism about the economy and the central bank's Beige Book also noted modest improvement.
Federal Reserve Chairman Ben Bernanke
"Everything is universally moving in the right direction, but we already knew that," said Jeffrey Kleintop, chief market strategist at LPL Financial of the Fed's June report, which noted improvement across all 12 districts.
After climbing more than 100 points and clearing 10,000 for the first time this week, the Dow industrials (DJI:^DJI - News) ended at 9,899.25, off 40.73 points, or 0.4%.
"We have an indecisive marketplace. The only major catalyst was the euro dipped below the psychological $1.20 level," said Art Hogan, chief market strategist at Jefferies & Co.
Twenty-two of the Dow's 30 components finished with losses, led by Bank of America Corp. (NYSE:BAC - News) , off 2.1%.
The S&P 500 Index fell 6.31 points to 1,055.69, with energy off the most among its 10 industry groups.
"Stocks stalled out amid BP bankruptcy fears," said analysts at Action Economics of BP Plc (NYSE:BP - News) , shares of which were off 15% as the company contended with the Gulf of Mexico spill now in a seventh week.
"There would be a lot of potential bidders for those assets, we've seen some pharmaceutical companies because of problems forced to sell off assets," said Kleintop of the BP talk.
But, the energy Goliath's troubles are not a huge driver for the overall markets, as it's a known issue, Kleintop said.
"Any progress in containing the spill would be welcome news. But in terms of BP itself, it's a sideshow, and it's distracting for Congress, which should be working on financial reform, and tax reform," said Kleintop.
On Capitol Hill, Bernanke told a House budget panel that any fallout from Europe's debt trouble would likely have only a modest impact on U.S. economic growth, so long as financial markets continue to heal.
The fact that Bernanke is "not saying anything negative, and rates are going to remain low, it's a good environment for stocks," said Kevin Kruszenski, national director of equity trading at KeyBanc Capital Markets Inc.
"Wall Street does not see him as a threat, people see him as a reasonable, balanced person," Kruszenski added of the Fed chief.
Bernanke, whose comments about prospects for growth in an interview late Monday helped bolster Wall Street sentiment, also called on lawmakers to come up with a long-term plan to cut the U.S. budget deficit.
The Nasdaq Composite Index (COMP - News) shed 11.72 points to 2,158.85.
"Some would argue that you should be selling [stocks] because of so much uncertainty, but the companies we're talking to say conditions seem to be pretty good here," said Kruszenski, who believes basic materials and industries are among those leveraged for growth as the economy recovers.
"We're in a low interest-rate environment and companies are very lean, with lots of cash on their balance sheets, and buying one another, which they would not be doing if they weren't comfortable with the business environment," said Kruszenski.
For every seven stocks on the rise eight were declining on the New York Mercantile Exchange, where 1.7 billion shares traded. Composite volume topped 6.4 billion.
In its June report, the Fed's Beige Book found ongoing improvement across the country, with the pace of growth generally termed modest. Crude-oil futures topped $74 a barrel and gold neared $1,230 an ounce."
Karl Denninger, former CEO of MCSNet in Chicago, now trading the capital markets for a living at MarketTicker.com, nearly had a kitten when he heard that the Swiss National Bank intervened and bolstered the Euro on June 8, 2010:
" You want to know where the spikes in the Euro came from today?
That's "official intervention" by the Swiss National Bank and if they don't cut this crap out they're going to cause an equity and credit market collapse.
These jackasses now have double the Euros they held just a short while ago from these "operations", and as you can see, they're pissing into a hurricane on even a daily basis, say much less on anything more consequential:
This sort of tampering, performed by a private party, is illegal. Of course it's routine and "expected" in the FX space for sovereigns to interfere, but much of the instability that we have seen of late has been caused by this sort of "intervention."
Specifically, today [June 8, 2010] it was responsible for a sixteen point, or 1.5%, jack-rabbit move in both directions in the stock market in the space of less than two hours.
There is absolutely no excuse for The United States to support this sort of garbage with our taxpayer backstops.
These instabilities in the foreign exchange markets make it impossible for real companies to hedge costs and profits in foreign nations and do severe and irrevocable damage to these firm's operations.
It is also reflecting into the US Commercial Paper markets and driving spreads wider there as well.
This is the very same market that locked up in 2008 and triggered the equity market collapse.
The SNB's "interest" in doing this is clear: Half of European banks are stuffed full of debt written in Swiss Francs - in nations where the currency is the Euro!
These idiots (both the borrowers and the banks that offered these "products") have now seen the principal balance of these loans represented in Euros rise by 11% in the last year.
This sort of idiocy, incidentally, is one of the reasons two years ago that I said there was no chance we could possibly "inflate our way out" or play the "Keynesian game" any more and get away with it.
These instabilities can and will come to the fore and force defaults and there is literally nothing that can be done about it.
The more the ECB intervenes in the bond market the weaker the Euro gets and the more damage is done to debtors holding Swissy-denoted notes!
We made a critical error in 2007 and compounded it in 2008 and 2009 by building in structural deficits as a supposed "sop" to the banksters who got us into this mess - both here and abroad.
We have continued to refuse to force them to eat their own cooking and close those firms that were responsible for doing this and both were and are insolvent, both here and abroad.
Now we have CENTRAL BANKS flailing around trying to stop that which is inevitable, expending tens of billions that have effective time periods measured in minutes, and yet we STILL refuse to wake up and smell the coffee.
There is no durable economic stability or recovery possible until these imbalances are forced out of the system in their entirety. This means forcing those who are insolvent to admit it and swallow their medicine.
The extreme volatility will continue so long as their jackassery by entities like Bernanke and the SNB continue, and as more and more investors and traders give up on any sort of longer-term holding due to the volatility and head to the sidelines liquidity in both equities and credit will contract until there is an all-on no-bid circumstance one day - a full, all-on crash - and this one will NOT retrace.
If you thought the "Flash Crash" was bad I hope you're prepared for what's coming, unless we find a leader somewhere in the world who will pull these jackasses into the dock and demand that they stop it - right now.
I've been warning people now for three years about snipping the fuse before it goes inside the box.
It appears it may have now done so, in which case it's too late."
Europe At Crossroads:
Sunday Afternoon Shopping: Camden Market, London, England
Credit: Visual Impacts
Britain's new coalition government used Tuesday's official state opening of Parliament, a ceremony filled with pomp and pageantry, to reiterate its commitment to getting the country's books in order.
"The first priority is to reduce the deficit and restore economic growth," Queen Elizabeth II said in the House of Lords, in accordance with tradition that the monarch outlines the agenda of the ruling government.
And the Italian government met Tuesday to discuss a plan that would cut $29 billion in spending.
Details reported in Italian media said Rome would reduce the amounts it transfers to local governments as well as slashing the state payroll by freezing wages and hiring for three years, while gradually raising the retirement age for public-sector employees.
The British and Italian moves follow the painful spending cuts and tax hikes announced by Greece, Spain and Portugal as those countries try to narrow their budget gaps and stem the loss of market confidence in their economies.
Europe's main stock markets saw sharp sell-offs Tuesday, with the exchanges in London, Paris and Frankfurt all shedding about 3% of their value.
Meanwhile, the battered euro, already down against the U.S. dollar to one of its lowest levels in four years, struggled to maintain an even keel. It closed at $1.23, down one cent.The British pound was also down slightly against the dollar, despite the new government's tough austerity talk Tuesday.
The new coalition made good Monday on a Conservative Party campaign pledge to announce an immediate program of about $9 billion in spending cuts.
Among the measures are the closure of some smaller agencies, a government hiring freeze and the cancellation of some state-funded projects.
In a feisty attack on the economic management of his Labor Party predecessors, Conservative Prime Minister David Cameron said his government had inherited "a deficit that is bigger than Greece's."
British Prime Minister David Cameron
But Monday's cuts add up to barely 4% the size of the deficit, and whether the markets deem that a good enough start remains to be seen.
"The cuts we have just heard about are the easy bit of the story," commentator Hamish McRae wrote in Tuesday's edition of the Independent newspaper. "The tough choices are ahead."
Nor do investors appear impressed by the even harsher budget plans announced elsewhere in Europe. The uncertainty stems largely from questions about whether those governments will follow through in the face of public opposition and unrest.
In unusually strong terms, the International Monetary Fund warned Spain on Monday that it must not balk at reforming its labor market — unemployment there has topped 20% — or consolidating its banks, which have been hard hit by the collapse of a sizable real estate bubble.
U.S. Treasury Secretary Timothy F. Geithner arrives in London May 26 for meetings with European officials about the economic situation there ahead of next month's Group of 8 gathering in Canada of the heads of the major world economies.
Speaking to reporters during his visit to China on Tuesday, Geithner reiterated his belief that Europe can solve its economic problems.
"It's important to understand that Europe has the capacity to manage these challenges. And we're confident they will," he said.
Geithner also will meet Wednesday with British officials, including the new finance minister, George Osborne, and Bank of England head Mervyn King.
Then Geithner will travel to Frankfurt, Germany, for a working dinner with Jean-Claude Trichet, president of the European Central Bank."
Germany Versus the EU
~ Stephen Castle, Washington Post, reports May 25, 2010 ~
Germany called 'naive' on the Euro?
BRUSSELS — "The European Commission president, José Manuel Barroso, on Tuesday accused the German government of lacking leadership during the euro crisis and describing its plans to rewrite the European Union’s rulebook as “naive.”
In an uncharacteristically blunt intervention, Mr. Barroso took issue with German proposals to change the European Union’s Lisbon Treaty so that punishments can be increased for countries, like Greece, that break the rules governing euro countries.
He also suggested that the alarm in the markets, which has destabilized the euro, might have been calmed by quicker assurances of German support.
The comments, made in an interview in the Frankfurter Allgemeine Zeitung, irritated German officials, where some of Mr. Barroso’s claims were dismissed as “absurd” on Tuesday.
The diplomatic feud underscores the difficulty the European Union faces in reaching consensus on how to reform the single-currency rules to avert a repetition of the Greek debt crisis.
The criticism also highlights the extent to which the market distress in the euro zone has often put Germany, the bloc’s dominant economic power, at odds with many of its European partners.
In many quarters, the German caution over a bailout for Greece, which was first rejected in February, is faulted for helping to turn a crisis over Greek debt into one that destabilized the entire euro zone.
Though criticism of Berlin has been widespread among officials in private, no senior European Union politician has made such a direct attack on Chancellor Angela Merkel.
The fact that the comments come from Mr. Barroso, who often goes out of his way not to offend the big member states, underlines the strain on relations between the European Commission and Berlin.
On Friday, the European Union’s 27 finance ministers met to consider changes to shore up the euro and deepen economic coordination under the chairmanship of Herman Van Rompuy, the president of the European Council.
He is expected to produce recommendations in October.
Berlin is pushing for tough sanctions against countries that breach rules, including powers to deprive them of European Union subsidies and their voting rights.
Mrs. Merkel has expressed her support for the idea of rewriting the Lisbon Treaty, a step that would help give any new measures legal certainty in Germany.
German Chancellor Angela Merkel
But Mr. Barroso said it would “be naive to think one can reform the treaty only in areas Germany considers important,” adding that countries like Britain might try to put their more skeptical ideas into the negotiating pot.
“There are already procedures by which states with excessive deficits do not vote,” Mr. Barroso said. “Under constitutional law it would be nearly impossible to do more, in my view.”
The German economy minister, Rainer Brüderle, said in a statement that he was “surprised at the criticism” from Mr. Barroso, adding that the “current process of economic policy coordination cannot prevent problems arising in the member states and the euro zone.”
In his interview, Mr. Barroso said that while a quicker rescue of Greece was probably impossible, “perhaps from the beginning one should have been able to say more clearly that Germany has a strong interest in keeping the euro stable, not just because of European solidarity but because of its own interests.”
“In recent years in German politics,” Mr. Barroso said, “there haven’t been enough strong voices explaining to the public how important it is for Germany to have the euro.”
From the looks of it, at least to me, perhaps the Germans are doing what other countries have not been doing when it comes to dealing with sovereign debt, and the manipulator speculators ~ you know, a practice drill?
See > Just in case?
American Economic & Social Anxiety?
US Treasury Secretary Timothy Geitner on Capitol Hill, Washington D.C.
~ Scott Malone of Reuters reported May 24 that ~
BOSTON, May 24, 2010--"The U.S. economy faces major problems while Europe's is "teetering," the head of General Electric Co. told a class of graduating college students on Monday.
"We are at an unprecedented moment in the history of our country. There is economic and social anxiety," said Jeff Immelt, chairman and chief executive of the largest U.S. conglomerate. "Europe appears to be teetering."
Still, the risk that the Greek debt crisis could drag down other European economies does not appear to be enough to derail the world's overall economic recovery, he told reporters after addressing Boston College's commencement.
"It's going to be slow growth in the economic region, but look, I'm 28 years with GE and I can't remember when Europe was fast growth," Immelt said.
"I think the U.S. economy is very good right now and improving. We have to see what happens in Europe, but I don't think it's enough to slow the recovery, I really don't."
China's economy -- a key growth market for GE, the world's largest maker of jet engines and electricity-producing turbines -- "remains reasonably robust," Immelt said.
'IT'S A MESS OUT THERE'
The U.S economy will have to confront problems ranging from the rising cost of healthcare to the loss of many of the manufacturing jobs that once sustained the nation's middle class, Immelt said at Boston College, where GE does extensive recruiting.
The company currently employs some 270 alumni of the school.
"Look, it's a mess out there. There are some real problems that need to be fixed. I could really bum you out if I wanted to," Immelt told the graduates.
"Your country will be better coming out of the financial crisis if we learn a few lessons: that real, honest, ethical leadership matters, that the U.S. cannot prosper today as just a service economy."
Improving the U.S. healthcare system is a pet cause of Fairfield, Connecticut-based GE, which is a major maker of medical imaging devices.
GE aims to invest some $6 billion over the next four years in ventures it hopes will help lower the cost of healthcare.
"The problems with the American healthcare system are real and will require great determination," Immelt said.
The GE chief, who was awarded an honorary doctorate in business administration, also said the world needs to come to terms with the growing gap between rich and poor, both in the United States and abroad.
May 2010: Athens, Greece
"The global economy will not tolerate a few people getting rich while other people get poor," said Immelt, who earned his Masters of Business Administration at nearby Harvard Business School.
He also told reporters he was confident that GE, which runs a hefty finance operation, was prepared to cope with any changes to U.S. regulations resulting from the sweeping financial reforms passed last week by the U.S. Senate.
"Is it perfect? No, but could we live with what's passed the Senate? Sure," Immelt said. "We'll have to adjust to new standards and we're ready for that."
Last year, some observers suggested the reforms could force GE to spin off its GE Capital unit, an idea the company fought."
May 26, 2010 -- "First came Greece, which threatened Europe's economy with its staggering 130% debt-to-GDP ratio. Now comes Spain, which also seems to be contributing to the debt crisis in Europe.Unlike Greece, Spain has a low debt-to-GDP ratio. The country's problem is its banks' large real estate debt, fears about Spain's economy, and the fact that its sovereign debt is largely financed abroad.
If foreign investors walk away from Spanish bonds, it could cause a sovereign debt crisis for Madrid that could spread to the rest of Europe.
'Spain May Experience Japan-like Deflation'?
World stock markets shuddered last week after the Bank of Spain, the country's central bank, seized a small savings bank called Cajasur, and replaced its directors after it failed to merge with a larger savings bank, Unicaja.
This was followed on Monday by the announcement that four small savings banks were being merged into the country's fifth-largest bank, with assets of 125 billion euros ($152 billion), causing fears of market instability to spread across the continent.
"Spain could easily be like Japan," says Jonathan Tepper, a partner at Variant Perception, an independent macro economics research firm based in London, referring to Tokyo's 15 years of price deflation and stagnating economy.
"In terms of a long, protracted period in which property prices go down on a sustained basis and banks have to recapitalize themselves, I think the problems are far ahead."
Unlike Greece, Spain's debt-to-GDP ratio is among the lowest in Europe, about 55% of GDP. Japan's debt is approaching 200% of GDP, but thanks to a high savings rate, it finances 95% of the debt internally.
Spain's problem, along with the rest of Europe's periphery, is that it must finance its debts abroad. Some 45% of Spanish debt is held by foreigners -- the amount climbed to 55% in the last year.
"If people don't show up for your bond auctions, it can be a big problem," says Tepper.
"There was a problem with one of the Spanish bond auctions last Wednesday where they didn't raise the full amount they wanted and had to do it at a higher price.
People are focusing on the wrong thing -- it's not so much the absolute level of debt, it's more how the debt is funded."
'Skittish Foreign Creditors?'
What's the problem with foreign creditors? They tend to be more nervous than domestic lenders and often flee at the first sign of trouble. That forces up interest rates, which could cause interest payments to balloon.
Santiago Lopez Diaz, a bank analyst for Credit Suisse, says the Bank of Spain's intervention in Cajasur "may raise concerns for the financial system, for the sovereign risk profile and for the economy in general," though he added that he didn't think the system was at risk.
Diaz, in a note to investors, says he thinks banks' cost of funding is likely to go up due to higher sovereign risk, an increase in deposit costs and restructuring of the financial system.
He said he expects earnings to decline by an average of 4% over the next three years at Spanish domestic banks.
'Spain's Real Estate Debt a Real Drag?'
"The risk for the debt outlook lies, in our opinion, in the looming bank restructuring," Diaz said.
While the Spanish financial system had virtually no exposure to toxic assets like U.S. subprime bonds in 2007 and 2008, it's exposed to the highly leveraged domestic real estate sector.
Outstanding loans to developers now stand at around 325 billion euros ($397 billion), or about 31% of GDP.
One big problem, according to Tepper, is that Spanish savings banks have a huge amount of undeveloped land on their books. This property is held at relatively high values as urban land available for development.
But with 1 million unsold homes in the country, it's unlikely that anyone is going to build new residences anytime soon, meaning the undeveloped land is worth a lot less now than it's being valued at on the bank's books.
"A lot of this land should be marked down," Tepper says. "The long-term solution is being more aggressive about writing down loans and recognizing losses."
Tepper adds that the Bank of Spain's approach is to hope that eventually these losses will be recognized, but it doesn't want to do anything now to upset the stability of the financial system.
"If that's the case, you just have a grossly long period of stagnation where credit isn't available because it's tied up in illiquid assets," he says.
'Getting Worse Before It Gets Better?'
The International Monetary Fund concluded a visit to Spain this week with a downbeat assessment of the country's economy.
"Spain's economy needs far-reaching and comprehensive reforms," the IMF report said.
"The challenges are severe:
'A dysfunctional labor market, the deflating property bubble, a large fiscal deficit, heavy private sector and external indebtedness, anemic productivity growth, weak competitiveness, and a banking sector with pockets of weakness.'
The usual antidote to an economic slump is to devalue the currency and pump government funds into the economy to create jobs.
But Spain is part of the eurozone and thus can't adjust the currency to its needs.
And the IMF and the European Union are forcing Spain to make cuts to its government budget, reducing civil-service pay and public-sector pensions, at the precise moment it needs to increase spending to boost the economy.
This could have a drastic impact for years on economic growth in Spain and the rest of the European Union.
"The bad news for investors is that due to the reforms, markets will turn more negative before they will improve," says Philip Gisdakis, a strategist at Unicredit, a large European bank, adding:
"Harsh austerity measures and a reform of the banking system in the midst of a deflating property bubble is definitely not supporting growth."
'A Bit Frightened by European Debt Woes?'
~ Emily Chasan for Reuters reported May 26, 2010 ~
New York-- "Some of Wall Street's biggest names said they are frightened and worried by the debt crisis in Europe, but still do not expect a double-dip recession in the United States.
"We're frightened at this moment to see how this can all play out with these countries already in a fragile position," said Larry Fink, chief executive of asset manager BlackRock Inc., at a Reuters Insider Newsmaker panel in New York.
Wall Street Titans on Europe: (from left to right) Joseph Perella, chairman and CEO of Perella Weinberg Partners; Roger Altman, chairman & CEO of Evercore Partners; and Laurence Fink, chairman & CEO of BlackRock, meet at Reuters Insider "New Wall Street Newsmaker" in New York City May 26, 2010.
Credit: Brendan McDermid/Reuters
He cited austerity measures that countries like Greece, Spain, Italy and Portugal must implement to deal with heavy debt loads.
"Now they're going to have to bring down their deficits in the tens of billions of dollars to stabilize their country, but will that destabilize their social fabric?"
Recent riots in Greece have sparked concerns about how austerity measures will play out in other countries, like Spain, where unemployment is already very high, Fink said.
"It's very hard to see a good ending," he said, noting his firm, which manages about $3 trillion in assets, is avoiding Southern Europe debt at the moment.
"The real question is how long can Netherlands, France and Germany support these Southern Rim countries," Fink said.
The latest developments are a strong signal that the global credit crisis is not over, as some had thought only a few months ago, Roger Altman, founder and chairman of boutique investment bank Evercore Partners (EVR.N), said at the panel.
"The really serious crises of the last 150 years tend to be long and drawn out and have several stages, including a sovereign debt stage," he said.
"The global financial crisis is not over, and it's not close to being over, and there are probably other large shoes that can drop beyond Europe," he continued.
Another concern is the effect that the crisis has had on European banks and their ability to lend, said Joseph Perella, chairman and chief executive of investment banking firm Perella Weinberg Partners.
"Right now, people are concerned about the impact of this European crisis on the liquidity that will be available from their commercial banks," Perella said.
"If you're a major corporation in Europe and you think you might want to do a big acquisition ... you wonder whether or not what's going on in Greece or other countries could ultimately impact (European banks') ability to provide liquidity for you. "
While fiscal belt-tightening in Europe could slow growth, it won't necessarily torpedo a U.S. economic recovery, unless the debt troubles grow into a larger currency crisis for the euro, the panel said.
"At the moment, I don't think the problems in Europe will bleed into the United States," BlackRock's Fink said.
Altman said he expects "flat growth" in the euro zone, could simply pinch demand and shave a few extra points of growth off the U.S. economy in the next year.
Most economists think the U.S. economy will grow at a roughly 3 percent pace this year and next, so it would take a powerful blow to knock it back into recession."
...Can We Call It A Global Default?"
Don't forget to wash your hands when you're done hun
The entire “credit crisis” that started in 2008 was a bunch of bankers having a hissy fit because they were unable to get people to pay off the fraudulent debts they created, even though any reasonable person, looking at the underlying debts, would have concluded from the very beginning that they were never going to be paid.
Indeed, what does a “credit rating” mean coming from a banking cartel that has had to borrow trillions from taxpayers over the last 2 years just to stay in business?
French President Nicolas Sarkozy
Led by French President Sarkozy, and German Chancellor Angela Merkel, it was discovered that French banks may collapse, with stories that Sarkozy threatened to pull out of the Euro if the euro was not supported by a common and united effort.
The world transits of spring in the northern hemisphere are giving way to the formation of the cardinal transits of the planets from Mars to Pluto, in an unusual, and powerful configuration T-Square, when joined by the transits of the Moon, becomes a Grand Cross.
This is what the August 7, 2010 Grand Cardinal Cross Looks Like Over London, England:
Grand Cardinal Cross: August 7, 2010
The cardinal inclinations, especially the waning Saturn/Pluto Square with Jupiter/Uranus conjoined as part of the Cardinal T-square signifies the need to creatively step over the blockages created by others. In this case global manipulators and speculators.
The Euro's problems are no different than what the dollar has experienced, yet the dollar, as the world's currency, benefits from the fall of the Euro. This accounted for the Swiss move recently to bolster the ailing currency.
The Cardinal T-square itself reflects a turning point of sorts, call it an evolution, away from outworn methods, corruption, greed and incompetence of the late 20th century and into a visionary era, where the ideas and learned lessons of history are applied as truths unto themselves, with its failures repeated less often.
The cardinal crisis years are a series of years of challenges for those who stubbornly refuse to admit that they were wrong, and to step aside as a new generation becomes the new establishment. There's a lot of work to be done.
May 21, 2010 -- "Well, the current state of the global financial markets is certainly interesting.
German Chancellor Angela Merkel declared that “speculators are our enemies,” confusing law-abiding traders who passively speculate on price movements with criminal manipulators who actively seek to inflict harm on the markets.
May 6, 2010: The New York Stock Exchange's mysterious "fat finger" 1,000-point drop
And, what would happen to Wall Street if 60% of their business was drastically changed by effective government regulation?
'No Escape From Europe's Rubble?'
credit: Visual Impacts
By Aaron Task, Yahoo finance
May 21, 2010-- "If the market hates uncertainty, as the saying goes, just about the only good news this week was that "uncertainty" over regulatory reform was removed.
But the reforms aren't necessarily positive, and major uncertainty remains about the euro and the outlook for the global economy -- among other small matters.
First, the grim tally: Thursday's washout left all major U.S. averages at least 10% below their 2010 highs.
That the decline occurred less than a month after most averages hit those highs is at least as disturbing as the fact that the Dow and S&P entered official "correction" territory. (On Friday, the Dow dipped below 10,000 early on before rebounding to close higher.)
So there's a good reason why a lot of investors are feeling whipsawed --and maybe a little nauseous -- right now, The VIX, a.k.a. "the fear index," has jumped about 175% in the past month, while Treasuries, the dollar and gold have benefited from the "risk aversion" trade.
Inevitable Object Meets Irresistible Force?
The Euro-zone crisis has reminded the global financial community that despite all of the government liquidity and credit … the process of needed private and public sector deleveraging is going to be painful and -- to no small extent -- has been delayed/stunted by the government stimulus itself," says Daniel Alpert, managing partner at Westwood Capital.
But the outlook for the euro remains in doubt.
Why the Euro Matters So Much
The euro's fall vs. the dollar raises concerns about the profit outlook for U.S. multinationals, which have benefited greatly from a weak dollar in recent years.
Suddenly, the optimistic earning forecasts for S&P 500 stocks are being called into question.
That's a big reason why mega-caps like GE (NYSE: GE - News), IBM (NYSE: IBM - News), Boeing (NYSE: BA - News) and Caterpillar (NYSE: CAT - News) have been so battered in recent weeks.
Beyond the stock market, a weak(er) euro has major ramifications for the global economy because it will make European exports more competitive against rivals from the U.S., Japan and China, most notably.
[For more on this dynamic, see: Outlook for Global Economy Is "Bleak," Former IMF Chief Economist Says.]
Concern about the economic impact of the currency crisis is a big reason commodity prices have tumbled recently, most notably oil. Historically, currency crises lead to trade barriers and protectionism, which typically bring slower economic growth, if not deflation and depression.
The euro will be a major issue when U.S. Treasury Secretary Timothy Geithner and Chinese Vice Premier Wang Qishan meet next week for a strategic and economic dialogue.
Ahead of the gathering, Chinese officials said the euro's weakness means they are less likely to let their currency, the renminbi, rise in value, something U.S. policymakers have long agitated for.
In sum, Europe's mess is further complicating an already highly sensitive sore spot between the world's largest and world's fastest-growing economies.
Meanwhile, in a world "intertwined by $500 trillion of derivatives," as Minyanville's Todd Harrison likes to say, Europe's crisis has also revived fears of "systemic risk" and financial contagion.
'Fighting the Last War?'
The regulatory reform bill passed by the U.S. Senate May 20 was designed expressly to address such an event, fear of which had diminished heading into the weekend. But whether the Dodd bill could prevent another "contagion" remains very much in doubt.
As The Wall Street Journal reports, key elements of the Senate bill include:
• Establish a new council of "systemic risk" regulators to monitor "too big to fail" firms and prevent bubbles from forming.
• Create a new consumer protection division within the Federal Reserve.
• Empower the Federal Reserve to supervise the largest, most complex financial companies.
• Resolution authority for the government to seize and liquidate failing financial firms without a taxpayer-funded bailouts.
• Give regulators new powers to oversee derivatives.
• Force banks to stop "proprietary trading," or making market bets with their own capital, and put limits on firms' ability to grow beyond a certain size of liabilities.
The WSJ labeled the Senate bill (which must be reconciled with a House version) "harder than expected" and said Wall Street is "bracing for seismic changes."
Considering prop trading and derivatives have become huge sources of income for Wall Street firms, maybe "certainty" over reg reform isn't such good news, after all.
No tears are being shed for the "fat cats," but if the reforms result in a contraction of credit, as opponents contend, the U.S. economy and our 401(k)s will feel the impact."