Around the Globe 06.10.2013

IMF Says Another Greek Bailout Necessary | Zero Hedge.

Greek Privatization Plan Hits Snag –

Hail the outbreak of honesty about Greece’s bailout –

Bad IMF Predictions 2

The IMF has admitted that its economic predictions for Greece have been poor and this has caused the Greek people unnecessary suffering.  You can see how bad the predictions have been in the chart above.  Each has missed to the downside including privatization receipts, but the Fund still will not admit that the poor predictions were not mistakes but rather political compromises to enable the Europeans to present their voters with a smaller cost.

The can was kicked yet again, and once again it appears that we are running out of road.  Greece has missed its unemployment, economic growth and privatization forecasts by so much that another bailout is inevitable by the end of the year just like we wrote months ago:

Recovery Meme Spreads to Greece, Yes, Greece | DARECONOMICS.

Japan current account surplus doubles as income gains, exports rise | Reuters.

Japanese Current AccountThe mainstream media must spin news positively to keep those clicks coming.  It is accurate to state that Japan’s current account surplus has doubled, but by removing this number from context the author has made this piece of news “optimistic.”  The chart above shows that as a percentage of GDP the current account has been decreasing and the trend continues.  The red arrow points to the spot where the current account balance resides today.  Placing that number in context, in order to finance itself without foreign assistance, Japan’s current account surplus must be close to 10%.

German Top Court Likely to Say ‘Yes, But’ to ECB Policy – Bloomberg.

German court to hear case against ESM, ECB bond-buying in June | Reuters.

German Supreme CourtThis is the official symbol of the German Supreme Constitutional Court in Karlsruhe.  It looks pretty cool and is ready for duty on a government website, official publication or the hood of a Pontiac Trans-Am.  On to the business at hand…

The German high court will never render a decision that imperils the euro.  As such, it will rubber stamp whatever argument put forth by Merkel’s government to allow the ESM and ECB to monetize periphery debt as long as it is with the consent of the Bundestag.  In an effort to keep things calm so that everyone carries on, the decision will not be issued until after elections.

No Inflation as Yields Jump Belies Point of No Return View – Bloomberg.

US 10yr 06.10.2013

The taper tantrum began May 2.  Since then, the stock market has moved sideways, and the bond market has fallen (yields rose).  My alternate explanation is that liquidity is drying up.  First, commodity markets felt the pinch.  Then, it was the bond markets.  That leaves equity markets for the next big move.  Arguably, this has already started with foreign stock markets led by Japan moving downwards during the last six weeks.

Housing’s Up, but Is Foundation Sound? –

US Housing Sales through 04.2013

This is a well-written piece explaining both sides of the housing recovery debate.  In my opinion, the bears are a bit too optimistic.  A full-fledged recovery to pre-crash levels will take years.  In the meantime, the U.S. must figure out another way to promote economic growth rather than replacing one bubble with another.

Rupee Falls to Record Lows –

Rupee to Dollar 06.10.2013

This asset also is experiencing a taper tantrum.  In fact, it appears to correlate perfectly with the recent decline in treasury prices. India does have macroeconomic issues, but why did these issues begin to manifest themselves in the rupee exchange rate beginning May 2?

The Painful Side Of Japan’s “Growth Strategy” | Zero Hedge.Oil Price in Yen 02.01.2013

The decline in the yen has led to a large increase in the price of oil for Japanese consumers.  The high oil price will drag down Japanese growth rates for the immediate future.


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