Archive for August, 2012

Jadi atau Tidak?

August 29th, 2012 1 comment

“Somehow many policymakers and citizens have come to believe that money printing is some kind of magical process, that good things can be produced literally out of thin air, and that if leaders don’t create growth from obviously-needed changes in wrongheaded policies, then poof!… printing more money will solve it.  This is pathetic.

“The range of inevitable costs to societies practicing such alchemy is somewhere between “a lot” and “utterly catastrophic.”  The damage is already becoming evident, particularly in the distortion between the rise in financial asset prices and the sluggishness of the real economy.

When consumer prices soar across the board or there are other painful consequences, we wonder what excuses the blameworthy policymakers will make to deny their responsibility.

“A loss of confidence in paper money could result in searing and startling inflation, evaporating life savings and turning every stolid worker into a frantic speculator.  If that were to occur, nobody could possibly say in hindsight that the conditions for such a sorry state of affairs were not in place.  The people who are telling us now that inflation is impossible because there is slack in the global economy, and that central banks can print trillions of dollars more without a significant risk of inflation, are the same folks who not only failed to predict the financial crisis, they did not even have a clue that a crisis of such kind was possible.”

-Paul Singer, founder and CEO of hedge fund Elliott Management Corporation

Kita akan mengakhiri bulan Agustus ini dengan pidato yang sudah sangat diantisipasi pasar, dari the Fed Chairman, Ben Bernanke, di Jackson Hole AS pada hari Jumat. Pada forum yang sama di tahun 2010, Bernanke mengumumkan program Quantitative Easing ke-2 (QE2), namun tidak demikian ketika tahun 2011.  Karena itu para pelaku pasar akan sangat menantikan apa yang akan dikatakannya pada pertemuan tahunan para bankir dan ekonom tersebut di tahun 2012 yang akan diselenggarakan di akhir pekan ini.

Ketika melihat sesuatu, yang terbaik adalah membuka diri dan menerima sudut pandang pihak lain. Memang mayoritas pelaku pasar saat ini memproyeksikan bahwa the Fed akan mengambil langkah  kongkrit pada pertemuan FOMC bulan depan, namun bukanlah seluruhnya.

Menurut Yohay Elam, seorang founder dan chief editor pada Forex Crunch, QE3 jelas TIDAK akan dilakukan pada pertemuan FOMC September. Untuk mengetahui alasannya, silahkan Anda baca laporan terbarunya yang ditulis pada 23 Agustus 2012 berikut ini:

The FOMC Minutes certainly gave the QE3 camp a lot of ammunition, and dealt a blow to the US dollar. Nevertheless, a decision on more money printing in the September 12-13 meeting is certainly not a done deal.

Here are 7 reasons why markets could be very disappointed on September 13th, and the dollar could make a big comeback. No, it’s not the proximity to the elections.

1) Is there a smoking gun?

From the minutes:

Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery.

This is supposedly the “smoking gun”. But many questions rise: How many is many? Is there a clear majority? In addition, these members support “additional monetary accommodation”. This doesn’t necessarily mean QE3.

2) Option of changing guidance

The Fed added a conditional pledge to keep rates low in the summer of 2011. This was extended in the January 2012 meeting and currently states that rates will likely remain low until late 2014.

A change in guidance was also discussed: instead of setting a potential date for tightening, the Fed could tie the tightening to economic factors.

3) Ideas from overseas

The Fed also discussed the British Funding for Lending scheme and the ECB’s cut of the deposit rate to 0% as possible tools for easing. These are new ideas, and the Fed has been quite creative in the past.

4) Easing only if economy doesn’t improve

This is a clear condition for more easing (which isn’t necessarily QE3). Since this meeting was held on July 31st and August 1st, there were some encouraging signs: retail sales rebounded, housing continued improving and most importantly, job gains were significantly stronger. Manufacturing remained weak.

There is one more Non-Farm Payrolls report before the next meeting on September 12-13th. Another positive report could lower QE3 expectations even before the meeting, but this is still to be seen.

In this context, it’s important to note that FOMC member Dennis Lockhart acknowledged the improvement in the economy after showing support for more bond buys during July. Lockhart is a “swing” member – he doesn’t always side with the doves or the hawks. His small shift to the hawkish side is significant. Are other members also acknowledging the improvement?

Update: Also FOMC member James Bullard acknowledged the recent improvement and even said that the “FOMC minutes are a bit stale“.

5) Yields are still low, food and oil are high

QE1 was launched to lower long term interest rates and encourage lending. Despite recent rises, 10 year bonds yield less than 2%. QE2 was launched to counter the potential deflation. Oil and food prices have risen lately. How can more bond buys stimulate the economy?

6) European situation improving

One of the issues weighing on the US is the uncertainty about the European debt crisis. A weaker euro-zone means less economic activity for the US, and a significant event could hurt US banks. The European crisis was also mentioned by the Fed in various papers and statements.

Since Draghi opened the door for QE in Europe, the mood in the markets has improved. With a recent German approval to buying of Spanish bonds, the ECB seems ready to act on its September 6th meeting, as long as Spain officially asks for help.

7) Using expectations to keep yields low?

Since QE2 ended on June 30th 2011, Bernanke and his colleagues always left the door open for more QE, using subtle hints.

Keeping expectations high also contributed to lower yields. Investors buy bonds at a certain price and expect the Fed to buy it for a more expensive price (lower yields). Are these minutes going along the same lines?

It would not be surprising if the Fed refrained from launching QE3 in the September meeting but rather opts to use more moderate tools.

If the Fed does go for more dollar printing, it would be possible to suspect that the Fed is on a new course of monetary policy: inflating debt away.”

Selain itu Graham Summers, Chief Market Strategist dari Phoenix Capital Research, yang memberikan pesan lugas kepada mereka yang masih berharap the Fed dan bank-bank sentral dunia lainnya akan melakukan langkah penyelamatan, serta yakin bahwa bursa saham akan terus naik.

Berikut adalah komentarnya mengenai kemungkinan quantitative easing lanjutan dalam tulisannya yang berjudul An Open Letter to the MSM: QE3 Is Not Coming.  Stop the Propaganda:

“Listen up Mainstream Financial Media, the Fed is not going to announce QE 3. You’ve been running the same tired stupid story after every single FOMC meeting since May 2011, desperately trying to spin everything the Fed says into a call for more QE.

The fact of the matter is that only a handful of Fed members have called for more QE. They are Charles Evans and Bill Dudley, both of whom represent financial centers (Chicago and New York). These guys want QE Infinity because they represent the banks and could care less about the average American. Heck, Dudley even went so far as to suggest inflation was under control because iPads are getting cheaper… at a time when food prices were at all time highs!

Those folks have been clamoring for QE all along. This is nothing new.

Let me explain why QE 3 is not coming and why your desperate feeble attempts to spin every Fed statement into a call for more QE are going to bite you in the tail.

The Fed cannot announce QE 3 because:

  1. Food prices are already exploding higher towards records
  2. Gas prices are sharply up
  3. Inflation is actually much much higher than CPI claims
  4. The stock market is at or near four year highs

Those are the obvious reasons that anyone with a working brain could figure out. Now let’s explain the more significant reasons that someone who actually grasps how the financial system works knows about.

If the Fed announced QE 3, or decided to monetize everything in sight, the bond market would implode. Every time we’ve had QE, interest rates have risen. More QE now after we’ve already had QE 1, QE lite, and QE 2 would signal that the Fed is willing to monetize everything under the sun. The end result would be an absolute catastrophe (the bond market dwarfs the stock market in size) as bonds would collapse, sending interest rates through the roof.

This in turn would take down many corporations as they’d be forced to default on their debt payments. It would also destroy the US economy as credit card defaults, mortgages, student loans, etc would be defaulted upon.

So no QE, guaranteed.

There’s another reason QE isn’t coming. QE sucks Treasuries out of the financial system. Treasuries are the senior most assets against which banks make their trades. Consider that the top four banks in the US (JP Morgan, Goldman Sachs, Bank of America, and Citigroup) only have $7.12 trillion in assets backstopping over $200 TRILLION in derivatives.

When the Fed “monetizes” debt it is in fact pulling assets out of the system (swapping out Treasuries and other assets for cash). With over $224 TRILLION in derivatives outstanding this is the LAST thing the Fed wants.

Indeed, Bernanke has all but admitted this recently, saying “I assume there is a theoretical limit on QE as the Fed can only buy TSYs and Agencies… If the Fed owned too much TSYs and Agencies it would hurt the market.

Why would it hurt the market? Because the banks NEED these assets. And QE takes them out of the system.

Trust me… Bernanke knows about this situation in the financial system. This is why he propped up the four TBTFs as well as Fannie/ Freddie and AIG while letting just about everyone else go under: if these firms collapsed it would implode the system.

So QE is not coming. That’s a fact. You can spin the Fed’s language however you want but you’re just making stuff up. You’ve been wrong about QE 3 for over a year now. And you will remain wrong. All you’re doing is propping up stocks with your propaganda.”


Pertanyaan vital saat ini tentunya adalah apakah Bernanke akan memberikan sinyal untuk langkah QE3 pada konferensi tahunan di ‘Jackson Hole’ pada akhir pekan ini.  Tom Fitzpatrick dari Citigroup yakin bahwa it would be irresponsible to do so and that we need a more ‘responsible fiscal policy’ which will not materialize as long as we have an ‘irresponsible monetary policy’ bailing policymakers out”:

To QE Or Not QE:

“from a Fed perspective

Recent data seems to have been a little more supportive of the economy (on the face of it) and may lead the Fed to stay on hold in the near term (September meeting). This will almost certainly raise the bar to moving extremely high as we head into the Presidential race proper. If this window closes then a move before December will be extremely unlikely barring a major financial/market/economic shock. There is no Fed meeting in November so after the 13 Sept meeting the window likely closes until Dec 12 without an “event risk” scenario materializing.

However this increases the danger of the Fed getting “caught behind the curve” in their objectives.

The reason for not moving is that it could be a mistake, one step too far. What is the consequence of being wrong to move – the likelihood of inflation in a debt laden economy.

While as in the 1970’s this would be painful and likely create a “stagflationary” economic dynamic it is an acceptable outcome in a “debt laden economy” (the lesser of two evils argument).

From a Fed perspective this decision process looks to becoming less linear and more in favor of renewed balance sheet expansion.

Do we believe this is the right way to go? Probably not.

Do we think it will ultimately be inflationary? Yes.

However what we think does not matter.

What we think the Fed thinks is what matters and we are starting to think that a move is becoming more , not less likely, just as the market and possibly even the Fed seems to be thinking otherwise. A move in September now certainly looks less likely but ironically the lack of a move may see the Fed once again “behind their curve” and scrambling to catch up again in late 2012/early 2013.

Succinctly summarized thus:

1.   What we have to pay for is rising in price (oil and food)
2.   What we choose to pay for is falling in price reflecting stresses on the consumer and businesses alike.

This is not a positive dynamic in a very uncertain environment.”

Saat para investor dunia sedang menantikan pidato dari orang-di belakang-layar tersebut pada hari Jumat nanti, memiliki pandangan yang sangat masuk akal terhadap pidato Bernanke di Jackson Hole tersebut, dalam tulisan yang berjudul The Jackson Hole “fix” is not coming:

“Expectations of a new asset purchase program by the Fed continue to persist as various pundits anticipate its unveiled at the Jackson Hole gathering.

CNBC: – Ebullient stock markets are increasingly pricing in the possibility that the Federal Reserve will soon unveil another round of monetary stimulus, Pimco Managing Director Neel Kashkari told CNBC Wednesday.

“The Fed is really in a box right now,” said Kashkari, who was an architect of the Troubled Asset Relief Program that bailed out major banks during the 2008 financial crisis. Inflation expectations and stocks are at levels that appear to be assuming imminent Fed action, he told CNBC’s “Squawk Box.”

“Those indicators have already priced in … that the Fed should act,” Kashkari said. As a result, the fund manager suggested Fed Chairman Ben Bernanke’s “hands appear to be tied” ahead of a closely watched speech on the economic outlook later this month in Jackson Hole, Wyo.

Market participants are looking for a fix, a repeat of the “high” Bernanke delivered at Jackson Hole in 2010 when QE2 was introduced. Markets however are in for a major disappointment because no outright asset purchases will be announced. There are multiple reasons for this, including the fact that real rates are now deep in the negative territory (as discussed here) and the policy as expressed in long-term real rates is far more accommodative than it was in 2010.

But what makes 2012 entirely different is that the key concern that pushed the Fed into asset purchases in 2010 no longer exists. The summer of 2010 was marked by renewed fears of deflation driven by credit contraction. The Fed was afraid of Japan-style deflationary pressures that are extremely difficult to arrest as bank lending shuts down. In the months preceding the 2010 Jackson Hole speech, credit was contracting sharply with banks steadily shrinking balance sheets. As discussed before, just the opposite is true in 2012 – credit is expanding at a decent pace. The chart below compares the trends now and in 2010.

So what should we expect from Bernanke this time around?  It will likely be more of the same things we’ve already heard recently:

  1. 1. US economic growth has lost some momentum.  Growth in employment has been slow and the unemployment rate “remains elevated”.
  2. 2. Europe poses downside risks.  A slowdown in emerging markets is also a concern.
  3. 3. The Fed will remain vigilant and expects to maintain a “highly accommodative stance for monetary policy”.
  4. 4. The Fed is to continue with Maturity Extension Program (Twist) and Reinvestment Policy (reinvesting in MBS to maintain constant balances).

That’s basically it. If the markets are pricing in more from Jackson Hole – which the recent equity rally suggests may be the case – we are setting up for a sharp selloff in risk assets.

CNBC: – “If he doesn’t deliver in Jackson Hole … you’ll see these risk markets react and fall back,” Kashkari said. Investors clamoring for more quantitative easing “suggests there’s downside risk from here if the Fed doesn’t move.”

Jadi bagaimana seharusnya kita memposisikan diri?

Dalam tulisan yang berjudul Crunch Time for Central Banks, Michael Pento dari Pento Portfolio Strategies menjelaskan dengan ringkas apa yang akan menjadi harapan di bulan mendatang:

“A growing possibility of war in Iran and the worsening economies in Europe and the U.S. have caused central banks to prepare investors for another round of money printing.  The time has now arrived for the Fed and ECB to either follow through on their threats or to sit back and watch as equity shares plummet and bond yields in Europe soar.  If central banks launch the assault on their currencies, I expect gold and energy prices to increase sharply.  In that case precious metal and energy shares should fare the best.  However, in the unlikely event that the month of September ends without any action on the part of the ECB and Fed, I would expect a significant retracement in all global markets and especially in commodity prices.”

Sementara BofAML juga secara singkat menjelaskan apa yang akan terjadi jika the Fed mengecewakan:

“This mixed data outlook makes the Fed call for the September meeting especially close.  There is little doubt for us that if the data resume sliding to the downside, the Fed will step in and ease further this year.  Right now, however, we are in an anti-Goldilocks period in which the data are too hot for clear-cut Fed easing, but too cold to support a sustained rebound – anything but “just right”.

Meanwhile, discussions with investors suggest that the equity markets have not yet priced in the fiscal cliff or resumption of risks from Europe once policy makers there return from vacation.  Our equity strategists have highlighted downside risks to the equity market, now that the S&P 500 index is within striking distance of their year-end target.  Another on-hold Fed meeting – or even an extension of the forward guidance when the market really wants QE3 – could be a catalyst that begets a sell-off, in our view.  Look out below.

What Do the Charts Say?

Harga bahan bakar tidak pernah naik di pekan ke-3 Agustus! (lihat grafik di bawah ini dari John Lohman).  Jadi apakah ini kemudian dapat menjadi alasan lain untuk tidak melakukan stimulus lanjutan?

(h/t @Not_Jim_Cramer)

Untuk Rabu hingga Jumat pekan ini saya akan absen menulis laporan harian ini karena akan memberikan sejumlah seminar di luar kota, sebelum saya pergi hingga akhir pekan nanti, satu hal lagi akan akan saya sampaikan di sini.  Seperti mungkin Anda telah tahu, seorang permarealist dari Nomura, Bob Janjuah, menjadi perhatian dengan market calls-nya dalam beberapa bulan terakhir.

Oleh karenanya sangatlah menarik untuk selalu mendengar apa yang dia katakan mengenai masa depan bursa AS secara umum, lebih spesifik adalah indeks S&P500.  Berikut adalah pandangan terbarunya dalam tulisan yang berjudul Bob’s World: Warning over, time for action:

“This is a very brief update of my most recent note published on July 25th.  Referencing back to this July note the key takeaways were:

Firstly: ‘In terms of markets, the route map I set out in early April and which I affirmed in early June continues to play out extremely well.  After correctly calling the late March/early April 1420 high in the S&P500, and also the early June (1270) low, we have also now fully captured the risk-on rally in stocks and credit that began in early June…’

Secondly: ‘Tactically, we have not yet hit my targets for the risk-on phase I called in early June – my S&P500 target was set at 1400/1450 by late July/early August.  And I also said in June, this risk-on phase was likely to be a struggle due to headline risk and volatility, market illiquidity, and the general lack of strong investor views/willingness to take big risks.  Nevertheless, stock and credit markets have indeed climbed the wall of worry.  Over the extreme short term, over the next two to four weeks, I would not be surprised to see my targets ultimately hit.’

And lastly: ‘However… I now think the correct thing to do – as I also said in April and June – is to prepare for a serious risk-off phase between August and November … over the August to November period I am looking for the S&P500 to trade off down from around 1400 … by 20% to 25% … to trade at or below the lows of 2011.  This coming major risk-off phase will, in my view, also be very USD bullish (my expectation of Fed USD1trn QE in December should eventually alter the bullish USD trend of course) and bullish core government bonds (USTs, Gilts, Bunds) – perhaps we could see10yr Bunds at 50bp all-in yields, with USTs and Gilts at/close to 1%.  By late 2012, based on my Fed December QE view, my tactical call will likely turn bullish/risk-on – let us see about that closer to the time.’

My July note thus held out the prospect of further Risk On over late July and August, where 1400/1450 has been my long-standing target ‘high’ for Q3 2012, but it also warned that in August we were likely to see the beginning of the next risk off phase, which would likely be the ‘biggest’ move of 2012.  Whilst in the extreme short term – days – more risk on is possible, we now feel comfortable in flipping from risk on to risk off and positioning for this major risk off phase.

Just in case something genuinely new and unusual is happening – we note that the risk on phase has, time wise, extended for a few more days than we had originally forecast – and in the interests of prudence, my stop loss on the risk off call effective immediately is a consecutive weekly close on the S&P500 at or above 1450.  As the Global Macro Strategy team is looking for Mr. Bernanke to disappoint markets at Jackson Hole this week, and also because we are confident that markets will soon discover that neither the ECB nor Euro zone politicians will actually be able to deliver on their ‘promises’, we are hopeful that our stop losses will not be triggered.  For now we are happy to risk 30 S&P points against us, in order to potentially pick up 300 S&P points in our favor.”

Terakhir saat saya melihat gambar dari williambanzai7 di bawah ini, saya tidak dapat menahan tawa! terutama pada Hopium Cloud yang terlihat menggoda, bukankah demikian?

Dibuat Tanggal 28 Agustus 2012

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A September to Remember?

August 28th, 2012 No comments

“In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.
“There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.
“Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.”
-From an essay by Frédéric Bastiat in 1850, “That Which Is Seen and That Which Is Unseen”

Karena saat ini sudah di pekan terakhir Agustus,  Saya ingin membuat pembaca setia saya bersiap menyambut bulan berikutnya, mengingat banyak peristiwa penting pada agenda selama September nanti yang dapat menggerakkan pasar secara signikan.

Pertama adalah Tyler Durden dari, yang berbicara dengan terus terang saat memberikan peringatan untuk sangat berhati-hati bulan depan dalam tulisannya September: Crunchtime for Europe and Germany. Berikut adalah apa yang dikatakannya mengenai bulan yang penting tersebut:

September will undoubtedly be the crunch time,” one senior euro zone policymaker said. “In nearly 20 years of dealing with EU issues, I’ve never known a state of affairs like we are in now,” one euro zone diplomat said this week. “It really is a very, very difficult fix and it’s far from certain that we’ll be able to find the right way out of it.”

Terus berlanjutnya perlawanan Eropa dengan setan kembar logika dan matematika membuat waktu hampir habis. Selain itu para eurocrat juga sedang menjalankan liburan wajib mereka dari pekerjaan yang telah dilakukan dengan baik dengan menghabiskan waktu 2 minggu ke depan untuk santai-santai di beberapa pulau Mediterania atau mendengarkan opera, membuat Eropa berada dalam hibernation mode, yang akan memperlambat penerbitan obligasi pemerintah. Namun itu semua akan berubah dengan sangat cepat saat masuk bulan September, sebagaimana yang dijelaskan Reuters menjelaskan, “is shaping up as a “make-or-break” month as policymakers run desperately short of options to save the common currency.” Hal ini yang kemudian akan kita lihat jika semua uang yang dihabiskan pada newsletter untuk mendorong para active prayer mendesak perencana sentral dalam arahnya atau arah yang lain, dikeluarkan dengan baik, atau justru hilang ratusan miliar dalam lubang hitam sebagai “dana talangan” yang tidak mencapai hasil apapun selain mengabadikan perilaku destruktif yang sama yang tadinya dimaksudkan untuk memberikan perubahan.

Reuters menjelaskan menjelaskan mengapa September juga dikenal sebagai popcorn month:

In that month a German court makes a ruling that could neuter the new euro zone rescue fund, the anti-bailout Dutch vote in elections just as Greece tries to renegotiate its financial lifeline, and decisions need to be made on whether taxpayers suffer huge losses on state loans to Athens.

On top of that, the euro zone has to figure out how to help its next wobbling dominoes, Spain and Italy – or what do if one or both were to topple.

Following a year of real-time failed rumor, innuendo, speculation, prepackaged ‘bankruptcy that is not a bankruptcy’ negotiations, and much more, Europe has figured out what was patently obvious to everyone. This:

In Reuters’ own words, the life raft is about to go pop:

Zona euro nampaknya tidak memiliki kas cukup pada saat ini sebagai solusi jika Spanyol dan Italia membutuhkan bantuan, dan firasat buruk sedang berkembang di antara para pembuat kebijakan, Memerangi krisis, kata diplomat zona euro, adalah seperti mencoba untuk mempertahankan perahu kehidupan di atas air.

“For two years we’ve been pumping up the life raft, taking decisions that fill it with just enough air to keep it afloat even though it has a leak,” the diplomat said. “But now the leak has got so big that we can’t pump air into the raft quickly enough to keep it afloat.”

Dua bantuan, dan satu kepailitan, dan masalah Yunani pun teratasi. Tidak

Karena masalah yang sangat bercampur-aduk, Yunani masih jauh tertinggal bersama program-program reformasi untuk memperbaiki kondisi finansial dan ekonominya, sehingga masih perlu waktu yang lebih lama, dana yang lebih besar dan pengurangan hutang dari pemerintah zona euro.

Jika hutang Yunani tidak dapat diperpanjang, maka negara tersebut kemungkinan akan keluar dari keanggotaan zona euro, yang akan mengakibatkan goncangan di pasar finansial dan perekonomian Eropa sendiri.

Namun Yunani, sekali lagi, hanyalah awal.

Tanggal 12 September akan menjadi hari yang krusial dalam catatan Eropa. Karena saat itu Mahkamah Konstitusi Jerman dijadwalkan akan memberikan putusan apakah perjanjian untuk mendirikan organisasi dana talangan permanen di zona euro, European Stability Mechanism (ESM) senilai 500 milyar euro, sesuai dengan konstitusi Jerman.

Sebuah keputusan yang positif sangat penting, karena Jerman adalah penyandang dana terbesar dari ESM, dan zona euro tidak akan berdaya untuk melindungi Spanyol atau Italia tanpa ESM.

Di hari yang sama, juga akan diselenggarakan pemilu parlemen di Belanda tempat dimana penolakan untuk mengucurkan dana talangan lanjutan demikian kuat. Pemilu Belanda tersebut dapat mempersulit pembicaraan tentang revisi program bantuan kedua Yunani, yang juga akan disepakati pada bulan September.

Apakah ECB memang akan melakukan impairment lanjutan? Dan jika memang Draghi melakukan haircut terhadap kepemilikan aset-aset Yunaninya, berapa lama sampai ia harus melakukan hal yang sama dengan Portugal, Irlandia, Spanyol dan Italia? Dan berapa lama sampai EUR menjadi mata uang yang digerakkan oleh putusan-putusan, ketika orang yang sama sekali buta pun mulai menyadari bahwa neraca ECB sudah banyak kekurangan modal, sehingga perlu melakukan pencetakan uang lebih lanjut, suatu hal yang akan membuat Jerman tidak senang.

Dan kemudian ada Spanyol dan Italia, serta fakta bahwa ESM adalah tidak cukup (belum termasuk yang tidak aktif), sehingga mendorong asumsi bahwa ECB harus terjun membantu. Harapan seperti inilah yang mendorong rebound bursa global pekan lalu. Namun kemarin, Jerman memberikan indikasi jelas bahwa Draghi melakukan a deal without the devil, dan hal tersebut merupakan upaya menyesatkan Jerman.

Presiden ECB Mario Draghi Kamis lalu memberikan sinyal bahwa bank sentral Eropa tersebut siap mengambil langkah, yang mengindikasikan bahwa pihaknya akan menghidupkan kembali program oembelian obligasi pemerintah yang bermasalah di pasar sekunder.

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,” Draghi said. “To the extent that the size of the sovereign premia (borrowing costs) hampers the functioning of the monetary policy transmission channels, they come within our mandate.”

Namun, Jerman selalu menentang ide tersebut dan Bundesbank mengatakan Jumat bahwa pihaknya masih melihatnya sebagai “in a critical fashion”.

Menteri Keuangan Jerman Wolfgang Schaeuble menolak saran bahwa Spanyol akan meminta dana bailout sebagai langkah untuk menurunkan biaya pinjaman dengan membeli obligasi.

Spanyol memiliki biaya pinjaman yang tinggi karena investor takut mereka tidak akan mendapatkan uang mereka kembali. Ekonomi Spanyol menyusut, banyak daerah otonom yang membutuhkan dana talangan dari pemerintah pusat dan bank membutuhkan rekapitalisasi hingga 100 miliar euro.

Pada gilirannya, membuat orang-orang lari investasi di pasar obligasi Spanyol, karena harapan dan doa merupakan strategi (dan ingat: Lehman tidak akan pernah bangkrut), saat kondisi tidak baik:

Pemerintah Spanyol haru menambah 50 milyar euro ke pasar hingga akhir tahun nanti. Dan ini adalah tidak mungkin jika funding cost-nya masih jauh di atas 7 persen untuk obligasinya yang bertenor 10 tahun.

Komentar Draghi Kamis lalu sempat menekan yield-nya lebih dari 40 bps ke bawah level 7 persen, namun bisa saja kemudian akan kembali naik dengan cepat jika pelaku pasar masih belum melihat langkah kongkrit ECB jangka pendek ini.

Hal ini, dan juga banyak lainnya, akhirnya akan muncul, saat waktu penantian mulai habis: hanya sekitar 1 bulan dari sekarang ini saat Eropa harus beraksi atau diam. Dan kita akan benar-benar mengetahui seberaoa besar kekeliruan “European Union” itu.

Akhirnya, bagi mereka yang ingin mengetahui apa saja yang akan menjadi fokus Eropa ke depan, berikut adalah dari Deutsche Bank.


  • 6 September: ECB Governing Council meeting. If we are right about the outcome of the 2 August ECB meeting (dominated by “quantity” measures), we suspect that revisions to staff forecasts for growth and inflation are likely to be a basis for a 25bp rate cut.
  • 12 September: German Constitutional Court ESM ruling. The German Constitutional Court is to rule on the complaints lodged against the ESM and fiscal compact. The chances of the ESM being vetoed are low. However, the Court might again strengthen the German Parliament’s prerogatives as regards future European integration. Germany is the last approval needed for the ESM to come into effect. Then the first installment of the capital has to be paid by the ESM members within 15 days of the ESM treaty entering into force. There are three other countries where Constitutional Court queries are outstanding — France, Austria and Ireland. France’s Constitutional Court will be deciding by mid-August. Neither Austria (which may take another 3-6 months) nor Ireland is large enough to hold back the ESM — the ESM will come into force when countries representing 90% of the subscribed capital have approved it. Both Germany and France have an effective veto power in that case.
  • 12 September: Dutch Election. In April, the VVD/CDA minority government failed when Geert Wilders’ PVV party withdrew its support amid negotiations for the 2013 austerity budget. A crisis was averted when three smaller parties came forward to give support to a budget, but an early election was unavoidable. Domestic austerity and European crisis issues will likely play important roles in the election. Compared to the configuration of parliament at the October 2010 election, the latest opinion polls (Maurice de Hond) show PM Rutte’s VVD liberal party vying with the Socialist Party for the dominant party position. Both would gain 31 seats in the 150 seat parliament on the latest polls. This is an unchanged position for VVD, but a doubling of SP seats. SP are gaining at the expense of all other parties except VVD and neo-liberal D66. This may reflect a backlash against the austerity for 2013 which has broad party political support. SP have also taken a stance against euro rescue initiatives, voting against the ESM alongside the PVV and extracting a pledge from Dutch FinMin De Jager that parliament will vote on any future direct bank recapitalization disbursements. Given the typical distribution of the vote among several parties, the questions are what coalition emerges from this election, how long it takes to form a government and what policies will it support? Markets in particular will be watching the ramifications for domestic fiscal policy (the 2013 Budget is a week after the election) and euro rescue initiatives.
  • 13-14 September: G20 Finance Ministers and Central Bankers meeting. In Mexico.
  • 14 September: ECOFIN meeting. This is very likely the finance ministers meeting when adjustments to Greece’s second loan program will be considered. The remaining EUR23bn recapitalization of the Greek banks is due to complete by the end of September, assuming a positive review of the loan program. This is also when finance ministers should have their first discussion on the proposals for a common bank supervisory regime under the ECB. Any delays, with knock-on delays for a direct bank recapitalization mechanism, will disappoint the market. Options for a reconsideration of Ireland’s legacy bank bailout policies may also be discussed (decision not due until October ECOFIN meeting).

Berbicara mengenai Eropa, Mark J. Grant, penulis di Out of the Box, pekan lalu juga memberikan warning kepada para investor mengenai situasi yang semakin memburuk di benua tersebut. Dia selalu memiliki hal terbaik saat berbicara tentang Eropa, jadi saya sarankan Anda untuk memperhatikan dengan seksama tulisan terbarunya berikut:

Grant’s Rules

Grant’s Rules have never been more important than they are now. There is Rule #1 that is cast in stone and reiterated nine times to form the bulwark of my thinking which is “Preservation of Capital.” You may do what you like and there is certainly a place for some speculation at the edges but you do not, ever, put the core of your capital at risk. It is on this corner stone where I stand and hold court and have done so for the ten years that my commentary has been in existence. Not only is my viewpoint valid in all markets but the point is now of particular importance in a time of such low interest rates where it takes so long to make lost money back. Hedge fund, money manager, bank or insurance company there is never a time and now is certainly not the time where any risk should be taken that will diminish the bulk of your capital.

Besides the issue with minimal yields there is a second consideration which is the incredible amount of risk that is currently on the table. You may believe what you like about Europe. You may be wildly optimistic or incredibly pessimistic but what cannot be denied is that tremendous risk is currently present and that things could go wildly erratic in one direction or another. Economics, outside of the classroom, never exists without its cousin politics but the political considerations are now so huge and the money at stake is now so large that the sheer size of the capital on the table should and ultimately will give everyone pause. We are about to arrive at moments where the notion of “muddling through” will no longer be possible and where real decisions, tough decisions, are going to come into play. Predicting coming events is never an easy task but it is made easier if you can determine the limits past which boundaries cannot be stretched.

There are many events that could go either way such as the German Constitutional Court’s ruling on the ESM and I think the vast majority of market participants think that the court will allow the Stabilization Fund’s existence in one form or the other and I am not speaking today about these kinds of events. Today I want to pinpoint specifically the 90% events. I want to shift your focus to the boundaries of the playing field so that the consideration of everything else properly lies within the out of bounds lines that I will try to define. Today I mark the perimeter.

Odds at 90%

Germany with a GDP of $3.5 trillion does not have the capital or the resources or the assets to support the rest of Europe. You may think of a wooden cross bar and the Brooklyn Bridge and the absolute inability of some piece of wood to support the trucks that roll across the bridge. It is just not possible and the same can be said with exactly the same amount of certainty for Germany’s position with all of Europe; they cannot support the European Union alone which is exactly what some ill informed people think. Therefore given Germany’s realistic position and not some fantasy notion, it is possible to project the limits of what can be done and what they will allow to be done to preserve their own country and their national interests. I would put forth the point that no country in Europe will bankrupt itself to save its neighbors and work backwards from this proposition.

It may be in September or a few months later or even six months from now but Germany will not keep handing Greece money ad infinitum; it is not happening. Greece, on the other hand, is not capable of paying its debts; sovereign, bank or private obligations, they cannot pay them. They also know they cannot pay them which is why they beg for money using the strategy of a European Union which is all for one and one for all and the common good and all manner of schemes appended to this basic concept but the money they owe cannot be paid back and so they make this and those kinds of noises and plead to put off the final act for as long as they can. There are only three choices here which are growth which is economically impossible or debt forgiveness which is politically impossible or the refusal to fund which is the 90% odds play that I see coming soon.

In one sense Greece played the game well and got way more money than they should have ever been given and Germany played the game badly and allowed themselves to be suckered into a corner where they should have never gone but now with the stakes so high it will end soon and you can bet on it; a 90% you have it right bet.

It may be Merkel and her allies or it may be the opposition but I project that the citizens of Germany have just about had it with tossing their hard earned money into the olive tree groves in Greece and that it will soon stop. Germany is being dragged into a recession along with her neighbors and I predict soon that the productions numbers, not quite accurate for their automobile industry among others and the real costs of their Traget2 funding and the cash that is pouring into their ownership of the ECB and of the EU will not only come to light but will glisten with the resonance of a loud “Auchtung” and then a screamed “Verbotin” which will thunder down the Autobahn between Frankfurt and Berlin. As we have seen with the idiocy of the IMF projections and the 120% debt to GDP ratio for Greece that was trotted out and flaunted by the wish-it-would-be’s of Washington; the real numbers a few quarters out eventually show up to embarrass those that created the fairy tale.

Then there is the Draghi Hail Mary pass. He has made a promise that cannot be kept because there is no possible way to keep it. The ECB on its own cannot rescue Europe and his muttered under the breath “whatever it takes” flashing neon billboard proclamation is stopped in its tracks by the realizations that someone has to pay for all of this, that there are economic consequences of printing money and that the ECB is only as sound as the financial health of the nations in the EU which fund it and so with Spain and Italy slipping into the Mediterranean along with Greece there may be the will at present but there are not the resources to do it. In my mind this is another 90% bet because the ECB does not exist in a vacuum and does not stand on its own and people would be better served using their hopes and prayers in other areas of concern rather than wasting them on fantasies of Camelot and on Lancelot riding out of the castle gates to save the day. Don’t bet your money on make believe fables; that is my opinion.

The next 90% bet is Spain; they are going down. For years they have provided inaccurate Real Estate valuations, inaccurate bank numbers, inaccurate regional debt figures and the manure has hit the fan and is splattering. The country can no longer afford itself, cannot afford their obligations for the European Union and I predict a very hard landing. The hogwash about the money being only for some banks that most of us never heard of until recently is a lie compounded by Mr. Rajoy’s desire to remain in power which is also something that I see soon coming to an end one way or the other. Perhaps somewhere in some unknown universe governments can live in castles in the air but not on this world and not in our universe and the rock is going to hit the hard place and the make believe is going to collapse.

The final comment I will make today is about the ECB. It is a 90% bet that the ECB cannot do anything of gravity without the tacit support of Ms. Merkel and of the Bundesbank. There will be no grand scheme without their approval because if there is then I think that Germany will refuse to fund it and so end any fantasy. It can certainly be said that Germany has now found herself in a corner of her own making. Germany has played the Great Game badly and allowed country after country in Europe to get in financial trouble and so the majority of nations in Europe are now up against it and pleading for funds, mercy and alms all under the banner of the motto of the three musketeers but what could be done has been done and now the intrusion of reality is making itself known to one and all. Soon, I think, Italy will be joining the chorus and the tumult will be loud and noisy but the road is already marked by the brambles that have been put in place and so the course is set.

The Days of Muddling are now behind us and the Days of Reckoning are to the fore!

What Do the Charts Say?

Art Cashin di UBS baru-baru ini menyatakan dalam Mark Your Calendar And Cross Your Fingersprevalensi yang tidak proporsional dari peristiwa-peristiwa yang terjadi pada bulan September. Berikut adalah pemikirannya tentang mengapa ini menjadi begitu historis, dan yang lebih penting mengapa kali ini tidak berbeda:

“Savvy Fed observer, Greg Ip, now writing and blogging at the Economist has come across a possible seasonal pattern in banking crises. Here’s a bit of what he wrote:

Most readers of this blog are familiar with the path-breaking work of Carmen Reinhart and Kenneth Rogoff on financial crises. Fewer have heard of Luc Laeven and Fabian Valencia, but they too have contributed richly to the raw material of crisis economics. Laboring away at the International Monetary Fund, they have assembled a detailed database of 147 banking crises from 1970 to 2011. They recently published a new working paper detailing some of their latest findings. There’s lots of fascinating stuff in here but what leaped out at me was a chart showing the likeliest months for crises to begin.

Ip then shows a chart indicating a disproportionate number of events in September. He continues:

The frequency with which the world goes to hell in September seems hardly random. Unfortunately the authors provide no explanation for this beyond observing, “An interesting pattern emerges: banking crises tend to start in the second half of the year, with large September and December effects.”

I recall reading that historically the fall was a popular time for crises because farmers needed to borrow to bring in the harvest, which strained fractional-reserve banking systems. I can’t think why that pattern would persist into the post-industrial era. One theory blames the October 30th fiscal year-end of American mutual funds; managers trying to avoid losses or hold onto gains for the year were more likely to succumb to herd behavior as that date approached. But that wouldn’t explain why the pattern holds in other countries which, I assume, have different year-ends. Maybe it’s because policy makers and bankers don’t confront their problems until they get back from vacation, the macro equivalent of doctors scheduling c-sections during office hours.

No matter the explanation, this gives more reason, as if you needed more, to sweat as the fall approaches. Just to elevate the anxiety further: another calendar pattern to which Mr Rogoff first alerted me is the tendency for crises to happen in election years; think Mexico, 1982 and 1994, Korea, 1998, America, 2008, Greece, 2009. The intuition behind this was that crises are the result of imbalances that accumulate over a long time. Politicians have a strong incentive to delay dealing with them until after an election, and often, as was the case with Greece, to actually hide the truth until the polls close. This means imbalances often reach their breaking point right around the election. This has been a busy year for elections: we’ve already had Russia, France (we’re still waiting for the true state of France’s fiscal affairs), and Greece, twice. Mexico’s is just a few weeks away, and of course, America’s fiscal problems come to a (contrived) head mere weeks after November’s election. That’s also roughly around when China has its version of elections, i.e. the long-orchestrated change in the Communist Party’s leadership.

Try to enjoy your summer.”

Jadi apa yang akan dilihat pada bulan September bring?  Yang pasti tidak ada yang tahu, namun memang akan sangat menarik melihat sejarah berulang dengan sendirinya di saat ini …

Dengan ketidakpastian yang terus bergantung di pasar seperti pedang Damocles, dimana kita harus menyalurkan investasi? Ini adalah pertanyaan yang bernilai $1 juta, dan nampaknya dapat dijawab secara lebih akurat oleh analis terkemuka dari Citigroup, Tom Fitzpatrick, seperti dalam wawancaranya dengan King World News (, yang akan diperkuat dengan sejumlah grafik:

“We remain bullish on the gold price.  Most importantly, this is a bullish gold view, not a gold/dollar view.  So while the gold/dollar chart now looks strong, and momentum is picking up, we believe gold will outperform all paper currencies in the developed world.  This is because there is so much money printing taking place, particularly in the West.

But we believe over the next 12 to 18 months that we are going to see the euro significantly lower vs. the dollar.  Ultimately we see the euro below parity with the dollar, and maybe as low as 90 cents.  So over that 12 to 18 month period, we not only see gold performing well vs. the dollar, but we see gold significantly outperforming the euro.

In fact, gold may perform 20% to 25% better against the euro vs. the dollar.  It is also worth noting that gold is only 3% off the all-time highs in euro terms.  Silver has also held nicely above the $27 level, and very recently we have seen silver begin to outperform gold.  The silver chart looks very bullish.  We believe that silver will continue to outperform gold in this breakout move.”

Fitzpatrick juga menambahkan: “The entire backdrop from 1973 to 1975 is very interesting.  At that time we saw the downturn in the equity market, the economy, and housing, along with the surge in the oil price and corresponding move higher in soft commodities.  We saw a settling down until 1978/1979, then we got that second surge, which ultimately yielded the stagflationary dynamic in the US.

We replicated a lot of that in the 2007 and 2008 time period.  Now we are seeing a surge in soft commodities once again, and that’s exactly what happened back in 1978/1979 time period.  So we’re convinced there is more upside to come.  We expect new all-time highs in Brent Crude.  We believe we will see a surge to the $160 level on Brent, and if we replicate the move in 2007/2008, that would target $190 for Brent.

So we expect to see significantly higher prices in crude oil.  A continued move higher in food and energy, exacerbated by money printing, can only be construed as extremely negative for the global economy going forward.”

Dari tulisan terbaru Tom Fitzpatrick:

“Gold has taken out the top of the range at $1,641 on a close basis and is now testing the trend line that comes down from the highs at $1,661.  A weekly close above this trend line would confirm what is looking like a bullish break and open the way for a test of the double (or triple) bottom neckline at $1,790-$1,802 (see chart below).

From a longer term perspective the $1,790-$1,802 levels are key.  A weekly close above that would argue for new trend highs and a move to $2,040.

Silver – The trend line down and 200 day moving average are under threat at $30.37-48 (see chart below).  A weekly close above (200 day moving average) would open the way for the double bottom neckline at $37.47 (23% away).  As gold goes higher, do not be surprised if Silver becomes the “poor man’s gold trade” and plays some catch up.

Brent Crude – A weekly close to new trend highs would then open the way for the all time high again at $147.50.  As we have often highlighted, a number of market dynamics seen over the past several years have been similar to those seen throughout the 1970s.  Some of these include the major housing downturn of 1973-1975 (70% down in Housing starts compared with 77% down between 2005-2009), an equity market collapse, and major policy reaction from the Fed and a number of economic factors including the rise in unemployment.

One other important similarity was the Oil price.  The 1970’s saw two oil price shocks, the first was the Oil embargo in late 1973 – early 1974 from where the oil price tripled.  The second came 5 years later after late 1978 resulting from a combination of regime change and conflict in the Middle East.

The chart (below) shows the price of Brent in relation to the 200 week moving average.  In 2003 Brent chopped around the 200 week moving average which was then around $26 before trending up to hit a high of $78.64 in Aug 2006.  From there we saw a 35% drop to just above the 200 week moving average.

There we posted a monthly hammer followed by two strong up months (insert) before seeing a break of the then trend high ($78.64) and ultimately a rally to $147.50.  This rally was just short of $100 above the Jan 2007 low ($50.75 – just above the 200 week moving average) and almost a tripling of that Jan 2007 low.

This time we saw the Oil price chop around the 200 week moving average at just below $80 in the second half of 2010 then rally to a high of $128.40 in March this year.  From there we fell 31% to just above the 200 week moving average where we then posted a monthly hammer pattern and have now seen two strong up months.

So the price action has been similar to late 2006/early 2007.  The danger here is that over the medium term we see a breach of $128.40 which would, as a minimum, open the way for the all time high at $147.50.  A move of $100 from the low this year (which would be similar to the 2007-2008 rally) would take us close to $190.”

Dan sebagai lelucon, berikut adalah guyonan the first ever blonde GUY:

An Irishman, a Mexican and a Blonde Guy were doing construction work on scaffolding on the 20th floor of a building.

They were eating lunch, and the Irishman said, “Corned beef and cabbage!  If I get corned beef and cabbage one more time for lunch, I’m going to jump off this building.”

The Mexican opened his lunch box and exclaimed, “Burritos again!  If I get burritos one more time, I’m going to jump off, too.”

The blonde guy opened his lunch and said, “Bologna again!  If I get a bologna sandwich one more time, I’m jumping too.”

The next day, the Irishman opened his lunch box, saw corned beef and cabbage, and jumped to his death.

The Mexican opened his lunch, saw a burrito, and jumped, too.

The blonde guy opened his lunch, saw the bologna and jumped to his death as well.

At the funeral, the Irishman’s wife was weeping.  She said, “If I’d known how really tired he was of corned beef and cabbage, I never would have given it to him again!”

The Mexican’s wife also wept and said, “I could have given him tacos or enchiladas!  I didn’t realize he hated burritos so much.”

Everyone turned and stared at the blonde’s wife.  The blonde’s wife said, “Don’t look at me.  He makes his own lunch.”

Dibuat Tanggal 27 Agustus 2012

Categories: Pasar Internasional Tags:

Krisis Eropa: Badai akan Menerjang!

August 27th, 2012 No comments

“Europe’s real problem is a long-brewing and dangerous one: Political backlash in the streets.  At some point, angry Spaniards, Frenchmen, Portuguese et al may join their compatriot Greeks, stand up to their cowed leaders, and collectively shout in unison: “To hell with your austerity.”

-Justice Litle

Michael Snyder, seorang publisher dari The Economic Collapse blog, memiliki kemampuan luar biasa untuk selalu melihat segala sesuatu sebagaimana adanya. Berikut adalah penjelasannya mengenai masalah di Eropa, dengan suatu persamaan yang merangkum hal-hal yang mencengkram ekonomi Eropa belakangan ini:

“Europe is in a massive amount of trouble.

The equation is simple …

Brutal austerity + toxic levels of government debt + rising bond yields + a lack of confidence in the financial system + banks that are massively overleveraged + a massive credit crunch = A financial implosion of historic proportions

Unless something truly dramatic happens, the economy of Europe is a dead duck.

There is no way that Europe is going to be able to substantially reduce the flow of money coming from national governments and substantially reduce the flow of money coming from the banks and still be able to avoid a major recession.

An economic “perfect storm” is developing in Europe.  All of the things that need to happen for a major recession to occur are falling into place.”

Sejujurnya, situasinya bukanlah bertambah baik. Bahkan semakin buruk … dan tinggal menunggu waktu sebelum krisis yang sedang berlangsung di pasar kredit Eropa tersebut mengalir masuk ke bursa saham!

Boleh dikatakan bahwa krisis perbankan Eropa masih harus dimulai. Dan jika itu memang terjadi, euro akan menghadapi kredit bermasalah yang bisa mengerdilkan krisis yang beberapa waktu lalu terjadi di Amerika Serikat, paling tidak karena aset perbankan Eropa memiliki proporsi yang jauh lebih besar terhadap PDB daripada perbankan AS.

Bahkan, institusi perbankan Eropa diizinkan untuk me-leverage pembelian obligasi pemerintah mereka sebesar 30 atau 40 berbanding 1 modal aktual mereka. Artinya meskipun default (gagal bayar) terjadi di negara anggota yang kecil tetap memiliki konsekuensi yang berpotensi besar.

Atau seperti kesimpulan dari Paul Brodsky, seorang co-founder dan co-managing member pada QB Asset Management: “The issue suffocating global economic activity is literally bank solvency, which can be seen by the incredibly wide gaps separating outstanding global debt from outstanding money needed to repay it.

There simply isn’t enough money with which to repay the debt and this is creating solvency issues for debtors and creditors.  It is not a case of poor liquidity for sovereign bonds, as some argue.  It is academically, functionally, purely, without question, a case of systemic solvency for Euro-based creditors and debtors.”

Berikutnya hedge fund manager Kyle Bass telah memperoleh banyak keuntungan ketika bertaruh terhadap pasar subprime mortgage pada waktu terjadi keruntuhan di tahun 2008. Dan sekarang Bass berpeluang menambahnya lagi – dari negara-negara Eropa yang default.

Kisah Bass tersebut diceritakan dalam buku terakhirnya Michael Lewis, BOOMERANG: Travels In The New Third World (yang telah saya baca dan sekaligus juga sangat merekomendasikannya untuk Anda), yang menceritakan kisah-kisah dari kecerobohan fiskal di Eropa dan AS yang menyebabkan krisis hutang saat ini.

Lewis menulis bahwa Bass menyadari pemerintahan di seluruh dunia tidak dapat menghentikan krisis keuangan tahun 2008, melainkan hanya menundanya. Jadi Bass memutuskan bahwa mereka juga akan cenderung gagal.

“What he saw was that the debts that had been accumulating in the banking system were too large for governments to handle in some countries,” Lewis mengatakan.  “In Ireland, the debts in the banking system were eight times the size of government tax revenues.  In Iceland, it was even worse.  It was bad throughout Europe. Maka pada dasarnya ia berkata, ‘What happens the next time there’s doubt in the system?’  People are going to ask the question, ‘Can governments afford to bail out these banks?’  And the answer the next time is going to be no … and then it’s really ugly because there isn’t a backstop.”

Sementara itu, perbankan Eropa harus segera menambah modal dalam jumlah besar, di saat mereka akan bersaing di pasar dengan negara mereka itu sendiri.

Ini dapat menyebabkan krisis kredit besar di Eropa.  Singkatnya, perbankan regional Eropa akan sulit untuk memperoleh dana. Jika mereka tidak dapat menambah uang untuk mendukung kuantitas pinjaman yang dimiliki, maka mereka harus mengecilkan neraca mereka.

Artinya bahwa mereka perlu memperkecil jumlah pinjaman mereka. Itu berita buruk bagi konsumen dan perusahaan Eropa. Ekonomi modern dijalankan dengan kredit. Jadi ketika saluran kredit – sistem perbankan – rusak, maka itu melumpuhkan perekonomian.

Hal lain yang tak kalah penting adalah fakta bahwa bank-bank Eropa adalah, dan telah, menjadi pemberi utama pinjaman internasional. Mereka memiliki kontribusi lebih dari 50% dari pinjaman bank internasional di semua wilayah utama di dunia, kecuali di Asia yang sedikit di bawah 45%. Bank-bank tersebut sedang berada di bawah tekanan, sehingga mereka mungkin sudah mengurangi pinjaman internasional mereka termasuk di Asia. Jika tren ini menjadi signifikan, dampak penularannya akan sangat besar.

Terakhir – sebelum kita melihat sejumlah grafik di bawah ini – Egon von Greyerz, seorang founder sekaligus managing partner pada Matterhorn Asset Management, baru-baru ini kepada King World News mengatakan bahwa kartu-kartu domino sedang jatuh setiap hari dan kita seharusnya khawatir kekacauan di sistem perbankan akan semakin besar, termasuk kebangkrutannya:

“The banking world is on the way to bankruptcy here.  We’ve talked about the leverage in the banking system, but people don’t seem concerned about it.  What we are going to see, one day, is when these dominoes start falling, there will be panic.

Banks are supposed to come down to 20 times leverage.  There is only one bank of the top twenty-five banks in the world today that is below 20 times leverage.  Every other bank is above.  20 times leverage means that if they only lose 5% on their loan book, they have lost their capital.

I will bet you that virtually every bank in the world has a bad debt position which is worse than 5% of their assets.  And if you look at an entity such as Deutsche Bank, do you know what their leverage is?  62 times.  It means that if they have a bad debt position of 1.5%, the bank is bust.  Deutsche Bank is bigger than German GDP.  So, if something happens to Deutsche Bank, Germany goes under.

Credit Agricole, the largest French bank, has 63 times leverage.  This is absolutely frightening.  This situation is untenable.  Some of these banks will not survive.  Of course, central banks are aware of this, governments are aware of this, and they will print money.  Will they print in time?  Maybe for some banks, but some banks will not survive, I’m sure.

The two big Swiss banks combined total 7 times Swiss GDP.  The banks have a leverage which is unsustainable, and in many cases are bigger than the countries themselves.”

What Do the Charts Say?

Seperti terlihat dalam rangkuman grafik berikut dari Der Spiegel, tiga hal akan terjadi secara bersamaan ketika hal-hal yang di luar dugaan akhirnya muncul: 1) produksi ekonomi merosot, 2) tingkat pengangguran melonjak, dan 3) harga konsumen melejit.

Meskipun hasilnya beragam, patut dicatat bahwa tidak ada negara yang masih sehat jika terjadi perpecahan di Eropa:

Dan bagi mereka yang masih memimpikan pemulihan ekonomi di Eropa, berikut adalah reality check dari Tyler Durden di

“The two major overnight data points were European Q2 GDP which printed at -0.2%, or the expected continuation of the European double dip. As SocGen explains, these numbers continue to paint an all too predictable picture of growth in Europe, with expansion in Germany driven by exports and consumption, growth in France stagnating and deep recessions continuing in southern  Europe. The European GDP pattern is now expected to be a copy of 2011. Amongst the country details, growth beat expectations in Germany (+0.3 q/q), Austria (0.2%), Slovakia (+0.7%) and the Netherlands (0.2%) but this was offset by deep declines in Finland (-1.0%) and Portugal (-1.2%). Amongst data already published we know Italy declined 0.7%, Spain declined 0.4% and Belgian GDP declined 0.6%. And while the market was clutching at the German GDP beat straw, it was the German ZEW Survey which threw a cog in the spikes of German economic perception, after the number came at a whopping -25.5, declining for the 4th consecutive month and far below expectations of -19.3, and a drop from the already negative -19.6. Finally, while there may be hopes that this is the bottom, already weak IP data confirms that the weakness in Europe has continued into Q3 and as such as the continental contraction will likely not stop contracting for the foreseeable future.

More on Europe’s dimming prospects from SocGen

Looking beyond the headline numbers for a second, it is clear that the ebb and flow of the sovereign debt crisis has generated considerable volatility in the GDP data as firms and households first put their spending plans on hold and then subsequently relax them as financial conditions improve somewhat. This has generated a particularly strong inventory cycle in some countries with imports subsequently leaping to make up an earlier rundown in stocks. This almost certainly explains the jump in French imports which grew 1.8% q/q in Q2 and the marked volatility in French investment which expanded 0.6% in Q2 following a 0.8% contraction in Q1.

IP data suggest weakness extended into Q3

The same volatility is also reflected in the monthly data, where euro area industrial production decline 0.6% m/m in June following a revised 0.9% expansion in May. As such this leaves industrial production down 0.5% q/q in the second quarter and suggests that activity might have taken another lurch down coming into Q3. Certainly this would also be the message of the ZEW survey for August. Our euro area GDP forecast for the year as a whole remains unchanged at -0.4%.”

Seperti yang dikatakan Nat King Cole:

The party’s over

The candles flicker and dim

Now you must wake up, all dreams must end

Menurut pendapat saya, satu-satunya jalan keluar politis yang layak dari krisis Eropa adalah dengan menghidupkan mesin cetak. Itu juga berarti membiarkan Bank Sentral Eropa mencetak lebih banyak mata uang Euro, atau membiarkan negara-negara seperti Yunani keluar dari euro, sehingga mereka dapat mencetak mata uang mereka sendiri. Tapi sejauh ini tidak ada di agenda. Jerman tidak akan membiarkan ECB mencetak uang lagi. Dan anggota Eropa belum siap untuk keluar dari mata uang tunggal. Sampai salah satu dari hal-hal tersebut terjadi, maka tidak akan ada resolusi untuk krisis.

Apa yang seharusnya terjadi untuk mengakhiri krisis ini – penghapusan hutang, kepailitan perbankan, keluarnya beberapa negara dari keanggotaan euro, atau kemungkinan disintegrasi mata uang secara menyeluruh – adalah sangat menyakitkan. Jadi pembuat kebijakan global hanya memiliki satu pilihan: Teruslah berusaha membingungkan dunia dengan rumor, bahkan ketika krisis yang berlangsung semakin buruk dan buruk, dan kita makin mendekati sebuah bencana seperti “Lehman Brothers”!

Yang juga tak kalah penting, Wesley Legrand dari Grand Private Equities menduga bahwa krisis finansial ini akan lebih dalam dan lebih panjang waktunya, bahkan lebih buruk dari krisis 2008/09:

“You had really a liquidity crisis in 2008, governments worldwide bailed out their private sectors, and now you have a solvency crisis where the world’s governments actually can’t afford to service their own debts without resorting to trickery like suspending ‘mark-to-market’ accounting rules or printing money to buy their own bonds (effectively a ponzi scheme).  So this global deleveraging process is by no means over, it gets a lot worse before it gets better.  I am a naturally optimistic person, but you got to look at the facts and take the only logical course of action, and that’s to hope for the best, but be prepared for the worst, and I can’t see any other way how this bursting debt bubble isn’t going to be the most painful in history.”

Agar Anda tetap ceria dan tersenyum di tengah ketidakpastian ekonomi global, berikut adalah lelucon dan gambar kartun yang sangat lucu mengenai kondisi Eropa:

European Economics!

Some years ago a small rural town in Spain twinned with a similar town in Greece.  The Mayor of the Greek town visited the Spanish town.

When he saw the palatial mansion belonging to the Spanish Mayor he wondered how he could afford such a house.

The Spaniard said: “You see that bridge over there?  The EU gave usa grant to build a two-lane bridge, but by building a single lane bridgewith traffic lights at either end this house could be built.”

The following year the Spaniard visited the Greek town.  He was simply amazed at the Greek Mayor’s house, gold taps, marble floors, it was marvelous.

When he asked how this could be afforded the Greek said: “You seethat bridge over there?”

The Spaniard replied; “No.”

Sumber: Matt, The Telegraph, December 3, 2011.

Terima kasih telah membaca laporan ini, dan selamat berakhir pekan!

Dibuat Tanggal 24 Agustus 2012

Categories: Pasar Internasional Tags:

Krisis Eropa: E questo non va bene Italia! (That is not good enough Italy!)

August 27th, 2012 No comments

“Buying the bonds of these countries would only serve to weaken the ECB and do nothing to resolve underlying issues of competitiveness. It makes no sense for the ECB to start financing those countries.  It would only lead to the ECB taking on the whole public debt of Spain and Italy onto its balance sheet.  That would in turn weaken the ECB and do nothing to resolve the underlying problems.  We haven’t forgotten what happened in August of last year: We bought Italian bonds and right after that the Italian government reneged on its pledges.  The conclusion is clear: When you take away the market pressure, you take away the pressure on politicians to act.”

-Belgian national bank governor Luc Coene

Meskipun fokus kebanyakan orang kini tertuju pada persoalan di Yunani dan Spanyol, tentunya kita tidak boleh mengabaikan negara dengan ekonomi terbesar ketiga di zona euro, yakni Italia, yang tengah terbebani hutang lebih besar dari gabungan hutang Yunani, Irlandia, Portugal dan Spanyol!

“While there has been much talk of Italy being in a different position to Greece, with only a small overall deficit and a primary surplus,” demikian menurut Gary Jenkins, head of fixed income di Evolution Securities yang berbasis di London, “the fact remains that it has a large amount of debt outstanding which needs rolling over and will remain the case even if it sticks to its targets and achieves a balanced budget in 2013.”

Menurut Jenkins Italia memerlukan €300 milyar untuk membiayai hutangnya tahun ini, demikian juga pada tahun 2013. Jenkins memperkirakan Uni Eropa menghadapi total bailout senilai €1,4 trilyun jika Italia juga perlu diselamatkan.

Karena besarnya ukuran ekonomi Italia – terbesar ketiga di Eropa setelah Jerman dan Perancis – dan hutangnya yang luar biasa besarnya yakni €1,9 trilyun, para ahli mengatakan persoalannya jauh lebih besar daripada Yunani.

“The EU has just not got enough committed money available to cover that kind of amount,” menurut Jenkins. “Given the size of the economy and the amount of debt involved Italy cannot be bailed out, but it cannot be allowed to go bust either.”

Ketika yield obligasi Yunani, Irlandia dan Portugal menyentuh level 7% dalam waktu yang lama, maka mereka pun meminta bailout, kata Jenkins. Meskipun level 7% tersebut bukanlah sebuah level kunci secara fundamental maupun technical, menurut Jenkins hal tersebut memberikan sinyal adanya ‘persoalan besar’.

Jika ada di antara Anda yang sudah lupa, pada grafik berikut adalah digambarkan apa yang terjadi di akhir tahun lalu ketika yield obligasi naik di atas level krusial tersebut:

Masih terkait dengan hal tersebut, Ryan Avent, seorang koresponden ekonomi untuk The Economist, memberikan komentarnya sebagai berikut:

“No data point better captured the outlook for the global economy over the past year than the yield on 10-year Italian government bonds. The crisis in the euro zone has the potential to have as significant a negative impact on the world economy as the financial panic of 2008, and no single data point better captures its manageability than Italian borrowing costs. Italy is the world’s third-largest bond market, and Europe could not allow the crisis to spread from the small economies of Greece, Ireland, and Portugal to the too-big-to-fail-and-save economy of Italy. As euro-zone leaders struggled to get ahead of the situation, markets weighed in in real time on their progress, a process captured in this chart. And as Italy’s outlook has grown darker, so too has the prospect for an export-driven recovery in America and a soft landing in emerging markets now buffeted by the withdrawal of bank capital. The world watched this chart in 2011, and will continue to monitor it obsessively in 2012.”

Dunia finansial dapat saja mengatasi keruntuhan finansial Yunani, namun jika terjadi keruntuhan finansial di Italia maka sama dengan kiamat finansial untuk Eropa. Itulah kenapa Italia kini menjadi sangat vital.

Sekali lagi, biaya pinjaman yang tinggi adalah bencana, mengingat Italia harus melakukan roll over lebih dari €300 miliar dari utang €1,9 trilyunnya hanya untuk tahun 2012 saja. Jika terjadi default pada Italia, negara dengan ekonomi terbesar ketiga di zona euro dan kedelapan terbesar di dunia,  maka persoalan di Lehman akan terlihat kecil.

Sulit memang untuk melebih-lebihkan seberapa besar krisis Italia tersebut akan berpengaruh. Berikut ini adalah komentar dari mantan hedge fund manager Bruce Krasting mengenai situasi terkini:

“At this point there is zero possibility that Italy can refinance any portion of its €300b of 2012 maturing debt.  If there is anyone at the table who still thinks that Italy can pull off a miracle, they are wrong.  I’m certain that the finance guys at the ECB and Italian CB understand this.  I repeat, there is a zero chance for a market solution for Italy.  I think the Italian story is make or break.  Either this gets fixed or Italy defaults in less than six months.  The default option is not really an option that policy makers would consider.  If Italy can’t make it, then there will be a very big crashing sound.  It would end up taking out most of the global lenders, a fair number of countries would follow into Italy’s vortex.  In my opinion a default by Italy is certain to bring a global depression; one that would take many years to crawl out of.”

Kecuali ECB mengambil langkah sesegera mungkin dan dalam skala besar untuk membantu Italia, maka kita akan menyaksikan sebuah kekacauan yang spektakuler.

Jika tidak ditangani dengan baik, maka kekacauan insolvency pada debitur terbesar ketiga di dunia dengan hutang publik €1,9 trilyun dan dengan total hutang hampir mencapai €3,5 trilyun akan menjadi peristiwa yang jauh lebih besar daripada jatuhnya Credit Anstalt pada tahun 1931.

Bencana Anstalt memicu runtuhnya perbankan Eropa, menyebabkan getaran di London dan New York, serta mengubah resesi menjadi depresi. Dalam waktu empat bulan tatanan keuangan global telah hancur sampai ke dasarnya.

Jadi … tetap monitor yield obligasi 10 tahun Italia karena ini akan menjadi salah satu angka keuangan yang paling penting di dunia dalam beberapa bulan mendatang!

Sebelum kita melihat sejumlah grafik, saya akan menyajikan artikel luar biasa lainnya dari Mark Grant, penulis Out of the Box, yang menjelaskan secara fasih krisis hutang Eropa saat ini dan bagaimana kemungkinan akan berakhir nantinya. Dan ini tentunya juga merupakan tulisan yang HARUS DIBACA:

“Want of foresight, unwillingness to act when action would be simple and effective, lack of clear thinking, confusion of counsel until the emergency comes, until self-preservation strikes its jarring gong these are the features which constitute the endless repetition of history.”

-Winston Churchill

The Great Game

The Europeans have played the Great Game badly; are playing it badly and there will be consequences for their failures.  All of this nonsense with Greece, with Spain, could have been avoided by telling the truth about the numbers, by not goose stepping with plans meant to mislead instead of illuminating the truth, with trying to hide the self-evident and presenting scams as solutions or by addressing the size of firewalls instead of trying to cure the sickness of the nations that lie within them.  The indefensible schemes that have been foisted upon us reflect errors in judgment that are not just wrong headed in conceptualization but just plain dumb. The trivialized minds in Brussels and Berlin have vastly underestimated the intelligence of the people that matter, the institutional investors that are required to fund their programs and pick your language, “Nein, Non, No” is the growing response that is echoed down the hallways of finance from one institution to the next, from one nation to the next.

“Out of the Box” is not the Financial Times or the Wall Street Journal but then it does not need to be for me to assess the reaction of those that matter which are the world’s large institutional investors.  The savants in Brussels and Berlin think that it is the hedge funds or other speculators that are causing the yields to rise for Italy, Spain and the rest but they are 100% wrong.

It is the real money institutions that are fleeing and moving fast.  The debt at the ECB can be expanded and the local institutions can be pressured by their sovereigns but, in the end, there is not enough money in these institutions to fund the European experiment.  I can report to you with certainty that many large institutional investors will no longer play, will not fund, as they have been consistently lied to and abused by the European Union and her various branches. The first European bank stress tests were a sham as manipulated by incorrect data and the second one was falsified by its methodology and the projected 120% debt to GDP ratio for Greece was little more than the antics of a fool while the baloney about the $125 billion for the Spanish banks that would not affect the country of Spain is a fairytale with the same substance as Snow White and her dwarfs.  There is not Prince, there are no glass slippers and the bills have to be paid and the money to pay them will not be found in the pot of gold at the end of some rainbow.

Day by day and month by month the bills accumulate and there is not enough capital left in Europe to pay them unless the Germans are willing to have the same standard of living as those in Greece and that will not be happening so that it can be foretold that the play will end badly.  It is not economics that will determine the end of the European fantasy but politics. If it were just economics I could have given you the date of the end long ago but fiscal and monetary policies have long ago given way to machinations of the political system in Europe but the lies and deceit only have a lifespan that is so long and so the trend, regardless of the daily fluctuations, is set in place.  Down goes the Euro, up goes the Dollar, up go Treasury prices, down go European bond prices, down goes the equity markets, the recession worsens, the contagion spreads until the counting houses are out of money and the printing presses only print paper and some German in some political party rises that says, “Enough!”

At the end of a battle during World War II a Soviet General was quoted; “We gained 22,000 square miles of territory which is just enough to bury our dead.”

What Do the Charts Say?

Pada tulisan kedua yang berjudul For Italy, It Is Game Theory Over, Tyler menjabarkan dengan jelas apa yang menjadi tujuan akhir negara ini:

Italy just announced its all-time record high general government debt load at EUR 1.973 trillion. What is perhaps most stunning, given all the talk of austerity, cutting back, reforms, and change is that the size of this debt is growing at an ever-increasing pace that is simply stunning.

Pre-Euro (1999), Italy’s debt was growing at a rate of just less than EUR 2 billion per month; in the eight years from then until the crisis in 2008, Italy’s pace of debt growth (fostered we are sure by the convergent cheapness of funding and their immutable belief in invincibility) almost perfectly doubled to EUR 3.8bn per month. Since 2008, and the onset of excess Keynesian ridicule we assume, Italy’s debt load has grown at a stunning pace of EUR 6.4 billion per month and perhaps most incredible; however, the last nine-months (since the peak ‘peak’ of the crisis in September of last year) has seen the pace of debt-load growth surge to EUR 9.5 billion per month. Sustainable levels of exponential debt growth – sure!

Chart: Bloomberg

Yang kedua berjudul For Italy, It Is Game Theory Over, Tyler menjabarkan dengan jelas apa yang menjadi tujuan akhir negara ini:

We discussed the use of Game Theory as a useful tool for analyzing Europe’s predicament in February and noted that it was far from optimal for any (peripheral or core) sovereign to pre-emptively ‘agree’ to austerity or Eurobonds respectively (even though that would make both better off). This Prisoner’s Dilemma left the ugly Nash-Equilibrium game swinging from a catastrophic break-up to a long, painful (and volatile) continuation of the crisis.

Recent work by BofAML’s FX team takes this a step further and in assigning incentives and from a ‘do-not-cooperate’ Nash-equilibrium between Greece and Germany (no Greek austerity and no Eurobonds) they extend the single-period game across the entire group of European nations – with an ugly outcome. Analyzing the costs and benefits of a voluntary exit from the euro-area for the core and periphery countries, the admittedly over-simplified results are worrying. Italy and Ireland (not Greece) are expected to exit first (with Italy having a decent chance of an orderly exit) and while Germany is the most likely to achieve an orderly exit, it has the lowest incentive to exit the euro-zone – since growth, borrowing costs, and a weakening balance sheet would cause more pain. Ultimately, they play the game out and find while Germany could ‘bribe’ Italy to stay, they will not accept and Italy will optimally exit first – suggesting a very dark future ahead for the Eurozone and with EUR tail-risk so cheap, it seems an optimal trade – as only a weaker EUR can save the Euro.

The cost of insuring against EUR tail risk, which was already in retreat even before the EU Summit, has fallen further since, is at 2 year lows.

Should investors view these developments as a sign that the worst of the crisis is now behind us, or should they see them as providing an opportunity to pick up cheap EUR tail risk insurance? We would argue for the latter.

To some extent, the drop in tail risk premium is a reflection of the poor performance of tail risk hedges in the past two years. It is also possible that investors have reduced their exposures to eurozone assets so much that their need for insurance against EUR downside risk has simply diminished. We are skeptical about the wisdom of this consensus. Recent political developments in the eurozone have given us good reasons to think that the EUR breakup risk is not falling but rising.

Only a weak EUR can save the EUR

Despite the depreciation of the euro in the last three years, its trade weighted index is in the middle of its range of the last 30 years, and still nearly 10% stronger than where it was in 2000. Against the USD, it is still some 45% stronger than its low in November 2000.

Our analysis makes it very clear that a much weaker EUR may help save the EUR in the end. For one thing, a much weaker EUR would significantly reduce the incentive of any country to exit. For example, a 20% depreciation of the EUR against the USD would reduce by nearly half the loss of competitiveness of Italy to the US since the inception of the EUR (Chart 6).

Our analysis above suggests that the eurozone is now facing two paths – break up or accept a much weaker EUR. To the extent that the first path is likely to be also associated with a weaker EUR (at least in the transition), it seems that further depreciation of the EUR is inevitable.

Source: BofAML

Agar tulisan ini tetap memiliki laporan yang ceria, berikut sebuah lelucon dan gambar kartun yang lucu mengenai Eropa:

Q:  What economic model correctly forecasts the outlook for the European economy?  A double-dip recession, a V-shaped recovery, or something else?

A:   A bathtub.  A steep decline, then a period of stagnation, then it goes down the drain.

Matt, The Telegraph, September14, 2011.

Dibuat Tanggal 22 Agustus 2012

Categories: Pasar Internasional Tags:

Krisis Eropa: Vive la France! (Jayalah Perancis!)

August 24th, 2012 No comments

“The trouble with socialism is that, eventually, you run out of other people’s money.”
-Margaret Thatcher

“Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang! –confidence collapses, lenders disappear, and a crisis hits.”

-Carmen Reinhart and Kenneth Rogoff

Perancis sedikit memperoleh keberuntungan dari arus safe-haven, namun nampaknya ada peluang akan melemah kedepannya. Semakin banyak orang yang mulai bertanya tentang Perancis, serta menanyakan apakah pasar obligasinya akan bernasib sama dengan Spanyol dan Italia.

Dengan kata lain, apakah obligasi Perancis akan menjadi yang berikut yang harus diwaspadai? Jika kita percaya kepada John Mauldin, penulis newsletter mingguan tak berbayar untuk investasi dan ekonomi, Thoughts from the FRONTLINE, maka hal berikut akan terjadi di masa mendatang:

“We know about Spanish and Italian problems. What European leaders have not recognized (and indeed most of the world hasn’t, from what I see) is that France is the real problem. France is careening toward a dénouement of biblical proportions. Within a few years it will be just as problematic as Spain is today. France is in deep, deep foie gras.

Germany thinks it has an AAA debt partner for its guarantees of European debt in the EFSF, ESM, etc. It does today, but France will soon lose that AAA rating, absent significant changes that are not going to be forthcoming under Hollande and the Socialists. It could happen as early as September, although I doubt Moody’s or S&P will move before the German Constitutional Court ruling on the 12th – unless of course they really want to demonstrate their independence of thought from the political considerations of the moment!

And that ratings cut will just be the first of many. France is in the process of raising taxes on “les riches,” or those making over €1 million, to a nose-bleed 75%. Why stay in France when you can move, pay lower taxes, and visit when you want to? The new law will end up lowering, not raising tax collections, as has been shown by recent state tax hikes on the rich in the US. People vote with their feet.

In France it is not just the tax on the rich that is leading to trouble but so many other actions, like lowering the retirement age to 60, even though people are living longer and there are fewer people paying into the system as the nation ages. France has a near-term entitlements problem at least as severe as the US’s, but government spending is already at 55% of GDP.

By the time France becomes the clear problem, European voters will have committed so much to the process that to walk away will be far more costly than it would be today. Unless Merkel can somehow convince Hollande to really cut social spending dramatically in the coming years, the day of reckoning will arrive.”

Selain itu pasar menganggap Hollande kurang memiliki komitmen kuat untuk penghematan. Sampai dia menunjukkan sebaliknya, Perancis rentan terhadap repatriation spiral dan akhir yang tak terelakan di mana permintaan domestik untuk obligasi menjadi unsustainable.

Pada akhir Juni, Maurice Pomery dari Strategic Alpha memberikan keterangan yang menggugah pikiran mengenai langkah Hollande yang counter-intuitive dan mengapa itu menakutkan bagi pasar:

Is it really Germany that is the problem at this summit or France? I expect more fiddling whilst Rome burns.

I am not convinced that Germany should be deemed the stubborn aggressor in all of this as they have the morals and responsibility on their side and there is no way Germany should pay for all the problems in Europe without massive changes to laws and some union in common standards. Plus if we look at the numbers, they can’t afford it.  In fact it is France now that I see as the problem as Hollande is making things worse by raising minimum wages, reducing retirement age and taxing the hell out of everyone. He is forcing the split in Europe to become a massive fault line. Surely nothing can be done unless we have a common level playing field in Europe. Do the politicians not get that? It is crying out for centralization and whilst I am not keen on such a thing, a Union simply cannot exist without it. On this basis I see little more than some short term plaster again being put on this problem at the summit.

Banking unions and any other union will take a very long time indeed and I am not sure what can be done in the meantime unless they agree to change the mandate of the ECB or the structure of the ESM. Possibly a vehicle thy may be able to restructure quickly is the EIB but this is not clear but you cannot have a banking union without a viable fiscal AND political union. As the leaders enter this summit it is clear that there are massive rifts and both sides have laid their stores out quite publically which means a loss of face for someone or no agreement. On the macro issues I see no agreement at all but they look likely to discuss the role of the ECB and the ESM. But the ECB has already said that they cannot fix the crisis and must be left independent. Merkel is NOT going to be bullied into any wealth transfer; forget it. To me we are close to the point of no return as this game of chicken is coming to a conclusion and Merkel does not look like she is going to blink first.

Hollande cannot make sweeping socialist changes and expect Germany to pay for it, especially without structural reform and we hear nothing on this from this populist politician. He is yet to be tested but his true colors are very red indeed. . This is madness. The political rifts in Europe have never been wider since the EUR was born at a time when they need to be as close as ever. The problem is as this fight continues capital flight may force the issue into a fully blown bank run. The idea that it’s merely a question of Germany paying is not only naïve, but also impossible. To me the only real way forward is to fully restructure the whole thing as the cost of keeping this dying patient alive is huge and could remain in this coma for years. The costs will be too great to bear soon.

Hollande has again and again stated: “There can be no transfer of sovereignty if there is no improvement in solidarity”. Well that sounds good but he keeps making the situation worse and as for solidarity; pah. He is deliberately moving in the opposite direction to the wealthy core. Hollande does NOT want to cede sovereignty to Europe, never has and in fact he is becoming more insular the European. So who will win this battle between Hollande and Merkel? Merkel without doubt in my view as the weaker components of Europe cannot have money without strict rules. We have already tried that and look where it got us. No, Merkel is not the problem of Europe, it is Hollande. The trouble is at this summit neither will cede to the other and so nothing concrete can come until the 11th hour when Europe stares into the abyss. However that point is a lot closer than these idiots realize.

Back off Hollande and allow the structural process to take place and align yourself with the stronger nations or this whole thing is going to fail. Extend and pretend is no longer an option and if this is all we get from this summit as I think is the case, then the bond markets will trash Spain and Italy. Watch these yields closely as there is a very real danger that 10yr yields at 7% are the new floor rather than the ceiling. The ECB will likely cut rates but in all honesty it is a gesture at best and will make little difference. More LTRO? Maybe but QE is not what it was. Extend and pretend needs to end but we have more pain to come before the likes of Hollande give up their arrogance. The future of peace, stability and confidence in Europe is at stake and they are playing petty politics. I despair. Again I see France as the problem here not Germany but I guess that doesn’t really matter. They need to sort this out as no one can afford to bail Spain AND Italy.

Maybe Europe needs to be restructured with fewer in it and maybe Germany may test the experiment on Greece. Expect Greece to come back into view soon as to me it must. Germany must stick to its guns as if they cave in we may see a year or so of relief but then the whole thing implodes as the costs kill the very core of Europe. It is NOT an option for Germany and must NOT become one in my view. If they cave in they will see Bund yields explode at a time when global demand will see their economy struggle as the export engine stalls. This is a nightmare and I am pleased the lady is not for turning. It is France and Hollande that scare me the most.”

Kemenangan François Hollande di pemilu presiden Perancis telah dilihat oleh para cyclicalists sebagai tanda bahwa, setidaknya di Eropa, pendulum mungkin akhirnya berayun dari penghematan ke pertumbuhan. Banyak orang lain percaya bahwa masalah intinya adalah struktural, bukan cyclical. Resesi tumbuh dan merupakan wujud dari lemahnya perekonomian yang berkepanjangan, sehingga memperbaiki masalah struktural harus terus dilakukan, dan bukan dengan menambah hutang lebih besar.

Itulah mengapa presiden Perancis yang baru terpilih tersebut banyak dikritik karena akan memperparah krisis hutang di Eropa. Misalnya dari Alexander Green, seorang chief investment strategist dari U Investment, yang mengingatkan pembacanya dalam tulisan yang berjudul “Francois Hollande and the Flight of French Capital” bahwa pasar keuangan sekarang akan menyuarakan pendapat mereka tentangnya dan Hollande hampir pasti tidak akan menyukainya:

“We’ve all heard the nattering between economists about Europe’s choice between austerity and growth.  Stronger countries, like Germany, want southern members of the Euro zone to demonstrate fiscal responsibility and cut out-of-control spending.  But the citizens of these countries – especially Spain with its unemployment rate of 25% – want jobs.  They want growth.

Fortunately, austerity and growth are not incompatible.  Unless you believe it’s achieved through still more reckless spending and painful taxes on risk takers.

Recognize that France already has one of the highest overall tax burdens, yet it continues to bleed red ink.  Debt is 90% of GDP.  Trillions in unfunded pension and retiree health-care obligations loom in the not-too-distant future.

Hollande’s answer to this budget crisis?  Still more spending and a proposed 75% tax rate on job creators.

To be sure, this has populist appeal among some voters, especially those who believe national governments are giant candy stores funded by millionaires and billionaires.

Let’s set aside the obvious folly of piling new debt on top of old in the midst of a fiscal crisis.  Entrepreneurs and other business owners – being rationally self-interested like the rest of us – will take every step imaginable to avoid a punitive 75% tax rate.  Many, in fact, will choose to take their money out of the country – or not invest it at all.

A businessman or businesswoman under a high-tax regime always does a simple back-of-the-envelope calculation.  It goes like this: If I start or expand my business, I will face the risk of substantial losses for which I will be solely responsible.  But if through hard work, enterprise and a bit of luck I beat the odds and succeed, the government will take up to three-quarters of what I make.

Many will choose to punt.  Their businesses will not be expanded.  The unemployed will not be hired.  Tax revenue will not be raised.  Economic growth will not expand.  And neither will corporate profits.  That bodes ill for Europe’s equity markets.”

Terakhir Michael Snyder, yang kini menjadi publisher pada The Economic Collapse blog, mengkhawatirkan bahwa hasil pemilu Perancis baru-baru ini akan memicu kegemparan di sistem keuangan global nantinya:

“All of the financial deals that France has made over the past few years may be null and void.  New French President Francois Hollande seems determined to take France on a path away from austerity.  But can France really afford to keep spending money that it does not have?  France has already lost its AAA credit rating and French bond yields have started to move up toward dangerous territory.

Investors are still willing to lend to France at reasonable interest rates, but if France chooses to run up huge amounts of additional debt at some point they will end up just like Greece.

What is even more important in the short-term is the crumbling of the French/German alliance on European fiscal matters.  Angela Merkel and Nicholas Sarkozy were a united front, but now Merkel and Hollande are likely to have conflict after conflict.

Instead of moving in one clear direction, the euro zone is now fractured and tensions are rising.”

What Do the Charts Say?

Euro terdepresiasi ke level terendah dalam hampir 9 tahun ketika diukur dalam trade-weighted terms. Pandangan umumnya adalah mengasumsi bahwa hal tersebut akan memicu upgrade pada estimasi PDB di regional Eropa, namun menurut UBS hal tersebut TIDAK akan terjadi:

UBS: Euro depreciation: Implications for GDP

The euro has depreciated to its lowest level in nearly nine years when measured in trade-weighted terms. Clients have asked if this might trigger a GDP forecast upgrade for the common currency area. The short answer is no; the currency has depreciated on fear and risk aversion – and economic growth tends to suffer rather than flourish in that environment.

The euro has depreciated by 15% since its recent peak in October 2009. The depreciation is, in fact, exactly in line with our forecast, which is for the EURUSD to drop further to 1.15 by the end of this year and to 1.10 by the end of next year.

At first sight, this should boost output, but the exchange rate response is simply part of the bigger, well-known picture of economic stress in the common currency region. Our asset allocation team highlighted this point in their latest piece, with a compelling chart that shows a tight relationship between the value of the euro and the relative size of the ECB’s balance sheet (Chart 2). The ECB’s balance sheet has expanded much faster than the Fed’s and this is simply because the euro zone economy and its banks remain troubled (sounds familiar).

This evaporation of confidence in parts of the European banking sector has a direct impact on the real economy, including through a higher cost of capital for companies and from tougher credit conditions for loans. The Spanish, Italian, Greek and Portuguese economies are in recession, and growth in the euro zone as a whole has ground to a halt.

To establish our point more explicitly, we have run a macro simulation on NiGEM, a large global macro model. We have specifically asked: what is the impact on the economy of the heightened fear that is reflected in wider risk premia? The calibration of the shock can vary depending on one’s judgments and on the time period under consideration, but the bottom line is that fear can drive the exchange rate lower – and economic growth.

What next for the exchange rate? The policy response to the crisis will remain an influence, but, as Chart 2 above shows, in essence it is the fundamentals that will be crucial for the long-term value of the currency.

The two structural measures that help us determine the outlook for the currency – the internal balance (output gap) and the external balance (current account) – point to further weakness. The charts below compare: (1) the euro area output gap with the weighted average output gap of its main trading partners; and (2) the euro area current account balance compared with that of its main trading partners. The charts essentially show that, although the current account is in balance, the euro area output gap is bigger than its trading partners’. If we think of the equilibrium exchange rate as one that restores internal and external balance, these charts suggest that there is scope for further depreciation in the euro.

To summarize, the euro has depreciated in response to broader concerns related to solvency and competitiveness in the single currency region. Although the weaker currency will help the troubled economies rebalance, the weakness is not a trigger for forecast revisions. Looking ahead, fundamentals continue to suggest that there is further scope for euro depreciation. We expect EURUSD at 1.15 by end-2012 and 1.10 by end-2013.

Yang tak kalah penting, The Economist memberikan pandangan yang tidak terlalu dipolitisasi terhadap kondisi Perancis dalam artikelnya yang jenaka yang berjudul A Country In Denial serta mengetengahkan rincian sekitar celah ekonominya yang mengerikan:

“France has not balanced its books since 1974.  Public debt stands at 90% of GDP and rising.  Public spending, at 56% of GDP, gobbles up a bigger chunk of output than in any other euro-zone country – more even than in Sweden.  The banks are undercapitalized.  Unemployment is higher than at any time since the late 1990s and has not fallen below 7% in nearly 30 years, creating chronic joblessness in the crime-ridden banlieues that ring France’s big cities.  Exports are stagnating while they rear ahead in Germany.  France now has the euro zone’s largest current-account deficit in nominal terms.  Perhaps France could live on credit before the financial crisis, when borrowing was easy.  Not any more.  Indeed, a sluggish and unreformed France might even find itself at the centre of the next euro crisis.

It is not unusual for politicians to avoid some ugly truths during elections; but it is unusual, in recent times in Europe, to ignore them as completely as French politicians are doing.”

Dan terakhir di bawah ini adalah gambar kartun yang sangat menyerupai keguncangan yang terjadi anggota-anggota zona euro:

Dibuat Tanggal 23 Agustus 2012

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