Why the Greek Decision Means A Complete Unravelling of Last Week's Deal - By Ambrose Evans-Pritchard (2/11/11) PDF Print E-mail
By Ambrose Evans-Pritchard   
Wednesday, 02 November 2011 07:30

GREECE'S astonishing decision to call a referendum – "a supreme act of democracy and of patriotism", in the words of premier George Papandreou – has more or less killed last week’s EU summit deal.

The markets cannot wait three months to find out the result, and nor is China going to lend much money to the EFSF bail-out fund until this is cleared up. The whole edifice is already at risk of crumbling. Société Générale is down 15pc this morning. The FTSE MIB index in Milan has crashed 7pc. Italian bond spreads have jumped to 450 basis points.

Unless the European Central Bank step in very soon and on a massive scale to shore up Italy, the game is up. We will have a spectacular smash-up.



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Last Updated on Wednesday, 02 November 2011 07:32
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Merk Commentary: Euro Bailouts - The Good, The Bad & The Ugly - By Axel Merk, Merk Hard Currency Fund (2/11/11) PDF Print E-mail
By Axel Merk, Merk Hard Currency Fund   
Wednesday, 02 November 2011 07:06

Axel Merk
Merk Hard Currency Fund
Oct 31, 2011

The markets appear euphoric about the ability for European policy makers to deliver on new promises. Low market expectations were met. We, too, have a positive takeaway, but only because of one detail of the grand plan; actually, let’s call it a “grand sketch,” as many details are still unknown.



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How Fannie Mae And Freddie Mac Guarantees Work In Brief - By Anthony Randazzo (31/10/11) PDF Print E-mail
Anthony Randazzo   
Monday, 31 October 2011 09:40

Reason.org

Sometimes you don't want all the details on how government funded guarantee programs work. Sometimes you do. For those interested (welcome Reason.com readers), here is a very brief summary of the way that Fannie Mae and Freddie Mac are continuing to bail out mortgage investors through their guarantee programs:

When you get a mortgage, the rights to your loan payments are typically sold to a secondary source. There is a lot of debate over whether the originator of the loan should keep some of the risk, but currently they can make a loan, sell it, and basically be done with it unless they have lied about its contents and are forced to by it back down the road.

So the mortgage is sold to the secondary market, likely Fannie Mae or Freddie Mac. In fact, the GSEs and FHA bought or guaranteed 95% of all new mortgages in fiscal year 2011! Mind blowing numbers compared to when 40% market share was seen as high in the early 2000s.



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The US Paper Dump Continues: Norway's Sovereign Wealth Fund Sells All Of Its US MBS Exposure - By Tyler Durden (31/10/11) PDF Print E-mail
Tyler Durden   
Monday, 31 October 2011 09:35

Zero Hedge

Two days ago we noted that foreigners are selling US paper at a record pace, whether to raise capital in a locked out liquidity environment like French banks, or to make a politicial statement, like China. Today we get the first confirmation to this from Norway's Sovereign Wealth fund, best known for its prediction that it would buy and hold Greek bonds in perpetuity back in September 2010. Just recall: "Norway has taken the view that [Greek bonds] will not [default]. The Greek holdings are particularly interesting because the consensus in the market is that they will at some point restructure or default." Well, about a year later it is now official that the best the Norway SWF can hope for is a 50% recovery. So what does it do? It proceeds to dump US paper. Mortgage Backed Securities first. Because if it announced that a sovereign wealth fund instead of buying into the biggest ponzi ever, we finally defecting from it, then all bets would be of. Bloomberg reports: "Norway’s $570 billion sovereign wealth fund sold all its holdings in U.S. mortgage-backed securities as part of a shift of its fixed-income portfolio. The fund holds no mortgage bonds issued by Fannie Mae and Freddie Mac, the U.S.-controlled mortgage financiers, and an “insignificant” amount of private home loan-backed bonds, said Yngve Slyngstad, chief executive officer of Norges Bank Investment Management, today in an interview in Oslo. “We’ve reduced our holdings of mortgage-backed securities,” he said. “MBS has been taken out of our internal policy benchmark. This means that we don’t have mortgage-backed securities issued by Freddie Mac and Fannie Mae any longer."



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Gold, Silver And Fraudulent Investor Traps - By Jim Willie (29/10/11) PDF Print E-mail
Jim Willie   
Saturday, 29 October 2011 09:08

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