Prepare for the "The Kick The Can Down The Road Crash of 2011"

Boy oh boy was that another flush. If Europe comes apart then watchout. Risk was priced high for awhile and now it is squeezing. So another good flush down. Hard to pick a bottom without a stinky finger.....

 

Whats Obama going to come up with? How do you kick start the economy without spending? Looks very ugly to me.

 

I'll try to warn you when its time to go long the TSX.

 

Just about time for another leg down. I'm sure another non event G7 meeting will do the trick.

those euro banks still on the ropes. Won't take but one or 2 punches now.

 

ok maybe 1 more punch.

 

G7 offers little to calm markets on growth, debt

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By Catherine Bremer and Glenn Somerville
MARSEILLE, France | Fri Sep 9, 2011 6:36pm EDT
(Reuters) - Group of Seven finance chiefs pledged on Friday to make a coordinated response to a slowdown in the global economy but offered few specifics and differed in emphasis on Europe's debt crisis.

The United States pressed Europe's strongest economies to give "unequivocal" financial support to weaker euro zone states to overcome a debt crisis threatening world economic recovery, but Germany stressed the top priority of cutting deficits.

In joint "terms of reference" agreed after hours of talks in the French port city of Marseille, G7 finance ministers and central bankers signaled no shift in policy to try to revive flagging growth.

"We met at a time of new challenges to ... growth, fiscal deficits and sovereign debt... There are now clear signs of a slowdown in global growth. We are committed to a strong and coordinated response to these challenges," they declared.

"Given the still fragile nature of the recovery, we must tread the difficult path of achieving fiscal adjustment plans while supporting economic activity, taking into account different national circumstances," they said in an attempt to square reconcile austerity and growth.

But the thin statement, which a German government source said was issued at host France's insistence to try to calm anxious markets, broke no new ground.

"We have to get away from the idea that there is only one solution for all.... It's not rigor (austerity) versus growth," French Finance Minister Francois Baroin told a news conference.

Yet there was a clear difference in tone between U.S. Treasury Secretary Timothy Geithner's call for more generous aid for Europe's debtors and German Finance Minister Wolfgang Schaeuble's emphasis on cutting high deficits.

"I don't think people were expecting a great deal and sure enough the G7 doesn't appear to be delivering much in the way of concrete action," said Brian dolan, chief strategist at Forex.Com in New Jersey.

U.S. PRESSES EUROPE

A U.S. official said most of the meeting was devoted to the euro zone sovereign debt crisis.

"European officials fully understand the gravity of the situation there," Geithner said. "The G7, alongside the International Monetary Fund, is committed to working with them to decisively address the crisis in Europe."

The G7 statement voiced support for U.S. President Barack Obama's $447 billion jobs plan and for Europe's July 21 decision to beef up the powers of the euro zone's EFSF bailout facility.

It said exchange rates should be determined by markets and pledged: "We will consult closely in regard to actions in exchange markets and would cooperate as appropriate."

A shock announcement that the top German official at the European Central Bank is quitting in conflict with the bank's policy of buying government bonds to support Italy and Spain laid bare deep rifts over how to manage the debt crisis.

The ECB confirmed chief economist Juergen Stark will retire nearly three years before his term is due to expire. His exit means Bank of Italy governor Mario Draghi will start his term at the ECB helm in November with a mountain to climb to restore its credibility in Germany, Europe's biggest economy.

Mounting anxiety over Europe's debt crisis and the fragility of its banks as well as concern over the U.S. economy and Washington's political impasse over deficit reduction caused a big fall in world stock markets in recent weeks.

Differences between the economic problems facing the euro zone, Britain and the United States are complicating the task though, meaning one-size-fits-all solutions will not work.

IMF chief Christine Lagarde said in London before boarding a flight for Marseille that policymakers in advanced economies should use all available tools to boost growth and called for bold action to weather a "dangerous new phase" of recovery.

She also cautioned against too much fiscal consolidation in a climate of sputtering growth.

But the Marseille talks produced no agreement on coordinated monetary easing.

U.S. President Barack Obama's new package of tax cuts and spending could lift U.S. growth by one to three percentage points in 2012 and add more than a million jobs if approved by Congress, which is far from assured.

In debt-ridden Europe, there is little scope for fiscal stimulus, and where there is some wiggle-room -- in Germany and Britain -- there is no political appetite for it.

ASIA AS CONCERNED AS U.S.

With Asian economies deeply worried about the West's debt crisis and slow growth, Japan voiced its concern and sought backing for its right to unilaterally intervene to counter safe-haven purchases pushing up the yen.

Finance Minister Jun Azumi said he believed Tokyo had gained understanding for its view.

Bank of Japan Governor Masaaki Shirakawa told reporters the debt problems in the United States and Europe were behind the rise in global economic uncertainty and must be tackled.

Lagarde said policymakers must act now, "and boldly", giving her blessing to more quantitative easing by central banks and saying the challenge was to find a pace of adjustment that was neither too fast nor too slow.

She said countries facing market pressures must push ahead with urgent fiscal consolidation, while there was scope for slower action in countries not at the mercy of market forces.

"If growth continues to lose momentum, balance sheet problems will worsen, fiscal sustainability will be threatened, and the scope for policies to salvage the recovery will disappear," she said.

Decisions by the European and British central banks this week to keep interest rates unchanged accentuated the gloom in Europe but neither indicated that a cut was imminent, while Federal Reserve Chairman Ben Bernanke gave no hint of new stimulus to boost the economy in a keenly awaited speech.

 

Yeah, he'll "warn" you when to go long, but never tell you when to get out.

AKA "The Roach Motel" trade that this senile idiot continues to gloat about.

 

Marseille lays bare G7 differences and lack of policy room


By Daniel Flynn and Annika Breidthardt
MARSEILLE | Sat Sep 10, 2011 7:30am EDT
(Reuters) - Vague pledges and a lack of action by G7 countries underscored differences between Europe and the United States and a lack of room to maneuver in the face of the worst loss of confidence since the credit crisis.

After weeks of market turbulence, finance ministers and central bankers from the Group of Seven industrialized nations pledged a coordinated response on Friday to the global slowdown, but offered no specific steps and differed in emphasis on Europe's debt crisis.

While the United States called on Europe's biggest economies to provide "unequivocal" support to struggling peripheral states to overcome a debt crisis that is crippling the world recovery, euro zone paymaster Germany said the priority was cutting deficits.

"There is no sense of direction, which is entirely expected given that there is no agreement on the path for fiscal policy between the U.S. and Europe, and there is no agreement on the path of monetary policy either," said Gilles Moec, senior economist with Deutsche Bank in London.

"In a way, it's a communique which is a list of constraints which policymakers are facing," he said of a final statement host country France pushed other reluctant G7 members to produce at the end of talks that overran by nearly two hours.

Despite initially saying there was no need for a communique, France changed its tune to send a signal of unity to markets after Wall Street slumped nearly 3 percent on Friday.

"The communique was at the insistence of the French but in practice it's meaningless. We can't even agree on the problems so how can we agree on an analysis," said one G7 delegate.

Already battered markets were roiled by Friday's resignation of the top German official at the European Central Bank in protest at the bank's bond buying program, laying bare divisions within the European policymaking sphere just as the G7 illustrated global differences.

NO TALK OF COORDINATED STIMULUS

The final "terms of reference," less binding than a formal G7 communique, acknowledged tensions in markets and clear signs of a slowdown in global growth.

"We are committed to a strong and coordinated international response to these challenges," it said, but provided no further specifics beyond urging growth-friendly fiscal adjustments.

The statement voiced support for U.S. President Barack Obama's $447 billion jobs plan and for Europe's July 21 decision to beef up the powers of the euro zone's EFSF bailout facility, but papered over cracks in policy differences.

Speculation had swirled in some quarters that G7 central bankers might flag a coordinated monetary stimulus involving quantitative easing, but a second G7 delegate said that possibility was not even discussed.

"It is not realistic for the market to expect us to put hundreds of billions on the table every time we meet," he said.

Geithner told Friday's meeting he was confident the U.S. government would get at least a substantial part of Obama's jobs package through Congress despite Republican resistance, another delegate said.

But U.S. officials said most of the meeting was devoted to Europe's debt crisis and the health of its banks.

Seeking to allay fears over European bank funding, ECB President Jean-Claude Trichet told the meeting European banks held some $5 trillion in collateral eligible for access to central bank funds.

While Japan said it had received G7 blessing for unilateral foreign exchange action, delegates said the issue had not really even been discussed in depth by the meeting, and the statement had simply used the wording of previous statements.

 

Greek Economy Will Shrink More Than Expected, Finance Minister Says
By REUTERS
Published: September 10, 2011

THESSALONIKI, Greece (Reuters) — Greece’s economy will shrink by more than 5 percent this year, topping earlier projections, the country’s finance minister told business people in this northern Greek city where the prime minister will speak about the economy later on Saturday.

A deep recession is making it harder for Athens to increase tax revenue and meet deficit-reduction goals under a bailout plan agreed to with its euro zone partners and the International Monetary Fund. Without corrective action the continued flow of aid may be at risk.

“The recession is exceeding all projections, even the troika’s forecast,” the finance minister, Evangelos Venizelos, said, referring to the European Union, the International Monetary Fund and the European Central Bank. “The projection in May was that recession would be at 3.8 percent, now we are exceeding 5 percent.”

The Greek economy shrank at an annual 7.3 percent clip in the second quarter, after an 8.1 percent contraction in the first three months of 2011.

Austerity measures, including higher indirect taxes and cuts in public sector pay and pensions, have hurt economic activity.

Mr. Venizelos was keen to send a message to Greece’s euro zone partners, who are growing frustrated with its backsliding, that Athens is fully committed to carrying out agreed economic reforms.

Chancellor Angela Merkel of Germany reiterated on Saturday that Greece had to meet conditions laid out by the European Union, European Central Bank and International Monetary Fund to receive the aid it is seeking.

Athens is expecting to get 8 billion euros, or $11 billion, in its next installment of emergency financing under the bailout plan, without which it would default down the line.

Greece’s financial troika, which suspended talks with Athens last week in frustration at Greece’s struggle to stick to its deficit-reduction plan, is expected to come up with a form of words in its next report to allow the next tranche of bailout funds to be paid.

“The most clear message Greece is sending right now,” Mr. Venizelos said, “is that we are absolutely determined, without weighing any political cost, to fully meet our obligations versus are institutional partners.”

“We must prove all those who say that Greece can’t, or doesn’t have the will, is a pariah or does not deserve to be in the euro, wrong” he said.

He also said that holders of Greek government bonds were warming up to a debt-swap plan Greece aims to conclude next month, a crucial part of its new rescue package agreed in July.