Couple of small addenda to my lengthier missive above:

[url=http://www.zerohedge.com/article/rating-agencies-have-now-been-silenced-balance-sheet-mlec-style-debt-rollover-plan-will-not-]ZeroHedge (citing a Reuters piece) reports[/url] that the reason the EuroPonzi-overseers chose "The French Model" for Greek debt rollover is that it exploits a kind of "preapproved loophole" in the ratings agencies' criteria for CDS-triggering-event defaults.


And despite gasoline futures rapidly climbing back to their pre-SPR-oil-release levels in the past week, there may be some good news on the U.S. midwest-crop front, where flooding worries had caused prices of corn, soybean and such to spike to rather scary levels in the past few months:
[url=http://globaleconomicanalysis.blogspot.com/2011/06/corn-soybean-wheat-futures-plunge-on.html]
Corn, Soybean, Wheat Futures Plunge on Crop Report; Inflation, Interest Rate Outlook[/url]

As a continuation of my post above, this hit the news today.
[url]http://www.bizjournals.com/birmingham/morning_call/2011/07/farkas-gets-30-years-for-taylor-bean.html[/url]

[QUOTE]Lee B. Farkas, former chairman of Florida-based Taylor Bean & WhitakerbizWatch , received a prison sentence of 30 years on Thursday for his role in orchestrating a $3 billion fraud that helped bring down Alabama's Colonial Bank. (bizWatch)

According to the Associated Press, Federal prosecutors in northern Virginia had hoped for a life sentence, citing the case against Farkas as one of the most significant to arise from the financial meltdown in the United States.

Farkas was convicted in April by a federal jury on 14 counts that included securities fraud and conspiracy.[/QUOTE]

DarJones

I still don't understand how this "French Model" will fix this problem.

[URL="http://www.theaustralian.com.au/business/economics/sp-puts-spanner-in-greek-debt-plan/story-e6frg926-1226087694819"]http://www.theaustralian.com.au/business/economics/sp-puts-spanner-in-greek-debt-plan/story-e6frg926-1226087694819[/URL]

On the Greek side, although austerity measures have been agreed upon and passed by the Greek government (although the public may blunt some of the outcome), they are far from taking effect. Capital proceeds from the privatization of assets are required as part of the solution and that has yet to begin.

The French and the German banks have got their ties tangled in a slow rotating lathe and the ECB will not jump in to break the tie (so to speak) as their policy is not to accept Greek's bonds given their current rating as collateral.

There seems not to be sufficient time to fix these problems or else it'll be a photo finish. Calmly we walk through this July day ...

Portugal is in the news today with a debt downgrade to junk status. Why is it that the ratings agencies take so long to decide this? Technically, Greece, Ireland, and Portugal have already had to be bailed out. How much longer can Spain hang on? And if (when) Spain goes down, how long before Italy is on the ropes?

DarJones

[QUOTE=imwithid;265481]I still don't understand how this "French Model" will fix this problem.[/quote]

It would seem the ratings agencies share your skepticism:

[url=http://www.nytimes.com/2011/07/05/business/global/05iht-euro05.html?_r=1&hp]S.&P. Warns Bank Plan Would Cause Greek Default[/url]
[quote] Greece risks being judged in default on its debt obligations if banks are forced to bear part of the pain, Standard & Poor’s said Monday, suggesting that current proposals for rescuing the euro zone’s weakest member may have to be reconsidered.

In particular, a plan proposed by the French government and banks “could require private sector debt restructuring in a form that we would view as an effective default,” S.&P. said in a statement.

The rating agency also said it was cutting its long-term rating on Greece three notches deeper into junk territory, to CCC from B.

A finding by the credit ratings agencies of default would also require the E.C.B. to impose discounts, known as haircuts, on the Greek debt it has accepted as collateral. That would inflict more financial pain on banks holding that debt.[/quote]
Much more in the above article, and a related Mish post [url=http://globaleconomicanalysis.blogspot.com/2011/07/s-warns-greek-bailout-plan-constitutes.html]here[/url].

Denninger later posted this amusing snip hot off the financial newswires:
[quote]EU FINANCIAL REGULATION CHIEF: EU COULD LOOK INTO POSSIBILITY OF SUSPENDING RATINGS ON EU COUNTRIES RECEIVING BAILOUTS[/quote]
In effect, "If the ratingshouses refuse to play ball by our rules, we just take the ball and go home." Ooh yeah, I'm sure the bond and CDS markets will treat such a unilateral action as a giant "problem solved" signal and all will be well.
[b]
[i][Added a bit later:][/i]
[/b]
And Matt Taibbi notes the questioning of "Why has the Obama Administration so utterly failed to clean up Wall Street?" is getting louder and more mainstream in terms of major media coverage:

[url=http://www.rollingstone.com/politics/blogs/taibblog/frank-rich-blasts-obama-20110706]Frank Rich Blasts Obama For Letting Wall Street Off the Hook[/url]
[quote]A lot of people are talking about Frank Rich’s [url=http://nymag.com/news/frank-rich/obama-economy/presidents-failure/]explosive new article in New York magazine[/url]. I think it is a remarkable thing, the latest and maybe the most comprehensive in an increasingly lengthy series of articles and investigations into the Obama administration’s failure to properly investigate the causes of the financial crisis.

By now this is not quite a mainstream media drumbeat, but it’s coming close: between the reporting of Louise Story and Gretchen Morgenson at the New York Times to the recent not-terribly-laudatory piece on New York Southern District U.S. Attorney Preet Bharara by the New Yorker’s George Packer, to Eliot Spitzer’s bitter commentary on the subject on CNN, to my own bleatings, and now this Rich broadside, it seems quite clear that the Obama administration’s failure to clean up Wall Street is becoming a matter of some fascination with the few investigative journalists who are not covering the Casey Anthony case.[/quote]

Pair of NYT articles:

Article #1 is on today's dismal U.S. jobs report:

[url=http://www.nytimes.com/2011/07/09/business/economy/job-growth-falters-badly-clouding-hope-for-recovery.html?ref=business]Job Growth Falters Badly, Clouding Hope for Recovery[/url]: [i]For the second month in a row, employers added a dismally small number of jobs, showing that the United States economy is barely creaking along.[/i]

Two amusing tropes in the above piece need a bit of translation:

[i]"Economists were stunned since they had been expecting June to show stronger job creation as oil prices eased and supply disruptions receded in the aftermath of the Japanese tsunami and earthquake."[/i]

Translation: Economists once again prove themselves to be permanent wild-eyed optimists. Anyone following trends in the actual employment-market data over the past year knows that $100-per-barrel oil is simply an add-insult-to-injury-kind of icing on the double-dip-recession cake which was baked when governments round the world agreed to bail out the TBTF banks, rather than forcing all the bad debt clogging the arteries of the global economy out into the open and instead of throwing wads of new-printed bailout cash at the banks, focusing on sustainable productive jobs-creation.

[i]Most analysts are not yet forecasting an outright slide back into recession.[/i]

Translation: An outright slide back into recession is clearly well-underway.

And check out the obligatory desperate-search-for-a-silver-lining:

[i]"Janette Marx, senior vice president at Ajilon Professional Staffing, a unit of Adecco, said that while companies in the accounting and finance sector had ratcheted down their requests for temporary workers, they were slowly recruiting permanent hires. Some economists pointed to more recent data showing a pickup in retail sales at chain stores and a rise in an index of business hiring intentions as an indication of future job growth.

In manufacturing, some analysts said that a pickup in auto production in the fall after the Japan-related slowdown, as well as steady growth in business equipment sales, could fuel job creation in the coming months.

Daniel J. Meckstroth, chief economist of the Manufacturers Alliance, a trade group, said that consumers who had been delaying purchases of cars, washing machines, refrigerators and other big equipment that breaks down over time would eventually start buying again as they paid down debts accumulated before the recession."[/i]

The only thing missing - due to the unfortunate fact of it being July - was "many economists blamed heavy snowstorms in the northeastern U.S."-style nonsense.


Article #2 is on a rapidly-weakening IPO market, due to a combination of numerous recent [url=http://www.bloomberg.com/news/2011-06-21/paulson-dumping-sino-forest-may-deal-clients-720-million-loss.html]Chinese-fraud-company scandals[/url], concerns about credit bubbles in [url=http://globaleconomicanalysis.blogspot.com/2011/07/credit-crisis-in-brazil-consumer-loan.html]emerging markets[/url], and concerns about the recent wave of much-hyped U.S. tech IPOs being a social-media-centric second coming of the dotcom bubble a decade ago:

[url=http://www.nytimes.com/2011/07/09/business/the-boom-and-crash-cycle-of-ipos.html?ref=business]The Boom and Crash Cycle of I.P.O.’s[/url]: [i]The 98 canceled offerings in 2011’s second quarter hark back to the dot-com crash in 2000.[/i]

It seems to me that the economic cycle is directly correllated to the ease of making money with accounting games over the ease of making money with real economic activity, by hiring people to do real things.

Europe on the Brink
 

I think the titles of Mish`s latest half-dozen Europe-related posts serve as an adequate summary of goings-on in the Eurozone financial Ponzi. (I`ve decided to describe most of the world`s "developed" economies, all of which have central banks run by Keynesian nitwits - simply as "[geographic/economic region] financial Ponzi", since they are engaged in large-scale Ponzi schemes with respect to sovereign debt and economic 'growth', which have all now reached or surpassed their limits of viability under the crushing weight of the accumulated debt load, and are all in various stages of blowing up):

[url=http://globaleconomicanalysis.blogspot.com/2011/07/cardiac-arrest-italy-and-spain-close-to.html]Cardiac Arrest; Italy and Spain Close to the Abyss; EU Commissioner Seeks to Prohibit Agencies from Rating Debt of Countries in Rescue Programs[/url]

[url=http://globaleconomicanalysis.blogspot.com/2011/07/sheer-panic-eu-revives-default-buyback.html]Sheer Panic; EU Revives Default, Buyback Ideas; New Strategy Coming "Shortly", No Timeline Set; Here's a clue: They are Clueless[/url]

[url=http://globaleconomicanalysis.blogspot.com/2011/07/bond-vigalantes-stike-crisis-in-italy.html]Bond Vigilantes Strike; Crisis in Italy Escalates; Portugal 2-Year Debt Hits 18.36%, Greece 31.34%, Ireland 17.83%; New Record High Spreads[/url]

[url=http://globaleconomicanalysis.blogspot.com/2011/07/european-government-bond-spreads-at.html]European Government Bond Spreads at Record Highs vs. Germany; 2-Year Spreads: Greece 30.09, Portugal 17.11, Ireland 16.58[/url]

[url=http://globaleconomicanalysis.blogspot.com/2011/07/invisible-elephant-now-visible-eu-ready.html]Invisible Elephant Now Visible; EU Ready to Tell Trichet to "Stuff It"; Help for Italy?[/url]

OK, that was just 5 posts, not the half-dozen I promised...by way of a 6th, here is a headline from today`s online edition of the German [i]Die Welt[/i]:

[url=http://www.welt.de/finanzen/article13482959/An-den-Finanzmaerkten-ist-die-Panik-zurueck.html]An den Finanzmärkten ist die Panik zurück[/url]: [i]Die Sorge der EU um Italien schürt die Nervosität an den Märkten. Die Banken stehen stark unter Druck, sie halten 90 Prozent des Risikos.[/i]

Translation: [i]Panic Returns to Financial Markets: Worries about Italy stokes nervousness in the markets. The banks are under strong pressure, they hold 90% of the risks[/i]
[quote]The panic must be stemmed - that was the clear goal of the EU finance ministers. They announced that banks which fail the proposed stress tests could count on emergency rescues from EU governments. The signal to the markets was direly needed, since panic had already returned to the financial markets.

On the German exchanges trading was halted multiple times after financial shares plunged. This "circuit breaker" is triggered automatically when a given equity price exceeds daily trading-range limits.

The nervousness began in Italy. Already since Friday, shares of the banks there had been halted in trading multiple times. Within a few days shares of the large Unicredit bank lost more than 20 percent of their value. Only as of the afternoon did shares once again turn positive.

[i][EWM: Aside - I just love how so many MSM finance writers simply assume that the natural state of the markets is permanently rising, and here that the real problem is not the fact that Unicredit is likely teetering on the vege of insolvency, but rather that the share price is falling.][/i]

"There is no explanation in terms if fundamental data for the market panic", said Renato Panichi, Banking expert for the ratings agency Standard and Poors. "The large Italian banks are comparatively well-capitalized."[/quote]
[i]My Comment:[/i] "Comparatively well-capitalized?" In comparison to what? Lehman brothers just before it went belly-up? Suuuuuuuure they are ... With gobs and gobs of Eurozone debt, with the balance of such holdins probably tilted toward their own nation`s.

[QUOTE=ewmayer;266208]I think the titles of Mish`s latest half-dozen Europe-related posts serve as an adequate summary of goings-on in the Eurozone financial Ponzi. (I`ve decided to describe most of the world`s "developed" economies, all of which have central banks run by Keynesian nitwits [/QUOTE]

"Keynesian nitwits " is too soft a description. Gordon Gekko, willing to
do whatever it takes to line his own pockets while screwing others is
perhaps more apt. It is greed on the part of the bankers themselves.

USA on the brink
 

(With acknowledgement to EWM for the title)


[quote=bbc]
[SIZE=3][B]Moody's to review US triple-A debt rating[/B][/SIZE]

[B]Ratings agency Moody's has said it may cut the US AAA debt rating, citing the "rising possibility" the US will default on its debt obligations.[/B]

The agency warned the likelihood the US would fail to raise its statutory debt limit in time to avert default was low but not insignificant.

It came as a fourth day of cross-party talks in Washington on the debt limit were said to have ended stormily.

US Fed chief Ben Bernanke said a default would cause a "major crisis".

Speaking before Congress on Wednesday, the Federal Reserve chairman warned it "would send shockwaves through the entire financial system".[/quote]
Full article at [URL]http://www.bbc.co.uk/news/business-14142621[/URL]


Paul

[QUOTE=R.D. Silverman;266210]"Keynesian nitwits " is too soft a description. Gordon Gekko, willing to
do whatever it takes to line his own pockets while screwing others is
perhaps more apt. It is greed on the part of the bankers themselves.[/QUOTE]

That's the accusation levelled at [b]investment[/b] bankers - Goldman Sachs and the like; central bankers are a rather different group - they're Treasury bureaucrats, not particularly heavily paid.

The problem is that central bankers are currently finding it politically difficult to do what would be economically sensible, because the financial industry represents quite a large portion of the economy in their countries, and they don't know who's gambling with whose money as to whether a default will occur. So they are desperate to do something which has the same effect as defaulting without triggering CDS-like objects which are written to trigger on default.