EUROZONE RESOLVE PUZZLE !

21 Mar

1. EUROZONE UPDATE

2.ECB and EU COMMISSION NEWS

3.RATING NEWS

4.US and GLOBAL ECONOMY

5. METALS and CURRENCY UPDATE

6.CONCLUSIONS

1. EUROZONE UPDATE

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Looking at EUROZONE  surplus and deficit countries it´s apparent that the southern countries have exploded deficit after

entry EUROZONE with low interest rates with huge investments in Real Estate.Anyway most of profits from the inflated economy

don´t show up as tax revenues! Conclusion: Tax evasion symphtomatic in Latin countries by historical heritage.In order to rebalance

deficit explosion an effective tax system must be implemented.Cuts in public services etc only couse population unrest with uprisings etc.

A just tax system is only solution parallel to a strict Budget control and Fiscal DISCIPLINE.!

SPAIN:

EU Commission have looked at the Spanish economy and suggested higher taxes and  a labor reform with more flexibility

to generate Job growth.Banking sector also need restructuring to deleverage  sub primes in massive amount.The difficult part for

Government will be control of the BARONS in charge of local governments  that was resposible for mayor part of deficit.

Last year deficit 8.3% way over forecasted 6% is adding burden.After some discussion in Euro Group decided Spain goal 2012 is 5.3%

and 2013  3% a tough challenge for a recessionary economy! Spain Deficit Target 2012.

Fact is Spanish debt burden is mostly of private and Businesses created during the euphonic years up to 2007.

This debts are International  and amounts to a souring 170% of GDP!! A MISSION IMPOSSIBLE for Spain?

Government forecast 600000 more unemployed this year! Just INSANE for voted Government claiming to create recovery!

Another UNBELIEVABLE mistake to takeover CAM Banks and resell for 1 Euro to Banco Sabadell.Taxpayer risk 6000mil. euros!!

They should takeover Bank and force lending, restore credit lines to small medium sized companies and be example for other

Spanish Banks.Bank can be resold later to Market recovering all of taxpayers money as been demonstrated in Sweden,USA,Island.

This just demonstrate a link between politicians and Banks that smell CORRUPTION!! A National cleaning of Corruption and

application Fiscal and Budgetary DISCIPLINE as agreed with other 24 EU countries. In order to raise taxes no tabus valid!

The catholic Church tax haven in SPAIN must end can bring revenues 1 bilj. euro anually.Italy is entering this road as allready declared.

ITALY:

MONTI is struggling to get consensus for a range of reforms including Taxes,labor rules..Alarming is close connection

between political class and the MAFFIA. A string of corruptive behaviour is directing public funds into the BLACK SECTOR!

Just this week US Bank JPM Milan office announced closure of VATICAN BANK account as non transparent probably used

in Money laundering operations.During last 18th monthes 1.8 bilj. Euros have been transfered from ITALY to GERMANY.

Account have been closed DAILY??VATICAN STATE BANK attempt to qualify for EU white list again questioned for sure!

Fact that ITALY employment rate only reach 57% lowest in EU . Progress and confidence in Sovereign Bond Market is improved maybe

thanks to MONTI not being a pure politician! Both ITALY and SPAIN is facing a  tremendous difficult 2012  and 2013.

Everybody must be fully aware that if those economies fails so does the entire EUROZONE with present composition resulting in

complete desintegration of  EUROZONE.Like US money printing from ECB last resort.

GREECE:

The second  bailout agreed with a succesfull PSI with 85% participation.Remaining will be enforced to comply with deal.

A small part of CDS (Credit default swaps) was triggered without any Bank shocks.

The CAN ONCE AGAIN KICKED FURTHER DOWN THE ROAD saving time for politicians to face a GREECE economy still in a free fall!

A stepwise default of Greece is the selected road forward.A total default would be disaster for GLOBAL economy growth and not an option.

A recovery of Greece economy remains an ILLUSION  presently. Debt deleverage until a sustainable level reached is needed.

Election 22nd April can cause further turmoil in Market and is a downside risk for EUROZONE . The EXIT door for Greece to EUROZONE

can be reality  when patience from GERMANY stalls.Saving the EURO not Greece  is the GERMAN priority always!

2 ECB and EU COMMISION NEWS

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ECB:

The second LTRO 530 bilj. Euros well recieved from over 800 banks accepting a 3 y loan for 1% interest rate.This backdoor QE

increase Bank solvency and  keep down sovereign Bond rates without ECB direct Bond purchases.

A stabilization in Eurozone in sight.Primary rate unchanged 1% .Price and inflation stable in target zone.A gradual recovery predicted

for 2012 and 2013.  Positive loans to private sector in Feb.Progress Fiscal position and structural reforms must be enforced.

Concern on securities from German Bundesbank on TARGET 2 saldos.Germany have demands for 500bilj.Euros .A letter from Weidmann

to Draghi not yet answered on this issue.Prof. Sinn have showed this anomaly in EURO transfer system with collateral implications.

In US a delevereging is done every April to rebalance accounts between local Central Banks and FED with collaterals.Such a system needed in

EUROZONE for adjusting and controlling abuse of TARGET 2 system. Flaw in EURO system is apparent to be corrected!

EU COMMISSION NEWS:

A list of Commitments agreed at EU summit. Fiscal compact and start of permanent rescue fund ESM from July 2012 most important.

Interesting  announcement from EFSF fund Financial officer 16th March.”The EFSF is moving to a new system for recouping funding costs.

All countries will be charged the same rate!! ” A big step forward in the right direction.Will be like Union Bonds! Maybe first step

until real EURO BONDS see light. Now Greece situation under control until at least coming election in April.

IMF Lagarde is warning for a new crisis triggered by OIL PRICES. “A crisis can come from many angles”

Mr Armstrong believes the debt crisis have reached it´s turning point. He sees crisis rotating from Europe to Japan and

finally reaching the US economy with diasterous results.World currency status for USD coming to it´s end !!

A much brighter view on economic recovery in Eurozone is provided by Consuting grp Roland Berger. A continued 3% growth

for Germany 2012 and much stronger performances from ITALY and SPAIN then other forecastsRoland_Berger_Economic_scenario_2012_20120310 .

3 RATING NEWS

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A European Rating agency have been on agenda a long time.Now a German Markus Krall is our last hope.He is working

hard raising money and plan to make first rating within 18month.Starting with  rating of EU STATES  only.

He is backed by the ROLAND BERGER grp present in many European countries as Consultants. Roland Berger have

showed that the ownership of the US rating agencies are very much linked close to Wall Street a fact we have seen too much.

A German article from Die Zeit .I think many EU states will welcome this initiative and financing their RATINGS.

Ratingagenturen

4. US and GLOBAL ECONOMY

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US debt situation is not very rosy.Like EUROZONE actions must be taken to better control of deficit.

Money printing is the action taken by FED to keep things afloat. A QE3 seems today less likely if jobcreation continues and

consumer confidence on the rise.Primary rate to be raised sometime next year seems to be consensus. The opinion among

many is fact that the US have been exporting inflation worldwide by continous inflating money printing. Effect seen more outside US

as the issuer of worlds reserve currency.Immunity will not last forever so when the end comes a price surge in economy at large expected.

Still US have hidden potentials not much discussed.EAGLE DIESEL is the FUTURE CAR FUEL claimed by some US producers.

It´s fluid Natural gas chilled down and presently tested large scale in trucks and Buses all over the Nation.Price half off Gasoline!

Huge resources available in US that can sustain and also export Natural gas coming years.Rising OIL prices make exploration feasable

in many interesting areas of US for both OIL and Natural Gas.A 90% reduction of toxic emission compared with a Gasoline CAR!!

Innovative capability and investors is hallmark of US Economy  I expect can make a strong resolve sooner than later.

World currency status besides WAR expenses is causing much of US  problems and a reform of status can consolidate and strenghten economy

in future.Today all currencies are freely -vacillating ( Fiat money) without any peg to GOLD price.

5. METAL and CURRENCY

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Gold and Silver in retracement Gold  Target=1530 and Silver=27.5 . Gold and Silver expected to surge up during the year.

Gold to 1900 and Silver 50 usd/ounce. Eurozone holds GOLD  10788 tons and US  8133 tons. World amount 2009 estimated 170000tons

GOLD. About 20% in Central Banks. Around 50% in Jewelry .Largest producers CHINA and South Africa.

CURRENCY EURO:

Euro Futures June contract we can see clear BULLISH sign from Large Speculators shrinking down short positions.

Target based on Elliot wave theory 1.3850 for EURO . This is a more long term Target on fundamentals.Sentiment clearly now

more Bullish as Greece issue not head front any more.

6. CONCLUSIONS

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Spain facing a general strike 29th March. Unions clearly unsatisfied with new labor reform with max flexibility for Employer.

Spanish rules have been outdated so in order for creating jobs this step making working conditions modern seems in line with

many western economies.Italy in same situation with a too rigid labor market needing reform.

If  these 2 countries manage to turn around any time soon a relief for EUROZONE suffering it´s first severe crisis.

Greece situation in control and no default  uncontrolled will take place.When EUROZONE recovers time is ripe for dealing

with GREECE final default if needed!Market then in shape to handle such event without a GLOBAL Financial disaster to unfold.

If Greece show strength and stamina to reform economy  staying in Eurozone best option. The danger for Greece is when:

“The music stops only when the people say NO MORE” . The battle against tax evasion,fraud and corruption is top priority in all 3 nations.

With Fiscal discipline,budget ceilings and general austerity with public expenses  a recovery expected  sooner than later.

EUROPE must stand up for the FUTURE of the continent  and turn optimistic in looking forward. Well Germanised the continent

can rival any other continent in Industry,Research ,Innovation.. If everybody works in same direction a strong resolve coming 2013 !!.

LENFRED  BETTING ON ECONOMIC RESOLVE!

To be continueed————-

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