Dr. Michael "The Big Short" Burry's "Brutal Hangover Is Inevitable" State-Of-The-World UCLA Commencement Speech

The prediction has been made.  Will Dr. Burry continue his roll?  Zero Hedge(Video at the link) Whole post:

Infamous for his prediction of the great recession, Europe's demise, and the collapse of the US financial system (as well as profiting extremely handsomely from said predictions), so well captured in Michael Lewis' book "The Big Short", UCLA's Dr. Michael Burry undertakes UCLA's Economics Department's commencement speech with much aplomb. In this "age of infinite distraction", the astounding truthiness of this 15 minute speech is stunning from single-sentence summation of Europe's convulsions that "when the entitled elect themselves, the party accelerates, and the brutal hangover is inevitable" he reminds us that Californians, and indeed all Americans, should take note. A quarter-of-an-hour well spent from a self-described 'chicken-little' who was "just trying to figure it all out".


Another clear-eyed warning to be ignored, yeah?  It's not like this collapse is already in motion or anything..

Global Financial House Of Cards In Peril By New Round Of Moody's Downgrades

Britain gets sucked into the mix..  British banks to be downgraded by credit ratings agency Moody’s as euro-crisis spreads  The Extinction Protocol.  Excerpts:

Royal Bank of Scotland, Lloyds Banking Group and Barclays are all in line for a downgrade by ratings agency Moody’s over fears the eurozone crisis threatens their stability. In a move that would cost financial institutions billions of pounds and could have a knock-on effect on the cost of credit to business and consumers, Moody’s is set to push some banks down two notches, sources said. Moody’s will also downgrade a number of the biggest banks around the world, it was claimed, a decision that would show how the eurozone sovereign debt crisis is hitting all areas of global finance. The cuts are part of a wider review by Moody’s of the global banking sector that Sky News said is likely to be unveiled tonight after the US market closes. The downgrades, which are expected to range in scope from one notch to three notches, will follow joint efforts by the Bank of England and Treasury to boost cash flows in Britain’s banks through a multi billion pound cheap loan scheme. The banking industry has been hit by higher funding costs as the eurozone troubles escalated and has been hoarding money for fear of another worrying phase in the crisis.

And U.S. banks aren't immune,either..  This from the L.A. Times.  Excerpts:

U.S. banks hammered with downgrades: Moody’s Investors Service lowered the credit ratings of 15 the world’s largest banks late Thursday, including Bank of America, JPMorgan Chase and Goldman Sachs, saying their long-term prospects for profitability and growth are shrinking. The ratings agency said it was especially concerned about banks with significant financial markets businesses because those markets have become so volatile.



The global effects of this round of downgrades should be a large portion CNBC's jabber-talky today, but probably not scary enough for Rick Santelli to shit his pants on-air.  Although that day is coming, it probably won't be Friday..  When that day comes, don't worry, though:  I will be posting video!

Unregulated global derivatives debt market hits $647 trillion mark

This is what will kill our economy.  Global economy.  So we've got that going for us..  The Extinction Protocol.  Excerpts: 

..Gross Credit Exposure has returned to 2008 levels, something the world might want to pay attention to. Once the lessons of the mistakes of the past are ignored, the risk factor increases proportionally and with Europe teetering on the edge of a Lehman event, the increase in interest rate derivatives might well indicate a new risk that has not been accounted for: A sudden collapse of the Euro currency below the 1.20 or even parity level. Such an event would make Lehman look like a picnic but there is more bad news beyond that as it is not just interest rate derivatives that have increased past 2008 levels as the chart above demonstrates, but some idiots placed bets on the currency markets which means that a collapse of the Euro creates an irreversible game of dominoes and destruction: Unfortunately for us common folk, no one has taken the time to explain the implications of a 10, 20, or even 30% decline in the value of the Euro versus the US Dollar in a compressed time period.

Credit goes where credit is due.. Lifetime Achievement Award!

Spain in recession as austerity bites deep

Austerity is Stasis/Immovable Object.  Dynamic populations are Inertia/Irresistible Force.  There's definitely going to be more trouble before stability and growth returns.  Reuters.  Excerpts:

Spain sank into recession in the first quarter and economists said spending cuts aimed at meeting strict EU deficit limits, together with a reeling bank sector, would delay any return to growth until late this year or beyond.



It is the second recession in just over two years for the euro zone's fourth largest economy and comes as the government tries to convince investors it will not need outside aid to put its house in order.


The country is caught between pressure from its European peers to fix public finances and growing domestic resistance to austerity measures that have helped push unemployment to more than double the EU average.



Ratings agency Standard & Poor's added to the country's problems with a two-notch rating downgrade last week and on Monday it chopped the credit score of 11 banks.
..
"The wheels are very clearly coming off," Jefferies economist David Owen said. "It wouldn't surprise me to see a very significant decline in GDP both in the second and third quarters this year."

..
Spain's demand for electricity, a good indicator of the strength of economic output, fell for the eighth month in a row in April, the national grid operator said.



Spanish bonds showed little reaction to the GDP report but yields have risen to around 6 percent in recent weeks. At around 7 percent, they are seen as financially unsustainable.


The IBEX share index finished April down 12.7 percent, its worst monthly showing in nearly 1-1/2 years..

The real problems haven't even begun.  Spain and Greece are just the opening act.  Followed by, in no particular order, Portugal, Italy, and Ireland.  The others(E.U. and non-E.U.) will also be sucked asunder, victims of Austerity's implosion wave.  How much pressure can France, and ultimately Germany, withstand? 

The E.U.'s individual country/collective state implosion illustrates the concept of Immovable Object/ Irresistible Force:  I'm unsure of the outcome, but the Victor will soon be known by all.  These circumstances, at present, cannot sustain.  There will be no dispute after this head-on, high-impact event.

Is the Chinese Economy Sputtering for the Same Reasons as the American Economy?

From Washington's Blog.  Excerpts:

It was tempting to believe that China was different.

With its command and control economy with some of the trappings of free market capitalism, trillions in reserves, and abundant natural resources, many thought that China would "decouple" from the Western world's problems and sail into a prosperous future.
However, despite its long history, exotic names and seemingly strong position, China cannot avoid the rules of economics which have applied to all countries throughout history.
And:
The Telegraph noted last June:



China's chief auditor has warned that high levels of local government debt could derail the country's economy, with some observers suggesting that a number of Chinese provinces are even more fiscally-troubled than Greece.
 
Few countries will come through unscathed when the global economy tanks.  And I do think China looks stronger than it actually is..

And Now, To Greece..

Greece: Prime Minister George Papandreou survives by just 12 votes

GREECE'S prime minister survived a key confidence vote, keeping alive a government bid to avert a debt default that could spark a financial maelstrom around the world.

MPs voted 155 to 143 along party lines last night to back George Papandreou, who now faces a critical vote next week on a massive austerity package that Greece's international creditors have said must pass by the end of June.

He is seeking 28 billion euro (s24.8bn) in budget cuts and new taxes and 50 billion euro (s44.3bn) worth of privatisation of public assets. Unless the new measures pass, Greece will not receive the next batch of bailout funds worth 12 billion euro (s10.6bn), and will face a disastrous default in July, when it runs out of money.

A default by Greece could drag down Greek and European banks and renew fears over the finances of other eurozone countries such as Portugal, Ireland and Spain.
And:
As deputies voted, several thousand protesters gathered outside parliament chanting "Thieves! thieves!", shining green laser lights at the parliament building and into the eyes of riot police. Continuing strikes by electricity company workers objecting to privatisation caused a second day of rolling power cuts.

This anger doesn't seem to be factored as a tangible power.  But it is, and it's just begun to fester.

This Week In EU Implosion News..

True Finns set for government, see EU bailout changes

The True Finns, the anti-euro party voted into a powerful role in the Helsinki parliament at the weekend, expect the European Union to change plans for a bailout of Portugal, its leader said on Monday.
..
"This is a big, big bang in Finnish politics. This is a big, big change. This will change the content of Finnish politics," Jan Sundberg, professor at the University of Helsinki, said.

Finland's parliament, unlike others in the euro zone, has the right to vote on EU requests for bailout funds, meaning it could hold up costly plans to shore up Portugal and bring stability to debt markets.

The strong showing for the populist True Finns reflects growing public frustration in some EU states about footing the bill for weaker economies such as Greece, Ireland and Portugal.

Portugal's bailout threatened by veto from Finland 

The next phase of Portugal's bailout negotiations start today, but already face trouble from an unlikely source - a strong election performance from an anti-euro party in Finland, which has pledged to vote against financial aid.

Ireland’s banks downgraded to junk status  From Business ETC.  Excerpts:
IRELAND’S GOVERNMENT BACKED banks are now officially junk following a downgrading of the long-term deposit ratings of the four surviving banks by the ratings agency Moody’s.

The decision to downgrade Bank of Ireland (BoI), Allied Irish Banks (AIB), EBS Building Society and Irish Life & Permanent (IL&P) follows the move to cut Ireland’s own ratings status to one level above junk status last week.

Debt restructuring on Greece's path

The International Monetary fund's opinion is that a Greek debt restructuring is inescapable at this point and will have to take place by next year. This does not mean private bond holders will receive haircuts, but rather the global financial organization sees rescheduling loan repayments as a form of restructuring.

After a tense week that saw EU officials giving in, for the first time, and admitting that Greece might be forced to restructure its debt, Ireland's sovereign debt downgraded yet again by Moody's and Portugal's bailout put in check, the weekend wasn't better. Restructuring fears grew on reports that top IMf officials were convinced Greece would be unable to service its debt.

The Greek debt to GDP ratio is over 10% and accumulated debt will be 160% of GDP by 2013, coupled with a contracting economy and soaring borrowing costs make escaping restructuring a severely uphill road.
And:
The Greek situation is bound to be a handful for the European Union, one they will not be able to put all their strength into. Finland's right-wing party True Finns became the third political force in the Nordic country after Sunday's elections. The re-shaped parliament in that country has the right to decide on Finland's position in terms of a bailout for another European country. True Finns are set against paying for Portugal and could block the much needed aid.

And the Greeks begin to riot again.  As a country, they really do own their anger..

Global Banks Face 'Wall Of Maturing Debt'  Awesome.  Excerpts:

DEBT-LADEN banks are the biggest threat to global financial stability and they must refinance a $US3.6 trillion ($3.4 trillion) ''wall of maturing debt'' that becomes due in the next two years, the International Monetary Fund says.

With the $3.6 trillion that matures in two years the rollover requirements are most acute for Irish and German banks, the report said.

''These bank funding needs coincide with higher sovereign refinancing requirements, heightening competition for scarce funding resources.''

Silver's On The Rise Again..

Trading starts at $36.39 later this morning.  (Kitco chart via Urban Survival.)
Wow wow wow..

PRECIOUS METALS - European Opening View - Strong start for metals as silver clears $36/oz

The PGMs remain on the back burner this morning as gold and silver continue to dominate, opening higher in Asia with gold currently up 0.5% and silver a further 2.3% touching a fresh 31-year peak of $36.51 a short while ago, leading the AU/AG ratio below 40:1 for the first time in 13-years. The new highs in silver could prompt some profit taking later in the day but with the situation in the MENA region still extremely volatile and oil continuing rise both gold & silver are likely to extend on a mix of safe-haven and anti-inflationary hedging with silver set to challenge $38-40/oz but ultimately the all-time record of $50/oz.

It's the Inequality, Stupid

Eleven charts that explain everything that's wrong with America.  From Mother Jones.

Bank of America website exposes customer accounts, data

High incompetence from America's Bank. Blurg.. From Jalopnik Excerpts:

Bank of America's account websites are experiencing an unprecedented online security breach and isn't rectifying the problem. That's right, your online account data and full account access may be in the hands of someone else.
..

The person I spoke with immediately called Bank of America, and was told that although they knew of the problem, they didn't they yet know what was causing the problem, and despite having known about it for over a half an hour, they had not shut down online access. One hour later, my source tells me she still has access to the other party's account information.

There you have it. If you've got an account with BofA, enjoy your Sunday! Maybe the people who hold your money will get around to fixing a problem that allows others to steal said money: Or not.. The level of indifference BofA has shown towards their clients is astonishing, even for these clowns.

Another Example Of How We Don't Understand What's Destroying Us..

Two Views on The Bernank Gonzalo Lira points out the different reporting of Fed Chief Bernanke's speech last week. The American version of what happened is quite a bit different than, well, everyone else's..

..The American media is focusing on an obvious political nonstarter: The idea that the budget ceiling will not be raised.
..
The foreign media, on the other hand, is focusing on something that really matters: How the U.S. is exporting inflation, especially food price inflation, which is leading to social unrest.
..
Compare:
The New York Times reports in the lead of its story,

The Federal Reserve chairman, Ben S. Bernanke, warned Congressional
Republicans on Thursday not to “play around with” a coming vote to raise the government’s legal borrowing limit or use it as a bargaining chip for spending cuts.
..
Contrast those lead paragraphs with these from the UK’s Telegraph (not
exactly a bastion of Lefty thinking):Ben Bernanke, the chairman of the US Federal Reserve, has dismissed the idea that the central bank’s policies are to blame for the rise in global food prices to a record high that helped trigger political unrest in Egypt.

..
The Times and the rest of the American mainstream media is focused on a non-issue—while the rest of the world is focusing on something that matters: Food price rises, and the perception that America is exporting inflation.

The American financial media’s thing about the Federal government debt ceiling is sort of silly—everyone knows that the debt ceiling will be raised.

But food price inflation is real. The riots in Egypt are real—and they have nothing to do with “Muslim extremists”, or even Mubarak’s dictatorship: They’re about food prices, plain and simple, which have been steadily rising ever since the Federal Reserve’s loose money policies and various versions of QE have driven commodity prices to the moon.

Lira's right: Theatrics aside, the debt ceiling will be raised. Journalistically; not a big deal at all. Rising food costs triggering global, social unrest.. Of course that's the bigger story. And the bigger question? Why is there such a disconnect between American media's coverage/perspective and the World's? Yes, it was rhetorical.

Having Trouble Understanding The Machinations and Implications Of The EU Financial Crisis?

Gonzalo Lira can help. Why is the EU Crisis important? Globalist financial/banking policy has tangled not only neighboring European countries economies together in a way impossible to decouple without serious turbulence, but the majority of the world's collective economy is also locked in a larger magnification of what currently ails the EU. And, as goes Europe, so goes the Global Financial System. Lira writes simply, directly, distilling complex financial situations into an easy to understand narrative of real-time economic events, and why there are no easy or immediate answers to this rapidly blooming global catastrophe..

Lira also thinks the European situation is deteriorating rapidly, even more than he recently predicted. I know, I know.. The economic crisis is no where near as fun as Bristol Palin or even the Royal Engagement, but hopefully a few of you will take the 15 minutes or so required to read both articles. You should, then, have a much better handle on the implications this has for America's immediate financial future.

Short answer: Huge, and Terrible.

This Is The Tipping Point, Or A Contributor Thereof..

Yuan Bets Reined In After ‘Masterful Job’ at G-20: China Credit

Abhisit calls on Asia to use yuan in trade Huh. Thailand's thinking of dropping the Dollar.

Ireland Goes Bust, Irish Bank Run

Obama didn't have any fun at the G20 at all..

Just because you can't hear them doesn't mean massive financial bombs aren't exploding all over the place.