JPMorgan Joins Apple Among Stocks Favored Most

JPMorgan Chase & Co. (JPM) is winning higher ratings from analysts than Apple Inc. (AAPL), the iPad maker that doubled since its low last year, after the European debt crisis battered the U.S. bank’s shares.

The two companies are among 15 in the Standard & Poor’s 1500 Composite where “buy” recommendations made up 85 percent of analyst ratings and there were no “sells,” data compiled by Bloomberg Rankings as of Oct. 24 show. Stocks with fewer than 15 analysts covering them were excluded. For JPMorgan, the total was 89.5 percent, compared with 87.5 percent at Apple.

JPMorgan shares are lagging behind the Standard & Poor’s 500 Index by 15 percentage points this year after investors sold banks amid concern the European crisis would prompt losses. Following its decline, no other financial institution in the U.S. has more support from analysts.

“It shouldn’t be beaten up,” Jeff Harte, a Chicago-based financial analyst at Sandler O’Neill & Partners LP, said in a telephone interview on Oct. 26. During the last financial crisis in 2008, JPMorgan “capitalized on others’ weakness.”

JPMorgan, based in New York, topped Bank of America Corp. as the biggest U.S. lender by assets as of Sept. 30 and posted more trading revenue than any other Wall Street firm for the fourth straight quarter.

The company was profitable every quarter during 2007 and 2008 as the collapse of the subprime mortgage market prompted $2.1 trillion in writedowns and losses at banks, brokerages and other financial firms worldwide. Chief Executive Officer Jamie Dimon bought Bear Stearns Cos. and the banking unit of Washington Mutual Inc. amid the turmoil three years ago.

JPMorgan’s Drop

JPMorgan has retreated 13 percent since Dec. 31, while the S&P 500posted a gain of 2.1 percent, turning positive for the year yesterday for the first time since Aug. 3. The stock, which had 34 “buy” ratings and four “holds” as of Oct. 24, is beating its peers. The diversified financials group in the S&P 500 has slumped 20 percent in 2011.

“JPMorgan tends to be run more conservatively, which is probably why it’s liked by its analysts,” Craig Hodges, president of Dallas-based Hodges Capital Management Inc., who oversees about $700 million, said in an Oct. 26 phone interview.

Besides JPMorgan and Apple, the 15 companies include Google Inc. (GOOG) and Halliburton Co. (HAL), according to Bloomberg data. The most- favored stocks in the S&P 500 beat the entire index since the last bear market ended 2 1/2 years ago, the data show. They returned 144 percent on average since March 9, 2009, versus 90 percent for the S&P 500. Since the index peaked this year in April, the 15 stocks have lagged behind, falling 3 percentage points more than the measure.

Fivefold Gain

Apple, the world’s most valuable technology company, rallied the most out of the group since the bull market began in March 2009, rising almost fivefold. The Cupertino, California- based company missed the average analyst profit estimate for the first time since at least 2004 last week. It had 49 “buy” ratings and seven “holds” as of Oct. 24.

While third-quarter revenue and earnings missed projections because of fewer-than-forecast iPhone shipments, Apple’s forecast for the first quarter was “strong” and should benefit from the new iPhone 4S, said William Power, an analyst at Robert W. Baird & Co. who has an “outperform” on the company and sees the stock climbing 33 percent to $540 a share in a year.

“We continue to view Apple’s growth prospects positively, driven by strong iPad and iPhone momentum,” Houston-based Power wrote in a note dated Oct. 24. “With several upcoming potential catalysts, and an attractive valuation level, Apple remains our top overall pick.”

Post-Summit Scrutiny Deepens for EU

European leaders may struggle to maintain the euphoria that drove the euro to its biggest one-day gain in more than a year as scrutiny deepens on their latest attempt to stem the region’s turmoil.

European Central Bank President Jean-Claude Trichet called for “swift implementation” if financial stability is to be restored, Germany’s Bild Zeitung reported in an extract of an interview to be published tomorrow.

The weaknesses of Europe’s common currency area, ranging from its design to a persisting dearth of bank funding and anemic economic growth, weren’t properly addressed in this week’s accord to stem investor panic, said Harvard University economist Kenneth Rogoff andJonathan Loynes at Capital Economics Ltd. in London.

“My read of this is that the markets are cheered that they’re still alive,” Rogoff, a former International Monetary Fund chief economist, said as a compensated speaker at the Bloomberg FX11 Summit in New York Oct. 27. “Even in a fairly short period, doubts will start to grow again.”

Ten hours of bargaining by European leaders at the 14th crisis summit in 21 months culminated in an early-morning agreement Oct. 27 to bolster the region’s crisis-combat toolbox by boosting their rescue fund to 1 trillion euros ($1.4 trillion) and persuading bondholders to take 50 percent losses on Greek debt. Measures also included a recapitalization of European banks and a potentially bigger role for theInternational Monetary Fund.

Euro’s Retreat

The euro retreated 0.3 percent yesterday to $1.4147 after jumping 2 percent the previous day. The Euro Stoxx 50 Index slid 0.6 percent following a 6 percent surge in the day after the summit.

Underscoring remaining investor concerns, Italy’s borrowing costs rose yesterday to a euro-era record at a sale of three- year bonds. The Rome-based Treasury sold 3.08 billion euros of 2014 bonds to yield 4.93 percent, the highest since November 2000.

German Chancellor Angela Merkel described the agreement as “a good joint package to take the next steps,” while French PresidentNicolas Sarkozy said the accord will allow Greece to “save itself.” The summit outcome also drew international praise, as U.S. PresidentBarack Obama labeled the deal a “critical foundation” for averting a global economic slump.

Buying Time

Europe’s leaders have claimed victory before. They described their plan in March as a “comprehensive” strategy, while Luxembourg Prime Minister Jean-Claude Juncker said the July 21 accord on a second bailout for Greece and more powers for the rescue fund was the “final package, of course.”

“The very best you can hope for is it buys you time,” said Loynes, Capital Economics’s chief European economist. “It avoids an imminent catastrophe and means Greece should be able to meet its obligations in the near future, and it may restore a bit of confidence. But it won’t prevent the debt crisis overall from rambling on and indeed escalating.”

The focus has now shifted from Brussels as Group of 20 leaders prepare to meet in Cannes, France, Nov. 3-4 and European officials seek contributions from countries with bulging reserves such as China, Brazil and Japan to a prospective fund.

Papandreou’s Challenge

In Greece, Prime Minister George Papandreou faces the challenge of maintaining consensus on budget austerity and job cuts amid protests and languishing growth. He urged Greeks to back his efforts to revamp the economy after returning to Athens having bargained for an easing of Greece’s debt burden.

“The crisis gives us the opportunity and this agreement gives us time,” Papandreou said in a televised address Oct. 27. “We negotiated and managed to erase a very important part of our debt. Tens of billions of euros have been lifted from the backs of the Greek people.”

European leaders also promised to look “urgently” at ways to guarantee bank debt and thaw funding markets, though lenders needing to refinance more than $1 trillion of debt next year may struggle until policy makers follow through on a guarantee of their bond sales. Many banks remain dependent on the European Central Bank for its unlimited short-term financing.

“The biggest problem at the moment is that banks haven’t been able to fund themselves,” said David Moss, who helps manage about 8.5 billion euros at F&C Asset Management Plc (FCAM)in London. “If banks can’t fund themselves, they’ll struggle to exist.”

Turning Point

While much of the agreement still needs to be hammered out and enacted, the summit may still mark a turning point in Europe’s crisis-management effort, said Erik Nielsen, global chief economist at UniCredit Bank AG in London.

“Although lots of details still have to be elaborated on and some issues have to be clarified, yesterday’s deal underpins my view that the summit would likely be the place where the odds start to change in the right direction,” he said in a note to investors today.

Rogoff remained skeptical and said that the sustainability of the whole euro project is in doubt because of “too many inconsistencies” about a bloc of countries seeking to stay independent while unifying their currency.

“It’s pretty darn clear the euro does not work,” he said. “It’s not a stable equilibrium.”

EURUSD Analysis - October 29, 2011

EURUSD's rise from 1.3146 extended to as high as 1.4246. Further rise is still possible next week and next target would be at 1.4500 area. Support is at 1.3800, only break below this level could indicate that the rise from 1.3146 is complete.

For long term analysis, EURUSD had formed a cycle bottom at 1.3146 on weekly chart. Further rise towards 1.5000 would likely be seen over the next several weeks.

Cash Crunch in China Picks Up Momentum; Chinese Economy "Teetering On the Edge"

Todd Martin, an Asia equity strategist at Societe General SA, talks about the outlook for China's economy and credit market. Martin also discusses global stocks and commodities. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia."

The interview starts off with a very weak idea "fundamentals have been thrown out the window". However the analysis gets much better as the video progresses. Here are a few key ideas from Todd Martin.

RMB offshore vs. onshore rate is at a historic low. This shows Hong Kong or China mainlanders are hoarding cash, possibly to repay debts.
The liquidation phase is concerning. Markets are looking into a deflationary abyss.
Recent capital inflows into China are misleading. It was not investment but rather mainland money repatriated to repay debt.
Cash crunch in China picks up momentum. We are going into a new down phase and true credit cycle in China. That can take on a life of its own.

Select Quotes

Rishaad Salamat: "Are you saying at the moment that the Chinese economy is teetering on the edge as a consequence of all this?"

Todd Martin: "It's beginning to look like that. There are signals that there is a cash crunch and it is picking up momentum. The offshore RMB market for one. The repatriation of capital for two. This could cascade into a property correction. Once that gets going, you could probably get a lot of sellers jumping into the market."

Rishaad Salamat: Is commodities the worst asset class to be in, at the moment?

Todd Martin: "Commodities is probability the worst asset class to get hit. If you are in a business seeing input prices fall and you have some pricing power downstream, then you could come out OK. Steel prices are still falling faster than iron ore, so that is still not one to be in yet. It's pretty bloody. We are withing 15% of the bottom but the credit cycle concerns me."

Fundamentals

I disagree with Martin about the fundamentals. I think fundamentals on China are horrible. I have been bearish on commodities because China is overheating at a time global demand from Europe and the US will collapse.

For further discussion, please see Michael Pettis: Long-Term Outlook for China, Europe, and the World; 12 Global Predictions written August 22.

Hopping into commodities or commodity-related currencies with a strengthening US dollar, falling global demand, a potential breakup of the Eurozone, a default by Greece, etc, was a poor investment idea.

Please see the link for a very nice discussion of 12 detailed ideas for the global economy.

This is what I said on August 22, in response to the ideas of Pettis.

Six Key Ideas

China Will Slow Much More than China Bulls and Commodity Bulls Think
Non-food Commodities Take Big Hit
Eurozone Experiment Ends in Breakup
US Protectionism Takes Hold
Deficit Countries Control Demand, Thus Have the Best Cards
Disaster Hits BRICs


Contrarian Thinking

Except perhaps for points three and four (and perhaps for all six points) investors and analysts have taken the opposite view. Most are looking to buy the dip, invest in commodities, invest in commodity producing currencies, and invest in the BRICs.

We did not have commodity producer decoupling in 2008 and there is no reason to expect it as debt-deflation plays out and China abandons its reckless investments in infrastructure.

I suspect China slows sooner than Pettis thinks, but no sooner than the next regime change in China. Markets, however, may react well in advance.

Global Deflationary Outlook

Pettis does not use the word "deflation" in his writeup, but he describes a very deflationary global outlook complete with protectionism, beggar-thy-neighbor policies, currency wars, and falling non-food commodity prices.

Pettis did not discuss energy, but the forces are clear: peak oil. vs. global slowdown. Given peak oil and the possibility of war over it, energy is a wildcard.

China did not decouple in 2008 (except perhaps in reverse), and it will not be immune from this global slowdown either.

Germany Central Bank President Slams Debt Crisis Steps; Europe Goes All In; S&P Says Larger Europe Bailout Fund Could Weigh on Ratings

The open feud between the German Central Bank and the ECB widened significantly. Making matters even worse Chancellor Angela Merkel is also in an open feud with the Bundesbank.

Please consider, Top German central banker slams debt crisis steps

Germany's top central banker warns that efforts to halt the debt crisis in Europe could give countries incentives to run up deficits in the future.

The statements by Bundesbank president Jens Weidmann underline his differences with German Chancellor Angela Merkel and his fellow board members of the European Central Bank.

Weekend meetings of global financial leaders in Washington raised hopes of a change in strategy, with officials indicating that would focus on further boosting the firepower of the euro440 billion ($595 billion) rescue fund -- perhaps by allowing it to tap loans from the European Central Bank or otherwise leveraging its lending capacity.

Hopes for such a move boosted European stock markets on Monday, with German and French bank shares rising strongly.

However, ahead of a parliamentary vote Thursday on changes to the fund that eurozone leaders already agreed to in July, Berlin was keen to underline its attachment to its often-criticized step-by-step approach.

When asked in Washington whether he supported the idea of leveraging the rescue fund, German Finance Minister Wolfgang Schaeuble said: "Of course we will use the EFSF in the most efficient way possible."

Some in Chancellor Angela Merkel's center-right coalition already find the beefing up of the EFSF by giving it new powers hard to swallow, and anything beyond that could be a hard sell among its lawmakers.

Christian Lindner, the general secretary of the Free Democrats -- Merkel's junior coalition partner -- called on the chancellor to provide clarity and stressed that his party opposes allowing the fund to tap ECB loans.

The rescue measures were criticized once again by Germany's top central banker, Bundesbank head Jens Weidmann.

Weidmann said in a speech in Washington that the package of support measures for indebted governments "weakens the underlying principle of European monetary union that each country has to bear the full consequences of its own fiscal policy."

Efforts to shield governments from the consequences of their behavior means "we risk seeking the propensity for excessive deficits rise even further in the future."

Weidmann was until earlier this year Merkel's economic adviser, but since his appointment at the Bundesbank he has defended its traditional strict approach to monetary and fiscal policy.

Merkel has been caught between criticism from abroad for doing too little and from supporters at home who fear she is putting taxpayer money at risk. She went on German television Sunday night to defend her step-by-step tackling of the crisis.

She warned of the dangers a radical restructuring of Greek debt might bring at this stage.

"Lehman Brothers was allowed to go bust, and then the world was surprised that it fell into a deep crisis," Merkel said on ARD television. "What we have to learn is that we can only take steps we can really control."The rescue measures were criticized once again by Germany's top central banker, Bundesbank head Jens Weidmann.

Europe Goes All In

Peter Tchir of TF Market Advisors writes EU Goes From Monetary Union To Suicide Pact

As alleged details are leaked about an alleged proposal to leverage the EFSF all I can do is cringe. I'm waiting for some actual details, but as far as I can tell, Europe is attempting go all in. It is going to make leveraged bets on itself. If it doesn't work, the senior debt holders will own Europe if the BRICs buy the senior tranche and will end in a fast and furious death spiral if the senior tranche is owned by the ECB or European banks. We may get a lift on the news. We are trying to rally on the back of the news right now. But if this plan goes ahead, even the slightest cold in the future will turn into the plague. There will be no strong countries left as they will have tied themselves to the PIIGS anchor with a Gordion Knot that will never be untied in time.

Haven't they seen what happens to SIV's? Are the so confident in an economic recovery that will risk it all at this time? If they get it wrong and it doesn't work, there will be no fall back.

All I can hope is they are tired and too happy with the late night "solution" and the markets initial reaction that after the initial euphoria, cooler heads, like Schaeuble, will prevail. This has the makings of an Epic disaster in the making.

Schaeuble a "Cool Head" or a "Clueless Minister"?

I agree with Tchir this has the makings of an epic disaster. However, I disagree that Schaeuble is a "cooler head".

Please consider this snip from a Eurointelligence Daily Briefing, September 22, 2011.

Mass circulation tabloid Bild launches a campaign against Wolfgang Schäuble accusing him that he has been systematically misleading the German public on Greece and the euro crisis in the 18 months. In a scathing article it presents a long list with dates and contradictory statements on the need for a rescue program for Greece and the conditions attached to it.

Bild reporter Rolf Kleine adds to that a column under the title “Minister Clueless”. “Whether the billions for Greece will be sufficient to save the country from collapsing, whether the Euro will remain stable – all that is decided by the markets, not by the German finance minister. He can tell the people whatever he wants – and also the opposite”.

Please consider these Schäuble Flip-Flops courtesy of Google Translate.

21st December 2009
"We Germans can not pay for Greece's problems."

16th March 2010
"Greece has not asked for help, this is why there is no decision, and there is no decision had been taken."

11th April 2010
Four weeks later, on 11 April, he decided to finance the first Euro-Greece-aid package of € 30 billion.

16th April 2010
"We still believe that the Greeks are on the right track and that they may end up not even have to take the help."

22nd April 2010
"The country has had no problems in financing themselves this week in the markets. The agreement on the assistance in an emergency has been a purely preventive measure."

Greece officially asked for help April 23. In early May a rescue package of 110 billion € was in the works.

27th April 2010
"Rescheduling not an issue"

May 2010
The 110 billion euros in the first aid package "ceiling" is a one-time emergency assistance.

21st March 2011
The EU finance ministers decide on a rescue fund with legendary 750 billion euros (ESM) - with the voice Schäuble.

6th June 2011
Greece will receive a new package with more than 100 billion €. Schäuble said: Otherwise, "we face the real risk of the first disordered state of insolvency within the euro zone."

AND WHAT'S NEXT?
Previously, the Finance Minister is on his no to common bonds of all euro countries, the so-called Euro-bonds remained. But perhaps he thinks it is so different again next week .

Unless the definition of "cool head" encompasses "clueless political hacks", Schäuble is not a "cool head".

Larger Europe Bailout Fund Could Weigh on Ratings

Reuters reports Larger Europe Bailout Fund Could Weigh on Ratings

David Beers, the head of S&P's sovereign rating group, said it is still too soon to know how European policymakers will boost the European Financial Stability Facility, how effective that will be and its possible credit implications.

But he said the various alternatives could have "potential credit implications in different ways," including for leading euro zone countries such as France and Germany.

European officials, seeking more resources to protect the euro zone against fallout from its debt crisis, are considering ways to increase the impact of the 440 billion-euro fund by leveraging, although it remains unclear exactly how.

Beers said it was evident, however, that policymakers cannot leverage the EFSF without limits.

"There is some recognition in the euro zone that there is no cheap, risk-free leveraging options for the EFSF any more," Beers told Reuters.

Some analysts say at least 2 trillion euros would be needed to safeguard Italy and Spain if the Greek crisis spreads.

"We're getting to a point where the guarantee approach of the sort that the EFSF highlights is running out of road." Beers said in an interview late on Saturday.

Today, fueled by rumors of still more bailouts, the market rallied for umpteenth time, as if use of leverage to bail out Greece is a good idea. It isn't and just a week ago, the ECB was against the idea. Desperation has set in. If the ECB agrees to do this, Peter Tchir is correct: Europe essentially went "All In".

International Tensions Soar: Jamie Dimon, CEO of JP Morgan, Accuses Bank of Canada Governor Mark Carney of "Juvenile Delinquency"

In case you mistakenly thought there was some semblance of a chance of international accord to address the global financial crisis, please consider Dimon in attack on Canada’s bank chief

Jamie Dimon of JPMorgan Chase launched a tirade at Mark Carney, Bank of Canada governor, in a closed-door meeting in front of more than two dozen bankers and finance officials, underscoring mounting tensions between bankers and officials over financial regulation.

The atmosphere was so bad after the meeting that Lloyd Blankfein, chief executive of Goldman Sachs and head of the Financial Services Forum bankers’ group which arranged the session, emailed the central banker to try to smooth relations, people familiar with the matter said.

On Sunday, 48 hours after the contretemps, Mr Carney delivered a speech to global bankers at the Institute of International Finance, warning them “it is hard to see how backsliding [on implementing new capital rules] would help” the global economy.

“If some institutions feel pressure today, it is because they have done too little for too long, rather than because they are being asked to do too much, too soon,” he said.

Mr Dimon told Mr Carney that many of the rules discriminated against US banks and he was going to continue to use the phrase “anti-American”, first used in a Financial Times interview this month, because it seemed to resonate with people who might be able to modify the reforms.

In his speech, Mr Carney said: “Authorities are increasingly hearing concerns about the pitch of the playing field for Basel III implementation. Everyone is claiming to be a boy scout while accusing others of juvenile delinquency.”

He added: “However, neither merit badges nor detentions will be self-selected but, rather, determined by impartial peer review and mutual oversight.”

Exclusive Response from JP Morgan

The dispute was over rules agreed by the Basel group of international regulators that would force all banks to hold 7 per cent core capital against risk-weighted assets. The biggest face an additional surcharge of up to 2.5 per cent.

Financial Times did not capture a response from Jamie Dimon but I managed to do so. Please consider this exclusive video straight from the closed door meeting at the Institute of International Finance.

Germany's Top Judge Throws Major Monkey Wrench Into Leveraged EFSF Machinery, Demands New Constitution and Popular Referendum for Further Powers

The major story of the day is the leveraged EFSF is dead without a popular referendum and a new German constitution says Germany's top judge.

Please consider German turmoil over EU bail-outs as top judge calls for referendum

Germany's top judge has issued a blunt warning that no further fiscal powers may be surrendered to Europe without a new constitution and a popular referendum, vastly complicating plans to boost the EU's rescue machinery to €2 trillion (£1.7 trillion).

Andreas Vosskuhle, head of the constitutional court, said politicians do not have the legal authority to sign away the birthright of the German people without their explicit consent.

"The sovereignty of the German state is inviolate and anchored in perpetuity by basic law. It may not be abandoned by the legislature (even with its powers to amend the constitution)," he said.

"There is little leeway left for giving up core powers to the EU. If one wants to go beyond this limit – which might be politically legitimate and desirable – then Germany must give itself a new constitution. A referendum would be necessary. This cannot be done without the people," he told newspaper Frankfurter Allgemeine.

The extraordinary interview comes just days before the Bundestag votes on a bill to revamp the EU's €440bn bail-out fund (EFSF), enabling it to purchase EMU bonds pre-emptively and recapitalise banks.

Carsten Schneider, finance spokesman for the Social Democrats, demanded that Chancellor Angela Merkel and finance minister Wolfgang Schäuble clarify their "true intentions " before the vote on Thursday.

"A new multi-trillion programme is being cooked up in Washington and Brussels, while the wool is being pulled over the eyes of Bundestag and German public. This is unacceptable," he said.

Prince Hermann Otto zu Solms-Hohensolms-Lich, the Bundestag's deputy president and finance chief for the Free Democrats (FDP) in the ruling coalition, expressed outrage over the secret plans.

"Unless the German finance minister can give an immediate assurance that there will be no leveraged formula, I will not vote for this law. We might as well dispense with months of negotiations if all this means is that the Bundestag will be circumvented and served cold left-overs," he said.

The accusation that German leaders are conspiring with EU officials to emasculate the Bundestag is highly sensitive, going to the core of the raging debate in recent months over EU encroachments on German democracy.

The German court has already killed eurobonds. Now, if the top judge's call stands, leveraged EFSF just bit the dust as well.

Clearly the German court has had enough of Chancellor Angela Merkel, her cronies, and all the politicians who want to rob German taxpayers for their own agenda.

Barclays Capital Changes Stance, Now Sees Additional UK Quantitative Easing

Damn the price inflation, the massive UK housing bubble, and the fact that previous rounds of Quantitative Easing did not do the US or UK any good, expect more QE says Barclays Capital Research.

Via Email, Barclays says Monetary Policy Committee set for November QE boost

We are changing our UK monetary policy forecast, and now expect the MPC to announce an expansion of QE at its November meeting. We think additional asset purchases of £75bn will be announced within an overall additional facility of £150bn. As a consequence of this change, we have pushed back our forecast for the first rise in Bank Rate into 2013.

Why expect more QE?

The case for more QE is relatively straightforward. In the August Inflation Report the MPC’s modal projection was for inflation to fall below target in the medium term, albeit with risks skewed slightly to the upside. This forecast was predicated on expectations of GDP growth of 0.8% q/q in Q3 (factoring in a strong rebound from an erratically depressed Q2) and 0.5% q/q in Q4. Growth in H2 now seems likely to be much weaker than this, however. We are expecting growth of just 0.2% q/q in each of Q3 and Q4, while the MPC itself has said the forward indicators for Q4 suggest growth could be zero. Mechanically, this implies that the degree of spare capacity in the economy will be higher for longer, and that without further monetary easing inflation is more likely to fall substantially below target in the medium term.

This forecast assessment is consistent with the message from the minutes of the September MPC meeting. Most MPC members appear to have become alarmed at the deterioration in the growth outlook, believing that the decision on monetary policy had become “finely balanced” and that it was “increasingly probable” that QE would have to be resumed. The consensus view in September seemed to be that a further deterioration in the outlook would mean that additional QE was warranted. The various demand and confidence indicators published since that meeting suggest the outlook has indeed deteriorated further.

Whatever the reason, more QE cannot possibly do the UK any good. It will not help growth or hiring any more than it did in the US, which is to say none.

In fact, global QE exacerbated a bubble in the stock market and commodities. Bernanke since abandoned QE in favor of "Operation Twist" and that policy has failed already as well.

Central bankers never learn on their own accord, from others, or from history.

IMF Needs Funding; My Dear Darling

Things are so dire the IMF is out of cash. Don't take that from me, take it from Christine Lagarde, head of the IMF.

The Telegraph reports IMF may need billions in extra funding, says Lagarde

Christine Lagarde said the money available to the organisation “pales in comparison to the potential financing needs of vulnerable countries”.

In the wake of the global credit crisis, the funding of the IMF tripled and Britain’s exposure to it rose to £20 billion. This figure is poised to rise again if financial troubles engulf bigger economies such as Italy and Spain.

Yesterday, Alistair Darling, the former Labour chancellor who was in office during the previous crisis in 2008, warned that the problems facing the global economy were worse than three years ago.

“There are lessons to be learnt, and they are not being learnt by those responsible at the moment,” he said. “Lehmans [the investment bank that collapsed in September 2008] taught us one thing which is if you know there is a problem, take action, sort it out [in a way] that is more decisive than people expect if you are going to stop it.

My Dear Darling

My dear Darling, you are a complete fool (but no, I don't love you anyway). Here are the "Lessons of Lehman"

Lessons of Lehman

Lehman was overleveraged
Lehman went under
Lehman should have gone under
The world did not end


Darling continues ....

“The problem with the Greek crisis is that it has been allowed to run on and on and on.”

I happen to agree with that Darling sentence, unfortunately I completely disagree with the context.

The smart thing to do would have been to let Greece default. It is now clear Greece is going to default anyway.

History will show the world will not end. It will also show that bailouts to date have done nothing but harm.