Saturday, July 4, 2015

Three lines on McEwen Mining

IKN, 3 June 2015 - McEwen Mining files a shelf prospectus to raise $200M. *

IKN, 18 June 2015 - McEwen Mining decides to initiate an annual dividend.**

IKN, 2 July 2015 - McEwen Mining no longer meets NYSE continued listing requirement.

Someone please tell Rob McEwen that I've watched gold producer stocks go to $0.00 before, and as far as I'm concerned he's been doing a damn good job of imitating them.

* - shelf prospectus means they want to raise cash.
** - initiating a dividend means they want to give away cash.

Friday, July 3, 2015

Greek referendum prediction, and why

I'm just some bozo who's never even been to Greece, so my opinion is about as worthless as one from Doug Kass or Bill Ackman. But maybe I can make you think about something.

I'm pretty much certain that the Greeks vote Yes this Sunday. Old pensioners are always a militant voting bloc, and I think the grayhairs will vote en masse to continue in the ECU and EZ with the hope that Draghi and Merkel will continue paying their pension cheques.

Old people are never never never never the demographic of revolution and change. They're the demographic of piddlesome fear and cowed obedience.

Now, here's the thing: there has been a lot of 1s and 0s wasted this week on speculation about "what's next if Greece votes No", but nobody has bothered to ask how Europe digs itself out of its abysmal clusterfuck if Greece votes Yes.

Friday videos: the most obnoxious summer hit single of ever

Yay! Carly Rae!

Oh and the most obnoxious summer hit single is written and performed by a Canadian, thank you. Because we live through six fucking months of hideous winter every year is why.

It's like the British writing good songs about sex because they only get it 2-3 times in their life. That sort of thing.

Thursday, July 2, 2015

And some Greece news

And for those yanks who haven't sufficiently piddled their frilly pink panties yet, here's more Greece news:

FT Alphaville - Greece shows the ECB's stress tests were nonsense. God DAMN it, when a neocon plutocrat gets roasted this bad by the Financial Times, you know he fucked up:
Remember the Comprehensive Assessment? You know, the European Central Bank’s report in October 2014 that said three Greek banks were adequately capitalised to survive a stressed scenario thanks to their fundraising efforts earlier in the year, while the fourth was only off by five basis points?

We ask because the ECB seems to have forgotten. Otherwise, we can’t think of why the euro area’s central bank is choking off Greek lenders and effectively forcing the Greek government to impose capital controls.
And they get to the nub of the problem:
The methodology may not have been perfect but the ECB’s leaders can’t endorse the results without also agreeing that the banks that passed the tests will have unrestricted access to liquidity facilities from the central bank. It’s a trade-off: you get government support in a crisis in exchange for regulatory approval that your business is sound. That, in turn, ought to prevent the risk of runs.

In Greece, the ECB doesn’t seem to be honoring this deal. Forget whether or not Greece would be better off leaving the euro. The government has said it doesn’t want to leave and, strictly speaking, there is no reason it would have to leave even if it defaulted on certain outstanding sovereign debts. The only thing that would force an exit would be if the banks were in danger of failing and the government decided to restore monetary sovereignty in order to provide liquidity. (Default on only some debts wouldn’t have to hit the banks.)
Basically, the stress test is meaningless if it doesn't take into account the possibility of the ECB refusing to intervene in a member state's bank run. And that is the ECB's job, the ECB being Greece's central bank - up until this week, when they decided to quit the job.

Why is this bad?
The ECB’s unwillingness to do its job as a lender of last resort is bad for Greece but it’s even worse as a precedent for other countries in the euro area. Plenty of other countries share Greece’s bad demographics, slow growth, and lots of public debt owed to foreigners, especially once QE proceeds further. Would they too be forced out of the single currency the next time growth ticks downward and the people elect a government unfavoured by elites?
There's your political contagion right there. It's hard to firewall your own plutocratic conspiracy.

More news

Well, I aced yet another Econ test, so in celebration here's some news:

New Deal Demoncrat - June unemployment report. Nonsupervisory wages continue to go nowhere, because the plutocracy has won its battle against the workers. I linked to a Fed research paper a while ago that agreed we wouldn't see wage growth even with an economic recovery, so yes the Fed already knows.

Calculated Risk - June unemployment report and June unemployment report 2: the employening. Remains on trend, ignore doomers.

WSJ RTE - US construction spending hits post-recession high. This is a component of GDP.

Caixin - Chinese government once again tries to pull market out of nosedive. Is it a bubble if valuations are fair? Maybe the Chinese just aren't made for stock market investing?

Today's vix comment

So I bought on Tuesday, USA bounced Wednesday.

But I sold the vix short today, cos if the USA is closed Friday, then given their panty-piddling response to Greek events earlier this week, I'd expect a lot of sissy Americans to go buy short-date downside protection today. And that'll mean $VIX intraday spiking, and maybe the VIX futures term structure backwardating.

So $300 isn't a bad win for 2 days' work.

$VIX itself is doing this:

Which is a blow-up to +3SD on Monday, a retract back down to the EMA(10) this morning, and now I wouldn't be surprised to see a blow-up back at least to +2SD.

I assume if Greece votes no this weekend, the US market will reek of urine-soaked pink panties on Monday, so there might be some opportunity in the future to short $VIX if you so desire.

Though last year $VIX was backwardish through the second half of the year, so XIV actually lost money from last June thru to this Feb. I dunno why, but I wouldn't want to sit through that again.

Wednesday, July 1, 2015

USA and Sweden on one graph

This is either funny or all those stupid charts have been destroying my brain cells:

Some news

Gotta do a calc assignment and study for my first Micro test, and thankfully the Canadian market isn't open anyway and I feel pretty good about my present allocations so I can walk away from the computer, but even still here's some news to get you started on the day:

Calculated Risk - auto sales over 17M. And on this news Whitey dumps Ford 4% because blah blah Greece. God it's so damn easy to make money in this market: just don't do what the stupid people are doing.

Paul Krugman - Greece over the brink. Quote:
Don’t be taken in by claims that troika officials are just technocrats explaining to the ignorant Greeks what must be done. These supposed technocrats are in fact fantasists who have disregarded everything we know about macroeconomics, and have been wrong every step of the way. This isn’t about analysis, it’s about power — the power of the creditors to pull the plug on the Greek economy, which persists as long as euro exit is considered unthinkable.
It's also about race, Kruggers. You can see it in the subtext of every article in Bild and every article in FT. It's always framed as the superior Teutons versus the swarthy, thieving, lazy Mediterraneans.

Time - more Stiglitz on Greece. Quote:
“The creditors should admit that the policies that they put forward over the last five years are flawed,” says Stiglitz, a professor at Columbia University. “What they asked for caused a deep depression with long-standing effects, and I don’t think there is any way that Europe’s and Germany’s hands are clean. My own view is that they ought to recognize their complicity and say, ‘Look, the past is the past. We made mistakes. How do we go on from here?’”

The most reasonable solution Stiglitz sees is a write-off of Greece’s debt, or at least a deal that would not require any payments for the next ten or 15 years. In that time, Greece should be given additional aid to jumpstart its economy and return to growth. But the first step would be for the troika to make a painful yet obvious admission: “Austerity hasn’t worked,” Stiglitz says.
Yeah well don't hold your breath buddy. You identified the idiocy of the IMF 14 years ago and nothing changed, and you and me and Kruggers all know it's because the IMF aren't there to make the world a better place. They're there to rule as an unelected kleptocratic elite.

Brad DeLong - the "hangover theory" of the 2008 crash doesn't work because of timing. The charts prove it. And here's a Krugman quote:
Liquidationist views played an important role in the spread of the Great Depression—with Austrian theorists such as Friedrich von Hayek and Joseph Schumpeter strenuously arguing, in the very depths of that depression, against any attempt to restore ‘sham’ prosperity by expanding credit and the money supply. And these same views are doing their bit to inhibit recovery in the world’s depressed economies at this very moment….
In fact, certain people today still rail on about "sham prosperity by expanding credit" (a.k.a. dishonest systems eventually coming apart at the seams). But look, here comes the first-year economic theory!:
Here’s the problem: As a matter of simple arithmetic, total spending in the economy is necessarily equal to total income (every sale is also a purchase, and vice versa). So if people decide to spend less on investment goods, doesn’t that mean that they must be deciding to spend more on consumption goods—implying that an investment slump should always be accompanied by a corresponding consumption boom? And if so why should there be a rise in unemployment?

Most modern hangover theorists probably don’t even realize this is a problem for their story. Nor did those supposedly deep Austrian theorists answer the riddle. The best that von Hayek or Schumpeter could come up with was the vague suggestion that unemployment was a frictional problem created as the economy transferred workers from a bloated investment goods sector back to the production of consumer goods. (Hence their opposition to any attempt to increase demand: This would leave ‘part of the work of depression undone,’ since mass unemployment was part of the process of ‘adapting the structure of production.’) But in that case, why doesn’t the investment boom—which presumably requires a transfer of workers in the opposite direction—also generate mass unemployment? And anyway, this story bears little resemblance to what actually happens in a recession, when every industry—not just the investment sector—normally contracts….

The hangover theory, then, turns out to be intellectually incoherent; nobody has managed to explain why bad investments in the past require the unemployment of good workers in the present. Yet the theory has powerful emotional appeal. Usually that appeal is strongest for conservatives, who can’t stand the thought that positive action by governments (let alone—horrors!—printing money) can ever be a good idea. Some libertarians extol the Austrian theory, not because they have really thought that theory through, but because they feel the need for some prestigious alternative to the perceived statist implications of Keynesianism. And some people probably are attracted to Austrianism because they imagine that it devalues the intellectual pretensions of economics professors.
Speaking of which, I'll just put a link to a good book right here. It's a classic and it's been around for 50 years, you might want to read it.

Raw Story - did Jesus ride dinosaurs? Bobby Jindal's twitter Q&A hilariously backfires. And there's still some backwater corner of the plutocracy that hasn't yet learned to never ever give the masses a voice:
Which spice girl is your favorite and if you had a chance, what laws would you pass to oppress them for having a uterus? #AskBobby
— Zora Neale Thirstin (@CarefreeBlkGirl) June 30, 2015"

#askbobby Can I have your stuff after the Rapture?
— Rabid Badger (@rabidbadger) June 30, 2015

#AskBobby What's your all-time favorite exorcism? Why?
— Matthew Thomas Hall (@MatthewHallKDM) June 30, 2015

When are widely disliked famous people going to learn how Twitter works?!? #AskBobby
— Katie Rogers (@katiearog) June 30, 2015
See Bobby, this is why they put "free speech zones" behind barbed wire and a riot police cordon, ten miles away from anyone. In the internet age fascists can no longer be populists, so don't bother trying.

Monday, June 29, 2015

Here's a vote on eurocontagion


Yeah Angela, I think you might want to rethink your strategy. Seems the market is voting with the professors of economics, and against the failed physics post-doc.

Speaking of which, damn I keep slapping my hand away from the "go short $VIX" button. I'd rather give it a couple days, and with shorting $VIX it pays to be late.

Greece opinion from people who know what they're talking about

If you want to read opinion on Greece, then you can either listen to neoliberal clowns on CNBC, Yale MBAs with an easy ticket into the corporate kleptocracy, or actual economists.

So here are some actual economists:

Joe Stiglitz - Europe's attack on Greek democracy. Quote:
In fact, European leaders are finally beginning to reveal the true nature of the ongoing debt dispute, and the answer is not pleasant: it is about power and democracy much more than money and economics.

Of course, the economics behind the program that the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) foisted on Greece five years ago has been abysmal, resulting in a 25% decline in the country’s GDP. I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece’s rate of youth unemployment, for example, now exceeds 60%.

It is startling that the troika has refused to accept responsibility for any of this or admit how bad its forecasts and models have been. But what is even more surprising is that Europe’s leaders have not even learned. The troika is still demanding that Greece achieve a primary budget surplus (excluding interest payments) of 3.5% of GDP by 2018.

Economists around the world have condemned that target as punitive, because aiming for it will inevitably result in a deeper downturn. Indeed, even if Greece’s debt is restructured beyond anything imaginable, the country will remain in depression if voters there commit to the troika’s target in the snap referendum to be held this weekend.

In terms of transforming a large primary deficit into a surplus, few countries have accomplished anything like what the Greeks have achieved in the last five years. And, though the cost in terms of human suffering has been extremely high, the Greek government’s recent proposals went a long way toward meeting its creditors’ demands.

We should be clear: almost none of the huge amount of money loaned to Greece has actually gone there. It has gone to pay out private-sector creditors – including German and French banks. Greece has gotten but a pittance, but it has paid a high price to preserve these countries’ banking systems.
Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, was Chairman of President Bill Clinton’s Council of Economic Advisers and served as Senior Vice President and Chief Economist of the World Bank.

Peter Dorman - a referendum on what to do yesterday. Quote:
As for the IMF, it was no secret that there has been a lot of tension between the technical staff and the politicians at the top. They have a policy, established after the Argentine fiasco, of not lending to insolvent states, but instead requiring writedowns from the creditors. Ah, but the creditors in the Greek case are the banks and governments that installed the IMF directors, so the policy is being flagrantly violated. Personally, I'm disturbed there have been no high-profile resignations on the part of the IMF economists. It's not like Blanchard couldn't pick up another job somewhere, for instance. Years down the road there will be memoirs saying "I argued against this behind closed doors", but when has that ever really mattered?
I'm not sure, but this might be the Peter Dorman at Evergreen State in Olympia.

Charles Wyplosz - the staggering cost of central bank dependence. The ECB isn't even an independent central bank, and so this is what you get as a result:
Furthermore, by joining the Troika, the ECB also chose to play a strange role. In normal programs, the IMF sits on one side of the table while the country’s authorities, the government and the central bank, occupy the other side. By being on the lenders’ side, the ECB found itself in the position of imposing and monitoring conditions. This is one aspect of the more general point made by De Grauwe (2011).

The deep reason for the Eurozone sovereign crisis is that the euro is a foreign currency for member countries. It also provides an example of how deeply politicized the ECB has become. No other central bank in the world tells its government what reforms it should conduct, nor how sharp should fiscal consolidating be. As a member of the Troika, the ECB was instructing Greece to carry out deeply redistributive policies, for which only elected politicians have a democratic mandate. In the end, it must accept the blame for poorly designed policies that have provoked a deep depression and its political consequences.

The decision to freeze ELA is taking this politicization process to a new height. In effect, the ECB is pushing Greece out of the Eurozone. Politicians may debate about the wisdom of making Greece leave. As non-elected officials, the people who sit on the Governing Board of the Eurosystem have no such mandate. A charitable interpretation is that they felt that many governments would harshly criticize keeping the flow of liquidity to Greek banks open after the Greek government in effect closed the negotiations by calling a referendum. This is true, but central bank independence is designed to prevent this kind of pressure.
Charles Wyplosz is professor of International Economics, Graduate Institute, Geneva; Director, International Centre for Money and Banking Studies; and a CEPR Research Fellow.

David Beckworth - was Grexit inevitable? There are hints in here about yet more central bank non-independence: really, it's not a European central bank, it's the German central bank. Quote:
Maybe the Eurozone crisis happened when it did because of colossal policy errors rather than being a necessary outcome of a flawed currency union. I make this argument in a new working paper and contend the policy errors were the ECB's two tightening cycles in 2008 and 2010-2011. These tightening cycles were a huge mistake and arguably what set in motion the Eurozone crisis. They helped precipitate the sovereign debt crisis and gave teeth to the austerity imposed on the periphery.

In early 2008 the Eurozone began contracting, as seen in the first panel of the figure below. The growth of total money spending, a broad indicator of monetary conditions, had started declining even earlier. With monetary conditions beginning to tighten and the economy slowing down most central banks would have cut interest rates. The ECB, however, did nothing and kept its target interest rate pegged at 4 percent. Moreover, as seen in the second panel below, the ECB was signalling a rate increase which further intensified the slowdown. Thus began the first tightening cycle of the ECB in early 2008. Finally, in July 2008 the ECB raised its target interest rate to 4.25 percent and kept it there for three months. This tightening cycle was arguably that shock the triggered the Eurozone crisis.

The second monetary policy tightening cycle began in late 2010 when the ECB began signaling again that it would be raising its policy rate to stem the burgeoning inflation. This too can be seen in second panel of the figure above. This expectation began stemming total money spending growth in early 2011. The ECB followed through on these expectations by raising its policy rate from 1 percent to 1.25 percent in April and then to 1.50 percent in July where it stayed for four months. This second tightening cycle occurred even though Eurozone was still recovering from the first recession and is arguably the shock the intensified the crisis in 2011.

As I show in the paper, these tightening cycles and preceded the financial panic of late 2008 and sovereign debt problems and appear to have given teeth [to] the austerity programs. How different would the Eurozone look today had the ECB had instead cut rates in 2008 and started its QE program back then? I think the Eurozone would be a lot different. And no, Grexit would not be an inevitable outcome. There would still be problems for the currency union, but they would problems that could be sorted out in an economy not beset by a depression.

The ECB, in other words, bears a lot of the responsibility for the impending breakup of the Eurozone. Keep that in mind this week as the Grexit comes to fruition.
David Beckworth is associate professor of economics at Western Kentucky University in Bowling Green, Kentucky.

Now that's all a rather different quality of commentary than the crap you're getting from talking heads, ain't it?

Chris Squire died.

BBC - Yes bassist Chris Squire dead at 67. Wow.

Sunday, June 28, 2015

Krugginator on Greece

Paul Krugman - OK, now it's for real. Quote:
OK, this is real: Greek banks closed, capital controls imposed. Grexit isn’t a hard stretch from here — the much feared mother of all bank runs has already happened, which means that the cost-benefit analysis starting from here is much more favorable to euro exit than it ever was before.

Clearly, though, some decisions now have to wait on the referendum.

I would vote no, for two reasons. First, much as the prospect of euro exit frightens everyone — me included — the troika is now effectively demanding that the policy regime of the past five years be continued indefinitely. Where is the hope in that? Maybe, just maybe, the willingness to leave will inspire a rethink, although probably not. But even so, devaluation couldn’t create that much more chaos than already exists, and would pave the way for eventual recovery, just as it has in many other times and places. Greece is not that different.

Second, the political implications of a yes vote would be deeply troubling. The troika clearly did a reverse Corleone — they made Tsipras an offer he can’t accept, and presumably did this knowingly. So the ultimatum was, in effect, a move to replace the Greek government. And even if you don’t like Syriza, that has to be disturbing for anyone who believes in European ideals.

Post #5000! And it's the Cookie Monster!

Here's a link to 46 minutes (plus commercials) of the Cookie Monster on BNN!

BNN - Brent Cook talking about the continuing gloom and horror of the junior gold scene.

You'd have thought post #5000 would have been something special. Like a retrospective of Mila Kunis pics. Well, truth be told I'm a little let down too, so I'll just add this:

Hey, gold went up tonight. Wonder why?

Hey. I wonder why gold just popped $10.

The Guardian - Greece crisis deepens as banks close for a week. Tsipras is going to hold a referendum where the Greeks get to vote on whether they want to be humiliated by Europe.

In the meantime, the rest of the world gets to watch whether Europe's "firewalls" are strong enough to hold back the collapse, and Greece doesn't actually have to leave the EZ. Like I said already, my interest is in Europe's nonexistent political firewall... let's see what happens there.

I think it all ends miserably, because:
The Greek government decided on Sunday night it had no option but to close the nation’s banks the following day after the European Central Bank (ECB) raised the stakes by freezing the liquidity lifeline that has kept them afloat during a six-month run on deposits.
That's not exactly a sign of a willingness to pursue constructive solutions.
The European commission said on Sunday for the first time in the crisis that it wanted to offer Greece debt relief, Tsipras’s central demand during the five months of stalemated talks. Reports from Berlin said that Angela Merkel and Fran├žois Hollande shared that view.
So... you are just playing a game of chicken, then? So, why did you waste everyone's time by picking a fight with a government whose finance minister wrote three different textbooks on game theory?

See, people: this is why you don't fight economists with failed physics post-docs and tax lawyers. Don't bring a fucking butterknife to a gunfight, Germany.

BBC - Greek debt crisis comes to a head. Quote:
As for the impact on the rest of the eurozone, corporate treasurers and wealthy individuals will wake up on Monday wondering if their money is safe in the banks of other weaker eurozone economies.
Cough cough contagion cough cough....
German Chancellor Angela Merkel and US President Barack Obama spoke about the crisis by phone, agreeing that it was "critically important" to help Greece remain in the eurozone, the White House said.
Hey Angela, if you feel this so strongly, you might want to talk to the ECB about that whole "freezing the liquidity lifeline" thing.

NYT Upshot - the next few days have the potential to transform Europe. Yeah, I doubt that. Oh, and quote:
Capital controls that limit people’s ability to withdraw and move money out of the country are, it is safe to say, not a sign of a healthy currency union. It would be hard to call the dollar the national currency of the United States if laws prevented me from taking Maryland dollars and depositing them in a Virginia bank.
Yeah well, the Euro is a failed currency union to begin with, because it doesn't have fiscal union or even a simple fiscal transfer. Good luck keeping the rest of the EZ together, guys!
But saying that this won’t be a Lehman Brothers-style economic catastrophe isn’t the same as saying it would be a good thing. In geopolitical terms it would push Greece closer to a hostile Russia. It would set a precedent that the European currency, and the European Union more broadly, is more fragile than its leaders would like the world to think.
That an American columnist clued into that last sentence there, oh so late in the game, means we should have a fun couple weeks on the markets.

Darn, I sure hope there's nobody short gold on margin out there....