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238 Years Of The (Dis)United Kingdom

by Tyler Durden
As the World anxiously awaits the results of today's Scottish Referendum for independence from The United Kingdom, we thought a little context on just how many 'nations' have left over the last 238 years...

Source: GlobalPost
*  *  *
And As The Onion reports,

Projecting from the rate of territorial decline over the last two centuries, experts predicted Thursday that the British Empire will be reduced to an area of eight acres surrounding Buckingham Palace by as early as 2050.
“Considering the loss of its colonial possessions around the world over the years, as well as Scotland’s current independence campaign, we project that the once vast and mighty British Empire will soon reach only a few hundred feet beyond the property lines of the royal palace,” said Oxford University political science professor Patrick Withers, adding that within 35 years, the sum total of British-held territory will likely extend from Upper Belgrave St. a few blocks west of Buckingham Palace to just a small fraction of St. James’s Park to the east.
“According to even the most generous estimates, the England of 2050 will no longer include the British Museum, most of the River Thames, or the Houses of Parliament, which will present extraordinary difficulties in governance and sustaining British identity at all.”
Withers went on to say that within 100 years, the British Empire may be reduced to the Queen’s throne room and part of the hallway outside.

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Italy’s Growing Debt Looms Over European, and Global, Economies

By Ian Talley

Looking at Italy’s ballooning debt, Germany’s reluctance to allow the European Central Bank free rein on the cash lever makes some sense.

The International Monetary Fund on Thursday cut its outlook for the Belpaese again, forecasting a 0.1% contraction instead of 0.3% growth this year.  That means a third consecutive year of economic shrinkage.

Absent Teutonic market pressures that ECB action relieves, Rome may keep on its current path. (The failure of the government to move ahead with needed policy adjustments has led to a short term for Carlo Cottarelli, the IMF’s former Fiscal Affairs chief, as Italy’s budget watchdog. He’s announced an October departure.)

Perhaps like others in Europe, the IMF has consistently been optimistic about Rome’s ability to make the tough economic changes necessary to spur growth and cut debt levels. As a result, the fund’s also been consistently wrong. Its median forecast error for the past eight years is 1.6 percentage points above actual gross domestic product growth.

“While growth outcomes in Italy have sometimes tended to be worse than projected, the current growth projections are in line with consensus but below the authorities’ forecasts,” the IMF said in its latest annual economic review of the country.

At least for now. But the fund is honest about the risks. Deep structural changes—such as simplifying labor contracts and a more efficient judicial system—are urgently needed to secure a recovery and spur growth, the fund warns.

“The risks are tilted to the downside,” it adds. “Italy’s high public debt, large public financing needs and elevated [nonperforming loans] leave the economy vulnerable to financial contagion and/or low growth and inflation.”

Three years of Europe’s third-largest economy shrinking has pushed debt levels dangerously ever higher. It’s not a negligible risk for the rest of the continent, or for the global economy.

The IMF has had to repeatedly push its forecasts of peak debt higher and farther into the calendar, a mountain of obligations that risk overwhelming the country’s ability to pay in the years ahead, especially if the government can’t generate the political momentum for a raft of economic policy reforms.

Without structural changes to the economy, the fund projects Italy’s debt will continue to rise:

And so will the country’s need to raise more cash:

Italy has been somewhat insulated. First, by Europe’s bailout facilities and the ECB’s vows to “do whatever it takes.” Secondly, Italy’s debt has a long-term structure, meaning there aren’t immediate financing needs.

But, the IMF warns, the country remains vulnerable to a loss in market confidence given the size of its refinaning needs, which would push up borrowing costs. As the past several years have shown, it’s also exposed to growth shocks such as those that could come from the Ukraine/Russia crisis.

“In addition to being a drag on economic growth for the region and beyond, further unrest could also trigger large spillovers on activity in other parts of the world through a renewed bout of increased risk aversion in global financial markets, higher public spending or revenue losses, or disruptions to commodity markets, trade, and finance,” the IMF told global finance leaders Wednesday.

In stress tests, the IMF estimated that Rome’s debt trajectory could hit nearly 150%—up 15 percentage points from current levels—if Italy’s economy were to contract by an average of 1.3% over the next couple of years or if a banking crisis forced the government to bail out the financial industry.

Given that such a scenario would likely send shockwaves around the world, Italy’s sluggish efforts to restructure its economy are likely to be a topic at the Group of 20 meeting this weekend in Australia.

A senior U.S. Treasury official recently told reporters Europe’s lackluster growth would be a top priority at the meeting. “We’ve emphasized the need to boost domestic demand in Europe, and we’ve underscored that it will require implementation of more accommodative measures across the full range of macroeconomic policies,” the official said.

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European Sovereign Debt Levels to GDP Before and After the Bank Bailouts

by Jesse

What is even more clever than lining your pockets by ballooning the financial system into a great bubble by fraud and bad governance?
Getting the victims and bystanders to pay the price of your perfidy, and shifting the anger of the people to some unfortunates,  while 'reforming' the system to make it even more efficient at looting so that you can do it all over again.
No wonder that any movement that threatens the status quo in the least bit gets these white collared reivers and their pampered princes in such a lather.  It is important to make people think that no one else cares, and that they are alone.
Such a parcel of rogues in a nation.

"The sudden explosion of European sovereign debt is the direct and indisputable result of all our political parties deciding they would safeguard their mates’ and their own personal wealth (it is the top 10% who hold the bulk of their wealth in the financial products which would be destroyed in a bank collapse. NOT the rest of us!) by bailing out the private banks and piling their unpaid debts on to the public purse.
So whatever the trigger of the next crisis may be, they know any solution which saves the wealth and power of the over-class will have to involve piling new, private-bank bad-debts on to already indebted sovereigns and that, our leaders must be keenly aware, will not be easy to force on an already angry public. They know a whole range of the assurances they might like to give us about what must be done when the next crisis hits and how those things will undoubtably save us, will not be so easy to shove down people’s throats...
I think one of the cleverest things the 1% have done over the last few years is the way they have created a relentless public discourse, via their paid political front-men and women and their media empires, to insist on the need to ‘fix’ and protect the system, and the extreme danger to us all should the system not be ‘saved’. This has served as a perfect cover for making sure that not enough people have noticed that the system is, in fact, being gutted and replaced by something that better serves the interests of the 1%. We have not been fixing the banks, we have been feeding them."

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Sell the Rumor and Buy the News?

by Tom Aspray

The markets appear to have survived the long awaited FOMC meeting as the financial media has been obsessed over what the Fed may or may not say. Much of the selling in the past week seems to have been related to speculation that the wording of their announcement would change.

Some may end up regretting their selling as I speculated Monday that it was maybe “a sell the rumor and buy the news situation.”  Having a plan and sticking to it will help you avoid emotional selling. Though the major averages did close higher, they gave up much of their post meeting gains. The S&P 500 was showing double digit gains but closed up just 2.60 points.

The market internals were pretty much flat as the McClellan oscillator rose only slightly to -108. A strong close above the +40 level would be bullish. In early trading, the S&P futures are showing nice gains as are the EuroZone markets. With Wednesday’s close, the technical evidence had not confirmed that the correction was over but in my estimation the odds are about 60/40 that it is over.

A strong close either Thursday or Friday will shift the balance of evidence in favor of a new uptrend. Let’s look at the technical evidence and also how the market leading PowerShares QQQ Trust (QQQ) has reacted to the other FOMC meetings in 2014.

Click to Enlarge

Chart Analysis: The Spyder Trust (SPY) shows Wednesday’s wide range and the formation of a doji.

• The resistance that connects the July and early September highs is now in the $202 area with the daily starc+ band at $202.74.
• The monthly projected pivot resistance is at $207.63.
• There is minor support at $198.38, which was Monday’s low.
• The monthly pivot is at $197.36 with the monthly projected pivot support at $193.90.
• The S&P 500 A/D line has edged slightly above its WMA as it turned higher after testing the support at line b.
• The A/D line did make a new high in early September.
• The daily on-balance volume (OBV) has moved back above its WMA but is still below the bearish divergence resistance, line c, that goes back to late July.
• There is good OBV support at line d and the weekly OBV is positive.

The SPDR Dow Industrials (DIA) made a new high yesterday as the resistance at line e, was overcome.

• The daily starc+ band is now at $172.82.
• The weekly, along with the quarterly projected pivot resistance, are in the $175.34 area.
• There is minor support now at $170.93 with the 20-day EMA at $170.20.
• A close below last week’s low of $169.40 would return the focus on the downside.
• The Dow Industrial A/D line has moved strongly back above its WMA and is not far below its all time high.
• The volume Wednesday was double the daily average and the OBV is rising sharply.
• The downtrend in the OBV, line f, has been broken but the OBV is still below the July high.
• The weekly OBV (not shown) will make a new high this week with a positive close.

Click to Enlarge

The Powershares QQQ Trust (QQQ) is up 14.9% YTD as it made new highs for the week on Wednesday.

• The daily starc+ band and the quarterly pivot are in the $101.30 area.
• The monthly projected pivot resistance is at $103.88.
• The monthly pivot at $97.86 was almost reached at Tuesday’s low.
• The support from the July high (line a) and the uptrend, line b, are in the $97.50 area.
• The Nasdaq 100 A/D has turned up but is still slightly below its WMA.
• The daily OBV has moved back above its WMA, which is a positive sign.
• The prior FOMC meeting periods have been highlighted on the chart.
• In March, the QQQ held up well for a few days but reversed to the downside the following Monday.
• At the time, the A/D was in a solid downtrend (line c) and just barely made it back to its WMA.
• The OBV was already in a well established downtrend, line d, and had made a series of lower lows.
• At the June meeting, the QQQ was in a sideways range.
• Both the A/D line and OBV were in solid uptrends (see arrows), which was a positive sign.
• As for the current situation, the chart is more similar to March.
• The technical studies, however, do look more positive as they are still in uptrends but not as strongly as they were in June.

What it Means: It will be important for the next two days to keep an eye on the market internals as one day with 3-1 positive A/D numbers will be a strong sign that the correction is over.

Conversely, if the market rallies on just slightly positive A/D numbers, it will suggest that the trading range is not over yet.

How to Profit: Should be long the PowerShares QQQ Trust (QQQ) $86.88 and would add a 25% long position in at $97.52 or better, stop at $92.89.

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