Map of the day...

...U.S. Carrier Group locations...

Chart of the day...

...emphasizing the point of the previous post...these things have a tendency for reversion...

To laugh or cry...

...Austerity does what again?

The International Monetary Fund is to admit that it has made serious mistakes in the handling of the sovereign debt crisis in Greece, according to internal reports due to be published later on Wednesday.

Documents presented to the Fund's board last Friday will reveal that the Washington-based organisation underestimated the damage austeritywould cause to the eurozone country, which has required two bailouts in the past three years.

The Wall Street Journal reported that the papers would say that financial support from the Fund, the European Central Bank and the European Commission had bought time for Greece but had only been made possible because the IMF had bent its own rules to make the country's debt look more sustainable than it was. According to the WSJ report, Greece failed to meet three of the Fund's four tests to qualify for help.

Closer...

...to the end of the "Great Rate Compression".  The last countries to attempt similar monetary easing as the developed nations will (of course) be the most damaged by the eventual global interest rate expansion (some would say "normalization")

Its not here yet.  But as the great Mark Cuban said "in business and in life, there are three I's:  Innovators, Imitators, and Idiots, and it helps to know which of those categories you fall into".

I will refrain form labeling entire countries under these guidelines, but as always, the maximum benefit accrues to those with initiative.

India’s bond yield held at the lowest level in a week as easing inflation and slowing economic growth spurred speculation the central bank will add to three interest-rate cuts this year.

Gross domestic product climbed a decade-low 5 percent in the 12 months ended March, below the 10-year average of about 8 percent, official data showed last week. Reserve Bank of India Governor Duvvuri Subbarao said May 14 that inflation at a 41-month low of 4.89 percent in April would be taken into consideration at the next monetary policy review.

“Sovereign bond yields have eased sharply in anticipation of easier monetary policy and lower inflation,” said Gaurav Kapur, a senior economist at Royal Bank of Scotland Group Plc in Mumbai. “While the RBI may not reduce rates on the 17th of June in its mid-quarter review of monetary policy, it is likely to guide that the room for policy rate cuts can increase.”

Deposit wars.

Its Money Market Funds vs. Money Center Banks in a winner take all contest.

My money is on the big boys.

So expect further pressure for regulatory apparatchiks to force assets to the Money Center Banks...because they are such excellent stewards of capital...

The Game...

...is this:  Will the global rise in equities and corresponding wealth effect force the current broken Monetary Channel back into something resembling a healthy banking system?

This is happening quickly in the U.S., less so in the other major economies and Europe as usual being the laggards.  So I fully expect the U.S. to benefit from this global rotation and continue to lead.

We are still in the land of negative real yields.  The Fed's main concern is getting out of this predicament and returning to "normal" monetary policy and creation.

A little late...

...to the party, but certainly a shot across the bow for China, who regards the Continent as its own Saudi Arabia.  I have told readers here that Africa is THE chessboard for the world now, and proxy kinetic conflicts and more prosaic financial battles will determine the winner.

In Japan's case, they cannot afford to appear weak given China's position and will happily open another theater of competition to distract from the Sengoku issue.

Full article here.

Japanese Prime Minister Shinzo Abe pledged 3.2 trillion yen ($32 billion) to Africa as his government seeks to catch up with China in pursuing resources, markets and influence on the continent.

Abe announced the five-year commitment of public and private support in a speech today at theTokyo International Conference on African Development. Officials from about 50 nations are attending the meeting, held every five years, which is the biggest African development event outside the continent since it began in 1993.