August 5: The crash we had to have

Greece 2 Year 5 Year 10 Year
Portugal 2 Year 5 Year 10 Year
Ireland 2 Year 5 Year 10 Year
Spain 2 Year 5 Year 10 Year
Italy 2 Year 5 Year 10 Year
Belgium 2 Year 5 Year 10 Year
France 2 Year 5 Year 10 Year
Germany 2 Year 5 Year 10 Year
  • Anatomy of the crash. FT
  • Barosso pushes the panic button. Letter (h/t Calculated Risk)
  • Italy is a major problem. WSJ
  • Italian police raid rating agencies. Zero Hedge
  • Now Spain pulls its bond auction. Zero Hedge
  • ECB buying Italian bonds. Zero Hedge
  • Interbank liquidity drying up. Pragmatic Capitalism
  • On the edge, again. Tim Duy
  • BNY Mellon charges to take deposits. Reuters Yes, charges
  • China’s middle class revolt. FT
  • Crises of government. FT
  • Currency takes the cream off Rio. FT
  • Infrastructure blues. Adele Ferguson
  • PC on productivity. Stutchbury
  • Commodities to withstand slow growth. Bloomberg
Houses and Holes
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  1. Ouch ! A real good news day !

    Think i might go back to sleep after i check my stock pile of baked beans.

    • Yeah ,Just released..”Crash Bandhitmute” 2
      the wrath of the cortex game..
      Grab a seat this could be as intense as the first….JR

  2. Extreme measures to discourage saving and force people into tge markets! Desperate days.

    “Meanwhile, short-term rates went negative, as measured by one-month Treasury bills, thanks in part to an announcement by Bank of New York Mellon that it would begin charging fees for cash deposits, sending hundreds of billions of dollars into the market. US two-year yields have breached 29 basis points, a record low.”

    From the FT link above.

  3. I see the miracle commodity is still heading north. Gina and Twiggy truly are God’s chosen people.

    • Their on Top of you’re world ,looking round to sell creation,
      And a homely explanation,they can mine
      Is the love that they’ve found in our lucky ground,
      Ore gloves ,put them at the pop of your world…
      Just for you Bud
      enjoy your day…cheers JR

  4. It’s either lingering faith that China can stay clear of the slowdown or a moral hazard play on China boosting its infrastructure spend to do just that.

    Either way, unless QE3 comes first, it’s gonna crack too.

    • a moral hazard play on China boosting its infrastructure spend to do just that.

      In a crisis, that’s all they know what to do. Start building stuff like crazy to keep the economy pumping. How many times can they do it?

        • So you buy into the Chinese infallibility idea as well? At least, you agree that the China can continue investing for decades, regardless of whether the investments are economic?

          In other words, Chanos doesn’t get it, China is different.

          • You’re being overly binary. Chanos is about to be proved right. But only for the cycle. China can do it all again for another cycle and Chanos will be right again at the end of that one too.

          • Ok then, if China open the credit taps and re-light the investment boom after every cycle ad infinitum, why can’t the US do QE forever, and Europe announce bailouts forever.

            Why is China different? When do they stop? When they’ve concreted over the entire country?

          • The Lorax. I think China will keep going until they either run out of money (which is what basically has happened to the debt ridden west) or the income disparity created by their form of stimulus gets so bad that there is social unrest. In terms ot time, it can’t be that long.

          • “When do they stop? When they’ve concreted over the entire country?”

            90% of Japan’s coastline is concreted. I think China has a long way to go to catch up.

  5. Precious Bodily Fluids

    turbo rocket: US treasuries.

    rocket: the VIX, which had been pretty tame prior to today despite the rally into treasuries.

  6. Naturally Adam Carr can only find good news. Global growth is still going gangbusters in Adam’s universe.

    Other than that though there was no real news or data that could have sparked such massive moves – I’ve yet to find a catalyst. Maybe punters are just fed up with the constant displays of political ineptitude. Who knows? Not that it matters, but the data was actually quite good. German factory orders surged 1.8 per cent in June after a 1.5 per cent jump in May and US jobless claims were steady at 400,000. Indeed US chain store sales rose at a healthy 4.6 per cent annual rate in July or 3.5 per cent excluding gasoline. These are good numbers.

  7. Just put 60% of our cash in to a term deposit for the next 9 months.

    Time to hedge those bets.

      • You did – We are following your advice 🙂

        TD rates still have not moved yet, but they will!

        We got 6.11% with Ubank for 9 months.

        Bank swap rate is currently around 5.00% for 6 to 12 months…

    • All of my super’s been sitting in cash for a while now. Won’t mean much eventually anyway.

      • Is that SMSF? I dunno what AMP has done with my super. 🙁 … but I have only about 2 years of super contributions.
        BTW, other than my super, all my savings/investments have been in cash for 1 1/2 year now – It is all about capital preservation – I am an early bird tin-foil cap wearer 🙂

    • Sandgroper Sceptic

      9 months? 5 years or keep it dry so you can wade in and buy the upcoming market specials. ASX3000 here we come!

      • 9 months suits our time frame at the moment.

        Plus that is only a portion of our cash, I wouldn’t want to be putting all of it out there in that risky market right now!

      • I sold out stocks a few months before the GFC and then loaded up with iron ore miners, oil, gas and gold near the bottom which I sold about 12 months later. It worked quite nicely. It looks like the same trick may soon be possible again. My super is 9:1 in cash with the rest in energy stocks.

    • following bond market lead switched my super into 100% cash allocation.

      it is “the crash we have to have” — GFC round 3, when gov stimulus programs finally run out of puff and time for austerity?

      no one like it, but no one know how we can dig ourselves out of this big mess either.

  8. If we get a GFC replay, which is not that unlikely, it will be interesting to watch our unraveling mining investment boom. The whole thing looks really bubbly and at the end of the day is supported by the Chinese credit bubble. Even a combination of a slight demand drop and more capacity coming online may wreak havoc. There will be a lot of frozen and burnt capital and mine workers selling their negatively geared investment properties.