Trading Desk reports “mayhem” in the AAA Eurozone markets

I just received this.
Seems money managers with fiduciary responsibility are holding off on buying any euro member securities since the 50% Greek haircuts were announced.

Our Trading Desk reports “mayhem” in the AAA Eurozone markets
– France 11bps wider
– Netherlands 6bps wider
France now 178bps over Germany
Increasing talk/fear of Eurozone break up and capitulation trades in AAA markets are widespread.
We are seeing no real demand for anything – even Germany.
Tomorrow’s Shatz auction looks a big ask with a yield of 30bps and no risk appetite out there.

SENATORS HAGAN, MCCAIN TO INTRODUCE REPATRIATION

Good report on this supposed ‘job creator’ here.

Hint, it’s not…

US Daily : Profit Repatriation Tax Holiday: Still an Uphill Climb (Phillips)

Published October 5, 2011

* Media reports indicate that Sens. Kay Hagan (D-NC) and John McCain (R-AZ) plan to introduce legislation to allow for a one-time tax holiday for repatriation of corporate profits from abroad. If such a plan were enacted, it would most likely increase dividend payments and share buybacks, potentially resulting in a slight easing of financial conditions. However, we would not expect a significant change in corporate hiring or investment plans: most firms with large amounts of overseas profits are likely to have adequate access to financing, so the availability of cash on hand is unlikely to be a constraint on investment at the present time.

* Repatriation legislation also still appears to face significant legislative hurdles. The most important may be its estimated cost; the official cost estimate of a repeat of the 5.25% temporary tax rate enacted in 2004 is nearly $80bn over ten years in lost revenue. A second hurdle is the interest some lawmakers have in saving such a tax break as an incentive for broader tax reform.

Shameless

DJN: US Senators Plan To Introduce Repatriation Tax Break Bill

By Kristina Peterson

October 5 (Dow Jones) — A bipartisan pair of senators plans to introduce on Thursday a bill proposing a tax break for U.S. companies that bring home foreign profits.

Sens. John McCain (R., Ariz.) and Kay Hagan (D., N.C.) will co-sponsor legislation that would create a repatriation tax holiday, reducing the corporate taxes that U.S. multinationals would pay when bringing home overseas profits, in an effort to boost the economy. Their bill, called the Foreign Earnings Reinvestment Act, would create an incentive for companies to bring back an estimated $1.4 trillion currently kept overseas, according to an advisory from their offices.

from prof Andrea Terzi

The US government currently owes about $14.2 Trillion. Who did we borrow that money from, and how did those financiers get that money?

Has that money always been on earth? If not, then where did it come from? Did somebody issue it into existence? If so, then by what authority did they do so, and for what reason do nations lack that authority?

This is an excellent question. Where does the money that the Government borrows come form? And the answer is: It comes from the Treasury and the Fed! And it cannot come from any other source. This is what so few people realize, perhaps because economists are too reluctant to explain.
 

When the Government ‘borrows’, it sells Treasury securities and receives reserves from banks. Bank reserves are deposits at the Fed owned by banks. Deposits at the Fed can only come into existence through two channels:
1. Government spending (e.g., when the Treasury buys output from business or pays federal employees); and
2. Fed lending (e.g., when the Fed makes loans to banks).
This means that the money that government borrows (bank reserves) ultimately comes from the Treasury or from the Fed.
 

This simple statement has significant consequences:
-The Government does not borrow money created by others,
-The Government does not borrow anything it cannot create itself,
-The Government has no functional need to borrow,
-The Government issues securities because if it did not, the banks would have an excessive amount of reserves and the interest rate would go to zero,
-When the Government borrows, it functionally makes monetary policy (in the same way as the Fed doing open market operations),
-Governments self inflict deficit and debt rules onto themselves that are causing the world economy to collapse
-Rules for governments that aim to promote jobs and prosperity should be:
1. Do not overtax the economy for any desired size of the government sector;
2. Let deficits grow until we reach full employment;
3. Do ‘quality spending’ to create jobs and control prices.