SABMiller FINALLY Manages To Take Over Foster's After Months Of Being Rebuffed

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You have to be ruthless and persistent to win in a hostile takeover, and that's what SABMiller has just proved.

Australian brewer Foster's has finally caved to a $10.2 billion bid from the UK-based brewer and bottler, after three months of telling them to shove off, according to the Wall Street Journal.

Here's all the drama that led up to the final deal:

SABMiller first tried back in June, but the $10 billion bid quickly rejected -- Foster's CEO John Pollaers later said it was "so far from reality, it wasn't worth engaging," according to the Wall Street Journal.

It just got more hostile from there. In August, Foster's rebuffed another $10 billion offer, saying that it "significantly undervalued" the company. 

Then it really got ugly. The brewer accused Foster's of making misleading financial statements and tried to get Australia's Takeovers Panel to intervene, but it refused the review.

SABMiller actually reduced its cash offer to $9.6 billion in another bid earlier this month, and was once against told that it was "inadequate." Foster's gave up the fight just over a week later after the bid was increased back over the $10 billion mark.

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HOUSE OF THE DAY: An Insane Chateau On Central Park Is Listed At $12.5 Million

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A former 19th century chapel-turned-cancer hospital-turned-nursing home-turned-apartment is back on the market for $12.5 million (via Curbed).

The apartment is being billed as an investment opportunity. Someone (a renter) is currently living there, but will move out if he has to.

Sitting on Central Park West, the apartment features neo-French Renaissance Chateauesque style Prewar design, five bedrooms, five bathrooms, spanning 5,000 square feet.

The home has an interior private elevator, a chapel great room with vaulted ceilings and peaked chapel windows.

There's a library and balcony sitting room, as well as stone columns, an arched gallery, paneled rooms, antique French stone floors, gold-leafed, plaster walls, gas and wood-burning fireplaces.

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Bad Economic Data Strikes Everywhere, As Europe Manufacturing Shows First Contraction In Over Two Years

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Not helping things today: Fresh barometers of the economy in the form of PMI data.

In China. the HSBC's Flash PMI Manufacturing reading came in at 49.4, sub-50 for the thrid straight month, a sign of persistent weakness.

And in Europe, same deal.

According to Markit, the continent is now slipping into contraction for the first time in two years.

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Should The New Facebook Terrify You? The SAIcast Break It Down

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Epic Fail On The Runway: Even Models Can't Walk In Those Shoes!

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When fashion week in New York City rolls around it's never hard to spot the models who are in for the event. 

They tower over the rest of us, their skin is perfect, and even in sweatpants they look put together.

It's a comfort to know they're not perfect.

Yes, even models fall. 

The combination of the highest shoes you've ever seen and a freshly waxed runway makes it difficult to stand- even famous supermodels like Naomi Campbell and Alexandra Tomlinson have had their less-than-graceful catwalk moments.

In honor of fashion week, we took a look at some big spills on recent runways.

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The NFL Has Fined A Falcons Player $40,000 For A Cheap Hit On An Eagles Player

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Falcons corner Dunta Robinson has been hit with a $40,000 fine for launching himself helmet-first at the head of Eagles receiver Jeremy Maclin last night.

He will not be suspended.

Last season, Robinson was fined $50,000 for a similar hit on Desean Jackson.

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White House Screws Up Jobs Plan Message

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Hours after top adviser David Axelrod asserted that President Barack Obama wants his jobs bill to pass Congress without amendment, White House economic adviser Gene Sperling said the opposite — that Obama would not veto a plan that only contained parts of his proposal.

On Good Morning America Tuesday, Axelrod said "we’re not in a negotiation to break up the package, and it’s not an à la carte menu. It is a strategy to get this country moving."

But Sperling told reporters today that if Obama is “presented with parts of his plan, his instinct would be not to reject things he favored but to come back and keep fighting and fighting to get the entire program,"according to POLITICO.

House Republicans have said they do not approve of Obama's plan in its current form, and intend to make significant modifications to the bill. House Majority Leader Eric Cantor categorically ruled out any tax increases to pay for the bill on Thursday, eliminating any chance the bill can pass in its current form.

The confusion is the latest miscue for Obama since the White House struggled with Republicans over the date of his speech to Congress to outline the plan. 

Obama will travel to Ohio today to try to build public support for his bill.

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The Most Miserable Cities In America

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The most miserable cities in America, according to Brookings, of course! The think tank combined every major U.S. city's unemployment rate, level of employment, gross metropolitan product and housing prices to create an index of utter wretchedness.

Nationwide economic progress in the second quarter was "uneven and unsure" and some by measures we're back in recession. The worst cities are clustered in former housing bubble areas like Florida and California.

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Opus Dei Pair Accused Of Making French Woman Work For Fifteen Years Without Pay

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Two members of the Roman Catholic minority movement, Opus Dei are under trial after being accused of forcing an assistant to work for 15 years without pay, reports News24.

The accuser, Catherine Tissier, was 14-years-old when she joined Donsen hotel school where religious matters were conducted by Opus Dei. Tissier accepted the faith, but also worked 14 hours a day without payment for her services.

By the time she was 29-years-old she weighed only 86 lbs as a result of her labors, reports the Irish Independent.

After visiting her family, and a doctor, she was told she should not go back to the school due to her poor health.

The couple have been charged with undignified punishment and illegal employment.

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Google Tried To Buy Flipboard, Flipboard Said No, Now Google Will Try To Flatten Flipboard (GOOG)

Not a Googler (we don't think) (Flickr/opacity)

Kara Swisher has dug up some more details on Google's forthcoming, allegedly "mind-blowing" Flipboard copycat.

Google approached Flipboard about an acquisition last year, Swisher reports. Flipboard opted to stay independent. During the talks Google told Flipboard if it couldn't buy it, then it would just build its own version.

Which is just what its doing. The new product is being called "Propeller" internally.

This is (at least) the fourth time in the two years or so that Google has taken this approach. It tried to buy Groupon, was rejected, and launched Google Offers. It tried to buy photo sharing startup Path, was rejected, and launched a few photo sharing apps, which were later killed off. It tried to buy Yelp, was rejected, and launched Places.

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Tony Romo Led The Cowboys To A Comeback Win With A Punctured Lung Yesterday

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Dallas Cowboys quarterback Tony Romo has a punctured lung.

He came out in the second half against the 49ers yesterday, but was able to return and throw for three touchdown passes in the 27-24 Cowboys win.

Somehow, coach Jason Garrett says Romo should be fine to play next week.

"I would not think there's any reason to think that he won't play Monday," he said. "We're certainly hopeful."

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How The French And German Economies Are Doing Compared To The Periphery

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Good chart in the latest Markit Eurozone PMI report.

As you can see, the scene on the periphery is pretty ugly, but the situation for France and Germany, growth-wise, is hardly better.

Nominally things aren't quite as bad, but the direction is exactly the same. Down.

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Jeffries: Expect Massive Policy Response In Europe, Bank Nationalizations And TARP In Drachma

Tyler Durden is a reference to the lead character in Fight Club. It's the pseudonym for Zero Hedge's key author(s) used to hide their identities.

The most scathing report describing in exquisite detail the coming financial apocalypse in Europe comes not from some fringe blogger or soundbite striving politician, but from perpetual bulge bracket wannabe, Jefferies and specifically its chief market strategist David Zervos.

"The bottom line is that it looks like a Lehman like event is about to be unleashed on Europe WITHOUT an effective TARP like structure fully in place. Now maybe, just maybe, they can do what the US did and build one on the fly - wiping out a few institutions and then using an expanded EFSF/Eurobond structure to prevent systemic collapse. But politically that is increasingly feeling like a long shot. Rather it looks like we will get 17 TARPs - one for each country. That is going to require a US style socialization of each banking system - with many WAMUs, Wachovias, AIGs and IndyMacs along the way.

"The road map for Europe is still 2008 in the US, with the end game a country by country socialization of their commercial banks. The fact is that the Germans are NOT going to pay for pan European structure to recap French and Italian banks - even though it is probably a more cost effective solution for both the German banks and taxpayers... Expect a massive policy response in Europe and a move towards financial market nationlaization that will make the US experience look like a walk in the park. "

Must read for anyone who wants a glimpse of the endgame. Oh, good luck China. You'll need it.

Full Report:

In most ways the excess borrowing by, and lending to, European sovereign nations was no different than it was to US sub prime households. In both cases loans were made to folks that never had the means to pay them back. And these loans were made in the first place because regulatory arbitrage allowed stealth leverage of the lending on the balance sheets of financial institutions for many years. This levered lending generated short term spikes in both bank profits and most importantly executive compensation - however, the days of excess spread collection and big commercial bank bonuses are now long gone. We are only left with the long term social costs associated with this malevolent behavior. While there are obvious similarities in the two debtors, there is one VERY important difference - that is concentration. What do I mean by that? Well specifically, there are only a handful of insolvent sovereign European borrowers, while there are millions of bankrupt subprime households. This has been THE key factor in understanding how the differing policy responses to the two debt crisis have evolved.

In the case of US mortgage borrowers, there was no easy way to construct a government bailout for millions of individual households - there was too much dispersion and heterogeneity. Instead the defaults ran quickly through the system in 2008 - forcing insolvency, deleveraging and eventually a systemic shutdown of the financial system. As the regulators FINALLY woke up to the gravity of the situation in October, they reacted with a wholesale socialization of the commercial banking system - TLGP wrapped bank debt and TARP injected equity capital. From then on it has been a long hard road to recovery, and the scars from this excessive lending are still firmly entrenched in both household and banking sector balance sheets. Even three years later, we are trying to construct some form of household debt service burden relief (ie refi.gov) in order to find a way to put the economy on a sustainable track to recovery. And of course Dodd-Frank and the FHFA are trying to make sure the money center commercial banks both pay for their past sins and are never allowed to sin this way again! More on that below, but first let's contrast this with the European debt crisis evolution.

In Europe, the subprime borrowers were sovereign nations. As the markets came to grips with this reality, countries were continuously shut out from the private sector capital markets. The regulators and politicians of course never fully understood the gravity of the situation and continuously fought market repricing through liquidity adds and then piecemeal bailouts. In many ways the US regulators dragged their feet as well, but they were forced into "getting it" when the uncontrolled default ripped the banks apart. Thus far the Europeans have been able to stave off default because there were only 3 borrowers to prop up - Portugal, Ireland and Greece. The Europeans were able to do something the Americans were not - that is "buy time" for their banking system. And why could they do this - because of the concentrated nature of the lending. In Europe, there were only 3 large subprime borrowers (at least so far), so it was easy to front them their unsustainable payments - for a while. But time is running out. Of couse, the lenders (ie the banks) have always been dead men walking!

At the moment, the European policy makers – after much market prodding - have finally come to grips with the gravity of their situation. And having seen the US bailout movie, they know all too well what happens when a default of this caliber rips through the financial system. The reason the EFSF was created in the first place was so that there could be some form of a European TARP when the piper finally had to be paid and the defaults were let loose. Certainly many had hoped the EFSF could be set up as a US style TARPing mechanism (like our friend Chrissy Lagarde suggests). The problem of course is that there are 17 Nancy Pelosis and 17 Hank Paulsons in the negotiation process. And while the Germans are likely to approve an expanded TARP like structure on 29-Sep, it increasingly looks like it may be too little too late. The departure of Stark, the German court ruling on future bailouts/Eurobonds, the statements by the German economy minister and the latest German political polls all suggest that Germany is NOT interested a full scale TARPing and TLPGing process across Europe. They somehow think they will be better off with each country going at it alone.

The bottom line is that it looks like a Lehman like event is about to be unleashed on Europe WITHOUT an effective TARP like structure fully in place. Now maybe, just maybe, they can do what the US did and build one on the fly - wiping out a few institutions and then using an expanded EFSF/Eurobond structure to prevent systemic collapse. But politically that is increasingly feeling like a long shot. Rather it looks like we will get 17 TARPs - one for each country. That is going to require a US style socialization of each banking system - with many WAMUs, Wachovias, AIGs and IndyMacs along the way. The road map for Europe is still 2008 in the US, with the end game a country by country socialization of their commercial banks. The fact is that the Germans are NOT going to pay for pan European structure to recap French and Italian banks - even though it is probably a more cost effective solution for both the German banks and taxpayers.

Where the losses WILL occur is at the ECB, where the Germans are on the hook for the largest percentage of the damage. And these will not just be SMP losses and portfolio losses. It will also be repo losses associated with failed NON-GERMAN banks. Of course in the PIG nations, the ability to create a TARP is a non-starter - they cannot raise any euro funding. The most likely scenario for these countries is full bank nationalization followed by exit and currency reintroduction. Bring on the Drachma TARP!! The losses to the remaining union members from repo and sovereign debt write downs at the ECB will be massive (this is likely the primary reason why Stark left). It will require significant increases in public sector debt and tax collection for remaining members. And for the Germans this will probably be a more costly path. Nonetheless, politics are the driver not economics. There is a reason why German CDS is 90bps and USA CDS is 50bps – Bunds are not a safe haven in this world – and there is no place in Europe that will be immune from this dislocation. Expect a massive policy response in Europe and a move towards financial market nationlaization that will make the US experience look like a walk in the park. Picking winners and losers will be VERY HARD but let’s look at a few weak spots –SocGen 12b in market cap (-70% this year) with assets of 1.13 trillion BNP 31b in market cap (-55% this year) with assets of 2 trillion Unicredito 13b in market cap (-70% this year) with assets of 1 trillion Intesa 14b in market cap (-70% this year) with assets of 700b Compare this with the USA where we have - JPM 125b in market cap with assets of 2.1 trillion BAC 70b in market cap with assets of 2.2 trillion

Importantly, France GDP is only 2 trillion and in bank balance sheets are some 400% of that number. The banks are dead men walking with massive leverage to both home country income as well as assets. The governments are about to take charge and Europe as a whole is about to embark on a sloppy financial market socialization process that has been held back for nearly 2 years by 3 bailouts. The weak links will not be able to raise enough Euros/wipe out enough private sector equity to get this done, so there will be EMU members that need to exit and use a reintroduced currency for this process. We put a Greek drachma on the front cover of our Global Fixed Income Monthly 20 months ago for a reason.

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Synthetic Equity: A Way To Buy Stocks Without Buying Stocks

So, it seems we can now rule out a bad bet on the Swiss franc.  From what we can tell, Adoboli appears to have made highly speculative equity trades, masked as synthetic equity trades, which would be no surprise because they came out of UBS's London-based Global Synthetic Equity department.

Synthetic Equity

There is more than one way for a portfolio manager to increase exposure to stocks, or equities.  The most obvious way is to just buy equities.

Another way is to take long positions in equity futures contracts.  Portfolio managers prefer this latter method because 1) transactions costs are lower when trading futures contracts and 2) the portfolio is able to preserve liquidity because the manager only has to maintain the futures exchange's margin requirement, which is much lower than the total dollar value of the securities underlying the futures contracts.

When constructing a generic synthetic equity position, the portfolio manager uses cash to buy risk-free bonds and takes a long position in equity futures contracts.  If the portfolio manager already has a position in risk-free bonds, she can just add the contracts.  This combination of bonds and futures replicates the performance of the equity without actually having an equity position.  Hence, synthetic equity.

Adobolu's Trades

According to UBS, Adobolu's trades appeared to combine equity futures and cash ETFs.  Cash ETFs are kind of like risk-free bonds.  As such, Adobolu's trades looked like synthetic equity positions, or relatively low risk bets on stock market movements.

However, UBS said the cash ETF positions were falsified.  So, rather than moving with the already volatile stock markets through synthetic equity positions, Adoboli was betting on the markets only through futures contracts, making movements in his actual portfolio much more volatile.

Questions Remain

Many questions remain, including how Adobolu was able to falsify his cash ETF positions.  But even if he actually had those cash ETF positions, it seems that Adobolu would have lost the $2.3 billion anyways because cash is not that volatile.

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Silicon Valley Howls With Laughter At Thought Of Meg Whitman Being CEO Of HP

We'll admit that we were a bit startled to hear that the HP board is already throwing in the towel on CEO Leo Apotheker after less than a year--and even more startled to hear that former eBay CEO Meg Whitman was his rumored replacement.

Meg did a great job at eBay in the early years, but she checked out in the later ones, and the only thing that HP and eBay have in common is that they're both in the Valley.

What we're most startled by, however, is the speed with which the Valley's tech pundits have gone public to ridicule the idea of Meg running HP.

Here, for example, is Elevation Partners partner Roger McNamee, as quoted by David Streitfeld in the New York Times:

"The notion that H.P. can be fixed by adding a celebrity chief executive is laughable."

(Okay, maybe Roger's trashing HP, not Meg).

And here's Charles House, a former HP engineer, also quoted in the New York Times:

Ms. Whitman would be “an unmitigated disaster...Her style is so arrogant it gags.”

Yale School of Management Jeffrey Sonnenfeld also walloped Meg:

“It’s not a ridiculous choice...But they could have done better.”

Not exactly raves.

Meg certainly doesn't need the money--she's an eBay billionaire--and one suspects she also doesn't need the headaches. So one wonders whether the Valley-wide Bronx cheer will have her and the HP board reconsidering.

See Also: Check Out How Much Severance HP's Apotheker Will Get For Getting Fired In A Year

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A CRISIS FOR THE WORLD: Citi's Willem Buiter Warns What Happens If Greece Quits The Euro

Citi's Willem Buiter is out with a new note firmly opposing all those who toy with the idea of a Greek exit from the eurozone.

"The prospect of Greece exiting the euro area is seldom viewed with the proper degree of fear and trepidation," he writes.

While Buiter admits that a Greek exit could have euro-positive implications in the long term, in the short term it would be an "economic disaster" for both Greece and the remaining 16 euro states with "severe economic and political implications" for the rest of the world.

Here are a few of his main points:

- A Greek exit is still unlikely but has become a lot more possible in the last few weeks.

- While the Euro Area can't formally kick Greece out of the euro, denying it bailout funds or forcing it to adopt unfeasible austerity measures would virtually amount to booting the Greeks out. Buiter cites stalled negotiations (set to resume tomorrow) between Greek officials and ECB/EU/IMF troika inspectors as a bad sign that this not impossible. "For the sake of economic stability and growth in the euro area, the wider European Union and the global economy, we hope that this message is taken to heart by the European authorities."

- Buiter believes that the troika will continue to give Greece funding, but will probably force Greece to endure more austerity cuts and will be directly involved in designing the program.

- Private creditors to Greece will probably accept a haircut of 65-80% net present value of their investments. More than 90 percent of Greek sovereign debt held by private creditors was issued under Greek law. That means Greece could pass a single law and walk away from all these debts. Creditors would have no recourse. Not that Greece will do that -- just that it can.

- Were Greece to exit from the euro, however, Buiter would expect private creditors to lose 90-100% net present value on all Greek debt.

- Greece will not leave the euro on its own. "A collapsed banking system, widespread default throughout the economy, a continuing non-competitive economy and high inflation with a material risk of hyperinflation would make for a deep and enduring recession/depression in Greece. Social and political dislocation would be certain. There would, in our view, be a material risk of a downward spiral of dysfunctional politics and economics."

Here's what would happen in Greece if it left the euro:

- Greece immediately issues a new currency, a run on banks would ensue, and no one will be able to get cash in Greece. The banking system there would be kaput. This also wouldn't restore growth or competitiveness to Greece in the long run.

- The big deal for the rest of the euro area is that an exit from the area was allowed and precedent was broken.

- After a Greek exit, markets would immediately focus on the PIIGS countries most likely to follow suit. Investors would withdraw any deposits they would have there.

He paints a pretty picture of just what would happen:

Apart from bank runs in every country deemed, by markets and investors, to be even remotely at risk of exit from the euro area, there would be de facto funding strikes by external investors and lenders for borrowers from these countries. Again, putting under foreign law (most likely English or New York) all cross-border (or perhaps even all domestic) financial contracts and instruments could at most mitigate this but would not cure it.

The funding strike and deposit run out of the periphery euro area member states (defined very broadly), would create financial havoc and mostly like cause a financial crisis followed by a deep recession in the euro area broad periphery. The counterparty inflow of deposits and diversion of funding to the ‘hard core’ euro area and the removal (or at least substantial reduction) of the risk of ECB monetisation of EA sovereign and bank debt would drive up the euro exchange rate. So the remaining euro area members would suffer (at least temporarily) from an uncompetitive exchange rate as well from the spillovers of the financial and economic crises in the broad periphery.

DON'T MISS: Here's who gets crushed if Greece goes bust >

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How To Get Permission To Put $2 Billion Of Your Employer's Money At Risk (UBS)

To better understand why, you must understand value-at-risk, or VaR.

VaR is one of the most common ways to measure how much money a bank has at risk.  In a nutshell, VaR is the maximum amount of money one could lose over a certain period of time given a certain level of confidence.

For example, if you had a one day VaR of $100 at a 95% level of confidence, then there is a 95% chance you won't lose more than $100 in one day.

However, this doesn't mean that the worst-case-scenario loss in a given day is capped at $100.  In fact, thanks to the existence of derivatives and the ability to short, the maximum loss for a trading department can be unknown. Such weaknesses have drawn criticism from the likes of hedge fund manager David Einhorn and The Black Swan author Nassim Taleb, who calls VaR a "fraud."

So, now we have framework in which to think about UBS' $2 billion loss.

DealBreaker's Matt Levine did some digging and found that the UBS investment bank's maximum one day VaR at a 95% confidence level was 98 million Swiss francs, or around $113 million, at the end of the second quarter.

After crunching the numbers, Levine concluded that losing $2 billion would've been a 29 standard deviation event, effectively a statistical impossibility.

So, here's one way the whole UBS' trade might've gone down: Kweku Adoboli comes into work one day and goes to his manager with a trade idea.  He presents a couple of negative scenarios including one absolutely insane scenario just for kicks.  "Boss, there's a chance I might lose $2 billion dollars on this trade.  But that would be a 29 standard deviation event, which means I'm more likely to get struck by lightning while riding on the back of a flying pig!"  Both laugh and Adoboli gets the go-ahead.

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Former Goldman Sachs Employee Teaches Us How To Front-Run Goldman In 10 Easy Steps (GS)

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Allegedly, Spencer Mindlin wasn't one of those people. 

Now thanks to his alleged activities, we know how to front-run Goldman Sachs. (But of course, we'd have to be employees or otherwise know of Goldman's upcoming trades to actually do it.)

Background: the SEC recently filed insider trading charges against Mindlin for trades he made while he was an employee at Goldman Sachs.  According to the allegations, Mindlin and his father made $57,000 by taking positions in securities underlying the SPDR S&P Retail ETF (XRT) with knowledge that Goldman Sachs would later make market moving trades on those same securities.

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Stocks Going Crazy, But Remember What Happened Yesterday...

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One hour to go, Dow up 180.

But remember what happened yesterday.

Major late-day selloff.

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Here's The Right Way To Put An End To The Eurozone Crisis

Greece is not sustainable without a continual influx of subsidized capital, the Greek systems will crash simply under the weight of its sovereign debt, and that’s assuming that the banks don’t crash it first.

The choice for the rest of Europe is an unenviable one.

Either subsidize Greece and any other countries who can’t meet their bills in perpetuity or eject them from the eurozone.

However, Greece is not an island and ejecting them would cause cascading bank failures in Spain, Italy, France and the rest of the eurozone in a matter of a few weeks, so before you can seriously discuss ejecting Greece from the eurozone, you first have to build a structure that can contain the damage.

Step one is to ratify an agreement called the EFSF2 that is already under discussion in most European Parliaments.

The original EFSF, the European Financial Stability Facility, was designed to serve as the bailout regiment — it is in place.

The reforms, part two if you will, were designed to broaden its scope and allow it to deal with, for example, banking crises and make the bailouts more sustainable in the long run.

This program is currently being debated in all of the European capitals right now, pending ratification.

EFSF2 faces two major challenges. The first is from a series of states led by Finland and the Netherlands who are seeking collateral deals. Now, in the end, STRATFOR sees these collateral deals being allowed and struck probably by the end of the month, certainly by the end of the quarter. That’s not where we see the major problem. The major problem is that Germany, the country who wrote the EFSF protocols, won’t ratify it themselves. The EFSF protocols in specific are not very popular with German voters, particularly among the conservative parties that form the current government. It is possible, although not particularly likely, that the German parliament may reject the very reforms proposed and written by the German government. The final vote will be at the end of September.

That’s step one. Step two is to expand the bailout facility so that it can handle additional problems. Currently, the EFSF has the authority to raise 440 billion euros backed up by various state guarantees. That might be sufficient for a Greece or an island, but it’s woefully insufficient for the scope of the problems ahead. Those problems are twofold. First, you have Italy with 1.9 trillion euro in outstanding government debt. If Greece falls or is ejected, it’s highly likely that the Italians are going to be following suit. The EFSF strategy to date has been to provide a bailout package to damaged states in a volume equal to their total financing needs for a three-year period. In the case of Italy, you’re talking about 700-800 billion euro.

Additionally, one must assume that if Greece is ejected from the eurozone, that it will default in short order on its debt, causing the banking crisis cascade of failures that was mentioned before. This will require, at a minimum, about 400 billion euro to stop cold any Greek-specific contagion — that’s about the outstanding value of Greek government debt. It will also require a cushion of funds to counter the inevitable market chaos that will happen once Greece defaults. Using the American 2008 financial crisis as a template you’re looking at needing a fund of about 800 billion euros to backstop all the European banks that are exposed to distressed government debt. Add that together and you get a ballpark figure of about 2 trillion euros of bailout funds needed. STRATFOR expects the expansion of the EFSF to be the issue of 2012 in Europe. Without a bailout facility of that size, it would be impossible to head off the Italian catastrophe or a major European banking crisis, either of which could easily lead to the dissolution of the eurozone.

Now obviously there is any number of ways that this could all go horribly wrong. For example, a number of states, most notably including Germany, could decide that the cost of the bailout program is simply too high and vote it down, triggering a complete collapse of the system right off the bat. Greek authorities could come to the conclusion that they’re about to be jettisoned anyway and preemptively default, taking the entire system with them before the EFSF is ready to handle the collateral damage. An unexpected government failure could lead to a debt meltdown somewhere else. Right now Italy and Belgium are the two leading candidates. Already the Italian prime minister is scheduling meetings with senior European personnel to avoid having to meet with Italian prosecutors. And Belgium, which hasn’t had a government for 17 months and whose caretaker prime minister announced that he was going to quit today.

Finally the European banking system might actually be in worse shape than it looks like and 800 billion euro might not cut it. After all, major French banks were all downgraded just today, but shy of allowing every capital poor state in Europe to go on the doll permanently — this is the only road forward that can salvage the eurozone.

"This post originally appeared at STRATFOR, the world's leading private intelligence firm. To get access to more intelligence from STRATFOR, click here."

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THE SAD STATE OF WORK IN AMERICA: The Young Sit Idle, The Elderly Work Forever

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The US Census Bureau released fresh data today, including some grim charts that put our depressing labor situation in perspective.

Here's the takeaway: The labor force has stagnated. If you haven't lost your job you'll probably keep working for long past retirement. If you're young and don't have job (nor work experience) you won't be finding one for a long time.

We have a few details on this troubling situation.

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LIVE: NFL Highlights And Headlines From Week Two

NFL RECAP: Brees Drops A Bomb, Baltimore Lays An Egg In Week Two Login With Facebook | Login With Twitter | Login | Register Sports Page Home Tech Entertainment Wall Street Markets Strategy Sports Lifestyle Politics EuropeData Misc. Your Money Video Latest Your News Sports Page Home NFL MLB NHL NBA Sports Media College Sports Golf Sports Page 64 HiveTapePRContributors Follow us on Facebook and get updates from Sports Page posted directly to your news feed 

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Email Zip NFL RECAP: Brees Drops A Bomb, Baltimore Lays An Egg In Week Two Tony Manfred | Sep. 18, 2011, 7:38 PM | 545 | 1 A A A   x Email Article From To Email Sent! You have successfully emailed the post.

Image: AP

It was another high-scoring week in the NFL.

Drew Brees and the Saints recovered from their opening-week loss to the Packers to beat Chicago 30-13.

The Baltimore Ravens suffered a letdown to Tennessee, losing 26-13.

Buffalo went to 2-0 with a late-second 38-35 win over Oakland.

Detroit absolutely dominated Kansas City 48-3 (knocking out Chiefs RB Jamal Charles in the process).

Tampa came back from a 17-0 deficit to stun Minnesota.

Cam Newton had 432 more yards in Carolina's loss to the Packers.

In the late games, Dallas beat San Fran in OT. And New England took it to the Charges 35-21.

See the videos below for the day's biggest highlights.

Note: turn off auto-refresh for easier video viewing

Auto-refresh: On | Off Sort: Oldest First | Newest First 7:32 PM | VIDEO: Dallas gets a deep bomb to set up a game-winning FG

7:16 PM | New England puts away San Diego. Dallas-San Fran heading to overtime after Dallas tied it up with a FG as time expired

7:07 PM | DAL-SF, DEN-CIN coming down to the wire. NE-SD looks safe as the Pats get a big first down to kill more clock

7:03 PM | VIDEO: Awesome one-handed catch by Vincent Jackson pulls San Diego within 7 (28-21 NE with 5 minutes left)

6:43 PM | Strange decision

Belichick decides to go for it on 4th and 4 at midfield. Chargers get the stop and now have a short field and can go ahead with a touchdown. 20-14 NE with 11 minutes left

6:37 PM | VIDEO: San Diego pulls within a score of New England (Pats lead 20-14)

6:30 PM | VIDEO: Jon Kitna strikes again to set up a San Fran touchdown

6:22 PM | ViDEO: This is the closest thing we'll get to a highlight in this Broncos-Bengals game (DEN leads 17-12)

6:07 PM | VIDEO: Alex Smith throws it right back to the Cowboys, terrible

6:04 PM | VIDEO: Jon Kitna throws a truly awful interception

5:56 PM | One thing to keep in mind in the NE-SD game

San Diego might not be good. They barely beat Minnesota last week at home. And while they have all sorts of talent, they haven't been able to put it together on the field since 2009. So adjust your fear of the Patriots accordingly

5:54 PM | Fantasy alert

Jamal Charles of Kansas City might be out for the year after tearing his ACL against the Lions today. More bad news for the Chiefs

5:54 PM | Romo hurt

Tony Romo has been replaced by Jon Kitna in San Fran. Romo took a huge blindside hit and he hasn't come back since. 14-7 Niners

5:41 PM | Scores at half

Patriots 20, Chargers 7. 49ers 14, Cowboys 7. Houston 16, Miami 3. Denver 10, Cincy 3.

5:25 PM | VIDEO: Brady hits another tight end for another touchdown (17-7 NE)

5:18 PM | VIDEO: New England gets a huge goalline stand on fourth down (game tied 7-7)

5:14 PM | VIDEO: Fancy footwork gives the Niners a 14-0 lead

4:55 PM | VIDEO: Really silly play sets up a 49ers touchdown (they lead Dallas 7-0)

4:44 PM | VIDEO: Malcolm Floyd makes a nice catch to set up a San Diego touchdown (7-7, NE with the ball)

4:29 PM | Late games

Four late-afternooners coming. Cowboys-49ers, Patriots-Chargers, Broncos-Bengals, and Texans-Dolphins. We'll try to keep our coverage of the awful Broncos-Bengals game to a minimum

4:28 PM | Early game takeaway #5

Going to be a long year for Minnesota and Indy. Sad times in the midwest

4:27 PM | Early game takeaway #4

Cam Newton is for real, for real. 432 more passing yards in the loss

4:27 PM | Early game takeaway #3

The Bills! They drop 38 more points today and move to 2-0

4:26 PM | Early game takeaway #2

The Ravens are no juggernaut. They lose to the Titans 26-13.

4:26 PM | Early game takeaway #1

The Chiefs stink. They lose 48-3 and now they've been outscored 89-10 in their first two games

4:21 PM | VIDEO: Bills take the 38-35 lead on a last-second TD

4:16 PM | Fun game in Buffalo

Oakland leads 35-31. But Buffalo has a first and goal with under 20 seconds left

4:07 PM | Baltimore loses. Jacksonville, Kansas City get blown out.

4:06 PM | VIDEO: Jordie Nelson scores a dagger TD for the Packers

3:59 PM | Comeback nipped in the bud

Cam Newton had the Panthers within the 10 yard line down 23-16. But the Panthers couldn't convert on 4th down, and Green Bay takes control with three minutes left

3:55 PM | FINAL: Tampa 24, Minnesota 20

McNabb and Co. get booed off the field. Awful sign

3:53 PM | VIDEO: LaGarrette Blount puts the Bucs up 24-20

3:51 PM | Comeback completed

24-20 Tampa over Minnesota after being down 17-0. Video coming

3:49 PM | Tampa first and goal down 3 under a minute to go

3:41 PM | VIDEO: Larry Fitzgerald takes a 73-yard bomb to the house

3:36 PM | The Chiefs really, really stink

It's now 41-3 Lions. They've been outscored 81-10 in the first 7+ quarters of the 2011 season

3:33 PM | Baltimore letdown

Last week, they looked like the AFC favorite in blowing out the Steelers. But they've suffered a severe letdown today. It's 23-10 Titans

3:32 PM | Weirdest penalty ever

Hue Jackson and the Raiders were penalized in Buffalo for trying to challenge a touchdown play. This year, all TDs are automatically reviewed, so coaches are not allowed to challenge. Odd.

3:25 PM | The Chiefs stink

34-3 Lions. Kansas City is getting embarrassed for the second-straight week

3:19 PM | VIDEO: Insult to injury in DET. Lions make it 27-3 after going for it on fourth down

3:18 PM | Comeback alert

Bills down just 4 against the Raiders, and they have the ball. 21-17 late in the third quarter

3:17 PM | VIDEO: Cam Newton throws his THIRD pick of the game (GB 20, CAR 13)

3:11 PM | NOLA looking good

The Saints have recovered nicely from that 7-0 opening hole. They're up 23-13 now, and the defense is no long getting sliced and diced

3:10 PM | The other football

Manchester United-Chelsea is currently on Fox. Odd sight to see on an NFL Sunday in the U.S.

3:07 PM | Jets pulling away

Touchdown and it's 22-3 in Jersey.

3:01 PM | Freeman picked

Josh Freeman got intercepted after Tampa recovered that kick. Momentum stunted, Tampa still down 17-7.

2:59 PM | VIDEO: Tampa recovers an onside kick

2:52 PM | We're back

Tampa is charging here. They got a Blount TD run and then recovered an onsides kick. Highlights coming...

2:33 PM | Halftime scoreboard

Raiders 21, Bills 3. Lions 20, Chiefs 3. Ravens 10, Titans 10. Browns 14, Colts 9. Vikings 17, Tampa 0. Saints 16, Bears 10. Jets 15, Jags 3. Steelers 17, Seahawks 10. Redskins 10, Arizona 7. Carolina 13. Packers 7

2:25 PM | VIDEO: Arizona blocks as Washington field goal

2:16 PM | Big Ben back

It looked like his knee buckled pretty badly. But he's back in the game as the Steelers look to make it 21-0 before half, dodged a bullet.

2:13 PM | Roethlesberger hurt

Looks like a knee injury

2:02 PM | Early surprise

The Raiders are beating the Bills 14-0. Neither are these teams are elite, but you'd expect the Bills to show a little more fight at home after blowing out the Chiefs in KC last week.

1:59 PM | The comeback is on in Carolina

Now just 13-7 Panthers after a Green Bay touchdown run

1:53 PM | VIDEO: Steelers score to make it 14-0

1:47 PM | Redskins get a field goal, 7-3 against Arizona

No one really cares about this game right? I'm not even sure if Washington and Arizona fans care

1:46 PM | The Carolina train keeps rolling

It's 13-0 after another field goal. Cam had the Panthers with a first and goal, but they had to settle for three.

1:34 PM | ViDEO: First Jets TD (they lead JAC 9-0)

1:31 PM | VIDEO: Cutler TD passes makes it 7-0 over the Saints

1:30 PM | Chicago goes up 7-0

That Saints -5 bet isn't looking so hot early

1:26 PM | Carolina up 10

10-0 over Green Bay after a Randall Cobb fumble. Let's see if Carolina can hold on after failing to close against Arizona last week.

1:17 PM | Cam Newton's hot start continues

He drives down for a TD against the Packers. If he has another good week this week, he's for real.

1:11 PM | Scores in Carolina and and New York

Sanchez finds Holmes to put the Jets up 7-0. Everyone was talking about how the Jets can't score in the first quarter. So they go down and the field and score a TD on the first drive.

12:45 PM | Bets we like

The Bucs are way better than the Vikings, so they should be able to win that game outright. The Saints have an extra few days of rest, and they're playing at home, so we like them to cover. Take it to the bank.

12:35 PM | Early game lines

NO (-5) over CHI. DET (-8) over KC. NYJ (-9) over JAC. BUF (-4) over OAK. WAS (-4) over ARZ. BAL (-6.5) over TEN. PIT (-14) over SEA. GB (-10) over CAR. MIN (-1.5) over TB. CLE (-2) over IND.

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Target's Blunders With Missoni Could Have Long-Lasting Effects

NEW YORK (AP) — Target is a victim of its own success.

The discounter drummed up so much hype around its exclusive, limited-time line by upscale Italian designer Missoni that its website crashed and was down most of the day on Sept. 13 when the collection was launched, angering customers.

More than a week later, some shoppers who bought the Missoni for Target line are posting on social media websites Facebook and Twitter that they won't shop at Target again because their online orders are being delayed — or worse, canceled — by the retailer.

Brielle deMartino, 23, from Del Ray Beach, Fla., was so excited that she woke up at 6 a.m. on the launch day and spent $700 on Missoni clothes, a bike and plates. The next day, she got an email from Target that her online order was cancelled. Then, she spent hours on the phone with Target customer service representatives she describes as unapologetic.

"I have never been treated like this," says deMartino, who got the charges removed from her card after calling her bank and posted on Facebook and Twitter about the ordeal. "Instead of taking responsibility, they didn't care. I have always been pro-Target, but I don't want to give my money to a company like that again.'

Talk about having a bulls-eye on your back. Target became the discount industry's darling by making it cool to buy stylish clothes and trendy decorations at the same place you pick up toothpaste and paper towels. But recently, it has suffered from similar public relations nightmares as its rival Wal-Mart Stores Inc.

Earlier this year, Target had its first union election in what is seen as a precursor to more labor disputes nationwide. Now, customers are blasting Target on websites like Twitter at a time when Americans worried about the economy are easily being influenced by what their friends say on social media websites.

"This was badly handled," said Robert Passikoff, president of Brand Keys Inc., a New York customer research firm that has an index that shows Target's image has taken a hit. "What was supposed to be engaging and delightful is now the opposite — disappointment."

Morgan O'Murray, a Target spokeswoman, said the company experienced unprecedented demand for the collection and is working on correcting problems. "This demand impacted our Target.com site and affected the shipment and delivery of select guest orders," O'Murray said in a statement. "Providing an exceptional experience is incredibly important to Target, and we have a team dedicated to addressing those guests who have been affected."

The crash heard around retail The Missoni collection was an attempt by Target to regain the cache it lost among the fashion-forward crowd after it began focusing on expanding its food business. Target is among a few retailers who have partnered with high-end designers that create exclusive lines they can offer for a limited time at deep discounts.

The collections can spur demand by creating a sense of urgency to buy. Last year, Target scored big with a line created by Liberty of London, offering 300 items with the designer, which is known for its floral prints, and selling out of most of it in a couple of days. The retailer tried to recreate that success with Missoni line, which featured stationery for $2.99 up to $599.99 patio furniture at a fraction of the cost of the designer's original works that can go for $595 to $1,500 and more. Target declined to comment say how much it spent on marketing, but it used social media websites and ads on TV and in Vogue magazine.

Target also opened a temporary store in Manhattan at the start of New York Fashion Week on Sept. 8. On the night of the store's opening, Target hosted a party attended by Missoni-clad celebrities like actress Elizabeth Olsen, the younger sister of the twin actresses Mary-Kate Olsen and Ashley Olsen.The temporary store, which spanned six blocks, was supposed to stay open three days, but closed after items sold out in six hours.

By Sept. 13, the day of the launch, Target said demand for Missoni items rivaled the frenzy on the day after Thanksgiving, which is typically the busiest shopping day of the year. More than 100 customers lined up at stores nationwide. Some locations sold out in a few hours.

Celebrities were even writing about the launch, or tweeting, on Twitter. Actress Busy Phillips, who plays Laura in ABC's "Cougar Town," tweeted: "Got the bike. Not the colorful one but still SO EXCITED." Actresses Jessica Alba and Jessica Simpson also were gushing about the line: "I dreamt about the Missoni 4 Target bike last night," Alba tweeted. Simpson replied, "I want that bike too!! So cute!"

The buzz turned to frustration for some shoppers. About two hours after the 6 a.m. launch, many on Target's website came face-to-face with Target's mascot bulldog and the disappointing news: "Woof! We are suddenly extremely popular. You may not be able to access our site momentarily due to unusually high traffic. Please stay here and we'll try to get you in as soon as we can!" This happened throughout the day. Some who were patient got through. Those who weren't left the website disappointed.

Ben Rushlo, director of performance management at Keynote Systems Inc., which tracks websites' performance, said that he couldn't remember the last time a site stayed down most of the day. He said usually, a website slowly deteriorates throughout the day — with minor glitches becoming more prevalent — before crashing. "It wasn't your normal meltdown," he said.

Even some customers who got through complained that items disappeared from their online shopping carts. Some were unable to checkout. Those who were able to buy breathed a sigh of relief, with some hocking their buys on eBay.com for more than double Target's prices.

But the celebration was short-lived for some. Twitter and Facebook are abuzz with customers complaining that they got emails from Target notifying them that their orders will be delayed or canceled altogether. The posts range from mild ("I'm waiting for orders and now get an email that some may not ship," to prickly ("Every time I see someone with Missoni for Target I get a little more mad.").

Megan Bonner, 26, from Memphis, Tenn., bragged on Twitter after ordering $300 worth of Missoni dresses and cardigans until the next day when she got emails telling her that her shipments would be delayed. Nervous that she wouldn't get the items at all, she bought some of them at a nearby Target. But now she worries she won't be refunded for the other merchandise.

"I feel violated. I feel taken advantage of," she said. "If I don't hear back from them in another week, I will call back. Maybe, I just won't go back anymore."

Target had planned to sell the line into October online and at all 1,700 U.S. stores. But many locations are sold out and the online pickings website are slim. Target had said it was replenishing merchandise, but that it would trickle in.

The debacle comes at a precarious time for Target. The chain, which has struggled to return to its pre-recession growth, is just beginning to benefit from its expanded grocery business and a 5 percent discount it gives shoppers who pay with a Target credit or debit card. Target Corp., based in Minneapolis, had been posting disappointing revenue gains, but it had a 3.9 percent second-quarter increase in revenue at stores opened at least a year — a measure of a retailer's health. That compares with a 2 percent first-quarter gain.

Analysts disagree on whether Target's image can rebound from the snafu, which comes just months after a failed measure to unionize by employees at a Valley Stream, N.Y. spurred organizers to target stores nationwide. C. Britt Beemer, chairman of America's Research Group said in order for Target to recover, it needs to placate angry customers by, say, offering $10 to $20 gift cards. "A lot of companies don't want to fix the problem," he said. "They feel it's better to let it go away. But the problem is that's a dangerous strategy."

Passikoff, with Brand Keys, says the damage is already done — and he can prove it. He said the negative publicity has pushed down Target's reading on the company's Loyalty Index, which measures brand reputation, among other things, to 109 from 119 in August. Brands should have at least a 116, Passikoff says, and anything under 100 signals "trouble."

But Brian Sozzi, a Wall Street Strategies analyst, says shoppers' discontent — much like the Missoni for Target line — is fleeting. "I think it is short-term anger," he said.

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The Smartest Computers In The World

  x You have successfully emailed the post. America's fastest computer

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IBM's Watson computer astonished the world in February when it won a Jeopardy match against two human contestants.

This week, Watson got a job at WellPoint health insurance as a consultant.

In honor of this, we've re-released our list of the greatest electronic processors on the planet.

Most of these are supercomputers: giant mainframes that link many small processors to achieve breakneck speeds. In terms of pure speed, the smartest is China's Tianhe.

But we also looked at computers that are incredibly good at a certain task. Watson is the best Jeopardy playing computer, just like there's a best weather predicting computer.

As Ken Jennings said when he was beat out on Jeopardy. "I for one welcome our new computer overlords."

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This Is Why Russia Is Blocking International Action Against Syria

Syrian President Bashar al-Assad's brutal crackdown on the popular uprising against his rule, which has left some 2,600 people dead since March, has earned him opprobrium across the globe. But international efforts to pressure his regime further are unlikely to be enough to bring it down, so long as Mr. Assad retains the support of one powerful global player: Russia.

A traditional ally with trade ties worth close to $20 billion, Russia has a strong financial stake in the Assad regime's survival. But Moscow's support goes beyond pocketbook issues. As a vast country that has seen its share of uprising and revolution, the one-time superpower tends to support autocracy as the lesser evil and is skeptical of Western intervention – particularly in the wake of NATO's Libya campaign.

As one of five veto-wielding members on the United Nations Security Council, Russia can block any attempt to exert major international pressure on Assad, whether through economic sanctions or military intervention.

“Russia is now a business-oriented country, and the Russian government obviously wants to protect the investments made by its businessmen in Syria,” Yevgeny Satanovsky, president of the independent Institute of Middle Eastern Studies in Moscow. “But … the main reason in being so stubborn [blocking UN action against Syria] is because Moscow perceives that the Western bloc is wrecking stability in the Middle East in pursuit of wrong-headed idealistic goals. A lot of Russians are horrified at what’s going on in the Middle East and they’re happy with their government’s position.”

Russia has been a prominent defender of the Assad regime, dispatching delegations and envoys to the Syrian capital and warning against international intervention similar to the NATO-led campaign against Col. Muammar Qaddafi.

Russian President Dmitry Medvedev said recently that some of those taking part in the Syrian street protests had links to “terrorists,” while another senior Russian foreign ministry official said that “terrorist organizations” could gain power in Syria if Assad’s regime is toppled.

Such comments, which echo those of the Assad regime, have been warmly greeted in Damascus. On Sunday, Assad welcomed the “balanced and constructive Russian position toward the security and stability of Syria.”

True, Moscow is not the only country expressing wariness at sudden change in Syria: the five-nation BRICS bloc (Brazil, Russia, India, China, and South Africa) recently declared they were against intervention in Syria and urged dialogue between the Assad regime and the Syrian opposition. But Russia’s public and repeated defense of the regime has frustrated the Syrian opposition, which is seeking the support of the international community in its bid to oust Assad. Last week, Syrian protesters vented their irritation by staging a “day of anger against Russia.”

Russia’s support for the Assad regime is rooted in self-interest, and calculates that Assad could yet prevail against the Syrian opposition movement.

"In fact we see that there is no united opposition in Syria, nor is there NATO support [for the rebellion] as was the case in Libya,” says Georgi Mirsky, an expert with the official Institute of World Economy and International Relations in Moscow. “Arab countries will never agree to even limited military operations against Syria [as they did in Libya]. The Syrian army is not split. Therefore, we see serious reasons to believe the Assad regime can survive. Even if it’s discredited, it could still hold on for a number of years. So there’s no sense of urgency in Moscow to change policies.”

Russia has long-standing commercial, military, and political ties to Syria. According to a recent article in The Moscow Times, Russian investments in Syria in 2009 were valued at $19.4 billion, mainly in arms deals, infrastructure development, energy, and tourism. Russian exports to Syria in 2010 totaled $1.1 billion, the newspaper said.

Other than lucrative business deals, Moscow is seeking to wield greater influence on the global stage after losing some of its prestige with the collapse of the Soviet Union in 1991. It traditionally opposes foreign interventions – which potentially can set precedents for Russia in the future – and serves as a counter-balance to the perceived axis of the United States, the European Union and NATO.

Furthermore, Russia – with a multitude of ethnic and religious sects, as well as nationalist minorities – has an innate suspicion of popular uprisings and their uncertain outcomes, from ousting a regime to plunging a country into chaos. While the West optimistically embraces the Arab Spring as a welcome shift toward democracy in the region, Russia takes the more hard-nosed view that the outcome will be instability and bloodshed.

“Western idealism has contributed to chaos in the Middle East, and for once Russian foreign policy is right not to want any part of it,” says Mr. Satanovsky from the Institute of Middle Eastern Studies in Moscow. “The minimum we can expect in Syria is civil war, with rivers of blood. Yes, it is a cruel dictatorship, but Russia sees only worse things taking its place.”

Russian-Syrian ties are perhaps strongest in the field of arms sales. The Soviet Union was Syria’s main supplier of weapons during the cold war, leaving Damascus saddled with a $13.4 billion arms debt.

Although trade dwindled following the collapse of the Soviet Union, it picked up again beginning in 2005 when Moscow wrote off almost 75 percent of the debt. Russia and Syria have signed arms deals worth some $4 billion since 2006. They include the sale of MiG 29 fighter jets, Yak-130 jet trainers, Pantsir and Buk air defense systems, and P-800 Yakhont anti-ship missiles. Syria also hopes to receive Iskandar ballistic missiles and S-300 anti-aircraft missiles, the latter of which would pose significant threats to hostile aircraft operating in Syrian skies.

Much of the funding for the arms deals reportedly is underwritten by Iran, which signed several defense agreements with Syria from 2005. That enables some of the weapons allegedly to be quietly transferred to Iran thus circumventing a United Nations ban of arms exports to the Islamic Republic.

Russia also operates a naval supply and maintenance site near the Syrian port city of Tartous on the Mediterranean. The Soviet-era facility has been in Russian hands since 1971 but fell into disrepair in 1992. However, the port is undergoing a major refurbishment which will grant Russian naval vessels a permanent base in the Mediterranean after 2012. Presently, Russia’s only other warm-water naval facility is at Sevastopol in the nearly-landlocked Black Sea. All Russian shipping exiting the Black Sea must sail through the narrow Bosporus channel, which lies within Turkish waters.

However, the billions of dollars in investments and the strategic naval facility in Tartous could all be jeopardized if the Assad regime is overthrown or the country descends into violent chaos. As it is, Moscow, which has criticized the NATO-led intervention in Libya, is waiting to see if the new authorities in Tripoli will honor some $10 billion worth of business deals reached with the Qaddafi regime.

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SPORTS CHART OF THE DAY: Ironically, The Big 12 Is College Football's Best Conference

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Everything Is Diving After The Big Italy Downgrade

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Markets around the world are lower after S&P's downgrade of Italy.

That includes US futures (down over 0.5%), the euro, and Asia.

Here's the Nikkei, down about 1.5% right now.

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The Really Ironic Part Of The Fed's Big Move Today

Something ironic about the big Fed Operation Twist announcement today...

Ostensibly, the idea behind selling short term debt and buying more long term debt is to bring interest rates down, with all the (theoretical) advantages that brings to the economy.

And boy (!) did interest rates come down today. The 30-Year is now at 2.98%. The 10-year yields 1.85%, which is basically the lowest in history.

And though the Fed wants rates lower, this is a bad sign. That kind of dramatic Treasury buying (especially coupled with the heavy selling in stocks) is a pretty clear sign that growth and inflation expectations are declining, which is exactly the OPPOSITE of what the Fed wants to see.

Remember, QE2 was also ostensibly about keeping rates down, but because it created a boom in risk assets (however temporary) long rates moved much higher during it.

What's particularly worrisome too, is that it seems like the Fed really went about as aggressive as it could on the Operation Twist front.

Nomura makes a strong case here for that:

The most notable move was the Fed’s announcement that it would “support conditions in mortgage markets” by reinvesting “principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.”

What's more, the FOMC announced its intent to “purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less” (Figure 1). Selling the front-end means this is a more active version of the so-called “twist” option than we had anticipated. The Fed hopes that its action will “put downward pressure on longer-term interest rates and make broader financial conditions more accommodative.” The size and length of the twist program implies monthly purchases of $50 billion (over the 8 month period). The combination of MBS purchases and the extension of the average maturity of the Fed’s portfolio should provide more support than anticipated for the housing market.

The main takeaway, sadly: Be scared. The Fed brought out its latest weapon, and the conclusion of the market was that it didn't have the ammo to make a difference.

And again, the irony: The Fed wants lower rates, but the dramatic move down in rates is a strong signal that what the Fed is going to do won't work.

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