The financial damage is massive and the question boils down to how far the contagion can spread throughout Europe (and elsewhere).  Austerity measures throughout Europe are now backfiring.  France put in Hollande as a move back to the left as Sarkozy’s austerity measures were just going to be too great for the population to want.  Inflation before cutbacks!  Live well today, let the kids figure it out when hey get older!  Hell, even The Netherlands could not agree on a budget and they have their act together financially just about as well as any of the top nations.  Angela Merkel’s party suffered a regional election loss in recent weeks as well.

Greece will not likely be the only casualty here.  Portugal, Spain, and Ireland are all at risk.  Sinn Fein has been making policy statements about austerity and the Euro inclusion and went as far as issuing a video to call for a NO vote in the Austerity Treaty referendum.  Spain has a serious capital shortfall in its banks if the reports over the size of the property value losses versus face value of loans is even only one-third true.  Portugal is just totally irrelevant to Europe, but it is upside down and at risk.  And Italy is just simply “too big to bail” with its debt and spending issues that lie ahead.

The fallout is running top to bottom… safe havens to PIIGS… We are seeing all the new 52-week lows come into play in some positions while many others are still above those recent lows.

iShares MSCI Germany Index (AMEX: EWG) is down 2.2% at $19.87 against a 52-week low $16.96; iShares MSCI France Index (AMEX: EWQ) is down 2.4% at $18.61 against a 52-week low of $17.88. The there is “the Euro currency ETF” via the CurrencyShares Euro Trust (AMEX: FXE) with a drop of 0.9% at $125.03 (new 52-week low) as the Euro is at the lowest point since July 2010.  iShares MSCI Italy Index (AMEX: EWI) is down 3.8% at $10.26 and only one-penny above the $10.25 52-week low.

Ireland… The Bank of Ireland (NYSE: IRE) is down 2% at $4.90 against a 52-week low of $3.99. The New Ireland Fund, Inc. (NYSE: IRL) is down 1.1% at $7.79 against a 52-week low of $6.49.

Greece… National Bank of Greece SA (NYSE: NBG) is flat at $1.52 against a 52-week low of $1.45; Global X FTSE Greece 20 ETF (AMEX: GREK) is down 3.5% at $9.99 at a new 52-week low (prior $10.25 low). The election in mid-June will likely be the key determining factor here.  If not, the situation is still not over and Greece is going to be an ongoing flight risk.

Spain… iShares MSCI Spain Index (AMEX: EWP) is down 3.3% at $22.81 and under the prior 52-week low of $22.87.  Banco Santander, S.A. (NYSE: STD) is down 3.5% at $5.58 against a 52-week low of $5.52 and Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is down 4% at $6.02 against a 52-week low of $5.96.

Vanguard MSCI Europe ETF (AMEX: VGK) tracks the  MSCI Europe Index, which is made up of approximately 460 common stocks of companies located in 16 European countries-mostly companies in the United Kingdom, France, Switzerland, and Germany.  It is down 2.6% at $39.85 against a 52-week low of $38.40.  The SPDR EURO STOXX 50 (AMEX: FEZ) tracks the STOXX Europe 50 Index and it is down 2.9% at $26.93 against a 52-week low of $26.10.

This is sort of funny on the surface if you don’t think about the financial and human tragedy that is unfolding.  It is not exactly as though the global economy rose this much when they launched the Euro.  Little reward, massive pain!

Sadly, Europe is starting to feel like Latin America of the 1980s and early 1990s all over again.

JON C. OGG

Samsung Electronics (OTC: SSNLF.PK) and LG Electronics both paid Kodak nearly $1 billion to gain rights to the discredited patent. Kodak claimed that Apple owed it more than $1 billion for infringing.

The patent was one of about 1,100 included in Kodak’s digital capture technology patent portfolio. That’s about 10% of the company’s total patent portfolio that has been valued as high as $3 billion.

Today’s ruling calls into question the value of Kodak’s entire patent portfolio. Many of the patents are fine, of course, but the ones that really matter are all going to be litigated and a buyer’s anticipated profits from the portfolio just dropped. And probably by a lot. Zero may not be too low.

Paul Ausick

So the question is, ahead of a summit aimed at putting up fences in Europe to contain problems can the banks really make it.  We have heard all sorts of new stories and rumors and frankly it is hard to know what is posturing, what is malarkey, and what is reality.  Some talk about bank guarantees is out there, and other chatter is on deeper assistance.  And what about lending directly to banks but not the nations? Reuters has a speech today worth a read that underpins some of the problems and hopes for Europe given by ECB policymaker Joerg Asmussen.

A look at the banking ADRs today signals that the bank issues “may” be manageable for Greece or Ireland.  The problem is that this could just be a short-covering head fake too.  The ADRs for Spain are still in the red.

National Bank of Greece SA (NYSE: NBG) is up 4% at $1.56 against a 52-week range of $1.45 to $7.65.  The Bank of Ireland (NYSE: IRE) is up 3.8% at $4.93 against a 52-week range of $3.99 to $17.50.

Banco Santander, S.A. (NYSE: STD) is down 1.2% at $5.70 against a 52-week range of $5.52 to $11.92; Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is down 1.1% at $6.19 against a 52-week range of $5.96 to $12.13.  An IIF report on loan losses is holding these banks down today.

And what about broader exposure?  The ADR of Deutsche Bank AG (NYSE: DB) is up 2.6% at $36.95.

Barclays PLC (NYSE: BCS) is technically not even a part of the Euro-woes as far as sovereignty, but it would be absolutely naive to think they have no exposure.  Ditto for UBS AG (NYSE: UBS) in Switzerland.  Barclays is up 2.6% at $11.44 against a 52-week range of $8.38 to $18.40; and UBS is up 1.6% at $11.44 against a 52-week range of $10.41 to $19.62.

JON C. OGG

A report at Reuters names South Korea’s SK Hynix and US chip maker GlobalFoundries as two firms the unhappy bondholders have begun discussions with. At the time that Micron was declared the winning bidder, the only other competitor was a combined bid from two Japanese private equity firms.

If a couple of private equity firms think that Elpida is worth less than Micron thinks it’s worth, then it doesn’t make a lot of sense to believe that either Hynix or GlobalFoundries will think Elpida is worth more. Elpida’s debt is more than double the price Micron has offered to pay, so it’s no surprise that the bondholders want to smoke out a higher bid. At best they’re probably hoping to get another bid that is slightly better than Micron’s in the hope that Micron will bid again. Another possibility is that one of the private equity firms will take part with one of the chip makers, lowering the amount of capital at risk, but likely to muddy the waters over who’s in charge and what the strategy should be going forward.

Micron’s shares are up 0.8% in the pre-market, at $5.67 in a 52-week range of $3.97-$10.23.

Paul Ausick

National Bank of Greece SA (NYSE: NBG) appears to be challenging all-time lows on an adjusted basis as shares are down 12% at $1.51 in active trading.  The Global X FTSE Greece 20 ETF (AMEX: GREK) is down 1.9% at $10.90 and this hit a new low today as Greek shares have reportedly hit lows not seen in years and years.

What is interesting is that Coca-Cola Hellenic Bottling Company S.A. (NYSE: CCH) is actually up 5.3% at $16.25 against a 52-week trading range of $14.75 to $27.40.  This outfit is the bottler of The Coca-Cola Company’s products located in Athens which distributes some 90 brands (including Coke) up into parts of the developed nations in Europe and into Eastern Europe and a few other select nearby markets.

We are seeing a mixed move in other banks in the lands of the PIIGS in ADR trading in New York. The Bank of Ireland (NYSE: IRE) is up 4% at $5.13; Banco Santander, S.A. (NYSE: STD) is down 1.5% at $5.72; and Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is down 0.7% at $6.24.

Here is a comment from a speech from ECB President Mario Draghi today: “Before concluding, let me comment briefly on the difficult situation in Greece. Since the Treaty does not foresee anything on exit, this is not a matter for the ECB to decide. While the ECB will continue to comply with the mandate of keeping price stability over the medium term in line with Treaty provisions and preserving the integrity of our balance sheet, I want to state that our strong preference is that Greece will continue to stay in the euro area.”

Keep in mind a report from Reuters yesterday from Italian Industry Minister Corrado Passera saying that the Euro could survive even if Greece were to leave the union’s single currency. Trusting anything from any minister in Italy is a hard issues when you consider that Italy is one of the PIIGS and is a larger problem for the Euro than all other four PIIGS combined.

This is one of those situations where wording on headlines has to be closely watched… and interpretation depends upon many things.  Traders and investors will shoot first and ask questions later.

JON C. OGG

The most news out of Greece is that hundreds of millions of Euros have exited the Greek banking system on top of the Greek government not forming any coalition.  Maybe some of the cash exodus could be Greeks paying their bills and living off their cash, but some is definitely a flight of capital out of Greece to safer countries where the banks are not so dependent upon the fortunes of what would be a bankrupt nation without outside help. Is literally a few hundred million Euros the start of a run on the banks in Greece?  National Bank of Greece SA (NYSE: NBG) is down 6.5% at $1.73 in ADR trading in New York.  There is also a rather pathetic exchange traded product called the Global X FTSE Greece 20 ETF (AMEX: GREK).

Where the situation in Greece gets so interesting is that up until this year there was no exit strategy from the Euro.  The Europeans did not really have a way to boot any nation out of the Euro, and any Euro-member nation did not really have the means to exit the Euro.  Now all the politicians are saying that they want Greece to remain in the Euro and that they hope Greece stays in the Euro.  What they are really saying is that the mechanism to exit the Euro is coming into place, without really saying how it will work.

Greece is either going to leave the Euro or it is going to get booted from the Euro.  What happens after that is going to boil down to whether or not Greece can remain the isolated event or whether it merely acts as the first domino to fall.  Spain is a much larger issue, then it boils down to the wild cards of Spain and Ireland.  The Bank of Ireland (NYSE: IRE) is down only 1.4% at $4.92 and almost $1.00 above a 52-week low for its ADR; Banco Santander, S.A. (NYSE: STD) in Spain is at $5.80 on its ADR at a new 52-week low; and iShares MSCI Spain Index (AMEX: EWP) is down 2.6% at $23.59 also at a new 52-week low today.

The biggest issue, which is larger than all of the other PIIGS combined and then some, is Italy.  America has banks that are too big to fail.  Italy is simply too big to bail.  Moody’s just downgraded 26 major Italian banks and left the outlook as negative.  iShares MSCI Italy Index (AMEX: EWI) is down 3.4% at $10.51 at a new 52-week low.

What has changed in the last month is the French have gone backwards into socialism and have effectively voted out the prior austerity measures.  As financially conservative as the Dutch are, even The Netherlands reached an impasse on austerity and balancing a budget.  And now Merkel’s party suffered a regional election loss.

What sort of Euro break-up is coming is hard to know whether it is a partial break-up or just the PIIGS out of the Euro or just some of the PIIGS out of the Euro.  Either way, the path is set that the Euro is not going to have all of the same member states as it did in 2011.  If I was a betting money on Greece’s future, it would be Greece with a Drachma rather than Greece with a Euro.

Can any of the Greek banks survive a Greek exit from the Euro?  National Bank of Greece SA (NYSE: NBG) is one of the safer of the large Greek banks, yet this is less than a dime from hitting a new 52-week low on its ADRs in New York.

One thing that no one wants to admit is that the Euro was an economic version of World War III.  After all, isn’t the Euro now just a very watered down Deutsche Mark?  Also, don’t be shocked when S&P or Moody’s downgrades the banks or sovereign ratings in the lands of the PIIGS. That is assured to be the case.  The current story of the Euro is one which is not going to end in a pretty manner.

More misery to follow…

JON C. OGG

Here is the formal announcement from LightSquared.

LightSquared has reportedly filed for bankruptcy protection.  This will put the creditors in charge and the Bloomberg report shows that the company lists more than $1 billion in assets and liabilities each.  Creditors had previously asked backer Philp Falcone of Harbinger Capital Partners to move aside after he had invested some $3 billion or so into the company.

Bloomberg also noted that Carl Icahn cleaned up buying and selling the LightSquared debt, but Dish Network Corp. (NASDAQ: DISH) Chairman Charlie Ergen has reportedly acquired some $350 million of the debt.

The company’s website notes, “LightSquared will unleash the boundless opportunity of wireless broadband connectivity for all. We believe that it is time to transform the broadband industry to one that truly fosters innovation, creativity, and freedom of choice—with limitless and unimaginable possibilities.”  It sure sounds like LightSquared needs to change all of those verbs to past tense.

Another huge wireless venture bites the dust.  Whether or not this company has any future other than its large spectrum is a guess.

JON C. OGG

Nokia has been losing market share due to the explosion of smartphones.  Whether this is fair or not after the company recently went after a new Windows phone, the company is considered to be a large seller of cheaper phones in emerging markets.  What is so ironic about this story is that Nokia was just recently shown to be one of the top brands in Asia. Apparently that isn’t going to cut it.

The competition from Apple Inc. (NASDAQ: AAPL) for the iPhone and also from Samsung and Google Inc. (NASDAQ: GOOG) for Droid phones has been too steep.  Now even the emerging markets are starting to explode in smartphone use.  Even Research-in-Motion Ltd. (NASDAQ: RIMM) is not quite as in bad of shape for now as Nokia.

Ask yourself a simple question: How many do you know that have a Nokia phone?  Maybe the only hope is that Nokia can somehow get every person in the world who does not have a phone yet to buy one of their lower-end models in emerging market expansion. Or maybe an alternative hope is that suddenly no one can afford smartphones…

The downgrade already expects things to get worse.  Here is the dire warning in the Societe-Generale downgrade… if the company keeps losing share with sales declining and keeps its restructuring costs so high, then it risks burning through most of its available cash.  It ultimately even sets the conditions that it brings Nokia’s survival into question, although that is a scenario outside of the base case.  That is not exactly a call that Nokia is going bankrupt, but it sure feels like a dance around that notion without causing undue offense and pressure merely by the mention of such a possibility.

It is important to remember that billions and billions of dollars have been lost here.  Yahoo! Finance still lists Nokia as an $11+ billion market value and that is with shares at a 52-week low (and decade-plus low) of $3.03 today.  The prior 52-week range was $3.12 to $8.73 and the ADR was worth $15 in mid-2010 and over $25 back in 2008.

This downgrade did not exactly call for bankruptcy.  It just sets yet one more call against Nokia’s future.

JON C. OGG

Analyst Vijay Rakesh noted, “1) Muted reaction pending more clarity on the final amount that MU will pay, and 2) Based on that if MU needs to come to market for any additional financing. Nonetheless we would be buyers with MU paying only 30-35c or less per dollar for the deal… We believe some of the muted reaction is because of no Official comments thus far and investors waiting to see how much the deals ends up to be.”

Whether the deal comes to $2 billion or $2.5 billion, Stern Agee’s note is talking up the Hiroshima fabrication plant with 120,000 wafers per month of 30nm/300mm manufacturing and 64% ownership in the Rexchip fab, as well as the Akito Elpida Back end Packaging and 3 to 4 design centers.  The assets were carried on Elpida’s books at about $7 billion but the firm’s take is that the assets with Elpida’s Memory intellectual property is worth more than $7 billion.  If so, then Micron is paying thirty to thirty-five cents on the dollar or even less if the deal includes future Potential Capex for Elpida.

Stern Agee concludes, “Given the pace of negotiations, we believe the deal should be accretive L-T and drive consolidation, price stability and profitability in the DRAM marketplace.”

Micron shares are trading up $0.03 at $6.53 on first look and the 52-week trading range is $3.97 to $10.93.

JON C. OGG

The forgiveness will of course not apply to all mortgages but the letters are targeted at over 200,000 ‘potential candidates’ and these letters should start arriving in the mail this week.  Just be advised that the report also shows that most of the letters will be mailed by the third quarter of this year.

The bank estimates average monthly savings of 30 percent on mortgage payments of customers who qualify for this program. Today’s news also shows that Bank of America actually began making principal reduction offers under the program guidelines in back in March.  This effort was targeted at homeowners who were already in the modification review process and about 5,000 trial modification offers have been mailed so far with a potential savings of supposedly $700 million.

Another key is that homeowners are required to make at least three timely payments before the modification can become permanent.  Here are some of the criteria: the mortgage is more than the property is worth today; was 60 days or more behind on payments on January 31, 2012; has a contractual monthly payment (principal, interest, property taxes, hazard insurance, and association fees) totaling more than 25% of gross household income; and has a loan that is owned and serviced by Bank of America (or serviced for another investor that has given the bank delegated authority to do such modifications).

What investors and Joe Public need to take away here is that these letters will not make everyone eligible. Some of the criteria may also be ‘just outside’ of what would helped many borrowers.  It doesn’t look there are any free lunch tickets here and they are not all going to be coming out at once.

JON C. OGG