Jun 122015
 
 June 12, 2015  Posted by at 11:07 am Finance Tagged with: , , , , , , , , , ,  1 Response »


Jack Delano Main street intersection, Norwich, Connecticut 1940

Peak America: Our Run Is Over (Paul B. Farrell)
American Dreaming, From G1 to Bilderberg (Pepe Escobar)
US Is Still Drowning In Mortgage Debt (MarketWatch)
The Warren Buffett Economy – Why Its Days Are Numbered-Part 3 (Stockman)
Myopic US Policies Pave Way For China’s Dominance (MarketWatch)
China’s Answer to Europe’s Needs (Bloomberg)
The World’s Worst Investment Bubble Will Burst Soon (MarketWatch)
Demands On Greece Will Yield The Opposite Of What They Promise (FT)
Varoufakis: ‘Contrary To Stubborn Rumours, We Never Gambled’ (Bloomberg)
Greek Pension Mess Shows There’s No Easy Way Out of Impasse (Bloomberg)
German Government Consulting On What To Do If Greece Goes Bankrupt (Reuters)
Keeping Greece in the Euro May Have Nothing to Do With … Euros (Bloomberg)
EU Issues Final Warning To Greece As Last-Ditch Talks Achieve Nothing (AEP)
IMF To Alexis Tsipras: ‘Do You Feel Lucky, Punk?’ (Guardian)
The Slow Transformation Of The IMF (Rochon)
Stupidity Is The Biggest Problem In The Housing Debate (Pickering)
A Bitcoin Start-Up Has Made Exchanging Currency Free (CNBC)
Italian Statistics Agency Validates Citizens Income Proposal (M5S)

“..our internecine political conflicts prevent us from delivering on the braggadocio..”

Peak America: Our Run Is Over (Paul B. Farrell)

Peak America? Yes. We’re on the downside? Yes. Not exceptional? No. The questions come up a lot lately. In a Time magazine review of his new book “Superpower: Three Choices for America in the World,” foreign policy expert Ian Bremmer asks the blunt ones: “What role does President Barack Obama believe America should play in the world? His words and his actions tell different stories,” says Bremmer. Bottom line, “words aside, Obama’s deeds suggest he’s not acting so much as reacting to crises as they appear.” In his earlier best-seller, “Every Nation for Itself: What Happens When No One Leads the World?” Bremmer saw America’s spliting apart as a reflection of a global trend. He sees us living in a new “G-Zero, the new world order in which no single country or durable alliance of countries can meet the challenges of global leadership … What happens when the G-20 doesn’t work and the G-7 is history?”

The big question: “Have we hit Peak America?” asked the elite Foreign Policy magazine last year. Yes. The cover was a mess, total confusion, chaos, fragmentation. Yes, everything’s peaking. We talk a good game about exceptionalism. But our internecine political conflicts prevent us from delivering on the braggadocio. In “Superpower” Bremmer predicts even more fragmentation in America, reflecting our extreme political and cultural partisan conflict, plus Big Oil’s battle over climate science and carbon emissions. And across the world, it’s every nation for Itself. Prediction: America will peak with the 2016 election. Not just because of the insanity of 20 GOP presidential candidates. Truth is most are hustlers, not presidential timber.

Jeb Bush flip-flopping on his brother’s foreign policy was total incoherence. Rand Paul? Marco Rubio? Long shots. Hillary Clinton? Not incoherent, just running silent. The only coherent candidate is Bernie Sanders. Too good to be true. So special-interest billionaires will do everything possible to use him to destroy Clinton. No good news ahead. After the presidential election drama, no matter who’s elected, chaos, fragmentation and incoherence will accelerate. The delusional Federal Reserve and its bubble economy will finally collapse onto Wall Street’s overinflated stock market, confirming Jeremy Grantham’s forecast that the 2016 election will trigger a 50% drop, plunging America and the world into an economic recession, worse than 2007-08, with GDP near the flat line.

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“Washington factions were blaming Germany for making the West lose Russia to China, while adult minds in the EU – away from the Bavarian Alps – blamed Washington.”

American Dreaming, From G1 to Bilderberg (Pepe Escobar)

What’s the connection between the G7 summit in Germany, President Putin’s visit to Italy, the Bilderberg club meeting in Austria, and the TTIP – the US-EU free trade deal – negotiations in Washington? We start at the G7 in the Bavarian Alps – rather G1 with an added bunch of “junior partners” – as US President Barack Obama gloated about his neo-con induced feat; regiment the EU to soon extend sanctions on Russia even as the austerity-ravaged EU is arguably hurting even more than Russia. Predictably, German Chancellor Angela Merkel and French President Francois Hollande caved in – even after being forced by realpolitik to talk to Russia and jointly carve the Minsk-2 agreement.

The hypocrisy-meter in the Bavarian Alps had already exploded with a bang right at the pre-dinner speech by EU Council President Donald Tusk, former Prime Minister of Poland and certified Russophobe/warmonger: “All of us would have preferred to have Russia round the G7 table. But our group is not only a group (that shares) political or economic interests, but first of all this is a community of values. And that is why Russia is not among us.” So this was all about civilized “values” against “Russian aggression.” The “civilized” G1 + junior partners could not possibly argue whether they would collectively risk a nuclear war on European soil over a Kiev-installed ‘Banderastan’, sorry, “Russian aggression.” Instead, the real fun was happening behind the scenes.

Washington factions were blaming Germany for making the West lose Russia to China, while adult minds in the EU – away from the Bavarian Alps – blamed Washington. Even juicier is a contrarian view circulating among powerful Masters of the Universe in the US corporate world, not politics. They fear that in the next two to three years France will eventually re-ally with Russia (plenty of historical precedents). And they – once again – identify Germany as the key problem, as in Berlin forcing Washington to get involved in a Prussian ‘Mitteleuropa’ Americans fought two wars to prevent. As for the Russians – from President Putin and Foreign Minister Lavrov downwards – a consensus has emerged; it’s pointless to discuss anything substantial considering the pitiful intellectual pedigree – or downright neo-con stupidity – of the self-described “Don’t Do Stupid Stuff” Obama administration policy makers and advisers. As for the “junior partners” – mostly EU minions – they are irrelevant, mere Washington vassals.

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It’s all still propped up. In essence, market manipulation.

US Is Still Drowning In Mortgage Debt (MarketWatch)

The percentage of homes underwater — where the home is worth less than the mortgage — has been dropping as the housing market has recovered, but more than 4 million U.S. homeowners owe the bank at least 20% more than their homes are worth, totaling $579 billion of so-called negative equity, according to real estate company Zillow. “Homeowners who remain underwater will likely be the toughest to free from negative equity,” says Zillow chief economist Stan Humphries. The rate of underwater homeowners is much higher among the homes with the least value, according to Zillow, which uses data from credit bureau TransUnion. More than 25% of those who own the least valuable third of homes were upside down, compared with about 8% of the most valuable third of homes.

In Atlanta, 46% of low-end homeowners were underwater, compared with 10% of high-end homeowners. In Baltimore, 32% of low-end homeowners were in negative equity, compared with 9% of those who own the highest-value homes. The good news: There were 15 million homes in negative equity at the peak of the housing crisis. The national negative equity rate dropped to 15.4% of all homes with mortgages in the first quarter, down from rate 18.8% the same period last year. The rate of negative equity improved in all of the 35 largest housing markets in the first quarter of 2015, “a sign that the country is continuing to recover from the lax lending rules and subsequent housing market bust of the last decade,” the report says.

Millions of Americans are so far underwater, it’s likely they may not re-gain equity for up to a decade or more at these rates,” Humphries says. Because negative equity is concentrated so heavily at the lower end of the market, it prevents potential first-time buyers from finding affordable homes for sale, he adds. “Owners of those homes can’t move up the chain because they’re stuck underwater in the entry-level home they bought years ago. The logjam at the bottom is having ripple effects.”

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That $50 trillion zombie.

The Warren Buffett Economy – Why Its Days Are Numbered-Part 3 (Stockman)

During the last 27 years the financial system has ballooned dramatically while the US economy has slowed to a crawl—–a divergent trend that has intensified with the passage of time. For instance, since Q4 2000, nominal GDP has expanded by just 70% compared to a 140% gain in market finance (i.e. the value of non-financial corporate equity plus credit market debt per the Fed’s Flow Of Funds report). As a consequence, and as we previously demonstrated, the ratio of finance to economic output has soared to nearly 540% of national income compared to a historic norm of about 200%. Had even the stabilized ratio of 240% that the Volcker sound money policy had put in place by 1986, for example, remained at the level, total credit market debt and equity finance would be $50 trillion lower than today’s gargantuan $93 trillion total.

Even when you purge the cumulative price inflation out of the above picture, the story does not remotely add-up. That is, while real median household income has not gained at all since the late 1980s, and thus currently stands at just 1.03X of its 1987 value, the GDP deflator-adjusted value of corporate equities and credit market debt outstanding stands at 8.0X and Warren Buffett’s real net worth at 19.0X. Needless to say, that’s not capitalism at work; its central bank driven bubble finance. So the question remains why did the Fed expand its balance sheet by 22X over the past 27 years (from $200 billion to $4.5 trillion)? After all, the empirical result was a sharp slowing of main street growth, a massive financialization of the US economy and monumental windfalls to financial speculators who surfed on the $50 trillion bubble.

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“..when governors like Sam Brownback of Kansas or Scott Walker of Wisconsin slash spending on education and withhold infrastructure investment, they are serving the long-term interests of China rather than their own citizens”

Myopic US Policies Pave Way For China’s Dominance (MarketWatch)

The Republican governors who are reducing taxes and slashing government spending are no doubt keeping their wealthy campaign donors happy. But when governors like Sam Brownback of Kansas or Scott Walker of Wisconsin slash spending on education and withhold infrastructure investment, they are serving the long-term interests of China rather than their own citizens. Trapped in the short-term objectives of their myopic ideology, these governors, as well as the Republican majorities in Congress, are hastening the decline of the U.S. as a world hegemon, and speeding the day when China will fashion a truly world empire.

Even as this country founders with a misguided fiscal retrenchment that will leave it ill-equipped to face global competition in coming decades, China is spending hundreds of billions on highways, rail lines, and pipelines to knit together a Eurasian landmass that a longstanding theory of geopolitics sees as the key to a genuine world empire. When the high-speed rail network and web of pipelines being feverishly constructed by China makes the land transport of resources more economical than sea transport, the containment policy followed by naval powers — first Britain, then the U.S.— will no longer work.

This is the daunting thesis advanced by University of Wisconsin historian Alfred McCoy, who sees China fulfilling the geopolitical destiny first described by British geographer Halford Mackinder in January 1904 in an impactful presentation to the Royal Geographical Society. “If China succeeds in linking its rising industries to the vast natural resources of the Eurasian heartland, then quite possibly, as Sir Halford Mackinder predicted on that cold London night in 1904, ‘the empire of the world would be in sight,’” McCoy wrote in a blog post this week. In Mackinder’s view — which has come to be known as the Pivot of History or Heartland Theory — it is the “world island” comprising Europe, Asia and Africa that is destined by geography to become the dominant world empire.

Though Mackinder’s forecast has taken longer than expected due to two world wars, the Russian Revolution and the Sino-Soviet split, China is now making good on the potential he described, McCoy says. “After decades of quiet preparation, Beijing has recently begun revealing its grand strategy for global power, move by careful move,” McCoy writes. “Its two-step plan is designed to build a transcontinental infrastructure for the economic integration of the world island from within, while mobilizing military forces to surgically slice through Washington’s encircling containment.”

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The old dream of the big continent. But what happens when China’s economy halts?

China’s Answer to Europe’s Needs (Bloomberg)

Although Budapest and Beijing are separated by 6,000 miles, they’ve just agreed to become much closer. In a quiet ceremony held last weekend, Hungary became the first European country to sign onto China’s New Silk Road initiative, a multi-billion dollar program to build up infrastructure and trade along the land and maritime routes of the ancient Silk Road that stretched across Asia and Europe. Right now, Hungary’s participation probably won’t have an impact beyond its own borders. But as others countries follow its lead, China’s economic and political relationship with Europe will likely undergo a dramatic shift – one that may not be to the European Union’s liking.

The Chinese government’s interest in Europe isn’t new. In recent years, it has made substantial investments in Greek port facilities, and agreed to help finance the development of high-speed rail service between Belgrade and Budapest. In both cases, China wanted to simplify the logistics of exporting to European markets. In return, it offered something to the countries in question: help building infrastructure, and easier access to Chinese markets (assuming they could figure out something to export back). The novelty of the New Silk Road initiative is that China is now pursuing far deeper partnerships as part of a comprehensive political strategy. Previously, policy makers in Beijing tended to treat, say, an investment in Tajikistan as a discrete exchange – you get a pipeline, we get gas.

Under the New Silk Road framework, it’s part of an explicit effort to expand Chinese influence across Eurasia – one step toward earning primacy for China on the global stage. Beijing hasn’t denied having vast ambitions for a program it expects to spur $2.5 trillion in annual trade by the end of the decade. In March, Xinhua, China’s official state news wire, announced the purpose of the program is nothing less than to “change the world political and economic landscape.” According to an analysis by Barclays, China’s economy will benefit enormously from opening up new markets for its excess capacity. For example, China’s massive state-owned sector currently earns an average return on investment of just over 4%. In contrast, Barclays estimates the average return for Chinese firms on New Silk Road infrastructure projects to be between 10 and 15%.

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It’s like a vaudeville act: Xi and Li playing with fire.

The World’s Worst Investment Bubble Will Burst Soon (MarketWatch)

Investment bubbles always look so obvious in hindsight. But when you’re in the middle of one, it’s hard to fight the crowd, even if that little voice in your head tells you to run for the hills. Why? Bubbles produce compelling narratives that give people reasons to believe. The Internet is changing everything. Housing prices never go down. Tulips are the most precious commodity on God’s green Earth, etc. Now the same thing is happening again in China, a market that has had one huge bubble burst only recently. The Shanghai Composite index briefly topped 6,000 in October 2007 only to plummet to just above 1,700, a sickening 70% plunge in only 12 months.

But a mere seven years later, Shanghai is above 5,000 again, and the bulls say more gains lie ahead, even though China’s economy is slowing dramatically and some valuations already are stratospheric. They’re counting on China’s central bank to keep cutting rates. It already has reduced them three times in the past six months. Sound familiar? Also, the Chinese government has eased trading restrictions on foreign investors. On Tuesday, index provider MSCI said it “expects to include China A shares in its global benchmarks” once it works out some issues with Chinese regulators.

A flood of institutional money would presumably follow. Indeed, mutual fund company Vanguard said last week it would gradually increase the number of mainland China-traded A shares in its Emerging Markets Stock Index Fund and ETF. This macro “story” has powered Shanghai 150% higher in the past 12 months. Shenzhen and other mainland markets with riskier, more speculative stocks have nearly tripled. With the animal spirits unleashed, average Chinese investors are piling in. In a reverse of what happened in the U.S. in the 2000s, Chinese investors fleeing a busted housing market have thrown their money into stocks. Talk about going from the wok to the fire!

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“Other eurozone countries insisted that restructuring must not happen in 2010, and to the extent it was for their benefit, they should share the burden.”

Demands On Greece Will Yield The Opposite Of What They Promise (FT)

The creditor demands and Greek counterproposals cover the primary (before interest) budget surplus, tax rates and pension payments, and a host of structural reforms. As you contemplate the list, it is worth shoving the details to one side and asking a more basic question: why do the creditors bother? What does it matter to Brussels, Frankfurt, Berlin and Washington whether the leftwing radicals in Athens adopt economic policies that the creditors claim are better for Greece? Why can’t the Greeks be left to sink or swim on their own? Of the answers that could be thought up to this question, many are illegitimate. They include the feeling that Greece need to be punished for being a deceitful troublemaker in Europe’s midst.

Also, the anti-democratic view that if the people make a bad choice the technocrats had better protect them against themselves. The only legitimate justification for the creditors’ insistence on specific policies is that these may be necessary for them to get their money back. Even there, the legitimacy is not clear-cut. Only 10% of the rescue loans financed Greek spending – the rest went to pay back outstanding debt that should have been restructured instead. Other eurozone countries insisted that restructuring must not happen in 2010, and to the extent it was for their benefit, they should share the burden. But for what it’s worth, the creditors’ interest in getting their money back makes the primary surplus by far the most important negotiation point.

The other demands can be justified only insofar as they are needed to reach a legitimate primary surplus target, otherwise not. But the creditors show a galling unwillingness to realise that by now, tightening Greece’s primary balance will make them less, not more, likely to get their money back. It is worth repeating the debt arithmetic we drew up last week. A plausible assumption is a fiscal multiplier (the effect of budget tightening on the economy) of 1.5 and a second-round effect of a GDP loss on the budget of one-third (it would be interesting to know which numbers the creditors use).

That means to achieve a given consolidation, measures twice as large have to be put in place, and the economy will shrink by three times the amount. Athens now seems to have accepted the creditors’ demand for a 1% of GDP primary surplus this year – from the 2/3% deficit the creditors’ currently expect. So to achieve that one-and-two-thirds percentage point improvement, fiscal measures have to be taken worth 3.33% of GDP – not, as many seem to think, one-and-two-thirds. And the economy will be 5% smaller than it would otherwise be.

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There is no clearer sign of how the EU has deteriorated than having certified nut Tusk speak on its behalf.

Varoufakis: ‘Contrary To Stubborn Rumours, We Never Gambled’ (Bloomberg)

Greece was told to stop fighting creditors’ demands and sign a deal that will avert a default as officials plan for a worsening of the crisis. Diplomatic niceties evaporated in Brussels on Thursday as European Union President Donald Tusk rebuked Greek Prime Minister Alexis Tsipras for dragging his feet on a debt agreement and the IMF’s team walked out of negotiations. Greek stocks tumbled. At a meeting of euro-area government staffers late Thursday, Greece was given less than 24 hours to come up with firm proposals to end the impasse, two officials present said. Policy makers are now examining all scenarios if Greece refuses to compromise, including the possibility that the country could eventually leave the currency, said the officials.

“There is no more time for gambling,” Tusk told reporters in Brussels on Thursday. “The day is coming, I am afraid, that someone says the game is over.” Greek banks fell as much as 8.1% and traded 7.1% lower at 11:30 a.m. in Athens. Greek bank stocks have lost more than 50% since the previous government of Antonis Samaras began to unravel in December. The Athens Stock Exchange Index, which has lost 24% since then, dropped as much as 4.2% on Friday. Standing on the brink of economic ruin, a reality check awaited Greece. The trio of lenders that hold the key to the country’s fate have run out of patience with what they see as delaying tactics and mixed messages of a leader elected to end an era of austerity.

“The ball is very much in Greece’s court,” IMF spokesman Gerry Rice told reporters in Washington. “There are major differences between us in most key areas. There has been no progress in narrowing these differences recently.” Greece is ready to speed up talks as its creditors have demanded and is aiming to reach an agreement in the next few days, government spokesman Gabriel Sakellaridis said in an e-mail on Thursday as Finance Minister Yanis Varoufakis pushed back against Tusk’s criticism. “Contrary to stubborn rumours, we never gambled,” Varoufakis said on Twitter.

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It shows that no-one can be expected to overhaul the whole edifice in 5 months while they’re ordered to draft new troika plans every single day.

Greek Pension Mess Shows There’s No Easy Way Out of Impasse (Bloomberg)

To find out why Greece’s pension system is tying negotiators up in knots, look no further than Maria Kounani, 59, a mother of two, single parent and early retiree. The maker of sewing patterns applied for a reduced pension last year, when the business where she’d worked for 20 years struggled with unpaid orders. To qualify for a full pension she needed to work another 10 years. She opted for early retirement, the only real choice she says she had, and one Greece’s creditors say is undermining the pension system. “I did it because no one is hiring me,” Kounani said. “They’re not even hiring my daughter who’s 39.” As Greek pensions remain a key sticking point in talks with creditors, cases like Kounani show why there are no simple ways out.

For creditors, the pension system is still too generous. For the Greek government, it’s a system struggling to cope after five years of recession and dwindling contributions in a nation with the European Union’s highest unemployment. In the first quarter, the rate was 26.6% overall and 30.6% for women. An aging population and an €8 billion hit to pension finances because of the largest sovereign debt restructuring in history in 2012 hasn’t helped. “If you have a new contribution system and a new system of calculating pensions and a person loses her job, she falls out of the system,” said Jens Bastian, an economist and a former member of the EC’s Greek task force. “That’s a macro issue that no number of pension system reforms can fix.” [..]

In parliament on June 5, Tsipras called the proposals from creditors “unrealistic” and said no lawmaker could agree to demands such as removing a stipend from the lowest-paid pensioners. Tsipras has agreed to merge funds to cut costs and close loopholes that allow early retirement. He blamed five years of austerity for weakening the system, saying fund reserves fell by €25 billion through the 2012 debt swap and high unemployment. In the last five years, pensions fell as much as 48%, Tsipras said, while 45% of recipients get pensions that are below the poverty threshold. Kounani gets a provisional payment of €420 a month and will get a final pension disclosed to her next year. She hopes it will be a little more than what she gets now, so that there’s a bit left over after paying her rent of €360 a month.

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As of that’s news. All parties must do this.

German Government Consulting On What To Do If Greece Goes Bankrupt (Reuters)

The German government is holding “concrete consultations” on what to do in the case of a bankruptcy of the Greek state, German newspaper Bild said, citing several people familiar with the matter. This includes discussions about introducing capital controls in Greece if the crisis-stricken country goes bankrupt, Bild said in an advance copy of an article due to be published on Friday. It said a debt haircut for Greece was also being discussed, adding that government officials were in close contact with the ECB on that.

The German government did not, however, have a concrete plan of how it would react if Greece goes bankrupt and much would have to be decided on an ad-hoc basis, Bild cited the sources as saying. Earlier on Thursday, the International Monetary Fund dramatically raised the stakes in Greece’s stalled debt talks, announcing that its delegation had left negotiations in Brussels and flown home because of major differences with Athens.

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Obviously.

Keeping Greece in the Euro May Have Nothing to Do With … Euros (Bloomberg)

The need to keep Greece firmly in the bosom of the West has always underpinned decisions about its European role. Greece became the 10th member of what’s now the EU in 1981 – joining before Spain and Austria. For 26 years, until Bulgaria joined in 2007, it shared no land border with another EU member. It adopted the euro in 2001, only then to reveal less than a decade later its finances weren’t in order. Merkel’s words were an echo of what Truman told Congress in 1947. That’s when he got approval for military and economic aid to prevent Greece from falling under the influence of the Soviet Union during its 1946-49 civil war. ‘‘Should we fail to aid Greece and Turkey in this fateful hour, the effect will be far-reaching to the west as well as to the east,” Truman said.

“We must take immediate and resolute action.” The Greeks joined NATO in 1952, three years before the Federal Republic of Germany and the same time as Turkey, uniting two traditional enemies under one umbrella. The aid Greece received under the Truman Doctrine and then the Marshall Plan bankrolled years of growth. Greek leftists chafed at the U.S. influence. The military regime, or junta, in 1967 to 1974 was seen as sponsored by the U.S. Truman’s statue, erected in 1963 by grateful Greek Americans, was defaced, attacked and toppled regularly over the years to protest U.S. policies in Greece and the region.

As Tsipras prepared to meet Merkel in Brussels on Wednesday evening, his foreign minister, Nikos Kotzias, told a gathering at Oxford University that now is the time to decide whether the pursuit of security, prosperity and freedom will prevail over the focus on numbers and profit margins. “Nowadays the role of geopolitics is more important than before,” Kotzias said. “Our world is in the midst of a conflict between its current needs and the future demands.” The EU “needs to learn to see beyond the end of its nose, as we say in Greece,” he said. “To manage our future not as a momentary action, nor as a shareholders’ meeting that thinks with an horizon of quarterly earnings.”

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Debt restructuring is inevitable, so let’s get it done.

EU Issues Final Warning To Greece As Last-Ditch Talks Achieve Nothing (AEP)

The European Union has warned Greece in the clearest language to date that its patience is exhausted and the country will be abandoned to its fate unless it accepts creditor demands in short order. Donald Tusk, the EU’s president, said the radical-Left Syriza government must stop spinning out the negotiations and face hard choices before Greece spirals irrevocably into default. “There is no more time for gambling. The day is coming, I’m afraid, that someone says that the game is over,” he said. The blunt language came as the International Monetary Fund pulled its officials out of the talks, citing a failure to break the deadlock after four months of wrangling. “There are major differences between us in most key areas. There has been no progress in narrowing these differences,” it said.

Greek prime minister Alexis Tsipras failed to secure any substantive concessions during two days of stormy talks with key power-brokers in Brussels, including German Chancellor Angela Merkel and French president Francois Hollande. Mrs Merkel tried to put the best gloss on events, insisting that Greece had agreed to work “full steam ahead” to break the impasse. Yet her assurances belie the reality that Syriza and Europe’s creditor powers are no closer to a deal as bankruptcy looms. The Greek interior ministry has ordered regional governors and mayors to transfer all cash reserves to the central bank as an emergency measure. The mounting worry is that the government may not be able to meet its bill for salaries and pensions this month. The economy is sliding deeper into recession and tax revenues are falling short.

Bizarrely, the Athens stock market soared 8.2pc in a wave of euphoria, swept by unsubstantiated rumours of a breakthrough that left Greek officials scratching their heads. The Piraeus Bank and Eurobank both jumped 19pc, while yields on two-year Greek debt plummeted 135 basis points to 23.8pc. Markets may have misjudged the political choreography of the talks in Brussels. It is understood that Mr Tsipras chose to acquiesce in what insiders deem to be a “negotiating charade” in order to show willingness and avoid blame at home if the showdown ends in rupture, and even in Greece’s ejection from the euro. It does not mean that Athens has ditched its fundamental demand for debt restructuring, an end to austerity and a comprehensive solution that puts Greece on a viable economic path.

“They tell us that there will be plenty of money for the next year or two if we sign on the dotted line and accept the Memorandum,” said one official. “The creditors are taking this to the wire because they think we are scared – and we are scared – but we cannot accept these terms because they solve nothing,” he said. Syriza has proposed a debt swap that would let it borrow from the eurozone bail-out find (ESM) to repay €27bn of liabilities to the ECB, a rotation from one creditor to another. This would have the effect of stretching maturities and averting a default to the ECB in July. The plan has so far been rejected out of hand by Brussels.

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The extent to which the press shows any true insight in what’s going on is painfully limited. They see no fundamental difference between selling a second hand car and negotiating about abject poverty of half a country.

IMF To Alexis Tsipras: ‘Do You Feel Lucky, Punk?’ (Guardian)

“You’ve got to ask yourself one question. Do I feel lucky? Well, do ya, punk?” The lines spoken by Clint Eastwood in Dirty Harry sprang to mind when the International Monetary Fund (IMF) announced that it had called its Greek negotiating team home from talks in Brussels. The IMF’s message was short and brutal. There were still major differences between Greece and its creditors. There was no progress in narrowing those differences. The two sides were well away from an agreement. So much, then, for the talk earlier this week that a deal is close. Shares across Europe surged on hopes that a resolution to the crisis was at hand, but that optimism was punctured by the news from Washington. The IMF, clearly, has had enough.

It was unimpressed by Greece’s decision to bundle up all four of the debt repayments due this month and is frustrated by the unwillingness of Alexis Tsipras, the Greek prime minister, to cross its two “red line” issues – pensions and labour-market reform. This, then, is the IMF holding the gun to Alexis Tsipras’s head. It feels like a pivotal moment, the point where the creditors are saying “take it or leave it” and the Greeks have to decide whether the IMF really means it. Up until now, the view in Athens has been that the troika – made up of the IMF, the European Central Bank and the European commission – has been bluffing.

The view has been that there is always room for a bit more haggling, always time to cut a better deal that would avoid the need to make the changes to pensions, VAT and collective bargaining being demanded in exchange for fresh financial assistance. Greece has reached this conclusion for a number of reasons. It thinks European politicians will be wary of anything that might push Greece out of the single currency, because that would be a setback to the idea that Europe only ever moved forward. It believes that Angela Merkel will be willing to compromise for fear that a Grexit would push Tsipras into the willing arms of Vladimir Putin. And it is convinced that the reforms being demanded by the troika are wrong-headed and will impose more pain on a population that has suffered enough.

For their part, the creditors say Greece is not serious about reform, with the IMF noting that the Greek government is contributing 10% of GDP to pensions against an EU average of 2%. Put simply, they know Greece is running out of money and wants to stay in the euro. They are fed up with Tsipras acting like he is the one holding the .44 Magnum and they are threatening to pull the trigger. This movie climaxes next week.

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“We are left with the conclusion that IMF leaders just don’t seem to be reading their own research.”

The Slow Transformation Of The IMF (Rochon)

In recent years, the IMF research department has even espoused and given empirical support to a wide range of socially oriented economic policies, what many would call left-friendly. Today, there is no doubt the research department at the IMF has drifted somewhat away from its right-of-centre pulpit, in a series of important policy shifts. Of course, there remain important differences between what trained economists at the IMF are writing (the analysis) and what the political leaders of the IMF, like its director Christine Lagarde, are espousing publicly (the policies). Nowhere is this more evident for instance than the advice given to Greece. We are left with the conclusion that IMF leaders just don’t seem to be reading their own research. As economist Francesco Saraceno has clearly demonstrated, the IMF has gone on record with the following analytical conclusions:

1. Expansionary fiscal policy, with a focus on public investment, is basically a “free lunch.” Given the large impact of public expenditures, particularly in recessions, austerity programs are harmful and should be replaced by higher government spending. In fact, austerity the IMF argued, could not work. Concern over public debt is overrated;

2. Labor-market flexibility (for instance, reduction in wages; decreases in union participation) do not foster economic growth; they just are another element in a regressive income distributive regime, along with financial globalization;

3. Countries should actively manage their capital accounts, and even reverse the trend for even more deregulated financial flows;

4. Sustained and stable economic growth is achieved through a progressive income distribution, with redistributive efforts having no discernible negative impact on the economic performance. This argument is virtually a rejection of the efficiency-income egalitarianism trade-off behind the neoliberal discourse and “trickle-down” policies.

At first glance, these policies can appear to be quite progressive, and in many respects they are. Ignored by the mainstream of the profession and discarded by leaders and institutions around the globe, these policies have at one time or another, all been actively promoted by progressive economists, as well as by some progressive political parties and organizations.

Read more …

Australia.

Stupidity Is The Biggest Problem In The Housing Debate (Pickering)

Recent comments by Prime Minister Tony Abbott and Treasurer Joe Hockey highlight the biggest problem with Australia’s housing debate: pure unfettered stupidity. Faced with a social issue that requires real solutions and hard decisions; the federal government has instead stuck its head in the sand and hopes it will just go away. Reserve Bank governor Glenn Stevens was having none of it yesterday, declaring that the Sydney market had become “crazy” and a genuine “social problem”. It was strong language from a normally circumspect public servant. “What is happening in housing in Sydney I find acutely concerning for a host of reasons,” Stevens told the Economic Society of Australia yesterday. “I think some of what’s happening is crazy, but we [the RBA] have a national focus and so that just increases the complexity.”

If Stevens believes that a market has gone ‘crazy’ then there’s a good chance it went past that point long ago. It’s been well documented how slow the RBA was to endorse the use of macroprudential policies — particularly given the swift action of the Reserve Bank of New Zealand. The data itself suggests that current dynamics in the Sydney property market are unprecedented over the past few decades. The only comparable episode, in the early 2000s, resulted in real Sydney dwelling prices falling to such an extent that they didn’t pass their 2003 peak for another decade. Earlier this month, Treasury secretary John Fraser warned that the Sydney property market was “unequivocally” in a bubble. Nevertheless, Hockey and Abbott won’t have a bar of it.

“The starting point for a first home buyer is to get a good job that pays good money,” Hockey said earlier this week. “Then you can go to the bank and borrow money.” “If housing were unaffordable in Sydney, no one would be buying it.” It’s a simplistic view of the world that suits the ideological foundations of a party famed for its usage of three-word slogans. If only life was that simple. In the Sydney property market it is no longer enough to simply find yourself a good job. An individual can earn between $80,000 and $90,000 in Sydney while renting and make minimal progress towards saving up for a housing deposit. Increasingly younger Australians are relying on their parents or grandparents for financial support either directly through rent-free living or via cash handouts. Misguided housing policy has created an intergenerational property market in which the wealth of one’s parents is the single best indicator of whether you can enter the market.

Read more …

It’ll be an uphill battle.

A Bitcoin Start-Up Has Made Exchanging Currency Free (CNBC)

A bitcoin start-up has launched a service that will allow people to carry out foreign exchange transactions for free, dodging the expensive commission often charged by major financial institutions. Bitreserve, a company founded last year by CNET and salesforce.com co-founder Halsey Minor, allows people to convert bitcoin into normal currencies and precious metals. The start-up used to charge a 0.45% commission for bitcoin-to-dollar transactions, but has now cut its fees entirely. The move is likely to give it an edge in the hotly contested “fintech” market where a number of companies such as U.K.-based Transferwise are contesting the currency transfer and mobile payments space.

Users of the platform will be able to make currency exchanges in eight major currencies: euros, dollars, pounds, yuan, yen, pesos, rupees, swiss francs. People will also have the ability to convert the currencies into gold, silver, platinum and palladium, depending on the market price. Bitreserve offers the mid-market rate for currencies. “Those in society who can least afford it have to spend so much for things that are so commonplace,” Anthony Watson, president and chief operating officer of Bitreserve, told CNBC by phone. “If you look at Mexican immigrants, they send approximately $30 billion home every year and they pay just under $3 billion for the privilege of sending that money home. That is 10% and that is disgusting.”

Bitreserve’s service comes with a catch however – you have to own bitcoin to use the service in order to make an initial deposit and then convert it to another asset. Plus, when users receive money, they can only spend it in bitcoin. This could put it at a disadvantage to other companies that allow people to sign up with bank accounts and send money for still a small commission.

Read more …

Most of Europe -excluding, Italy, Greece- in effect have a citizens income already. So why not make it a European law?

Italian Statistics Agency Validates Citizens Income Proposal (M5S)

The Citizens’ Income is the priority for ltaly. ISTAT, the Statistics Agency, has verified that the cost to implement this would be €14.9 billion. The M5S has found the resources to finance this – by cutting wasteful spending, and Europa is demanding that we implement this. The only thing missing is the willingness of the parties to discuss and approve it in Parliament. The Citizens’ Income is being discussed right now in the Senate Committee and we are callling on the President of the Senate, Grasso, to get together with the group leaders and Alberto Airola to get our Citizens’ Income draft law onto the agenda for the floor of the Senate as soon as possible (as set out in Art. 53 section 3 of the Senate Regulations). Each day that is lost is another slap in the face to each of the 10 million Italians living below the poverty line. No one must be left behind. Citizens’ Income now!

“This morning in the Senate’s Labour Committee, the President of ISTAT and various members of the Statistics Agency spoke to the Committee and presented a report containing an in-depth financial analysis about our proposed law for a Citizens’ Income. In the last few months we have been attacked in so many ways and we have heard unfounded criticism coming from people in different political parties stating that the cost of our proposal was more than 30 billion. But now it’s ISTAT that is confirming the validity of our proposal! According to the ISTAT report presented to the Senate, the income support in this package would cost €14.9 billion, which is €600 million less than the estimate we had in our initial model.

It’s worth noting that even ISTAT reckons that the M5S’s proposal for a Citizens’ Income turns out to be the most comprehensive proposal under discussion. This is because there is no distribution of resources to those who are not experiencing serious financial difficulties. In fact, the money is targeted at the 2,759,000 families (about 10 million people) with an income that is below the poverty line defined by Eurostat: €780. ISTAT adds that the Citizens’ Income is a measure that “tends to create a solid network of social protection, and fills in certain gaps that could be found in the welfare system. It highlights the difference between youth poverty and the situation of young people living on their own.“

Thanks to the savings verified by ISTAT, it is possible to free up further resources by taking additional actions like: strengthening the Job Shops, and promoting the creation of new enterprises and innovative start-ups. There are no longer any excuses. We are now calling on the President of the Senate, Grasso, to get together with the group leaders and Alberto Airola to get our Citizens’ Income draft law onto the agenda for the floor of the Senate as soon as possible (as set out in Art. 53 section 3 of the Senate Regulations). Thus let Pietro Grasso keep to his commitments, respect the regulations and take immediate steps. With the Citizens’ Income, nobody gets left behind.”

Read more …

Jun 112015
 
 June 11, 2015  Posted by at 2:06 pm Finance Tagged with: , , , , , , , ,  1 Response »


G.G. Bain Auto polo, somewhere in New York 1912

There’s a Reuters article by Paul Taylor today that’s thought provoking, but not along the same line of thought that the writer follows (or the twist he gives to it). Taylor concludes that the IMF would love to wash its hands off Greece, but can’t because it’s subservient to German and Brussels interests (a junior partner). However, he also describes, without realizing it, why and how the Fund can rectify that.

Not that we’re not under the illusion the IMF is prone to latch on to the following, but that it would nevertheless be an extremely wise move for the Fund, and especially for its reputation. Which, no matter how you see it, is under threat from its Asian ‘competitor’, the Asian Infrastructure Investment Bank (AIIB), not in the least because the non-western world has long found that the west has far too much power in the IMF, which after all is a global organization.

In that vein, let’s start off with an article the FT published in April 2013, by Ousmène Mandeng, who also features in Taylor’s piece. This former IMF deputy division chief pointed out what unease the IMF role in Greece caused, and how that role undermined its role as an international institution. Today, nothing has changed.

The IMF Must Quit The Troika To Survive

There are many victims of the eurozone crisis but one loser is seldom mentioned: the IMF has suffered considerable collateral damage. It has been dragged along in an unprecedented set-up as a junior partner within Europe, used as a cover for the continent’s policy makers and its independence lost. The monetary fund was set up as a technocratic institution. That, indeed, is why it was brought into Europe: it was felt that a neutral broker was needed to fix the eurozone’s problems.

It is an outsider that would seem less biased in its assessments of peripheral eurozone countries than, say, the chancellor of Germany or the president of the European Commission. While the distribution of voting power within the IMF has been controversial for some time, it is a consensus-driven body. Its independence from any one region or power has provided the basis for efficient decision-making – and is essential to it.

That last sentence sounds more like wishful dreaming than an assessment of reality.

So the fact that decisions about IMF-supported adjustment programmes are seemingly being taken in Berlin, Frankfurt and Brussels should horrify its members.

The commission and the ECB are not even members of the IMF yet they seem to be running the show.

Together with the IMF, they are the troika running the continent’s rescues. Being part of this approach means political meddling has been institutionalised. The approach to the eurozone crisis also undermines the long-running efforts to reform the governance of the IMF, which were, after all, intended to reduce the disproportionate influence of western European governments.

The interests of other eurozone countries or institutions dominate proceedings unduly, so it is often unclear whether the interests of the IMF, the global economy, the eurozone or individual countries are being protected by its work.

For the neutral observer, it seems very clear whose interests the IMF ‘protects’.

[..] troika adjustment programmes have been guided often by the needs of neighbouring European governments rather than global economic considerations. It would surely already have walked away from Greece had it not been held back by political inconvenience. The eurozone has further undermined the IMF by setting up its own crisis resolution institution. The European Stability Mechanism is for all practical purposes a European monetary fund.

Proposals for an Asian monetary fund during the Asian crisis were attacked with good reason: there was real concern that a regional fund would reduce the effectiveness of multilateral co-operation. These concerns seem to have been forgotten.

Well, those concerns are back.

It is not hard to imagine a scenario where a country has suffered a considerable economic shock and requires significant financial resources to avoid a painful and disruptive adjustment – say a large debt restructuring. In such circumstances, the interests of that nation, the world and neighbouring countries might not be aligned.

The fund cannot be seen as neutral and at the same time serve the immediate interests of the eurozone. [..] the eurozone debacle risks destroying the credibility of the IMF – and therefore the foundations for multilateral economic co-operation.

The IMF’s potential effectiveness has suffered and countries may be less willing to seek assistance from the fund, possibly prolonging future economic pain. This will come to matter a great deal if a larger eurozone country should come to require its help. To save itself, the IMF needs to leave the troika.

The main take-away from this should perhaps be that the IMF has not even so much served the interests of the eurozone, but exclusively those of its richest members, Germany, Britain and France. That this can be damaging in the long term is obvious. But there may be a way it can redeem itself, as we will argue. First, though, let’s go to Taylor’s article today:

IMF’s ‘Never Again’ Experience In Greece May Get Worse

For the IMF, five years of playing junior partner in European bailouts for Greece has been a “never again” experience, and the worst may be yet to come. The global lender has lent far more to Athens than to any other borrower, contributing nearly one-third of the total €240 billion.

But it has sat uncomfortably in the side-car of the Greek rescue. Called in by EU paymaster Germany to try to keep the European institutions and the Greeks honest, the IMF has never had control of the program.

Critics say the IMF has damaged its credibility by going along with political fudges to keep Greece in the euro zone rather than insisting on write-offs, first by private creditors and now by European governments..

Keep that in mind: uncharacteristically, the IMF has not made restructuring debts a priority for Greece. Or, one could argue, debts were restructured, but too late and in the wrong way. That, too, may prove very damaging for the Fund.

“One of the most important lessons for the IMF from the Greek program should be that a multilateral institution should not institutionalize special interests of a subset of its membership,” said Ousmene Mandeng, a former IMF official.. “The interest of the IMF is not necessarily aligned with the EU/ECB,” he said.

In 2013, the IMF published a critical evaluation of its own role in the first Greek bailout in 2010, arguing that it should have insisted on a “haircut” on Greece’s debt to private creditors from the outset. Instead it went along with European governments frightened of a Lehman-style market meltdown and keen to shield their banks from losses.

A 2010 IMF staff position note described default on any debt in advanced economies as “unnecessary, undesirable and unlikely”, yet 18 months later the IMF advocated a 70% “haircut” on Greek government debt as a condition for continued involvement in lending to Athens.

Now IMF chief Christine Lagarde is hinting that European governments need to give Greece debt relief to make the numbers add up, but since this is politically unacceptable in Germany, she has had to talk in code in public. “Clearly, if there were to be slippages from those (fiscal) targets, for the whole program to add up, then financing has to be considered,” Lagarde told a news conference last week.

In other words, politically unacceptable in Germany trumps politically unacceptable in Greece by seven leagues and a boot and a half. That is not just damning for the IMF’s image, it damages that of the EU just as much. The leaders of neither seem to care much. But internally in the IMF, the discussions have always been there, and always provided the right approaches. It’s just that third-party considerations prevailed.

Behind closed doors, IMF officials are telling the Europeans that Greece will not survive without a third bailout program, which will require debt restructuring by European governments. The IMF insists on being repaid in full and is not expected to lend any more to Athens. But Berlin and its allies want the Fund to remain involved..

[..]The Fund prefers to see its role as that of a truth-teller, making an objective assessment of a country’s ability to sustain its debt based on economic criteria such as interest rates and loan maturities, growth, productivity and the fiscal balance. Insiders say privately it would love to get out of the Greek program for good, but the Europeans may not let it.

Summarized: the IMF is a political tool. Nothing new there. But it’s being a tool that threatens for the Fund to become a bit-player in the global scene. China and Russia have seen enough, as, obviously, has Greece. Though Athens whould have been justified in venting a lot more anger about what happened to it than it has, even to this -Syriza- day.

In its various ‘critical evaluations’, the IMF will probably use a term like ‘mistake’. But there is a large difference between ‘mistake’ and fault’ or ‘blunder’ or even ‘criminal neglicence’. And the IMF needs to admit that it has been at fault, and seek to retroactively rectify that fault. If it wants to undo the damage to its reputation, that is.

The 2010 -first- Greek bailout, worth €110 billion, happened without any debt restructuring. Of course that should never have been accepted inside the IMF offices. It was a gross departure from established policy.

But the reason why is crystal clear: 90% of the money didn’t go to Greece, it went to save German, Dutch and French banks who had gambled and lost big-time, largely with loans to an Athens government serving the interests of the country’s existing oligarchic elite. The proper term is ‘collusion’.

After the troika had bailed out the European banks and thus further indebted the Greek people to the tune of another €100 billion, obviously a second bailout became necessary. After all, Greek debt had neither been relieved not restructured. It took just 18 months for that second bailout to enter the scene, stage left.

Meanwhile, those same European banks, handily helped along by the €100 billion they received courtesy of the Greek people, had reduced their exposure to Greek debt from €122 billion to €66 billion. Which put a further € 56 billion pressure on Athens.

In July 2011, Dominique Strauss-Kahn, who had overseen the first bailout, was forced out of the IMF governor role through some ‘bizarre incidents’, and in came Wall Street darling Christine Lagarde. A second bailout package for € 100 billion was agreed, but Greek PM Papandreou didn’t feel secure enough politically to accept its terms without calling a referendum. The EU, though, doesn’t like referendums (it tends to lose out in those).

In short order, Berlin/Paris/London had Papandreou replaced by Yale and Federal Reserve clone Lucas Papademos as Greek PM on November 10 2011. Just 6 days later, they also toppled Silvio Berlusconi as Italian PM, and replaced him with another banking technocrat, Mario Monti. Europe and democracy, it’s a strange-bed-fellows relationship.

That second bailout, agreed to in October 2011, but ratified only in February 2012, included a 53.5% face value loss for bondholders. But since the big ‘foreign’ banks had pulled out, that loss was mainly forced upon Greek banks and funds. Dragging the country’s economy even further down. The pattern is deceptively simple and even almost elegant in its destructiveness.

And that is why we find ourselves where we are today.

The whole point of this long history lesson is that what the IMF can do today to restore its reputation, its independence and indeed its very relevance, is to go back to the first Greek bailout of 2010 – it can simply claim that any deals agreed to under Strauss-Kahn were illegal for, by lack of a better term, pimping reasons-, and to retroactively undo the damage done by any and all deals under the troika umbrella.

That is to say, since the IMF is on the hook for €80 billion, a third of the €240 billion Greece ‘owes’, it can go to the ‘systemic’ European banks that were the recipients of this unjustified largesse, and demand its money back from them, instead of from the Greek people.

That would instantly solve the whole Greek debt issue everyone’s been talking about for forever and a day, the Athens government could go to work on reforms aimed at alleviating the misery forced upon its people instead of having to focus on troika talks 24/7, and all the false narratives about lazy Greeks living above their means could be thrown out the window in one fell swoop.

And the IMF could, make that would, regain its reputation, its credibility and its -global- relevance. Just like that. Overnight.

Like stated at the beginning, we don’t expect it to happen. But the opportunity is there. And it makes a lot more sense than just about anyone in the west will be willing to admit. The IMF can’t just serve only the EU and US and their banking sectors, or its days are numbered. It can either try and restore its reputation by doing what’s right or it can become yet another ingredient in history’s long gone and forgotten alphabet pea soup.

May 292015
 
 May 29, 2015  Posted by at 2:32 pm Finance Tagged with: , , , , , , ,  2 Responses »


Walker Evans Saint Charles Street. Liberty Theatre, New Orleans 1935

With the 3rd US Q1 GDP print coming in at -0.7% (-3% if not for inventories), perhaps the media spotlights – and lively imagination – can move away from Greece for a few weeks. The US has enough problems of its own, it would seem. For one thing, its Q1 GDP is now worse than Greece’s. Of course its debt is also much higher, just not to the IMF and ECB. But let’s leave that one be for the moment. Though a bit of perspective works miracles at times.

Of course it’s not a technical recession yet for the US, which only recently presented a +4% quarter with a straight face, and there’s always the ‘multiple seasonal adjustment’ tool. But still. It’s ugly.

The IMF confirmed on Thursday that Athens has the right to ask for “bundled” repayments in June. “Countries do have the option of bundling when they have a series of payments in a given month … making a single payment at the end of that month,” as per an IMF spokesman. Who added that the last country to do so was Zambia three decades ago.

That leaves Athens, in theory, with a 30-day window, not a 7-day one. This of course takes the pressure cooker away from Athens, and the media attention as well. There is no immediate risk of a default, or a Grexit, or anything like that. The negotiations with the creditors will continue, but the conversation will change with time less of an issue.

One thing that’s changing is that the pressure on the other eurozone countries is rising fast. They might yet get to regret the way ‘their side’ conducts the debt talks with Syriza, in which they are a party through the eurogroup of finance ministers. Because it makes ever more deposits disappear from Greek banks, some €300 million in the past few days alone. That triggers a eurozone ‘program’ entitled Target2. For those who don’t know what it is, I’ll use an explanation by Mish from 2012:

If a Greek depositor sends money to a foreign bank (say a German bank), that bank now has additional deposits. To the extent it doesn’t want to recycle them (in the past, it may have used them to buy Greek government bonds), it deposits them with a national central bank – in this case the Bundesbank. Target claims are created because the Greek bank that loses deposits gets funding via the ECB’s ELA (Emergency Liquidity Assistance) program.

Simply put, the ECB sends money to the Bank of Greece in a kind of open credit line to make up for the cash that left the Greek bank. There are some restrictions, but not many. This is not a major problem unless Greece changes currencies, or defaults. If it does, Greece will repay the credit line with Drachmas, not euros.

There are quite a few other ways in which the rest to the eurozone is on the hook for Greek debts, but this is a major one. RIght now, so-called ‘Intra-Eurosystem Liabilities’ from the Greek national bank, the Bank of Greece, have risen to €115 billion and counting -fast-. Germany’s on the hook for 27% of that, or €31 billion. While that is not life threatening for Germany, other countries will not feel that comfortable.

Countries like Spain and Portugal may by now scratch their heads about taking a hard line on the Greek issue. They may not have fully realized to what extent the eurozone is indeed a shared commitment. All eurozone nations now have at least another 30 days to think that over. The main risk in that period is that Greece may decide to leave on its own.

The 30-day grace period will probably dampen the deposit outflows for a bit, depending on what both parties have to offer in the way of statements going forward. And the incumbent ‘leaders’ in various countries can use the time to try and tell the troika that they don’t want to explain the potential losses to their voters. There are elections coming up all over, starting with Italy this weekend.

There is another possibility: that the ECB makes good on its long running threat of limiting Greek banks’ access to the ELA program. But, given the 30-day ‘grace’, and given that it would be seen as a political move by at least some parties, that seems unlikely. And it’s not like the entire thing has now become predictable, just that there’s breathing space. In which clearer -and smarter- heads can prevail.

As for the US, it’s spring, the season to adjust. But -0.7% still stings, and things ain’t going well at all no matter what anybody tells you.

May 192015
 
 May 19, 2015  Posted by at 7:38 pm Finance Tagged with: , , , , , , , ,  4 Responses »


Harris&Ewing Horse and Motor Oil, Washington, DC 1918

Will this Greek stuff ever stop? Probably, but don’t hold your breath. I was reading up on China, but that will have to wait till tomorrow. A friend just sent me a Sputnik story -they’re a Russian news channel, so they can’t be trusted, right?!- that adds more juice to the Syriza vs troika tale. And whaddaya know, the king of Greece leaks, Paul Mason at Channel 4, is involved once again.

Let’s do Mason first. He’s in Athens and, wait for it, he scored another leak. But not a direct leak to Mason; this one concerns a European Commission document leaked to Greek newspaper To Vima. There are some useful numbers here. Mason:

Greece: Europe’s Last-Ditch Effort To Keep It In Euro?

According to To Vima, the EU commission boss (Juncker, ed.) has offered Greece a deal that delays the harshest austerity for two years, and releases €5bn of bailout money to help fill the gaps in the Greek budget. To get the money Greece has to:

• Run a primary surplus of 0.75% of GDP – much lower than the previous demands from the ECB and IMF. And a surplus of 2% of GDP in 2016.

• This rises to 3.5% for both of the next years, but would have to be seen as notional – as committing to anything in 2018 barely matters when you are three weeks from default.

• Greece has to raise VAT to 18% – with 15% for card transactions. This cleverly forces tax evaders into the formal economy by setting a relatively low rate.

I was wondering why I saw two different numbers being reported, but this makes sense. As much as I am suspicious of the war on cash issue as well, we must be aware that using cash to avoid taxes is a huge issue in Greece, and Syriza has do to something about that. I’m guessing there’s a similar difference for the lower VAT rate, 6.5% vs 9.5%.

• Greece gets its way on labour market reform, which will be done using “ILO best practice”. But it has to keep an unpopular property tax called ENFIA and it has to reduce pension entitlements for public sector workers.

This may jeopardize the whole thing no matter how much water Juncker is putting into the wine. But Tsipras may find a way, provided any changes are pushed far enough into the future.

The obvious sticking point is the IMF. As I reported on Saturday, the IMF – one of Greece’s major creditors – has rules that prevent the sign-off of a “quick and dirty” settlement, such as the one Jean-Claude Juncker is offering. The debt has to be judged sustainable – yet the Juncker proposal puts off a long-term deal until October.

Greek government insiders were already worried that the IMF was going to walk away – asking the EU to take over the next bailout of Greece. The Juncker document acknowledges this problem and hints that the Greek debt will have to be taken over solely under the EFSF fund.

I don’t know that Syriza was worried about the IMF leaving the table, as long as the EU is still there.

It may still be too austere for Syriza’s left to accept – meaning Alexis Tsipras’ government could not get it through parliament, and that there may have to be new elections.

That is a possibility. The Syriza meeting I wrote about last night is happening as I write this, 3pm EDT. But the left side will also want to keep its powder dry if Tsipras can convince them he’s really close.

Beyond the usual left wingers, people I’ve found rigidly loyal to the party’s line were saying “if we surrender I am leaving”. But the leaked offer at the same time is way more generous than any proposal previously considered by the ECB and the German Finance Minister Schauble. If the Germans veto it, then it leaves Alexis Tsipras with nothing palatable to sell his own voters. A German veto would, if it came to a euro exit referendum, probably play well for those advocating a “controlled exit”. Greeks would no longer be seen as walking away from the euro, since the commission had offered them a compromise – but from a Europe where the commission has no power, and only the voters of Germany get their way.

Mason obviously gets confused in that last bit, but that’s alright. German veto, controlled exit, German voters, that’s all just opinion making. And not all reporters are equally good at opinions.

But this is just the warm up. The juice comes from the Sputnik piece. Turns out, the US has gotten involved. And they want peace and quiet in their own back yard while they’re wreaking havoc anywhere from Kiev to Ramadi to Aden. Yes, it’s about “Greece’s geopolitical value as a NATO outpost”. And Greek ports frequented by US oil tankers.

US Pressures EU via IMF Over Greece’s Permanence in the Euro

The EU is under increasing American pressure via the IMF to bail out Greece, as Grexit has become anathema to Washington, Deutsche Wirtschafts Nachrichten (DWN) reports. DWN quoted a recent article in the New York Times stating that: “Even as Greece’s European neighbors are focused on the country’s ability to repay its debts, the United States is intent on addressing Greece’s geopolitical value as a NATO outpost at the southern tip of the Balkans and as an important gateway for energy from Central Asia.” Hence the dispute is not between Greece and the EU, but between the EU and the US, added DWN. It all started with a memo dated May 14 that the IMF leaked to Paul Mason of Channel Four.

The memo was apparently leaked to put pressure on the EU in the run-up to the gathering of European leaders in Riga for the Eastern Partnership Summit on 21-22 May. Either a deal is reached then, or Greece will default a couple of weeks later. [..] Hidden in the IMF memo, however, is a nasty surprise for the still unaware European, and especially German, taxpayer. According to DWN, the US-dominated IMF is trying to pass on its credit risks to the EU via the rescue mechanism ESM (European Stability Mechanism).

Here is the IMF memo again: “While staff emphasized they are not pushing the European partners to consider debt relief, at the same time staff noted the numbers need to add up. In particular, it was noted there is an inverse relationship between reforms and sustainability.”

I forgot to ask the question yesterday in The IMF Leaks Greece, but now I see it again, I’m still puzzled. “..an inverse relationship between reforms and sustainability”, does that mean the more reforms, the less sustainability? Fewer reforms, more sustainability? It would be way less funny if it didn’t ring so true.

According to Paul Mason of Channel Four: “This translates as: the more austerity the Europeans demand, the bigger the chance that Greece defaults on its debts.” Indeed the IMF is not content with so-called “quick and dirty” solutions favored by the EU. Which is sensible enough, giving the EU’s attitude to just buy time and delay real solutions. The problem is who foots the bill. We are talking of IMF own credit risks with Greece, after all. And yet, the IMF memo mentioned “debt relief” in connection to “the European partners”. So, just as with sanctions on Russia, the US decides, the EU pays.

That’s not a bad find at all.

Yesterday, the EU hit back by leaking its own – strictly confidential, of course – memo to the Greek newspaper Vima. The EU memo contains the European Commission’s proposal to keep Greece afloat — and in the Eurozone. Clearly the US have succeeded in persuading the EU that Grexit is a no-go. The show must go on and here is how — the harshest austerity measures will be delayed for two years, and $5.6 billion (€5bn) of bailout money provided to help finance the Greek budget.

In case you weren’t paying attention, that’s just about exactly what Syriza has been asking for.

As the NYT has written: “European and international lenders continue to hold back on releasing $8.1 billion (€7.2bn) in funds from a bailout program, demanding economic overhauls in Greece that the Tsipras government has so far been reluctant to carry out.” Now the EU has been persuaded to put up at least $5.6 billion (€5bn). “To get the money,” – explains again Mason, quoting Vima – “Greece has to run a primary surplus of 0.75% of GDP – much lower than the previous demands from the ECB and IMF. And a surplus of 2% of GDP in 2016. “This rises to 3.5% for both of the next years, but would have to be seen as notional — as committing to anything in 2018 barely matters when you are three weeks from default.”

Varoufakis exonerated indeed.

As for the labor market, a contentious point between the IMF and Greece, the EU will demand no reforms. But public sector workers’ pensions, another contentious point, will have to be reduced. What the above plan amounts to, however, is precisely what the IMF calls “quick and dirty solutions”.

But who controls the IMF?

The EU memo hence, is hardly the latest chapter of the “save Greece saga”, but by now we can be confident that, one way or the other, quick and dirty or with EU-footed “debt relief”, Greece will be offered to remain in the Eurozone. Will it accept? It is not just a financial decision. It is a highly political, almost civilization one. To remain in the Eurozone means to stay under Brussels and Washington. To exit, might open up other opportunities. Greece has indeed been invited by Russia to join the New Development Bank (NDB). Whether Greek Prime Minister Alexis Tsipras will want, or even be able to, sell the EU deal to his voters and backbenches remains to be seen.

Amen.

In a veritable, last minute flinger flick, Greek Finance Minister Varoufakis said last night that the referendum will be on Grexit, not on any deal, be they IMF or EU sponsored. As for Washington’s stance, DWN quoted sources in the financial scene: “The USA will not want to hear any discussions about a Grexit nor will any hard negotiations between EU-creditors and Greece be allowed.” So, it really is up to the people of Greece.

Amen again. We all got the picture now?

Apr 242015
 
 April 24, 2015  Posted by at 3:13 am Finance Tagged with: , , , , , ,  5 Responses »


Jack Delano Female freight handler at AT&SF depot, Kansas CIty 1943

This is an open letter I received from a group of 57 Greek intellectuals, addressed to the EU and America, concerning the waves of refugees (migrants, immigrants) that ‘wash ashore’ on Greek territory in increasing numbers.

We all know by now to what extent Europe has dropped the ball on the issue, and I’ll have much more to say on that soon. I thought it would be a good and respectful idea to let this letter stand on its own, and on its own merit.

The number of refugees trying to make it to Greece was estimated at 30,000 in 2014. It’s certain to be a multiple of that this year. The EU may quote numbers like 150,000 for all of southern Europe for 2015, but in real life it will easily be over 500,000.

The EU has no idea what it’s doing, what it’s up against, or what to do next. Brussels figured if it would just close its eyes, the problem would go away. And even today, after almost 1000 victims drowned last weekend, passing the buck to its weakest member nations is apparently still too tempting an opportunity to resist.

Greece Can No Longer Withstand The Waves Of Desperate People Arriving From War Zones:

Your Immediate Action Is Imperative
 

To:
• The Leaders of all European countries
• All Members of the European Parliament
• President Obama and All Members of the United States Congress


Greece, April 2015

The conflicts in many Middle-Eastern and African countries have devastated life in these regions and made survival uncertain. While the world has been witnessing the horrific decapitations and burning alive of human beings, large scale events are also occurring that can change the history and the fate of the affected countries and the world. Thousands of people, Christians and Muslims, are fleeing the war zones in any way they can; entire families jump into boats hoping to reach Europe, if they do not drown on the way.

Southern Europe is the most accessible, and particularly Greece and Italy. Tragedies in the Mediterranean Sea, with desperate people drowning on the way to Europe, have been happening for a few years by now. But only recently this news reached the United States (US) and every part of the world, due to the extensive loss of human lives, while it is hardly in the news that Greece and Italy have been left essentially with no help to deal with these tragedies.

Greece has now close to a 27% unemployment rate and is struggling to convince her lenders of the obvious: that the economy will not recover by more cuts in salaries and pensions, more mass layoffs, and the sell-off of public assets. Signs of the crisis are everywhere. An increasing number of Greeks are being fed by their local churches. Illegal immigrants already fill the streets of Athens and try to survive by searching the garbage or turn to criminal activities. Hospitals struggle to provide care to all of Greece’s inhabitants. Against this background, the waves of hungry and sick people from war zones arriving at Greece’s ports and islands are growing.

Others arrive by crossing the borders with Turkey, whose government seems to turn a blind eye to this situation, giving the human traffickers free rein. Greece, a small country with a population of only about 10 million, already has an estimated one and a half million immigrants (legal and illegal), and the number of refugees has been increasing dramatically in recent months.

Even hospitable Greeks cannot take care of the refugees. They simply cannot feed and provide shelter in the short-term, or employment in the long-term. Greece is akin to a boat where those aboard are trying to prevent it from sinking, while people who are desperate to avoid drowning appear all around the boat and try to jump in. The fate of such a boat and all of those aboard is sadly predictable.

The European Union (EU) and the US cannot remain observers to this externally-inflicted Greek drama. Steps that must be taken immediately include:

1) Efforts to resolve the conflicts in the Middle East and Africa must intensify. Success will not be achieved if lessons from past mistakes are not heeded. The words “dictator” and dictatorship” do not sound good to our “democratic ears”, but if one has to choose between favoring on one hand, a dictatorship under which Christians and all Muslims live peacefully side and side, and on the other hand complete chaos and devastation, the choice is obvious.

2) The Dublin Regulation, according to which the Member State through which an asylum seeker first enters the EU is responsible for the care of the refugee who must be returned to the “Member State of Origin” if caught in another European country must be cancelled or modified. Among other serious shortcomings, it places excessive pressure on South Europe, and particularly on Greece and Italy.

Who can honestly say that such a regulation is in accordance with the spirit of fair share of the burden among the EU countries? The Dublin regulation has been criticized by the European Council of Refugees and Exiles, as well as by the UN High Commissioner for Refugees. It is high time for changes to this regulation, which will be beneficial to all concerned.

3) A number of good proposals have been offered by Ms. Federica Mogherini (European Union High Representative for Foreign Affairs and Security Policy) and Mr. Dimitris Avramopoulos, Commissioner for Migration, Home Affairs, and Citizenship. Such are the transfer of Syrian Refugees to Northern Europe and the creation of safe zones within the regions of conflict, where asylum cases and other refugee issues can be resolved.

These proposals must move from the discussion to the implementation phase immediately. Additionally, the US should accept her fair share of these refugees.

The EU and US need to hear the pleas coming from the southern European countries, as well as those of the refugees. The humanitarian catastrophe has reached large scale, with profound and irreversible consequences. Greece is paying a disproportionately high price, although Greece played no role in triggering this catastrophe. The EU and the US have the moral obligation, which is also consistent with their long-term interests, to take the necessary steps to put an end to the suffering of those in war zones, while at the same time preventing Greece’s collapse under the mounting pressure of refugees.
 

Signatories:

  1. Anagnostopoulos Stavros A., Emeritus Professor, University of Patras, Chief Editor (Europe), Earthquakes and Structures GREECE.
  2. Anastassopoulou Jane, PhD, Privatdozent, Professor, National Technical University of Athens, GREECE
  3. Andreatos S. Antonios, Prof. of Comp. Engineering, Hellenic Air Force Academy, GREECE.
  4. Angelides Demos, Ph.D., P.E., Professor Emeritus of Marine Structures, Department of Civil Engineering Aristotle University of Thessaloniki, Thessaloniki 54124, GREECE
  5. Angelides Chr. Odysseas, DIC, CEng, MIET, Chartered Engineer, CYPRUS
  6. Argyropoulos, Yiannis, Ph.D., Principal Member of Technical Staff, AT&T Labs, USA.
  7. Arkas Evangelos  Ph.D. Physics & Th.D. CEO. PHOS Solar Technologies Ltd London, UK.
  8. Aroniadou-Anderjaska, Vassiliki, Ph.D., Research Associate Professor, Maryland, USA.
  9. Baloglou George, retired SUNY Professor of Mathematics, GREECE . 
  10. Blytas, George C. Ph.D. Physical Chemistry and Chemical Engineering. Research Consultant, Royal Dutch-Shell; President, GCB Separations Technology, Founder and Conductor:  The Houston Sinfonietta. Author, The First Victory, Greece in the Second World War, 2009. USA.
  11. Christakis Christofi, General of Cyprus Army (Ret.), CYPRUS.
  12. Cefalas Alkiviadis-Constantinos, Director of Research, National Hellenic Research Foundation, Theoretical and Physical Chemistry Institute, GREECE.
  13. Christou Theodora, PhD in Law from Queen Mary University of London, UK
  14. Dokos Socrates, PhD, Associate Professor, Graduate School of Biomedical Engineering, University of New South Wales, Sydney, UNSW, 2052, AUSTRALIA
  15. Economidis Alexandros, Engineer, GREECE.
  16. Eleftheriades George Savva, OAM, GCSCG, CETr, JP, Retired Academician, Australia.
  17. Eleftheriadou Eugenia, CLETr, CSH, Retired Academician, AUSTRALIA.
  18. Eleftheriou Panicos, Bank customer service officer, GREECE
  19. Euthymiou Pavlos N., Emeritus Professor, Aristotle University of Thessaloniki, GREECE
  20. Evangeliou, Christos C., Professor of Philosophy, Towson University, Maryland, USA.
  21. Foutsitzis George, PhD. Ecole Superieure Robert De Sorbon, FRANCE.
  22. Fytrolakis Nikolaos, Emeritus Professor, National Technical University of Athens, GREECE.
  23. Gatzoulis, Nina, Professor, University of New Hampshire, USA.
  24. Georgiadis Georgios, Maj. General (Ret.), GREECE.
  25. Georgiadis Sotirios, Admiral (Ret.), GREECE.
  26. Giannoukos Stamatios, Ph.D., University of Liverpool, UK.
  27. Gryspolakis Joachim, Professor Emeritus, Technical University of Crete, 73100 Chania, GREECE.
  28. Ioannides Panos, Lawyer-Industrialist, Nicosia, CYPRUS.
  29. Ioannou Petros, Professor, Electrical Engineering Systems, University of Southern California, Director Center for Advanced Transportation Technologies, Associate Director for Research METRANS, Director of Financial Engineering Masters Program, Los Angeles, CA, USA
  30. Kakouli-Duarte, Thomais, PhD., Lecturer, Institute of Technology Carlow, Past President Hellenic Community of Ireland, Trustee Greek Orthodox Church of the Annunciation in Dublin, Patron and Director at Phoenix Project Ireland, IRELAND.
  31. Kaloy, Dr. Nicolas,  Ph.D.(Philosophy), Geneva, SWITZERLAND.
  32. Katsifarakis Kostas, Professor, Department of Civil Engineering, Aristotle University of Thessaloniki, GREECE.
  33. Kostas/ Konstantatos Demosthenes Ph.D,MSc, MBA, Greenwich CT USA
  34. Kostopoulos K. Dimitra, LLB.,LLM (International Law of the Sea), GREECE.
  35. Kostopoulos S. Konstantinos, B.A., M.Sc. (Transport Economics), GREECE.
  36. Koumakis Leonidas, Jurist, Author, GREECE.
  37. Kyriakou Georgios, Professor, Democritus University of Thrace, GREECE.
  38. Kyratzopoulos S Vassilios, System Analyst, Voula, Attica, GREECE.
  39. Lazaridis Anastasios, PhD, Professor Emeritus, Widener University, Chester, PA, USA.
  40. Magliveras Spyros S., Ph.D., Professor of Mathematics, Florida Atlantic University, and Assoc. Director CCIS.
  41. Mermigas Lefteris, Pathology SUNYAB, USA.
  42. Moraitis L. Nicholaos, Ph.D., International relations-Comparative politics. University of california, U.S.A.
  43. Negreponti-Delivanis, Maria, Former Rector and Professor in the University of Macedonia, President of Delivanis’ Foundation, GREECE.
  44. Papagiannis Grigorios, Dr. Phil., Associate Professor, Democritus University of Thrace, GREECE.
  45. Papadopoulos Nikolaos, Th., Ph.D., FEBO Emeritus Professor of Medicine, Aristotle University of Thessaloniki, GREECE.
  46. Papadopoulos A.P. Tom, Senior Research Scientist and Adjunct Professor, Windsor, Ontario, CANADA
  47. Papadopoulou Maria, Civil Engineer, Ph.D. Candidate, Author, Director of the Institute for the Preservation of Hellenic Culture, GREECE.
  48. Papakostas Stefanos, MBA (Univ. of Texas at El Paso), Ex Professor of the American Colleges in Athens, Southeastern College, Deree College, Univ. of Indianapolis, GREECE.
  49. Pavlos Georgios, Associate Professor, Democritus Technological University of Thrace, GREECE. 
  50. Phufas-Jousma Ellene, Professor, SUNY ERIE, Buffalo NY USA.
  51. Rigos, Capt. Evangelos, Master Mariner, BBA Pace University of New York, GREECE.
  52. Salemi Christina, MSc, Mechanical Engineering, GREECE.
  53. Stampoliadis, Elias, Professor, Technological University of Crete, GREECE.
  54. Tjimopoulou Fryni, Chemist, University of Athens, GREECE.
  55. Vallianatos Evaggelos, Ph.D. Scholar and Writer, USA.
  56. Vamvakousis Georgios, PhD. Engineer, University of Paul Sabatier, FRANCE
  57. Yannopoulos Panayotis, Professor, Department of Civil Engineering, University of Patras, GREECE.
Apr 222015
 
 April 22, 2015  Posted by at 11:08 am Finance Tagged with: , , , , , , , , ,  6 Responses »


Jack Delano AT&SF Railroad locomotive shops, San Bernardino, CA 1943

Appalled doesn’t cover it. Disgusted won’t do either. Angry doesn’t come close. Maybe I have yet to learn of a word that would express my feelings on the following topic. There’s a disease, an epidemic, that spreads through out the western world. We are all turning into accomplices to murder. And I still believe we are better than that. Just perhaps not all of us.

The US, and the rest of the west, have made plenty enemies already without needing to create their own out of thin air – as if there were ever a need to create enemies. But that’s still what we’ve been doing in many places in the world, including Ukraine. And there’s an entire multi-billion machine working just to make us think what someone else wants us to think about these ‘enemies’.

These days, when you call someone ‘pro-Russian’, that’s about on on the same level as ‘murderer’, rapist, things like that. And that must be why the western press once again resorts to ‘pro-Russian’ as a swear word, or even curse, in reporting on the murders of at least 10 people in Ukraine over the past 3 months. As far as we can see, all were considered ‘allies’ of former President Yanukovych (whatever ‘allies’ may mean in this context) and 2 were journalists (of whom at least 1 was also a historian).

Yanukovych was (or is, actually) not a saint. He was the utterly corrupt president of a country that has been utterly corrupt for a very long time. It still is today, and it’s getting worse, fast. Whereas Russia didn’t feel it had the right or need to interfere in the country, the west did. Its interference culminated in the ouster of Yanukovych in late February 2014, and the introduction of a ‘government’ that is extremely pro-western and extremely anti-anything-‘that has anything to do’-with Russia (including the language).

First, we saw the US install its puppet Yatsenyuk as PM (we know about this through leaked tapes of US Dep. Secretary Victoria Nuland). ‘Yats’ to this day has never been elected to office by ‘his’ people (or any other people, for that matter) . A few months later came oligarch Poroshenko as president, who was.

Both men have been instrumental in waging a very bloody and deadly war against a significant segment (a third) of their own population, in east Ukraine. This warfare has coincided with an ever more blatant propaganda war against anything-‘that has anything to do’-with Russia, both in Ukraine and across the west. Need I repeat not one of the accusations against Russia has, still to date, ever been substantiated, despite the best spy satellites etc. equipment in human history?

Whereas someone who cannot be accused of anything worse than being pro-Russian is merely equal to a murderer or rapist, being – labeled as – pro-Putin is several levels worse than that. Meanwhile, Russian President Putin himself has been compared to the biggest mass-murderers in human history, amongst others by US presidential candidate Hillary Clinton.

And lest we forget, Yatsenyuk has labeled all east Ukrainians ‘subhuman’. Let’s see any other prime minster in any other country in the world do that and remain in office.

So far, nothing new. Why then get back to this? Because of all those people who are being killed. The Kiev regime for quite a while attempted to label them all ‘suicides’ (something that was eagerly quoted in western media), hindered in this ‘policy’ only by facts getting in the way.

And when these facts get in the way, they blame Russia for the murders. The ‘rationale’ being that Moscow sought to prevent all these now deceased Ukrainians from divulging details about ‘anti-Maidan’ protests they may have been involved in (can’t have that in a democracy).

One western ‘news source’ even quoted an ‘expert’ just the other day as claiming Putin had ordered two of the murders to coincide with his latest yearly phone-in TV show last week: “political analyst Volodymyr Fesenko said the fact that the killings coincided with Vladimir Putin’s annual phone-in “aroused great suspicion”.

What remains most galling – well, other than us supporting cold blooded murder – is the extent to which western media blindly keep reporting whatever Kiev says, despite the fact that it should be clear to every single reporter that neither Poroshenko nor Yatsenyuk has ever been caught saying anything of substance that proved to be true.

Putin did mention the murder of journalist and historian Oles Buzina last week briefly on that show, and added there has been a series of murders recently in Ukraine, which are not being (or don’t seem to be) properly investigated by Kiev. “”This is not the first political assassination. Ukraine is dealing with a whole string of such murders..”

‘The difference with Russia, Vladimir Putin said, was that killings such as that of opposition figure Boris Nemtsov got properly investigated, leading to arrests. “In Ukraine, which pretends to be a democratic state and wants to be part of a democratic Europe, nothing like that is happening. Where are the murderers of these people? They are simply not there, neither those who carried them out nor those who ordered them, But Europe and North America prefer not to notice.“’

While the killing spree is ongoing, US troops arrived last week to ‘train’ the Ukraine government (and oligarchs) army. The British have had ‘instructors’ there for a long time. We know Blackwater aka XE aka Academi has boots on the ground. We also know that Right Sector leader Dmitro Yarosh (known for various photographs with his ‘troops’ which feature swastikas), was appointed to a high post in that same Ukraine army. Yarosh is also an MP. Nice assembly.

And ‘we’ support this? By we, I mean not only the US, Europe is just as hungry for a fight, and just as blind when it comes to facts vs fiction. But what on earth are we doing paying for all this? Have we all completely lost our heads, hearts and minds? We’re supposed to support democracies, not death squads!

Here’s a list of the victims, largely taken from a piece by Justin Raimondo last week, with a few additions on my part. As you can see, most of them would be considered intellectuals. The ‘cream’ of what was left in Ukraine and did not support Poroshenko, Yatsenyuk and their supporters abroad, in the west, is systemically being eradicated and may now be gone.

• January 26 – Nikolai Sergienko, former deputy chief of Ukrainian Railways and a supporter of Viktor Yanukoych’s Party of Regions, reportedly shot himself with a hunting rifle. The windows were all locked from inside, and no note was found.

• January 29 – Aleksey Kolesnik, the former chairman of the Kharkov regional government and a prominent supporter of the now-banned Party of Regions, supposedly hung himself. There was no suicide note.

• February 24 – Stanislav Melnik, another former Party of Regions member of parliament, was found dead in his bathroom: he is said to have shot himself with a hunting rifle. We are told he left a suicide note of “apologies,” but what he was apologizing for has never been revealed, since the note has not been released.

• February 25 – Sergey Valter, former Party of Regions activist and Mayor of Melitopol, was found hanged hours before his trial on charges of “abuse of office” was set to begin. Whoever was responsible neglected to leave a “suicide” note.

• February 26 – Aleksandr Bordyuga, Valter’s lawyer and former deputy chief of Melitopol police, was found in his garage, dead, another “suicide.”

• February 26 – Oleksandr Peklushenko, a former Party of Regions member of parliament and chairman of Zaporozhye Regional State Administration, was found dead in the street with a gun wound to his neck. Officially declared a “suicide.”

• February 28 – Mikhail Chechetov, a professor of economics and engineering, former member of parliament from the Party of Regions, and former head of the privatization board, supposedly jumped from the seventeenth floor window of his Kiev apartment. Another “suicide”!

• March 14 – Sergey Melnichuk, a prosecutor and Party of Regions loyalist, “fell” from the ninth floor window of an apartment building in Odessa. Or was he pushed?

• April 15 – Oleg Kalashnikov, yet another prominent Party of Regions leader, died of a gunshot wound – the eighth since the beginning of the year.

• April 16 – Oles Buzina, historian and journalist, shot dead.

• April 16 – Serhiy Sukhobok, journalist, shot dead.

• April 17? – Olga Moroz, editor-in-chief of the Neteshinskiy Vestnik, found dead in her home. Her body showed ‘signs of violent death’.

Moreover, in a perhaps separate incident, on March 22, Yanukovych’s 33-year-old son Viktor Jr., a former Ukraine MP, died after his car ‘apparently fell through ice on Russia’s Lake Baikal’.

There are also an unknown number of people who simply disappeared. This happened for instance on April 15 with Dr. Skorokhodov Vitali and ‘militiaman’ Alexey Astanin. There may be many more. Which reminds me of an interview that Patrick Smith posted a few days ago in Salon, with Stephen F. Cohen, arguably America’s top expert on Russia. One of the things Cohen said – more of him later – puts a major question mark behind official – UN – numbers of Ukraine civil war casualties:

The horror of this has been Kiev’s use of its artillery, mortars and even its airplanes, until recently, to bombard large residential cities, not only Donetsk and Luhansk, but other cities. These are cities of 500,000, I imagine, or 2 million to 3 million. This is against the law. These are war crimes, unless we assume the rebels were bombing their mothers and grandmothers and fathers and sisters.

This was Kiev, backed by the United States. So the United States has been deeply complicit in the destruction of these eastern cities and peoples. When Nuland tells Congress there are 5,000 to 6,000 dead, that’s the U.N. number. That’s just a count of bodies they found in the morgues. Lots of bodies are never found. German intelligence says 50,000.

We haven’t seen the German data Cohen cites, but we see no reason to doubt him either. It would place the entire matter in a whole different light, however.

There are some details behind the murder spree coming to the surface. There’s a site called ‘Peacemaker’ (psb4ukr.org), supported by Ukraine MP and government advisor Anton Gerashchenko, who has said: “Information from the website of the “Peacemaker” center has long enjoyed the Ministry of Internal Affairs, security service, intelligence, border service to collect information to open criminal cases and obtaining a court decision on the detention and arrest of separatists and terrorists.”. Gerashenko is also involved in financing the operation.

“Peacemaker”
RESEARCH CENTRE FEATURES OF CRIMES AGAINST UKRAINE’S NATIONAL SECURITY, PEACE, SECURITY AND HUMANITY international law
Information for law enforcement authorities and special services about pro-Russian terrorists, separatists, mercenaries, war criminals, and murderers.

The site apparently has a list to download with some 7,700 names of “saboteurs” and “terrorists”. People are invited to post personal information, including addresses and phone numbers, of people deemed hostile to the Kiev regime. Such information for Buzina and Kalashnikov was posted on the site less than 48 hours before they were murdered.

A few people in the west have done some further digging into the site’s origins (with ‘traceroutes’, ‘nslookup’, ‘reverse nslookup’ etc.), and they claim to have found links to Dallas, Texas and Calgary, Alberta, as well as one to a NATO server – located in Dallas. You can find further details at Moon of Alabama and Niqnaq.

Meanwhile, the murders were claimed by a group that calls itself Ukrainian Insurgent Army, quoted by the BBC as having written: “We are unleashing a ruthless insurgency against the anti-Ukrainian regime of traitors and Moscow’s lackeys. From now on, we will only speak to them using the language of weapons, all the way to their elimination.”

As far as I can tell, nobody has been arrested for any of the murders to date.

And yes, we are all involved in this. You, me, all of us. How did we get there? Perhaps the second quote from that interview with Stephen F. Cohen serves to explain how we did:

Stephen F. Cohen on the U.S./Russia/Ukraine History the Media Won’t Tell You
(The New York Times “basically rewrites whatever the Kiev authorities say”)

I wrote an article in, I think, 2012 called the “The Demonization of Putin,” arguing that there is very little basis for many of the allegations made against Putin, and that the net result was to make rational analysis in Washington on Russian affairs at home and abroad impossible, because it was all filtered through this demonization. If we didn’t stop, I argued, it was only going to get worse to the point where we would become like heroin addicts at fix time, unable to think about anything except our obsession with Putin. We couldn’t think about other issues. This has now happened fully. The article was turned down by the New York Times, and an editor I knew at Reuters published it on Reuters.com.

The history of how this came about [begins] when Putin came to power, promoted by Yeltsin and the people around Yeltsin, who were all connected in Washington. These people in Moscow included Anatoly Chubais, who had overseen the privatizations, had relations with the IMF and had fostered a lot of the corruption. He came to United States to assure us that Putin was a democrat, even though he had been at the KGB.

When he came to power, both the Times and the Post wrote that Putin was a democrat and, better yet, he was sober, unlike Yeltsin. How we got from 2000 to now, when he’s Hitler, Saddam, Stalin, Gaddafi, everybody that we have to get rid of, whom we know killed Boris Nemtsov because from the bridge where Nemtsov was killed [on February 27] you can see the Kremlin…. Well, remember, Sarah Palin could see Russia from Alaska! It’s preposterous. But the demonization of Putin has become an institution in America. It is literally a political institution that prevents the kind of discussion that you and I are having.

Kissinger had the same thought. He wrote, last year, I think, “The demonization of Putin is not a policy. It’s an alibi for not having a policy.” That’s half correct. It’s much worse now, because they did have a policy. I think the “policy” growing in some minds was how to get rid of Putin. The question is, “Do they have the capacity to make decisions?” I didn’t think so, but now I’m not so sure, because in a lot of what comes out of Washington, including the State Department, the implication is that Putin has to go.

I asked a question rhetorically several years ago of these regime changers: Have you thought about what would happen in Russia in the event of regime change? If what you say is true, if Putin is the pivot of the whole system, you remove Putin the whole system collapses. Russia has every known weapon of mass destruction in vast quantities. What would be the consequence of that conceit on your part—that we’re going to get rid of Putin—for the rest of the world?

So this Putin phenomenon has to be explained. How did he go from a democrat for sure, now to maybe the worst Russian leader since Ivan the Terrible. How do you explain it? Does that tell us more about Putin or more about us?

I guess the main question is not ‘How did we get here?’, but ‘How do we get out?’.

Here’s the now unfortunately no longer among us Oles’ Buzina talking about the history of Ukraine (don’t forget to turn on subtitles/CC)

Apr 042015
 
 April 4, 2015  Posted by at 8:15 am Finance Tagged with: , , , , , , , , ,  4 Responses »


DPC Coaches at Holland House Hotel on Fifth Avenue, NY 1905

Huge Miss: +126,000 Jobs, Labor Force -631,000 in Two Months (Mish)
US Jobs Data: Winter of Discontent, Summer of Discomfort (WSJ)
Americans Not In The Labor Force Soar To Record 93.2 Million (Zero Hedge)
Michael Lewis: ‘I Knew Flash Boys Would Be A Bombshell’ (Guardian)
German Bank Files Lawsuit To Challenge ECB Supervision (WSJ)
Fannie Mae to Begin Auctioning Defaulted Home Loans to Investors (Bloomberg)
Russia Said to Plan No Aid to Greece, May Ease Curbs on Food (Bloomberg)
Saudi Arabia and Iran Vie for Regional Supremacy (Spiegel)
Russia Calls UN Security Council Session On Yemen Crisis (RT)
Donbass: ‘The War Has Not Started Yet’ (Pepe Escobar)
Warren Buffett’s Mobile Home Empire Preys On The Poor (Public Integrity)
Mediterranean Sea ‘Accumulating Zone Of Plastic Debris’ (BBC)
As Quakes Rattle Oklahoma, Fingers Point to Oil and Gas Industry (NY Times)
Half Of Urban California’s Water Is Used To Water The Grass (MarketWatch)

Not much recovery left.

Huge Miss: +126,000 Jobs, Labor Force -631,000 in Two Months (Mish)

For a huge change we see the existing pattern of a strong establishment survey but a poor household survey has been replaced by weakness all around. Last month I stated “The household survey varies more widely, and the tendency is for one to catch up to the other, over time. The question, as always, is which way?” It is still difficult to say if this is the start of a new trend, but it could be. Last month the household survey showed a gain in employment of a meager 96,000 and much of that was teen employment. This month the household survey came in at an anemic 34,000.

The labor force declined in each of the last two months. Those “not in the labor force” rose by a whopping 631,000 in the last two months. The Bloomberg Consensus jobs estimate was for 247,000 jobs, missing by a mile. In fact, the number came in lower than any estimate. The estimate range was 200,000 to 271,000. Not only that, January and February were both revised lower. The net was 69,000 lower. Economists blame the weather. Bad weather in March? And not in January and February?

Read more …

“Whichever way the economic data break in the months ahead, somebody is going to get caught badly offside.”

US Jobs Data: Winter of Discontent, Summer of Discomfort (WSJ)

Friday’s jobs numbers made the Federal Reserve’s path over the next several months clearer. Just not in a good way. The Labor Department reported that the economy added just 126,000 jobs in March, far fewer than the 247,000 economists were looking for and the smallest gain in more than a year. Worse, downward revisions to January and February reduced America’s job count by 69,000. If there was any question that the Fed would pass up on raising rates at its June meeting, it has been resolved. Indeed, amid signs that global economic weakness has begun to weigh on the U.S. job market, even the September liftoff on rates that most economists have been forecasting is looking iffy. The labor market’s weakness last month was concentrated in what are known as the goods-producing sectors: manufacturing , construction and mining and logging.

These saw a loss of 13,000 jobs, marking the worst month since July 2013. Some of that may be attributable to the cold: The number of people who said they had jobs but didn’t work because of the weather was elevated, and the goods-producing sectors are prone to such effects. But the more worrisome exposure is to weakness abroad. Struggling economies overseas have helped send oil and other commodity prices lower and the dollar higher. These are things that hurt the mining sector (which includes oil extraction) and manufacturers (which compete globally) in particular. Chances are the labor market will be able to handle these challenges. Low oil prices help America more than they hurt it and over time should add more jobs than they take away.

In the absence of the factors that weighed on it over the winter—including not just the weather but also the West Coast port dispute and companies working down inventories—the economy should improve in the spring. And that should give more impetus to hiring. But the Fed will want to be sure. That is particularly the case when, partly as a result of those same overseas factors, inflation is running well below its 2% target. The big question now is whether the Fed will gain such confidence, and raise rates, by September. Fed funds futures contracts now put nearly even odds of it foregoing an increase at that meeting. Even if a June rate rise is off the table, the market’s chronic state of uncertainty ahead of the Fed’s next move lingers. Whichever way the economic data break in the months ahead, somebody is going to get caught badly offside.

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WIth 93 million people not counted, it’s not hard to get low jobless numbers.

Americans Not In The Labor Force Soar To Record 93.2 Million (Zero Hedge)

So much for yet another “above consensus” recovery, and what’s worse it is, well, about to get even worse, because while the Fed keeps baning some illusory drum that slack in the economy is almost non-existent, the reality is that in March the number of people who dropped out of the labor force rose by yet another 277K, up 2.1 million in the past year, and has reached a record 93.175 million. Indicatively, this means that the labor force participation rate dropped once more, from 62.8% to 62.7%, a level seen back in February 1978, even as the BLS reported that the entire labor force actually declined for the second consecutive month, down almost 100K in March to 156,906.

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“People are so cynical about Wall Street they don’t believe any of it.”

Michael Lewis: ‘I Knew Flash Boys Would Be A Bombshell’ (Guardian)

Katsuyama noticed that large stock orders were being “scalped”. Moments after an order was placed, high-speed traders (our titular Flash Boys) were snapping up shares before the order could be fulfilled, using powerful algorithms and super-charged computers to force buyers to pay a higher price. The difference in cost can be counted in fractions of a penny – but on massive orders the numbers add up and the losers are the pension funds of millions of Americans. Katsuyama set up IEX, the Investors Exchange, as a market free from scalpers. While he had alerted many big investors about his concerns, he had not spoken to the media about his findings. “They were afraid that if there was a huge controversy, it would hurt their business as opposed to just quietly informing investors how badly they were getting screwed,” Lewis said.

Instead they decided to work with the author of Moneyball and Liar’s Poker to tell their story. They didn’t escape controversy. Trading floors came to a standstill in New York when Lewis and Katsuyama were confronted on CNBC, the financial news channel, by William O’Brien, president of Bats Global Markets, the second-largest stock exchange operator in the US. “Shame on both of you for falsely accusing literally thousands of people and possibly scaring millions of investors in an effort to promote a business model,” O’Brien said, accusing the pair of dishonesty and Lewis of writing a 300-page commercial for IEX. Days later, O’Brien was being hauled over the coals by regulators for claims he made on the show. Months later, he was gone. Wall Street’s fightback, however, has not stopped.

The opposition has launched what Lewis describes as “essentially a political campaign” to minimise the impact of his book and the work of IEX. Last month, the former commodities trading regulator Bart Chilton called Lewis’s assertions that the market was rigged “a big lie”. Chilton, again on CNBC, asserted high-frequency trading had contributed to making markets cheaper, faster and safer than ever before. The former boss of the Commodities Futures Trading Commission now works with the high-frequency trade association Modern Markets Initiative. He said Lewis’s claims were irresponsible and had been debunked by academic research. Visibly irritated by what he sees as a campaign to halt reform and serious discussion, Lewis said Chilton was “essentially a flack”. “He’s deceiving the public in order to make the markets less fair,” he said. “People are so cynical about Wall Street they don’t believe any of it.”

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Interesting power struggle.

German Bank Files Lawsuit To Challenge ECB Supervision (WSJ)

A small German lender has filed a lawsuit against the ECB in a bid to avoid coming under its supervision, marking the first legal challenge to the ECB’s new monitoring role. In November the ECB took over direct supervision of Europe’s 120 largest banks, assuming that responsibility from national supervisors such as Germany’s financial watchdog BaFin and the German Central Bank, or Bundesbank. The move has raised objections from some politicians and smaller banks that are concerned about the additional regulatory costs, among other issues. Development bank Landeskreditbank Baden-Württemberg filed a lawsuit with the European Court of Justice—the European Union’s highest court—to “legally challenge that it was put under direct supervision of the ECB,” the bank told the WSJ.

L-Bank, as it is known, claims ECB oversight entails significantly higher bureaucratic expenses. An ECB spokeswoman confirmed the central bank had received notice of the court case but declined to comment further. The lawsuit, filed March 12, is the most radical step by a European bank against ECB supervision, a cornerstone of the eurozone’s integration project. It highlights the headwinds the ECB is facing from some politicians and smaller lenders in Germany, Europe’s biggest economy. L-Bank said that higher costs tied to ECB supervision would undermine its ability to support local families and businesses. Instead it wants to be supervised by BaFin and the Bundesbank, which L-Bank says would be more appropriate, given its local focus.

L-Bank argues that its business model is simple and clear, while the ECB has been tasked with regulating more complex banks through a structure known as the single supervisory mechanism. Being under ECB scrutiny “goes against the guidelines of the single supervisory mechanism,” L-Bank said. The ECB is supposed to take direct responsibility for all banks whose assets either exceed €30 billion and/or make up more than 20% of their home country’s gross domestic product. In countries where banks don’t hit that threshold at least three banks will come under ECB oversight unless their assets are below €5 billion, as will any bank that has received help from one of the eurozone’s bailout funds. In addition, the ECB can claim supervisory powers over any bank that has significant operations in at least two countries.

L-Bank is one of 21 German banks under the ECB’s direct watch. It had around €70 billion in assets at the end of 2013, the most recent figures available, and recorded slightly more than €100 million in profit. In 2013, it supplied €7.4 billion in low-cost credit to support local projects, businesses and families.

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“Freddie Mac has auctioned about $2 billion in defaulted debt in three separate sales since last year.”

Fannie Mae to Begin Auctioning Defaulted Home Loans to Investors (Bloomberg)

Fannie Mae will begin bulk auctions of mortgages, including some sales targeted for non-profit groups and small investors, as the company moves to cut the number of non-performing loans on its books. “These transactions are intended to reduce the number of seriously delinquent loans that Fannie Mae owns, to help stabilize neighborhoods and to offer borrowers access to additional foreclosure prevention options,” Fannie Mae Senior Vice President Joy Cianci said in a statement Thursday. “Our goal is to market these loans to a diverse range of buyers”. The Federal Housing Finance Agency, which has overseen U.S. conservatorship of Freddie Mac and Fannie Mae since 2008, is requiring the companies to reduce the number of severely delinquent loans on their books this year.

In March, the agency released a set of new rules for the sale of troubled mortgages. Freddie Mac has auctioned about $2 billion in defaulted debt in three separate sales since last year. Fannie Mae’s first sale will happen “in the near future,” the company said. FHFA will require prospective investors to prove they’ve retained a loan servicer with a track record of handling delinquent debt, the agency said in a March 2 statement. Servicers also will have to offer aid to avoid foreclosures as a condition of sale. Demand for soured mortgages has been increasing as Wall Street firms compete to buy loans at a discount after a real-estate market rebound. Investment firms including Lone Star Funds, Bayview Asset Management and Selene Finance have been some of the biggest buyers of delinquent home loans.

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“Russia-EU relations will be discussed in light of the sanctions policy applied by the EU and the rather cold attitude toward this sanctions policy from Athens..”

Russia Said to Plan No Aid to Greece, May Ease Curbs on Food (Bloomberg)

Russia isn’t considering any financial assistance for Greece as Prime Minister Alexis Tsipras plans to visit Moscow next week, according to three Russian government officials with knowledge of the discussions. Even so, Russia is ready to discuss easing restrictions on Greek food products, which were imposed as as part of the retaliation for EU sanctions levied over the conflict in Ukraine, said two of the three officials. Russia has been building ties with European countries that may help it scuttle the sanctions. The 28-member bloc will need unanimous approval to prolong curbs targeting Russia’s financial and energy industries that expire in July. President Vladimir Putin will discuss the measures against Russia at the talks with Tsipras, according to the Kremlin.

The EU’s most-indebted state is locked in negotiations with euro-area countries and the IMF over the terms of its €240 billion rescue. The standoff, which has left Greece dependent on ECB loans, risks leading to a default within weeks and the nation’s potential exit from the euro area. “Russia-EU relations will be discussed in light of the sanctions policy applied by the EU and the rather cold attitude toward this sanctions policy from Athens,” Putin’s spokesman, Dmitry Peskov, told reporters Friday on a conference call. Putin and Tsipras will also hold talks on the economic situation in the Balkan country, Peskov said. Greece hasn’t yet asked Russia for any financial aid, he said.

Russia would consider a request from Greece if it’s made, Finance Minister Anton Siluanov said in an interview in February. Greece this week failed to win support from creditors for proposals to cut spending and receive €7 billion in bailout funds in return. Greece needs the money as government coffers empty and bills come due, such as a debt payment to the International Monetary Fund on April 9, the day after Tsipras visits Putin in Moscow. Greece is asking for money and a discount on natural gas supplies from Russia, neither of which is possible right now, one official said.

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More US induced mess.

Saudi Arabia and Iran Vie for Regional Supremacy (Spiegel)

The Saudi military coalition began its intervention in Yemen in the name of security. But after just a week, it has become clear that the top priority of the alliance is not that of creating a balance of power between the two adversarial camps in the Yemen conflict – which pits Shiite Houthi rebels, who have joined together with former Yemeni President Ali Abdullah Saleh (who was ousted in a 2011 “Arab Spring” uprising), against Saudi-backed government troops. Indeed, the conflict is more of a complicated domestic struggle than a purely sectarian fight. Still, the Saudi monarchy’s intervention is primarily aimed at its ideological rival: Iran.

At the same time, the military operation is a chance for Saudi King Salman bin Abdulaziz Al Saud to demonstrate his independence from the US – as well as to perhaps prove his country’s military leadership in the region as a complement to its longstanding economic strength. What is clear, however, is that the brewing Sunni-Shiite struggle in the Middle East is extremely dangerous. And the most recent escalation has the potential for not just destroying Yemen, but also for turning into a disaster for Saudi Arabia. It was only last fall that Riyadh badly miscalculated in Yemen by cutting off financial aid to Hadi, who has since fled his country for the Saudi capital. The Saudi monarchy believed that Hadi, a Sunni, was being far too lenient with the Shiite Houthis, which make up a third of the population of Yemen.

But Hadi had only been striving for political survival between the various fronts – a task made all the more difficult by the return of his Shiite predecessor Saleh, who was trying to regain power at the forefront of his own militia. Without support from Riyadh, Hadi didn’t have a chance. Even if the Iranians are confessional brothers to the Houthis and have allegedly supplied them with weapons, it is ex-president Saleh who has been the primary reason for their triumphant march through the country. It is an ironic development, given that Saleh, while in power, waged a campaign of his own against Houthi insurgents. Now, however, he has placed his own elite troops – which he once equipped with the help of hundreds of millions of dollars from the US – at their disposal. The troops are akin to a private army, and Saleh has a fortune of billions he can use to finance them.

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And they’re right.

Russia Calls UN Security Council Session On Yemen Crisis (RT)

As fighting in Yemen intensifies Russia has called up an emergency UN Security Council session to put on pause Saudi-led coalition airstrikes for humanitarian purposes in an effort to quell the violence that is impacting civilians. Russia insists it is necessary for the international community to discuss the establishment of regular and mandatory “humanitarian pauses” in the ongoing coalition air strikes on Yemen, Russian UN mission’s spokesman Aleksey Zaytsev told Sputnik. An extraordinary meeting is scheduled for Saturday, at 3pm GMT at the UN headquarters in NYC. A coalition of Arab states, led by Saudi Arabia, has been engaging Houthi militias from the air for over a week now, after the Yemeni President Abd Rabbuh Mansur Hadi was forced to flee the country and asked for an international intervention to reinstate his rule.

Moscow is calling for a diplomatic solution to the conflict emphasizing that foreign military intervention would only lead to more civilian deaths. On Friday, Russia’s Deputy Foreign Minister Mikhail Bogdanov met with the newly appointed Saudi ambassador, conveying the “necessity of a ceasefire” to create favorable conditions for a peaceful national dialogue. Russia has already taken steps to evacuate all of its personnel from its Yemeni consulate, which was damaged in the conflict. It has also taken an active role evacuating Russian nationals and other civilians from the country.

On Thursday Russia proposed amendments to a UN Security Council draft resolution on Yemen. The world security body “should speak in a principled manner for ending any violence…in the Yemen crisis,” Russian Foreign Minister Sergey Lavrov said, adding that a draft resolution on the crisis has already been submitted to the UNSC. Echoing Lavrov’s words, Foreign Ministry spokesman Aleksandr Lukashevich also called on immediate cessation of hostilities, adding that Russia will continue active diplomatic efforts in dealing with all Yemeni factions and Middle Eastern partners in order to restart political process. Lukashevich also called on the UN special envoy to Yemen, Jamal Benomar, to play a bigger role in the settlement of the crisis.

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“Kiev’s army, after the recent IMF loan, was allocated no less than $3.8 billion for weapons…”

Donbass: ‘The War Has Not Started Yet’ (Pepe Escobar)

Two top Cossack commanders in the People’s Republic of Donetsk and a seasoned Serbian volunteer fighter are adamant: the real war in Donbass has not even started. It’s a spectacular sunset in the People’s Republic of Donetsk and I’m standing in the Cossack ‘holy land’ – an open field in a horse-breeding farm – talking to Nikolai Korsunov, captain of the Ivan Sirko Cossack Brigade, and Roman Ivlev, founder of the Donbass Berkut Veterans Union group. Why is this Cossack ‘holy land’? They take no time to remind me of the legendary 17th century Cossack military hero Ivan Sirko, a.k.a. “The Wizard”, credited with extra-sensory powers, who won 55 battles mostly against Poles and Tatars.

Only three kilometers from where we stand a key battle at a crossroads on the ancient Silk Road called Matsapulovska Krinitsa took place, involving 3,000 Cossacks and 15,000 Tatars. Now, at the dawn of the Chinese-driven 21st century New Silk Road – which will also traverse Russia – here we are discussing the proxy war in Ukraine between the US and Russia whose ultimate objective is to disrupt the New Silk Road. Commander Korsunov leads one of the 18 Cossack brigades in Makeevka; 240 of his soldiers are now involved in the Ukrainian civil war – some of them freshly returned from the cauldron in Debaltsevo. Some were formerly part of the Ukrainian Army, some worked in the security business. Korsunov and Ivlev insist all their fighters have jobs, even if unpaid – and have joined the Donetsk People’s Republic army as volunteers. “Somehow, they manage to survive.”

What’s so special about Cossack fighters? “It’s historical – we’ve always fought to defend our lands.”Commander Korsunov was a miner, now he’s on a pension – although for obvious reasons he’s receiving nothing from Poroshenko’s Kiev set up; only support from the Berkut group, the Ministry for Youth and Sports of the People’s Republic, and humanitarian food convoys from Russia. Korsunov and Ivlev are convinced Minsk 2 will not hold; fierce fighting should resume “in a matter of weeks.” According to their best military intelligence, Kiev’s army, after the recent IMF loan, was allocated no less than $3.8 billion for weapons.

“After Odessa”, they say – a reference to the massacre of civilians in May last year – Ukraine as we know it “is finished”. So what would be the best political solution for Donbass? Their priority is “to free all Ukraine from fascism.” And after victory, referenda should be held in all regions of the country.“People should vote for what they want; whether to remain in Ukraine, whether to align with Europe, or with Russia.” This implies advancing towards Western Ukraine across hostile territory; “We’re ready for five, seven years of war, it doesn’t matter.” So even if a political solution might be possible on a distant horizon, they are preparing for a long war. The EU is “mistaken” to treat them as separatists and even terrorists. As for those elusive Russian tanks and soldiers relentlessly denounced by NATO, where are they? Hiding in the bushes? They laugh heartily – and we’re off to a countryside Cossack banquet.

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“.. loan terms that changed abruptly after they paid deposits or prepared land for their new homes; surprise fees tacked on to loans; and pressure to take on excessive payments based on false promises that they could later refinance.”

Warren Buffett’s Mobile Home Empire Preys On The Poor (Public Integrity)

The families’ dealers and lenders went by different names – Luv Homes, Clayton Homes, Vanderbilt, 21st Mortgage. Yet the disastrous loans that threaten them with homelessness or the loss of family land stem from a single company: Clayton Homes, the nation’s biggest homebuilder, which is controlled by its second-richest man – Warren Buffett. Buffett’s mobile home empire promises low-income Americans the dream of homeownership. But Clayton relies on predatory sales practices, exorbitant fees, and interest rates that can exceed 15 percent, trapping many buyers in loans they can’t afford and in homes that are almost impossible to sell or refinance, an investigation by The Center for Public Integrity and The Seattle Times has found.

Berkshire Hathaway, the investment conglomerate Buffett leads, bought Clayton in 2003 and spent billions building it into the mobile home industry’s biggest manufacturer and lender. Today, Clayton is a many-headed hydra with companies operating under at least 18 names, constructing nearly half of the industry’s new homes and selling them through its own retailers. It finances more mobile home purchases than any other lender by a factor of six. It also sells property insurance on them and repossesses them when borrowers fail to pay. Berkshire extracts value at every stage of the process. Clayton even builds the homes with materials — such as paint and carpeting — supplied by other Berkshire subsidiaries.

And Clayton borrows from Berkshire to make mobile home loans, paying up to an extra percentage point on top of Berkshire’s borrowing costs, money that flows directly from borrowers’ pockets. More than a dozen Clayton customers described a consistent array of deceptive practices that locked them into ruinous deals: loan terms that changed abruptly after they paid deposits or prepared land for their new homes; surprise fees tacked on to loans; and pressure to take on excessive payments based on false promises that they could later refinance. Former dealers said the company encouraged them to steer buyers to finance with Clayton’s own high-interest lenders.

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“The Mediterranean Sea represents less than 1% of the global ocean area, but is important in economic and ecological terms. It contains between 4% and 18% of all marine species..”

Mediterranean Sea ‘Accumulating Zone Of Plastic Debris’ (BBC)

Large quantities of plastic debris are building up in the Mediterranean Sea, say scientists. A survey found around one thousand tonnes of plastic floating on the surface, mainly fragments of bottles, bags and wrappings. The Mediterranean Sea’s biological richness and economic importance means plastic pollution is particularly hazardous, say Spanish researchers. Plastic has been found in the stomachs of fish, birds, turtles and whales. Very tiny pieces of plastic have also been found in oysters and mussels grown on the coasts of northern Europe. “We identify the Mediterranean Sea as a great accumulation zone of plastic debris,” said Andres Cozar of the University of Cadiz in Puerto Real, Spain, and colleagues.

“Marine plastic pollution has spread to become a problem of planetary scale after only half a century of widespread use of plastic materials, calling for urgent management strategies to address this problem.” Plastic is accumulating in the Mediterranean Sea at a similar scale to that in oceanic gyres, the rotating ocean currents in the Indian Ocean, North Atlantic, North Pacific, South Atlantic and South Pacific, the study found. A high abundance of plastic has also been found in other seas, including the Bay of Bengal, South China Sea and Barents Sea in the Arctic Ocean. Commenting on the study, published in the journal PLOS ONE, Dr David Morritt of Royal Holloway, University of London, said scientists were particularly concerned about very small pieces of plastic (less than 5mm in length), known as microplastics.

The study found more than 80% of plastic items in the Mediterranean Sea fell into this category. “These very small plastic fragments lend themselves to being swallowed by marine species, potentially releasing chemicals into the gut from the plastics,” Dr Morritt, of the School of Biological Sciences, told BBC News. “Plastic doesn’t degrade in the environment – we need to think much more carefully about how we dispose of it, recycle it, and reduce our use of it.” The Mediterranean Sea represents less than 1% of the global ocean area, but is important in economic and ecological terms. It contains between 4% and 18% of all marine species, and provides tourism and fishing income for Mediterranean countries. “Given the biological wealth and concentration of economic activities in the Mediterranean Sea, the effects of plastic pollution on marine and human life could be particularly relevant in this plastic accumulation zone,” said Dr Cozar.

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“Shutting down disposal wells and the industry they serve, he added, “will make ‘The Grapes of Wrath’ look like a cheery movie.”

As Quakes Rattle Oklahoma, Fingers Point to Oil and Gas Industry (NY Times)

From 2010 to 2013, Oklahoma oil production jumped by two-thirds and gas production rose by more than one-sixth, federal figures show. The amount of wastewater buried annually rose one-fifth, to nearly 1.1 billion barrels. And Oklahoma went from three earthquakes of magnitude 3.0 or greater to 109 — and to 585 in 2014, and to 750-plus this year, should the current pace continue. In the United States, only Alaska is shaken more. The Corporation Commission lacks explicit authority to regulate earthquake risks. So it is trying to contain the risks posed by roughly 3,200 active wastewater disposal wells using laws written to control water pollution. Last spring, the commission began trying to weed out quake risks by scrutinizing wells near larger quakes for operational problems and permit violations.

A few dozen wells made modifications; four shut down. It is now difficult to win approval for new wells near stressed faults, active seismic areas or the epicenters of previous quakes above 4.0 magnitude. Regulators significantly expanded the areas under scrutiny last month. Yet the quakes continue. Privately, some companies are cooperating with regulators and scientists by offering proprietary information about underground faults. Publicly, the industry wants Oklahomans to beware of killing the golden goose. Many in the industry were reluctant to comment for this article. But Kim Hatfield, the regulatory chairman of the Oklahoma Independent Petroleum Association and president of Crawley Petroleum, warned: “A reaction of panic is not useful.” Shutting down disposal wells and the industry they serve, he added, “will make ‘The Grapes of Wrath’ look like a cheery movie.”

The mechanics of wastewater-induced earthquakes are straightforward: Soaked with enough fluid, a layer of rock expands and gets heavier. Earthquakes can occur when the pressure from the fluid reaches a fault, either through direct contact with the soaked rock or indirectly, from the expanding rock. Seismologists have documented such quakes in Colorado, New Mexico, Arkansas, Kansas and elsewhere since the 1960s. But nowhere have they approached the number and scope of Oklahoma’s quakes, which have rocked a fifth of the state. One reason, scientists suspect, is that Oklahoma’s main waste disposal site, a bed of porous limestone thousands of feet underground, lies close to the hard, highly stressed rock containing the faults that cause quakes.

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“..while green lawns may be at risk, urban water use accounts for a minority of the state’s total water use, PPIC noted. About 80% of human water use is in agriculture.”

Half Of Urban California’s Water Is Used To Water The Grass (MarketWatch)

As California searches for ways to dramatically cut its water use, the lawn may have to go, or at least shrink. About half of water usage in the state’s urban areas goes for landscaping, said Jeffrey Mount, a senior fellow at the Public Policy Institute of California and a water expert. “We have a lot of room in the urban sector to adjust,” and the most obvious place is in landscaping. Reducing the amount of water devoted to lawns won’t have a major negative impact on the economy or on lifestyle, he said. On Wednesday, California Gov. Jerry Brown ordered statewide water reductions of 25% for the first time ever, as California’s drought worsens. Previously he had sought voluntary cuts of 20%. The State Water Resources Control Board is expected to decide on new regulations over the next month.

Brown’s announcement said campuses, golf courses, cemeteries and other large landscapes will have to make significant cuts in water use. But it did not mention residential lawns. PPIC says outdoor residential use accounts for one-third of urban water use, twice that of commercial and institutional landscapes, including golf courses and cemeteries. While homeowners may face further curbs of their water use, the state has already made strides in conserving water. Per-capita water use dropped more than 23% from 1990 to 2010, based on data compiled by the U.S. Geological Survey that is collected every five years. Some of that has come through low-flow shower heads, low-flush toilets, new standards for washing machines and dishwashers, and other water-saving technologies.

The state’s population has increased in that time, leaving overall urban water use essentially unchanged. And while green lawns may be at risk, urban water use accounts for a minority of the state’s total water use, PPIC noted. About 80% of human water use is in agriculture.

Read more …

Mar 172015
 
 March 17, 2015  Posted by at 2:37 am Finance Tagged with: , , , , , ,  8 Responses »


Jack Delano Union Station, Chicago, Illinois 1943

I need to start of off the bat with an update to this piece, which I started writing yesterday, since I now know that Angela Merkel actually did invite Alexis Tsipras on Monday. It only took her two months…. But that doesn’t take away anything from my point that Merkel has been sorely lacking and missing, it just goes to prove that point.

And if she doesn’t get her act together very quickly (why not ask Tsipras to be in Berlin tomorrow morning?!), this will, I’ve said it before, go down as her main legacy. She will be known as the person who let Europe slip into war, for no good reason whatsoever. Here’s what I started off with last night (Oz time):

The increasing ugliness of the ‘negotiations’ between the Greek Syriza government and the rest of the eurozone, which is ruled by the German government, needs to be halted and put in reverse. There is an urgent need for a detente, for cooler heads and for trust. And there is only one person who can act to create these things: Angela Merkel. But Merkel is nowhere to be found or seen.

The increasing ugliness of the propaganda war the west is waging against Russia and its president Vladimir Putin, also needs to be halted. There is an even more urgent need there for a detente, for cooler heads and for trust. There is only one person who can act to create these things: Angela Merkel. But Merkel is AWOL.

There are German voices in the Putin case that call for reason and quiet, and that have labeled people like NATO head Stoltenberg, NATO General Breedlove and US State Department ‘Assistant’ Victoria Nuland more or less insane. But Merkel’s voice is not among them, nowhere to be heard.

German Finance Minister Wolfgang Schäuble was born in 1942. That means he was alive when German troops committed the worst of their war crimes and atrocities on Greek soil, and on Greek people, which the Syriza government says it wants to receive war reparations for. But Schäuble high-handedly poo-poohs these demands, claiming everything has been settled decades ago. As if he were talking about things that happened 1000 years ago or more.

They did not, Mr. Schäuble, they happened during your lifetime, and no level of high-handedness, not one level of it, is appropriate here on your part. The only appropriate reaction is humbleness and the highest level of respect you are capable of. Whether there’s a legal issue is something for legal experts to decide, but until then, you have no right to poo-pooh anything.

Besides, you’re a finance minister, and this is not a finance issue, it’s far too sensitive to be regarded as such. The only person who should indeed address it is your boss, Angela Merkel. But no-one’s seen her around.

Merkel should have told Schäuble weeks ago to keep his trap shut, but she has instead allowed him to antagonize Athens even more. And blame the Greeks for that.

It may already be too late when it comes to the Ukraine issue. Angela should have intervened a long time ago. She did not. She suddenly turned her back on her friend Vladimir, for reasons she never explained, and allowed US and NATO hotheads to completely take over European politics. Never a good idea, for obvious reasons.

And now she may be stuck with the consequences: a war on her doorstep. Which, in reality, has of course already started. 6000 Ukrainians are gone, millions have been forced to leave their homes. Angela Merkel could have prevented most of this from happening. Blood on your hands, girl.

She let Schäuble get out of hand with his hugely out of place and out of whack comments on Greece’s financial situation, on Varoufakis and on the crimes perpetrated by his parents’ generation in not just Greece, but certainly also in Greece. Comments not befitting the European Union’s de facto political and economical leader. And that has left space for extremists to come in and take the lead over from Merkel.

Likewise, she’s let Breedlove and Nuland take the lead in the Ukraine issue, while she could have easily defused it, leading to a situation where Putin this weekend made it a point to say that he felt so strongly about Crimea, he would have been ready to alert his nuclear capacity. That the western press chooses to put that fact in entirely different, and far more threatening terms, was and is only to be expected, for Angela as much as for you and me.

The most powerful woman in the world had better stand up now, or it will be too late in both instances.

Greece will be forced into a Grexit or Grexident, neither of which EU leaders have anywhere near the grip on that they try to convince us they have; more countries will leave after Greece, and financial markets will start betting on just that.

And the US and NATO will force Ukraine into a full blown war theater, something Merkel should never ever want to her immediate eastern flank, and something that was always entirely preventable is she had put her foot down.

Is Angela going to be the umpteenth tragic lady with a tragic footprint in history, or will she wake up in the nick of time, stand up, and say: no more of this?! We’ll soon know.

(posted from Melbourne Tullamarine Airport)

Mar 152015
 
 March 15, 2015  Posted by at 9:01 am Finance Tagged with: , , , , , , , , ,  4 Responses »


NPC Fred Haas, Rhode Island Avenue NE, Washington, DC 1924

Welcome To A Fed Without Patience (MarketWatch)
US Debt To Hit Legal Limit Again On Monday (MarketWatch)
BP CEO On Oil: ‘It’s Going To Be Very Painful’ (CNBC)
Oil Futures Suffer Nearly 10% Weekly Plunge (MarketWatch)
‘Most Significant Break Between Germany And US Since WWII’ (RT)
Poroshenko: 11 EU States Struck Deal With Ukraine To Deliver Weapons (RT)
Ukraine Says Creditors Face Principal Losses on Dollar Bonds (Bloomberg)
The #ALBA Dawn Of A New Europe (Beppe Grillo)
Presenting An Agenda For Europe, Ambrosetti, Lake Como, 14-3-2015 (Varoufakis)
Greece Has Plenty Of Options. It’s Just That None Are Good (Satyajit Das)
Juncker, Tsipras Agree On Creating Greek Task Force For Reforms (Kathimerini)
Athens Ready To Delay Some Election Pledges, Says Varoufakis (Reuters)
Greece’s Varoufakis Says QE To Fuel Unsustainable Equity Rally (Reuters)
The Greek Election: Why I Went Home To Vote For The First Time (Alex Andreou)
The Power of Le Pen (BBC)
UK Support For China-Backed Asia Bank Prompts US Concern (BBC)
Russia In A Spin As Its Putin Goes Missing (FT)
Is EU Army Intended To Reduce US Influence In Europe? (RT)
Steven Pinker Is Wrong About Violence And War (John Gray)

“We’re in the ninth inning of a zero-rate environment.”

Welcome To A Fed Without Patience (MarketWatch)

Get ready for a central bank without patience. The Federal Reserve on Wednesday is widely expected to remove its pledge to be “patient” in raising short-term interest rates, giving them the flexibility to move as soon as June. This may be the most anticipated Fed meeting in some time as it fundamentally changes policy to a meeting-by-meeting calculation. The Fed has not hiked rates since 2006, and it has kept rates at zero since December 2008 . The Fed will release its policy statement on Wednesday at 2 p.m. Eastern along with its latest economic forecast and the projected interest rate path of the 17 officials. A press conference with Fed Chairwoman Janet Yellen will follow at 2:30 p.m.

Fed watchers said Yellen telegraphed the Fed policy committee’s intentions in her Congressional testimony last month. Read Yellen removes another obstacle to an eventual rate hike. “I would be shocked if ‘patient’ is not removed,” said John Ryding, chief economist at RDQ Economics. “Patient” meant the Fed would not raise rates for two meetings. With formal policy deliberations scheduled for late April and June, the pledge needed to go if a June move was to be on the table. “Enough Fed officials have said they want to have the debate about hiking rates at the June meeting, so it has to come out,” Ryding said. Avery Shenfeld, chief economist at CIBC World Markets, agreed patient would be dropped and said Yellen would use her press conference to stress that the central bank has not made up its mind about a June move.

The Fed chairwoman will stress the Fed is data dependent and a decision will come on a meeting-by-meeting basis. She will highlight some of the mixed messages the economy has been sending, such as the strength in employment but the relatively soft pace of GDP growth. The goal is to keep markets from overreacting and tightening financial conditions, he said. Q1 GDP seems likely to decelerate to a 1.5% annual rate from a 2.2% rate in the final three months of 2014, he said. But growth should rebound “north of 4% “in the second quarter, which should boost worker paychecks and give the Fed a green light to hike rates, Shenfeld said. Ryding agreed: “We’re in the ninth inning of a zero-rate environment.”

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“The creditworthiness of the United States is not a bargaining chip..”

US Debt To Hit Legal Limit Again On Monday (MarketWatch)

The U.S. government is about to run into the legal limit on how much it can borrow, but don’t expect a whole lot of fireworks again in Congress over what’s become a frequently quarrelsome issue. The U.S. debt limit goes into effect on Monday after a one-year suspension, with a ceiling of around $18 trillion. Treasury Secretary Jack Lew on Friday urged John Boehner, the Republican speaker of the House, to raise the debt limit as quickly as possible and not to allow the issue to become a political football. “The creditworthiness of the United States is not a bargaining chip, and I again urge Congress to address this matter without controversy or brinksmanship,” Lew wrote in a second letter to Boehner in two weeks.

Americans and foreign investors need not worry, though. The U.S. Treasury has the means to keep funding the government until October through the use of so-called extraordinary measures, the Congressional Budget Office estimates. And the Bipartisan Policy Center in a new report suggests a breach in the debt limit could be put off potentially until the end of the December. What’s more, the leader of the U.S. Senate, Republican Mitch McConnell of Kentucky, insists he won’t let the government default or shut down amid negotiations with the White House on raising the debt limit.

That’s good news for the nation’s bondholders or anyone dependent on the feds for support, such as retirees receiving Social Security or other benefits, because it means the government will continue to pay its bills on time. The modern-day debt limit, which has been in place since World War II, caps how much money the government can borrow. The limit has been raised about a hundred times since the 1950s, but it’s become the source of increasingly hostile political tug-of-wars since the mid-1990s.

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“We’re back into the normal world of volatility for oil and gas prices..”

BP CEO On Oil: ‘It’s Going To Be Very Painful’ (CNBC)

The dramatic drop in oil prices and the transfer of wealth to consumers is going to be very painful for the oil and gas industry, Bob Dudley, CEO of BP, told CNBC Saturday. Speaking at Egypt’s Economic Development Conference in the resort town of Sharm el-Sheikh, Dudley said that oil prices – which have fallen around 60% since last June – had been a “huge shock” for companies like his. “We’re back into the normal world of volatility for oil and gas prices,” he said on a CNBC-hosted panel. “Anything that happens that fast can have unintended consequences. BP was the first European major to sound the alarm on tumbling oil prices – on December 10, it warned that it was implementing a cost-cutting program as a result.

In December, oil majors in Europe also received a stark warning from credit ratings agency S&P, which placed BP, Total and Shell on a negative watch. It means the three firms are more likely to have their debt rating downgraded over the next three months. Speaking at the investment event in Egypt, Dudley added that BP had operated continuously in the country for the last 25 years. His comments come after the oil giant signed an deal to develop gas resources in Egypt, with investment of around $12 billion from BP and its partners. The company said the project underlined its commitment to the Egyptian market and was a vote of confidence in the country’s investment climate and economic potential.

Three days later, BP also announced a gas discovery in the East Nile Delta which it said was expected to be the deepest well ever drilled in Egypt. “I think the time is absolutely right,” Dudley said about investing in the Middle Eastern nation. “(Egypt) really is the lynchpin…it’s the largest market in the Middle East.” On Saturday, Dudley said the investments would increase in gas production in the country by 25 to 30%.

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Anything over zero is a godsend by now.

Oil Futures Suffer Nearly 10% Weekly Plunge (MarketWatch)

Oil futures fell sharply on Friday, to tally a weekly decline of nearly 10%, as a monthly report from the International Energy Agency raised concerns that the glut of crude supplies and tightening storage capacity in the U.S. may cause prices to weaken further. Crude-oil for delivery in April fell $2.21, or 4.7%, to settle at $44.84 a barrel on the New York Mercantile Exchange. Prices ended the week with a loss of 9.6%. April Brent crude on London’s ICE Futures exchange shed $2.41, or 4.2%, to settle at $54.67 a barrel, with the front-month contract down 8.5% for the week. After trading on Nymex ended Friday, the U.S. Energy Department said it plans to buy up to 5 million barrels of crude for the Strategic Petroleum Reserve. Prices in electronic trading edged backed above $45.

In its report early Friday, the IEA said any appearance of stability in oil is tenuous. “Behind the facade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly,” the report said. Ballooning inventories combined with the nation’s shrinking oil storage could drag prices lower, it said. The comments from IEA come as oil has been trading in a relatively narrow band over the course of the past few weeks, on the heels of steep declines in weekly U.S. rig counts. Baker Hughes on Friday reported that the number of U.S. rigs actively drilling for oil as of March 13 fell 56 rigs from last week to 866.

“Oil rig counts fell for a historic 14th week in a row,” said Phil Flynn, senior market analyst at Price Futures Group. “While at this point the rig count drop has not impacted output, at this rate it soon will.” Flynn also pointed out that the IEA report wasn’t all that bearish as it raised its demand estimate. The IEA forecast average global oil demand of 93.5 million barrels a day for 2015.

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Sounds good.

‘Most Significant Break Between Germany And US Since WWII’ (RT)

People in the US, like ex-CIA chief Michael Hayden, are trying to put Berlin back in place dissatisfied that the Germans are acting like adults but not like subservient servants from of the “five eyes” alliance, says Ray McGovern, a former CIA officer. Speaking at a Washington-based think tank, the New America Foundation, on Tuesday former NSA and CIA director, General Michael Hayden, said that terror attacks such as the Charlie Hebdo shooting are inevitable and similar to Ebola. He confessed that the NSA would never agree to stop spying on Germany whatever the political fallout.

RT: Do you really believe that nothing can be done to avoid terror attacks like Charlie Hebdo, given the West’s massive intelligence networks?
Ray McGovern: It does make everything that General Hayden implemented at the NSA worthless. The famous pile, from which you are supposed the extract a little nugget on terrorism, it hasn’t worked. Hayden has his nose out of joint. He is neocon who is very dissatisfied these days and particularly with the performance of German Chancellor Angela Merkel because she is not acting obediently anymore. She actually sees Germany interests first, and has prevented a worsening of the situation in Ukraine. General Hayden doesn’t like that. He doesn’t like Angela Merkel being an upstart and saying that she’s displeased at having her handy, her little cell phone monitored. Well, “she should know her place.” So Hayden here is not the most diplomatic person in the world. He is trying to tell Merkel and everyone else who is outside the [Five Eyes intelligence alliance] – the UK, the US, Canada, Australia, and New Zealand – that they are secondary citizens and they will remain so as long as they don’t spring to obedience the way the other four do.

RT: The former NSA director suggested that relations between Germany and the US might not be as rosy as generally believed. Is that true? How do you see relations between Berlin and Washington evolving from here?
RM: The most significant break since WWII has just happened. Angela Merkel came to Washington and she said“selling offensive arms and giving them to the Ukrainians is a bad idea, we oppose it.” And the President [Barack Obama] said: “Oh, we’re still trying to make our decision about that.” She went to Russia and worked out a deal with Putin and Poroshenko saying: “Look, we need a ceasefire,” and so far the good news is that ceasefire is holding.

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But then we still have the war types and lying basterds.

Poroshenko: 11 EU States Struck Deal With Ukraine To Deliver Weapons (RT)

Ukraine has concluded deals with eleven countries of the EU on delivery of weapons, including lethal, President Petro Poroshenko told the country’s TV. He, however, didn’t mention which countries will provide ‘defensive aid’ to Kiev. “The Head of State has informed that Ukraine had contracts with a series of the EU countries on the supply of armament, inter alia, lethal one. He has reminded that official embargo of the EU on the supply of weapons to Ukraine had been abolished,” said a statement on Poroshenko’s official website, citing his interview to the TV channel “1+1”.

According to Poroshenko’s statement, he is confident that EU and USA will support Ukraine with weapons if needed. “If there is a new round of aggression against Ukraine, I can surely say that we will immediately receive both lethal weaponry and new wave of sanctions against the aggressor. We will act firmly and in a coordinated manner.” Ukraine won’t reduce its defense capacity, said Poroshenko, adding that now “intensive combat training is being held” in the country. “We are mining the most dangerous tank directions and building engineering structures under the new plan and projects.”

The statement said that the decision of the US President Barack Obama “who decided to supply Kiev with defensive weaponry” is crucial. “This armament will increase preciseness and efficiency of the Ukrainian weapons. In addition, thermal imagers and radars that detect motion help counteract reconnaissance and subversive groups of the opponent.” The Ukrainian leader said the situation in Donetsk and Lugansk Regions is being gradually deescalated, adding that the Ukrainian army hasn’t suffered casualties for several days.

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Good model for Greece?!

Ukraine Says Creditors Face Principal Losses on Dollar Bonds (Bloomberg)

Ukraine’s bond restructuring may include a reduction in principal, as well as an extension of maturities and lower coupons, Finance Minister Natalie Jaresko said in her first talks with creditors about easing the country’s debt load. The nation of more than 40 million, which is struggling to contain a separatist war that has killed more than 6,000 people in its easternmost regions, will try to reorganize debt from both the government and publicly run entities by June, Jaresko said in a conference call on Friday. She called on Russia, which has lent Ukraine $3 billion in a bond maturing this year, to join the talks. The price of Ukraine’s dollar debt fell. The operation “will probably involve the combination of a maturity extension, a coupon reduction and a principal reduction,” Jaresko said. “The proportion of each of these elements will be discussed with creditors.”

Ukraine won approval this week for $17.5 billion of IMF aid, bolstering reserves that have fallen to a more-than-decade low. The loan is part of a $40 billion package to rescue the nation’s economy as it buckles under a plunging hryvnia currency and the war, which has devastated its industrial heartland. The best investors can try is to limit the principal reduction, said Richard Segal, the head of emerging-market credit strategy at Jefferies in London. Avoiding losses on the face value of the debt “seems to be mathematically impossible,” Michael Ganske, who helps oversee $7 billion in emerging-market assets as a money manager at Rogge Global Partners in London, said by e-mail.

Ukraine’s dollar bonds extended losses after Jaresko’s comments. The dollar notes due in July 2017 dropped 1.5 cents to 44.3 on the dollar at 8 p.m. in Kiev, increasing the yield to 53.48%. The securities fell as low as 41.35 cents last month, before rallying in the run-up to the IMF’s approval of its second Ukraine loan in 11 months this week. “Unfortunately, they have to insist on debt reduction,” Ronald Schneider, who helps manage about €800 million at Raiffeisen in Vienna, including Ukrainian bonds, said by e-mail on Friday. “Negotiations with creditors would be easier without a haircut” reducing the face value of the securities, he said.

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Beppe: “Something that can ensure no one is left behind.”

The #ALBA Dawn Of A New Europe (Beppe Grillo)

“They are telling us that the European economy is in recovery because the reforms are working. And the government has been celebrating the 0.1% growth in GDP in the first quarter of 2015 as a trophy. The reality is, however, that:
– since 2010, our GDP has lost 10 points;
– since the beginning of the crisis about 100 thousand companies have gone bust with the loss of more than a million jobs, and out of every hundred young people, fifty are without a job.

And (as we hope others will do), we can examine the state of our country in terms of the index called “Benessere Equo e Sostenibile” {Equitable and Sustainable Well-being} instead of using the Gross Domestic Product, and we become aware of a drama that is ever more ferocious. In this tragic recessionary vortex, the countries that have suffered the greatest setback are those in Southern Europe: as well as Italy, there’s Greece, Spain and Portugal. The economists all over the world and a few German hacks have called us “PIGS“. After depriving us of our future, they have insulted us in the media. Today we are at a crossroads.. The first round lost by Alexis Tsipras against the Troika, demonstrates that for Berlin, Brussels and Frankfurt there is no alternative to “austerity Europe”. This is confirmed by Renzi’s “Jobs Act” and the growing amount of trickery he’s coming up with.

It’ll be difficult to get out of this trap, but it is possible if we manage to build an alliance among the Mediterranean countries that can break the logic of German mercantilism. Italy, Greece, Spain, Portugal and France – together – represent the third biggest economy in the world. We could create a “cartel” and get greater contractual power with Berlin. Someone has already done it before us: the countries of ALBA, formed in 2001 as an alternative to The Free Trade Area of the Americas (FTAA) that was what the United States wanted. The political principles and the concept of social cooperation that the countries of Venezuela, Bolivia, Nicaragua, Ecuador and Cuba have signed up to, can be our source of inspiration to fight the domineering and neo-liberal process at the basis of the endless crisis in the West. They’ve had the FTAA, and soon, we’ll have TTIP.

Today there are movements and parties not delegitimized by years of power and of compromising with the corporate-financial lobbies that can, or must, start to think of a new supportive Community that can reject the diktats of the Troika. The dawn of a new Europe is close at hand: a great Euro-Mediterranean alliance of sovereign States that can give back freedom, civilisation, sovereignty and democracy to our own people. Something that can ensure no one is left behind.

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Yanis’ first blog since Jan 25 is this long speech at the Ambrosetti forum March 14.

Presenting An Agenda For Europe, Ambrosetti, Lake Como, 14-3-2015 (Varoufakis)

Dear All, Ministerial duties have impeded my blogging of late. I am now breaking the silence since I have just given a talk that combines my previous work with my current endeavours. Here is the text of the talk I gave this morning at the Ambrosetti Conference on the theme of ‘An Agenda for Europe’. Long time readers will recognise the main theme – evidence of a certain continuity… Back in March 1971, as Europe was preparing itself for the Nixon Shock and beginning to plan for a European monetary union closer to the Gold Standard than to the Bretton Woods system that was unravelling, Cambridge economist Nicholas Kaldor wrote the following lines in an article published in The New Statesman:

“… [I]t is a dangerous error to believe that monetary and economic union can precede a political union or that it will act (in the words of the Werner report) “as a leaven for the evolvement of a political union which in the long run it will in any case be unable to do without”. For if the creation of a monetary union and Community control over national budgets generates pressures which lead to a breakdown of the whole system it will prevent the development of a political union, not promote it.”

Unfortunately, Kaldor’s prescient warning was ignored and replaced by a touching optimism that monetary union will forge stronger links between Europe’s nations and, following some large financial sector crisis (like that of 200), European leaders will be forced by circumstances to deliver the political union that was always necessary. And so, at a time when America was recycling other peoples’ surpluses at a global scale, a Gold Standard of sorts was created in the midst of Europe, causing a wall of capital to flow into Wall Street fuelling financialisation and large-scale private money minting worldwide – with French and German rushing in to participate enthusiastically.

Within the Eurozone the illusion of riskless risk was reinforced by the fantasy that (in a union built on the Principle of Perfectly Separable Public Debts and Separate Banking Systems,) lending to a Greek entity was more or less equally risky as lending to a Bavarian one. As a result, net trade surpluses gave rise to net capital flows into the deficit nations, causing unsustainable bubbles in both the private and the public sectors. Our Eurozone growth model, ladies and gentlemen, relied heavily on private, bank-driven, vendor-financing for the net exports of the surplus nations. It was as if, in constructing the Eurozone, we removed all shock absorbers while ensuring that the shock, when it came, would be massive.

And when that massive shock came, in the form of the Great Eurozone Crisis in 2010, following the global Crash of 2008, with my country, Greece, proving the canary in the mine, Europe decided to remain in denial of the nature of the crisis, insisting on dealing with the insolvencies caused by the bursting of bubbles (first in the banking sector and then in the realm of public debt) as if they were mere liquidity problems, lending to the deeply indebted nations through SPVs (special purpose vehicles) that resembled stacked CDOs (collateralized debt obligations). The end result was a transfer of potential losses from the banks’ books onto Europe’s taxpayers in a manner that placed most of the burden of adjustment on the crisis countries that could least bear it.

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But that doesn’t mean they‘re all equally bad.

Greece Has Plenty Of Options. It’s Just That None Are Good (Satyajit Das)

The choices for Greece now are clear. In the first option, the European Union makes allowances: maturities for loans, especially short-term ones, are extended; there are concessions on interest rates; debt may be replaced with securities without maturity and a coupon linked to growth – Keynes-style “Bisque bonds”; the European Central Bank continues to support the liquidity needs of the Greek banks; and the hated Troika is renamed, to remove the odious association with the past. Despite the reduction in the value of the debt outstanding, the EU and lenders avoid a politically difficult explicit debt writedown. Syriza claims to have fulfilled its mandate to stand up to the EU and Germany, and reclaim Hellenic sovereignty and pride. In reality, little changes. Under this scenario, Greece and the EU are back at the negotiating table within six to 12 months, confronting the same issues.

In the second option, Greece defaults on its debt but stays in the euro. (It is not clear how a nation in default can remain within the euro other than through the fortuitous absence of an ejection mechanism.) Greek banks collapse if the ECB decides to withdraw funding. Capital flight accelerates, requiring capital controls. The Greek Government is left with no obvious source of funding, other than a parallel currency or IOUs, as used during some government shutdowns in the US. Greece’s competitive position is unchanged as it purports to use the euro. The EU and lenders incur substantial losses on their loans.

In the third option, Greece defaults and leaves the euro, bringing in new drachmas. There is short-term chaos. Activity in Greece collapses. The EU and lenders face the same problem as in the second option. In addition, the euro is destabilised. The third option allows Greece to regain control of its currency and interest rates. Sharp devaluation of the new drachma improves competitiveness, for example in tourism. The ability of the central bank to create and control money supply helps restore liquidity to its banks and provides a mechanism for financing the Government.

A cheap new drachma, if appropriately managed, may reverse capital flight, as the threat of a loss of purchasing power is reduced. A devalued currency may also help attract inflows of funds looking for bargains. In time, Greece regains access to capital markets as Russia did after its 1998 default. Greece regains economic sovereignty but at the cost of reduced living standards as import prices sky-rocket and international purchasing power is diminished. But after the initial dislocation, a strong recovery may ensue.

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“Juncker, however, insisted that there was no scope for Greece and its eurozone partners failing to find a way to progress.”

Juncker, Tsipras Agree On Creating Greek Task Force For Reforms (Kathimerini)

Greece was warned on Friday that it has to make swifter progress in agreeing reforms with its lenders, as European Commission President Jean-Claude Juncker and Prime Minister Alexis Tsipras agreed in Brussels on the creation of a Greek task force to work with EU experts on structural improvements. “I don’t think we have made sufficient progress,” Juncker told reporters as he welcomed Tsipras to the Commission on Friday, echoing Eurogroup chief Jeroen Dijsselbloem’s comments that the two weeks following the February 20 agreement on a four-month bailout extensions between Greece and its creditors had been “wasted.” Juncker, however, insisted that there was no scope for Greece and its eurozone partners failing to find a way to progress.

“I’m totally excluding a failure… This is not a time for division. This is the time for coming together,” he said. His comments came in the wake of German Finance Minister Wolfgang Schaeuble refusing to rule out the possibility that Greece would slip out of the single currency. “As the responsibility, the possibility to decide what happens lies only with Greece and because we don’t exactly know what those in charge in Greece are doing, we can’t rule it out,” he told an Austrian broadcaster. In an interview with Germany’s Der Spiegel magazine due to be published on Saturday, European Economic and Monetary Affairs Commissioner Pierre Moscovici strikes a similar tone to Juncker, insisting that the option of a Greek exit should not be considered. “All of us in Europe probably agree that a Grexit would be a catastrophe – for the Greek economy, but also for the eurozone as a whole,” he said.

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Mind you: Delay. Not give up.

Athens Ready To Delay Some Election Pledges, Says Varoufakis (Reuters)

Greek Finance Minister Yanis Varoufakis said on Friday he was confident Athens could reach a deal by April 20 with its international creditors on the reforms it must implement to unblock further aid. Speaking to reporters on the sidelines of a business conference in northern Italy, Varoufakis also said Greece’s new leftist government was prepared to delay some of its promised anti-austerity measures in an effort to win EU backing. “We can complete the review of the 20th of February agreement… We have a commitment, all of us, to reach an agreement by the 20th of April,” Varoufakis said. The government was elected in January on a pledge to roll back austerity and renegotiate the terms of a €240 billion international bailout, but it has faced fierce resistance from EU partners who are unwilling to offer Athens major compromises.

Although the partners agreed on Feb. 20 to a four-month extension to the bailout programme, the accord did not give Greece access to funds pledged to it from the euro zone and the International Monetary Fund. To obtain that cash, Athens needs to agree on a revised package of measures. After long delays, the discussions only kicked off in earnest this week in Brussels. Varoufakis indicated on Friday a willingness to compromise. “If this means that, for the next few months that we have negotiations, we suspend or we delay the implementation of our (election) promises, we should do precisely that in the context to build trust with our partners…,” he said.

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That’s not its worst consequence.

Greece’s Varoufakis Says QE To Fuel Unsustainable Equity Rally (Reuters)

The ECB’s bond purchases will create an unsustainable stock market rally and are unlikely to boost euro zone investments, Greek Finance Minister Yanis Varoufakis warned on Saturday. The ECB began a programme of buying sovereign bonds, or quantitative easing, on Monday with a view to supporting growth and lifting eurozone inflation from below zero up towards its target of just under 2%. Bond yields in the currency bloc have collapsed, but record low interest rates so far have not spurred investments that would support growth in recession-hit countries like Italy or Spain.

“QE is all around us and optimism is in the air,” Varoufakis told a business audience in Italy. “At the risk to sound the party pooper … I find it hard to understand how the broadening of the monetary base in our fragmented and fragmenting monetary union will transform itself into a substantial increase in productive investments. “The result of this is going to be an equity run boost that will prove unsustainable,” he said.

Varoufakis reiterated that the new Greek government was ready to time its promised anti-austerity measures in a way that helped negotiations with European Union partners over the disbursement of financial aid. “We never said we’re going to renege on any promises, we said that our promises concern a four-year parliamentary term,” he told reporters on the sidelines of the conference. “They will be spaced out in an optimal way, in a way that is in tune with our bargaining stance in Europe and also with the fiscal position of the Greek state,” he said.

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“Most understand that, whatever one thinks of the outcomes, there would not have been any negotiation at all but for Syriza.”

The Greek Election: Why I Went Home To Vote For The First Time (Alex Andreou)

It has become clear that most of the commentariat no longer possesses even the basic language to engage with politics that is not free market-based. It looks at a government with clear social intentions, but flexible methods, and it cannot make sense of it. Politicians who, after an election, appear to want to achieve precisely what they promised before it, just don’t compute. Even in its first months, Syriza must be discredited, it seems, at any cost. Recent polls, and the following interviews, reveal Greek voters to be infinitely more sophisticated. Most understand that this is merely the start of a necessary conversation about austerity and, more generally, capitalism. Many hope that Spain, Italy and even the UK will join it in time.

Most understand that, whatever one thinks of the outcomes, there would not have been any negotiation at all but for Syriza. After four decades of being ruled by corruption and nepotism, expectations are low. Everything is a bonus. It feels utterly refreshing to have someone fighting your corner. After almost two months of dominating international news, Greece will no doubt disappear again into relative obscurity. This is as it should be. A country whose economy accounts for less than 0.3% of the world’s GDP should not be the focus of such intense attention.

That it has been consistently presented as the fuse that, once lit, will set the globe on the path to inevitable decline is revealing. It says that the systemic interconnectedness that resulted in the global financial crisis is still very much present. It reveals a fear of anyone who does things differently. It speaks volumes about this being a political, as well as an economic, crisis. Most of all, such scrutiny makes it impossible for an inexperienced government to get on with the practical business of running a country. The absence of this obsessive examination will be welcome. Wouldn’t it be something if our collective folly, this experiment at fair and honest government, actually made a difference?

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“She talks about this as “regaining our economic freedom” and the “exercise of economic patriotism.”

The Power of Le Pen (BBC)

Marine le Pen. Arguably, she is the most important opposition politician in Europe, who has the potential to affect the way of life of all of us. How so? Well her party is France’s most popular. It topped the polls in last years European elections and is expected to do so again in the first round of local elections on March 22. Also France’s business and political establishment, with whom I have spent a good deal of time nattering in recent weeks, takes it for granted that she will go through to the second round of the French presidential elections in 2017 – and is not remotely confident that a centre-ground candidate of left or right will be able to rally sufficient moderate support to beat her. So she matters, which is why I interviewed her twice for my film, once before and once after the Charlie Hebdo atrocity.

One important question is whether her repudiation of her party’s racist and anti-Semitic past is more than cosmetic (she insists it is – but many argue the party’s criticism of Islam is insidious). Outside France probably what may matter most about her is that she explicitly blames the EU and eurozone for all France’s economic woes. She is in favour of French withdrawal from both, so that she can restrict immigration, impose customs duties on imports, nationalise big businesses when useful, and re-instate the French Franc. She talks about this as “regaining our economic freedom” and the “exercise of economic patriotism”. When I put it to her that her protectionist policies were chillingly similar to those that reinforced the Great Depression of the 1930s, she said she totally disagreed and that the relevant crisis was the “eurozone that has been the black hole of world growth for 12 years”.

Whether or not you think reinstating economic borders is the road to penury, it is very difficult to see how the eurozone could survive a French exit – and the economic shock of even rising fears of French withdrawal would seriously set back a European recovery (the cost of finance would rise sharply, because of the fear that converting strong euros into weak francs would generate huge losses on French assets). None of which is to say there is a need to panic about this now. But it does show that unless and until Europe’s establishment succeeds in demonstrating that the EU and the eurozone is serving the interests of most people, which they are conspicuously failing to do at the moment, Europe’s way of life will be under sustained and serious threat.

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“..the US sees the Chinese effort as a ploy to dilute US control of the banking system..”

UK Support For China-Backed Asia Bank Prompts US Concern (BBC)

The US has expressed concern over the UK’s bid to become a founding member of a Chinese-backed development bank. The UK is the first big Western economy to apply for membership of the Asian Infrastructure Investment Bank (AIIB). The US has raised questions over the bank’s commitment to international standards on governance. “There will be times when we take a different approach,” a spokesperson for Prime Minister David Cameron said about the rare rebuke from the US. The AIIB, which was created in October by 21 countries, led by China, will fund Asian energy, transport and infrastructure projects.

The UK insisted it would demand the bank adhere to strict banking and oversight procedures. “We think that it’s in the UK’s national interest,” said Mr Cameron’s spokesperson. Pippa Malmgren, a former economic advisor to US President George W Bush, told the BBC that the public chastisement from the US indicates the move might have come as a surprise. “It’s not normal for the United States to be publically scolding the British,” she said, adding that the US’s focus on domestic affairs at the moment could have led to the oversight. However, Mr Cameron’s spokesperon said UK Chancellor George Osborne did discuss the measure with his US counterpart before announcing the move.

In a statement announcing the UK’s intention to join the bank, Mr Osborne said that joining the AIIB at the founding stage would create “an unrivalled opportunity for the UK and Asia to invest and grow together”. The hope is that investment in the bank will give British companies an opportunity to invest in the world’s fastest growing markets. But the US sees the Chinese effort as a ploy to dilute US control of the banking system, and has persuaded regional allies such as Australia, South Korea and Japan to stay out of the bank.

Read more …

He’s already ‘back’. Who starts this sort of thing?

Russia In A Spin As Its Putin Goes Missing (FT)

He is the most talked-about person in Russia – even when he’s nowhere to be seen. Moscow is buzzing with talk about the whereabouts of Vladimir Putin who took a week-long hiatus from public appearances from March 5, fuelling wild rumours about the president’s health, political future and love life. On Twitter, critics of the president have been tweeting morbid jokes and memes under the hashtag “Putin is dead”, while Russian bloggers and pundits pore over the official Kremlin website looking for discrepancies in Mr Putin’s alleged work schedule.

Andrei Illarionov, a former adviser to Mr Putin now based in Washington, claimed in a blog post that Mr Putin had fallen victim to a palace coup and fled abroad, while Konstantin Remchukov, an influential Moscow editor, alleged that the state-owned oil company Rosneft’s chairman Igor Sechin was about to get the boot, indicating that a big government shake-up was looming. In Switzerland, the news outlet Blitz.ch ran a report claiming that Alina Kabaeva, a former gymnast and Duma deputy who has been linked romantically with Mr Putin, had given birth to a child this week in Switzerland’s Italian-speaking region of Ticino, suggesting that the Russian president had taken time off for a “baby mission”.

The Kremlin’s press service has brushed off the various allegations, with Mr Putin’s spokesman repeatedly insisting that the president’s health is “fine”. On Friday, the Kremlin announced that he would be meeting the president of Kyrgyzstan – publicly – in St Petersburg on Monday. Later, Russian state television channels co-ordinated to show Mr Putin at a Kremlin meeting with the head of Russia’s supreme court. However, at least one blogger claimed that the footage was dated, noting that the president’s desk had a clock on it that was supposed to have been given away as a gift a few days earlier.

Read more …

Great read.

Is EU Army Intended To Reduce US Influence In Europe? (RT)

Germany itself is the ultimate prize for the US in the conflict in Ukraine, because Berlin has huge sway in the direction that the EU turns. The US will continue to stoke the flames in Ukraine to destabilize Europe and Eurasia. It will do what it can to prevent the EU and Russia from coming together and forming a “Common Economic Space” from Lisbon to Vladivostok, which is dismissed as some type of alternative universe in the Washington Beltway. The Fiscal Times put it best about the different announcements by US officials to send arms to Ukraine. “Given the choreographed rollout, Washington analysts say, in all likelihood this is a public-opinion exercise intended to assure support for a weapons program that is already well into the planning stages,” the news outlet wrote on February 9.

After the Munich Security Conference it was actually revealed that clandestine arms shipments were already being made to Kiev. Russian President Vladimir Putin would let this be publicly known at a joint press conference with Hungarian Prime Minister Viktor Orban in Budapest when he said that weapons were already secretly being sent to the Kiev authorities. In the same month a report, named ‘Preserving Ukraine’s Independence, Resisting Russian Aggression’, was released arguing for the need to send arms to Ukraine — ranging from spare parts and missiles to heavy personnel — as a means of ultimately fighting Russia. This report was authored by a triumvirate of leading US think-tanks, the Brookings Institute, the Atlantic Council, and the Chicago Council on Global Affairs — the two former being from the detached ivory tower “think-tankistan” that is the Washington Beltway.

This is the same clique that has advocated for the invasions of Iraq, Libya, Syria, and Iran. It is in the context of divisions between the EU and Washington that the calls for an EU military force are being made by both the European Commission and Germany. The EU and Germans realize there is not much they can do to hamper Washington as long as it has a say in EU and European security. Both Berlin and a cross-section of the EU have been resentful of how Washington is using NATO to advance its interests and to influence the events inside Europe. If not a form of pressure in behind the door negotiations with Washington, the calls for an EU military are designed to reduce Washington’s influence in Europe and possibly make NATO defunct.

Read more …

Can’t let John Gray go unnoticed.

Steven Pinker Is Wrong About Violence And War (John Gray)

If great powers have avoided direct armed conflict, they have fought one another in many proxy wars. Neocolonial warfare in south-east Asia, the Korean war and the Chinese invasion of Tibet, British counter-insurgency warfare in Malaya and Kenya, the abortive Franco-British invasion of Suez, the Angolan civil war, the Soviet invasions of Hungary, Czechoslovakia and Afghanistan, the Vietnam war, the Iran-Iraq war, the first Gulf war, covert intervention in the Balkans and the Caucasus, the invasion of Iraq, the use of airpower in Libya, military aid to insurgents in Syria, Russian cyber-attacks in the Baltic states and the proxy war between the US and Russia that is being waged in Ukraine – these are only some of the contexts in which great powers have been involved in continuous warfare.

While it is true that war has changed, it has not become less destructive. Rather than a contest between well-organised states that can at some point negotiate peace, it is now more often a many-sided conflict in fractured or collapsed states that no one has the power to end. The protagonists are armed irregulars, some of them killing and being killed for the sake of an idea or faith, others from fear or a desire for revenge and yet others from the world’s swelling armies of mercenaries, who fight for profit. For all of them, attacks on civilian populations have become normal. The ferocious conflict in Syria, in which methodical starvation and the systematic destruction of urban environments are deployed as strategies, is an example of this type of warfare.

Read more …

Feb 252015
 
 February 25, 2015  Posted by at 3:18 am Finance Tagged with: , , , , , , , , , , , ,  8 Responses »


Gordon Parks “New York, New York. Scene in Harlem area.” 1943

Riddle me this, Batman. I don’t think I get it, and I definitely don’t get why nobody is asking any questions. The IMF and EU make a lot of noise – through the Eurogroup – about all the conditions Greece has to address to get even a mild extension of support, while the same IMF and EU keep on handing out cash to Ukraine without as much as a whisper – at least publicly.

The Kiev government, which has been ceaselessly and ruthlessly attacking its own people, is now portrayed as needing – monetary and military – western help in order to be able to ‘defend’ itself. From the people it’s been attacking, presumably. And hardly a soul in the west asks what that is all about.

Why did Kiev kill 5000 of its own citizens? Because there are people in East Ukraine who had – and still have – the guts to say they don’t want to be ruled by a regime willing to murder them for saying they don’t want to be ruled by it. And just in case there’s any confusion left about this, yes, that is the regime we are actively supporting, in undoubtedly many more ways than are made public. All the doubts about the western narrative are swept aside with one move: blame Putin.

Of the two countries, Greece, despite its humanitarian issues, is by far the luckiest one. Ukraine is quite a few steps further down the hill. One can be forgiven for contemplating that the west, aided by President Poroshenko and the Yats regime in Kiev, is dead set on obliterating the entire nation.

There are again peace talks under way, with no – direct – Anglo-Saxon involvement, but as the Foreign Ministers of Russia, Ukraine, France and Germany meet, Britain announces it’s sending military personnel into Ukraine and Poroshenko buys weapons from UAE, which is the same as saying from America. Where does he get the money? Chocolate sales? Had a good Valentine’s campaign?

Baltic states reinforce their armies (Lithuania just launched conscription), as NATO expands its presence there. The constantly repeated message is that Putin will attack them. It’s a made-up story. Poroshenko says he wants Crimea back, even as he knows full well that’s not going to happen.

What part of the fresh round of IMF/EU loans will go towards arms purchases? Can Brussels please supply a run-down ASAP? Don’t Europeans have a right to know where their money goes?

To start with, here’s a – partial – overview of loans from Constantin Gurdgiev:

IMF Package for Ukraine: Some Pesky Macros

Ukraine package of funding from the IMF and other lenders remains still largely unspecified, but it is worth recapping what we do know and what we don’t.Total package is USD40 billion. Of which, USD17.5 billion will come from the IMF and USD22.5 billion will come from the EU. The US seemed to have avoided being drawn into the financial singularity they helped (directly or not) to create. We have no idea as to the distribution of the USD22.5 billion across the individual EU states, but it is pretty safe to assume that countries like Greece won’t be too keen contributing.

Cyprus probably as well. Ireland, Portugal, Spain, Italy – all struggling with debts of their own also need this new ‘commitment’ like a hole in the head. Belgium might cheerfully pony up (with distinctly Belgian cheer that is genuinely overwhelming to those in Belgium). But what about the countries like the Baltics and those of the Southern EU? Does Bulgaria have spare hundreds of million floating around? Hungary clearly can’t expect much of good will from Kiev, given its tango with Moscow, so it is not exactly likely to cheer on the funding plans… Who will?

Austria and Germany and France, though France is never too keen on parting with cash, unless it gets more cash in return through some other doors. In Poland, farmers are protesting about EUR100 million that the country lent to Ukraine. Wait till they get the bill for their share of the USD22.5 billion coming due.

Recall that in April 2014, IMF has already provided USD17 billion to Ukraine and has paid up USD4.5 billion to-date. In addition, Ukraine received USD2 billion in credit guarantees (not even funds) from the US, EUR1.8 billion in funding from the EU and another EUR1.6 billion in pre-April loans from the same source. Germany sent bilateral EUR500 million and Poland sent EUR100 million, with Japan lending USD300 million.

Here’s a kicker. With all this ‘help’ Ukrainian debt/GDP ratio is racing beyond sustainability bounds. Under pre-February ‘deal’ scenario, IMF expected Ukrainian debt to peak at USD109 billion in 2017. Now, with the new ‘deal’ we are looking at debt (assuming no write down in a major restructuring) reaching for USD149 billion through 2018 and continuing to head North from there.

In other words, the loans are only and exclusively making Ukraine’s position worse. The Greeks may feel like debt slaves, but Ukrainians face a far darker feudal situation. They’re going to be -debt -prisoners in their own country. And that has nothing to do with Putin, it’s the ultimate shock doctrine. The distinct impression to me is the country will be turned into a testing ground for NATO and western military industries. Which is why ‘we’ have been so intent on engaging Russia in the Ukraine conflict.

But back to the loans first:

The point is that the situation in the Ukrainian economy is so grave, that lending Kiev money cannot be an answer to the problems of stabilising the economy and getting economic recovery on a sustainable footing. With all of this, the IMF ‘plan’ begs three questions:

  1. Least important: Where’s the European money coming from?
  2. More important: Why would anyone lend funds to a country with fundamentals that make Greece look like Norway?
  3. Most important: How on earth can this be a sustainable package for the country that really needs at least 50% of the total funding in the form of grants, not loans? That needs real investment, not debt? That needs serious reconstruction and such deep reforms, it should reasonably be given a decade to put them in place, not 4 years that IMF is prepared to hold off on repayment of debts owed to it under the new programme?

Why indeed? One thing seems certain: reconstruction is not in the cards. All assets will be sold for scrap, and most citizens ‘encouraged’ to cross one of many borders Ukraine has. Britain is next up in the escalation process. Again, as German/French talks with Russia continue.

Britain To Send Military Advisers To Ukraine, Announces Cameron

Britain was pulled closer towards a renewed cold war with Russia when David Cameron announced UK military trainers are to be deployed to help Ukraine forces stave off further Russian backed incursions into sovereign Ukraine territory. The decision – announced on Tuesday but under consideration by the UK national security council since before Christmas – represents the first deployment of British troops to the country since the near civil war in eastern Ukraine began more than a year ago. Downing Street said the deployment was not just a practical bilateral response to a request for support, but a signal to the Russians that Britain will not countenance further large scale annexations of towns in Ukraine.

The prime minister said Britain would be “the strongest pole in the tent”, and argued for tougher sanctions against Moscow if Russian-backed militias in eastern Ukraine failed to observe the provisions of a ceasefire agreement reached this month with the Ukrainian president, Petro Poroshenko. Downing Street said some personnel would be leaving this week as part of the training mission. Initially 30 trainers will be despatched to Kiev with 25 providing advice on medical training, logistics, intelligence analysis and infantry training. A bigger programme of infantry training is expected to follow soon after taking the total number of trainers to 75.

That’s simply war-mongering, and precious little else. We may wonder about the timing, but not the intention. Cameron goes on to make some really bizarre statements:

He said there was no doubt about Russian support for the rebels. “What we are seeing is Russian-backed aggression, often these are Russian troops, they are Russian tanks, they are Russian Grad missiles. You can’t buy these things on eBay, they are coming from Russia, people shouldn’t be in any doubt about that. “We have got the intelligence, we have got the pictures and the world knows that. Sometimes people don’t want to see that but that is the fact.”

No, Mr. Cameron, the problem is, the world does not know that, because it has never been shown either the intelligence or the pictures. Why not provide them? Because you don’t have them, is the only reason I can think of after a full year full of alleged activity of which there is not one shred of proof, but a million tons of accusations and innuendo. It’s literally a propaganda war, with the other side hardly firing back at all. And then there’s this from RT:

East Ukraine Artillery Withdrawal In Focus – As Poroshenko Buys UAE Weapons

While the foreign ministers of France, Germany, Russia and Ukraine were meeting in Paris to talk about the Eastern Ukraine peace settlement, it was revealed that the Ukrainian president has struck a deal on arms supplies from the UAE. The four ministers agreed on the need for the ceasefire to be respected, as well as on the need to extend the OSCE mission in Eastern Ukraine, reinforcing it with more funding, personnel and equipment. It’s important for Kiev troops and the rebels to start withdrawing heavy weapons right now, without waiting for the time “when not a single shot is fired,” Russian Foreign Minister Sergey Lavrov said after the meeting.

He added that his German and French counterparts thought it a positive development that the Donetsk and the Lugansk rebels had started to pull their artillery back. “The situation has significantly improved, that was acknowledged by my partners,” Lavrov said. “However, sporadic violations are being registered by the OSCE observers.” The withdrawal of heavy weaponry by Kiev troops and the rebels is part of the ceasefire deal struck in Minsk earlier in February. The Donetsk militia has announced it is complying.

Ukrainian President Petro Poroshenko has meanwhile reached an agreement on weapons supplies from the United Arab Emirates. That’s according to a Facebook post by advisor to Ukrainian Interior Minister, Anton Gerashchenko. The deal was struck with the Crown Prince of Abu Dhabi and deputy supreme commander of the UAE Armed Forces, Mohammed bin Zayed bin Sultan Al Nahyan. “It’s worth emphasizing that unlike Europeans and Americans, the Arabs aren’t afraid of Putin’s threats of a third world war starting in case of arms and ammunition supplies to Ukraine,” Gerashchenko wrote. He also said he believed the UAE blamed Russia for the drop in oil prices. “So, this is going to be their little revenge,” the adviser said.

Curious. Now it’s the Russians who are to blame for the oil price plunge? Weren’t they supposed to be the major victims? And when did Putin threaten with WWIII? There’s more to this:

[..].. former US diplomat James Jatras told RT: “This discussion in Washington about supplying weapons has been going on for some time. Usually that indicates that some kind of a covert program is already in operation and that we already are supplying some weapons directly,” he said. Jatras added that it is hard to believe that UAE would sell these weapons to Ukraine “without a green light from Washington.”

I would think the same thing: plenty forces in Washington who want nothing more than to supply weapons to Kiev, and there’s always a way. Note that Germany and France, the western partners in the peace talks, have so far managed to prevent direct arms supplies. They’ve now been blindsided, or so it would seem. Maybe it’s time for Merkel to pull her weight here, and a bit less on Greece. Germany doesn’t want an escalating warzone on its doorstep.

Meanwhile, the gas delivery issue is heating up again (pun intended). Ukraine continues to provoke Russia, but it will have to pay eventually. Unless escalation is the real goal, and freezing Eastern Europeans will be deemed a justifiable sacrifice.

Kiev Cash-For-Gas Fail Could Cost EU Its Supply (In 2 Days) – Gazprom

Russia will completely cut Ukraine off gas supplies in two days if Kiev fails to pay for deliveries, which will create transit risks for Europe, Gazprom has said. Ukraine has not paid for March deliveries and is extracting all it can from the current paid supply, seriously risking an early termination of the advance settlement and a supply cutoff, Gazprom’s CEO Alexey Miller told journalists. The prepaid gas volumes now stand at 219 million cubic meters. “It takes about two days to get payment from Naftogaz deposited to a Gazprom account. That’s why a delivery to Ukraine of 114 million cubic meters will lead to a complete termination of Russian gas supplies as early as in two days, which creates serious risks for the transit to Europe,” Miller said.

Earlier this month, Russian Energy Minister Aleksandr Novak estimated Ukraine’s debt to Russian energy giant Gazprom at $2.3 billion. In the end of 2014, Kiev’s massive gas debt that stood above $5 billion, forced Moscow to suspend gas deliveries to Ukraine for nearly six months. On December 9, Russia resumed its supplies under the so-called winter package deal, which expires on April 1, 2015. [..] On Monday, Ukrainian state energy company Naftogaz accused Gazprom of failing to deliver gas that Kiev had paid for in advance. Naftogaz says Russia has broken an agreement to deliver 114 million of cubic meters of natural gas to Ukraine by delivering only 47 million cubic meters.

During a meeting with President Vladimir Putin on February 20, Russian Prime Minister Dmitry Medvedev expressed concern about an increase in daily applications by Ukraine for the supply of gas, TASS reports. He noted that “Ukraine’s consumers have requested a larger supply; the volume has increased by 2.5 times. This means that the prepaid volumes left are enough for no more than two to three days.”

Overall, there seems to be little left that can be done to de-escalate the situation. The Donbass rebels may retreat some heavy weapons, but they won’t want to risk being defeated by a freshly replenished Ukraine/US/UK army. The make-up of which is ever harder to envision, since a few hundred thousand potential soldiers have already fled the country. Unless they extend the draft to 12- to 80-year-old women, what Ukrainians will be left to fight? And who will want to? Except for the private battallions of questionable make-up, that is.

Ukraine will at some point in the not too distant future be so impoverished that a new Maidan type revolution may be inevitable. There should really be elections in the country as soon as possible, but that doesn’t look likely to happen. Why Yatsenyuk is still PM should be a mystery, he was elected by a parliament at gunpoint. And he’s a US puppet, who’s recently invited three US citizens into key positions in his cabinet. Ukrainians may be scared to speak up, but if they don’t, things could get much worse real fast.

It’s once again time for the people to take to the streets. But that risks turning into an awful bloodbath that could make Kiev look like the Dresden. Unless all international parties retreat from Ukraine, there doesn’t seem to be a solution that would benefit the people.