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Saturday, January 31, 2015

First Greece now Spain then...

Spain rally: Podemos holds Madrid mass 'March for Change'

Tens of thousands of people have massed in central Madrid for a rally organised by radical Spanish leftists Podemos.

The "March for Change" is one of the party's first outdoor mass rallies, as it looks to build on the recent victory of its close allies Syriza in Greece.

Podemos has surged into the lead in recent opinion polls, and says it will seek to write off part of Spain's debt if it wins elections later this year.

Podemos says politicians should "serve the people, not private interests".
The BBC's Tom Burridge in Madrid says that there has been an impressive turnout and a carnival atmosphere at the rally.

Podemos leader Pablo Iglesias spelt out the party's message to the crowd.
"We want change," he said, quoted by the Associated Press. "I know that governing is difficult but those who have serious dreams can change things."

Protesters are parading in the same streets that over the past six years have seen many other gatherings against financial crisis cutbacks imposed by successive governments.
One marcher, Jose Maria Jacobo, told Reuters news agency that people had to fight back against the political class.

"It is the only way..., to kick out all of those politicians who are taking everything from us. They even try to take our dignity away from us. But that they won't take that from us," he said.

Thursday, January 29, 2015



Russia Links Loom Larger as Greece Seeks Debt Relief

Athens’s Resistance on New EU Sanctions Over Ukraine Could Be a Bargaining Chip

A new Greek government led by the left-wing Syriza party is creating an overlap between the two biggest crises Europe has faced in recent years: the deep economic malaise in the eurozone and the war in Ukraine.
Statements this week by members of the new government that distance Greece from European Union sanctions against Moscow have made officials in other European capitals wonder whether Greece might obstruct EU policy toward Russia over Moscow’s role in the war in Ukraine.

It isn’t clear yet how far the new government, ushered in by Sunday’s election, might go in resisting the EU’s strategy in the Ukraine conflict, which relies heavily on punishing Moscow’s support for separatist rebels by imposing sanctions on Russian officials, companies and industries.

But analysts said the early signs suggest new Prime Minister Alexis Tsipras may be poised to revive two traditional Greek stances: flirting with Moscow, and playing the part of a prickly ally for Europe and the West.

Russia extends olive branch to Greeks

COMMENTSJoin the Discussion
Russian Finance Minister Anton Siluanov told CNBC that Russia would consider giving financial help to debt-ridden Greece—just days after the new Greek government questioned further European Union sanctions against Russia.

Siluanov said Greece had not yet asked Russia for assistance, but he did not rule out an agreement between the two countries if Greece came asking.

Anton Siluanov, Russia's finance minister
Andrey Rudakov I Bloomberg via Getty Images
Anton Siluanov, Russia's finance minister
"Well, we can imagine any situation, so if such petition is submitted to the Russian government, we will definitely consider it, but will take into account all the factors of our bilateral relationships between Russia and Greece, so that is all I can say. If it is submitted we will consider it," Siluanov told CNBC in an exclusive interview in Moscow on Thursday.

Monday, January 26, 2015


No debt forgiveness for Greece, say eurozone finance bosses

The eurozone has ruled out debt forgiveness for Greece and warned Alexis Tsipras that his anti-austerity coalition government must honour all past agreements with international creditors. 

 Euro area ministers met in Brussels on Monday and tempered election congratulations to Alex Tspiras, the new Greek prime minister, with warnings over the limits of concessions available for Greece.

Jeroen Dijsselbloem, the Dutch finance minister who chairs meetings of the Eurogroup, told the new Greek government not to expect any write down of the nominal or face value of the €316bn (£236bn) debt owed by Greece.

At least 85pc of the Greek debt is owned by the EU, International Monetary Fund and European governments meaning that the cost of any write downs or cancellation would be predominantly borne by taxpayers in eurozone countries hostile to bailouts, such as Germany or Finland. 

Mr Schäuble of Germany reminded Mr Tsipras that “obligations apply” and the condition of talks would be Greek compliance with the terms of the existing EU-IMF agreement providing aid in return for structural economic reforms.

“There are rules, there are agreements,” he said. 

"Passen Mir Die Schnapps, Greichen Shweinhundt" he added.



Sunday, January 25, 2015

The beginning of the end of the era of Big Bank Hegemony:

The Guardian view on the Greek election: a new deal for a new era

Syriza’s victory is a rejection of the toughest austerity regime in the eurozone and should be respected
Syriza party leader Alexis Tsipras casts his vote
Syriza party leader Alexis Tsipras casts his vote in Athens, Greece, 25 January 2015. Photograph: Konstantinos Tsakalidis/Corbis
At a stroke, the Greek general election of 2015 has destroyed the post-recessionary political norms and assumptions of Greece and shaken those of the European Union to the core as well. For six years, Greeks have protested against harsh eurozone disciplines, but the nation’s eventual, though resentful, readiness to put up with the resulting hardships has been a source of stability. In Sunday’s vote, however, Greek patience finally snapped, particularly among the middle classes, ousting the pro-austerity government of New Democracy and electing the anti-austerity left-coalition Syriza in its place. As a consequence, the past is no longer much of a guide to the future, at least in Athens, and perhaps elsewhere in Europe.

Amid torrents of speculation about the meaning of the Greek result, the one certainty is that Syriza’s victory marks a historic refusal by Greeks to continue with the austerity to which they reluctantly assented in return for the €240bn bailouts of 2010 and 2012. Those bailout terms were due to be assessed next month any way. Now that process will take on far greater urgency. The probable new prime minister, Alexis Tsipras, has won a mandate to demand significant changes. He will need to be able to show Greeks that he can ease the wage and pension cuts and the higher taxes with which Greeks have struggled for so long. For the moment, Greece’s democratic verdict defines everything else. The question, both for Greece and for Europe, is what comes next. No one yet really knows the answer to that.

Syriza’s success is an astonishing electoral triumph. In postwar Europe it is highly unusual for a genuinely new electoral force – as opposed to a refit – to move from nowhere to government in the few years that it has taken Syriza. Other insurgent parties – such as France’s Front National, Germany’s Greens or Italy’s Lega Nord – can hardly compare with either the momentum or the achievement, never mind the programme. Such parties may have succeeded in inserting themselves into their national political calculus; none has swept to such a dizzying election win as Syriza managed on Sunday.

This fact is however a reminder that the situation in Greece is a very particular one. Every country in western Europe has a far left. From time to time these parties enjoy an electoral spike. But the severity of its fiscal crisis – which was partly the predictable payback for the reckless decision by Athens to insist on and by the EU to allow Greek membership of the eurozone – marks Greece out. So does its political history, shaped successively by German occupation, civil war, military rule and the corruption of modern governments of both right and left. Greece’s situation is not typical. Syriza’s success will trigger great enthusiasm in other parts of Europe. Whether it is an outrider for a more general far left moment in Europe is less certain. Other Syrizas are not likely to succeed without something close to the economic and political conditions that apply in Greece. Few other European countries fit that bill.

The overarching issue now is whether the Greek government and its creditors can find enough common interest to strike a deal. This is certainly what Greeks, three-quarters of whom want to stay part of the EU, want. Syriza’s clear mandate should help to concentrate minds on finding an outcome that gives Greece a fresh start that will satisfy the whole Syriza coalition and the rest of the eurozone, above all Germany, without triggering either a run on the banks or a domino effect around the eurozone as other nations demand similar treatment. Debt relief accompanied by commitment to continue reforms such as effective tax collection (many Greeks did not pay their taxes last month in anticipation of a Syriza win) is the key to this. This is certainly the most desirable outcome.

Whether it is a possibility depends largely on Germany, which still pretends that the eurozone can succeed only by continuing with the fiscal rectitude that caused the Greek political earthquake in the first place. This will not be easy for Angela Merkel. Yet unless and until demand is boosted in Greece and the eurozone generally, the political structures of Europe will continue to face moments like this, and perhaps worse ones. It is not just Greece that needs a fresh start but the whole eurozone. It is time for the north to listen to the message from the south.

Wednesday, January 21, 2015

Fed Officials Pretend to Reassess U.S. Outlook Amid Global Weakness

Jan 21, 2015 10:53 AM ET
Photographer: David Paul Morris/Bloomberg
A shopper browses merchandise at a Banana Republic LLC store in San Francisco,... Read More
Federal Reserve officials are starting to PRETEND TO reassess their outlook for the economy as global weakness and disappointing data on American consumer spending test their "resolve" (ABSURD PRETENSE THAT THEY MIGHT) raise interest rates this year.

San Francisco Fed President John Williams last week said he will trim his U.S. estimate because of slower growth abroad. Atlanta’s Dennis Lockhart said Jan. 12 that he advocates a “cautious” (NON EXISTENT) approach to rate increases and inflation readings “may be pivotal.” (GIVE US PLENTY OF COVER) Both are voters on the Federal Open Market Committee in 2015 and repeated that rates could (IN THE LAND OF MAKE BELIEVE) be raised in the middle of the year.

Weakness in Europe, Japan and China has dimmed the outlook for the world economy, with the International Monetary Fund and World Bank reducing their estimates for global growth. Last month’s decline in U.S. retail sales, the biggest in almost a year, suggests that Americans may be cautious about spending a windfall from cheaper gasoline even as the job market improves.

“You have some cracks appearing in the official line that lower oil prices are good for the U.S. economy and that the U.S. can grow even if the global economy is weakening,” said Thomas Costerg, an economist at Standard Chartered Bank in New York. “There are headwinds.”'

The Bank of Canada today unexpectedly cut its target rate by a quarter-point to 0.75 percent in response to the drop in oil prices, which it said will be “negative for growth and underlying inflation in Canada.”

FOMC Meeting

Fed officials will "discuss the outlook" (PRETEND TO MULL THINGS OVER) when they meet next week, though they aren’t scheduled to release their next set of economic projections until March.

Even small cuts to their forecasts are likely to reinforce the message that the FOMC can be “patient” (WILLING TO WAIT FOREVER) as it plans to PRETEND TO raise interest rates for the first time since 2006. Chair Janet Yellen indicated in her December press conference that rates are unlikely to be raised “for at least the next couple of "meetings,” (CENTURIES) or not before late April.  (OF 3015)

Tuesday, January 20, 2015

De Toqueville on American Democracy:

“I see an innumerable crowd of like and equal men who revolve on themselves without repose, procuring the small and vulgar pleasures with which they fill their souls.”

 “Over these is elevated an immense tutelary power, which takes sole charge of assuring their enjoyment and of watching over their fate. It is absolute, attentive to detail, regular, provident and gentle. It would resemble the paternal power if, like that power, it had as its object to prepare men for manhood, but it seeks, to the contrary, to keep them irrevocably fixed in childhood…it provides for their security, foresees and supplies their needs, guides them in their principal affairs….

“The sovereign extends its arms about the society as a whole, it covers its surface with a network of petty regulations – complicated, minute and uniform – through which even the most original minds and the most vigorous souls know not how to make their way…. It does not break wills; it softens them, bends them, and directs them; rarely does it force on to act, but it constantly opposes itself to one’s acting on one’s own…it does not tyrannize, it gets in the way; it curtails, it enervates, it extinguishes, it stupefies, and finally reduces each nation to being nothing more than a herd of timid and industrious animals, of which government is the shepherd.”

Monday, January 19, 2015

NY Times Best Seller list (Non fiction)

NY Times Best Seller list (Non fiction)

1.  "My Opinions about Stuff People Seem to be Talking about these Days" by Thomas Friedman

2. "My Opinions on Stuff that I Think Might be Going on in General" by Malcom Gladwell:

3.  "My Opinions about Assholes who Disagree with my Opinions" By Rush Limbaugh

4.  "My Head just Exploded" by Glenn Beck

5  "My opinions about a bunch of Spiritual Crap" By Deepak Chopra

6  "My Opinions about where all the Stock and Commodity Markets should be Trading" By Bob Prechter

7 "My Opinions about Women" By Machmoud Abbas

8  "My Opinion on Everything Here in my Wheelchair" by Stephen Hawking

Saturday, January 17, 2015

Hard Assets: What constitutes Intrinsic Value?

The value of a hard asset is comprised of four basic components:

1) Historical Importance

Historical Importance must rank as the most highly valued attribute of the Hard Asset.  In the case of commodified hard assets like precious metals and gem stones, they have been established as "valuable" over the course of thousands of years of human history.  Caesar collected pearls.  Ur Nammu collected gold objects.  Solomon collected gemstones.  The Ptolemies collected rare books.  They arranged with Athens to receive original copies of the plays of Aeschylus and Euripides so that they could copy them.  They posted 15 talents of gold as collateral.  Then they kept the originals.

But specific objects of established historical importance are the most valuable.  The Holy Grail.     The Ark of the Covenant.  The Shroud of Turin. What would these bring on the open market?  Of course, they're not on the market so people write novels and make films about them

philip's crown
Or how about more available objects: The Magna Carta.  The Gutenberg Bible.  Philip of Macedon's golden crown.  The Mona Lisa.  Michelangelo's David.  Napoleon's Sword.  The Brasher doubloon  .       The obelisk of Aksum.  the Sphinx's beard.  The Rosetta stone. 

All these would bring fantastic sums when and if  available because they are evocative of entire eras of history.

2) Rarity

Of course, if there were ten million original crowns of Philip (I know, how could there be - but if there were) it wouldn't be worth nearly so much.  Value is determined by the fact that only a very few can own it.

3) Beauty.

This is a tough one.  Your kid could draw a beautiful picture.  You can look out your window and see a beautiful vista.  Neither is worth much on the open market.

But when an object has historical importance and is rare and then is also Beautiful, the beauty tends to increase the value.  The Mona Lisa is the most valuable painting by Da Vinci as it is thought to be the most beautiful.

4)  Prestige.

Prestige is odd.  It is certainly the most important determinant in the short run.  And the least important in the long run.  In the long run Historical Importance, rarity and beauty determines prestige.  In the short run Prestige is a greater fools game of fashion.  In the short run, prestige is a bet on the future value of  historical importance.  It is a bet that is generally terribly unlikely to pan out.

Take a Warhol print.  It is neither rare nor particularly beautiful.  It can be argued that it is not meant to be either.  Yet it has tremendous short term value as it has tremendous prestige.  It's prestige is essentially a specualtive option on future historical importance.  Will it be important in 200 years?  Who knows.  Odds are very high against it.  But in the very short run you can make a lot of money by flipping them because it is fashionable to believe that it will.

Currency Crisis.

We are in the midst of an incipient currency crisis.  The Euro is dissolving.  The Rouble is crashing.  Emerging market currencies are in deep trouble.  The yen is dead currency walking.  That leaves the dollar and gold.  The dollar and gold  will strengthen as all the currencies fail.  When confidence in the US banking system falters, that will leave gold - and hard assets.

Warren Buffet famously remarked the in a crisis the tide runs out and we see who's swimming naked.

In other words SPECULATION becomes a dirty word.  Speculative value becomes very unattractive.  In a crisis we want certainty.  We want intrinsic value that has proved it worth over thousands of years.

For this reason, Hard Asset values rise during a currency crisis. Hard assets become an alternate currency during a currency crisis.  Commodified hard assets like gold coins and diamonds are the most liquid.  Historical objects like Napoleon's Sword are useful because they become a store of great value.

During a currency crisis prestige objects that lack historical credibility tend to lose value as they are so closely identified with the currencies that are collapsing.  They are fashionable because of their speculative value. 

Some few of these will retain value right through the crisis.  Some will not.

But It is best to stick with hard assets with a long track record of historical value.

Gold Stater Ancient Gold coin Update 4 - Early Greek Gold: Lydia
Image result for old master painting

Thursday, January 15, 2015

Deflation takes hold: Gold and the dollar rising together

If you listen to the financial press you will hear the word "Disinflation" all over the place.  This is like listening to the Disney channel and hearing a character curse by using the word "Darn!"  In real life people says "Damn it."  or "God Damn it to Hell!" or "Motherfucker!"

In real life we are not experiencing Disinflation.  We are in the early stages of massive, all consuming debt DEFLATION:

Here's what happens in deflation:



COPPER CRASHES: Dr Copper: the ultimate arbiter of industrial production:

 THE BALTIC DRY INDEX CRASHES: (movement of goods around the world)




Gold and the Dollar rise together: Everyone wants the safest currencies.  When the dollar begins to appear speculative, gold will rise alone.

Bitcoin crashes: who wants a speculative currency?





Thursday, January 8, 2015

EU Showdown: Greece Takes on the Vampire Squid

Wednesday, 07 January 2015 10:59 By Ellen Brown, The Web of Debt Blog
News Analysis 
Greece and the troika (the International Monetary Fund, the EU, and the European Central Bank) are in a dangerous game of chicken. The Greeks have been threatened with a “Cyprus-Style prolonged bank holiday” if they “vote wrong.” But they have been bullied for too long and are saying “no more.”
A return to the polls was triggered in December, when the Parliament rejected Prime Minister Antonis Samaras’ pro-austerity candidate for president. In a general election, now set for January 25th, the EU-skeptic, anti-austerity, leftist Syriza party is likely to prevail. Syriza captured a 3% lead in the polls following mass public discontent over the harsh austerity measures Athens was forced to accept in return for a €240 billion bailout.

Austerity has plunged the economy into conditions worse than in the Great Depression. As Professor Bill Black observes, the question is not why the Greek people are rising up to reject the barbarous measures but what took them so long.

Ireland was similarly forced into an EU bailout with painful austerity measures attached. A series of letters has recently come to light showing that the Irish government was effectively blackmailed into it, with the threat that the ECB would otherwise cut off liquidity funding to Ireland’s banks. The same sort of threat has been leveled at the Greeks, but this time they are not taking the bait.
Squeezed by the Squid

The veiled threat to the Greek Parliament was in a December memo from investment bank Goldman Sachs – the same bank that was earlier blamed for inducing the Greek crisisRolling Stone journalist Matt Taibbi wrote colorfully of it:
The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who’s Who of Goldman Sachs graduates.
Goldman has spawned an unusual number of EU and US officials with dictatorial power to promote and protect big-bank interests. They include US Treasury Secretary Robert Rubin, who brokered the repeal of the Glass-Steagall Act in 1999 and passage of the Commodity Futures Modernization Act in 2000; Treasury Secretary Henry Paulson, who presided over the 2008 Wall Street bailout; Mario Draghi, current head of the European Central Bank; Mario Monti, who led a government of technocrats as Italian prime minister; and Bank of England Governor Mark Carney, chair of the Financial Stability Board that sets financial regulations for the G20 countries.

Goldman’s role in the Greek crisis goes back to 2001. The vampire squid, smelling money in Greece’s debt problems, jabbed its blood funnel into Greek fiscal management, sucking out high fees to hide the extent of Greece’s debt in complicated derivatives. The squid then hedged its bets by shorting Greek debt. Bearish bets on Greek debt launched by heavyweight hedge funds in late 2009 put selling pressure on the euro, forcing Greece into the bailout and austerity measures that have since destroyed its economy.
Before the December 2014 parliamentary vote that brought down the Greek government, Goldman repeated the power play that has long held the eurozone in thrall to an unelected banking elite. In a note titled “From GRecovery to GRelapse,” reprinted on Zerohedge, it warned that “the room for Greece to meaningfully backtrack from the reforms that have already been implemented is very limited.”
Why? Because bank “liquidity” could be cut in the event of “a severe clash between Greece and international lenders.” The central bank could cut liquidity or not, at its whim; and without it, the banks would be insolvent.
As the late Murray Rothbard pointed out, all banks are technically insolvent. They all lend money they don’t have. They rely on being able to borrow from other banks, the money market, or the central bank as needed to balance their books. The central bank, which has the power to print money, is the ultimate backstop in this sleight of hand and is therefore in the driver’s seat. If that source of liquidity dries up, the banks go down.
The Goldman memo warned:
The Biggest Risk is an Interruption of the Funding of Greek Banks by The ECB.
Pressing as the government refinancing schedule may look on the surface, it is unlikely to become a real issue as long as the ECB stands behind the Greek banking system. . . .
But herein lies the main risk for Greece. The economy needs the only lender of last resort to the banking system to maintain ample provision of liquidity. And this is not just because banks may require resources to help reduce future refinancing risks for the sovereign. But also because banks are already reliant on government issued or government guaranteed securities to maintain the current levels of liquidity constant. . . .
In the event of a severe Greek government clash with international lenders, interruption of liquidity provision to Greek banks by the ECB could potentially even lead to a Cyprus-style prolonged “bank holiday”. And market fears for potential Euro-exit risks could rise at that point. [Emphasis added.]
The condition of the Greek banks was not the issue. The gun being held to the banks’ heads was the threat that the central bank’s critical credit line could be cut unless financial “reforms” were complied with. Indeed, any country that resists going along with the program could find that its banks have been cut off from that critical liquidity.
That is actually what happened in Cyprus in 2013. The banks declared insolvent had passed the latest round of ECB stress tests and were no less salvageable than many other banks – until the troika demanded an additional €600 billion to maintain the central bank’s credit line.
That was the threat leveled at the Irish government before it agreed to a bailout with strings attached, and it was the threat aimed in December at Greece. Greek Finance Minister Gikas Hardouvelis stated in an interview:
The key to . . . our economy’s future in 2015 and later is held by the European Central Bank. . . . This key can easily and abruptly be used to block funding to banks and therefore strangle the Greek economy in no time at all.
Europe’s Lehman Moment?
That was the threat, but as noted on Zerohedge, the ECB’s hands may be tied in this case:
[S]hould Greece decide to default it would mean those several hundred billion Greek bonds currently held in official accounts would go from par to worthless overnight, leading to massive unaccounted for impairments on Europe’s pristine balance sheets, which also confirms that Greece once again has all the negotiating leverage.
Despite that risk, on January 3rd Der Spiegel reported that the German government believes the Eurozone would now be able to cope with a Greek exit from the euro. The risk of “contagion” is now limited because major banks are protected by the new European Banking Union.
The banks are protected but the depositors may not be. Under the new “bail-in” rules imposed by the Financial Stability Board, confirmed in the European Banking Union agreed to last spring, any EU government bailout must be preceded by the bail-in (confiscation) of  creditor funds, including depositor funds. As in Cyprus, it could be the depositors, not the banks, picking up the tab.
What about deposit insurance? That was supposed to be the third pillar of the Banking Union, but a eurozone-wide insurance scheme was never agreed to. That means depositors will be left to the resources of their bankrupt local government, which are liable to be sparse.
What the bail-in protocol does guarantee are the derivatives bets of Goldman and other international megabanks. In a May 2013 article in Forbes titled “The Cyprus Bank ‘Bail-In’ Is Another Crony Bankster Scam,” Nathan Lewis laid the scheme bare:
At first glance, the “bail-in” resembles the normal capitalist process of liabilities restructuring that should occur when a bank becomes insolvent. . . .
The difference with the “bail-in” is that the order of creditor seniority is changed. In the end, it amounts to the cronies (other banks and government) and non-cronies. The cronies get 100% or more; the non-cronies, including non-interest-bearing depositors who should be super-senior, get a kick in the guts instead. . . .
In principle, depositors are the most senior creditors in a bank. However, that was changed in the 2005 bankruptcy law, which made derivatives liabilities most senior. In other words, derivatives liabilities get paid before all other creditors — certainly before non-crony creditors like depositors. Considering the extreme levels of derivatives liabilities that many large banks have, and the opportunity to stuff any bank with derivatives liabilities in the last moment, other creditors could easily find there is nothing left for them at all.
Even in the worst of the Great Depression bank bankruptcies, said Lewis, creditors eventually recovered nearly all of their money. He concluded:
When super-senior depositors have huge losses of 50% or more, after a “bail-in” restructuring, you know that a crime was committed.
Goodbye Euro?
Greece can regain its sovereignty by defaulting on its debt, abandoning the ECB and the euro, and issuing its own national currency (the drachma) through its own central bank. But that would destabilize the eurozone and might end in its breakup.
Will the troika take that risk? 2015 is shaping up to be an interesting year.