Aug 24

Marc Faber On Keynesian Folly, The ‘Missing’ Inflation, And Bubble-Blowing (ZeroHedge, Aug 22, 2012):

In as-comprehensive-an-explanation-as-we-have-seen of the monetary malfeasance and misunderstanding of the standard Keynesian central-banker, Gloom-Boom-Doom’s Marc Faber addressed an instutional audience in the Middle East earlier this year. Faber begins by explaining his (correct) view that ‘Keynesian’ intervention into the free-market or capitalistic society (with fiscal and monetary measures), in order to ‘smooth’ the business cycle, has in fact created a more violent business cycle – as they attempt to address long-term structural problems with short-term fixes (or bubbles). His lecture expands from his insight that in 1970 not a single investment bank was public – they were all private partnerships (implicitly playing with their own money as opposed to other-people’s – dramatically impacting the risk profile in the world) to the notion that central bank money printing (pushing dollars out the door) does have inflationary symptoms – but they do not necessarily have to show up in wages or CPI in the US (think Chinese wage inflation, or commodity price rises, or Aussie housing bubbles). Central bankers can determine the quantity of money but they cannot determine what we do with those USD bills. Must watch.Faber covers it all – from macro-economics to energy supply-and-demand and from the consequences of incessant money printing and how to hedge for the long-term.

With volumes still muted, and a general malaise of hand-sitters, it seems now is a great time to spend 45 minutes clarifying your perspective on just what the experimental efforts of our global elite is doing to the world – and whether that is a good thing economically or not… we suspect the conclusion will not surprise you…


YouTube

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Aug 20


YouTube Added: 15.08.2012

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Aug 13

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Aug 13

New Lawsuit Filed Against ESM Threatens Further Bailout Fund Delay (ZeroHedge, Aug 13, 2012):

Just as we were complaining about lack of newsflow, here comes Germany, coincidentally just as Merkel comes back from vacation, with an update from Karlsruhe that the Constitutional court, which may reject the ESM as is in its September 12th decision, will likely be delayed even more following the filing of a brand new lawsuit challenging the constitutionality of the ESM.

From Handelsblatt, loosely google translated:

The Constitutional Court in Karlsruhe has received a further appeal against the euro rescue package, which could upset the timetable for the euro rescue. According to information from Reuters Online, a group of plaintiffs to the € critic Professor Markus Kerber has filed a constitutional complaint, including an emergency petition. The key message is: Since the last ten days at the European Court in Luxembourg, the complaint is similar to an Irish MPs to decide, the German judges would wait until the spoke on the matter higher court judgment. The original date expected for an announcement, the 12th September, at which they would decide on the fast track in terms of admissibility of ESM and Fiscal Pact was likely untenable.

Continue reading »

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Aug 12

Belgian National Bank Governor Gets It: Bailing Out Spain “Makes No Sense” (ZeroHedge, Aug 11, 2012):

A week ago we explained quite clearly why instead of encouraging self-defeating, short-termist behavior by promising to save Europe’s insolvent countries if and when needed, which does nothing to resolves Europe’s problems and make it worse in exchange for a brief respite from bond selling, the ECB should be doing precisely the opposite: encouraging local governments to understand that there is no magic bazooka from the central banks. Specifically we said that “this Catch 22 of confounding cause and event can continue seemingly indefinitely, although in reality it can’t. Because fundamentally what the bond market does is keep sovereigns “honest” – just as Schauble said a week ago, Spanish yields at 7% are not the end of the world – instead what they are is a signal to the country to get its spending in control in order to reduce its deficit, and fundamentally get its house in order – yes, that means getting government spending to a sustainable level and firing hundreds of thousands of workers, as well as probably raising taxes even more. It also means pain all around, but the pain is inevitable and will only be worse the longer reality is denied.” This logic is so clear that only a lifelong economist, PhD or Goldman apparatchik can not grasp it: sadly that accounts for most of the people “in charge.”

Which is why we were delighted to read that at least one person “gets it” – Belgian national bank governor Luc Coene, the same Belgium that is also the clogged heart of the Burtonian bureaucratic labyrinth known as the EU, who told Belgium’s two largest newspaper that “buying the bonds of these countries would only serve to weaken the ECB and do nothing to resolve underlying issues of competitiveness.  “It makes no sense for the ECB to start financing those countries,” said Mr Coene, “It would only lead to the ECB taking on the whole public debt of Spain and Italy onto its balance sheet.” Bingo. And not a moment too soon – we really were starting to pull a Mogatu here. Continue reading »

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Aug 09

Treasury’s Secretive $2.4 Trillion Fund Guarantee (CNBC, Aug 9, 2012):

Details about a secretive government program to bail out money-market mutual funds are finally coming to light.

Acting without any explicit Congressional authority, the U.S. Treasury guaranteed in excess of $2.4 trillion of money market funds after the giant Reserve Primary Fund “broke the buck” following the bankruptcy of Lehman Brothers. The program, which ended on Sept. 18, 2009, seems to have successfully prevented a panicked run by money-market fund investors.

But until now the Treasury has kept the identities of the funds that received government backing and the amounts guaranteed secret. It was not clear how many funds obtained backing or for how much taxpayers were on the hook during the program’s duration.

Continue reading »

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Aug 09

From the article:

“The oligarchs have succeeded in making americans a dispossessed majority in their own country. In November americans will again give their approval to one of the oligarchy’s two candidates.”

“If americans had any sense, they would stay home and not vote.”

See also:

Dr. Paul Craig Roberts: ‘War Criminals Run The State Department And The Entire US Government’


Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.

paul-craig-roberts
Dr. Paul Craig Roberts

The Dispossessed Majority (Paul Craig Roberts, Aug 8, 2012):

The bumper sticker on the beat-up pickup truck read: “Friends don’t let friends vote Democrat.”

The driver was obviously not affluent. Yet, despite all the news about mega-trillion dollar bankster bailouts, mega-million dollar bonuses for financial crooks, and unimaginable compensation packages for corporate CEOs who have moved middle class jobs out of America, something made the down-and-out pickup truck driver associate with the political party of the super-rich.

As I wondered at this strange alliance of the dirt poor with the mega-rich, I remembered that in 2004 Thomas Frank wondered about how the Republicans had managed to convince the poor to vote against their best interests. Frank’s answer, or part of his answer, is that the Republicans use “social issues,” such as gay marriage and Janet Jackson’s exposed nipple to work up indignation over the threat to moral values posed by liberal Democrats.

The working poor have been convinced by Republican propaganda that voting Democrat means giving the working poor’s tax dollars to the non-working poor, to providing medical care and schooling for illegal aliens, and being soft on terrorism.

To the pick-up truck driver, standing up for America means standing up for bankster bailouts and the military/security complex’s multi-trillion dollar wars.

Continue reading »

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Aug 03

Greece agrees to £9bn ‘troika’ cuts (Telegraph, Aug 2, 2012):

Greek political leaders have agreed to €11.5bn (£9bn) of austerity cuts demanded under its bailout terms, opening the way for a deal with foreign lenders within the month, Greek officials said.

The junior partners in the conservative-led coalition government of Prime Minister Antonis Samaras set aside demands for an immediate renegotiation of the terms of the deal to ease talks with the troika of IMF and EU lenders.

With €3.2bn-worth of bond payments due in August, the clock is ticking for Greece to please visiting troika inspectors, who will rule on whether Athens gets more cash from its €130bn bailout.

Continue reading »

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Aug 02

TEPCO receives $12.8 billion public bailout (AFP, July 30, 2012):

The operator of Japan’s crippled Fukushima nuclear power plant was effectively nationalised Tuesday as it received one trillion yen ($12.8 billion) of taxpayer money to stay afloat.

The public bailout of Tokyo Electric Power Co. (TEPCO) in the wake of last year’s tsunami-triggered accident gives the government 50.11 percent of the utility’s voting rights.

And the deal has an option which allows the Nuclear Damage Liability Facilitation Fund to raise the stake up to 75.84 percent to impose stronger control if TEPCO fails to push reforms.

The country’s biggest utility will remain under state control for a “considerably long period of time”, Yukio Edano, the minister of economy, trade and industry, told a news conference.

Continue reading »

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Jul 30


YouTube Added: 28.07.2012

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Jul 25

Six Reasons Why Spain Will Be Forced To Request A Sovereign Bailout (ZeroHedge, July 24, 2012):

Just as the summer finally arrives in Northern Europe, the Eurozone crisis is heating up once again. With an increasingly flat (heading to inversion) yield curve, and spreads at record wides,  Spain appears to be in a downward spiral of market turmoil that might require a full-fledged TROIKA bail out. However, as UBS points out, rather than taking the country off the market, the program would have to allow Spain to keep borrowing from private investors. Any bail out of Spain would have to be designed in a way that would also be applicable to Italy. Spain has been the most recent crisis focus, and looks to intensify further with nothing immediately in sight that could reverse the trend. We, like UBS, have argued for some time that a full-fledged TROIKA program will ultimately be unavoidable and the following six reasons briefly explain why anything else is a pipe-dream.

Via UBS FX Strategy:

The Eurogroup last week formally approved a €100bn bank bailout but as our banking colleagues have argued, the programme generates no equity and no funding and is thus unlikely to make any lasting difference either to the limited market access of the banks or to the credit crunch affecting the country. Also, the decision at the June EU summit to take a first step towards a banking union has done very little to ease the pressure. The market initially assumed that the €100bn would be offloaded from the sovereign balance sheet to the ESM by the October or December EU summits once an ‘effective supervisory mechanism’ had been created.

However, subsequently it became clear that: Continue reading »

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Jul 24

From the article:

#10 The unemployment rate in Spain is up to an astounding 24.6 percent. The unemployment rate in Spain is already higher than it was in the United States at the peak of the Great Depression of the 1930s.

#11 The youth unemployment rate in Spain is now over 52 percent.

That is a depression, not a recession.

AND:

Spain Is Out Of Money In 40 Days … And ‘Spain Has No Plan B’ (FAZ)

Prepare for the collapse of the euro:

Billionaire Eric Sprott: ‘There Isn’t A Solution To The Problem’ – ‘If The People Had Any Sense They Would Be Buying (PHYSICAL) Gold And/Or Silver’


12 Signs That Spain Is Shifting Gears From Recession To Depression (Economic Collapse, July 23, 2012):

Where have we seen this before?  Bond yields soar above the 7 percent danger level.  Check.  The stock market crashes to new lows.  Check.  Industrial activity plummets like a rock and the economy contracts.  Check.  The unemployment rate skyrockets to more than 20 percent.  Check.  The bursting of a massive real estate bubble pushes the banking system to the brink of implosion.  Check.  Broke local governments beg the broke national government for bailouts.  Check.  The international community pressures the national government to implement deep austerity measures which will slow down the economy even more and hordes of violent protesters take to the streets.  Check.  All of this happened in Greece, it is happening right now in Spain, and mark my words it will eventually happen in the United States.  Every debt bubble eventually bursts, and right now Spain is experiencing a level of economic pain that very, very few people saw coming.  The recession in Spain is rapidly becoming a full-blown economic depression, and at this point there is no hope and no light at the end of the tunnel.

The bad news for the global economy is that Spain is much larger than Greece.  According to the United Nations, the Greek economy is the 32nd largest economy in the world.  The Spanish economy, on the other hand, is the 4th largest economy in the eurozone and the 12th largest economy on the entire planet.  It is nearly five times the size of the Greek economy.

Continue reading »

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Jul 22

Floodgates Open As Four More Spanish Regions Seek Bailout; German Nürburgring Faces Bankruptcy (ZeroHedge, July 22, 2012):

Even as Europe has become an utterly dysfunctional experiment in everything relating to modern economics and monetary theory, it has one redeeming feature: it has proven that the Defection regime under Game Theory is 100% correct. It says that once the defections from an unstable Nash equilibrium begin, there is no stopping until the entire system collapses under its own weight. This is precisely what has happened in Spain, where first Catalunya, then Valencia on Friday, and now virtually everyone else is set to demand a bailout. From Bloomberg: The Balearic Islands and Catalonia are among six Spanish regions that may ask for aid from the central government after Valencia sought a bailout, El Pais reported. Castilla-La-Mancha, Murcia, the Canary Islands and possibly Andalusia are also having difficulty funding themselves and some of these regions are studying plans to tap the recently created emergency-loan fund that Valencia said it would use yesterday, the newspaper said, without citing anyone.”

“Spain created the 18 billion-euro ($23 billion) bailout mechanism last week to help cash-strapped regions even as its own access to financial markets narrows.” What Spain’s perfectly insolvent and highly corrupt regions also know is that the bailout money, like in the case of the ESM, will be sufficient for one, perhaps two, of the applicants. The rest will be out of luck.

Where the bailout money will come from? Ultimately from Germany of course. There is however one minor glitch. Some 80 millions Germans may soon be rather angry to learn that while they are working extra hours to fund the rescue of a few insolvent windmills, their own most legendary racetrack, the Nürburgring, is facing bankruptcy as soon as next week. From Spiegel: Continue reading »

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Jul 07

Spain’s Not Getting a Bailout… Neither is Italy… It’s the END GAME Folks (ZeroHedge, July 7, 2012):

Spain got a “bailout” or so the media claimed. Because I cannot find any entity in Europe with the funds to actually bailout Spain (the EUFN is tapped out, the ESM has major political issues, and Germany is risking a credit downgrade and insolvency based on its backdoor EU props).

As one would expect in this situation, things are rapidly going into hyper-drive in Spain. The weekend before last the country implemented capital controls including

  • A minimum fine of  €10,000 for taxpayers who do not report their foreign accounts.
  • Secondary fines of  €5,000 for each additional account
  • No cash transactions greater than €2,500
  • Cash transaction restrictions apply to individuals and businesses

Does this sound like the actions of an economy with a sound banking system?

On a related note, Italy is once again back on the brink: in the last 2 weeks Italy’s Prime Minister Mario Monti has said that the country is “flirting with economic disaster… [and] in a crisis.” He, like Spain’s PM Rajoy, has pushed for the ESM to buy sovereign bonds. He’s also asked the ECB to implement a mechanism through which it would buy Italian sovereign bonds whenever the spread between them and German bunds grows too large (a type of bailout).

Indeed, things are so desperate that he invited German Chancellor Angela Merkel, French President Francois Hollande, and Spanish Prime Minister Mariano Rajoy to an emergency meeting in Rome over the weekend. His goal was to convince EU leaders to allow Italy to receive funding directly from the EFSF and ESM.

The ECB and Germany have already rebuked this idea: Continue reading »

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Jul 02

The Exact Moment Greece Will Leave the Euro (ZeroHedge, July 2, 2012):

…the second Greek parliamentary elections in as many months came and went. While the media is making a big deal of the fact that the anti-bailout SYRIZA party didn’t win, the facts remain that the elections haven’t really accomplished anything of significance for Greece’s fiscal condition or the likelihood of it staying within the EU.

What I mean by this is that while the game of political musical chairs in Europe creates the appearance of change, the fact remains that Greece is broke and that the only thing stopping it from facing systemic collapse is continued support from the EU, particularly Germany. Continue reading »

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Jun 29


YouTube Added: 29.06.2012

Description:

After a tough night of wrangling, EU leaders have agreed to set up a new authority – tasked with keeping sinking banks afloat. And to do that, the new agency will be given access to Europe’s mammoth bailout funds – stocked in a large part by taxpayer money. This exact function was previously carried out by governments. But now, the EU can bailout a nation’s banks – without adding to the government’s debt levels – at least on the books. It’s something that Germany strongly opposed, but was forced to relent on due to Spanish and Italian insistence. Nigel Farage, a member of the European Parliament and leader of the UK Independence Party, believes that it’s Germany who plays the deciding role in these talks.

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Jun 28

Now Is The Time To Prepare For The (Next) French Bailout Of Their Banking System & Potential Bailout Of France (ZeroHedge, June 28, 2012)

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Jun 27

“The Entire Global Economic System Is In Collapse.”


YouTube Added: 27.06.2012

If Nostradamus were alive today, he’d have a hard time keeping up with Gerald Celente.
– New York Post

When CNN wants to know about the Top Trends, we ask Gerald Celente.
– CNN Headline News

There’s not a better trend forecaster than Gerald Celente. The man knows what he’s talking about.
– CNBC

Those who take their predictions seriously … consider the Trends Research Institute.
– The Wall Street Journal

A network of 25 experts whose range of specialties would rival many university faculties.
– The Economist

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Jun 27

Europe “Welcomes” The Spanish Bailout (ZeroHedge, June 27, 2012):

One just can’t come up with better wording if one tried. From Bloomberg:

  • EUROGROUP WELCOMES SPANISH REQUEST FOR FINANCIAL ASSISTANCE
  • EUROGROUP SAYS CYPRIOT RESCUE IS `WARRANTED AT THIS STAGE’
  • EUROGROUP SAYS SPAIN BANK NEEDS ESTIMATE AT EU51B TO EU62B
  • EUROGROUP SEEKS `AMBITIOUS MEASURES’ FROM CYPRUS ON BANKS

And a little change in the original plans:

  • EUROGROUP SAYS SPAIN TO REQUEST TECHNICAL ASSISTANCE FROM IMF

Now Europe is looking to welcome other broke countries for which Germany will pay.

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Jun 24

Must-see!



YouTube Added: 20.06.2012

… and here is the result (Turns out the sky wasn’t falling in Iceland!):

Two Thirds Of Icelanders Oppose EU Membership

Icelandic Anger Bringing Record Debt Relief in Best Crisis Recovery Story

Iceland Once Again Tells IMF, UK, Netherlands To ‘Go to Hell’; ‘Ice Torture’ Repayment Scheme Collapses

Iceland: Economy Exits Recession

Even better:

Why is Greenland so rich these days? It said goodbye to the EU!

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Jun 21

The ESM is totally unconstitutional, but who cares?


German court may delay bailout fund ratification (Reuters, June 21, 2012):

Germany’s constitutional court said on Thursday it will need time to study the euro zone’s permanent bailout mechanism after its expected approval in the German parliament next Friday, which could delay its scheduled start date on July 1.

Angela Merkel’s government and the centre-left opposition reached a deal on economic growth measures on Thursday which should enable parliament to ratify Merkel’s fiscal pact and the European Stability Mechanism (ESM) on June 29.

The ESM cannot come into effect without ratification by Germany, the biggest economy in the euro zone. But a spokeswoman for the top court said the ESM is so complex it expects head of state Joachim Gauck to delay his signature of the text approved by parliament until the court has had time to study it.

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Jun 21

Not Spain and Italy will be bailed out, but the banksters (AGAIN):

Nigel Farage On FOX News: ‘Barroso Is A Deluded Communist Idiot’ – ‘The Whole Thing Is A GIANT PONZI SCHEME’ – ‘And At The End Of The Day This Whole Thing Is Going Bust’ (Video):


European leaders are poised to announce a £600 billion deal to bail out Spain and Italy, it emerged at the G20 summit on Tuesday night.


Speaking before the meeting, François Hollande, the French president, said: ‘It’s not on growth. It will be more on mechanisms that allow us to fight speculation.’ Photo: A

Debt crisis: Spain and Italy to be bailed out in £600bn deal (Telegraph, June 19, 2012):

Two rescue funds are to be used to buy the debts of the troubled economies, the cost of which have reached record highs in recent weeks.

It is hoped that the move, which represents a substantial shift in policy for Germany’s chancellor, Angela Merkel, will send a strong signal to financial markets that Europe’s biggest economy is finally prepared to back its weaker neighbours.

Mrs Merkel and other European leaders have come under intense pressure at this week’s G20 summit to take radical action to stem the growing euro crisis which has pushed up the cost of Spanish bonds to unsustainable levels.

Continue reading »

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Jun 20


YouTube Added. 19.06.2012

Farage On Barroso: “He’s A Deluded Communist Idiot” (ZeroHedge, June 20, 2012):

Commenting on the incredible circle-jerk that Europe (sovereign-to-banking-system) has become, the outspoken UKIP MEP Nigel Farage exclaimed to FOX Business in this best-ever-rant clip that “The whole thing is a giant Ponzi scheme, isn’t it?” Goaded somewhat by the interviewer’s questions citing Barroso’s intimation that the US is to blame for Europe’s problems, Farage opines that “Barroso is a deluded idiot” and a communist who supported Chairman Mao. The contagion effect from the US financial crisis did have impacts on Europe, there is no doubt, but as the frustrated Farage notes: the reason the Euro is in the state it is in is that they put together a completely artificial currency with countries that never fitted together on top of which was added a regulatory cost burden through excess regulation on the environment and employment legislation that is driving parts of Europe towards being a third world country; “America, you are not to blame”. The clip goes on to discuss the circular bailout fantasy, the taxpayer burden leading to a democratic revolution, and at the end of the day “this whole thing is going bust” as the likable libertarian notes that European leaders believe that “well-educated bureaucrats know better than we the poor peasants how best our lives should be led” which is the same path that led to the economic and social crash-and-burn in the Soviet Union.

An Epic Rant…

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Jun 19

For your information.



YouTube Added: 11.06.2012

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Jun 18

Five Days Since The Spanish “Bailout”: You Are Here (ZeroHedge, June 18, 2012):

With few (if any) natural buyers of Spanish debt (especially given the lack of CDS-cash basis now), Spanish bonds continue to crumble lower in price and higher in yield/spread. For the first time ever, 10Y Spanish bond yields have passed 575bps over Bunds – currently trading at 7.15% yield. Since the post-banking-bailout open, Spanish bond spreads have soared a remarkable 114bps and whether this is seen as the fulcrum security or Italian bonds (which are also deteriorating rapidly this morning), it would appear that just as Spiegel reports today from the G-20, via a senior EU official: “If Germany Doesn’t Make A Move, Europe Is Dead”.

European sovereign bond spread movements post Spanish bailout

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Jun 18

Pro-austerity party wins Greek election (RT, June 17, Edited June 18, 2012):

The pro-bailout New Democracy party has come out on top in Greece’s parliamentary elections, having gained 29.6 per cent of the votes. With nearly all the votes counted, the anti-austerity leftist Syriza party is trailing on 26.9 per cent.

The results have kept fears of Greece’s imminent exit from the eurozone at bay for the time being. “The Greek people today voted for Greece to remain on its European path and in the eurozone,” New Democracy leader Antonis Samaras said after his party had won, AP reports. He added that voters had chosen “policies that will bring jobs, growth, justice and security.”

The pro-bailout Socialist PASOK party came third with 12.3 per cent of the votes. The far-right Golden Dawn part won 6.9 per cent.

Continue reading »

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Jun 17

For your information.

“It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything.”
– Joseph Stalin


– Will Tsipras Blow Up Europe? (ZeroHedge, June 17, 2012):

The world’s eyes are on the Greek election, and whether or not Greeks will elect New Democracy’s Samaras (widely-assumed to be pro-bailout, pro-status quo), or SYRIZA’s Tsipras (widely-assumed to be anti-bailout, anti-status quo).

The Eurocrats have very sternly warned Greece against voting against austerity. Merkel said:

It is extremely important for Greeks to elect lawmakers who would respect the terms of the bailout.

In recent days, opinion has swung back toward the status quo, with Intrade rating New Democracy’s chances of winning the largest number of seats at 65%, and SYRIZA at just 33%.

While I cannot rule out New Democracy winning, I think that I’d flip those odds. Greece widely reviles German-imposed austerity, but fears the consequences of leaving the Euro — 85% of Greeks want to stay in. A vote for New Democracy would reflect fear of Drachmatization. Meanwhile, a vote for SYRIZA would seem to reflect the idea that through brinkmanship and the threat of Euro collapse, Greece can negotiate their way to a much more favourable bailout position.

Continue reading »

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Jun 13

See also:

Spain Loses Final A Rating With Moodys Downgrade To Baa3, May Downgrade Further (Full Text)

Nigel Farage: ‘Once Greece Leaves The ECB Is Bust’ – ‘The Euro Titanic Has Now Hit The Iceberg And Sadly There Simply Aren’t Enough Lifeboats’ (Video)


Spanish bond yields at record high as Fitch downgrades 18 banks and financial contagion spreads to Italy (Independent, June 12, 2012):

Spain’s borrowing costs soared to their highest levels since the introduction of the single currency in 1999 today, as any confidence investors might have taken from Madrid’s weekend pledge to seek a bailout for its toxic banking sector drained away.

Yields on the country’s 10 year bonds shot up to 6.8 per cent this afternoon as investors frantically dumped their holdings of Spanish debt, before falling back to 6.72 per cent.

The credit rating agency Fitch added fuel to the flames of alarm by downgrading 18 Spanish banks, following its downgrade of Madrid’s sovereign debt to BBB last month. Among the Spanish lenders cut were Bankia, CaixaBank, and Banco Popular Espanol, with Fitch blaming the weakening Spanish economy, which is forecast to contract by 1.7 per cent this year and to remain in recession well into next year.

Continue reading »

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Jun 13


YouTube Added: 13.06.2012

Farage: “The Euro Titanic Has Now Hit The Iceberg” (ZeroHedge, June 13, 2012):

In an epic rant, trumping Biderman, UKIP’s Nigel Farage appears to have reached the limit of his frustration with his ‘peers’ in the European Parliament after the Spanish bailout. Rajoy’s proclamation that this bailout shows what a success the euro-zone has been, sends Farage over the edge as he sees the Spaniard as just about the most incompetent leader in the whole of Europe (up there with favorites like Van Rompuy and Barroso). The erudite Englishman notes that by any objective criteria “The Euro Has Failed” expanding on the insane farce of Italy funding Spain’s banking bailout at a loss (borrowing at 6% to fund a loan at 3% as we discussed here). “This ‘genius’ deal makes things worse not better” as it merely drives other nations towards needing bailouts themselves and while his socialist colleagues in the room are mumbling and checking their blackberries, he reminds them that Spanish national debt will surge and that 100 billion does not solve the problem, and that if Greece leaves, the ECB is failed, is gone, and to rectify this there will be a cash call from the very same PIIS (Ex-G) that are tumbling towards the abyss. Blood pressure surges as he screams “you couldn’t make this up” concluding that “the Euro Titanic has now hit the Iceberg and sadly there simply aren’t enough lifeboats.”

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Jun 12

Farage On The Spanish Bailout: “A Reinforcement Of Failure” (ZeroHedge, June 10, 2012):

While the short-term benefits can be weighed against any long-term solution a number of ways, Nigel Farage provides not just the most colorful summation of situation but also the most succinct when he refers to the ‘madness’ of ‘intervention to keep the Euro alive’ as “reinforcement of failure”. The better, and braver, in his opinion, thing to do, is to recognize that those Mediterranean countries should never have joined the Euro in the first place. As we have stated again and again, by kicking-the-can once again to prop up the euro-zone with bailout-after-bailout, all we are doing is prolonging the misery. The discussion on Sky News digs into the collateral-damage ‘strawman’ – which will happen anyway – and then ‘Red’ Ken Livingstone (an infamously socialist-leaning British politician who advocated for Britain’s joining the Euro when it was formed) now somewhat notably agrees with Nigel that “locking Europe into a decade of permanent economic malaise” adding that once the smaller countries were added to the core, “it was doomed to fail”. The two ‘odd fellows’ continue on to discuss the analogy of the USA to a United States of Europe noting that it took a civil war and a century before a common monetary and fiscal policy was accepted, adding simply that Europe’s “nations will not give up their sovereignty”.


YouTube

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Jun 11

The Spanish Bailout Explained With One Image (ZeroHedge, June 11, 2012):

Pretty much says it all.

Courtesy of Libertyblitzkrieg

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Jun 11

Spain’s Euro Bailout Might Boost Markets Tomorrow But Don’t be Fooled (Forbes, June 10, 2012):

Will Spain’s bailout boost the markets on Monday? As Abram Brown points out the markets are eager for good news. But there are serious question marks over the bail out. Not least that the Spanish can’t seem to agree on what they have agreed to. And Euro zone members don’t actually know how they are going to pull off this refinancing.

What they believe they have done is create a plan that will ward off contagion if the Greek election goes against the pro-austerity parties Monday week. That might be unraveling already, as Spaniards take to the streets to protest against the deal. Add in to the mix, skepticism about the size of the rescue – $125 billion is just not enough some analysts are saying. The real figure is at least double that.

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Jun 11

Eurozone agrees to give away another 100 billion euros to the banksters.


Euro zone agrees to lend Spain up to 100 billion euros (Reuters, June 10, 2012):

Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros ($125 billion) to shore up its teetering banks and Madrid said it would specify precisely how much it needs once independent audits report in just over a week.

After a 2 1/2-hour conference call of the 17 finance ministers, which several sources described as heated, the Eurogroup and Madrid said the amount of the bailout would be sufficiently large to banish any doubts.

“The loan amount must cover estimated capital requirements with an additional safety margin, estimated as summing up to 100 billion euros in total,” a Eurogroup statement said.

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Jun 10

Spain IS Greece After All: Here Are The Main Outstanding Items Following The Spanish Bailout (ZeroHedge, June 9, 2012):

After two years of denials, we finally have the right answer: Spain IS Greece. Only much bigger (it is also the US, although while the US TARP was $700 billion or 5% of then GDP, the just announced Spanish tarp is 10% of Spanish GDP, so technically Spain is 2x the US). So now that the European bailout has moved from Greece, Ireland and Portugal on to the big one, Spain, here are the key outstanding questions.

1. Where will the money come from?

De Guindos, Schauble and the Eurogroup, all announced that the sole source of cash would be the ESM and/or the EFSF. The problem with this is that the ESM has yet to be ratified by Germany, whose parliament said previously it is sternly against allowing the ESM to fund a direct bank bailout, something which just happened. Thus, the successful German ESM ratification vote, whenever it comes, and which previously was taken for granted, now appears to be far more questionable.

Which leaves the EFSF. The problem with the EFSF is that there is about €200 billion in dry powder. And this includes the Spanish quota of €93 billion, which we can only assume is now officially scrapped.

Which brings us to a bigger question: now that Spain is officially to be bailed out, what happens next. And by that we mean of course the big one: Italy. Recall that as we posted in Brussels… We Have A Problem, once the contagion spreads again to Italy, and that country also needs a bailout, it is game over. From the world’s biggest hedge fund Bridgewater: Continue reading »

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Jun 10

If The Spanish Bank Bailout Came To The United States… (ZeroHedge, June 9, 2012):

For those curious what the latest and greatest estimate of the Spanish bank bailout, which at last count was €100 billion and growing fast, would look like in US terms, here is a rough and dirty comparison of the scale we are taking about here…

  • Spanish GDP of $1.25 Trillion : US GDP of $15.5 Trillion :: Spanish Bank Bailout of $125 Billion : US Bank Bailout of $1.6 TRILLION

A trillion here… a trillion there…

Or visually:

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Jun 10

Here They Come: Ireland Demands Renegotiation Of Its Bailout Terms To Match Spain (ZeroHedge, June 9, 2012):

Well that didn’t take long. The ink on the #Spailout is not dry yet (well technically there is no ink, because none of the actual details of the Spanish banking system rescue are even remotely known, and likely won’t be because when it comes to answering where the money comes from there simply is no answer) and we already have an answer to one of our questions. Recall that mere hours ago we asked: “We also wonder how will Ireland feel knowing that it has to suffer under backbreaking austerity in exchange for Troika generosity, while Spain gets away scott free.” We now know. From the AFP: “Ireland wants to renegotiate its rescue plan to benefit from the same treatment as Spain, which looks set to win a bailout for its banks without any broader economic reforms in return, European sources said on Saturday.” And with Ireland on the renegotiation train, next comes Greece. Only with Greece the wheels for a bailout overhaul are already in motion and are called a “vote of Syriza on June 17.” And remember how everyone was threatening the Greeks with the 10th circle of hell if they dare to renegotiate the memorandum? Well, Spain just showed that a condition-free bailout is an option. Which means Syriza will get all the votes it needs and then some with promises of a consequence free bailout renegotiation. In other words Syriza’s Tsipras should send a bottle of the finest champagne to de Guindos – he just won him the election.

But back to Ireland. From AFP:

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Jun 10

Spain Agrees To “Unconditonal” Bank Bailout (ZeroHedge, June 9, 2012):

Just out from Bloomberg:

  • SPAIN AGREES TO SEEK BANK BAILOUT, EL PAIS REPORTS
  • IMF WILL SUPERVISE SPAIN BANK RESCUE PLAN, EL PAIS SAYS

And the funniest:

  • SPAIN RESCUE DOESN’T CARRY ECONOMIC POLICY CONDITIONS: MUNDO

So Spain has shockingly agreed to a bank bailout without conditions. Has Germany? The chips will commence falling, where they may, shortly. In the meantime, we are days from finding out just what Germany thinks when it has to ratify (that’s right, the ESM has still not been ratified by the one country which will fund the Spanish bailout) the direct rescue of the Spanish banks. Without conditions.

From El Pais:

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Jun 05

The Reign In Spain Is Over (ZeroHedge, June 5, 2012):

Spain Capitulates

Spain has now officially asked the European Union for aid for its banks. The markets seem to be responding as if the bank issue is isolated. It is not isolated. We are following the same schematic as we did with Ireland; first it was the banks and then it was the country and then the “Men in Black” showed up to take over. Spain says it is a 50 billion Euro problem and the reality is probably more like a 400 billion Euro problem. There is all kinds of cross lending between the banks in Spain and while Spain’s largest two banks have tried everything they could to isolate themselves; I predict there will be no escape for anyone. Now that Spain has asked for a bailout of their banks the European auditors will show up and I would bet large money that the values of many loans and the value of Real Estate and the securitizations tied to it will be found to have been vastly overstated. Then it will be the regional governments and their debts and the house of cards will implode. The Spanish Finance Minister kicked off the first domino this morning and we can all just stand by now and watch the rest fall.

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Jun 05

Spain Caves, Admits It Needs European Bailout (ZeroHedge, June 5, 2012):

And so those lining up at the bailout trough are now 4: remember all those lies Spain spoon-fed the gullible press that it didn’t need a European bailout as recently as yesterday? You can now forget them. From Reuters: “Spain said on Tuesday that credit markets were closing to the euro zone’s fourth biggest economy as finance chiefs of the Group of Seven major economies were to hold emergency talks on the currency bloc’s worsening debt crisis. Treasury Minister Cristobal Montoro sent out the dramatic distress signal in a radio interview about the impact of his country’s banking crisis on government borrowing, saying that at current rates, financial markets were effectively shut to Spain. Montoro said Spanish banks should be recapitalised through European mechanisms, departing from the previous government line that Spain could raise the money on its own and and prompting the Madrid stock market to rise. But his comments on Spain’s borrowing sent the euro down after the 17-nation European currency earlier hit a one-week high against the dollar on expectations that a conference call of G7 finance ministers and central bankers may hasten bold action.” Well, Germany got its wish: it got Spain to admit it is broke. Just as it wanted – because remember: all Germany is, is a true lender of last resort unlike the ECB: after all they are the decision makers. And Germany knows very well that it needs Europe desperate when it is forced to accept any conditions to the German DIP loan that Schrodinger Schauble proposes. Which means forget anything positive will come out of the G7, and certainly forget anything actionable will come out of the ECB’s June 7 meeting. If anything, things will first get much worse, before things get better. And finally, don’t forget just who benefits the most from EURUSD at parity or lower… That’s right: Germany.

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Jun 04


YouTube Added: 28.05.2012

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