Reading for July 4, 2015 ~ Tammuz 17, 5775
Num 22:2-25:9 ~ Micah 5:6-6:8 ~ John 13-14
Saturday, July 4, 2015: Balak (Balak)
The fast of the 17th of the Hebrew month of Tammuz, known as Shivah Asar B’Tammuz, is the start of a three-week mourning period for the destruction of Jerusalem and the two Holy Temples.
17th of Tammuz
The fast actually commemorates five tragic events that occurred on this date:
Moses broke the tablets when he saw the Jewish people worshipping the Golden Calf.
During the Babylonian siege of Jerusalem, the Jews were forced to cease offering the daily sacrifices due to the lack of sheep.
Apostomos burned the holy Torah.1
An idol was placed in the Holy Temple.2
The walls of Jerusalem were breached by the Romans, in 69 CE, after a lengthy siege. (Three weeks later, after the Jews put up a valiant struggle, the Romans destroyed the second Holy Temple on the 9th of Av.)
The Jerusalem Talmud maintains that this is also the date when the Babylonians breached the walls of Jerusalem on their way to destroying the first Temple.
Memory. No memory of life before the financial crisis; politics has dominated it ever since. But now I can hardly remember life before Friday night. Fear. I am terrified of tomorrow, all I now see is black. Uncertainty, leading us through our days, every remainder of hope for a brighter future being destroyed by the minute. I look at my three-year-old niece, I envy her ignorance, I envy her age. I am 21 years old and the past few days I feel tired by life. A referendum that supposedly gives me the right to define my future, seems to have taken it away.
There are hundreds of people queueing at the ATMs and petrol stations, there is silence in the streets, people’s faces are frozen. This is the reality since Friday night. There are, and have been for a long time, people literally starving. However, it seems that instead of their situation improving, the rest of us will have no different a fate.
Families and friends divide in Yes and No camps. We are called to exercise our democratic right by voting on a referendum while having no tangible explanation of what will follow each decision. I see everyone I know ready to take this huge responsibility without even being prepared to do so. I notice us, arguing endlessly, everyone supporting their stance fervently, ego dominating minds and words, while having no clue as to what is really at stake.
We all want the crisis to end, we all crave growth and happiness. I do not remember my parents being free of stress and anxiety in the past years. I do not remember not noticing shops closing every month, or the rapid increase of beggars in the streets. People that, before the financial crisis, never had to beg for anything. However, the past five days have been worse than all that has been so far. They say that all we hear is propaganda; but we have lost our trust in all sides, now everything seems to be lies.
It feels like an end. The end of our lives as we knew them. Yes, the lives that, before Friday, we already thought could be better; now we realise they were better then. The only thing we truly wish for is that the worst is not yet to come.
A 21-Year-Old Greek Unloads: “I Am Terrified Of Tomorrow…It Feels Like An End”
I pledge allegiance to no flag, but to truth and morality.
which doesn’t seem to exist in the Divided States of America.
And to no republic, for it stands for nothing,
One nation, under surveillance,
with Liberty and Justice destroyed
and inalienable rights taken from us all.
A Pledge Submitted by an American Reader
We have inquired with the OCC about both the derivative moves of both JPM’s “commodity” and Citi “precious metals” surges, both rising by over 1000% in the past quarter. We will promptly inform readers if we hear back, which we won’t.
666 Citigroup Just Cornered The “Precious Metals” Derivatives Market
One week ago, when we scoured through the latest OCC quarterly derivative report (in which we find that the top FDIC insured 4 US banks continue to account for over 90%, or $185.5 trillion of all outstanding derivatives which as of March 31 amounted to $203 trillion; nothing new here), we found something fascinating: based on the OCC’s derivative update, JPM had literally cornered the commodity derivatives complex, when from “just” $226 billion in total Commodity exposure, JPM’s notional soared by 1,690% in one quarter to $4 trillion, or about 96% of total.
Some, without even bothering to read the article, did what they always do when reacting to Zero Hedge articles: accused it of writing a “wrong” post first and asking questions later and coming up with some utterly incorrect response to show just how wrong Zero Hedge was because, guess what, the Office of the US Currency Comptroller had clearly “fat fingered” trillions in critical data which is far more logical.
As usually happens in these situations, Zero Hedge was right (there was some tongue in cheek apology but hey, at least someone got to boost their traffic briefly by namedropping this web site; incidentally apology accepted), which could have been checked simply just by looking at bank call reports, in this case the quarterly Regulatory Capital report, schedule RC-R, which made it very clear that indeed JPM’s OTC commodity derivatives had exploded to $4 trillion.
For those too lazy to check before tweeting, here is the number of OTC cleared “Other” commodity derivatives for JPM before, as of December 31: And after, as of March 31:
Furthermore, while we await the OCC to respond to our inquiry (we aren’t holding our breath), nobody has disputed our claim (because it is purely factual) that as of Q1 the OCC decided to exclude Gold as a separate commodity category (see call reports above) and lump it in with Foreign Exchange for some still unexplained reason. It would appear that gold is money after all…
So to summarize: as we reported first (and we would be delighted if other so called financial experts dedicated as much effort to digging through the primary data as they have to desperately try to disprove our article), JPM has indeed cornered the OTC commodity market, with its $4 trillion in “Other” commodity derivatives which amount to 96% of total. We don’t expect anyone to ask Jamie Dimon about this on the quarterly earnings call because this is one of those things one doesn’t want an answer to if one wishes to be invited to the next conference call.
However, another big question remains: just what is Citigroup – not, not JPMorgan – with the Precious Metals category.
Here is the chart showing Citigroup’s Precious Metals (mostly silver now that gold is lumped in with FX), exposure over the past 4 years. Of note: the 1260% increase in Precious Metals derivative holdings in the past quarter, from just $3.9 billion to $53 billion!
For those of a skeptical bent the proof can be found in Citi’s own call report, which can be seen here as of March 31, 2015 vs December 31, 2014.
Another way of showing what Citi just did with the “Precious Metals” derivative category, is the following chart which shows Citi’s total PM derivative exposure as a percentage of total.
Soaring from just 17.4% to over 70%, there is just one word for what Citigroup has done to what the Precious Metals ex Gold (i.e., almost exclusively silver) derivatives market.
So, the question then is: just what is Citigroup doing with its soaring Precious Metals (excluding gold) exposure, and why is such a dramatic place taking place at precisely the time when not only JPM is cornering the entire “Other” Commodity derivatives market in the form of a whopping $4 trillion in derivatives notional, but in the quarter after none other than Citigroup itself was responsible for drafting the swaps push-out language in the Omnibus bill AKA Presenting The $303 Trillion In Derivatives That US Taxpayers Are Now On The Hook For
And also: how is it legal that JPM is solely accountable for 96% of all commodity derivatives while Citigroup is singlehandedly responsible for over 70% of all “precious metals” derivatives? Surely even by the most lax standards this is illegal, but what makes the farce even greater is that all of this taking place out of FDIC-insured entities!
The final question, which we are absolutely certain will remain unanswered, is whether any of these dramatic surges have anything to do with the recent move in precious metals prices, or rather the complete lack thereof, even as Europe is on the verge of its first member officially exiting the Eurozone, and China’s stock market is suffering its worst market crash since 2008. Oh, and we almost forgot: with both JPM and Citi now well over 50% of the derivatives market in two critical categories, who is the counterparty!?
What I foresee is that Antichrist Communist China’s new regional debt and bank bail out is forcing it in to what is essentially QE. The flow of Yuan is going to be vastly increased. A good idea would be to have lots of people ‘need’ these yuan and be keen to soak them up. That is what would happen if the Yuan becomes a new reserve currency or, failing that, if there is at least a greater use of the Yuan as a settlement currency for major international trades.
Greece, Antichrist Communist China, & Putz Putin Russia – A Plan B For Tsipras
Which brings me to my speculation about Greece and the report quoted above about Antichrist Communist China helping Greece via the new AIIB. Might it not suit Antichrist Communist China, with its coming flood of new Yuan, to offer Greece a hand with a few Yuan. Greece might offer to conduct all its foreign trade in Yuan rather than dollars or Euros. Greece would benefit because it would not be beholden to America or Europe for a flow of their currencies. It could look to Antichrist Communist China instead. Russian would be happy with this because it has a settlement agreement with Antichrist Communist China. Any gas pipeline work could be financed in Yuan with chinese government backed Yuan loans. The AIIB could help Greece out with a loan to allow it to operate. Such a loan would not be blockable from Europe or America. Greece could default and still have operating money. Antichrist Communist China could spin it as almost humanitarian aid: The Antichrist Communist Chinese people reaching out to the desperate, impoverished but brave Greeks when the wicked capitalist Europeans would not.
Greece would survive, have new powerful friends, have bargaining chips that neither Europe nor America could ignore , Antichrist Communist China would have projected the use of the Yuan right in to Europe and Russia would have more than a toe-hold for military power right inside NATO.
If I was an Antichrist Communist Tsipras or Varoufakis I would be on the phone right now.
Whistleblower Andrew Maguire Says Short Selling Of Gold And Silver Was Done By Central Banks To Avoid Another Lehman Moment
Today whistleblower and London metals trader Andrew Maguire told King World News that the recent short selling of gold and silver was done by central banks in order to avoid another Lehman moment.
Massive Derivative Exposure Sufficient To Bankrupt Major Banks
Andrew Maguire: “The massive derivative exposure is sufficient to bankrupt the (major) banks. The underlying physical underpinning these paper-driven markets (in gold and silver) is evaporating….
Short Selling Of Gold And Silver Was Done To Avoid Another Lehman Moment
“And the central planners are playing a dangerous game. So this ‘official’ (central bank) investment to short sell gold and silver was a desperation measure to try to delay another Lehman moment.
And this time, with Deutsche Bank exposed to $75 trillion of over-the-counter derivative bets, these (derivatives) are intertwined with a daisy chain of connected insolvent banks and this is a serious risk to global stability and largely unreported by the mainstream media.
Large Quantities Of Physical Gold No Longer Available
No wonder we saw this official investment in capping gold. But the physical is not available in any size at these levels and the central banks have nothing (no available physical gold) to flywheel (this suppression) any longer.
Tonight’s chart has you looking eastward at the famous Summer Triangle. Today, notice the star Deneb, the northernmost star in the Summer Triangle. Its constellation is Cygnus the Swan. In a dark country sky, you can see that Cygnus is flying along the starlit trail of the summer Milky Way.
If it’s darker out, you might recognize the Summer Triangle by noticing that there is a cross within the Triangle. The constellation Cygnus is that cross. In fact, the constellation Cygnus is sometimes called the Northern Cross.
Okay, I’ve given you a lot of names here: Summer Triangle, Cygnus, Northern Cross.
Just remember, the constellation Cygnus the Swan contains the Northern Cross. The Cross is – more or less – just another way to see the Swan. The Northern Cross is what’s called an asterism, or recognizable pattern within a constellation. In this case, the pattern is the whole constellation, pretty much. At least, I never see them any differently.
Except for one thing. Deneb is at the top of the Cross, but at the tail of the Swan (the star name “deneb” always means “tail”). The little star Albireo is at the head of the Swan, but at the base of the Cross. Whew!
Summer Triangle: Deneb and Cygnus the Swan
The situation is worsening by the minute, and whereas the National Bank of Greece said last weekend the ‘replenishment of the ATM’s goes smoothly’, there now is a shortage of 20 EUR notes. This is due to the effect most people wanted to withdraw the maximal amount of 60 EUR, and the only possible combination at Greek ATMS (which only contain 20 and 50 EUR notes) is to withdraw 3 banknotes of 20 EUR. This leads to surrealistic situations where shops and supermarkets are unable to give their customers change.
Cash On A Greek Bank Account? *Poof* It’s Gone!
5:06 PM Massive Lightening Strike
4:27 p.m. update: We still have some heavy-rainers with some thunder and lightning moving through the immediate metro toward the southeast. The storms are starting to converge into a broken line as the punch through the area, which based on radar seems likely to be past the Beltway by around 5:30 p.m. Behind this main line of storms, we still have the chance for weaker storms and showers but it’s likely the worst will be over by then.
July 4, 2015 Thunder Storms in D.C.
4:06 p.m. update: The National Park Service has activated its “safe haven” protocol, which means museums and federal buildings will be opened so that people on the Mall can take shelter during the storms. These storms have some very heavy rain and also some lightning, so take advantage of the shelter and stay safe.
3:55 p.m. update: Storms are firing in the Beltway now and are moving east-southeast. Another batch of heavy storms are moving in behind this. In other words — expect heavy rain and some lightning on and off for the next couple of hours.
The Foo Fighters concert at RFK has been delayed and people are being told to evacuate, but so far they’re allowed to stay in the concourse while the storms pass.
Point Within The Circle July 4th Sirius
mARC 3 11MaP*S
Canadian entrepreneur, libertarian and anarcho-capitalist activist, Jeff Berwick is interviewed by Chuck Horton for Double Crossed Radio where he issues a dire warning to “get out of the U.S. by the end of the year.”
Berwick recently wrote and article titled “Escape From Amerika: 35 Percent f Americans Want To Leave The Land Of The Free,” discussing a TransferWisepoll which showed that 35 percent of Americans want to leave the the U.S., but rather than breaking down the reasons of why people wanted to leave the U.S., he details the reasons given by those that want to stay.
CNBC reports: “A recent online poll of more than 2,000 adults by TransferWise, a peer-to-peer money transfer service based in the United Kingdom, revealed that 35 percent of American-born residents and emigrants would consider leaving the United States to live in another country.”
This may come as quite a surprise to many patriotic Americans who still for some reason believe they live in the “land of the free.” It comes as no surprise to us. We think this number may double or even reach near 100% by the time all is said and done with the collapse of the US dollar (along with the faux economy and social infrastructure).
You can read his analysis on those reasons at The Dollar Vigilante.
Before offering a brief synopsis of the interview with Berwick you will hear in the embedded interview below, it is noteworthy to highlight that while the poll represents opinions, the latest numbers from the U.S. Treasury Department show that record numbers of Americans have already renounced citizenship in 2015, as shown in the graph below.
Topics include: Supreme courts make the congress irrelevant & take power from the states, NDAA, TPP, rapid roll out of the NWO, cashless society, you cant free those who don’t see their chains, vanishing privacy, rise of civil forfeiture, most people unaware it is happening, involuntary social contract, the power of the net to propagate counter narrative, we are in the end stages, US government out of control and other counties getting sick of it, Jeff attends the G7 and infiltrates Bilderberg, fake journalism in the main street media, burgeoning freedom in Guatemala, expatriation, Ecuador, Estonia, Cambodia, Columbia, Panama, relative freedom and safety with the US, Liberland, Hong Kong and much more…
THE ANTICHRIST’s NEW ECONOMIC ORDER SIRIUS 666 ”President Obozo’s 911 Homosexual Clown VISION FOR THE WORLD”
One week ago, we first explained that as the Cyprus bail-in “blueprint” scenario unfolds, the one final, and most important, remaining variable in the ongoing Greek drama, soon to devolve to tragedy, is how big the ECB’s ELA haircuts would be in the case of a No vote, which would be the first catalyst of a depositor haircut.
Then, overnight, in a report since denied by both the Greek finance ministry and by the European Banking Authority Plan, the pro-Europe FT did yet another hit piece on Greece desperate to push those Greek voters on the fence ahead of tomorrow’s referendum to vote “Yes” (just think of the lost advertising revenue if say Deutsche Bank were to go under).
Greek banks are preparing contingency plans for a possible “bail-in” of depositors amid fears the country is heading for financial collapse, bankers and businesspeople with knowledge of the measures said on Friday.
The plans, which call for a “haircut” of at least 30 per cent on deposits above €8,000, sketch out an increasingly likely scenario for at least one bank, the sources said.
Ignoring whether the FT is now merely a venue used by conflicted parties to publish pro-Europe, anti-Syriza hit piecestthat benefit “bankers and businesspeople with knowledge of the measures” and are promptly refuted, the article does bring up a relevant point: if the ECB does escalate the ELA collateral haircuts, something we analyzed in our own piece last week, what kind of haircut scenarios are possible, and will “insured” deposits under €100,000 be indeed made whole, or will the bail-in affect, as the FT suggested, everyone with over €8,000 in savings?
Regarding the first part of the question, what are the possible scenarios, JPM had this to say yesterday when evaluating the history of bail-ins in Europe in recent years:
If the deterioration in asset quality means there is no sufficient collateral to cover ELA claims, either the ECB (via its ELA residual claim) or domestic depositors will have to suffer a loss. Our understanding is that there are no clear rules on whether this ELA residual claim will be ranked above depositors or not. In fact EU policymakers adopted different and inconsistent approaches in the past when faced with bank insolvencies:
In the case of Cypriot banks, depositors were hit while senior bond holders were spared, so seniority was not respected. ELA claims were also protected. Deposits of foreign branches were protected in the case of Cyprus while deposits of domestic branches were hit. This is the opposite of what happened to Iceland.
In the case of Ireland, which also had a big banking system relative to the size of its economy, only sub debt holders, accounting for a very small portion of total creditors, were hit. No depositors were hit, in either domestic or foreign branches. In the case of SNS, sub debt holders were wiped out and reports suggest that the Dutch government came close to imposing losses on senior bond holders and was only prevented from doing so because of unsecured intergroup loans between SNS bank and Reaal insurance that would be subjected to the same losses as senior bond holders.
In other words, Europe will do what it always does: make it up as it goes alone. However, one notable difference between Cyprus and Greece is that the former held the deposits of a number of wealthy Russian oligarchs, which skewed the deposit distribution a la the 80/20 rule, and permitted smaller depositors to be saved while the Russians took the bulk of the hits (an outcome which according to some led to the suicide of Russian billionaire in exile, Boris Berezovsky).
Will Greek Depositors Under €100,000 Be Spared In Case Of A “Bail-In”
Unlike Cyprus, Greece does not have the luxury of several massive depositors. In fact, according to JPM, the distribution of deposits appears to be relatively flat. JPM continues:
… under a stress scenario of prolonged impasse, Greek depositors will be likely hit while ELA claims are protected. There is currently €120bn of deposits with Greek banks. A haircut increase on ELA collateral assets from our currently estimated level of 43% to 60%, for example, would require a €26bn deposit haircut or 20% of outstanding bank deposits assuming for simplicity no available buffer from shareholders or bond holders. A bigger increase in the collateral haircut, for example to 75%, would require a €50bn deposit haircut or 40% of outstanding bank deposits.
Whereas we disagree with JPM’s calculation due to our baseline assumption that the current haircut level is more in the 48% region, we do agree with the directionality. As a reminder, this was our own math as laid out last week:
But what does this mean for ordinary Greeks, those who have negligible amounts still held by Greek banks despite our recurring pleas to withdraw their funds ahead of just this eventuality? Sadly, nothing good. Here is JPM’s conclusion:
Could deposits below €100k be protected as it happened in Cyprus? The answer depends on the total amount of deposits above €100k. If there are enough of these large deposits above €100k, then most likely any required deposit haircut will be inflicted on these depositors only. There are no recent data on how big this universe of large deposits is. The most recent data from the European Commission suggest that at the end of 2012, covered (i.e. those below €100k) represented 75% of eligible Greek deposits. We suspect this number is now significantly higher leaving little room for depositors with less than €100k to be spared. And the reserves that the Greek state has to back its bank deposit guarantee are miniscule, likely not more than a couple of billions euros.
Which means that unlike Cyprus, which was mostly a targeted punitive bail-in aimed almost entirely at Russian oligarchs, should the ECB indeed enact ELA haircuts which it may have to do as soon as Monday in the case of a No vote, it will be the ordinary Greeks who will see their already meager savings get haircut even more, anywhere between 30%, potentially up to 100% if the ECB were to announce the entire ELA no longer legal, pulls all funding and locks up Greek bank collateral.
Will the ECB do that? We don’t know, however Varoufakis’ gambit is simple: should the ECB engage the full Greek haircut it will incite an immediate panic and risks a run on other peripheral banks and the true spread of Greek contagion to Italy, Spain, Portugal and all other economically crushed countries where an anti-austerity politician is a frontrunner for the next leadership position. Such as France.
With 6 Hours Until The Greek Vote, This Is Where We Stand
43% No 42.5% Yes
Earlier today, Yanis Varoufakis reiterated his core thesis driving the entire Greek approach from day 1 of its negotiations with the Eurogroup: “Europe [stands] to lose as much as Athens if the country is forced from the euro after a referendum on Sunday on bailout terms.”
This is merely a recap of what we said 4 years ago when in July of 2011 we explained “How Euro Bailout #2 Could Cost Up To 56% Of German GDP”
The contagion threat inherent in Europe’s alphabet soup of bailout mechanism as we explained four years ago in the post above, and as Carl Weinberg of High-Frequency Economics did hours ago in today’s edition of Barrons. Here is how the Greek contagion would spread, laid out in all its simplicity, should there be a Grexit, an outcome which the ECB could catalyze as soon as Monday in case of a “No” vote by raising ELA collateral haircuts:
The [Greek] government appears ready to renege on its debt obligations. So Greece’s creditors are going to lose money—a lot of money. Since these creditors are public entities, the losses will be borne, initially, by the public.
This crisis is about managing the resolution of bad Greek assets in a way that inconveniences creditor governments the least, forcing the least net new public borrowing, and minimizing financial system risks. The best way to do that is to avert a hard default, even if it means kicking the can down the road.
That, once again, is the Varoufakis all-in gamble, a gamble which assumes the ECB will be rational enough (in a game theory context) to appreciate the fallout of a Grexit on Europe’s creditors. Here is a qualitative determination:
Consider the ESM, Greece’s biggest creditor. Under its previous name, the European Financial Stability Facility, it loaned Greece €145 billion. If Greece defaults, the ESM, a Luxembourg corporation owned by the 19 European Monetary Union governments, will have to declare loans to Greece as nonperforming within 120 days. Accounting rules and regulators insist that financial institutions write off nonperforming assets in full, charging losses against reserves and hitting capital.
Here’s the rub: The ESM has no loan-loss contingency reserves. Its only assets—other than loans to Greece—are loans to Ireland and Portugal. Its liabilities are triple A-rated bonds sold to the public. How do you get a triple-A rating on a bond backed entirely by loans to junk-rated sovereign borrowers? Well, the governments guarantee the bonds, and because they are unfunded off-balance-sheet liabilities, they aren’t counted in their debt burdens—unless borrowers default.
If Greece defaults hard, governments will be on the hook for €145 billion in guarantees on those loans to the ESM. We expect credit-rating agencies to insist that these unfunded guarantees be funded. After all, unfunded guarantees are worthless guarantees.
And the punchline:
The strength of these guarantees is untested. Would the German Bundestag vote tomorrow to raise €35 billion by selling Bunds, the government debt, to cover Germany’s share of ESM losses on Greek bonds? That seems improbable. Bund sales of that scale, if they did occur, would flood the market, raising yields and depressing prices. If, instead, the Bundestag refused to cover its guarantees, then we would see a legal dust-up on a grand scale. With the presumption of valid guarantees, credit raters would have no choice but to downgrade ESM paper. Then losses would be borne by bondholders, and the ESM—the euro zone’s safety net and backstop—couldn’t raise money in the capital markets.
In other words, Grexit would usher in a pandemonium of unheard proportions because when the ESM, EFSF and countless other bailout mechanism were postulated, none even for a minute evaluated the scenario that is being flouted with ease, and, paradoxically, by the ECB itself most of all: an ECB which stands to lose the most…
A hard default would produce other losses to be covered. The ECB would have to be recapitalized after it writes off the €89 billion it has loaned the Greek banks to keep them liquid. The ECB would need to call for a capital contribution from its shareholders—the governments.
… not to mention any last shred of confidence it may have had.
But wait, there’s more:
The Greek Bluff In All Its Glory: Presenting The Grexit “Falling Dominoes”
And don’t forget that Greek banks owe the Target2 bank clearinghouse, a key link in the interbank payment system, an estimated €100 billion. The governments are on the hook to make good that shortfall, too. The cash required to cover these contingencies would have to be funded with new bond sales.
The conclusion is incidentally, identical to what Zero Hedge said back in the summer of 2011: “the ultimate loser in a Greek default would be the euro-zone sovereign-bond market, which is already vulnerable. ” The only difference is that this time, yields are near all-time lows, and durations are high. Ironically, even the smallest fluctuations in yield mean a volatile response in prices, and an immediate crippling of the bond market. Perhaps most ironic is that Europe’s bond market is far less prepared to deal with Greek contagion now than when Italian bonds were blowing out and trading at 7%, just because everyone has double down and gone all-in that the ECB can contain the contagion. If it can’t, it’s very much game over.
This is what Varoufakis’ likewise all-in gamble on the future of Greece boils down to.
And just so we have numbers to work with, here courtesy of Bawerk’s fantastic summary, is a way to quantify what a Grexit and the resultant falling dominoes would look like for Europe:
Simplistic representation of falling dominos not enough? Then here is the full breakdown of implicit exposure every Euro Area country has toward a Greek exit, because it is not just the EFSF dominoes, it is also SMP, MRO, ELA, Target2, and oh my…
And tying it all together, here is some more from “Eugen von Böhm-Bawerk“:
The Germans, French and IMF alike reluctantly admit so much, but they cannot give the Greeks any debt relief because as soon as Greece starts to default on their obligations on the off-balance sheet guarantees extended by the euro countries the whole system could fall like dominoes.
The problem, however, is that the IMF already did admit that Greece does need at least a 30% haircut, implying that at least one member of the grand status quo, under pressure form the US, already got the tap on the shoulder and has been told to prepare for more falling dominoes. Which leads to even more questions:
What would happen if Italy suddenly got an extra funding requirement of more than €60bn? Every euro apologist point to Italy’s primary surplus, but what good does that do when your debt is over 130 per cent of GDP and rising? The interest payment on that gargantuan debt load means Italy must cough up more than €75bn a year just to service liabilities already incurred. A primary surplus is a useless concept in a situation like the one Italy finds itself in. Adding another €60bn to Italy’s balance sheet could very well be the straw that breaks the Italian camel.
The French would be on the hook for around €70bn just when they have agreed with the European Commission to “slash” spending to get within the Maastricht goal of 3 per cent, in 2017!
Imagine the German peoples wrath when they learn that Merkel defied their sacrosanct constitution; a constitution that clearly state that the German people, through its Bundestag, is the sole arbiter of any act that have fiscal implications regarding the German people. The Bundestag did not approve the €42bn of ECB programs that have funded the Greek states excessive consumption.
All this is purely theoretical. For the practical implications of the above “falling domino” chain, we go back to Carl Weinberg:
What if a downgrade of ESM paper causes a hedge fund to fail, which triggers the demise of the bank that handles its trades? The costs of fixing failed institutions will also, of course, fall on governments. The ultimate cost of Greece’s default is yet to be seen, but it is surely larger than it seems.
Contained? We think not. And neither does Varoufakis, which is why he is willing to bet the fate of the Greek people on that most critical of assumptions. The only outstanding question is what does Mario Draghi, and thus Goldman Sachs, believe, and even more importantly, whether the Greek people have enough faith in Varoufakis to ”pull it” off…
Antichrist NWO 666 Crypto Fascist 911 WAR CALL
NOTE: For a quick confirmation go to the 1:40: 00 minute mark in the video link below to hear Antichrist NWO 666 Obozo The American Homosexual POTUS Pride Clown confirm his Masonic Occult July 4, 1776 2nd Of Sirius 911 call.
It’s almost impossible to keep anything secret these days – not even the core text of a hyper-secret trade deal, the Trade in Services Agreement (TiSA), which has spent the last two years taking shape behind the hermetically sealed doors of highly secure locations around the world.
According to the agreement’s provisional text, the document is supposed to remain confidential and concealed from public view for at least five years after being signed! But now, thanks to WikiLeaks, it has seeped to the surface.
The Really, Really Good Friends of Services
TiSA is arguably the most important – yet least well-known – of the new generation of global trade agreements. According to WikiLeaks, it “is the largest component of the United States’ strategic ‘trade’ treaty triumvirate,” which also includes the Trans Pacific Partnership (TPP) and the TransAtlantic Trade and Investment Pact (TTIP).
“Together, the three treaties form not only a new legal order shaped for transnational corporations, but a new economic ‘grand enclosure,’ which excludes China and all other BRICS countries” declared WikiLeaks publisher Julian Assange in a press statement. If allowed to take universal effect, this new enclosure system will impose on all our governments a rigid framework of international corporate law designed to exclusively protect the interests of corporations, relieving them of financial risk, and social and environmental responsibility.
Thanks to an innocuous-sounding provision called the Investor-State Dispute Settlement, every investment they make will effectively be backstopped by our governments (and by extension, you and me); it will be too-big-to-fail writ on an unimaginable scale.
LEAKED: How the Biggest Banks Are Conspiring to Rip Up Financial Regulations around the World
Yet it is a system that is almost universally supported by our political leaders. In the case of TiSA, it involves more countries than TTIP and TPP combined: The United States and all 28 members of the European Union, Australia, Canada, Chile, Colombia, Costa Rica, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, South Korea, Switzerland, Taiwan and Turkey.
Together, these 52 nations form the charmingly named “Really Good Friends of Services” group, which represents almost 70% of all trade in services worldwide.
As WOLF STREET previously reported, one explicit goal of the TiSA negotiations is to overcome the exceptions in GATS that protect certain non-tariff trade barriers such as data protection. For example, the draft Financial Services Annex of TiSA, published by Wikileaks in June 2014, would allow financial institutions, such as banks, to transfer data freely, including personal data, from one country to another – in direct contravention of EU data protection laws.
But that is just the tip of the iceberg. According to the treaty’s Annex on Financial Services, we now know that TiSA would effectively strip signatory governments of all remaining ability to regulate the financial industry in the interest of depositors, small-time investors, or the public at large.
1. TiSA will restrict the ability of governments to limit systemic financial risks. TiSA’s sweeping market access rules conflict with commonsense financial regulations that apply equally to foreign and domestic firms. One of those rules means that any governments that seeks to place limits on the trading of derivative contracts — the largely unregulated weapons of mass financial destruction that helped trigger the 2007-08 Global Financial Crisis — could be dragged in front of corporate arbitration panels and forced to pay millions or billions in damages.
2. TiSA will force governments to “predict” all regulations that could at some point fall foul of TiSA. The leaked TISA text even prohibits policies that are “formally identical” for domestic and foreign firms if they inadvertently “modif[y] the conditions of competition” in favor of domestic firms:
For example, many governments require all banks to maintain a minimum amount of capital to guard against bank collapse. Even if the same minimum is required of domestic and foreign-owned banks alike, it could be construed as disproportionately impacting foreign-owned banks… This common financial protection could thus be challenged under TISA for “modifying the conditions of competition” in favor of domestic banks, despite governments’ prerogative to ensure the stability of foreign-owned banks operating in their territory.
3. TiSA will indefinitely bar new financial regulations that do not conform to deregulatory rules. Signatory governments will essentially agree not to apply new financial policy measures which in any way contradict the agreement’s emphasis on deregulatory measures.
4. TiSA will prohibit national governments from using capital controls to prevent or mitigate financial crises. As we are seeing in Greece right now, capital controls are terrible. But for a government facing the complete breakdown of the financial system, they serve as a last resort for restoring some semblance of order. Even the IMF, which urged countries to abandon capital controls in the Washington Consensus years of the 1990s, recently endorsed capital controls as a means of maintaining the stability of the financial system. But if TiSA is signed, the signatory governments will be prohibited from using them:
The leaked texts prohibit restrictions on financial inflows – used to prevent rapid currency appreciation, asset bubbles and other macroeconomic problems – and financial outflows, used to prevent sudden capital flight in times of crisis.
5. TiSA will require acceptance of financial products not yet invented. Despite the pivotal role that new, complex financial products played in the Financial Crisis, TISA would require governments to allow all new financial products and services, including ones not yet invented, to be sold within their territories.
6. TiSA will provide opportunities for financial firms to delay financial regulations. If signed, TISA will require governments to address financial firms’ criticism of a regulatory proposal when publishing a final version of the regulation. Even then, governments would be obliged to wait a “reasonable time” before allowing the new regulation to take effect. In the United States, such requirements have produced delays sometimes lasting years in the enactment of urgently needed financial and other safeguards. If the same process is applied across the globe, it would make it almost impossible for government to constrain the activities of the world’s largest banks.
What that would likely mean is that when (not if) a new global financial crisis takes place in the not-too-distant future, the banks will once again be on hand to lead efforts to clean up and rebuild with taxpayer money the very sector that they themselves have destroyed. Lather, rinse, repeat. Only this time, on an even grander scale. By Don Quijones, Raging Bull-Shit.
Global banking behemoth HSBC is not having a good 2015. Now, is it just in dire financial straits? Read… Does HSBC Know Something Other Banks Don’t?
Get rid of the fag flag and burn it into oblivion!
Russian Government Now Wants To Ban The Antichrist Homosexual Flag, Saying That “Gay Delirium Is Threatening The Entire Civilized World.”
“This effectively strips us of all our First Amendment rights,” the Kleins, owners of Sweet Cakes by Melissa, which has since closed, wrote on their Facebook page. “According to the state of Oregon we neither have freedom of religion or freedom of speech.”
State Silences Bakers Who Refused to Make Cake for Antichrist Lesbian Couple, Fines Them $135K
Tropical Storm “Linfa” (Egay) to hit northern Luzon, Philippines late July 4
Astronomers are gearing up for high-energy fireworks coming in early 2018, when a stellar remnant the size of a city meets one of the brightest stars in our galaxy. The cosmic light show will occur when a pulsar discovered by NASA’s Fermi Gamma-ray Space Telescope swings by its companion star. Scientists plan a global campaign to watch the event from radio wavelengths to the highest-energy gamma rays detectable.
Astronomers Predict Fireworks from Rare Stellar Encounter in 2018
The pulsar, known as J2032+4127 (J2032 for short), is the crushed core of a massive star that exploded as a supernova. It is a magnetized ball about 12 miles across, or about the size of >>Washington<<, weighing almost twice the sun’s mass and spinning seven times a second. J2032’s rapid spin and strong magnetic field together produce a lighthouse-like beam detectable when it sweeps our way. Astronomers find most pulsars through radio emissions, but Fermi’s Large Area Telescope (LAT) finds them through pulses of gamma rays, the most energetic form of light.
J2032 was found in 2009 through a so-called blind search of LAT data. Using this technique, astronomers can find pulsars whose radio beams may not be pointed precisely in our direction and are therefore much harder to detect.
“Two dozen pulsars were discovered this way in the first year of LAT data alone, including J2032,” said David Thompson, a Fermi deputy project scientist at NASA’s Goddard Space Flight Center in Greenbelt, Maryland. “Nearly all of them would not have been found without Fermi.”
Once they knew exactly where to look, radio astronomers also were able to detect J2032. A team at the Jodrell Bank Centre for Astrophysics at the University of Manchester in the U.K. kept tabs on the object from 2010 through 2014. And they noticed something odd.
“We detected strange variations in the rotation and the rate at which the rotation slows down, behavior we have not seen in any other isolated pulsar,” said Andrew Lyne, professor of physics at the University of Manchester. “Ultimately, we realized these peculiarities were caused by motion around another star, making this the longest-period binary system containing a radio pulsar.”
The massive star tugging on the pulsar is named MT91 213. Classified as a Be star, the companion is 15 times the mass of the sun and shines 10,000 times brighter. Be stars drive strong outflows, called stellar winds, and are embedded in large disks of gas and dust.
“When we discovered this pulsar in 2009, we noticed that it was in the same direction as this massive star in the constellation Cygnus, but our initial measurements did not give any evidence that either star was a member of a binary system,” explained Paul Ray, an astrophysicist at the Naval Research Laboratory in Washington. “The only way to escape that conclusion was if the binary system had a very long orbital period, much longer than the longest known pulsar-massive star binary at the time, which seemed unlikely.”
Following an elongated orbit lasting about 25 years, the pulsar passes closest to its partner once each circuit. Whipping around its companion in early 2018, the pulsar will plunge through the surrounding disk and trigger astrophysical fireworks. It will serve as a probe to help astronomers measure the massive star’s gravity, magnetic field, stellar wind and disk properties.
Several features combine to make this an exceptional binary. Out of six similar systems where the massive star uses hydrogen as its central energy source, J2032’s has the greatest combined mass, the longest orbital period, and, at a distance of about 5,000 light-years, is closest to Earth.
“This forewarning of the energetic fireworks expected at closest approach in three years’ time allows us to prepare to study the system across the entire electromagnetic spectrum with the largest telescopes,” added Ben Stappers, a professor of astrophysics at the University of Manchester.
Astronomers think the supernova explosion that created the pulsar also kicked it into its eccentric orbit, nearly tearing the binary apart in the process. A study of the system led by Lyne and including Ray and Stappers was published June 16 in the journal Monthly Notices of the Royal Astronomical Society.
Tens of thousands of Greeks flooded the streets of central Athens on Friday evening ahead of Sunday’s referendum.
Both the “yes” crowd and the “no” crowd were out in force with the former camped out in front of Olympic stadium and the latter in front of Parliament. Each rally boasted participation of more than 20,000 people according to local police.
“I call you to say again a big proud ‘no’ to ultimatums on Sunday,” PM Alex Tsipras shouted, in a speech to the “No” supports. “We can also say it in German: Nein, Frau Merkel, Nein,” another speaker quipped.
Indeed, the size of the rallies was quite impressive, if somewhat disquieting.
As you can see from the drone footage below, Athenians are restless and we can’t help but wonder what the scene will be in the streets of Athens on Sunday evening once the results are tallied and one of these two dueling groups is forced to acquiesce to the other’s vision of Greece’s future.
A Drone’s Eye View Of The Massive Numbers Behind The Greek “No” Vote
The IMF Debt Sustainability Analysis report on Greece that came out this week has caused a big stir. We now know that the Fund’s analysts confirm what Syriza has been saying ever since they came to power 5 months ago: Greece needs debt relief, lots of it, and fast.
We also know that Europe tried to silence the report. But what’s most interesting is that this has been going on for months, as per Reuters. Ergo, the IMF has known about the -preliminary- analysis for months, and kept silent, while at the same time ‘negotiating’ with Greece on austerity and bailouts.
And if you dig a bit deeper still, there’s no avoiding the fact that the IMF hasn’t merely known this for months, it’s known it for years. The Greek Parliamentary Debt Committee reported three weeks ago that it has in its possession an IMF document from 2010(!) that confirms the Fund knew even at that point in time.
That is to say, it already knew back then that the bailout executed in 2010 would push Greece even further into debt. Which is the exact opposite of what the bailout was supposed to do.
The 2010 bailout was the one that allowed private French, Dutch and German banks to transfer their liabilities to the Greek public sector, and indirectly to the entire eurozone‘s public sector. There was no debt restructuring in that deal.
Reuters yesterday reported that “Publication of the draft Debt Sustainability Analysis laid bare a dispute between Brussels and [the IMF] that has been simmering behind closed doors for months.
But that’s not the whole story. Evidently, there was a major dispute inside the IMF as well. The decision to release the report was apparently taken without even a vote, because it was obvious the Fund’s board members wanted the release. The US played a substantial role in that decision. Why the timing? Hard to tell.
The big question that arises from this is: what has been Christine Lagarde’s role in this charade? If she has been instrumental is keeping the analysis under wraps, she has done the IMF a lot of reputational damage, and it’s getting hard to see how she could possibly stay on as IMF chief. She has seen to it that the Fund has lost an immense amount of trust in the world. And without trust, the IMF is useless.
This Is Why The Euro Is Finished
And while we’re at it, ECB chief Mario Draghi, who is also a major Troika negotiator, made a huge mistake this week in -all but- shutting down the Greek banking system, a decision that remains hard to believe to this day. The function of a central bank is to make sure banks are liquid, not to consciously and willingly strangle them.
How Draghi, after this, could stay on as ECB head is as hard to see as it is to do that for Lagarde’s position. And we should also question the actions and motives of people like Jean-Claude Juncker and Jeroen Dijsselbloem.
They must also have known about the IMF’s assessment, and still have insisted there be no debt relief on the negotiating table, although the analysis says there cannot be a viable deal without it.
One can only imagine Varoufakis’ frustration at finding the door shut in his face every single time he has brought up the subject. Because you don’t really need an IMF analysis to see what’s obvious.
Which is exactly why there is a referendum tomorrow: Alexis Tsipras refused to sign a deal that did not include debt restructuring. It would be comedy if it weren’t so tragic, most of all for the people of Greece.
The reason why all Troika negotiators should face very serious scrutiny is that they have willingly kept information behind that should have been crucial in any negotiation with Greece. The reason is obvious: it would have cost Europe’s taxpayers many billions of euros.
But that should never be a reason to cheat and lie. Because once you do that, you’re tarnished for life. So in an even slightly ideal world, they should all resign. Everybody who’s been at that table for the Troika side.
And I can’t see how Angela Merkel would escape the hatchet either. She, too, must have known what the IMF analysts knew. And decided to waterboard the Greek population rather than be forced to explain at home that her earlier decisions (2010) failed so dramatically that her voters would now have to pay the price for them. No, Angela likes to be in power. More than she likes for the Greeks to have proper healthcare.
Understandable, perhaps, but unforgivable as well. Someone should take this entire circus of liars and cheaters and schemers to court. They’re very close to killing the entire EU with their machinations. Not that I mind, the sooner it dies the better, but the people involved should still be held accountable. It’s not even the EU itself which is at fault, or which is a bad idea, it’s these people.
But fear not, there’s no tragedy that doesn’t also have a humorous side. And I don’t mean that to take anything away from the Greek people’s suffering.
Brett Arends at MarketWatch wrote a great analysis of his own, and get this, also based on IMF numbers. Turns out, the biggest mistake for Greece and Syriza is to want to stay inside the eurozone. The euro has been such a financial and economic disaster, it’s hard to fathom that nobody has pointed this out before. Stay inside, and there’s no way you can win.
I find this a hilarious read in face of what I see going on here in Greece. It makes everything even more tragic.
Stop Lying To The Greeks — Life Without The Euro Is Great
Will the euro-fanatics please stop lying to the people of Greece? And while they’re at it, will they please stop lying to the rest of us as well? Can they stop pretending that life outside the euro — for the Greeks or any other European country — would be a fate worse than death? Can they stop claiming that if the Greeks go back to the drachma, they will be condemned to a miserable existence on the dark backwaters of European life, a small, forgotten and isolated country with no factories, no inward investment and no hope? Those dishonest threats are being leveled this week at the people of Greece, as they gear up for the weekend’s big referendum on more austerity.
The bully boys of Brussels, Frankfurt and elsewhere are warning the Greek people that if they don’t do as they’re told, and submit to yet more economic leeches, they may end up outside the euro … at which point, of course, life would stop. Bah.
Take a look at the chart. It compares the economic performance of Greece inside the euro with European rivals that don’t use the euro. Those other countries cover a wide range of situations, of course – from rich and stable Denmark, to former Soviet Union countries, to Greece’s neighbor Turkey, which isn’t even in the EU. But they all have one thing in common.
During the past 15 years, while Greece has been enjoying the “benefits” of having Brussels run their monetary policies, those poor suckers have all been stuck running their own affairs and managing their own currencies (if you can imagine). And you can see just how badly they’ve suffered as a result.
They’ve crushed it. Romania, Turkey, Poland, Sweden, Croatia — you name it, they’ve all posted vastly better growth rates than Greece. The data come from the IMF itself. It measures growth in gross domestic product, per person, in constant prices (in other words, with price inflation stripped out). Greece adopted the euro in 2001.
And after 14 years in the same club as the big boys, they are back right where they started. Real per-person economic growth over that time: Zero. Meanwhile Romania, with the leu, has only … er … doubled. Everyone else is up. The Icelanders, who suffered the worst financial catastrophe on the planet in 2008, have nonetheless managed to grow.
Yes, all data points have caveats. Each country has its own story and its own advantages and disadvantages. But the overall picture is clear: The euro has either caused Greece’s disastrous economic performance, or at least failed to prevent it.
What I find amazing about the euro-fanatics is that they just don’t seem to care about facts at all. They carry on repeating the same claims about the alleged miracle cure of their currency, no matter what happens. You can hit them over the head with the latest IMF World Economic Outlook and they carry on droning, unfazed.
I was in England during the 1990s when those people were warning that if the Brits didn’t give up the pound sterling and join the euro, they were doomed as well. For a laugh, I just went through news archives on Factiva and refreshed my memory.
Britain without the euro would be an “orphan country,” petted, humored but ignored, warned one leading figure. Britain would lose all influence and status. It would become a marginal country outside the mainstream of Europe. It would lose “a million jobs.” Factories would close. The car industry would collapse. Foreign investors would walk away because of Britain’s isolation.
Exports would plummet because of exchange-rate fluctuations. The City of London, Britain’s financial district, would lose out to Frankfurt. The London Stock Exchange would be reduced to a local backwater. Tumbleweeds would blow in the streets. (OK, I made that one up.)
And here we are today. Since 1992, when the single currency project began taxiing for takeoff, the countries on board have seen total economic growth of 40%, says the IMF. Poor old Great Britain, stuck back at the departure lounge with its miserable pound sterling? Just 67%. Bah.
This currency that Greece is fighting so hard to be part of is in fact strangling it. The reason for this lies in the structure of the EMU. Which makes it impossible for individual countries to adapt to changing circumstances. And circumstances always change. As a country, you need flexibility, you need to be able to adapt to world events.
You need to be able to devalue, you need a central bank to be your lender of last resort. Mario Draghi has refused to be Greece’s lender of last resort. That can’t be, that’s impossible. there is no valid economic reason for such an action, it’s criminal behavior. But the eurozone structure allows for such behavior.
In ‘real life’, where a country has its own central bank, the only reason for it to refuse to be lender of last resort would be political. And it is the same thing here. It’s about power. That’s why Greece’s grandmas can’t get to their meagre pensions. There is no economic reason for that.
In the eurozone, there’s only one nation that counts in the end: Germany. The eurozone has effectively made it possible for Angela Merkel to save her domestic banks from losses by unloading them upon the Greeks. This would not have been possible had Greece not been a member of the eurozone.
That this took, and still takes, scheming and cheating, is obvious. But that is at the same time the reason why either all Troika negotiators must be replaced, and by people who don’t stoop to these levels, or, and I think that’s the much wiser move, countries should leave the eurozone.
Look, it’s simple, the euro is finished. It won’t survive the unmitigated scandal that Greece has become. Greece is not the victim of its own profligacy, it’s the victim of a structure that makes it possible to unload the losses of the big countries’ failing financial systems onto the shoulders of the smaller. There’s no way Greece could win.
The damned lies and liars and statistics that come with all this are merely the cherry on the euro cake. It’s done. Stick a fork in it.
The smaller, poorer, countries in the eurozone need to get out while they can, and as fast as they can, or they will find themselves saddled with ever more losses of the richer nations as the euro falls apart. The structure guarantees it.