Saturday, May 28, 2016
Chris Martenson – Greece Continued Implosion and Venezuela Going Mad Max
from Financial Survival Network
Chris Martenson
says that Greece is cooked. They’re getting their payments stretched
out and deferred nearly into the next century. But where’s the growth
going to come from. Greece is in a full scale depression. Austerity is
killing Greece, 10k businesses shut down so far this year and 250k since
the crisis started. And have you seen Venezuela lately. Lines to get
everything, people going Mad Max to eat. What’s a socialist to do?
Answer, look to free markets and true capitalism.
Click Here to Listen to the Audio
Chris Martenson
says that Greece is cooked. They’re getting their payments stretched
out and deferred nearly into the next century. But where’s the growth
going to come from. Greece is in a full scale depression. Austerity is
killing Greece, 10k businesses shut down so far this year and 250k since
the crisis started. And have you seen Venezuela lately. Lines to get
everything, people going Mad Max to eat. What’s a socialist to do?
Answer, look to free markets and true capitalism.Click Here to Listen to the AudioThe Fact of the Matter Is, Greece Is Insolvent
by Rodney Johnson
If you lent a guy money and he failed to pay you back, would you lend to him a second time? How about a third time?
That’s exactly what’s going on in Europe.
The European Central Bank (ECB), European Commission (EC), and the IMF – the three entities collectively known as the Troika – bailed out Greece in 2010… then again in 2012.
I’ve got a question. What difference does it make?
Even though Greek lawmakers agreed to more spending cuts and taxes over the weekend, it doesn’t change the facts on the ground.
Greece is insolvent.
The country generates a very small primary surplus, meaning it has a little bit of cash left over before it pays principal and interest on its debt. But the country owes more than 370 billion euros. That’s like saying you have a little bit of cash left over before you pay your mortgage or rent.
And why would the Greeks want more bailout bucks? Of the 216 billion euros they received from the first two rounds, a whopping 9.7 billion euros flowed to their coffers. A chunk of it, 90 billion, repaid old debt, and the rest flowed back to bondholders in the form of principal and interest payments.
So for 126 billion euros of net new debt, Greece received 9.7 billion of fiscal stimulus.
Brilliant!
The Troika, on the other hand, have no choice.
They must force another bailout, because they all own Greek bonds. Same with the central banks of Germany and other Northern European countries. They all need Greece to continue paying its debts, because they are the recipients of those principal and interest payments. If the Troika cuts Greece off, they’ll have a bankrupt nation on their hands that cannot continue to pay them.
No one in the Eurozone wants that.
As Charles recently noted, Brits will vote in late June on whether to stay in the European Community or cut their ties. The possibility of losing the financial capital of Europe is already sending tremors through the economic bloc. They don’t need another earthquake.
But Greece’s troubles aren’t going away. They’re just getting older.
A full 25% of the government’s budget goes toward pension payments. Since 2000, the government has spent over 175 billion euros on pensions, which is about half of its outstanding debt. If the country completely abandoned its current debt, it could just barely squeak by today.
But what about tomorrow? As more pensioners join the ranks, the problem will only get bigger.
As I’ve written many times, the country is already bankrupt. It’s just a matter of when everyone will acknowledge the fact and start working on real solutions.
Until then, expect more bailouts and Band-Aids as the Troika tries to keep Greece afloat so the Eurozone doesn’t splinter.
Rodney
Follow me on Twitter @RJHSDent
If you lent a guy money and he failed to pay you back, would you lend to him a second time? How about a third time?
That’s exactly what’s going on in Europe.
The European Central Bank (ECB), European Commission (EC), and the IMF – the three entities collectively known as the Troika – bailed out Greece in 2010… then again in 2012.
All told, Greece received 216
billion euros, and defaulted on a chunk of debt to private investors.
Now the Greeks are back at the bailout door, hoping to finalize a deal
before their next debt payment is due on July 1.
The ECB and EU have agreed to more austerity in Greece in exchange for just under 100 billion euros of bailout bucks, but the IMF is holding out.
Officials at the international bank don’t think Greece can make good on
the new promises. They want remaining creditors – like the ECB and
central banks across Europe – to discount their Greek bonds instead of
asking for budget cuts from the ailing country.I’ve got a question. What difference does it make?
Even though Greek lawmakers agreed to more spending cuts and taxes over the weekend, it doesn’t change the facts on the ground.
Greece is insolvent.
The country generates a very small primary surplus, meaning it has a little bit of cash left over before it pays principal and interest on its debt. But the country owes more than 370 billion euros. That’s like saying you have a little bit of cash left over before you pay your mortgage or rent.
And why would the Greeks want more bailout bucks? Of the 216 billion euros they received from the first two rounds, a whopping 9.7 billion euros flowed to their coffers. A chunk of it, 90 billion, repaid old debt, and the rest flowed back to bondholders in the form of principal and interest payments.
So for 126 billion euros of net new debt, Greece received 9.7 billion of fiscal stimulus.
Brilliant!
The Troika, on the other hand, have no choice.
They must force another bailout, because they all own Greek bonds. Same with the central banks of Germany and other Northern European countries. They all need Greece to continue paying its debts, because they are the recipients of those principal and interest payments. If the Troika cuts Greece off, they’ll have a bankrupt nation on their hands that cannot continue to pay them.
No one in the Eurozone wants that.
As Charles recently noted, Brits will vote in late June on whether to stay in the European Community or cut their ties. The possibility of losing the financial capital of Europe is already sending tremors through the economic bloc. They don’t need another earthquake.
But Greece’s troubles aren’t going away. They’re just getting older.
A full 25% of the government’s budget goes toward pension payments. Since 2000, the government has spent over 175 billion euros on pensions, which is about half of its outstanding debt. If the country completely abandoned its current debt, it could just barely squeak by today.
But what about tomorrow? As more pensioners join the ranks, the problem will only get bigger.
As I’ve written many times, the country is already bankrupt. It’s just a matter of when everyone will acknowledge the fact and start working on real solutions.
Until then, expect more bailouts and Band-Aids as the Troika tries to keep Greece afloat so the Eurozone doesn’t splinter.
Rodney
Follow me on Twitter @RJHSDent
We Have Entered The Looting Stage Of Capitalism — Paul Craig Roberts
(Paul Craig Roberts) Having successfully used the EU to conquer the Greek people by turning the Greek “leftwing” government into a pawn of Germany’s banks, Germany now finds the IMF in the way of its plan to loot Greece into oblivion .
The IMF’s rules prevent the organization from lending to countries that cannot repay the loan. The IMF has concluded on the basis of facts and analysis that Greece cannot repay. Therefore, the IMF is unwilling to lend Greece the money with which to repay the private banks.
The IMF says that Greece’s creditors, many of whom are not creditors but simply bought up Greek debt at a cheap price in hopes of profiting, must write off some of the Greek debt in order to lower the debt to an amount that the Greek economy can service.
The banks don’t want Greece to be able to service its debt, because the banks intend to use Greece’s inability to service the debt in order to loot Greece of its assets and resources and in order to roll back the social safety net put in place during the 20th century. Neoliberalism intends to reestablish feudalism—a few robber barons and many serfs: the One Percent and the 99 percent.
The way Germany sees it, the IMF is supposed to lend Greece the money with which to repay the private German banks. Then the IMF is to be repaid by forcing Greece to reduce or abolish old age pensions, reduce public services and employment, and use the revenues saved to repay the IMF.
As these amounts will be insufficient, additional austerity measures are imposed that require Greece to sell its national assets, such as public water companies and ports and protected Greek islands to foreign investors, principally the banks themselves or their major clients.
So far the so-called “creditors” have only pledged to some form of debt relief, not yet decided, beginning in 2 years. By then the younger part of the Greek population will have emigrated and will have been replaced by immigrants fleeing Washington’s Middle Eastern and African wars who will have loaded up Greece’s unfunded welfare system.
In other words, Greece is being destroyed by the EU that it so foolishly joined and trusted. The same thing is happening to Portugal and is also underway in Spain and Italy. The looting has already devoured Ireland and Latvia (and a number of Latin American countries) and is underway in Ukraine.
The current newspaper headlines reporting an agreement being reached between the IMF and Germany about writing down the Greek debt to a level that could be serviced are false. No “creditor” has yet agreed to write off one cent of the debt. All that the IMF has been given by so-called “creditors” is unspecific “pledges” of an unspecified amount of debt writedown two years from now.
The newspaper headlines are nothing but fluff that provide cover for the IMF to succumb to pressure and violate its own rules. The cover lets the IMF say that a (future unspecified) debt writedown will enable Greece to service the remainder of its debt and, therefore, the IMF can lend Greece the money to pay the private banks.
In other words, the IMF is now another lawless Western institution whose charter means no more than the US Constitution or the word of the US government in Washington.
The media persists in calling the looting of Greece a “bailout.”
To call the looting of a country and its people a “bailout” is Orwellian. The brainwashing is so successful that even the media and politicians of looted Greece call the financial imperialism that Greece is suffering a “bailout.”
Everywhere in the Western world a variety of measures, both corporate and governmental, have resulted in the stagnation of income growth. In order to continue to report profits, mega-banks and global corporations have turned to looting. Social Security systems and public services–and in the US even the TSA airline security screening–are targeted for privatization, and indebtedness so accurately described by John Perkins in his book, Confessions of an Economic Hit Man, is used to set up entire countries to be looted.
We have entered the looting stage of capitalism. Desolation will be the result.
Northwest Territorial Mint Scandal: Investors Had Fair Warning on This Blowup As Well
by moneymetals
The news unfortunately just keeps getting worse for customers and creditors of Northwest Territorial Mint. The prominent bullion dealer located near Seattle, Washington filed for bankruptcy court protection at the end of March. The losses of customers who never received delivery of orders plus the losses of other creditors could be as high as $50 million, according to news reports.
The U.S. Trustee in charge, Mark Calvert, recently estimated the firm has $56 million in liabilities and only $6.4 million in assets. He figures the recovery for unsecured creditors will be less than 10%.
Northwest Territorial’s former owner, Ross Hansen, seems to be blaming the bankruptcy on a defamation lawsuit that he and his firm recently lost.
The judgment was $38.3 million in total and the court ordered Hansen
to pay $12.5 million promptly. He filed for bankruptcy protection
instead.
The libel damages stem from a website Hansen created apparently to wage a campaign comparing a former landlord to infamous Ponzi scheme operator Bernie Madoff. He and the former landlord apparently had some disagreements.
Ironically, it appears Hansen is the one who may have something in common with Madoff. At a creditor’s meeting last week, trustee Calvert said, “Based on our analysis to date, the bullion sale of operations have attributes of a Ponzi scheme.”
The libel judgment may have been the final straw, but it wasn’t the only problem. Customers who ordered from this mint often experienced extraordinarily long delivery delays – 8 to 10 weeks, and even as long as 6 months.
Calvert believes the funds received for new orders were used to buy metal needed to deliver orders placed long before. If that’s the case, the mint was effectively borrowing money from its hapless customers to finance its business. And this practice may have been going on for as long as a decade. Yet, remarkably, customers continued to do business with the mint even as most other precious metals dealers across America make immediate delivery.
The bankruptcy, the potential fraud now under investigation, and the millions in likely losses represent another black eye for the industry. It comes on the heels of other high profile failures including a “low-price” dealer known as Tulving Company and Bullion Direct.
The problem is that do-gooder politicians have a miserable track record when it comes to defending consumers generally – and metals investors in particular. In the Northwest Territorial Mint case, theWashington State Attorney General’s Office had received hundreds of complaints, but didn’t take any actions which prevented the blowup. History shows that regulations will definitely increase costs to customers and probably not have any positive effect on reducing corruption.
The Northwest Territorial Mint debacle may cost people $50 million. The only thing worse would be to bring in the regulators to inflict further harm on all dealers and all customers nationwide.
The CFTC spent 5 years investigating the bullion banks for price rigging the silver futures market. Ultimately they declared there was “no viable basis to bring an enforcement action.” That’s embarrassing, given that Deutsche Bank just admitted to price rigging in the gold markets during the period when the CFTC was investigating. In mid April, they agreed to pay a settlement and provide evidence to assist plaintiffs in their suit against the remaining banks.
But the CFTC isn’t the only bureaucracy to fail in protecting investors. The Federal Reserve, which has been charged with regulating banks despite being privately owned by the largest among them, and the SEC complete a triumvirate of incompetence.
Banks have paid more the $200 billion in fines and penalties associated with fraud, rigging markets, and cheating customers since the 2007 financial crisis. Not a single high-ranking executive at any major bank has been prosecuted or sent to prison. It looks like these fines are simply a cost of doing business. The ill-gotten profits and bonuses run far in excess of what was paid.
SEC staffers may have been too busy watching porn to prosecute anyone. Or maybe regulators are worried about damaging their prospects for a great paying job on Wall Street. The most competent people responsible for regulating the banks wind up working for them instead. And many of those who remain would like to do so as well.
While they are substantial to the 3,500 poor souls who are impacted, the losses at Northwest Territorial don’t amount to much in comparison to these larger swindles. Investors should pray politicians and government bureaucrats don’t try to “help.”
Do an internet search for Better Business Bureau reviews on the company and look for a pattern of problems, particularly slow deliveries. There must be a reasonable explanation for delivery delays, and they should not be persistent and across all products. WARNING: a company that constantly struggles with making prompt delivery may be undercapitalized or outright insolvent.
Mounting issues were apparent at both Tulving and Northwest Territorial Mint going back months or even years. So when purchasing precious metals from any dealer, get a commitment upfront regarding when your order will be delivered – and pay close attention to whether that commitment is kept.
Businesses can and do fail, but it rarely happens suddenly and without warning. They generally start missing commitments first.
Remember that getting a good deal is nice, but getting delivery of what you paid for is far nicer. Choose your bullion dealer carefully, and you’re unlikely to get a raw deal.
The news unfortunately just keeps getting worse for customers and creditors of Northwest Territorial Mint. The prominent bullion dealer located near Seattle, Washington filed for bankruptcy court protection at the end of March. The losses of customers who never received delivery of orders plus the losses of other creditors could be as high as $50 million, according to news reports.
The U.S. Trustee in charge, Mark Calvert, recently estimated the firm has $56 million in liabilities and only $6.4 million in assets. He figures the recovery for unsecured creditors will be less than 10%.
Northwest Territorial’s former owner, Ross Hansen, seems to be blaming the bankruptcy on a defamation lawsuit that he and his firm recently lost.
The libel damages stem from a website Hansen created apparently to wage a campaign comparing a former landlord to infamous Ponzi scheme operator Bernie Madoff. He and the former landlord apparently had some disagreements.
Ironically, it appears Hansen is the one who may have something in common with Madoff. At a creditor’s meeting last week, trustee Calvert said, “Based on our analysis to date, the bullion sale of operations have attributes of a Ponzi scheme.”
The libel judgment may have been the final straw, but it wasn’t the only problem. Customers who ordered from this mint often experienced extraordinarily long delivery delays – 8 to 10 weeks, and even as long as 6 months.
Calvert believes the funds received for new orders were used to buy metal needed to deliver orders placed long before. If that’s the case, the mint was effectively borrowing money from its hapless customers to finance its business. And this practice may have been going on for as long as a decade. Yet, remarkably, customers continued to do business with the mint even as most other precious metals dealers across America make immediate delivery.
The bankruptcy, the potential fraud now under investigation, and the millions in likely losses represent another black eye for the industry. It comes on the heels of other high profile failures including a “low-price” dealer known as Tulving Company and Bullion Direct.
Regulation Won’t Help: There Is NO SUBSTITUTE for Doing YOUR OWN Due Diligence
No one should be surprised if bureaucrats in state and federal government take up the issue and “ride to the rescue” with new regulations claiming to protect customers.The problem is that do-gooder politicians have a miserable track record when it comes to defending consumers generally – and metals investors in particular. In the Northwest Territorial Mint case, theWashington State Attorney General’s Office had received hundreds of complaints, but didn’t take any actions which prevented the blowup. History shows that regulations will definitely increase costs to customers and probably not have any positive effect on reducing corruption.
The Northwest Territorial Mint debacle may cost people $50 million. The only thing worse would be to bring in the regulators to inflict further harm on all dealers and all customers nationwide.
The CFTC spent 5 years investigating the bullion banks for price rigging the silver futures market. Ultimately they declared there was “no viable basis to bring an enforcement action.” That’s embarrassing, given that Deutsche Bank just admitted to price rigging in the gold markets during the period when the CFTC was investigating. In mid April, they agreed to pay a settlement and provide evidence to assist plaintiffs in their suit against the remaining banks.
But the CFTC isn’t the only bureaucracy to fail in protecting investors. The Federal Reserve, which has been charged with regulating banks despite being privately owned by the largest among them, and the SEC complete a triumvirate of incompetence.
Banks have paid more the $200 billion in fines and penalties associated with fraud, rigging markets, and cheating customers since the 2007 financial crisis. Not a single high-ranking executive at any major bank has been prosecuted or sent to prison. It looks like these fines are simply a cost of doing business. The ill-gotten profits and bonuses run far in excess of what was paid.
SEC staffers may have been too busy watching porn to prosecute anyone. Or maybe regulators are worried about damaging their prospects for a great paying job on Wall Street. The most competent people responsible for regulating the banks wind up working for them instead. And many of those who remain would like to do so as well.
While they are substantial to the 3,500 poor souls who are impacted, the losses at Northwest Territorial don’t amount to much in comparison to these larger swindles. Investors should pray politicians and government bureaucrats don’t try to “help.”
Getting Actual, Prompt Delivery of Your Metals Is More Important Than Getting the Lowest Price
Bullion buyers are going to have to help themselves. Customers following a couple simple steps could have avoided most of the losses in recent dealer bankruptcies.Do an internet search for Better Business Bureau reviews on the company and look for a pattern of problems, particularly slow deliveries. There must be a reasonable explanation for delivery delays, and they should not be persistent and across all products. WARNING: a company that constantly struggles with making prompt delivery may be undercapitalized or outright insolvent.
Mounting issues were apparent at both Tulving and Northwest Territorial Mint going back months or even years. So when purchasing precious metals from any dealer, get a commitment upfront regarding when your order will be delivered – and pay close attention to whether that commitment is kept.
Businesses can and do fail, but it rarely happens suddenly and without warning. They generally start missing commitments first.
Remember that getting a good deal is nice, but getting delivery of what you paid for is far nicer. Choose your bullion dealer carefully, and you’re unlikely to get a raw deal.
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