Friday, February 24, 2012

Energy independence, or impending oil shocks?

Gasoline is back over $4 a gallon here in California and U.S. crude is holding firm over $100 a barrel, even though domestic demand is off more than 8 percent from the 2005 peak on an annual basis, and a whopping 16 percent on a monthly peak-to-trough basis. And that can only mean one thing: We’re entering the silly season in oil punditry.
A deluge of recent articles have asserted that the U.S. is on its way to energy independence thanks to the miracle of shale oil, or “tight oil.” (Shale oil is actual crude oil produced from tight shale formations like the Bakken. Tight oil is a broader term including shale oil and natural gas liquids produced from shale gas plays. Horizontal drilling and “fracking” are used in both kinds of shale production.) None of them, however, have demonstrated how we would get there.
An amateurish report from Citigroup last week entitled “Resurging North American Oil Production and the Death of the Peak Oil Hypothesis,” garnered the most attention, perhaps because it claimed that the U.S. could achieve energy independence this decade. Here’s what they called their “back-of-the-envelope” calculation:
U.S. crude and product imports are now about 11 million barrels a day, with about 3 million barrels a day of product exports. This leaves import reliance at 8 million barrels a day. If shale oil grows by 2 million barrels a day, which we think is conservative, and California adds its 1 million barrels a day to the Gulf of Mexico’s 2 million barrels a day, we reduce import reliance to 3 million barrels a day. Canadian production is expected to rise by 1.6 million barrels a day by 2020, and much of this will effectively be stranded in North America, and there is the potential to cut demand both through conservation and a shift in transportation demand to natural gas by at least 1 million barrels a day and by some calculations by 2 million barrels a day.
Naturally, most of the subsequent coverage of the report just repeated and amplified these extremely dubious claims under headlines blaring the dawn of our new energy independence, but a few energy journalists offered more balanced and skeptical views, notably Steve LeVine in Foreign Policy, Brad Plumer in the Washington Post, and James Herron in the Wall Street Journal.
But as ever, the task of digging up the hard data and examining these claims closely fell to yours truly.

The tight oil treadmill

The poster child for the tight oil ‘miracle’ is the Bakken play centered in North Dakota. Its production has gone from almost nothing a few years ago to over half a million barrels per day. We’re getting another 0.66 mbpd from the Eagle Ford Shale according to the Texas Railroad Commission, the state’s official oil-reporting agency. But that’s where the data trail runs dry. As I have reported previously, data from state agencies outside Texas is spotty at best, and the EIA does not offer detailed production data for tight oil at all. The EIA estimates overall U.S. tight oil production in 2011 at 0.54 mbpd, but I have seen other estimates (without the data to prove it) as high as 0.9 mbpd.
When the data runs dry, my go-to guy is French petroleum engineer Jean Laherrère, who maintains a detailed database from both public and private sources. He offered this chart of Bakken production in North Dakota:

It tells the real story of tight oil production beautifully. Each well produces a mere 150 barrels or so per day on average, and like shale gas wells, their output declines rapidly after initial production. As LeVine learned from a Bakken executive, the decline rate can be over 90 percent in the first year, then gradually tapers off. After seven or eight years, wells will have produced over 60 percent of their recoverable reserves. Therefore, you have to keep drilling like hell just to maintain production, and drill even more to increase it. Per LeVine’s source, “if the rate of drilling stays constant for a long time, the growth rate of field production will decrease, then plateau, then begin to drop.” But at around $7 million per well, these wells are not cheap.
As Laherrère’s chart shows, it takes about 1,200 wells to increase production by 150 thousand barrels a day on the Bakken tight oil treadmill. Compare that to the deepwater Gulf of Mexico, where a single gusher can produce 250 thousand barrels per day. By this metric it would take another 16,000 Bakken wells to achieve Citigroup’s projection of an additional 2 mbpd from shale oil, or five times the existing 3,200 Bakken wells.
Initial production rates from the next-biggest shale oil producer, the Eagle Ford play, appear to be substantially higher at around 350 barrels per day (including both oil and gas) over the first month, but then they decline to less than 100 barrels per day over the first year. The costs in the Eagle Ford are also substantially higher: as much as $10 million per well. Fracking the Eagle Ford is also challenged by the enormous requirements for water, an increasingly scarce resource in drought-ravaged Texas.

Elm Coulee: A cautionary tale

To see what happens to a shale oil play over time, we can look at one of the older portions of the Bakken. The Elm Coulee field in Montana, one of the Bakken “sweet spots” and the first commercially successful Bakken field in the entire Williston Basin, was discovered in 2000 and quickly ramped up to become the highest-producing onshore field in the Lower 48 by 2006. But after about five years of drilling, it was pretty well tapped out and the rigs moved on. It gave Montana a quick bump, then production fell off rapidly. Laherrère finds that Montana production is now falling by 1 percent per month.

The Saskatchewan portion of the Bakken likewise peaked in 2008. And although the North Dakota portion of the Bakken is far larger, it will eventually follow suit. A ten-fold increase in rigs since 2001 made North Dakota the envy of the country, but that can’t go on forever.
It takes an enormous leap of faith to see shale oil production rising another 2 mbpd from here, along with several leaps of logic, which the Citigroup report had in abundance. The EIA projects that all onshore tight oil production will only rise a little, to a total 1.3 mbpd by 2030, or about one-third the growth that Citigroup forecasts by 2020.

The narrow ledge of tight oil

In short, increasing our already-frenetic rate of drilling for tight oil requires sustained high oil prices. At today’s $105 a barrel for West Texas Intermediate, that’s no problem. But if prices were to fall to $70 a barrel, LeVine’s source says, drilling in the Bakken would become unprofitable and would cease, causing production to fall rapidly.
At the same time, the last few years have shown us that $100 oil translates to roughly $4 gasoline, and that’s the pain tolerance limit for most of America. Gasoline demand in the U.S. tends to fall off beyond $4, as does economic activity in general.
This is what analyst Steven Kopits of Douglas-Westwood call the “narrow ledge” of oil prices, as I detailed in 2009. Given the extremely volatile global marketplace for oil, influenced by everything from geopolitical aggression, to climate change, to the headline risk of Greece defaulting and being forced out of the Eurozone, it will be very difficult for the oil industry to cling to that ledge for a sustained decade or more as the Citi analysts breezily project. They simply wave away cost inflation, and don’t acknowledge a price ceiling at all.
The narrow ledge isn’t a problem for the surging developing economies of the world, however. China alone has replaced all of the oil demand lost in the U.S., and more, and it’s still growing fast with an 8.2 percent growth rate projected for this year by the IMF.

Want your blankey?

This point was highlighted in a fascinating debate last week, which I highly encourage you to watch, between former Shell Oil president John Hofmeister and Tad Patzek, professor and chairman of the Department of Petroleum and Geosystems Engineering at the University of Texas at Austin. China, Hofmeister noted, is “on a journey, ladies and gentlemen, to go from 9 mbpd consumption today—a year ago it was 8, now it’s 9—to 15 mbpd by 2015. India from 4 to 7 mbpd in the same time frame. There’s not enough oil out there to meet that demand.”
These nations use oil far more efficiently than we do, and derive far more economic value from it. As I like to say, picture three guys and a chicken burning one gallon of gas on a scooter to go to the market each day in India, versus a soccer mom in the American suburbs burning three gallons a day to run errands without generating any economic gain. Asia can outbid the West for the declining available net exports for a long, long time, and that demand will continue to pull prices above our pain threshold.
Hofmeister waxed apoplectic in frustration over U.S. policymakers’ failure, for four decades straight, to do something about our oil dependency. “We are in an oil shock, and we are facing impending shortages,” he warned, and went on to recall what those shortages were like here in 1973-4. His solution? To create a federal board that would assume control of the nation’s energy strategy—a proposal that seems not altogether crazy to me, but also not likely to succeed in America’s dysfunctional politics—and command greater domestic production of oil and gas in the short term, while plotting a transition to renewables.
Patzek’s prescription was far more pragmatic, and aligns closely with my own: “Don’t wait on government programs; don’t wait on people to tell you what to do; start to insulate yourself from these shocks.” As I wrote last month, the revolution will be bottom-up. “Try to think about simple things, simple steps that you can do…to insulate yourself as much as you can from the upcoming shocks. They’re coming! So take it for granted, so no matter what Daniel Yergin and others will tell you.”
Patzek acknowledges that this message is a tough sell in America. Forecasts like Citigroup’s aren’t based in reality, but in politics. As another perspicacious friend of mine, who has been looking at such rosy forecasts for decades, remarked to me this week, “the masses (and the cheerleaders) love this story because it is one of Abundance and Manifest Destiny in this Exceptional Country of ours.” We like supply-side solutions. We don’t like anybody telling us that we need to cut our consumption.
Patzek muses: “If I think about the United States, this great, magnificent country of ours, I think about a grown-up baby, who now is very large, and on a cold night wants to cover herself with a baby blankey. And no matter what she tries, there is always a part of her body that is uncovered and exposed to the cold weather. That’s where we are.”
That’s what the Citigroup report was: a blankey. It was obfuscation by oblation, the offering of a cargo cult that desperately wants to bring back the good ol’ days of US production. They discussed the decline rate of mature fields—about 3.7 mbpd of lost production each year—at some length, then failed to do the simple addition to balance that against their production outlook, instead wandering off into a long musing about capital efficiency. Several of their charts were clearly wrong, like the production levels of the Bakken and Eagle Ford shown in Figure 2, and 80,000 barrels per day per Bakken well in Figure 26 instead of 150. They plotted production separately from well or rig count, obscuring their intimate relationship. I could go on for several thousand words, but I’ll spare you.
If the Citigroup forecast were serious, it would have shown how many rigs, and where, it would take to generate another 2 mbpd from shale oil, and discussed a price scenario that would foster continued drilling for another eight years. Instead, they buried the reader in 18 pages of mostly irrelevant data about reserves and formation characteristics, and tossed off an optimistic production forecast based on little more than hand-waving, along with the obligatory jab about Thomas Malthus. It was an excellent piece of political posturing, but I wouldn’t give a plugged nickel for their forecast.
Now look at the chart I posted at the top. All the talk of incipient U.S. energy independence is based on a mere 15 percent production increase in 2011 over 2008, which required thousands of wells and great expense. Retaking our 1970 production peak of 9.6 mbpd with such expensive and low-output wells, as Citigroup suggests, is a fantasy. Production from the Canadian tar sands will probably grow a bit over the next decade, but doubling its production is unlikely. Let’s remember that tar sands production was projected to grow from 1 mbpd in 2006 to 2.8 mbpd in 2012, but actual production is currently just 1.6 mbpd; this is a direct consequence of the narrow ledge getting narrower. California’s Monterey Shale will not be exploited any time soon. Another 2 mbpd from the Gulf of Mexico would take a truly Herculean effort, at great expense, with the risk of a complete ban on drilling there if another blowout happened.
Meanwhile, the treadmill continues to speed up. As Patzek notes, incremental new oil production per rig in the U.S. was about 1,000 to 1,500 barrels per day in 2005. In 2011, it was one-tenth that, at 100 barrels. The story of energy independence is just that: a story. The data tells us that we are losing the race against depletion, oil shortages are in our near future, and we had better plan as individuals to confront the impending oil shocks.
Credit: Top chart from EIA, marked up by Chris Nelder
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Chart: 'America’s Per Capita Government Debt Worse Than Greece'

The office of Senator Jeff Sessions, ranking member on the Senate Budget Committee, sends along this chart, showing that 'America’s Per Capita Government Debt Worse Than Greece,' as well as Ireland, Italy, France, Portugal, and Spain:

Stop The Pillaging of America

An excerpt from Bob Chapman's weekly publication.

One of the things we learned in almost 30 years in the brokerage business is that self-regulation does not work. The players are simply too abusive, greedy and prove to take the regulations to the very edge. We saw that at MF global. All markets are rigged today. Twenty-five years ago perhaps 80% were rigged. The SEC and CFTC are well aware of this and in many cases aid and abet in the crimes. The crimes are too many to mention, but among the leading problems are complicity in front running and naked shorting. There is no such thing as an efficient market hypothesis. Just another phase to led you off into the forest.

A small group of big hitters control Wall Street, the Federal Reserve, our government and our economy. Just ask members of the Council on Foreign Relations, the Trilateral Commission or the Bilderberg Group. They know what is going on because they help make policy, and arrange to get it executed. Wall Street is one long litany of fraud, where the guilty seldom go to jail and the tables are squared via fines, usually paid by the firms and not the individuals. While the SEC and CFTC investigations go nowhere, or don’t happen at all, they relish charging small and medium sized brokerage houses to justify their existence. That is when they are not pursuing some newsletter writer, all of whom cannot afford top legal help, or any legal help at all. The whole game is crooked and has been for many years. It is government and its agencies and Wall Street and baking that controls your entire lives. Their power is immense and that is how they get away with what they get away with.

The same is true with Congress 90% of which are bought and paid for via campaign contributions and other artifices such as insider trading. That is why we have free trade and globalization, offshoring and outsourcing. Congress and those running for the office and president don’t even talk about it, yet, in 12 years it has cost 12 million jobs and 450,000 businesses. Obviously that is not a serious matter for Congress. Or should we say those who pay Congress, transnational conglomerates, want free trade just as it is. Our nation could not compete with slave labor countries in 1795 and they cannot compete now. There has to be a leveling force, a balance that stops the pillaging of America, which destroys economic independence and eventually sovereignty. We are a step away from post industrial dependency and bankrupt as well. Congressional complicity stands out like a beacon, when these asset strippers do not have to pay taxes on foreign earnings. Who has ever heard of something so unreasonable? Instead of lowering corporate taxes as other nations had done we eliminated taxation, so transnational corporations could compete. This is what we call modern colonialism.

After the debacles of the 1790s and British colonialism, the US switched to a tariff system, which worked quite well until about 25 years ago. Then came WTO, NAFTA and CAFTA, the result of which you are witnessing today. The system of tariffs allowed government to fund itself via exercise taxes funded by foreign corporations, which kept Americans from having to pay income taxes for about 100 years. Tariffs are part of what made America great and we cannot be great again without tariffs, it is as simple as that. You cannot have prosperity giving away 12 million jobs in 12 years. As we have seen you cannot have persistent and growing trade deficits year after year and not go broke. Here we are 217 years later doing the same stupid thing over again. The main reason for this is that the public is not paying attention and Congress does whatever their paymasters tell them to do.

The debt position of the US deteriorates each day and with it not only the dollar, the world’s reserve currency, deteriorates versus other currencies and gold and silver. Having the dollar as the world’s reserve currency gives many benefits to Americans and if that advantage is lost so is what is left of American prosperity. Are we to follow in the footsteps of Greece? It is wrong to say that tariffs cause depressions. They were increased six times over the past 200 years and no depression followed. If we do not get tariffs America cannot survive as a world leader.

If a written document exists outlining the deliberate default of Greece and has been in the possession of two Wall Street banks for a month then the fall of Greece has been in the works for some time. The date of March 23rd was supposedly the date for default. The rating agencies are supposed to be the trigger for the default. The 23rd is a Friday and on Saturday Greek bank accounts are to be frozen. If that is true all Greeks should have their euros and any other currencies and valuables out of all Greek banks.

Several months ago we stated that we did not know what was really going on behind the scenes in Germany. Our question was did they really want to save Greece and perhaps the euro, or were they interested as the majority of Germans are, in dumping the euro and the EU? Over the past week commentaries were all over the place, many of them off the wall. We have seen delays for 2-1/2 years, but nothing like we have seen over the past month. It is like most non-Greeks had monkey wrenches to throw into the gears of progress. The US says they do not want to get any deeper into Europe’s problems, as the IMF offers a pittance. The Germans and Schäuble these past 2 weeks had nothing but negative comments and commands trying to keep moving the goal posts, so to cast confusion among Greek negotiators. We are told on Saturday that on Thursday a deal was cut. Mrs. Merkel wants to replace the Greek government with a EU commissioner. In German it is called Gauleiter. We guess they want to have Greece as a subsidiary of Germany.

#7 ISSUE NWO Puppet Masters VS. Military PATRIOTS = Revolution: Part 1 of 2

NWO Puppet Masters VS. Military PATRIOTS = Revolution: Part 2

Bob Chapman - Erskine Overnight - 18 Feb 2012

Interview 463 – The International Forecaster with Bob Chapman

Bob Chapman - Liberty Round Table - 20 Feb 2012

Bob Chapman - WideAwakeNews RADIO - Feb. 20, 2012

Bob Chapman - 3rd Hour Radio Liberty - 20 Feb 2012

Bob Chapman - USAprepares Radio Show - Feb. 21, 2012

Last week the Dow rose 1.2%, S&P rose 1.4%, the Russell 2000 gained 1.9% and the Nasdaq 100 rose 1.4%. Cyclicals rose 1.2%; transports fell 0.3%; consumers rose 1.6%; banks 2.4%; broker/dealers 2.6%; high tech 1.9%; semis 2.8%; Internets 1.0% and biotechs were unchanged. Gold bullion was unchanged, as the HUI fell 0.6% and the USDX gained 0.3%.

We have not seen a conclusion to the Greek debt crisis and it and Europe are an unmitigated disaster. Europe is on the tail end of a post credit boom. The LTRO-ECB-FED new bailout could buy 1 to 2 years. Then they will need another $1.6 trillion.

Two-year T-bills rose 2 bps to 0.29%, the 10-year T-note rose 1 bps to 2.00% and the 10-year German bund rose 2 bps to 1.92%.

Fed credit expanded $4.6 billion to $2.918 trillion – year-on-year that is up 17.1%. Fed foreign holdings of Treasury, Agency debt surged $26.2 billion to $3.447 trillion. Custody holdings were up $63.5 billion, yoy, or 1.9%.

Global central bank international reserve assets rose $958 billion yoy, or 10.3% to $10.250 trillion. Growth over two years has been 31%.

M2, narrow, money supply fell $7.4 billion to $9.772 trillion. That is up 10% yoy.

Total money fund assets rose $3 billion to $2.659 trillion.

Total commercial paper out declined $10.8 billion to $962 billion. That is down $79 billion yoy, or 7.6%.

            Four men arrested last month for allegedly participating in a “criminal club” that made almost $62 million using illegal tips to trade in Dell Inc. stock pleaded not guilty.

            Level Global Investors LP co-founder Anthony Chiasson; Todd Newman, a portfolio manager formerly at Diamondback Capital Management LLC; Jon Horvath, an analyst at hedge fund Sigma Capital Management LLC; and Danny Kuo, a fund manager for Whittier Trust Co., entered not guilty pleas to conspiracy and securities fraud charges yesterday in Manhattan federal court.

            Prosecutors from the office of Manhattan U.S. Attorney Preet Bharara said the ring, which allegedly involved five hedge funds and investment firms, is the largest identified by the U.S. to date tied to a single stock. One trade earned a $53 million illegal windfall for Chiasson and Level Global, prosecutors allege.

            All four men are charged with one count of conspiracy to commit securities fraud. Newman is charged with three counts of securities fraud and Chiasson with four counts of securities fraud. Horvath and Kuo are additionally charged with one count of securities fraud. All four were arrested Jan. 18. They entered their pleas in a hearing before U.S. District Judge Richard Sullivan.

            Prosecutors have recordings of conversations between Chiasson and John Kinnucan, founder of an expert networking firm whose mobile phone was wiretapped by federal investigators, Assistant U.S. Attorney Antonia Apps told the judge.

            “Mr. Chiasson fired me after only three months, much to my surprise at the time, but after seeing the kind of information he was evidently getting elsewhere, now I understand why he didn’t have any need for the types of channel checks I could provide,” Kinnucan said in an e-mail yesterday.

            Kinnucan said he’s “highly confident Mr. Chiasson will not be convicted of any insider trading charges based on any of our conversations, since everything we talked about was industry- standard research, as practiced by all the investment banks, large and small, and which practices have been blessed by the SEC for many years now,” a reference to the U.S. Securities and Exchange Commission.

            Prosecutors also have recordings of Newman, Horvath and Kuo speaking with cooperating witnesses, Apps said. She didn’t name the witnesses.

            Three other men charged in the scheme pleaded guilty and are cooperating with the U.S. -- Jesse Tortora, formerly of Diamondback; Spyridon “Sam” Adondakis, a Level Global analyst; and Sandeep Goyal, a former employee at Round Rock, Texas-based Dell, the third-largest maker of personal computers.

            Sullivan scheduled a hearing in the case for April 13. He didn’t set a trial date.

The case is U.S. v. Newman, 12-cr-121, U.S. District Court, Southern District of New York (Manhattan).

            Ex-Citigroup Executive Denies Wrongdoing in Tibor-Fixing Case

A former Citigroup Inc. executive accused by Japanese regulators in a probe of suspected interest-rate manipulation denied wrongdoing and said authorities never questioned him before they issued findings.

            Christopher Cecere, who worked for Citigroup in Tokyo as head of G10 trading and sales for Asia until 2010, was identified as “Director A” in a Dec. 16 administrative case by Japan’s Financial Services Agency, according to two people with knowledge of the inquiry. The agency said Director A and another Citigroup trader engaged in “seriously unjust and malicious” conduct by asking bankers to alter data they submitted in the process of setting a benchmark Japanese lending rate. Japan’s FSA penalized the firm and took no action against the employees.

            During Citigroup’s internal investigation, the New York- based bank didn’t question Cecere about his conduct or indicate to him that it suspected he had acted improperly, he said in a Feb. 10 phone interview. Regulators also didn’t seek his version of events, he said. He left the firm in good standing, he said. He later joined Brevan Howard Asset Management LLP, a London- based hedge fund that manages about $33 billion.

            Japan’s regulators were the first to announce findings as authorities in Asia, Europe and the U.S. conduct widening inquiries into whether employees at some of the world’s biggest banks sought to manipulate the London, Tokyo and euro interbank offered rates, known as Libor, Tibor and Euribor, respectively. The rates were used by investors to gauge the ability of firms to borrow money at the height of the 2008 credit crisis and can play a key role in derivatives trades.

            While Cecere asserted his innocence, he declined to comment on the FSA’s description of events, including whether he pressed someone to change rates for Tibor, saying he has no insight into the watchdog’s investigation or findings.

            Citigroup was forced to write off $50 million as it exited trades made by Tokyo-based employees, a person familiar with the matter said last week. Thomas Hayes, a Tokyo-based trader for Citigroup, was dismissed last year for suspected involvement in the rate manipulation, according to two people familiar with the case. Contact information for Hayes couldn’t be found.

            Cecere said the holdings that Citigroup recorded losses on were one of many businesses that reported to him in his role overseeing sales and trading units in Asia.

Mika Nemoto, a Tokyo-based spokeswoman for Citigroup, declined to comment on Cecere’s remarks.

            Once again, the Securities and Exchange Commission has embarrassed itself. Last week it let off the hook two hotshot former Wall Street hedge-fund managers who lost a bundle for the investors trusting them to manage their money responsibly.

Instead of going to court on Feb. 13 and laying bare the sordid facts for a jury, at the last minute the SEC settled a civil suit against Ralph Cioffi and Matthew Tannin of the now defunct Bear Stearns Cos. These were the hedge-fund managers who five years ago loaded up their two funds with billions of dollars of lousy mortgage-backed securities and collateralized- debt obligations, leveraged them to the hilt and, when the market for the securities soured in July 2007, liquidated the funds.

            According to the SEC’s 2008 civil complaint against the men, the collapse of the funds cost investors at least $1.6 billion. These problems were among the very first indications that serious trouble was looming in the housing market and securities tied to it. The liquidation of the two funds led to the effective bankruptcy of Bear Stearns itself in March 2008 and the subsequent financial crisis that nearly wiped Wall Street off the face of the earth.

            But the price the SEC extracted from Cioffi and Tannin as part of a settlement -- after previously telling the court it intended to go to trial -- was a mere pittance, “chump change,” according to the federal judge in Brooklyn overseeing the case. Cioffi, who made $22 million in 2005 and 2006 at Bear Stearns, will pay just $800,000 and agree to a three-year ban from the securities industry. Tannin, who was paid $4.4 million in his last two years at Bear, will pay $250,000 and agree to a two-year ban. Neither has to admit to wrongdoing. The agreement will deter absolutely no one from trying to pull off a similar stunt.

            In combination with their November 2009 jury acquittal on criminal charges in federal court, the SEC civil settlement provides a major victory for the defendants’ attorneys, Hughes Hubbard & Reed LLP (for Cioffi) and Brune & Richard LLP (for Tannin). The American public, on the other hand, is left with the trillion-dollar bill for Wall Street’s financial crisis caused by the Wall Street bankers and traders who walked off with billions in bonuses.

            This outcome is beyond outrageous. In its complaint, the SEC flat-out stated that Cioffi and Tannin mislead their investors: “Particularly during the first five months of 2007, as the funds suffered increasing losses to the value of their portfolios and faced growing margin calls and redemptions… senior portfolio manager Cioffi and portfolio manager Tannin deceived their own investors, as well as the funds’ institutional counterparties, by fraudulently concealing from them the full extent of the funds’ deepening troubles.”

            One of the ways Cioffi and Tannin did this was by displaying, graphically, on the monthly account statements the percentage of the funds invested in subprime mortgages. For instance, according to an investor’s statement from March 2007, the amount of the funds invested in subprime mortgages was stated clearly as 6 percent. But when the funds blew up, Bear Stearns created internal “talking points” memos for how to deal with investor complaints. A memo from June 2007 pointed out that one of the questions deemed likely to be asked was: “I thought the fund was diversified, and now it turns out it seems to have had a fair amount of exposure to the subprime mortgage market. What exactly was the exposure?” The answer: “60 percent.”

            In other words, Cioffi and Tannin told their investors the funds were diversified -- and raised billions of dollars based on that representation -- but in reality they were highly concentrated in subprime mortgages. And now, thanks to the SEC’s settlement, the two men may never even be held remotely accountable.

            Even Frederick Block, the judge who was to preside at the trial but instead has been asked to bless the settlement, openly questioned whether the terms fit the crime. He not only called the monetary settlement “chump change,” but also said the SEC’s injunctive provision was “silly” and asked, “Am I just a rubber stamp here or is there some inquiry I ought to be making about these provisions?”

            In this, he was echoing the well-known views of the outspoken federal Judge Jed Rakoff, who last year rejected an agreement between the SEC and Citigroup Inc. (C) where the give-up by the bank was relatively small -- $285 million -- and the firm was allowed to settle without denying or admitting guilt. In the Cioffi-Tannin case, the penalty is even smaller and the investors’ loss greater. Go figure.

            John Worland, the SEC’s attorney, defended the agency by saying that it has no ability to sue for damages, only for the disgorgement of ill-gotten gains. While technically correct, it’s not the whole story: The SEC certainly figured out a way to penalize Goldman Sachs Group Inc. (GS) to the tune of $550 million in the so-called Abacus case in 2010, when the firm actually lost some $90 million on the deal.

Then Worland delivered this stunner: “Neither Mr. Cioffi or Mr. Tannin got rich.” You know how far things have gone downhill when a lawyer for the SEC, making a bureaucrat’s salary -- God bless him -- can’t seem to see that two hedge fund managers are in fact quite rich and got that way in the course of losing their investors a fortune.

            We are all worse off for the SEC’s continued lax enforcement of wrongdoing on Wall Street. If it won’t protect us from charlatans, who will? Judge Block, please deny the proposed pathetic settlement and send the parties back to the negotiating table or, even better, your courtroom.

(William D. Cohan, a former investment banker and the author of “Money and Power: How Goldman Sachs Came to Rule the World,” is a Bloomberg View columnist. Read his previous column on Wall Street arbitration online. The opinions expressed are his own.)

             Prompted by a delay in a big trade at a popular ETF, the U.S. Securities and Exchange Commission is taking a closer look at a possible connection between high-frequency traders and hedge funds jumping in and out of ETFs, and instances where ETF trades fail to settle on time, this person said.

            The SEC's inquiry is part of a wider probe that began last year and focused on complex ETFs that allow investors to magnify returns or bet against stock indexes.

             U.S. and UK regulators are concerned that so-called settlement fails - when trades are not completed on time - could contribute to volatility and systemic risk in financial markets. The probe's main focus is on illiquid ETFs, but regulators are now also examining popular ETFs and failed trades, according to the person.

Projected PIIGS Pillage: 3233.5 Tons Of Gold To Be Confiscated By Insolvent European Banks

While hardly discussed broadly in the mainstream media, the top news of the past 24 hours without doubt is that in addition to losing its fiscal sovereignty, and numerous other things, the Greek population is about to lose its gold in a perfectly legitimate fashion, following amendments to the country's constitution by unelected banker technocrats, who will make it legal for Greek creditors - read insolvent European banks - to plunder the Greek gold which at last check amounts to 111.6 tonnes according to the WGC. And so we come full circle to what the ultimate goal of banker intervention in the European periphery is - nothing short of full gold confiscation. So just how much gold will be pillaged by the banker oligarchy (it is amusing how many websites believe said gold is sacrosanct by regional national banks, and thus the EUR is such a stronger currency as it has all this 'gold backing' - hint: it doesn't, as all the gold is about to be transferred to non-extradition countries)? As the World Gold Council shows in its latest update, between all the PIIGS, who will with 100% certainty suffer the same fate as Greece (which has shown that unlike during World War 2, it is perfectly willing to turn over and do nothing) there is 3234 tonnes of gold to be plundered. And likely more as further constitutional amendments will likely make the confiscation of private gold the next big step. how much does this amount to? At today's prices this is just shy of $185 billion. Of course by the time the market grasps what is going on the spot price of the yellow metal will be far, far higher. Or, potentially far, far lower and totally fixed as the open gold market is eventually done away with entirely in a reversion to FDR gold confiscation and price fixing days.
The chart below shows total gold holdings for the top 40 countries. Little Ireland is off the chart with just 6 tonnes of gold.

Greece: The Epicenter of Global Pillage

by Stephen Lendman

Predatory bankers make serial killers look good by comparison. Their business model creates crises to facilitate grand theft, financial terrorism, and debt entrapment.

They steal all material wealth and then some. They systematically rob investors and strip mine economies for self-enrichment.

They demand they get paid first. They hold nations hostage to assure it. They turn crises into catastrophes.
They leave mass impoverishment, high unemployment, neo-serfdom, and human wreckage in their wake.
Their Federal Reserve/ECB/IMF/World Bank/political class lackeys do their bidding.

They’re more dangerous than standing armies. They wage war by other means. They cause “demographic shrinkage, shortened life spans, emigration and capital flight,” explains Michael Hudson.

They’re a malignancy ravaging societies and humanity. Greece is the epicenter of what’s metastasizing globally. The latest bailout deal highlights out-of-control pillage.

On February 20, New York Times writer Stephen Castle headlined, “Europe Agrees on New Bailout to Help Greece Avoid Default,” saying:

On Tuesday morning, Luxembourg president/Euro Group head Jean-Claude Juncker announced:
“We have reached a far-reaching agreement on Greece’s new program and private-sector involvement. The new program provides a comprehensive blueprint for putting the public finances and the economy of Greece back on a sustainable footing.”

In fact, it assures human misery and economic destruction, not restoration. It’s a deal only bankers can love. It demands Greece reduce its debt from 160% to about 120% of GDP by 2020, but how incurring more debt achieves it wasn’t explained.

It also demands sacking 150,000 public workers by 2015, slashing private sector wages 20%, lowering monthly minimum wages from 750 to 600 euros, cutting unemployment benefits from 460 to 360 euros, and reducing pensions 15% en route to eliminating them altogether.

Media reports said bondholders agreed to a 53.5% face value haircut – the equivalent of losing 75% overall. In fact, only 30% of toxic assets are involved. Most held aren’t touched. Greece must make good on them, no matter the impossible burden.

Private lenders will swap current holdings for new lower face value/lower interest rate bonds. Representing bondholders, Institute of International Finance’s Charles Dallara and BNP Pariba’s Jean Lemierre called the deal “solid….for investors, a fair deal for all parties involved.”

In other words, raping Greece for bankers is “solid” and “fair.” Its citizens had no say. Without rights, what’s best for them wasn’t discussed.

They’re left with huge wage and benefit cuts combined with mass layoffs. Greece faces less tax revenue to cover domestic priorities. In late 2011 alone, its economy shrank 7%. January revenues fell 7% year-over-year. Value-added tax receipts decreased 18.7% from last year. Death spiral financial deterioration continues monthly.

Moreover, the nation’s $650 billion debt burden is double the reported amount. The more it increases, the harder it is to service and repay, the more future aid’s needed, and deeper the country’s economic catastrophe heads for total collapse.

The deal escrows $170 billion to assure bankers get paid. Investment advisor Patrick Young got it right telling Russia Today that dealmakers don’t trust Greece living up to terms because its track record is so bad.
“So we now have a situation,” said Young, “where Greece said we’ll do anything you want, but the problem is” too great a burden to bear. “It’s a catastrophe pushing people to the brink of starvation.”

No matter. Finance ministers will give Greece some money on dreadful terms “where like a nine year old child, every Friday it has to go to daddy, say it’s done its homework, say it’s been a good boy, can it please have next week’s pocket money to pay its civil servants. (It’s) a horrible loss of sovereignty.”
Troika power runs Greece – the IMF, ECB and EU. They’re predators saying pay up or else.
Reports say its government will change its constitution to prioritize repaying debt ahead of vital domestic obligations.

Other terms involve lenders cutting interest rates on bailout loans by 0.5% over the next five years, and 1.5% thereafter. An estimated 1.4 billion euros would be saved by 2020.

The ECB will compensate by distributing profits on its 40 billion Greek debt holdings. In addition, Eurozone countries will contribute their Greek bond income through the end of the decade.

Still to be decided is EU/IMF burden sharing. Both agreed to contribute. Not discussed or considered is leaving 11 million Greeks on their own out of luck. They have three choices – starve, leave, or rebel.

The Rot Beneath the Surface

On February 21, Financial Times contributor Peter Spiegel headlined, “Greek debt nightmare laid bare,” saying:
“A ‘strictly confidential’ report on Greece’s debt projections prepared for eurozone finance ministers reveals Athens’ rescue programme is way off track and suggests the Greek government may need another bail-out” soon after the latest one.

Even under the most optimistic scenario, imposed austerity’s punishing Greece so severely, its burden’s impossible to bear.

Agreed on terms are “self-defeating.” Forced austerity elevates debt levels, weakens the economy, and prevents Greece “from ever returning to the financial markets by scaring off future private investors.”
As a result, continued financial infusions are needed. Double or more the agreed amount’s required. Current problems increase exponentially toward total collapse, default and bankruptcy.

The report explained Greece’s impossible burden. It also “paints a troubling outlook for the debt restructuring, expected to begin this week.” Bond swapping creates “a class of privileged investors who will chase off” others when Greece tries selling fixed income securities at market. Germany, the Netherlands and Finland opposed a deal doomed to fail.

The report warned “Greek authorities may not be able to deliver structural reforms and policy adjustments at the (envisioned) pace.” Perhaps never with shrinking revenues unable to cover liabilities.

It’s “now uncertain whether market access can be restored in the immediate post-programme years.” Left unsaid was restoring it’s impossible ever. Greece faces protracted deep depression. Its life force is ebbing. Only its obituary remains to be written.

A Final Comment
Greece’s debt deal provides a model for future European sovereign restructurings. It’s one of six or more troubled countries. Portugal looks like the next domino to fall, but Spain, Italy, Ireland, and others may follow.
Moreover, implementing Greece’s deal entails problems. Reality may prevent fulfilling promises. If April elections are held, new MPs may balk. Declaring a debt moratorium, defaulting and leaving the Eurozone are options.

Moreover, private lenders may object. Legal challenges may follow. A sweetheart banker deal may unravel. Pressuring China and Japan to help isn’t working. China Investment Corporation, the nation’s sovereign wealth fund, and Chinese central bankers aren’t willing to buy troubled European sovereign debt. According to one official, “(w)e aren’t stupid.”

How it all plays out isn’t known. Technocrats run Greece. They may cancel April elections and stay in power. Public sentiment remains the wild card. Impossible to bear pain may become uncontainable rage. More than buildings may burn.

If political Greece doesn’t care, people must act on their own. Revolutionary seeds are planted. They can erupt any time. Change only comes bottom up. It’s long past time to get started.


What Really Happened with Mike Rivero 21st Feb 2012

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Megauproar: 'ACTA targets & harms legal users'

Greece’s Lenders Have The Right To Seize National Gold Reserves

Gold’s London AM fix this morning was USD 1,776.50, EUR 1,334.41, and GBP 1,130.45 per ounce.
Yesterday's AM fix was USD 1,754.75, EUR 1,325.04, and GBP 1,116.32 per ounce.

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Cross Currency Table - (Bloomberg)

While many market participants would expect that Greece’s gold reserves would be on the table in the debt agreement, it is the somewhat covert and untransparent way that this is being done that is of concern to Greeks and to people who believe in the rule of law.

The Irish Times reported in November that EU finance ministers’ discussed a wider strategy by the ECB to sound out the possibility of gaining control over the gold reserves of the euro zone’s central banks.

Senior German politician, Gunther Krichbaum, a lawmaker in German Chancellor Angela Merkel’s governing coalition and Chairman of the Committee on the Affairs of the European Union of the German Bundestag has proposed late last year that Italy sell its sizeable gold reserves in order to lower its debt.

Gold’s importance as debt and third party, risk free collateral and as money is increasing by the day.

While Greece’s gold reserves are very small – Greece’s creditors and senior German and EU financial officials clearly understand the value and monetary and strategic importance of Greece and the other heavily indebted European nations gold reserves.

Silver is trading at $34.52/oz, €25.98/oz and £21.97/oz.

Platinum is trading at $1,729.00/oz, palladium at $711.00/oz and rhodium at $1,500/oz.
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Intel Exclusive: Trillion Dollar Terror Exposed


Intel Exclusive: Trillion Dollar Terror Exposed


Bush, Fed, Europe Banks in $15 Trillion Fraud, All Documented

By Gordon Duff, Senior Editor


Below is one of the strangest stories in financial history, one involving the US government lying about hundreds of thousands of tons of imaginary gold, illegal wire transfers and loans totalling $15 trillion.  The video, from the House of Lords, is amazing in itself. 
What it doesn’t express is where the money came from though Lord James of Blackheath proves conclusively that an effort was made to say it came from a gold reserve in Brunei that, in fact, never existed.

At surface, it appears we have stumbled upon the largest terrorist organization in the world and have found original documents tracing its funding to the Secretary of the Treasury and the Chairman of the Federal Reserve, two of the top financial officers in the US.  A cursory review of terrorism statues in the US indicate that all transactions we will learn about are, in fact, to be assumed “terrorist money laundering” and that the only thing preventing the immediate arrest of hundreds of top financial officials is their political connections alone.

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We will be able to offer an alternative, more insights, some hard intelligence and some very valuable background that we hope will offer insightful and realistic perspectives on this amazing story.

On February 16, 2012, Lord James of Blackheath, member of Britain’s House of Lords presented evidence of an illegal scheme begun, he has thus discovered, in 2009.  His documents including originals signed by Alan Greenspan and Timothy Geithner, show the illegal “off the books” transfer by the Federal Reserve Bank of New York of $15 trillion to, initially, HSBC (Hong Kong Shanghai Banking Corporation) London and then to the Bank of Scotland.

The Bank of Scotland, under royal charter but restricted from involvement in any such transactions, simply “gave” the money to 20 European banks to use in a highly profitable scheme of co-trading “fresh cut” MTN’s (mid-term notes), generating trillions of dollars in profits over 3 years, none of which is shown on books, none has been taxed or has benefitted shareholders in those banks.

As Blackheath outlines, the “deception and cover” for this transfer is the imaginary seizure of 750,000 tons of gold by agents of an unspoken entity (confirmed by the highest official sources as the Bush family and CIA), the listed “source” of the money.

The government of Indonesia confirms this to be an utter fabrication and that the individual named had 700 tons of gold (about half of what Gaddafi was holding), not 750,000.  It is noted that only 1,500 tons of gold have ever been traded in world history, as stated in the House of Lords.

The issues that are initially brought out, issues inconsistent with international convention and starting the reader on what is only the surface discovery of two decades of crimes involving dozens of governments are as follows:

        At no time has the Federal Reserve Bank of New York been authorized to hold the funds indicated
        However, documents held by Lord Blackheath prove, conclusively that they did hold such funds and transfer them in a manner as to obscure their origin by using HSBC and the Bank of Scotland.  This process, seemingly involving Alan Greenspan, Timothy Geithner and others would appear to be “money laundering” until some other explanation were found.  None has been offered.
        The “collateralization” of these funds, being 750,000 tons of gold, is proven to be fantasy.  These funds then, in no way or manner, are related to Brunei.  The presentation of this false transaction has been conclusively proven to be a “cover and deception” project such as an intelligence organization would use.
        The transfer of these funds, all done without any authorizations, governmental or otherwise, particularly without agreements, payment of interest to the United States and without knowledge and approval of congress makes every aspect of this criminal in nature, a violation of innumerable statues.
        The receipt and use of these funds by the 20 banks, two of which are Wall Street’s largest, and the use of these funds to generate profits while the funds themselves are held “off the books” and the profits hidden and laundered, themselves the earnings of funds received through criminal acts makes any and all involved part of a criminal enterprise.


There is no record of the Federal Reserve being authorized to “create” $15 trillion, equal to the entire national debt of the United States.  There is, however, proof that funds that totalled, at one time, $27 trillion had been earned surreptitiously, disposed of as part of an intelligence operation against the Soviet Union and then later stolen with accusations made against George H. W. Bush as being the perpetrator.

I have spoken with two individuals, one President Reagan’s intelligence coordinator and the other Chief Legal Cousel for the Central Intelligence Agency regarding these funds.  Both have indicated that former President Bush had asked that these funds, totalling $27 trillion, be transferred to his control, that threats were made by Bush and that many involved in this operation suffered, issues including murder, illegal arrest, torture and detention among them.

The individuals I am speaking of repreatedly met with President  Bush over these funds, disputed his claim to them, and indicate that the majority of the funds are the property of the people of the United States.

These funds are the mysterious “Wanta” funds, monies earned through years of currency trading aimed at collapsing the Soviet Union, a plan originated by President Ronald Reagan, then White House Intelligence Coordinator Lee Wanta and CIA Director William Casey.  I have been told that, while this operation went forward under President Reagan, he had ordered that his successor, George H. W. Bush not be “briefed” out of “mistrust” for Bush.

The funds themselves were earned through a scheme of trading Soviet roubles at enormous profit, a practice that eventually collapsed their government.  A portion of the profits are subject to current litigation in the Federal Court of the Eastern District of Virginia, Judge Lee presiding.  I have over 2,000 pages of documents on this case which shows a remainder of the original funds had been transferred to the Federal Reserve Bank of Richmond by the Bank of China, a party to the rouble trading practice, in 2006 and is claimed as totally owned by Ameritrust Corporation.  That amount was $4.5 trillion of which we hold the SWIFT transfer documents.

The other monies, which “likely” make up from the unspent portion of the missing $27 trillion, may well constitute all that is recoverable.

Wanta, sole shareholder in Ameritrust, has offered his companies share, valued by the court now at $7.2 trillion, entirely to the American people as intended by President Reagan.

The origin of the additional funds, issued by the Federal Reserve during the 80s and 90s, totalling nearly $8 trillion is unknown.   High ranking sources within the US government indicate that this can only be either the remainder of funds Wanta raised or profits made from them after the majority of funds were stolen.

Stories, some quite good actually, and personal interviews plus my own review of documents would place the theft or conversion of these funds initially with:

        The Bush family
        The “P2,” a Masonic lodge operating out of Switzerland involved in dozens of terror bombings tied to “Operation Gladio”
        People around Wanta himself including the CIA

What is lacking is a source for half of these funds.  Technically, they don’t exist as there is no record of them being originated by nor transferred to the Federal Reserve Bank of New York though there are clear and discernible records of them being transferred out of that institution which never possessed them, according to their 2010 audit, in the first place.


The transfer of Wanta funds, they can be assumed to have no other origin as they track into the Federal Reserve banking system while in escrow and are currently awaiting payment based on the orders of President Obama in accordance with findings of the federal court, is complicated by the Scottish transfer.

Either Wanta has claim to the entire amount or it is the property of the US government.  That no effort has been made to secure the funds or enforce criminal and civil remedies to recover enough money to pay the entire US national debt and more, as with earnings, we are nearing well over $30 trillion by this time, is an indication that a criminal conspiracy with enough influence to overrule our own government is involved.  Whether that “conspiracy is, as noted, the Bush family, rouge sections of the CIA or a secret society such as P2, one we can prove or others we only suspect exist, is another story.

The lack of action, here or as requested by Lord James in Britain, is, in itself, proof of both the seriousness and actuality of these events and the powers that can prevent any inquiry when irrefutable documents such as SWIFT transfers are available.  In fact, Lord James has offered a wealth of documents which, when combined with the 2000 pages of Wanta “discovery” from the Federal Court, constitutes more than prima facia evidence of money laundering, conversion, terrorism or worse.

Thus, the inaction in the face of overwheming and unquestioned proof is inexplicable.


Currently, Wanta’s legal status is as technical conservator and owner of $7.2 trillion.  However, as nearly half that is owed in taxes and the court settlement required Wanta to purchase $1 trillion in treasury bonds, the federal government should show positive interest other than President Obama and a few others.  More are being obstructionist with the payout and exercise of $3 trillion in US debt reduction.

This is, not only illegal but an indication of conspiracy.

In addition, Russian Prime Minister Putin has communicated that he awaits the agreed upon 3% payment of Russian taxes, initially on the $7.2 trillion.  Will Putin want to be paid on the entire $15 trillion plus interest and will Russia and/or the US have interest in why the Bank of Scotland transferred these funds to 20 European banks to trade in MTN’s (mid term notes) without any authorization or agreement, any participation or sharing of profits.

As the funds, at least the half which the US government can claim ownership of, combined with the interest and earnings of, would quickly put the US “in the black,” again we look at, not just the press blackout on the Wanta litigation of the last 6 years but the press blackout on Lord James of Blackheath and the wealth of damning documentation he submitted to Parliament.

Nothing has been done since, it is as though the proof submitted was so dangerous that those moments in time have been erased by a mysterious g-dlike power.

What makes Wanta dangerous is that he has begun to distribute funds, some to government entities, counties and states, law enforcement agencies, giving them standing, not just in recovering funds intended for their use but in helping prosecute anyone involved in interfering with or attempting to divert funds.

One grand jury is being formed to investigate diversion of Wanta funds even at this early date.  It is likely that Wanta/Ameritrust funds earmarked for border protection could lead to the indictment of high ranking US officials.  This is only the beginning.

If the Royal Bank of Scotland doesn’t think it should be expecting the biggest chargeback in the history of the world, they are in for a shock.

Scandal: Greece To Receive "Negative" Cash From "Second Bailout" As It Funds Insolvent European Banks

Earlier today, we learned the first stunner of the Greek "bailout package", which courtesy of some convoluted transmission mechanisms would result in some, potentially quite many, Greek workers actually paying to retain their jobs: i.e., negative salaries. Now, having looked at the Eurogroup's statement on the Greek bailout, we find another very creative use of "negative" numbers. And by creative we mean absolutely shocking and scandalous. First, as a reminder, even before the current bailout mechanism was in place, Greece barely saw 20% of any actual funding, with the bulk of the money going to European and Greek banks (of which the former ultimately also ended up funding the ECB and thus European banks). Furthermore, we already know that as part of the latest set of conditions of the second Greek bailout, an 'Escrow Account" would be established: this is simply a means for Greek creditors to have a senior claims over any "bailout" cash that is actually disbursed for things such as, you know, a Greek bailout, where the money actually trickles down where it is most needed - the Greek citizens. Here is where it just got surreal. It turns out that not only will Greece not see a single penny from the Second Greek bailout, whose entire Use of Proceeds will be limited to funding debt interest and maturity payments, but the country will actually have to fund said escrow! You read that right: the Greek bailout #2 is nothing but a Greek-funded bailout of Europe's insolvent banks... and the Greek constitution is about to be changed to reflect this!
The smoking gun quote:
The Eurogroup also welcomes Greece's intention to put in place a mechanism that allows better tracing and monitoring of the official borrowing and internally-generated funds destined to service Greece's debt by, under monitoring of the troika, paying an amount corresponding to the coming quarter's debt service directly to a segregated account of Greece's paying agent.
As for the priority of payments - it is more than clear:
Finally, the Eurogroup in this context welcomes the intention of the Greek authorities to introduce over the next two months in the Greek legal framework a provision ensuring that priority is granted to debt servicing payments. This provision will be introduced in the Greek constitution as soon as possible.
So there you have it: the Second Greek bailout is nothing but the first Greek bailout of Europe's banks! And the Greek constitution is about to be changed to reflect that.
Congratulations Greece - you just got royally raped by your own unelected rulers and you didn't even know it.
Full Eurozone document (source).

Greek deal leaves Europe on the road to disaster

By Clive Crook
If Europe’s new plan for Greece succeeds, nobody will be more surprised than the politicians who designed it. At best, the arrangement is a holding action, one that fails yet again to deal with the much larger confidence crisis facing the euro area.
The deal announced on Tuesday starts with private lenders. Their representatives agreed to accept even bigger losses on Greek government bonds than previously discussed. The bonds’ face value will be cut by 53.5 percent, and they’ll pay a low interest rate, starting at 2 percent then rising later. Altogether, this reduces their net present value by about 75 percent, far more than deemed necessary just weeks ago.
If enough private lenders go along, that triggers the inter-governmental side of the plan: new official loans to cover Greece’s ongoing budget deficit and replace debt coming due. The terms include a lower interest rate on bailout loans as well as various other kinds of European Union taxpayer subsidy, folded in with greater or lesser degrees of stealth. The European Central Bank and national central banks, for example, will pitch in by channeling back to Greece the “profits” they have made on Greek bonds bought at deep discounts to face value. The International Monetary Fund is going to take part, too. Exactly how still isn’t clear.
If too many private lenders opt out, it’s back to the drawing board. Ditto if voters in Greece force the government to renege on promises to cut the minimum wage, make advance debt- service payments into an externally monitored account, change the constitution to prioritize debt repayment, accept oversight of public accounts by an on-site team of EU officials, and more.
That’s only a partial list of what might still derail the agreement. Even if it sticks, its designers don’t sound confident it will work. An official analysis leaked to the Financial Times discusses a “tailored downside scenario,” which, to many observers, looks more like a plausible central case.
In this projection, Greece postpones the structural changes -- such as a lowering of wages -- needed to make its economy competitive. Fiscal adjustment and privatization are delayed. The government’s dependence on official loans grows, and its debt burden surges higher. The debt trajectory would be “extremely sensitive to program delays,” the officials conclude, “suggesting that the program could be accident prone, and calling into question sustainability.”
Sounds like business as usual. All through this crisis, the EU has chosen to keep muddling through, never doing quite enough to resolve the problem, infusing each round of subsequent crisis-management with high political drama. Advocates of this method argue, with a particle of justification, that it’s working. Unilateral default has been avoided and pressure has been brought to bear on Greece and others to push ahead with economic reforms that were long overdue.
If there is some intelligent principle behind this approach, rather than mere flailing incompetence, it would sound like this: “Let’s build this manageable problem up into a crisis capable of vast destruction that we might be unable to control. That will create the fear needed to force some real improvements in economic policy.”
Panic is what first turned an EU liquidity crisis (where governments struggle to borrow money) into an insolvency crisis (where the burden of debt settles on an unavoidably explosive path). This financial metastasis works through interest rates. If rates stay high enough for long enough, they can make solvent governments insolvent. When panic gripped the markets recently and bond yields surged, the solvency of Spain and Italy -- plainly capable of servicing their debts under conditions of no panic -- was called into question. It beggars belief that the EU is willing to let the fear of a calamity on such a scale persist, when there’s no need.
But it has been willing, and still is. The EU’s own financial officials doubt the new program will work. Greece may end up defaulting unilaterally -- the panic-maximizing event. Lately finance ministers have actually entertained the idea of a Greek exit from the euro as a way of bringing further pressure to bear on the government. Are plans in place for that contingency? Take a guess. If it happens, and bond yields spike again, there’s no firewall to protect the rest of the system. Europe’s banks are still undercapitalized and the European Financial Stability Facility is at best a third as big as it might need to be.
Greece is small enough for the rot to be stopped right there. Add in Europe’s other two acutely distressed economies -- Ireland and Portugal -- and the problem is still manageable.
Greece’s debts, official and privately held, should be written off. Until its government can get to a primary budget surplus or renew its access to market borrowing -- for which it needs some economic growth -- Europe should provide official financing on terms that won’t kill the economy. Euro exit must be avoided: Wages will have to fall, but dumping the common currency for a devalued drachma opens too many new channels of risk. The EU should stand ready, if need be, to do all this for Ireland and Portugal, as well.
In any event banks have to be recapitalized and the EFSF greatly enlarged. If all this were done, the risk of renewed panic would subside, and Spain, Italy and the EU as a whole would be moved back from the brink of disaster. The cost to euro-area taxpayers is not small, but it’s nothing compared with the crash they will suffer if this game of chicken with financial markets goes wrong.
What part of this doesn’t Europe understand?

55 Interesting Facts About The U.S. Economy In 2012

55 Interesting Facts About The U.S. Economy In 2012

The Economic Collapse
February 23, 2012
How is the U.S. economy doing in 2012? Unfortunately, it is not doing nearly as well as the mainstream media would have you believe. Yes, things have stabilized for the moment but this bubble of false hope will not last for long. The long-term trends that are ripping our economy and our financial system to shreds continue unabated. When you step back and look at the broader picture, it is hard to deny that we are in really bad shape and that things are rapidly getting worse. Later on in this article you will find a list of interesting facts that show the true state of the U.S. economy. Hopefully many of you will find this list to be a useful tool that you can share with your family and friends. Each day the foundations of our economy crumble a little bit more, and we need to wake up as many Americans as we can to what is really going on while there is still time. We have accumulated way too much debt, we consume far more wealth than we produce, millions of our jobs are being shipped overseas, our big cities are decaying, family budgets are being squeezed more than ever, poverty is rampant and we have raised several generations of Americans that expect the government to fix all of their problems. The U.S. economy is at a crossroads, and the decisions that the American people make in 2012 are going to be incredibly important.

The statistics listed below are presented without much commentary. They pretty much speak for themselves.

After reading this list, it will be hard for anyone to argue that we are on the right track.

The following are 55 interesting facts about the U.S. economy in 2012….

#1 As you read this, there are more than 6 million mortgages in the United States that are overdue.
#2 In January, U.S. home prices were the lowest that they have been in more than a decade.
#3 In Florida right now, some drivers are paying nearly 6 dollars for a gallon of gas.
#4 On average, you could buy about 10 gallons of gas for an hour of work back in the mid-90s. Today, the average hour of work will get you less than 6 gallons of gas.
#5 Sadly, 43 percent of all American families spend more than they earn each year.
#6 According to Gallup, the unemployment rate was at 8.3% in mid-January butrose to 9.0% in mid-February.
#7 The percentage of working age Americans that have jobs is not increasing. The employment to population ratio has stayed very steady (hovering between 58% and 59%) since the beginning of 2010.
#8 If you gathered together all of the workers that are “officially” unemployed in the United States into one nation, they would constitute the 68th largest country in the entire world.
#9 When Barack Obama first took office, the number of “long-term unemployed workers” in the United States was approximately 2.6 million. Today, that number is sitting at 5.6 million.
#10 The average duration of unemployment in the United States is hoveringclose to an all-time record high.
#11 According to Reuters, approximately 23.7 million American workers are either unemployed or underemployed right now.
#12 There are about 88 million working age Americans that are not employed and that are not looking for employment. That is an all-time record high.
#13 According to CareerBuilder, only 23 percent of American companies plan to hire more employees in 2012.
#14 Back in the year 2000, about 20 percent of all jobs in America were manufacturing jobs. Today, about 5 percent of all jobs in America are manufacturing jobs.
#15 The United States has lost an average of approximately 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001.
#16 Amazingly, more than 56,000 manufacturing facilities in the United States have been shut down since 2001.
#17 According to author Paul Osterman, about 20 percent of all U.S. adults are currently working jobs that pay poverty-level wages.
#18 During the Obama administration, worker health insurance costs have risenby 23 percent.
#19 An all-time record 49.9 million Americans do not have any health insurance at all at this point, and the percentage of Americans covered by employer-based health plans has fallen for 11 years in a row.
#20 According to the New York Times, approximately 100 million Americans are either living in poverty or in “the fretful zone just above it”.
#21 In the United States today, corporate profits are at an all-time high. The percentage of Americans that are living in “extreme poverty” is also at an all-time high according to the U.S. Census Bureau.
#22 In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.
#23 The poorest 50 percent of all Americans now collectively own just 2.5%of all the wealth in the United States.
#24 The number of children living in poverty in the state of California has increased by 30 percent since 2007.
#25 According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.
#26 Since Barack Obama entered the White House, the number of Americans on food stamps has increased from 32 million to 46 million.
#27 As the economy has slowed down, so has the number of marriages. According to a Pew Research Center analysis, only 51 percent of all Americans that are at least 18 years old are currently married. Back in 1960, 72 percentof all U.S. adults were married.
#28 In 1984, the median net worth of households led by someone 65 or older was 10 times larger than the median net worth of households led by someone 35 or younger. Today, the median net worth of households led by someone 65 or older is 47 times larger than the median net worth of households led by someone 35 or younger.
#29 If you can believe it, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.
#30 After adjusting for inflation, U.S. college students are borrowing about twice as much money as they did a decade ago.
#31 According to the Student Loan Debt Clock, total student loan debt in the United States will surpass the 1 trillion dollar mark at some point in 2012. If you went out right now and starting spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
#32 Today, 46% of all Americans carry a credit card balance from month to month.
#33 Incredibly, one out of every seven Americans has at least 10 credit cards.
#34 The average interest rate on a credit card that is carrying a balance is now up to 13.10 percent.
#35 Of the U.S. households that do have credit card debt, the average amount of credit card debt is an astounding $15,799.
#36 Overall, Americans are carrying a grand total of $798 billion in credit card debt. If you were alive when Jesus was born and you spent a million dollars every single day since then, you still would not have spent $798 billion by now.
#37 It may be hard to believe, but the truth is that consumer debt in America has increased by a whopping 1700% since 1971.
#38 At this point, about 70 percent of all auto purchases in the United States involve an auto loan.
#39 In the United States today, 45 percent of all auto loans are made to subprime borrowers.
#40 Mortgage debt as a percentage of GDP has more than tripled since 1955.
#41 According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.
#42 To get the same purchasing power that you got out of $20.00 back in 1970 you would have to have more than $116 today.
#43 When Barack Obama first took office, an ounce of gold was going for about $850. Today an ounce of gold costs more than $1700 an ounce.
#44 The number of Americans that are not paying federal incomes taxes is atan all-time high.
#45 A staggering 48.5% of all Americans live in a household that receives some form of government benefits. Back in 1983, that number was below 30 percent.
#46 The amount of money that the federal government gives directly to Americans has increased by 32 percent since Barack Obama entered the White House.
#47 During 2012, the U.S. government must roll over nearly 3 trillion dollarsof old debt.
#48 The U.S. debt to GDP ratio has now reached 101 percent.
#49 At the moment, the U.S. national debt is sitting at a grand total of$15,419,800,222,325.15.
#50 The U.S. national debt is now more than 22 times larger than it was when Jimmy Carter became president.
#51 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.
#52 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.
#53 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.
#54 Right now, the U.S. national debt is increasing by about 150 million dollars every single hour.
#55 Spending by the federal government accounted for about 2 percent of GDP back in 1800. It accounted for 23.8 percent in 2011, and according to former U.S. Comptroller General David M. Walker, it will account for 36.8 percent of GDP by 2040.

Bad news, eh?

But it isn’t just our economy that is decaying.

We are witnessing a tremendous amount of social decay as well. As I wrote about the other day, America is rapidly decomposing right in front of our eyes.

When the water level of a river drops far enough, it will reveal rocks that have been hidden from view for a very long time. Well, a similar thing is happening in America right now. For decades, our debt-fueled prosperity has masked a lot of the social decay that has been going on.
But now that our prosperity is evaporating, a lot of frightening stuff is being revealed.

Unfortunately, another major financial crisis is rapidly approaching and economic conditions in the United States are going to get a lot worse.
So what is our country going to look like when that happens?
That is a very good question.