Saturday, May 28, 2016

Dollar Reality – End of Petro Dollars

by Martin Armstrong
QUESTION: Dear Mr. Armstrong,
(a) You say that the world is losing confidence in governments and I do not question that for a minute.
(b) BUT you also say that the dollar will strengthen for various probable sounding reasons, which it is presently doing. (whereas many think it will collapse).
For the collapse theory: it appears the petro dollar is being dumped which bodes ill for the dollar remaining the prime reserve currency. ——– does not think it will and that SDR’s will replace it. Surely as this eminent position of the petro dollar declines, there will be further debasement? (loss of purchasing power) – the opposite of a stronger dollar.
These two factors (a) and (b) seem to be very much at odds with each other. Does not a strong and growing stronger currency boost confidence in government? or at least keep it in power.
We have a debased dollar as per the examples you gave re the silver content of our coins from 1964 till now and we see what happened to the Romans who did the same thing, so it is hard to wrap your head around the fact that our debased dollar is growing stronger. (understood that its strength is relative to other currencies). Is this because no matter whether confidence is lost confidence in government, the money is all people have to hoard in deflationary periods which makes paper money become more valuable for a time (only)?
I also understand that the bad situation in Europe will drive money over to the US which is on the plus side for the dollar.
Whereas a collapsing currency often spells a collapse of government. (watching Venezuela)
Exception: we see in the case of Zimbabwe, that although its currency collapsed, Mugabe still has the money to pay his army which keeps him in power. I expect Mugabe gets US dollars from what is left of the country’s exports and somehow has nationalized the businesses that produce those dollars – in order to get his hands on them. Just guessing.
The US has not yet reached this point, although examples of mismanagement become more evident by the hour.
I believe Milton Friedman when he said”put government in charge of the Sahara and sooner or later there will not be any more sand”
I also keep in mind Greenspan’s quote: “There is no place to hide”.
I hope you are going to tell us in due course where to hide when so many of our assets are just numbers on a screen. Understood is the importance of asset allocation, but that does not take care of investments in brokerage accounts. Perhaps it is not possible to protect these.
So … it is the seeming inconsistency of the (a) and the (b) that I wonder if you could/would shed some light.

The facts you are putting together are old and out of date. The US dollar has nothing to do with oil. The days of the petro-dollar are long gone. The USA is now exporting energy and electric cars are here. I bought one myself. It is a hybrid that gets 75 miles to a gallon. That is slightly better than my sports cars when I was a kid where 8 miles a gallon was fantastic. Saudi Arabia is in serious trouble. They have all had to pump more just to make ends meet because they are now forced to borrow money to fund budgets that expected $200 oil forever.
Currency Rallies during Recession
Your scenario about confidence and a currency is a bit skewed. As an economy declines, the currency rises because people stop buying assets and seek to go to cash. This is why the dollar rallied during the Great Depression as well and the deep recession from 1980 into 1985 forcing the government to create the G5 (now G20) at the Plaza Accord in New York. The yen rallied dramatically into 1995 falling to 75 to the dollar when the country was also doing terrible. It rallied again into 2011 when all looked rather bleak. In all of these cases, there was no concern that the government would collapse. Demand for the currency rose in each affair. This is not on par with a collapse in confidence in government to the point of hyperinflation. To produce that result, nobody is willing to buy the debt so all they can do then is print. In that instance, it all flips. You spend the money to buy assets. A normal correction you sell assets that crash to go to cash.
Musical ChairsYes we peaked in government 2015.75 and have begun a downward cycle in public confidence. We are witnessing this on a GLOBAL scale at a far greater pace than within the United States. This is a game of musical chairs. Capital is moving from one to the next until there is just one standing. Then the final shoe will drop. Read Herbert Hoover’s memoirs for 1931 and you will see what he described was the same behavior when Greece was in trouble starting in 2010.
The USA will be the last to fall. I have been warning this is simply how things will play out for years because the USA is the core economy like Rome in ancient days. The disease always begins in the limbs and then moves to the chest and finally strikes to heart. So dollar up as the disease is in the limbs. Then the rise in the dollar will force political change on many levels. Not the least will be a new monetary system, but that is the end-game once it hits the chest. We are not there yet. It’s coming.
ft-1998As for SDRs, I proposed that back in 1985, The White House responded to me with a two-page letter stating that such a system would mean the government will lose domestic policy objectives for international. That is happening right now any way. The Federal Reserve is becoming the central bank for the world because it is chaos everywhere else.
Today, however, I would oppose the IMF SDR system for the IMF is way too corrupt. I have told how I was invited by Edmond Safra to the IMF Washington Dinner he put on for the IMF renting the entire National Gallery. Everybody was there from politicians to Paul Volcker. I was told bluntly to join the bankers “club” back then. I was invited to demonstrate to me that they had the IMF in their pocket. They poured money into Russia and the IMF was to keep the loans going. When they could not, the whole mess collapsed. That produced the Long Term Capital Management crisis and the first Fed bailout.
Because the London Financial Times had reported on the front page that at our London WEC in July 1998, I delivered the forecast that Russia would collapse in a matter of weeks, that began this whole mess alleging I manipulate the world economy because I must have more people on my side than they did on their’s. People judge others by themselves. The “club” tries to manipulate the world paying bribes and controlling mainstream media. When my forecasts become correct despite all their machinations, they scream I am the one manipulating the world because they lost. Nobody can manipulate the world and if these fools do not figure that out, all I can say is they are not even at the dumb and dumber level of stupidity.
To break the world monetary system, that willONLY take place with a rising dollar. But with a declining outcome thereafter. You are just missing that part that FIRST the dollar must soar to screw up the world to create the change in the monetary system and that illogical proposition is in fact what makes it happen. Forget about petro-dollars. They are history. Measuring confidence is key. The confidence is turning against government now. We can see that with Trump and Bernie. The masses are not so happy. They are rising up everywhere you look.
In Europe we have 2/3rd of Germans against Merkel. In France, the biggest union uprising is forming against Hollende. We have Greece in trouble, Britain voting on whether to stay or go, Catalonia voting to separate from Spain, Austria rigging the election claiming write-in ballots of just 31,00 decided the election, and Brussels is trying desperately to prevent any democratic vote because they know the people are turning against the whole euro idea, which is the federalization of Europe.
Don’t worry. Just go with the flow. It’s happening fast. Just let go off the old-world theories. The reserve status of the dollar cannot be changed by pricing oil in even rubles or yuan. The reserve status is created by the fact BIG MONEY can park in US debt. It cannot park in European debt which remains in chaos outside of Germany. Britain, Canada, Australia are too small, Japan is too restrictive, and China as well as Russia are not quite ready for prime time. The debt has to turn belly-up in the fish bowl to change reserve status. It is not even something the USA, China, or Russia can decree. This is created by the Invisible Hand which is beyond the control of governments. People who have no real world experience in trading or seriously advising in the big leagues have way too much time on their hands to come up with theories that amount to just sophistry. You would not ask someone to operate on your brain because they smile nice or sound good but happen to be a piano player instead of a doctor. There are just some things you cannot understand without experience. That is why school is so bad in the social sciences (economics) beyond reading, writing,

Negative Rate Policies Depressing US Treasury Yields

by: otterwood
Negative interest rate policies implemented by central banks in Europe and Japan have driven yields on many sovereign debt issues into negative territory.
If you look at the BAML Sovereign Bond index just 6% of the bonds had negative yields at the beginning of 2015. Since then the share of negative yielding bonds has increased to almost 30% of the index, see below.

With negative yielding bonds becoming the norm investors are instead reaching for the remaining assets with positive yields (i.e. US Treasuries). Private Japanese investors have purchased nearly $70 billion in foreign bonds this year with the sharpest increase coming after the BoJ adopted negative rates. Additionally inflows into US Treasuries from European funds have increased since 2014, see below.

According to an analysis by Bank of America Merrill Lynch for every $100 currently managed in global sovereign benchmarks, avoiding negative yields would result in roughly $20 being pushed into overweight US Treasuries assets.

Greenspan: We’re Headed Towards A State Of Disaster… Entitlements Must Be Curtailed… Profound Longterm Problem Of No GDP Growth

Former Federal Reserve Chairman Alan Greenspan has a dire warning about the economy. During an exclusive interview on The FOX Business Network’s Cavuto: Coast to Coast he told Neil Cavuto the U.S. has “a global problem of a shortage in productivity growth” and is headed for a state of disaster.
“What the Fed does at this particular stage is less important than what the markets are doing. And what the markets are beginning to show us is acceleration in money supply for the first time in a very long time… We have a global problem of a shortage in productivity growth and it’s not only the United States but it’s pretty much around the world and it’s being caused by the fact that the populations everywhere in the Western world, for example, are aging and we are not committing enough of our resources to fund that,” he said.
Greenspan said the main thing confronting our country and the global economy is long-term economic growth.
“Our problem is not recession which is a short-term economic problem. I think you have a very profound long-term problem of economic growth at the time when the Western world, there is a very large migration from being a worker into being a of recipient of social benefits as it is called. And this is legally mandated in all of our countries. The size has got nothing to do with the rate of growth in economic activity, but if we stay down at the two percent economic growth in the United States and elsewhere, we’re not going to be able to fund what we are already legally obligated to spend,” he said.

: "Entitlements Must Be Curtailed... Profound Longterm Problem Of No Growth May 26 @FoxBusiness 

Rail strike hits Belgium, bringing the country to a standstill

(Ross Mitchell)  Rail workers in Belgium’s French-speaking region of Wallonia began an indefinite strike Wednesday evening. Yesterday, it brought the southern part of the country to a standstill, also impacting Flanders, and creating large traffic jams in the capital, Brussels.
The workers are protesting plans by the state-run SNCB railroad company to undermine the 36-hour workweek. Management is attempting to reduce compensation for overtime worked by the 34,000 rail workers. Normally, employees receive time off corresponding to extra time worked.
The strike was brought forward from its previously scheduled date of May 31 by the Confederation of Christian Trade Unions and the General Federation of Belgian Labour in an effort to keep the growing anger of the workers under their control.
The strike followed Tuesday’s 60,000-strong demonstration in Brussels against the pro-austerity government of Prime Minister Charles Michel, which is attempting to impose cuts to the welfare system, budget cuts in public service and education, and a labour reform allowing companies to introduce a 45-hour workweek and impose overtime without extra pay.
A further mass protest and strikes, mainly in the public sector, are scheduled for May 31. Another protest is set for June 24.
Over the last year, with the collaboration of the trade unions, Employment Minister Kris Peteers has been rolling out a labour law that drastically undermines workers’ social rights. The aim of the government is to reverse social gains made by the working class in the postwar period.
The law imposes a workweek of 45 to 50 hours, and 9-to-11-hour working days. Employees can be notified of work schedules by bosses with just 24 hours’ notice. It enforces an increase in weekend and night working. Working hours are averaged over a year of work, allowing overtime work without overtime pay. It introduces a yearly maximum quota of overtime work employers can impose on workers, while not having to pay them in cash.
The retirement age has also been increased from 60 to 67 in the private and public sectors.
These attacks meet the demands of capital for workers to be available on demand depending on the market fluctuations for goods and services.
Due to the connivance of the trade unions, which only demand a greater role in implementing the cuts demanded by capital, 1 million workers have already been toiling under the Peteers laws for the past year.
In October 2015, the Belgian trade union federation, consisting of the FGTB, CSC and CSSLB union bodies, declared it will challenge one of the main austerity measures, ending the pegging of pensions and wages to inflation of the government, through legal means only. This move was in opposition to any mobilisation of workers nationwide and a mechanism to quell growing opposition in the working class to the government’s attacks.
Prime Minister Charles Michel told news channels Wednesday he was willing to negotiate with the unions as long as the law is implemented.


by Jim Willie CB May 27, 2016

Jim Willie CB, editor of the “HAT TRICK LETTER”

Use the above link to subscribe to the paid research reports, which include coverage of critically important factors at work during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. The historically unprecedented ongoing collapse has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.

The entire Western financial systemic, complete with USDollar-based foundation platforms, is breaking down. The breakdown is in full view, very noticeable, in almost every arena. What happened in 2008 with the Lehman Brothers failure event is currently underway with almost every single financial platform, structural entity, financial market, banking structure, and arena. In response to the Lehman killjob event, where JPMorgan and Goldman Sachs strangled the victim firm (by denying Lehman proceeds on countless asset sales), the entire Western financial system has been lashed together, tied together, and connected among its many member parts. The main parts are the big banks, which use derivative contracts to lash themselves together. They believe there is strength in numbers, which is true to some extent. But the consequence turns out to be that all will fail at the same time in a cascade of insolvent marred by illiquidity while steeped in corruption and market rigging. The breakdown could be described as having begun in full force, in earnest power, at the start of this 2016 year. This is the year of systemic failure, or financial breakdown, and of revelations of important crimes for the last generation or more. The revelations are against the Western power centers for their grand criminal activities. The East, by favoring a Gold Standard, has put the West on notice for exposure, if not prosecution. The gold weapon has power in its arbiter role in commerce, banking, and economies. No nation will be spared from the urgent nasty effects of being forced to achieve trade balance.

Bill Holter issued red alert warning: this is your last chance! Extreme distress and disruption is coming to the united states economy, businesses, politics, society, and community affairs. Bill Holter is associated with JSMineset, alongside Jim Sinclair. He is formerly from Miles Franklin, where he might have become too controversial in his very appropriate but unconventional views. Holter offers an extreme warning for people of the United States, that a series of nasty events is coming. Holter warns that the events will be so disruptive and historical without precedent, that recovery will be extremely difficult without proper preparation. This warning is the latest in a long string of such detailed specific warnings, as a result of the systemic breakdown and urgent official actions to come. The Jackass agrees with 97% of his message, a true red alert warning.

A shocking $100 billion in Glencore debt has emerged, linked to commodity derivatives. The next Lehman has been spotted in the commodity trading arena, if not the gold mining sector. Similar exposure is cited for other large players, to reveal a potential half $trillion hole in energy finance. The global financial crisis is set to endure a redux of Lehman in a systemic event, as commodity derivatives reveal a major hole in the financial picture. The huge gaps of insolvency have nothing to do with mining project shutdowns, except perhaps indirectly. They are more directly related to lower commodity prices, in an immediate effect.

Bank of America has done an extensive analysis to break down Glencore’s true gross exposure. Glencore PLC is an Anglo–Swiss multinational commodity trading and mining company headquartered in Baar Switzerland, with its registered office in Saint Helier Jersey Isle. Here is their conclusion. “We consider different approaches to Glencore’s debt. Credit agencies such as Standard & Poors start with normal net debt, i.e. gross debt less cash and then deduct some share (80% in the case of S&P of RMIs, the Readily Marketable Inventories). These are considered to be cash-like inventories (working capital) in the marketing business. At the last results, RMIs were about US$17.7 billion. Giving full credit for RMIs plus a pro-forma for the equity raise and interim dividend, we derive a Glencore Adjusted Net Debt of about US$28 billion. On the other hand, from discussions with our banks team, we believe the banks industry (and ultimately regulators) may look at the number, i.e. gross lines available (even if undrawn) plus letters of credit with no credit for inventories held. On this basis, we estimate gross exposure (bonds, revolver, secured lending, letters of credit) at around $100bn. With bonds at around $36bn, this would still leave $64bn to the banks account (assuming they don’t own bonds). Over US$100bn in estimated gross exposures to Glencore. We estimate the financial system’s exposure to Glencore at over US$100bn, and believe a significant majority is unsecured. The group’s strong reputation meant that the buildup of these exposures went largely without comment. However, the recent widening in GLEN debt spreads indicates the exposure is now coming into investor focus.” Debt default comes very soon, complete with huge fallout effects and contagion within the energy sector.

In other words, counting all exposure beyond ordinary debt, like derivative exposure, Glencore is mired in a $100bn hole. The Zero Hedge group of analysts is on the job, as always. They reported recently a change in the finance winds, making it more difficult to support the debt and other related exposure. Bond market spreads imply a non-investment grade rating. ZH reported the following. The group’s bond spreads imply a rating in the single-B range and a rollover cost of funding over 200 basis points (bps) above the cost of debt outstanding. We believe banks have gross margins on their exposures that are below the Glencore group’s average funding cost, with drawn financing at spreads around 50bps and undrawn lines materially below this. The cost of hedging exposure is currently over 600bps. Thus, the profit & loss (P&L) dynamics for banks are difficult. This implies that banks may increase the challenge for the business model of commodity traders. This implies that banks may increase the cost of and reduce the availability of credit to commodity traders, thus challenging their business model. TCK refers to Teck Resources, in deep shiitte. Ooops, errr, deep sneakers! Glencore is in red, in severe trouble also. One must recall that Glencore is a major commodity trading house, and not an active business with tangible product in its activity. The chart given has a mix of trading firms and mining firms. All are at tremendous risk of failure.

Not only Glencore is cause for deep concern in bank exposure. Very likely the rest of the commodity trading space is in the same vulnerable position. Their combined gross exposure blows up to a simply stunning number. Among these unique firms, Glencore might not be the only exposure in the commodity trading space. Other entities such as Trafigura, Vitol, and Gunvor could become a new perceived risky feature on bank balance sheets as well. Think $100bn exposure, times four. A ripe half $trillion in very highly levered exposure to commodities is a very real prospect. The oil & gas price declines triggered this sector crisis. Bear in mind, the energy asset class has been crushed in the past year. According to the derivative desks, the Glencore 5-year Credit Default Swap tightened by 85 bps in a recent single day to around 640 bps.

Bank of America does some solid analysis. Here is their conclusion in summary. 1) Comparisons are being made with some financially leveraged companies during the 2008 Global Financial Crisis. 2) If credit is downgraded, banks could lower their exposure to Glencore. 3) The high yield market is small and therefore expect to see temporary dislocations in a scenario in which GLEN is downgraded to junk. 4) Bank stress tests could start to include commodity trader distress. This could lead to less credit availability and more expensive bank funding of traders. Credit to Zero Hedge for excellent analysis on an ongoing basis.

One can combine the energy sector debt distress with the commodity derivative exposure, to see a systemic Lehman event on the near horizon. The many factors are lining up to force a systemic failure event, a massive financial crisis globally with numerous sectors in failure mode. The energy sector has been well detailed for its debt risk to the big banks. The legal prosecution with heavy fines and penalties remains a big risk in the mortgage sector. The Emerging Market debt exposure, triggered by both currency risk and economic decline, has also been well detailed. The market rigging cases grow by the month. Finally, with cases like Glencore, the commodity derivative risk has entered the picture. The Jackass has been recounting the risk and building the case for a major systemic Lehman type of event in the very near future.

The destruction of the European Union is a project well along. It began with the Russian sanctions after the US & Israel worked their magic in orchestrating and engineering a coup d’etat in Kiev Ukraine. Thousands of amphetamine vials helped the event along, as did hired rooftop snipers, all funded by the US and EU darlings. The Western propaganda machinery immediately fulfilled their role in painting the Russians as villains, even though the Western Fascist Axis was responsible. The Kremlin was quick to rush in and to secure their naval port in the Crimea, a valuable Russian Naval facility. The local population voted over 95% in favor of being annexed by Russia, a major point omitted in the Western dutiful dog-like press. In recent months, it has been clear that the Kiev crew, led by Washington, have violated the Minsk Agreements, not the Russians. In recent months, some sordid human organ trafficking, complete with vast fields of organ-less cadavers, has been exposed for the Kiev Regime. For the USGovt to be closely associated with war criminals, human rights violaters, and perpetrators of mini-nuclear bomb events in the Western Ukraine region is abominable. Yet many mindless observers in the West continue to view Russia as the villain. They read the New York Times and watch CNN far too much, like robots with a sub-Bush IQ.

The motive has been to cut off Russia from Western Europe with respect to energy supply, in particular with natural gas supply. The Washingon Neocon Neo-Nazis would prefer that Western Europe purchase more expensive natgas from the Gulf Region and Arab friends. The entire Syrian War is another blockade or cheaper natgas supply for the Western European Economy and its market. The Iranian Gas Pipeline would provide natgas even cheaper than Russian Gazprom, and the USGovt does not want that!! The USGovt, led by fascists and advocates of endless war, are working feverishly with war and sanctions and bank pressures and undermined coalitions and and contract bribery and heavy propaganda to prevent the unification via trade between Europe and Russia, and between Europe and Iran. They will fail on all fronts. The Eurasian Trade Zone, its economic union plus Silk Road, will continue to enjoy buildout and infra-structure projects on a vast scale. It will construct the Gold Standard in trade, banking, and currencies. Commerce will trump war. Gold will win.

The saturation of Western Europe with Arab and Moslem refugees will be told as the most unique contamination event of the modern era. It matches the destruction of the Gulf of Mexico by Halliburton and the spread of Corexit chemicals. It matches the attack and ruin of Fukushima by the Bush Crime Family, after Japan began work with China on a regional currency. The radioactive contamination has reached the West Coast of the United States. It matches the widespread water table contamination by fracking projects, under the ruse of energy production. Gold Ole Halliburton got away with over one billion gallons of contaminated water dumping from fracking operations into the California water table, with the USGovt EPA nowhere to be seen. The refugees from North Africa and Syria are invited by the Western Govts. The first indication of foul play and vile motive was detected by the Jackass when questions arose on how the passage across the Mediterranean Sea was being paid. Poor people cannot pay for food, especially for ship passage. The Austrian Govt security agency confirmed it was largely via the Soros NGO groups. The stench of planned contamination at the social level was clear. The crime level, the fear level, and disorder level, have all increased. The effect on the Western European Economy has been clear, powerful, and devastating. Few people think in similar wavelengths.

The dilution of their society, the rise in their crime level, the dissolution of their borders, and the ratcheting down of their economy, these are all critical elements toward establishment of the European Union fascist state. Lord Rothschild is pleased, enjoying the destruction in typical Satanist manner. In keeping with the dumping program on many fronts, Turkish leaders have been bribed into cooperating with the contamination. The $3 billion bribe paid to Erdogan was not to offset the costs incurred for accepting Moslem refugees. It was to send them to Europe, where EU member nations would be forced to absorb them without proper channels followed. Erdogan will enjoy his retirement soon, but it might be in a pine box. The likelihood of a Turkish Military coup rises with every passing week.

Turkey plans to lift visa requirements for travel to the European Union, including Cyprus. Erdogan has provided a jet assist to the Moslem dumping into Europe. The plan is disruption and further economic degradation, along with a dilution of their society. Turkey has decided to lift visa requirements for all EU citizens, including Greek Cypriots. The move comes following a report stating that the European Commission will propose the easing of visa requirements for Turkey. Visa free travel for 28 EU member states was adopted by the Turkish cabinet recently, a decision published in the country’s Official Gazette. Although visa requirement will be lifted for all Greeks in Cyprus, a Turkish official told Reuters that Ankara does not recognize Cyprus, a certain odd source of confusion. The gesture does mean the recognition of Cyprus. On the current status, Greek Cypriots can already travel to Turkey.

Reuters had earlier reported, quoting sources close to the Brussels-Ankara negotiations, that the European Commission will propose easing visa requirements for Turkey. The reports come after Turkey threatened to back out of the landmark migrant deal. Reuters cited a diplomatic source as stating that Turkey’s visa free demands will be met when the European Union’s top executive body announces its proposal to ease visa requirements for Turkish citizens during an upcoming meeting (maybe past by now). Another source said that the committee’s preparatory meeting already expressed support for the proposal. The European Commission is scheduled to issue an official report as to Turkey has met the benchmarks for visa free travel. An EU official speaking to Reuters claimed that Turkey has fulfilled as many as 65 requirements, meaning it doubled the number of satisfied conditions in less than two weeks. As of the end of April, the Turkish Govt had reportedly met less than half of the conditions required.

In April, Ankara threatened to back out of the migration agreement with the EU, unless travel rules were relaxed for Turkish citizens when entering the 28-nation union.  According to the deal, Ankara has promised to accept repatriated refugees from Greece with no EU entry permits, in exchange for sending the same number of vetted Syrian refugees. In return, Turkey would be given up to EUR 6 billion in European funding over the next five years.

Furthermore, as a diplomatic reward, Turkey has brought to the table its desire for the EU to fast track its application to be included in the visa free Schengen zone travel as early as June. The EU has provisionally agreed to consider Turkey’s bid, putting up a list of 72 conditions it must fulfill, including the use of sophisticated biometric passports and stricter border controls. The migration deal between Ankara and the EU went into effect on March 21st. Even though the EU seems eager to keep the deal with Turkey, the agreement has been highly criticized by human rights groups, who question whether Turkey is a safe place for migrants. Moreover, the human rights concerns have increased after Amnesty International revealed that Turkey has returned thousands of Syrian refugees to the war-torn country since mid-January. Also, Turkey has been accused of murdering numerous refugees at its borders.

In time, expect an eventual refusal by Eastern producing nations to accept USTreasury Bills in payment for trade. The IMF reversal decision assures this USTBill blockade in time, and might accelerate the timetable. The United States Govt cannot continue on five glaring fronts of gross negligence and major violations. These violations have prompted the BRICS & Alliance nations to hasten their development of diverse non-USD platforms toward the goal of displacing the USDollar while at the same time take steps toward the return of the Gold Standard. The violations are:
1) to import finished goods and crude commodities, paying with IOU coupons
2) to commit multi-$trillion bond fraud in its big banks, done without legal prosecution
3) to do QE bond purchases in applied hyper monetary inflation, monetizing debt
4) to rig all major financial markets in favor of the primal USDollar
5) to engage in numerous regional wars to support the USDollar.

The New Scheiss Dollar will arrive in order to assure continued import supply to the USEconomy. It will be given a 30% devaluation out of the gate, then many more devaluations of similar variety. The New Dollar will fail all foreign and Eastern scrutiny. The USGovt will be forced to react to USTBill rejection at the ports. The US must accommodate with the New Scheiss Dollar in order to assure import supply, and to alleviate the many stalemates to come. The United States finds itself on the slippery slope that leads to the Third World, a Jackass forecast that has been presented since Lehman fell (better described as killed by JPM and GSax). The only apparent alternative is for the United States Govt to lease a large amount of gold bullion (like 10,000 tons) from China in order to properly launch a gold-backed currency. Doing so would open the gates for a generation of commercial colonization, but actual progress in returning capitalism to the United States. The cost would be supply shortages to the USEconomy, a result of enormous export increases to China.

The colonization has already begun, with secret deals galore. It is very unclear what deals are being struck in order to arrange for the USGovt to have a proper gold reserve hoard, for backing a new legitimate USDollar. Meetings at very high level are in progress, with little if any popular representation, only elite members present. Failure to produce a legitimate bonafide gold-backed currency would mean the United States must proceed with the New Scheiss Dollar, an illegitimate fake phony farce of a currency. It would be subjected to a series of devaluations. The result would be heavy powerful painful price inflation from the import front. The effect would be to reverse a generation of exported inflation by the United States. The entire USEconomy would go into a downward spiral with higher prices, supply shortages, and social disorder. However, the rising prices would come from the currency crisis, and not so much from the hyper monetary inflation. That flood of $trillions has been effectively firewalled off.

As Ron Paul has stated, one cannot blame capitalism for the current failure, since we have had almost none! He can take credit for the independent audit conducted on the US Federal Reserve itself in 2009. From the audit, it was learned that $23 trillion in near zero cost loans were granted to the USFed owners, by the banker cabal to itself. The US population remains largely asleep and steeped in ignorance on the entire financial crime scenes. They must prepare with reduced paper wealth held as assets, and more Gold & Silver bars & coins held instead as assets. The reckoning has begun.

The Gold price will find its true value and price over $10,000 per ounce. The Silver price will find its true value and price over $300 per ounce. In reaching these levels, the ratio will return to the 30-1 range. Several steps have been laid out by the Hat Trick Letter toward the return of proper price to precious metals. The major upcoming events will be exciting to watch unfold, one after the other, in an inevitable sequence away from fascism and concentrated uni-polar power, with a strong movement toward freedom and equitable systems with distributed power. The steps will each involve a quantum jump in the Gold & Silver prices. The process will take a few years, but might be breath-taking in speed once the process is begun. The steps involve:

  • the critical mass of rejected USTBills in trade settlement, citing its corrupt roots and illicit monetary policy as foundation
  • the return to the Gold Trade Standard and introduction of Gold Trade Notes as letters of credit, in replacement for a fair tangible payment system (no more IOU coupons)
  • the recapitalization of the global banking system with Gold as primary reserve asset, so as to relieve the grotesque stagnation, insolvency, and dysfunction
  • the seeking of equilibrium in Supply vs Demand in the new fair uninhibited market, with exclusive control removed from London and New York, and placed elsewhere like in Shanghai, Hong Kong, Dubai, and Singapore.
  • the seeding of BRICS gold & silver backed currencies from participating nations within the Alliance (likely several with slight variation in features)
  • the re-opening of the gold mine industry with some blue sky, and relief from the Evergreen element at Barrick
  • the remedy toward owners of over 40,000 tons of rehypothecated and stolen gold in bullion banks across the world (primarily in Switzerland.

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“For over five years I have been eagerly assimilating any and all free information (articles, interviews, etc) that Jim Willie puts out there. Just recently I finally took the plunge and became a paid subscriber. I regret not doing this much sooner, as my expectations were blown away with the vast amount of sourced information, analysis tied together, and logical forecasts contained in each report.”
  (JosephM in South Carolina)
“Jim Willie is a gift to our age who is the only clear voice sounding the alarm of the extreme financial crisis facing the Western nations. He has unique skills of unbiased analysis with synthesis of information from his valuable sources. Since 2007, he has made over 17 correct forecast calls, each at least a year ahead of time. If you read his work or listen to his interviews, you will see what has been happening, know what to expect, and know what to do.”
  (Charles in New Mexico)
“A Paradigm change is occurring for sure. Your reports and analysis are historic documents, allowing future generations to have an accurate account of what and why things went wrong so badly. There is no other written account that strings things along on the timeline, as your writings do. I share them with a handful of incredibly influential people whose decisions are greatly impacted by having the information in the Jackass format. The system is coming apart on such a mega scale that it is difficult to wrap one’s head around where all this will end. But then, the universe strives for equilibrium and all will eventually balance out.”
  (The Voice, a European gold trader source)

Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at For personal questions about subscriptions, contact him at

Top trader: Dollar to remain strong for ‘next few weeks’

From Jeff Clark, Editor, Stansberry Short Report:
Three weeks ago, the U.S. dollar was on life support.
Short-term conditions pointed to a bounce. But the longer-term picture looked bearish. So we figured any bounce in the dollar was likely to be short-lived.
The buck was poised to break down.
But now, it may be time to rethink that bearish position – at least, for the next few weeks…
We’ve gotten the short-term bounce we were looking for. The U.S. Dollar Index has rallied from 92.6 to 95.3. That’s a gain of almost 3% in just three weeks. That’s a remarkable move for a currency. It’s a much stronger move than I was looking for. And it has changed the intermediate-term picture on the charts.
Take a look at the following chart…

Three weeks ago, I was looking for the dollar to bounce back up to its 50-day moving average (DMA) before turning back down. As you can see from the chart, though, the dollar has broken above the 50-DMA on the recent rally. That’s a short-term bullish sign.
Even more important, the nine-day exponential moving average (EMA) has crossed above the 50-DMA on this move.This sort of “bullish cross” often leads to a stronger rally that lasts for several weeks.
The bullish cross last July fueled a 3% rally in the dollar in one month. The bullish cross last October was good for a 5% move higher.
A similar move this time around could push the U.S. Dollar Index back up to the 98 level over the next few weeks.
Over the longer term, there are still plenty of reasons to be bearish on the dollar. The recent bounce in the buck hasn’t done much to change the ominous setup on the long-term chart I showed you earlier this month.
But this bounce has been strong enough to change the intermediate-term picture from bearish to bullish. As long as the nine-day EMA remains above the 50-DMA, traders should be looking for more strength in the dollar over the next few weeks.
Best regards and good trading,
Jeff Clark

I Used To Think Freddie Mac Was A Pimp

Friday post dedicated to Chris Whalen and Sheila Bair. Song from Rhett and Link.
"I used to think that Freddie Mac was a pimp, but now my mutual fund is the one walking with a limp.  Fannie Mae, you almost failed me, boo.  But the faithful feds, they bailed you."

Poor Lehman Brothers....yall got the shaft (shaft!)
The government said, good luck with that (shaft!)
And AIG, old Uncle Sam he loaned you
85 Billion, but now he owns you.
Some cry out, Weve become a socialist state!
While others say, We need to regulate.
Should I vote McCain or pull the lever for O-bama?
Im thinkin either way, Ill be movin back in with momma.
(but the cookins good---and I think shell drive me to work)
You see, I dont have much job security
Im an internet comedian...Im not sure thats even technically a job. I dont think it is.
I cant put my finger on it; but you know things have gone wrong
when I cant even afford to finish this...

Global Debt Crisis: Brazil’s Rio De Janeiro State Misses Debt Payment, Podemos Wants to Talk to Investors About Easing Spain’s Debt…

This is likely just the start. Brazil’s state and federal debt are unsustainable, and they have a socialist government so it isn’t going to embrace spending reforms. Defaults coming.

Podemos Wants to Talk to Investors About Easing Spain’s Debt

Bloomberg6 hours ago
With 53 percent of sovereign debt held outside the country, Spain is paying almost … as 1.7 trillion euros into European debt markets in a bid to revive inflation.

Gross Says Central Bank Forgiving Debt Is Only Endgame for Japan

Bloomberg14 hours ago
Billionaire bond investor Bill Gross said the only way for Japan to eventually cut its debt burden is for the central bank to acquire it and forgo repayment, …

10000 elderlies’ assets seized in lieu of nursing care premiums (Japan)

Asahi Shimbun10 hours ago
10,000 elderlies’ assets seized in lieu of nursing care premiums … 10,000 since the Ministry of Health, Labor and Welfare began keeping track in fiscal 2012.

China Says It Has Room to Increase Debt to Boost Economic Growth

Bloomberg44 minutes ago
Overall risks associated with government debt, which amounted to 26.66 trillion yuan ($4.1 trillion) at the end of last year, are under control, the ministry said in a …

Brazil’s Rio de Janeiro State Misses Debt Payment

Wall Street JournalMay 25, 2016
Rio has 72 billion reais in debt with Brazil’s federal government and owes another 35 billion reais to public banks and international lenders including the …

Insurers Seek Big Premium Boosts

Wall Street Journal15 hours ago
Big health plans stung by losses in the first few years of the U.S. health law’s … such as or state equivalents won’t feel the full impact of premium …

G7 Stands Pat on Anti-Russian Sanctions

G7 leaders confirmed their intention to stick to anti-Russian sanctions imposed in connection to Crimea.

The G7 leaders have stressed that sanctions against Russia will remain in place until full implementation of the Minsk peace agreement on Ukraine, pointing out, however, that maintaining constant dialogue with Russia is crucial to the peaceful resolution of the crisis.
"We stand united in our conviction that the conflict in Ukraine can only be solved by diplomatic means and in full respect for international law, especially the legal obligation to respect Ukraine’s sovereignty, territorial integrity and independence. We reiterate our condemnation of the illegal annexation of the Crimean peninsula by Russia and reaffirm our policy of its non-recognition and sanctions against those involved," the G7 leaders said.
They stressed the importance of all sides adhering to the Minsk peace agreement on Ukraine.
"We recall that the duration of sanctions is clearly linked to Russia’s complete implementation of the Minsk agreements and respect for Ukraine’s sovereignty. Sanctions can be rolled back when Russia meets these commitments. However, we also stand ready to take further restrictive measures in order to increase cost on Russia should its actions so require," the G7 leaders stressed.
They pointed out, however, that maintaining dialogue with Russia is crucial to the resolution of the internal crisis in Ukraine.
"We recognize the importance of maintaining dialogue with Russia in order to ensure it abides by the commitments it has made as well as international law and to reach a comprehensive, sustainable and peaceful solution to the crisis," the G7 leaders said.
Leaders of G7 club of industrialized countries — Britain, Italy, Germany, France, Canada, Japan and the United States — came together on Thursday for a two-day summit in Japan's Ise Shima. The meeting traditionally deals with global economic issues.

Last week, EU foreign policy chief Federica Mogherini said in an interview with German newspaper Die Welt that she expected that European sanctions against Russia would be extended after July.
Earlier, President of the European Council Donald Tusk stated that EU economic sanctions against Russia will remain in place until the Minsk agreement on Ukraine is implemented in full.
The United States, the EU and some of their allies have imposed several rounds of sanctions targeting key sectors of the Russian economy, as well as a number of individuals and entities, over Crimea's reunification with Russia and Moscow's alleged interference in the conflict between Kiev and independence militia in eastern Ukraine.
Russia has repeatedly refuted the allegations, warning that the Western sanctions are counterproductive. In response to the restrictive measures, Russia has imposed a food embargo on some products originating in countries that have targeted it with sanctions.

Central Banks Can't Go It Alone Anymore

Whether through signals from the Group of Seven meeting this week or in the outcome of the latest round of European negotiations on Greece, officials of advanced countries increasingly are acknowledging that the problems facing their economies require a new response to take over from the overlong use of narrow short-term tools.
This recognition has been too long in the making and, judging from the regrettable lack of credible and detailed action plans, still needs time to be translated into progress on the ground.
Secular Stagnation
Before the G-7 meeting in Japan, several member countries indicated they understood that their individual and collective policy stances needed to evolve. Germany warned against continued over-reliance on central banks, simultaneously stressing the need for structural reforms. Canada and Japan urged a more aggressive and imaginative use of fiscal policy. And the U.S. warned Japan to resist the temptation to intervene to depreciate the yen.
Earlier this week, Greece’s European partners concluded that they needed a greater emphasis on debt relief for that beleaguered economy. In a conference call with reporters on Wednesday, an International Monetary Fund official, who spoke on the condition of anonymity, said there is there was agreement among all stakeholders that Greece's debt was "highly unsustainable" and needed relief. In addition, the official said the parties "accept the methodology that should be used to calibrate the necessary debt relief. They accept the objectives in terms of the gross financing need in the near term and in the long run. They even accept the time periods, a very long time period, over which this debt has to be met through 2060."
These notable developments reflect an important evolution in mindsets, which are shifting more decisively toward looking at structural and secular conditions, and away from an excessive emphasis on cyclical considerations. This shift is driven by three developments: recurring disappointing economic growth despite extraordinary monetary policy stimulus and, in the case of Greece, eye-popping bailout packages; concern that the benefits of unconventional central bank involvement are being offset by a mounting risk of collateral damage and unintended consequences; and recognition that the political context is becoming more complicated as anti-establishment movements gain momentum amid growing popular mistrust of “elites” both in government and the private sector.
Such thinking should, one would hope, lead to the implementation of pro-growth structural reforms, tax reform in conjunction with lessened fiscal austerity; debt relief for segments with crushing debt overhangs; and effective global policy coordination.
Nonetheless, the translation of greater collective awareness into credible actions remains frustratingly patchy.
Take the case of Greece. Despite the overdue acknowledgement of reality by European creditors -- that debt relief is a necessary (though not sufficient) condition for Greece to have any realistic chance of restoring durable economic and financial viability -- this recognition hasn't been turned into clear action. "Fundamentally, we need to be assured that the universe of measures that Europe –is willing to commit to is consistent with what we think is needed to produce debt relief," said the IMF official who described the negotiations Wednesday. "We do not yet have that."
As a result, the fund is unwilling to back with loans the compromise understanding on Greece reached this week. Meanwhile, it is unlikely that the G-7 will implement a much different policy stance once officials return to their national capitals. As a result, the crucial handoff from reassuring words to effective measures on the ground will once again fail to materialize.
Yet greater awareness is a critical ingredient of durable mindset adaptations and related course corrections, so there is hope that the advanced economies are getting closer to putting in action a much-needed comprehensive policy response. So if not this time, maybe next time. Still, time is not on their side.
A troubling aspect of structural impediments to growth is that the longer they remain unaddressed, the deeper they become embedded in the system. Today’s growth shortfalls become harder to reclaim even as tomorrow’s growth potential is undermined. That, in turn, erodes the potency of any given policy response.
These unsettling economic consequences are amplified by fluid political conditions. Anti-establishment movements are benefiting from the recent history of insufficient growth whose limited benefits have accrued to a small (and already well-off) segment of the population. As the system awaits policy actions, politics is likely to further erode support for established political parties and simultaneously reduce the potential for constructive bipartisan policy making. Meanwhile, the alternative -- a radical shift to the implementation of the more extreme policies advocated by anti-establishment movements -- is likely to be contained by the checks and balances in the system. Indeed, the experience of the Syriza party in Greece provides a vivid illustration of the constraining effect of these institutional guardrails.
Advanced economies should be congratulated for their willingness to incorporate a larger dose of structural and secular considerations into their economic deliberations. But every quarter they wait to enact credible and comprehensive measures adds to the difficulty of removing the impediments to inclusive growth and makes the political context even more complicated.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Here it Comes! Some eight years & $trillions later we are facing another “liquidity crunch”. It does not make sense that liquidity is scarce after all of the various QE’s but it is.

by & filed under Bill Holter.
Have you ever wondered “who” would be blamed this time around? To this point, we speak about the “Lehman moment” when we look back at 2008. Of course it was not Lehman’s fault as they were forced, sacrificed or purposely destroyed, however you’d like to describe it. The way I saw it, the banking system needed an injection of capital, cheap capital and lots of it. The only way to get public funds was to “create” an emergency BEFORE the emergency became all engulfing, this is exactly what they did.
Now, some eight years and multiple $trillions later we are facing another “liquidity crunch”. It does not make sense that liquidity is scarce after all of the various QE’s but it is. The credit markets are very thin and trading even small pieces of credit has become hard work. The liquidity is just not there to support fully functional and liquid markets. The question now becomes, which financial donkey will have the tail of failure pinned on them?

I believe we have been getting the answer over just the last few weeks. My odds on guess is none other than Deutsche Bank, the largest or second largest derivatives monster on the planet. They have settled several cases recently including Libor, stock manipulation and for manipulating the London gold and silver fixes. I find it humorous as we were assured for so many years that gold and silver were THE ONLY things not being manipulated …how foolish of us to have thought such a thing?
As you know, DB is now offering 5% rates on 90 day money from it Brussels division. This makes no sense at all since they should be able to raise money in credit markets or from the ECB directly for nearly 0% or even negative …but for some reason they cannot. I have speculated Deutsche Bank has been “kicked out of the club” and their access to capital is being blocked. This may or may not be true but would make sense since they have agreed to turn state’s evidence and rat on other firms misdoings.
The latest, DB had their credit rating downgraded yesterday to two notches above “junk” Deutsche Bank’s credit rating was downgraded to 2 notches above junk. This will obviously make it even more difficult to raise capital and certainly increase their costs for capital. I find this very curious because from a systemic standpoint, we now have a wobbling counter partner in the derivatives market with well over $50 trillion! How comfortable can those be on the other side of derivatives with Deutsche Bank? Are they (were they ever?) really “hedged” or not? Without a doubt, it will be better not to find out but that is only wishful thinking.
Another aspect is from the judicial side, it now appears the courts are going to allow civil suits against the banks collectively based on criminal acts. The obvious here is that the banks collectively do not have enough capital to settle all the claims that are sure to come. What I am saying here is this, the old “pay to play” model which worked so well for so long may be breaking. It may be that the “paying” part may end up as more expensive than the profits made from “playing”.
All of which… which leads me to an important conclusion, the “banks”, collectively, need the system to come down and they need someone to blame. The “someone to blame” part is obvious, but why do they need the entire system to come down? Think about this, if the collapse is systemic then no one individually (except Deutsche Bank?) will have fingers pointed at them. The next logical point is this, how will a court be able to find for plaintiffs if the banks are ALL broke? Can you really squeeze blood from a stone? And penalizing the banks, no matter what they did would certainly not be viewed as something “for the common good”.
Let’s face it, the system is coming down one way or the other. If you cannot see this yet then all I can say is “you don’t know that you don’t know” and good luck to you. If the banks have reached the point of no return, doesn’t it make sense to “control” the crash? Or at least the narrative? Doesn’t it make sense to be able to point a finger at one particular bank as the reason instead of admitting it is ALL the banks and the system itself that was flawed. It will be very interesting to see how this exactly unfolds but my money is on Deutsche Bank as the Lehmanesque scapegoat!
Speaking of scapegoats, I am sure you saw the Senate vote last week that “sovereigns” (think Saudi Arabia) can be sued civilly. The finger has been pointed at the Saudis for being complicit in 911. The Saudi press returned volley yesterday by claiming the U.S. government was complicit themselves Saudi Press Just Accused US Govt of Blowing Up World Trade Centers as Pretext to Perpetual War. I think what is being missed here is both the Saudis and the U.S. are moving away from the official (impossible) story. Neither now claim that 19 Arabs did this on their own!
Do you see the importance of this? “Truth”, (uncovered in these small portions) is slowly coming out via “truth bombs”. The official stories whether they be financial, political or geopolitical are having small shreds of truth added in. As I have said all along, I believe we will see the mother of all truth bombs dropped by Mr. Putin with an absolutely “shocked” China looking in. Any sort of truth bomb will have U.S. (Western) financial markets as the prime target… Can Western markets even survive the real truth?
This has been a public article, if you enjoyed this and would like to see all of our work please click here to subscribe
Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome

“Breakthroughs” for Greece actually mean more debt for longer

by Shaun Richards 
There are many sad components of the Greek crisis and only on the 9th of this month I pointed out how the whole episode is like groundhog day or more realistically year. An example of this occurred late last night.  Here is Eurogroup President Jeroen Dijesselbloem.
We achieved a major breakthrough on which enables us to enter a new phase in the Greek financial assistance programme.
We have learned to be very careful with phrases like “major breakthrough” as the original hype of “shock and awe” reminds us. The Financial Times also decided to join in with the hype.
Greece reaches breakthrough deal with creditors
Care is needed with headlines written at 5 am after a long night and as discussed above particular care is needed with Greece so let us take a look at the deal.
Greece needs more funding
This is a regular feature of the ongoing story where despite all the hype Greece remains unable to fund itself in the financial markets but needs to refinance in debt. In particular the first rule of Greek fight club is on its way. That is that the ECB (European Central Bank) must always be repaid whatever the circumstances! Some 3.5 billion Euros is required by July if we include a component for the IMF (International Monetary Fund) as well. This meant that Greece did have something of a hold on its creditors but it has not used it. Also it is hard to avoid the thought that two of the main creditors the ECB and the IMF always insist on 100% repayment of capital which of course blocks debt relief.
The details of the funding to be provided are shown below.
The second tranche under the ESM programme amounting to EUR 10.3 bn will be disbursed to Greece in several disbursements, starting with a first disbursement in June (EUR 7.5 bn) to cover debt servicing needs and to allow a clearance of an initial part of arrears as a means to support the real economy. The subsequent disbursements to be used for arrears clearance and further debt servicing needs will be made after the summer.
You may note that this only mentions debt servicing and clearing arrears and not boosting the Greek economy for example. This is a rather dystopian style future which seems to be all about the debt and not about the people. Indeed those who have claimed that this whole process is like something from the world of the novel Dune do get support from this.
Do the Greek people get anything?
This does not seem to be much of a reward.
The Eurogroup also welcomes the adoption by the Greek parliament of most of the agreed prior actions for the first review, notably the adoption of legislation to deliver fiscal parametric measures amounting to 3% of GDP that should allow to meet the fiscal targets in 2018,
Ah so austerity is now spelt “fiscal parametric measures” in the way that the leaky Windscale nuclear processing plant became the leak-free Sellafield. What do the Greeks have to do? Well here it is.
the pension reform
Back on the 9th of this month I pointed out what this actually means in practice.
Sunday night of overhauls of the Greek tax and pension systems…..All 153 coalition lawmakers backed the legislation, which is worth 5.4 billion euros in budget savings.
In other words the Greek economy will be given another push downwards. This is happening in a country which has not be growing at over 2% per annum since 2012 in the original “shock and awe” “breakthrough” but as of the latest data has done this.
Available seasonally adjusted data indicate that in the 1 st quarter of 2016 the Gross Domestic Product (GDP) in volume terms decreased by 0.4% in comparison with the 4 th quarter of 2015, while it decreased by 1.3% in comparison with the 1 st quarter of 2015.
The economy is still shrinking in what we must now call a DEPRESSION. This is a human crisis on a large-scale which seems to have been forgotten in the hype above. Also anyone with any sense can see that such a situation makes the debt ever more unaffordable and in that sense is self-defeating.
What about debt relief?
The cat was put amongst the pigeons by this from the IMF.
, by IMF: The substantial gap between projected outcomes and the sustainability objectives. Baseline scenario
So Greece is the new Japan or at least it would be. Except of course Japan has surpluses elsewhere and can finance itself extremely cheaply and these days even be paid to finance itself. Of the two graphs it is the second which is the most significant and let me show you the IMF text on it.
Gross financing needs cross the 15 percent-of-GDP threshold already by 2024 and the 20 percent threshold by 2029, reaching around 30 percent by 2040 and close to 60 percent of GDP by 2060.
Firstly the situation is now so bad the numbers which first went to 2020 and then 2040 now go to 2060 in a confirmation of my To Infinity! And Beyond! Theme. But also there is a debt filled future where in 2060 Greece will be spending 60% of its GDP on financing its GDP. This even had the IMF singing along to the nutty boys.
Madness, madness, they call it madness
Madness, madness, they call it madness
I’m about to explain
A-That someone is losing their brain.
What have they done?
Right now they have done nothing at all except make sure that the left hand of the Euro area taxpayer ( represented by the European Stability Mechanism) pays out the right hand of the Euro area taxpayer as represented by the ECB. Or an example of round-tripping.
Of course the last effort at debt restructuring did not go so well mostly because of the first rule of ECB fight club. Here is the Jubilee Debt Strategy.
At the end of 2011, before the ‘debt relief’, Greece’s government debt was 162% of GDP
Ah so the “breakthrough” is for it to rise to 250% by 2060?! Most people can see the problem there. However rather than a solution what we have seen overnight is yet more can-kicking as nothing will be done until 2018. As Oasis so aptly put it Definitely Maybe.
For the medium term, the Eurogroup expects to implement a possible second set of measures following the successful implementation of the ESM programme.
Oh and considering the track record so far this is simply breath-taking.
For the long-term, the Eurogroup is confident that the implementation of this agreement on the main features for debt measures, together with a successful implementation of the Greek ESM programme and the fulfilment of the primary surplus targets as mentioned above, will bring Greece’s public debt back on a sustainable path over the medium to long run.
So we see that the “breakthrough” is in fact yet another example of kicking the problem a couple of years ahead. This passes a few elections and the UK Brexit referendum but will weaken the Greek economy even more. It is a particular shame that at least part of the Financial Times seems to have joined the trend to copy and pasting official communiques.
Meanwhile ever more heroic efforts are required from the ordinary Greek for what exactly? Every number is fudged as for example the IMF view on trend growth goes from -0.6% per annum to 1.3%. If this were true it would be an oasis of good news in a desert but the truth is that this is backwards financial engineering so that the debt numbers do not look even worse. A bit like this really from the IMF.
it is no longer tenable to base the DSA on the
assumption that Greece can quickly move from having one of the lowest to having the highest productivity growth rates in the eurozone.
Hands up anyone who actually believed that?
Meanwhile let me end with some lighter relief even if it is of the wry variety. I need to pick my words carefully so let me say that there have been rumours that the Clintons ( yes those 2…) never had a loss making futures trade putting them ahead of Buffett and Soros. Well this does not apparently apply to all the family. as if their son-in-law had not closed large losses on his Greek bond fund he might be in profit today.

Graphic video shows Venezuelans looting, eating garbage

FBN’s Liz MacDonald with exclusive video of the effects of the food shortage crisis in Venezuela.


UK to Lose Out on Millions Due to Tax Loophole For Fracking Firms

The UK budget will lose out on millions of pounds in tax returns from companies exploring for shale gas, an influential environment watchdog said Wednesday.

MOSCOW (Sputnik) — Greenpeace’s Energy Desk found out that the UK government is giving UK fossil fuel companies investing in fracking tax breaks in form of enhanced capital allowances that reduce their taxable profit.
"It’s inexcusable that Ministers are treating fracking firms to a generous tax loophole, whilst denying clean, renewable energy projects the very same tax breaks," Caroline Lucas, a Green Party member of parliament, said, commenting on the findings.
Energy Desk cited figures in Treasury documents that suggest a sum of over $36 million in lost tax revenue over the next four years. Companies dealing with renewable energy sources, such as wind and solar power, will not profit from these tax breaks.
This comes two days after authorities in North Yorkshire allowed the UK company Third Energy to begin hydraulic fracturing for shale gas in the village of Kirby Misperton, marking the return of fracking to the United Kingdom after a 5-year hiatus.

Europe Revolts Against Russian Sanctions

Europe Revolts Against Russian Sanctions

From ministerial offices to barricades on the streets, Europe is in open revolt against anti-Russian sanctions which have cost workers and businesses millions of jobs and earnings. Granted, the contentious issues are wider than anti-Russian sanctions. However, the latter are entwined with growing popular discontent across the EU.
Germany’s vice chancellor Sigmar Gabriel is among the latest high-profile politicians to have come out against the sanctions stand-off between the European Union and Russia.
At stake is not just a crisis in the economy, of which the anti-Russian sanctions are symptomatic. It is further manifesting in a political crisis that is challenging the very legitimacy of EU governments and the bloc’s institutional existence. The issue is not so much about merely trying to normalize EU-Russian relations. But rather more about preserving the EU from an existential public backlash against anti-democratic and discredited authorities.
Gabriel, who also serves as Germany’s economy minister, said that relations between the EU and Moscow must be quickly normalized. And he called for the lifting of sanctions that have been imposed since early 2014 as a result of the dubious Ukraine conflict. The EU followed Washington’s policy of slapping sanctions on Russia after accusing Moscow of «annexing» Crimea and interfering in Ukraine’s internal affairs. The charges against Russia are tenuous at best and are far removed from the mundane pressing concerns of ordinary EU citizens, who are being made to bear a heavy economic price for a stand-off that seems unduly politicized, if not wholly unwarranted.
Russia responded to the sweeping sanctions by implementing counter-measures banning exports from the EU and the US. The stand-off has hit the European economies hardest, with the Austrian Institute of Economic Research estimating that the trade war will cost the EU over €100 billion in business and up to 2.5 million in jobs. By contrast, the US has scarcely felt a pinch from the trade impasse.
Germany, Europe’s biggest economy with the largest trade links to Russia, has suffered most from the sanctions rift. Up to 30,000 German businesses are invested in Russia, amounting to as many as half a million jobs in danger and €30 billion in lost revenues, according to the Austrian Institute of Economic Research.
In one German state alone, Saxony-Anhalt, the local economy minister Jorg Felgner says that exports to Russia have been slashed by 40 per cent, with the loss of €200 million to his state. Felgner is among the growing chorus of EU voices who are calling for the anti-Russian sanctions to be lifted when the EU convenes in July to decide on whether to extend its embargo or not.
The EU has been reviewing its sanctions policy on Russia every six months since 2014. To extend the measures, a unanimous decision is required among all 28 member states. It looks increasingly unlikely that the EU will maintain its hitherto unanimity. It can be safely assumed that if Brussels were to end the sanctions, then Moscow will respond in kind to promptly resume normal trade with the bloc.
In addition to the country’s vice chancellor, Germany’s foreign minister Frank-Walter Steinmeier has also expressed disquiet with the ongoing EU-Russian tensions stemming from the sanctions. Steinmeier noted that «resistance to anti-Russian sanctions is growing across the EU».
He also reiterated dismay over a fundamental contradiction in EU policy objectives. «How can we expect Russia’s help in solving the Syrian crisis while at the same time imposing economic sanctions on Russia?» asked Steinmeier.
It’s not just Germany that is growing leery with the deterioration in relations with Russia. Hungary and Italy, which have also strong historic trade ties with Russia, are increasingly opposed to the EU’s policy towards Moscow, according to a recent Newsweek report.
Added to the maligned mix is Greece. The country’s six-year economic crisis has been greatly exacerbated by the loss of a once-bustling agricultural export business to Russia. The country’s finance minister Dimitrios Mardas attributed major losses specifically to the anti-Russian sanctions, which have piled on fiscal deficits to the teetering Greek economy. Greece is no isolated problem. It threatens to undermine the whole EU from its chronic bankruptcy.
In France, the National Assembly’s Lower House voted last week by 55 to 44 votes to end the EU sanctions on Russia. The vote is non-binding on the government of President Francois Hollande. Nevertheless, it demonstrates the growing popular opposition to what is widely seen as a self-defeating policy of trade antagonism with Russia.
The cancellation last year by the Hollande government of the Mistral dual helicopter-ship contract with Moscow epitomizes the self-inflicted pain on French workers. The cancellation – cajoled by Washington – cost the French government revenues of over €1.5 billion and has put thousands of shipyard jobs at risk. Paris claims to have since directed the ships’ order to Egypt, but that remains doubtful.
The economic losses from anti-Russian sanctions have rebounded severely on French farmers too. Dairy, meat, vegetable and fruit exports to the once lucrative Russian market have been pummeled. Hollande recently vowed to release €500 million in state aid to placate angry farmers. The absurdity is not lost on the French agricultural sector that such state handouts would not be necessary if the Hollande government hadn’t sabotaged Russian markets in the first place by following US hostility towards Moscow, as in the case of the Mistral fiasco.
France’s economic problems, as with the rest of Europe, are not entirely related to the downturn in relations with Russia. But there seems little doubt that the issues intersect and are compounded. And the public knows that.
Hollande – the most unpopular French president since the Second World War – is ramming through draconian labor reforms. The president and his truculent prime minister Manuel Valls claim that the retrenchment of workers’ rights will boost the economy and reduce France’s soaring unemployment rate of 10 per cent nationally and 25 per among French youth.
In opposition to the French government’s deeply unpopular assault on workers’ rights, the country is to observe nationwide strikes this week. The protests have been going on now for several months and seem set to escalate, as Hollande’s administration digs its heels in and refuses to relent.
Among students and farmers joining France’s nationwide strike are workers in the transport sectors of road haulage, rail, shipping and airports. With exports to Russia slashed due to the French government-backing of EU sanctions, the transport sectors are among the hardest hit. The Hollande government’s attempt to force through labor cuts, purportedly to reinvigorate the economy, is seen as it trying to offload responsibility for economic woes on to workers and businesses. If Hollande did not pick a fight with Russia – at Washington’s goading – then the country’s economy wouldn’t be under such duress.
Across Europe, the popular revolt against economic austerity is bound up with the EU’s self-defeating sanctions on Russia. And it is leading to a crisis of authority among EU governments who are held with increasing disdain by their citizens. More enlightened political leaders like Germany’s vice chancellor Sigmar Gabriel and foreign minister Frank-Walter Steinmeier are obviously aware of the geopolitical connection that citizens are making.
As Europe’s economic crisis deepens, the policy of anti-Russian sanctions is tantamount to the EU cutting off its nose to spite its face. The growing public disaffection is also fueling the electoral rise of anti-EU political parties in Germany, France, Britain, Netherlands, Hungary, Poland, Slovakia and other member states.
Mainstream EU parties like the ruling coalition government in Berlin realize that the EU’s trade war with Russia is simply becoming untenable. It is an ideologically driven and dubious antagonism that the EU can ill-afford. That policy speaks to EU citizens of a political leadership that is losing legitimacy from its fundamentally wrongheaded and anti-democratic governance. As well as from slavish pandering to American hegemonic ambitions.
Brussels, in following Washington’s hostility to Moscow, is inflicting further economic pain on the bloc’s 500 million citizens. Something has to give way if Europe is not to implode, or explode, from popular fury. Normalizing relations with Russia is not the whole solution to Europe’s economic and political crises. But such a move would certainly alleviate. And is long overdue.
EU governments are thus facing a stark choice. Are they to continue on the path of destruction at Washington’s reckless behest, or can they find an independent policy of pursuing mutual relations with Russia? Undoing the crass anti-Russian sanctions is taking on an urgency – before such a policy leads to the undoing of the EU itself.