Seeking Alpha

FocalPoint Anal...'s  Instablog

FocalPoint Analytics
Send Message
I own and operate an analytical services/ research company.
My book:
The Internet in Everyday Life (Chapter 19)
  • Stability Of The European Union (18) March 26, 2013 To April 18, 2013 221 comments
    Mar 26, 2013 7:18 PM

    This instablog is designed as an interactive News Concentrator devoted to news and discussions about the debt and associated problems in the EU and its member states.

    The top portion of the instablog contains useful background information/ charts.

    Up-to-date news content is posed in the comments area. So if you are interested in current news, read the comments.


    A picture is often worth a thousand words. Here we have the Percent Economic Growth Rates for three countries: US, Greece, Germany. Note the distinct downturn in the US Economic Growth Rate.

    Here is National debt as a percentage of GDP in 2009 for the Euro Zone. Look at Greece and Italy.

    Here is Government deficit as a percent of GDP for 2009. Look at Greece and Ireland. Look at UK and Spain.

    Here is the all important Jobs Picture as of March 2010. Look at Greece, Spain, Ireland and France.


    What is the EFSF?:

    The European Financial Stability Facility (EFSF) is a special purpose vehicle financed by members of the Eurozone to combat the European sovereign debt crisis. The €110 billion bailout to Greece is not part of the EFSF guarantees, but a separate commitment.

    When you look at the Guarantee commitments by the different euro zone countries [] you will see something interesting. Greece, Ireland, Italy, Portugal, and Spain (i.e., the PIIGS) account for over one-third (36.7%) of EFSF commitments. All by themselves, Italy and Spain have a financial commitment of almost one-third (29.8%) of the total EFSF commitment.

    (October 23, 2011) I added this nice summary graphic of the Dominoes effect associated with the European debt crisis. You can also see the graphic and the accompanying article with the following link:

    (October 23, 2011) Guest Post: The European Financial Crisis In One Graphic: The Dominoes Of Debt. From: Zero Hedge, by: Tyler

    The original copyrighted graphic is from Charles Hugh Smith (" 2011)

    Added February 9, 2012

    Greek General Government Debt Percent GDP

    (March 10, 2012)

    Unemployment for individuals less than 25 rose to 51.1 %, twice as high as three years ago as budget cuts imposed by the European Union and the International Monetary Fund as a condition for dealing with the country's debt problems have caused a wave of corporate closures and bankruptcies.

    Fantasy Greek GDP Growth Rates:

    In the fantasy report "Greece: Preliminary debt Sustainability Analysis" dated February 15, 2012 which I referred to as the "Deus ex machine" report one of the EUs key economic assumptions was that Greek GDP growth in 2012 would be -4.8% and -1% in 2013.

    The Greek economy saw growth rates of:

    -0.2% in 2008,
    -3.3% in 2009,
    -3.4% in 2010,
    -6.9% in 2011
    -7.5% in fourth quarter of 2011.
    (Data from John Mauldin report

    I plotted the Greek GDP data below and projected the GDP values for 2012 and 2013 based on the current data. I also plotted the Greek GDP projections from the Deus ex machine report - blue line.

    There is no Greek stimulus, jobs are in freefall. Which projection do you believe?

    (March 29, 2012) Greek Deposit Run Update: Hopeless And Getting Worse.


    Added April 27, 2012

    Q1 unemployment is now one quarter of the working population or 24.44%, up nearly 2% from the 22.85% as of December 31

    (click to enlarge)

    Global PMI Changes from March to April 2012

    (click to enlarge)

    From: ZeroHedge


    (click to enlarge)

    From: ZeroHedge -

    Ten Year Bond Yield Curves as of 7/20/2012

    From: The Disciplined Investor

    (click to enlarge)

    Here are some interesting charts on Italy sourced from Bloomberg's BRIEF
August 7, 2012, available on "The Big Picture"

    I verified the shadow economy figures in the following sourced article about shadow economies:

    Shadow Economies: Size, Causes, and Consequences by FRIEDRICH SCHNEIDER and DOMINIK H. ENSTE, Journal of Economic Literature
Vol. XXXVIII (March 2000) pp. 77-114

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)



    (click to enlarge)

    From: Labor Force Survey by the Hellenic Statistical Authority January 10, 2013

    (click to enlarge)

    From: Labor Force Survey by the Hellenic Statistical Authority January 10, 2013

    (click to enlarge)

    This chart is based on the data from the Hellenic Statistical Authorities Labour Force Survey published January 10, 2013.

    This shows the rate of change of unemployment among age groups from 2011 to 2012.

    Yet the Greek government, under the direction of the Trokia, is about to initiate an even more Draconian series of spending cuts and tax increases.

    Remember the IMFs fantasy report? GDP was supposed to start increasing again in 2012. Instead, it continued to fall, and this is one of the reasons why. They are systematically forcing people out of their jobs. No jobs, no income, no income, no spending.

    Yes, the 15-24 age group has unemployment at 56.6%, but as this chart shows, the older age groups are suffering a higher rate of increase of unemployment. So they are rapidly catching up.


    Remember, the top portion of this insta contains some useful historical information. CURRENT NEWS is posted in the comments area.

    WARNING: This is a no Troll Zone. If you are disruptive, your comments will be deleted.

Back To FocalPoint Analytics' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (221)
Track new comments
  • Author’s reply » Link to the previous Stability of the European Union Instablog
    26 Mar 2013, 07:23 PM Reply Like
  • Expect These Eight Steps From The Government’s Playbook


    Direct confiscation
    Capital Controls
    Wage and Price controls
    Wage and Price controls– on STEROIDS
    Increased regulation
    War and National Emergency
    26 Mar 2013, 08:46 PM Reply Like
  • How about one more...


    Blame free markets.
    26 Mar 2013, 09:28 PM Reply Like
  • short read on the real threat to the EZ : banks

    26 Mar 2013, 10:08 PM Reply Like
  • re: Monopolies, we were talking about monopolies on the last APC, Cramer has a good article on why corp profits are so high in the recession.


    Only caveat, Ford CEO just expressed concern over the weakening yen ( what he's really afraid of it the strong dollar) US corps have benefited from the weak dollar, now that's reversing. That gives Japanese auto makers a big advantage if it keeps up. So fix Japan first with a weak yen, then the euro.
    Long $USD / short euro and yen that we talked about last summer turned out well.
    27 Mar 2013, 05:17 AM Reply Like
  • Interesting analysis of capital reserves in EU:



    Any ideas why Malta is such an outlier?


    edit: Malta is not like Cyprus:
    27 Mar 2013, 10:02 AM Reply Like
  • Agree Maltese banks generally do not operate fast and loose. Malta's recent attraction for hedge fund change in domicile has also added profits and liquidity for banking.


    Valletta is also a great place to visit!
    27 Mar 2013, 10:13 AM Reply Like
  • The movie "Popeye" was filmed in Malta.

    27 Mar 2013, 10:15 AM Reply Like
  • Update on Malta -- the author of this SA article today thinks "Malta has all the potential to be the next crisis du jour for the euro zone." Good factoids and a historical reminder of the Bank of Valetta liquidity run of 1973 -- which also hit Barclays Bank of Malta at the time.

    2 Apr 2013, 09:58 AM Reply Like
  • Mercy good find, for now everyone is safe but for how long I do not know. I am sure nothing will happen until the prez and cabinet and all the other politically connected.....get their money out of the banks. The game plan has to be followed. Now who tracks that......
    2 Apr 2013, 10:06 AM Reply Like
  • Euro fell below 1.28-- last time it behaved that way was November of last year. Gold is falling with Euro. That's a riddle to me.
    27 Mar 2013, 10:11 AM Reply Like
  • O.G: IIUC, when Euro weakens, USD goes up and gold in USD terms then should be lower. It's the traders, likely, not investors that drive that correlation?


    27 Mar 2013, 10:25 AM Reply Like
  • 10:30 EST
    Gold mines up substantially with $AUY up 2.5% and $KGC up .57% though $Sand up just .5%
    Silver mines don't appear to be all moving w/gold though $AG and $SLW both up a little.


    27 Mar 2013, 10:49 AM Reply Like
  • Hi, HTL. I took a chart of GLD and put it up against the EUR/USD chart, for a year time period. A death cross occurred on 1/23/13 and the pattern you noted started 1/23. Now, maybe my choice of GLD is not a good proxy for gold futures as there's been tons of selling by heavy weights like Soros and his band of brothers.
    But, this pattern is very new comparing the above. I wish I had the know-how to post the chart here.
    27 Mar 2013, 10:42 AM Reply Like
  • OG, here is one authors take on Gold & Silver vs. Equities in an asset "deflation" situation....don't ask me, i have no idea. Too much intervention going on.
    27 Mar 2013, 10:55 AM Reply Like
  • O.G: If you want to do that, you can put it in an instablog. If you want some help on how to capture the image etc., PM me and we'll "git 'er done"!


    27 Mar 2013, 11:07 AM Reply Like
  • thanks, pal!
    27 Mar 2013, 07:44 PM Reply Like
  • Hat tip to Double Guns:
    More on gold and central banks:
    27 Mar 2013, 10:54 AM Reply Like
  • Have yall noticed the Cypriot banks are now talking about an 80% hair cut. Seems beheading would be more appropriate description. Wonder when the populace starts rolling out the guillotines. A head for a head.
    27 Mar 2013, 10:58 AM Reply Like
  • LT thanks for that article. Honestly, I find it hard to believe that we are living through a period of asset deflation.
    27 Mar 2013, 10:59 AM Reply Like
  • There is a lot of discussion about gold during a deflation, here is one.


    Many point out that gold still performs well in a deflation. I guess there really is only one way to find out. We have to live it and see what manipulation occurs. Its the manipulation that puts a joker in the deck.

    27 Mar 2013, 11:02 AM Reply Like
  • OG, I don't know what to believe anymore either. I get calls every week now wondering why my trading has went to almost zero.


    I can see where as debt goes down globally, where that could have a negative price effect on Gold.
    27 Mar 2013, 11:03 AM Reply Like
  • "I don't know what to believe anymore either."
    definitely a +1 on that.


    "I can see where as debt goes down globally, where that could have a negative price effect on Gold."


    Only thing is debt can't go down without growth, right? I hear others keep talking about the growth picking up but I have yet to see one data point that supports it. I see data that is a hair above abysmal but most all of it is still at recessionary levels if you compare it historically, and most of it out of europe is worse then ever.


    Still, I am very much +1 on confused. I just want to read one compelling article that takes into account all things in Europe as well as domestic data and supports the theory of a recovering global and domestic economy. (the Fed printing just does not fill all the gaps for me, they can print forever in a vacuum.)


    LT, have you read anything lately that really supports a bullish case, I would sincerely appreciate it.
    27 Mar 2013, 11:28 AM Reply Like
  • JAK: "Only thing is debt can't go down without growth, right?"


    No. Debt shrinks through forgiveness, write-downs, haircuts, paydowns, re-financings (in certain types of transactions?), and even growth in debt at a pace lower than economic growth (not the case since growth is not climbing as fast?).


    EDIT; Forgot an important one, embodied in "write downs" - bankruptcy.
    27 Mar 2013, 11:52 AM Reply Like
  • Jak, I was never as negative on the USA as most, however last summer and even now, I am still amazed that the EZ remains intact. Especially the euro$.


    What we underestimate here is how the created wealth (no matter how) helps:
    -record corp profits
    -housing recovery
    -stock mkt.
    It's just really the opposite of '08 when $50 T was lost. So I do understand some of it. As to growth, I think that is exaggerated, so long as it isn't "deflation". Positive growth, even 1-2% will still keep things afloat and all the while things keep gradually healing.


    The EZ problem, is legally they can't print or expand their fed's balance sheet to recapitalize the banks. Merkel (as bad as I hate her & the Germans) has done what "had" to be done forcing austerity...but the selling of all public utilities & ports will not have a happy ending. The monopolies gain too much again. This time around they actually cut costs and raised prices during a depression therefore the record profits.
    Now they won't expand or create new business. (Cramer is right)


    I might add to the wealth creation: What we ( i ) do with it is the key.
    27 Mar 2013, 11:54 AM Reply Like
  • Wait for it LT the govt may take those assets back at some time. Call that another haircut starting right at the adams apple.


    At this point everything is on the table it seems.
    27 Mar 2013, 11:56 AM Reply Like
  • Your right on part of it DG, that's what scared mkt's about Cyprus that they can't print so they take from the depositors.....and no doubt this was as TB stated: "a laboratory and trial run for the PIIGS".


    It may have backfired, but I seen where PIMCO and one other bond fund cut holdings +/- 25% .... they are not taking any more risks there. This too will hurt longterm, not many gonna catch them again when they fall by buying their bonds.
    27 Mar 2013, 12:00 PM Reply Like
  • States are struggling to live one day at a time. Reminds me of Rossingtons Collins song "sometimes you can put it out and it dont do you no good" There is a line in there that says " why should I worry what happens tomorrow, you know tomorrow it just might not come"



    Video Watch "Sometimes You Can Put It Out"


    Sometimes you can put it out, but it just don't do no good
    Sometimes you get lucky, sometimes you knock on wood
    But ain't it good to walk out on a limb and find that it holds
    I plan on climbin' high instead of growing old


    Sometimes I wake up feelin' I could conquer anything
    Sometimes I wake up feelin' like I'm hangin' by a string
    Aw but stretch that tightwire over the city
    I know that walk is dangerous but the view is so pretty


    Why should I worry what happens tomorrow
    You know tomorrow -- it just might not come
    I'll take my chances on livin' my life today
    Sometimes you can put it out and it don't do you no good


    Experience is the teacher, but its a hell of a way to learn
    Still you've got to feed the fire and hope you don't get burned
    Aw, now don't you fool yourself you gotta pay the price
    You gotta take some chances if you want to bring home the prize


    Why should I worry what happens tomorrow
    You know tomorrow -- it just might not come
    I'll take my chances on livin' my life today
    Sometimes you can put it out and it don't do you no good


    Well now I've put my fingers in the pie, just pulled out my thumb
    But I know how sweet the meat is of that juicy plum
    Well I'm just the kind that can't help reachin' for the moon
    If I only get half-way, I guess that's okay too


    Sometimes you can put it out, but it just don't do no good
    Sometimes you get lucky, sometimes you knock on wood
    But ain't it good to walk out on a limb and find that it holds
    I plan on climbin' high instead of growing old


    Why should I worry what happens tomorrow
    You know tomorrow -- it just might not come
    I'll take my chances on livin' my life today
    Sometimes you can put it out and it don't do you no good
    27 Mar 2013, 12:05 PM Reply Like
  • LT: "... they can't print so they take from the depositors"


    And due to ignorance of the population in general, they take from depositors, and everyone else too, when they print, but few recognize the theft.


    27 Mar 2013, 12:46 PM Reply Like
  • Do not forget the theft when they reduce interest rates on every saver. Your loosing you interest income. It was stolen to bail out the banks.
    27 Mar 2013, 02:26 PM Reply Like
  • Talking about gold during a deflation I just came upon this from SA commentor WMARKKW its from Oxford econ and in section 4 covers gold in inflation, deflation and stagflation.

    27 Mar 2013, 04:15 PM Reply Like
  • And this just posted at ZH. Rick Santellis gold rant. NOTICE THE TWO CHARTS AT THE END OF THE ARTICLE!!! Hint, hint!!!!

    27 Mar 2013, 04:19 PM Reply Like
  • Excellent charts DG. I would also like to see a third line on the graph showing P/E for miners. Over time they may catch up, but for now physical pm is the only way to go. Central Banks certainly agree!
    27 Mar 2013, 07:05 PM Reply Like
  • Thumbs thingy not working this AM.
    27 Mar 2013, 11:03 AM Reply Like
  • I am sure most in Italy feel the same.


    Monti says he cant wait to leave office.

    27 Mar 2013, 11:18 AM Reply Like
  • A chart on silver production and demand through 2011.

    27 Mar 2013, 11:24 AM Reply Like
  • Oops put that in the wrong insta FPA.
    27 Mar 2013, 11:25 AM Reply Like
  • John Mauldin writes about Cyprus and more in and article titled: You Can't Be Serious.

    27 Mar 2013, 01:11 PM Reply Like
  • Nice article Maya!!
    27 Mar 2013, 03:10 PM Reply Like
  • >MS


    I think what he said was the most important surely is-


    Anyone with more than €100,00 in any Eurozone bank should get it out sooner rather than later.


    27 Mar 2013, 07:22 PM Reply Like
  • HTL: Same over here as with the APCs. SA not working correctly today. Home Page messed up, Instas a pain in the butt, as no new comment flagging is occurring. Time for a milk run!
    27 Mar 2013, 02:40 PM Reply Like
  • Mayascribe: Mine just cleared up - you should be good-to-go now too!


    27 Mar 2013, 03:10 PM Reply Like
  • They need to call this South Park episode the Cyprus edition.

    27 Mar 2013, 03:17 PM Reply Like
  • Guns: Perfect!
    27 Mar 2013, 03:43 PM Reply Like
  • Faber sees bubbles everywhere....says you can't hide even in Gold.
    27 Mar 2013, 09:43 PM Reply Like
  • I wish I could find the original source but ZH had this chart made by Goldman Sachs research for the ECB on Cyprus Deposit outflows in Jan and Feb of this year, so who knew what was coming?

    28 Mar 2013, 09:52 AM Reply Like
  • The rich, connected and politically connected always get to remove their money during a country's collapse. The surfs do not matter. If you do not know which one you are......your a serf. The others know full well who they are.


    When they hang 10 surfing it has an entirely different meaning than it does in California. Welcome to the gallows my friend.
    28 Mar 2013, 10:15 AM Reply Like
  • Chart of Europes collapse of confidence.

    28 Mar 2013, 10:28 AM Reply Like
  • Author’s reply » Italy's Bersani Fails To Form Government.
    28 Mar 2013, 02:38 PM Reply Like
  • Cancer rate drops after nuke plant closes:
    interesting data, makes me wonder if they don't know more than we think.
    29 Mar 2013, 07:28 AM Reply Like
  • France has a long history of this. The French had regulations outlawing buttons to protect French cloth makers, thus driving up clothing costs. They even had rules against calico, and like in the article, you face problems with cost in policing that. So what do you do? Why you turn your entire populace into a police force to rat each other out. You would actually have citizen patrols roaming the streets and looking in windows to see if people were wearing calico.



    Socialism and Communism are basically just rehashed versions of Absolutism.


    Notice old Jacques use of "the public good".



    The way it works is that you convince the unspecting public that they need someone to look out for them. So, in the name of the public good, a small group of "elites" must be put in charge to look out for the little guy, when in reality all that is going to happen is supply is going to be reduced and price increased. This benefits the select few at the cost of the many, and viola, the very thing the little guys were supposed to be protected from is exactly what happens to them.


    Of course at some point nature checks the idealogies that don't comport with nature.

    29 Mar 2013, 08:52 AM Reply Like
  • Investors have less stocks to choose from, sorta explains part of the upward also backs up the global monopoly theory we spoke of and you can reinforce it by going to and read the short article "Corp profits at record, but workers get little of it" posted at approx. 2 p.m. yesterday.


    8:45 AM The stock market is shrinking. The number of companies that individual investors can buy shares in is in a major decline, a fall that’s been years in the making but accelerating this year with its record-breaking start to takeovers, mergers and buyouts. The average investor has steadily fewer choices, both broadly and within specific industries, when it comes to picking individual stocks. 2 Comments [U.S. Economy]
    29 Mar 2013, 09:15 AM Reply Like
  • "Investors have less stocks to choose from" & "The stock market is shrinking." & "Corp profits at record, but workers get little of it"




    This is part of a high tax, high regulation economy. Its exactly what's supposed to happen when the sales pitch of "let the gov tax and regulate to protect the little guy" is swallowed hook line and sinker. A special interest can't tell the public they need the coercive hand of gov to cartelize the system, and thereby reduce supply and raise prices, so they need a sales pitch that the public will swallow to allow them to do it. Its works extremely well, as you can tell by the comments on sites such as SA.


    Think about what happens here. A gov imposed tax or regulation (regulations are just taxes too), means imposing a cost via coercion. As such, the cost occurs inspite of what current technology levels will support. Since technology can't pay for the increased costs, the only way to do so is with volume. As such, the extra cost can be spread around a larger pool of production.


    The incentives are created by the coerced gov rule (price fix) to have fewer larger companies with economies of scale that offer fewer choices at higher prices instead of lots of smaller companies with a wider range of choices at lower prices.


    The economies of scale mean less pressure for employees, thus you can pay employees less, and less choices for consumers, so you can charge them more (ie higher profits - combine this with the Fed subsidizing interest rates and what would you expect - they better make a profit). It also means less choices for shareholders, because you get fewer and fewer companies because they have to merge into each other and because the cost of starting up create such barriers to entry that you get very few new competitors.


    This is the same reason the Absolutists wanted to tax and regulate the economy of France (all for the "public good" mind you aka Jacques). It cartelizes the system. That means the remaining producers protected by the gov's coercive power can lower supply and raise prices. Its a wealth transfer scheme that ruling elites have been tricking the public into for centuries with the "I'm just here to protect you line". Its how you create an aristocracy, just as we are seeing now. Have you noticed the growing tendency for more and more family members to be in public office (the Clintons, the Bushs, the Kennedys, the Bidens, don't be surprised to see Michele Obama as President in 2016).


    We can rail and rant against this and advocate for freedom, but with so many people in gov schools being trained to be gov slaves and only getting their news from the Comedy Channel or NPR or MSNBC, its never going to end. All you can do is recognize it, understand the wealth transfer that is going to happen, figure out where the wealth is going, and be there when it gets there.
    29 Mar 2013, 09:41 AM Reply Like
  • Stock buybacks also contribute the the less stock for investors. I personally do not like a company like Exxon, buying back $200 billion in stock since their Mobile merger, this is money they mostly dodged taxes on and could have been paid in dividends, and if you look they have more debt now.


    If dividend growth & buybacks are fueled with debt, it is BAD for shareholders long term.
    This is one reason I think Wall St. loses it's luster over the next 20 years. It could grow, but IMO, they will reach a point where more debt is not feasible, dividend growth stops, and share pps goes stagnant and then down. Remember: you pay a premium today for future growth. I don't see it at some point. Not today, but definately in the future.
    29 Mar 2013, 02:42 PM Reply Like
  • Low interest rates are an incentive to switch from equity to debt.
    29 Mar 2013, 03:53 PM Reply Like
  • LT, higher stock prices are GOOD if you have company granted stock options and you want to bail out anytime soon. Lots of leverage for those holding "free" options, like corp officers.


    Selling "real" stock removes possible future dividends as well as causing cap gains tax costs.
    29 Mar 2013, 08:27 PM Reply Like
  • LT: Maybe that's why companies buying stock back are commonly considered to be notoriously bad a at timing the market - they tend to buy high!


    Taking your thesis, it's conceivable that the buyback *causes* the pps to deteriorate over time, to lower levels for the reasons you mention.


    That would be ironic: buy-backs are touted as returning value to investors. Short-term POV, as usual these days, probably by the fast-money crowd.


    29 Mar 2013, 02:54 PM Reply Like
  • There is no doubt that buybacks prop the stock price near term. It puts a "floor" under it so to speak. No trader will challenge Exxon.


    Good managers like Buffett won't buy back unless there is a 20% disparity in what they think "intrinsic value" is and the price.
    He uses that cash to buy companies and grow his business.


    That was the highlight of the article that big corps are not utilizing the cash to grow their business. But Exxon and others have floated new debt every year to sustain dividend increases & buybacks. Not good long term. What happens when it ends ?
    It will also dampen mergers if a company already carries a certain % of debt.
    Debt limits ability of future growth. Both in mergers, acquisitions, and debt service costs.
    29 Mar 2013, 03:13 PM Reply Like
  • Deteriorating pps (or the anticipation thereof) is among several reasons why many companies buyback shares. Accelerating authorized buybacks in periods of declining pps is a common habit with managements that are paid salary & bonus based on increased earnings per share.
    29 Mar 2013, 03:11 PM Reply Like
  • Companies use debt to buy back shares, buybacks are a natural course of action to create shareholder value in a very low interest environment that just had taxes raised on dividends. They are giving the shareholders the value they can with the tools that are currently available. If they felt global macro growth was going to accelerate and contribute to higher returns they would probably use the money more for acquisitions, but I don't think the global economic environment lends itself to being aggressive like that right now, imo.
    29 Mar 2013, 05:23 PM Reply Like
  • M&A activity is up quite a bit in the first quarter. This is one way companies with buckets of cash can grow- Through the purchase of smaller companies that are growing. The big (S&P) companies are doing more laying off than hiring.


    No economies of scale working for you in that environment.


    29 Mar 2013, 05:20 PM Reply Like
  • Author’s reply » Coming back to the intent of this instantblog, information and discussion on the "stability" of the Euro Zone... here is an example of the start of the consequences of the recent bailout / bailin agreement on Cypriot businesses ...


    The Setup:
    As I stated back on 16 March, the day I said the EU just self inflicted a mortal wound on its grand scheme of a unified Europe under a monetary union.


    My words...
    "You can see by the terms that the 'bailout' imposes conditions that appear to be designed to make depositors flee the banks, businesses abandon the country, and increase unemployment while encouraging a takeover (privatization) of key assets of the island's economy under favorable terms to EU banks and their corporate vassals. I see this is a blatant example of the use of Economic Tyranny."


    And Now The Consequences:
    Caught In The Cyprus Crossfire: Small Businesses Suddenly With Zero Cash.


    Part of the spin about the Cypriot cash confiscation is that it primarily affected rich, tax-evading individuals of Russian origin. However, it turns out that those individuals are likely to have been least affected as subsequent discoveries of capital control breaches by the "richest and best connected" have been revealed.


    [In other words, they got their money out through deliberate holes in the capital control system for the express benefit of large 'foreign investors' ... non-Cypriot banks... Those backdoors allowed non-Cypriot banks to escape with their capital while the remaining local Cypriot accounts were effectively raped. So they went from a 20% loss to an 80% or more loss.


    How do I know the holes in the capital control system were deliberate:


    Meanwhile, it becomes increasingly apparent that the uninsured depositors on whose back the Cyprus banks were "bailed out" are small and medium corporations, who had cash deposited for working capital purposes, cash which has now been stolen to cover the banks loses on their high-risk bets made on Greek sovereign debt bonds. That stolen cash is now no longer available to fund day-to-day business activities such as payroll, purchases, and business operations.


    The following link shows a small businesses bank statement, and states the consequences of the EU's actions on this persons business that was located in Cyprus.


    The majority of circulating assets on our business Current Account are blocked.


    Over 700k of expropriated [stolen] money will be used to repay country's debt. [Actually, it will be used to pay the banks debt.] Probably we will get back about 20% of this amount in 6-7 years. [Prediction of a loss of 80% of their working capital funds.]


    I'm not Russian oligarch, but just European medium size IT business. Thousands of other companies around Cyprus have the same situation.


    The business is definitely ruined, all Cypriot workers to be fired.


    We are moving to small Caribbean country where authorities have more respect to people's assets. Also we are thinking about using Bitcoin to pay wages and for payments between our partners.


    So this Cyprus business is history, and all of the companies business operations in Cyprus will be terminated, along with the Cypriot workers jobs, and the tax revenues from that business and the workers pay. Also remember that any surviving businesses in Cyprus will now look forward to a 25% increase in their corporate taxes, mandated by the ever-cooperative EU. How would your business do under those conditions? Arguments along the lines of '... their original tax rate was low' are irrelevant ... margins and prices were set relative to the prevailing tax rate. Now the business tax rate is 25% higher. Of course they will attempt to pass that increase on to their customers. If the business is Cyprus food, and all the Cyprus food businesses just got a 25% increase in their taxes, guess who will end up eating that increase?


    Of course unemployment will soar and tax revenues will precipitously drop. The EU knows this. The notion that tax revenues MAY increase is malarkey, right up there with the IMFs unicorn paper by Blanchard and Leigh. The paper that served as an attempted smoke screen for the IMFs blown forecast by coming up with the explanation that the presence of unknown "fiscal multipliers" were the reason the IMFs projections for Greek GDP were totally wrong.


    It's highly unlikely that Cyprus can now float any sovereign debt bonds because their credit rating is destroyed. Ultimately, Cyprus will face bankruptcy. At that point, they will have to go hat in hand to the EU again, and this time the price will be the sale of Cyprus utilities, firing of public workers, yet more tax increases. Alternatively, Cyprus can leave the Euro. Its a take it or leave it moment.


    On Economic Subjugation:
    If a country gives up its ability to print its own currency and uses another governing bodies currency, that adopted currency now becomes a financial dagger pointed at the heart of the adopting country.


    One thing is certain, when a country gives up its own currency; its options during financial crises are limited. While there are trade benefits associated with Euro adoption, there is also a significant loss of stabilization controls in the adopting countries economic system.


    When things are going well, adoption of the Euro looks like a great decision. But when things start to go wrong, adoption of the Euro by countries with weaker economies risk domination by the stronger economies with subsequent loss of political control and sovereignty.


    Instead of bayonets we have Euros, instead of bombs we have bonds. Conquest is Conquest whether by force of arms or economic subjugation. The results are the same - forced submission to control by others.


    annihilate, crush, defeat, smash, thrash, trounce, wallop, whip, enslave, put down, quash, quell, repress, silence, smother, snuff, squash, squelch... suppress.
    29 Mar 2013, 08:15 PM Reply Like
  • Author’s reply » Contagion...


    The Italian bank Monte dei Paschi reports that customer deposits fell by "a few billion euros"


    They make it sounds like a trivial amount... But looking at their current capital structure, you can see current total deposits are about 8 B Euros. So if a few is more than one but less than three, that means total deposits have dropped by at least 20%.


    And now along comes Cyprus...
    31 Mar 2013, 05:54 AM Reply Like
  • FPA: Once again, thank you for your work on this instablog. I gain more useful information on the EZ mess here then from all the commercial sites I watch, combined.


    Your "info-filter" seems very effective, even if it's purpose is to save you from typing quantities of less useful info :-)


    31 Mar 2013, 12:03 PM Reply Like
  • FPA,
    I would also like to thank you for this very informative blog.


    My take on that announcement is a little different than yours. In order to make a generalized statement to recognize but understate the obvious, I think that "a few" is more than a couple and therefore
    37% or more (3 divided by 8) (I explained my math as I am math challenged;-). JMHO
    31 Mar 2013, 02:02 PM Reply Like
  • Author’s reply » Thanks Silicon. And thanks for bringing up the subject of filtering / editing. This is a complex subject. It involves the selection and presentation of materials as well as the perception of the importance of the materials. It's that latter aspect of filtering and editing that has been simultaneously the most challenging and rewarding for me.
    31 Mar 2013, 04:15 PM Reply Like
  • >FPA


    From what I've seen there is no one better at it either.
    Thanks for taking the time.


    31 Mar 2013, 05:09 PM Reply Like
  • Monte De Paschi is caught up in the middle of a scandal.Their problems are not "just" ez related.
    It will be interesting to see how they survive and if they get the 2b2f treatment.
    3 Apr 2013, 08:41 AM Reply Like
  • The Economist overview back in January is worth a re-read on the topic:


    I would predict that they will be merged with a larger institution, but with some structuring to maintain their flagship name and location (for political reasons, which of course were the roots of their current failed condition as well).


    As for the scandal, I suspect it will fade away without any real solution in the end as regards important political figures that were involved.
    3 Apr 2013, 09:36 AM Reply Like
  • A billion here a billion there....Even Everett Dirksen would have said that adds up.


    31 Mar 2013, 03:44 PM Reply Like
  • Cyprus President's Family Transferred Tens Of Millions To London Days Before Deposit Haircuts

    31 Mar 2013, 04:02 PM Reply Like
  • SMaturn, Of course. Would anyone expect anything less of the corrupt. Only the sheeple and peons get sheared. LOL
    31 Mar 2013, 09:37 PM Reply Like
  • Author’s reply » More on SMaturin's story up above....
    Cypriot banks 'forgave' loans to firms, MPs


    A list of Cypriot companies and politicians that allegedly had millions of Euros in loans written off by the Cypriot Banks at the center of the banking collapse has been forwarded to Cyprus's parliamentary ethics committee.


    According to the list, Bank of Cyprus, Cyprus Popular Bank (Laiki) have "forgiven" companies, MPs and local officials millions of euros in loans over the past five years.
    Among the people listed is Cyprus' former president, George Vassiliou.


    Than we have this:


    Cyprus President's Family Transferred Tens Of Millions To London Days Before Deposit Haircuts


    ENET English reports that Cypriot newspaper Haravgi claims that current President Nicos Anastasiades' family businesses transferred 'dozens of millions' from their Laiki Bank accounts to London just a week before haircuts were unleashed upon his people


    The newspaper, which is affiliated to the AKEL party, reports that three days before the Eurogroup meeting the company took five promissory notes worth 21 M Euros from Laiki Bank and transferred the money to London (Remember that London bank hole...)


    Responding to the allegations, Anastasiades said: “The attempt to defame companies or people linked to my family… is nothing but an attempt to distract people from the liability of those who led the country to a state of bankruptcy.”
    And also from ENET:


    Troika threats following court appeal:
    Following his appeal to the Supreme Court against the Troika's decision to write off shares held in the Bank of Cyprus, Archbishop Chrysostomos has said that the Troika threatened him that “both banks [Bank of Cyprus and Laiki] will go bankrupt”.


    The leader of Cyprus' Orthodox Christian church, which holds millions worth of shares in the bank, said he would not withdraw the appeal unless the governor of the central bank and the finance minister resigned.


    Following the appeal, the court issued a temporary order to suspend implementation of the Troika decision.


    And for dessert we have this:


    News has leaked that the ECB recently provided Emergency Liquidity Assistance (ELA) for some Greek banks.


    The ECB provides ELA funding to shore up insolvent banks. The provision of ELA is not communicated when it happens because that would immediately signal that the bank was insolvent.
    My guess is this intervention represents an ongoing contagion of fear. The EU and ECB will claim there is no contagion... That claim is patently absurd.
    31 Mar 2013, 10:47 PM Reply Like
  • Author’s reply » Ahhh... I finally found something I have been looking for... how much of the money provided by the Troika to the Cyprus banks is being used to pay back maturing debt presumably held mostly by the ECB. Answer, 7.5 B is being lent to Cyprus in order to be paid right back to Europe.


    I found this in the recent ZeroHedge article:
    How Big Is The 'Bailout' Of Cyprus (Hint: Trick Question)


    There is more information in this article, but I can't fully follow it, and one of the key links is broken.
    31 Mar 2013, 11:31 PM Reply Like
  • >FPA-


    I figured that Ivan would be there to "help out" their buddies the Cypriots.
    I wonder what they are trading for the largess?


    1 Apr 2013, 10:58 AM Reply Like
  • Author’s reply » A cute April Fools Joke over on the Greek Reporter...


    Greece and Cyprus Leave Eurozone, Adopt Dralira. From: Greek Reporter.
    1 Apr 2013, 05:31 AM Reply Like
  • I wondered when this would surface, IMO, there was a coordinated effort allowing Merkel to do her work, and then the world led by the USA would ultimately bail them out. They refuse to print euro's$ so there probably isn't another option.


    Obama may be only one to save the EZ:
    1 Apr 2013, 11:32 AM Reply Like
  • Corps wanting tax reform, probably wanting to get taxes raised on the workers by closing loopholes before their cash hordes get raided in the EZ & USA & get taxed, Cyprus gave a wake up call to them.

    1 Apr 2013, 02:07 PM Reply Like
  • Author’s reply » Enet obtains draft troika memorandum for Cyprus


    Entitled "Memorandum of Understanding on Specific Economic Policy Conditionality", the document runs to 24 pages and comes with the proviso "Contains sensitive information, not for further distribution DRP"


    Cyprus can expect microscopic supervision and the thorough "restructuring / resolving of financial institutions" by its troika lenders.


    Envisaged within the 10 B Euro program is the achievement of a 4% of GDP primary balance in 2017 (the original Troika demand had been 2016) and maintaining at least such a level thereafter and to "correct the excessive general government deficit as soon as possible".


    It stresses: "In the event of underperformance of revenues or higher social spending needs due to adverse macroeconomic effects, the government should stand ready to take additional measures to preserve program objectives.


    [In other words as a result of the Trokia's demands, expect further tax increases and salary and pension reductions]


    Revenue Boosting Measures:
    * Raising at least 70 M Euros from property taxation


    * Increasing statutory corporate income tax rate to 12.5% [25% increase]


    * Increasing the tax rate on interest and dividend income to 30%.


    * Increase fees for public services by at least 17%.


    * Increase standard value added tax [VAT] from 17% to 18% this year, and to 19% in 2014.


    Cost Reductions:
    * Increase retirement age for public sector employees by two years and elsewhere for the minimum age for an unreduced pension going by six months per year. [The younger you are, the greater the increase in your pension year. Don't know how this is capped.]


    * Penalties for early retirement [in other words a reduced pension - amount not specified]


    * Pension freeze until 2016 [I don't know what this means - either no retirements, or no cost of living increases?]


    * The number of public sector employees will be reduced by at least 5,000 by 2016, and their pay and benefits amended [Same story as Greece, fire public employees and reduce their pay which will also reduce future pension liabilities]


    * At least 1.4 B Euros will be raised through privatization by 2016 with the Cypriot government expected to supply a list of "assets, including real estate, owned by central government, municipalities and regional administrations.


    * Tax collection and investigations are expected to become more rigorous and the terms of trusts used to shield funds more onerous,.


    * The Troika also demands the implementation of "a system of wage indexation commensurate with ensuring a sustainable improvement in the competitiveness of the economy and allowing wage formation to better reflect productivity developments."


    And finally, special mention of Cyprus' hydrocarbon deposits - the only part of the draft memorandum text that is underlined.


    Program partners expect to receive:


    * A rollout plan for the infrastructure required for the exploitation of natural gas, taking into account the current large uncertainties and risks in this context. The plan should cover: the required investments, associated costs, financing sources and methods, related major planning risks and bottlenecks; and a projection of the revenue streams over time [first version Q2-2013].


    * Outline of the regulatory regime (CERA) and market organization for the energy sector and gas exports, which would be conducive to the introduction and proper functioning of open, transparent, competitive energy markets.


    * A plan to establish the institutional framework for the management of hydrocarbon resources, including a resource fund, which should receive and manage the public revenues from offshore gas exploitation. The preparatory phase should include the required legal steps and their adoption.
    In other words, same economy killing austerity measures as with Greece with the additional caveat of killing the current mainstay of the Cypriot economy, financial services.


    Than we have the requirement for investigation of natural gas resources. This will surly be followed by demands for grabbing those resources.


    People that thought they escaped confiscation of their funds when their under 100k deposits were not stolen will now be the recipients of increased property, income, investment, and value added taxes. Many will loose their jobs, and will face salary and pension reductions.


    The business accounts that had 80% of their working capital stolen now face increased business taxes, income, property, investment and value added taxes. They will of course go out of business causing a massive increase in unemployment. The resultant loss of income tax revenues will require yet more tax increases, and so the death spiral begins to be intensified by each additional Trokia demand for more revenues.


    Publically owned assets will be sold and formal evaluation of the extent of Cyprus natural gas resources will be completed.


    Those natural gas resources will of course be required to be sold to pay off the next bailout which will be caused by the Trokia's economy killing directives.


    It's those natural gas resources that the EU really wants to control.
    1 Apr 2013, 05:30 PM Reply Like
  • Those EZ folks need to learn the "New Jersey salute"! Maybe refusing to do the NG thing until *after* everything collapses and Cyprus has its own currency would be the ticket.


    Let's hope Cyprus learned from stuff that came before and can see the futility of what's proposed.


    1 Apr 2013, 06:27 PM Reply Like
  • Cyprus might be wishing they were bold as Icelanders in a week or two but......its too late for that now. Maybe a prez and his wife being shot so fast at a firing squad that no one had a chance to record it. Like the Ceausescus.


    From wikipedia


    The Ceaușescus were executed by a gathering of soldiers: Captain Ionel Boeru, Sergeant-Major Georghin Octavian and Dorin-Marian Cirlan,[20] while reportedly hundreds of others also volunteered. The firing squad began shooting as soon as the two were in position against a wall. The firing happened too soon for the film crew covering the events to record it
    1 Apr 2013, 06:58 PM Reply Like
  • DG
    Cyprus Parliament President Says "No Future" Under Troika, Calls For "Iceland" Solution



    You might like this one too.
    Gun Control? - How To "3D-Print" A Semi-Automatic Rifle
    1 Apr 2013, 08:25 PM Reply Like
  • Froggey77: A bit OT, but 2.5 minutes of enjoyable.



    2 Apr 2013, 07:14 AM Reply Like
  • Froggey77,When they walk the walk I will applaud them. While its just talking the talk I will assume its just that. Like all politicians they can talk the talk very well. I would assume that if that was really in the cards they would have done that prior to stealing everyones money.


    But I will say this, at least that discussion has started. Maybe the folks will push this so hard that it will happen. If the populace does not get involved they deserve what ever they get. One other thing Iceland JAILED the bankers. Now that is something to be proud of for sure. Until you see the jail. It is only fenced on 3 sides.

    2 Apr 2013, 09:43 AM Reply Like
  • Thanks HTL
    They're great.
    I ran into them about 2009 and haven't seen them in a long time.
    2 Apr 2013, 07:22 PM Reply Like
  • >H.T.Love ... I love these guys. I found them about 6 years ago when an oil tanker cracked up.

    2 Apr 2013, 07:32 PM Reply Like
  • From the daily email blurb...


    • Eurozone manufacturing contracted less than expected, with the PMI index rising to 47.9 in March from 46.8 in February. Meanwhile, the Euro-area unemployment rate rose to a new record high of 12% in February, suggesting that the recession extended into the first quarter.


    • Monte Paschi stock is down as much as 13% in Milan trading today after posting a bigger-than expected loss on bad-loan provisions.


    • The market appears to be searching for the “next Cyprus” and has settled on Slovenia. Slovenia’s 5 year CDS is out 110 bps to 369 since March 22nd. Slovenia, formerly part of Yugoslavia, is a small alpine country of 2 million just north of Croatia. The Country has a new left-leaning prime minister that is already battling real estate corruption scandals in her coalition. The state-owned banks are under-capitalized and need approximately €1billion in additional funds. Combined with general funding needs, the IMF estimates that Slovenia needs to issue around €3 billion in debt in 2013. While its GDP is expected to contract 2% this year, we are hard pressed to directly compare Slovenia to Cyprus. First, the banking sector is much smaller and more manageable. Slovenia’s banking assets are only 130% of GDP, where Cyprus’ were closer to 700%. Also, Slovenia’s debt-to-GDP as of 2012 is only 45% and their 5 year bonds are yielding 5.64%, implying that the country could raise €3 billion from external sources without relying on an international bailout.
    2 Apr 2013, 10:01 AM Reply Like
  • Cyprus is a geopolitical headache for the EU (has been for years) due to the nastiness which flows through there, essentially the central money laundering operation for Russia's underworld (which a few years back merged with Russia's leadership, in a friendly alliance of oligarchies). The sovereign debt/banking issues are just part of the camouflage.
    2 Apr 2013, 07:38 PM Reply Like
  • Not a Faber Fan, but he & I agree with this:


    8:15 PM The expropriation of wealth that happened in Cyprus will happen everywhere, warns Marc Faber. Growing wealth inequality means that the wealthy have nowhere to hide and similar events like those in Cyprus will happen in more countries around the world, including developed nations, where wealthy people will lose part of their wealth, either through expropriation or higher taxation. "You have to be prepared to lose 20 to 30%," Faber says. "I think you're lucky if you don't lose your life." 2 Comments [Global & FX, U.S. Economy]
    2 Apr 2013, 08:39 PM Reply Like
  • I especially believe the "no where to hide" and the "either expropriation or higher taxation" maybe both. Higher taxes for sure.
    2 Apr 2013, 08:40 PM Reply Like
  • Russia's new ultimatum, bring all off shore money home:

    3 Apr 2013, 04:51 AM Reply Like
  • LT,
    The article said there may be a loop hole for a family business, but in a country that not too long ago had the sound of boots on the pavement in the early morning hours to teach a lesson, I wouldn't count on it too much. There could still be low whispers of lessons learned coming soon.
    3 Apr 2013, 06:03 AM Reply Like
  • Pwned by Putin.


    Imagine that, competition amongst the Kleptocrats.


    "All your moneys belong to us."
    3 Apr 2013, 07:30 AM Reply Like
  • Putin, as first among Russian godfathers, knows well that the more money that comes home to Russia, the more competition for the major businesses that money would be invested in...


    By seeming to (I emphasize "seeming to") cooperate with the Western bankers seeking to steal their money, Putin could indeed create a large (but temporary) inflow of money back to Russian markets. Could this have been the plan all along?


    I would NEVER put money into the Russian equity markets, but it will be interesting to look for any effects on stock prices from this attempted mass scale robbery.
    3 Apr 2013, 08:33 AM Reply Like
  • >SM-


    Kind of begs the question as to how many greenbacks are in foreign accounts.


    Gee- I wonder that if we could convince everybody to bring their hoard home how much that would be?


    3 Apr 2013, 08:49 AM Reply Like
  • WT, if they issue a new currency and give 90 days to convert all old dollars to the new dollars at only US soiled banks we would see that number. We could also eliminate all the counterfeit currency out there too. Imagine the shock wave that would create. Something of this nature would not suprise me with the tyranny of our fed govt. Force the money home!!
    3 Apr 2013, 10:46 AM Reply Like
  • they should have already done this, but crime & drug lords won't allow it.
    3 Apr 2013, 10:49 AM Reply Like
  • And folks who love freedom and hate tyrants..Gold and silver eliminates govt control. We need that back.
    3 Apr 2013, 10:54 AM Reply Like
  • TB
    "I would NEVER put money into the Russian equity markets"
    Might be an option play though.
    I don't how it works with foreign exchanges
    3 Apr 2013, 01:33 PM Reply Like
  • >DG-


    Agree wholeheartedly, but when we got off the gold standard in the early '70s and the fat cats had an epiphany on the potentials of loosely controlled credit leverage, I don't think we will ever get 'em back in the barn.


    As far as getting the money home just give 'em 90 days like you said and change the color of the stuff. I think it would be kind of fun.


    3 Apr 2013, 09:30 PM Reply Like
  • WT, And the Dow would surge past 20,000 as the money poured into the market. First in wins!!!! Some how that all seems more like govt run capitalism that is not working to our benefit. We are the peons and are not on the list to capitalize from this. If it ever happens make sure you are in the market ASAP. A little front running of our own.
    4 Apr 2013, 04:50 PM Reply Like
  • earlier Germany and France PMI drops big, contracting. I expect this to put more pressure on them.


    6:12 AM U.K. services PMI rises to its highest in seven months, increasing to 52.4 in March from 51.8 in February and beating consensus of 51.5. New business volumes rose at the strongest rate since May last year and business confidence hit a ten-month peak. With the improvement offsetting contractions in the manufacturing and construction, the data points to GDP growth of 0.1% in Q1 and the avoidance of a triple-digit recession. (PR) [Global & FX] Comment!
    4 Apr 2013, 07:17 AM Reply Like
  • >LT: Yes, the perfect socialist economy, where I walk your dogs and you do my laundry. Pure service, closed loop and clean.


    Umm, but who makes the washer and dryer?


    Oh well, back to the next 5 year plan. How DO we tax dog walkers, anyway, if they run on barter?
    4 Apr 2013, 11:59 AM Reply Like
  • Ayn Rand (Atlas Shrugged 2 is out, I liked it better than part 1) laid it all out very clearly. One of the most believable portions of her prediction was that even the most committed socialists retained (right up until the ultimate culture war crash) a naïve faith in their enemies' ability to use their capitalistic drive and creativity to overcome whatever barriers the socialists erect, and thus to ultimately save the socialists from their own dead end.


    Maggie Thatcher captured the problem in her famous quote: "The problem with socialism is that eventually you run out of other people's money"... But Rand laid out the global parameters of the concept, ie, that the experiment would dominate the entire planet before reaching an ultimate end.


    Like the ultimate Ponzi scheme, it grows and metastasizes, and has long since outgrown even hyperpower national borders. Even tracking a huge polity like the European Union is too small a field of view...
    4 Apr 2013, 12:18 PM Reply Like
  • On that theme of globalized Ponzi monetary schemes:


    Helicopter QE will never be reversed
    By Ambrose Evans-Pritchard



    <<Columbia Professor Michael Woodford, the world's most closely followed monetary theorist, says it is time to come clean and state openly that bond purchases are forever, and the sooner people understand this the better....


    "If we are going to scare the horses, let's scare them properly. Let's go further and eliminate government debt on the bloated balance sheet of central banks," he said. This could done with a flick of the fingers. The debt would vanish.


    Lord Turner, head of the now defunct Financial Services Authority, made the point more delicately. "We must tell people that if necessary, QE will turn out to be permanent."


    The write-off should cover "previous fiscal deficits", the stock of public debt. It should be "post-facto monetary finance".


    The policy is elastic, for Lord Turner went on to argue that central banks in the US, Japan and Europe should stand ready to finance current spending as well, if push comes to shove. At least the money would go straight into the veins of the economy, rather than leaking out into asset bubbles.>>
    4 Apr 2013, 12:24 PM Reply Like
  • Not sure I understand that completely. To print and wipe out debt is always an option, However... I would bet with foreign gov'ts holding US debt , there is a signed agreement not to devalue and cover it.


    It would suit me fine if they did it for the public too.
    4 Apr 2013, 02:11 PM Reply Like
  • Printing doesn't wipe out debt. All you do is trade treas notes for fed notes. Any note is just a claim on labor. So all you do is trade an interest rate for an inflation rate in some asset class somewhere or all classes at the same time. All you've done is trade one sort of problem for another. The underlying issue of growth in the value of your labor vs the growth in the notes that represent a claim on your labor still exists. Sorry, nature doesn't care about semantics.
    11 Apr 2013, 06:23 AM Reply Like
  • True, printing does not erase/eliminate debt, but it hurts its value. Eventually it can drive down the value of long term issues quite a bit, far beyond the small interest payments.


    This is one reason that China's move to climb aboard the US$ tiger to avoid allowing their own currency to trade freely had several inherent dangers for them... They have been buying up US debt to support the $, doubtless far beyond what they intended, and now even though they have halted this support, they still remain seated firmly aboard the tiger.


    Many investors have been gambling that China would soon depart the tiger, but that expectation assumes that they are willing to absorb the instant pain which would result. The yuan would skyrocket in value, pushing the prices for China's export-driven economy upward. The dislocation in the Chinese economy as they lost their foreign trade to cheaper sources would be severe, potentially triggering civil unrest and even war.


    China's other alternative, to go back to the walled-off Communist mystery of Mao, would be even worse, and is literally unthinkable for them at this point.


    The huge debt which has been run up by the American leadership is a grave problem for us, but not JUST for us... Those holding this debt have elected to share our fate, creating strange allies.
    11 Apr 2013, 07:02 AM Reply Like
  • " but it hurts its value."


    Not necessarily. A Fed note is just a note, like a treas note. They have different terms, but what gives either one its underlying value is the value of US labor. Gov price blind regulations that drive up the cost of US labor relative to labor markets in the world lowers the return of US labor and thus its value. As the value of US labor goes down and our note creation goes up, you get dilution of the claim on labor each of those notes represents.


    This is China's problem. They needed us to stay capitalist, so their switch to a communist/mercantilist hybrid would allow their exporters and the gov officials their exporters are tied to, to get rich. A mercantilist approach basically taxes the domestic population via money medium dilution (currency manipulation) to transfer that wealth to exporters. its a risky strategy, because if the market you are trying to export to, goes socialist or communist, then that consumer market begins to shrink, and you as the mercantilist get stuck with a bunch of notes (like the Treas China holds) that start to decline in value. Germany has this same problem with Greece.


    China has another option (so does the US for that matter). If China went full bore free market instead of the coerced markets they have now, they would become the haven for people and capital for the entire world. Capital and valuable labor would flood into China and their standard of living would skyrocket. This would mean their current warlords, uh, I mean, the current communist aristocrats, er, I mean leaders, would have to give up their power and wealth and have to work for a living. That's why it will never happen, not to mention they control education, so their populace thinks this is all happening for the public good. They think the little guy is being taken care of. So while the little guy lives in massive poverty, the guy supposedly looking out for them lives like a king. Whatever happened to redistribution these guys promised?


    This is why the US debt is a problem. Its not because it exists, it always will, but because our note creation is growing at the same time we are instituting policies that are lowering the value of our labor. Somewhere off in the future there is a breaking point for that ratio, and that's where we loose reserve currency status. When that happens and we can no longer export inflation, the standard of living in the US will plummet drastically. Then we will be truly like China with a rich ruling elite, and a vast, vast swath of massively poor peasants, who have almost no hope of ever changing that.
    11 Apr 2013, 07:27 AM Reply Like
  • "Then we will be truly like China with a rich ruling elite, and a vast, vast swath of massively poor peasants, who have almost no hope of ever changing that."


    We are already there.
    11 Apr 2013, 07:46 AM Reply Like
  • It strikes me that it is impossible to differentiate between Gov price blind regulations and government actions (like printing) which wreck the value of the currency and degrade the value of US labor relative to labor markets elsewhere. They are the same thing, functions of government operating with the customary price blinders fully on.


    The objective value of US debt instruments (and hence of American labor as it is represented by those fiat dollars) is indeed damaged (though not instantly erased) by Gov price blind actions.


    I too can create a scenario in which runaway printing CAN be overhauled by some ex post machina event, ie, conversion to an entirely different economic system, but given the current world we live in, that seems unlikely.


    I agree that China has miscalculated the timeline wherein the United States self-destructed into an accelerated version of European Fabian socialism. As I mentioned earlier, socialists (and particularly the communist versions, oddly enough) retain a naïve faith in their capitalist opponents' ability to generate wealth regardless of whatever they might do. They also view EVERYTHING in the universe as mutable and subject to change, EXCEPT capitalists, who are their one true constant. This faulty judgement has landed them on the back of a very dangerous and corrupt socialist tiger, whereas they thought they were harnessing their wagon to a dependable and honest capitalist donkey.


    China's problem is not really whether or not China will survive the disruption from clambering down from the tiger, I suspect China will eventually be better for it, but whether or not the current uberkomrades running things will. They will make their calculations based upon self-interest, and that will rarely result in the best for their nation (in all honesty, our own national leadership works in the same manner). Their best strategy right now seems to be to slowly taper off their dollar marriage, and to attempt to depart the tiger before it goes completely rabid. I think they need to hurry up their plan if they expect to succeed...
    11 Apr 2013, 07:53 AM Reply Like
  • TB, not to get into politics or such...but the black swan that caught China off guard was the 2 wars and their cost of $4-6 Trillion. Until that, the USA was in decent shape on debt to GDP ratio.


    Or at least it was manageable. Then the housing bust that followed making it 2 simultaneous black swans. I would imagine they look back and wish they had done something different that would have changed that outcome.
    11 Apr 2013, 08:03 AM Reply Like
  • "We are already there."


    Exactly. Because from day one of the founding of the US there has always been an effort to use gov to control people's lives. Granted it was much less at the founding, but there was still slavery, which is a form of socialism or communism (a ruling elite controlling everyone else). It has grown over the centuries and really accelerated since about 1900. FDR threw it into high gear, and we have been following this pattern ever since. When you give gov power to control people, even in the name of the little guy, all you do is create the economics for a ruling elite. The access to coercion by anyone makes stealing cheap. If you don't have controls on those people, because you believe they are going to protect the little guy, all that happens is the economics for a ruling elite. They best way to protect the little guy is to not give people unchecked power, even if they promise to protect the little guy. Coercion is the source of one person getting richer and another getting poorer. Its the basic theft transaction and that's why thieves use force and fraud.
    11 Apr 2013, 08:29 AM Reply Like
  • Good discussion guys on Fed notes and debt. James Rickards (author of Currency Wars) provides good perspective on just how fast that Fed printing press is running:


    "The Fed has capital of about $60 billion and assets approaching $3 trillion. If the Fed’s assets declined in value by just 2 percent, that decline applied to $3 trillion in assets produces a $60 billion loss—enough to wipe out the Fed’s capital. A 2 percent decline is not unusual in today’s volatile markets."
    - James Rickards


    Those potential losses don't seem to matter much to the Fed or most of our elected officials -- unless inflation and subsequent USD diversification spirals up -- and by then it will be too late to tweak our unending game of printing.
    11 Apr 2013, 08:43 AM Reply Like
  • "It strikes me that it is impossible to differentiate between Gov price blind regulations and government actions (like printing) "


    The distinguishing factor I use is, "what CAN gov regulate". That's the first issue. The gov can only regulate based on what power the populace CAN grant the gov. The populace CAN grant the gov the power to use coercion, but the populace CAN'T grant the gov the power of surperior market knowledge. Only with the latter could the gov manage prices. Think about that, if the populace had perfect or superior knowledge of prices above what they currently possed, why would they need to grant that to gov, so the gov could give back to the populace what they already had in the first place?


    Thus, whenever gov attempts to regulate prices, the only tool they have is coercion. The gov doesn't have superior price knowledge. Coercion has only two uses with regards to humans. It can either be used to steal (make one person richer and another person poorer) or it can be used as a defense against stealing. The latter is the legitimate role of gov.


    Whenever you see gov not doing the latter and attempting the former, you know that one group of people will get richer and another will get poorer. The problem is that by taking away incentives for the poor to get richer, is that overall productivity goes down. As such, the asset classes that are inflating due to the wealth transfer that thereby make the selected class richer at the expense of the exploited class, are in a bubble. At some point nature forces the assets prices back to their natural level. The decreasing level of productivity means aggregate income is going down. At some point that dimished cash flow will force down the PV of the assets, regardless of the notes in existence.


    The trick is to move past the semantics and conventional wisdom that we hear in the news, from gov schools, and from popular culture (they are all educated to be compliant peasants and only think the gov is looking out for the little guy - it keeps them from asking questions or at least questioning the wrong things), and to start recognizing the reality of what is going on. The more you (rhetorical) start to see the world as a relationship between real productivity and ownership rights in that productivity (notes), then you can understand what the relationship means between note creation and asset creation.


    So when a gov monopolizes a money medium (notes) they have a duty to get the relationship right. To do so means they must be price sensitive. Since the only grant a populace can give a gov is coercion, the gov is blind to prices. Access to coercion means you don't have to pay for mistakes until someone else uses coercion against the gov (violent revolt). Bloodshed is not a market correction you want, and its why gov is always going to war and wasting our blood and treasure. Since gov's only tool is coercion and not price sensitivity, it uses coercion as the only means to regulate.


    It is gov's attempt to use its coercion to regulate things like money mediums, smoking, family, religion, etc, etc that causes the rich to get richer and the poorer to get poorer. That's why you have bubbles and why we believe we have a business cycle. China, the US, Europe, South America, and basically everywhere on the globe gov coercion is being misued. That misuse will forever cause bubbles and lead to the rich getting richer and the poor getting poorer. I will advocate against it, and LT will insult me for doing so, but never-the-less it is real and its not going to change. All you can is find ways to protect yourself by recognizing the bubbles and positioning yourself for them.
    11 Apr 2013, 09:02 AM Reply Like
  • And Plosser is already out there waving the flag of potential capital losses with the Fed's portfolio duration:


    7:46 AM Philadelphia Fed President and noted hawk Charles Plosser tells a Hong Kong audience the Fed should consider reducing the average duration of its portfolio by reinvesting the proceeds from maturing securities in shorter duration paper and should also pare down its holdings of MBS in favor of Treasurys. The fed funds rate should be the primary means by which the central bank conducts monetary policy, he adds. Plosser also notes that the longer the average duration of the portfolio the riskier an exit will be in terms of capital losses.
    11 Apr 2013, 09:12 AM Reply Like
  • "in assets produces a $60 billion loss—enough to wipe out the Fed’s capital."


    The Fed's capital is only the Fed's capital if you believe the Fed is an independent body. You have to remember the mindset during the era of the Fed's creation. It still exists today, but it was getting birthed then. The idea is that the gov is going to setup an entity that is not part of the gov. One of the main reasons for this is to get a public that was educated to have a natural skepticism of gov to think the gov wasn't setting up a gov entity that the people had not given the gov the power to create.


    This is why the Fed is called Federal Reserve and not the US Central Bank. Its also why we have 12 districts and not 1 run out of New York (which is where JP Morgan was). You actually see this discourse between Warburg and Aldrich. Warburg (the banker) was trying to make this politically palatable. Aldrich (the politician) was trying to create a straight central bank. So its interesting that the banker had to convince the politician on the more politically expedient route.


    So when you finally realize the Fed is just an arm of the Treas, you realize the Fed was just an end run to get the 0% notes that the Treas would always prefer to issue. This means the Fed's capital is not what shows on its balance sheet. The real capital at risk is every taxpayer. That's the Fed's (and any CB for that matter) real power. Any person that holds FRN's has their capital on the line.


    Consider this. The member banks are supposed to "own" the Fed via the stock they "own" in the Fed. However, how often do we hear the Fed lovers bragging about how much "profit" the Fed just turned over to the US Treas? Profits are supposed to be wages for owners, and owners are supposed to be the ones holding the stock. So who do you really think owns the Fed via whom the Fed turns its "profits" over to?


    The Fed can't go bankrupt the same way the US gov can't go bankrupt. The reason is, is because its not their capital on the line. Its our capital on the line. All the mumbo jumbo about the mechanics of how the Fed works is just irrelevant. What matters is the reality, and the reality is, its your labor and my labor that backstop all gov actions. So just because the Fed and the US gov can't go bankrupt is irrelevant. What matters is that you and I can go bankrupt trying to support the price blind policies of a Fed/Gov complex pledging both your wealth and my wealth without any real accountability for their flawed theories.


    Its time to question all the semantics and conventional wisdom we have all been told, and start thinking about what is REALLY going on in the world.
    11 Apr 2013, 11:17 AM Reply Like
  • Also interesting is they way the ownership of the Fed was financed. IIRC (it's been a long time), the initial deposit to the Fed was lent out to the (later) owning member banks so they could "purchase" their ownership stakes. In effect, the U.S. Treasury financed and funded the owners stakes in the Federal Reserve Bank.


    All the legislation was done, purposefully, while most of congress was on Christmas holiday so that the opposition would not be present.


    With possibly faulty memory,
    11 Apr 2013, 11:47 AM Reply Like
  • "the initial deposit to the Fed was lent out to the (later) owning member banks so they could "purchase" their ownership stakes"


    This is an way mimics what a bank would do if banks were private and semi-nationalized the way the are now. A bank would be just a warehouse. People would place items in the warehouse, and a receipt would be issue. The traditional item was a precious metal, which was just a money medium. Then a receipt is issued for the money medium that was deposited, and then the receipt became the money medium. You could also deposit a business, and the bank would issue a receipt for the business that could then be used a money medium.


    The value of the notes issued by the bank (warehouse), would be based on the people in the bank and their underwriting ability. In other words, the value of the notes would be determined based on the reputation for the bank to find valuable assets and valuable assets are created by valuable labor. As such, the bank is issuing claims on labor and the value of those claims is determined by the value of the labor.


    So if you think about any balance sheet, the asset side is real things and the liability side is an abstract that simply accounts for ownership rights. Both debt and equity are just forms of ownership rights. We just divide them for accounting purposes to show who has the different classification ownership and the strength of that claim.


    So when the Fed was originally started, what real asset was deposited to create the ownership rights on the liability side? If we say it was loaned from the Treas, where did the Treas get its assets? The only assets a gov can get are the assets it gets from the public. So when the Fed was initially capitalized it was done so via an implied direct claim on all the labor of every citizen in the US. When a gov levies a claim, its called a tax. Congress levied an invisible direct tax on everyone in the US that they couldn't see to create the Fed. The Constitution doesn't allow for direct taxes. The only direct tax is the income tax which was allowed by an amendment.


    Now probably Warburg and Aldrich, et al, didn't realize what they were doing viaing the tax aspect, but they did realize what they were doing was going to be good for them. This is what we are seeing in Europe. The CB is a taxing mechanism, and they don't realize it, thus they tax themselves to prop up their financial markets. So the general populace gets poorer, people connected to the financial markets get richer, and then they wonder why their economic data is so poor. Combine this with national healthcare (a tax on healthcare), gov schools, gov roads, subsidized unions, and it boils down to their technology is not high enough to pay for the artificially fixed costs they have imposed on themselves. Thus, all they can do is get poorer because they don't realize what they are doing to themselves. I do, and that's what I use to drive when I put $25 million to work, and when I don't.
    11 Apr 2013, 12:10 PM Reply Like
  • "... it boils down to their technology is not high enough to pay for the artificially fixed costs they have imposed on themselves".


    And thanks to you-know-who controlling our education system, we have now jumped into the same boat ... *unless* we believe the claims by businesses that they can't find the skills they need are just lobbying lies to enable cheaper labor to be imported with the (to be) relaxed visa rules.


    I do believe *some* are lies. I do believe we also created this scenario not only through our education system, but also through making it unattractive for potential employers to support on-the-job training for many positions, as was done when I was young.


    Partly, again, due to price-insensitive government policies, possibly the most egregious examples being minimum-wage laws and forcing government contractors to pay union scale on government contracts, where applicable, even when highly-skilled lower-cost labor is available in the locale of the project(s).


    11 Apr 2013, 12:31 PM Reply Like
  • The fly in the ointment is that we are and have been exporting inflation. All commodities priced in USD cost more of them when you print them with no commensurate increase of productivity. That inflation is now finding it's way home and we will see it in the behavior of retailers and individuals long before we see it in the behavior of our government.
    22 Apr 2013, 04:42 PM Reply Like
  • Interesting charts from a site that was sent to me unsolicited.
    Note the consumer confidence and the unemployment numbers!



    4 Apr 2013, 06:27 PM Reply Like
  • Want to know why gov'ts are all broke? Why tax increases havn't worked? Why revenue fails to grow ?


    $21 Trillion dollars in off shore accts. from all over the world
    Millions of secret files just released to the public:
    5 Apr 2013, 02:33 PM Reply Like
  • When gov is a thief the most noble action of all is tax evasion. I hope to see it double.
    5 Apr 2013, 03:04 PM Reply Like
  • >HOOP-


    Now, now Hoop.


    That desired result would be tax avoidance with panache, not tax evasion.


    8 Apr 2013, 08:12 PM Reply Like
  • Author’s reply » Portugal High Court Says Some Austerity Elements In 2013 Budget Are Unconstitutional


    (Reuters) - Portugal's constitutional court on Friday rejected four out of nine contested austerity measures in this year's budget, but is unlikely to derail reforms two years after the country's bailout.


    The measures rejected by the court should deprive the country of at least 900 million euros ($1.17 billion) in net revenues and savings, according to preliminary estimates by economists.


    University of Lisbon political analyst Antonio Costa Pinto said that while the impact of the rejected measures was significant, it should not lead to the kind of political crisis that would have been possible had the court thrown out the bulk of the measures.
    5 Apr 2013, 10:53 PM Reply Like
  • 2:54 AM The EU is preparing to take the apparent non-template that is the Cyprus bailout and incorporate some elements of it into a new law that would force haircuts on large deposits in banks that fail, economic affairs chief Olli Rehn has said. Bundesbank Jens Weidmann says that the Cyprus crisis shows that banks can be wound up. Along with Rehn's comments, it also shows that depositors' money is no longer safe in Europe. [Global & FX, Top Stories] Comment!
    7 Apr 2013, 05:01 AM Reply Like
  • This should keep or increase capital flows to the US. The 10 yr may not see 2perc for a long time.
    7 Apr 2013, 07:11 AM Reply Like
  • Germany acct. surplus > 7%
    8 Apr 2013, 07:08 AM Reply Like
  • Author’s reply » Shares in Greek banks NBG, Eurobank fall on dilution woes
    (Reuters) - Shares in Greek lenders National Bank and its subsidiary Eurobank plunged on Monday as investors dumped shares on dilution fears as both face nationalization. Both shares fell 30 percent at Monday's open, hitting their daily volatility limit [in other words, trading was stopped].


    Together, the two banks need 15.6 billion euros ($20.31 billion) in fresh capital to shore up their solvency ratios to levels set by the central bank after incurring losses from a sovereign debt write-down [74% haircut] and impaired loans.
    The two banks told the central bank they are unlikely to raise a required 10 percent of their capital need via share offerings from the market. "Their admission that it is unlikely they will raise the required 10 percent from private investors is quite negative, their shareholders may become owners of a nationalized bank," said Maria Kanellopoulou, an analyst at Euroxx Securities.


    Consequences of Nationalization
    When the government takes over a bank, its common stockholders usually get little or nothing. In addition, bondholders would also get hurt if their debt were restructured.


    What about deposit holders?
    Greek government spokesman Simos Kedikoglou assures Greeks that their deposits are "absolutely safe”. Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of Eurozone finance ministers, told Reuters that the Cyprus bailout, including depositor levies, could be replicated in future. The president of the ECB Mario Draghi claims that Cyprus is no template.


    The prudent thing for depositors here would be to withdraw their money immediately. My guess is we will next see capital controls put in place in these two banks.
    8 Apr 2013, 07:32 AM Reply Like
  • The sad thing is that most common workers do not the ability to transfer money globally like we think. I know I could, but it is not easy to transfer and then access daily to live.


    I do agree that capital controls will come next, but big money is already gone. Just like Cyprus, that loophole to move money out of Cyprus thru another country was placed there in the beginning just for this type of a black swan event. They knew things would crash some day so there was the escape hatch.
    Not counting the inside info available.


    For the average guy, he doesn't stand a chance.
    8 Apr 2013, 07:45 AM Reply Like
  • Author’s reply » Spanish bankruptcies hit record in first quarter of 2013.


    (Reuters) - A record number of Spanish companies went bankrupt in the first quarter of 2013 as companies remained under intense pressure from tight credit conditions and meager demand.


    The 2,564 firms filing for insolvency proceedings in first three months of the year was a 10 percent rise from the previous quarter and a 45 percent increase on the same period in 2012, the survey by credit rating agency Axesor said.
    Spain has been in its second recession in five years for the past 18 months and unemployment is more than 25 percent.
    8 Apr 2013, 01:14 PM Reply Like
  • I would be curious to know what percentage of these companies floated large loans immediately before the sovereign debt crisis...


    Few of the very wealthy people I have met have never had a "fortuitous bankruptcy". Many have had several.
    8 Apr 2013, 07:14 PM Reply Like
  • France on the brink of second depression.

    9 Apr 2013, 07:11 PM Reply Like
  • Goldman lowers gold forecast for '13 & '14, says desire to hold gold and no fallout from Cyprus as factors.
    10 Apr 2013, 05:04 AM Reply Like
  • It is usually best to not follow Goldman. Only muppets listen to them.

    10 Apr 2013, 12:10 PM Reply Like
  • Author’s reply » Tax revaluations are the mechanism of the Troika's privatization program - The seizing of private property for the benefit of friends of the Troika.
    Greece Will Reassess Property Values


    The Greek Finance Ministry said it will quickly proceed with revising property tax values [objective values] that haven’t been changed despite big pay cuts, tax hikes and slashed pensions as part of austerity measures that have greatly reduced the 'objective' value of buildings, many going unrented or with reduced rents.


    The decision by the Finance Minister provides for the formation of a committee that will deliver new values by July 8. The new values will be determined by adjusting data used by previous committees to today’s conditions. In recent years this information has been supplied by prefectural authorities and estate agents, a practice which is set to continue for the time being due to the fact that the property value database, which will adjust values automatically in accordance with transactions, is not yet ready.


    Ministry officials say values will be reduced in several parts of the country, in line with commercial prices which have declined considerably in recent years due to the major drop in demand, especially in the most expensive areas of Athens and the country’s other main cities.


    On the other hand, other parts of the country will see significant increases, particularly in areas where the system of valuating properties according to construction costs has been applied. Hundreds of villages and towns in places such as Myconos, Santorini, Rhodes, Crete and even in parts of Attica will see their values soar.


    So valuations will drop in the big cities in line with a major drop in demand for rental properties. But values are expected to increase in the Greek Islands like Myconos, Santorini, and Rhodes. New tax rates will be set by a "committee". And who assigns people to that committee? In some places valuation will be applied based on construction costs as opposed to current market price???


    The country is in the middle of a major economic depression. How can they possibly justify tax increases? The answer is they can't. It's just another way of confiscating people’s wealth. The primary locus of that confiscation will occur on the Greek islands. These are the properties that the Troika wants to own, and they will steal them by raising taxes until people are forced to sell. The Troika's code word for this is 'privatization.'
    10 Apr 2013, 05:16 AM Reply Like
  • 5:57 AM Siemens (SI) CEO Peter Loescher expects a weak global business cycle to constrain demand for the conglomerate's technology equipment. "Business has not become easier...We still don't expect any tailwind from the global economy and markets," Loescher said. "Many experts expect an upswing in the second half. We have yet to see any signs of that." Comment! [Global & FX]
    10 Apr 2013, 06:18 AM Reply Like
  • Author’s reply » Cyprus To Sell €400 Million In Gold To Finance Part Of Its Bailout
    10 Apr 2013, 10:56 AM Reply Like
  • Do you think we will see those gold sales reflected in the commodities/futures markets? Or, do you think it will be brokered thru the EZ or IMF?
    Has anyone read whether there is a link between gold prices falling right now, and central bank pledges or sales? I don't want to read speculation, just facts!
    10 Apr 2013, 01:12 PM Reply Like
  • Hi OG,
    Here is one SA authors thoughts.
    10 Apr 2013, 02:14 PM Reply Like
  • That article is over a year old and has nothing to do with the question "Are the central banks of bankrupt EZ countries already selling gold, and are they flooding the market?" That is the question I am asking.
    Thanks for trying, Stilldazed, but that article is not on point and too old to matter.
    If anyone sees anything related to Euro Zone countries dumping gold, let's share that.
    10 Apr 2013, 03:19 PM Reply Like
  • OG, I have not seen anything but FAP's post & mine on GS downgrade to even a lower price and I read a lot. I would think some bankrupt countries have had to sell some. But I have not read anything except Goldmans downgrade to even a lower point.


    They are saying it is individuals not central banks, Do you think CB's will announce they are selling (if they are selling)? No pun intended, but I don't think they will be very open, we may find out way after the fact. I know that you want to be ahead of that if it is happening, I just don't know how to find out.
    10 Apr 2013, 03:24 PM Reply Like
  • I will add, as most of you know I have said the the mother of all trades would be short the euro$ and long the USD$ if you could time it, IMO, the CB's are taking this trade off the table by bringing the USD up to parity and devaluing the yen....that has closed half the gap of the euro vs. usd$ so there isn't going to be much left for the little guy.


    I think the goal is global parity +/- of currencies.
    10 Apr 2013, 03:27 PM Reply Like
  • Hi OG,
    Ouch, small details like the year, not just the date, Are important. Embarrassing slip up.
    10 Apr 2013, 03:39 PM Reply Like
  • Hello, LT.
    I am quite sure we ( you and I, and Joe Six Pack and John Q. Public) will not know unless a good reporter stumbles across it or someone leaks the information.
    That doesn't mean the market makers don't know, or even represent them and game us in the process, playing both sides, as usual.
    In past times central banks went through the IMF. That doesn't mean that will happen this time, with the EZ all involved.
    After England sold their gold, it was public information. Gordon Brown is infamous regarding his decision to sell gold at its lowest in the late 1990's.
    I am not worried about the little guys selling. It is the Central Banks and market maker manipulators that can slaughter us along the way. I am simply asking that anyone who reads an article reporting that central banks are selling, please share the source. I am also questioning whether central bank selling will impact the commodities markets/ the futures contracts. If you see any articles that answers either of those questions, please share the source.That is what I am asking; it's that simple.


    On Sept. 12, 2001 I read a translation of an Italian news article on the internet that disclosed there was uncharacteristically large short positions taken against the US Markets on 9/11.
    I never read anything like it in the US papers at the time.
    All kinds of information comes out. If you see anything, please share.
    10 Apr 2013, 03:49 PM Reply Like
  • Cyprus to dive into its gold reserves -FT


    <<Cyprus is the first euro member to sell its reserves in the three-year eurozone crisis. To raise €400m, it will need to sell just over 10 tonnes of the yellow metal of the 13.9 tonnes held by the central bank. The central bank’s holdings account for 62 per cent of its total official reserves, according to the World Gold Council, the industry lobby group.


    Governments in the eurozone’s beleaguered southern periphery tend to hold a large part of their total foreign reserves in gold – the Italian central bank holds 2,451 tonnes of gold, over 70 per cent of its total reserves, while Portugal’s holding of 383 tonnes accounts for 90 per cent.


    James Steel, precious metals analyst at HSBC in New York, said the Cypriot plan “has been a psychological blow to the market”. “The market has taken a pretty hard tumble,” he added.


    However, one Cyprus official said the move was likely to be a “one-off”. Some analysts said it would be unlikely for larger countries to turn to gold sales to reduce their debts.>>

    10 Apr 2013, 04:00 PM Reply Like
  • No need to be embarrassed, it happens to all of us. I appreciate that you took the time to look, Stilldazed!
    10 Apr 2013, 04:08 PM Reply Like
  • I will share whatever I find. I bet that the recent drop in gold is due to Cyprus already going to mkt with their gold, IMO that was in the bailout deal and not disclosed.
    Probably GS knew it and that's why they downgraded.
    10 Apr 2013, 04:17 PM Reply Like
  • Oy Gee and everyone: Greetings. They may not have much left to sell. My apologies for not posting in some time but things have been and remain kind of crazy here. I filed paperwork for my new start up: Fergus Hill Estate Development in Austin and have received my EIN from the IRS and there is allot more to do. I'm not ready to quit my day job so the bulk of my work on the new company is being done on week ends and after hours. I'll keep you all posted as I can. I hope everyone is well and seeing good profit.
    10 Apr 2013, 06:22 PM Reply Like
  • Robert: You'll do well! Here's best wishes for your endeavor!


    11 Apr 2013, 05:45 AM Reply Like
  • Thanks HT.
    22 Apr 2013, 05:22 PM Reply Like
  • Author’s reply » Cypriot committee suspends probe into bank transfers list


    (Reuters) - A parliamentary committee looking into who transferred money out of Cyprus before the island's banking system was locked down in March suspended its probe on Tuesday, complaining of not being given all the data it had demanded from the central bank.


    The head of the Cypriot parliament's ethics committee, which was due to look into a list detailing transfers of more than 100,000 euros from the two major banks - Bank of Cyprus and Cyprus Popular Bank - said on Tuesday that the list fell short of what he had requested. "It was with great disappointment and anger that, when we opened the envelope, we realized it contained data for only 15 days even though we had asked for a year," lawmaker Demetris Syllouris told reporters. "This kind of behavior is unacceptable."


    In a letter to Syllouris, then central bank deputy governor Stavrinakis said he was only attaching a list of individuals and companies who transferred money out of Cyprus between March 1-15 this year.


    "We believe your request would lead to a huge volume of information, which would possibly not help the aim of your committee," Stavrinakis said. This included foreign companies that transfer large sums of money each day, as well as Cypriots who bought property, he said.
    10 Apr 2013, 12:28 PM Reply Like
  • If the Cypriot committee were serious they would also look at the transfers to "affiliated banks" in London and Russia.
    But I don't think the CB and political "powers that be" in the EU or in Cyprus want to open that can of financial worms. Too many people might be implicated in dealing information for money or "favors".
    10 Apr 2013, 04:18 PM Reply Like
  • First ECB report on Eurozone Household Finances and Housing- Just released yesterday.
    An astounding 96% of households hold savings accounts while over 60% own their own homes with only 20% with a mortgage.



    10 Apr 2013, 04:48 PM Reply Like
  • WT added info
    Germans Among Poorest in Europe: ECB


    (and Cypriots the richest)
    Yahoo finance today (In case the long link doesn't work.)

    10 Apr 2013, 10:18 PM Reply Like
  • >froggey-


    Go figure-
    I guess the long period after unified Germany happened was even more expensive than I realized. I recall it was 15 years before the old East came up to the West. I was there for a couple of weeks three years ago and things seemed prosperous. I did not, however visit the bail-outees.


    10 Apr 2013, 11:14 PM Reply Like
  • A bit of a different view from Zero Hedge


    Germany: Land Of Poverty... Or Prosperity?
    16 Apr 2013, 03:48 PM Reply Like
  • There was no mention of the cost of reunification in the article. Formerly "West" Germany funded over two trillion dollars into the former East to build infrastructure. That investment is still not flowering. The frustrating situation shows in unemployment numbers with unemployment in the former West Germany at 6 percent, it remains at 11.2 percent, in the former east. GDP between the two is at $40,000 per capita in the west and less than $30,000 in the east, although the east figure is more than doubled in comparison with the west since reunification. the link to a NY Times article a few months ago clarifies much more.



    An older Reuters article adds some more info.



    The Zero Hedge article didn't get into the meat of the differences, as well they should have. Simply showing graphs and drawing conclusions isn't the whole story.


    16 Apr 2013, 09:26 PM Reply Like
  • Froggy that is a great eye opener article. I assume that the east germans are the poorest germans since reunification. Just a thought.
    17 Apr 2013, 08:58 AM Reply Like
  • oops, WT, I should have read your comment prior to commenting.
    17 Apr 2013, 08:59 AM Reply Like
  • >DG


    No problem, Amigo-
    I had done some research a while back trying to find distressed companies in the country and just had a bit more insight. {:-))


    17 Apr 2013, 10:00 AM Reply Like
  • OT .. The Fed Reserve sends 12 big banks, a powerful Wall St. Law Firm, and Hedge Fund the Fed Minutes a day early.


    I always wondered how they could analyze and trade huge swings in seconds. Now we know.


    I expect to hear major uproar over this.


    Source: it's headlines on
    10 Apr 2013, 06:28 PM Reply Like
  • LT,
    But..but.. that sounds like insider trading. Trading on knowledge that isn't public, before it is made public.(sarc off) Just admitted, nothing will be done about it, look at the Congress people that trade on similar info.
    10 Apr 2013, 06:43 PM Reply Like
  • >Stilldazed-


    Can't be insider trading- Just ask Blankfein- They were just looking out for their clients.


    What they will do about it is just let the fat cats et al keep doing it.


    Life moves on


    10 Apr 2013, 07:09 PM Reply Like
  • None of these early releases to the golden few should surprise us when golden ones like Mr. Corzine helped so generously in framing our economic recovery strategy: Worth a re-post since sometimes our memories wane. :)
    17 Apr 2013, 10:05 AM Reply Like
  • MJ,
    Thanks for the reminder.
    17 Apr 2013, 01:37 PM Reply Like
  • Author’s reply » The Central Bank of Cyprus has denied the gold sale reported by Reuters . The spokesperson for the Central Bank of Cyprus said that a gold sale was, “never discussed nor are there current or future plans to do so on the board’s agenda.”


    Reuters based its story on a draft report from the European Commission which assessed the nation's financing needs.
    So is the CBC lying, or were Reuters and the FT fed a false report for the purpose of manipulating the gold market, or did something else happen?


    Reuters and the FT are reliable news sources who's reputation for accuracy is their primary business. My read is the CBC is lying...


    I would think Gold would pop on the news..
    11 Apr 2013, 10:24 AM Reply Like
  • Author’s reply » I thought this was interesting information about Central Banks and Gold.
    Gold sales on their own would be far from a magic bullet to solve euro zone financing problems, but the Cyprus situation shows that even a relatively small gold sale may help address severe debt problems.


    This is something that has the gold market somewhat concerned given that a big sale would push down the price. Indeed, spot gold posted its biggest one-day drop in nearly two months on Wednesday after news of the planned sale broke.


    Despite this, potentially hefty barriers lie in the way of central banks making sales to meet financing needs. Article 7 of the Protocol of the European System of Central Banks guarantees central bank independence and freedom from government influence. In other words, if a central bank doesn't want to sell its gold, in theory it can resist.


    The European Central Bank issued an opinion against an Italian government proposal to levy a 6 percent capital gains tax on the central bank's balance sheet, apparently including its gold holdings, in 2009.


    The ECB noted at the time that the monetary financing prohibition within the Treaty "is of key importance to ensuring the primary monetary policy objective of price stability, which must not be impeded", "We can't rule out the possibility of other banks trying to find a way of mobilizing gold, but history is against it," she told the Reuters Global Gold Forum on Thursday.


    The Central Bank Gold Agreement, originally signed in 1999 and currently in its third incarnation, caps gold sales by signatories at 400 metric tons a year.
    But if central banks in troubled euro zone states started to sell, that could quickly change.


    Leveraging gold does not necessarily have to mean selling it, of course.
    Central banks can also swap gold for cash with other central banks or other institutions through a simultaneous sell spot/buy forward transaction, with a view to redeeming it later.


    The World Gold Council says methods other than selling may offer better returns for gold holders. "It is important that Cyprus explores all the options available to it and outright sales are not the only one, a spokesman for the WGC said. "We believe that the most effective way for countries to benefit from holding gold is to leverage its gold as collateral for sovereign issuance."


    "A gold-backed bond could raise four or five times the value of Cyprus' current total gold reserves - more than 2 billion euros in today's money."


    Of course if a country is in debt and uses gold as collateral on a leveraged loan, if they than default., the gold is gone without a sale...
    11 Apr 2013, 11:15 AM Reply Like
  • Author’s reply » Cyprus forced to find extra €6 B for bailout,


    Crisis-hit Cyprus will be forced to find an extra €6 B to contribute to its own bailout under leaked updated plans for the rescue.


    In total, the bill for the bailout has risen to €23 B, from an original estimate of €17 B, less than a month after the deal was agreed. And the entire extra additional cost will be imposed on Cyprus. [That's over a one-third increase!].


    After a more detailed "debt sustainability analysis" the shortage in the nation's finances is far deeper than first thought. The revised bill shortage that Cypriot taxpayers and depositors have to pay has now been set at €13 B. The €23 B overall bill is larger than the size of the Cypriot economy.


    [My guess allowing large depositors with juice to escape the capital controls is responsible for most of that €6 B shortage.]


    There was also a suggestion that holders of €1 B worth of Cypriot government bonds could be urged to agree to a debt swap [haircut or longer payback period]. This could signal a messy period of negotiation and uncertainty.


    [NOTE: Cyprus’s bonds are governed by English law, something Cyprus had to agree to in order to lure investors to its smaller, inherently riskier economy. English law makes it easier for private investors to sue if their bonds are restructured as part of a bailout.]


    Some analysts also warned that the projections for Cyprus's economy on which the bailout plans are based could prove to be over-optimistic, as has repeatedly been the case in Greece, potentially prompting a fresh bailout.


    [Yes, those projections would be more of the IMF's fantasy projections which as demonstrated in Greece were complete fabrications.]


    Cyprus's economy is expected to suffer a deep recession, with GDP contracting by 8.7% in 2013, and 3.9% next year. However, a government spokesman in Cyprus last week suggested the downturn this year could be far deeper, perhaps up to 13%, which could throw the bailout plans off course within months.


    [The amount of money needed to be raised by Cyprus just increased by one-third. So the bailout plan is not off course, it's blown-up.]


    Simon Derrick, chief currency strategist at BNY Mellon, questioned the idea that the economy would recover within two years, recording growth of 1.1% in 2015. "Why would confidence return and make people want to put money into Cyprus?" he said. "The economy is three things: banking, property and tourism. You're not going to rebuild an offshore banking industry in Cyprus; and in tourism it's competing against Turkey, where the currency is down 50% since mid-2005."
    Derrick failed to mention the proven economy killing effects of severe austerity measures like increasing taxes, and mass layoffs. Cyprus will of-course enter an economic death-spiral.
    11 Apr 2013, 12:50 PM Reply Like
  • Author’s reply » Greek Unemployment Soars By 1.5% In One Month, Hits Record 27.2%.


    January unemployment surging by 1.7% in one month to a new all time record high 27.2%. Youth unemployment also hit a record high of 59.3% in January.
    11 Apr 2013, 12:56 PM Reply Like
  • Gold article, has lot's of patting his own back, but some good charts.
    11 Apr 2013, 12:59 PM Reply Like
  • Currency Wars..some nations can't compete:

    11 Apr 2013, 01:00 PM Reply Like
  • On COMEX GOLD Stocks-


    Article published 8 April, 2013. Reports dramatic drop in gold holdings from JP Morgan Chase's stockpile down 1.2 Million oz. over the last 120 days.
    That's a lot of bling!



    11 Apr 2013, 04:32 PM Reply Like
  • Author’s reply » Same thing appears to be happening with physical Silver in COMEX's depositories.
    I am not familiar with this news source...
    11 Apr 2013, 04:58 PM Reply Like
  • physical is being sucked up by the tons and skipping the reinvestment of contracts. THEY ARE TAKING DELIVERY OF THE METALS.


    This could turn the paper price of the metals on their nose as physical goes crazy. Watch for backwardation first and if the price for this month gets crazy compared to next months...well that would mean....IT'S ON!!!


    Pay attention to the miners...they may start to pop but until they do I would be careful. There are going to be a lot of explorers that are not going to make it if this price and sentiment keeps up. Check burn rate and cash avail as DD.
    11 Apr 2013, 05:48 PM Reply Like
  • EZ crisis back on several fronts...and Cyprus confirms it may have to SELL it's GOLD, meeting being held today in the EZ.

    12 Apr 2013, 08:43 AM Reply Like
  • Thanks for the link LT. Isn't it hilarious. Sell its gold to raise a paltry €400m in a €23B bailout. If central banks have to start selling their gold to fund bailouts they may finally start letting the price rise. It is better to sell it at $3000/oz than $1500/oz.
    12 Apr 2013, 08:53 AM Reply Like
  • "Hollande Calls for Global Tax Havens to Be Abolished"


    Boy, these morons just don't understand economics. This is what happens when people only get their education from journalists and gov schools. It creates a mob of rabib imbeciles that will eventually wind up eating their own bodies to try and quell their hunger. The sad thing is the mob will wind up voting for the very things that will make them poorer and guys like Hollande richer all in the name of "protecting the little guy".
    12 Apr 2013, 08:55 AM Reply Like
  • Jak, that was my first impression exactly. I can't prove it but I think OG was thinking the same way that the drop in Gold price very well could be CB selling high instead of buying and just not reporting it.
    Ex: JPM storage dropped >1 million oz. recently.


    So now the mkt. knows it thus GS downgrade and they will pile on. It doesn't look good, but meantime Germany is picking off the assetts of the bailed out on the cheap,


    IMO, Soros is right. Germany needs to leave the euro, and if I were a dictator and the EZ wanted all my country just for a bailout...I would take the high road and withdraw and do it alone.
    12 Apr 2013, 09:17 AM Reply Like
  • I have been saying for a while that I think germany will leave the euro. I do not see another solution. Once they leave the euro will drop and improve the situation for everyone left in the euro. I think germany will not be the only one to leave however. Some of the other northern members may go too. The remainder can then have a chance with a cheaper euro but unless the leadership improves its just buying time. They are rapidly running out of other peoples money.
    12 Apr 2013, 10:05 AM Reply Like
  • Evolution or devolution?
    22 Apr 2013, 05:29 PM Reply Like


    On Thursday, it emerged that Cyprus would need to raise an extra 6 B euros to secure a 10 B euro bailout. Mr Anastasiades is urging EU leaders to change their policy towards Cyprus, but he is NOT asking for more money.


    The German government has also confirmed that the size of a eurozone bailout will not increase.


    Late on Thursday, a Cypriot government spokesman confirmed that one fundraising option being considered was the sale of some of the country's gold reserves.


    Jonathan Loynes, chief European economist at Capital Economics, said that the "biggest burden of the increase in the bailout will fall on depositors and bank bond holders, whose combined contribution will rise from an expected 5.8 B euros to 10.6 B euros." [ But wait a second... read the next section...]


    Late on Thursday, Cyprus relaxed restrictions that were imposed last month on access to accounts in order to head off a run on banks.


    A new decree, which will remain in place for seven days, lifts ALL restrictions on transactions under 300,000 euros, a move aimed at helping cash-starved domestic businesses which had difficulty paying suppliers and employees.


    Also, the daily limit on transactions outside of Cyprus not requiring prior approval is raised from 5,000 to 20,000 euros.


    However, the daily cash withdrawal limit of 300 euros stays in place.
    So we have talk of increasing the amount to be confiscated [stolen] from large bank accounts, BUT capital controls on transactions under 300k Euros are being removed while daily cash withdrawals of 300 Euros remains in place. Sounds kind of ominous for small deposit holders...




    Cyprus mulls early EU structural funds:


    (Reuters) - Cyprus wants to put EU structural funds to earlier use, but is not asking for a bigger bailout from the euro zone and the International Monetary Fund than the agreed 10 billion euros, EU officials said on Friday.


    Cypriot President Nicos Anastasiades told reporters in Nicosia on Friday that he would send a letter to European Commission President Jose Barroso and European Council President Herman Van Rompuy to give it extra assistance given the bad economic situation of the island.


    The letter ... has nothing to do with asking for more money than the sum agreed in the MoU [memorandum of understanding]. It asks about finding ways to use EU structural funds in better ways to help Cyprus.


    Structural funds come from the long-term EU budget and are used to co-finance projects in less EU developed countries to help them expand economically. The flow of such funds is spread over the seven years of the EU budget, but can be accelerated to increase the amount of money in the earlier years at the cost of the latter ones -- this method has been employed to help Greece already.


    12 Apr 2013, 09:07 AM Reply Like
  • Author’s reply » European Union finance ministers say they've agreed to extend the repayment of emergency loans to Ireland and Portugal for a further seven years, easing the pressure on both countries to exit their bailout programs and resume normal borrowing.


    The decision by ministers of the 17 EU nations that use the euro currency is expected to be backed by the ministers of all 27 EU members when they meet later Friday at in Dublin Castle.
    12 Apr 2013, 10:11 AM Reply Like
  • Author’s reply » Cyprus announced, then refuted, then re-admitted, it would need to fund a portion of the incremental €7 billion in cash demands by selling €400 million, or nearly all 13.9 tons, of its central bank gold. Today, we learn that this demand came from none other than the head of the ECB Mario Draghi. Bloomberg reports: "European Central Bank President Mario Draghi said the profits of any gold sales by the Cypriot central bank must be used to cover losses it may sustain from emergency loans to Cypriot commercial banks."
    12 Apr 2013, 12:33 PM Reply Like
  • That's been the EZ way....give em a bailout then take all the assetts ASAP and leave the country worse off in 6 months (Greece). Grant you, gold does not generate income, but it does generate & instill confidence and gives them some leverage.


    Without income & some financial security (even tho $400M is small in the scope of >$10B) countries can not service debt, and the gold can be a nice emergency fund.
    12 Apr 2013, 12:55 PM Reply Like
  • Kitco op ed states the sell off today is directly related to Draghi's comments.
    12 Apr 2013, 05:14 PM Reply Like
  • Kitco News op ed on gold sell off related to Draghi comments on Cyprus:
    12 Apr 2013, 05:11 PM Reply Like
  • Is there really any gold to sell? Has it been loaned or ? already? Do they physically have it in the CB of Cyprus? More paper swap? It really is continuing to sound like a bad soap opera. Maybe this is how they are getting the gold to return to Germany? Enquiring minds want to know.
    12 Apr 2013, 06:33 PM Reply Like
  • Austria refuses to end bank secrecy in tax evasion and off shore accts.
    13 Apr 2013, 08:24 PM Reply Like
  • G-20 to meet and set debt reduction targets to 90% GDP. Want even lower. To pressure China further on more open mkt. currency.
    14 Apr 2013, 03:45 AM Reply Like
  • Cramer ... I know most are not his fans, but here is what he is watching this week & says by Friday we should have a feel for the global economy. So far he has been correct.
    14 Apr 2013, 03:47 AM Reply Like
  • GOLD...I am up way to early on a Sunday, so my vivid imagination is running wild. Question :
    What IF, the EZ and CB's are now deciding to make countries sell their gold to pay for bailouts and other necessities?


    IMO, after making Cyprus to this when $400 M is pennies compared to $16 B bailout, and GS downgrade on gold to next support of $1250..
    I would bet the big countries and boyz are short gold. They made countries buy gold high, shorted it, and now making them sell cheap for a grand slam in profit and further damaging/punishing them for mistakes.
    and, take a couple of hedge funds down who they don't like.


    If true, gold has a bumpy road. Can't eat it, costs too much to store it, and to some a waste of capital not being used along with paying interest instead of drawing interest. Double whammy there.


    Someone is going to wind up with a pile of gold almost free.
    14 Apr 2013, 06:49 AM Reply Like
  • LT,
    Yup, probably go back on the gold standard then.
    14 Apr 2013, 11:44 AM Reply Like
  • >LT: Then again, if the Vampire Squid wants folks to get rid of their gold (and so maybe drive down the market price), will they be ready as it falls past 1300 to start buying again? Maybe they want to swap paper for physical PM for their own reasons. Did they sell a lot of gold at or near its highs earlier this year or last year?


    Do any of you believe that GS is out to help the small investor these days? Have they turned over a new leaf?


    Do I ask a lot of questions? Sigh :-)
    14 Apr 2013, 11:34 PM Reply Like
  • LT, here is Peter Schiff's answer to your questions
    15 Apr 2013, 06:08 AM Reply Like
  • SH,
    Re: " Have they turned over a new leaf?"


    This in 2 days ago:
    "Goldman Sachs Group Inc.'s (GS) lead outside director, James J. Schiro, said in his first letter to shareholders accompanying the firm's proxy on Friday that the board is "very focused" on the reputation of the firm as he broadens his role on the board."


    Perhaps their new leaf is to enhance further their "reputation" with muppets. :)
    15 Apr 2013, 07:07 AM Reply Like
  • OG, agree with Peter. The Chinese will be screaming MOAR!!! They are looking to get rid of fiat us dollars for gold so this will make them happy. Now to set off the copper colander. Wonder if this has anything to do with the negotiations going on in China over North Korea. Just a bit of speculation there well maybe more like out there. .
    15 Apr 2013, 09:42 AM Reply Like
  • Dg, With the flu epidemic, N.Korea, and many other things going on such as Malaysia election....I don't think China is worried about the USD$ or gold. IMO, they have a long term plan and are just sticking to it. China and other CB's are more concerned about how much more Japan does. That's a bigger threat. It's even made China's USD look better.
    There was perceived bad news out on China's growth rate at 7.7%, but their domestic economy was up 12%, so it's not as bad as the media portrays it. They knew they couldn't grow at 10-20% forever. In fact, IMO they are doing pretty well at cooling it down slowly.


    The media has been hurting since the election for barn burner news to dropping and china flu has given them something to run with...don't believe much that we read for a while til the dust settles.
    15 Apr 2013, 10:21 AM Reply Like
  • I heard but have not read that Japan is looking to do a little rearming. I assume its over NK and China issues. The powder keg is getting bigger. SK I heard is looking to do a bit more rearming. I would think China would be smacking NK upside the head with everyone looking to rearm in the pacific that is not good for Chinas ability to bully folks around. Wait till the Phillipines, Viet Nam, Loas, Cambodia, Australia and India start adding to the keg. We have added to Guam already. No way I see this as good for China.
    15 Apr 2013, 03:45 PM Reply Like
  • 6:06 AM The eurozone swings to a trade surplus €10.4B in February from a deficit of €4.7B in January and comes in well above consensus of €3B. The move to a surplus was due to falling demand for imports rather than because of export growth. The deficit for energy narrowed on an annual basis, while the surplus for manufactured goods increased. (PR) [Global & FX] 1 Comment
    15 Apr 2013, 07:43 AM Reply Like
  • I am posting 2 snippets here, the first is pitiful that we let large corps get away with this...think of the drag on the economy.


    5:48 AM Procter & Gamble (PG) is reportedly planning to save up to $2B by extending the time it takes to pay suppliers to 75 days from 45 days. P&G hopes to sweeten the pain by working on an arrangement in which banks would pay the suppliers, possibly early, and then receive the money from P&G later on. The suppliers would be charged a low interest rate until P&G pays up. Companies that could be affected include Albany International (AIN). [Consumer] Comment!


    GM, F 5:33 AM European car registrations dropped for the 18th consecutive month in March, slumping 10% to 1.35M vehicles. Germany led the way as sales skidded 17%, while Spain, Italy and France all fell, although the U.K. rose 5.9%. GM (GM) registrations -13%, Ford (F) -16% and Toyota (TM) -17%, although Honda (HMC) +17%. "People have stopped buying cars as consumers are much less confident of the future, especially after the latest decision on Cyprus," said analyst Hans-Peter Wodniok. (PR) [Top Stories, Global & FX, Consumer] Comment!
    17 Apr 2013, 06:16 AM Reply Like
  • What we need is a law that says large corps can't charge anything for their products. Then we can have all the benefits of slavery, or at least get rid of all the laws that are apparently forcing us to buy the products of large corps.
    17 Apr 2013, 06:23 AM Reply Like
  • Germany support for euro waning:

    17 Apr 2013, 07:49 AM Reply Like
  • Nice article LT.
    17 Apr 2013, 09:07 AM Reply Like
  • I always thought it would eventually make sense for Germany to cuts its losses and leave the EU. Eventually, they would make up the losses by not having to subsidize AR accounts they would never really be able to collect on.

    17 Apr 2013, 09:29 AM Reply Like
  • Europe in trouble?


    "The investment of money in Europe is now a risk far greater than present yields can justify. Senior debt, subordinated debt, deposits; anything can now be taxed, confiscated or impounded at the direction of Brussels/Berlin. Nothing is safe!"

    17 Apr 2013, 09:47 AM Reply Like
  • this is not a prediction, just an observation & my opinion.


    The only thing keeping that EZ ship afloat is not necessarily Germany, but the $2 Trillion in corp profits stashed there and the $20 Trillion in Switzerland, the Cayman islands (that the thousands of files of account holders was recently released).


    So, when that money starts moving out to a safer place, those bonds will hit the mkt. like ETF's did Gold this week...and a huge collapse that mirrors Cyprus begins. and DG is right, nothing is safe there.


    I am not saying this happens, but that it could. I am silently watching to see when US corps start slowly spending that money and/or start begging for a "tax holiday" to onshore it back here.


    there is no doubt in my mind, the next major global push will be to close loopholes that allow corps to pay zero taxes.
    17 Apr 2013, 10:00 AM Reply Like
  • LT I would love for corps to pay zero tax after implementation of Fair Tax. As it stands now only the select few corps with contacts in Washington pay zero tax.


    Corp tax is payed by the people not the corps. Corps just raise the cost of product to collect the tax from the shoppers. We pay our income tax and the corps income tax but all to often the corps just keep that added income and split it with the politicians in Washington and it NEVER gets paid. What a racket.
    17 Apr 2013, 10:38 AM Reply Like
  • Author’s reply » Athens (dpa) - Cyprus‘ parliament must ratify a 23-billion-euro (30.3 billion dollar) international bailout deal in order for it to become valid, government spokesman Christos Stylianides said on Wednesday.
    17 Apr 2013, 11:37 AM Reply Like
  • FPA
    Wrong link.
    17 Apr 2013, 12:04 PM Reply Like
  • Author’s reply » Hi Froggey77
    The source is "Europe Online Magazine" The article title is: Cyprus' parliament must vote on bailout deal: government official.


    That is what comes up when I press the link... what are you getting?
    17 Apr 2013, 12:15 PM Reply Like
  • FPA
    It's working for me now too.
    I was getting a book at Amazon.
    Consistently the same book.
    Anyway thanks for the check.
    17 Apr 2013, 06:29 PM Reply Like
  • Author’s reply » Farage Unleashed: "You Are Common Criminals"


    Some excerpts from his speech


    ... I tried over the years in this parliament to predict what the next moves would be as the euro disaster unfolded. But not even me, in my most pessimistic of speeches would have imagined, Mr Rehn, that you and others in the Troika would resort to the level of common criminals and steal money from peoples' bank accounts in order to keep propped up this total failure that is the euro.


    You even tried to take money away from the small investors in direct breach of the promise you made back in 2008.
    I must say, the message this sends out to investors is very loud and clear: Get your money out of the Eurozone before they come for you.


    What you have done in Cyprus is you actually sounded the death knell of the euro.


    ... then we have a new German proposal that says that actually what we ought to do is confiscate some of the value of peoples' properties in the southern Mediterranean eurozone states.
    But what of this place, what of the parliament? This parliament has the ability to hold the Commission to account. I have put down a motion of censure debate on the table. I wonder whether any of you have the courage to recognize it and to support it. I very much doubt that.
    17 Apr 2013, 02:52 PM Reply Like
  • The more I hear that man, Farage, the more I like him!


    If he survives the Euro demise, along with the EZ, there's hope for them over there.


    17 Apr 2013, 03:53 PM Reply Like
  • Author’s reply » Egan-Jones downgrades Germany rating to A from A+
    17 Apr 2013, 04:04 PM Reply Like
  • Author’s reply » This was already a powder keg...


    IMF Warns Spanish Debt-Load Is Unsustainable


    As Bloomberg Briefs notes, general government primary borrowing, a measure that excludes the cost of paying interest on government debt, was revised up to 7.9% of GDP from 4.5% for 2012.


    The inability to narrow the budget deficit appears partially due to lower real GDP growth forecasts and even then a recent study has found that World Economic Outlook real GDP growth forecasts showed a tendency to systematically exceed outcomes. This phenomenon was particularly prevalent in countries with an IMF-supported program.


    The IMF warns Spain "will need to undertake unprecedented fiscal efforts to bring their debt ratios to traditional norms," as most countries have never experienced debt levels similar to current ones; and seemed to think a debt restructuring is more likely and will "entail substantial and long-lasting economic and social costs."
    Given what happened in Cyprus, it's time for the Spaniards to pull their funds out of Spanish banks. In fact, it's time that Spaniards moved their financial assets off shore where they can't be stolen by the EU and a Spanish government run by the Spanish banks.


    Of course, you can't take your property, and that is exactly the reason behind the new German proposal [reported by Nigel Farage] that says the EU needs to confiscate some of the value of peoples' properties in the southern Mediterranean Eurozone states. This would be done though a "one-off" property tax. My guess is that rental properties will be allowed to pass part of the tax increase off to the renters. Lots of room for maneuvers in a government that is under investigation for massive corruption.


    Spain's bond costs should go through the roof on this as "likely debt restructuring,” means haircuts. On top of that Spanish unemployment is already very high, and that means the base of people with jobs that you can tax is small. A small base means higher tax increases for those that still have jobs or businesses.
    18 Apr 2013, 01:08 PM Reply Like
  • There would not be anything wrong with the debt write-off alone, but they will structure it like Greece, where they wind up still owing the same or more.
    IMO, politicians are now willing to fix the tax structure in the EZ, USA or anywhere. The lobbyist and corps are just too strong, they own the pol's everywhere.


    The end result is going to be very slow growth, deflation, negative GDP. With the babyboomer retirement changing demographics, consumer spending won't offset it. Old people downsize, spend less on goods & services. It's just normal. Nothing is going to change this.
    18 Apr 2013, 02:03 PM Reply Like
  • A new study by consulting firm AlixPartners estimates by 2015, the cost of outsourcing manufacturing to China will be equal to the cost of manufacturing in the U.S


    18 Apr 2013, 02:04 PM Reply Like
  • P.S. Can we have a new concentrator ?
    18 Apr 2013, 02:04 PM Reply Like
  • Author’s reply » Link to the new concentrator
    18 Apr 2013, 05:53 PM Reply Like
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.