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  • Stability Of The European Union June 2, 2014 To December 31, 2014 266 comments
    Jun 2, 2014 7:54 AM

    This instablog is designed as an interactive News Concentrator devoted to news and discussions about 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.

    SADLY, A LOT OF THE LINKS I POSTED HERE ARE NOW BROKEN. I HAVE NO IDEA WHY.


    tinyurl.com/25vyea7

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


    tinyurl.com/2vvcnxv

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


    tinyurl.com/2vvcnxv

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

    tinyurl.com/29grmpy

    =================
    EFSF

    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 [tinyurl.com/3xde35o] 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 Durden.tinyurl.com/3ulxgmj

    The original copyrighted graphic is from Charles Hugh Smith (" 2011) attinyurl.com/ygsa6j

    Added February 9, 2012

    Greek General Government Debt Percent GDP
    tinyurl.com/73h5q2x

    (March 10, 2012) tinyurl.com/7moa6tg

    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 tinyurl.com/7axvcmw)

    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. tinyurl.com/8425yf7

    ============

    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 tinyurl.com/76d39dj

    FUNDING GAP

    (click to enlarge)

    From: ZeroHedge - tinyurl.com/88qfjmc

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

    From: The Disciplined Investor tinyurl.com/7yg5zku

    (click to enlarge)

    Here are some interesting charts on Italy sourced from Bloomberg's BRIEF?August 7, 2012, available on "The Big Picture" site:tinyurl.com/8lty5uj.

    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 tinyurl.com/8fpz6nz.

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)

    ----------------------------------------------------------------------------

    2013

    (click to enlarge)

    From: Labor Force Survey by the Hellenic Statistical Authority January 10, 2013 tinyurl.com/bzjlk4m

    (click to enlarge)

    From: Labor Force Survey by the Hellenic Statistical Authority January 10, 2013 tinyurl.com/bzjlk4m

    (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.

    ============

    Latest youth unemployment chart as of May 31, 2013

    (click to enlarge)

    From: ZeroHedge Nov 26, 2013 tinyurl.com/lpjlh58

    Socgen in its most recent report predicts that Europe is only half way through its lost decade of 2007-2018 (see chart). We blame much of this weak performance on a slow policy response in tackling both the sovereign and banking crisis, and the still too slow pace of structural reform. The fear is now that the euro area is on the verge of deflation.

    Nice video on the European Debt Crisis...

    Hat tip to DoubleGuns

    The European Debt Crisis Visualized (Jan 13, 2014)

    (tinyurl.com/nsz4z4d)

    ----------------------------

    Anti-Euro Vote Percents Across Europe in May 2014 Elections

    (click to enlarge)

    From ZeroHedge, July 15, 2014
    Portugal Business Lending Drops Most On Record

    tinyurl.com/pj2wx8k

    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 (266)
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  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Link to the previous EU News Concentrator:
    http://tinyurl.com/obh...
    2 Jun 2014, 07:58 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Here is my take on the EU elections.

     

    Eurosceptic nationalists scored large victories in the EU Parliament elections in France and Britain last Sunday as critics of the EU more than doubled their seats in what appeared to be a large protest vote against austerity, limitless immigration, and presumed resultant unemployment.

     

    France:
    The French Prime Minister Valls referred to the breakthrough by Marine Le Pen's anti-immigration, anti-euro Front National a political "earthquake" as the Front National won 26 percent of the vote becoming France's number one political party in the EU. I doubt Valls would throw out that term without careful consideration, so irrespective of what the 'talking heads' say, the French results are a political bomb-shell.

     

    Le Pen, the leader of the French Front National says the people want to take back their destiny. The people want to build another Europe, a Europe of free and sovereign nations and freely decided cooperation. She said the election results in France represent a massive rejection of the EU.

     

    As a consequence of the FN's win, President Hollande, pledged that France MUST push the EU to change direction, saying the triumph of the French far right in European elections showed voters felt the EU was not serving them. In a televised address to the nation Hollande said this had been "a vote of mistrust towards Europe." "Europe has become illegible, distant, basically incomprehensible, even for governments. This cannot go on". I note he is not saying anything here about corrective actions. It sounds like he thinks things can be fixed with some publicity campaigns. Good luck with that approach.

     

    Just to be crystal clear here, France's FN has pledged to close France's borders to stop "the free movement of cheap foreign labor", to drop the euro (!!) and return to the franc, to end free trade agreements with America. French exit polls suggested that anger over immigration played a larger role than economic worries in the far-right Front National's upswing.

     

    I think the results in France can be summarized in three words: Vive la France!

     

    However, I have to say I am suspicious of the roots of the FN and I wonder if any political party can escape the influence of the true power behind the throne.

     

    By the way, only around 43% of the people voted. This is likely to be used in an attempt to trivialize election results that don't go according to plan. In other words, the results don't reflect the "true" feelings of the underlying population. However, in the end, what matters are those that vote.

     

    Meanwhile in Britain:
    Farage's UKIP won 27.5 percent of the vote, with the Labor opposition winning 25.4 percent and the Conservatives 24 percent. This win by Farage will increase pressure on PM Cameron to take an even tougher line on the EU. Farage's position should be clear to the readers of the EU concentrator.

     

    "The whole European project has been a lie, I don't just want Britain to leave the European Union, I want Europe to leave the European Union."

     

    PM Cameron's pro-European Liberal Democrat coalition partners ended up with one seat! That's a loss of ten out of eleven seats!! This is nothing less than a disaster for one of the British government's junior coalition partners, the Liberal Democrats. As a result, a senior figure, Matthew Oakeshott, member of parliament's House of Lords, resigned from the party last Wednesday calling for Nick Clegg, leader of the Liberal Democrats, to stand down after loosing all but one of their 11 seats (91%) in the EU Parliament. If Clegg's leadership is challenged, it could put the future of PM Cameron's government into doubt less than a year before the 2015 national election. If Clegg's leadership is not challenged after loosing 91% of his seats, something is seriously wrong.

     

    While the results of the election should serve as a “wake up” call for the established British government, I suspect they either don't understand the message, or they refuse to accept it. The message I see is that a lot of people want limits on immigration. People don't want to be ordered about by people outside their country telling them what they can and cannot do. People don't want to be disenfranchised.

     

    Look at what Le Pen is saying:
    The French people "... no longer want to be led by those outside our borders, by EU commissioners and technocrats who are unelected. They want to be protected from globalization and take back the reins of their destiny". Words to that effect should be familiar to regular readers of the EU Concentrator.

     

    Remember this classic speech from Nigel Farage (http://tinyurl.com/73p...) where he exposed the actions of unelected EU commissioners and technocrats who fearing the Greek people's vote in a public referendum forced their democratically elected president out by the application of financial pressure. The same thing happened in Italy. Farage basically provided us with a look behind the curtain as to who is actually running the show.

     

    Ramifications for the Transatlantic trade Agreement:
    The pro-trade center-right and center-left parties still control a majority of the seats in the European Parliament and officials in Brussels insist they have the support needed 'eventually' to see an EU-US pact ratified.

     

    But following these elections, EU and US officials are bracing for a bumpy ride. In other words, the recent elections will likely translate into slower progress.

     

    Le Pen, the leader of the National Front has vowed to block the EU-US deal. “If these negotiations, conducted on the sly, succeed, it would be a catastrophe for our economy, our democracy and for our freedom to feed ourselves as we wish.” Beppe Grillo, the leader of Italy’s Five Star Movement, has also spoken out against it. Farage wants the responsibility for trade to Britain in British hands, not the hands of the EU. I doubt they can stop it, but they sure can delay it until reinforcements appear.

     

    Summary:
    The real impact of the EU parliament elections are more likely to be felt in FUTURE national elections.

     

    I expect anti-EU members to have the greatest impact in their home countries, not in Brussels. It seems more likely that nationalist members will use their new positions as a forum to influence government in their home countries towards more Eurosceptic positions, and to fight delaying battles on issues such as trade agreements. The greater the ability to delay, the greater the influence.

     

    I would re-evaluate investments in EU agriculture and energy based on increasing trade with Europe until the dust settles. Expect more targeted EU attacks on single businesses such as Google. In other words, I expect an increase in cross-country anti-business behavior. If they can't do it uniformly, they will try to do it piecewise. Expect more EU protective exemptions to be granted, particularly with respect to French agriculture.
    2 Jun 2014, 07:59 AM Reply Like
  • H. T. Love
    , contributor
    Comments (18896) | Send Message
     
    Comprehensive summary Rattie! Good, insightful post.

     

    HardToLove
    2 Jun 2014, 12:16 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » I added a chart in the header showing the anti-Euro vote across countries. It's just below the picture of Angela.
    2 Jun 2014, 08:52 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Bloomberg June 2, 2014:
    BNP Fine Stirs French Anger, Pressuring Hollande to Act
    By Fabio Benedetti-Valentini and Mark Deen http://tinyurl.com/ot6...

     

    A potential $10 billion U.S. penalty against France’s largest bank BNP Paribas SA (BNP) for its alleged dealings with Iran and other sanctioned nations, is stirring outrage in the country.

     

    Hollande, who during his 2012 campaign described the world of finance as “my real enemy,” is now under pressure to seek leniency for BNP Paribas.

     

    [It Starts....]
    The right-wing Front National, which beat France’s two mainstream political parties in the May 25 European parliamentary elections, called on the government to “defend the national interest” in the case. In a statement on its website, the Front National accused the U.S. of “racketeering,” in an effort to weaken BNP and aid its American rivals. “We demand that the French government not stay idle,” the statement said.

     

    Some in France say the penalty against the bank is disproportionate. Former French Trade Minister Pierre Lellouche said in Le Monde that it was “shocking and exorbitant.” “It would be unacceptable for the French government to do nothing at a time when the European Union is negotiating a free-trade accord with the U.S.,” he said.

     

    [Is the fine an opening salvo to put pressure on France to remove its objections to that trade agreement?? No... they would not do that would they? ;) ]

     

    French officials are acting behind the scenes to help the bank, Jean-Marie Le Guen, minister in charge of relations with parliament, said yesterday. “Megaphone diplomacy is not what’s called for here,” Le Guen said on BFM television. “The United States can’t treat its allies like this.”

     

    The U.S. is claiming jurisdiction because the transactions were processed in dollars. Simon Maughan, head of research at financial-analysis firm OTAS Technologies in London. “The point is that if you use dollars and make dollar transfers, you’ve got to play by U.S. rules.”

     

    “This affair is part of Washington’s hegemonic ambition in law and commerce,” said Jacques Myard, a lawmaker from Former President Nicolas Sarkozy’s UMP Party. “Washington has the annoying habit of trying to apply its laws outside its jurisdiction and use its strength for commercial ends.”

     

    BNP’s leverage in the case is limited, because it risks suspension of its U.S. banking license. The bank has a large corporate and investment banking operation in the U.S. and owns BancWest, which operates retail branches in California and about 20 other Western and Midwestern states, according to its website. [Ahhhh.... so the leverage on this is much greater than 10b.]

     

    [The Plot Thickens]
    BNP’s efforts to clean up its operations were focused on a unit in Geneva that structured deals to move oil and other commodities around the world, people familiar with the investigations on the U.S. side said the transactions being probed weren’t restricted to the Swiss city.

     

    About 30 executives who worked at BNP’s energy and commodities finance unit in Geneva and Paris have resigned, gone on leave, been fired or relocated since 2012, three people with knowledge of the staffing said last week.
    ===
    Sell (BNP.PA).
    2 Jun 2014, 09:24 AM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    IMO, we will see much more "anti-globalism" in the EU and eventually here in the USA, here we call it "protectionism".

     

    I have expected this for a while now, and it appears cracks are appearing in the "crony capitalism" societies.

     

    I expect it to get louder and worse.
    2 Jun 2014, 11:12 AM Reply Like
  • tripleblack
    , contributor
    Comments (13580) | Send Message
     
    I think our next elections in November will demonstrate that whereas the citizens of the EU are rediscovering the power of grass roots political movements focused upon narrow local issues, we are moving in the opposite direction.

     

    Crony capitalism may also start to detach from the dominant political forces in Europe, though I have my doubts, given the fact that the various new winners are very preoccupied with jobs.

     

    As for the US, I see the crony socialist/capitalist conversion accelerating and becoming more firmly imbedded here.
    2 Jun 2014, 09:14 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Busy day...

     

    From: ZeroHedge - Nigel Farage May Team Up With Italy's Beppe Grillo
    http://tinyurl.com/mo7...

     

    UKIP's Nigel Farage met with 5-star leader Beppe Grillo earlier this week after both parties performed strongly in European Parliament elections. “The leader of Britain's anti-European Union UK Independence Party (UKIP) said on Sunday he hoped to form an alliance with Italy's 5-Star Movement in the European Parliament. "I met Beppe Grillo last week … I am hoping we can do a deal with him and our group will sit bang in the middle politically of that parliament with a strong Euro-skeptic agenda. If UKIP and 5-Star can form a coalition, the move will likely undercut David Cameron's reported attempts to cut off UKIP's EU funding by trying to poach UKIP allies which hitherto were said to be 'unacceptable' to the Tories.

     

    Forming a political group gives its members more power to support or block legislation, greater access to funding and the right to sit on committees. To form such a group in the 751-seat Strasbourg-based parliament, 25 members of parliament from seven states are needed. In the new legislature, UKIP will have 24 seats and 5-Star will have 17 seats.

     

    Farage repeated previous comments that he would not work with France's National Front leader Marine Le Pen, who this week struck a deal with four other Euro-skeptic parties. "They come from a different political family," he said. "We want nothing to do with that party at all."
    2 Jun 2014, 09:43 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Spain Prepares $8.6 Billion Economic Stimulus Package

     

    Spanish Prime Minister Rajoy is planning to launch an $8.59 billion economic stimulus package, a move to keep sky-high unemployment from rising and lowering the risk of deflation from derailing the country's recovery.

     

    Mr. Rajoy told 200 business leaders at a conference in Sitges that his government will on Friday approve the details of the plan, which is set to take effect in the second half of this year.

     

    Mr. Rajoy also said he would cut the main corporate tax rate to 25% from 30%.

     

    The main idea, he said, "is to lower taxes."
    2 Jun 2014, 10:13 AM Reply Like
  • H. T. Love
    , contributor
    Comments (18896) | Send Message
     
    So the Spanish actually do what the U.S. has jawboned about for years and done nothing - increase competitiveness by lowering corporate tax rates.

     

    We are likely to sit another decade or so before doing anything in that arena.

     

    HardToLove
    2 Jun 2014, 12:24 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » It's astonishing HT. The U.S. Has the Highest Corporate Income Tax Rate in the OECD currently at
    39.1 percent. That overall rate is a combination of a 35 percent federal rate and the average rate levied by U.S. states. Unless of course your business is in CA. Their rate varies between 8.8 and 10.8%. So the total tax bill in CA is 43.8 to 45.8%. Gee, I wonder what companies are going to do about that?

     

    Corporations headquartered in the 33 other industrialized countries that make up the Organization for Economic Cooperation and Development (OECD) have an average rate of 25 percent.
    2 Jun 2014, 01:22 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    What tax rate do corporations pay? A lot less than you would think. The average corporate tax rate to both federal and state is between 12 and 13% in spite of the 39.1% supposed tax rate. Tax credits and a whole mess of crony capitalism chew the top off very well.

     

    http://cnnmon.ie/1eQMSbq

     

    http://on.wsj.com/1nIvzNA

     

    WT
    2 Jun 2014, 03:43 PM Reply Like
  • H. T. Love
    , contributor
    Comments (18896) | Send Message
     
    WWT: I think we should add back in the cost of tax compliance.

     

    Then see what the total/percentage looks like.

     

    Getting a bit more esoteric, they pay 0% - customers or shareholders pay for all of it.

     

    HardToLove
    2 Jun 2014, 03:55 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Yeah, but the average is not nearly as important as the marginal. If you had a chance to open up a new factory, but it would require you to work another 20 hrs a week, your inclination to give up that extra 20 hours a week when you are already working 60 is eroded as the marginal amount of income you get to keep for working those extra 20 hrs gets diminished.

     

    So, if that extra work only gets you 20% of what you would earn often means the extra effort is not worth it, especially when you already have a very satisfying lifestyle. The result is no new factory, no new jobs from that, and no new taxes from the effort. Then people say, "see the average is not so bad", but what they never saw was what didn't happen. The "seen and the unseen" is one of Bastiat's most important lessons.
    2 Jun 2014, 04:00 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    There are all sorts of mysteries out there. The actual cash flow, the check written to uncle is what I focus on. The shell games can be played ad nauseum from then on. I want to know how each country's tax bill on businesses compares to mine.

     

    From other readings we are about at the 50 percentile compared to other 'rich' nations. Not withstanding that Hoop's point is quite valid- Examine what the marginal rate is- That's the one that counts.

     

    One thing I know for sure it's not anywhere near 39%.
    2 Jun 2014, 05:15 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    In general a corporate tax is just about the dumbest thing anyone could do. Corporations are just associations of people. As such, corporations are people and only people pay taxes. So the idea that taxing corporations is somehow not taxing people is like saying property taxes don't tax people.

     

    At the end of the day the people who pay corporate taxes are customers, vendors, employees, shareholders, or all of the above. The problem is, the taxation is hidden and people don't see it, so they think some nasty, evil corporation is paying the tax and not them.

     

    Add to this that corporate taxes are a small piece of overall Treas collections, and the fact that we set up any barriers for corporations shows double stupdidity.

     

    Capital is like water. It will always flow to the past of least resistance which is also saying it will always flow to its highest return. All corporate income taxes should be abolished. The resulting benefits would easily pay for any increases in the Fed deficit and debt.
    2 Jun 2014, 05:30 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Forget corporate tax rates!! Look at small business tax rates. There you find that 39% figure because small business does not get to buy lobbiests, senators, congressmen and presidents.

     

    I know what my tax rate is after paying all the various taxes and at the margin its 39% fed, 15% ssn ( I pay both halves as a small business owner) state tax, 1% city tax, unemployment, workers comp, various regulatory fees, taxes on various services (phone, electric, gas, water to name the most obvious one) numerous licensing fees and that is just the obvious ones I can recall right now.

     

    My tax rate is well over 60% in total.
    1 Jun 2015, 10:59 AM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    “The United States can’t treat its allies like this.”
    Since when is France a "true" ally ?

     

    Last I heard, we couldn't even fly over their airspace.
    2 Jun 2014, 11:07 AM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    FPA, I wonder if this election has anything to do with some of the mega-mergers that are taking place with companies that have tons of cash stashed in the EU ? (ex=Pfizer bidding for Astra-Zeneca)
    2 Jun 2014, 12:01 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » That's an interesting thought LT. I wonder if owning a European company with lots of employees might provide insurance in case the EU, in response to the extreme parties, decides to retaliate against the US for throwing its weight around. The EU has some significant economic weight too.
    2 Jun 2014, 01:02 PM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    I don't think it has anything to do with jobs, or weight. It's just cash and the tax benefit of not on shoring the money.
    in Phizer's case, they had $60 + billion, and bid $100 billion for AZ....it was highly advantageous tax wise....not counting the drug pipeline.
    IMO, $100 b was too high.

     

    ONE big question I have had is what will happen to the EU capital ratios IF that $2 trillion stashed there gets pulled and spent ?
    2 Jun 2014, 03:47 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » King Juan Carlos announced Monday that he will abdicate in favor of his son so that fresh royal blood could rally the nation. http://tinyurl.com/nxd...

     

    Not sure what's going on here. One possibility is that Spain's traditional two-party system could be in disarray after the EU vote where the country's traditional two-party system took a big hit.

     

    In the 2009 EP election, the two parties together received 81 percent of the votes. This year they got only 49 percent, a development that many commentators in Spain see as being the beginning of the end of the country's two-party system. The election result is being seen as an indicator of the general elections in Spain next year. http://tinyurl.com/p4b...

     

    So the political infrastructure continues to fracture and the country, specifically Catalonia what's to be more automous.

     

    I don't see how King Juan Carlos abdication and the succession of his son Felipe is going to help the situation. It appears the country wants a different form of government... A Third Spanish Republic?

     

    Pedro J. Ramírez, the former editor of El Mundo, has said this week that if Spain’s political leaders do not immediately reform the Spanish system - politically and constitutionally - revolution will arrive. http://tinyurl.com/q38...

     

    Something to keep an eye on... Jssss what a news day this has been.
    2 Jun 2014, 09:23 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » (Reuters) - The European Central Bank is poised to impose negative interest rates on its overnight depositors, seeking to cajole banks into lending instead and to prevent the euro zone falling into Japan-like deflation.
    5 Jun 2014, 07:59 AM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    Greece open to selling all its major ports
    http://on.mktw.net/1kH...
    7 Jun 2014, 11:28 AM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    Re: Greece selling its ports-

     

    They better watch out- Putin may just come in and annex them all.

     

    WT
    9 Jun 2014, 11:50 AM Reply Like
  • tripleblack
    , contributor
    Comments (13580) | Send Message
     
    Nope. Putin will step in when Greece finally gets booted out of the EU, and drops out of NATO.

     

    THEN the bear comes callin'...
    9 Jun 2014, 12:46 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    I wonder if they could get away with having Ruskies dressed as Greek independent freedom fighters in Cypress-

     

    Bit of a stretch, I suppose.

     

    WT
    9 Jun 2014, 05:23 PM Reply Like
  • tripleblack
    , contributor
    Comments (13580) | Send Message
     
    Check the history on the last such occasion. Cypress nothing, they did it in Greece just after War 2. And the outcome was a very near thing...
    9 Jun 2014, 08:00 PM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    after a few elections, Germany softens

     

    German ex-chancellor says more time needed for EU reforms
    As EU policymakers continue talks regarding budget consolidation, former German Chancellor Gerhard Schroeder stressed the need for southern European indebted countries to be given more time to fix their budgets, lest voters turn to extremes on the political right and left.

     

    EU rules allow for slower budget consolidation if a country makes investments or undertakes structural reforms, although officials want to see proof that real reform efforts are taking place.

     

    During a meeting in Luxembourg yesterday, finance ministers agreed there was no need to change the EU Stability and Growth Pact, which reduces budget deficits to 3% of gross domestic and public debt to 60% of GDP.
    ETFs: EU, EUFN, GUR, ESR, IFEU
    20 Jun 2014, 05:20 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » July 15, 2014 - Portugal Contagion Spreads: Espirito Santo To Default On Portugal Telecom Loan, Business Lending Drops Most On Record From: ZeroHedge

     

    Banco Espirito Santo bonds and stock is hitting record lows (down over 10% on the day). Meanwhile, the contagion has aparently spread to Rioforte, which controls Grupo Espirito Santo's non-financial arm. They are likely to default on a EUR 847 million payment to Portugal Telecom. Meanwhile, Portuguese business lending in May collapsed at a record pace (down 8.23%). http://tinyurl.com/pj2...
    ===

     

    ZeroHedge seems to be more hysterical lately, but the chart in the above article on Portuguese business lending is quite compelling that all is not right in Portugal. (I included it at the bottom of the EU concentrator for archival reference).

     

    Remember, there are no EU bail-outs anymore, there are bail-in's. So large depositors in these EU banking institutions are at risk to fund the failed business decisions of bankers. Why would anyone in their right mind keep a large amount of money in an EU bank? Of course, if all the large depositors did flee, than I am sure what would follow next would be some-kind of hidden bail-out tax.
    15 Jul 2014, 10:57 AM Reply Like
  • H. T. Love
    , contributor
    Comments (18896) | Send Message
     
    Rattie: If the big money flees the banks, the little guy gets screwed. I expect that social unrest might result. 'Course, depends on how well hidden the "bail-out tax" is hidden from the populace?

     

    HardToLove
    15 Jul 2014, 11:07 AM Reply Like
  • tripleblack
    , contributor
    Comments (13580) | Send Message
     
    FPA: The definition of what constitutes "large depositor" will be extremely fluid. Its the way similar crooks of lesser stature do their American income tax returns. They start with the bottom line fictional number, and then back up the page, making the rest of the form fit the desired outcome.

     

    What we cannot know is when a "more equal pig" will have its personal swill endangered by the current policy. Even so, I believe we can rest assured that when that happens, policy will indeed change.
    15 Jul 2014, 11:11 AM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    I would bet the big money is already gone, just like Cyprus. They knew these problems were coming and have already made counter moves.
    15 Jul 2014, 11:13 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » July 15, 2014 - Jean-Claude Juncker has been voted in as the European Commission President by 422 votes to 250.

     

    As is the custom in the EU, the vote was made via SECRET BALLOT. Nigel Farage stated that "Absolutely nobody in the United Kingdom when they voted in the European elections had any idea that Mr. Juncker had anything to do with the elections..." "There's been a coup d'état on nation-state democracies," Mr. Farage added.

     

    * In what I suspect is related news, William Hague resigned as UK Foreign Secretary and will be replaced by Phillip Hammond. In Philip Hammond, the UK has a Foreign Secretary who has said he would vote to leave the EU if it does not REFORM. Hammond's appointment sends a clear message that reform is fundamental to the UK's EU membership.

     

    Joe "When it becomes serious, you have to lie" Juncker does not meet David Cameron's idea of someone that will lead EU reform. Cameron suffered a humiliating defeat as EU leaders voted 26-2 in favour of Juncker's nomination for European commission president.

     

    Before the vote Cameron told EU leaders they may live to regret the appointment, warning them of the grave consequences for public opinion in Britain. Cameron condemned a "backroom deal" to appoint Juncker, who was being "railroaded" through against the wishes of Britain and Hungary.

     

    Cameron, who warned of "wafer thin" British support for the EU, told EU leaders: "[Jean-Claude Juncker] is the ultimate Brussels insider who has been at the table for the last two decades of decisions. If you want change is that the type of person you want for the future?" http://tinyurl.com/me5...
    15 Jul 2014, 10:58 AM Reply Like
  • tripleblack
    , contributor
    Comments (13580) | Send Message
     
    Unsurprising. In fact, its SO unsurprising that I am almost surprised at the outcome.

     

    The UK will be leaving the EU soon, perhaps shockingly to many EU elites who have pooh-poohed the idea for years.

     

    The 26-2 vote is a dramatic dismissal of recent EU elections, where the upheaval was dramatic and the wishes of the electorate apparent.

     

    I have rarely seen a megastate whose ruling elite was so unified, and yet so numb to the wishes of the ruled.
    15 Jul 2014, 11:16 AM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    There is an article where a bill is introduced in the UK to make tax inversion mergers/takeovers more difficult...this comply's with my prediction of protectionism coming globally.

     

    The article states that the entire EZ is terrified now after the huge take overs and bids of late. Phizer, GE, Medtronic, etc and this is just the tip of the iceberg.

     

    I don't have time to post the link.
    15 Jul 2014, 11:20 AM Reply Like
  • tripleblack
    , contributor
    Comments (13580) | Send Message
     
    With China building the world's largest Cartel structure hand over chop stick, and the EU about to sport some major defections (UK, of course, but others could follow, even some that voted for Juncker), and currency wars getting hotter and hotter...

     

    Protectionism is coming, and soon.
    15 Jul 2014, 11:25 AM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2579) | Send Message
     
    article about the ECB and QE

     

    http://seekingalpha.co...
    16 Jul 2014, 03:16 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » This is worth a read...
    The Italian Government Owes Over $100 Billion To Private Suppliers July 27, 2014 - ZeroHedge http://tinyurl.com/lv9...
    27 Jul 2014, 11:45 PM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2571) | Send Message
     
    Great find FPA. Italy has many examples to follow globally in its own brand of "deficit spending." The end of this year could be a time of reckoning for a lot of hot spots around the world.
    mj
    28 Jul 2014, 06:52 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Banco Espirito Santo Plunges: Shareholder Meeting Cancelled Due To "Unexpected Facts"

     

    Despite DE Shaw and Goldman Sachs recommending investors buy the shares. [LMAO]

     

    Despite Bank of Portugal reassurance last night that "BES is able to raise capital" ... the stock is plunging this morning on news of "unexpected facts"
    http://tinyurl.com/m3m...

     

    You have to love that phrase "Unexpected Facts".

     

    At first, you kind of gloss over it, but than it starts gnawing at your consciousness as you get that uh–oh feeling in your gut and the hairs on the back of you neck start to uncontrollably quiver. Not only is the news unexpected, but it’s factual, and significant enough to cause the cancellation of a pre-arranged shareholders meeting... the shareholders response is to start bailing - the shorts are smiling, the sheep are bleeding... all is right in the bankers world as they extract their pounds of flesh http://tinyurl.com/qbp...
    29 Jul 2014, 10:59 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    I like falling knives! However I'm all full up on bank stocks and this looks like a falling Sword. I'll take a pass on this one!
    29 Jul 2014, 11:04 AM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2579) | Send Message
     
    Nice choice of music, FPA.
    29 Jul 2014, 03:05 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Speaking of European banks.

     

    http://on.wsj.com/1toz9Ol

     

    "At one point, the bank examiner in his December letter scolded Deutsche Bank executives for a “regulatory reporting infrastructure that is fragmented and ineffective in ensuring high-quality, accurate reports.”"

     

    Watch out for this. Often this language is driven by lawyers at the regulatory agencies, and the goal of the lawyer is to have the ball in the regulator's court. So, and exit interview with bank management might say one thing, but the report says another. Then management has to decide how much to spend to fight the report. Of course, even if you win, the same regulator you won against is still your examiner, and guess how good they are going to feel on their next visit. So guess how you get treated after that.

     

    What might be brewing here is a coming shake down (aka - "if you pay a fine, we will drop charges). Maybe foreign banks with offices in the US have be sighted as targets.
    29 Jul 2014, 03:21 PM Reply Like
  • SMaturin
    , contributor
    Comments (2268) | Send Message
     
    Yeah you really gotta watch out for those Unexpected Facts.

     

    Especially when bungee jumping with banksters.

     

    "Oops, reality! It was only a used rubber band!"
    30 Jul 2014, 01:42 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Some of those "Unexpected Facts" about Banco Espirito Santo [BES] have now surfaced ...

     

    July 30, 2014 - Portuguese Regulator Bans Short-Selling After Banco Espirito Santo Unveils Massive $5 Billion Loss. From: ZeroHedge http://tinyurl.com/q4c...

     

    After the US equity markets closed, Portugal's troubled Banco Espirito Santo unveiled a EUR 3.58 Billion loss. This loss is 15 times larger than the loss the bank suffered a year earlier. Data through the end of June shows notable deposit flight with a 73.1% plunge in banking income, 24% decrease in commercial banking income, a -41% decrease in total equity (i.e. liquidity), and an increase in net operating costs of 6%. After this was revealed, Portugal's securities regulator enforced a short-selling ban on BES.
    ===

     

    More "unexpected facts" ...

     

    (Reuters) - Laws may have been broken at Portugal's Banco Espirito Santo.

     

    The bank's new management, appointed on July 14, provided fresh details of irregularities in the way the bank dealt with family companies in the recent past. The revelations included the fact that 120 million euros were loaned to a family company in June without passing through the bank's related party lending controls that are in place to approve such transactions.

     

    The bank also said it had to take 856 million euros of provisions after it discovered two letters issued by the bank in favor of creditors' of a family holding company, ESI, which were not registered in the bank's public accounting records at the end of June. http://tinyurl.com/onz...
    ===

     

    Not registered in the banks accounting records (!!). Well now, good luck recovering with that kind of unexpected fact. These unexpected facts have so far pushed BES below the regulatory minimum capital requirement. So they have to raise capital to keep operating. Raising new capital is likely going to be difficult, because the bank’s shares have lost 70 percent of their value since the big capital raise in June.

     

    In the meantime:

     

    Reuters: BES seeks capital as key staff suspended after massive losses

     

    The Bank of Portugal announced that BES's top risk management, compliance, supervision and audit officials had been suspended over suspected "harmful management" that may have contributed to the bank's massive losses. The regulator also barred ESFG, the holding company of the bank's founding family, from exercising any voting rights from its 20 percent stake in the bank. http://tinyurl.com/l7d...
    ===

     

    The fact that BES's top risk management, compliance, supervision and audit officials had been suspended and it's known that liabilities have not been recorded in the banks books means that the true financial status of BES is an unknown, and will not be known until the books have been forensically examined.

     

    This is going to take some time, but the bank needs capital now. If any kind of "bail-in" is under consideration, they are going to have to limit withdrawals immediately. If they do introduce capital controls, I wonder about contagion. If they don't introduce capital controls, probably no bail-in, and that means someone else is going to be on the hook here....
    31 Jul 2014, 06:37 AM Reply Like
  • tripleblack
    , contributor
    Comments (13580) | Send Message
     
    Someone (a lot of someone's) is indeed going to be on the hook - the usual someone's - the taxpayers. They will nationalize this bank.

     

    This "family" (makes me think Mafia, actually) should be liable as well, in civil courts and criminal. A more clear case of past management looting a company is hard to find.

     

    This "structure" for a major bank is downright medieval, but I would not be surprised to find it elsewhere in Europe, particularly Spain...
    31 Jul 2014, 07:19 AM Reply Like
  • tripleblack
    , contributor
    Comments (13580) | Send Message
     
    Oh, meant to mention that I seem to recall the new EU bailout, er, "banking" regulations call for a claw-back provision for large depositors that manage to extract their funds just before a bank failure. That's a paper chase that could be revealing.
    31 Jul 2014, 07:21 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » August 1 - Banco Espirito Santo Shares Suspended After 40 Percent Drop.
    From: The Washington Post and Bloomberg.

     

    The stock was trading down 40 percent at 12 euro cents before the CMVM suspended trading at 3:42 p.m. local time. The decline followed yesterday’s 42 percent slump.

     

    Banco Espirito Santo’s 750 million euros of 7.125 percent subordinated bonds due 2023 plunged 18 cents on the euro to 36.3 cents, a record low.

     

    Investors are concerned that subordinated bondholders may be made to take losses in a rescue bail-in.
    1 Aug 2014, 03:02 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » August 4, 2014 Banco Espirito Santo Collapses

     

    Portugal authorities were compelled to put up 4.9 billion euros to prevent the collapse of ailing Banco Espirito Santo. Portugal split Espirito Santo into two banks: a "good bank", called Novo Banco, which keeps the company's healthy businesses, and a "bad bank" that will hold toxic assets and retain the Banco Espirito Santo name.

     

    The bad bank will be put into liquidation and shareholders / junior bondholders (subordinated), including some major companies such as Portugal Telecom, will get to bear the brunt of the losses. The rescue money comes from a special fund [Troika Resolution Fund] set up during the eurozone crisis and designed to help financial institutions in difficulty.

     

    The Bank of Portugal governor Carlos Costa conceded in a televised statement Sunday that officials had been duped by a type of Ponzi scheme whereby cash and debts were shifted around the Espirito Santo family's tourism-to-health care business empire on four continents. Costa said an audit by the central bank detected problems eleven months ago, but It remains unclear why action to shore up the bank were not taken back then. Portuguese politicians are demanding an inquiry into how Banco Espirito Santo slipped through the net of supervision. Police suspect former Chief Executive Ricardo Espirito Santo Salgado of fraud, forgery and money-laundering.
    ===
    One of the questions here concerns whether this will trigger CDS insurance.... LOL... CDS is not worth the paper it's written on.

     

    At least the depositors did not get Cyprused... so far...
    4 Aug 2014, 03:05 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Italy enters recession. This could be the beginning of the big slip, um well bigger slip with less manipulation.

     

    Reality setting in?!

     

    http://bit.ly/XDbble
    6 Aug 2014, 06:46 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » August 6, 2014 From: Bloomberg

     

    ITALIAN gross domestic product dropped in the second quarter, showing the economy is in recession. Gross domestic product fell 0.2 percent from the previous three months, when it declined 0.1 percent, the national statistics institute Istat said in a preliminary report in Rome today.

     

    GERMAN manufacturing orders fell 3.2% in adjusted terms in June from May, compared with a 1.6% decline in May from April. The decline was the sharpest since September 2011 and raises concern that political upheaval in Ukraine and sanctions against Russia are weighing on the prospects for German firms.
    6 Aug 2014, 07:59 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » An article from the NY Times, confirms who is going to end up paying for the Banco Espírito Santo bailout... it is of course no surprise to us that the taxpayers in Germany, France, Finland and other Eurozone countries will end up paying the bill.

     

    http://tinyurl.com/npk...

     

    From the Times article:
    Officially, the money for the €4.9 billion bailout is coming from a resolution fund bankrolled by the financial industry. But because the fund does not have nearly enough cash, the "government" is lending it €4.4 billion. If all goes well, the healthy part of Banco Espírito Santo will later be sold and the proceeds will be used to reimburse taxpayers.

     

    However, it is not at all clear whether a sanitized version [i.e., Good Bank] of Banco Espírito Santo will be worth enough to repay the loan. Because the Portuguese government is using money from a fund established by other European countries, taxpayers in Germany, France, Finland or other Eurozone countries could ultimately wind up paying the tab.
    ===

     

    I think it's important to look at this in detail.

     

    In all the official news releases about the rescue of BES, the rescue funds were said to be coming from the "Troika Resolution Fund". However, we now find that the "Enchanted" Troika Resolution Fund does NOT have sufficient funds to bail out BES. In fact, the Troika Resolution Fund appears to be €4.4 billion short [90% - interesting round percent there].

     

    So where does the shortfall in funding coming from? It comes from taxpayers. The fund can borrow from the taxpayers because the fund is a government creation. As a result, the funds credit is not an issue, it has a blank check. Unfortunately, for the taxpayers, it's doubtful that the sanitized [i.e., Good Bank] part of Banco Espírito Santo will be worth enough to repay the loan.

     

    Look at the slight of hand here. A phony fund; actually a funding mechanism is established. When it needs funds, it "borrows" from the taxpayer’s treasury. The funds borrowing is not constrained by the real worth of assets it is going to acquire. In fact, the funds capacity to borrow is politically determined.

     

    Now the sale comes up short, and the fund is in the red. Exactly who is punished for the poor financial performance of the fund? It's the taxpayers who had no say in the management of, or establishment of the fund. In other words, the fund is simply a mechanism to seize taxpayers money to cover high-risk behavior of different countries banking institutions. Banking institutions that have a major influence on who runs the EU.

     

    I believe this looting mechanism pretty much guaranties that troubled assets will be sold at barging basement price. Why? Because the profit/ loss position of the enchanted funds are irrelevant. Exactly who pays for loan loses if the sale of BES assets does not cover the amount loaned?

     

    How you win in this game is to never make loans to businesses or consumers. Those are high-risk loans. Winning banks only loan money to other banks. If those banks go into failure mode, they will be backed up by EU taxpayers. Meanwhile, the good assets of the failed banks will be scoped up by the winning banks. The losers in all this - the taxpayer. And now for something completely different.

     

    Trustful "Relevant" News Source:
    The first thing I noticed when I read this was that the meat of the NY Times article appears to have been cloaked. I got the impression that the writer knows what is going on here, but the way the information was presented raises questions. Is this really the way the article was written, or was it substantially edited?

     

    I see the meat of the article as:

     

    1. Basically, the rescue fund is NOT funded so the money is coming from taxpayers.

     

    2. It is not clear whether a sanitized version [i.e., Good Bank] of Banco Espírito Santo will be worth enough to repay the loan.

     

    3. So EU taxpayers will end up paying to bail-out a peripheral EU countries bank.

     

    4. From contextual knowledge that should have been applied to this article - The EU said after Cyprus that their policy is to no longer bail-out peripheral countries banks, they would bail-in those banks.

     

    5. Based on "4" what we are apparently looking at here is a major change in EU rescue policy.

     

    Yet the title of the article is: "Calm After a Bank’s Collapse in Portugal Could Signal Eurozone Resiliency"

     

    Read the NY Times article and see if you agree with the way the article is titled.
    6 Aug 2014, 10:12 AM Reply Like
  • tripleblack
    , contributor
    Comments (13580) | Send Message
     
    FPA: OK. The "more equal pig" must be involved. Policy has changed because it HAD to change to accommodate the herd of the "more equal". Had the damage been confined to outsiders and little, merely "equal" pigs, the policy would have triggered an intricate "bail in".

     

    In this case, I suspect the primary more equal pig was the government of Portugal, though there are many other suspects. The bank had been thoroughly looted before the crisis came, so there are presumably few assets left, and few depositors to tap as unwilling new "share holders".

     

    The timing with geopolitical events in eastern Europe and the Middle East is, I think, not a coincidence. In times of economic stress, it is the weak and lame that are brought down by the wolves first.
    7 Aug 2014, 01:34 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Seems the Fed has spotted a scam in our banks too!!! However I doubt anything will be done. This is just so they can say they actually did something this time prior to the collapse.

     

    Well at least they mentioned it.

     

    http://bit.ly/XE5nbt
    6 Aug 2014, 11:34 AM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2579) | Send Message
     
    Maybe the banks should just hurry up the crash so they can get bailed out under the current "rules"?
    6 Aug 2014, 03:15 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Hillbilly, that may just be in the cards but at least the Fed did its part and put out a warning. Regulators were wide awake this time. LOL
    6 Aug 2014, 03:23 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » August 7, 2014 "Stop Putin" Coalition Cracking: Greece Laments "Blind Obedience To Cold War Strategies Of Brussels And Washington"
    From: ZeroHedge

     

    Earlier today the Greek foreign minister said that Greece is trying to protect agricultural production, keep friendly relations with all countries, and fulfill its EU obligations. The problem is that it can't satisfy everyone, and certainly not its food exporters if it wants to remain on friendly terms with the EU that has kept it on life support for the past 4+ years.

     

    Add to this that the Greek main opposition party Syriza today said that the Greek government's "blind obedience to the Cold War strategies of Brussels and Washington will be disastrous for country’s agriculture." Syriza asked govt to immediately lift all sanctions to Russia, as they don’t contribute to a solution of the Ukrainian crisis, and "instead fuel an economic and trade war, in which Greece has unfortunately become involved." Syriza concluded that the current government hasn’t correctly weighted Greece’s special interests and bilateral relations with Russia.

     

    [Some Context here: The EU is desperately attempting to sabotage Syriza who wants to default immediately on Greek Debt. But now, the EU's actions are going to directly hurt Greek food exports, and damage the Greek Economy]

     

    [HOWEVER]
    Another country that recently aligned itself with Russia and the South Stream gas pipeline, Austria, also made it very clear that the sanctions approach won't stand. Austria exported €238 million of agricultural products, edibles to Russia last year; Russia is Austria’s 3rd biggest export destination for such products outside of the EU.

     

    Germany said moments ago that the Russian ban on imports of meat, fish, dairy products, fruits and vegetables from EU and U.S. will have “noticeable” impact, German agricultural exporters. And they, unlike Russian consumers, get to vote in German elections.

     

    But the coup de grace, that assures that things are only about to get much worse concerns the following...

     

    Will Europe follow the US which is so friendly with its allies that it was recently exposed in the biggest spying scandal with Germany in recent history? Or will they remain friendly with Russia, a country that provides it with nearly a half of its energy needs and which just showed it can and will cause far more pain to Europe than vice versa. http://tinyurl.com/kfq...
    ===

     

    Sure looks like someone needs to engineer a shooting incident here... The airliner incident did not work.
    7 Aug 2014, 11:39 AM Reply Like
  • H. T. Love
    , contributor
    Comments (18896) | Send Message
     
    Easy to apply sanctions as long as the backlash is only against others, huh?

     

    HardToLove
    7 Aug 2014, 12:06 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » The pawns are starting to complain… I don't think the person moving the pieces understands the game.
    7 Aug 2014, 12:15 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    "Germany said moments ago that the Russian ban on imports of meat, fish, dairy products, fruits and vegetables from EU and U.S. will have “noticeable” impact, German agricultural exporters. "

     

    Wow, its really scary how history repeats itself. After Young collapsed the stock market in Oct of 1929 by raising the discount rate up to over 6% (just like BB did in 2006 and held it there until late 2007 - what happened to stocks in March of 2009?), Hoover (a Progressive interventionist - no laissez faire guy) brought on Smoot-Hawley to protect agriculture. Of course, what did our "trading partners do? Why, just like Putin, they retaliated.

     

    Now, think about this for a second. When you lower the cash flows for a particular asset, say ag land, what happens to the PV of that asset? Now, ask yourself, what happens when that ag land asset has been used for collateral at a bank? Now consider this, a bank has to write-down loans when a collateral dependent loan sees a decline in the value of the collateral. That flows to capital, and reduced capital reduces the bank's ability to lend, and if you get enough write-downs banks begin to fail.

     

    http://1.usa.gov/V176pA

     

    Now, think about this, where there bank runs in the US AFTER Smoot-Hawley?
    7 Aug 2014, 12:39 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Nice thinking JH… The ECB is currently performing a comprehensive assessment prior to assuming full responsibility for supervision under the Single Supervisory Mechanism (SSM) in November 2014.

     

    This assessment is an important step in preparing the SSM and, more generally, towards bringing about greater transparency of the banks’ balance sheets and consistency of supervisory practices in Europe.

     

    The assessment started in November 2013 and is due in October 2014.

     

    If that comprehensive assessment is actually valid, I would think PVs on the old balance sheets just changed radically for a lot of those banks.

     

    I know this is going to hurt Greece quite a bit, but what about France? They are very protective of their Ar sector. On top of that they are getting pressured about those Mistral Amphibious Assault Ships… Their economy is really hurting, and the U.S. just fined French lender BNP Paribas nearly $9 billion…

     

    I can't imagine anything that would likely insult the French more than that fine for doing what everyone else was doing….

     

    As I said, I don't think the person moving the pieces on our side of the board knows how to play the game. No way this is going to turn out well… We not only end up shooting ourselves in the foot, we also end up shooting our partners in other vital parts…
    7 Aug 2014, 01:31 PM Reply Like
  • D-inv
    , contributor
    Comments (4583) | Send Message
     
    "Sure looks like someone needs to engineer a shooting incident here... The airliner incident did not work. "

     

    http://bit.ly/V1kLgo
    "Russian strategic nuclear bombers conducted at least 16 incursions into northwestern U.S. air defense identification zones over the past 10 days, an unusually sharp increase in aerial penetrations, according to U.S. defense officials."
    7 Aug 2014, 02:01 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    I guess it's kinda like Putin kicking sand in Obamas face at the beach. Remember the ads on the back of comic books etc years ago. I really doubt BO will order the free book. LOL

     

    http://bit.ly/V1IoFt
    7 Aug 2014, 04:35 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    DG-

     

    Shades of George Atlas!

     

    That scene you describe probably wouldn't happen today- The wimpy guy would likely have a UZI under the towel!

     

    WT
    9 Aug 2014, 05:34 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    I meant to say CHARLES Atlas, not George-

     

    Sorry about that!

     

    WT
    25 Aug 2014, 02:48 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    French govt dissolved by President Hollande. New govt to be up by tomorrow says Hollande.

     

    I am sure this will make him so much more popular. /s

     

    http://bit.ly/1ws0Wjv
    25 Aug 2014, 10:36 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » A delaying tactic to stay in power as long as possible. The handwriting was on the wall after the last EU election…
    25 Aug 2014, 01:46 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Rattie, I think you have sniffed him out. So to speak.
    25 Aug 2014, 02:43 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » September 4, 2014 The European Central Bank unexpectedly lowered all its interest rates Thursday to record lows and took its rate on bank deposits further into negative territory, in an effort to keep ultra-low inflation rates from undermining the eurozone's fragile recovery.

     

    The ECB's main lending rate was lowered to 0.05% from 0.15%. The ECB also lowered the rate on overnight bank funds parked at the central bank to -0.2% from -0.1%. The ECB in June became the largest central bank to experiment with a negative rate on bank deposits, a measure aimed at encouraging banks to lend surplus funds to other financial institutions rather than parking them at the ECB. The ECB also cut the rate it charges on overnight loans to 0.30% from 0.40%.
    4 Sep 2014, 08:33 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    "from undermining the eurozone's fragile recovery."

     

    If they really wanted to do that, they could scrap their regulatory regime. Printing more money will only provide further subsidies to the financial markets.

     

    "The ECB also lowered the rate on overnight bank funds parked at the central bank to -0.2% from -0.1%. "

     

    Instead of encouraging lending between banks, I've been developing a theory that it has encouraged more lending to govs, hence the recent drop in yields we have seen in Euro sovereign yields. If so, then I guess we should expect yields to drop further.
    4 Sep 2014, 08:43 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » September 4, 2014 - Last night France suspended delivery of the Mistral-class warship to Russia. France stopped short of cancelling the deal, suggesting that a change in Russia's behavior and handling of the Ukraine crisis could pave the way for the delivery at a later date. Months of resistance to suspending the deal testified in part to Paris' unwillingness to give up a contract worth more than 1 billion euros and thousands of jobs at a time of France's economic slump.

     

    In July, Hollande said the Russians had paid for the ship, and France would have to reimburse Moscow if it canceled.
    ===
    My guess is France will be reimbursed with interest.
    4 Sep 2014, 08:36 AM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    the Eu also just started its own QE of buying bonds and asset backed securities.
    4 Sep 2014, 08:44 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Well, they really aren't calling it QE, but its sort of a distinction without a difference. It's LTRO with a T at the beginning (TLTRO).

     

    http://bit.ly/1lGmTqv

     

    From what I can tell, its around 400 billion, which is smallish. Full blown QE is still on the table, but it hasn't been launched yet, as far as I know.

     

    http://bit.ly/1t3GYoU

     

    Really, LTRO and QE are really the same thing. QE is supposed to be a purchase, but since a central bank could reverse this decision at any time, the banks never know when they might be forced to buy the securities back. If you think about it, what we really have here is an ASC 860 issue, although we know govs typically pick and choose when they use GAAP.

     

    Either way, the bottom line here, is the ECB is using the only tool it has, printing money. For the moment they are engaged in printing, but the volume of printing is relatively small. However, in this environment, money printing is typically risk-on.

     

    During the previous LTRO the Fed was engaged in OT. Back then rates stayed flat, but equities went up. OT didn't grow the balance sheet. Now the Fed is engaged in Taper, which is still growing the balance sheet but only slower. So, we may see a repeat, but with the geopolitical turmoil we may continue to see rates fall. Also, add that the ECB is trying to chase money from reserves which may mean Euro banks buy more sovereigns, so indeed, the world of facts suggest lower rates even while equities rise.
    4 Sep 2014, 09:25 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    "This is a good summary of pending ECB action."

     

    http://bit.ly/1qhiWc3
    4 Sep 2014, 02:52 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    First round of TLTRO is a bit of a dud.

     

    http://on.wsj.com/1qVnyFR

     

    A lending facility differs from QE in the aspect that a lending facility is basically a pledge of assets (like a block of loans) for some sort of structured advanced (like a 3 year facility that's 50 bps lower than a comparable brokered CD). QE is just buying the assets off the banks books without stating when the bank will be required to buy the loans back.

     

    If banks aren't willing to take the TLRTO advance, it probably means they are worried where they will get the deposits or other borrowings to pay the advance off when it comes due.
    20 Sep 2014, 08:50 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    More on DTLTRO. D for dud.

     

    http://bit.ly/Y1NC5x

     

    Once again, its a good thing the experts are in charge so order will replace chaos.
    23 Sep 2014, 12:41 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    ECB QE may soon be on the horizon.

     

    http://bloom.bg/1swMMMi
    26 Sep 2014, 05:51 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » I wonder how they will disguise it?
    26 Sep 2014, 06:17 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Well, here it is.

     

    http://bloom.bg/1sOQtwW

     

    Looks like it could be as big as 1 trillion.

     

    Don't forget the effects of LTRO.

     

    http://seekingalpha.co...

     

    This could very well get the S&P on its way to 2100 or more. The actually result is not as important that the overall effect should be risk-on.

     

    We have the risk-off of Dodd Frank and Obamacare still to deal with, but we won't really see the effects of these increased burdens on asset prices until the middle of next year. So, it will be a matter if the ECB QE risk-on will overpower the US regulatory risk-off.
    2 Oct 2014, 09:38 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » September 4, 2014
    ECB ABS Decision:
    What's this ECB ABS decision about? Too many initials? ECB is the European Central Bank and ABS stands for Asset Backed Securitizations. A typical ABS occurred when investment banks bought large numbers of low quality US mortgages, repackaged them, and sold them as high quality, low risk investments.

     

    What the ECB is proposing is to buy the banks ABS's. This provides new capital to the banks so they can presumably lend it to businesses. It also shifts the risks involved with the purchased ABSs to the public balance sheet. So it’s just another facet of the old risk transfer mechanism previously described in this blog. It might also have an extra sweetener as the decision process involved with what ABSs the ECB buys is an obvious corruption opportunity.

     

    Of course, if there are no strings attached to the new capital acquired by the banks, you can be pretty sure the banks will go right out and buy more high risk, high return investments. If they don't work out, what the hell, the ECB has their back. Or put another way, the taxpayers end up carrying the can.

     

    So what we have is the Wash/ Rinse/ Repeat cycle with the taxpayers ending up with dirty water and the banks and deal makers rolling in money.
    4 Sep 2014, 08:50 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Italy's Triple Dip

     

    http://bit.ly/1qg3OLL
    4 Sep 2014, 09:30 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    We always hear about aging populations. Well of course, when you have labor regulations that chase young people away or encourage young people not to be created, the result will be an aging population. Its a sign of the unintended consequences of gov price regulation.

     

    You can even see this in Sweden (the so called paradise).

     

    http://bit.ly/REqlPq
    4 Sep 2014, 09:33 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Still lots of wobbly knees among the European banks.

     

    http://seekingalpha.co...
    4 Sep 2014, 11:08 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » I bet the decision to start ABS is related to a preliminary look at the big banks balance sheets in those so called stress tests. Those banks are very heavy in sovereign bonds.
    4 Sep 2014, 11:44 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    The Eurozone has ground to a standstill.

     

    http://bit.ly/1uCZTs2

     

    How can this be. We were told that if we let the experts regulate the economy, then all the chaos that cause booms and busts would be replaced with order created by these so called experts that would lead to perpetual growth and jobs for everybody.
    5 Sep 2014, 08:57 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Oh....well when they said everybody did you thiiiiink you were an everybody? Sad news.....You, me and "every body else" do not run in the crowd of everybody's they were talking about. We are the lower form of everybody, we are the every body else's...and we do not count....... except at election time. Works perfectly for those elite "everybodys".
    8 Sep 2014, 04:01 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » September 8, 2014 - The European Council on Monday formally adopted a package of further sanctions against Russia over its actions in eastern Ukraine, but is delaying the enforcement to assess the implementation of the cease-fire agreement first.

     

    The sanctions will be implemented "in the next few days," the President of the European Council Herman Van Rompuy said in a statement. He said the delay of the execution of the sanctions would leave time for "an assessment of the implementation of the cease-fire agreement and the peace plan." "Depending on the situation on the ground, the EU stands ready to review the agreed sanctions in whole or in part," Van Rompuy said.

     

    The new round of Western sanctions are expected to deepen earlier penalties targeting Russia's ENERGY and arms sectors. The penalties are also expected to tighten access to international loans, with the current ban on credits and loans of more than 90 days reduced to 30 days. http://tinyurl.com/kcl...
    ===
    This solves nothing. If I understand Putin sanctions will result in counter sanctions. Ramp up followed by Ramp up...
    8 Sep 2014, 05:13 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Ramp up followed by Ramp up......

     

    I worry where the ramp goes.

     

    I wonder if there is a connection. Are we being played in a game leading up to WWIII or something?

     

    If I recall correctly it was trade barriers that helped get us all involved in WWII. Now here we go again.

     

    Is this planned?

     

    http://bit.ly/1lOkPMK
    8 Sep 2014, 06:40 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » I think they are building an excuse guns.
    8 Sep 2014, 07:01 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    "adopted a package of further sanctions "

     

    Yes, sanctions are trade limitations. Have you ever noticed that to protect jobs from going overseas we need trade limitations. Such limitations will supposedly keep jobs at home and make the economy stronger. However, when we want to punish another economy, trade limitations are imposed. Well, if the trade limitations keep jobs at home and grow the economy, how can imposing trade limitations on Russia be a punishment? Shouldn't that grow their economy and be a reward and not a punishment?
    9 Sep 2014, 08:28 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Well, it wasn't hard to predict.

     

    http://bit.ly/1uVzBTV
    23 Sep 2014, 11:54 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Talk about a boat rocking event. Hollande must be wondering if they are sharpening the guillotine.
    http://bit.ly/1nOz4wK
    11 Sep 2014, 02:57 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    Sanctions against Russia?

     

    Lukol Gasoline is a Russian company.

     

    WT
    11 Sep 2014, 09:26 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Interesting discussion on UKIP.

     

    http://bit.ly/1qOhDS6
    12 Sep 2014, 01:46 PM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2571) | Send Message
     
    "The U.K. will become the first Western government to issue renminbi-denominated sovereign debt ... The bond will be used to add renminbi to U.K. foreign exchange reserves as the currency becomes increasingly internationalized." http://on.wsj.com/1qOA8Wr

     

    mj
    Discl: Still long renminbi
    12 Sep 2014, 03:21 PM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2571) | Send Message
     
    My take on the Scottish vote next week is that it has the potential for becoming a black swan event -- although I think the higher probability is that it may become a good opportunity for buying our picks on our watchlists.

     

    Along with the FOMC statement and press conference on Wednesday the Scottish independence vote on Thursday is likely to be close enough to continue giving the market jitters irrespective of who wins. http://reut.rs/1qzQ4wy

     

    Although a "Yes" for independence vote does carry currency risks, North Sea oil volatility, and credit rating risks (UK with Scotland has the oldest AAA rating in the world) -- I do think that the biggest longer term risk by far is to the stability of the European Union:
    "Thus if Scotland breaks Britain next week, a chain of events would begin that is likely to end with Britain breaking the Europe Union." http://reut.rs/1qzQ4wz
    mj
    14 Sep 2014, 09:32 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Scots spurn independence, vote to stay in the United Kingdom From: Reuters, By Alistair Smout and Angus Macwan.

     

    Scotland has chosen to stay in the United Kingdom, spurning independence in a historic referendum that had worried allies and investors, results showed on Friday with more than two thirds of the vote declared.

     

    Scotland's final verdict on the union should be clear within two hours. Supporters of the United Kingdom have won 54 percent of the vote, according to Reuters calculations, and that share could climb.

     

    The independence camp conceded that it had come up short.
    http://tinyurl.com/mna...
    ===
    The people have spoken. A very important vote from a very important part of the UK.
    19 Sep 2014, 01:58 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » September 20, 2014
    French vegetable farmers protesting against falling living standards have set fire to tax and insurance offices in town of Morlaix, in Brittany.

     

    The farmers used tractors and trailers to dump artichokes, cauliflowers and manure in the streets and also smashed windows, police said.

     

    Prime Minister Manuel Valls condemned protesters for preventing firefighters from dealing with the blaze.

     

    The farmers say they cannot cope with falling prices for their products.

     

    Reason prices are falling?
    The Russian embargo on some Western goods imposed over the Ukraine crisis has blocked off one of their main export markets. Surplus of product = falling prices. http://tinyurl.com/pnf...
    20 Sep 2014, 07:40 PM Reply Like
  • SMaturin
    , contributor
    Comments (2268) | Send Message
     
    Imagine that! Unforeseen consequences!

     

    Just break some windows and the economy will be restored to balance.

     

    Oh, Bastiat, where are you today?
    20 Sep 2014, 10:33 PM Reply Like
  • SMaturin
    , contributor
    Comments (2268) | Send Message
     
    http://bit.ly/1uafG4K
    20 Sep 2014, 10:38 PM Reply Like
  • Stilldazed
    , contributor
    Comments (2812) | Send Message
     
    Hi Doc,
    Thanks for the link. I enjoyed it greatly.
    21 Sep 2014, 11:57 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Excellent link doc. Definately book marked that one. Thanks.
    23 Sep 2014, 04:30 PM Reply Like
  • H. T. Love
    , contributor
    Comments (18896) | Send Message
     
    SMaturin: I've been reading it off and on as time permits and absolutely love the logic of it.

     

    I'm thinking I'll refer to it a lot over time just because of the lucidity.

     

    HardToLove
    23 Sep 2014, 04:35 PM Reply Like
  • SMaturin
    , contributor
    Comments (2268) | Send Message
     
    I'm glad you are all enjoying the classic essay.

     

    It still rings true after more than a century and a half, and the logic can be applied to any govt endeavor you choose to name today.
    23 Sep 2014, 07:33 PM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2571) | Send Message
     
    Is Merkel's refusal to open her purse-strings a bargaining tactic or tipping point for another EU recession?

     

    The stated "political, cultural and economic reasons for the refusal [include]:

     

    1) Germany is determined to set an example by meeting its fiscal targets and running the first balanced federal budget since 1969 with no borrowing...

     

    2) Germany has less fiscal space than outsiders understand because it has an aging, shrinking population...

     

    3) The euro zone's economic problem is largely one of supply rather than demand. Structural reforms of labor markets, legal systems, pensions and welfare to improve competitiveness are the only way to achieve a sustainable recovery..." http://bit.ly/1ruWFYm
    mj
    28 Sep 2014, 09:25 AM Reply Like
  • Alex T
    , contributor
    Comments (295) | Send Message
     
    Very good point Mercy.
    30 Sep 2014, 10:44 PM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    This tax inversion thing is developing faster than I expected:

     

    EU to publish details of probes of Apple, Fiat tax deals
    http://on.mktw.net/1rm...
    28 Sep 2014, 03:45 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Yeah, this is a great example of the utter stupidity of gov officials. Corporations are people. Corporations don't pay taxes, people pay taxes. Corporations are customers, vendors, employees, and shareholders. All of these people pay the taxes that the supposed corporation pays.

     

    Think about it. What do people ultimately use to pay their "taxes"? Why, ultimately they use central bank notes. Sending central bank notes to a gov treasury, takes these bank notes out of the system. Its basically the same principal as a company doing a reverse split. All that has happened is there are less notes in the hands of the real productive economy. In fact the whole point of gov monopolizing bank notes, was so that the gov didn't have to collect to spend. Most people don't even understand, and that's espcially true for these dunder headed politicians.

     

    Here's another question. When a central bank becomes accomodative, is it tyring to increase or decrease its bank notes in circulation? Well, then, if the CB is trying to put notes into the system to spur economic activity, then when it removes those notes, it is trying to quell economic activity (typically to stifel inflation). So, if a CB taking notes out of the system to quell economic activity, what do you think is going to happen when a treasury does the same thing.

     

    Taxes destroy CB notes, thus taxes are risk-off (equities down and rates down). I can't believe people actually advocate for these morons being in charge.

     

    http://bit.ly/YBRx9I
    29 Sep 2014, 09:53 AM Reply Like
  • SMaturin
    , contributor
    Comments (2268) | Send Message
     
    How do the Eurocrats think they can declare illegal a tax deal between Apple and Ireland in 1991 when the EU was not even founded until 1993?

     

    Absurd.
    28 Sep 2014, 04:04 PM Reply Like
  • SMaturin
    , contributor
    Comments (2268) | Send Message
     
    from the full WSJ article today:

     

    http://bit.ly/1rmrzDq (paywalled)

     

    Google search for "EU to Publish Details of Probes of Tax Deals Benefiting Apple, Fiat" to get past paywall

     

    >>The com­mis­sion will base its de­ci-sion in Apple's case on guide­lines on trans­fer pric­ing es­tab­lished in 2010 by the Or­ga­ni­za­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment, a club of rich coun­tries, a per­son fa­mil­iar with the mat­ter said.

     

    The move came af­ter ear­lier ef­forts by the EU to crack down on tax avoid-ance and tax eva­sion made painfully slow progress and yielded lit­tle. De-spite much hand-wring­ing by some politi­cians over Ire­land's low cor­po-rate tax rate, tax pol­icy re­mains largely in the hands of na­tional gov-ern­ments, which can veto EU de­ci-sions.
    <<

     

    So the EU wants to declare as illegal deals from 1991 and 2007 based on rules formulated in 2010.
    28 Sep 2014, 04:34 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    This is rich too. Basically, what's going on here is punishing people for what central banks attempt to do as part of policy. Lowering a rate between banks, encourages lending between banks, exactly what the CBs are attempting to do.

     

    http://bit.ly/YBUGWO

     

    There world has lost its sanity.
    29 Sep 2014, 10:01 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    We've been hearing this for years now.

     

    http://bit.ly/YBVxHd

     

    Interest rates go up because economic opportunity outstrips the current supply of capital. Given all the regulated and taxed economies around the world, that ain't happening anytime soon.

     

    Interest rates goes up for credit risk. So, for the sovereigns on the bottom deck of the Titanic, they will see higher rates first. For all those on the top deck of the Titanic (the only other choice is the lower decks), their rates will stay low for a long time.

     

    Unemployment and a lack of economic opportunity is a gov regulatory phenomenon.
    29 Sep 2014, 10:05 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Jhooper, Excellent point. Take a look at the interest rates on Credit cards as evidence of the lower decks paying the higher interest. Bonds on the other hand (upper deck) ....very cheap.
    29 Sep 2014, 10:15 AM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2579) | Send Message
     
    >guns, I have to differ with you on the reason for higher CC rates. Anyone who borrows money from a CC company at today's rates is unlikely to have other credit sources. CC companies have a high loss rate from default and theft. BUT, they have demonstrated that they will not increase the security of their systems until public and political pressure force them to.

     

    They make more money with more customer transactions. Anything that reduces the number of transactions lowers their income from interest and penalty charges, paid mostly by the less affluent. They have decided to tolerate porous security and maintain high rates in order to maximize income. I don't believe it has anything to do with the "cost of money" via official interest rates.

     

    30 Sep 2014, 01:28 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Hillbilly, I agree that is part of the answer but its not all of it. They do it because they can and usury rates are no longer an issue. If they could not charge those rates I'll bet the security would improve.

     

    "The rates will remain high until the security improves around here." Sounds like something you might hear in the halls of one of those firms. LOL
    30 Sep 2014, 03:16 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    "is unlikely to have other credit sources"

     

    That's one of the reason interest rates go up. If you have no alternatives, you have to take what someone offers. A country that has a history of defaulting on its debts will have limited takers of that debt, hence they have to pay higher rates.
    30 Sep 2014, 03:45 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    >SHB-

     

    Re: CC rates-

     

    A lot of that makes sense. In a related situation I know a large part of the casualty insurance dogma is based on hi visibility events resulting in huge claim payouts. It's like free advertising.

     

    That's when the big casualty companies get a big hit it is headline news. The insurance company name is recognized and remembered.

     

    WT
    1 Oct 2014, 10:52 AM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2571) | Send Message
     
    "The annual rate of inflation in the eurozone fell further below the European Central Bank's target in September, and to its lowest level since October 2009.

     

    The decline is a setback to the ECB which, earlier this month, launched a series of measures designed to boost growth and start to move the inflation rate back toward its goal of just below 2.0%..."http://on.wsj.com/1nGdQ9Y
    An fx "expert" this am was opining that the USD and the EURO may reach parity within the next couple of years if current trends persist.!
    mj
    30 Sep 2014, 02:10 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Mercy, There will be plenty of inflation when the gas prices go up this winter.
    30 Sep 2014, 03:17 PM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2571) | Send Message
     
    Forecasters are sometimes off, DG, so you may indeed be right. Guess we'll have to keep an eye on Brent at a 2-year low http://bloom.bg/1wVihO3; US liquid petroleum (oil and gas) production at an all time high; and
    "a tanker ship full of crude oil on its way to South Korea from Alaska -- the first oil export from Alaska in a decade -- a sign that domestic demand for the state's crude is drying up as production rises in the continental U.S." http://bit.ly/1wVij8R.
    mj
    30 Sep 2014, 03:51 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Mercy, I ment the price in EZ because Russia will be putting the screws to them. Already they cut supply by 15%. Its gotta have an effect on the EZ gas price this winter.

     

    And it was tongue in cheek by the way.
    30 Sep 2014, 05:42 PM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2571) | Send Message
     
    Got it DG -- but the so called forecasts could easily be totally off. We have seen it before.
    Thx,
    mj
    30 Sep 2014, 07:07 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Mercy, I am shocked, shocked I say!!! I can not figure out where your cynicism in forecasts could possibly be coming from. Don't you trust the gubmint. LOL
    Agree on the so called forecasts.......It's just a matter of how badly they will be off.
    1 Oct 2014, 07:47 AM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    >MJ-

     

    Just saw that The 10 year German bond is now below 1% for the first time. I wonder if serious deflation a major concern?

     

    WT
    1 Oct 2014, 10:57 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Wonder if they "forecast" that.
    1 Oct 2014, 11:00 AM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2571) | Send Message
     
    Yes, WT, agree very much worth watching.
    mj
    1 Oct 2014, 11:06 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    I wonder if that is down since the Germans are balking at the wholesale purchase of the Junk by the ECB which might create huge demand for German bonds as folks worry about the "others" bonds.

     

    Just a question. Timing seems to line up but......its still speculation.
    1 Oct 2014, 11:08 AM Reply Like
  • H. T. Love
    , contributor
    Comments (18896) | Send Message
     
    Puts Germans in the catbird seat as they can finance anything they want, especially their sovereign debt, at rates even lower than the U.S.

     

    That gives them some leverage, if they choose to use it, to even further enhance their economic might relative to the less fortunate EZ members.

     

    But they would need to have a thick skin.

     

    HardToLove
    1 Oct 2014, 11:25 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Germans having problems with Draghi's plan to have the ECB buy up the junk bonds held by the banks in EZ.

     

    Remember Draghi is a former Goldman trained manager so fleecing the muppets is obviously part of the training program. Tax payers are about to get stuck with the junk rated bonds that the banks have all been rehypothicating amongst each other and now want to unload to supply liquidity.........to buy more junk?

     

    http://bit.ly/1qUSuAg
    1 Oct 2014, 07:58 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Stability in America is only one reality or glitch from failing and failing miserably.

     

    Preppers are way ahead of this issue......when it comes, as it will, because this, as they say ponzi scheme can not go on forever. When your grocery store is looted out of existence where do you go and what chaos will that add fuel to.

     

    http://bit.ly/1qUUAQo
    1 Oct 2014, 08:10 AM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    >DG-

     

    Now don't you worry about nourishment. The gubmint will be sure to provide enough Soma to keep everyone calm.

     

    WT
    1 Oct 2014, 11:00 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Obviously I did not get mine yet. Where is the line forming.
    1 Oct 2014, 11:09 AM Reply Like
  • SMaturin
    , contributor
    Comments (2268) | Send Message
     
    Outside the Apple Store?
    1 Oct 2014, 01:10 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    I posted this link over on the Swine blog but it probably more appropriately belongs here.

     

    Country ranking of efficiency and cost of delivering health care.

     

    http://bloom.bg/1E1BzpU

     

    WT
    1 Oct 2014, 05:54 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    ECB Buying asset backed securities and bonds including Greek and Cypriot bonds even junk-
    Apparently a plan to increase inflation that has been non-existent recently.

     

    http://bit.ly/1rIrRSQ

     

    WT
    3 Oct 2014, 11:01 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » I am sure that EU tax payers will enjoy being placed on the hook for buying high risk loans, some with zero assessed value. But what the hell, it's only the tax payers money. Another good reason for tax payers to vote to get out of the EU.
    3 Oct 2014, 11:04 AM Reply Like
  • H. T. Love
    , contributor
    Comments (18896) | Send Message
     
    FPA: I keep remembering that a good parasite never kills the host - just constantly bleeds them.

     

    We have our version in the U.S., but with a (still?) decidedly less-socialist bent, I guess we aren't as bad as the typical EZ parasite?

     

    HardToLove
    3 Oct 2014, 11:08 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Hell, a parasite is a parasite… unfortunately, we can't exit , they still have the right to leave. I am hoping that the UK will do just that. But you can be sure that the bribes will be quite mighty. And if the bribes don't work…
    3 Oct 2014, 11:13 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    There are examples in Europe of what can be done.

     

    "Liechtenstein is the richest (by measure of GDP per capita) country in the world"

     

    "Liechtenstein has the highest gross domestic product per person in the world when adjusted by purchasing power parity"

     

    "The country has a strong financial sector located in the capital, Vaduz, and has been identified as a tax haven"

     

    "It is a member of the European Free Trade Association and part of the European Economic Area and the Schengen Area, but not of the European Union."

     

    "Few national constitutions provide a right of secession, but municipalities in Liechtenstein are entitled to secede from the union by majority vote"

     

    http://bit.ly/YUGg4a
    3 Oct 2014, 11:28 AM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    "Liechtenstein is the richest (by measure of GDP per capita) country in the world"

     

    And-

     

    It is the only constitutional monarchy in Europe with virtually no government nor government expense-
    It has less than 40,000 people-
    No refugees-
    No military-
    No airport-
    The lowest average age in Europe-
    and has a lot of banks.

     

    Why would any of its municipalities even consider seceding?

     

    WT
    7 Oct 2014, 11:43 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    "Why would any of its municipalities even consider seceding?"

     

    Is the ability to do so that creates the environment where you wouldn't want to leave. Its one of nature's laws. The right of freedom to associate.
    7 Oct 2014, 12:41 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    " Its one of nature's laws. The right of freedom to associate."

     

    Oh, you mean like the Russians helping the Ukraine separatists to associate over to Russia?
    7 Oct 2014, 12:51 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    If you think about it. Gov is just a security product. However, since it uses guns for security, gov has become a product that can force you to use its services. In other words, gov has become an agent of theft, which was the very thing gov was supposed to protect us from.

     

    The next evolution of human society will be when a person can pick and choose what gov they want just as easily as they pick the clothes they want to wear.

     

    Disney is an example.
    7 Oct 2014, 01:17 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    If the Germans balk......I am waiting to see how that's going to go over with them. This really is a fleecing of German tax payers since most of the others have no money and their bonds are all junk.

     

    This is simply a rodeo with musical chairs and they have simply changed the direction everyone is walking to make it appear things are getting better......till the chairs break.

     

    http://bit.ly/1xL2CEi
    3 Oct 2014, 11:42 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Germans balking? According to Draghi they are saying no to everything.

     

    http://bit.ly/1vXx8rp
    13 Oct 2014, 10:12 AM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Germany is against Draghi's buying crap bonds policy. But if Draghi's can't buy the crap bounds, several big banks are going to be in trouble, including one particular large bank in Germany. Because of that, I suspect Merkel will relent.
    13 Oct 2014, 10:53 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    The solution for France is simple. It needs to raise that top marginal to 100%, triple the labor laws, mandate a guaranteed income equal to $100k a year, and shoot anyone that wants to leave their big happy family that's just trying to steal, er I mean, take care of each other.

     

    http://bit.ly/1utYAhd
    6 Oct 2014, 05:25 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Another article on France.

     

    http://seekingalpha.co...
    7 Oct 2014, 12:41 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Sort of another article on France.

     

    http://bit.ly/1scowNg
    8 Oct 2014, 03:55 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    I surprised anyone in Europe was allowed to publish such a thing.

     

    http://bit.ly/1rXHPbW

     

    Ironically, central banks were supposed to be the end to bank runs. After all the whole point of an "elastic" money supply is that you can print whatever you want when people demand to hold money. So, deposit insurance should be redundant. After all, what does an insurer collect from the bank to keep in its "reserves", why, central bank notes. When the FDIC went to the Treasury for an emergency line of $500 million, what was the Treasury going to advance to the FDIC if they needed it, why, Federal Reserve notes

     

    The central bank, in theory, was supposed to be the bank regulator, but in typical gov fashion, since ignorant politicians set the policies, the only loosely wind up being what the theoretician outlined because politics is more important than theory. The result? Why, a special interest, bloody mess that results in boom and bust cycles as politics inflates asset prices only to be followed by regulatory panic that pulls the supports out from underneath asset prices and presto, you get a bust.

     

    "Deposit insurance works, to the extent that it does so, by being interpreted as an implicit government promise that it will keep the bank running and maintain liquidity. And that is in fact what happens. "

     

    So, if the central bank had fullfilled its supposed purpose, people would have confidence that they would always have access to their money, and thus, no bank runs, and thus no need for another, extra, layer of gov agencies and their related costs.

     

    Its pure insanity.
    8 Oct 2014, 04:49 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Bank runs are "On" again because of things like Cyprus and Negative interest rates becoming a reality. Who sits around with those threats hanging over their head.

     

    The bank run has become "the sword of damocles" hanging over the bankers heads now that most of the cash is in worthless bonds. The only buyer is the ECB and the Germans are not buying the idea or the bonds. If the ECB can not inject cash into the banks by buying the bonds a bank run is a serious threat and we could see the "Cyprus" solution imposed which of course could lead to more runs across EZ, I believe.
    13 Oct 2014, 10:39 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Talk about timing.

     

    Here is something on the bail-ins (deposit confiscations) for EU, UK, US and Canada.

     

    "It is now the case that in the event of bank failure, your deposits could be confiscated.
    Let's be crystal clear: The EU, UK, the U.S., Canada, Australia and New Zealand all have plans for bail-ins in the event of banks and other large financial institutions getting into difficulty."

     

    Are your deposits safe?

     

    I sure feel like bank runs could become rampant once they do this just one time.

     

    http://bit.ly/1o7Plmj
    13 Oct 2014, 12:20 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Jhooper, I think the bankers are twisting in the wind now. Here for your entertainment is Chubby Checker singing EZ style.

     

    http://bit.ly/1vXCVND
    13 Oct 2014, 10:57 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Thanks.

     

    Let me add, that I think the European bank runs are going to look something like this. Just imagine its a teller line.

     

    http://bit.ly/11LLW0p
    13 Oct 2014, 12:35 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » LOL. Back when I was young and working my way through college I worked at a major department store. That clip brought back great memories. Sales went something like this. You put out your sale tables, the doors open, and in came a stampede of women shoppers. They ripped everything apart on the sale tables and than started on the regular merchandise ripping off the protective wrappers and tearing out the pins. The sales staff had no time to make the place look better because we were working to ring up the sales. At the end of the day, the department looked like a bomb went off.

     

    I loved working just before Christmas. You could smell the fear. They would come in with a look of panic - “I need a small conservative V neck sweater.” My reply - “All I have left is this X-large red cardigan.” There reply, “I’ll take it. They can always exchange it after Christmas.”

     

    What they did not know or care about was that the store always marked everything down right after Christmas so if someone did not have a sales receipt on their gift, and they exchanged it, or tried to get a credit to their account, they would only get a marked down credit or something called script, not cash. Script was the stores own money. I learned a lot about how the world worked in that job.
    13 Oct 2014, 01:21 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    My favorite part (if you look closely) is just as the crowd comes in, there is a woman in a red dress that leaps over the counter.
    13 Oct 2014, 04:30 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Yep just dove in head first. LOL
    13 Oct 2014, 10:11 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Another funny memory - I ask "will that be cash or charge?" The woman replies "Yes".
    13 Oct 2014, 10:33 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Rattie, I love it when a woman can only say "yes". ;-{)
    13 Oct 2014, 10:41 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » LOL…
    13 Oct 2014, 10:53 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    From Nein to Non to no. There is no "Yes" here Rattie.

     

    http://bit.ly/1w6HhD8
    14 Oct 2014, 03:17 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    The history of Europe is one of trade wars breaking out into the real thing. Napoleon took almost 600k soldiers into Russia because old Alex I crawfished Bony by continuing to trade with the British. Makes you wonder where these guys might be going with this current squabbling.

     

    http://bit.ly/ZqX6rB

     

    Bony came back with less than 100k alive.
    14 Oct 2014, 05:09 PM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    some are saying that the downturn is increasing the odds that the EZ breaks up....
    14 Oct 2014, 06:09 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    I figure at some point the Germans leave. They are the ones with the most to loose. Everyone else has already lost most of what they had and risk far less at this point than the Germans.
    14 Oct 2014, 06:29 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    French bonds plunge. Rates soar.

     

    http://bit.ly/1rf3qsT
    16 Oct 2014, 09:22 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    "France sees the deficit rising to 4.4 percent of gross domestic product this year -- the first increase in five years - - and barely improving to 4.3 percent in 2015. The shortfall won’t shrink to the EU limit of 3 percent of GDP before 2017. That’s two years later than the extended deadline set down by the Commission. "

     

    Well the solution is simple. Its just like the arguments for stimulus which say if it doesn't work then that just means you didn't spend enough (which sort of works like medicine when "bleeding" was prevelant - its how Washington was killed).

     

    So the solution is simple. Just make that 75% income tax rate 95%, and then lower the threshold.

     

    http://bloom.bg/1vhJk7p
    16 Oct 2014, 09:36 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    This guy might as well be called Thomas Robert Malthus.

     

    http://bit.ly/1vhNcFq

     

    The reason these doom and gloomers are always wrong is because of a little think in economics called price. Price is an expression of pain and pleasure. Price redirects human behavior into activities that on aggregate make life better. As such, the only way these doom and gloomers would ever be right is for all humans to suddenly loose all feelings.

     

    Malthus was proved wrong because of price, and so too, will this fearmonger.
    16 Oct 2014, 09:50 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    We have an "Event".

     

    http://bit.ly/1yaFXi9

     

    The ECB is going to turn on consumption subsidies, which is risk-on. Now, the question is, "How much volume". In general, this will tend to boost equities, and provide support for US Treas yields. LTRO occured during Twist. Twist didn't grow the balance sheet, so that wasn't really risk-on. During that period, equities went up, but rates stayed relatively flat. If the Taper ends in Oct 2014, then that is basically the same as Twist - the balance sheet isn't growing.

     

    So, for now, we have a risk-on event. The next step is to get a feel for the volume. Time will tell.
    20 Oct 2014, 09:39 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    I see they started with french bonds. They were plunging on the 16th. (see above link several comments up) Wonder if that is what prompted this response. No greek bonds yet.
    20 Oct 2014, 09:50 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    I also noticed they said they are planning to move the balance sheet back to 2012 levels. That appears to be a 1.5 trillion shift.

     

    You can track the ECB balance sheet here.

     

    http://bit.ly/1jsAe3m

     

    Compare it to the Fed's balance sheet. Notice how the ECB's balance sheet has shrunk whereas the Fed's has kept growing.

     

    http://1.usa.gov/sQo6xW
    20 Oct 2014, 10:02 AM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    I bet it was part of the French/German deal cut this weekend on the French budget.

     

    Greek bonds are next...the politically could not begin with Greece.
    20 Oct 2014, 10:26 AM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    >Hoop-

     

    Thanks- Neat link on the ECB.

     

    Reading over the weekend tells me DE-flation the real boogyman for the EU.

     

    We are facing similar economic risk it seems as no matter how much gets pumped in to the system the available money isn't being utilized. Velocity of M2 still dropping.

     

    WT
    20 Oct 2014, 11:39 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    I'm going to post something I put on another thread. It explains my approach in determining what is risk-on and what is risk-off.

     

    Keep in mind, central bank notes are used to bid up assets. Without them, assets can't be bid up. In other words, they deflate.

     

    Now, think about this, austerity in Europe has been about some minor reductions in the rate of spending increases, but they have also been engaged in tax increases (France for example).

     

    One of the great myths is that gov regulators are experts. The idea from the so called Progressives is that the experts would be put in charge, and all the chaos would go away. Then PHDs and sophisticated politicians (I guess like Strauss Khan) would take us all under the omnscience wings and save us from ourselves.

     

    Now, after saying that, think about what these govs are doing by "raising taxes". They are taking central bank notes out of the system, at the same time the ECB balance sheet was shrinking. As I said earlier, without those notes, assets can't be bid up. So, essentially, raising "taxes" in such a scenario is destroying central bank notes, and thus we get deflation, which of course the so called experts were going to make sure never happened again.

     

    So, what's been happening is the bungling by the so-called experts causing asset inflation and deflation, hence my terms risk-on and risk-off. By watching these buggers you can get a pretty good sense of the direction of equities and interest rates. The ups and downs of the markets, suddenly aren't so mysterious anymore.

     

    Now, here's my comment for why I say this is the case.
    20 Oct 2014, 11:54 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    "we shouldn't stop funding government "

     

    You need to wrap your head around this. Its an extremely important point and will improve your analysis of investments and gov a hundred fold.

     

    When a country monopolizes bank notes via a central bank, and then basically outlaws all other money mediums, the result is the gov has basically monopolized money. Money is a claim on labor. The gov has basically consolidated all the money claims on labor under the gov's roof. By doing so, it has converted those notes into a general claim on the labor of the populace. In other words, the notes have value to the extent the populace can produce assets that can satisfy those notes.

     

    In essence what the above process has done is to convert the monopolized money mediums (ie Fed Res notes) into stock certficates. Therefore the system of the gov collecting gold in order to spend or private bank notes in order to spend has disappeared. That means the IRS is a useless organization. Any "collecting" of Fed notes to "fund" the gov is an illusion. Its the same thing as a company collecting treasury stock or outright cancelling stock. The result of those transactions only changes the ratio of notes to assets, thus changing the value of the remaining notes. It doesn't "fund" anything.

     

    Think of it this way. The gov is just a sub of the American people, who are the parent. The gov tax revenue is the populace's tax expense, but when you consolidate the two, the tax revenue and expense disappear, and all you have left is the income and expenses of the populace. So, what really funds the gov is the real productivity of the American populace.

     

    We could get rid of the IRS tomorrow, and the debt and deficit would keep going up, but the increase in productivity from not having to waste production time on the stupid IRS would produce the assets that would give those notes value. People from around the world would still line up to get US notes. To add to this, if you cut spending and gov policies that encouraged people to be less productive, the asset production would go up even more, the gov would issue less notes, and the remaining notes would have even more value (all this while there is no IRS).

     

    So, wasting our time debating the differences on policy about how to do something that is totally irrelevant is a pointless exercise. The gov will always be funded by the productivity of the operation divisions knowns as the American economy. As long as we produce assets faster than we produce notes, those notes have value.

     

    Ask yourself this, do you worry when Apple's equity accounts rise. Those equity accounts represent a debt to the owners. No one worries about this debt because people realize that an Apple note (stock is just a note) gives you a claim to a powerful asset producer. The same is true for US notes.

     

    So, since this is the model we have, we need to stop talking in terms of a private money medium model where the gov has to collect the medium in order to "fund" itself. I'm not advocating for any of this, mind you. I just saying this is what we have. Until we change, we could at least utilize its full potential given we are not allowed the other, better alternative.

     

    [This was all from another thread]
    20 Oct 2014, 11:55 AM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    >Hoop-

     

    Thanks-

     

    Excellent- My education in level II Macro Economics and others is attempting to dust off the cobwebs from the 60s!

     

    WT
    20 Oct 2014, 12:37 PM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2579) | Send Message
     
    >jhooper: That is the clearest explanation I have ever heard of how fiat money operates. Thanks! Like a stock price, it is partly based on trust.
    20 Oct 2014, 07:02 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    "Like a stock price, it is partly based on trust. "

     

    Indeed, and consider this, a private company must be price sensitive in order to create its notes (stocks). If a company has a tendency to dilute its stock, people will till to shun it. Thus, there is a market force that makes private notes more valuable than gov notes.

     

    Govs still have the market to contend with, but a market correction for a fiat currency is often expressed in war or private revolt. The point of free market discipline is to avoid blood shed corrections.

     

    Also, understanding this also illustrates why stock markets tend to do well in money printing. There is a natural tendency to move out of the undisciplined gov notes and into the more disciplined private notes. Hence, during QE equities go up and rates go up, as people leave bonds and chase the return of equities. This is why, ironically, rates go up during QE even though the point of QE was to lower rates.

     

    From this I derive the risk-on during QE, equities up and rates up. When QE wanes, stops, or even gets reversed, risk-off returns, which is equities down and rates down.

     

    Which is what we have seen in Europe as the ECB's balance sheet has shrunk, and what we are seeing being threatened in the US as we even get a whiff that QE might be over. Of course, look at the 10yr since December. We were told all last fall that Taper meant rates would go up. Since Taper began in Jan of 2014, the 10 yr has fallen. It even touched 1.86 last Wednesday.

     

    People have been conditioned to think a rising equity market means a rising economy, and it certainly can, but if you give people notes that you can create without price sensitivity, then you invoke what I said above, and presto, you get rising equity markets without necessarily having a rising economy. Then the politicians get to say, "look what I have done".

     

    This is why this system is favored so much by politicians. Its a cheat, but if you understand the cheat, you can make money from it.
    20 Oct 2014, 07:21 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Whispers of the italians leaving the Euro and returning to their previous currency.

     

    http://bit.ly/1wrsm6S
    20 Oct 2014, 01:59 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    >JHooper-

     

    Hey, Hoop-

     

    Have you been advising these guys?

     

    http://nyti.ms/1wryc8f

     

    WT
    20 Oct 2014, 03:20 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    "Irish government decided last week to get rid of a tax loophole "

     

    Yeah, I saw that the other day. I rather think someone else decided for them.

     

    Its a shame really. Just makes you wish somebody, somewhere would take a stand against all this tyranny and insanity.

     

    However, I really love the fact that they innovated and are maybe finding a way around it. If they really were listening to me though, they would just get rid of the corporate taxes all together.

     

    For one thing, as I noted earlier, in a fiat system, taxes don't "fund" the gov. Funding the gov is only true when the gov doesn't own the money medium. When money, is say, gold, the gov actually has to collect it in order to spend it. Under fiat, the tax becomes inflation, and its a virtually inescapable tax. So, there's not point in collecting the central bank notes that the gov already owns, but they do anyways, which just goes to show they aren't the experts they claimed to be.

     

    However, the real benefit in getting rid of a corporate tax is the savings from all of the compliance efforts. The US for example has what's known as section 382. That's the change of control provision that limits ownership changes so that any NOLs will be nuked if such a chang occurs. So...that throws up a barrier for a change of control, and thus new capital for struggling businesses that would otherwise have a good chance for success, don't get that help and therefore often fail. Without corporate taxes, all that just evaporates.

     

    I saw a great saying on another thread the other day...

     

    "Capital and labor just want to be loved."

     

    Ireland seems to have figured this out to an extent. They just need to give in to their love affair.
    20 Oct 2014, 04:24 PM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Hoop, we should have you writing for the tea party newsletter. Great stuff.
    21 Oct 2014, 01:00 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    It is my hope to share what I have learned with other people. Hopefully, they will come to understand, as I have, that the ups and downs in markets aren't as unpredictable as we have been led to believe.

     

    The idea that some mysterious cosmic force causes the economy to tank in a few days or weeks wherein everyone makes the exact same mistake at the exact same time is a preposterous explanation.

     

    The people trying to make this excuse are the people who have been trying to use gov to provide them with protectionist measures designed to create the cartels the free markets would not allow.

     

    So, when this gov intervention results in asset inflation, followed by another gov mistake that results in asset deflation, these guys can't let everyone catch on that it is they who caused the problem, so what do they do? Why they do what all gov regulators do. They blame someone else. Rands books are full of gov regulators making excuses and blaming other people. She lived through it, so she knows how these guys think. I actually had a regulator say on a phone call we had once, "Its not my fault". It hit me then just how right she was.

     

    So, after causing a huge mess, the gov regulators that caused it, claim its not their fault, and want even more of the power they used to create the mess in the first place.

     

    The depression of 1920-21 was caused by increases in the Discount Rate and higher marginal income taxes. The stock market collapse in Oct of 1929 was caused when Young took the Discount Rate to over 6%.

     

    In fact, notice how raising the Discount Rate typically precedes a recession.

     

    http://bit.ly/1sZE5UT

     

    Not, always, because there are other factors going on with fiscal policy and real economic growth, but by studying this in what I call the Subsidy Mix, the directions of markets become far less mysterious.

     

    Knowing that there is not some mysterious force causing the collapses like the regulators would have us believe so they can't be blamed gives you a great deal more confidence.

     

    I certainly want others to share that, and to also have them be able to protect their wealth and not have it transferred away.
    21 Oct 2014, 09:44 AM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    Total's CEO dies in a plane crash in Moscow

     

    This is bad news for France and the EZ, is the cold war really back?
    21 Oct 2014, 03:57 AM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    Total CEO reported dead in Moscow plane crash
    Total SA (NYSE:TOT) CEO Christophe de Margerie is reported dead after a plane crash in Moscow, according to Interfax.De Margerie, 62, has held the positions of chairman and CEO at the oil/gas giant since 2010.Updated 7:13 p.m.: Various sources are saying that de Margerie was the only passenger on a light aircraft aside from a three-person crew, all of whom also died when the plane hit a snowplow on takeoff.
    21 Oct 2014, 04:17 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    Snow plow driver was drunk. He died too.
    21 Oct 2014, 10:14 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    ECB QE slowly ramping up.

     

    http://bloom.bg/1pAhhu9

     

    Now we just have to see if we get any news from the Fed on Oct 29.
    22 Oct 2014, 08:26 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    "Chronic joblessness can be attributed to a number of rigidities in the French labour market, which include a relatively high minimum wage, restrictive laws on hiring and firing of workers, and prohibitive income and labour taxes. "

     

    The minimum wage is to blame? Why I thought that study in those 13 states dispelled that idea. I guess France didn't get the study.

     

    http://bit.ly/1pAxEH6
    22 Oct 2014, 10:01 AM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2571) | Send Message
     
    A related factoid that may interest you, jhooper, as much as it interested me is that more men in the US (25-54 year olds) are unemployed -- than those unemployed in a similar group in France. Larry Summers pointed out yesterday that 1 out of every 6 men (17%) in that age group in the US is unemployed today -- and that % is higher than France's. No way is our "unemployment rate" reflecting reality. The link is broken on Bloomberg so you will need to look it up under " Larry Summers on U.S. Economy, China, Global Markets" 10/21/14 (data presented around 3 minute mark on this video.)
    mj
    22 Oct 2014, 10:22 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    We are often told that inflation is a monetary phenomenon. A better saying is that unemployment is a gov regulatory phenomenon. In reality, all gov regulations are about wage control. An EPA ruling about a certain level of particulates is a cost that limits the wage of people. In cases of protecting property, a gov regulation is appropriate, like in murder, we want the rewards for murder to be zero. As such, we create heavy regulations against murder. The reason is that property rights is how we become most sensitive to price. Price sensitivity expresses people's feelings about what makes their lives better and what does not.

     

    So an agreed upon wage is simply an expression of people's feelings about what wage level makes both parties better off. That wage level is driven by current technology that allows that wage level to be met. A gov price control for labor is really a ban on labor below that price control. Since gov cannot mandated new technology to pay for the gov set labor price, the result is a surplus of labor, otherwise known as unemployment.

     

    So, while an expressed minimum wage in one country may not be as high as another, if you have other labor laws, manufacturing controls, or high levels of capital rules (like an SEC), then you have clandestine wage controls. If the economy does not have technology to pay for the imposed wage controls, the result is, yet again, a surplus, or unemployment.

     

    In a free market created by gov only be limited to protection of property and person, there would be no such thing as unemployment. Free prices will always clear the market, like they do for iphones.
    22 Oct 2014, 10:48 AM Reply Like
  • Windwood Trader
    , contributor
    Comments (3718) | Send Message
     
    >Mercy-

     

    Thanks for the Larry Summers piece. I also picked up the following on expectations for China growth near term and the next ten years as well-

     

    Their "New Normal" will be a lot lower.

     

    http://bit.ly/1tbRoqW

     

    WT
    22 Oct 2014, 11:11 AM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2571) | Send Message
     
    WT -- good embedded links in your article re: China's slowdown. I have been long the Renminbi for several years -- and I am still evaluating the probability of big devaluations in China as the global currency wars stay in full swing during the next ten years.
    thx,
    mj
    22 Oct 2014, 11:36 AM Reply Like
  • doubleguns
    , contributor
    Comments (9264) | Send Message
     
    This is a link to an article about the Germans not being able to save the EZ with a stimulus package.

     

    However, at the bottom of the page is a link to an article on the EZ banks not passing the stress test. I could not open it because you only get 10 articles per month for free. It might be of interest to anyone who has not hit the 10 article wall.

     

    http://bit.ly/1pACpAu
    22 Oct 2014, 10:24 AM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Good article.

     

    Yeah, the only stimulus plan is the only that ever existed in the first place, yet is the only one they won't do. They have to lower their cost of production by removing the clandestine wage controls they have via all of their preference regulations (i.e. business and labor regulations). Only then will their problems start to resolve themselves. Until then they are going to keep trying one consumption subsidy after another, each one with the same predictable results, a risk-on rally (asset inflation) followed by a risk-off spiral (asset deflation).
    22 Oct 2014, 10:52 AM Reply Like
  • Mercy Jimenez
    , contributor
    Comments (2571) | Send Message
     
    Let's hope Putin's strong words don't get transformed into further actions.

     

    "The U.S., according to Putin, is a global Big Brother that blackmails and bullies its allies while producing instability and misery around the world. Because the U.S. realizes it no longer has the ability to succeed as the lone hegemon in an age of rising powers, it is trying to recoup that status by re-creating the Cold War and producing a new enemy against which to rally countries ... What is worrying is that the post 1990s narrative Putin laid out -- in which the U.S. has ignored, humiliated, encircled and isolated Russia since the collapse of the Soviet Union -- is one most Russians whole-heartedly believe." http://bv.ms/1wrWXQB

     

    Meanwhile George Soros appears alarmed in opining that Russia's incursions into Ukraine poses a threat to the EU's very existence. http://bloom.bg/1wrX0vU
    mj
    25 Oct 2014, 01:55 PM Reply Like
  • LT
    , contributor
    Comments (5783) | Send Message
     
    MJ, IMO Putins plan to bring Russia back into power again is by doing just what he's accusing the USA of doing. If he could get the EU broken back up, he would automatically leap into second place again.
    Not to mention taking over the motherland again.
    25 Oct 2014, 02:05 PM Reply Like
  • jhooper
    , contributor
    Comments (7266) | Send Message
     
    Sometimes, these types of chest thumpings are more for domestic consumption than they are for international consumption.
    25 Oct 2014, 05:28 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Twenty-Five Out of One Hundred and Thirty of European Banks Fail Stress Test

     

    The E.C.B. said that 25 banks in the Eurozone showed shortfalls in their own money, or capital, after a review devised to uncover hidden problems and test their ability to withstand a sharp recession or other crisis.

     

    The review looked at banks’ books through the end of 2013. Of the 25 banks, 13 have still not raised enough capital to make up the shortfall, the central bank said. It did not immediately name the banks.

     

    The failed banks are 25 billion euros, or $31.7 billion, short of the money they would need to survive a financial or economic crisis. That conclusion was a result of a yearlong audit of Eurozone lenders that is potentially a turning point for the region’s battered economy.

     

    The highly anticipated assessment of European banks was intended to remove a cloud of mistrust that has impeded lending in countries like Italy and Greece and left the entire Eurozone struggling to avoid lapsing back into recession. By exposing the relatively small number of sick banks — of the 130 under review — the central bank aims to make it easier for the healthier ones to raise money that they can lend to customers. [LOL - Buy junk bonds guarantied by tax-payers without knowledge they are on the hook for the high risk bonds.] http://tinyurl.com/p8b...
    ===

     

    The fact that nearly one out of five tested banks failed seems to enhance the cloud of mistrust. On top of that, just giving the number of failed banks does not provide a complete picture. Surely the size of the failed institutions makes a big difference in the picture. The fact that size of the failed institutions was withheld makes the cloud of mistrust downright opaque.
    26 Oct 2014, 07:36 AM Reply Like
  • siliconhillbilly
    , contributor
    Comments (2579) | Send Message
     
    FPA: The criteria used to judge whether the EU banks were "healthy" seem very tame to me. I wonder if those limits were chosen specifically to be on the edge of where many more banks would fail?

     

    Also remember that the ones that failed had significant time to pad their books, but they still failed a low bar test. Not encouraging.
    26 Oct 2014, 10:00 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (6282) | Send Message
     
    Author’s reply » Totally agree. The tests were rigged and nearly one out of five failed anyway. The tests also did not consider a key stressor, deflation. There are eight EU countries in deflation now. http://tinyurl.com/ml9...

     

    I also saw a report where EU banks have over one Trillion in bad debt on their books. http://tinyurl.com/nl8... I suspect a good portion of that consists of high return, high risk sovereign debt bonds. There is no way that Greece is ever going to pay back what it owes. So who pays the piper?
    26 Oct 2014, 11:52 PM Reply Like