Saturday, May 5, 2012

Money & Economy: it's the deteriorating asset base, stupid!

Zerohedge: "Everything You Know About Monetary Policy Is Wrong... And Why This Is Very Bad News For Europe"

For over a year we have been cautioning that even more than a "liquidity versus solvency" debate, the biggest unspoken factor (though slowly gaining prominence) not only for Europe, although manifesting itself there most prominently, but all across the developed world is the quality of the (deteriorating) asset base, thanks mostly due to the Fed's influence over corporate cash misallocation, and courtesy of the fact that the bulk of credit money creation in the past decade has come via the shadow banking system, broad asset collateral. Last year MF Global taught us that it is this shadow collateral which exists merely in ledger entries between fractional reserve entities (mostly broker dealers and hedge funds), that is now extremely scarce and has to be pledged and repledged in daisy chains of ultra rehypothecation, and which just like robosigning exists until it is actually called for delivery, when the entire collateral<->money linkage falls apart. It is this intersection of traditional monetary liabilities and new shadow aggregates that is completely undiscussed by conventional economic literature, and is why traditional monetary theory is completely helpless in coming up with credible and effective means of returning the world to a growth state. In other words, the Krugmans of the world are absolutely unable to explain how shadow banking should be accounted for when explaining something as simple as the leverage collapse, first in Europe, and then in the US (we have covered the collapse of shadow banking repeatedly, most recently here). (...) >>>

May 5, 2012

Muppets explain Keynes for dummies -

ZeroHedge: "Keynes For Muppets: Elmo Explains The National Debt"

(...) It’s hard to get the right answer when you’re counting the wrong stuff, and maybe that’s why Wall Street’s minions never discuss income per capita. It’s a meaningful measure of economic strength that ordinary Americans can relate to. Well, that and it exposes “pro-growth” policies for what they actually are: An excuse to loot the country in broad daylight by focusing on GDP, where government money, no matter how horribly misspent, shows up in the “win” column. Strip away that illusion and it becomes crystal clear that their path to prosperity is our highway to hell. (...) >>>

Apr. 18, 2010

Paul vs The Bernank -

The Bernank is on a two day visit in Congress. In the meanwhile, there's this unbelievable piece of news! "Next Leg Of The Ponzi Revealed - Foreign Central Banks To Begin Buying US Stocks Outright Starting Today". Here another primer on QE in relation to high oil prices: Sago: "Quantitative Easing 101" (ECB: LTRO (pr. eltro) -


Statement before the House Committee on Financial Services
Congressman Ron Paul
February 29, 2012

View Video of Dr. Ron Paul's Statement and Q&A with Fed Chairman Ben Bernanke (...) >>>

Mar 1, 2012

Debasing our wealth -

On the day after Greece defaulted and on the eve of the EZ's LTRO2 (more here) Rick Moran touches on the Fed's equivalent (QE), potentially causing severe inflation in the US. Whereas the Fed's QE is freely leaking into the real economy and oil prices are through the roof, the ECB's crisp fiatmoney is likely to remain in reserve, since banks are still hardly lending. Still, according to some experts euro inflation has been 11% per year since its inception -

American Thinker: "Are we headed for 15% inflation?"

Febr. 28, 2012

Why the next bank bail out will fail -

Here then is finally the answer why Paulson force fed bailouts on the banks on that fateful Friday afternoon. So as not to stigmatize those banks that needed the cash and turn them into take over prey. In Europe the ECB has no such considerations.
"Yet all these considerations pale before the reality that any banks that borrows even €1 on February 29 will suddenly be perceived as a lower-tier performer, when faced with banks that parade with their "fortress balance sheet." And as everyone knows, bail outs only work when everyone agrees to be bailed out. Otherwise, it is a shortcut to collapse. Because the last thing Intesa and UniCredit and STD and a whole lot of not so healthy banks will want on March 1 and onward is to be put in the "bailout recipient" category when so many others clearly no longer need the cash..."
"It appears that European banks, in their vain attempts for short-term capital gains, may have just sealed the fate of the entire financial sector." Tyler Durden explains -

Zerohedge: "European Nash Equilibrium Collapses - Bank Bailout Stigma Is Back At The Worst Possible Time"

and more jaw dropping from the category of "In times of moral crisis truth becomes a revolutionary act" -

Zerohedge: "Believe In A Return To The Gold Standard? You Are Now Officially An Extremist According To The FBI"

Feb. 9, 2012

On scare tactics and how to prep -

Why Are George Soros, The IMF And The World Bank Purposely Trying To Scare The Living Daylights Out Of Us?, asks The Economic Collapse. To mature the minds for more bail outs and Cas$h. When you get rattled enough, get ready to prep and become a survivalist -

CNSNews has the Obama QE inflation update: Price of Gas UP 83% | Ground Beef UP 24% | Bacon UP 22%

For updates on the Euro SNAFU, read up on Building the State of Europe -

Jan. 25, 2012

The global banking cabal -

While we got used to the conspiracy theories from the right @RealAlexJones we here have a variety from the left in which a major part is set aside for evil Big Corporations that own the government and a chunk of the world's wealth. They never explain to us, how these covert manipulators benefit from blowing up the system, which they in effect are doing. And they never explain why Paulson forced the banks to take TARP money and closeted them in a room on that fateful Friday afternoon in 2008 (here's the explanation) - Hat Tip @kruithoph

Divine Cosmos: "FINANCIAL TYRANNY: Defeating the Greatest Cover-Up of All Time"

Jan. 15, 2012

Fed's covert bailout of ECB -

GoldAlert: "Ex-Fed Official Accuses Bernanke of “Covert Bailout” of European Banks"

The Federal Reserve, led by Chairman Ben Bernanke, has engaged in a “covert bailout” of European banks, according to ex-Fed vice president Gerald P. O’Driscoll Jr. In a piece published by the Wall Street Journal on Wednesday, O’Driscoll – a former vice president and economic advisor at the Federal Reserve Bank of Dallas, and a current senior fellow at the Cato Institute – argued that the Fed’s temporary U.S. dollar liquidity swap arrangement with the European Central Bank (ECB) is a “fig leaf” to cover up what is essentially a transfer of U.S. dollars to banks in Europe.

“This Byzantine financial arrangement could hardly be better designed to confuse observers, and it has largely succeeded on this side of the Atlantic, where press coverage has been light,” O’Driscoll noted. “Reporting in Europe is on the mark. On Dec. 21 the Frankfurter Allgemeine Zeitung noted on its website that European banks took three-month credits worth $33 billion, which was financed by a swap between the ECB and the Fed.” (...) >>>

Dec. 31, 2011

Oil to make up for copy>print -

Here's why central planners keep housing and oil outside the inflation statistics: as oil prices sore the inflationary politics become apparent. More oil imports must keep price  levels under control. Unfortunately Iran is threatening to close the Straits of Hormuz and is holding two weeks of war games. Two news facts in one article -

Zerohedge: "Iran Begins Straits of Hormuz Wargames"

As was reported yesterday, Iran has now officially commenced its 10 day wargame exercise in the Straits of Hormuz. What happens next is 10 days in which one false move, either planned or false flagged, can have some serious (if required by the status quo) consequences: after all WTI is at $100, and the ECB has quietly "printed" $700 billion in the past 6 months, with the Fed not far behind - there has to be some implicit backstop to keep crude from soaring once it becomes clear that print mode is on, and the only way that can happen is the "possibility" of expanded oil supply through control of the main supply channels. (...) >>>

Dec. 24, 2011

Creative destruction is a moral imperative -

Zerohedge: ""Black Swan" Fund Creator Explains Why Central Planning Has Doomed Us All"

In a must read Op-Ed in the WSJ, Mark Spitznagel, founder of "fat tail" focused hedge fund Universa, where Nassim Taleb has been known to dabble on occasion, explains the fundamental flaw with central planning, and specifically why "moral hazard" or the attempt to avoid the destructive part of natural cycles, is the greatest unnatural abomination ever conceived by man. His visual explanation should be sufficient for even such grizzled academics who have no clue how the real world works, as the Chairsatan, to comprehend why what he is doing is an epic abomination of every law of nature: "Suppressing fire, creating the illusion of fire protection, leads to the wrong kind of growth, which then invites greater destruction. (...) >>>

Dec. 23, 2011

Release Keynes' animal spirit -

The grandfather of government intervention who gave politicians their ultimate toy, advised to leave well alone -
The Foundry: "Keynesians Should Listen to Keynes"

As we’ve argued countless times, government attempts to stimulate the economy create uncertainty that often paralyzes business decisions. Don’t take our word, though. In a letter to President Roosevelt during the Great Depression, the father of Keynesianism himself, John Maynard Keynes, wrote the following (...) >>>

Dec. 17, 2011

Credit crunch 2.0 underway -

The Slog: "CRASH 2 BREAKING: COMMERZBANK IN CALL FOR BERLIN BAILOUT - Second largest bank in Germany on verge of collapse"

After a long series of barely spun excuses and bad results, reliable reports are filtering in from Germany tonight that Commerzbank needs immediate State aid to stop it going under. It has long been accepted by financial commentators that Commerzbank had one of the worst German exposures to ClubMed debt. At the end of September, it had €13-billion of exposure to the sovereign debt of Greece, Ireland, Italy, Portugal and Spain. It raised €5.3-billion from shareholders in June, but since then Greek sovereign debt haircut proposals and tougher capital rules have made its position increasingly fragile. (...) >>>

Dec. 12, 2011

Year end do & don't lists -

Zerohedge: "Bank Of Countrywide Lynch On The Top Ten Macro Themes For 2012"

Dec. 9, 2011

A survival guide -

Personal financial advice by -

Zerohedge: "How to Position Yourself for the Future"

What we care about most here is helping people adjust and adapt -- happily, profitably, and safely -- to what is likely to be a very different future.

Our framework centers on the idea that humanity is facing a set of predicaments quite unlike anything else in the history books. Because this time there are no borders to cross in search of safety; the entire world is involved. (...) >>>

Dec. 7, 2011

Rife with rumor -

Markets surged today after a number of central banks announced an invention. According to a report on Forbes, a major European bank failure was narrowly averted. Other reports state German finance minister says EU finance ministers have agreed on national guarantees for banks. Waiting confirmation. This is huge! More rumors: Sky says, FSA is urging British banks to prepare for Euro breakup... and Did The Fed Leak The European Bailout Decision On Monday Morning? A Visual Exhibit?

Nov. 30, 2011

An Irish accounting error and bailouts are bad for the economy -

Iceland's decision not to bail out its banks and to use state money to help hard-pressed households and lower income groups has left it in a much better place than Ireland, according to two Nobel prize winning economists and IMF experts -

Irish Examiner: "Iceland on mend in spite of refusal to bail out banks"

After the Germans (scroll down to entry on Oct. 29) it's now the Irish who discover a billion euros accounting error in the national debt -

The Sovereign Independent: "Paper trail shows how €3.6bn alert was ignored. Its behind you, OH NO IT ISNT! OHH YES IT IS!"

Nov. 21, 2011

Galt exists and MF Global: Was It A Hit?


Ann Barnhardt describes herself as a an “an old-school commercial hedge broker specializing in CATTLE and GRAIN.” And she just shut down her business by delivering a passionate and chilling open letter posted on her website. “I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not,” she writes. And then she unloads:
Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.
Nov. 19, 2011

Italy, the next domino -

Italy: mathematically game over. But Italy is too big to bail! Oh dear, now what?! #tuttobene -

InfoWarsL "Arrivederci Berlusconi - The Economic Collapse"

As I wrote about recently, it has been the fumbling of the Greek debt crisis by European leaders which has set the stage for the burgeoning financial crisis in Italy to go to a whole new level. Once the Greek debt deal was announced, I warned that it would shatter confidence in the sovereign debt of the rest of the PIIGS and it would cause their bond yields to soar. That is exactly what has happened. The yield on 10 year Italian bonds (probably the most important financial number in the world at the moment) is now up to 6.7 percent. Never before in the euro era has the yield on Italian bonds been as high as we have seen this week. So why is this important? Well, the reality is that Italy simply cannot afford to service its massive national debt when yields are this high. We are officially in the danger zone. Carl Weinberg, the chief economist at High Frequency Economics, recently said the following about what would happen if Italian bond yields go up into the 8 to 10 percent range…. (...) >>>

Nov. 9, 2011

Gold has value after all (or perhaps not) -

While Greek opposition leader Samaras is calling for a "message of stability" instead of delivering stability itself (how very pOmo!), Germany and other gold reserve countries are pressured to pledge their treasure to the ESFS bailout fund - BL**DY EFFING UNBELIEVABLE - these pomos have no concept of value! Of course not, they killed it!

EZ Gold and Foreign Exchange Reserves
Mish's: "In Act of Desperation, G20 Asks Germany to Pledge its Gold for EFSF Rescue Fund, Bundesbank Refuses; Grateful for the Arrogance"

The gall and arrogance of the G20 and Euro-nanny finance minister clowns is staggering. German newspapers report that the G20 discussed asking Germany to pledge its gold to bail out Greece and the Piigs, and to fund the EFSF. The Bundesbank, Germany's central bank said "We know this plan and we reject it." One might think that would be enough to stop such idiotic talk, but one would be wrong. In spite of Bundesbank opposition, euro zone finance ministers will discuss the idea next week. (...) >>>


Zerohedge: "Morgan Stanley Says Europe's Pandora's Box Has Been Opened"

Nov. 6, 2011
While all eyes are on Athens and Cannes (G20) it doesn't hurt looking back a bit on the fascists of crony capitalism. At the time Mario Draghi (now President of the ECB) was employed by Goldman Sachs. He and the Bank Of Italy deny it, stating “The operation was carried out before Mario Draghi’s arrival.” Paulson, of infamy was CEO of Goldman Sachs at the time - while Papademos (bio) - former VP ECB, is tipped to succeed George Papandreou as PM of Greece -

The Daily Bail: "CORRUPT ACROSS THE GLOBE: How Goldman Sachs Helped Greece Hide It's National Debt"

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit. (...) >>>

Nov. 3, 2011

Be afraid, very afraid -

Zerohedge: "Germany "Raises" €55.5 Billion, or 1% Of Its Debt/GDP Ratio, Thanks To Derivative "Accounting Error""

As usual, the most surreal news of the day, perhaps week, is saved for Friday night, when we learn that Germany has magically raised over a quarter of its total EFSF obligation of €211 billion by way of what is essentially magic. The Telegraph reports that "Germany is €55bn richer than it previously thought because of an accounting error at state-owned bank Hypo Real Estate Holding. The mistake at "bad bank" FMS Wertmanagement, happened because collateral for derivatives wasn't netted between the asset and liability side, an FMS spokesman said. As a result, FMS will only contribute about €161bn to Germany's debt this year, down from €216.5bn in 2010." Another way of representing the error is that it is equal to a ridiculous 1% of the country's debt to GDP ratio. "Germany's 2010 debt-to-GDP ratio also drops, to 83.2% from the previous 84.2%, a finance ministry spokesman said." In other words, the modern world, best characterized by the imploding fiat ponzi, has discovered a way to raise capital (electronic, naturally) courtesy of CDS bookmarking errors. And now, we have seen it all. (...) >>>

Oct. 29, 2011

EFSF annotated draft -

Zerohedge: "Annotated European Union Document On EFSF Status", from Peter Tchir of TF Market Advisors

Here is the draft document with our thoughts inserted directly into the document. As more actual details or termsheets become available we will attempt to analyze them as well.

European Union Document on EFSF Status

Here is the text of the Draft Terms and Conditions according to a bloomberg article. After an initial read we have included our thoughts in bold into the document.

2011-10-24 19:03:43.159 GMT

Oct. 24 (Bloomberg) -- Attached is a document prepared by European Union officials on the current status of the euro region’s bailout fund. The document was distributed to German lawmakers and obtained by Bloomberg News.

23 October 2011

Draft Terms and Conditions

Maximising the lending capacity of the EFSF (...) >>>

Oct. 25,2011

Debunking Keynes Day -

Spooky Dude SoroS has a proposal that no doubt would be the stake through the heart of the monetary system, such as it is! Read his 7 point proposal to save the Oyro in FT - And Zerohedge has an article, pomo banking for dummies: "The Evolution And Recycling Of The Debt Crisis" -

Following piece not just debunks another Keynesian tenet, it makes plain that the useful idiots of #Occupy are protesting their own Leftist monetary policies -

Zerohedge: "The Paradox of Thrift — Debunked"

Ever since John Maynard Keynes popularized the Paradox of Thrift, economists, central bankers and politicians have labored under the misapprehension that high levels of savings are bad for the economy and inhibit growth. The Paradox of Thrift simply states: Increased savings means there are less buyers for goods produced, so the nation as a whole will tend to produce less.

  • If an individual saves they increase their wealth;
  • But if an entire nation saves, this causes a shortfall in consumption; and
  • The shortfall in consumption will cause national income to fall.

Keynes was correct in his observation that high level of savings caused a shortfall in national income, but we need to remember that he was writing in the 1930s — in the middle of the Great Depression. His General Theory was published in 1936. What Keynes observed was an anomaly caused by the financial crisis. (...) >>>

Oct. 24, 2011

Weekend of despair -

Pomoland: "Epic Fail: #EUSSR Race to the Abyss"

They don't do what needs to be done, but what they can reach consensus on. Governing by consensus is always weak. The EZ countries will pay the price. Former Dutch Commissioner Bolkestein explains the mistake: decision making used to be a matter for the Commission. For speed they've dropped it with the Council of Govt leaders. The result is the present mess.

EZ governments trying to save euro from collapse Friday night, faced a new bombshell: IMF saying it would not pay for a 2nd Greek bail-out. British businesses are turning their back on Brussels regulations, with supermarket chain Tesco leading the charge. The proposal put forward by Herman Van Rompuy would be clearest sign yet of a new “US of Europe” — with Britain left on the sidelines. French Banks are awash with Greek debt. If bailed out with French money, France loses its AAA rating which is what EFSF requires from its donors. (...) >>>

"Let us finally pull the plug of the EUSSR!" by Udo Ulfkotte

Now waiting a presser by Merkozy

Oct. 23, 2011

Zerohedge: "European Finance Ministers Driven To Despair As Reality Returns"

The release of the Troika report (stating the what-we-all-know that is much larger haircuts will be needed for any type of debt sustainability) seemed to bring events this weekend in Europe to an early halt, according to SudDeutsche. As the sheer mathematical certainty of the event horizon that is Europe these days is slammed at light speed into the foreheads of the European cognoscenti, we finally see some actual frustration, foot-stomping, and 'throw-your-teddy-bear-out-of-the-pram'-ness. The Telegraph reports on some choice turns-of-phrase among the leading players, our favorite being:
"It was grim. The worst mood I have ever seen, a complete mess," said one eurozone finance minister.
But it only got better from there, with several of the major movers feeling the need to express their frustration (and what is German for Schadenfreude?) at the lunacy of what SudDeutsche reports was in the Troika debt sustainability report (...) >>>

Oct. 23, 2011

Dithering on the brink -

Chatter has it, the Germans haven't reached consensus yet about EFSF leveraging. France and Germany disagree about almost every aspect how to handle the crisis. In the meanwhile with the EZ on death row, the commission proposes to throw away the clock and kill the rating agencies. These pomo people live separated from reality, and yet they rule -

Irish Times: "EU may curb ratings agencies"

The European Union may seek the power to prohibit the publication of credit ratings of countries that are under a rescue programme, an EU official familiar with the proposal said today. The proposal from Michel Barnier, the EU official in charge of regulation, may yet get shot down because it needs the blessing of EU countries as well as the region's parliament in order to take effect. The move would be controversial and experts have previously warned that tough restrictions on rating agencies can undermine efforts to rebuild investor confidence in the euro zone. (...) >>>

Oct. 21, 2011

Bazooka turns out pea shooter -

Zerohedge: "There Is No Bailout Spoon: The Math Behind The €2 Trillion EFSF Reveals A "Pea Shooter" Not A "Bazooka"

The latest and greatest plan to bail out Europe revolves around using the recently expanded and ratified €440 billion EFSF, and converting it into a "first loss" insurance policy (proposed by Pimco parent Allianz which itself may be in some serious need of shorting - the full analysis via Credit Sights shortly) in which the CDO would use its unfunded portion (net of already subscribed commitments) which amount to roughly €310 billion, and use this capital as a 20% "first-loss" off-balance sheet, contingent liability guarantee to co-invest alongside new capital in new Italian and Spanish bond issuance (where the problem is supposedly one of "liquidity" not "solvency").

In the process, the ECB remains as an arm-length entity which satisfies the Germans, as it purportedly means that the possibility of rampant runaway inflation is eliminated as no actual bad debt would encumber the asset side of the ECB. A 20% first loss piece implies the total notional of the €310 billion in free capital can be leveraged to a total of €1.55 trillion. So far so good: after all, as noted Euro-supporter Willem Buiter points out in a just released piece titled "Can Sovereign Debt Insurance by the EFSF be the "Big Bazooka" that Saves the Euro?" there is only €900 billion in financing needs for the two countries until Q2 2013. As such the EFSF would take care of Europe's issues for at least 2 years, or so the thinking goes. There are two major problems with this math however, and Buiter makes them all too clear. (...) (...) >>>

Oct. 18, 2011

The massive derivative crash -

The Paulson TARP documents turned up (here's the explanation):

Business Insider: "Documents Reveal How Paulson Forced Banks To Take TARP Cash"


For who needs reminding how this started: the Community Reinvestment Act, a piece of Socialist madness dating back to the Carter era, which enforces banks to contract bad mortgages -

The Extinction Protocol: "$600 trillion derivative time-bomb: the day the glass ceiling finally cracks"

You want to know the real reason banks aren’t lending and the PIIGS have control of the barnyard in Europe? It’s because risk in the $600 trillion derivatives market isn’t leveling out. To the contrary, it’s growing increasingly concentrated among a select few banks, especially here in the United States. In 2009, five banks held 80% of derivatives in America. Now, just four banks hold a staggering 95.9% of U.S. derivatives, according to a recent report from the Office of the Currency Comptroller. The four banks in question: JPMorgan Chase & Co. (NYSE: JPM), Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC) and Goldman Sachs Group Inc. (NYSE: GS). Derivatives played a crucial role in bringing down the global economy, so you would think that the world’s top policymakers would have reined these things in by now – but they haven’t. (...) >>>

Oct. 15, 2011

Derivatives for dummies -

NewZeal: "Understanding Derivatives - a Primer"

This explains the “derivatives” scam better than anything else I have read.
Heidi is the proprietor of a bar in Detroit. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers’ loans). (...) >>>
Oct. 11, 2011
Latest update on rebellion and chaos -

Politeia: "Of Revolution, Chaos, Mayhem and a Global Coup"

It didn't have to be this way. The revolt that has been brewing for the last couple of years, that temporarily came to the eruption known as "the Arab Spring", is now on its way to the West. It is at present converging on Wall Street #OccupyWallStreet and Brussels #OccupyBrussels #Revolution_info #globalchange. Apotheosis expected next week. It's a wide range far lefty outfit consisting of midguided libertarians, #Anonymous Wiki Leaks supporters, eco fascists, anti consumer brigades, anti globalists, unions and other rag tag lefty causes. Here's a hypothesis about the next move on the global chess board. (...) >>>

Oct. 6, 2011

Do your own homework! -

Word of the day: leveraging -- a process that would enable the EFSF to use its assets as collateral to borrow money from the European Central Bank and boost its scope to fight the crisis. Here's what WSJ think of the notion: "EFSF Leverage: Euro Zone's Most Dangerous Delusion". The solution? More productivity, and not just on work floor, also in bed -

You do the math! Collateralized debt obligation (CDO) ("what not even bankers understand")

And here's virtual money printing, Quantitative Easing (QE) for dummies - here quantitative easing and qualitative easing

FT: "Leveraging the EFSF is attractive, but risky"

Sept. 28, 2011

Germany shaken to the core -

Bundestag votes Thursday September 29 on the ESFS bailout fund. Read all about it in Der Spiegel: "Wrangling and Hand-Wringing - The Euro Crisis Visits Berlin". -

Telegraph: "German turmoil over EU bail-outs as top judge calls for referendum"

Germany's top judge has issued a blunt warning that no further fiscal powers may be surrendered to Europe without a new constitution and a popular referendum, vastly complicating plans to boost the EU's rescue machinery to €2 trillion (£1.7 trillion). (...) >>>

Sept, 27, 2011

Money without value -

The Vrijspreker article -

ZeroHedge: "The Dutch Ask Their Central Bank: "Where Is Our Gold?"

Think Ron Paul is the only person asking questions about the actual gold supposedly backing the currency in circulation. Think again: the "ask your central banker where his gold is" tour just went global after the Dutch the Dutch Socialists Party (SP)’s spokesman for financial affairs, Mr. Ewout Irrgang, asked the Dutch Secretary of the Treasury 10 detailed questions about the gold supposedly held by the Dutch Central Bank. Questions vary from: where is the gold? why are gold and gold receivables one line item? how much gold is loaned out? As Dutch website points out, "This is potentially a big breakthrough for global awareness on how central banks hide crucial info from the public and the disastrous effects central banks have on society." Is Belgium next to ask the same question in a vain attempt to understand just how much of its gold is permanently "lent out"? And after Belgium, everyone else with a central bank perhaps? The Questions (...) >>>

Sept. 21, 2011

EZ FinMins dis Timmy Geithner...

...well, perhaps someone should report them to #AttackWatch, but it now appears he reciprocated the honor! (raw vid) -

WSJ: "Geithner Warns Europeans"

The U.S. Treasury secretary warned his European counterparts of the "catastrophic risk" of the Continent's swirling sovereign-debt crisis, pointing out divisions among the 17 nations who use the euro, and between those countries and their central banks.

But European finance ministers meeting here reacted coolly to Timothy Geithner's sharp exhortations Friday to bolder action, officials said, in a sign that Europe's stronger economies were nearing the limits of their ability—or desire—to pay for backstops for the weak. (...) >>>

Sept. 17, 2011

Dutch FinMin: Greek bankruptcy a given -

ZeroHedge: "Dutch Finance Ministry Says Greek Default Is Unavoidable, Immediately Retracts"

Even though it has since provoked a firestorm of denials and refutations, the reality is that Dutch media RTLZ (see our Dutch language blog Plein 2010 for original report) probably had some very good sources (certainly better than the FT's yesterday when China was supposed to LBO Italy for the 4th time in 2011) to release the following information, namely that according to the Finance Ministry, the bankruptcy of Greece is inevitable, and that the "question is no longer whether but how Greece goes bankrupt." Additionally, Reuters added that according to Jan Kees de Jager, "We are studying scenarios in secret together with the Dutch central bank (DNB) and also with other countries. We are looking at our own economy, our government finances, the financial sector and consequences for Europe," De Telegraaf added that the "other countries" also included Germany and Deutsche Bank. He said it was difficult to let a country go bankrupt in a controlled way. (...) Of course, in keeping with the European M.O. of spreading a rumor, gauging the market response, and if response is unpleasant, to immediately refute it, Dow Jones and everyone else has since reported that the Dutch were only kidding and were not calling for an orderly default for Greece. Sure. Just preparing for one. Huge semantic difference there... (...) >>>

Sept. 13, 2011

On the brink ... again -

More on Wall Street Journal -

- "IMF Chief Lagarde Softens Stance on European Banks" #G7
- "G-7 Torn Between Stimulus and Cuts"
- "Germany Picks ECB Candidate"
- "Moody's May Cut French Banks' Ratings"
- "Greek Leader Vows To Press Changes"

ZeroHedge: "The IMF Proudly Presents.... "Threat To The International Monetary System" Part Three"

It's that time again when the IMF has just telegraphed something very big and very bad is about to happen. But let's back up, and paraphrase our post from March: "Back in April 2010, before Waddell and Reed sold a few shares of ES, effectively destroying the market on news that Europe was insolvent, we made the following observation: "The IMF has just announced that it is expanding its New Arrangement to Borrow (NAB) multilateral facility from its existing $50 billion by a whopping $500 billion (SDR333.5 billion), to $550 billion." Little did we know that our conclusion "something big must be coming" would prove spot on just a month later after Greece, then Ireland, then Portgual, and soon Spain, Italy, Belgium, and pretty much all other European countries would topple like dominoes tethered together by a flawed monetary regime. Well, based on news from Dow Jones we can now safely predict the following: "something bigger must be coming." The specific reason for this prediction was the following: "the International Monetary Fund is expected to soon activate a special funding pool that will boost the fund's ability to prevent or resolve economic crises." Sure enough something bigger came, and then some: Greece received its second bailout package about 4 months later, only to see the entire Eurozone hang by a thread following the political fallout that has since ensued. Well, it is time to shift from the comparative to the superlative: "something biggest must be coming." (...) >>>

Sept. 11, 2011

Is today D-Day for Greece and the Euri? -

Greek Finance Minister: nothing to see here, just rumor and speculation -

BusinessInsider: "Here’s Why Everyone’s Thinking That Greece Might Default This Weekend", by Simone Foxman

Tons of people are chattering about the possibility of a Greek default today, with Germany ready to bail out its banks if that happens. There are two reasons that people are speculating on a Greek default this weekend.
First, private sector participation in the bailout—in which bondholders would have to accept about a 21 percent haircut voluntarily—is not going to be very popular.

Greece bank managers have said they expect private sector participation in the bond swap to reach about 80%. This is well short of the 90% Greece demanded last month. If Greece were actually to take a hard line on this, it would compromise an $185 billion piece of the bailout agreement.

This swap technically signals default anyway, so the failure to go through with it means we’d see a hard default rather than the managed, “selective” default outlined in the July 21 agreement. (...) >>>

Sept. 10, 2011

Regime stimulus on steroids -

A Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress - get this -

Bloomberg: "Wall Street Aristocracy Got $1.2 Trillion From Fed"

Citigroup Inc. (C) and Bank of America Corp. (BAC) were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits.

By 2008, the housing market’s collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret.

Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress. (...) >>>

Aug. 22, 2011

Private currency, out with funny money -

PJM: "Privatized Currency: It Might be Happening Already", by Steve Green

Returning to the gold standard makes so much sense — in theory. And even the briefest thought of taking control of the currency away from Washington sends a thrill down my leg. “Money they can’t monkey with,” would be a fine slogan for the campaign, don’t you think? (...) >>>

Aug 14, 2011

Downgrading the world standard (update) - The fall out is only now beginning - bringing down the US as the world's sole super power -

- Infowars: G7 Preparing Statement To Support Dollar, EU, In Fact Everything That Would Otherwise Collapse Tomorrow, Before Asia Open
- NYT: Europe's Web of Debt - chart
- Reuters: China blasts U.S. over debt problems, calls for dollar oversight -

Telegraph: US is stripped of its AAA credit rating for the first time"

American government debt is no longer one of the world's safest investments according to ratings agency Standard & Poor's, which last night stripped the world's biggest economy of its top credit rating for the first time. (...) >>>

Aug 6, 2011

Infowars: "Greece: This is What an IMF Riot Looks Like"

The European stock market reacted jubilantly to news that the Greek parliament agreed to Mafia-like terms demanded by the international loan sharking operation, the IMF. Investors looked myopically at the boards showing the London FTSE 100 up a smidgen along with Frankfurt’s DAX and CAC-40 in Paris. In the United States, stock futures ticked up modestly as Wall Street opened for the day. Dow Jones Industrial Average futures for September delivery and Standard & Poor’s 500 contract for the same month are up 0.2% at 12,238.00 and 1,306.30, respectively. Markets reacted triumphantly in South Korea, India, Brazil and elsewhere. It has turned out to be a red letter day for the globalists and the financial class.

Meanwhile, on the streets of Athens, an IMF riot is in full swing. “Despite continuing protests – some violent – on the streets of Athens, investors were pleased that a euro-zone financial disaster had been averted,” the Wall Street Jounral cheerfully reports today. The IMF riot will undoubtedly get worse later today as the Greek parliament figures out the mechanics of bankster-imposed austerity. It’s business as usual for the financial class on Wall Street, and in London and Brussels.

“Although one would not think it from the pictures from Athens, European policy makers have expressed their approval that Armageddon has been averted following the vote of approval in the Greek parliament,” said Dermot O’Leary, economist at Goodbody Stockbrokers. Of course, it depends on how you define Armageddon. (...) >>>

June 30, 2011

How Democrats caused the subprime crisis -

Like Conservatives have maintained all along the crisis has now been traced back to the Democrats and old operatives of the Clinton administation by authors Gretchen Morgenson, a Pulitzer Prize-winning business reporter and columnist at The New York Times, and Joshua Rosner, an expert on housing finance. Read it in the NYT, by Robert B. Reich. Nothing new there... but: Pat Caddell, a former Democrat strategist/pollster made this point:
...the book is so straight forward, and easy to comprehend, that the average citizen can understand how the economy imploded, what caused it, and just who is guilty of all this. And perhaps this book may not bode well for the Democrats in the upcoming election. I actually did some searching around, and have come up with several pieces on the book. Here is the first one, and Walter Russell Mead thinks that Democrats had better Watch Out. Personally, I'm skeptical of this destroying Democrats, because this would require the GOP to actually have the where-with-all, and gumption, to take advantage of the gift looking them in the face. After all, the GOP is filled with Dumbasses, who couldn't even stumble across the finish line, if they were actually drug across it. The GOP is that Stupid and Gutless. If anybody actually accomplishes anything it will be the Tea Party, almost exclusively by themselves.
The American Interest: "Fanniegate: Gamechanger For The GOP?", by Walter Russell Mead

June 9, 2010

NWO is already upon us -

Prison Planet: "The IMF Can Print Money Like a Central Bank"

In an article entitled “IMF may need to ‘print money’ as crisis spreads”, the Telegraph reveals that the IMF has the power to create money just like the Federal Reserve (...) >>>

May 15, 2011

The Obama train wreck -

WSJ: "The Keynesian Growth Discount - The results of our three-year economic experiment are in"

For three long years, the U.S. has been undertaking an experiment in economic policy. Could record levels of government spending, waves of new regulation and political credit allocation, and unprecedented monetary stimulus re-ignite growth? The results have been rolling in, and they represent what increasingly looks like an historic mistake that deserves to be called the Keynesian growth discount. (...) >>>

Apr 30, 2011

SoroS' plan for new world order put to action -

FoxNews: "Why Are the Media Ignoring Plans By George Soros to Remake the Entire Global Economy?", by Dan Gainor

Two years ago, George Soros said he wanted to reorganize the entire global economic system. In two short weeks, he is going to start – and no one seems to have noticed.

On April 8, a group he’s funded with $50 million is holding a major economic conference and Soros’s goal for such an event is to “establish new international rules” and “reform the currency system.” It’s all according to a plan laid out in a Nov. 4, 2009, Soros op-ed calling for “a grand bargain that rearranges the entire financial order.”

The event is bringing together “more than 200 academic, business and government policy thought leaders” to repeat the famed 1944 Bretton Woods gathering that helped create the World Bank and International Monetary Fund. Soros wants a new “multilateral system,” or an economic system where America isn’t so dominant. (...)

Especially since Soros warns, all this needs to happen because “the alternative is frightening.” The Bush-hating billionaire says America is scary “because a declining superpower losing both political and economic dominance but still preserving military supremacy is a dangerous mix.”

The Soros empire is silent about this new Bretton Woods conference because it isn’t just designed to change global economic rules. It also is designed to put America in its place – part of a multilateral world the way Soros wants it. He wrote that the U.S. “could lead a cooperative effort to involve both the developed and the developing world, thereby reestablishing American leadership in an acceptable form.”

That’s what this conference is all about – changing the global economy and the United States to make them “acceptable” to George Soros. >>>

Mar 24, 2011

Crash an act of war? -

! Read also: "Was George Soros Behind the Attack Forcing the 2008 Financial Crisis?" -

TWT: "Financial terrorism suspected in 2008 economic crash - Pentagon study sees element"

Evidence outlined in a Pentagon contractor report suggests that financial subversion carried out by unknown parties, such as terrorists or hostile nations, contributed to the 2008 economic crash by covertly using vulnerabilities in the U.S. financial system.

The unclassified 2009 report “Economic Warfare: Risks and Responses” by financial analyst Kevin D. Freeman, a copy of which was obtained by The Washington Times, states that “a three-phased attack was planned and is in the process against the United States economy.”

While economic analysts and a final report from the federal government's Financial Crisis Inquiry Commission blame the crash on such economic factors as high-risk mortgage lending practices and poor federal regulation and supervision, the Pentagon contractor adds a new element: “outside forces,” a factor the commission did not examine.

“There is sufficient justification to question whether outside forces triggered, capitalized upon or magnified the economic difficulties of 2008,” the report says, explaining that those domestic economic factors would have caused a “normal downturn” but not the “near collapse” of the global economic system that took place. (...) >>>

Mar 1, 2011

An economic view of the revolution -

ZeroHedge: "It's Not an Arab Revolution ... It's a GLOBAL Revolution"

While the revolution in Tunisia, Egypt, Libya and other North African countries may seem like an "Arab revolt", it's actually worldwide.

Protests involving thousands of protesters have recently been held in:

Greece, India, North Korea, China, Halabja, Kut, Sulaimaniya and other Iraqi towns, Iran, And elsewhere

Predicted Years Ago. The worldwide riots are not mysterious or unforeseeable. They've been predicted for years, and are a direct result of the bad policy choices made by most nations worldwide.

The Bank for International Settlements - the world's most prestigious financial agency, nicknamed the "central banks' central bank" - warned in December 2008 that the bailouts and other bank rescue programs were putting nations were transferring risks from private companies to nations. As I noted at the time (...) >>>

View Inflation Riots and Protests 2011 in a larger map

Feb. 24, 2011

! On the origin of the financial crisis -

USA Survival: On the origin of the financial crisis

Feb. 2, 2011

While we weren't watching oil went $99 -

While the civilized world has been concentrating on Palin and TeaParty bashing, oil prices are nearing triple figures. As Rush Limbaugh has remarked, oil prices only partly consist in a market. Prices are set by OPEC -

TVNZ: "Oil prices nearing triple figures"

Brent crude prices rose on Wednesday to near $US99 a barrel after production shutdowns, falling US inventories and growing demand sent oil toward triple digits for the first time since 2008. (...)  Crude gained after a US government report showed oil inventories fell for the sixth straight week, slashing supplies by nearly 27 million barrels in that stretch, the biggest six-week decline since January 2008.

The drawdown added to global supply concerns stoked this week by the temporary shutdown of production in the North Sea and Alaska, while cold weather in the US Northeast also supported crude. Oil prices have been steadily climbing since the third quarter of 2010 on signs the improving economy was spurring demand fuel growth, and that it would rise further this year.

While oil's climb toward $US100 a barrel raised concerns about the impact of rising fuel costs on the economic recovery, top oil exporter Saudi Arabia - which has said it prefers a $US70-80 a barrel price range - kept supplies to customers steady.

Brent crude, the benchmark for Europe, the Middle East, and Africa, rose $US1.19 to $US98.80 a barrel, after touching a 27-month high of $US98.85 earlier.

US crude rose $US1.02 to $US92.13, after climbing to $US92.39, near the $US92.58 the Jan. 3 peak that is the highest since October 2008 (...) >>>

Jan. 14, 2011

Another bad day for the Euro -

ZeroHedge: "Next European Leg Down? First Failed ECB Monetization Sterilization, As Central Bank Has E13 Billion Shortfall In Bond Bids"

Today, to little fanfare, the ECB managed to obtain just E60.8 billion in tender interest for its most recent 7 Day SMP "peripheral bond monetization" operation, whereby it needed at least E73.5 billion to be able to offload all of its cumulative acquired sovereign bonds to other financial institutions: a de facto sterilization, which is why the ECB has so far been claiming it is not monetizing debt (as it constantly rolls the held balance on other bank balance sheets). That is no more: following today, the ECB is left with just under E13 billion in sovereign holdings and thus are not sterilized. This development follows Monday's announcement, which was reported first on Zero Hedge, that the ECB acquired 100% more in peripheral bonds in the prior week compared to two weeks ago. Another notable development (...) >>>

Dec. 28, 2010

PIIGS are chained to the Euro -

YTWHW: "Pimco: Greece, Ireland, Portugal Should Leave EMU - Welt"

Greece, Ireland and Portugal should leave Europe's single currency area if they cannot cope with the burden of their debts, the German daily Die Welt quotes a fund manager with Pimco as saying Monday. "Greece, Ireland and Portugal won't get back on their feet without either their own currency or high transfer payments," Andrew Bosomworth, head of portfolio management with Pimco in Munich, said in an interview. "I'm not assuming that growth will return, the way that the International Monetary Fund and EU expect," he added. The decisions taken at last week's European Union summit meeting hadn't fixed the solvency problems facing some euro-zone states, Bosomworth said. "Politicians can't just close their eyes any more to the possibility of a default inside the EU," Bosomworth said. >>>

Dec. 20, 2010

Eurozone woes -

Fortune: "Can the euro survive its 'hair shirt'?", by Colin Barr

It's not looking good, says longtime euroskeptic Desmond Lachman. Lachman, a former Salomon Smith Barney strategist and onetime policy adviser at the International Monetary Fund, has been saying for more than a year that the center can't hold in Europe. But now he says the next year could bring a crisis that will likely end with weaker countries streaming for the euro zone's exits. (...) >>>

Dec. 13, 2010

Harvest of 4 years DemocRat rule - Hat Tip: Catinflorida -

American Thinker: "The Economic Legacy of the Four-Year Democratic Congress", by Yossi Gestetner

From early 2007 through the end of 2010, the Democrats had strong Majorities in -- and control of -- the US House of Representatives and also the U.S. Senate. Both are chambers where laws and policies that affect the economy are created and shaped. The following table shows how the Democrat Congress performed on average during its four year tenure, vs. the average of the previous four years, 2003 through the end of 2006, when Republican were at the helm (...) >>>

Dec. 9, 2010

Fascism, as some define it - Government control of the economy while maintaining the appearance of private ownership is a characteristic of fascism -

WaPo: "Fed aid in financial crisis went beyond U.S. banks to industry, foreign firms"

The financial crisis stretched even farther across the economy than many had realized, as new disclosures show the Federal Reserve rushed trillions of dollars in emergency aid not just to Wall Street but also to motorcycle makers, telecom firms and foreign-owned banks in 2008 and 2009. (...) >>>

Dec. 2, 2010

The next domino is dropping - Wow, Von Mises in "The Irish Subjugation" catch it in a few words: the Euro is the symbol of the European project. If the Euro fails, the EU fails and that would never do. Therefore it will be propped up no matter what, at the expense of the people, their liberty and democracy! -

ZeroHedge: "The Next Shoe To Drop: European Insurance Companies - Assicurazioni Generali CDS Explodes"

As the idiot market relishes in yet another day of foolish self-delusion that the most globalized market in history can simply decouple between the two largest economies in the world (Europe as a whole is far larger than China), things are starting to stir beneath the surface in Europe. While it is now given that no state will be allowed to default, no market will be allowed to trade down, and no bank will ever be impaired as long until the current flawed economic fundamentalist religion is violently overthrown, the question now becomes (just like it did in the America in late 2008) how far down the foodchain with the global Bernanke put stretch? Case in point: Italian insurance company Assicurazioni Generali (CDS ticker: ASSGEN). (...) >>>

Nov. 30, 2010

Ireland bailing out -

CNN: "Irish bail-out to be announced Sunday"

The outline of an €85 billion ($112B) bail out deal for Ireland will be published on Sunday, in an effort to calm the turmoil in Europe's financial markets, a Dublin minister has indicated. "There has to be some clarity on our deal before Monday because what we've seen is a real uncertainty affecting markets, affecting this country, affecting other countries," Eamon Ryan, the communications minister, told Irish radio on Saturday. (...)

The bail-out talks have plunged Ireland into political turmoil. The latest details emerged as tens of thousands of people marched through Dublin to protest against the government's €15bn ($20B) austerity measures announced earlier this week by the government. Approximately 50,000 people took part in the demonstration, which was organised by the Irish Congress of Trade Unions. (...) >>>

Nov. 28, 2010

QE, a tool against deflation -

American Thinker: "Bernanke's Folly", by Kerem Oner

The chairman made it official that the Fed will be implementing QE2 (Quantitative Easing) in the form of buying back $600 billion in U.S. treasuries. For those who need clarification, this translates in to monetizing our debt, which, by the way, Mr. Bernanke had testified to the Congress that he would not do.

The intended purpose of this foolish act is to nudge interest rates lower, make credit even cheaper, and consequently (it is hoped) jolt the faltering economy back into health by providing excess liquidity to the credit markets. Unfortunately, the unintended consequences, as Bill Gross of PIMCO -- manager of world's largest mutual fund company -- speculates, is 20% or more devaluation of the dollar.

(...) whether QE works or not is as unsettled as AGW (anthropogenic global warming). A static analysis of available data may suggest some success, but a more dynamic analysis would lead most observers to hold a healthy dose of skepticism.

As to the unintended consequence of QE2, application of basic economic principles suffice for abandoning the policy. QE, as its planned implementation suggests, will most likely cause the U.S. dollar to decline in value vis-à-vis other global currencies. It is a basic economic fact that printing money without creating corresponding economic activity in the form of goods and/or services debases a currency.

Finally, and perhaps most importantly, the reason QE will not work in this instance is that we do not have a credit availability problem. Our woes are based simply on a crisis of confidence. All surveys of businesses have consistently indicated that businesses small and large are nervous about the regulatory environment as well as the uncertainty over possible tax hikes. Corporations are sitting on nearly $2 trillion in cash instead of investing it, partially because of record low consumer confidence and partially because of the uncertainties this administration and Congress have created over the past two years. Simply put, no amount of liquidity will entice businesses to invest and create jobs -- at least not until the business environment improves. (...) >>>

Nov. 10, 2010

Fed, forever blowing bubbles -

Zero Hedge: "Mark Fisher Slams Bernanke: "QE Is Going To End Bad...This Is Going To Be The Bubble Of All Bubbles"

Today's must watch clip comes from Mark Fisher. Key highlights: "QE2 can't end right. Worthless paper after endless paper.... What's good for the equity markets is not necessarily good for the economy. The equity markets are not going to create jobs. If you have a paper bag full of money are you going to go out and hire workers and take risk with healthcare and all these other regulatory restrictions? No, you are going to go ahead and buy high yield, you will buy equities, you will buy risk assets. The fallacy in the whole thing is that you are not going to go ahead and create jobs just by pushing up the market by 20%, 15%. In fact, to some degree by pushing up commodity price to levels that are going to be obscene, which is what is going to happen, you are hurting everybody in mainstream America... (...) >>>

Nov. 9, 2010

Schäuble: Geithner's Keynesianism clueless -

Spiegel: "Interview With German Finance Minister Schäuble - 'The US Has Lived on Borrowed Money for Too Long'"

In an interview with SPIEGEL, German Finance Minister Wolfgang Schäuble, 68, criticizes US calls for Germany to reduce exports, outlines his plans for an insolvency framework for indebted European nations and the emphasizes the significance of the German-French axis for Europe.

SPIEGEL: Minister Schäuble, how well do you get along with your American counterpart, Treasury Secretary Timothy Geithner?

Schäuble: Mr. Geithner is an excellent minister. We have a good personal relationship.

SPIEGEL: Nevertheless, he constantly criticizes government officials in countries that are achieving high export surpluses and not doing enough to stimulate their domestic economies. He's referring to you, isn't he?

Schäuble: It would appear that way. That's why I tell him again and again that I think his point of view is incorrect in this regard. (...) >>>

Nov. 8, 2010

Set the printing presses to work! -This is postmodern monetary policy, severed from anything actually based in reality! -

FT Blog: "$600bn QE2 from the Fed"

QE2 is sailing in the States - very close to expectations, at $600bn. “The unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent … with its dual mandate,” said the Fed press release.
To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities… the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month…The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent (...) >>>
Nov. 3, 2010

! On the September 2008 money vortex - FEATURE -

Read also today's posting on The Lighthouse: "Generation Zero and the September 2008 Capital Vortex". You can't make this stuff up. Some intrepid commentators are also venturing a guess. One cobbled together the timeline (see the comment sector at the bottom of the first article, particularly here and here). So much coincidence just doesn't happen! You don't have to wear a tin foil hat to see that!

PJM: "Generation Zero Zeros in on Cultural Roots of Financial Crisis", by Mary Claire Kendall

A new documentary, featuring PJM's own Roger Kimball and Victor Davis Hanson amongst its interviewees, compellingly argues that only by attacking the causes of this still-bubbling crisis will we make it to shore.

September 18, 2008 — the day the market lost $550 billion in little over an hour, costing Americans $14 trillion — was the tipping point for deeply indebted, over-obligated America. (...)

 “We were having an electronic run on the banks” Kanjorski said the Fed concluded after immediately pumping $105 billion into the system to no effect. The only solution was to “close the operation, close down the money accounts….”(...) “Someone,” Kanjorski concluded, “threw us in the middle of the Atlantic Ocean without a life raft. And we’re trying to determine which is the closest shore and whether there’s any chance in the world to swim that far. We don’t know.” (...) >>>

Sept. 19, 2010

The classics, free Athens v. totalitarian Sparta -

Von Mises: "Economic Thought in Ancient Greece"

The intellectual odyssey that laid the foundations for Western civilization began in classical Greece. Unfortunately, Greek thinkers failed in their attempt to grasp the essential principles of the spontaneous market order and of the dynamic process of social cooperation which surrounded them. While we must acknowledge the important Greek contributions in the areas of epistemology, logic, ethics, and even the conception of natural law, the Greeks failed miserably to see the need for the development of a discipline, economic science, devoted to the study of the spontaneous processes of social cooperation that comprise the market.

What is even worse is that when the first intellectuals emerged, so did the symbiosis and complicity between thinkers and rulers. From the beginning, the great majority of intellectuals embraced statism and systematically undervalued and even criticized and denigrated the society of trade, commerce, and crafts that flourished around them. (...) >>>

Sept. 15, 2010

The tightening noose around liberty -

The Economic Collapse: "The Death Of Cash? All Over The World Governments Are Banning Large Cash Transactions"

Are we witnessing the slow but certain death of cash in this generation? Is a truly cashless society on the horizon? Legislation currently pending in the Mexican legislature would ban a vast array of large cash transactions, but the truth is that Mexico is far from alone in trying to restrict cash. All over the world, governments are either placing stringent reporting requirements on large cash transactions or they are banning them altogether. (...) >>>

31 Aug. 2010

Of Obamanomics, lies and grand disaster -

Heritage: "Morning Bell: An Admission of Failure"

It is established practice in Washington that if you have to release bad news, it is best to do it on a Friday … the later in the day the better. So not only did the White House schedule the publication of the “Mid-Session Budget Review” for last Friday, but they then released it three hours late to ensure that as few reporters as possible were left in the nation’s capital to cover it. But Heritage’s dedicated budget team patiently waited the Obama administration out, and their analysis shows that this year’s mid-session review is nothing short of a complete admission of failure of the White House’s economic policies.

When President Obama sold his $862 billion economic stimulus to the American people, he promised that, if enacted, it would prevent unemployment from ever rising above 8%. With unemployment currently at 9.5%, the American people are now well aware that the President’s stimulus has been a complete failure. But Friday’s report was the first time this Administration was forced to admit just how long Americans will have to suffer for their failed economic policies. According to Friday’s report, the Obama administration now projects that unemployment will average 9% throughout all of next year and 8.1% throughout 2012. And if that news wasn’t bad enough, the report pegs this year’s budget deficit at $1.471 trillion, or 10% of the entire U.S. economy. (...) >>>

Jul 26, 2010

Applied economic postmodernism - Confusing God with the State ... like He, the State can create ex nihilo -

PJM: "Beware Dr. Galbraith’s Snake Oil", by Paul Hsieh

Even in the face of the Greek situation, some economists continue to argue that deficits don't matter. (...) Most Americans know that these ideas are deeply wrong. They recognize that borrowing doesn’t produce new wealth, that government can’t create something from nothing, and that the ultimate source of wealth is not entries in a government ledger book, but real goods and services created by real people. So why are such obvious fallacies so widespread in academia and government? As writer Ayn Rand once advised, “Don’t bother to examine a folly — ask yourself what it accomplishes.” Galbraith himself answers that question in his article in The Nation. (...) Galbraith’s consistent theme is his demand that we suspend our reason and instead defer to his alleged economics expertise. Our voluntary suspension of reason is precisely what men like Galbraith need for their schemes to work. In essence, they are saying, “Don’t worry if our plan doesn’t make sense. Let us do your thinking for you — and we promise that you’ll magically get something for nothing!” (...) >>>

May 31, 2010

Why the US economy isn't recovering -

Telegraph: "US money supply plunges at 1930s pace as Obama eyes fresh stimulus", by Ambrose Evans-Pritchard

The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history. The M3 figures - which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance - began shrinking last summer. The pace has since quickened.

The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of insitutional money market funds fell at a 37pc rate, the sharpest drop ever. "It’s frightening," said Professor Tim Congdon from International Monetary Research. "The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly," he said. (...) >>>

May 27, 2010

The global ponzi scheme at work - Suffering from cognitive dissonance? Here's why ... and lest we forget that the boys who're running these schemes are mathematicians and physicists (this is like doing algebra with chemistry) -

Nourishing obscurity: "Where does the money come from?", by James Higham
(...) I have stressed repeatedly that you cannot fix someone who is overlevered by offering them more credit, no matter [what] the terms. You can only solve their problem by reducing their credit load.
These ECB/IMF/sovereign loans are simply enormous amounts of debt. But to whom? Where does their money come from in the first place? As acidorphan asked in the comments thread: Could any person out there tell where this money is coming from, ie from the EU as a whole or just the eurozone countries?

Well, clearly, to restart an economy, there are three main ways to go. Firstly – to begin producing goods and find another economy somewhere in the world to buy them or secondly – to spend your way out, which is what the Keynesians such as Nu Labour do. However, to spend, you need money and that gives you hyperinflation as you print truckloads of it [figuratively and literally].

Banana republic. There is another way – borrow from the bankers in what is now a ginormous, international Ponzi scheme. (...) >>>

May 13, 2010

Free markets vs welfare states in absolutes - Link to caption -

Heritage: "Europe Faces Reality"

The European economic model is dead. Don’t believe us? – Ask The Washington Post. Yesterday’s front-page story reported that the loans being made to stave off the debt crisis come with conditions which, if enforced, would require “European governments [to] rewrite a post-World War II social contract that has been generous to workers and retirees but has become increasingly unaffordable for an aging population.”

There is an obvious and painful connection to the U.S. and our economic direction. Unless we adopt a much better set of economic policies, the American version of Europe’s crisis is inevitable. (...) >>>

May 12, 2010

... Update: on top of the dilemma, an EU to whom rules and agreements are dustbin lining material. The ECB now think they're the Fed ... monetizing the colossal debts ... but the euro is saved, for now -

Telegraph: "ECB risks its reputation and a German backlash over mass bond purchases"

The European Central Bank risks irreparable damage to its reputation by agreeing to the mass purchases of southern European bonds in defiance of the German Bundesbank and apparently under orders from EU leaders. (...) >>>

May 12, 2010

A European dilemma: rescue means further integration, federalization of Europe, loss of national sovereignty. Avoiding that could bring about the collapse of the system. Europeans have been treated like chattel. Now they're caught in a catch 22 - at the European Centrale Bank meanwhile ... "Trichet Indicates ECB Bond Purchases Not Unanimous" -

WSJ: "Euro Zone Pledges Bailout Fund - Bloc's Leaders Approve Greek Aid, Plan Stabilization Actions Amid Currency's 'Most Serious Crisis'", by Charles Forelle and Stephen Fidler

Leaders of the 16 euro-zone nations agreed to assemble a fresh pot of money that could be used to rescue its troubled members, as a crisis spurred by Greece's fiscal woes spiraled well beyond its epicenter. Meeting here past midnight Friday, EU leaders sealed their €110 billion ($145 billion) bailout of Greece, allowing money to be released in the next few days, and quickly turned their attention to the crisis's contagion into countries such as Portugal and into the European banking system.

The leaders agreed to create a "stabilization mechanism" over the weekend that would be in place before markets reopen Monday morning. There were few details on the mechanism, though French President Nicolas Sarkozy said the bloc's crisis response would "include all the institutions of Europe." He said the euro was facing "its most serious crisis since its creation." One possibility for part of the stabilization mechanism is direct borrowing by the European Commission, the EU's executive arm, which would be guaranteed by European nations. A similar structure was used in earlier bailouts of non-euro-zone countries such as Hungary. A person close to the discussions described it as "not huge."

The euro-zone leaders also agreed on a host of other, longer-term measures, including a pledge to accelerate budget cuts across the bloc and to craft more effective sanctions for those who violate its debt and deficit limits—as Greece and others have done for years. But the rescue has taken months to assemble and U.S. officials say that slow decision-making by European governments has already allowed the crisis to threaten Spain and Portugal and could lead it to spread. In an ominous sign that the present contagion is moving faster than European governments are acting to stop it, investors punished the debt of Portugal, in a near-repeat of the credit squeeze that preceded the Greek bailout. (...) >>>

May 10, 2010

The bestiary explained -

The Guardian: "Control the jackals circling the beleaguered people of Greece", by Ruth Sunderland

When the speculators have finished exploiting financial meltdown in the eurozone, they will turn their rapacious eyes on Britain (...) >>>

May 9, 2010

Why the Greek economy is a basket case: Greece hates entrepreneurs -

WSJ: "The Greek Economy Explained - A warning for Europe, Albany and Washington"

(...) In terms of overall ease of doing business, Greece comes in 109 out of 183 countries around the world. It is dead last among the 27 members of the European Union as well as the advanced economies in the OECD. You have to go up 30 slots to find the next worst EU performer, Italy. The U.S. ranks fourth and Singapore is first. At 109, Greece ranks below such models of transparency and free enterprise as Egypt (106), Zambia (90), Rwanda (67) and Kazakhstan (63). A country has to work hard to do this poorly. (...) >>>

May 8, 2010

What happened last Thursday? - Hot on the trail of the money vortex - Articles related to this issue are marked with the red exclamation mark -

Accuracy in Media: "Manipulation, Not Error, Behind Market Plunge", by Cliff Kincaid

The major media say the chaos on Wall Street was the result of a "trader error, possibly a typo," as the Washington Post put it. Some reports claim the culprit was a "fat finger" on a computer somewhere that pressed the wrong key. But Zubi Diamond, author of the Wizards of Wall Street, says these claims are all lies. "What happened in the market on Thursday is a typical example of pure market manipulation" by unregulated hedge fund short sellers.

His book, whose subtitle refers to the scam that elected Barack Obama, warns that the same hedge fund short sellers were behind the financial crash of 2008 that paved the way for Obama's election to the presidency. Diamond says the historic market plunge on Thursday was "due to computerized hedge fund short selling because there is no protection for the invested capital in the equity markets. There is no uptick rule, no circuit breakers and no trading curbs. Our market is primed for manipulation."

Diamond is referring to financial regulations, which have been repealed, designed to prevent market manipulation. (...) "What happened on Thursday happens to a select group of individual stocks on a daily basis as the hedge fund short sellers prey on common investors," he asserted. "They are now expanding the manipulation to include the whole market. They can now crash the market, panic shareholders out of their stocks, buy to cover their short positions for hefty shorting profits, and then buy back in at the bottom to open long positions and then recover the whole market (indexes) to normal levels."

These market manipulators, he notes, have the ability to drive prices down and then drive them back up, all within a 15 minute period. "How's that for no-risk investing?" he says. "They make money through stock price volatility and market volatility. They manipulate stock prices through unrestricted short selling." (...) "What happened on Thursday will happen again," he adds. "They are getting bolder every day. The hedge fund short sellers, who are members of Managed Funds Association, and their strategic partners at the different stock exchanges, are responsible for the scam that was perpetrated on Thursday." "The market plunged and recovered," he says. "The carnage and destruction of investor's capital was therefore concealed." (...) >>>

May 7, 2010

In Europe, integrate or die -

Breitbart: "Riots erupt in Athens, 3 bank workers killed"

Deadly riots over harsh new austerity measures engulfed the streets of Athens on Wednesday, killing three bank workers as angry protesters tried to storm parliament, hurled Molotov cocktails at police and torched buildings. Tens of thousands of people took to the streets as part of nationwide strikes to protest new taxes and government spending cuts demanded by the International Monetary Fund and other European nations before heavily indebted Greece gets a euro110 billion ($141 billion) bailout package of loans to keep it from defaulting. (...) "We are all concerned by Greece's economic and budgetary situation but at this time our thoughts are with the human victims in Athens," European Union President Herman Van Rompuy said in Brussels.

German Chancellor Angela Merkel called the bailout critical for all of Europe. "Nothing less than the future of Europe, and with that the future of Germany in Europe, is at stake," Merkel told lawmakers in Berlin, urging them to quickly pass the country's share of the bailout—euro22 billion ($28 billion) over three years—by Friday. "We are at a fork in the road." European Union officials tried to calm market fears that Greece's debt crisis was spreading to the rest of Europe, insisting the debt-ridden country is a "unique case" combining profligacy and tampered accounts. Van Rompuy said the situation in Spain and Portugal has "absolutely nothing to do with the situation in Greece."

"Greece is a unique and particular case in the EU" because of its "precarious debt dynamics" and because it "has cheated with its statistics for years and years," EU Commissioner Olli Rehn said in Brussels. But Moody's Investor Services, a major ratings agency, put Portugal's bond rating on review for possible downgrade Wednesday. Spanish and Portuguese bonds and stocks slumped further on the news, reflecting fears that they may likewise have trouble repaying their debt and that the eurozone would have to extend even larger bailouts to them. (...) >>>

May 5, 2010

H Kathimerini: "Deal agreed, tough steps announced - More tax hikes, spending cuts to hit home"

Finance Minister Giorgos Papaconstantinou prepares to announce the latest austerity measures to cut Greece’s public deficit and trigger the release of up to 45 billion euros of loans this year from the International Monetary Fund and the other 15 countries in the eurozone. Greece could receive another 65 billion euros over the next two years.

In return for receiving emergency loans of 110 billion euros from the International Monetary Fund and the eurozone over the next three years, Greece yesterday announced that it was adopting the most stringent austerity measures the country has seen in its modern history.

Prime Minister George Papandreou said the agreement would result in “an unprecedented support package for an unprecedented effort by the Greek people.” “These sacrifices will give us breathing space and the time we need to make great changes,” he said in a televised address following an emergency Cabinet meeting. (...) >>>

May 3, 2010

The Dems house banker - Don't forget the hedge funds! - Read also, "The Left's Favorite Bank" -

American Spectator: "Rush Was Right(er)", by Jay D. Homnick

The spectacle of Goldman Sachs being hammered for "unbridled greed" by the United States Senate on Tuesday was good for a horse laugh. Those headless horsemen who spend untold trillions without reins are missing a bit more than just a bridle. And crass insouciant hubristic callous indifference trumps greed on my list of deadly sins any day of the week. Rush Limbaugh used his program to level a withering critique of Congress for being less than frank about its own role in the creation of the subprime mortgage.

Most of those ruinous investments we have been hearing so much about involved loans given for houses under pressure from both Houses. The government had been promoting home ownership by leaning on banks to lend to people who could not reasonably be expected to pay. There was a chance those loans would be repaid, but only if every variable lined up perfectly: homeowner retained his job, house retained its value and all parties behaved responsibly. The moment the bubble burst, the works were gummed up all around, hurting everyone including Wall Street. (...) >>>

Apr 30, 2010

Greece's socialists set to work - Remember, the party is dealing with the mess it created itself in 2003. As Standard and Poor downgrade Greece's and Spain's credit status to junk status, Czech President Vaclav Klaus reviews the life of the Euro so far -

Free Republic: "Václav Klaus: When will the eurozone collapse?"

Apr 28, 2010

Greece's socialists set to work -

- MarketWatch: "Greece formally requests activation of rescue package"
- WSJ: "EU Sees Wider Greek Deficit, Roiling Markets"
- Bloomberg: "EU Working on Greek Aid Terms as German Parliament Test Looms"
- Reuters: "Oil rises to $84 on expectations of Greek bailout"
- NYT: "Euro Drops to One-Year Low on Greek Debt Woes"
- WSJ: "Markets pushing Greece to the Brink"
- WSJ : "Fiddling while Athens burns"

Apr 23, 2010

"Obama sacrificing his Wall St. pay masters" has moved to dossier "Under the Bus" -

Apr 21, 2010

Two great articles on Opinion Journal say it all -

- WSJ: "Fannie and Freddie Amnesia - Taxpayers are on the hook for about $400 billion, partly because Sen. Obama helped to block reform"

- WSJ: "An Economy of Liars - When government and business collude, it's called crony capitalism. Expect more of this from the financial reforms contemplated in Washington"

Apr 20, 2010

Saving Greece, in European style ... the IMF being for post colonial basket cases, not for post democratic European federalists -

WSJ: "It Depends What You Mean by ‘Somewhat’"

Euro-zone finance ministers agreed Sunday on the amount and the interest-rate formula for a potential Greece bailout. One could say, loyal readers, that they further clarified the modalities.

Of most concern to investors is the interest rate. Would it be much below what Greece pays in the market? Much higher than what the International Monetary Fund charges?

Here are the details (...) >>>

Apr 11, 2010

SoroS and his band of looters -

AiM: "Who’s Behind the Financial Crisis?", By Cliff Kincaid

The New York Times is quoting a spokesman for George Soros as saying that the well-known hedge fund operator is guilty of no wrong-doing in connection with the financial upheaval currently affecting Greece and Europe as a whole. But Zubi Diamond, author of the powerful new book, Wizards of Wall Street, says the agenda of Soros and other short sellers is clear. Their purpose, he says, is "to loot America and any foreign country which invested in America. Greece was one of them. Iceland was ravaged and annihilated." (...) The most influential members of Managed Funds Association, the hedge fund short sellers, have an anti-capitalism agenda, an anti-industrialized nation agenda, and a far left liberal, Marxist radical agenda," Diamond says."

Hedge Fund short sellers are not capitalist. They are anti-capitalist and they are not investors; they are anti-investors." He says they "loot" companies and countries. The Times noted that a dinner was held in New York last month where "representatives of some of these hedge funds discussed betting against the euro" in the wake of the Greek financial crisis. As a result, the paper said, at least four hedge funds had been asked by the Justice Department to turn over trading records and other documents. They were Greenlight Capital, SAC Capitol Advisors, Paulson & Company and Soros Fund Management. (...) >>>

Apr 2, 2010
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