Wednesday, February 18, 2015
Europe is on the verge of a horrifying financial meltdown, and there are only a few short weeks left to avert total disaster. On Monday, talks that were supposed to bring about yet another temporary “resolution” to the Greek debt crisis completely fell apart. The new Greek government has entirely rejected the idea of a six month extension of the current bailout.
The Greeks want a new deal which would enable them to implement the promises that have been made to the voters. But that is not going to fly with the Germans, among others. They expect the Greeks to fulfill the obligations that were agreed to previously. The two sides are not even in the same ballpark at this point, and things are starting to get very personal. It is no secret that the new Greek government does not like the Germans, and the Germans are not particularly fond of the Greeks at this point.
But unless they can find a way to work out a deal, things could get quite messy very rapidly. The Greek government has about three weeks of cash left, and any changes to the current bailout arrangement would have to be approved by parliaments all over Europe by March 1st. And the stakes are incredibly high.
If there is no deal, we could see a Greek debt default, Greece could be forced to leave the eurozone and go back to the drachma, the euro could collapse to all time lows, all the banks all over Europe that are exposed to Greek government debt could be faced with absolutely massive losses, and the 26 trillion dollars in derivatives that are directly tied to the value of the euro could start to unravel. In essence, if things go badly this could be enough to push us into a global financial crisis.
On Monday, eurozone officials tried to get the Greeks to extend the current bailout package for six months with the current austerity provisions in place. Greek government officials responded by saying that “those who bring this back are wasting their time” and that those negotiating on behalf of the eurozone are being “unreasonable”…
A Greek government official said that a draft text presented to eurozone finance ministers meeting in Brussels on Monday spoke of Greece extending its current bailout package and as such was “unreasonable” and would not be accepted.Without specifying who put forward the text to the meeting chaired by Dutch Finance Minister Jeroen Dijsselbloem, the official said: “Some people’s insistence on the Greek government implementing the bailout is unreasonable and cannot be accepted.”
Most observers have speculated that the new Greek government would give in to the demands of the rest of the eurozone when push came to shove.
But these new Greek politicians are a different breed. They are not establishment lackeys. Rather, they are very principled radicals, and they are not about to be pushed around. I certainly do not agree with their politics, but I admire the fact that they are willing to stand up for what they believe. That is a very rare thing these days.
On Monday, Greek finance minister Yanis Varoufakis shared the following in the New York Times…
I am often asked: What if the only way you can secure funding is to cross your red lines and accept measures that you consider to be part of the problem, rather than of its solution? Faithful to the principle that I have no right to bluff, my answer is: The lines that we have presented as red will not be crossed.
Does that sound like a man that is going to back down to you?
Meanwhile, the other side continues to dig in as well.
Just consider the words of the German finance minister…
Wolfgang Schaeuble, the German finance minister, accused the Greek government of “behaving irresponsibly” by threatening to tear up agreements made with the eurozone in return for access to the loans which are all that stand between Greece and financial collapse.“It seems like we have no results so far. I’m quite skeptical. The Greek government has not moved, apparently,” he said.“As long as the Greek government doesn’t want a program, I don’t have to think about options.”
Global financial markets are still acting as if they fully expect a deal to get done eventually.
I am not so sure.
And without a doubt, time is running short. As I mentioned above, something has got to be finalized by March 1st. The following comes from the Wall Street Journal…
Any changes to the content or expiration date of Greece’s existing €240 billion ($273 billion) bailout have to be decided by Friday, to give national parliaments in Germany, Finland and the Netherlands enough time to approve them before the end of the month. Without such a deal, Greece will be on its own on March 1, cut loose from the rescue loans from the eurozone and the International Monetary Fund that have sustained it for almost five years.
So what happens if there is no deal and Greece is forced to leave the eurozone?
Below, I have shared an excerpt from an article that details what Capital Economics believes would happen in the event of a “Grexit”…
- The drachma would be back. The euro would be effectively abandoned, and Greece would return to the drachma, its previous currency (it might take a new name). The drachma would likely tumble in value against the euro as soon as it was issued, and how much the government could print quickly would be a big issue.
- It would have to be fast, with capital controls. There would be people trying to pull their money out of Greece’s banks en masse. The Greek government would have to make that illegal pretty quickly. The European Central Bank drew up Grexit plans in 2012, and might be dusting them off now.
- European life support for Greek banks would be withdrawn. Greek banks can currently access emergency liquidity assistance from the ECB, which would be removed if Greece left the euro.
- Likely unrest and disorder. Barclays expects that this sudden economic collapse would “aggravate social unrest”, and notes that historically similar moves have caused a 45-85% devaluation of the currency. Capital Economics suggests that the drop could be more mild, closer to 20%, and Oxford Economics says 30%.
- Greece would resume economic policymaking. Greece’s central bank would probably start doing its own QE programme, and the government would likely return to running deficits, no longer restrained by bailout rules (though investors would probably want large returns, given the risk of another default).
- Inflation would spike immediately, but both Capital Economics and Oxford Economics say that should be temporary. It might look a bit like Russia this year — with the new currency in freefall until it finds its level against the euro, prices inside Greece would rise at dramatic speed. The inflation might be temporary, however, because with unemployment above 20%, Greece has plenty of spare labour slack to produce more.
That certainly does not sound good.
And once Greece leaves, everyone would be wondering who is next, because there are quite a few other deeply financially troubled nations in the eurozone.
David Stockman believes that Spain is a prime candidate…
In spite of the “recovery” in Spain, close to 24% are still unemployed. That statistic explains Pessimism in the Streets.The crisis is here to stay according to significant majority of Spaniards. The general perception is that the current situation in which the country is negative and far from getting better, can only stay stagnant or even worse.A Metroscopia poll published in El País makes it clear that the Spanish are unhappy with the current state of the country. Five out of six (83%) see the economic situation as “bad”, while more than half of the remaining perceive “regular”.
Right now, Europe is already teetering on the brink of an economic depression.
If this Greek debt crisis is not resolved, it could set in motion a chain of events which could start collapsing financial institutions all over Europe.
Yes, we have been here before and a deal has always emerged in the end.
But this time is different. This time very idealistic radicals are running things in Greece, and the “old guard” in Europe has no intention of giving in to them.
So let’s watch and see how this game of “chicken” plays out.
I have a feeling that it is not going to end well.
Credit to Economic Collapse
MELBOURNE, Fla. -
A possible hate crime is under investigation after a fire was set at a Central Florida church, where vandals also spray-painted "Allahu Akbar."
The incident happened around 3 a.m. Monday at the New Shiloh Christian Church in Melbourne on Sarno Road. About 1,500 members attend the church.
Melbourne police said officers and firefighters discovered the blaze after a fire alarm sounded. Arson was the expected cause, police said.
Fire sprinklers helped contain the flames to a storage unit connected to the 125,000-square-foot building.
The words "Allahu Akbar" were spray-painted on the storage unit. "Allahu Akbar" is an Arabic phrase typically translated as "God is great" and is a common expression used in various contexts.
A swastika was also scrawled on church property. Inside the swastika was written, "We see u."
"To find something like that in 2015 is unbelievable. It's just disheartening," said New Shiloh Christian Church Bishop Jacquelyn Gordon. "They told us that this is definitely a hate crime and that they're going to patrol our area even more and just look out for us and they thought it was senseless and I feel the same way."
Police have not confirmed to Local 6 that the case is being investigated as a hate crime, but say they are investigating the fire and vandalism as arson and criminal mischief.
"I would just say that everything is being looked at. All avenues are going to be explored. If it meets that criteria, that would be something that would be looked at," said Lt. Cheryl Trainer.
Police told Local 6 they are hesitant to label the case as a hate crime because they don't want to alarm the public. They said they will determine if the graffiti was done at the same time as the vandalism and arson to determine if it is, in fact, a hate crime. At this time they are calling it arson and criminal mischief.
Damage to the church property was estimated to be about $5,000.
Gordon said her staff tried to spray paint over the message to hide it.
"It really took a lot out of me when I drove up and I saw that sign on the side of the building because I'm preaching God is love, why would someone take the time to put a sign up to show hatred," Gordon said.
No information about the arsonist or arsonists was known, and a police investigation is ongoing.
The FBI told Local 6, “We are aware of the incident and reviewing the matter.”
Gordon said is the second time in less than two weeks that vandals have targeted her building, which is in the process of being remodeled.
The church said it plans to increase security while members are there. The bishop said he will tell congregants Wednesday evening what happened.
"The one thing I really want them to do is not to be afraid," said Bishop Jacquelyn Gordon. "We're going to have people walking around surrounding the area every time we have service here to make sure people are safe and nothing happens on our watch."
Credit to Clickorlando.com
Even the Main Stream Media Gets It
A Dream of Revelation
An Email Excerpt Which Represents the “Many”
George Soros Is the Ultimate Economic Hit Man
Credit to Common Sense
A program aired on the British Broadcasting Corporation recently held a discussion as to whether or not major religious figures like Jesus Christ and the Buddha were from other planets. In a religion-focused series titled “The Big Questions”, host Nicky Campbell oversaw a discussion asking the query, “Have beings from other planets guided our religions?” “Last month NASA’s Kepler space telescope identified another planet that might have the right conditions for life,” said Campbell. “It will be no surprise to the followers of those religions who’ve long believed that life – possibly not as we know it – exists elsewhere in the galaxy.
Life which has possibly exerted its influence here on planet Earth. Have beings from other planets guided our religions?” The segment featured two groups, the Aetherius Society and the British Union Of Spiritist Societies, which advocated for the theory that various religious figures, including Jesus, were aliens.
Credit to Skywatch
Credit to Skywatch
With less than 24 hours until the ECB's meeting at which Mario Draghi and company are set to decide if i) they will increase the current Greek emergency liquidity allotment from €65 billion as a result of the ongoing bank deposit run or ii) reduce - or even outright cancel it - to send Tsipras a message that the time for negotiations is over, Europe is no longer playing Mr. nice guy. In fact, judging by the latest report in Reuters, which may well be nothing but another planted trial balloon (in the aftermath of today's latest Telegraph revelations one should read everything presented in the media, here certainly included, with a cape-size ship full of salt) Greece can kiss goodbye not only any a loan extension without a bailout "programme" resumption, but also any hope that tomorrow's its ELA will be increased.
The reason: ze Germans.
The European Central Bank faces resistance from Germany to allowing any extra emergency lending for Greek banks, people familiar with the matter said, increasing pressure on Athens to sign up to an extended aid-for-reform programme.... the ECB's policymaking governing council will review on Wednesday how far the country may support its weak banks, which face rising deposit outflows. While the ECB is unlikely to lower the ceiling on emergency lending assistance (ELA) by the Greek central bank, a refusal to increase it would nonetheless be bad news for Greek banks, which are close to using up the full 65 billion euros granted so far.Bundesbank chief Jens Weidmann, who has warned against the misuse of the emergency funding to indirectly finance the Greek state, is set to stick to this stance at the ECB meeting, the sources said. Some other governors have similar reservations.
Which means that the standoff will may well continue past midnight tomorrow. Now, in the worst case scenario, should the ECB yank all Greek ELA, then all bets are off, and on Wednesday it is unlikely that any banks will reopen in Greece, which incidentally would likely lead to an immediate compromise by the new PM and FinMin, unless of course they are prepared for this contingency and reveal a new €100 billion or so loan from the BRIC bank, compliments of Vladimir Putin.
But even in the less Draconian case, one in which the ECB decides to remain merciful for 10 more days, the outcome is not much better: "Unless Athens agrees an extended aid programme soon, keeping ELA capped would put lenders in a funding squeeze that could require the introduction of capital controls to limit savers taking out more of their money, the sources said."
As noted earlier, the bank runs may (or may not: depending on one's agenda), have accelerated in the past few days:
A senior Greek banker told Reuters up to 500 million euros ($571 million) had been withdrawn from Greek bank accounts on both Thursday and Friday last week.There was a lull on Monday but deposit outflows picked up again on Tuesday after talks collapsed, the banker said.
One thing is clear however: Greece will almost certainly not last until the proverbial D-Day on February 28 before it either i) runs out of money, ii) is forced to sign a "bailout extension" deal with the Eurogroup thus crushing its credibility with the people, or iii) exits the Eurozone. Needless to say, two of the three above options are very unpleasant for Greek savers, assuming any are left. And it is those savers that the Eurozone is directly targeting when it does everything in its power to provoke a bank run with statement such as these:
"The situation of the banks is getting more and more difficult every day," said a European official. "In the end, in order to safeguard the banking system, capital controls will probably have to be imposed."
And to think a comparable statement about any other peripheral Eurozone country, all of which are as insolvent as Greece, would be met with howls of murderour rage and demands for a death penalty on account of provoking a bank run panic.
Not Greece though: for the small country that dared to provoke Goliath, anything and everything is fair game.
The ECB's chief economist Peter Praet has cautioned that the funding is for the short term only, although Austria's central bank chief Ewald Nowotny recently signalled that the ECB would resume direct funding if Athens struck a deal to extend its EU/IMF bailout.Frustration with Greece is growing. Euro zone finance ministers have given Athens until the end of the week to request an extension or lose financial assistance when the bailout expires at the end of February.Were the ECB to cancel all emergency funding for Greek banks, as it threatened to with Cyprus in 2013, it would leave Athens with no choice but to strike a new deal with its international backers or face bankruptcy.But the ECB would be very reluctant to take such a step.
In short: Europe suggests Greek panic.
But here lies the rub, because despite the market's complete lack of willingness to react, pardon "market", since every risk asset is now exclusively controlled by the world's "developed" central banks, kicking Greece out would - without doubt - lead to the worst possible of Mutual Assured Destruction outcomes.
"Pulling the plug on Greece would have potentially catastrophic consequences," said Ashoka Mody, a former IMF official who helped design Ireland's bailout."The ECB's threats are completely empty. Despite all the bluster, it has no choice. The ECB has to ask itself how it can stabilize the financial system, not undermine it."
And that particular game theory outcome is precisely what the non-game theory playing finance minister is betting the farm, and the nation on. The one where it ultimately costs Europe far, far less in current certain costs, than the "unknown unknowns" of the worst case scenario that will be revealed once the Eurozone is effectively no more. This is how Goldman described a world in which Greece is kicked out:
... ‘Grexit’ would constitute a non-diversifiable event, affecting all financial assets. This is because, upon the departure of one of its members, EMU would likely be seen as a fixed exchange rate arrangement between countries which can elect to adhere or leave. Convertibility risk would resurface, exposing the possibility of a collapse of the entire project.To be sure, the ECB would not stand idle in the face of such a course of events. But the severity and persistence of the ‘shock’ from Grexit would depend on several factors, which include:
- What has led to the departure of Greece (metaphorically, was the country pushed or did it jump?).
- What institutional arrangements the remaining countries put in place to signal their commitment to stay together (presumably in the form of greater sovereignty sharing).
- How does Greece perform outside of the single currency?
So even as Europe is throwing the kitchen sink at Greece in hopes of sparking a bank run, it should be very careful what it wishes for. Because a nation with nothing left, with no hope, is far more dangerous than the servile debt-slave Europe expects Greece to be. And if as Goldman suggests, a Grexit has far greater and far more negative consequences for Brussles than Athens, then Varoufakis' gambit will be spot on, and Europe will be begging Greece to stay, or return, before all all is said and done and the European project is cast away on the every larger trash heap of failed neo-liberal ideas.
Credit to Zero Hedge
America appears to have found something else to blame the Russians (or North Koreans) for... The Weather. As The Daily Mail reports, CIA chiefs fear hostile nations are trying to manipulate the world’s weather... seriously.
So-called "geoengineering techniques" range from cloud seeding, in which chemicals are sprayed by planes trigger rainfall, to shooting mirrors into space to reflect sunlight and cool the Earth.
But as The Daily Mail reports, a leading academic has told how he got a mysterious phone call asking whether foreign countries could be triggering droughts or flooding...
Professor Alan Robock, from Rutgers University in New Jersey, said:"Consultants working for the CIA rang and said we’d like to know if someone is controlling the world’s climate would we know about it?Of course they were also asking - if we control someone else’s climate would they then know about it."
The professor is one of many scientists from around the world are actively looking at manipulating the weather as a way of combating climate change.
Professor Robock told the callers that any attempts to meddle with the weather on a large scale would be detectable.However, he told the American Association for the Advancement of Science’s annual conference in San Jose, that the weather has been weaponised in the past.During the Vietnam War, US scientists tried to increase rainfall to hamper the enemy’s progress by spraying particles into the clouds.And the CIA seeded clouds over Cuba "to make it rain and ruin the sugar harvest".Asked how he felt when he got the call, the professor said: "Scared.""I’d learned of lots of other things the CIA had done that haven’t followed the rules and that wasn’t how I wanted my tax money spent.""I think this research has to be open and international, so there isn’t any question of using it for hostile purposes."To add to the intrigue, the CIA is believed to have helped fund a major report into geoengineering.
Published last week by the prestigious US National Academy of Sciences, the report mentions the ‘US intelligence community’ in its list of sponsors, alongside organisations such as Nasa.
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He added that the tension created by any large-scale meddling in the climate could escalate to such an extent that it would end in all-out war.
The professor said: ‘If one country wants to control the climate in one way, and another doesn’t want it or if they try to shoot down the planes...if there is no agreement it could result in terrible consequences.’
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So is the US economy now at the mercy of some cunning geo-engineer in Moscow seeding snow clouds over the Midwest and crushing GDP in the process?
Credit to Zero Hedge