Visualizing The American Taxpayer Relief Act

While our previous visualization of the incredible impact of the American Taxpayer Relief Act (ATRA) seemed to clarify to many people exactly what 'compromises' had been made, the following infographic perfectly relates the stunning difference such a 'fair and balanced' act will make to both revenues and spending... just remember $1 billion (of $100 bills) would weigh 10 tons.

Spain Plunders 90% Of Social Security Fund To Buy Its Own Debt

With Spanish 10Y yields hovering at a 'relatively' healthy 5%, having been driven inexorably lower on the promise of ECB assistance at some time in the future, the market has become increasingly unsure of just who it is that keeps bidding for this stuff. Well, wonder no longer. As the WSJ notes, Spain has been quietly tapping the country's richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish government bonds - with at least 90% of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt. Of course, this is nothing new, the US (and the Irish) have been using quasi-government entities to fund themselves in a mutually-destructive circle-jerk for years - the only difference being there are other buyers in the Treasury market, whereas in Spain the marginal buyer is critical to support the sinking ship. The Spanish defend the use of pension funds to buy bonds as sustainable as long as it can issue bonds - and yet the only way it can actually get the bonds off in the public markets is through using the pension fund assets. The pensioners sum it up perfectly "We are very worried about this, we just don't know who's going to pay for the pensions of those who are younger now," or those who are older we would add.

Via Wall Street Journal: Spain Drains Pension Fund In Borrowing Spree

Spain has been quietly tapping the country's richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish government bonds, raising questions about the fund's role as guarantor of future pension payouts.

Now the scarcely noticed borrowing spree, carried out amid a prolonged economic crisis, is about to end, because there is little left to take. At least 90% of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt, according to official figures, and the government has begun withdrawing cash for emergency payments.

Although the trend has drawn little public attention or controversy, it has become a matter of concern for the relatively few independent financial analysts who study the fund, which is used to guarantee future payments of pensions.

In addition, there are worries that Social Security reserves for paying future pensioners are running out much quicker than expected.

In November, the government withdrew €4 billion from the reserve fund to pay pensions, the second time in history it had withdrawn cash. The first time was in September, when it took €3 billion to cover unspecified treasury needs.

Together, the emergency withdrawals surpassed the legal annual limit, so the government temporarily raised the cap.

"We are very worried about this," says Dolores San Martín, president of the largest association of pensioners in Asturias, a small region that has one of the highest percentages of retirees in Spain. "We just don't know who's going to pay for the pensions of those who are younger now."

...

After the crisis began, some of those countries began using the pension reserves for other contingencies, such covering a drop in foreign demand for their government bonds. Since the collapse of Ireland's property boom, for example, most of its pension fund has been used to buy shares of nationalized banks and real estate for which no foreign buyers could be found.

"Most of the [Spanish] fund is an accounting trick," said Javier Díaz-Giménez, an economics professor in Spain's IESE business school. "The government is lending money to another branch of government."

Spanish officials defend the heavy investment of the Social Security Reserve Fund in their government's high-risk bonds. They say the practice is sustainable as long as Spain can continue borrowing in financial markets, and they predict the economy will start to recover late in 2013, easing the debt crisis.

...

"With foreign investors staying away from the Spanish debt market, you're going to need all the support you can get from domestic players," said Rubén Segura-Cayuela, an economist with Bank of America-Merrill Lynch.

...

Spain's commercial banks already have increased their Spanish government-bond portfolio by a factor of six since the start of the crisis in 2008, and now own one-third of government bonds in circulation.

The percentage of Spanish government debt held by the Social Security Reserve Fund stood at 55% in 2008, according to official figures; by the end of 2011 it had risen to 90%. Analysts say the percentage has continued to rise, even as international agencies have lowered Spain's credit ratings.

Spain's continued use of those reserves to buy its own bonds appears to violate a rule set by government decree that mandates their investment only in securities "of high credit quality and a significant degree of liquidity."

...

But with unemployment now above 25% of the workforce and fewer wage earners paying in, the Social Security System is about €3 billion in deficit, according to government estimates.

And in other news, and completing the picture, if not the circle jerk, is news from Libremercado that according to the Spanish Confederantion of Employer Organizations, some 60% of the Spanish companies are now losing money. Via Google translate:

The President of the Spanish Confederation of Employer Organizations (CEOE) has estimated that "60 percent of the companies are in losses. Thing is that entrepreneurs are more thoughtful and went outside."

Joan Rosell responds well after being asked if he receives "Spanish citizens too negative" in an interview with the newspaper La Razon, who heads a special titled "2013, the recovery begins," and says that "social unrest is evident and business world is no exception. "

The president of the CEOE has considered that the private sector "has already made ??all the restructuring that had to do and the decline in employment in the private sector has virtually stopped. now is the restructuring of the public sector."

After defining the first year of Mariano Rajoy in government as a year of shock, Rosell has considered that the Spanish economy remains "superfluous fat by many sides.'s Central government, regional and local. Avoid duplication. We are a country Over regulated".
Zero Hedge

Europe's dream of toppling dollar fades

International Monetary Fund data show that emerging nations have cut the weighting of EMU bonds in their reserves to 24.7pc from a peak of 30pc at the onset of Europe’s crisis three years ago, with a record drop in the third quarter of 2012.

“They have lost their appetite for peripheral EMU bonds, and some have simply cut Italy and other countries from their benchmarks,” said Jens Nordvik, currency chief at Nomura.

The IMF data also show a record $19bn (£12bn) surge in holdings of sterling by advanced central banks to $98bn, the biggest three-month jump ever recorded. Analysts say this is almost certainly caused by the Swiss National Bank as it takes extreme measures to hold down the franc. The SNB has already bought an estimated $80bn-worth of euro bonds and is increasingly switching to other assets.

“There aren’t many places to go in this 'ugly contest’ if you don’t like the euro, dollar or yen,” said HSBC’s David Bloom.

The effect has been to thwart the Bank of England’s efforts to weaken the pound. The Swiss and UK central banks are effectively in a “low intensity” battle against each other. “This is what happens in currency wars. Desperate times lead to desperate acts,” said Mr Bloom.

A weaker euro may be a blessing in disguise for European industries struggling with an overvalued exchange rate. Former French leader Charles de Gaulle once called dollar hegemony America’s “exorbitant privilege”, but the eurozone has learnt that reserve status can also be an exorbitant burden.

Central banks increased their holdings of eurozone bonds by an estimated $1.5 trillion in the early EMU years as China, Russia and the Middle-Eastern petro powers invested fresh reserves in euros to diversify away from the dollar. This pushed the euro to an all-time high of $1.60 by 2008, a level that inflicted serious damage on the manufacturing bases of France, Italy and Spain. It also distorted the EMU credit structure, fuelling debt booms across Club Med.

“There was too much euro buying. It is probably a good thing if the central banks pull back, so long as it does not go too far and lead to a buyers’ strike,” said Mr Nordvig.

^{Source: Nomura/IMF}

Asia’s trade tigers dominate global reserves, holding almost two-thirds of the $10.8 trillion total along with commodity exporters. China holds $3.3 trillion.

Advanced central banks have increased their euro holdings over the past year, but that is entirely due to Swiss intervention, a “one-off” anomaly, and may have stopped already.

The broader retreat from EMU bonds has not stopped the euro rising 8pc since July to $1.31 against the dollar. Hans Redeker, from Morgan Stanley, said this is largely due to deleveraging by European banks, which are cutting global exposure to meet tougher capital ratios. “It is a repatriation effect, but it won’t last. We think the euro will fall much closer to parity within two years,” he said.

The Telegraph

Ahmadinejad in suicidal anti-corruption drive against Khamenei’s establishment

In the unexpected role of social crusader, Iranian President Mahmoud Ahmadinejad said in a speech at Kermanshah Wednesday, Jan. 2, “The country’s economy should not be controlled by 3,000 or 10,000 people.” Seventy-six million Iranians still don’t benefit from the country’s oil revenues – “only an elite minority,” he said.

Predictably, DEBKAfile’s Iranian sources report, the Iranian president’s relations and friends are rushing for the exits: they are selling property and packing their bags ready to quit the country, worried about his fate and their own, as Supreme Leader Ayatollah Ali Khamenei and his powerful machine prepared to hit back.

Ahmadinejad is certainly in for serious persecution even before his six months as president are up in June. In his second four-year term as president, he made enemies of the most powerful parts of the ruling establishment: He attempted to overshadow the Supreme Leader, brushed aside the advice of his mentor, the influential religious figure Ayatollah Mesbah-Yazdi, and dared to poke a finger in the eye of the powerful Revolutionary Guard Corps, by asking why they controlled and profited from the largest slice of the nation’s assets instead of the people.

Now they are all gunning for him, using as their political bludgeon allegations of financial corruption.

But Ahmadinejad has not been put off. Although he sees his undoing written large on the wall, at every opportunity, before even small audiences of 300-400 people, he continues to maintain that the only way the country can save itself is by forcing the redistribution of national wealth.

His message goes down well in the Iranian street and he is beginning to build a grass-roots power base that may help protect him from retribution by Khamenei and his henchmen. The “elite minority,” which need to be relieved of their assets, was easily understood to impugn the super-rich, like Khamenei’s own son Mojtaba and some of the Revolutionary Guard commanders.

Our sources in Tehran say that many of his associates have already taken the precaution of removing themselves to safety in the United States or Europe; others are keeping their heads down or knocking on the president’s door to wangle foreign postings so long as he has the clout to disburse them. One such prominent figure is Hamid Baqa’I, the president’s deputy for executive affairs. In two months, he is due to take up the post of Iranian ambassador to UN institutions in Geneva and New York, in place of the incumbent Mohammad Khaza’i.

Ahmadinejad is going through the motions of promoting his close aide Esfandyar Rahim Masha’I, who is also the father of his daughter-in-law, as presidential contender in June. But he knows it is a lost case. Masha’i is also likely to end up at a foreign posting with his family, when his candidacy is disqualified by the Guardian Council of the Constitution which is under Khamenei’s thumb.

Foreign appointments also appear to be in the works for some other members of Ahmadinejad’s inner circle, such as Seyyed Hossein Moussavi, Malek-Zadeh and others.

But not all his hangers-on are getting a sympathetic hearing. Our sources in Tehran have learned that the president lost patience this week when a bunch of his cronies confronted him with demands for cushy overseas appointments. He threatened instead to fire some of them Under heavy criticism for mismanaging the Iranian economy, he may use the opportunity to assign the blame to his less favorite advisers, sweep them out and replace them with new faces. One of the most prominent heads on the block may be First Vice President and de facto prime minister Mohammad Reza Rahimi.

Rahimi stirred an international furor by his anti-Semitic remarks which accused Jews of “spreading narcotics around the world in accordance with the teachings of the Talmud … whose objective is the destruction of the world.” He almost outperformed his boss, now turned social crusader, who more than once attracted international condemnation for his inflammatory remarks about Israel and Jews.

Most recently, Ahmadinejad called his close cronies together for a pep talk. He told them he held an insurance policy for his and their survival: the secret dossiers of 300 top Iranian officials containing detailed records of their misdeeds. He obtained them by rifling the archives of the Ministry of Intelligence and Security during the brief period after he sacked the intelligence minister, Heydar Moslehi, and before Khamenei forced him to reinstate the minister a week later.

He and his staff had meanwhile combed through the incriminating files and made copies of them which were now held safe in the presidential office.
Khamenei, who has the support of the bulk of Iran’s political and military leaders, knows all about Ahmadinejad’s plans and is determined to eliminate him one way or another and make sure that the 300 dossiers never leave the president’s office.
More than once, Ahmadinejad has implied recently that he would make their contents public if he or members of his clique were charged with corruption or the misappropriation of state funds. For now, he is weeding out of his administration the officials he regards as its Achilles heels – according to our sources, the first scheduled to go are Oil Minister Rostam Qassemi and Interior Minister Mohammad Mostafa Najjar.

The Iranian Oil Ministry is a notorious hotbed of financial embezzlement, whereas the Interior Ministry is responsible for organizing the upcoming presidential election and Ahmadinejad would prefer one of his confidantes to be sitting in that office.

Only last week, he sacked Health Minister Marzieh Wahid Dastjerdi for remarking that Ahmadinejad prefers to earmark foreign currency for importing dog food rather than medicines. Her dismissal put many backs up against the president in the top echelons of government.

President Ahmadinejad was publicly warned this week to shut his mouth and stop ruining his reputation by Esma’il Kovsari, Khamenist adherent and powerful parliamentary voice. Kovsari pointed out that the Revolutionary Guards helped Ahmadinejad come to power as president and supported him on many occasions and so he must not turn his back on them now.

Another supporter of Khamenei, Al Sa’idi, said that most regime heads are now sorry they brought Ahmadinejad to power because he has become a different person.

Does this royal battle within the Iranian establishment affect its nuclear plans? The answer is no. Will crucifying the president cause rioting over the summer election? Not likely. Politically, Ahmadinejad is on his way out and leaves the stage to the most radical elements of the regime. And physically? Well, car accidents are a common feature of the Iranian political scene.

DEBKAfile

Obama signs NDAA 2013 without objecting to indefinite detention of Americans

Sudan Army Kills 11 Christians In Airstrikes; Priests Detained

Christians in Islamist-run Sudan have ushered in the New Year amid ongoing airstrikes by Sudanese government forces that killed at least 11 believers before and after Christmas, while two priests remained detained for converting a Muslim.

The rebel Sudan People's Liberation Movement-North (SPLM-N) said four people, including two children, were killed when the Sudanese military dropped nine bombs in and around the Christian village of Adar, also spelled as Al Dar, in the war-torn Nuba Mountains on December 26.

Among the victims were at least two Christian women - identified as 70-year-old Kuku Tia and 45-year-old Aisha Tutu Tolodi, and children Rehab Adam Alful, 8, and her sister Najah Adam Alful, 4, local Christians and security sources said.

News website Nuba Reports, run by Christian aid worker Ryan Boyette, said Sudanese Russian-made Antonov aircraft also dropped 12 bombs on Kauda town, wounding pastor Ayube Ibrahim and killing three cows.

Kauda is the home to four different churches that all celebrated Christmas for three days starting December 25, Christians said.  The bombings came just days after another attack on December 23 killed Shawli Jalbora, 45, when a bomb hit his house in the region, according to the SPLM-N.

CHRISTIAN FAMILY TARGETED

Earlier, on December 18, five people of a Christian family were reportedly killed when a Russian-made Antonov airplane bombed Eire village.

Those killed were identified as Fatuma Naway, 45, and 4-year-old girl Intazar Mubarak Sabil, 4-year-old boy Ramadan Mubarak, 6-year-old Nadia Ibrahim and 9-month-old infant Gamu Ibrahim.

Another family member, Regina Ibrahim, was reportedly injured in the airstrike.

It came after Christians were also shocked by a reported attack on December 6 when a 40-year-old woman, Habiba Tia, was reportedly killed when one of a dozen bombs landed on her home in the Fama and Shat-Safia area of the Nuba Mountains.

At least two other civilians and an 11-year old child were injured in the December 6 airstrikes in the area, said Nuba Reports.

MORE CHRISTIANS KILLED

Several Christians were also killed in November when armed forces of the Islamic government of Sudan's President Omar al-Bashir attacked at least 26 villages in the Nuba Mountains, according to well-informed Christian activists.

Satellite images showed burned out huts in South Kordofan, where the Nuba Mountains are located.

The government of Sudan has denied wrongdoing, saying it is fighting a rebellion led by the SPLM-N that engineered the secession of South Sudan.

However rights activists point out that the military campaign is part of efforts by President Omar al-Bashir to impose more strict Islamic rule in a nation where Christian conversions are not recognized and believers from a Muslim background are treated as Muslims.

"Following South Sudan's secession from the north in July 2011, the president asserted that Sudan's constitution would be based on Sharia (Islamic law). Many believers have since left the country [and] Christians are caught up in the attacks in Darfur and the Nuba Mountains," said Open Doors, a Christian advocacy and aid group.

PRIESTS DETAINED

News of the latest violence came as two priests from the Coptic Orthodox Church in Sudan remained behind bars after the religious conversion of a Muslim in the Islamist state. “I understand there was someone from the Arab origin that accepted Christ and was baptized by them,” leading to their detention last month, one religious leader said, speaking on condition of anonymity.

A little-known group calling itself Al-Qaeda in the Nilien States recently sent a statement to Sudanese journalists threatening violence against Copts unless the woman who converted and was “kidnapped” by the Christians is returned, French news agency AFP reported.

Amid the violence, Christians of the neighboring new-born South Sudan were urged this Christmas to pray for their leadership on Christmas Day.

The appeal came as over 10,000 Christians assembled at the Presbyterian Church of the Nuer speaking congregation in the capital Juba celebrated the birth of Jesus, local media reported.

In November, nearly 100,000 South Sudanese reportedly braved sweltering heat to hear American evangelist Franklin Graham deliver the Gospel message of faith in Jesus Christ.

"THOUSANDS ACCEPT CHRIST"

Some 6,000 attendees accepted Jesus as their Lord and Savior at Graham's two-night "Hope for the New Nation" event, organizers said

Graham's aid group, Samaritan's Purse, has worked in South Sudan for more than 20 years, providing relief and other assistance from decades of war and famine. They claim to have helped rebuild over 500 churches destroyed during war with the North, now known as Sudan.

In a recent interview he said it was time for an internationally backed no-fly zone over the skies of Sudan to halt ethnic cleansing.

"The North is creating instability by sending tens of thousands of refugees into the South," he told the U.S.-based Christian Broadcasting Network (CBN). "These are Muslims and Christians who don't want to live under Shariah law."

He said U.S. President Barack Obama has an "excellent opportunity" to bring the two sides together. "The two can not survive without each other, the oil is now in the South," Graham noted.


Bosnewslife

Iran not yet crossed red line

Iran has not yet crossed the red line that Israel set on its nuclear program, and Israel remains determined to prevent Tehran from acquiring nuclear weapons, Prime Minister Binyamin Netanyahu said on Thursday.

Netanyahu was speaking at the last session of the annual year-end meeting in the Foreign Ministry for Israel’s ambassadors serving abroad.

During a speech at the UN in September, Netanyahu drew a red line on a picture of a bomb signifying when Tehran would be 90% on the way to development of a bomb – meaning before it had acquired enough enriched uranium to build a nuclear detonator if it so decided. He said Iran would not likely pass that line until the spring or summer.

“Iran remains the number one threat,” Netanyahu told the envoys, adding that there was a chance for positive change in the region if that country was prevented from getting a nuclear weapon. The prime minister added that in the short term he expected regional tribulations to continue.

Netanyahu was accompanied to the meeting by his national security adviser, Yaakov Amidror, who earlier this week chastised the envoys for asking critical questions of Israel’s decision to announce construction plans beyond the Green Line in response to the Palestinians’ successful upgrade bid at the UN in November. When he addressed the envoys on Monday, Amidror said they could either faithfully represent the government’s decisions or resign.

Ministry officials said the incident did not come up during the meeting with Netanyahu, though the prime minister did address the issue of E1, saying that what was stopping progress along the diplomatic front with the Palestinians was not an announcement of construction plans there but the Palestinian refusal to recognize Israel’s right to exist as a Jewish state within any borders.

Netanyahu warned that Hamas could take control “any day” of the Palestinian Authority, and therefore “concrete security arrangements” needed to be included in any agreement, as well as a recognition of Israel as the nationstate of the Jewish people, an end to the “right of return” claim and an honest declaration of an end to the conflict.

Netanyahu cited an editorial in The Washington Post on Wednesday to support his assertion that the E1 announcement was not the barrier to progress on the diplomatic front.

That editorial, headlined “Overheated rhetoric on Israeli settlements,” argued that the criticism of the “flurry of announcements of new construction in Jewish settlements in Jerusalem and the West Bank” was counterproductive “because it reinforces two mistaken but widely held notions: that the settlements are the principal obstacle to a deal and that further construction will make a Palestinian state impossible.”

The editorial noted that Netanyahu had limited construction in areas that both sides expect Israel to eventually annex as part of a final agreement, and that the government announcement of planning on E1 was “hardly the ‘almost fatal blow’ to a two state solution” that critics have claimed.

In addition to Netanyahu, the envoys also heard on Thursday from Shin Bet (Israel Security Agency) head Yoram Cohen, who briefed them on the country’ security situation and said he did not believe Israel was on the brink of a third intifada. 

Jerusalem Post