Archive - Jul 2015

There is at least one legal way to get your euros out of Greece these days, to guard against the prospect that they might be devalued into drachmas: convert them into bitcoin. As Reuters reports, although absolute figures are hard to come by, Greek interest has surged in the online "cryptocurrency", as new customers depositing at least 50 euros with BTCGreece, the only Greece-based bitcoin exchange, open only to Greeks, rose by 400% between May and June. With Bitcoin having surged from $238 to $268 in the last few days since Greek PM Tsipras announced Greferendum, it is clear it's not just the Greeks that are losing faith in faith-based fiat currencies.

On Tuesday, someone broke into an underground vault in Sacramento, and cut several high-capacity internet cables. Nobody knows who this person is or why they did it, but since that time the FBI has revealed that it was not an isolated incident. They’ve been investigating 10 other recent attacks on the internet infrastructure of California, and they seem to be deeply troubled by the vulnerability of these cables.

Greece just took a hit… and once again it’s depositors that will take it on the chin. But this process is only just begun. Similar Crises will be spreading throughout the globe in  the coming months.

Even after this somewhat catastrophic drop, BofAML warns the Chinese market looks expensive. Deleveraging is likely far from over, they add, concluding that the market is a "falling knife" and only direct buying by the government will mark the bottom. As Deutsche adds, "so large are the losses for the 20 million accounts opened from mid-April to mid-June that in aggregate no money has been made for 2 years."

It's what goes unsaid that matters...

Royal Dutch Shell is nearing a start to drilling in the Arctic, but has run into some hiccups. The U.S. government decided that Shell cannot actually drill both of its wells in the Chukchi Sea as planned. The Interior Department said that doing so would run afoul of its rules that protect marine life...

While this Greek saga unfolds, very few are looking at China

In the last few days there were dozens of separate attacks in Egypt from the Sinai up to Cairo. More than 60 people died while the Egyptian army used F16 attack plains to protect itself against it disgruntled population. It is clear that the Egyptian rulers will not be able to contain the current situation, today could be marked as the start of Egypt’s civil war.

America is better off when President Obama is out on the stump bloviating and boasting rather than in Washington actively doing harm. But the whoppers he just told the students at the University of Wisconsin are beyond the pale. Said our spinmeister-in-chief: "And the unemployment rate is now down to 5.3 percent. (Applause.) Keep in mind, when I came into office it was hovering around 10 percent. All told, we’ve now seen 64 straight months of private sector job growth, which is a new record — (applause) — new record — 12.8 million new jobs all told." That’s a pack of context-free factoids.

BACKGROUND

The referendum on Sunday will likely have a significant impact on the prospects of Greece reaching a new bailout agreement and the immediate future of the governing Syriza party. Following the expiration of the second bailout and the missed IMF repayment on 30th June, Greece has had to impose capital controls while negotiations between the country and its creditors have been put on hold until after the referendum. Eurozone officials have indicated that a “No” vote would likely mean a Greek exit from the currency union although the Greek government sees the vote as only pertaining to the terms of a bailout programme.

The ECB is moving to backstop Bulgaria's banking sector in an effort to get ahead of a Greek contagion."The ECB would provide access to its refinancing operations, offering euros to the banking system against eligible collateral," Bloomberg reports, citing unnamed sources. 

The timing of the release of The IMF's 'Greece needs a debt haircut no matter what' report this week was odd to say the least. Being as it confirmed everything the Greek government has been saying and provided the perfect ammunition for Tsipras to spin Sunday's Greferendum as a Yes/No to debt haircuts - something everyone can understand (and get behind). It is understandable then that, as Reuters reports, Greece's eurozone allies tried to block the release of the damning report this week but the Europeans were heavily outnumbered and the United States, the strongest voice in the IMF, was in favor of publication, sources said. While The IMF concluded, "Facts are stubborn. You can't hide the facts because they may be exploited," one wonders if this move merely reinforces Goldman's concpiracy theory.

Stock buybacks have been in the news lately, as their growing size has lead to criticism, especially from politicians who believe they contribute to economic inequality. But the simplest critique of the practice of buybacks can be made on economic grounds, in terms of value created or destroyed.