European Union

There is a saying: "strike while the rehypothecated iron is hot", and nobody is better at it than Germany, which hours after the latest disappointing Eurogroup summit failed - again - to reach a solution on the third iteration of the Grexit dilemma, has decided to pour even more gas on the fire in the form of infamous Euroskeptic, the president of the Ifo Institute for Economic Research, Hans-Werner Sinn who in an FT op-ed beckons someone, supposedly Europe's federalist, if non-existant, powers which in the mind of the German have control over Greek sovereignty, to immediately 'impose capital controls in Greece or repeat the mistake of Cyprus."

Contrary to popular opinion, it is not “demand” from the world’s population which creates the mind destroying drug trade. Rather, it is the world financial oligarchy, looking for massive profits and the destruction of the minds of the population it is determined to dominate, which organized the drug trade. The case of HSBC underscores that point. Serving as the central bank of this global apparatus, is HSBC.

War: people dying from sheer misery, people dying because they have no access to the services we take for granted, and even people being shelled by their own government.  All these things are happening as we speak, and we accept them lying down – on our couches - and choose to ignore and even deny them, because we are trapped in narratives spun by those who see a profit in spreading these narratives. And who have a solid grip on what gets spun and what is not. This is not going to end well. Not unless we speak up. Not for anyone amongst us. This one will not pass by your door, or mine. We’re approaching decision time. For the world, for your life and mine. It’s time to pick sides.

Lately, and tragically, not a month can pass in Europe without some deadly, mass shooting event whose inspiration is supposedly racial hatred. One month after the Charlie Hebdo massacre in Paris which left 20 people dead, another series of deadly shootings rocked otherwise quiet Copenhagen this weekend, where the person suspected to be responsible for the death of two people and injuring five first at a freedom of speech event and subsequently, at a synagogue in Copenhagen, was killed by police early in the Sunday morning hours.

"Greece will make every effort to reach an agreement with its euro zone partners at Monday's meeting of euro zone finance ministers on how to transition to a new support program, its government spokesman said on Friday. "We will do whatever we can so that a deal is found on Monday," Gabriel Sakellaridis told Skai TV. "If we don't have an agreement on Monday, we believe that there is always time so that there won't be a problem." The reason for this rapid about face? "Senior bank officials have told Kathimerini that almost all the liquidity available to Greece (59.5 billion euros) has been absorbed and that banks’ total dependence on the Eurosystem amounts to 90 billion. The rapid deterioration in liquidity conditions has been attributed to the uncertainty that arose when the snap general elections were called as well as the new government’s inability to reach a swift agreement with the country’s creditors." As usual: money threatening to walk, walks.

Essentially, our analysis suggests that there is a large divergence in the perceptions of both sides but the rational choice is to hold to their respective positions. In other words, our analysis of the payoffs suggest that the EU won’t offer debt relief and Syriza won’t back down from demanding it. Our fear is that the markets, inured by previous bailouts, expect the Greeks to cave, leaving the risk of an unexpected negative outcome in Europe is probably higher than what is currently being discounted. At the same time, EU policymakers are assuming that contagion will not occur, which may not be accurate.

So far it has been an overnight session which clearly forgot to take its lithium, with futures first tumbling after CNBC's "leak" that a Greek deal had been reached was refuted, only to surge subsequently on both the Riskbank's foray into NIRP and QE which crushed the Swedish currency and sent its stocks to recorder highs, and more importantly, on the latest ceasefire out of Minsk which has pushed Russian and European assets substantially higher. While only the most naive believe that any palpable end to Ukraine hostilities will emerge as a result of today's delay, expect for Greek headlines to return with a vengeance as today it is Tsipras' turn to speak at a summit of the 28 European Union leaders set to begin momentarily.

There’s nothing good left from the initial idea that gave birth to the EU. It’s devolved into something utterly ugly, in which fat Germans driving their Mercs and Beamers down the autobahn can yell at their car stereos that those lazy Greeks must pay their due - which stems from Merkel et al. bailing out Deutsche Bank’s insanely outsized derivatives portfolios. The whole thing is so morally bankrupt, it’s really insane that we’re still trying to have a serious discussion about it. The whole thing, the entire global banking system, is as morally bankrupt as it is financially. So far, all the EU has (anyone notice how silent the IMF has been?) is hubris, bluster and chest-thumping. They play politicians, but Syriza plays real life.

Greece has the potential to be the small domino that ends up toppling much larger dominoes.

Update: OBAMA ASKS CONGRESS TO AUTHORIZE WAR AGAINST ISLAMIC STATE: AP

Several years ago, Obama impressed a handful of crusty, old people in Norway who believed the recent Illinois senator's vision of a world without war, validated by his eagerness to end the war in Iraq and withdraw US troops to their native country. He got an award for it. Today, Obama will finally complete the circle started in August when, under the premise of "humanitarian intervention", allegedly meant to save a group refugees stranded on a mountain, Obama launched an airborne coalition effort to destroy the same group of radical jihadist extremists that the US was assisting when they were merely fighting the Assad regime in Syria. Because today is when Obama will officially request that those same troops that he so liberally pulled out in compliance with his Nobel Peace Prize, be put back in Iraq in order to declare war on, drumroll, a nation that doesn't technically even exist: the Islamic State.

"Greece's Foreign Minister Nikolaos Kotzias is to visit Moscow on Wednesday to hold talks with his Russian counterpart Sergei Lavrov, Russia's Interfax and TASS news agencies reported on Monday citing a source in the Russian Foreign Ministry." In other words, at precisely the same time as the FinMin is in Brussels discussing the fate, or lack thereof, of Greece in the Eurozone, the new Greek foreign miniser will be in the Kremlin, getting instant updates from Brussels and perhaps discussing the fate of Greece in the Eurasian Economic Union. Or put in the simplest of terms, tomorrow Greece will decide: Europe, or Russia.

As reported yesterday in his Q4 letter to investors, Third Point's Dan Loeb took down his net leverage going into 2015 for one simple reason: a "haunted house market" as he described it, where "a new scary event lurks around each corner", and no event is scarier than a worst-case outcome to the Greek situation. So how does Loeb see the latest Greek crisis ending? Read on for this thoughts.

Update: EUROPEAN COMMISSION SAYS THERE IS NO FORMAL PROPOSAL FOR GREECE BUT TALKS ARE INTENSIVE

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Did Europe just fold? Moments ago Bloomberg blasted a headline which has to be validated (and may well be refuted considering this is Europe), which said that:

COMMISSION TO PROPOSE 6 MONTH EXTENSION FOR GREECE - SOURCES.

So did Greece just win the first round of its stand off with Brussels, and why? What emerged as the biggest point of leverage overnight was the following threat reported hours ago by Reuters, citing the Greek defense minister Kammenos, who essentially threatened to go to Russia and/or China if Europe decline to cooperate.

• Greek defense minister says Greece has Plan B if EU rigid on deal (Reuters)
• Germany rejects Greek claim for World War Two reparations (Reuters)
• Greece to Seek $11.3 Billion in Financing to Avoid Funding Crunch (BBG)
• Lazard Sees $113 Billion Greek Debt Cut as ‘Reasonable’ (BBG)
• U.S. Navy Considers Setting Up Ship Base in Australia (BBG)
• Dalio’s Bridgewater Fund Said to Rise 8.3% in January (BBG)
• As U.S. Exits, China Takes On Afghanistan Role (WSJ)
• EU money funds cut exposure to bank debt (FT)
• China Inflation Drops to Five-Year Low in January (WSJ)
• Oil-Price Rebound Predicted (WSJ)

The future of Europe now depends on something apparently impossible: Greece and Germany must strike a deal.