France

Old School American Patriotism ... Washington, Jefferson, Franklin, Adams, Monroe, Hamilton and the Rest of the Founders Used Encryption

Markets are beginning to signal that policy makers are losing control.  Many second-order-effects of the unprecedented and experimental global actions taken since the 2008 crisis are beginning to manifest.  There are always causes and effects that develop; but they do so at different speeds. Many actions in recent years have prioritized 'benefits today' over 'consequences tomorrow'.  'Tomorrow' is approaching ever more quickly. There is no 'free lunch'.

• Fed Chair Yellen To Speak As Global Tensions Rise (WSJ)
• Greek PM Tsipras seeks party backing after abrupt concessions (Reuters)
• France Hails Greek Aid Proposals as Germany Reserves Judgment (BBG)
• Greek PM says does not have mandate to exit eurozone (Reuters)
• France Intercedes on Greece’s Behalf to Try to Hold Eurozone Together (WSJ)
• Frozen Funds, Fleeing Tourists: Greek Startups Feel the Pinch (BBG)
• Doubts Simmer Despite China’s Gain (WSJ)

It's officially Groundhog day... and month... and year... and so on.

When you shred democracy and the central tenants of a legal system in order to benefit the very few, it’s only a matter of time before the whole system collapses.

We previously questioned whether western sanctions imposed on Russia were being regularly breached by E.U. and Asian companies, noting that sanctions only work if all countries unite behind them. Now, only one year after being imposed, the sanctions are eroding as it seems that government and business policies are pulling in opposite directions. A U.S. State Dept. representative may have let the truth slip out recently when he noted, "if you tell us you’re going [to break a sanction], we’ll probably order you not to, but if you go and don’t tell us, we’ll probably do nothing."

In an odd escalation over the Grexit fiasco, where Greece is now expected to provide yet another detailed reform proposal today by midnight at the very latest, it was the one man whose decision will make or break the Eurozone when (if) he decides to impose even more ELA collateral haircuts (or yank ELA entirely) forcing Greece to Grexit by imposing its own currency (since there is no legal mechanism to kick a nation out of the new Berlin Wall) that made some surprisingly candid comments on the fate of the Greek negotiations. According to Reuters, ECB president Mario Draghi voiced "unprecedented doubts about the chances of rescuing Greece from bankruptcy as Greek Prime Minister Alexis Tsipras was due to put forward last-ditch reform proposals on Thursday."

Need a Quick Break From It All?

"At the moment and in principle we see, as the chancellor said expressly in her press conference in Brussels, no occasion at all to discuss this issue - there is no leverage or basis for that," Martin Jaeger said at a news conference. "That refers to a haircut in the classic sense but I explicitly add we also take that to mean measures that aim to bring about a reduction in the cash value of debt - those are things that you hear in discussions under profiling, restructuring and similar things."

Given the weekend ’s events it bears repeating that the echoes of 1914 are growing louder and louder. We are likely embarked on the death spiral phase of a game of Chicken, just as in the summer of 1914. The stakes are, for now at least, not nearly as cataclysmic today as they were a century ago, but the social and political dynamics are eerily alike.

In the end, finance—at any level—has to be about rules and numbers, or it becomes about nonsense. Break enough of your own rules, and your money turns to garbage, because in a world where money is debt and debt is garbage, money is garbage. But there is a proven method for solving this problem and moving on: it's called national bankruptcy. Greece is bankrupt; if its resolution brings on the bankruptcy of Spain, Italy and others, and if that in turn bankrupts the entire Eurozone, then that's exactly what must happen. But something else might happen instead.

Corruption has been the coveted jewel in everybody’s crown since antiquity. Aristotelian philosophy believed that everybody who had power could become corrupt.

The Big Crisis, the one in which entire countries go bust, has begun. It will not unfold in a matter of weeks; these sorts of things take months to complete. But it has begun.

While not predicting that Tehran and six world powers will strike a deal by the new July 10 deadline, a senior Iranian oil official says his country hopes to nearly double its crude exports immediately if and when sanctions are lifted and hopes that OPEC will accommodate this growth by capping production by the cartel’s other members. “We are like a pilot on the runway ready to take off,” Mansour Moazami, Iran’s deputy oil minister for planning and supervision, told The Wall Street Journal inTehran on July 5. “This is how the whole country is right now.”

1. A new program requiring very major structural reforms of the Greek side, and much larger than the last Juncker proposal.
2. Introduction of parallel currency, primarily through promissory IOU.
3. Controlled bankruptcy and leaving the euro