Greece has been the most pillaged country in Europe this Depression, among other reasons, because no one in any leadership position seems to have learned lessons from the 1930s. Plus, banks have more power now than they did then to call the shots. Despite no signs of the first bailout working – certainly not in growing the Greek economy or helping its population - but not even in being sufficient to cover speculative losses, Euro elites finalized another 130 billion Euro, ($170 billion) bailout today. This is ostensibly to avoid banks’ and credit default swap players’ wrath over the possibility of Greece defaulting on 14.5 billion Euros in bonds. Bailout promoters seem to believe (or pretend) that: bank bailout debt + more bank bailout debt + selling national assets at discount prices + oppressive unemployment = economic health. They fail to grasp that severe austerity hasn’t, and won’t, turn Greece (or any country) around. Banks, of course, just want to protect their bets and not wait around for Greece to really stabilize for repayment.
Americans participating in a recent Gallup poll showed the highest level of confidence in an economic recovery in a year. Sounds great, but you can’t ignore the nearly 13 million unemployed, the 46 million people on food stamps and the roughly 29% of the country’s homeowners whose mortgages are under water. They would find it hard to subscribe to the poll’s sunny conclusion. On the other hand, there’s no getting away from a bevy of seemingly increasingly favorable economic data, which, more recently, includes falling weekly jobless claims, four consecutive monthly gains in the leading economic indicators, somewhat perkier retail sales and a pickup in housing starts and business permits. Pounding home this cheerful view is the media’s growing drumbeat of increased economic vigor....Confused? How can you not be?
An explicit contagion path chart, since you probably won't get info like this anywhere else...
- IMF Official: 'Huge' Greek Program Implementation Risks In Next Few Days (WSJ)
- European Banks Take Greek Hit After Deal (Bloomberg)
- Obama Urged to Resist Calls to Use Oil Reserves Amid Iran Risks (Bloomberg)
- Hungary hits at Brussels funds threat (FT)
- Bank Lobby Widened Volcker Rule Before Inciting Foreign Outrage (Bloomberg)
- Germany fights eurozone firewall moves (FT)
- New York Federal Reserve Said to Plan Sale of AIG-Linked Mortgage Bonds (Bloomberg)
- G-20 Asks Europe to Beef Up Funds (WSJ)
- New Push for Reform in China (WSJ)
Somehow out of the blue, the strangely morbid yet delightfully Hollywood-esque story of Greek modern day Robin Hood Vassilis Paleokostas re-emerged today. Which, considering the latest developments out of Greece is probably oddly appropriate: if there is anything the Greek population needs now to finally free itself of its usurping, unelected and banker-appointed technocratic oligarchy, which does nothing but keep selling the nation ever further down the river just so it can use Greece as a passthru funding vehicle to keep Europe's banks solvent, it is many more like Paleokostas. And incidentally, so does the US, when considering the farce the country's "democratic process" has become, where both parties are merely representative agents of the Wall Street banking class (recall who the main funders are of the last three presidential campaigns). It is thus our belief that in keeping with the endless global Onion-esque farce that has gripped the world, Kodos (of Simpsons fame) is a perfect running mate for Paleokostas' presidential campaign - a campaign that is suitable not just for the US, but for any country which is controlled not by democratic checks-and-balances, but by bank issued checks (backed by nothing but electronic "money"). Because the farce will truly be strong with those two. And that, unfortunately, is all that makes any sense in this centrally planned world.
- Obama Administration Said Set to Release Corporate Tax-Rate Plan Today (Bloomberg, WSJ)
- Greece races to meet bail-out demands (FT)
- IAEA ‘disappointed’ in Iran nuclear talks (FT)
- Hilsenrath: Fed Writes Sweeping Rules From Behind Closed Doors (WSJ)
- Fannie-Freddie Plan, Sweden FSA, Trader Suspects, CDO Lawsuit: Compliance (Bloomberg)
- Bank of England’s Bean Says Greek Deal Doesn’t End Disorderly Outcome Risk (Bloomberg)
- Greece Second Bailout Plan an ‘Important Step,’ Treasury’s Brainard Says (Bloomberg)
- Shanghai Eases Home Purchase Restrictions (Bloomberg)
January's hopium catchphrase of the month was that Europe's recession would be "technical" which is simply a euphemism for our Fed's beloved word - "transitory." Based on the just released Euroarea PMI, we can scratch this Euro-accented "transitory" addition to the lexicon, because contrary to expectations that the Euroarea composite PMI would show expansion at 50.5, instead it came out at 49.7 - the manufacturing PMI was 49.0 on Exp of 49.4, while the Services PMI was 49.4, on hopes of expansion at 50.6, which as Reuters notes suggests that firms are still cutting prices to drum up business and reducing workforces to cut costs. This was accompanied by a overnight contraction in China, where the flash manufacturing PMI rose modestly from 48.8, but was again in contraction at 49.7. We would not be surprised if this is merely the sacrifice the weakest lamb in the pack in an attempt to get crude prices lower. So far this has failed to dent WTI much if at all following rapidly escalating Iran tensions. What is curious is that Germany and France continue to do far better than the rest of the Eurozone - just as America has decoupled from Europe, so apparently have Germany and France. This too is surely "sustainable."
- Spiegel: Stop the 130-billion bank transfer! (Spiegel)
- Greece Wins Bailout as Europe Chooses Aid Over Default (Bloomberg)
- Greek pro-bailout parties at all-time low, poll shows (Reuters)
- Eurozone agrees €130bn Greek bail-out (FT)
- Top Banks in EU Rush for Safety (WSJ)
- Medvedev Adviser Says Kudrin Would Be Better Prime Minister (Bloomberg)
- US and Mexico in landmark oil deal (FT)
- McCain calls for US to support Syria rebels (FT)
- Coal Shipments to India Overtaking China on Fuel Shortage (Bloomberg)
- Gillard Shrugs Off Ousting Threat (WSJ)
The BLS better have some tricks up its statistical sleeve.
Stepping softly onto a slippery slope...
San Fran Fed Asks If "People Understand Monetary Policy"; Finds Those With "No High School Diploma" Don'tSubmitted by Tyler Durden on 02/17/2012 13:18 -0400
For their sake, we hope at least the answer from the Fed is "yes." Yet it is quite ironic that the subtext of this paper is that Monetary Policy can actually fail, when, get this, people don't grasp all the nuances of monetary policy. In other words, it is not the Fed's fault when it fails - it is the people's fault: "we fi?nd evidence that the relationship between unemployment and interest rates is not properly understood by households in the lowest income quartile, and by those with no high school diploma." Cue Kartik Athreya to explain to us all why only Ph.D.s understand the complexities of monetary policy when it works, and why it is those without a highscool diploma that are at fault, when it doesn't.
Today, Rand’s fictional world has seemingly become a reality – endless bailouts and economic stimulus for the unproductive at the expense of the most productive, and calls for additional taxation on capital investment. The shrug of Rand’s heroic entrepreneurs is to be found today within the tangled ciphers of corporate and government balance sheets. The US Federal Reserve has added more than $2 trillion to the base money supply since 2008 – an incredible and unprecedented number that is basically a gift to banks intended to cover their deep losses and spur lending and investment. Instead, as banks continue their enormous deleveraging, almost all of their new money remains at the Fed in the form of excess reserves. Corporations, moreover, are holding the largest amounts of cash, relative to assets and net worth, ever recorded. And yet, despite what pundits claim about strong balance sheets, firms’ debt levels, relative to assets and net worth, also remain near record-high levels. Hoarded cash is king. The velocity of money (the frequency at which money is spent, or GDP relative to base money) continues to plunge to historic lows. No wonder monetary policy has had so little impact. Capital, the engine of economic growth, sits idle – shrugging everywhere.
Are we really in an economic recovery or is it a figment of the Fed's quantitative easing? This will be the biggest factor in the 2012 elections.
When Greece defaults, the fall-out will be much, much larger than people expect simply by virtue of the fact that everyone is lying about their exposure to Greece.
The task of the financial/political/media Status Quo is to convince Americans to overlook the abundant evidence of economic deterioration and focus on heavily juiced "evidence" of robust "growth." The game plan is this: if the Status Quo can convince you that the economy has righted itself and from here on in everything will get better and better, every day and in every way, then we will abandon financial rationality and start buying homes we can't afford on credit, cars we can't afford on credit and boatloads of stuff from China that we don't need on credit (of course looking cool is a "need," i.e. having an iPad to carry around). In other words, believing it is so will make it so. That is the essence of the campaign to stimulate "animal spirits" confidence: though the economy is actually tanking, if they can only convince us the Dow is moving to 15,000 and then on to 20,000, jobs are being created left and right and things are looking up everywhere, then the resulting piranha-like shopping-feeding-frenzy will create the expansion that is currently chimerical.