Biggest Greek Crackdown In 39 Years: Leadership Of Far-Right Golden Dawn Party, Third Most Popular In Greece, Arrested

In what may be a highly destabilizing step, both political and socially, Greece announced this morning that in a shocking political crackdown, the biggest since the fall of the military junta in 1974, the Police had arrested the leader and more than a dozen senior members of the far-right Golden Dawn party after the killing of an anti-fascist rapper by a party supporter triggered outrage and protests across the country. Reuters reports that the party's leader Nikolaos Mihaloliakos, spokesman Ilias Kassidiaris, two other lawmakers and 10 members were arrested on charges of founding a criminal organisation. They are due to appear in court this weekend to be charged formally. Police confiscated two guns and a hunting rifle from the home of Mihaloliakos, saying he did not have a license for them. As has been reported previously, Golden Dawn, is under investigation for the murder of Pavlos Fissas, who bled to death after being stabbed twice by a party sympathiser.


Guest Post: Don't Cry For Me, Ben Bernanke

Financial volatility since Federal Reserve Chairman Ben Bernanke’s announcement in May that the Fed would “taper” its monthly purchases of long-term assets has raised a global cry: “Please, Mr. Bernanke, consider conditions in our (non-US) economies when you determine when to end your quantitative-easing policy.” That is not going to happen. The Fed will decide on monetary policy for the United States based primarily on US conditions. Economic policymakers elsewhere should understand this and get ready.  All of this is just hard reality. The best way to prepare is to limit the use of credit in boom times, prevent individuals and companies from borrowing too much, and set high capital requirements for all banks and other financial institutions. The Fed surprised markets last week by deciding to maintain its quantitative-easing policy. But that underscores a larger point for non-US economies: You never know when the Fed will tighten. Get ready.

Greece On The Verge? Military Special Forces Have 15 Demands... Or Else

Greek government authorities are on alert after a union of Greek army reservists of Special Forces issued a statement urging the Greek administration to step down and make way for a national unity government. As Keep Talking Greece notes, the statement on the union' website included 15 demands - including the resignation of the Greek President - and urged people to gather at the infamous Syntagma Square on Saturday. The statement was interpreted by some as a call to a "coup d'etat" - denied by the union - but prompted Greece's Supreme Court to meet to discuss it.

Detroit’s Bankruptcy Postmortem: The Worms Keep Slithering Out

You may have seen recent revelations that Detroit routinely raided its pension funds to award extra cash – including bonuses dubbed “the 13th check” – to both retirees and active employees. These payments were far in excess of the city’s negotiated obligations and hidden from both the public and Detroit’s bond investors. There may be no cleaner account of the repercussions of handing power to those who show their compassion with the public purse. However well meaning the union reps controlling Detroit’s pension board may have been, their politics clearly compromised the city’s long-term health.

The Big-Picture Economy, Part 4: Income Disparity And Education

Rising income disparity in the U.S. troubles many of us, for a number of reasons. If more of the national income is flowing to the top 1/2 of 1% and less to those earning income from their labor, the foundations of both a vibrant economy and stable democracy are undermined. Many observers identify education as one solution for rising income disparity, as those with higher education (college) have more skills and knowledge and tend to earn more. Statistically, the connection between getting a college degree and higher incomes is weakening as those with college degrees are now in surplus. "More education" of the current sort is not a panacea to wealth inequality, as the widening gaps in education, employment and income are all reflections of a much larger set of forces at work.

Guest Post: 10 Reasons The Market Will (Or Won't) Crash

Being bullish on the market in the short term is fine... The expansion of the Fed's balance sheet will continue to push stocks higher as long as no other crisis presents itself. However, the problem is that a crisis, which is 'always' unexpected, inevitably will trigger a reversion back to the fundamentals. The market will eventually correct as it always does - it is part of the market cycle. The reality is that the stock market is extremely vulnerable to a sharp correction. Currently, complacency is near record levels and no one sees a severe market retracement as a possibility. The common belief is that there is 'no bubble' in assets and the Federal Reserve has everything under control.

Mario Draghi's Nightmare Gets Worse: European Loans Decline At Record Rate

Moments ago Mario Draghi's nightmare just got worse following a release by the ECB overnight that loans to the private sector dropped 2 percent from a year earlier. That’s 16th monthly decline and the biggest since the start of the single currency in 1999. "The data shows a depressing picture for the credit market," said Annalisa Piazza, an analyst at Newedge Group in London. "Although the ECB made clear that the ECB cannot do much to boost credit to the corporate sector, we expect the current picture for loans to remain one of the key reasons behind expectations of a prolonged period of accommodation." Translated: all monetary transmission mechanisms in Europe are completely broken, which in turn feeds the feedback loop of the deleveraging depression, leading to even less demand for loans, more deleveraging by banks ad lib.

Stephen Roach On Inequality And The Fed's "Treacherous Endgame"

The Federal Reserve continues to cling to a destabilizing and ineffective strategy. By maintaining its policy of quantitative easing (QE) – which entails monthly purchases of long-term assets worth $85 billion – the Fed is courting an increasingly treacherous endgame at home and abroad. By now, the global repercussions are clear, falling most acutely on developing economies with large current-account deficits. But there is an even more insidious problem brewing on the home front - wealth effects are for the wealthy (as the Fed knows too well). QE benefits the few who need it the least. That is not exactly a recipe for a broad-based and socially optimal economic recovery.

The 3 Big Lies Right Now

There appears to be 3 big lies (among many other smaller ones) currently driving the flow of speculative capital around the world. First, Bernanke said the Taper was off due to 'worsening' financial conditions (except financial conditions remain very near all-time highs). Many mean-reverting extrapolators are calling for a renaissance in emerging markets and Asian growth that will lead us out of this 'temporary' slowdown (except consensus growth expectations for Asian economies are tumbling in reality) and most people assume US economic 'escape velocity' growth is around the corner and the Fed will normalize policy 'just right' (but a glance at Eurodollar futures suggests the market is far more dovish than previous tightening cycles would suggest). With normaliation implying 600bps rates rises, we suspect the reality of these 'lies' will come back to bite sooner rather than later.

Troika Skeptical Of Greek Leaders' Economic Optimism

Various Greek leaders have proclaimed the worst over for the desperately troubled nation. The basis for that optimism - a primary surplus - however is being brought into doubt by none other than the Troika (the overseer of the bailouts). As ekatherimini reports, the troika has doubts about Greek projections for a primary surplus this year and next and has begun the process of discussing with Athens the contents of the 2014 budget. Skeptical of Greek projections of a 1.5% of GDP primary surplus this year, it is also ironic that the Greek leaders themselves are downplaying the size of the surplus for fear that handouts will sour. All-in-all, it seems, Greek data (in light of the extreme unemployment) is anything but trustworthy - especially in light of further doubts over the effectiveness of the unified property tax.

The Other Reason The Fed Is Terrified Of A Government Shut Down

While some have argued that the Fed is flying blind, given their endless efforts to convince the market that their actions (or inactions) are now all data-dependent - what happens when that data simply does not exist? As SMRA notes, the official word from the BLS is that they are working under the assumption that there will not be a government shutdown and the employment data will be released as scheduled; but what happens if the un-negotiation reaches beyond October 1st? How will our central-planners know what to do?

20 Ordinary Americans Take About Their Economic Despair

Yesterday we highlighted the plight of Tom Palome and his cohorts as they face a need to work well into once-thought-retirement age. However, there are hundreds of formerly prosperous communities all over America that are being steadily transformed into rotting, decaying hellholes. The good paying middle class jobs that once supported those communities are long gone, and they have been replaced with low paying service jobs if they have been replaced at all. When you visit those communities, it is almost as if all of the hope has been sucked right out of the air. The following are 20 quotes from ordinary Americans about the economic despair that is rapidly growing around them.

French Court Orders Flagship Sephora Store Not To Work So Much

When it comes to the "fairness doctrine", there was always some confusion in the matter of work ethic: how was it fair that some should work under the socialism-endorsed confines of a 29.5 hour workweek, while being forced to suffer the indignity and moral denigration of watching others labor under the faux guise of capitalism, putting in 60, 80, even 100 or more hours per week in the pursuit of self-actualization, contentment and general happiness? Furthermore, as has been well documented, despite rumors the contrary, the biggest incubator of neosocialism the "fairness doctrine" is not the US, nor Leningrad (sic), but France.... Sephora's flagship Champs Élysées cosmetics store, one which attracts six million people a year or nearly as many as the Eiffel Tower, has been ordered by a French appeals court to close at 9 pm at the latest because it "breached work-time regulations by hosting customers until midnight on weekdays and 1 am on weekends."

An Alternative View Of Why The Fed Did Not (and Will Not) Taper

A few years back Chairman Bernanke was asked by a financial reporter how confident he was that the Fed could easily start the process of withdrawing from the accommodation of “unorthodox” monetary policy. Some might argue (ourselves included) that the answer 'should' be something like “very confident” or “We feel we have the right tools and the right people to manage that process”. Instead the answer given was “100%”. At last week's press conference, Chairman Bernanke, in CitiFX Technicals' view, looked like the “cat that got the cheese", despite the more downbeat message he was giving? Why? Because he got his way. In their “conspiracy theory” interpretation it is likely that Janet Yellen’s nomination will indeed be announced in the near future and that tapering is now firmly back off the table despite the guidance given in recent months to the contrary. Bonds seem to agree (so far).

QE Worked For The Weimar Republic For A Little While Too

There is a reason why every fiat currency in the history of the world has eventually failed. At some point, those issuing fiat currencies always find themselves giving in to the temptation to wildly print more money. Today, the Fed finds itself faced with a scenario that is very similar to what the Weimar Republic was facing nearly 100 years ago. Like then, the U.S. economy is struggling and like the Weimar Republic, the U.S. government is absolutely drowning in debt.  Unfortunately, the Fed has decided to adopt the same solution that the Weimar Republic chose. The Fed is recklessly printing money out of thin air, and in the short-term some 'positive things' have come out of it. But quantitative easing worked for the Weimar Republic for a little while too.