STOCK MARKET WATCH -- Friday, 1 May 2015

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Friday, 1 May 2015[font color=black][/font]

SMW for 30 April 2015

AT THE CLOSING BELL ON 30 April 2015
[center][font color=red]
Dow Jones 17,840.52 -195.01 (-1.08%)
S&P 500 2,085.51 -21.34 (-1.01%)
Nasdaq 4,941.42 -82.22 (-1.64%)


[font color=red]10 Year 2.09% +0.02 (0.97%)
30 Year 2.79% +0.02 (0.72%) [font color=black]


[center][/font]

[HR width=85%]

[font size=2]Market Conditions During Trading Hours[/font]
[center]
(click on link for latest updates)
Market Updates
[/center]

[font size=2]Euro, Yen, Loonie, Silver and Gold[center]

[/center]

[center]

[/center]

[HR width=95%]

[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
[center]
Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
[/center]

[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
[center]
The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
Wall Street on Parade
[/center]

[font color=black][font size=2]Handy Links - Essential Reading:[/font][/font]
[center]
Matt Taibi: Secret and Lies of the Bailout


[/center]

[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
[center]
LegitGov
Open Government
Earmark Database
USA spending.gov
[/center]

[font color=black][font size=2]Handy Links - Videos:[/font][/font]
[center]
Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
[/center]

[div]
[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.
02/06/14 Matthew Martoma convicted of insider trading while at hedge fund SAC (Stephen A. Cohen) Capital Advisors. Expected sentence 7-10 years.
03/24/14 Annette Bongiorno, Bernard Madoff's secretary; Daniel Bonventre, director of operations for investments; JoAnn Crupi, an account manager; and Jerome O'Hara and George Perez, both computer programmers convicted of conspiracy to defraud clients, securities fraud, and falsifying the books and records.
05/19/14 Credit Suisse, which has an investment bank branch in NYC, agrees to plead guilty and pay appx. $2.6 billion penalties for helping wealthy Americans hide wealth and avoid taxes.
09/08/14 Matthew Martoma, convicted SAC trader, sentenced to 9 years in prison plus forfeiture of $9.3 million, including home and bank accounts







[HR width=95%]


[center]

[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Tansy_Gold]

1. bonus toon

There was a 'toon a week or so ago with the caption "If Hillary were a Republican" and depicted her sitting in a jail cell. And my thought was, "Hmm, how many pukes have actually gone to jail for their crimes? Ensign? Vitter? DeLay? Isn't it usually the Dems who resign in disgrace (Weiner, Spitzer) or just slink out of sight (Edwards)?" To be fair, Ensign did resign, but so many other pukes have just gone about their business as usual.

I thought this one, today, was fitting. Not that she'd be forgiven by her dem detractors, but then again, she's not a puke. It's so much more about their hypocrisy than hers. She has enough of her own.

[Fuddnik]

2. Well, she did spend years praying with "The Family" in DC.

So, she's well aquainted with Ensign and Vitter et al.

[Demeter]

3. I don't think she's stopped, either

which is why she doesn't have a prayer with my support

[Demeter]

4. The Job Guarantee would enhance the private sector

http://bilbo.economicoutlook.net/blog/?p=30759

There are still those who criticise the concept of a Job Guarantee. I have received a lot of E-mail’s lately about a claim that the introduction of a Job Guarantee would be de-stabilising in a growth phase unless there is some time limit put on the jobs or the wage is flexible. Apparently, in a growing economy, the stimulus provided in the form of Job Guarantee wages (relative to what occurs when unemployment buffer stocks are deployed) will drive the economy into an inflationary spiral, which will then necessitate harsher than otherwise fiscal and monetary policy contraction. Further, the Job Guarantee is claimed to limit the size of the private sector relative to a system of unemployed buffer stocks and this distorts resource allocation and would undermine our overall material standards of living. The criticisms have been dealt with before – there appears to be a cyclical sort of pattern where newcomers seize on past criticisms and recycle them, without bothering to read the original literature on employment buffer stocks, which includes my work and several other authors. That literature considered all these possible issues – 15-20 years ago.

A LONG, THOROUGH DEVELOPMENT OF THE IDEA, AND THE DESTRUCTION OF THE ARGUMENTS AGAINST IT, FOLLOWS...

[Demeter]

5. Obama’s Big Trade Failure by DEAN BAKER

http://www.counterpunch.org/2015/04/27/obamas-big-trade-failure/

The Obama administration is doing its full court press, pulling out all the stops to get Congress to approve the fast-track authority that is almost certainly necessary to get the Trans-Pacific Partnership (TPP) through Congress. One of the biggest remaining stumbling blocks is that the deal will almost certainly not include provisions on currency. This means that parties to the agreement will still be able to depress the value of their currency against the dollar in order to gain a competitive advantage. This is a really big deal, which everyone thinking about the merits of the TPP should understand.

The value of the dollar relative to other currencies is by far the main determinant of our balance of trade. We can talk about better education and training for our workforce, improving our infrastructure and better research, all of which are important for the economy.

But anyone who claims that improvements in these areas can offset the impact of a dollar that is overvalued against another currency by 15 to 20 percent is out of touch with reality. If the dollar is overvalued by 20 percent against another country’s currency, it has the same effect as imposing a 20 percent tariff on US exports and giving a government subsidy of 20 percent to imports...

MORE

[Demeter]

6. "Fast Track" Flouts the Constitution By Thom Hartmann

http://www.truth-out.org/opinion/item/30462-fast-track-flouts-the-constitution

IT'S ALL THERE, IN BLACK AND WHITE

[Demeter]

7. Wendell Potter: Allyson Schwartz's new advocacy group is not what it appears Read more at http://www

ALL ABOUT MEDICARE'S GOVERNMENT-SPONSORED SCAMMING

http://www.philly.com/philly/news/politics/Wendell_Potter_Allyson_Schwartzs_new_advocacy_group_is_not_what_it_appears.html

[DemReadingDU]

8. LOL - New Element Discovered

News from the Scientific World: New Element Discovered

Victoria University of Wellington researchers have discovered the heaviest element yet known to science. The new element, Governmentium (symbol=Gv), has one neutron, 25 assistant neutrons, 88 deputy neutrons and 198 assistant deputy neutrons, giving it an atomic mass of 312.

These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called pillocks. Since Governmentium has no electrons, it is inert. However, it can be detected, because it impedes every reaction with which it comes into contact.

A tiny amount of Governmentium can cause a reaction that would normally take less than a second, to take from 4 days to 4 years to complete. Governmentium has a normal half-life of 1 to 3 years (in NZ). It does not decay, but instead undergoes a re-organisation in which a portion of the assistant neutrons and deputy neutrons exchange places.

In fact, Governmentium's mass will actually increase over time, since each reorganisation will cause more morons to become neutrons, forming isodopes.

This characteristic of moron promotion leads some scientists to believe that Governmentium is formed whenever morons reach a critical concentration. This hypothetical quantity is referred to as a critical morass. When catalysed with money, Governmentium becomes Administratium (symbol=Ad), an element that radiates just as much energy as Governmentium, since it has half as many pillocks but twice as many morons.

http://pc.blogspot.co.nz/2015/04/new-element-discovered.html

[Demeter]

9. GM to invest billions of dollars in U.S. plants

WHY HERE? WHY NOW? I SMELL A RAT, OR A LIE

http://www.reuters.com/article/2015/04/29/us-gm-investment-idUSKBN0NK2IZ20150429

General Motors (GM.N) on Thursday will announce a multibillion-dollar, multiyear investment in several U.S. manufacturing plants in a move to boost production and vehicle quality, a person familiar with the matter said. GM has scheduled a press conference at its stamping plant in Pontiac, Michigan, to make a "major U.S. manufacturing announcement." A spokesman declined to provide further details. The largest U.S. automaker is expected to reveal plans to make capital investments in plants and equipment, including body shops and stamping plants, said the person, who asked not to be identified. The investments are expected to create jobs, but it is unclear how many.

The announcement comes as GM and the United Auto Workers union gear up to negotiate a new master contract this fall for GM's roughly 50,000 U.S. hourly workers. UAW leaders have pushed for the Detroit automakers to invest in union-represented factories.

GM has budgeted $9 billion for global capital spending in 2015, up from last year's $7 billion, to pay for vehicle launches and investments in new technology. It has historically spent about two-thirds of its capital outlay in North America and officials have said that would remain true going forward. The U.S. plants receiving the new investments will not be identified, the source said, but will likely include the Pontiac plant at which the announcement will be made. The plant stamps metal parts used for 20 different vehicles.

Separately, GM is weighing a $1.3 billion investment in its large SUV plant in Arlington, Texas, that would add 589 jobs. City officials in Arlington are expected on Wednesday night to give necessary approvals for the project. GM has said only that it is looking at investing in the Texas plant to fund upgrades and no decision has been made, but it has told city officials it wants to move fast. GM executives have talked about their desire to break bottlenecks at the Texas plant that have held back production of highly profitable big SUVs like the Cadillac Escalade. Most GM truck plants have been running at or near full capacity to meet demand.

Automakers have been wary of adding too much production capacity in North America, and risk undoing gains in pricing power they have achieved since making painful cuts during the financial crisis. GM and rivals have instead pushed to increase output at existing plants using additional shifts, overtime and investments to improve efficiency.

[Demeter]

10. UPDATE: GM's $5.4B investment includes upgrades to 3 Michigan plants

http://www.freep.com/story/money/2015/04/30/general-motors-lansing-pontiac-warren/26623259/

GM will invest $783.5M in Lansing, Pontiac, Warren plants. The largest portion, $520 million, will go for new tooling and equipment at the Delta Township assembly plant near Lansing, where workers produce the Chevrolet Traverse, Buick Enclave and GMC Acadia...

The company's Pontiac Metal Center, which stamps body panels for most Chevrolet, GMC, Buick and Cadillac models, will receive $124 million in new equipment. The Pontiac plant was nearly closed as part of GM's 2009 bankruptcy, but it has bounced back and employs about 490 hourly and salaried workers. The new investment will create 15 new jobs, said GM spokeswoman Katie McBride.

GM will spend $139.5 million for a new body shop and to upgrade stamping operations at a plant in Warren that builds prototype bodies of future models.

[Demeter]

13. Why GM Wants To Buy Wind Energy

http://www.forbes.com/sites/heatherclancy/2015/03/24/why-gm-wants-to-buy-wind-energy/?ss=energy

For those who love downplaying or discounting renewable energy as something on the fringe of mainstream economic interests, General Motors’ recent decision to back construction of a Mexican wind farm should come as a wake-up call.

About 75% of the energy generated by the project, which gets under way next quarter, will supply GM’s Toluca Complex manufacturing operation. The rest will go two other nearby facilities, the San Luis Potosi and Ramos Arizpe complexes.

This is GM’s first wind procurement, but not the first time it has invested in power generated by renewable sources. It also relies on projects using solar, landfill-to-gas, and waste-to-energy technologies. Collectively, these installations will supply approximately 12% of GM’s total power needs after the wind project comes alone. That’s about 104 megawatts of capacity versus the automaker’s target of 125 megawatts by 2020.

The decision was motivated by economics, although there are obvious environmental benefits. Electricity prices in Mexico tied to traditional fossil fuels generation technologies are approximately one-third higher than those in the United States, said Rob Threlkeld, GM’s global manager of renewable energy. “Once online, we’ll evaluate the project to better understand how we can expand the use of wind power,” he said.

more

[Demeter]

11. Why did the US pay this former Swiss banker $104M?

Bradley Birkenfeld was released from federal prison in August 2012 after serving 2½ years for his role as a Swiss banker hiding millions of dollars for wealthy American clients.

Five weeks later, he found himself in the kitchen of a small rental house in Raymond, New Hampshire. At that moment, Birkenfeld was an ex-con. He was out of work, infamous in a famously discreet profession, and probably unemployable as a private banker anywhere.

But then his lawyer walked into the room, carrying a check from the U.S. Treasury to Birkenfeld for $104 million—minus taxes. On the face was a picture of the Statue of Liberty.

It was Birkenfeld's cut as a whistleblower of the massive settlement his former employer—the Swiss bank UBS—had paid to the United States government in a settlement for helping Americans dodge taxes. As Birkenfeld signed the check, he was transformed from convicted felon to government-made multimillionaire.

"It was vindication," Birkenfeld said. "I am glowing. I love it."

MORE AND VIDEO INTERVIEW WITH THE GUY AT LINK: http://www.cnbc.com/id/102631594

VERY INTERESTING AND REVEALING

[DemReadingDU]

12. Excellent find, thanks!

While Birkenfeld is talking to CNBC, he is still holding information close to the vest. He will not name the clients who he turned over to the government. Of the 30 names he says he gave the U.S. government, only one has been charged and publicly named, he said.

Birkenfeld is not the only one criticizing the Justice Department. A damning 2014 report by the Senate's Permanent Subcommittee on Investigations criticized the department for failing to even obtain the names of Americans who had secret accounts, despite the extensive legal wrangling with UBS and other banks.

The report found that of the 22,000 Americans who had Swiss accounts at Credit Suisse, the U.S. government got the names of only about 230 clients. The Justice Department, the report found, "did not use any of the authorities and remedies available to it in U.S. courts … to obtain U.S. client names and account information directly from Credit Suisse."

There is probably no one angrier about all of that than Birkenfeld. Sitting in his luxury box at the Boston Garden as his beloved Bruins got set to play the Buffalo Sabres, Birkenfeld reflected on his own personality, and why he's coming forward now, when many others would be happy to spend their millions in a luxury retirement. "I'm a hammer looking for nails," Birkenfeld said. "A chainsaw looking for trees. The worst person they could ever p---off? Me. Because I'm relentless and I'm resourceful and I will get the job done."

A big part of Birkenfeld's joy, he said, is his feeling of schadenfreude over the pain he believes the massive payout caused his antagonists inside the U.S. government. "Oh, they were p---ed," Birkenfeld said, with a grin. "And I'm pleased."


edit
Be sure to watch the series of 6 short videos!

[mother earth]

23. Wow. It just never stops, the corruption is monumental, the revelations just keep coming.

No wonder every thing is coming apart.

[Demeter]

14. One surprising downside of marijuana legalization: major energy use

http://www.washingtonpost.com/news/energy-environment/wp/2015/03/23/one-surprising-downside-of-marijuana-legalization-major-energy-use/

Across the country, there’s a growing trend toward the legalization of marijuana. Four states — Oregon, Washington, Colorado, Alaska — have voted to allow people to possess limited amounts of marijuana for personal use and also to let producers apply for licenses to produce and sell it. D.C. also just voted to allow personal possession. All of this is on top of the 23 states that allow it for medical reasons.

In some states, where businesses are also now legally cultivating and producing marijuana, a mainstream industry is emerging. Marijuana sales totaled $700 million in Colorado last year, for instance. But there’s a surprising catch. It turns out that indoor marijuana growth in particular — a cultivation method often favored in the industry for many reasons — uses a surprising amount of energy.

Indeed, the level of power use appears to be so significant that one scholar is now suggesting that as the industry grows, states and localities should take advantage of marijuana licensing procedures to also regulate the industry’s energy use and greenhouse gas emissions.

“Given that this is a new ‘industry’ that is going to be pretty highly regulated, I felt like the state and local policymakers have a unique opportunity to incorporate energy usage and climate assessments into their state marijuana licensing fees,” says Gina Warren, a professor at the Texas A&M University School of Law whose paper, titled “Regulating Pot to Save the Polar Bear: Energy and Climate Impacts of the Marijuana Industry,” will soon appear in the Columbia Journal of Environmental Law...MORE

[Demeter]

15. Utility Sales May Drop by Half as Homes Make Their Own Power

http://www.bloomberg.com/news/articles/2015-04-07/utility-sales-could-drop-by-half-as-homes-make-their-own-power

Utilities in the U.S. Northeast stand to lose as much as half of residential sales by 2030 as customers install solar and battery-storage systems and generate their own power, according to a report by the Rocky Mountain Institute.

Residential and commercial customers who opt for alternatives to traditional, utility-supplied electricity could erode power sales in the region by as much as $34.8 billion, the Snowmass, Colorado-based energy consultant said in the report released Tuesday. Fewer kilowatt-hours sold to customers also will affect utilities’ abilities to raise the estimated $2 trillion that needs to be spent to maintain power grids between 2010 and 2030.

A drop in the cost of solar panels and new leasing programs that offer installation with no upfront customer payments has led to a boom in U.S. rooftop systems, which have climbed more than 50 percent annually during the past three years. Utilities in some states have sought added fees from customers who generate their own power, saying the funds will support a grid to which users sell excess supply and upon which they rely when their own systems aren’t available.

“For owners and operators of central generation and transmission, our findings are likely bad news,” James Mandel and Leia Guccione, staff members for the institute, wrote in the report. Utilities need to find new business models that incorporate these systems into their networks, they concluded...

NOT GOOD FOR THOSE WHO CAN'T JOIN IN, EITHER...THEY WILL BE SQUEEZED LIKE LEMONS BY THE REMAINS OF THE POWER INDUSTRY

[Demeter]

16. What’s Really Behind the Flash Crash Trader Prosecution? By Pam Martens and Russ Martens

http://wallstreetonparade.com/2015/04/whats-really-behind-the-flash-crash-trader-prosecution/

The Justice Department’s case against the 36 year old lone bedroom trader in the U.K., Navinder Singh Sarao, has now been thoroughly discredited by every Wall Street veteran who has studied it, most pointing out that what Sarao did is happening every second that Wall Street is open for business. Business writers at the New York Times, Financial Times, Newsweek, and Bloomberg View have given the charges an unequivocal thumbs down. The Justice Department’s complaint itself is unusual. It consists of a one page complaint cover sheet followed not by a detailed breakdown of the counts but by an affidavit from an FBI agent. The case is filed in the Federal District Court in the Northern District of Illinois but no U.S. Attorney or Assistant U.S. Attorney from that district has signed this complaint. The names listed at the top of the first page, more as a reference since they have not signed any part of this complaint, are Department of Justice Fraud Section Assistant Chief Brent S. Wible and Fraud Section Trial Attorney Michael T. O’Neill. Both show phone numbers with the 202 area code, meaning this case came out of the Washington, D.C. office of the Justice Department, not the Northern District of Illinois where the futures market that Sarao is charged with manipulating is located.

The case is based largely on analysis from an unnamed “consulting group” and a “professor and academic researcher who studies and has written extensively on financial markets and algorithmic trading.” Given the public drubbing of this case, that professor is now likely climbing deeper into his hole of anonymity. Add all of the above to the fact that the case is coming out of the blue, five long years after the Flash Crash of May 6, 2010, and after regulators had already fingered mutual fund company Waddell & Reed as the key culprit in their lengthy report of 2010, and you are left with the highly intriguing question as to what the real motivation is for the Justice Department to go out on such a precarious limb with this case.

Four schools of thought come readily to mind. First is that the Justice Department wants to frighten off the tens of thousands of solo day traders who are jazzing up pre-packaged software and periodically beating the Wall Street big boys at their own game of spoofing and layering. Next is that Sarao may be some kind of genius trader or software developer and Wall Street wants him extradited to deploy his talents on this side of the pond. Third, there may be more to the FBI’s case than we know: for example, why was a mega global bank like Credit Suisse financing Sarao’s trading. Was there more to this relationship than is presently known? And, finally, elements of all three of the above scenarios may be in play. We’ll look at each of the first three elements separately.

There is no question, whatsoever, that prosecutors can be seduced into doing the bidding of the big Wall Street firms. One only needs to look closely at the serial prosecution of Sergey Aleynikov and the separate Squawk Box case to understand how very true this is...

MORE

THIS STINKS LIKE YESTERDAY'S DIAPERS...ANOTHER ED SNOWDEN IN THE MAKING

[Demeter]

17. There are only three options remaining for the Syriza government.

https://www.jacobinmag.com/2015/04/syriza-eurozone-default-exit-stathis/

Events in Greece have taken a dramatic turn, and insolvency is at the gates.


...Regling went much further than Coeuré: commenting on the possibility of a “Grexit,” that is of Greece leaving the eurozone, he said calmly that this “is not the baseline scenario. But if it were to happen and we work very, very hard to avoid it, then I think there would be a lot of uncertainty because we don’t have any kind of similar experience.” He added that “of course it would be more manageable than five or six years ago because we have new institutions, the EFSF, the ESM, other countries in the euro area have made tremendous adjustment progress such as Ireland, Portugal, Spain.” Regling also explicitly opposed the current plans of the Greek government to reduce some taxes and increase the minimum wage and pensions, saying that this amounts to “moving backward” and is putting negotiations in danger. Moreover he made it clear that the disagreement goes deep since the Greek government thinks that the approach of its predecessors is mistaken, whereas according to him, “the strategy was working.” “This difference has not been resolved,” he says.

He concludes by ridiculing the idea that the creditors might “back down because they don’t want a credit event, or accident,” saying that “our procedures for providing loans are very clear, and very well established. They are linked with conditionality, it is clearly written in the ESM treaty. We need a unanimous decision of our shareholders and the approval of six EU parliaments, and the parliaments definitely will check very carefully whether the conditionality — which is a key requirement — is met.”

It’s worth remembering that the hypothesis that despite their intimidating declarations the Europeans will at the end of the day make concessions and, to quote Varoufakis, “admit their mistakes,” is the one adopted so far, publicly at least, by the Greek government. But the soundbites coming from the creditors’ side point to something radically different: either Syriza accepts continuing the policy of the memoranda, or it will have to endure until the end the consequences of the ongoing strangulation.



At this stage, the options remaining for the Syriza government seem to be restricted to the three following ones.

The “good scenario,” the one which is still favored by the Greek government, is that the Europeans will make concessions, and a compromise will be reached very soon. However, as the IMF president made clear, in order to get the €7.2 billion at stake in this four-month bridge agreement, Greece needs to get a positive “review” and to conform fully to the “reforms” agreed by to its predecessors. In any case, this possibility has already been explicitly ruled out by European Commission President Jean-Claude Juncker, German Finance minister Wolfgang Schäuble and others, who made repeated statements these last days saying that the only deadline to be considered is now June 30, and that no money will be transferred to Greece before a “big deal” — in other words, another “rescue package” coming with the usual conditions.

The Greek government gives up. This is of course the avowed aim of the Europeans. But in a recent interview with Reuters, Tsipras made it clear that there are “political, not technical disagreements” on four key issues: labor legislation, pension reform, a hike in value-added taxes, and privatizations, which he referred to as “development of state property” rather than asset sales. Making concessions on that bottom line would amount to surrender and to political suicide for Syriza.

The Greek government defaults on the debt. In a recent interview with the Huffington Post, Varoufakis said that if the government had to choose between paying its creditors and paying salaries and pensions, it would prioritize the second option. But of course such a choice means a decisive rupture and exiting the eurozone (the scenario of a double currency within the euro cannot last for more than a few weeks at the very best).

The complication here is that defaulting in May means defaulting on IMF repayments, and this can entail enormous complications at the level of trade (the IMF can take sanctions that will make access to private credit for trade nearly impossible). Greece should preferably default on the ECB/EFSF loans, but these repayments are due in the summer and it seems nearly impossible to hold firm until then.

MUCH MORE

[Demeter]

18. Default without Grexit: Are they all pre-planned eventually?

http://failedevolution.blogspot.gr/2015/05/default-without-grexit-are-they-all-pre.html

A controlled Greek default scenario inside euro under a new government of technocrats has been developed by Berlin and ECB, according to a report in the Italian newspaper La Stampa.

The "war room" of ECB and eurozone Finance ministries is ready to openly discuss the worst case scenario, the newspaper writes and argues that one of the "hypothetical choices" examined by the German government and the European Central Bank is the possibility of default without Grexit.

According to this scenario, there will be a kind of short - controls within the country, coupled with a mild program to deal "humanitarian crisis" and an EU emergency program to avoid the collapse of the Greek banks.

La Stampa notes that the possibility of default inside euro has been “suggested” by the president of Bundesbank, the German central bank, who in a recent speech stated: “Member States must take responsibility for the impact of their political decisions. There must be a correlation between the control and obligation. Ultimately, this implies the possibility of default for a state, without the collapsing of its financial system.”

Source:

http://tvxs.gr/news/ellada/la-stampa-plan-b-me-xreokopia-entos-eyro-kai-kybernisi-texnokraton

So, is everything determined from the start? This is probably a plan by the lenders to bring Greece progressively back to the course of the neoliberal catastrophic policies with the help of technocrats. How will SYRIZA respond?

EVEN MORE RELEVANT: HOW DOES THAT WORK, ACTUALLY? WHEN THE ENTIRE NATION GOES UP IN FLAMES, OR GENOCIDE, WHERE WILL THOSE TECHNOCRATS HIDE?

Scenario 3:

Neither the neoliberal nor the anti-neoliberal front will be able to form government. In that case, the political dead end through repeated elections may give the suitable excuse to see a technocratic government by banking puppets, which will be presented as the only viable solution. This sub-experiment has already been tested in Greece and Italy through the banking puppets Papademos and Monti. This "solution"-parameter in the Greek experiment could be proved a dangerous threat to European parliamentary democracy, as may be used in other countries in times of political crises, becoming permanent practice and finally, establishing definitely the sovereignty of the plutocrats against the majority.

http://failedevolution.blogspot.gr/2014/12/various-scenarios-for-national.html

[Demeter]

22. Ratings agencies say no default if Greece misses ECB, IMF payments

THE CONSPIRACY AGAINST GREECE WILL NOT BE IMPEDED...

http://www.reuters.com/article/2015/05/01/us-greece-default-ratings-idUSKBN0NM3N420150501?feedType=RSS&feedName=businessNews

- Most top credit rating agencies say they would not cut Greece's rating to default if it misses a payment to the International Monetary Fund or European Central Bank, a stance that could keep vital ECB funding flowing into the financial system.

Greece owes nearly 1 billion euros to the IMF in May and almost 7 billion euros to the ECB over July and August and there are concerns that the government, stuck in funding talks with official lenders, will miss the payments. This would be an unprecedented move that could put Athens' future in the euro in doubt and has raised questions about whether it could set off a chain reaction, possibly accelerating repayments due to other official and private sector creditors and compounding Greece's problems. But for most rating firms, whose views determine whether the ECB can still accept sovereign Greek securities as collateral for lending to its banks, a missed IMF payment would not lead them label the country in default. This is critical to keeping the life-support mechanism, the ELA emergency cash provided by the Greek central bank with the blessing of the ECB, flowing to banks because the ECB would not accept any securities issued by a government in default.

Standard and Poor's, Fitch and DBRS, three of the top four, all say that as the IMF and ECB are not standard creditors, a missed payment to either, although likely to push Greece's rating even deeper into junk, would not be classed as a default.

"If Greece were, for whatever reason, not to make a payment to the IMF or ECB that would not constitute a default under our criteria as it is 'official' sector debt," said Frank Gill, who rates Greece for S&P.

As was seen during Greece's massive 2012 debt restructuring, only when all four of the main agencies -- Moody's is the other one -- declared Athens in default, did the ECB say it would not accept Greek bonds as ELA collateral. Even then it did a quick U-turn after euro zone countries put 35 billion euros into an escrow account to cover the central bank in case there were any problems during the restructuring.

******************

Even though the ratings agency might not declare a default after a missed IMF or ECB payment, the International Swaps and Derivatives Association (ISDA) committees, which are run by banks and other bonds holders, could decide to do so which could trigger payouts on Credit Default Swaps and 'cross defaults' on other bonds. Nevertheless, the risk of automatic 'cross defaults' from a missed payment to the IMF or ECB to other public and private sector Greek debts appears minimal according to legal experts. The only potential impact Allen & Overy's Yannis Manuelides saw from any missed payments was that they could technically give the European Financial Stability Facility (EFSF) the option to demand immediate repayment of one of its big Greek loans. But as the EFSF is government controlled, that seems highly unlikely and it would most likely waive that option.

Still, failing to make the payments to the ECB and IMF -- Fitch has said it "cannot be discounted" -- would leave the ECB in a powerful position with regard to Greece. Although it would probably not cut off Greek banks' emergency funding completely, the ECB could raise the 'haircuts' or discounts applied to Greek government securities when they are used as collateral, reducing the amount of cash it will extend to Greek banks. The average haircut on Greek ELA collateral is estimated to be around 35 percent although it can be smaller, particularly on government bonds with a few years left to run. Increasing the haircut would leave Athens with less money, creating more pressure on Athens to seal a deal for more aid.

All four ratings agencies said missing the IMF or ECB payments would not be a good idea...

[Demeter]

19. GE: Back to Basics By James Surowiecki

http://www.newyorker.com/magazine/2015/05/04/back-to-basics-why-g-e-ditched-finance

...In the public imagination, G.E. never stopped being an industrial company, but for the past three decades it’s also been, essentially, a huge bank. Its finance division got started during the Great Depression, as a way of helping consumers pay for washing machines and refrigerators. But Jack Welch, who took over in 1981, was obsessed with “growing fast in a slow-growth economy.” G.E.’s traditional businesses, like appliances and lighting, were no longer growing quickly, so Welch needed a new profit engine. Enter G.E. Capital. It became a key source of profits, growing almost twice as fast as the company as a whole and expanding into every conceivable market: consumer lending, credit cards, equipment leasing, commercial real estate, auto loans, leveraged buyouts, even subprime mortgages.

G.E. Capital had a couple of advantages. Because it was not officially a bank, it faced less regulatory supervision. And, because G.E.’s industrial businesses still generated steady profits, the financial arm operated with a pristine triple-A credit rating. (Most big banks are a notch or two lower.) That meant that it could borrow money more cheaply than its competitors, which made its lending highly profitable. Indeed, the sharp ascent of G.E.’s share price during Welch’s tenure arguably owed as much to G.E. Capital as to Welch’s famous management style (Fortune called him “the most widely admired, studied, and imitated CEO of his time”). By 2000, financial services accounted for more than half of G.E.’s revenue. Even after Welch retired, in 2001, finance remained crucial. By the middle of the decade, it was responsible for about half of G.E.’s profits.

But finance entailed problems that weren’t apparent until after Welch left. G.E. Capital sucked up more and more of the company’s resources. In the course of Welch’s tenure, G.E.’s in-house R. & D. spending fell as a percentage of sales by nearly half. Vijay Govindarajan, a management professor at Dartmouth who worked as chief innovation consultant to Immelt from 2008 to 2009, told me that “financial engineering became the big thing, and industrial engineering became secondary.” This was symptomatic of what was happening across corporate America: as Mark Muro, a fellow at the Brookings Institution, put it to me, “The distended shape of G.E. really reflected twenty-five years of financialization and a corporate model that hobbled companies’ ability to make investments in capital equipment and R. & D.”

Finance is also inherently risky. Admirers claimed that cunning risk management enabled G.E. Capital to “eliminate—or at least reduce—all risks that do not carry a big potential payoff.” As if. When the financial crisis hit, G.E. Capital’s earnings plummeted, and the division’s dependence on borrowed money jeopardized the company as a whole. Keeping it afloat required the support of the Federal Reserve and an F.D.I.C. guarantee of more than fifty billion dollars in unsecured debt....Meanwhile, the outlook for industry is better than it’s been in a long time. American manufacturing was decimated during the first decade of this century, with six million jobs gone, and it was easy to believe that manufacturing was a lost cause. Yet it still accounts for more than two trillion dollars in output, and American factories are still among the most productive in the world. What’s more, energy costs here are falling, and labor costs abroad are rising. Suddenly, the U.S. seems like a reasonably affordable place to make high-end products, like G.E.’s jet engines and gas and wind turbines. There’s a growing market for such products, too. As developing countries get richer, they’re spending more on power, transportation infrastructure, and health care. The energy sector, even with the recent drop in oil prices, has a voracious appetite for exploration and drilling. These are all industries that G.E. specializes in. This kind of manufacturing, with its automated, high-tech factories, doesn’t create as many jobs as old-fashioned heavy industry, but the gains are still significant. In the past six years, G.E. has opened more than twenty new plants and added more than sixteen thousand new workers in the U.S. “We’re not talking about some nostalgic, morally attractive American folkway,” Muro said. “Advanced manufacturing is a major driver of innovative activity, exports, and economic growth. So it’s good to see a hallmark company refocussing on it.” After twenty-five years of the financial tail wagging the industrial dog, it’s time to try something new.

A LITTLE MORE AT LINK

[Demeter]

20. When Will Apple Stop Screwing the US Economy?

http://www.moneyballeconomics.com/when-will-apple-stop-screwing-the-us-economy/

...The issue at hand is the way Apple’s relentless greed has undermined the US economy and damaged its future industrial competitiveness. All so Apple can make $5 more per phone.

After oil and cars, smartphones are the US’ biggest import. Almost $100B of phones was imported in 2014 (per the Census Bureau). Half of them were Apple iPhones.

The trade in smartphones cuts two ways:

It is singlehandedly keeping afloat the economies of China, Taiwan, Korea and Vietnam.

The flip side is that it is steadily hurting the US economy, as I’ll show in a moment...

The US’ Loss is Everyone Else’s Gain

It’s like an unintended Marshall Plan for the 21st Century. The US is transferring $100B a year to three Asian economies, creating over a million jobs and helping them accelerate up the high-tech manufacturing ladder so that US jobs are now in jeopardy. In other words, the standard complaints about corporate America off-shoring production. But there’s a twist: the high-tech competitive advantage that we are losing has bigger, costlier consequences.

“Hold on a minute!” you might say. Assume that handing a $100B+ high-tech industry to Asia can’t possibly be in the US’s long-term economic interest. Why blame Apple? For starters, because Apple started the hollowing out of American semiconductor dominance and made certain that the critical jobs and manufacturing went offshore. Secondly, with 50% of the US smartphone market, Apple is the only company which can make an impact, but it won’t because that means losing $5 per phone...

AND WITH MONOPOLY TRUST-BUSTING AS DEAD AS DINOSAURS...WE ARE SCEWED

[Demeter]

21. What to Do?

First, boycott Apple products. If you buy an Android phone you can take comfort in knowing that some of that money comes back to the US via Google, which does a lot to support the US economy. Second, let’s encourage Congress to close the tax loopholes that let companies like Apple hide from taxes. Third, don’t support a one-off tax moratorium on cash brought in from offshore. These companies are dying to bring the money back anyway. They dodged taxes to get it offshore, and now they want to continue dodging them to bring it back? No way.