Weekend Economists: (Oh) Say, Can You See? June 19-21, 2015

[Demeter]

http://3.bp.blogspot.com/-esdOygUQhl8/UqD1qKPTaUI/AAAAAAAADIo/Dul3D6cr60k/s1600/star+spangled+banner.png

Star-Spangled Banner and the War of 1812

The original Star-Spangled Banner, the flag that inspired Francis Scott Key to write the song that would become our national anthem, is among the most treasured artifacts in the collections of the Smithsonian’s National Museum of American History in Washington, D.C.

Quick Facts about the Star-Spangled Banner Flag

Made in Baltimore, Maryland, in July-August 1813 by flagmaker Mary Pickersgill
Commissioned by Major George Armistead, commander of Fort McHenry
Original size: 30 feet by 42 feet
Current size: 30 feet by 34 feet
Fifteen stars and fifteen stripes (one star has been cut out)
Raised over Fort McHenry on the morning of September 14, 1814, to signal American victory over the British in the Battle of Baltimore; the sight inspired Francis Scott Key to write “The Star-Spangled Banner”
Preserved by the Armistead family as a memento of the battle
First loaned to the Smithsonian Institution in 1907; converted to permanent gift in 1912
On exhibit at the National Museum of American History since 1964
Major, multi-year conservation effort launched in 1998
Plans for new permanent exhibition gallery now underway

Making the Star-Spangled Banner

In June 1813, Major George Armistead arrived in Baltimore, Maryland, to take command of Fort McHenry, built to guard the water entrance to the city. Armistead commissioned Mary Pickersgill, a Baltimore flag maker, to sew two flags for the fort: a smaller storm flag (17 by 25 ft) and a larger garrison flag (30 by 42 ft). She was hired under a government contract and was assisted by her daughter, two nieces, and an indentured African-American girl.

The larger of these two flags would become known as the “Star-Spangled Banner.” Pickersgill stitched it from a combination of dyed English wool bunting (red and white stripes and blue union) and white cotton (stars). Each star is about two feet in diameter, each stripe about 24 inches wide. The Star-Spangled Banner’s impressive scale (about one-fourth the size of a modern basketball court) reflects its purpose as a garrison flag. It was intended to fly from a flagpole about ninety feet high and be visible from great distances. At its original dimensions of 30 by 42 feet, it was larger than the modern garrison flags used today by the United States Army, which have a standard size of 20 by 38 feet.

The first Flag Act, adopted on June 14, 1777, created the original United States flag of thirteen stars and thirteen stripes. The Star-Spangled Banner has fifteen stars and fifteen stripes as provided for in the second Flag Act approved by Congress on January 13, 1794. The additional stars and stripes represent Vermont (1791) and Kentucky (1792) joining the Union. (The third Flag Act, passed on April 4, 1818, reduced the number of stripes back to thirteen to honor the original thirteen colonies and provided for one star for each state — a new star to be added to the flag on the Fourth of July following the admission of each new state.) Pickersgill spent between six and eight weeks making the flags, and they were delivered to Fort McHenry on August 19, 1813. The government paid $405.90 for the garrison flag and $168.54 for the storm flag. The garrison flag would soon after be raised at Fort McHenry and ultimately find a permanent home at the Smithsonian Institution’s National Museum of American History. The whereabouts of the storm flag are not known.

http://www.si.edu/encyclopedia_si/nmah/starflag.htm

A Restored Fort McHenry--outside Baltimore, Maryland

In eighth grade, I had music class with Mr. Butler, who required that we learn all three verses of the Star Spangled Banner, and sing it at the opening of every class as our vocal warm-up. Thank you, Mr. Butler of Clark Jr. High, wherever you may be now....apparently, the school is now called Henderson Academy, and appears to be a charter school....sic transit gloria mundi

[Demeter]

1. We haven't lost a bank since May 8th

Lucky us.

[Fuddnik]

5. Lost a lot of bankers, though.

[Demeter]

7. Not Enough, Doc. Not enough, yet!

[Fuddnik]

14. Well, ya gotta start somewhere.

[Demeter]

2. Stealth Block to Monetary Reform: Fast-Tracking TiSA by ELLEN BROWN

http://www.counterpunch.org/2015/06/12/fast-tracking-tisa/

It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.

— Attributed to Henry Ford

In March 2014, the Bank of England let the cat out of the bag: money is just an IOU, and the banks are rolling in it. So wrote David Graeber in The Guardian the same month, referring to a BOE paper called “Money Creation in the Modern Economy.” The paper stated outright that most common assumptions of how banking works are simply wrong. The result, said Graeber, was to throw the entire theoretical basis for austerity out of the window...The revelation may have done more than that. The entire basis for maintaining our private extractive banking monopoly may have been thrown out the window. And that could help explain the desperate rush to “fast track” not only the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP), but the Trade in Services Agreement (TiSA). TiSA would nip attempts to implement public banking and other monetary reforms in the bud.

The Banking Game Exposed

The BOE report confirmed what money reformers have been saying for decades: that banks do not act simply as intermediaries, taking in the deposits of “savers” and lending them to borrowers, keeping the spread in interest rates. Rather, banks actually create deposits when they make loans. The BOE report said that private banks now create 97 percent of the British money supply. The US money supply is created in the same way.

Graeber underscored the dramatic implications:

. . . Money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There’s really no limit on how much banks could create, provided they can find someone willing to borrow it.

Politically, said Graeber, revealing these facts is taking an enormous risk:

Just consider what might happen if mortgage holders realised the money the bank lent them is not, really, the life savings of some thrifty pensioner, but something the bank just whisked into existence through its possession of a magic wand which we, the public, handed over to it.

If money is just an IOU, why are we delivering the exclusive power to create it to an unelected, unaccountable, non-transparent private banking monopoly? Why are we buying into the notion that the government is broke – that it must sell off public assets and slash public services in order to pay off its debts? The government could pay its debts in the same way private banks pay them, simply with accounting entries on its books. What will happen when a critical mass of the populace realizes that we’ve been vassals of a parasitic banking system based on a fraud – that we the people could be creating money as credit ourselves, through publicly-owned banks that returned the profits to the people?

Henry Ford predicted that a monetary revolution would follow. There might even be a move to nationalize the whole banking system and turn it into a public utility...It is not hard to predict that the international bankers and related big-money interests, anticipating this move, would counter with legislation that locked the current system in place, so that there was no way to return money and banking to the service of the people – even if the current private model ended in disaster, as many pundits also predict. And that is precisely the effect of the Trade in Services Agreement (TiSA), which was slipped into the “fast track” legislation now before Congress. It is also the effect of the bail-in policies currently being railroaded into law in the Eurozone, and of the suspicious “war on cash” seen globally; but those developments will be the subject of another article.

TiSA Exposed

On June 3, 2015, WikiLeaks released 17 key documents related to TiSA, which is considered perhaps the most important of the three deals being negotiated for “fast track” trade authority. The documents were supposed to remain classified for five years after being signed, displaying a level of secrecy that outstrips even the TPP’s four-year classification. TiSA involves 51 countries, including every advanced economy except the BRICS (Brazil, Russia, India, China, and South Africa). The deal would liberalize global trade in services covering close to 80% of the US economy, including financial services, healthcare, education, engineering, telecommunications, and many more. It would restrict how governments can manage their public laws, and it could dismantle and privatize state-owned enterprises, turning those services over to the private sector.

Recall the secret plan devised by Wall Street and U.S. Treasury officials in the 1990s to open banking to the lucrative derivatives business. To pull this off required the relaxation of banking regulations not just in the US but globally, so that money would not flee to nations with safer banking laws. The vehicle used was the Financial Services Agreement concluded under the auspices of the World Trade Organization’s General Agreement on Trade in Services (GATS). The plan worked, and most countries were roped into this “liberalization” of their banking rules. The upshot was that the 2008 credit crisis took down not just the US economy but economies globally. TiSA picks up where the Financial Services Agreement left off, opening yet more doors for private banks and other commercial service industries, and slamming doors on governments that might consider opening their private banking sectors to public ownership...

BUT WAIT! THERE'S MORE! SEE OP, AND ALSOFOLLOWING LINKS




The disturbing revelations concerning TiSA are yet another reason to try to block these secretive trade agreements.

For more information and to get involved, visit:

Flush the TPP http://www.flushthetpp.org/

The Citizens Trade Campaign http://www.citizenstrade.org/

Public Citizen’s Global Trade Watch http://www.tradewatch.org/

Eyes on Trade http://citizen.typepad.com/eyesontrade/

Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at EllenBrown.com.

[Demeter]

3. Making the Economy Work for The Many and Not the Few #10: End Mass Incarceration, Now. ROBERT REICH

http://robertreich.org/post/121924725970

Imprisoning a staggering number of our people is wrong. The way our nation does it is even worse. We must end mass incarceration, now.

If I'm walking down the street with a Black or Latino friend, my friend is way more likely to be stopped by the police, questioned, and even arrested. Even if we're doing the exact same thing—he or she is more likely to be convicted and sent to jail. Unless we recognize the racism and abuse of our criminal justice system and tackle the dehumanizing stereotypes that underlie it, our nation – and our economy – will never be as strong as it could be. Please take a moment to watch the accompanying video, and please share it so others can understand what’s at stake for so many Americans.

Here are the facts:

Today, the United States has 5 percent of the world’s population, but has 25 percent of its prisoners, and we spend more than $80 billion each year on prisons.

The major culprit is the so-called War on Drugs. There were fewer than 200,000 Americans behind bars as recently as the mid-70’s. Then, a racially-tinged drug hysteria swept our nation, and we saw a wave of increasingly militant policing that targeted communities of color and poorer neighborhoods.

With “mandatory minimums” and “three strikes out” laws, the number of Americans behind bars soon ballooned to nearly 2.5 million today, despite widespread evidence that locking people up doesn't make us safer.

Unconscious bias and cultural stereotypes lead to discriminatory enforcement of the laws – from who gets pulled over to where police conduct drug sweeps.

Even though Blacks, whites, and Latinos use drugs at similar rates, people with black and brown skin are more likely to be pulled over, searched, arrested, charged with a crime, convicted, and sent to jails and prisons where they can be subject to some of the worst human rights abuses.

As a result, black people incarcerated at a rate five times that of whites, and Latinos incarcerated at a rate double that of white Americans.

Even if you’ve “served your time,” you never escape the label. A felony conviction can bar you from getting a student loan, putting a roof over your head, or even from voting. It might even disqualify you from getting a job which can make it impossible for people with felony convictions to pull themselves out of poverty. And many who end up in prison were living in chronic poverty to begin with. All of this means a lot of potential human talent is going to waste. We’re spending a fortune locking people up who could fuel our economy and build strong communities, in some cases just to increase the profits of private prison corporations.

So what do we do?

First, enact smarter sentencing laws that end mandatory minimums and transform the way we treat people who enter the criminal justice system. Instead of prisons and jails, we need well-paying jobs, and to invest in proven and cost-effective alternatives to incarceration, like job training and mental health and drug treatment programs.

Second, stop the militarized policing and end discriminatory policing practices such as "stop and frisk" and "broken windows" that disproportionately target communities of color.

Third, stop building new jails, start closing some existing ones, and begin to invest in schools, public transit, and housing assistance or local jobs programs. States are spending more and more on prisons, while cutting funding for schools. That’s crazy.

Finally, “ban the box” – the box on job applications that asks whether you have ever been convicted of a felony on a job application. Already, dozens of states cities, and counties have passed bills requiring that employers consider what you can do in the future, not what you might have done in the past.

Instead of locking people up unjustly, and then locking them out of the economy for the rest of their lives, we need to stop wasting human talent and start opening doors of opportunity – to everyone.

[Demeter]

4. What’s Next for the World’s Largest Federation of Worker-Owned Co-Ops?

http://www.yesmagazine.org/new-economy/world-s-largest-federation-of-worker-owned-co-operatives-mondragon-josu-ugarte

In early May, President Barack Obama visited Nike’s headquarters in Oregon to gather support for the Trans Pacific Partnership, a trade deal between the United States and 11 other Pacific Rim countries. Critics of the deal have charged that it would increase income inequality, weaken labor and environmental protections, and encourage U.S. companies to offshore jobs. With its history of offshoring American jobs, Nike is an obvious ally for the deal, argues commentator Rose Aguilar at The Guardian.

But what if there were an alternative corporate model for the president and other world leaders to shape their thinking around? A model that was still globally competitive but empowered local workers and addresses income inequality? Mondragon Corporation, a federation of 103 worker-owned cooperatives based in the Basque region of Spain, could provide an example. Unlike Nike, which is controlled by a small group of shareholders, ordinary workers are deeply involved in Mondragon’s decision-making process. Mondragon made about €11.6 billion ($13.1 billion) in income in 2013. The corporation employs more than 74,000 people around the world. About 60,000 are worker-owners, or “associates,” who own assets in the company and can be elected to the General Assembly, the body that oversees the corporation. With Mondragon, you won’t find the pay gap between executives and workers that are typical of multinational corporations. Managers at Mondragon cannot make more than six times the salary of their lowest paid workers.

Mondragon is not without its challenges. In 2013, it had to close Fagor Electrodomesticos, a member cooperative that manufactured domestic appliances and employed almost 2,000 people. But the way it handled that crisis shows how having workers in control makes a difference. Instead of sending the laid-off workers to seek unemployment benefits from the government, Mondragon retrained them and found new jobs for most of them at other member cooperatives....

INTERVIEW WITH Josu Ugarte, the president of Mondragon International, about cooperative values, how its member co-ops support one another, and how it interacts with its workers outside of Spain FOLLOWS...SEE LINK!

[Demeter]

6. What Happens If Greece Defaults On Its Debts?

http://www.huffingtonpost.com/2015/06/19/greece-defaults-european-union_n_7604666.html?utm_hp_ref=business&ir=Business



Graffiti that reads "Greece vs Everybody" is seen in Athens, Greece. The Greek central bank warned on Wednesday that the country could be forced to leave the eurozone and the European Union if Greece does not reach a deal with its creditors. | Milos Bicanski via Getty Images

As negotiations between Greece and its creditors continue to fail to produce a bailout deal, the Greek central bank warned on Wednesday that the nation could start down the path to leaving both the euro and the European Union if it defaults on its debts...Greece owes the International Monetary Fund 1.6 billion euros by the end of June. The IMF says it will allow no grace period, although it has occasionally done so for debtors in the past. Most likely, if Greece cannot secure an agreement with the so-called "troika" of creditors -- the IMF, the European Central Bank and the European Commission -- it will be unable to make the payments, 7.2 billion euros in bailout aid won't be released and the country will go into default immediately. While both sides wish to avoid such an outcome, the talks seem to be at loggerheads. Greece's left-wing Syriza government stands opposed to harsh spending cuts while the troika demands the government make more internal reforms.

The specter of a Greek exit from the euro, sometimes called the "Grexit," has loomed over this year's bailout talks, just as it did in previous years of debt negotiations. However, as the deadline approaches, observers have started analyzing what will actually happen if the country does default on its debt. There are multiple scenarios that could occur in the event that no deal is reached. Many economists and financial writers predict that the effects on Europe would be bad, but not nearly as harmful as what would happen within Greece itself.

WHAT COULD HAPPEN TO GREECE?

1. Default without exiting the euro.

Despite the Greek central bank's warning that a default could force the country to give up the euro and leave the eurozone (the group of nations that use the currency), that wouldn't automatically be the case.

If Greece defaults, the ECB will need to decide whether to continue authorizing emergency lending to Greek banks or to pull the plug altogether, Reuters notes. Should the ECB continue lending, Greek banks could stay afloat for a little while.

This default-without-exit plan, The Wall Street Journal explains, could give Greece more time to reach a bailout deal, or might simply mitigate the consequences of an immediate default.

2. Greece leaves the euro and adopts its former currency.

An obstacle to the emergency lending is that Greece has more big payments approaching in July, which it doesn't have the money to pay. If the ECB decides to cut off lending and the country runs out of money, Greece would likely be forced to abandon the euro and print its own currency. In this event, the country might return to the drachma, its old currency.

Experts fear that this move could cause a bank run, in which citizens take euros out of their accounts en masse before the euros can be converted to drachmas. This hasty withdrawal would damage Greek financial markets and cause capital to flee the country, Reuters notes. Actually, a slow-motion version of this has already been taking place, with Greek bank deposits hitting a 10-year low earlier this year.

To make these bank runs less likely in the event of a return to the drachma, Greece could institute capital controls in an attempt to limit the amount of money that could be transferred out of the country. It's not known exactly how this would work in Greece, but a recent Bloomberg article explained that Cyprus instituted comparable policies during its financial crisis. These included daily caps on ATM withdrawals and limits on the amount of money Cypriots could take while traveling and on how much they could send abroad.

Some economists, like Paul Krugman, see a long-term upside to defaulting and switching to the drachma. They argue that Greece could devalue its currency and begin an export-based recovery, as well as restore funding to social programs. On the other hand, these economists ackowledge, European creditors would lose out on payments they would get if Greece remained in the eurozone.

3. Greece leaves the euro and starts a parallel currency.

Another potential scenario is that instead of reverting to the drachma, Greece could start a parallel currency to the euro that it could print and use to pay government workers' salaries. This would free up euros with which Greece could pay its international creditors, with the new currency acting as a kind of IOU from the government to its citizens. The problem is that the government needs to be able to convince Greeks that it will actually honor these IOUs. The parallel currency could also be perceived as a kind of "Disneyland" money that's good within Greece but not accepted under the same terms as the euro. Or the notes could be printed in excess, which would devalue the currency, Bloomberg notes.

4. Greece leaves not only the eurozone, but the European Union as well.

There is also the question of whether Greece could ultimately exit the European Union if it defaults, as the Greek central bank suggested. Martin Schulz, president of the EU parliament, told The Guardian on Wednesday that dropping out of the eurozone would also mean leaving the EU. But it's not clear how that would transpire without a legal mechanism to give Greece the boot: Under current EU treaties, there's no process for kicking a country out of the union. Although states can leave voluntarily, the majority of Greeks want to stay.

WHAT COULD HAPPEN TO EUROPE?

1. Financial contagion.

The European Union worried in previous "Grexit" scares that if Greece left the euro, French and German banks that had lent funds to Greece would be threatened. There was also concern about default spreading via a domino effect of sorts: Markets in weak eurozone economies would be spooked by the ECB letting Greece default, resulting in bank runs in nations like Portugal, Ireland and Italy. Fearing a currency devaluation, companies might be compelled to withdraw huge amounts of capital from these countries, thereby causing further economic crisis...In this round of negotiations, however, there is less worry about this possibility. The EU has set up the European Stability Mechanism rescue vehicle, which seeks to provide a bulwark for weak economies that could be affected by a Grexit, according to The New York Times. Also, Greece mostly paid off the French and German banks with its first bailouts, The Washington Post notes. Greece now owes the majority of its debt to European governments, meaning that a default, while harmful, wouldn't destroy these countries' broader economies.

European banks are also doing better than they were during the last round of negotiations, with regulatory measures and increased capital designed to withstand stress, the Times notes.

2. The end of a political project

A more serious way in which the default could hurt Europe has to do with the desire to preserve the eurozone as a political project. European leaders have tried for five years to keep Greece part of the eurozone, and as Germany's Der Spiegel explains, it would be seen as a disaster if all that time and effort were for nothing. Greece would be the first country to leave the euro, and its departure would be a huge blow to the idea of the eurozone as a project for prosperity in a united Europe. The BBC notes that a Grexit could benefit anti-EU political groups and shake the sense that the euro was permanent.

3. A poor precedent

Greece leaving the euro could also set a precedent for other nations to leave in the future. Portugal is a candidate for a similar outcome, as it also faces its own debt crisis. The country's prime minister, Pedro Passos Coelho, has denied that Portugal would be next if Greece is to go. Wealthier nations like Germany also fear that if Greece succeeds in receiving a bailout without making the spending cuts that creditors demand, a precedent would be set in which countries could threaten to leave the eurozone in exchange for receiving loans.

GREEK GRAFFITI AT LINK

[MattSh]

18. Inciting Bank Runs as a Negotiating Tactic - The Automatic Earth

The troika of Greek creditors has gone into full-frontal morals-be-damned attack mode, handpicking arms from a weapons arsenal we haven’t seen used before, and that we never should have seen in an environment that insists – and prides – on presenting itself as a union, both in name and in spirit. Now that they are being used, there no longer is such a union other than in name, in empty words.

This has turned into the kind of economic warfare one would expect to see between sworn and lethal enemies, that the US would gladly use against Russia for instance, but not between partners in a union founded on principles based entirely and exclusively on being mutually beneficial to everyone involved.

Those principles, and everything that has been based on them, the common currency, the surrender of ever more sovereignty on the part of the nations involved, the relinquishing of national powers to the various supra-national bodies in Brussels, has for everyone involved been based on trust. Nobody would ever have signed up to any of it without that trust. But just look where we are now.

When spokespeople at the troika side of the table stated on Thursday that they don’t know if Greek banks will be open on Monday, they crossed a line that should never even have been contemplated. This is so far beyond the pale, it should by all accounts, if everyone involved manages to keep a somewhat clear head, blow up the union once and for all. If a party to a negotiation that can’t get its way stoops to these kinds of tactics, there is very little room left for talk.

And all EU nations should understand by now that this is not about Greece anymore, it’s about all of them. Any member nations that does not fall into -goose- step with Brussels must from here on in be prepared to deal with attempts to crush it economically and politically.

Whatever trust there once was is now gone. And trust, once blown, is painfully difficult to regain. The negotiations on the Greek debt crisis have become just another dirty business deal, and have nothing to do anymore with conversations between equal partners in a union. Even though that is still what they’re supposed to be. Officially.

Translation: there are no equal partners in Europe. There only ever were in name. When people thought they signed up for a tide to lift all boats. The Greek crisis has destroyed that lift-all-boats notion once and for all. All that’s left of the union is power politics, of those (s)elected to represent all member nations, working to crush one of them with all weapons at their disposal.

One of those weapons is utilizing the media to incite a bank-run in Greece, aimed at paralyzing the Greek government into full submission. The run-up to the bank-run has been building up steam ever since Syriza took over 5 months ago, but apparently not fast enough for the troika.

The threat has always been simmering below the surface; what changed is that the moral constraint which kept the creditors from speaking out loud in public about it, was dropped yesterday. And that changes everything.

Complete story at - http://www.theautomaticearth.com/2015/06/inciting-bank-runs-as-a-negotiating-tactic/

[Demeter]

19. Well, they lied, didn't they?

The Belgians aren't sufficiently powerful and connected to be more than the mouthpiece of a more shadowy power. Unless they are all Rothschilds and lackeys?

The question is: where is the ultimate responsibility? With Germany? The Germans would have to be incredibly foolish to try this a third time in a century. The Bilderbergers? Now that we have been introduced to them, a possibility, but where do the banksters come in? Are they both the same?

For it looks like the banksters are the moving parts, here. Deutsche Bank is going down, I believe. Maybe they want to take the EU with them...

Evil stalks Europe. It always has. The Eurozone was a vain attempt to make the continent inhospitable...but the Evil turned it from the beginning with its my-way-or-the-highway terms.

But we have to deal with the Evil at home in America. We don't have the time or energy or payoff to mess around in Europe. Not this time. Europe has nothing left for America to steal and its dying as a market, strangled by its own austerity.

[DemReadingDU]

21. Who wants America

Perhaps it is the desire of someone to have evil destroy America? Seriously, who would want to see America's empire dissolved? Who is the wealthiest European family? the Rothschilds?

[Demeter]

24. The Rockefellers and Rothschilds “fused” while no one was looking

http://wearechange.org/the-rockefellers-and-rothschilds-fused-while-no-one-was-looking/

Finally revealed by Vanity Fair and unbeknownst to everyone aside from insiders, the Rockefeller family and Rothschild family have merged as part of a secretive 2012 deal.

The Rockefellers (who changed their name from Rockenfelder before coming to the US in the 1800s) were founders of the Standard Oil Company in 1870 and a wealth-management firm in 1882 and have been influencing many walks of life for a long time. David Rockefeller (son of the notorious banker John D. Rockefeller) is the current patriarch of the Rockefeller family. It was revealed in his personal memoir; that David admitted to being “guilty” and “proud” of an “international conspiracy” against US sovereignty. We Are Change were one of the first to confront him about this admitted international manipulation:

FROM
http://www.democraticunderground.com/111667638#post23

[Demeter]

30. The Story Behind The Most Insidious Rothschild Dynasty Conspiracy Theory STARTED 1812 WAR

Hailed as the pioneers of modern finance, the Rothschilds have amassed an incredible fortune that has lasted for centuries. The family's vast wealth and secrecy have also made it a target of countless conspiracy theories. If you believe everything you read, the Rothschilds have facilitated the assassination of multiple U.S. Presidents, control the world's money supply, and have a network of clandestine agents that served as puppet business associates during the family's rise to power. While most of these theories fail to present a shred of evidence, we thought we'd investigate one of the more famous stories regarding the family that has ever been told: that Nathan Rothschild was the driving force behind the War of 1812.

Conspiracy theorists allege that:

Alexander Hamilton acted as an agent of the Rothschild family when he helped create the First National Bank;
The First National Bank was dominated by foreign investors, including the Rothschilds; and
Nathan Rothschild ordered the War of 1812 after the charter for the First National Bank was not renewed in 1811.

Lines between truth and inaccuracies may have blurred as time passed, but it's clear as day that this war wasn't a one-man show. The story starts with Alexander Hamilton, the father of the First National Bank of the United States. In 1791, Washington was undecided about a central bank and asked Hamilton for advice after Thomas Jefferson and Attorney General Edmund Randolph advised against it. Hamilton wrote nearly 15,000 words in what was evidently a successful rebuttal; Washington signed the bill, which provided a 20-year charter for the First National Bank. Conspiracy theorists insist Hamilton was a Rothschild agent. He is often accused of acting in the Rothschilds' interests by facilitating the creation of a central bank.

The following quote is commonly used in online postings to connect Hamilton to Rothschild:

Alexander Hamilton married into the Rothschild family December 14, 1780, Alexander Hamilton was born Alexander Levine, of Jewish lineage, in St. Croix, the West Indies. After changing his name and his geographical situs, he married Elizabeth Schuyler… (The Intimate Life of Alexander Hamilton, by Allan Hamilton 1910)

Source: The Robot's Rebellion

But the quote they base that on doesn't appear in the referenced material -- the book in question does not even mention the Rothschilds. Other 'fringe' books like No More Taxes by John Paul Mitchell insist that Hamilton married into the Rothschild family. Here's what we actually know about Hamilton's in-laws: the father, Philip Schuyler, was a General during the Revolutionary War, while the mother Catherine instituted a scorched earth policy to deprive the British of food.

It's true that the First National Bank was dominated by foreign owners.

Dr. Thayer Watkins of San Jose State University claims that 70 percent of the central bank was owned by foreigners, and notes that Britain was the primary source of capital for the U.S during this era. Given that the U.S. relied on British capital, and British banks were dominated by the Rothschilds, it's safe to say the family had a substantial stake in the First National Bank. When the bank's charter came up for renewal in 1811, the motion failed in a very close vote. Not good for foreign investors like Nathan Rothschild. Thomas Jefferson and Andrew Jackson were vociferously opposed to a central bank, and believed the American people (through Congress), not private or foreign interests, should dictate the supply of money.

Conspiracy theorists argue that Nathan's influence over financial affairs gave him the stature to force the entire nation into war. In England, Nathan reportedly issued the following chilling ultimatum. Upset at losing this profitable monopolistic venture, Nathan is said to have furiously declared, “Either the application for the renewal of the charter is granted, or the United States will find itself involved in a most disastrous war.” He then 'instructed' the British to “Teach these impudent Americans a lesson. Bring them back to Colonial status.” These quotes have not been verified, and serve as the basis of the Rothschild 1812 conspiracy thesis. In this version of history, Nathan Rothschild caused the War of 1812 in order to load America up with debt. This ignores several legitimate causes of the war, such as:

England's desire to keep the U.S. from helping Napoleonic France;
Restrictions on trade;
Impressment of U.S. citizens into the Royal Navy; and
British affronts to U.S. autonomy, as demonstrated by the Chesapeake-Leopard affair.

In the same year, the Rothschilds supposedly legitimized their U.S. banking interests using another Rothschild agent. Moses Taylor, another alleged Rothschild agent, founded the National City Bank of New York in 1812, which conspiracy theorists claim is an extension of the Rothschild banking conglomerate. National City Bank would later become Citibank.

But a prominent historian insists that the War of 1812 was, in fact, all about commercial supremacy. As explained in this excerpt from Reginald Horsman's The Causes of the War of 1812:

Some restrictions on neutral commerce were essential for England in this period. That this restriction took such an extreme form after 1807 stemmed not only from the effort to defeat Napoleon, but also from the undoubted jealousy of America's commercial prosperity that existed in England. America was unfortunate in that for most of the period from 1803 to 1812 political power in England was held by a group that was pledged not only to the defeat of France, but also to a rigid maintenance of Britain's commercial supremacy.

But conspiracy theorists point to the fact that during the war, U.S. public debt surged. The Bureau of the Public Debt reports "Total public debt increased from $45.2 million on January 1, 1812, to $119.2 million as of September 30, 1815." And so, in desperate need of funds, the U.S. reinstituted a central bank in 1816. The Philadelphia Fed reports:

"In effect, the country found itself in circumstances similar to those after the Revolutionary War: mounting debt from a war with England, soaring prices, and devalued money from rising inflation."

As such, President James Madison authorized the creation of the Second Bank of the United States. Foreign investors, like Rothschild, dominated this bank, too. Foreign holdings of the Second Bank of the United States grew from just under 30,000 shares in 1820 to over 84,000 shares in 1832. James de Rothschild of France was rumored to be a principal investor in the new central bank. So even though Nathan wasn't the mastermind behind the War of 1812, the conflict and its results definitely swelled the family's riches. The Rothschild 1812 theory is flawed from the start from its assumption that Alexander Hamilton acted as an agent of the family – which would presumably be for his personal gain – because Hamilton died destitute. The Rothschilds would go on to perfect the strategy of lending to countries on each side of a conflict over the following century of chronic warfare.

Read more: http://www.businessinsider.com/rothschild-family-war-of-1812-conspiracy-2013-1?op=1#ixzz3dbqsoizK

[DemReadingDU]

53. Looking to preserve their wealth

5/30/12 The Rockefellers and the Rothschilds Make a Deal
http://www.forbes.com/sites/lauriebennett/2012/05/30/the-rockefellers-and-the-rothschilds-make-a-deal/

[Demeter]

20. What If There is No Deal on Greece?

IF THE EU WANTED A DEAL, WE WOULD HAVE HAD ONE MONTHS OR YEARS AGO...THEY WANT CAPITULATION. THAT'S NOT A DEAL, THAT'S SLAVERY. THAT'S EMPIRE, FASCISM, BANKSTERS (NOT BANKERS) AND NOT CORPORATIONS BUT DICTATORS.

http://www.nakedcapitalism.com/2015/06/what-if-there-is-no-deal-on-greece.html

A resolution of the Greek impasse still looks remote, particularly given that Angela Merkel, in a speech to Parliament this morning, made all sorts of apple pie and motherhood statements about the importance of the Eurozone, but nevertheless pointed to the need for Greece to make concessions: “When the politicians in Greece muster this will, then an agreement with the three institutions is still possible.”

The alarming part of the deadlock is the lack of a plan on the creditor side to develop a Plan B, a sort of mirror image of the Greek government’s claim that its has bet everything on securing a favorable agreement. Even if the ECB has been gaming out scenarios (as was rumored as early as February), it can only do so much unilaterally. The Eurozone crisis is on the verge of entering a phase where a common view among different governments and institutions is necessary before any concerted action can take place. Even allowing for a relatively quick agreement on preliminary steps, there is still a ton of moving parts, as well as the near certainty of continued high friction with Greece.

A Eurogroup meeting THURSDAY is expected to be short and inconclusive. Finance minister meetings extend into Friday, with all EU members attending. That may allow for further discussion, but it’s hard to see how anything more could emerge than a very high level agreement on a few principles, like “We need to develop a plan for how to keep Greece in the Eurozone if it defaults” and maybe also “We need to get serious about preparing for what happens in the event of a Grexit” (a variant might be “Can/should we assist Greece with a Grexit?” I think the latter is too hard to accomplish given the short timeframe and the fact that Greece would have to trust and rely on foreign technocrats, ironically including the IMF, which allegedly has the most technical expertise). It is possible that as a result of the Thursday/Friday meetings, the Eurocrats hit the panic button and try to extend the bailout, which is set to expire June 30 (June 21 appears to be the last viable emergency meeting date). But that was offered to Greece before, with the condition that it agree to crossing its red lines of pension and labor market “reforms”. We keep coming up against each side’s boundary conditions. It’s career suicide in too many countries for politicians to vote through a deal with Greece with no pension reductions, and far too little time to soften public opinion by June 30. The ball moves into the ECB’s court after a bailout expiration/IMF non-payment. Other lenders to Greece apparently do not have cross-default clauses with IMF debt, so the immediate impact of an IMF missed payment (the term of art is “arrearage”) is the blow to confidence, a bar on new IMF lending, and a reduction in the quality of the collateral pledged to the ECB for loans under the ELA, particularly Greek government debt (which is a comparatively small portion of total collateral). Note that the Eurozone member states, many of which are lenders through the European Financial Stability Fund and the Greek loan facility, won’t suffer any immediate impact. As Bloomberg notes:

No European state will be unable to balance its budget because of missing Greek interest payments, which have already been deferred by 10 years and would in any case be linked to the European Financial Stability Facility’s minuscule funding costs.

The bank run is certain to accelerate in anticipation of an IMF non-payment and immediately thereafter. So the liquidity demands will rise as the ECB will have every reason to impose higher haircuts on collateral, moving the banking system closer to the end of its ELA runway. Draghi stressed in his presentation to the EU parliament earlier this week that the ECB was a rules-based institution and would keep providing support to Greek banks as long as they were solvent and had collateral against which to lend. The Greek banks are deemed to be solvent by the ECB despite the fact that they clearly aren’t. And their underlying insolvency is getting worse. From a different Bloomberg story:

Greek banks, which received two capital infusions in the past two years, may need a third one as a recession drives up losses from bad loans.

The four biggest lenders, accounting for 91 percent of the country’s banking assets, could see their 12 billion euros ($14 billion) of tangible core capital wiped out by mounting provisions as overdue and restructured loans default.

Even if Greece reaches an agreement with European creditors to free up additional money, its next bailout will need to include a new round of funding for the ailing banks.

Bad loans rose last quarter as the economy slipped back into recession and Greeks delayed payments waiting for the new government to pardon debt. With the recovery stalled, the four banks — National Bank of Greece SA, Piraeus Bank SA, Alpha Bank AE and Eurobank Ergasias SA — could require 16 billion euros in additional provisions to cover losses if half of the 59 billion euros of overdue and restructured loans on their books sour.

While the ECB could in theory cut off the ELA air supply on June 30, the complexity of the situation, plus its “rule driven” message seems to signal that it will wait to act until it has a clear cut cause. But going past the June 30 event horizon means Greece will be under more pressure to introduce capital controls, particularly since experts have estimated that Greek banks will run out of collateral eligible for the ELA sometime in July, and that was before allowing for the possibility of increased haircuts on collateral as a result of the IMF arrearage. That is not a pretty picture. From the Financial Times:

If the bailout expires and Greece fails to make the IMF payment — but the ECB decides emergency loans to Greek banks can continue — Greece enters what Mario Draghi, ECB president, recently called “uncharted territory”. An economy hamstrung by capital controls, a government without any cash and a banking system struggling on life support, Greece would essentially begin a drawn-out process of economic suffocation.

And while imposing capital controls will help with liquidity (as in access to the ELA), it will further erode solvency. Back to Bloomberg:

As Greece and its creditors head for a showdown, the specter of the country’s exit from the euro or the imposition of capital controls is rising. The latter would try to halt the deposit flight from the banking system by restricting cash withdrawals and money transfers abroad. Such controls could hurt the economy more as importers face difficulty paying suppliers and consumers without full access to their savings cut spending. That could further sap borrowers’ ability to pay and speed up the rise in bad loans.

Greece has two payments due to the IMF on June 20 that total €3.5 billion. The Financial Times contends that “it would be virtually impossible for Greece to survive inside the eurozone if it defaulted on the ECB.” Analyst David Zervos of Jeffries (hat tip Scott) claims that an default against ECB would make all Greek collateral ineligible for Eurosystem loans. I’ve tried verifying that and have come up empty. But independent of when the ECB decides to pull the trigger, Zervos gives an idea of how brutal the process is (and recall this sort of threat was what drove Ireland to assume responsibility for its banks even though there was no government guarantee). You need to read past Zervos’ schadenfreude; a more borrower-friendly writeup in Tagesspiegel of how the ECB executed the Cyprus bail-in made it clear that the central bank had planned its moves carefully and left Cyprus with no good escape routes. From Zervos:

And to be sure, making an example of Greece is a probably the greatest achievement for the fiscal disciplinarians of Europe. Maastricht never had any teeth. But this exercise is impressive. It shows that fiscal excess will be squashed in Europe. The Portuguese, Spanish and Italians are surely taking notice. And in the days that lead up to a Greek default on 30 June, and then more importantly on 20 July, these disciplinarians will surely display their power for all to see. Oddly enough, I actually think this has been the German plan all along. With no real way to ensure fiscal discipline through the treaty, they resorted to killing one of their own in order to keep the masses in line. It explains why Merkel took out Samaras when she knew a more hostile government would surely emerge in Greece. This was masterful political manipulation.

In any case, enough about the past, let’s run through the most likely end game for this Greek saga as a deal never gets agreed before default.

1. Greece misses its IMF payment on the 30th of June. This could be a trigger but it may not be. The IMF has 30 days to call Greece in arrears so technically Greek government guaranteed collateral, and hence the Greek banks, are still solvent after the 30th. However on the 20th of July the Greeks will surely default to the ECB without a deal. This is the official D Day.

2. Upon default, the collateral at Greek banks cannot be posted any longer to the Euro system. The Greek banks then become insolvent and the ECB, through the newly created Single Resolution Mechanism (SRM), is obligated to resolve the Greek banks.

3. So the ECB goes to Tsipras and tells him – we are immediately instituting capital controls and we will begin resolution of your banks unless U sign the agreement and re-enter a program. Without a bailout program in place the Greek government, and banking system, are both insolvent. So Tsipras says – what do you mean resolve my banking system? And then Mario explains as follows. First we wipe out all equity and bond holders. And then, as in Cyprus, we bail in depositors. There are 130b in Greek deposits against 90b in ELA. And while those deposits are technically insured up to 100,000 euro, there is no pan-European bank insurance yet in place. That only comes in 2016. Right now Greek deposits are only insured with a Greek deposit insurance fund that has about 3b in it. This Is hardly enough for the 130b in deposits. So we take the 130b against the 90b in ela. Any remaining deposits go to fund a bad bank that begins resolving all the NPLs. The good loans of course will go into a good bank which will be funded with German capital and most likely will have a German name. Of course depositors will get 2 to 3 euro cents on the dollar for their existing balances from the 3b in the insurance fund. So you have that going for you!

4. Tsipras hyperventilates and quickly reaches for a bottle of ouzo.

5. Then it’s basically time for the gallows. He either signs a document cutting pensions, raising VAT and violating all his red lines. Or he takes the Greek people into bankruptcy and out of the euro. Either way he is a dead man. His own party destroys him if he does the former. And the 70 percent of Greek who want to stay in the euro destroy him if he does the latter. Of course there is one other choice for Tsipras. He could just resign and call for new elections. In that case maybe the banks stay closed and the ECB does not start the resolution process until the Greek people decide what they want. But in any event, it’s over for Tsipras in that case as well.

The German fiscal disciplinarians have won the battle. Tsipras dies under that bridge. The end!

We warned readers that the creditors had implements of torture that they had yet to deploy. The forced choice of a bail-in versus a Grexit is the ugliest, but the fact that the ECB has used this weapon before (under its “we’re just following the rules” excuse) means it might resort to it again. Since this post is already long, we will save the description of some of the other possible discipline mechanisms for future discussions.

What about a default in the Eurozone? The big impediments to the ECB going down the path above is concern that it can’t contain financial contagion after a Grexit and not wanting to buck EU political leaders who are correctly worried about political contagion. But other roads are hard to clear. I’ve read twice the most definitive legal brief on this matter, a 2009 ECB paper, which tooth-gnashes over ambiguities in the treaties. One of its firmer conclusions is that a Eurozone exit means an EU exit, and Varoufakis also seemed to be of that view (he has mentioned the loss of EU subsidies, particularly agricultural subsidies, as one of the many reasons to shun a Grexit).

The consensus is moving away from our initial view, that the best solution for Greece is a default in the Eurozone. The problem is that the country remains in what I’ve called the creditor sweatbox, without a primary surplus due to the deterioration of its economy. It has to pay pensioners and government employees in scrip. Even if the Eurocrats tolerate that (and my guess is they will), this will put the Greek economy in even more duress and damage the ruling coalition’s credibility. This state is probably not sustainable for more than a period of months. The creditor hope would be that Tsipras has to form a new coalition, and the result would be a more tractable negotiating counterparty. Most observers think that default morphs into a Grexit; but if the creditors have steeled themselves to that risk, they have little to lose if they can keep Greece in a zombie state and see what happens next.

Even if the creditors decide to be more generous, it’s hard to make that work. A Politico article today gives a high-level overview of how messy the legals issues are. On the one hand, that means some can probably be fudged, but even fudging takes time, and that means more uncertainty for Greece, which in turn hurts its economy and isn’t so hot for the rest of Europe either (except for making the euro cheaper).

The worry is that European law could force Greece to abandon the EU before it can leave the eurozone.

At a time when anti-EU parties are on the rise across much of the Continent and the U.K. is debating its future in the union, Europe’s leaders don’t want to risk letting Greece go…

Greece’s Central Bank, in rare public comments Wednesday on the crisis, echoed those fears, warning that a default would force Greece from the euro and “most likely from the European Union.”

From a legal standpoint, however, Greece would still be a member. Even if a country violates the treaty, there’s no mechanism for kicking it out.

Yves here. While that is true, there is a mechanism for suspending membership in the EU. Back to the Politico article:

Europe has a long history of giving political expediency precedence over the fine print. Both the U.K. and Denmark, for example, were granted exceptions to a requirement that EU members eventually join the euro. Why not let Greece leave the euro and stay in the EU, advocates of a compromise argue.

If Greece defaults, it will have left European taxpayers holding the bag for more than €200 billion in aid. Offering Greece a special arrangement is likely to cause a further outcry in Germany and other EU countries

So while there may be a remedy, financial time moves faster than political time, making it much harder to reach consensus on any “don’t cut off your nose to spite your face” options to give Greece a glide path.

What about Russia? We’ve argued that the idea that Greece will get a rescue from Russia is overdone. Putin has signaled that he is not overly eager, even bothering to make clear that certain contacts were initiated by Greek officials, not Russia. There’s an old saying in finance, that you don’t buy on the courthouse steps (on the verge of bankruptcy) if you can get it cheaper after bankruptcy. Anything Putin might want from Greece he can get at lower cost later….if he can get it at all. The reason we doubt the concerns voiced about Greece slipping into Russia’s orbit is that the US, which is treating Putin as Public Enemy Number One, isn’t worried enough about it to cudgel the Europeans into being less bloody-minded in the Greek negotiations. Even Guntram Wolff at Bruegel, a card carrying believer in austerity, argues that the primary surplus targets that the creditors are seeking are unproductively high. Perhaps the US believes it can give Turkey rope to discipline Greece if it gets too cozy with Russia. But the objective risk of a new Greece-Russia alliance is not what will drive European reactions. It is whether Europeans are worried enough about this risk to change course. Despite the fact that this issue is mentioned regularly in the mainstream press, Merkel has also not moved her position meaningfully regarding Greece either since deciding to back the IMF two and a half weeks ago. And Merkel likes Putin about as little as Obama does.

Now Merkel is in a tough position with her coalition on Greece and she may be doing a lot of behind the scenes arm-twisting, and the Russia card is probably her best leverage point to bring other countries along. But at this juncture, the fear of Russia getting a foothold seems secondary to domestic political considerations.

I must confess to being fried by following this drama so closely, and the idea that this could go on another month or even longer is draining. Imagine how the officials involved feel. Frayed nerves and exhaustion increase the already high odds of bad decisions and impulsive action.

[Demeter]

22. At Emergency Summit, Creditors Plan to Make Greece an Offer It Can’t Refuse

http://www.nakedcapitalism.com/2015/06/at-summit-creditors-plan-to-make-greece-an-offer-it-cant-refuse.html

For those who may not be familiar with American cultural references, we’ve previously cited this scene from the Godfather relative to the Greek negotiations:

Michael: Well, when Johnny was first starting out, he was signed to a personal services contract with this big-band leader. And as his career got better and better, he wanted to get out of it. But the band leader wouldn’t let him. Now, Johnny is my father’s godson. So my father went to see this bandleader and offered him $10,000 to let Johnny go, but the bandleader said no. So the next day, my father went back, only this time with Luca Brasi. Within an hour, he had a signed release for a certified check of $1000.

Kay Adams: How did he do that?

Michael: My father made him an offer he couldn’t refuse.

Kay Adams: What was that?

Michael: Luca Brasi held a gun to his head, and my father assured him that either his brains or his signature would be on the contract.

A Eurogroup meeting ended if anything with Greece and its creditors even more alienated from each other. Greek finance minister claims he was ready to give a proposal (and he apparently did set forth some of his ideas) but wasn’t given an audience; the other participants told the press that Varoufakis’ idea of what a proposal amounted to was out of synch with what they wanted. This sort of culture clash has been a constant feature of these talks. From Politico:

Take this counter-claim from an EU official: “A debt brake, fiscal authority and debt swap: They are nice but none of that replaces the need for reforms … We still do not have a proposal. There was no substantial discussion, to be honest. I didn’t see a five-page proposal, I saw a verbal presentation of his ideas and Dijsselbloem said we need a proper proposal…”

Michael Noonan, the Eurogroup elder statesman from Ireland, was the most specific about the Varoufakis contributions. “They tend to be more macroeconomic in nature than specific. And negotiations are about specifics.”

If an account in the Financial Times is accurate, an emergency summit of Eurozone leaders set for Monday evening is prepared “an offer you can’t refuse,” meaning an offer less generous than one previously made because the other party is signaling his superior position by worsening terms. Recall that it was leaked on June 8 that European Commission president Jean-Claude Juncker and Eurogroup Chief Jeroen Djisselbloem offered Greece an extension of the current bailout till March 2016, with the strings attached that Greece would still need to agree to cross its red lines and agree to pension and labor market “reform”. We stressed that it was not clear whether Juncker and Dijsselbloem had gotten IMF and ECB consent, or whether they needed to sell them on the plan in the unlikely event Tsipras had agreed...Now I doubt the “offer you can’t refuse” element (assuming the rumor proves to be accurate) is by design but due to the fog of negotiations and the looming deadlines limiting flexibility. Regardless, the Greek side is certain to reject a proposal of this sort with prejudice. From the Financial Times:

Jeroen Dijsselbloem, the Dutch finance minister who chaired the ministerial gathering in Luxembourg, for the first time acknowledged that time had run out to disburse rescue funds to Athens before the bailout programme closes at the end of the month.

Instead, Mr Dijsselbloem said any agreement would now need an extension of the programme into July — the third extension in six months — heightening the risk that Greece will default on a €1.5bn loan repayment due to the IMF in less than two weeks.

“It is unthinkable the implementation of reforms by Greece and then disbursement would also take place before the end of the month,” Mr Dijsselbloem said.

If a deal is reached and an extension agreed, among the options being discussed by creditors is using €10.9bn in existing aid previously set aside to recapitalise Greek banks and redeploying it as normal bailout funds that Athens could use to pay its upcoming debts.

Athens faces €6.7bn in bond repayments in July and August.

But Mr Dijsselbloem made clear that no extension would be granted unless a deal were struck on economic reforms…

Mr Dijsselbloem rejected Mr Tsipras’s continued demands that any agreement include debt relief. Several officials believe the Greek premier will be unable to sign a deal without some kind of debt restructuring. Eurozone officials said leaders were prepared to offer the promise of future writedowns, but not as part of the current deal

One wonders why the creditors are bothering to convene, given that both sides are too wedded their current positions to make needed concessions. It seems to be at best an effort to have a talking point if needed if and when a Grexit proves to be as damaging as some fear. Political leaders need to be able to tell voters that they did what their best, even if their best was not all that good. A Politico story suggests that the summit will also focus on how to contain the damage of a Greek default and/or Grexit. As is typical with the disconnect with realities on the ground, an FT editorial urges Tsipras to accept a deal, then describes one that is markedly more generous than the creditors are willing to offer.

The dire remarks of the head of Greek’s central bank, as we predicted, considerably accelerated the bank run, with €3 billion withdrawn so far this week, outpacing the ELA increase. As readers may recall, the head of the bank of Greece submitted a dire report on the likelihood and consequences of default and Grexit. It didn’t help that Reuters reported that a member of the ECB’s governing board was reported by Reuters as expressing uncertainty as to whether Greek banks would open on Monday. The ECB promptly denied it. The ECB will have a call Friday to approve an ELA increase between regular two-week reviews. It would take a 2/3 vote to deny it. Varoufakis denied speculation that Greece would impose capital controls. Per the Financial Times:

“A monetary union that has accepted capital controls is a monetary union that has accepted that it has failed in its duty to preserve the free flow of capital,” Mr Varoufakis said.

As we’ve said, the ECB is the real power player, and it will play a decisive role in coming weeks. Greek banks depend on ELA support and the ECB will determine if and when it is withdrawn, which would force a depositor bail in or a Grexit. From Politico:

Economists are divided over whether the ECB would sustain its aid to the banks.

“If there’s no prospect for another aid package, I don’t think the ECB will end the emergency liquidity,” said Jörg Krämer, chief economist at Commerzbank in Frankfurt. “It would be the right thing to do, but it’s a deeply political decision that they don’t want to make.”

Still, Greece faces a number of large bond repayments in July. Those bonds are held by the ECB. It would be difficult for the ECB to help Athens if it fails to make the payments. Doing so would amount to using its printing press to fund a defunct state, a clear breach of its charter.

We may have a clue as to how Draghi is leaning. In his presentation to the EU parliament on Tuesday, he stressed in his discussion on Greece that the ECB is a rule-based institution. If he holds to that view, the ECB would not be able to keep supporting Greek banks if the Greek government defaults on a €3.5 billion payment due July 20. And note that as we have said previously, Russia is not about to ride in to the rescue. From the Telegraph:

Meanwhile, Greek prime minister Alexis Tsipras arrived in St Petersburg to meet with Russian president Vladimir Putin to discuss Russia’s planned extension of the ‘Turk Stream’ gas pipeline and a BRICs bank.

Russian Deputy Finance Minister Sergei Storchak said that despite speculation “there have been no requests for help from Greece”. He added that “there are no resources in our budget to provide money.”

So the high drama will continue next weeks. Sadly, no probable set of outcomes looks good for the long-sufffering Greek people.

[Demeter]

23. Greece is now officially a part of Russia big new gas plan

Russia signed a preliminary $2.27 billion (2 billion euro) agreement on building a pipeline through Greece, according to Bloomberg. The section of the Turkish Stream in Greece will have annual capacity of 47 billion cubic meters. Construction will start in 2016 and is expected to be completed set for 2019, according to Russian Energy Minister Alexander Novak. Russia's development bank will own 50% of the link and will do all of the financing, and Greece will own the rest. Russia's Gazprom will not hold a stake in the section crossing Greece, according to Novak.

“The pipeline is not against anyone in Europe or the world,” Greek Energy Minister Panagiotis Lafazanis in St. Petersburg. “It is here to serve people, peace and stability. Energy can bring people together and not feed Cold War situations.”

The Turkish Steam, a Gazprom project, was announced in January after the company abandoned the $45 billion South Stream project in December. The project is expected to begin somewhere between June-July 2015. The key geopolitical takeaway regarding both projects is that they’re supposed to bypass crumbling Ukraine — which would allow Russia to both maintain its gas leverage over the EU and hurt Kiev.

“To help Gazprom reach Central European markets, Russia has advocated the construction of a pipeline that would run from Greece to Macedonia, Serbia and Hungary,” analysts from Texas-based consulting firm Stratfor wrote in a report, according to Bloomberg.

“These four countries are at the center of a Russian diplomatic offensive."

Although some analysts have expressed doubts over the projects, "the Russians seem determined to let their transit contract with Ukraine expire by 2019 in favor of the alternative route under the Black Sea. Gazprom has already laid 472 kilometers (293 miles) of the so-called Southern Corridor, the onshore part of the pipeline in Russia, in anticipation of the deal," according to Bloomberg.

Greece has been cozying up to Russia the last few months. Some analysts noted that a potential gas deal was a major factor behind the schmoozing.

"A new long-term gas deal to provide energy security for the fragile Greek economy and give the left-wing Syriza party an early win (at least in the eyes of the Greek electorate," Business Insider's Tomas Hirst wrote back in January after Greece took a stance against sanctions on Russia.

Read more: http://www.businessinsider.com/greece-is-now-officially-a-part-of-russia-big-new-gas-plan-2015-6#ixzz3dbjLDk3m

[Demeter]

26. The IMF’s “Tough Choices” on Greece James K. Galbraith

http://www.project-syndicate.org/commentary/imf-greece-debt-restructuring-by-james-k-galbraith-2015-06

The International Monetary Fund’s chief economist, Olivier Blanchard, recently asked a simple and important question: “How much of an adjustment has to be made by Greece, how much has to be made by its official creditors?” But that raises two more questions: How much of an adjustment has Greece already made? And have its creditors given anything at all?

In May 2010, the Greek government agreed to a fiscal adjustment equal to 16% of GDP from 2010 to 2013. As a result, Greece moved from a primary budget deficit (which excludes interest payments on debt) of more than 10% of GDP to a primary balance last year – by far the largest such reversal in post-crisis Europe...The IMF initially projected that Greece’s real (inflation-adjusted) GDP would contract by around 5% over the 2010-2011 period, stabilize in 2012, and grow thereafter. In fact, real GDP fell 25%, and did not recover. And, because nominal GDP fell in 2014 and continues to fall, the debt/GDP ratio, which was supposed to stabilize three years ago, continues to rise.

Blanchard notes that in 2012, Greece agreed “to generate enough of a primary surplus to limit its indebtedness” and to implement “a number of reforms which should lead to higher growth.” Those so-called reforms included sharply lower public spending, minimum-wage reductions, fire-sale privatizations, an end to collective bargaining, and deep pension cuts. Greece followed through, but the depression continued...The IMF and Greece’s other creditors have assumed that massive fiscal contraction has only a temporary effect on economic activity, employment, and taxes, and that slashing wages, pensions, and public jobs has a magical effect on growth. This has proved false. Indeed, Greece’s post-2010 adjustment led to economic disaster – and the IMF’s worst predictive failure ever.

Blanchard should know better than to persist with this fiasco. Once the link between “reform” and growth is broken – as it has been in Greece – his argument collapses. With no path to growth, the creditors’ demand for an eventual 3.5%-of-GDP primary surplus is actually a call for more contraction, beginning with another deep slump this year. But, rather than recognizing this reality and adjusting accordingly, Blanchard doubles down on pensions. He writes:

“Why insist on pensions? Pensions and wages account for about 75% of primary spending; the other 25% have already been cut to the bone. Pension expenditures account for over 16% of GDP, and transfers from the budget to the pension system are close to 10% of GDP. We believe a reduction of pension expenditures of 1% of GDP (out of 16%) is needed, and that it can be done while protecting the poorest pensioners.”

Note first the damning admission: apart from pensions and wages, spending has already been “cut to the bone.” And remember: the effect of this approach on growth was negative. So, in defiance of overwhelming evidence, the IMF now wants to target the remaining sector, pensions, where massive cuts – more than 40% in many cases – have already been made. The new cuts being demanded would hit the poor very hard. Pension payments now account for 16% of Greek GDP precisely because Greece’s economy is 25% smaller than it was in 2009. Without five years of disastrous austerity, Greek GDP might be 33% higher than it is now, and pensions would be 12% of GDP rather than 16%. The math is straightforward.

Blanchard calls on Greece’s government to offer “truly credible measures.” Shouldn’t the IMF do likewise? To get pensions down by one percentage point of GDP, nominal economic growth of just 4% per year for two years would suffice – with no further cuts. Why not have “credible measures” to achieve that goal?

This brings us to Greek debt. As everyone at the IMF knows, a debt overhang is a vast unfunded tax liability that says to investors: enter at your own risk. At any time, your investments, profits, and hard work may be taxed away to feed the dead hand of past lenders. The overhang is a blockade against growth. That is why every debt crisis, sooner or later, ends in restructuring or default. Blanchard is a pioneer in the economics of public debt. He knows that Greece’s debt has not been sustainable at any point during the last five years, and that it is not sustainable now. On this point, Greece and the IMF agree. In fact, Greece has a credible debt proposal. First, let the European Stabilization Mechanism (ESM) lend €27 billion ($30 billion), at long maturities, to retire the Greek bonds that the European Central Bank foolishly bought in 2010. Second, use the profits on those bonds to pay off the IMF. Third, include Greece in the ECB’s program of quantitative easing, which would let it return to the markets.

Greece would agree to fair conditions for the ESM loan. It does not ask for one cent of additional official funding for the Greek state. It is promising to live within its means forever, and rely on internal savings and external investment for growth – far short of what any large country, controlling its own currency, would do when facing a comparable disaster. Blanchard insists that now is the time for “tough choices, and tough commitments to be made on both sides.” Indeed it is. But the Greeks have already made tough choices. Now it is the IMF’s turn, beginning with the decision to admit that the policies it has imposed for five long years created a disaster. For the other creditors, the toughest choice is to admit – as the IMF knows – that their Greek debts must be restructured. New loans for failed policies – the current joint creditor proposal – is, for them, no adjustment at all.

[Demeter]

27. The Truth About Greece… and What It Means For Larger Problem Countries

http://www.zerohedge.com/news/2015-06-19/truth-about-greece%E2%80%A6-and-what-it-means-larger-problem-countries

The situation in Greece has very little to do with politics or economics. Instead it is entirely focused on just one thing. That issue is collateral.

What is collateral? Collateral is an underlying asset that is pledged when a party enters into a financial arrangement. It is essentially a promise that should things go awry, you have some “thing” that is of value, which the other party can get access to in order to compensate them for their losses. For large European banks, EU nation sovereign debt (such as Greece) is the collateral backstopping hundreds of trillions of Euros worth of derivative trades. This story has been completely ignored in the media. But if you read between the lines, you will begin to understand what really happened during the Greek bailouts.

Remember:

1) Before the second Greek bailout, the ECB swapped out all of its Greek sovereign bonds for new bonds that would not take a haircut.

2) Some 80% of the bailout money went to EU banks that were Greek bondholders, not the Greek economy.

Regarding #1, going into the second Greek bailout, the ECB had been allowing European nations and banks to dump sovereign bonds onto its balance sheet in exchange for cash. This occurred via two schemes called LTRO 1 and LTRO 2 which happened in December 2011 and February 2012 respectively. Collectively, these moves resulted in EU financial entities and nations dumping over €1 trillion in sovereign bonds onto the ECB’s balance sheet. Quite a bit of this was Greek debt as everyone in Europe knew that Greece was totally bankrupt. So, when the ECB swapped out its Greek bonds for new bonds that would not take a haircut during the second Greek bailout, the ECB was making sure that the Greek bonds on its balance sheet remained untouchable and as a result could still stand as high grade collateral for the banks that had lent them to the ECB. So the ECB effectively allowed those banks that had dumped Greek sovereign bonds onto its balance sheet to avoid taking a loss… and not have to put up new collateral on their trade portfolios.

Which brings us to the other issue surrounding the second Greek bailout: the fact that 80% of the money went to EU banks that were Greek bondholders instead of the Greek economy. Here again, the issue was about giving money to the banks that were using Greek bonds as collateral, to insure that they had enough capital on hand. Piecing this together, it’s clear that the Greek situation actually had nothing to do with helping Greece. Forget about Greece’s debt issues, or protests, or even the political decisions… the real story was that the bailouts were all about insuring that the EU banks that were using Greek bonds as collateral were kept whole by any means possible.

So here we are today and Greece is back in the headlines. Once again the country is out of money and the ECB and IMF are trying to punish it without hurting the larger EU banks. Why are they making such a big deal about Greece… a country whose GDP is just 2% of the EU? Because whatever happens in Greece will be used as a template for much larger problems AKA Spain and Italy. Spain and Italy, by comparison, have €1.78 trillion and €1.87 trillion in external debt respectively. That is a heck of a lot of collateral that would be in BIG trouble in the event of a bond crash for either country. And both countries have bond yields that are spiking...

GRAPHIC PROOF AT LINK

[Demeter]

28. Greek Debt Committee Just Declared All Debt To The Troika "Illegal, Illegitimate, And Odious"

http://www.zerohedge.com/news/2015-06-17/greek-debt-committee-just-declared-all-debt-illegal-illegitimate-and-odious

It was in April when we got a stark reminder of a post we first penned in April of 2011, describing Odious Debt, and why we thought sooner or later this legal term would become applicable for Greece, because two months ago Greek Zoi Konstantopoulou, speaker of the Greek parliament and a SYRIZA member, said she had established a new "Truth Committee on Public Debt" whose purposes was to "investigate how much of the debt is “illegal” with a view to writing it off." Moments ago, this committee released its preliminary findings, and here is the conclusion from the full report presented below:

All the evidence we present in this report shows that Greece not only does not have the ability to pay this debt, but also should not pay this debt first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious.

As we predicted over four years ago, Greece has effectively just declared that it will no longer have to default on its IMF (or any other debt - note that the dreaded "Troika" word finally makes an appearance after it was officially banned) simply because that debt was not legal to begin with, i.e. it was "odious." If so, this has just thrown a very unique wrench in the spokes of not only the Greek debt negotiations, but all other peripheral European nations' Greek negotiations, who will promptly demand that their debt be, likewise, declared odious, and made null and void, thus washing their hands of servicing it again. And another question: when Greece says the debt was illegal and it no longer has to make the June 30 payment, what will be the Troika's response: confiscate Greek assets a la Argentina, declare involutnary default, sue it in the Hague?

Good luck.

From the full just released report by the Hellenic Parliament commission:

Hellenic Parliament’s Debt Truth Committee Preliminary Findings - Executive Summary of the report

In June 2015 Greece stands at a crossroad of choosing between furthering the failed macroeconomic adjustment programmes imposed by the creditors or making a real change to break the chains of debt. Five years since the economic adjustment programmes began, the country remains deeply cemented in an economic, social, democratic and ecological crisis. The black box of debt has remained closed, and until now no authority, Greek or international, has sought to bring to light the truth about how and why Greece was subjected to the Troika regime. The debt, in whose name nothing has been spared, remains the rule through which neoliberal adjustment is imposed, and the deepest and longest recession experienced in Europe during peacetime.

There is an immediate need and social responsibility to address a range of legal, social and economic issues that demand proper consideration. In response, the Hellenic Parliament established the Truth Committee on Public Debt in April 2015, mandating the investigation into the creation and growth of public debt, the way and reasons for which debt was contracted, and the impact that the conditionalities attached to the loans have had on the economy and the population. The Truth Committee has a mandate to raise awareness of issues pertaining to the Greek debt, both domestically and internationally, and to formulate arguments and options concerning the cancellation of the debt.

The research of the Committee presented in this preliminary report sheds light on the fact that the entire adjustment programme, to which Greece has been subjugated, was and remains a politically orientated programme. The technical exercise surrounding macroeconomic variables and debt projections, figures directly relating to people’s lives and livelihoods, has enabled discussions around the debt to remain at a technical level mainly revolving around the argument that the policies imposed on Greece will improve its capacity to pay the debt back. The facts presented in this report challenge this argument.

All the evidence we present in this report shows that Greece not only does not have the ability to pay this debt, but also should not pay this debt first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious.

It has also come to the understanding of the Committee that the unsustainability of the Greek public debt was evident from the outset to the international creditors, the Greek authorities, and the corporate media. Yet, the Greek authorities, together with some other governments in the EU, conspired against the restructuring of public debt in 2010 in order to protect financial institutions. The corporate media hid the truth from the public by depicting a situation in which the bailout was argued to benefit Greece, whilst spinning a narrative intended to portray the population as deservers of their own wrongdoings.

Bailout funds provided in both programmes of 2010 and 2012 have been externally managed through complicated schemes, preventing any fiscal autonomy. The use of the bailout money is strictly dictated by the creditors, and so, it is revealing that less than 10% of these funds have been destined to the government’s current expenditure.

This preliminary report presents a primary mapping out of the key problems and issues associated with the public debt, and notes key legal violations associated with the contracting of the debt; it also traces out the legal foundations, on which unilateral suspension of the debt payments can be based. The findings are presented in nine chapters structured as follows:

Chapter 1, Debt before the Troika, analyses the growth of the Greek public debt since the 1980s. It concludes that the increase in debt was not due to excessive public spending, which in fact remained lower than the public spending of other Eurozone countries, but rather due to the payment of extremely high rates of interest to creditors, excessive and unjustified military spending, loss of tax revenues due to illicit capital outflows, state recapitalization of private banks, and the international imbalances created via the flaws in the design of the Monetary Union itself.

Adopting the euro led to a drastic increase of private debt in Greece to which major European private banks as well as the Greek banks were exposed. A growing banking crisis contributed to the Greek sovereign debt crisis. George Papandreou’s government helped to present the elements of a banking crisis as a sovereign debt crisis in 2009 by emphasizing and boosting the public deficit and debt.

Chapter 2, Evolution of Greek public debt during 2010-2015, concludes that the first loan agreement of 2010, aimed primarily to rescue the Greek and other European private banks, and to allow the banks to reduce their exposure to Greek government bonds.

Chapter 3, Greek public debt by creditor in 2015, presents the contentious nature of Greece’s current debt, delineating the loans’ key characteristics, which are further analysed in Chapter 8.

Chapter 4, Debt System Mechanism in Greece reveals the mechanisms devised by the agreements that were implemented since May 2010. They created a substantial amount of new debt to bilateral creditors and the European Financial Stability Fund (EFSF), whilst generating abusive costs thus deepening the crisis further. The mechanisms disclose how the majority of borrowed funds were transferred directly to financial institutions. Rather than benefitting Greece, they have accelerated the privatization process, through the use of financial instruments.

Chapter 5, Conditionalities against sustainability, presents how the creditors imposed intrusive conditionalities attached to the loan agreements, which led directly to the economic unviability and unsustainability of debt. These conditionalities, on which the creditors still insist, have not only contributed to lower GDP as well as higher public borrowing, hence a higher public debt/GDP making Greece’s debt more unsustainable, but also engineered dramatic changes in the society, and caused a humanitarian crisis. The Greek public debt can be considered as totally unsustainable at present.

Chapter 6, Impact of the “bailout programmes” on human rights, concludes that the measures implemented under the “bailout programmes” have directly affected living conditions of the people and violated human rights, which Greece and its partners are obliged to respect, protect and promote under domestic, regional and international law. The drastic adjustments, imposed on the Greek economy and society as a whole, have brought about a rapid deterioration of living standards, and remain incompatible with social justice, social cohesion, democracy and human rights.

Chapter 7, Legal issues surrounding the MOU and Loan Agreements, argues there has been a breach of human rights obligations on the part of Greece itself and the lenders, that is the Euro Area (Lender) Member States, the European Commission, the European Central Bank, and theInternational Monetary Fund, who imposed these measures on Greece. All these actors failed to assess the human rights violations as an outcome of the policies they obliged Greece to pursue, and also directly violated the Greek constitution by effectively stripping Greece of most of its sovereign rights. The agreements contain abusive clauses, effectively coercing Greece to surrender significant aspects of its sovereignty. This is imprinted in the choice of the English law as governing law for those agreements, which facilitated the circumvention of the Greek Constitution and international human rights obligations. Conflicts with human rights and customary obligations, several indications of contracting parties acting in bad faith, which together with the unconscionable character of the agreements, render these agreements invalid.

Chapter 8, Assessment of the Debts as regards illegtimacy, odiousness, illegality, and unsustainability, provides an assessment of the Greek public debt according to the definitions regarding illegitimate, odious, illegal, and unsustainable debt adopted by the Committee.

Chapter 8 concludes that the Greek public debt as of June 2015 is unsustainable, since Greece is currently unable to service its debt without seriously impairing its capacity to fulfill its basic human rights obligations. Furthermore, for each creditor, the report provides evidence of indicative cases of illegal, illegitimate and odious debts.

Debt to the IMF should be considered illegal since its concession breached the IMF’s own statutes, and its conditions breached the Greek Constitution, international customary law, and treaties to which Greece is a party. It is also illegitimate, since conditions included policy prescriptions that infringed human rights obligations. Finally, it is odious since the IMF knew that the imposed measures were undemocratic, ineffective, and would lead to serious violations of socio-economic rights.

Debts to the ECB should be considered illegal since the ECB over-stepped its mandate by imposing the application of macroeconomic adjustment programs (e.g. labour market deregulation) via its participation in the Troïka. Debts to the ECB are also illegitimate and odious, since the principal raison d’etre of the Securities Market Programme (SMP) was to serve the interests of the financial institutions, allowing the major European and Greek private banks to dispose of their Greek bonds.

The EFSF engages in cash-less loans which should be considered illegal because Article 122(2) of the Treaty on the Functioning of the European Union (TFEU) was violated, and further they breach several socio-economic rights and civil liberties. Moreover, the EFSF Framework Agreement 2010 and the Master Financial Assistance Agreement of 2012 contain several abusive clauses revealing clear misconduct on the part of the lender. The EFSF also acts against democratic principles, rendering these particular debts illegitimate and odious.

The bilateral loans should be considered illegal since they violate the procedure provided by the Greek constitution. The loans involved clear misconduct by the lenders, and had conditions that contravened law or public policy. Both EU law and international law were breached in order to sideline human rights in the design of the macroeconomic programmes. The bilateral loans are furthermore illegitimate, since they were not used for the benefit of the population, but merely enabled the private creditors of Greece to be bailed out. Finally, the bilateral loans are odious since the lender states and the European Commission knew of potential violations, but in 2010 and 2012 avoided to assess the human rights impacts of the macroeconomic adjustment and fiscal consolidation that were the conditions for the loans.

The debt to private creditors should be considered illegal because private banks conducted themselves irresponsibly before the Troika came into being, failing to observe due diligence, while some private creditors such as hedge funds also acted in bad faith. Parts of the debts to private banks and hedge funds are illegitimate for the same reasons that they are illegal; furthermore, Greek banks were illegitimately recapitalized by tax-payers. Debts to private banks and hedge funds are odious, since major private creditors were aware that these debts were not incurred in the best interests of the population but rather for their own benefit.

The report comes to a close with some practical considerations. Chapter 9, Legal foundations for repudiation and suspension of the Greek sovereign debt, presents the options concerning the cancellation of debt, and especially the conditions under which a sovereign state can exercise the right to unilateral act of repudiation or suspension of the payment of debt under international law.

Several legal arguments permit a State to unilaterally repudiate its illegal, odious, and illegitimate debt. In the Greek case, such a unilateral act may be based on the following arguments: the bad faith of the creditors that pushed Greece to violate national law and international obligations related to human rights; preeminence of human rights over agreements such as those signed by previous governments with creditors or the Troika; coercion; unfair terms flagrantly violating Greek sovereignty and violating the Constitution; and finally, the right recognized in international law for a State to take countermeasures against illegal acts by its creditors , which purposefully damage its fiscal sovereignty, oblige it to assume odious, illegal and illegitimate debt, violate economic self-determination and fundamental human rights. As far as unsustainable debt is concerned, every state is legally entitled to invoke necessity in exceptional situations in order to safeguard those essential interests threatened by a grave and imminent peril. In such a situation, the State may be dispensed from the fulfilment of those international obligations that augment the peril, as is the case with outstanding loan contracts. Finally, states have the right to declare themselves unilaterally insolvent where the servicing of their debt is unsustainable, in which case they commit no wrongful act and hence bear no liability.

People’s dignity is worth more than illegal, illegitimate, odious and unsustainable debt

Having concluded a preliminary investigation, the Committee considers that Greece has been and still is the victim of an attack premeditated and organized by the International Monetary Fund, the European Central Bank, and the European Commission. This violent, illegal, and immoral mission aimed exclusively at shifting private debt onto the public sector.
Making this preliminary report available to the Greek authorities and the Greek people, the Committee considers to have fulfilled the first part of its mission as defined in the decision of the President of Parliament of 4 April 2015. The Committee hopes that the report will be a useful tool for those who want to exit the destructive logic of austerity and stand up for what is endangered today: human rights, democracy, peoples’ dignity, and the future of generations to come.

In response to those who impose unjust measures, the Greek people might invoke what Thucydides mentioned about the constitution of the Athenian people: "As for the name, it is called a democracy, for the administration is run with a view to the interests of the many, not of the few” (Pericles’ Funeral Oration, in the speech from Thucydides’ History of the Peloponnesian War).

[Demeter]

29. FROM THE COMMENTARY--REMAKING "GREECE-THE MUSICAL"

The Grexit - part 1: The never ending story

The Grexit part 2: It's Happening This Weekend.... For Reals This Time

The Grexit - part 3: The epic saga continues

The Grexit part 4: Germany Strikes Back

The Grexit - part 5: Greece pivots

The Grexit - part 6: Enter the IMF Dragon

The Gexit - part 7: Loan sharknado

The Grexit - part 8: the bankers dozen

The Grexit - part 9: the bailout begins

The Grexit - part 10: atms the new frontier

The Grexit - part 11: Drachma fever

The Grexit - part 12: fiat wallpaper blues

The Grexit - part 13: drackma park

The Grexit - part 14: terminator euro II

The Grexit Returns: Raiders of the lost bailout

The Grexit - part 15: pretty in pink slips

The Grexit - part 16: grumpy old bankers

[Demeter]

35. EU, Greece Pursue Quiet Diplomacy to Stave Off Default

http://www.bloomberg.com/news/articles/2015-06-19/greece-stumbling-to-euro-exit-as-talks-end-in-frustration-ib3d3x9x

VIDEO INTERVIEW AT LINK

European Union leaders and Greece’s creditors headed into a flurry of behind-the-scenes weekend diplomacy before high-level meetings to unlock aid for the nation flirting with default.

With markets closed, the weekend gives negotiators trying to avert a Greek exit from the euro some room to lay out a road map for what will be a high-stakes week with an emergency summit of EU chiefs on Monday. The clock is running down on a June 30 deadline to make payments and work out a new deal amid disagreements on pensions, sales tax and a deficit target.

German Chancellor Angela Merkel and her French counterpart, Francois Hollande, spoke by phone on Friday. As leaders of the two biggest economies in the 19-nation euro bloc, they’ve presented a united front against Greek Prime Minister Alexis Tsipras, who has spent his five months in power trying to roll back the austerity policies underpinning the country’s bailout.
It’s Now About Exercise of Power and Winning: Magnus

“I want to say very clearly on expectations, that the summit meeting on Monday can only be a decision-making summit if a basis for making decisions is there,” Merkel said at a Christian Democratic party event in Berlin....

[Demeter]

36. Weekend of Fear in Greece as Monday Brings Salvation or Ruin COLOR COMMENTARY

OR MAYBE...A DECISION BY SOMEBODY?

http://www.bloomberg.com/news/articles/2015-06-20/weekend-of-fear-in-greece-as-monday-brings-salvation-or-ruin

Dorothea Lambros stood outside an HSBC branch in central Athens on Friday afternoon, an envelope stuffed with cash in one hand and a 38,000 euro ($43,000) cashier’s check in the other.

She was a few minutes too late to make her deposit at the London-based bank. She was too scared to take her life-savings back to her Greek bank. She worried it wouldn’t survive the weekend.

“I don’t know what happens on Monday,” said Lambros, a 58-year-old government employee.

Nobody does. Every shifting deadline, every last-gasp effort has built up to this: a nation that went to sleep on Friday not knowing what Monday will bring. A deal, or more brinkmanship. Shuttered banks and empty cash machines, or a few more days of euros in their pockets and drachmas in their past - - and maybe their future.

On a street corner, a performance artist burned what he said were his last euros. Nearby, an Afghan beggar joked about how he should have gone to Sweden instead. A mother grabbed her toddler’s hand as a dozen policemen motorcycled past, heading to a rally outside Parliament. And in his neighborhood restaurant Panagis Vourloumis, a 78 year-old ex-CEO, current investment banker and survivor of coups, dictators and communists, leaned forward and laid his worries on the table.

“We thought we had escaped the past, that we were a normal country now,” he said. “But instead, we are living day-to-day.”

“This, today now, is the worst I have ever seen,” he said.

Deposit Withdrawals

For Greeks, the fear is that Monday will be deja vu, a return to a past not that distant. Before the euro replaced the drachma in 2002, the Greeks were already a European bête noire, their currency mostly trapped inside their nation, where cash was king and checks a novelty. Since December, Greeks have been preparing for a weekend such as this, pulling more than 30 billion euros out of banks. Week after week, the Bank of Greece borrowed banknotes from the rest of the continent to replenish this hoarding of the one asset Greeks still trust -- cold, hard cash. Its liabilities to the rest of the euro area for the excess physical cash it has to put into circulation quadrupled between December and April, the last month for which there’s available data.

Without access to capital markets, Greek lenders have to rely on almost 86 billion euros of Emergency Liquidity Assistance to stay afloat, subject to weekly boosts by the European Central Bank. This time, it didn’t last a week. On Friday, the ceiling of the so-called ELA was raised by 1.8 billion, just a couple of days after a 1.1 billion injection. On Monday, the banks will be back, asking for more.


Everything comes together on Monday. Greek Prime Minister Alexis Tsipras, back from a visit with Vladimir Putin in St. Petersburg, will spend his weekend coming up with a proposal to take to a Monday showdown with euro-area leaders. A deal there is key. The bailout agreement that’s kept Greece from defaulting expires June 30. That’s the day Greece owes about 1.5 billion euros to the International Monetary Fund. In an interview published Saturday in Brussels-based l’Echo newspaper, Greek Finance Minister Yanis Varoufakis warned that the ruling Syriza party could be replaced by neo-Nazis if Greece ends up defaulting and leaving the euro...

MORE

[Demeter]

38. What Things Might Be Like If Greece Had Never Joined the Euro NOSTALGIA? NOW?

A COUPLE OF SONGS COME TO MIND

http://www.bloomberg.com/news/articles/2015-06-19/what-things-might-be-like-if-greece-had-never-joined-the-euro

The International Monetary Fund’s chief economist, Olivier Blanchard, recently asked a simple and important question: “How much of an adjustment has to be made by Greece, how much has to be made by its official creditors?” But that raises two more questions: How much of an adjustment has Greece already made? And have its creditors given anything at all? —James K. Galbraith, Project Syndicate

What if?

What if there had never been a euro? What if the request for a unifying currency had not occurred in 1929 within the League of Nations debate? What if Jacques Delors had not done his heavy lifting, one part of the path to the euro replacing the European Currency Unit in December 1995. What if …

What if Greece had not joined the party?

For a beleaguered Greece, it’s a profound question. With all that has gone wrong, there’s that nagging reality that a Greece with its own currency would have seen a devaluation that would’ve assisted Greek exports, even with offsetting wealth destruction...



The chart is plotted semi-log, so slope matters. The slope of Greece’s depreciation to Germany is ugly from 1981 to 1986, less ugly but elegantly persistent from about 1986 to 1996, and then billiard-table flatness from near the advent of the euro, 1999 to the present. What if that had never happened? If we can assume further trend depreciation, one path is shown: massive drachma weakness. But there can be countless other less dramatic paths below and, even worse, above the red-arrowed extrapolation.

Obviously an independent, freestanding drachma would have import and export implications for Greece, and to a lesser extent Germany. Less obvious is the profound impact on the real Greek economy. Let’s consider reality: Since the rough advent of the euro, in 1999, through 2013, Greek per capita real GDP is up less than 1 percent. The German equivalent is up 19.4 percent. And of course, there is further carnage in 2014 and 2015. The 1981 inflation-adjusted, per-person GDP difference between Germany and Greece was $8,102; in 2013 it was $20,976. Greek unemployment has doubled in 1999-2015, from 11.4 percent to 25.6 percent; in Germany, from 8.8 percent to a jaw-dropping 4.7 percent.

Back to the present: To jump-start your weekend reading on our collective Greek Drama, start with James K. Galbraith’s primal scream in Project Syndicate. The good liberal goes after the IMF but, critically, ends with a common plea for restructuring. Then read Barry Ritholtz, who somehow gets from Athens to King’s Landing.

Discuss.

[MattSh]

47. OR... my preferred version of "My Way"

[DemReadingDU]

52. Everything comes together on Monday

I won't be holding my breath

[Demeter]

40. Greece’s Ruling Party Goes to War With Its Own Central Bank

http://www.bloomberg.com/news/articles/2015-06-19/greece-s-ruling-party-goes-to-war-with-its-own-central-bank

VIDEO DISCUSSION AT LINK

The Greek government sees a lot of enemies in its campaign to reach an eleventh-hour deal on the country’s finances. Including its own central bank.

Last night in Luxembourg, Finance Minister Yanis Varoufakis launched a broadside against the Bank of Greece, accusing it of encouraging liquidity fears in an “astonishing” fashion. Earlier this week, the parliamentary speaker refused to accept the central bank’s annual monetary policy report, which urged a deal with creditors, instead releasing a document arguing that “odious” debts shouldn’t be repaid.

The clash between the ruling Syriza party and the Bank of Greece shows the extent to which the Mediterranean country’s debt crisis risks undermining the basic functioning of its governing institutions. It’s also left Prime Minister Alexis Tsipras fighting on yet another front to fulfill pledges to keep his country in the euro region without further rounds of austerity.

“This highlights the desperation of what’s happening,” said Dario Perkins, the chief European economist at Lombard Street Research in London.



MORE

[Demeter]

49. Greece Played Germany Like a Violin; Horrified Syriza Demands 'Icelandic' Default

http://globaleconomicanalysis.blogspot.com.au/2015/06/greece-played-germany-like-violin.html?m=1

I CANNOT REPRODUCE IT BECAUSE OF THE WAY IT'S FORMATTED...

[Demeter]

50. Who Has the Gun?

http://globaleconomicanalysis.blogspot.com/2015/06/air-of-unreality-do-you-feel-lucky-punk.html

The IMF? OK. Pull the trigger. Tsipras wants someone to blame. If he can point the finger at the despised IMF, the IMF will effectively have shot itself. Greece has nothing to lose. The Troika does have something to lose. Let's look at things from the point of the best case scenario.

Best Case Scenario

Greece defaults.
Greece sheds €330 billion worth of debt.
Greece opens up trade with Russia, killing EU sanctions once and for all (and exposing the stupidity of the unanimous nature of EU rules in the process).
Greece threatens to yank US access to the US military base in Crete.
Russia builds pipeline through Greece. In turn, Greece collects shipment and storage fees.
Russia provides interim funding for Greece until Greece runs a primary account surplus.
The interim agreement from Russia requires Greece to initiate some market reforms that will pay big dividends down the road.
Greece reforms and does very well in a relatively short time frame.
Italy, Spain, Portugal, get some clever thoughts of their own.

US Naval Base in Greece

image:


The military Base is in Souday Bay, Greece. Note the strategic location.

In August of 2013, the US Asked Greece for Military Base Access in Kalamata and Souda for a possible strike on Syria over the alleged use of toxic gas in Ghouta on the eastern outskirts of Damascus. In 2013, Greece said yes. What will they demand to say "yes" the next time?

Nothing to Lose

From my perspective, Greece has nothing to lose. To be sure, Greece would be far better off defaulting and reforming rather than simply defaulting. But default is the best option for sure. Even staunch euro supporter Wolfgang Münchau agrees. See his April 19 column: Greek Default Necessary but Grexit is Not. For my take on Grexit, please see Can Greece Default and Stay in Eurozone? Russia is the Key!

When default is inevitable (and it is), it's best to do it sooner rather than later.

Read more at http://globaleconomicanalysis.blogspot.com/2015/06/air-of-unreality-do-you-feel-lucky-punk.html#lsCV6UoAYdedZZLS.99

[Demeter]

8. Deutsche Bank’s $96 Million Banker Bonus at Center of Lawsuit

http://www.bloomberg.com/news/articles/2015-06-18/deutsche-bank-s-96-million-banker-bonus-at-center-of-lawsuit?cmpid=yhoo

Bonuses of as much as 84 million euros ($96 million) paid out by Deutsche Bank AG to individual bankers just after the global financial crisis are at the center of a lawsuit filed by a former trader. Yves Paturel, who was fired amid probes into the rigging of Libor rates, said in London court documents that senior colleagues received generous bonuses for 2008 and 2009, while he had to make do with 4.3 million euros. His colleagues were rewarded with payouts that dwarfed his when accounting for the profit they generated for the company, he said. Lawmakers and regulators cracked down on banker pay in the wake of the financial crisis, putting an end to many of the awards highlighted in Paturel’s lawsuit. Still, the lawsuit captures a snapshot of compensation in the banking world before the industry became mired in a never ending cycle of scandals.

“Those bonuses are a once in a lifetime scenario,” said Jason Kennedy, chief executive officer of London-based recruitment firm Kennedy Group. “It was a place and time that will never reoccur in our generation.”

Paturel was fired in April when Frankfurt-based Deutsche Bank paid a record $2.5 billion in fines to settle U.S. and U.K. investigations into its role in rigging the London interbank offered rate. His breach of contract lawsuit, initially filed with another trader who has dropped the claim, was seeking as much as 5 million pounds ($8 million) in bonus payments. A wave of litigation followed the regulatory crackdown on bonuses, with mixed results. According to the filings, Paturel has hired Andrew Hochhauser, the trial lawyer who helped 104 Dresdner Kleinwort bankers win about 50 million euros from Commerzbank AG in the U.K.’s biggest ever bonus lawsuit.

Paturel says former Deutsche Bank trader Christian Bittar, who is also caught-up in the Libor probe, received bonuses of 84 million euros for 2008 and 63 million euros for 2009. He also states Carl Maine, who he says held the same director role as him, was given a bonus of 38 million euros for 2008. Deutsche Bank said in its defense documents that Maine and Bittar didn’t receive any discretionary compensation in 2008 and 2009. Instead, their pay was based on separate metrics that were subject to their “contractual arrangements,” the bank said. Those kinds of payouts, which were based on a percentage of profit, were ceased after the 2009 performance year, the bank said in a statement.

“Paturel was dismissed as a result of an order made by the New York Department of Financial Services with respect to interbank offered rates,” Deutsche Bank said in an e-mail Thursday. “His claim for further compensation, which is based on information that is inaccurate and unverified, is without merit and we will contest it.”

...According to Paturel’s suit, the head of global finance and forward foreign exchange awarded Paturel 1.3 million euros for 2008, about 1 percent of the 133 million pounds he’d made in profit that year. The executive said all members of the money markets derivatives desk had been treated similarly and Paturel was “lucky” not to be a managing director because the cut would be bigger. Bittar was a managing director and allegedly received 11 percent of the profit he made, Paturel said in the lawsuit...

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9. Dow sees triple-digit fall, but indexes muster weekly gains

http://www.marketwatch.com/story/us-stocks-may-log-four-day-winning-run-on-dovish-fed-2015-06-19?siteid=YAHOOB

U.S. stocks ended Friday deep in the red Friday as the persistent deadlock in Greek debt talks turned investors cautious heading into the weekend. A so-called quadruple-witching day - when options and futures for stocks and stock indexes expire simultaneously, may have contributed to the late-session selloff on Friday, according to analysts. Rallies during the week, however, helped main indexes record weekly gains. The S&P 500 SPX, -0.53% finished down 11.25 points, or 0.5%, at 2,109.99, with all 10 of its main sectors closing lower. Utilities and financials lead losses. The main benchmark recorded a 0.8% gain over the week.

The Dow Jones Industrial Average DJIA, -0.55% dropped 101.56 points, or 0.6%, to 18,014.28, but posted a modest 0.6% gain over the week. The Nasdaq Composite COMP, -0.31% ended down 15.95 points, or 0.3%, to 5,117.00, retreating from record highs set Thursday. The tech-heavy index clocked in a 1.3% gain over the week.

Setting the stage for stocks Friday was the European Central Bank, which approved an emergency loan to Greece’s banking system nearly 24 hours after eurozone finance ministers failed to strike a deal with debt-laden Greece Thursday. Eurozone leaders will hold an emergency crisis summit Monday after finance leaders again failed to reach any kind of agreement between Greece and its creditors on Thursday.

Channing Smith, portfolio manager at Capital Advisors, said the market rally over the past few days has been perplexing.

“Big moves on Thursday were attributed to the Fed, however, the Fed has not changed its stance. And the fact markets are at these levels despite the complete failure to find a resolution to Greece’s debt problems, is baffling,” Smith said.

MORE

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10. Venezuela sees 2016 ruling on bid to annul $1.6 bln award to Exxon

http://finance.yahoo.com/news/venezuela-sees-2016-ruling-bid-172351774.html

A World Bank arbitration tribunal should rule in the second quarter of 2016 on Venezuela's bid to annul a $1.6 billion compensation award to Exxon Mobil Corp for nationalizations, the country's attorney-general's office said on Friday. Earlier this week, the World Bank's International Centre for Settlement of Investment Disputes (ICSID) rejected a separate Venezuelan request that the centre review the award. Venezuela has been arguing that the ICSID should either annul the $1.6 billion award or at least deduct the country's previous payment of $908 million to Exxon that was ordered by the Paris-based International Chamber of Commerce (ICC).

"A large part of the compensation for Exxon Mobil's Cerro Negro project decided by the ICSID tribunal had already been paid by (state oil company) Petroleos de Venezuela (PDVSA), in accordance with the ICC ruling," the attorney-general's office said in a statement.

"That's why Venezuela's case with Exxon Mobil continues despite the ICSID decision to reject Venezuela's request to revise last year's ruling."

President Nicolas Maduro's government faces a raft of big-figure arbitration claims as it also handles an economic recession, a tumble in oil prices and substantial debt payments.

The cases date from former president Hugo Chavez's 14-year rule when he nationalized a range of oil ventures, including the Exxon-operated Cerro Negro and La Ceiba projects.

Venezuela in the past has paid ICSID awards and says it will honor rulings in ongoing cases.

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11. One ominous reason why Wal-Mart is bringing back greeters

http://finance.yahoo.com/news/one-ominous-reason-why-wal-145335922.html#


Wal-Mart is bringing back employees known as "greeters" to its store entrances...The company is also adding a fleet of "asset protection customer specialists," who will check receipts as shoppers leave, The Wall Street Journal reports. Wal-Mart is testing the added door presence in 300 of its 4,500 US stores, according to the report.

This could indicate that Wal-Mart's theft problems are getting worse. The company likely loses about 1% of its US revenue — or roughly $3 billion dollars every year — to stealing by customers and employees, Reuters reports. Wal-Mart US chief Greg Foran recently said that the company is making a renewed push to reduce theft.

"One percent of $300 billion is quite a lot of money. If you can save 10 basis points [or 0.1%] of it — boy I’ll take it every day of the week and put it into lower prices for customers," Foran told Reuters.

The losses could come from stealing or mistakes in recording inventory, he said.

In an earnings call last month, Foran blamed a decline in gross profit margins on theft, which the company calls "shrink," Reuters notes. He said half of the theft occurred in the food departments.

MORE

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12. The War of 1812 and the Burning of Washington AND THE SONG!

Although its events inspired one of our most famous national songs, the War of 1812 is itself a relatively little-known war in American history. Despite its complicated causes and inconclusive outcome, the conflict helped establish the credibility of the young United States among other nations. It also fostered a strong sense of national pride among the American people, and those patriotic feelings are reflected and preserved in the song we know today as our national anthem.

Britain’s defeat at the 1781 Battle of Yorktown marked the conclusion of the American Revolution and the beginning of new challenges for a new nation. Not even three decades after the signing of the Treaty of Paris, which formalized Britain’s recognition of the United States of America, the two countries were again in conflict. Resentment for Britain’s interference with American international trade and impressment of American sailors combined with American expansionist visions led Congress to declare war on Great Britain on June 18, 1812.

In the early stages of the war, the American navy scored victories in the Atlantic and on Lake Erie while Britain concentrated its military efforts on its ongoing war with France. But with the defeat of Emperor Napoleon’s armies in April 1814, Britain turned its full attention to the war against an ill-prepared United States. Admiral Alexander Cochrane, the British naval commander, prepared to attack U.S. coastal areas, and General Robert Ross sought to capture towns along the East Coast to create diversions while British army forces attacked along the northern boundaries of the United States.

In August 1814, General Ross and his seasoned troops landed near the nation’s capital. On August 24, at Bladensburg, Maryland, about 30 miles from Washington, his five-thousand-member British force defeated an American army twice its size. That same night, British troops entered Washington. They set fire to the United States Capitol, the President’s Mansion, and other public buildings. The local militia fled, and President James Madison and wife Dolley barely escaped.

The Battle of Baltimore

With Washington in ruins, the British next set their sights on Baltimore, then America’s third-largest city. Moving up the Chesapeake Bay to the mouth of the Patapsco River, they plotted a joint attack on Baltimore by land and water. On the morning of September 12, General Ross’s troops landed at North Point, Maryland, and progressed towards the city. They soon encountered the American forward line, part of an extensive network of defenses established around Baltimore in anticipation of the British assault. During the skirmish with American troops, General Ross, so successful in the attack on Washington, was killed by a sharpshooter. Surprised by the strength of the American defenses, British forces camped on the battlefield and waited for nightfall on September 13, planning to attempt another attack under cover of darkness.

Meanwhile, Britain’s naval force, buoyed by its earlier successful attack on Alexandria, Virginia, was poised to strike Fort McHenry and enter Baltimore Harbor. At 6:30 AM on September 13, 1814, Admiral Cochrane’s ships began a 25-hour bombardment of the fort. Rockets whistled through the air and burst into flame wherever they struck. Mortars fired 10- and 13-inch bombshells that exploded overhead in showers of fiery shrapnel. Major Armistead, commander of Fort McHenry and its defending force of one thousand troops, ordered his men to return fire, but their guns couldn’t reach the enemy’s ships. When British ships advanced on the afternoon of the 13th, however, American gunners badly damaged them, forcing them to pull back out of range. All through the night, Armistead’s men continued to hold the fort, refusing to surrender. That night British attempts at a diversionary attack also failed, and by dawn they had given up hope of taking the city. At 7:30 on the morning of September 14, Admiral Cochrane called an end to the bombardment, and the British fleet withdrew. The successful defense of Baltimore marked a turning point in the War of 1812. Three months later, on December 24, 1814, the Treaty of Ghent formally ended the war.

Because the British attack had coincided with a heavy rainstorm, Fort McHenry had flown its smaller storm flag throughout the battle. But at dawn, as the British began to retreat, Major Armistead ordered his men to lower the storm flag and replace it with the great garrison flag. As they raised the flag, the troops fired their guns and played “Yankee Doodle” in celebration of their victory. Waving proudly over the fort, the banner could be seen for miles around—as far away as a ship anchored eight miles down the river, where an American lawyer named Francis Scott Key had spent an anxious night watching and hoping for a sign that the city—and the nation—might be saved.

The Inspiration of Francis Scott Key: From Poem to Anthem

Before departing from a ravaged Washington, British soldiers had arrested Dr. William Beanes of Upper Marlboro, Maryland, on the charge that he was responsible for the arrests of British stragglers and deserters during the campaign to attack the nation’s capital. They subsequently imprisoned him on a British warship.

Friends of Dr. Beanes asked Georgetown lawyer Francis Scott Key to join John S. Skinner, the U.S. government’s agent for dealing with British forces in the Chesapeake, and help secure the release of the civilian prisoner. They were successful; however, the British feared that Key and Skinner would divulge their plans for attacking Baltimore, and so they detained the two men aboard a truce ship for the duration of the battle. Key thus became an eyewitness to the bombardment of Fort McHenry.

When he saw “by the dawn’s early light” of September 14, 1814, that the American flag soared above the fort, Key knew that Fort McHenry had not surrendered. Moved by the sight, he began to compose a poem on the back of a letter he was carrying. On September 16, Key and his companions were taken back to Baltimore and released. Key took a room in the Indian Queen Hotel and spent the night revising and copying out the four verses he had written about America’s victory. The next day he showed the poem to his wife’s brother-in-law, Judge Joseph Nicholson, who had commanded a volunteer company at Fort McHenry. Nicholson responded enthusiastically and urged Key to have the poem printed. First titled “The Defence of Fort McHenry,” the published broadside included instructions that it be sung to the 18th-century British melody “Anacreon in Heaven” — a tune Key had in mind when he penned his poem. Copies of the song were distributed to every man at the fort and around Baltimore. The first documented public performance of the words and music together took place at the Holliday Street Theatre in Baltimore on October 19, 1814. A music store subsequently published the words and music under the title “The Star-Spangled Banner.”

During the 19th century, “The Star-Spangled Banner” became one of the nation’s best-loved patriotic songs. It gained special significance during the Civil War, a time when many Americans turned to music to express their feelings for the flag and the ideals and values it represented. By the 1890s, the military had adopted the song for ceremonial purposes, requiring it to be played at the raising and lowering of the colors. In 1917, both the army and the navy designated the song the “national anthem” for ceremonial purposes. Meanwhile, patriotic organizations had launched a campaign to have Congress recognize “The Star-Spangled Banner” as the U.S. national anthem. After several decades of attempts, a bill making “The Star-Spangled Banner” our official national anthem was finally passed by Congress and signed into law by President Herbert Hoover on March 3, 1931.

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13. HOW DID THE US HONOR FRANCIS SCOTT KEY?

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15. Unresolved Allegations of Criminal Insider Trading Leaks from the Fed

http://www.nakedcapitalism.com/2015/06/unresolved-allegations-of-criminal-insider-trading-leaks-from-the-fed.html

A segment on yesterday’s Boom/Bust program, starting a 22:30, discusses the still-open inspector general criminal investigation into leaks from the Fed. As Ed Harrison recounts, the Fed had set up limits on meetings with officials in 2011 because former Fed staffers were profiting from these relationships. ProPublica broke the story. Huffington Post provides a summary:

The shocking leak constituted a serious breach of protocol at the normally secretive FOMC, the central bank’s main policymaking body. In October 2012, one day before the scheduled release of minutes from the Fed’s September 2012 meeting, elite clients of Medley Global Advisors, a political and economic policy intelligence firm, received valuable information about a coming innovation to the Fed’s long-established quantitative easing program. Quantitative easing attempts to stimulate the economy by keeping borrowing costs so low that businesses and households are induced to spend and invest.

Medley clients were sent a newsletter informing them of specific actions the Fed had contemplated at the meeting, such as tying the future direction of short-term interest rates to a 6.5 percent unemployment rate. The numeric thresholds of the Fed’s new policy were not publicly revealed until December 2012.

To make matters worse, an internal investigation was hidden from Congress. Huffington Post again:

The independent investigator charged with policing the Federal Reserve conducted a secret inquiry into the 2012 leak of a sensitive central bank decision, according to a person who was interviewed in the probe. It wasn’t disclosed to Congress….

Ben Bernanke had asked William English, secretary of the Federal Open Market Committee, and Scott Alvarez, the Fed’s powerful general counsel who is sometimes referred to as the “8th Governor” on the Fed’s seven-person board, to investigate the leak…

According to the person interviewed in the inspector general’s investigation, who spoke on the condition of anonymity, the probe included rounds of interviews conducted in 2013 and 2014. The IG, which acts as an in-house auditor but is supposed to remain independent of the central bank, has reported neither the inquiry nor the results in any of its regular semi-annual reports to Congress, which are publicly available. These reports serve as the unit’s accounting of its activities and enable the legislative branch to perform its oversight of the Fed….

Unlike many investigations, the existence of actual wrongdoing was not in dispute at the outset of the probe: The inquiry was tasked only with determining who was responsible.

Sen. Elizabeth Warren (D-Mass.) excoriated Federal Reserve Chairwoman Janet Yellen last month [February] over the central bank’s failure to publicize the results of English and Alvarez’s initial investigation, and demanded more information about the probe.

A June update from the New York Times:

J. W. Verret, a law professor at George Mason University, said the Fed should have referred the matter to law enforcement immediately because of the possibility that the leak amounted to insider trading. …

The review was conducted by William B. English, an economist who ran the Fed’s powerful monetary affairs division and served as the committee’s secretary, and Scott G. Alvarez, the Fed’s general counsel. The Fed’s 2011 policy for investigating leaks — formulated by a committee headed by Ms. Yellen, then the Fed’s vice chairwoman — had called for those two officials to conduct an “initial review” and then determine whether to request a full investigation. The results of that investigation would be reported to the Federal Open Market Committee, which consisted of the Fed chairman and other top monetary officials.

Instead, in March 2013, Mr. Alvarez and Mr. English reported to the committee that they had not been able to identify the source.

By then, the inspector general had received a tip about the leak, eliminating the need for Mr. Alvarez to request a full investigation.

Notice the reluctance of both stories to use the word “criminal” By contrast, consider this Bloomberg account from March:

House Financial Services Chairman Jeb Hensarling said he has been informed by the Federal Reserve’s inspector general that “there is currently an open criminal investigation” into the leak of confidential Fed information in 2012.

This segment is a reminder that the central bank has yet to make disclosures demanded by lawmakers. If nothing else, you need to see the face that Yellen makes when asked about it. Again, the relevant part begins at 22:30.

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16. THE ORIGINAL TUNE

Last edited Sat Jun 20, 2015, 10:05 AM - Edit history (1)

Drinking! Not a bad idea! You either need vocal training, or a snoot-full, to sing it.

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17. The Star-Spangled Banner and the Smithsonian

Sometime before his death in 1818, Lieutenant Colonel George Armistead acquired the flag that was immortalized in Key’s poem as the “Star-Spangled Banner.” While there exists no documented evidence as to how Armistead came to possess the flag, it is generally understood that he simply kept it as a memento of the triumphant battle.

At the death of Armistead’s widow in 1861, the Star-Spangled Banner was bequeathed to his daughter, Georgiana Armistead Appleton, who recognized that it held national as well as familial significance. As its owner, she permitted the flag to be publicly exhibited on several occasions. Eben Appleton, Armistead’s grandson, inherited the flag from his mother in 1878. Faced with the public’s increasing curiosity about the Star-Spangled Banner, he began to seek an appropriate repository. In 1907, Appleton lent the historic flag to the Smithsonian Institution, and in 1912 he offered the flag as a permanent gift to the nation. He later wrote, “It is always such a satisfaction to me to feel that the flag is just where it is, in possession for all time of the very best custodian, where it is beautifully displayed and can be conveniently seen by so many people.”

Snippings from the Star-Spangled Banner

In the late 1800s, souvenirs, or relics, of important events and people in American history became highly prized and collectible objects. The Star-Spangled Banner, historic and celebrated, was subjected to this practice.

The Armistead family received frequent requests for pieces of their flag, but reserved the treasured fragments for veterans, government officials, and other honored citizens. As Georgiana Armistead Appleton noted, “had we given all that we have been importuned for little would be left to show.” Despite efforts to limit the practice, however, over two hundred square feet of the Star-Spangled Banner was eventually given away, including one of the stars.

By giving away snippings, the Armisteads could share the Star-Spangled Banner with others who loved the flag. The citizens who received these mementos treated them with reverence and pride. Some framed and displayed these pieces of history in their homes; others donated them to museums. Today, the Smithsonian’s National Museum of American History has thirteen Star-Spangled Banner fragments in its collections. Since conservators and curators cannot be sure from which part of the flag these fragments were taken, the pieces cannot be integrated back into the flag. However, they can be analyzed, allowing conservators to document changes in the condition of the flag’s fibers and better understand how time and exposure to light and dirt have affected the flag.

1914 Conservation

By the time it arrived at the Smithsonian in 1907, the Star-Spangled Banner was already in a fragile and tattered condition. In 1914, the Smithsonian hired Amelia Fowler, a well-known flag restorer and embroidery teacher, to “resuscitate” the flag. Working with a team of ten needlewomen, Fowler first removed a canvas backing that had been attached to the flag in 1873, when it was displayed and photographed for the first time at the Boston Navy Yard by Admiral George Preble. The women then attached the flag to a new linen backing, sewing approximately 1.7 million interlocking stitches to form a honeycomb-like mesh over the flag’s surface. Fowler’s work took eight weeks (mid-May to mid-July 1914), and she charged the Smithsonian $1243: $243 for materials, $500 for herself, and $500 to be divided among her ten needlewomen.

The flag was then displayed in a glass case in the Smithsonian’s Arts and Industries Building. It remained on view there for nearly 50 years, except for two years during World War II, during which time it was housed in a government warehouse in Virginia, to be protected from possible bombing raids on the nation’s capital. In 1964 the flag was moved to the new National Museum of History and Technology (now the National Museum of American History), where it was displayed in the central hall on the second floor.

1998-2006 Conservation

During the time that the Star-Spangled Banner was displayed in Flag Hall, museum staff recognized that inconsistent temperatures and humidity and high light levels had adversely affected the flag. In 1981, the Smithsonian began a two-year preservation effort: staff vacuumed the flag to reduce accumulated dust, installed new lighting and air-handling systems, and mounted a screen in front of the flag to protect it from light and damaging airborne matter.

By 1994, museum officials recognized the need for further conservation, and in 1996 they began developing a plan to preserve the Star-Spangled Banner using modern, scientific conservation techniques. This most recent preservation effort was formally launched in 1998 with the flag’s inclusion in “Save America’s Treasures,” a wide-reaching Millennium preservation project initiated by First Lady Hillary Rodham Clinton. At this time, the flag was taken down from the wall where it had hung since 1964; in 1999, it was moved to the climate- and light-controlled conservation lab where it remains today.

It took conservators nearly two years to remove Fowler’s stitching and linen backing. Doing so allowed them to see the flag’s true condition and learn more about its construction. They examined the flag’s colors and fibers. They measured stains, holes, and mends, and removed those mends that stressed the fibers. The next step was to remove harmful materials from the flag. Using dry cosmetic sponges, conservators blotted the flag and lifted off much of the surface dirt; its composition offered insights into the flag’s history. After extensive research and analysis, conservators used an acetone/water solution to remove the most harmful contaminants.

In the final phase, to prepare the Star-Spangled Banner for reinstallation in a permanent exhibition gallery, conservators attached a lightweight polyester fabric called Stabiltex to one side. This provides enough support to hold the flag together and allow it to be displayed.

The conservation goal has not been to “restore” or “fix” the flag, but rather to prevent further deterioration.

A new Home

Conservators and curators collaborated with architects and engineers to develop a long-term preservation plan for the Star-Spangled Banner. This included constructing a state-of-the-art flag chamber with a climate-controlled environment and low light levels, and displaying the flag at a shallow angle. All of these features will help preserve the flag for future generations. The state-of-the-art gallery opened November 21, 2008.



Star-Spangled Banner Website (http://amhistory.si.edu/starspangledbanner/).

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25. EU regulators tell 11 countries to adopt bank bail-in rules

The European Commission on Thursday gave France, Italy and nine other EU countries two months to adopt new EU rules on propping up failed banks or face legal action.

The rules, known as the bank recovery and resolution directive (BRRD), seek to shield taxpayers from having to bail out troubled lenders, forcing creditors and shareholders to contribute to the rescue in a process known as "bail-in".

The Commission drafted the rules in response to the financial crisis which started in 2008, giving the 28 countries in the European Union until the end of last year to apply them.

It said Bulgaria, the Czech Republic, France, Italy, Lithuania, Luxembourg, the Netherlands, Malta, Poland, Romania and Sweden had yet to fall in line.

"If they don't comply within two months, the Commission may decide to refer them to the EU Court of Justice," the EU executive said in a statement, referring to Europe's highest court based in Luxembourg.

Read more: http://www.businessinsider.com/r-eu-regulators-tell-11-countries-to-adopt-bank-bail-in-rules-2015-5#ixzz3dblCF2PQ

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31. ADOPTING A NATIONAL ANTHEM

"The Star-Spangled Banner" was recognized for official use by the United States Navy in 1889, and by U.S. President Woodrow Wilson in 1916, and was made the national anthem by a congressional resolution on March 3, 1931 (46 Stat. 1508, codified at 36 U.S.C. § 301), which was signed by President Herbert Hoover.

Before 1931, other songs served as the hymns of American officialdom. "Hail, Columbia" served this purpose at official functions for most of the 19th century. "My Country, 'Tis of Thee", whose melody is identical to "God Save the Queen", the British national anthem, also served as a de facto anthem. Following the War of 1812 and subsequent American wars, other songs emerged to compete for popularity at public events, among them "The Star-Spangled Banner".

HAIL COLUMBIA

The anthem was composed by Philip Phile in 1789 for the first inauguration of George Washington, titled "The President's March", arranged with lyrics by Joseph Hopkinson in 1798. It was used in the United States as a de facto national anthem for most of the 19th century, but lost popularity after World War I when it was replaced by "The Star-Spangled Banner" in 1931.

It was the anthem for the President until it was replaced by the song Hail to the Chief.

It is now the official Vice Presidential anthem. When played in honor of the Vice President, the song is always preceded by four ruffles and flourishes. In addition, the song has been used as a slow march during military ceremonies, often while the band counter-marches.

The song is not to be confused with "Columbia, the Gem of the Ocean", nor with "Stand Columbia", the alma mater of Columbia University.

MY COUNTRY, 'TIS OF THEE

THE STAR SPANGLED BANNER

O say can you see by the dawn's early light,
What so proudly we hailed at the twilight's last gleaming,
Whose broad stripes and bright stars through the perilous fight,
O'er the ramparts we watched, were so gallantly streaming?
And the rockets' red glare, the bombs bursting in air,
Gave proof through the night that our flag was still there;
O say does that star-spangled banner yet wave,
O'er the land of the free and the home of the brave?

On the shore dimly seen through the mists of the deep,
Where the foe's haughty host in dread silence reposes,
What is that which the breeze, o'er the towering steep,
As it fitfully blows, half conceals, half discloses?
Now it catches the gleam of the morning's first beam,
In full glory reflected now shines in the stream:
'Tis the star-spangled banner, O! long may it wave
O'er the land of the free and the home of the brave.

And where is that band who so vauntingly swore
That the havoc of war and the battle's confusion,
A home and a country, should leave us no more?
Their blood has washed out their foul footsteps' pollution.
No refuge could save the hireling and slave
From the terror of flight, or the gloom of the grave:
And the star-spangled banner in triumph doth wave,
O'er the land of the free and the home of the brave.

O thus be it ever, when freemen shall stand
Between their loved homes and the war's desolation.
Blest with vict'ry and peace, may the Heav'n rescued land
Praise the Power that hath made and preserved us a nation!
Then conquer we must, when our cause it is just,
And this be our motto: "In God is our trust."
And the star-spangled banner in triumph shall wave
O'er the land of the free and the home of the brave!

Additional Civil War period lyrics

In indignation over the start of the American Civil War, Oliver Wendell Holmes, Sr. added a fifth stanza to the song in 1861 which appeared in songbooks of the era.

When our land is illumined with Liberty's smile,
If a foe from within strike a blow at her glory,
Down, down with the traitor that dares to defile
The flag of her stars and the page of her glory!
By the millions unchained who our birthright have gained,
We will keep her bright blazon forever unstained!
And the Star-Spangled Banner in triumph shall wave
While the land of the free is the home of the brave.

Alternative lyrics

In a version hand-written by Francis Scott Key in 1840, the third line reads "Whose bright stars and broad stripes, through the clouds of the fight".

SATIRE

The song is notoriously difficult for nonprofessionals to sing because of its wide range – a 12th. Humorist Richard Armour referred to the song's difficulty in his book It All Started With Columbus.

In an attempt to take Baltimore, the British attacked Fort McHenry, which protected the harbor. Bombs were soon bursting in air, rockets were glaring, and all in all it was a moment of great historical interest. During the bombardment, a young lawyer named Francis Off Key [sic] wrote "The Star-Spangled Banner", and when, by the dawn's early light, the British heard it sung, they fled in terror.

—Richard Armour

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32. CUSTOMS CONCERNING THE ANTHEM

United States Code, 36 U.S.C. § 301, states that during a rendition of the national anthem, when the flag is displayed, all present except those in uniform should stand at attention facing the flag with the right hand over the heart; Members of the Armed Forces and veterans who are present and not in uniform may render the military salute; men not in uniform should remove their headdress with their right hand and hold the headdress at the left shoulder, the hand being over the heart; and individuals in uniform should give the military salute at the first note of the anthem and maintain that position until the last note; and when the flag is not displayed, all present should face toward the music and act in the same manner they would if the flag were displayed. Military law requires all vehicles on the installation to stop when the song is played and all individuals outside to stand at attention and face the direction of the music and either salute, in uniform, or place the right hand over the heart, if out of uniform. Recently enacted law in 2008 allows military veterans to salute out of uniform, as well.

However, this statutory suggestion does not have any penalty associated with violations. 36 U.S.C. § 301 This behavioral requirement for the national anthem is subject to the same First Amendment controversies that surround the Pledge of Allegiance. For example, Jehovah's Witnesses do not sing the national anthem, though they are taught that standing is an "ethical decision" that individual believers must make based on their "conscience."

AT EASE!

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33. IS THIS A THINLY-VEILED REFERNCE TO GREECE'S TRAVAILS?

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34. Fed Says Rate Hike Still on Track for This Year SURE IT IS

IT AIN'T NEVER GOING TO HAPPEN, BECAUSE THE STUPIDS HAVE NOT YET TAKEN OVER THE FED

UNFORTUNATELY, THE COMPETENT WERE DRIVEN OUT LONG AGO--NOW ALL WE HAVE IS THE POLITICALLY CONNECTED, AND THE HACKS AREN'T GOING TO CRASH THE ECONOMY, SO WE ARE SAFE. THEY WON'T STOP THE QE, EITHER, BUT THERE'S ALWAYS GOLD AND FARMLAND...


http://www.bloomberg.com/news/articles/2015-06-17/fed-says-job-gains-pick-up-staying-on-track-for-2015-rate-rise

The Federal Reserve signaled a pickup in the economy is keeping it on track to raise interest rates this year, though subsequent increases are likely to be more gradual than anticipated earlier.

“Since the committee last met in April, the pace of job gains has picked up and labor-market gains have improved further,” Fed Chair Janet Yellen said at a press conference in Washington Wednesday after the Federal Open Market Committee voted to keep the main rate at zero, where it has been since late 2008.

New forecasts issued by the committee implied two quarter-point rate rises this year but a shallower pace of increases in 2016. Yellen stressed that the date of the first rate increase is less important than the trajectory of subsequent ones. She said tightening would be “gradual,” and that the Fed wouldn’t follow a “mechanical” formula.

“They’re starting from a very low point and they’re going to take it very slowly,” said Brian Jacobsen, who helps oversee $250 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin....

[Demeter]

43. Fed says U.S. economy strong enough to handle rate hike SURE IT IS!

http://www.reuters.com/article/2015/06/17/us-usa-fed-idUSKBN0OX2DX20150617

The U.S. economy is growing moderately after a winter swoon and likely strong enough to support an interest rate increase by the end of the year, but concerns remain over the recovery of the labor market, U.S. Federal Reserve officials said on Wednesday.

AND WHAT HAPPENS NEXT WINTER, JANET? WINTER COMES EVERY YEAR!

With the economy still on track to grow as much as 2 percent for the year, the central bank's latest policy statement keeps it on track for at least one and perhaps a second rate increase later this year. Fed Chair Janet Yellen, however, emphasized that the rate decision was still up in the air and rested squarely on further improvement in the labor market - renewing her focus on a longstanding concern. In a press conference following the end of the Fed's two-day policy meeting, Yellen said she wanted "more decisive evidence" that labor markets were healing, and that wages would increase beyond their current "subdued pace." Even as the Fed appeared to be approaching a decision to proceed with a rate hike as soon as September, "some cyclical weakness in the labor market remains," Yellen said, pointing to the low labor force participation rate and the high level of part-time employment. Her comments are likely to focus even more attention on upcoming U.S. employment and wage reports, as markets look for signs that continued economic growth is translating into more jobs and higher wages.

After a weak start to the year, highlighted by a first-quarter economic contraction, policymakers said gross domestic product is poised to grow between 1.8 percent and 2.0 percent in 2015, down from a March forecast of between 2.3 percent and 2.7 percent. The Fed also said the unemployment rate is expected to be slightly higher at the end of the year - at 5.2 percent to 5.3 percent - than previously forecast despite the continued improvement in labor markets. The unemployment rate last month was 5.5 percent. Inflation remains low but is expected to gradually rise to its 2 percent target over the medium term, the Fed said. Still, the policy statement and forecasts keep the Fed on track to raise rates once or twice over its four remaining policy-setting meetings this year, an outlook reaffirmed by Yellen's comments in the press conference.

"The Fed has two criteria: labor market improvement, which we continue to see, and confidence that inflation will move to its objectives. That's starting to happen," said Wayne Kaufman, chief market analyst at Phoenix Financial Services in New York.

Financial markets were little moved by the Fed's policy statement. U.S. stock indexes added to losses before rallying to close slightly higher, while prices for U.S. Treasuries inched up. The dollar was weaker against a basket of currencies.

Fed policymakers maintained the current near-zero interest rate for now and said a hike would be appropriate only after further improvement in the labor market and greater confidence that inflation would rise.

"Economic activity has been expanding moderately," the Fed said in its policy statement. "The pace of job gains picked up while the unemployment rate remained steady. On balance, a range of labor market indicators suggests that underutilization of labor resources diminished somewhat."

In their projections, Fed officials lowered expectations for economic growth in 2015 after accounting for the weak start to the year. It was the second time since December that the central bank has downgraded its GDP growth forecast for this year. But 15 of 17 Fed policymakers still indicated the first rate hike should take place this year, no change from their previous set of predictions. More significantly, policymakers' individual projections for the appropriate federal funds rate at year's end remained clustered around 0.625 percent. However, seven policymakers are now in favor of hiking rates only once or not all this year. In addition, Fed officials see slightly lower rates at the end of 2016 and 2017 than forecast in March. With rates currently set at a range of between 0 percent and 0.25 percent, that would imply two quarter-point rate hikes between now and the end of the year, with many analysts predicting an initial hike in September.

The Fed's meeting this week was the first since the depths of the 2007-2009 financial crisis in which the outcome was not constrained by "forward guidance," the central bank's open-ended commitment to keep rates low to counter the worst downturn since the Great Depression.

I REPEAT...WHAT HAPPENS COME NOVEMBER, DECEMBER, JANUARY, FEBRUARY, AND IF WE ARE VERY UNLUCKY, MARCH?

ONE INTEREST RATE RISE IN SEPTEMBER, AND IT'S 1929, ALL OVER AGAIN, WITH FIREWORKS.

[mother earth]

37. CA Drought Dire, Greek Default Closer, Fed Cannot Raise Interest Rates, USA Watchdog, Greg Hunter

Published on Jun 18, 2015


Almost 100% of California is in a severe drought. Many parts of the West are also experiencing drought, but California is ground-zero. This is a huge food growing region, and the state has just started restricting water to agriculture. This is a vast problem not only for the U.S. but the entire world, and there is no end in sight.

[Demeter]

39. 3% OFTHE NATION IS IN EXCEPTIONAL DROUGHT

http://droughtmonitor.unl.edu/mapsanddata/maparchive.aspx

It's been getting better as the summer progresses, too. California's problems are exacerbated by its refusal to accept the fact that it lives in a desert, not a "Mediterranean climate" and adjust water usage accordingly. I have no sympathy for the Lotus Eaters.

[mother earth]

41. Keiser Report: Pick a pocket or two (E771)

Published on Jun 16, 2015


In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss picking a pocket or two as the UK returns to Dickensian times. In the second half, Max continues his interview with documentary filmmaker Nick Broomfield about whether #BlackLivesMatter when NHI (“no humans involved”).

[Demeter]

42. The Most Powerful Person at the Federal Reserve You've Never Heard Of

http://www.bloomberg.com/news/articles/2015-06-19/the-insider-born-at-the-federal-reserve-is-on-the-hot-seat-now

He played a key role in the controversial bailout of American International Group Inc. He is central to how Dodd-Frank is put into practice. Most everything of significance at the Federal Reserve Board goes across his desk. And you have probably never heard of him. Scott Alvarez is the Fed’s chief counsel, but he is much more than that. He is, in the view of many, the power behind the throne, the backroom officer who, while prominent appointees come and go, quietly makes himself indispensable to them through dedication, mastery of detail and unparalleled knowledge of the Fed’s secrets. And now, for the first time in his 34 years at the Fed, Alvarez is under a spotlight, a harsh one, the focus of a growing congressional appetite to rein in the central bank’s power. The ostensible reason is that Alvarez led a failed five-month investigation into a 2012 leak of confidential Fed information. Not only did he not determine the leak’s source, he didn’t bring in the Fed’s internal watchdog or the Federal Bureau of Investigation, though they later began their own probes. Alvarez’s harshest critics accuse him of not trying very hard and of fighting only to keep outsiders away.

“This is a very, very serious issue for Scott Alvarez and others,” said Laurence Ball, an economics professor at Johns Hopkins University in Baltimore who lost a lawsuit to force the Fed to release Alvarez’s documents. “They didn’t seem to have a very successful investigation and have not come out with a very clear account of what happened.”

Public Servant

Alvarez almost never speaks to journalists. The Fed declined to make him available for this article. A spokesman referred to a statement released in February after Senator Elizabeth Warren blasted him at a hearing. In that statement, Fed Chair Janet Yellen called Alvarez a “dedicated public servant” who she and her colleagues lean on for “expert advice and counsel.” The question at the center of the leak -- who gave the firm Medley Global Advisors the unauthorized information that may have been used by investors -- remains the object of an intense congressional probe. In May, House Financial Services Committee Chairman Jeb Hensarling issued a subpoena that demanded communications between Alvarez and members of the Fed Open Market Committee, which sets monetary policy.

Independent Agency

But underlying the dispute over the leak and Alvarez is something much larger: what oversight and control the legislature can exert over the fiercely independent agency, especially in the wake of its aggressive role since the 2008 financial crisis. The Fed’s interventionism -- highlighted by the purchase of trillions of dollars of Treasury bonds to stoke economic growth -- has become the model for central banks around the world. The legislative quest for oversight comes from elements on both sides of the aisle but for different reasons. The right wants control to get the Fed to back off from its activism; the left wants the opposite -- to push it toward greater regulation of the financial sector. Alvarez, named general counsel in 2004 by former Chairman Alan Greenspan, represents the pre-crisis, laissez-faire Fed to advocates on the left. Both sides accuse the Fed and Alvarez of lack of responsiveness. For example, when Congress sends questions to the Fed after the chair’s semi-annual testimony, the replies go through Alvarez’s legal department and come back months later, preventing any real exchange or follow-up, one person complained.

‘On Scott’s Desk’

Alvarez, who is 60, began at the Fed in 1981 straight out of Georgetown Law School, when Paul Volcker was jacking up interest rates to crush inflation. He rose through the ranks of the legal department over the following two decades. Those who have worked with Alvarez -- this article is based on interviews with nearly two dozen people, nearly all of whom declined to be named due to their ongoing interaction with the Fed -- describe him as brilliant, stubborn, loyal, maddening and compassionate. The phrase “on Scott’s desk” was coined by Fed employees to express their frustration with the piles of paperwork that Alvarez insists on personally vetting. He’s reluctant to delegate his authority and, despite his mild manner, micromanages when he does, two people said.

THIS IS THE FIRST SIGN OF A CROOKED BOOKKEEPER, BY THE WAY....THAT, AND NOT TAKING TIME OFF

Walk past his office after the summer sun has set behind the National Mall and you’re likely to find Alvarez still at his desk, say current and former colleagues. He is also there most Saturdays and often on Sundays, a testimony both to his work ethic and penchant for micromanagement, former colleagues say. Alvarez is a regular donor to Catholic charities in Washington and elsewhere, newsletters from the organizations show. He has an adult son who also works as a lawyer.

‘Born at the Fed’

Alvarez so identifies with his agency that he quipped to a congressional panel in 2010 that he was “born at the Federal Reserve.” That was reprised as a video skit at the legal division’s Christmas party -- featuring a grade-school boy wearing an Alvarez-style mustache. His is gray and neatly trimmed.

His opponents, who declined to be cited by name because they feared it would complicate relations with the agency, paint Alvarez as a stumbling block to quick implementation of the Dodd-Frank act who has tried to undermine needed regulation. Former administration officials, banking regulators and congressional aides, who all declined to be cited by name, complained that Alvarez had insisted on getting a new law passed before the Fed could regulate insurers differently than banks under a section of the Dodd-Frank act. Those critics said it was unnecessary and delayed needed capital-safety rules.

MORE SQUABBLING AT LINK

[hamerfan]

44. Musical Interlude

Not the Star Spangled Banner, but
America, The Beautiful by Ray Charles:

[Demeter]

45. I've run out of gas (or it's time for lunch)

be back tonight...I want to get the inbox at least down a bit...

[MattSh]

46. Marifel: the woman who left her children behind to look after mine — Medium

Through the glass of the Philippines’ Kalibo Airport departure lounge I can see a domestic worker and her husband sitting silently on a bench, going through the ritual of another painful goodbye.

Marifel is on her way back to work in Singapore after a trip home to see her family. She is one of 220,000 women who work in the city as domestic workers, cleaning, looking after children, the elderly and disabled and performing countless other domestic chores. They get called many things — helpers, nannies, maids, FDWs (foreign domestic workers); they are also known as the silent army helping Singapore become a powerful regional business hub.

Marifel’s goodbyes are now very well-drilled — before she leaves home she kisses her three children goodbye outside her small house in the Barangay of Patria on Pandan Island, on the northern tip of Antique. She hugs her dad, brother, nieces, nephews, and jumps on the back of her husband’s motorbike, placing her bag between them.

Her husband will drive some 50–60kms on the Aklan West Road through the towns of Ibajay and Tangalan, past rolling green hills and along blissful coastal roads all the way to the airport. Tourists travel the same route in reverse to get to the Philippines’ island paradise of Borocay. Marifel and her husband get to the airport early enough to ensure she is the first person on the flight —but there they sit and wait until the last person has checked in for the Tiger Airways flight to Singapore. As today is the weekend before Chinese New Year — Kalibo is packed with holiday makers.

When all the passengers have checked in, Marifel calmly kisses her husband goodbye, walks into the airport, presents her booking details and coasts through immigration. She might look like a late boarder — the person who got her timings wrong — but she’s not: all of this is the meticulous habit of someone who has done this journey many times before as a foreign worker in Singapore.

Complete story at - https://medium.com/@robobr7/marifel-the-woman-who-left-her-children-behind-to-look-after-mine-b16b0ad671cb

NOTE: Apparently because of the @ in the link, it's not going to work correctly. I seem to remember that there is some kind of workaround, but I don't have time to look it up right now. So you will need to copy and paste. But don't worry. This story WILL be worth your time.

ON EDIT: Or try this link... https://goo.gl/7w2E9r

[Demeter]

48. The 29 hour work week: It's not just for nasty Republican restaurant owners anymore ;-).

http://www.correntewire.com/the_29_hour_work_week_its_not_just_for_nasty_republican_restaurant_owners_anymore

Departments:
The Department of Don't Say You Weren't Warned
Tags:
ObamaCare clusterfuck

I have a bad habit of looking at employment opportunities on about every web site I visited, even when I visit the zoo. Today was no exception. And what to my wondering eyes should bleed all over the page but a whole list of jobs with 29 hour work weeks! -- at least in the lowly positions, which are most of them. So sorry, college students. Thanks to a horribly thought out law, you can't earn that extra $400/month... Unless you can find two employers who will allow you to coordinate the irregular hours that typically come with part-time work, not to mention the extra commute time. If you can't do this, you'll just have to borrow the extra money from our government's banker friends! It's a win for all! Except the little people, of course.

Who would have ever guessed this would happen! I mean, yeah, Mr. Right-wing Olive Garden did it. But a city government in an uber liberal state skirts the ObamaCare mandate by limiting the most lowly paid employees to 29 hours/week? OMGee!!!! And BTW, where's the outrage from the local media over this? Non-existent.

TABLE AT LINK

[Demeter]

51. How to Punish Bank Felons

http://robertreich.org/post/122011081135


...Five giant banks – including Wall Street behemoths JPMorgan Chase and Citicorp – recently pleaded guilty to criminal felony charges that they rigged the world’s foreign-currency market for their own profit. This wasn’t a small heist. We’re talking hundreds of billions of dollars worth of transactions every day. The banks altered currency prices long enough for the banks to make winning bets before the prices snapped back to what they should have been. Attorney General Loretta Lynch called it a “brazen display of collusion” that harmed “countless consumers, investors and institutions around the globe — from pension funds to major corporations, and including the banks’ own customers.”

The penalty? The banks have agreed to pay $5.5 billion. That may sound like a big chunk of change, but for a giant bank it’s the cost of doing business. In fact, the banks are likely to deduct the fines from their taxes as business costs. The banks sound contrite. After all, they can’t have the public believe they’re outright crooks. It’s “an embarrassment to our firm, and stands in stark contrast to Citi’s values,“ says Citigroup CEO Michael Corbat. Values? Citigroup’s main value is to make as much money as possible. Corbat himself raked in $13 million last year...JPMorgan CEO Jamie Dimon calls it "a great disappointment to us,” and says “we demand and expect better of our people.” Expect better? If recent history is any guide – think of the bank’s notorious “London Whale” a few years ago, and, before that, the wild bets leading to the 2008 bailout – JPMorgan expects exactly this kind of behavior from its people. Which helped Dimon rake in $20 million last year, as well as a $7.4 million cash bonus.

When real people plead guilty to felonies, they go to jail. But big banks aren’t people despite what the five Republican appointees to the Supreme Court say. The executives who run these banks aren’t going to jail, either. Apologists say it’s not fair to jail bank executives because they don’t know what their rogue traders are up to. Yet ex-convicts often suffer consequences beyond jail terms. In many states they lose their right to vote. They can’t run for office or otherwise participate in the political process. So why not take away the right of these convicted banks to participate in the political process, at least for some years? That would stop JPMorgan’s Dimon from lobbying Congress to roll back the Dodd-Frank act, as he’s been doing almost non-stop. Why not also take away their right to pour money into politics? Wall Street banks have been among the biggest contributors to political campaigns. If they’re convicted of a felony, they should be barred from making any political contributions for at least ten years. Real ex-convicts also have difficulty finding jobs. That’s because, rightly or wrongly, many people don’t want to hire them. A strong case can be made that employers shouldn’t pay attention to criminal convictions of real people who need a fresh start, especially a job.

But giant banks that have committed felonies are something different. Why shouldn’t depositors and investors consider their past convictions? Which brings us to Santa Cruz County. The county’s board of supervisors just voted not to do business for five years with any of the five banks felons. The county won’t use the banks’ investment services or buy their commercial paper, and will pull its money out of the banks to the extent it can.

“We have a sacred obligation to protect the public’s tax dollars and these banks can’t be trusted. Santa Cruz County should not be involved with those who rigged the world’s biggest financial markets,” says supervisor Ryan Coonerty.

The banks will hardly notice. Santa Cruz County’s portfolio is valued at about $650 million.

But what if every county, city, and state in America followed Santa Cruz County’s example, and held the big banks accountable for their felonies? What if all of us taxpayers said, in effect, we’re not going to hire these convicted felons to handle our public finances? We don’t trust them. That would hit these banks directly. They’d lose our business. Which might even cause them to clean up their acts. There’s hope. Supervisor Coonerty says he’ll be contacting other local jurisdictions across the country, urging them to do what Santa Cruz County is doing.


IT IS AN ECONOMIC BOYCOTT...JUST LIKE WHAT THE US IS DOING TO RUSSIA...TOTALLY.

[Hotler]

79. Attorney General Loretta Lynch called it a “brazen display of collusion”

that harmed “countless consumers, investors and institutions around the globe — from pension funds to major corporations, and including the banks’ own customers.”

Gee, didn't she take an oath when sworn to office to uphold the constitution blah, blah, blah and protect this country blah, blah, blah ?
Yet she just sat back and aloowed those fuckers to walk free again from their crimes.
Maybe she would be willing to sit in jail for themand when she gets out can go to work for them making speaches and earning big bucks.

Nothing to see here. Move along.

[DemReadingDU]

54. Anthem offers $47 billion for Cigna

6/20/15 Anthem offers $47 billion for Cigna

U.S. health insurer Anthem Inc (ANTM.N) said on Saturday it had offered $47 billion in cash and stock for smaller rival Cigna Corp (CI.N) but that the deal was stalled over Cigna CEO David Cordani's role in the merged company.

The announcement comes as the biggest U.S. health insurers seek acquisitions to boost membership in government-paid healthcare plans and the employer-based insurance that is Cigna's specialty. They say being bigger can help them negotiate for better prices and improved networks of doctors.

Insurers Aetna Inc (AET.N) and Cigna are participating in an auction to acquire another rival, Humana Inc (HUM.N), according to a person familiar with the matter, who asked not to be identified because the sale process is confidential.

Humana declined to comment. Aetna was not immediately available for comment. Cigna declined to comment on the Humana auction or the Anthem offer.

Anthem, the second largest health insurer in the United States, said in a statement that it had made four offers for Cigna in June, sweetening each one. The Wall Street Journal first reported on the rejected offers last week.

more...
http://www.reuters.com/article/2015/06/20/us-cigna-m-a-anthem-idUSKBN0P00PS20150620?

[Demeter]

56. They should buy some software security firm, IMO

[Demeter]

57. With deepest sympathy

[DemReadingDU]

69. So sorry to hear

[Demeter]

58. Missoula wins legal fight to take over Mountain Water Co.

http://missoulian.com/news/local/updated-city-of-missoula-wins-legal-fight-to-take-over/article_c16fa303-87fe-520e-8492-1594c00ffb98.html



Missoula won its legal fight to take ownership of Mountain Water Co. and the city’s drinking water system Monday. In a 68-page decision, Missoula District Court Judge Karen Townsend said the city "carried its burden of proof" and showed that "its contemplated use of the water system as a municipally owned water system is more necessary than the current use as a privately owned for-profit enterprise." "Based on credible evidence at trial, the Court concludes that the object of this condemnation proceeding, the use of the water system, is a public use for which the right of eminent domain may properly be exercised" under Montana law, Townsend said. The judge said she “considered the broad range of circumstances,” and weighed “the benefits to be derived from the proposed public use against the impairments to the existing use.” Her conclusion: “The proposed public use is more reasonable” and “proper.”
The city made its case, she continued, and proved that “the taking is a more necessary public use.”

The city did try to purchase Mountain Water Co. from its owner, global equity firm The Carlyle Group, Townsend said, “and the final written offer was rejected.” It is now, she said, Missoula’s “right to acquire” the water system by exercising its power of eminent domain.

***

John Kappes, president of Mountain Water, said his company disagreed with Townsend’s ruling.

“We will review the decision and then proceed to take the next steps to exercise our constitutional rights as private property owners in Montana,” Kappes said Monday night. “In the meantime, we will continue to provide our customers with high-quality water service as we have for over 130 years.”

Ward 2 City Council member Adam Hertz opposed the city’s attempt to take ownership of Mountain Water from the beginning. At each week’s council meeting, Hertz cast a dissenting vote when it came to paying the latest invoices from attorneys representing the city. (As of two weeks ago, the city’s legal bills totaled about $2.7 million.) After the announcement Monday night, Hertz said the ruling came as welcome news to the council, which otherwise supported the city’s efforts to take ownership of the utility. “I haven’t had a chance to see the ruling,” said Hertz. “I’ve been against the condemnation effort for many reasons. I did expect the city to prevail in District Court, so I’m not surprised. But the game isn’t over. We’re probably at halftime and we’ve got a lead.”

Ward 4 council member Jon Wilkins supported the city’s efforts. Like the rest of the council, he also received word of the judge’s ruling during Monday night’s meeting, when Mayor John Engen announced the news. He said the costs associated with the takeover will surface as the legal proceedings move to the next phase. “It’s the beginning of the end,” said Wilkins. “I’m sure there will be appeals. I suspect this will drag on for another year or so. The only words I can say, it’s the beginning of the end.”

***

Townsend took the case under advisement on April 6, following 11 days of testimony and months of pretrial wrangling by a team of attorneys. The city’s task was to prove that public ownership of the water utility is "more necessary" than private ownership. The defendants, on the other hand, argued that the city cannot afford to own the company. They also pointed to the city of Missoula's failed attempt to condemn the water company in the 1980s in a case that went to the Montana Supreme Court.

Townsend’s role, then, was to determine if public ownership is more necessary than private ownership, irrespective of any supposed value of the company. Now that she has ruled in favor of the city, the parties will argue over "just compensation" in a separate court proceeding before a panel of appointed condemnation commissioners. The city’s most recent takeover bid dates to December 2010, when The Carlyle Group announced plans to buy California-based Park Water Co., the parent company of Mountain Water Co., from the Wheeler family. Henry “Sam” Wheeler bought the city’s water system in 1979 from Montana Power Co. for $8 million. Because of what was reported to be “bad blood,” Wheeler refused every offer from the city of Missoula to purchase the water system.

Mayor Engen immediately asked the Montana Public Service Commission to place conditions on the proposed sale to Carlyle. The city, he said, should have first rights to any subsequent sale of Mountain Water Co. by Carlyle. The ultimate agreement gave Missoula a chance to buy the water system in the future. In exchange, the city agreed to support Carlyle’s purchase of Park Water, and with it Missoula’s public drinking water system.

Carlyle did not, however, hold true to its word. After the Missoula City Council voted in October 2013 to pursue Mountain Water Co.’s acquisition through negotiation or condemnation, Carlyle managing director Robert Dove initially emailed Engen and said the firm planned to make good on its commitment. However, in an email earlier that year, another executive at Carlyle had warned Dove that Mountain Water's parent water company in California would lose $2.1 million in annual revenue if it sold the Missoula company. On the stand, the Carlyle director admitted he never made a counteroffer to the city of Missoula’s $65 million proposal. By Jan. 17, 2014, Dove had told Mountain Water’s president that Carlyle would not negotiate with Engen, according to court testimony.

In April 2014, the city took Mountain Water Co. and The Carlyle Group to court to try to force a sale under Montana's eminent domain law. In May, the city filed an amended complaint and served the defendants. Carlyle added yet another twist in September, when it announced an agreement to sell Mountain Water Co. and two California utilities – together called Western Water Holdings – to a Canadian company, Algonquin Power and Utilities Corp., for $327 million, including $77 million in debt. The plan would have placed Mountain Water Co. under the management of Algonquin’s subsidiary, Liberty Utilities.

IMAGINE TRYING THAT UNDER TPP--IT WOULD BE IMPOSSIBLE!

[Demeter]

59. How Policing Works in a Privatized City

https://fee.org/anythingpeaceful/detail/how-policing-works-in-a-privatized-city

IS IT REAL OR IS IT POTEMKIN? YOU READ AND DECIDE

[Demeter]

60. Government paves way for multi-employer pension plan cuts

http://news.yahoo.com/government-paves-way-multiemployer-pension-plan-cuts-155134577--finance.html

The government is preparing to cut benefits over the next few years for hundreds of thousands of retirees covered by underfunded multi-employer private pension plans.

The Obama administration announced on Wednesday that well-known mediator Kenneth Feinberg review applications from pension plans under a law passed last year. The law would cut benefits as a last ditch means to stave off insolvency of troubled plans such as the huge Teamsters Central State Fund. The new law earned mixed reviews from the unions whose members are covered by such defined benefit plans, including construction workers, Teamster truckers and food service workers. The Teamsters and AARP opposed the law when it passed last year as part of a governmentwide spending bill. But other unions saw it as a solution that was preferable to plans becoming insolvent and getting a federal bailout.

Treasury Secretary Jacob Lew named Feinberg, an attorney, to review applications for fairness. Feinberg has administered the compensation funds for claims from the Deepwater Horizon oil spill and from families of victims of the 9/11 terrorist attacks. Feinberg said the job is a "very, very difficult, challenging assignment" and said he won't accept compensation for the task.

More than 10 million people are covered by 1,400 or so multi-employer plans, but about 1 million of those are covered by plans expected to run out of money in coming years. They would be eligible under the new system that would cut benefits to people already in retirement. People 80 years old and over are protected from any upcoming cuts, while those over 75 are partially protected.

THE REST OF US ARE SCREWED

[DemReadingDU]

70. Screwed bad

People worked all their lives for a decent retirement, only to see the pensions drastically cut when they need it the most.

yet the banks get bailed out, and there is always money to go to wars

[Fuddnik]

71. Anytime you see Lew, Feinberg, et al, attatched to anything, you're screwed.

Thanks Obama.

[Demeter]

61. EU Seeks Transaction Tax as 11 States Meet in Bid to Choose Path

http://www.bloomberg.com/news/articles/2015-06-17/eu-seeks-transaction-tax-as-11-states-meet-in-bid-to-choose-path

The 11 European nations seeking a financial-transactions tax WILL mEet Thursday in Luxembourg in a bid to decide how to design the measure, according to European Union officials. Participating states are wrangling over which trades to tax and who should collect revenue, according to planning documents obtained by Bloomberg News. Finance ministers and deputies are next slated to meet in Luxembourg with EU Economic and Tax Commissioner Pierre Moscovici before scheduled meetings of all 19 euro-area finance ministers.

At a May 11 meeting, the participating nations considered three options for how to collect the tax, according to a document prepared for that meeting. One option would be a broad tax based on a financial firm’s country of residence, a second would be similar but more narrowly focused, and a third option would be based on where trades are issued. In May, ministers also considered how broadly the tax should cover derivatives trades, alongside questions of what exemptions might be permitted. In subsequent technical meetings, they considered a list of 17 “building blocks” that might be part of a final tax plan.

Tax collection options were discussed in the technical meetings, based on a study by consulting firm EY, according to a document prepared for those meetings. Under one option, financial firms would report and collect taxes due on an individual basis. Another option would be more central tax collection, carried out by a central counterparty or clearinghouse or other utility.

Transaction-tax plans have bogged down as countries disagree about how much revenue the tax should raise....The 11 nations that have volunteered to work on the joint transaction-tax plan are: Germany, France, Spain, Italy, Belgium, Austria, Portugal, Greece, Estonia, Slovakia and Slovenia.

[Demeter]

63. EU reaches deal to shine a light on "shadow" banking

http://www.reuters.com/article/2015/06/17/uk-eu-securities-regulations-idUKKBN0OX1GH20150617

Financial transactions using shares or other assets to secure credit will come under greater scrutiny after the European Union reached a deal on Wednesday to improve transparency and mitigate risks in the so-called "shadow banking" sector. The sector creates credit outside mainstream banking by allowing banks, asset managers, pension funds and others to access secured funding through a temporary exchange of assets as a guarantee for cash.

Figures from the global Financial Stability Board showed that shadow banking grew by $5 trillion in 2013 to reach $75 trillion. But the lack of transparency in such transactions has made it difficult to identify who owns the assets and monitor risks.

The European Parliament and EU member states agreed on a final text of a new law on Wednesday to require stricter reporting requirements on securities financing transactions. All contracts will have to be reported to a trade repository with six already set up in the EU. Investors will also have to be told how their assets are being used.

"These activities are important for the financing of the economy and the right kind of oversight will make it easier to monitor and assess the risks involved," EU financial services chief Jonathan Hill said in a statement.

The deal will be formally rubber-stamped by EU states and the parliament at a later date.

[Demeter]

62. Americans Are Taking Fewer Crazy Risks With Their Retirement Money

http://www.bloomberg.com/news/articles/2015-06-15/americans-are-taking-fewer-crazy-risks-with-their-retirement-money

...more balanced strategies are showing up in worker 401(k)s. Vanguard defines a "balanced" portfolio as one with 40 percent to 90 percent stock and less than 20 percent in employer stock...

The reason for these changes? Some workers have undoubtedly wised up since the recession. More important, employers have realized they can't leave investment choices up to workers who know little or nothing about finance. Instead, workers are automatically being steered into recommended strategies. The most common are target-date funds, which automatically adjust exposure to stocks and bonds as workers get older. This year, for the first time, target-date funds are getting more than half of all 401(k) contributions.

MORE

[Demeter]

64. You'll Never Guess the Best 401(k) Provider in the U.S.

http://www.fool.com/investing/brokerage/2015/06/20/youll-never-guess-the-best-401k-provider-in-the-us.aspx

Millions of Americans rely on access to 401(k) plans at work as their primary way of saving for retirement. Despite this, criticisms of 401(k) plans are frequent, with many workers complaining about their high costs, lack of strong investment options, and general shortage of help in setting up a viable retirement savings strategy.

Not all 401(k) providers are bad, though. In fact, a recent survey from the National Association of Retirement Plan Participants surveyed thousands of Americans in an effort to find the best financial firm helping their client companies' employees plan for their retirement. The shocking finding: the nation's most successful 401(k) plan provider was none other than Bank of America (NYSE: BAC ) and its Merrill Lynch unit...

MORE

[Demeter]

65. Tax Revenue Collapses in Greece; Government Denies Capital Controls; Citizens Pull €2bn in Three Day

http://globaleconomicanalysis.blogspot.com/2015/06/tax-revenue-collapses-in-greece.html

Knowing that a default is now inevitable, Greek citizens made a decision to stop paying taxes. The result was foreseeable: Greek Government Suffers Collapse in Revenue in May.

The Greek government suffered a collapse in revenue in May after companies and individuals delayed filing tax returns amid fears that emergency levies were imminent in order to secure a deal with bailout creditors.

The news of the sharp drop in receipts comes as eurozone finance ministers held a crunch meeting to discuss the country’s bailout.

Greek government revenues in May were €900m, or 24 per cent, short of the monthly target, according to preliminary budget figures. It had met projections for the previous three months.

But Greece still ran a primary budget surplus — before making payments on the public debt — amounting to €1.5bn for the first five months after slashing payments to suppliers and outlays for public investment.

“There appears to be a complete freeze on domestic payments apart from wages and pensions as the government rounds up cash to pay international creditors,” a senior Athens banker said. “This is starting to have a knock-on effect on revenue collection.”

A government spokesman on Wednesday denied reports Greece was considering imposing capital controls, perhaps as early as next week.

Cash withdrawals from local banks have picked up pace, with almost €2bn pulled out in the past three days, the same banker said.

“This week’s gloomy scenarios have affected depositors . . . We are back where we were in January [when about €10bn left Greek banks],” he said.

Capital Controls?

On one hand, we have an official denial. Please recall the expression: "Never believe anything until it's officially denied". On the other hand, it makes sense for Greece to allow citizens to pull cash as long as the ECB does not remove ELA. Sooner or later, either the ECB or the Greek government will impose capital controls. I suspect it will be the ECB that forces the issue.

Meanwhile, my oft-repeated message takes on increased urgency: "Get your money out of Greek banks while you still can!"

Read more at http://globaleconomicanalysis.blogspot.com/2015/06/tax-revenue-collapses-in-greece.html#QRjmKVsYhs612bpu.99

[Demeter]

66. Greek Default Risk Belied in Markets as Bond Liquidity Dries Up

http://www.bloomberg.com/news/articles/2015-06-19/greek-default-risk-belied-in-markets-as-bond-liquidity-dries-up

You wouldn’t know from looking at activity in the Greek bond market that the nation may be hurtling toward default.

None of the government’s bonds traded publicly last week nor derivatives insuring them, according to data from the Bank of Greece and the Depository Trust & Clearing Corp. Still, two-year Greek notes yield 28.6 percent and credit-default swaps imply about an 80 percent probability of default.

Greece may be unable to meet its commitments to creditors just three years after investors exchanged bonds at a loss as part of the biggest ever debt restructuring. International Monetary Fund Chief Christine Lagarde said Thursday that the IMF will immediately consider Greece in default unless it pays about 1.5 billion euros ($1.7 billion) due on June 30, the same day its euro-area bailout agreement expires.

“We’re in a completely different world to 2012,” said Bill Blain, a strategist at Mint Partners in London. “Any kind of Greek bond is completely illiquid.”\


MORE

[Demeter]

67. What Happens If Greek Banks Can't Open?

http://www.theatlantic.com/business/archive/2015/06/grexit-default-preparation-drachma/396386/

The scariest quote for the world economy this week came from a member of the European Central Bank’s executive board. Asked by Eurogroup President Jeroen Dijsselbloem whether Greek banks would open Friday, his answer was stark:

"Tomorrow, yes. Monday, I don't know," replied Benoit Coeure.

So far, Coeure is right: Greek banks were open on Friday, though that wasn’t what people were worried about. The important issue is whether Greece can come to an agreement with its creditors to release bailout funding that will keep banks running. At the moment, Greece is due to owe creditors €1.6 billion at the end of June, money the government says it doesn’t have. If it can’t either repay or reach an extension deal, Greece might leave the eurozone—the doomsday scenario with the somewhat silly name “Grexit”—though default wouldn’t necessarily mean departure.

On Friday, the ECB apparently gave Greece a short-term cash infusion to last through the weekend, and the eurozone ministers will reconvene on Monday to try to hammer out a longer-term deal. If you feel like you’ve been hearing about this for years, you’re not entirely wrong—there have been dire warnings about Greece departing the eurozone since the spring of 2012. This time really does seem to be different. Greece’s left-wing government has refused to make as many concessions as its creditors want—which isn’t to say that Grexit is inevitable...

[Demeter]

68. Why There Cannot Be Greek Debt Relief

http://www.forbes.com/sites/timworstall/2015/06/20/why-there-cannot-be-greek-debt-relief/

It’s been a standard point for months now about the Greek crisis that there should be, in economic terms, some debt relief. Hack a haircut off the total amount that Greece owes. We all know that it won’t pay that total amount, there’s just about no way possible that it could. So, all the economically rational people have been saying that we should impose the haircut and cut that total amount of debt. Yet it hasn’t happened and it’s most unlikely that it will. For while this is the correct economic answer it’s also one that is politically almost impossible.

The reason for this is that the capitalists and the banks don’t actually own any of this debt (OK, some banks do, but it’s almost entirely Greek banks and if their holdings are haircut then they go bust and the Greek government then needs to prop them up again, achieving nothing). So, we can’t stick the bill with the capitalists or the banksters neither of whom would get a great deal of sympathy over their losses at the best of times. The money is owed to the taxpayers of other European Union and eurozone countries. And what’s more, those taxpayers know this. How much is owed to whom is listed on this nice little chart from Barclay’s:



So, here’s what the problem is. In order to solve the Greek debt problem something like 50% of that debt has to be written off. So, in the range of 1.5% to 2% of GDP for each of those countries listed. Now, that can be done of course. It’s not that they’ve then got to go out and collect another 2% of GDP in taxes from their own citizens to pay for it. Not in one year at least. The pain will be spread over the years: most of it would probably come from the European Central Bank returning smaller profits to the shareholders, those nations, over the years. However, the citizenry can read that chart as well as you or I can. And they know that writing down the debt means that they lose some of their money.

And 2% of GDP is a substantial sum. If we scale that up to the US economy that’s around $340 billion. We’re not talking about chopped liver here. Imagine President Obama going on TV and announcing that the US is going to give $340 billion to some foreign country (this is substantially more than all US aid to all countries in any one year). Or, more pertinently, imagine a politician who doesn’t like Obama going on TV and announcing that Obama has just given $340 billion to some foreign country.

Then add in that a number of those countries are currently poorer than Greece. Slovenia, Slovakia, Estonia for example. Now try to measure the political lifespans of people who say, right, we’re going to give $340 billion to people richer than we are.

It’s not going to work, is it? Which is why a haircut on that Greek debt, while it’s the economically rational thing to do, just hasn’t happened and is most unlikely to happen...

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[Demeter]

72. I was under the distinct impression that we gave away much more than $340B in TARP and Co.

Didn't the final total come to something like $13T? I'm sure at least $340B went to European banks.

So, pony up, Eurozone. You created this mess with your dystopian economic straitjacket!

[DemReadingDU]

76. I recall a similar gazillion amount for the TARP, plus

when the IMF bailouts countries, the U.S. is a part of that too!




from 5/3/2010 The Great Reflation by John Mauldin

Let me start this week's Outside the Box by venting a little anger. It now looks like almost 30% of the Greek financing will come from the IMF, rather than just a small portion. And since 40% of the IMF is funded by US taxpayers, and that debt will be JUNIOR to current bond holders (if the rumors are true) I can't tell you how outraged that makes me.

What that means is that US (and Canadian and British, etc.) tax payers will be giving money to Greece who will use a lot of it to roll over old bonds, letting European banks and funds reduce their exposure to Greece while tax-payers all over the world who fund the IMF assume that risk. And does anyone really think that Greece will pay that debt back? IMF debt should be senior and no bank should be allowed to roll over debt and reduce their exposure to Greek debt on the back of foreign tax-payers.

I don't think I signed on for that duty. Why should my tax money go to help European banks? This is just wrong on so many levels and there is nothing seemingly we can do. Oh, well. Thanks for listening.
more...
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2010/05/03/the-great-reflation.aspx



edit to add
2/20/13 The total cost of the Bank Bailout by gjohnsit

The net total? As of November 10, 2011, it was $29,616.4 billion dollars — (or 29 and a half trillion, if you prefer that nomenclature). Three facilities—CBLS, PDCF, and TAF— are responsible for the lion’s share — 71.1% of all Federal Reserve assistance ($22,826.8 billion).

more...
http://www.dailykos.com/story/2013/02/20/1188374/-The-true-cost-of-the-Bank-Bailout

[Demeter]

74. Austria finmin expects Greek banks to be open without problems over next few days

http://finance.yahoo.com/news/austria-finmin-expects-greek-banks-095949567.html

Austria's finance minister said on Sunday it was important for the European Central Bank to keep providing emergency liquidity for Greek banks as long as they are solvent, adding that he expected Greek banks to open without problems next week.

"I expect that tomorrow and in the next few days this won't be a problem," Hans Joerg Schelling told Austrian broadcaster ORF, adding that no European bank would withstand several months' worth of the kind of capital outflows Greece has been seeing.

"That's why I think it's important, that we keep these support programmes, also those from the ECB, running as long as possible."

hmmmm

[Demeter]

77. European Central Bank agrees emergency funding for Greece FRIDAY

http://www.theguardian.com/business/2015/jun/19/greek-crisis-ecb-meeting-to-decide-on-emergency-funding?CMP=ema_565

The European Central Bank has agreed to pump more funds into Greek banks to prevent a full-blown financial emergency in the eurozone’s crisis state.

The decision – taken at a hastily convened conference call on Friday – comes after the acrimonious breakdown of talks between finance ministers in Luxembourg on Thursday night raised the prospect of Greece’s exit from the single currency bloc.

The ECB’s decision-making governing council on Friday agreed that Greek banks could draw on extra funds from an emergency facility. However, it was unclear whether Greece had got the full €3.5bn (£2.5bn) it was hoping for under the Emergency Liquidity Assistance (ELA) programme, or whether it has been given only enough to see it through until Monday’s meeting of EU leaders...The ECB has set another meeting for Monday, suggesting that the latest cash injection will only see Greece through the weekend.

Monday is shaping up to be a red-letter day in the five-year old Greek debt drama. The ECB meeting will be followed by yet another gathering of eurozone finance ministers in the afternoon, topped by an emergency summit of European leaders scheduled for the evening.

European leaders agreed to the special summit after a meeting between Greece and its eurozone creditors broke up amid recriminations over who was responsible for the impasse. The timing of the emergency leaders’ summit - just three days before a scheduled meeting of all European Union leaders - was determined by fears of a run on Greek banks....

[Demeter]

73. Will Wells Notice Lead to Legal Action for State Street?

http://finance.yahoo.com/news/wells-notice-lead-legal-action-180006103.html

Boston-based State Street Corporation STT might encounter a civil enforcement action by the U.S Securities and Exchange Commission (SEC). Reportedly, the SEC suspects State Street to have indulged in inappropriate solicitation of the bank’s asset servicing business for public retirement plans.

Based on media sources, the SEC’s enforcement division has been investigating secret partnerships between activist investors and some companies, in potential violation of federal securities law since quite some time, and is investigating State Street’s solicitation process in Ohio since Nov 2014.

In a regulatory filing with the SEC on Jun 18, State Street confirmed that it has received a “Wells” notice from the agency, specifically concerning the bank’s relationship with clients in two states during 2011. Moreover, “in at least one instance”, the investigation includes political contribution by one of State Street’s consultants or lobbyists, during and following a public bidding process.

Though a Wells notice is an indicator of a potential action, it does not guarantee that an enforcement action will be taken. Moreover, it provides an opportunity to the subject company to submit a response to the agency. State Street disclosed in the filing that it intends to submit such a response....

[Demeter]

75. Defaulting on student loans like 'civil disobedience': Author

http://www.cnbc.com/id/102773503

If you're one of the 43 million Americans burdened by student loan debt, then you know that repaying your loan isn't fun.

So what if you just stopped?

That's what author Lee Siegel recently proposed in his controversial New York Times op-ed "Why I Defaulted on My Student Loans." He wants borrowers to stop paying on the collective $1.2 trillion in total student debt, in order to protest a system that in his mind unfairly penalizes poor and middle-class students. "If the banks have become too big to fail, then the people have become too small to succeed," argued Siegel, defending what he says would be "a collective act of civil disobedience" in an interview with CNBC's "On the Money." Currently, student loan default rates hover below 14 percent, according to government data. Yet a number of observers warn that a potential wave of defaults could loom, as graduates find themselves unable to pay while tuition prices keep climbing.

Siegel attended two small colleges before earning his bachelor's and master's degrees from Columbia University. He explained that he took out a total of $48,000 in loans that have since ballooned to $150,000 with interest and fees on his way to becoming a college professor. He contended that he chose to become a writer instead but "tried to pay it back, and just couldn't do it."

The class of 2015 could face a similar future. According to college financial planning site Edvisors.com, 70 percent have graduated with student loans averaging a total of $35,051. For those graduating from for-profit colleges, that number jumps to $48,024...

[Demeter]

78. I'M CALLING A WRAP

Can't take any more trauma.....

Here's the last word, from a cute little girl named Curly Sue: