Tag Archives: greece

Currency Wars: Central Banks in Denial or Lying?

Here’s a piece of recent news that you almost certainly missed: A large consumer products company, Johnson & Johnson, announced a one-off loss owing to a 32 percent currency devaluation in Venezuela. The reason I expect you missed that less-than-seismic piece of news is that, unless you happen to be particularly fascinated in Johnson & Johnson, or utterly enthralled by the development of currency policy in Venezuela, you probably didn’t care.

But here’s the thing. Do you care to guess how much J&J lost thanks to that currency movement? Answer: a cool hundred million dollars. Johnson is a pretty large company, but even so. To lose a hundred million bucks? In Venezuela? That sounds a little disturbing, no? A bit like the start of one of those killer-virus horror flick, where the pretty teenager who comes down with a benign little illness ends up dying horribly as some unknown disease takes hold.

Our Central Planners Bernanke, Draghi and Merkel Hard at Work
Central Planners Bernanke, Draghi & Merkel Hard at Work

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The Greeks Have Already Dumped the Euro

Submitted by Michael Krieger of LibertyBlitzkrieg

Really fascinating article about how many cities and communities in Greece have already moved on from the euro to bartering as well as alternative currencies.  The city of Volos, 200 miles north of Athens with a population of 170,000 is highlighted in the article due to the size of its alternative money market centered around a local currency call the Tem.

Now, from the Guardian:

It’s been a busy day at the market in downtown Volos. Angeliki Ioanitou has sold a decent quantity of olive oil and soap, while her friend Maria has done good business with her fresh pies.

But not a single euro has changed hands...

Read the rest here.

The Fed’s Nuclear Balance Sheet. Stand Back: This Baby’s Going to Explode

Over the coming weeks, we’re going to be hearing a lot about the ‘fiscal cliff’: the threat that some 5% of GDP is going to be ripped out of the economy in a combination of tax hikes and spending cuts. A fiscal slow-down on that scale will almost certainly trigger recession. The CBO thinks so, though their numbers look optimistic to me. (If you cut demand by 5%, more or less overnight, then you shouldn’t expect the economy to grow by more than 1% in the year following.)

The Feds solution to debt: more debt

The Feds solution to debt: more debt

Because the process of fiscal compromise acts itself out on the political stage – all big personalities and high drama – the media loves to report it. Loves to imply that vast questions are at stake, that political careers will stand or fall by the outcome.

But they’re not. Not really. This so-called ‘cliff’ is really just the first in a series of steps. The US budget is arguably the most distorted in the Western world. Greece and Japan may have higher debts, Italy and Portugal may have worse growth prospects – but for sheer budgetary insanity, the US is probably the world leader, combining huge current deficits with vast unfunded promises to retirees, and welfare entitlement program recipients. You don’t need to take my word for this. The IMF states, ‘under our baseline scenario, a full elimination of the fiscal and generational imbalances would require all taxes to go up and all transfers to be cut immediately and permanently by 35 percent. A delay in the adjustment makes it more costly.’ Continue reading →

2012 US Elections – 6 Billion spent for “Status Quo” – Economic Consequences

Four More Years
Four More Years

Obama’s an accomplished individual. Smart, cool, in control. But his standout quality is probably his ability to create euphoria. Create it, sustain it, ride it. Watch the people celebrating with him at his victory rally in Chicago and you could easily believe that the USA had just won a war or beaten a recession.

Unfortunately for Obama, reality doesn’t have much time for speeches. The economy was dire going into the election. Coming out of it, you can almost hear the engine failing.

Let’s take the first indicator of failure – the stock market. The market mood darkened in September and October, then dropped abruptly as news of Obama’s victory sank in. I don’t actually think that’s because Wall Street hates Obama. I think it’s more that as the election hoopla dies away, investors realise how little they can expect from the government, how bad the economic situation really is. And, for that matter, how bad the political situation is. The House remains solidly Republican, the Senate comfortably Democrat – and the whole divisive status quo guaranteeing gridlock for another four years. Continue reading →

‘Nazis out!’ Greek protesters attack conference, throw coffee on German diplomat

Dozens of Greek activists protesting austerity policies broke into a conference and clashed with police in a protest against a German government official.

Law enforcement officers used truncheons and teargas to disperse some 250 activists in the northern city of Thessaloniki, where a meeting of Greek and German mayors was taking place.

WE ARE A NATION OF LIONS LED BY DONKEYS IN THIS ECONOMIC TRENCH WARFARE

A hundred years ago, a generation of men – many of them volunteers – fought an unprecedently bloody war for almost invisible gains. The men were heroes, but the generals commanding them were too often blunderers, too little conscious of the ever-mounting casualties. David Cameron is right to demand that our schoolchildren are reminded of the Great War and the vast sacrifices involved.

He’s right, but he’s also showing some chutzpah. History remembers those men as ‘lions led by donkeys’. Heroes betrayed by blundering and unimaginative leaders. We are not – thank God – at war on that scale now, but in economic terms we are deep in our own version of trench warfare and David Cameron has too little idea how to lead us out. Continue reading →

Letting Greece Twist In The Wind

With impeccable timing, it seeped out that a group of experts at the German Finance Ministry is studying ways to deal with a Greek exit from the Eurozone. A spokesperson clarified helpfully on Friday, rather than denying it, that the group has been in existence for over a year. Impeccable timing because it happened as Greek Prime Minister Antonis Samaras was arriving in Berlin for his begging expedition. German Chancellor Angela Merkel must have smiled. The heat was on.

For that whole debacle, read…. Letting Greece Twist In The Wind

Euro Optimism Surges, A Greek Tax Revolt Flares Up: It’s Decision Time, Again

Euro optimism is once again gushing through the system on the hope that the debt crisis could be wished away with a nod by German Chancellor Angela Merkel or with a wink by the Bundesbank at the European Central Bank, which is dying to print unlimited amounts of moolah to buy sovereign bonds—and old bicycles, if it has to—in order to force yields down for debt-sinner countries like the US Spain and Italy. But in Greece there has been an incident.

For a debacle that taxpayers in other countries may have to pay for, read…. Euro Optimism Surges, A Greek Tax Revolt Flares Up: It’s Decision Time, Again

Too big to fail, too big to bail: Spain and Italy are too indebted for even Germany to rescue, so let’s just end the Euro currency!!

Another day, another faux bailout. Recently, European finance ministers agreed to let the Spanish banks get the first €30 billion slice of their bank bailout.

Those same finance ministers are also set to approve a year’s delay in the deadline given to Spain for reaching a budget deficit of 3% of GDP. That won’t, of course, be the last bailout for Spain and, please note, a budget deficit of 3% is still pushing debt ever upwards in acountry whose economy is getting smaller not bigger.

Unsurprisingly, government bond markets have once again been wildly unimpressed. Spanish bond yields briefly touched 7.76% , before falling back. Given that Spanish debt (according to the misleading official figures) is around 7.7% of GDP and rising fast, interest rates at this level mean that about 6 cents in every euro are going to pay the interest on that debt.

The costs of euro collapse will be huge, but those costs are coming anyway. And they only get bigger the longer you defer the moment of truth

Put another way, Spaniards have to work about three weeks a year, simply to pay off the interest they owe on the national debt. No wonder their economy is failing under the weight of that burden. No wonder unemployment is so extravagantly high.

It’s time to end this massive Ponzi Scheme. If the problem is too much debt, you don’t solve the problem by extending more debt. If the problem is banks with irresponsibly reckless lending practices, the solution is not to “gift” them more money. If the problem is a wildly uncontrolled money supply, you don’t solve that problem by printing money until the presses are smoking hot.

A Ponzi Scheme is any merry-go-round fraud where you have to keep pulling new idiots into your scheme to keep things going. It’s the economics of the chain-letter. People can sometimes make money, but only if the supply of idiots is big enough. These things always collapse – and collapse disastrously – in the end.

We’re near that point now. Spain can’t receive a Greek-style bailout: all the EU rescue funds combined don’t have the resources to do it. Even if Germany decided to do all it could, the scale of these debts would simply overwhelm Germany’s (already very indebted) economy. In any case, if the fairies came and Spain were rescued, the pressure on Italy would soon become almost overwhelming. And though France hasn’t been hitting the headlines recently, it has higher debt than Spain, a history of deficits and a huge banking sector with vast exposure to Spain, Italy and Greece.

So why not let’s just call it a day? For Spain. For Italy. For the single currency failure know as the Euro. For this whole misconceived and duplicitous Ponzi Scheme. The costs of euro collapse will be huge, but those costs are coming anyway. And they only get bigger the longer you defer the moment of truth.

David Cameron wants to hold a referendum on Europe sometime after the next election. But he’d better get on with it. Europe, in its current form, doesn’t have that long to live.

Mitch Feierstein is CEO of Glacier Environmental Fund and author of Planet Ponzi: How bankers and politicians stole your future