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Archive for February, 2016

The Game Changed in Venezuela Last Night

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Listen and understand. The game changed in Venezuela last night. What had been a slow-motion unravelling that had stretched out over many years went kinetic all of a sudden.

What we have this morning is no longer the Venezuela story you thought you understood.

Throughout last night, panicked people told their stories of state-sponsored paramilitaries on motorcycles roaming middle class neighborhoods, shooting at people and  storming into apartment buildings, shooting at anyone who seemed like he might be protesting.

People continue to be arrested merely for protesting, and a long established local Human Rights NGO makes an urgent plea for an investigation into widespread reports of torture of detainees. There are now dozens of serious human right abuses: National Guardsmen shooting tear gas canisters directly into residential buildings. We have videos of soldiers shooting civilians on the street.

And that’s just what came out in real time, over Twitter and YouTube, before any real investigation is carried out. Online media is next, a city of 645,000 inhabitants has been taken off the internet amid mounting repression, and this blog itself has been the object of a Facebook “block” campaign.

What we saw were not “street clashes”, what we saw is a state-hatched offensive to suppress and terrorize its opponents.

Here at Caracas Chronicles we’re doing what it can to document the crisis, but there’s only so much one tiny, zero-budget blog can do.

After the major crackdown on the streets of large (and small) Venezuelan cities last night, I expected some kind of response in the major international news outlets this morning. I understand that with an even bigger and more photogenic freakout ongoing in an even more strategically important country, we weren’t going to be front-page-above-the-fold, but I’m staggered this morning to wake up, scan the press and find…

Nothing.

source:http://caracaschronicles.com/2014/02/20/the-game-changed/

Irish SPVs (special purpose vehicles) are exporting risk to other financial systems around the world

Based in a drab office building in Dublin down the road from a pub frequented by Prime Minister Enda Kenny, VPB Funding Ltd. had no employees but one function: selling bonds. In 2013, it issued $225 million of unsecured notes.

The proceeds of that sale were funneled to Vneshprombank Ltd., a Moscow lender whose license was revoked last month when Russian authorities accused management of pilfering its assets and falsifying accounts. VPB’s notes have plunged to pennies on the dollar.

The entanglement of an obscure Dublin firm in the woes of a lender 2,000 miles away shows why Irish officials have begun shining a light on special purpose vehicles like VPB, unregulated entities that borrow on behalf of corporations throughout the world. The Irish capital, home of Europe’s costliest banking meltdown, remains a hub for the sort of opaque operations that contributed to the global financial crisis, threatening risks that policy makers are seeking to stamp out.

“There’s concern that Irish SPVs are exporting risk to other financial systems around the world and could have contagion effects,’’ said Shaen Corbet, a lecturer in finance at Dublin City University.

SPVs fall under the heading of shadow banking — lending by entities outside the traditional banking industry. Ireland ranks with China as the biggest center for nonbank finance firms after the U.S. and the U.K., with 2.3 trillion euros ($2.6 trillion) of assets, based on a survey by the Financial Stability Board, a group of global regulators. The nation’s shadow-banking system — including hedge funds, mutual funds and insurers — is more than 10 times the size of the economy.

While most of the network falls under the purview of authorities in Ireland or elsewhere, unregulated vehicles — including SPVs — account for an estimated half a trillion euros, the survey found.

Gareth Murphy, who heads the Irish central bank’s markets-supervision unit, said authorities must increase cooperation in circumstances where a Dublin-based SPV, for example, is linked to “a German bank or a French bank which is prudentially regulated elsewhere.”

“Monitoring of the full financial landscape wasn’t good enough,’’ Murphy, who formerly worked at JPMorgan Chase & Co. and the Bank of England, said in an interview. “One of the lessons of the financial crisis is that a narrow, inwardly focused approach to the pursuit of one’s regulatory mandate really doesn’t work because of the global nature of financial services.”

Gathering Data

The scenario has played out before. In 2007, Germany’s Landesbank Sachsen Girozentrale needed a 17 billion-euro emergency credit line from a group of German banks after its Dublin-based SPVs, loaded with toxic assets, were unable to pay their debts.

Irish authorities have begun amassing data on SPVs, and joined last year in an annual survey of shadow banking by the FSB, a group of regulators that monitors the global financial system. The report examined 26 jurisdictions, though some countries with large shadow-finance operations, such as Luxembourg, didn’t participate.

“It makes sense for the central bank to look for that kind of information just to get an idea of the scale of what’s happening,” said Enda Faughnan, a Dublin-based partner at accounting firm PricewaterhouseCoopers, which helps set up the vehicles.

Cross-Border Risks

The collapse of Vneshprombank encapsulates some of the cross-border risks the central bank is seeking to identify. The lender, which held billions of rubles in deposits for some of Russia’s biggest state companies, including oil producer Rosneft OJSC and pipeline operator Transneft OJSC, set up VPB Funding to raise cash for “general corporate purposes’’ and to “diversify its sources of funding,’’ a prospectus shows.

Last year, Russian regulators found a 187 billion-ruble ($2.5 billion) hole in Vneshprombank’s balance sheet. Former managers may have stripped the bank’s assets for investments in real estate, expensive vehicles and financial instruments, Russia’s central bank said in a Jan. 21 statement. The lender remains under administration by the central bank and a liquidation will follow, said a spokeswoman for Russia’s Deposit Insurance Agency who declined to comment further.

Ireland’s central bank said all prospectuses are subject to a “robust approval process,” and that the VPB notes were issued before the U.S. and European Union imposed sanctions on Russia in 2014. The sale was restricted to institutional investors and use of the proceeds was “clearly disclosed,” it said.

VPB Funding’s notes were quoted at 13 cents on the dollar as of Jan. 19, according to Trace, the bond-price reporting system of the U.S. Financial Industry Regulatory Authority.

Hidden Links

Shadow-banking assets have swelled since the financial crisis, and not just in Ireland. Globally, nonbank firms that extend credit had an estimated $36 trillion of assets at the end of 2014, after climbing by an average $1.3 trillion a year since 2011, according to the FSB. Regulators, concerned that banks may use shadow lending to evade new rules and wary that risks could build up unseen, are trying to map the size of the industry and develop rules for it.

Until late 2015, Irish SPVs had no obligation to alert the central bank to their presence in Dublin or explain their purpose, except where their activities touched on regulated areas.

Officials face a challenge in monitoring the SPVs because of the “complexity and opaqueness of their transactions,’’ Ireland’s central bank said in a report last July. The biggest borrowers through these vehicles are in the U.S., U.K., Germany, France, Italy, Russia and the Netherlands, according to the report.

Shadow Mapping

There are about 2,100 companies in Ireland set up under the legislation that governs SPVs, including some 1,400 since 2010, Irish Finance Minister Michael Noonan said in parliament last month. Even tax authorities don’t know how many assets these firms hold, he said.

“Risks may be building up in the part of the shadow-banking sector for which a statistical breakdown is not readily available,” the European Central Bank, the euro-area’s banking supervisor, said in an e-mailed response to questions.

Under Irish law, the entities are structured so that transactions deliver little or no taxable profit. Their shares are held by charitable trusts, which can keep their assets and liabilities off the balance sheets of the parties that use them. Law firms typically set up the trusts and pass along a portion of the fees they generate to charities, according to lawyers who structure them.

Putin’s Pals

VPB Funding is registered at the address of Cafico International, an Irish company that focuses on setting up SPVs for banks, airlines and aircraft-operating lessors. Cafico Managing Director Rodney O’Rourke didn’t respond to calls, emails and a visit to his offices seeking comment.

Vneshprombank wasn’t alone in making the trip to Dublin. Moscow-based UralSib Bank Ltd., which faced bankruptcy last year until the state orchestrated a takeover by an ally of President Vladimir Putin, is among Russian firms with ties to SPVs, Irish company filings show.

In 2013, another SPV lent $1 billion to Sibur Holding, a chemicals company part-owned by Gennady Timchenko, a billionaire subject to U.S. sanctions, and Kirill Shamalov, who a family acquaintance said last year is Putin’s son-in-law. (Putin has not confirmed the relationship.) Other entities have ties to Russian oil-drilling firms, energy companies, the country’s national energy grid and Domodedovo Airport in Moscow, filings show.

These are the kinds of cross-border links Ireland’s central bank should be worried about, said Corbet, a former commodities trader.

“I’d be concerned about the reputational, financial and contagion risks that would be associated should more Russian banks with SPVs in Ireland meet the same fate as Vneshprombank,’’ he said. “Without data, the central bank is in the dark.’’

The Biggest Threat To Deutsche Bank’s Survival

Two weeks ago, on one of the slides in a Morgan Stanley presentation, we found something which we thought was quite disturbing. According to the bank’s head of EMEA research Huw van Steenis, while in Davos, he sat “next to someone in policy circles who argued that we should move quickly to a cashless economy so that we could introduce negative rates well below 1% – as they were concerned that Larry Summers’ secular stagnation was indeed playing out and we would be stuck with negative rates for a decade in Europe. They felt below (1.5)% depositors would start to hoard notes, leading to yet further complexities for monetary policy.”

 

As it turns out, just like Deutsche Bank – which first warned about the dire consequences of NIRP to Europe’s banks – Morgan Stanley is likewise “concerned” and for good reason.

With the ECB set to unveil its next set of unconventional measures during its next meeting on March 10 among which almost certainly even more negative rates (for the simple reason that a vast amount of monetizable govt bonds are trading with a yield below the ECB’s deposit rate floor and are ineligible for purchase) the ECB may cut said rates anywhere between 10bps, 20bps, or even more (thereby sending those same bond yields plunging ever further into negative territory).

As Morgan Stanley warns that any substantial rate cut by the ECB will only make matters worse. As it says, “Beyond a 10-20bp ECB Deposit Rate Cut, We Believe Impacts on Earnings Could Be Exponential.

 

Which brings us the the punchline: according to Morgan Stanley, a fellow bank, the biggest threat to its largest European competitor, Deutsche Bank is not its unquantified commodity loan exposures, nor its just as opaque exposure to China, nor its massive derivatives book, not even its culture of rampant corruption and crime which have resulted in constant top management changes over the past several years, but the deflationary challenges to profitability – specifically, “Risks to Trading/Markets Revenues and Due to Negative Ratesimposed by none other than the European Central Bank!

 

In other words, according to Morgan Stanley the biggest threat to the profibatility, viability and outright existence of the most leveraged commercial bank in the world, is none other than ECB president Mario Draghi…

 

… who will almost certainly unveil even more negative rates in two weeks time, and in doing so will unleash another round of selling in European bank securities, which will further tighten financial conditions, which may force even more “desperate” ECB intervention and so forth in a feedback loop, for the simple reason that Draghi appears to not realize that just like Kuroda, he himself is the cause of asset volatility and European bank instability.

Which, incidentally, is precisely what Bundesbank president (and ECB member) Jens Wiedmann warned against. As WSJ reports, Weidmann expressed reservations Wednesday about further expansionary monetary policy to combat very low rates of inflation in the currency bloc.

According to prepared remarks to present the annual report of the Deutsche Bundesbank, which he heads, Mr. Weidmann said “it would be dangerous to simply ignore” the longer-term risks and side effects of loosening already highly accommodative policy.

As the WSJ writes, “the comments from perhaps the ECB’s most outspoken critic of very accommodative policy provide further evidence that ECB head Mario Draghi may have a tough time garnering unanimity for any effort to further expand the central bank’s accommodative monetary policy.”

Still, Draghi may well get his wishes: after all, despite the ongoing conflict between the two central bankers, so far Draghi has gotten absolutely everything he has gotten, from QE to NIRP, over Weidmann’s loud objections. The WSJ further adds that the ECB is expected to cut its deposit rate further into negative territory beyond the minus 0.3% where it sits now, as well as expanding its bond buying program beyond the EUR60 billion a month of mostly government bonds that it has purchased since last March.

The two are linked: for the ECB to expand QE – now that the NIRP genie has been released – it will have to cut rates or else it will run into liquidity limitations and an inability to procure the desire bonds.

full aricle at source:

http://www.zerohedge.com/news/2016-02-24/according-morgan-stanley-biggest-threat-deutsche-banks-survival

Enda Kenny wants your vote AGAIN :(

Enda Kenny Admits Cronyism

Ireland: OMG is this all we have ? This is the caliber of people who will lead our country ???? For God Sake please Ireland get real and get ride of these gobshits! Vote them out!

The Special Criminal Court. It is a political court designed to fast-track convictions.

 

Sent in to us to-day:

LET’S be clear about the Special Criminal Court. It is a political court designed to fast-track convictions.

Since the foundation of the State, militant republicanism was considered the biggest threat to established government, and special courts were used to counter the danger. On occasions, they consisted of Department of Defence personnel who had the power to pass death sentences.

The history of the jury-less court goes back to 1939 although its present manifestation dates from 1972 when a Fianna Fáil government took the line that ordinary courts were failing to preserve public order.

The party’s fanatical conservatism was widely condemned and over the years the United Nations Commission on Human Rights, Amnesty International and the Irish Council for Civil Liberties (ICCL) have all expressed opposition to the indefinite continuance of the three-judge system.

Former President Mary Robinson, a trenchant critic, said it had become a ‘permanent fixture in the judicial structure rather than an emergency court.’

Nevertheless right wing politicos and media (the Indo/Sindo) have expressed such hearty enthusiasm for the court that last October Indakinny’s government decided to establish a second Special Criminal Court. Groups campaigning for the government’s compliance with its obligations under human rights law greeted the announcement with dismay.

According to ICCL executive director Mark Kelly, the UN Human Rights Committee repeatedly warned that Ireland was already in breach of its legal obligations under international human rights treaties. Mr Kelly said that the court was created ‘as an extraordinary court in extraordinary times but today no reasonable person could claim a public emergency was threatening the life of the nation.’

But last week in the wake of two gangland murders, politicos advanced the argument that the court should shift to a greater extent towards the conviction of common criminals. They claimed (without a shred of evidence) that jurors in ordinary courts were incapable of performing their civic duty because of threats from mobsters.

Much was made of the fact that the court was used to prosecute two Dublin gangsters following the murder of journalist Veronica Guerin. Drugs boss John Gilligan also was tried in the Special Criminal Court, as were the murderers of the Limerick businessman Roy Collins.

But, the fact of the matter is that, outside of those few cases, the people currently before the Special Criminal Court were not arrested for offences related to organised crime. They are dissident republicans, suspected of membership of an unlawful organisation. In other words, the court has been used only on a handful of occasions to prosecute mainstream criminals.

The question also arises as to why the mosquito groups that make up dissident republicanism, such as the Continuity IRA, continue to be seen as a serious threat to the state? Their political insignificance would suggest they pose no threat at all and, if that is the case, then what is the purpose of a court that admits evidence which otherwise would not be presented in a jury trial?

Why do we need a court that resembles a court-martial rather than an open and transparent civilian court?

Non-jury trials erode public confidence in our judicial system. The Irish Council for Civil Liberties put it well when arguing that although organised violent crime is of legitimate concern to our legislators, tackling it should not rely on chipping away at the right to a fair trial.

Problem is that Kenny has had such a woeful record in dealing with organised crime that people got the impression his government was unable to find a coherent way of dealing with the problem and, worse still, Kenny didn’t care. Few would deny that the administration of justice under Kenny has been feeble, ineffectual and sloppy, marred by one controversy after another.

In 2015 criminal gangs shot dead eight people. In 2014 there were twelve killings.

No one was charged. Bungling inefficiency has characterised our forces of law and order – a perception reinforced by the arrival of the fire brigade before the gardaí at the recent gangster slaughter in Dublin’s Regency Hotel.

Nor was the rule of law helped by the ferocious rows, controversy and recriminations that dogged the Department of Justice and Kenny. Included in the drama was the exit of Justice Minister Alan Shatter amid allegations that several serious criminal investigations had been mismanaged.

Then the Garda Commissioner resigned and, in another battle, the Garda Síochána Ombudsman Commission declared members of the force might have bugged its premises.

Hot on the heels of that scandal was a Garda tip-off to the media concerning the detention for drunk driving of Clare Daly, a TD who was critical of the force. She was later proved innocent.

Of considerable concern too was the revelation during the Sophie Toscan de Plantier wrangle that privileged conversations in some garda stations had been bugged.

And as the public scratched its head in wonder, various gangs, whose marauding expeditions seemed exempt from punishment or penalty, wreaked havoc in rural communities.

Within that context, the government’s recent response to drug-related murders is interesting. As per usual the theme was that Fine Gael-Labour would be ‘tough on crime,’ the gardai would get heavy weapons (Clint Eastwood-style) and the Special Criminal Court would have an enhanced role in crime busting.

Inevitably, Kenny and chums were accused of crude politicking, especially in relation to their reliance on the Special Criminal Court for convictions. It was a dodgy course of action, considering that people still remember the shocking miscarriage of justice suffered by four innocent people at the hands of that court.

On March 31st, 1976, Osgur Breatnach, Nicky Kelly, Brian McNally, Michael Plunkett and John Fitzpatrick, members of the IRSP, were arrested, forced to sign ‘confessions’ and brought before the Special Criminal Court for their supposed involvement in the theft of £200,000 from the Cork to Dublin mail train.

On the basis that their statements had been voluntarily made and their injuries self-inflicted, three of the men received twelve years sentences and one a nine years sentence.

What made the trial notorious was the habit of one of the three judges to fall asleep during sittings of the court. Disconcerting too was the resistance from the judge’s colleagues to halt proceedings.

In May 1980, the Court of Criminal Appeal quashed the convictions of Breatnach and McNally (Kelly, who had fled to America, had to wait until 1992 for a presidential pardon). All the accused eventually were declared innocent and received substantial compensation from the State.

The trial was a chilling reminder of the fact that as a mechanism for dispensing justice the Special Criminal Court was neither effective nor appropriate. It called into question the integrity of the entire Irish legal system – a criticism that remains valid to this day.

source: http://www.southernstar.ie/news/roundup/articles/2016/02/22/4114752-opinion-a-political-court-designed-to-fasttrack-convictions/

Right2Change Pre-Election Protest 20/02/2016 Dublin City Centre. Ireland

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