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Posts tagged ‘IMF’

Behind The Global – Game Of – Thrones

by

Greek PM Alexis Tsipras yesterday laid out Syriza’s stance, and from what I saw he didn’t pull even one punch. Despite all the suggestions from the financial press throughout the past week that Tsipras and Varoufakis reneged on campaign promises to seek debt write-downs, they didn’t, and never have – other than perhaps in semantics.

Which I don’t find the slightest bit surprising. I would have been very surprised if they had. The misinterpretation, and the faulty expectations, are easily explained through the fact that – most of – these guys are not politicians, which they very deliberately expressed in the way they dressed for their meetings with ‘Europe’s finest’.

They don’t see the ‘space’ career politicians see to negotiate away the mandate their voters have given them. For them it’s simple: we were elected on our program – which in this case happens to be to end the misery forced upon Greece by the European and Troika schemes -, and we’re not going to move away from that just because ‘the other side’ starts threatening us, or (a crucial difference in politics) because our voters may not vote for us again in a next election.

In their view, trying to scare Greece into even more submission, which is the overlying message emanating from Brussels and beyond, is entirely null and void because Greece can’t – and shouldn’t – sink any lower than it has. Very and refreshingly simple. No surprise there, but, at least on my part, just support and admiration. Syriza is fighting the fight many others don’t have the intellect, the chutzpah and/or the courage for.

The first thing they did, apart from hiring back the government offices’ cleaning ladies the Troika got fired, was to say they wanted nothing to do with that same Troika. That to me is the most important statement so far by Yanis Varoufakis and his crew. Because that goes to the heart of why Greece is where it is, and why the entire world is.

I saw a headline last night that said something like ‘Greece doesn’t want to talk to the EU’. But that’s not true. Syriza merely wants the IMF out of the picture. And then it would prefer to talk to separate EU nations and offices, rather than top down Brussels bureaucrats. Not just because of the Colonel Blotto game theory I talked about before, but because they recognize how insidious and ruthless the IMF is. I’ll get back to that in a minute.

The most remarkable ‘news item’ for me yesterday came not from Tsipras (or Greenspan), but from former French President Nicolas Sarkozy, who did something he would never have when he was in office. Sarkozy went against the grain of the official western narrative vis à vis Ukraine and Russia. He said what no acting French president could possibly say (including himself), because as president he would have been beholden to the US and NATO dictated doctrine, that Putin is evil, and Ukraine should be ‘liberated’.

Sarkozy: Crimea Cannot Be Blamed For Joining Russia

Crimea cannot be blamed for seceding from Ukraine – a country in turmoil – and choosing to join Russia, said former president of France, Nicolas Sarkozy. He also added that Ukraine “is not destined to join the EU.” “We are part of a common civilization with Russia,” said Sarkozy [..]. “The interests of the Americans with the Russians are not the interests of Europe and Russia,” he said adding that “we do not want the revival of a Cold War between Europe and Russia.”

Regarding Crimea’s choice to secede from Ukraine when the country was in the midst of political turmoil, Sarkozy noted that the residents of the peninsula cannot be accused of doing so. “Crimea has chosen Russia, and we cannot blame it [for doing so],” he said pointing out that “we must find the means to create a peacekeeping force to protect Russian speakers in Ukraine.” In March 2014 over 96% of Crimea’s residents – the majority of whom are ethnic Russians – voted to secede from Ukraine to reunify with Russia.

That is pretty close to 180º different from what the official western position is. Putin has taken note. Because it destroys everything the West, as represented by Germany’s Merkel and France’s Hollande, brought to the talks in Moscow this weekend (and Minsk today). More importantly, it throws out what NATO wants and prepares for. In the exact same way that Greece seeks to throw out the IMF.

And that is no coincidence. Sarkozy reveals his dismay at being told what to do, when he was in office, by the supranational NATO. Tsipras and Varoufakis refuse being told what to do by the supranational IMF. Same difference. Well, to an extent: Sarkozy did the NATO and IMF’s bidding when he was in office, Syriza never has.

Merkel, meanwhile, ceased resisting Mario Draghi’s mad €1 trillion+ QE program recently, and along that same vein she may today, as she’s talking to Obama in Washington, give up her resistance to the west arming Kiev. Which would be equal to a declaration of war against Russia. The pressure on her is obviously huge and increasing, but Angela should be smart enough to know that it’s impossible for Russia to stop looking out for the Donbass.

Because just about every Russian citizen has family connections in the region, who’ve been shelled by their own government for close to a year now. And if Russia were to retreat, chances are these people will be obliterated in very ugly ways. What Merkel should be demanding at the ‘peace’ talks is for not-so-very-democratically-elected PM Yatsenyuk and his shady government to step down, and nationwide fair elections to be held that include the Donbass. But she won’t.

full article at source: http://www.theautomaticearth.com/2015/02/behind-the-global-game-of-thrones/

Why Goldman Is Closing Out Its “Tactical Pro-cyclical” European Trades On Grexit Fears

It will be politics rather than economics (or Q€) that drives the shorter-term outlook in Greece. Goldman Sachs warns that the new Greek government’s position is turning more Eurosceptic and confrontational than most (and the market) had anticipated ahead of last weekend’s election. This increases the risk of a political miscalculation leading to an economic and financial accident and, possibly, Greek exit from the Euro area (“Grexit”) and while many assume European authorities have the ‘tools’ to address market dislocations arising from this event risk, Goldman expects significant market volatility. Rather stunningly, against this background, and in spite of Q€, recommends closing tactical pro-cyclical exposures in peripheral EMU spreads (Italy, Spain and Portugal) and equities (overweight Italy and Spain).

Via Goldman Sachs,

Bottom line:

  • It will be politics rather than economics that drives the shorter-term outlook in Greece. Our base case remains that, eventually, some accommodation will be found between the new Greek government and Greece’s official creditors. This view has led us, so far, to expect modest spillovers from financial tensions in Greece to other Euro area markets. Thus far, this has proven correct.
  • But the new Greek government’s position is turning more Eurosceptic and confrontational than we anticipated ahead of last weekend’s election. This increases the risk of a political miscalculation leading to an economic and financial accident and, possibly, Greek exit from the Euro area (“Grexit”). While the European authorities now have better tools to address market dislocations in general (and the re-emergence of convertibility risk in particular), these are unlikely to be activated in a manner that entirely pre-empts market tension should Grexit risks intensify or materialise. We would expect significant market volatility surrounding an event of such systemic nature as Grexit. The intensity and persistence of such volatility would depend on the process by which Grexit occurred, and on the nature of the policy and political response to it in other Euro area countries.
  • Against this background, we recommend closing tactical pro-cyclical exposures in peripheral EMU spreads (Italy, Spain and Portugal) and equities (overweight MIB and IBEX vs. SXXP) until more clarity emerges about the direction ongoing negotiations between the new Greek government and the European authorities are taking. However, we continue to see the medium-term prospects for the European equity market as attractive given the high equity risk premium, the impact of QE in moderating deflationary fears, and improving cyclical prospects driven by the impact of lower oil prices and a weakening Euro exchange rate. We continue to see tighter intra-EMU spreads, steeper EURIBOR and ‘core’ yield curves over the balance of this year, and forecast 390 on the SXXP and 3800 on the SX5E over 12 months.

Greece: Taking stock post-election

Background – Pre-election expectations

1. Ahead of the Greek elections, it was widely anticipated that a new Greek government led by the radical-left Syriza party would embark on its promised renegotiation of the terms at which Greece receives financial support from the European and international authorities. Key elements of such a renegotiation would be: (a) demands for debt relief; (b) less strenuous (or even a reversal of) fiscal adjustment; and (c) relaxation of the conditionality and control over Greek policies imposed by the ‘troika’ (the European Commission, ECB and IMF overseers of Greece’s adjustment programme). These demands run counter to the terms offered by the European authorities in their proposed extension to the existing Greek adjustment programme.

2. The threat of renegotiation promised a period of heightened political tension between the new Greek government and the European authorities, as each staked out its bargaining position. In turn, these political tensions were likely to create strains in the Greek financial sector, reflecting market participants’ concerns that external financial support could be disrupted by the political stand-off.

3. In these circumstances, the risk of a Greek exit from the Euro (“Grexit”) would rise. Whatever the economic incentives to seek a compromise, in a fraught political situation the danger of a miscalculation leading to disorderly exit always exists. Yet nevertheless, ahead of the elections our base case was that ultimately a new accommodation would be found (see: “Greece: Uncertainty to persist and peak well after the election”, Global Markets Daily, January 23, 2015).

On the Greek side, the stated ambition of Syriza (and its leader, the new Prime Minister Alexis Tsipras) – in line with the overwhelming view of Greek public opinion (as reflected in polls) – was to retain the Euro and Greek membership of the Euro area. The realities of financial and economic dependence on external support, as well as the moderating effect of the anticipated more pro-European coalition partners in the new government, would eventually lead Syriza to seek some compromise.

full article at source: http://www.zerohedge.com/news/2015-02-02/why-goldman-closing-out-its-tactical-pro-cyclical-european-trades-grexit-fears

Comment:

By Thomás Aengus O Cléirigh
No matter what happens to Greece, the rest of Europe, Spain, Italy, Portugal, Ireland, Belgium France, peoples are now awakening only to see that the whole austerity “Thing” was nothing short of an engineered smash and grab of the savings ( National pension fund) and cash cow potential ( Tax collections) of the working class! A financial /economic system that rewards private gamblers who infest the national banks and are able to do as they please and if the reckless and downright criminal and treasonable actions result in massive debts the citizens of said countries are forced to pick up the tab! NO MORE! Greece is just the beginning and we the peoples of the various enslaved countries will not stop until we have rid ourselves of this toxic financial system: We want a better future for our children we have shafted all our lives and we are slowly waking up to the lies of this insane financial and political system where we always lose! We must always put of having a decent liven now for some unspecified future, but our political parasites and the bankers can have lottery lifestyles now! NO More! We will ensure our children will not have to pay these odious debts period!
We must end this monopoly money financial system where the ordinary people are always the losers!

In The Latest IMF Comedy Of Errors These Charts Are Most Disturbing

As noted earlier, one of the more irrelevant events that took place overnight was that the IMF once again cut its outlook for global growth. Irrelevant, because this is precisely what anyone who has seen the IMF in action in the past has come to expect (see “IMF Comedy Hour: The Complete History Of The IMF’s Growth “Forecasts” Since 2012“, “The IMF’s Comedy Of Quarterly Errors Reveals The Biggest Hockeystick You Have Ever Seen“, “Comedy Of Forecast Errors: Here Are The IMF’s Latest Projections Of Economic Growth” and so on). Sure enough, here is what the latest “global growth forecast” looks like: everything else is flat except 2015P which was cut from 3.8% to 3.5%, and 2016 was also cut by 0.3% to 3.7%.

 

On the surface nothing too surprising by the institution whose only job, year after year, is to try and stimulate global confidence, and year after year failing and instead making a joke of its economic forecasting abilities.

What drove the latest round of global cuts lower? It wasn’t the US which was actually revised modestly higher (for the time being; it too will ultimately be revised lower), and Europe which was just barely cut.

Here is the main culprit:

 

But even more disturbing than China’s growth forecast, is what the IMF sees global growth doing, which nobody will be shocked to learn, has once again been drastically slashed lower.

source: http://www.zerohedge.com/news/2015-01-20/latest-imf-comedy-errors-these-charts-are-most-disturbing

Waking up to reality

By David Mc Williams

This brilliant quote from economist JK Galbraith just about sums up why individuals and organisations tend to stick to plan A when the evidence suggests that Plan A isn’t working. No one likes to be proved wrong but, ultimately, the worst thing we can do when our world view turns out to be flawed is stick to it. Yet this is precisely what many of us do.

Given this general observation, it was fascinating to see the IMF conclude last week, with its influential world economic outlook, that it might have got its basic economics wrong. If not quite apologising for leading half of Europe up the economic garden path, the IMF has at least admitted that what we have been arguing for years in this column is right. For the first time, the IMF conceded that austerity doesn’t work and, not only does it not work, but it is counter-productive.

The implications of this concession for the continuation of the ‘austerity at all costs’ policy are enormous – and may prove to be the first chinks in the armour of the troika. Christine Lagarde’s IMF noted in its global outlook that the world economy has slowed down more rapidly than it had expected, and its experts asked themselves why had they got it so wrong yet again. Given that the main pillars of Irish economic forecasting – the Department of Finance……………………..

full article at source: http://www.davidmcwilliams.ie/2012/10/15/waking-up-to-reality

EUROBLOWN EXCLUSIVE: Power draining away from the IMF

From The Slog

The economic world’s shift in balance towards the East and South is making the IMF increasingly irrelevant to economic and fiscal thinkers, a qualitative study conducted by The Slog suggests.

Last weekend and during the early part of this week, I devoted some time to taking the temperature of the IMF among economists, traders, senior executives in commerce and the odd politician here and there. The territories covered were the UK, France, Germany, Greece, Singapore, Spain, the US and Mexico. We’re talking small-scale research here, so the findings come with a big health-warning; also some key States like Brazil, Argentina and Italy weren’t included. But the consistency of findings will come as a shock to some, I think.

The attitudes ranged from visceral dislike in southern Europe to a general feeling of anti-BRIC bias in developing areas – and perhaps very significant, a sense that the IMF is underfunded and ‘lightweight’ from opinion leaders in the larger territories.

full article at source:http://hat4uk.wordpress.com/2012/04/19/euroblown-exclusive-power-draining-away-from-the-imf-19/

IMF blunder forces out the truth about post-election crackdown in Greece

By the Slog

Yesterday, the IMF released disastrous forecasts about the Greek economic outlook for 2012. Unwittingly or otherwise, this development set Athenian journalists and anti-Establishment groups on a hunt for the truth about post-election austerity. The details (revealed today in Ekathimereni and other newspapers) can only benefit the smaller anti-EU Parties. The revelations follow hot on the heels of Monday’s Slog exclusive about plans to install another unelected Prime Minister in the event of an electoral dead-heat.

The Greek deficit this year will be far greater than expected, the IMF announced yesterday. According to their new report, there will be a need for additional spending cuts of more than 15 billion euros between now and 2017. This would represent 7.7% of gdp.

The IMF expects the deficit to end the year at 7.2% of gdp – something of a leap from the 6.7% previously forecast.

The new government (if any) to emerge from the May 6 election will have to bite the bullet and cut a further 11.6 billion euros from 2013 and 2014 alone. But yesterday’s IMF  update hints that spending cuts will continue well beyond 2014 – from 48.9% of GDP, spending will have to go down to 41.2% of GDP by the start of 2018 fiscal year.

full article at source:http://hat4uk.wordpress.com/2012/04/18/greek-election-sensation-what-the-voters-werent-told-but-just-found-out/

Time for Ireland’s New Deal

By David Mc Williams

Have you ever gone to a gig so ridiculously funny that you can’t actually communicate with the person beside you? You are reduced to grimacing; words just can’t come out, tears and snorts, yes, but words, no. When I finally pulled myself together at Tommy Tiernan’s latest show in Vicar Street, it struck me that Tommy might not realise this, but he has a lot in common with mainstream economic thought.

Tommy Tiernan, Franklin D Roosevelt and the IMF have something in common: they all want the small homeowners to get debt relief of some sort.

Tiernan’s brilliant take on the present debt crisis can be seen on YouTube. It’s a pretty blunt form of permanent debt repudiation but, that said, it is not a million miles away from what the IMF sugghested last week.

full article at source: http://www.davidmcwilliams.ie/2012/04/16/time-for-irelands-new-deal?utm_source=Website+Subscribers&utm_campaign=692526a7f6-16042012&utm_medium=email

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