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Posts tagged ‘Olli Rehn’

Olli Rehn Departs Reality Once Again


If one needs an example of out-of-touch, reality-denying and self-satisfied EU Commissioner, travel no further than Olli Rehn. Here’s the latest instalment from Court’s Favourite Entertainer of Things Surreal:

The speech focuses on what went wrong in Cyprus.

In the speech, Mr Rehn commits gross omissions and conjures gross over-exaggerations.

Nowhere in his speech does Mr Rehn acknowledge that Cypriot banks were made insolvent overnight by the EU (including EU Commission, where Mr Rehn is in charge of Economic and Monetary affairs) mishandling of PSI in Greek government bonds.

Nowhere in his speech does Mr Rehn acknowledge that Cypriot banks were massively over-invested in ‘core tier 1 capital’ in the form of zero risk-weighted sovereign bonds (Greek bonds…………………….

full article at source: http://trueeconomics.blogspot.ie/2013/05/852013-olli-rehn-departs-reality-once.html

EUROBLOWN: Why the Greeks should ignore the scaremongering, and dump the euro.

Olli Rehn, EU Economic and Monetary Affairs Co...

Olli Rehn, EU Economic and Monetary Affairs Commissioner (Photo credit: Wikipedia)

By The SlogThe twice-daily soap opera Euroblown is now pretty much into its stride as far as the format is concerned. Head Scriptwriter Wolfgang Schäuble briefs the cast on Mondays, after which the others learn their lines and dutifully do their best to make the wooden fantasy sound right.

“Greece leaving the eurozone is no big deal,” said Wolfie last Monday, “We are prepared now”.

And so…

Europe is “certainly more resilient” to a possible Greek exit than it was two years ago, when the bloc would have been “massively underprepared,” European Union Economic and Monetary commissioner Olli Rehn said Wednesday.

A Greek exit from the euro could be “technically” managed, European Central Bank Governing Council member Patrick Honohan assured regular listeners in a cameo role Friday

full article at source:  http://hat4uk.wordpress.com/2012/05/13/the-twice-daily/

Comment :

Any Government that resorts to blackmail and bullying of its own citizens is not fit for government and cannot be trusted to represent the citizens of that country .The Irish government have betrayed their oath of office to defend the Irish constitution in favour of the wishes of the faceless bondholders and financial terrorists who are the same gangsters, currently dismantling the Greek nation .Fair play to the heroic Greeks for standing up for their land and culture God bless Greece!

Now Cometh the Eurozone ‘Recession’

by Staff Report

EU predicts 0.3 per cent eurozone economic contraction in 2012, says bloc in ‘mild recession’ … The European Union estimates that the economy of the 17 countries that use the euro is in recession in the wake of a debt crisis that has prompted savage spending cuts and a jump in unemployment to record highs. The European Commission, the executive arm of the EU, forecasts that the eurozone economy will contract by 0.3 per cent in 2012 and grow by 1 per cent next year. Its prediction for 2012 is far weaker than the one it gave last November, when it predicted growth of 0.5 per cent. A year ago it was predicting growth of 1.8 per cent. Friday’s forecasts provide clear evidence of the impact of Europe’s debt crisis on the eurozone economy over the past year as governments have struggled to introduce deficit-reduction measures and business and consumer confidence has taken a dive. Olli Rehn, the EU’s monetary affairs chief, said the recession is likely to be “mild” and “short-lived.”

full article at source: http://www.thedailybell.com/3880/Now-Cometh-the-Eurozone-Recession

EU Threatens Greek Default If Austerity Plan Rejected

By Matthew Dalton


BRUSSELS (Dow Jones)–European Union officials Tuesday increased pressure on
the Greek parliament to approve a EUR28 billion package of spending cuts and tax
hikes, saying the country would face a default if legislators don’t approve the
austerity plan in a series of votes this week.

Greece will face a cash shortfall in the middle of July unless it receives a
EUR12 billion rescue loan payment from the euro-zone governments and the
International Monetary Fund, the fifth slice of EUR110 billion in rescue loans
agreed upon last year. Euro-zone governments and the IMF have said they won’t
approve the payment unless the Greek parliament passes the legislation, proposed
by Greek Prime Minister George Papandreou, in votes scheduled for Wednesday and

Greek labor unions Tuesday started a 48-hour strike ahead of the votes to
pressure Greek lawmakers to vote against the legislation, which would slash
social welfare spending and impose a special crisis levy on all taxpayers.

Some press reports, citing unnamed officials, have said that the EU has a
back-up plan to prevent a default if the parliament doesn’t approve the new
legislation. EU authorities in the past have pledged to prevent Greece from

But EU economics commissioner Olli Rehn denied that a back-up plan is ready
and threatened Greece with default if parliament doesn’t approve the austerity

“The only way to avoid immediate default is for parliament to endorse the
revised economic program,” Rehn said in a statement Tuesday. “To those who
speculate about other options, let me say this clearly: there is no Plan B to
avoid default.”

Joaquin Almunia, the EU’s antitrust chief and its former economics
commissioner, Tuesday warned of an “acute crisis” in the euro zone because of
Greece’s dire budget problems.

“The fiscal crisis in Greece is threatening to destabilize other euro-area
economies and even the proper functioning of the European monetary union, with
serious implications for the growth outlook in large parts of Europe and
beyond,” Almunia said in a speech in London.

Greece has billions of euros of debt maturing in the coming months: EUR4.4
billion in short-term treasury bills in July, another EUR2.48 billion in August
and a EUR5.9 billion bond repayment on August 20.

The government should be able to roll over the Treasury bills, but it must
also fund its budget deficit during that time. The deficit is expected to be
EUR17.1 billion for all of 2011, according to the government’s latest budget

Rehn in his statement also urged a reform of the Greek tax system that would
fight tax evasion, reduce rates and widen the tax base.

-By Matthew Dalton, Dow Jones Newswires; +32 (0)2 741 1487;


Looks like the boys in Brussels are getting tired of been
nice to Greece and the gloves are coming off. Threats are now emerging and the real
nasties are coming out, the same nasties by the way, our own gutless
politicians are grovelling up to on all fours !

I hope the Greeks will tell them where to go just like the
Icelanders did.

There country is been stolen right under their noses from
them and at least they are fighting back!

GreekWatch (Day 4 of 13):

GreekWatch (Day 4 of 13):

By namawinelake

  Again, it seems that the IMF and EU review mission teams are diligently and quietly working away on the ground in Athens whilst all hell is breaking loose everywhere else.
First up, the European Commission seems to be getting exasperated at the lack of meaningful progress by politicians in Greece. “Time is running out” said our Finnish friend, the Commissioner for Economic and Monetary Affairs, Olli Rehn. What Olli was hoping for yesterday, was consensus amongst the main Greek political parties to the latest round of austerity measures and privatisation programme. Despite a three-hour (or five-hour, depending on your sources) extraordinary meeting of the heads of the main political parties in Athens yesterday, under the auspices of the Greek president, no consensus was forthcoming; indeed from this perspective, political relations in Greece seem to be fracturing with recriminations getting  personal. What the EU wants is consensus to a road map of austerity and privatisation measures, it doesn’t want unpopular commitments unravelling a few months down the road as politicians jockey for advantage. Greece had its last elections in 2009 and the next ones are not due until 2013. The ruling PASOK party has 160 seats in a 300-seat parliament and it has additional allies in other parties but still the concern lingers that the €110bn bailout deal which was agreed in May 2010 may founder amidst political manoeuvres. If the EU was looking to early elections to provide a mandate for the bailout, then those hopes were dashed when the incumbent prime minister ruled out early elections after yesterday’s marathon meeting.
Next up, the IMF and their acting managing director, John Lipsky repeated the IMF’s mantra yesterday that restructuring is not foreseen as long as Greece adheres to the bailout terms. What we all want to know is whether or not the IMF will withhold its €3.3bn contribution to the next €12bn tranche draw-down by Greece from the €110bn bailout in June 2011, and if the IMF is demanding that the EU provide assurances to fund the remainder of Greece’s maturing debt in 2011 and possibly 2012. And we’re unlikely to get any comment from the IMF on this question before 6th June 2011 when the review mission in Athens is due to conclude its work.
There was a new voice adding shading to the debate yesterday when French president, Nicolas Sarkozy spoke in favour of bondholders sharing in the solution of Greek’s present woes. What he was calling for seems akin to the Vienna Initiative in 2009 where bondholders agreed to roll-over maturing debt. He specifically wasn’t talking about unilateral burning of bondholders. The national government perspective was backed up by Michael Meister, the CDU (Angela Merkel’s lot) finance policy spokesman who said Greece’s creditors may accept an extension of bond maturities if the Greek government adopts a more aggressive approach to cutting debt. With 10-year bonds trading at 55c in the euro and signs of growing turmoil in Greece, it’s hard to see bondholders being understanding.
The ECB has been silent onGreecein the past 24 hours.
So on Day 4 of GreekWatch what is the likely prognosis for the Greek patient?
(1) Greek politicians impose the austerity and privatization plans agreed with its creditors. This will certainly be attempted in early June in parliament but it seems messy without consensus. And unionists and protesters seem to be chomping on the bit to hit the streets during the hot summer months.
(2) Greek’s bondholding creditors agree to roll-over debt that matures in 2011 and possibly 2012. Seems unlikely given the likelihood of Greek default andGreece’s slow progress with complying with the bailout agreement
(3) The EU either picks up the entire tab for the next tranche or provides an assurance to fund the roll-over of Greek debt because the IMF won’t risk more funding and the immediate consequences of default will disproportionately affectEurope. This is messy because it may require an additional bailout (€60bn according to some estimates on top of the existing €110bn) and will require national parliament approval inGermany,HollandandFinlandwho all seem increasingly hostile towardsGreece.
(4) Greece doesn’t get the next tranche at all and defaults which would probably lead to all Greek banks being nationalized and capital controls to prevent euros leaving the country/banking system. Given thatGreecestill has a primary budget deficit, it would need either immediately close that or else exit the euro.
(5) The IMF and EU provide the next tranche without receiving sufficiently tangible commitments fromGreece, because the wider consequences of default outweigh €12bn



Thanks to Namawinelake for keeping us up to date on the Greek crises

Here we see again the method the EU is using to impose their so-called austerity measures on the Greek people .By trying to get the local politicians to do the dirty work for them .This strategy was very successful in Ireland as they waved plum jobs and money up to the noses of our politicians and they were falling over themselves to do the bidding of our new masters in Europe .Gone out, are the shambolic democratic principles in favour of dictates from the EU and the IMF.

Memories of the Lisbon and Maastricht treaties have all gone, and the true intentions of these con jobs are now apparent. The Irish political class have betrayed our people and we are now watching unfold before our ever eyes the tragedy that awaits us in Greece .We have a few more months before all of our own financial resources disappear down the black hole of bank bailouts and outrageous interest payments on private debts that have been foisted on to the shoulders of the ordinary people.  Our national pension fund is all but disappeared (30 Billion) and when we reach the bottom we will find a change in tone from our new government as they realize that the mantra of no default hasn’t cut any ice with the international financial markets .Just declaring this mantra every so often doesn’t make any more believable ,in fact just the opposite is true .Last year we were constantly hearing from the previous Finance minster that “we had turned the corner” and his expression “Our plan is working “was met with outbursts of laughter from the backroom financiers and bondholders .This is now been repeated by Mr. Edna Kenny, who seems to believe his own totally unrealistic utterances that the Irish government will not default, will not need to extend the bailout term and will not need any more bailout funds .Edna why not come out and jus flatly deny that the IMF are in the country and declare that their presence is a figment of our collective imaginations.

Austerity, we haven’t seen anything yet especially now that we know that this new government is set on staying the course Fianna Fail set before the last election.

We have been conned and the agenda to financial cripple the Independence of Ireland is about to get serious with the end result of enslaving the people of Ireland to the yoke of a United States of Europe governed by the German, French and our old colonial power England .

GreekWatch (Day 2 of 13) : “the situation seems desperate”

The IMF and EU teams seem to be working away quietly on their review mission in Athenswhilst the discussions about new austerity measures and privatisations get louder. There were rumours yesterday evening that the Greek prime minister was considering a referendum on new austerity measures though that seems to have been dismissed today with the claim that he is only seeking “consensus” – remember the prime minister controls 160 of the parliament’s 300 seats so “consensus” is a PR exercise, but it is one advocated by the IMF and EU. There were small-ish (by Greek standards) demonstrations on the streets yesterday evening when some 20,000 protesters across a number of cities staged peaceful protests.

Full article at source http://wp.me/pNlCf-1rh.


This morning I nearly fell out of my bed when I heard Ivan Yates and Willy Slattery Head of Ireland State Street in the IFSC take opposite sides to the problems of Irelands Debts .Judging from Mr.Slattery utterances and his categorical support for Mr. Edna Kenny’s declaration that there will be no default speaks volumes. This confirms to me that the Bondholders have indeed their feet under the cabinet table .By voting out the Last government we have unwittingly placed the spokespersons and lobbyists for the Funds industries and bond holders at the centre of power in Ireland .Just listen to this banisters blatant defence of his own interests and that of the international hot money industry in the IFSC. His claim that we now have good transparency in the Finances of the country is laughable and an outright lie. There is estimated 1.75 trillion Euros in managed funds in the IFSC and I would like to know what percentage is been paid in taxes for the secure harbour the Irish government is giving these dubious funds .after all let’s say the government gets .5% that would equate to an instant 8 750 000 000 Billion .in taxes for the hard pressed Irish Government.
Now why did Mr.Slattery not suggest his industry pay this tax??? No he wants the low paid workers and the unemployed to cough up and keep him and his cronies in business in the IFSC.As for Mr. Yates at least he understands that we simply cannot pay these debts as we simply do not have the earnings capacity .
Listen hear to the Breakfast show


“it is in a pretty catastrophic situation,”

BRUSSELS: Stressed eurozone states from Portugal to Finland faced up Saturday to the need to renegotiate Greece’s bailout repayments as “catastrophic” Athens finances returned to haunt the EU.

“We think that Greece does need a further adjustment programme,” Luxembourg Prime Minister Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, said after closely guarded talks in Luxembourg late Friday.

“This has to be discussed in detail,” he said, indicating it would top the agenda at a two-day meeting of eurozone and European Union finance leaders in Brussels on May 16 and 17.

The resurrection of the Greek debt conundrum will reverberate around political Europe.

To begin with, it is sure to complicate coalition negotiations in Finland with an ultra-nationalist, anti- EU party that scored a significant breakthrough in elections on a platform of refusing to participate in Portugal’s upcoming bailout.

Dow Jones Newswires reported that Germany and France did not see eye to eye during the unscheduled Luxembourg meeting.

Greek newspapers also spoke of postponements on the maturity of 65 billion euros worth of bonds this year and next, a postponement of national deficit reduction targets as agreed with the EU and even a possible “grace” period of no interest payments.

The Greek public deficit for 2010 was revised upwards, from 9.4 percent of gross domestic product to 10.5 percent.

That was blamed on a deeper-than-anticipated national recession that combined with brutal cuts in public spending to hack away at tax revenue, and while the country’s top crimebuster has been moved to fight fraud and corruption in a bid to squeeze out every last euro due, the prospects for this year and next are slipping.

Greece was given a 110-billion-euro ($160-billion) bailout last year, the terms were eased by EU leaders in the spring and a new rejig would leave the issue weighing on EU partners’ finances well into the next decade at least.

Athens already owes more than a year-and-a-half of its entire economic output, some 340 billion euros, which markets consider unsustainable, leading to growing fears of ultimate default — the nightmare scenario for the eurozone as a whole.

“We did not discuss an exit for Greece from the eurozone, we think that would be a stupid option,” Juncker underlined after the meeting at a Luxembourg castle with Germany’s Wolfgang Schaeuble, France’s Christine Lagarde, Italy’s Giulio Tremonti and Spain’s Elena Salgado.

European Central Bank chief Jean-Claude Trichet, the EU’s economic affairs commissioner Olli Rehn and Greece’s George Papaconstantinou also took part in talks triggered by concerns in the United States and at the International Monetary Fund, that “ruled out any restructuring of Greek debt,” Juncker added.

The result will leave ongoing EU efforts to close off a sorry chapter at a late-June summit looking ever more complicated.

Greece was due to return to commercial borrowing markets next year, but with current yields on benchmark 10-year bonds hitting 15 percent — junk level compared to Germany — “it is in a pretty catastrophic situation,” according to a source close to the talks.


EU Heart Attacked by Mainstream Press!

Tuesday, April 12, 2011

– by  Staff Report





Eurozone ship is on the course that was set for it: heading for the rocks … Two events last week saw the crisis in the Eurozone deepen – the Portuguese bail-out and the ECB’s interest rate increase. But much more is brewing. Everyone is now focused on government debt as the nub of the problem. And the numbers are shocking. – UK Telegraph

Dominant Social Theme: The EU will survive. These are merely trying times.

Free-Market Analysis: Two recent articles show the trouble the EU is in. Brussels’ “happy talk” – sub dominant social themes engineered to give the impression that the EU can surmount the problem – are apparently not having the desired effect anymore. In this article we will explore why. It is a notable evolution in our view.

The Telegraph article above, entitled, “Eurozone ship is on the course that was set for it” is startling in terms of its blunt talk about the REAL state of the Union (seemingly unsalvageable). The other article in the Financial Times is just as negative in its own way. Together they constitute a surprising indictment of the EU and its prospects for survival. This is big news.

Let’s start with the Telegraph article. It is written by Roger Bootle who is a managing director of Capital Economics and economic adviser to Deloitte. He’s also something of an internationalist who doesn’t much believe in gold and silver as money, according to back articles in his archive, and is even an unfortunate fan of an emergent Keynesian bancor (Lord help us). But on the issue of the euro and the EU, in this article anyway, he is positively ferocious.

Bootle claims the EU crisis is deepening and that both the Portuguese bail-out and the ECB’s interest rate increase are tell-tale signs of the Eurozone’s decline. It is the numbers that Bootle offers in this article that make it noteworthy. The debt of the Union’s peripheral states is becoming unmanageable. Also three other factors.

Competitiveness is one, he suggests. German’s labor costs have not risen the but labor costs in such countries as Greece, Spain and Portugal have positively soared; this makes it even more unlikely that the UE’s weaker countries will benefit from the Union. Then there is the real estate market. The property bubble lifted housing prices into the stratosphere in numerous countries including Ireland and Spain and these prices still have not corrected, leaving an unresolved overhang that could last years. The third problem is the congenital weakness of Europe’s big banks, ironically many of them in German, though also British and French. Germany as we reported previously, has not even bothered to recapitalize its banks; who knows, therefore, how seriously Germany is exposed to the EU’s defaulting PIGS.

It is the debt issue that must be most discouraging to Brussels; and it is here that Bootle makes his strongest points. Bootle’s conclusion: “The numbers are shocking. The debt to GDP ratio is over 140pc in Greece. Indeed, it is all but impossible for Greece to adjust through fiscal austerity. It is caught in a debt trap from which the only escapes are inflation (which is impossible if you are still in the euro), default, or being bailed out. As with most things ‘euro,’ the bail-outs provided to Greece and Ireland – and now on offer to Portugal – aren’t quite what they seem. They are high interest loans. If this is any sort of remedy, it is for a different malady.”

There you have it. Greece is stuck. The last umpteen months have been nothing but a shadow play, meaning little and signifying less. The IMF austerity that has caused such misery, so much rioting and bloodshed, will not matter after all without a devaluation. The notion that Greece can pay down its accumulated debt by raising taxes and lowering government spending alone is not feasible. Either banks that bought Greek bonds will have to agree to lower the face value of those bonds or Greece will have to leave the euro in order to inflate. These are the options. The rest according to Bootle is mathematically impossible.

The Financial Times‘s article entitled, “Anger begins to infect Europe’s prosperous core” is just as devastating in its own way, reporting on rising frustration in the more prosperous Northern half of the Union. The article points out that the EU is already readying an effort to “save Spain,” the EU’s fourth-largest economy, but that the real challenge may come from countries like Finland that may soon elect “the EU’s first Eurosceptic prime minister.”

According to the Financial Times, “Popular anger at bail-outs, austerity and general economic uncertainty has already toppled leaders on the Eurozone’s periphery: first in Ireland, then Portugal and arguably Spain, where José Luis Zapatero has said he will not seek a third term as prime minister … Mainstream parties are losing ground to populist outsiders playing on resentment and frustration triggered by austerity and falling living standards.”

The article reminds us that France’s Nicolas Sarkozy, a primary backer of the EU effort, is in electoral trouble. (This is understandable since several years ago the French voted against the now defunct EU Constitution.) Belgium, meanwhile, has not been able to form a government for nearly a year because of Flemish nationalist sentiment. The current Dutch government stays in power, according to the FT, only with the help of an anti-EU nationalist party. German nationalism – a source of much concern within Germany itself – may eventually impel centrist parties such as the liberal Free Democrats to take openly anti-EU positions. Germany’s chancellor Angela Merkel is beginning to lose local elections regularly because of her pro-EU stances.

While Europe’s nationalist parties have been painted as xenophobic and even racist in the past, the FT article claims that public frustration with an increasingly dysfunctional and costly EU is allowing them to reposition themselves as defenders of economic solvency and smaller government. By tapping into anti EU anger, nationalist parties discover issues that are at once more mainstream and less divisive.

In what must certainly be seen as a most shocking statement (for the FT anyway), the article suggests the following: “We are witnessing Europe’s own Tea Party moment.”

To see this in print in the FT is OUR shocking moment. In fact, we have long expected an EU “tea party” moment and considered it almost inevitable; but to have the language surface in a Financial Times article is truly surprising. Such a statement cries out for elaboration, which the FT declines to provide. Yet in a sense having such a point raised in the FT – one of the Anglo-American power-elite’s most prominent mouthpieces – is of itself a “teachable moment” and may be seen as a kind of metaphorical turning point in the argument over the EU’s survival.

We think we know why a Tea Party is erupting in Europe, of course. We’ve explained it many times. The truth-telling of the Internet itself is interacting with the ongoing financial crisis in predictable ways. Unlike past crises, in fact, the Anglo-American power elites have not been able to aim popular anger at private enterprise. The socialism and communism that the elites encouraged in the 20th century (in order to concentrate more power into their own hands) is not working very well now.

The anger instead, from what we can tell, is focused mostly where it should be – at the political and banking SYSTEM, not greedy individuals in private enterprise that make convenient, illusory scapegoats. This is surely a problem for the EU but even more of a problem for the power elite itself. It wasn’t supposed to happen this way. The financial crisis – which Eurocrats foresaw for decades – was supposed to generate an ever-closer EU. (Out of chaos, order.)

But back to Bootle, who astonishingly acknowledges this sentiment outright: “Most of this mess was envisaged by the critics of monetary union when the single currency was established but the euro-elite just ploughed on. The single currency was going to bring convergence between member countries. In fact, several members have diverged.” Bootle’s conclusion: “Europe is headed for the rocks.”

Bootle’s unvarnished anti-EU verdict when combined with the FT’s statement about a pan-European Tea Party mark an evolution of negative EU rhetoric. Recently, a feedbacker of ours claimed our articles had become seemingly more pessimistic about the idea of a general rollback of the nascent power elite one-world governance. We replied that we tried to be agnostic about elite prospects; our paradigm postulates a kind of war between the truth-telling of the Internet and elite fear-based promotions, but we didn’t intend to choose sides (despite our obvious bias), but only report on the conflict.

Yet here we are! A teachable moment. Two articles in one day – one from an admittedly anti-EU paper but another in one of Europe’s most prominent pro-EU publications – is the kind of watershed we look for. The conversation IS seemingly changing; and when it comes to the EU anyway the power elite is perhaps increasingly on the defensive. Long gone is the mindless mainstream tub-thumping for the EU, for expanded powers, for an ever “greater union.” Current stance: gritted teeth, a fingernail-clutching death grip.

We continue to try to look at both sides. We’ve suggested that the powers-that-be are endlessly inventive. Perhaps the EU’s unraveling can provide a further justification for a one-world currency. But when one considers what is taking place objectively, it likely makes no sense that the Anglo-American elites behind the EU (in our opinion) would want to tear down what has taken 50 years to build. Any EU retrenchment, any bank haircut, any sense that the austerity oppressing Southern Europe’s downtrodden masses is unworkable, must be seen inevitability as a defeat for the EU project.

This is where the power elite is today. The Internet has revealed the elite’s war against Western middle classes to too many people. As a result, money power has moved from stealth to strength. Elite promotions are to be implemented by brute force. The masses are to get the message that their enlightenment means nothing. The program is to continue.

And yet … the trouble with this stance is that by emphasizing strength over stealth, the PE has upped the ante considerably. Now any setback, any defeat, is magnified. The Anglo-American elite cannot acknowledge losses. If one is to insist on the implacability of one’s destiny and to show irredeemably that there is no escaping the onrushing new world order than one must not show weakness.

This is the reason we would argue that the Anglosphere elites bargained so long and so hard with tiny Iceland over a miserable US$7 billion (pocket change to central bankers). This is the reason for the absurd bailouts of bankrupt EU countries (which are NOT bailouts, the Germans are told). This is the reason, even, that the tiny African country known as the Ivory Coast has blown up and landed on front pages. No one is to be immune from money power. Every economic and sociopolitical event is now an object lesson and meant to be a hard one.

Money power is DETERMINED not to show weakness. The very same day that Iceland voters (see DB’s article yesterday) rejected reimbursing Britain and the Netherlands for banking losses, those two countries announced the intention to sue. Whether it actually happens is a tale yet to be told; but the rhetoric was immediate, furious and meant to send a message in our view similar to a certain historical personage’s “immoveable rigor.”

The subterranean conversation is obvious; one just has to listen to its heartbeat. The elite is keeping score because it knows you are too. It cannot show a single sign of weakness, or so it deems. The crimes are so extraordinary, the ambition so unfathomably arrogant, the stakes so impossibly high (and the revelations so out-of-control) that there is no room to back down and no place to go (as the Ivory Coast’s embattled president Gbagbo said only last week, see other article this issue).

Conclusion: The elite is now in a place where ANY setback is considerable and illustrates to the millions who are awakened that its grip is slipping. Because the secrecy is gone, all the elite has left is an aura of desperately cultivated invincibility. This is the final weapon in its arsenal, but it is a much more difficult one to wield. It demands “immoveable rigor” and a determination not to give in no matter the forces arrayed against it. Yet we would argue on almost every front elite plans are crumbling or at least under attack. The 21st century is not the 20th. The game has changed, and we have long wondered how those impossibly wealthy banking families ensconced in the City of London would react to the results. Not well, it seems.




EU Dominos Tumble Toward Spain?

Romano Prodi (second from the right) at the He...

Image via Wikipedia




There is a clear pattern of events in the eurozone, and not much to choose between Portugal and Spain At 20.5%, Spain’s unemployment rate is almost double Portugal’s 11.1%. Spain’s current account deficit looks a lot healthier than Portugal’s, and its national debt is lower but there’s little between the two countries when it comes to the size of their respective budget deficits. The notion that Spain is somehow different to Portugal is based on a somewhat fanciful belief that it is a more dynamic economy and is immune from speculative attack by virtue of its size. – UK Guardian/Larry Elliott, Economics Editor

Dominant Social Theme: Hey, Portugal’s leaders have finally admitted the country is tapped out. Glad that’s over with. Now the EU can get back to building stability.

Free-Market Analysis: The mainstream press for the most part is taking the usual ho-hum approach to Portugal’s impending default and the Guardian article above is one of the few that takes a different tack. More common when it comes to this latest EU setback is the Economist magazine, perhaps the most authoritative of all the elite media mouthpieces, as follows:

Another domino has fallen in the eurozone debt crisis … After Greece and Ireland, Portugal has become the third debt-laden economy on Europe’s periphery to request a financial rescue. European Union leaders have breathed a sigh of relief. Olli Rehn, the EU’s top economic official, said it was a “responsible step for securing the financial stability of the euro Zone.” José Manuel Barroso, a former Portuguese prime minister who is now president of the European Commission, said the request would be “processed in the swiftest possible manner.”

Of course that makes sense. The Eurocrats who got themselves into this mess by lying to Europeans serially over decades about their real intentions (to recreate the Holy Roman Empire) have become quite practiced when it comes to “bailouts” (which really aren’t bailouts as Germans won’t tolerate them). This is a kind of dominant social theme: All is well with the EU and its top thinkers can deal with innumerable crises without breaking a sweat. They are cool cats, just like America’s Barack Obama.

Yes, things are OK with the Union. It’s just a rough patch. On the other hand, had we postulated just three short years ago that more than 10 percent of the EU would be insolvent at the beginning of 2011, we probably could have made a cold fortune from Britain’s bookies who will bet on anything. We should have made the bet, too, because we have never believed the EU could work, not so much because of the one-size-fits-all currency but because the entire EU enterprise has been built on lies and attempts to defraud some 500 million people about the real import and ambition of the Union.

full articleat source:http://www.thedailybell.com/2003/EU-Dominos-Tumble-Toward-Spain.html


I believe we are only a few months away before we see the first bank failures  in Spain and then the S*** will hit the fan I would be buying Dollars anywhere above  1.48 Level  I might even have mortgage changed into dollars from Euros at that level or above.

Reggie Middleton’s take on Moody’s very late, appropriate Greek downgrade

Moody’s Very Late, But Nevertheless Quite Appropriate Greek Downgrade Inches Us Closer To the Rate Volatility Storm

For the past two years, and particularly over the last couple of months,  I have been harping on the coming interest rate volatility storm. Things are now moving in lockstep, precisely as I have forecast. In the news this morning from the mainstream media…

Moody’s Downgrades Greek Sovereign Debt by 3 Notches:

Moody’s rating agency downgraded Greece’s sovereign debt on Monday from B1 to Ba1 and assigned it a negative outlook, citing significant risks to its fiscal restructuring program.

Moody’s now has the lowest rating for Greece of all the major credit agencies and is the first to classify Greek government debt as ‘highly speculative’.

“The fiscal consolidation measures and structural reforms that are needed to stabilize the country’s debt metrics remain very ambitious and are subject to significant implementation risks,” Moody’s said in a statement. It added that it saw risks that conditions attached to continuing financial aid after 2013 will reflect solvency criteria that the country may not satisfy, and result in a restructuring of existing debt.

“At a time when the global economy is fragile and market sentiment is sensitive, unbalanced and unjustified rating decisions such as Moody’s today can initiate damaging self-fulfilling prophecies and certainly strengthen the arguments for tighter regulation of the rating agencies themselves,” it said.

So, the Greek officials threaten to “regulate” those who FINALLY come out with the truth. Did you guys ever see that movie called the “Adjustment Bureau”? The Greek government wants the truth “Adjusted”, and will even go so far as to do it themselves – see the Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse! excerpt below.

In addition, Moody’s is soooooo late to the party. As illustrated in explicit detail nearly a year ago, this event is practically a foregone conclusion. See What is the Most Likely Scenario in the Greek Debt Fiasco? Restructuring Via Extension of Maturity Dates and look as Greece’s situation before and after any restructuring after 2013 (Professional and Institutional level subscribers (click here to upgrade) may access the live spreadsheet behind the document by clicking here (scroll down after for full summary, spreadsheet and charts).


… and that is with their “pie in the sky” estimates, as clearly pointed out in Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!

…try taking a look at what the govenment of Greece has done with these fairy tale forecasts, as excerpted from the blog post Greek Crisis Is Over, Region Safe”, Prodi Says – I say Liar, Liar, Pants on Fire!


Think about it! With a .5% revisions, the EC was still 3 full points to the optimistic side on GDP, that puts the possibility of Greek  government forecasts, which are much more optimistic than both the EU and the slightly more stringent but still mostly erroneous IMF numbers, being anywhere near realistic somewhere between zero and no way in hell (tartarus, hades, purgatory…).

Now, if the Greek government’s macroeconomic assumptions are overstated when compared with EU estimates, and the EU estimates are overstated when compared to the IMF estimates, and the IMF estimates are overstated when compared to reality…. Just who the hell can you trust these days??? Never fear, Reggie’s here. Download our “unbiased, non-captured, empirically driven” forecast of the REAL Greek economy – (subscribers only,click here to subscribeGreece Public Finances Projections Greece Public Finances Projections 2010-03-15 11:33:27 694.35 Kb.

The  Greek Restructuring and Haircut Analysis that linked to above goes into explicit detail, showing the NPV of cashflows to investors after a a wide scenario analysis of prospective default and restructuring scenarios. It ain’t pretty!

greek debt restructuring spreadsheet

We have performed similar analysis for the usual suspects: Portugal, Spain, Italy and Ireland. Portugal is currently at record high funding rates – and that’s AFTER the bailout!

This is Portugal’s path as of today.

Even if we add in EU/IMF emergency funding, the inevitability of restructuring is not altered. As a matter of fact, the scenario gets worse because the debt is piled on.

Let it be known that there are larger sovereign states that are worse off. Ireland is a prime example. If one were to look at the cumulated funding requirement of Ireland over the next 15 years as clearly illustrated in Ireland’s Bailout Is Finalized, The Indebted Gets More Debt As A Solution But The Fine Print Is Glossed Over – Caveat Emptor! Monday, November 29th, 2010

There are other states that are not in as bad a shape but are poised to do much more damage,  and then there are a plethora of states that will get dragged down through contagion. Yet, the natural manner of pricing risk in the equity markets does not transmit these facts because of the unprecedented amount of liquidity stemming from central bankers around the world doing the Bernanke/Japanse QE thing.

Keep in mind that the German’s game plan is to kick this down the road till 2013, at which point it will be unsustainable butthe mechanisms will be in place to force bondholders to take haircuts in front of the tax payers…

Sounds like a plan, doesn’t it? Except for the high probability that you will probably have a rate storm well before 2013. If rate volatility and/or levels spike for the more developed nations before then, all hell breaks loose. In the US, we’re damn near zero now. Hey, what happens to residential and commercial real estate valuations when rates spike higher? See  The Coming Interest Rate Volatility, Sovereign Contagion, Geo-political Unrest & Double-Dip Recessions: Here’s The Answer To Valuing Global Real Estate Through This Mess.

Revisiting the Topic of Haircuts

Now, let’s return to the post “The ECB Loads Up On Increasingly Devalued Portuguese Bonds, Ensuring That They Will Get Hit Hard When Portugal Defaults“. All readers should open this link in a new window, scroll down to the spreadsheet at the bottom of the post, and reference the first column with the cell labeled “Decline in present value of cash flow for creditors” under the label “Haircut in the principal amount”. Now, scroll over the to the column labeled “Restructuring by Maturity Extension & Coupon Reduction w/Haircut”, which is the second to last column in blue highlight and carefully read the figure for the “Decline in present value of cash flow for creditors”. Booyah! And that’s the unlevered losses. 5x leverage wipes you out several times over. It is rumored that the ECB is levered over 90x, just for the sake of discussion. I strongly suggest anyone interested in this space study this spreadsheet very closely. This level of analysis is probably not available anywhere else on the free Web


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