Wednesday, June 22, 2011

June 22 2011: A low thunder rolling 'cross the plains [Update]

Edwin Rosskam Tabac January 1938
"Workers in a tobacco field, Puerto Rico; The straw shed in the background is a hurricane shelter"

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Ilargi: Update June 23:

I see the New York Times has published another article connecting Greece to credit default swaps. My, aren't we getting busy all of a sudden. Louise Story for NYT has this:
Derivatives Cloud the Possible Fallout From a Greek Default
It’s the $616 billion question: Does the euro crisis have a hidden A.I.G.?

No one seems to be sure, in large part because the world of derivatives is so murky. But the possibility that some company out there may have insured billions of dollars of European debt has added a new tension to the sovereign default debate.

In years past, when financial crises in Argentina and Russia left those countries unable to make good on their government debts, they simply defaulted. But this time around, swaps and other sorts of contracts have become so common and so intertwined in the financial markets that there are fears among regulators and financial players about how a Greek default would play out among derivatives holders.

The looming uncertainties are whether these contracts — which insure against possibilities like a Greek default — are concentrated in the hands of a few companies, and if these companies will be able to pay out billions of dollars to cover losses during a default.

Ilargi: I think this sort of attention is long overdue, and in that sense it’s good that it's there. But I’m not impressed or amused by the tone of Story's piece.
If there were a single company standing behind many of these contracts, that company would be akin to the American International Group of the euro crisis. The American insurer needed a $182 billion federal bailout during the financial crisis because it had insured the performance of mortgage bonds through derivatives and could not pay on all of them.

Even regulators seem unsure of whether a Greek default would reveal such concentrated risk in the hands of just a few companies. Spokeswomen for the central banks of both Europe and the United States would not say whether their researchers had studied holdings of such contracts among nonbank entities like insurance companies and hedge funds.

Asked about derivatives tied to Europe at a Wednesday press conference, Ben S. Bernanke, the chairman of the Federal Reserve, said that the direct exposure is small but that “a disorderly default in one of those countries would no doubt roil financial markets globally.

Derivatives traders and analysts are debating just how much money is involved in these contracts and what sort of threat they pose to markets in Europe and the United States. On the one hand, just over $5 billion is tied up in credit-default swap contracts that will pay out if Greece defaults, according to Markit, a financial data firm based in London. That is less than 1 percent the size of Greece’s economy, but that is a conservative calculation that counts protections banks have in place offsetting their positions, and is called the net exposure.

Ilargi: There's the overall tone Louise Story seems to be aiming for: it’s a small problem. At the same time, though, she can't deny that it's not.
The less conservative figure, the gross exposure, is $78.7 billion for Greece, according to Markit. And there are many other types of contracts, like about $44 billion in other guarantees tied to Greece, according to the Bank of International Settlements. The gross exposure of the five most financially pressed European Union countries — Portugal, Italy, Ireland, Greece and Spain — is about $616 billion. And the broader figure on all derivatives from those countries is unknown. [..]

he uncertainty, financial analysts say, has led European officials to push for a “voluntary” Greek bond financing solution that may sidestep a default, rather than the forced deals of other eras. “There’s not any clarity here because people don’t know,” said Christopher Whalen, editor of The Institutional Risk Analyst. “This is why the Europeans came up with this ridiculous deal, because they don’t know what’s out there. They are afraid of a default. The industry is still refusing to provide the disclosure needed to understand this. They’re holding us hostage. The Street doesn’t want you to see what they’ve written.”

Ilargi: That looks clear enough to me: there's no clarity. Regulators have no idea what banks hold. None. But that doesn't keep the New York Times from trying:
Regulators aren’t saying much. When asked what data the Federal Reserve had collected on American financial companies and their swaps tied to European debt, Barbara Hagenbaugh, a spokeswoman, referred to a speech made by Mr. Bernanke in May in which he did not mention derivatives tied to Greece. At the Wednesday press conference, Mr. Bernanke said that commonly cited data on derivatives do not take into account the offsetting positions banks have on their Greek exposures. And with those positions, he said, even if there is a Greek default, “the effects are very small.”

Ilargi: Mr. Bernanke show here that he's full of it. But Louise Story doesn't call him on that. For the truth we need to look elsewhere:
At the European Central Bank, Eszter Miltenyi, a spokeswoman, said: “This is much too sensitive I think for us to have a conversation on this.”

Ilargi: Now that is clarity. But it doesn't stop Ms. Story from trying to play it all down once again:
On Wall Street, traders are debating whether the industry’s process for unwinding credit-default swaps would run smoothly if Greece defaulted. The process is tightly controlled by a small group of bankers who meet in an industry group called the International Swaps and Derivatives Association.

The process is fairly well developed, but it has been little tested on the debt of countries. For the most part, Wall Street has cashed in on credit-default swaps tied to corporations’ debt. For most purposes, determining whether a default occurred in a country’s debt falls to ratings agencies like Fitch and Moody’s. But for the derivatives market, a committee of I.S.D.A. makes the call.

If the committee decides there was a default, it passes the baton to Markit, which is partly owned by the banks. Markit holds an auction to determine how much value has been lost on the debt, and that determines how much money is paid out to the parties that purchased the insurance.

Marc Barrachin, who runs the auctions, said there was no reason to worry about the process.

“The process is very smooth, very well understood by market participants,” said Mr. Barrachin, the director of credit products at Markit. “I mean if you go back to 2008 right in the fall, in five days we had auctions for Fannie Mae, Freddie Mac and Lehman Brothers, and two weeks after that you had Washington Mutual. I go back to that period of stress and the orderly settlements of large amounts of credit derivatives, for names that were widely followed, were testament of the efficiency of the auction system.”

Ilargi: Right. The Association that decides on any unwinding process is run by the very banks that have skin in the game. And if these bankers can't avoid any longer, they pass on the baton to Markit, a company they also -partially- own. No bias anywhere in sight?!

The simple naked truth is that nobody knows the numbers for outstanding swaps, or banks' exposure to them. Anyone who claims that they do is either lying in your face or has no idea what they talk about. Bankers don't even have any incentive to tell each other what they really hold. So don't go trying to tell me that they do, NYT. There is a huge potential problem brewing here, no matter what bernanke or the banks would like to see printed in the media that are friendly to them. At least my readers know some more about this by now. What should I say now? You heard it here first?

It's hard sometimes, and potentially unrewarding too, to write about topics where you know beforehand that a significant part of the data will need to remain opaque by default, and then still feel like you need to address them. As my regular readers know, I've talked about derivatives, CDS in particular, quite a bit recently in connection with the Greek restructuring, default, reprofiling (pick your own term and color the pictures), see for instance The Derivatives Pressure Cooker and Credit Downgrade Swaps.

After publishing the last piece I received a very nice email form Mike 'Mish' Shedlock, which very simply said: "Very Good". I thanked Mish for the kind words, and said: "I'm sometimes getting the feeling I'm kind of alone in hammering on about the role derivatives play in all this." Mish pointed me to an article he wrote the same day, June 15, in which he quoted Kash at Street Light, who on Monday June 13 wrote:
Indirect US Exposure to the Euro Debt Crisis, part 2
[..] Unfortunately, it's very difficult to get any good information about banks' derivatives exposures. The major US banks tend to downplay their exposure to the Euro debt crisis in their SEC filings.[..]

The aggregate CDS exposures of the big US banks are certainly large enough to be plausibly consistent with the BIS estimate of about $100 bn in indirect exposures to peripheral Europe.[..] ... it seems reasonable to guess that the total net open positions on CDS protection sold to third parties by the big US banks is between $1,500 and $2,000 billion.

Ilargi: At least that's something. But I still don't think it's the real story. And frustrating as it might be to be always left with incomplete sets of numbers, because derivatives are largely dealt over the counter, meaning no-one's keeping track of anything, I noticed some news items today that merit further scrutiny.

Derivatives are the $800 trillion or more gorilla in today's financial room. There would very and quite simply not be anything remotely approaching the tense talks on Greek debt that we see if not for the derivatives exposure of some of the main parties involved in these talks. It's not about a handful of billions of dollars the IMF will or will not fork over; that's what these guys literally pay for their peanuts. The problem lies in the bets, the wagers, in the shape of default swaps, to the tune of trillions of dollars, that are out there, and that risk being triggered by a default being declared a "credit event", either by the ratings agencies, or the International Swaps and Derivatives Association, or both.

A mjaor part of this is that nobody knows how big this is. There are estimates of the total derivatives market flying around, but they are to a large extent private deals, for which there's no all-encompassing clearing house. How large is that part? Well, we don't know, do we? The overall derivatives market was estimated at one point by the Bank for International Settlements to be over $1 quadrillion. Lately I see numbers in the vicinity of $600 trillion. But have really that many of these contracts been wound down, and no new ones engaged in? I find that hard to believe, I don't see why or how any of this would have been wound down, but I don't know anymore than anyone else does.

So let's get to those news items I mentioned. A British consulting firm, Fathom Financial Consulting, released a report ostensibly based on numbers provided by the UK Department of Business, that claims British banks could be on the hook in the Greek crisis for £366 billion, or $590 billion. That's a very far cry from the $8 or $10 billion or so commonly reported in actual bond holdings. It's equivalent to about £14,640 , or $23,5000, per British family, a quarter of the yearly GDP. And that’s just for Greece! Shit, guys that's just Britain, and it's just Greece. Let that sink in.

By way of comparison, French banks have an exposure to Greece in direct holdings that's about 4 times as big as their UK counterparts. Does that mean France could lose $2.36 trillion in case of a Greek default? Who's to know? And who knows anything about Fathom Financial Consulting anyway? Still, their report is interesting in that it's (one of) the first that tries to incorporate derivatives into the total exposure numbers for financial institutions. And we need that kind if data, badly. Shaken AND strirred, please.

Second news item: The New York Times published an editorial today, and what is the subject? You guessed it, derivatives.
Greece and You
The euro-zone bailout of Greece is, in good part, a bailout of European banks. In France and Germany alone, banks hold some $90 billion worth of public and private Greek debt. The European Central Bank also holds Greek government debt, and the fear is that if Greece defaults, cascading losses could threaten all of Europe.

Are American banks also vulnerable? No one is sure. They are not big lenders to Greece, but they are big players in the derivatives markets. If Greece defaulted, a European bank holding a credit-default swap on Greek debt from an American bank would be entitled to a payout from that bank.

Credit-default swaps are the kind of derivatives that were behind the blowup of the American International Group and the near meltdown that followed in the global financial system. From the available evidence, it doesn’t appear that a Greek default would have the same destructive power, but no one is eager to test the proposition.

In his recent confirmation hearing to be the next leader of the European Central Bank, Mario Draghi, the central banker of Italy, warned that no one really knows who is on the hook for these risky financial instruments. “Who are the owners of credit-default swaps? Who has insured others against a default of the country?” he asked.

Warning of a potential “chain of contagion,” he argued against requiring banks to restructure Greek debt — which could involve extending repayment terms or writing off principal — even though Greece’s apparent inability to pay in full makes a restructuring all but inevitable. [..]

The uncertainty is greater when you consider that credit-default swaps are only one type of derivative that links banks worldwide. What dangers lurk in other derivatives, like those on currencies and foreign exchanges?

Ilargi: If nothing else, the NYT editorial staff confirm what I've been harping on for some time now: It's about the derivatives, stupid! Why they chose today to -finally- address the issue is anybody's guess. Perhaps they want their readers to understand that last night's confidence vote in Athens means nothing: next week's austerity vote (June 28) is a much bigger deal. Or perhaps it's just a simple swipe at Republicans for stalling reform and regulation. "Republican lawmakers are bent on derailing reform by any means necessary, including starving regulatory budgets, impeding the confirmation of regulatory nominees and pressing regulators to adopt light-touch rules." Yeah, right, doh!, who's in charge again?

Third news item. Harry Wilson at the Telegraph reports that the International Swaps and Derivatives Association (ISDA) has declared a credit event at Allied Irish Bank:
Allied Irish Bank has 'defaulted' says derivatives body
Banks that sold insurance on the debt of Allied Irish Banks will have to pay out to investors in the nationalised lender's debt despite complex legal manoeuvres by the Irish authorities to avoid putting the lender into default.

The International Swaps and Derivatives Association (ISDA) yesterday said that a "credit event" had occurred on Allied debt, meaning the bank has effectively defaulted on its debt, a situation the Irish government has gone to extreme lengths to avoid. Credit default swaps (CDS) sold on Allied subordinated bonds and, crucially, its senior debt, have been activated by the decision of the ISDA determinations committee that decides whether a borrower has defaulted. [..]

While the Allied decision was in line with market expectations and covers only a relatively small number of bonds, it sets a precedent for upcoming decisions on Bank of Ireland debt that is likely to be more significant as the lender is the last major Irish bank not to be fully nationalised.

Of even more significance will be the read-across for CDS contracts written on Greek government debt and that of other indebted European governments. With a default by the Greek government regarded by most investors as a certainty, the issue is likely to become one of determining whether the form of the default allows holders of the bonds to exercise the CDS protection they have taken out on the bonds.

"There could be a big wake-up call here for investors. People still do not understand that a CDS credit event and default are two completely separate things," said one London-based credit trader.

Ilargi: Hmm. CDS payments due on Allied irish. We have no clue, nobody does, how much money is involved here. But don't be surprised if it's enough to bankrupt a bank or two or three. I’m not saying that wlll happen, just that the amounts involved may well be sufficient to trigger such events, if left alone. Whether it will actually come about depends on talks like the ones that have been going on in Athens for the last, eh, what, forever?!

But the game is on, and on the wagon, so to speak. As the NYT editors said: "[..] credit-default swaps are only one type of derivative that links banks worldwide". In other words, having to pay out on Allied Irish CDS can push the same banks over the edge that are counterparties to Greek CDS, and so on and so forth. And again, I've said it before: these things were never meant to pay out. They were designed to hide debt, to allow financial institutions to use their capital for further bets and wagers. AIG was once the biggest of the lot; TARP and QE2 have served, to the tune of, what, $2 trillion now?!, not even to pay off what's owed, but just to keep a lid on things.

It's starting to look like that "CDS to hide debt" idea might be backfiring. But, then again, all the Merkels and Obamas and Papandreous and Geithners and Junckers on this planet will try with all their might to prevent that from happening. And they have virtually limitless access to your money, and that of your children, to do just that. They have exactly zero chance of succeeding, but that won't keep them from trying: their jobs, their social status, perhaps even their very lives depend on it.

There's a low thunder rolling across the plains, and it's coming this way. There's nowhere to hide; we’ll have to live through it. It's called debt deflation. Derivative debt deflation. Financial crisis? You ain't seen nothing yet.

And since pictures say more than a trillion dollars' worth of words, I thought I’d leave you with this one from Der Spiegel. From this, please draw your own conclusions on the future of Greece, the Eurozone, and all the derivatives written on them by all the banks in the world. C'mon, you can do it, it ain't hard.

Greek crisis could cost UK £366 billion ($590 billion): British exposure 'significantly underestimated'
by Tim Shipman - Daily Mail

Britain could be hit with losses of up to £366billion from the collapse of the Greek economy, it has emerged. The potential devastation of banks and other City institutions would be equal to 24 per cent of our annual national output, or £14,640 for every family in the UK.

Ministers had claimed that British banks have 'only' £2.5billion of exposure to Greek government debt, while the Bank of England says the potential losses would be just £8billion. But experts last night said that UK financial institutions are in far more danger than previously thought, because banks are tied up in complicated derivatives and insurance deals. They warned that if Greece defaults on its debts the crisis could cause a series of dominoes to fall, with Portugal, Spain and Ireland heading to the wall in turn.

The Greek government last night faced a crunch confidence vote at its parliament in Athens. Without a 'yes' there was no prospect of Greece enacting the £25billion of spending cuts and tax rises that EU finance ministers have demanded before granting a second bailout.

Meanwhile, David Cameron said the euro must not fail - because it would drag Britain's economy down with it. In a slap-down to Boris Johnson and other Tories calling for the end of the single currency in its current form, he said: 'Britain suffers when the eurozone struggles. Forty per cent of our exports go to eurozone countries. Turbulence in the eurozone is not good for Britain.' Experts accused ministers of underestimating the true scale of the risk to the UK, as Channel 4 News revealed that estimates of potential exposure range as high as £366billion.

Danny Gabay, of Fathom Financial Consulting, which calculated the figure using data from the Department of Business, said: 'It's not the direct loan that’s the problem, it's the derivatives of those loans which can go on to be multiples of the actual original size of the loan. 'London made a vast amount of money in the ten years before this crisis selling those loans. Those chickens may now be coming home to roost.'

At the heart of the issue are credit default swaps - the same complex financial instruments that saw the sub-prime mortgage meltdown in the U.S. escalate into the global credit crunch. They allow banks exposed to debt  to take out insurance with other financial institutions to protect them from losses. They in turn sell the risk to others, meaning one debt can infect dozens of institutions.

Former Labour City minister Lord Myners accused Treasury minister Mark Hoban of giving 'numbers that significantly understate the truth' when he told MPs on Monday that British banks could lose $4billion - about £2.5billion. But despite this, the Prime Minister yesterday made it clear that Britain would not contribute to a second Greek bailout through the EU. 'It would be quite wrong now to bring Britain into this bailout,' he said.
Instead, the UK will contribute around £1billion through its membership of the International Monetary Fund. Mr Cameron's statements came as a report by the think-tank Open Europe predicted a third bailout will be needed to keep Greece solvent in the long-term.

Allied Irish Bank has 'defaulted' says derivatives body
by Harry Wilson - Telegraph

Banks that sold insurance on the debt of Allied Irish Banks will have to pay out to investors in the nationalised lender's debt despite complex legal manoeuvres by the Irish authorities to avoid putting the lender into default.

The International Swaps and Derivatives Association (ISDA) yesterday said that a "credit event" had occurred on Allied debt, meaning the bank has effectively defaulted on its debt, a situation the Irish government has gone to extreme lengths to avoid. Credit default swaps (CDS) sold on Allied subordinated bonds and, crucially, its senior debt, have been activated by the decision of the ISDA determinations committee that decides whether a borrower has defaulted.

The decision by the committee, which is made up of 10 major banks, follows the announcement earlier this month by the Irish High Court of a "subordinated liabilities order" that changed the terms under which junior debt in Allied was originally sold, forcing holders of the bonds to accept an extension in the maturity of the debt to 2035.

Allied had already missed a coupon payment on its Lower Tier 2 debt. However, changes in the law enabled the bank to avoid being forced to be formally placed in default. For the market, ISDA's decision renders this move largely irrelevant as it means the bank will be categorised as in default in the eyes of investors.

While the Allied decision was in line with market expectations and covers only a relatively small number of bonds, it sets a precedent for upcoming decisions on Bank of Ireland debt that is likely to be more significant as the lender is the last major Irish bank not to be fully nationalised.

Of even more significance will be the read-across for CDS contracts written on Greek government debt and that of other indebted European governments. With a default by the Greek government regarded by most investors as a certainty, the issue is likely to become one of determining whether the form of the default allows holders of the bonds to exercise the CDS protection they have taken out on the bonds.

"There could be a big wake-up call here for investors. People still do not understand that a CDS credit event and default are two completely separate things," said one London-based credit trader.

Greece and You
by NYTimes Editorial

The euro-zone bailout of Greece is, in good part, a bailout of European banks. In France and Germany alone, banks hold some $90 billion worth of public and private Greek debt. The European Central Bank also holds Greek government debt, and the fear is that if Greece defaults, cascading losses could threaten all of Europe.

Are American banks also vulnerable? No one is sure. They are not big lenders to Greece, but they are big players in the derivatives markets. If Greece defaulted, a European bank holding a credit-default swap on Greek debt from an American bank would be entitled to a payout from that bank.

Credit-default swaps are the kind of derivatives that were behind the blowup of the American International Group and the near meltdown that followed in the global financial system. From the available evidence, it doesn’t appear that a Greek default would have the same destructive power, but no one is eager to test the proposition.

In his recent confirmation hearing to be the next leader of the European Central Bank, Mario Draghi, the central banker of Italy, warned that no one really knows who is on the hook for these risky financial instruments. “Who are the owners of credit-default swaps? Who has insured others against a default of the country?” he asked.

Warning of a potential “chain of contagion,” he argued against requiring banks to restructure Greek debt — which could involve extending repayment terms or writing off principal — even though Greece’s apparent inability to pay in full makes a restructuring all but inevitable.

Whether or not American banks are at serious risk from this crisis, the fact is that nearly three years after A.I.G., derivatives are still largely unregulated. The financial reforms that are supposed to improve transparency and reduce speculation — trading derivatives on fully regulated exchanges, strict reporting requirements to regulators and new rules on capital adequacy and business conduct — have yet to be implemented.

The process has been slow in the face of heavy lobbying by the banks. Republican lawmakers are bent on derailing reform by any means necessary, including starving regulatory budgets, impeding the confirmation of regulatory nominees and pressing regulators to adopt light-touch rules. Some Democratic lawmakers and Obama officials are in favor of exemptions on specific derivatives rules that Wall Street opposes.

The uncertainty is greater when you consider that credit-default swaps are only one type of derivative that links banks worldwide. What dangers lurk in other derivatives, like those on currencies and foreign exchanges?

Greece is bound to get more bailouts as long as policy makers believe the alternative could be systemwide collapse. On Tuesday, the Greek Parliament gave the prime minister, George Papandreou, a vote of confidence, clearing the way for another tough vote next week on wage cuts and other painful austerity measures that European officials are demanding in exchange for more aid.

The Greek debt crisis is another reminder of how little has really changed since the financial blowup — and how much more must be done to avert a repeat here and around the globe.

Papandreou Allowed to Continue from Frying Pan to Fire
by David Böcking and Ferry Batzoglou - Spiegel

Greek Prime Minister Giorgios Papandreou survived a confidence vote on Tuesday night. But the battle against national bankruptcy will get no easier in the coming weeks. Protests indicate that opposition to his austerity path is growing and he faces a crucial vote next week.

When the vote was over, everything veered to the left. The laser pointers which had been criss-crossing the yellow façade of the Greek parliament were now directed at police in riot gear. The officers stood in the approach to the building, where Prime Minister Giorgios Papandreou had just withstood a vote of confidence. Now, he had to be protected from the anger of his people as he departed.

Papandreou, parliamentarians decided just past midnight on Tuesday night, can continue, despite a brief opposition walkout just prior to the vote and the resistance of a united opposition. But Papandreou's most important opponents, the scene out in front of the building made clear, were not seated on the opposition benches in parliament. They were out front, and there were thousands of them. They are furious with both Greece and the European Union as Athens struggles to survive the common currency crisis brought on by staggering public debt in Greece and elsewhere.

Thodoris, a 42-year-old actor from Athens who declined to provide his last name, was among them. Whistle in mouth, he said "I am here to protest against everything that is happening in my country." He was referring to the new austerity package which Papandreou, now that he has been confirmed in office, seeks to push through parliament next week. The belt-tightening measures, Thodoris said, are destroying the future of Greece, before he began blowing once again on his whistle.

Inside, parliamentarians could hear nothing of the tumult outside when the vote on Papandreou's future began at 12:24 a.m. local time. The president of the parliament called out the names of the representatives one at a time -- all 300 of them. Each responded with a "yes" or a "no".

A Growing Abyss
The process was an orderly one, but came on the heels of a minor scandal -- one which only served to deepen the growing abyss between Papandreou's Panhellenic Socialist Movement (PASOK) and the opposition conservatives. In remarks before the vote, Vice President Theodoros Pangalos said that democracy in modern Greece did not begin in 1974, when the Greek military dictatorship came to an end. Rather, it began in 1981, when PASOK took over for the first time.

It was likely an attempt to unite PASOK -- which saw the beginnings of an internal party rebellion last week before it was forestalled by a cabinet reshuffle -- behind the prime minister. But opposition leader Antonis Samaras saw it as an attack and delegates from his conservative Nea Dimokratia (ND) party left the plenary hall for half an hour. The move came just days after negotiations aimed at forming a national unity government pairing PASOK with ND dissolved. And shortly after returning, Samaras said the comments by Pangalos buried the prospects of a partnership once and for all.

For now, Papandreou need not worry about the opposition, as long as his 155 delegates remain loyal. But the popular protests outside have become increasingly dangerous for the prime minister, and for all those who would support him. The voice votes in parliament were announced one-by-one to the protesters outside. Each "yes" vote was greeted with thousands of boos. Dozens of laser pointers were aimed at the windows of the parliamentary building. In addition, the word "kleftes" -- thieves -- was projected onto the outside wall.

'I Think Society Will Explode'
Dimitris, who likewise refused to give his last name, was one of those wielding a pointer. "It is completely unfair that the money of the poor is used to save the banks," Dimitris, a 26-year-old engineering student, said. In the event the new austerity package is passed next week, he added, anything could happen. "I think that society will explode," he said.

The demonstrations ultimately remained largely peaceful, though police fired tear gas and stun grenades when a group of some 200 protesters began throwing bottles. There were other signs of anger as well. One poster read "Nazi - Nazi - Merkel - Sarkozy" with the stars of the European Union arranged to form a swastika. Another poster suggested throwing Germany out of the euro zone. A handful of demonstrators paraded a gallows in front of the police blockade.

Yet despite the risks of public fury, Papandreou has little choice. His country badly needs a €12 billion ($17.26 billion) tranche from the €110 billion bailout package assembled for Greece by the European Union and the International Monetary Fund (IMF) last spring. The European Union, however, has made the passage of additional austerity measures a condition for the payout of that tranche. The prime minister's hands are tied.

Many in Greece have begun criticizing Papandreou as being merely a lackey of foreign leaders. Furthermore, as the son of an American mother, he has been accused of being too close to the United States and the IMF. One poster on Tuesday evening included a photo of Papandreou beneath the IMF logo and the sentence: "Employee of the Year." Another read "Jefry Go Home! -- a reference to the fact that he was called Jeffrey as a child in the US. The fact that acting-IMF head John Lipsky, of the US, and US Treasury Secretary Timothy Geithner both upped the pressure on Greece in recent days hasn't helped.

Brief Respite
Still, Tuesday saw Europe move to defuse the growing crisis. European Commission President Jose Manuel Barroso pledged to accelerate the payout of billions of euros in European Union development funds once the austerity package is passed -- a proposal that has been under discussion for some time. The advantage is that the funds have already been budgeted. Payouts to Greece have been delayed, however, because Athens has been unable to come up with the requisite matching funds.

Furthermore, some are proposing that Greece move towards the creation of an economic stimulus package to boost the fading economy. Opposition leader Samaras has presented a plan and has the backing of several economists who have long warned that deep spending cuts threaten to delay economic recovery in the country. In an interview with the influential weekly Die Zeit, German Finance Minister Wolfgang Schäuble even proposed establishing Greece as a supplier of solar energy to Germany and the rest of Europe given that the sun shines there far longer each year than in the north.

Such proposals, though, won't be realized for some time -- time that Papandreou simply doesn't have. At 1:04 a.m., the results of the vote were announced, and the prime minister had survived. Just 10 minutes later, most parliamentarians were gone, having left out the side entrance yet still unable to avoid the laser pointer. For Papandreou, the respite will be brief. The austerity package vote is scheduled for June 28.

EU urged to block Greece bail-out
by Louise Armitstead - Telegraph

European leaders have been urged to scrap plans for a second Greek bail-out – as the Athens government wins a critical vote of confidence in parliament.

Leading London-based think tank Open Europe has claimed that a fresh bail-out, expected to be around €120bn (£106bn), will almost triple taxpayers’ existing exposure to Greek debt. “Despite a second Greek bail-out being EU leaders’ preferred option, it is only likely to increase the economic and political cost of the eurozone crisis,” said Open Europe in a report.

The warning came ahead of a crucial vote of confidence in the Greek government, which was won - as expected - late last night. The vote came at the end of a three-day debate on George Papandreou’s unpopular package of spending cuts and asset sales, which faces another vote on June 28. The prime minister has just a six seat majority in the 300-member parliament. On Sunday, European leaders said they would not release the next €12bn tranche of international aid unless Greece passes the measures.

Without the cash injection, which is the fifth instalment from the €110bn international bail-out package agreed last May, Greece will run out of money in mid-July. A failure to pass the measures is also likely to scupper plans for a second bail-out. On Tuesday, Greece held a successful auction of three-month treasury bills where global investors bought a higher amount of the €1.62bn debt issued than at a similar sale last month.

Traders said investors were confident that Greek politicians would pass the austerity measures – which include a €50bn privatisation programme, as well as job and spending cuts – despite the strong opposition to them. The euro also traded up on the back of the optimism. The Chinese Foreign Ministry said it was willing to talk about ways it could help stabilise the European financial system during its visit to Britain, Germany and Hungary this week.

Ahead of the visit by Premier Wen Jiabao, a spokesman said: “The Chinese government has already taken a series of proactive measures to push Sino-Europe trade and economic cooperation, such as buying euro bonds … China is willing to continue helping European countries realise economic growth.”

Power supplies across Greece and some of its islands were again disrupted following strikes by workers at Public Power Corp, a state electricity provider which is facing privatisation.
The power cuts have impacted a raft of firms from transport groups to restaurants, which have been struggling in the high temperatures.

Separately, European banks may be forced to quantify and publish their exposure to Greek debt as part of regulatory stress tests set for July 13. The European Banking Authority (EBA) is analysing each bank’s ability to handle a sovereign default or severe downgrade.

Tim Geithner, the US Treasury Secretary, called for European leaders to unite on a rescue plan for Greece. “It would be very helpful to have Europe speak with a clearer, more unified voice on the strategy,” he said. Stocks markets in Asia rose on Wednesday after the vote of confidence in the Greek government boosted hopes that the country will avoid default. The rose dipped against the dollar to $1.4395.

Europe's Dangerous Leap of Faith
by David Böcking and Carsten Volkery - Spiegel

When it comes to the euro crisis, Europe means business. That, at least, is the message sent by the decision to withhold a vital aid tranche until Greece passes a far-reaching austerity package next week. But the move could backfire.

One could be forgiven for thinking that hurdle races, long an Olympic discipline, originated in Greece rather than in England. Particularly these days. Prime Minister Giorgios Papandreou is doing all he can to keep his government together and prevent his country from going bankrupt. But the obstacles -- a full year after the European Union and the International Monetary Fund put together a €110 billion aid package for the country -- are myriad. And high.

The next hurdle is scheduled for Tuesday night at midnight, Athens time. Papandreou, himself an enthusiastic runner, faces a confidence vote in the Greek parliament. With his party holding 155 of 300 seats, his margin for error is thin. The conservative opposition has vowed to vote against him.

For once, however, all signs seem to point toward a Papandreou success. After a turbulent week, the markets have settled in anticipation of the prime minister surviving the confidence vote. Furthermore, a cabinet reshuffle late last week was successful in forestalling a full-fledged revolt within Papandreou's socialists. Many parliamentarians, to be sure, are finding it difficult to support yet another raft of austerity measures. There is, however, no alternative in sight.

But even if Papandreou survives Tuesday night's vote, the next hurdle is on the horizon. On June 28, the Greek parliament is to vote on a critical new package of austerity measures. Should it fail, it could result in a dramatic worsening of the crisis facing the European common currency.

European Responsibility
The European Union has made the passage of the austerity package a key criteria for handing over the next tranche of aid from the €110 billion bailout package, a position reiterated by European Commission President Jose Manuel Barroso on Monday evening. "I therefore trust that Greece's elected representatives will back these measures next week in a spirit of national and indeed European responsibility," Barroso said in a statement.

The European strategy is a risky one. Given the public opposition in Greece to additional austerity measures -- particularly given the negative effect such measures have already had on the country's economy -- there is a chance that the Greek parliament will reject the new package. Yet, should the EU and the International Monetary Fund refuse to pay out the €12 billion tranche by mid-July, Greece could go bankrupt.

In a Monday report, the IMF warned of the potential "spillover effects" for the global economy should the Greek crisis not be contained and issued a plea for further integration of euro-zone fiscal policy. Furthermore, the so-called troika -- made up of the European Commission, the European Central Bank and the IMF -- have sent experts to Athens to try and prevent the Papandreou administration from watering down the austerity program ahead of the June 28 vote. "A great deal of responsibility lies on the shoulders of the Greek authorities," European Commissioner for Economic and Monetary Affairs Olli Rehn said on Monday.

That so much is now riding on the vote next week comes as something of a surprise. A year ago, when the Papandreou government negotiated the conditions for the €110 billion bailout package, Athens seemed determined to fulfil the strict troika demands. Deep spending cuts were quickly passed along with other painful belt-tightening measures.

The prime minister himself insists that nothing has changed. "We are determined -- as a country and as a government -- to bring our program forward and do what is necessary to improve our country's economic position," he said following his meeting with Barroso. Despite such avowals, however, doubt has increased in recent weeks. And new numbers released by the Greek Finance Ministry on Monday indicate that Athens is behind on its consolidation aims.

Depth of Distrust
The debate in Athens has also made it more difficult for euro-zone countries to throw their support behind Greece. Negotiations on a new bailout package for Greece, which could even be slightly higher than the first, have been acrimonious and slow. And the delay in rubber-stamping the €12 billion payout from the first package is a clear indication of the depth of distrust felt in European capitals.

European politicians have sought to sell the delay as a pressure tactic. "We are calling for not just the government, but also the Greek opposition to support the plan," said Belgian Finance Minister Didier Reynders. Europe hopes that such pressure could ultimately help Papandreou push the austerity package through parliament.

But the strategy is not without risk. On the one hand, should the austerity package ultimately fail, the EU would be faced with going back on its word or allowing a Greek insolvency. On the other hand, protests against further belt tightening in Greece, while far from massive, have become more intense in recent weeks. The left-wing daily Ta Nea has begun calling public squares in the country a "secret weapon" against the troika.

Greek labor unions have also begun flexing their muscles. General strikes have become frequent and on Monday, workers at the partly-state-owned electric utility DEI went on strike, resulting in several small power outages. Labor unions and other groups have announced further protests for Tuesday. The aim is to block the roads leading to parliament in Athens.

A Slowing Economy
But it is not just concerns about social inequality that are fuelling the Greek anger. Many are afraid that the austerity measures could spell doom for the country's economy, particularly given the deep spending cuts and steep tax hikes. The most recent numbers from the Finance Ministry would seem to support such fears: Between January and May, tax revenues were lower than expected as a result of a slowing economy.

Opposition leader Antonis Samaras has long been warning against radical austerity measures. A year ago, he presented an alternative plan -- called Zappeion after the building where Greek's accession to the European Union was once signed. That plan has now been followed by Zappeion II. The most important measure? Taxes, he says, should be cut rather than raised to stimulate the economy.

According to a report in Ta Nea, the country's new finance minister, Evangelos Venizelos, might be listening. The Finance Ministry, the paper reported, is working on "alternative scenarios when it comes to taxation."

An additional proposal by the Papandreou administration is further along. In the autumn, Greeks are to vote in a referendum on a constitutional amendment. The change would make it easier to take members of the government to court. The conservative paper Eleftheros Typos, however, predicts that Papandreou won't be around that long. Greece, the paper wrote this week, is "experiencing the last act of a drama which began with the cabinet reshuffle and will end with new elections in September."

EU Links Greece Aid to Budget Cuts
by Riva Froymovich, Matthew Dalton and Charles Forelle - Wall Street Journal

Greece will get its next quarterly installment of bailout money only if the country's Parliament passes a contentious package of budget measures, European finance ministers said after a two-day meeting in Luxembourg. They also made long-planned changes to the euro zone's bailout funds.

The ministers deferred any final decision on the installment payment until early July, after the vote in Parliament, and showed modest signs of progress toward a broader agreement for a bigger package of aid to Greece for coming years. They set another meeting for July 3. French Finance Minister Christine Lagarde said France had initiated two conference calls with its counterparts in the Group of Seven—the U.S., Germany, Italy, Japan and the U.K.—to discuss Greece's economic troubles.

G-7 officials briefed on the calls, which took place late Sunday and Monday, said finance ministers expressed apprehension that Athens might not be able to deliver on the promised economic restructuring that its bailout loans are conditioned on. They also asked tough questions of their European colleagues and provided advice on how best to fix the plight, the officials said. The U.S. Treasury declined to comment on the call.

In Greece, pressure is mounting on Prime Minister George Papandreou. A vote on the austerity package is expected at the end of this month, but Mr. Papandreou must first survive a vote of confidence Tuesday. In brief remarks late Monday after meeting with European Commission President José Manuel Barroso in Brussels, Mr. Papandreou said he was seeking the "widest possible consensus" in Parliament for the budget cuts that European authorities have demanded.

Mr. Papandreou added that Greece was facing "very difficult and complicated" negotiations over the package. Mr. Barroso said in a statement that passage of the austerity measures was a "necessary condition" for more aid.

In Luxembourg, European finance ministers did spell out how they would increase the size of the EU's current temporary bailout fund, and decided on the final form of an agreement on the creation of a new bailout fund. It will go to national parliaments for ratification. One change was a pleasant surprise for the EU's weakest countries: Finance ministers dropped their demand that new lending from the forthcoming European Stability Mechanism bailout fund be given preferred-creditor status that would ensure it is paid back before other, private lenders.

The decision, implying a concession from Germany, applies only to Greece, Ireland and Portugal, the three countries already being bailed out. Those countries had warned that the preferred-creditor demand would make it much harder for the countries to return to the private markets to raise cash—which is the point of the bailout exercise.

The ESM won't come into being until 2013, and the three countries' bailout deals don't have the preferred-creditor features. But if they need more cash after 2013, it would likely come from the stability mechanism. "It's good news for Greece. It's good news for Ireland. It's good news for Portugal," said Jean-Claude Juncker, the Luxembourg prime minister who also is chairman of meetings of euro-zone finance ministers.

Michael Noonan, the Irish finance minister, said his country had been lobbying to strip the preferred status for months. "The change makes it possible now for Ireland to go back into the markets and be sure that there are people there who will lend us money," he said. He said investors had expressed worry about the status. Leaders repeated that access to the ESM will come with strict conditions and that private creditors will likely bear some of the burden. Private-sector involvement "will be the rule" for the stability mechanism, said Klaus Regling, head of the European Financial Stability Facility, the ESM's precursor.

The EFSF got a long-awaited boost in its lending capacity, to €440 billion ($630 billion) from about €250 billion. To ensure that the fund can borrow with a triple-A credit rating, the ministers agreed to raise their guarantees on the EFSF's borrowing to €780 billion from €440 billion. Some of the EFSF's funds will likely be chewed up by Greece. Ministers have acknowledged the country will need more money next year, beyond the €110 billion pledged.

They are still wrestling with how to do it—particularly with the knotty question of how to share the burden with private creditors. Germany had wanted private creditors to exchange their maturing bonds for new Greek debt, reducing the amount of cash it and other euro-zone countries need to come up with. But that might have led Greece to be called into "selective default" by credit-rating agencies, something the ministers have now agreed shouldn't happen.

"There will be no compulsion whatsoever," Mr. Juncker said Monday. Euro-zone ministers said Monday morning that they want to induce creditors to reinvest voluntarily, but it is unclear how many will risk lending anew to a heavily indebted country in deep political turmoil.

Greek debt crisis: Straw says eurozone 'will collapse'
by BBC

Jack Straw has predicted the collapse of the eurozone and urged the UK to consider the "alternatives" as the Greek debt crisis worsens. The Labour MP and former foreign secretary said the euro was facing a "slow death" and the 17-member eurozone "cannot last" in its current form. He was speaking as MPs discussed the prospect of a fresh bailout for Greece.

Treasury Minister Mark Hoban said it was in the UK's interest to "ensure the continuing stability" of the eurozone. However, he insisted the UK would not be participating directly in any bailout and UK exposure to the Greek economy was "relatively small". The countries which use the single currency have said Greece must agree further austerity measures before receiving £10bn, raising the prospect of the country defaulting on its debts should it be unable to do this.

'Going to collapse'
London Mayor Boris Johnson is among a growing number of UK politicians to call for this to be allowed to happen - and for Greece to leave the eurozone. Mr Johnson told The Daily Telegraph: "The euro has exacerbated the financial crisis by encouraging some countries to behave as recklessly as the banks themselves. "We are supposedly engaging in this bail-out system to protect the banks, including our own. But as long as there is the fear of default, as long as the uncertainty continues, confidence will not return across Europe."

Asked in the Commons to respond to a urgent question about the UK government's position in the event of a default, ministers faced a succession of calls from Tory and Labour MPs for Greece to exit the euro. Jack Straw suggested the eurozone was facing a potentially terminal crisis.

"What the government should do instead of sheltering behind the complacent language, weasel words that 'it is not appropriate, we should not speculate' is recognise that this eurozone cannot last," he said. "And it is the responsibility of the British government to be open with the British people now about the alternative prospects. "And since the euro, in its current form, is going to collapse is it not better that this happens quickly rather than a slow death?"

Mr Straw, who was home secretary before becoming foreign secretary between 2001 and 2006, was always seen as one of the more eurosceptic members of Tony Blair's cabinet. He has become increasingly outspoken on the issue since returning to the back benches after last year's general election.

In the Commons, Conservative MP Anne Main said Greece should be "put out of its misery" and allowed to "depart peacefully" from the eurozone while fellow Tory Bernard Jenkin called for an "orderly departure". Treasury minister Mark Hoban responded that Greece needed to get its economy "back on track" and that its inability to raise funding from financial markets meant that a further bailout might be required.

'Distress and misery'
However, he stressed that the UK would not be participating "directly" in any rescue - although it could be liable for any further support via the International Monetary Fund. "The UK only participated in the May 2010 package for Greece through its membership of the IMF. "So the burden of providing finance to Greece is shared by the IMF and Euro-area member states and we fully expect this to continue. Our position on this is well understood across the euro area."

Asked about the wider impact of Greece defaulting on its debts, he said the Treasury, Bank of England and Financial Services Authority was closely monitoring the financial system but that UK banks had an exposure of just $4bn to Greece - much smaller than either France or Germany. He said that the UK had a "big interest in ensuring the continuing stability of the eurozone." But he added: "Clearly this crisis demonstrates the huge strain the eurozone is under - that is why it was right for us to stay out of the eurozone."

The Greek government wants a similar rescue deal to the $110bn bailout it received last year but eurozone financial ministers have postponed the latest £10bn loan from the EU and IMF until further austerity measures are introduced and are awaiting the outcome of a vote by the Greek Parliament on Tuesday. But former Labour Europe Minister Denis MacShane insisted it was in Britain's self-interest to help prevent it defaulting on its debts and leaving the single currency.

Although he conceded that Greece should "probably not" have joined the euro in the first place, he said the consequences of it leaving now would be severe. "For a nation to go bankrupt would condemn its people to a long period of distress and misery, which would only create further immigration flows as Greek workers are forced to get on their bikes and seek employment elsewhere," he told BBC News.

IMF ties Greek aid to bail-out pledges
by Peter Spiegel - Financial Times

The International Monetary Fund is blocking a critical €12bn ($17bn) aid payment to Greece just weeks before it is due, insisting it cannot go through without concrete assurances from European officials on a new Greek bail-out.

European finance ministers went into a meeting on Sunday believing the two issues had been separated and that the payment would go ahead as planned in early July once a new austerity plan was approved by the Greek parliament. Recent public commitments stating the EU would ensure Greece remains solvent through next year were thought to be enough to secure the backing of the IMF, due to disburse €3.3bn of the aid payment.

But amid continuing disagreement between eurozone countries over the terms of a new bail-out, IMF officials told the emergency gathering they needed firmer commitments before making the payment, according to three eurozone officials briefed on the meeting. IMF officials said they had been consistent in their determination that funding must be in place for the next year before they can distribute the next tranche. Both the IMF and European Union are also insisting Greece pass new austerity measures.

“That needs to be done before we can move forward and we are hopeful the conditions can be met with alacrity,” John Lipsky, the acting head of the IMF, said at a news conference. Greece must get the €12bn payment before July 15 or it will default on its sovereign debt.

Concern over the Greek crisis has caused mounting alarm in the US. Finance ministers from the Group of Seven economic powers held a half-hour, late-night conference call on Sunday to be updated on European deliberations – a call one EU diplomat described as a sign of US concern. Another G7 call was scheduled for late Monday.

IMF policy prevents it from disbursing aid to a country that cannot pay its bills for the next 12 months. Eurozone finance ministers publicly acknowledged on Monday that under the current €110bn bail-out, Greece will run short in March 2012, when Athens was expected to return to the bond market.

The tensions over a second bail-out centre on the insistence by Germany and its northern allies that substantial costs of the new rescue be borne by private bondholders. But in its formal review of the Greek programme, the IMF called the bondholder debate “unproductive” and warned failure to take decisive action threatened the nascent economic recovery in Europe. A second emergency meeting has been called for July 3 to resolve the impasse.

Greek Banks Feel Hostage to Debt Crisis
by Jack Ewing - New York Times

A whiff of tear gas still lingered outside the downtown headquarters of Piraeus Bank last week, a souvenir of clashes between the police and demonstrators in front of the nearby Parliament building. It was a fitting metaphor for the way that Greek financial institutions have been trapped in the middle of their country’s turmoil.

Unlike their government, Greek banks were seen as well managed and prudent before the crisis. But they became victims of their government’s debt woes, severed from international lines of credit and able to borrow only from the European Central Bank.

Now the banks complain that the E.C.B. is pressuring them to reduce their dependence on central bank funding, hurting not only the banks but Greek businesses and consumers who are unable to get credit.

Alexandros Manos, managing director of Piraeus Bank, argues that the E.C.B. should be doing just the opposite: lending the Greek banks more money to help the economy recover, lift tax revenue and increase the country’s ability to pay its debts.

“It is quite possible that the economy has hit bottom,” Mr. Manos said during an interview, citing data showing increased exports and tourism revenue. “If we were able to lend into the economy, it could have a substantial impact.”

There is little doubt that, though small by international standards, the Greek banks are crucial actors in the debt drama, which has flared in recent days with uncertainty over bailout payments and a reshuffled government that was facing a confidence vote Tuesday night. If the banks fail, so does the Greek economy — with dire repercussions for the euro area.

The ratings agency Moody’s Investors Service last week highlighted one way that a Greek banking crisis could ricochet around the Continent. Moody’s said it was reviewing whether to downgrade the French banks Société Générale and Crédit Agricole because both have subsidiaries in Greece.

Crédit Agricole came under scrutiny even though its subsidiary, Emporiki, has relatively modest holdings of Greek government bonds. Emporiki’s loans to the Greek private sector of €21.1 billion, or $30.3 billion, could be at risk if the government defaulted, Moody’s said.

“The secondary effects of a Greek default scenario could have a significant impact on the bank, owing to these direct exposures to the local economy,” the agency said.

Société Générale has €2.5 billion in Greek government bonds while its subsidiary, Geniki, has €3.3 billion in loans to the Greek private sector, according to the bank. The French bank has said the effects on it of a Greek default would be manageable.

Both Société Générale and Crédit Agricole supply their Greek subsidiaries with financing, putting them in a better position than the independent Greek banks. The fate of the independents depends heavily on the E.C.B., as Mr. Manos’s comments illustrate.

That dependence has become painfully clear in recent weeks, as the banks became hostages in a dispute between central bankers and political leaders. The E.C.B. implied that it might have to cut off financing to Greek banks if Germany insisted on requiring holders of Greek bonds to share the cost of the next aid package.

The E.C.B. feared that any change in repayment terms might be seen as a Greek default. Fitch Ratings said Tuesday that even if banks agreed voluntarily to buy new Greek debt when their existing bonds mature, that would be considered a “credit event,” or a default.

“All this uncertainty during the last couple of months has given the economy another kick,” said Paul Mylonas, head of strategy and chief economist at National Bank of Greece.

In an economy often derided for lack of competitiveness, the largest Greek commercial banks — like National Bank of Greece, Piraeus Bank, Alpha Bank and Eurobank — were regarded as exceptions.

They survived the collapse of Lehman Brothers in 2008 better than most banks, and are among the international institutions most active in East European countries like Serbia, Romania and Ukraine. Even with all their problems, the biggest Greek banks remain profitable.

“The banking sector was one of the most competitive” parts of the Greek economy, said Dimitris Tsitsiragos, a regional director for the International Financial Corp., which is part of the World Bank. He was speaking at a conference in Athens last week organized by the International Herald Tribune and the Greek newspaper Kathimerini.

But the Greek banks’ track record did not count for much once Greek government bonds became toxic last year and the economy sank into recession.

Like banks anywhere, the Greek banks had large holdings of their own government’s debt, which they used as collateral on international money markets. Those bonds, with a face value of about €48 billion according to Barclays Capital, are now worthless as collateral anywhere except at the E.C.B.

Foreign investors also are reluctant to lend to Greek banks because they fear that the recession will make it harder for consumers and businesses to pay their loans. Indeed, 10 percent of Greek bank loans were classified as nonperforming at the end of last year, up from an already high 7.7 percent a year earlier.

The Greek banks’ only source of funds now besides the E.C.B. are customer deposits, which declined more than 16 percent last year. The banks argue that they need to be able to lend more in order to support business investment.

Otherwise, the bankers argue, the economy will continue to shrink, government finances will become even more hopeless, and Greeks will become even more angry than they already are about wage cuts and tax increases — fueling more unrest of the kind that shut down sections of the city last wee “Bank deleveraging is not compatible with economic growth,” said Mr. Mylonas of National Bank of Greece.

Mr. Manos, of Piraeus Bank, said that his request for more E.C.B. support was received politely, but he did not yet have a response. The E.C.B. declined to comment for this story, but past statements by the bank suggest it would be reluctant to give the Greek institutions any more help than it already has.

The E.C.B. has bought Greek bonds on the open market to support prices, and loosened its rules to allow Greek banks to use Greek government bonds as collateral for loans, even though credit ratings agencies have downgraded the debt to below investment grade, or “junk” status.

It was that forbearance that the E.C.B. threatened to withdraw if European political leaders took any steps that could be construed as a default of Greek debt. The E.C.B. may have been bluffing when it said it would stop lending to Greek banks, a move that would have probably strangled not just the banks but the whole economy.

But the debate illustrated just how much power the E.C.B. has over the country’s fate. E.U. officials have suggested that the Greek banks should raise money by selling assets like holdings in Eastern Europe, as National Bank of Greece has already done, or sell new shares, like National Bank of Greece and Piraeus Bank.

Official data provide some signs that the credit crunch in Greece may be easing. Lending to enterprises rose at an annual rate of 1.2 percent in April, though the shipping industry, which is less dependent on the domestic economy, seems to account for most of the increase.

But Greek bankers say that, while trying to support their most reliable clients, they have had no choice but to curtail lending. Business executives confirm that view.

“We have a dramatic problem in the private sector, which is financing,” said Constantinos G. Antonopoulos, chief executive of Intralot, a company based in Athens that supplies technology and services for government lotteries in a dozen U.S. states as well as countries like France and China.

Mr. Antonopoulos spoke at the conference sponsored in part by the International Herald Tribune. While large companies like Intralot can borrow from foreign banks, small businesses have no alternatives and are the hardest hit.

Despite their problems, Greek bankers express optimism that steps by the government in the past year will start to benefit the economy by reducing barriers to competition and hiring. But they say it will take time for improvements to become visible to the public and international investors.

“A lot of changes have happened in the last 12 months,” said Michael E. Massourakis, group chief economist of Alpha Bank. But “it will take considerable more time before reforms reach a critical mass.”

Local government pension gap balloons to £71.5 billion
by Jamie Dunkley and Anthony Kimber - Telegraph

The funding gap faced by local government pension schemes in England has grown to £71.5bn, new research has revealed, despite a rally in equity markets boosting returns on investments.

The collective deficit of local government pension schemes rose by 73pc during the year ending March 31 2010, up from £41.3bn in 2009. The figure, collated from the latest set of annual council reports would grow to about £90bn if district councils were included. Research by The Daily Telegraph found that Birmingham City Council had the largest gap between its assets and liabilities of the 151 county, metropolitan, unitary and London borough councils investigated. Its £1.65bn shortfall was followed by Leeds City Council at £1.47bn and Surrey County Council at £1.23bn.

The shortfall suffered across local government pension schemes was driven by changes to the way councils calculate their liabilities. For instance, in its most recent annual report, Brent Council in London, said: “Investment markets have risen during 2009/10, increasing the value of assets. However, liabilities have risen far more rapidly as a result of higher anticipated inflation, increased longevity and the use of a lower discount rate, reflecting the impact of quantitative easing by the Bank of England.”

These changes have had a significant impact on council pension schemes. Birmingham council’s pension fund had assets worth £2.5bn in March 2010, 53.7pc of which were invested into equities. However, changes to liability assumptions saw liabilities grow to £4.16bn at the same time, up from £2.95bn a year earlier.

The figures contrast sharply with the funding positions of most corporate defined benefit pension schemes, which have benefited from improved returns on equity market investments in recent months. According to a recent report by Pension Capital Strategies, FTSE 100 pension deficits stood at £37bn at the end of May, down from £62bn a year earlier, helped by stronger investment and “significant deficit funding”.

Sir Steve Bullock, chairman of the Local Government Association’s (LGA) workforce board, played down the significance of the actuarial changes. “Despite substantial gains in the value of assets, changes in actuarial assumptions will have seen the deficit rise for many local authorities from March 2009 to March 2010. This is down partly to increases in life expectancy and partly to the effect of lower interest rates,” he said. “However, the position between March 2010 and March 2011 will have improved markedly for many local authorities. This is due to a change in the way pension increases are calculated, with the index moved from the retail price index to the generally lower consumer price index.

“Our own position at the LGA is a good example. Our pension deficit grew by £13.7m between March 2009 and March 2010 due to changes in actuarial assumptions. But from March 2010 to March 2011 our deficit fell by £18.8m, taking it more than £5m below 2009 levels. The amounts we pay into our pension schemes are set at rates that aim to clear the deficit entirely over the next 15 years. Most local authorities have similar plans in place to wipe out all deficits within the next 25 years.”

Unlike other public sector pension schemes, which rely solely on contributions from current workers to provide for retired members, local government pension schemes are funded by £140bn in investments and assets. Sir Steve said they currently have enough assets to pay benefits for more than 20 years and “help 4.3m save towards a reasonable retirement, reducing reliance on state means-tested benefits”.

“We are not taking a head-in-the-sand attitude. Reform is needed and we’re working with the Government and workforce representatives to reach the right balance between supporting a reasonable retirement for scheme members and providing value for money for taxpayers,” he added.

On Friday, Danny Alexander, Chief Secretary to the Treasury, outlined Government plans to make public sector staff work until they are 66 before they can retire, rather than the current 60. The proposals, which will be introduced by 2020, will also see public sector workers pay more into their pensions under a so-called average salary scheme - rather than the current final salary offering.

The changes were originally outlined in a report by the Labour peer Lord Hutton last year. Duncan Howorth, chief executive, of JLT Benefit Solutions, said: “These figures are a stark reminder of the public sector pensions time bomb. As with the private sector, pension liabilities will continue to grow exponentially unless specifically addressed.

“The Hutton report is likely to recommend a change from final salary to career average. The Coalition should be congratulated for its proactive approach to pensions reform thus far. These figures clearly demonstrate why, despite the challenges, the Hutton reforms must be taken onboard immediately and not, as happened all too often during Labour’s time in government, merely parked in the long grass.”

Japan pensions bet on hedge funds to boost returns
by Chikafumi Hodo and Nishant Kumar - Reuters

Japan's corporate pension funds, hobbled by a sluggish domestic stock market, are raising their allocations to hedge funds as they scramble to boost returns for the country's aging population.

The move is part of a broader trend in Asia where institutions are looking to raise exposure to hedge funds in search for absolute positive returns and as confidence in the asset class improves, lifting prospects for the $2 trillion global hedge fund industry. Nearly all of Japan's corporate pension funds, which collectively manage more than $900 billion, have lowered their guaranteed yield in the last decade from about 5.5 percent to below 3.5 percent on average, industry observers said.

"Considering that they have had a very hard time raising decent returns by directly investing in equities over the past years, pension funds are now very seriously considering taking more exposure in alternatives," Tamotsu Adachi, the co-head of private equity firm Carlyle's Japan unit, told the Reuters Rebuilding Japan Summit in Tokyo this week.

A survey of 31 Japanese corporate pension funds by U.S. fund manager Russell Investments showed pensions slashing investment in domestic equities to 14.6 percent of their assets on average as of end-March from 18.7 percent a year earlier. By contrast, the 31 pension funds, which manage 7.54 trillion yen ($94 billion), said they had increased allocations to hedge funds and other alternative assets to 13.1 percent of their assets from 11.6 percent a year ago.

"In these conditions where Japanese pension funds are having trouble finding a return driver, they have to rely more on alternative assets, mainly hedge funds," said Mitsuhiro Arakawa, executive consultant at Russell Investments. "They don't want to be in stocks after seeing them slump over the last 10 to 20 years. In fact, they may want to cut them at a quicker pace after the disaster in Japan," Arakawa said.

The blow of the March 11 earthquake and tsunami and ensuing nuclear crisis knocked the Japanese economy into recession and battered stocks. Japan's benchmark Nikkei average is still down about 7 percent since the earthquake. Some corporate pensions are aiming to park as much as 40 percent of their assets in hedge funds, said Futoshi Ago, director at the prime brokerage arm of Bank of America Merrill Lynch in Tokyo.

Takahiro Mitani, president of the Government Pension Investment Fund, told the summit that while he had no plans to start investing in hedge funds immediately, the fund was evaluating the option. The GPIF, which holds about $1.4 trillion in assets, is known as a conservative fund that parks about two-thirds of its assets in Japanese government bonds.

Growing Trend
The Nikkei stock average has lost about a third of its value in the last 10 years. By comparison, the Eurekahedge Hedge Fund Index has surged 160 percent, forcing institutions to rejig their asset allocations. While Japanese corporate pension funds have kept their allocations to foreign stocks at around 20 percent of their assets in the past decade, they have cut their exposure to domestic shares by half. Investments in alternatives have risen to 13 percent from less than 3 percent.

Across Asia, institutions are preparing to invest more or are looking to start investing in hedge funds, after shying away from the asset class, as an uncertain economic outlook forces them to look at instruments that could benefit from falling markets.

South Korea's National Pension Service, the world's No. 4 pension fund with about $300 billion of assets, said earlier this month that it plans to raise its investment in alternatives to above 10 percent by 2016 from 5.8 percent in 2010 as a part of its move to diversify.

The industry has also received allocations from Chinese, Taiwanese and Malaysian institutions among others in Asia with more likely to join the fray. "The market is far more ready now to make allocations to hedge funds. Clearly I think that the large institutions are setting the path for others to follow," said Max Gottschalk, co-founder of Gottex Fund Management, one of the world's biggest fund of hedge funds.

Only about 18 percent of global hedge fund assets are sourced from Asia, according to a Credit Suisse survey of 600 institutional investors representing $1.2 trillion of allocations to single-manager hedge funds. "I think we are still in the early phase of adoption to alternatives in Asia and I think over the next 5-10 years Asia will become a far more prominent investor in this asset class," said Gottschalk who moved to Hong Kong earlier this year.

Pension changes heading for 'car crash'
by Nicholas Timmins

Government plans requiring employers to start enrolling their employees automatically into a pension scheme are heading for a “car crash”, a leading firm of actuaries and pension consultants has warned. A survey of finance and human resources directors at some of Britain’s biggest companies – the ones which will have to start auto-enrolment in October next year – shows that 40 per cent of finance directors are not aware of the deadline.

Two-thirds of all those surveyed think it will take less than a year to get ready and 39 per cent think it will take less than six months, Lee Hollingsworth, head of DC pensions at the consultants Hyman Robertson, said. In the first six months of the new scheme, he said, 600 of Britain’s largest organisations, employing about a third of the workforce, will have to start automatic enrolling. He estimates that 18 months of preparation are needed.

Employees can be enrolled either into a scheme the employer runs, or into Nest, the National Employment Savings Trust, the new low-cost pension provider for those on low to middle incomes. “Most large employers are leaving it too late,” he said. “This implies there will be a huge stampede that the pensions provider market and Nest simply can’t cope with. It is heading for a car crash.”

With a huge new demand for pensions, the provider market is likely to get more picky about which new business it takes, he said. That could push up prices, which in turn will see more employers deciding to use Nest. That in turn could put “significant and unexpected pressure” on the new scheme. Further down the line, he said, that could affect the smaller employers who have to start automatic enrolment later.

The department for work and pensions and the pensions regulator need to do more to make companies aware of the deadlines, Mr Hollingsworth said. Otherwise “a huge last minute rush could produce a pricing and capacity crunch”.

Senators Graham, Paul & Lee on Social Security Reform– "If you're under 47 - bend over"
by Bruce Krasting

Three heavy hitter Republican senators have put forward a plan to restructure Social Security. Lindsey Graham (R-SC), Mike Lee (R-UT) and Rand Paul (R-KY) have sponsored the Social Security Solvency and Sustainability Act, S. 804.

Overall, I give this plan a “C”. That grade is composed of two distinctly different analyses. On the pure question of economics, I give the plan a “B”. But on the more critical issue of “Is this fair” I give the plan a “D”.

Given that the proposal has some positive economics attached to it I think that something along these lines is what me might see if Congress ever got around to doing its business of passing legislation and fixing problems. I believe that if this plan were pushed to a vote it would get support from some Democrats and actually has a chance of passage sometime in 2012. The reason that there might be some Dems who cross the aisle to vote for something like this is that the structure of the proposal is very much a “Kick the Can Down the Road” approach. All politicians love that way of thinking.

The issues at Social Security are easy to define. It’s the Boomers that are the problem. The solutions are also relatively easy. Benefits can be cut, or taxes can be increased. A very convenient way to cut expenses is to just increase the age for eligibility by a few years. The critical questions are (1) when do these changes take place and (2) what age group is going to get screwed as a result.

Some details of the proposal:

A) Gradually increase Social Security’s full-benefit age starting in 2017, from today’s age 66 to age 70 for Americans born on or after 1970.
B) The legislation would increase the early-benefit age starting in 2021, from today’s age 62 to age 64 for taxpayers born on or after 1966.
C) Gradually change the benefit formula starting in 2017 so that upper-income Americans would start to receive smaller benefits while benefits for those with lower incomes would remain the same. These changes would become fully effective in 2055.

The financial health of SS is measured actuarially. This science looks at projected income and expense streams over a 75-year period and draws some conclusions. I don't see a better way to evaluate this mess. But I’m convinced that it is a flawed analysis. No one has the slightest idea what the world will look like in 50 years. And more importantly, the problems for both the broad economy and society that SS is bringing us have a window of only the next 15-years or so. It’s my opinion that if the USA does not address the imbalances that are currently impacting SS we will not make it to 2025. The system  will sink from the weight of these UNFUNDED liabilities.

Clearly Senators Graham, Paul and Lee don’t see it that way. The vast majority of those who do pick apart the numbers would agree with them. So I'm a bit out in left field calling for a blowup. I will say that if one did adopt the 75-year measure of financial health, the proposals put forward in S. 804. would, in fact, move the needle in the right direction.

The plan does not include any increase in taxes on worker's or their employers. To me, this is essential. SS is already sucking up 12.4% of worker's income. That’s too much. If anything the program should be scaled back so that the contributions are lowered. Under no circumstances should they be increased.

The Senator's proposal increases the socialization of the system. I think that is essential. Workers with high lifetime earnings will be subsidizing those who had low lifetime earnings. Call this a tax on the rich. I don’t see anyway around this.

Increasing the age limit is something that significantly improves the financial profile of SS. It looks like an easy way to push the numbers around. That’s true, but it’s not without consequence. I would point to the riots in France just two years ago when the retirement age was increased. Who were the protesters? A coalition of younger and older workers. The older ones had obvious reasons. The younger ones were brought to the streets because they desperately wanted the old folks to retire. Why? Because they wanted the jobs that would become vacant. Youth unemployment in France is north of 20%. That is exactly where it is headed in the USA. So raising the retirement age “fixes” SS but it also closes some doors for younger people all the way down to their early 20’s.

For these reasons I give that favorable “B” grade (there is no “A”). But now consider who is getting screwed.

The Baby Boomers will reach age 65 in 2011. This population bulge will continue to hit the SS system until 2029. Note this. We are on the very first rung of a very tall (and shaky) ladder.

The problem for SS over the next 20 years (and a Medicare in a bigger way) is the Baby Boomers. When you look at the age group that is causing the problems and overlay the proposed changes you see that the Boomer contribution to the “fix” is not very much at all.

(a) Increasing the age limit to 70 after 2017 only impact those born after 1970. So the Boomers get a free ride.

(b) Increasing the early retirement age is limited to only those born after 1966. Another miss.

(c) Changing the benefit formula starting in 2017 would hit the boomers (At least it would on paper). But the phase in of this takes place over 40 years. The Boomers will be dead and buried before the actual hit takes place.

So who are the losers in the Graham, Paul, Lee plan? The answer is that anyone born after 1966. If you’re younger than 47 today, bend over. The Boomers are going to screw you. You’re going to pay more than you should and you’re going to get less than the boomers got.

How could that possibly happen? Easy. It’s the demographics. Those who will “win” this age war out vote those who will lose. There are some very powerful lobbies at work as well. The AARP has a very big stick; they use their weapons on the Pols very effectively.

I will be sad if this comes about. This would be the greatest “Pass the Trash” for any generation in history. While the proposed changes would take SS off the discussion table for another decade or so it will come back into the headlines in a very big way at some point. There is absolutely no fairness in a plan that protects Boomers at the cost of the rest of society.

I think that in their hearts, Senators Graham, Paul and Lee don’t really believe in SS and would like to see it go away. It is, fundamentally, a socialist approach and it does suck up a huge amount of current tax revenue. But even these powerful Senators can’t kill SS. If their proposals are adopted it would destroy Social Security. Ten/Fifteen years from today public support for SS will have completely evaporated. It will just take that long for those younger generations to realize how badly they got set up.

I’m a cynical guy. I think that Graham, Paul, Lee (and all the others) understand that they are lighting a slow burning fuse on a very big bomb with plans like this. But they want to keep their jobs, power and influence, so they don’t do the right thing. They propose to kick the can to another few generations.

Color me disappointed. Especially with Rand Paul.:


lautturi said...

I'm puzzled whether the process running through all our societies is evolution or devolution of mankind...

The home-made drug that Oleg and Sasha inject is known as krokodil, or "crocodile". It is desomorphine, a synthetic opiate many times more powerful than heroin that is created from a complex chain of mixing and chemical reactions, which the addicts perform from memory several times a day. While heroin costs from £20 to £60 per dose, desomorphine can be "cooked" from codeine-based headache pills that cost £2 per pack, and other household ingredients available cheaply from the markets.

It is a drug for the poor, and its effects are horrific. It was given its reptilian name because its poisonous ingredients quickly turn the skin scaly. Worse follows. Oleg and Sasha have not been using for long, but Oleg has rotting sores on the back of his neck.

"If you miss the vein, that's an abscess straight away," says Sasha. Essentially, they are injecting poison directly into their flesh. One of their friends, in a neighbouring apartment block, is further down the line.

"She won't go to hospital, she just keeps injecting. Her flesh is falling off and she can hardly move anymore," says Sasha. Photographs of late-stage krokodil addicts are disturbing in the extreme. Flesh goes grey and peels away to leave bones exposed. People literally rot to death

jal said...

“It seems reasonable to guess that the total net open positions on CDS protection sold to third parties by the big US banks is between $1,500 and $2,000 billion.

The problem lies in the bets, the wagers, in the shape of default swaps, to the tune of trillions of dollars, that are out there, and that risk being triggered by a default being declared a "credit event", either by the ratings agencies, or the International Swaps and Derivatives Association, or both.

It's starting to look like that "CDS to hide debt" idea might be backfiring.”

Remember the song ...

There’s a log in the middle of the ocean
There’s a bump on the log
on and on ...

there’s a rope ...
there’s a needle ...
there’s an elephant ...





p01 said...

Maybe someone can insure against having to pay the insurance?
Hmmm....that would be a neat idea, no financial genius implemented it yet?
We could name them "D-derivatives", DDs colloquially.

We are so screwed.

lautturi said...

Funny thing that AIB, "last" bank of Ireland - it was actually reported already week plus ago. Somehow I didn't post it here earlier, my bad (ó_ò)

Stoneleigh said...


It's called reinsurance and it's common. It can have multiple iterations as well, so losses can propagate through the system - another risk amplification process.

bmusic said...

It would be interesting to see a "regular joe" buy a CDS and try to force it's payment.

p01 said...


Good Grief!

No matter how cynical one tries to get, the reality is always worse.

el gallinazo said...

Like the shark that can only survive by swimming forward, the great financial Ponzi can only survive by creating more funny money, by increasing leverage. So in the end the CDS's were just a part of the great accounting fraud. The writers did it for a quick buck and buyers to "neutralize" their liabilities. Of course the Ponzi fly in the ointment is that the writers had no reserve resources, other than taxpayers, to pay off. If I had only known, I could have personally insured billions of dollars of bonds. But first I would have needed some capital - a $5000 suit and a good haircut (pun intended).

I just watched Adam Curtis's three part The Trap (which I found to be profoundly superficial - but that is a different post). But in these days of complex cold war nuclear game theory, did the MotU think it out to the end. If a peabrain like myself can see it, couldn't their prodigious, for hire minds? Was it all just anarchic greed? Not according to David Rockefeller. There was a plan for sure. Did the plan blow up in the great ones' faces, or is it playing out nicely? So many questions and so few answers.

Bigelow said...

I think Ilargi makes the case -It's the Derivatives Sword of Damocles Stupid! Also as to why "austerity" is forced on the Greeks to underpin "restructuring".

While we wait for the Derivatives maelstrom Martin Armstrong observes the historic reaction to austerity:
"The so called rescue package is shoving deflation upon Greece to such an
extent, they are begging for civil unrest if not revolution. This same braindead
idea of imposing such draconian economic reality upon a nation
that led to the rise of Adolf Hitler. We forget that John Maynard Keynes
himself wrote perhaps his most prophetic work The Economic
Consequences of the Peace published in 1919. , Keynes made a plea to
the common sense of the politicians. But they refused to listen then as
they will refuse to listen now. That refusal to listen then produced the
rise of Adolf Hitler and World War II. He made a passionate pleas for reason, but nobody would listen:

I cannot leave this subject as though its just treatment wholly depended either on our own
pledges or on economic facts. The policy of reducing Germany to servitude for a generation, of
degrading the lives of millions of human beings, and of depriving a whole nation of happiness
should be abhorrent and detestable,--abhorrent and detestable, even if it were possible, even
if it enriched ourselves, even if it did not sow the decay of the whole civilised life of Europe." IS THE EURO DOOMED?

Max Keiser insists the only country able to compete with China is Germany as soon as they ditch the Euro. Teutonic Genie out of bottle, America punches itself in face

The politicians forced servitude upon Germany and it got the same unreasonable response in return.
Europe is making that same mistake again.

Bigelow said...

"The politicians forced servitude upon Germany and it got the same unreasonable response in return.
Europe is making that same mistake again." is also a quote from Mr. Armstrong. *#d)*> HTML

I'm Not POTUS said...

Am I crazy or did the article on Bending Over for SS Taxes never actually mention that eliminating the gross income upper limit would solve his theoretical problems.

I have an even better proposal.
Cut the tax, which is what it really is, down to say 5.0% on all income, no limits.
Let anyone who wants to, do the following;
If they cash out their IRA and other tax shelters let the IRS tax be deducted from your social security IOU total.
So if the IRS says you would owe $12,500 as an early withdrawal penalty you can pay it or tell them to take it out of what the SSA says they owe you in accrued benefits.

Anyone trapped in SS can stay trapped anyone else can cut their losses and do something incredibly responsible with their retirement savings or something utterly stupid, who cares.

They are doing utterly stupid things with 401K loans already.

In aggregate the give and take should, hopefully, reduce the burden that is the SS math.

This would release a lot of cash to the hapless public. Auto Earthers' will dutifully hoard the cash and wait to swoop in on the credit crunch, the rest will fitter the rest away. So be it.

Bigelow said...

"I think that in their hearts, Senators Graham, Paul and Lee don’t really believe in SS and would like to see it go away. It is, fundamentally, a socialist approach and it does suck up a huge amount of current tax revenue. But even these powerful Senators can’t kill SS."

Is not the following true? Social Security surplus revenues were put into special non-interest bearing Treasury I.O.U.s and the government spent the monies on war, pork projects and "balancing the budget". Now there isn't enough revenue to pay the boomers, no money to pay for those special I.O.U.s and "it does suck up a huge amount of current tax revenue."

Well, how about a claw-back of money from all those politicians that caused the imbalances and sales of a few government warships or cruse missiles in inventory?

Alexander Ac said...

World's wealthiest people now richer than before the credit crunch


Record flooding in North Dakota forces evacuation of 11,000

mikel paul said...

Still amazes me that Soc. Sec. and Medicare that we each pay into (those of us who have and do) are spoken of as 'entitlements' still.

It was set up as such. To be paid to those who paid.
Therein lies the rub.

The IOU's are sitting there...proof that it has been stolen by those who said they'd pay it back.....

They can't so they do it again, only this time you don't have to be born yet to experience their citizen 'clonic'....

what a piece of work...


Greenpa said...

"Japan pensions bet on hedge funds to boost returns"

My immediate subliminal translation:

"Boy, the slots aren't paying much. I can win more on the roulette wheel."

Lynford1933 said...

lautturi: Would that be a "crocodile" in the gene pool?

IMHO all drugs should be legal but not the public treatment for drug related problems. Then again, I guess I am a libertarian.

I was stationed in Minot when the Mouse Roared in '69. All the troops from Minot AFB went into town and sandbagged for several days. We did some good but other areas flooded out.

GreenPa: A couple times I was asked not to play 21 but double odds craps is the next best. In all cases the house will win ... kinda like the IRS.

I mentioned it a couple days ago but Americans do not understand Greeks and neither do Europeans. What will happen could be a great surprise to the world. At all levels from the docks to the museum curator who I knew, they were very proud of Thermopoly. They may very well jump over the cliff to kill the banksters.

p01 said...

Slowly, the message is reaching the ears that have something between them:
A Beginner’s Guide to Backyard Chickens

ogardener said...

If the conservative republicans ie; corporatists argue that tax breaks for the rich provide jobs, then why is the unemployment rate so high?

I really don't understand how that Obummer can maintain a serious face on the tee vee. LIAR!!!!

War is over if you want it.

ogardener said...

Jefferson Starship - Blows Against the Empire - Let's Go Together

rcg1950 said...
This comment has been removed by the author.
rcg1950 said...

Seems like a good time to let the music speak for us. This seems especially appropriate re what's erupting in Greece and elsewhere.

Too Much of Nothing [I like this version, and Sandy Denny]

scandia said... drug problems the causes of addiction and a compassionate and money saving treatment program are addressed by Dr. Gabor Mate in his book " In the Realm of Hungry Ghosts". My copy of the book arrived just yesterday so I can't yet make an informed comment. It is obvious that the imprisonment of addicts is very,very costly . Prison so far has been America's response to all its problems. I forget the statistics around the numbers of people incarcerated for drug use in America but it is staggering and is making a few people very rich- so much a head.I'll bet running prisons costs the taxpayer more than treatment.So you are already paying. Do you feel good about the solution you are paying for ?
I sincerely would like to understand how you might accept treatment for alcoholism or the diseases created by industrial food addiction yet not want to help the people wounded often very early in their childhoods who turn to drugs for relief from pain?
Mate told a story in a workshop about a Cdn detective who spent several years on Paedophile cases. Hours and hours of watching film of children being abused. He was haunted by images of children with " dead eyes". He started taking drugs to cope. In the end he was fired and sent to jail. Where is the justice in that?

scandia said...

I am shocked by the latest posting by London Banker,
" Protect the Bondholders".

Shocked because I didn't expect it from him/her, an insider in the banking world.

jal said...


Gee! people are starting to wake up!

"I suddenly have a lot more sympathy for the Greek people than I did a fortnight ago. Come the revolution here, I may be in the streets too."

jal said...

Here is an interesting link.

Why Are Problem Banks Allowed To Stay Open?
The reason regulators do not close more insolvent banks may be due to the fact that the FDIC Deposit Insurance Fund (DIF) had a negative balance of $1.0 billion at March 31, 2011.   A number of large banking failure could deplete the entire insurance fund and cause panic among bank depositors.  The DIF reserve ratio at March 31, 2011 was -.02 percent, far below historical ratios.

snuffy said...

I thought enough of this ones stance to make comment,when, normally I don't bother.
His/hers take on how the .gov is playing this is pure gold.[Scandia,put a large gold star up.KUDOs].

This is another big nail in the coffin... when you have those who appear to have a old-fashioned sense of what the old rules of the game were..{you place youse bets and youse take yore chances,and loose your ass when you get stupid with daddies money.No bailouts allowed}
I hope that one makes it out in time.England will not be nice place. soon.
I admit to being a bit jealous of stoneleigh.She is getting to see the last bit of this world "before".The Phase-change we are expecting will make travel much more difficult.And most likely very damned dangerous.

I am sooo busy with the bees.I dropped the ball yesterday and let one swarm...ouch.75 bucks just
flew away.
Rototiller man, I will call or email,or call me for your hive.Get your gear clean as I will be nucing some colonies soon and will have one with your name...

time to sleep....

Bee good,or
Bee careful


NZSanctuary said...

Children's radiation dose badges. Be sure to read the second comment in the comment thread, too. It's scary how opaque and controlled things are, and will continue to be as long as power structures try to cling to their dominance.

Compound F said...

here are some SEC data and thoughts on US bank exposure:

There's a previous related post from June 6th from the same blogger using BIS data here:

Ilargi said...

"Compound F said...
here are some SEC data and thoughts on US bank exposure:"

That link is in the article.


Ilargi said...

I updated today's post with a comment on a NYT article on derivatives. It's sort of quirky with the format, which is exactly why I want that to change. Hard at work on that as we speak.


scrofulous said...

U.S. Leading Global Effort to Release Oil Reserves to Market

The United States will release half of the total amount from the Strategic Petroleum Reserve, with the rest of the oil to be provided by other nations among the international agency’s 28 member states.

scandia said...

@Lautturi, I mentioned you and the ESM draft on London Banker. Hope that is okay with you?
If not beat me with a birch bow:)

Frank said...

@Bigelow The special bonds in the SS fund are interest bearing. They are not however sellable on the open market: They have no expiration date, but can be turned in to the treasury whenever the SSA needs the cash.

It is true that all that money has been spent, but so has every cent of every other security the Treasury has ever issued.

IMO, harping about that for the SS trust fund, and only the SS trust fund, is an attempt to set up a selective default: Stiff the people who paid FICA tax so there's more money to pay off the banksters who bought regular treasury bonds.

Mister Roboto said...

My understanding of the 2008 financial meltdown was that while the fall of Lehman Bros. was what precipitated the crisis, the CDS that had to be paid off as a result (the AIG situation) is what came very, very close to making the global economy "have a heart attack and die". So it's not exactly a surprise that the bankers and regulators aren't eager to tell all about CDS and other derivatives exposure of the various financial institutions.

p01 said...

Leavers meeting Takers for the first time.

(Leavers and Takers)

Punxsutawney said...

NZSanctuary and Greenpa,

A co-worker of mine is thinking of sending her son (half Japanese) to Japan to study Japanese and to play soccer. I suggested he be careful where he travels as there are large areas of contamination and I wouldn’t trust the officials. To which she replied something along the lines of: “Oh there’s no problem, we have relatives that live 35 miles from Fukoshima and they grow their own food. They just wash it before they eat it. As long as they avoid milk, (implied that cows don’t wash the grass before they eat) they are ok”.

Sigh…Someone please tell me I’m wrong, but don’t plants take up Cesium internally along the same pathways that they take up Potassium? All the washing in the world isn’t going to remove it at that point. Same with Strontium and Calcium.

Greenpa said...

Rather lengthy Polka Dot Gallows entry over on mine:

Greenpa said...

Punx- hey, my Gallows bit is relevant!

No, washing it off is useless. I'd be most worried about the strontium, which the Japanese press has periodically leaked is all over the damn place. And the "particles" that Gundersen points out are exceptionally dangerous.

35 miles from Fukushima; in any direction, looks to me like a death sentence- slowly.

lautturi said...

@ scandia

No problem giving a DL-link to ESM draft either. Where did you post? didn't notice your handwriting on LB's comments.

On other note, my ESM-video has gathered close to 8000 views in 10 days. A bit better compared to money/banking system -video that achieved 8000+ views - since January (^_^)

My latest is about economic totalitarianism we are currently living in. The no choice to saving banks -culture, you know. That obviously is a bit controversial but I'm positive it too will grow wings in the coming months.

Greenpa said...

It will be interesting to see if the Owners can pull off another mini stock rally; the down-pressures, now that Greece is pretty clearly about to sit on the toilet with the seat up- are really impressive.

But I would not be too astonished if they still have to clout to pull off yet another pump, after today's dump.

Mister Roboto said...

@Greenpa: I see what you mean by "today's dump". The USDI went up, and everything else went down. Gold is seriously taking a whoopin'!

D. Benton Smith said...

Is there so much as ONE person on this blog who disbelieves that the purpose of all the havoc wreaking, world wrecking, globally pandemic financial crime is to protect bondholders at all costs?

Very well, then.

The villains are identified and our task, though difficult, is set out clearly before us ! We must somehow win out against those evil banksters.

That leaves just one eensie weensie little detail:


No, no, no, no, no ! Not their craven minions. I mean the bank owners themselves

NOT their henchmen! NOT their public-face executives or media propagandists. NOT their captive political party hacks, academic apologists or canon fodder citizen goon squads.

I mean who are the bond OWNERS..... as in 'individual human persons.' Proper nouns. Name rank serial number sort of thing ( and throw in their home address while you're at it. )

You don't know ?

Well, then, prepare for the worst ass whuppin' you have ever experienced, because if you're in a dust-up with an INVISIBLE 800 pound gorilla you are not just going to lose.

You are gonna be ERASED.

Not even a full scale victorious revolution will save you in that case, because your invisible opponent will simply buy that game, too.

Come on, folks. Get honest before you get digested. Who are the bank owners?

They couldn't possibly be US, could they ?

We built a team, staffed it with sociopathic hired guns to serve our own purposes, and the hired guns wound up hi-jacking the team ! Duh ! Who could see that coming ?

Got T-Bills, or non-US equivalents? How about stock ? Pension ? Social Security ? How about plain old garden variety dollars ?

It is all part and parcel of the same scam, the same Ponzi scheme, the same exploitative rigged system that has been making that loud sucking noise for the past hundred years or so.

No one cries foul louder than a betrayed henchman, and that's pretty much what every one of us has been.

The enfranchised beneficiaries of a rotten system don't complain while the booty is rolling in. It's only when they get DIS-enfranchised that the wails of the betrayed rent the air. No one cries foul louder than a betrayed henchman.

Take this PIIGS debacle, for example.

Let's stage an election by secret show of hands ( no one will see your vote buy you, in the privacy of your own home. )

Here is the hypothetical referendum : Should Greece, Ireland, Spain, et al just straight up default, right now, Argentina style, no more shilly-shallying... on the understanding that the value of your own personal stash of wealth will cascade to zero almost overnight. How do you vote, yea or nay ?

Very well, then. The votes have been counted and you are now privy to the most secret insider information that there is : your own true position on this most crucial of issues.

Now that you know your own purposes you can craft a plan.

The funny thing is, EVERYBODY has the same plan !

Go short on the whole friggin' world, and hedge that bet by gaming the system as it falls.

And we wonder why the world is such a mess!

Is it too late to switch species? Homo Sapiens isn't looking like such a good bet.

lautturi said...

3min video "Why Do Banks Make So Much Money?". Nice presentation, easy to follow. Enjoy!

lautturi said...

@ scandia

...and by the way, I'm more into tickling than spanking. But each to his/her own.

scandia said...

@Lautturi, Not sure why my comment didn't make it through at London Banker. If it doesn't show up to-day I'll repost to-morrow.

Archie said...

Just have to share this bit of comic relief from Nate's place.

A public school teacher was arrested today at John F. Kennedy International airport as he attempted to board a flight while in possession of a ruler, a protractor, a compass, a slide-rule and a calculator. At a morning press conference, Attorney General Eric Holder said he believes the man is a member of the notorious Al-Gebra movement. He did not identify the man, who has been charged by the FBI with carrying weapons of math instruction. 'Al-Gebra is a problem for us', the Attorney General said. 'They derive solutions by means and extremes, and sometimes go off on tangents in search of absolute values.' They use secret code names like 'X' and 'Y' and refer to themselves as 'unknowns', but we have determined that they belong to a common denominator of the axis of medieval and have coordinates in every country. As the Greek philanderer Isosceles used to say, 'There are 3 sides to every triangle'. When asked to comment on the arrest, President Obama said, 'If God had wanted us to have better weapons of math instruction, he would have given us more fingers and toes.' White House aides told reporters they could not recall a more intelligent or profound statement by the President. It is believed that another Nobel Prize will follow.


scandia said...

p01 re the video of the tribe meeting with a white man. I was shouting kill him! He is the angel of death for your tribe, your culture,your environment. Same old whiteman trick offering mirrors and trinkets as an entre. I noticed that was filmed in 1976. Wonder how that tribes fairs now?
Did you notice the response to their first tasting of what looked like a carbohydrate, maybe rice? They hit their skulls as if they immediately noticed the change in their brains. It is thusly that addictions begin.Notice the mood changes after the new diet, laughing like they'd just smoked a joint.

Phlogiston Água de Beber said...


OMG! You've pulled the mask off the old Lone Ranger. I think the great secret that must not be revealed is that the entire financial world is held together with chewing gum and binder twine.

You are probably right about H. Sap. It appears to this observer that we have finally, after many inadequate attempts, managed to create a mess too big to sweep under the proverbial carpet.

Punxsutawney said...


Happy to be on the same page. The willing ignorance of some still surprises me.

I get the impression that they are fairly old so it may not matter, but if it was me I’d be out of there (easier said than done), and perhaps, just perhaps, a wee bit angry.

I looked at your blog and the tornado report and realized you are not far from Spring Valley which is where an uncle of mine used to run a photography business across from the DQ for years before retiring to Florida a couple of decades ago. I spent time every other summer there. It looks like the town has grown a bunch since then; the DQ isn’t where I remember it. Small World :-)

subgenius said...


I am sorry to have missed you in Pasadena - I have been waiting for you to visit LA, and I live only a few miles from Pasadena, but unfortunately was doing my final exams (I took a radical path to career change - from globetrotting IT consultant to Chinese medicine several years ago - before I came across TAE - in preparation for a collapse of existing structures) and couldn't make time to get to the talk.

Please visit us in hell-A again soon!

scandia said...

@Lautturi, on relection it would be better for you to post your thoughts and the ESM draft at London Banker rather than it coming second hand from me. What do you think?

Ewei said...

I still don't understand what the big deal is concerning derivatives and other synthetic forms of financial insurance. If an entity fails to pay up if events trigger a contract, then the recipient loses and the entity goes bankrupt or is otherwise destroyed. All under the jurisdiction, and under the thumb, of the political sphere. Let this happen a few times without intervention, meaning bailouts, and amazingly the financial world will begin to right itself.

Lynford1933 said...

Scandia: Here is a link about drugs that may interest you. especially the comments by others.

jal said...

“The villains are ...
We built a team, staffed it with sociopathic hired guns to serve our own purposes, and the hired guns wound up hi-jacking the team ! Duh ! Who could see that coming ?”

You have identified the villains.
Now, the villains are trying to prevent the discovery that they stole our money by pretending to be protecting the bond holders from a hair cut.

Bullshit! To their game.
We, the small owners of saving, knew nothing of finance and therefore, hired men of credentials who claimed to be honest brokers working for us.

They are all Madoff and they made off with our savings.
They were put in charge of our savings and miss used that trust and took advantage of our ignorance.

There is no way that sophisticated traders and money managers in France, and Germany that should have known that it is stupid to lend money to someone who cannot pay it back, continued to pour money into Greece, did so by doing due diligence on behalf of their clients. They had ulterior motives.

The savers are only 10% of the population and you expect 90% of the population to suffer to make the 10% not suffer any loses for hiring a bunch of Madoffs.

hint hint

The trader never loses when he trades for you. He always gets his commission and fee.


p01 said...

Yes, it's rice. Not as toxic as wheat, but a true human-domesticating plant nonetheless.
The hunter's reaction is priceless.

el gallinazo said...


Your last posting marks a first for me - the first time I have had any disagreement with what you have written.

Sure, it would be nice to have an alphabetical list of the Owners, but is it really that important practically? First, since the net "worth" of the owners is a continuum, we would have to define a cut-off. (Their real worth, of course is negative, for the same reason that the contents of a septic tank requiring a prompt pump out is negative, though as we learned yesterday, Japanese research may change that - in regard to septic tanks that is.)

So the line would have to be in the billions or trillions, depending on how strict one would make it. Ten billion? Fifty? A trillion? Each number would exercise a greater degree of potential control and manipulation. Junior and senior members. We probably know a few names under any criterion. The Rothschilds, the Warburgs, the Rockefellers, the royal family of England. And this also points out that the wealth is held and directed by clans and dynasties. A good study of this is William Engdahl's The Seeds of Destruction of the 5 Rockefeller brothers, of whom only David is (vaguely) alive today. Thank the heavens that physical immortality has yet to be invented. So one has to look at the Owners from a dynastic structure.

So what is the practical use of this information in the war we are now facing? The only one I can think of would be targeted assassinations by suicide operatives who could shoot off the head of a woodchuck at 400 meters (a rather select group and no offense intended to ‪Punxsutawney‬ .) But after a few attempts, successful or otherwise, Owner security would be beefed up to the point of making this near impossible. One might only look at Fidel Castro, who has eluded the combine machinations of the Mafia and the CIA for 50 years with their lethal drugs, expert snipers, and exploding cigars (Church Report).

And even if there were successful hits, the managing directorship would just go to a younger member of the clan, who would probably be even more greedy and ruthless, since even among this sociopathic group, age may have a slight mellowing effect.

As to your gedenkenexperimental vote, for those too old or infirmed to compete in the manual labor market or without any functioning doomstead, the voluntary relinquishing of all savings, combined with the disappearance of all entitlements, would be a near immediate death sentence. Even though I fall into this group, I still had to give it some thought. My first thought was that in all the countless 100 things to have lists for the great collapse, no one has put down a few grams of potassium cyanide, which i regard as a great oversight. Since I am approaching my biblically apportioned three score and ten, my vote would depend on the day taken. For example, yesterday morning I was feeling somewhat down and would have voted yes. But then last evening, I rediscovered Michelle Shocked's Arkansas Traveler on my mp3 player and plugged in my superduper reserved earbuds. Listening to the album was so pleasurable and ruminating on the joy that the large and incredibly talented and creative band behind her shared, afterward I would have voted no, deciding to stay on this benighted planet a little bit longer.

Stacy said...

Regarding the update, the NYT has used this sort of cautious, measured tone for years as a substitute for real journalism. They think it makes them sound as if they've actually done the research and that they are being even-handed and fair.

p01 said...

Here is the hypothetical referendum : Should Greece, Ireland, Spain, et al just straight up default, right now, Argentina style, no more shilly-shallying... on the understanding that the value of your own personal stash of wealth will cascade to zero almost overnight. How do you vote, yea or nay ?

Personally, HELL yea! (I'm at zero anyway and have been most my life)

Considering how the others will react? Hmm....I guess not.

Very good points, my dear sir.

Anonymous said...

@ Scandia

I am not sure why you are upset with London Banker. He is hardly in favour of protecting the bondholders. There is even a question mark in the title. He writes:
"If protecting bondholders from bad debt really is the primary objective of the supervisors, then the supervisors have become the problem. Capitalism does not work when capitalists are shielded from the economic risks that they freely undertake for profit when they enter into private contracts for debt finance."

In short, he is not if favour of protecting the bondholders.


scandia said...

Thanks Lynford933 for the Market Ticker link re legalization of marajuana. Long time coming...still leaves us with the treatment issue for more debilitating drug use.

Punxsutawney said...

No offense taken El-G,

No need to hire a super sniper to take me out. 50 bucks for a local thug to side-swipe me while I ride my bike home tonight will work fine. ;-)

If you really want to punish these folks, I suggest people take their wealth and power away (again more easily said than done) and leave them alive. I suspect there could be no worse punishment in their minds.

Nassim said...

A co-worker of mine is thinking of sending her son (half Japanese) to Japan to study Japanese and to play soccer...

My wife is a GP in Melbourne. She was brought in the Bryansk region of Russia, parts of which are highly contaminated. Her mother is an oncologist at the regional cancer hospital - where all the serious cases get sent. Leaders accused of neglecting Chernobyl legacy. There are masses of fresh cases all the time and villages and towns where 30+% of the newborns are suffering from its effects. It is truly scary.

Thanks to my readings, she is fully aware of what is going on in Fukushima and what Ernie Gundersen has to say.

Last week, she had a Japanese pregnant lady patient who is planning to visit the neighbourhood of Tokyo. My wife suggested that this lady delay her trip till after the delivery and this lady retorted that the Authorities say that everything is quite safe now. My wife really had a dilemma. You can only say so much in a consultation which lasts a few minutes and people are too lazy, time-poor or thick to do their own research.

Groov'nor said...

On the topic of drugs and bubbles, I shall point this wonderful piece by Jonah Lehrer called Can we prevent the next bubble?. In fact, I cannot recommend Lehrer's writings enough.

Ilargi said...

Last night. Jon Stewart. Greece. Derivatives. Brilliant. And in just 5 minutes.


el gallinazo said...

re marijuana legalization and the decriminalization of drugs in general

If someone told me the year that Sergeant Pepper hit the radio waves that marijuana would still be illegal 45 years later, I would have looked back in disbelief. I am skeptical that anything will change. It's just a bill entered into the House. There is just too much money in drug criminalization for Wells Fargo (who got caught and given a tap on the wrist) and the other banksters, the CIA, politicians and police around the world, and the prison industrial complex. I'll believe it when I see it, and maybe not even then. Would pose a giant contraction to the economy of Mexico. The drug wars in Mexico are all about franchises, which includes the army, police, and politicians as players as well as the gangbangers. None of them want decriminalization in the USA with Cantarell failing by a large percentage every year. Marijuana would be cheaper than celery if it were decriminalized.

re the update of the toilet paper of record

Ilargi is certainly taking the right approach by analyzing not meaning of the content of the article but rather analyzing the motives of disinformation. I figure that since we are nearing the end game, the NYT just wants to go on record that they were not totally oblivious to the problem. Also, to start scaring people that a Greek default would be the end of the world, and our Fed should support the ECB and IMF to whatever extent is necessary to prevent it. Louise Story appears to be unaware that the the Russian default did, in fact, precipitate the first derivatives banking crisis, and a rather serious one at that - from the geniuses at LTCM.

"In years past, when financial crises in Argentina and Russia left those countries unable to make good on their government debts, they simply defaulted. But this time around, swaps and other sorts of contracts have become so common and so intertwined in the financial markets that there are fears among regulators and financial players about how a Greek default would play out among derivatives holders."

Doesn't fill one with confidence about her knowledgability on the subject. But OTOH, certainly Geithner called Schulzberger and told him to run a story today with such and such an angle to prep the sheeple.

Re Argentina, their default was rather complicated and fascinating. I am still trying to get a handle on it, though I don't live there anymore. The Big Boyz including Citi pulled out their dollars through illegal pathways with the European Clearstream monopoly which was the final trigger to the bomb. Despite price inflation, money was so tight that many provincial governments printed their own scrip. The late Kirchner paid the IMF off one hundred cents on the dollar in early 2006. Typical sovereign bond pay-offs were in the range of 30 cents on the dollar, though about a quarter have held out to today and may do a lot better when an agreement is reached to finalize it. I am also pleased to inform you that the IMF put a lot of pressure on Kirchner on behalf of the vultures, which led him to criticize the entire underpinnings of the IMF on the floor of the UN. Anyway, the AR fiasco is a rich vein of study.

Ilargi said...

Cook County, Illinois Is $108 Billion In The Red.

Hallelujah. Are you at last getting to see how bad this whole thing really is? Guys? Gals?

Got to love the fact that the Treasurer's name is as Greek as they come. But that's just the cherry on it all.


Phlogiston Água de Beber said...

Better hurry if you want a bank deposit box in Switzerland says Golem XIV.

el gallinazo said...


Unfortunately Stewart's gofers didn't do their homework properly as he pushed the 53 year old retirement myth, which sole foundation seems to be a **comment** in a NYT blog that the US MSM picked up on without fact checking.

From the Sturdy Blog essay that Yves Smith linked yesterday:

Greeks retire early. The figure of 53 years old as an average retirement age is being bandied about. So much, in fact, that it is being seen as fact. The figure actually originates from a lazy comment on the NY Times website. It was then repeated by Fox News and printed on other publications. Greek civil servants have the option to retire after 17.5 years of service, but this is on half benefits. The figure of 53 is a misinformed conflation of the number of people who choose to do this (in most cases to go on to different careers) and those who stay in public service until their full entitlement becomes available. Looking at Eurostat’s data from 2005 the average age of exit from the labour force in Greece (indicated in the graph below as EL for Ellas) was 61.7; higher than Germany, France or Italy and higher than the EU27 average. Since then Greece have had to raise the minimum age of retirement twice under bail-out conditions and so this figure is likely to rise further.

scandia said...

@FB, When I wrote that I was shocked by London Banker's post on protecting bondholders I meant surprised. I was, in fact delighted by his post. I get a little paranoid from time to time that maybe bloggers don't get something, are drawing the wrong conclusion. When a central banker like London Banker joins the blogger chorus I was " shocked ".
I sure didn't expect it.

D. Benton Smith said...

@ El G

"Your last posting marks a first for me - the first time I have had any disagreement with what you have written. "

Damn, there I was headed for a perfect 300 game and left one pin standing in the last frame.

Seriously, in careful reading of your post I was hard pressed to determine just what the point of disagreement was. Was it identification of the Bank Bond Holders by individual name ?

Heck, big bird, I wasn't suggesting offing the bastards ( though I have no deep moral objections ) I was just saying that one of the most crucial rules of warfare ( a la "The Art Of War", by Sun Tzu ) is to know your enemy. Second only in importance to knowing one's self. You can't fight what you can't see, and by the same token our fish bowl lives make us the easiest of targets.

In more prosaic terms, imagine a blind deaf mute in bar brawl where everyone else has 20/20 vision and a cue stick. Lemme see the bloke who's smackin' me... at least it gives me the chance to duck.

Would it be of any REAL help to know them by name, given that they are giants who live atop Mt. Olympus with thunderbolts in both hands... and I am merely a wizened old Irishman near the end of his modest span of years ?

I dunno. At least it would allow me to detest them properly, or help me avoid the mistake of running to their fond embrace for help.

On the other hand, for me to remain totally ignorant of who it is that's sucker punching me from the blind side all the days of my life is an unnecessary disadvantage, and somehow demeaning.

Moreover, if knowing who they are was not important intelligence, then why are they so shy?

Perhaps the old banking dynasties are still in charge. The Rothschilds, Rockefellers, Warburgs and so on ... and maybe they are not. In any case, they are only people, not gods, and their power depends as much on information as it does upon cash... so why should they have all of the information and we none?

Knowledge may or may not be power... but ignorance is certainly the opposite. Besides, knowledge is also free, whereas ignorance can be quite costly. Just look at what it's costing the working class who still think America is on their side. It would sure help those poor guys to know who was really selling them down the river... and they wouldn't even have to shoot anybody.

Bigelow said...


Thanks for the correction on interest bearing-ness. The government stopped doing real audits of itself years ago. Politicians were happy to take Social Security surplus taxes and spend them elsewhere, but when they are expected to return the surpluses Social Security transforms into an unaffordable "entitlement".

Greenpa said...

Talk about people waking up!! Wowee!

"Richard Ravitch, who won an emergency appointment as New York’s lieutenant governor during the 2009 budget impasse, announced a high-level new project Thursday to untangle the finances of the states and shine a light on their hidden debts.

“Whereas there is enormous public attention to the federal deficit, the problems of the states are very serious and nowhere near very well understood,” he said in an interview. “People have to understand this, and address it with the same degree of gravitas as the federal deficit problem.”

"Mr. Ravitch will lead the project together with Paul A. Volcker, the former Federal Reserve chairman who is credited with wringing double-digit inflation out of the United States economy in the 1980s."

NYT journalism at it's finest- a whole big article on state finances- and they managed to do it all without one single mention of Meredith Whitney.

Thank goodness Ravishing Ravitch is here to save us; with his astonishing astuteness.

Greenpa said...

and then I went and spoiled it all,
by spelling something stupid like "it's".

hey, it's late, and my caffeine titer is low, and I'm worried the price of coffee may make me a vegetable in the near future.

Nassim said...

Chernobyl: Consequences of the Catastrophe for People and the Environment

I had difficulty finding this book and downloading it so I have put it on one of my spare domains. For anyone who in any doubt as to the dangers of radioactive particles, this book is a must-read. It also contains a lot of useful information about contamination outside the immediate region of Ukraine, Russia, Belarus and Poland. Places like Norway, Uk, France, Sweden, Greece, France, Ireland, Bulgaria and Turkey have lots of references as well.

Towards the end of the book there is a good explanation of how to reduce the effects of exposure - what can be done about it. This is very interesting.

Phlogiston Água de Beber said...


Perhaps I read too much into your name names comment. I thought you were suggesting that many of us little dogs were likely to be indirect holders of those must-not-lose bonds. That's very likely true. Even though the Big Dogs undoubtedly don't give a hoot about us losing wealth, I suspect they would like it to keep evaporating incrementally rather than all at once. I'm sure they suspect that in spite of our modest accomplishments, most of us could figure out the operation of a guillotine.

@ el g

Stewart is a self-confessed fake newsman, who just happens to cover news events better than most "real" newspersons. I wouldn't entirely discount the possibility that the script writers had learned the true figures. However, the point of the "report" was quite apparently to make fun of US, not to pillory the Greeks, and using the age 53 figure would be the correct choice for best comedic effect. Exageration is a standard comedic prop. IMHO, Jon and Aasif's skit was right on.

D. Benton Smith said...

" Perhaps I read too much into your name names comment. I thought you were suggesting that many of us little dogs were likely to be indirect holders of those must-not-lose bonds."

Nope, you got it right. That is one of the things I was suggesting, and one of the ways that the big dogs hold the world's economy for ransom ( I like Max Keiser's "Suicide Banker" metaphor.)

The main point, though, was that so long as the BIG bond holders remain behind the curtain of anonymity we will continue to be pulverized and they will continue to get away with it.

Guillotine's can work wonders ... if you know who to put under the blade.

Anonymous said...


You can start finding Big Finance Capital names here...

They don't just own banks, they own anything and everything big, by definition. Nobody else can bring the same wealth level to the party.

Big Agra, Big Energy, Big Pharma, Big Chemical, Big Government, Big Education, Big whatever...

Anonymous said...


All 4 parts here...

el gallinazo said...

The world's best English language economic interviewer, Bonnie Faulkner, just does an hour with Mad Max Keiser and he comes off as more informed and intelligent than one might imagine.


Well, maybe there isn't that much disagreement between us. Just really couldn't figure what one could do with that info on a pragmatic level. At best they regard us as cattle and at worst, as insects. But you are right, I would like to know as well. One never knows when knowledge becomes useful.


No argument that Stewart uses the misinformation for its full comedic value, but once the laugh is over, he has just continued the lie that the Greeks are getting fucked over because they are much lazier than the rest of us. And who does that disinformation benefit?


Thanks, I have been hearing about that book for several months now. Glad to have it on my hard drive.


Thanks for the links.

el gallinazo said...

Tyler Durden suggests that the mysterious $133B of "Other Assets" on the Fed's balance sheet which no MSM reporter seems inclined to inquire about may be the antigravity machine levitating the S&P500.

ben said...

agree with you, LG, about the stewart affair.

i was saying to girlfriend today after listening to max on guns and butter that he's great but not so smart when it comes to the future (who the fuck am i?) (a lucky TAEer) - basically predicting NWO of the single world currency/everyone pay taxes to the world bank variety. but after reading the first couple dean henderson posts skilo just provided -jesus!- i don't blame max quite so much for not paying better attention to I&S in paris. that's one vise-like oligarchy - and thorough. still, max, it's bigger than people now.

Nassim said...

Thanks, I have been hearing about that book for several months now. Glad to have it on my hard drive.


My pleasure. IMHO, if one has fuc**d up the genes of one's kids, life is meaningless.

Nassim said...

Google facing US antitrust probe - reports

I guess that is to make sure that Google cooperates fully with the authorities with its search engine, gmail, translator, Maps, books and so on. I mean, anyone who keeps tabs on my own usage of Google's services has a window into my mind - I doubt if I am of any interest though. :)

Biologique Earl said...

Dr. Jeff Masters posts summary of extreme weather records during year 2010:

Lynford1933 said...

Google Business: What if the answer to the FTC is. "Yes, that is what we do. We are a business, to make money for our shareholders. The more we can bend people to our profitable sites the better for us. Did you expect any business to be any different?" Duh.

jal said...

Re.: merging of two stock exchanges.
It seems like someone has figured out that they need the capital to use it as a leveraging machine, (printing press).

More integrating into the big ponzi.

It won't be good for us.


Punxsutawney said...

Nassim said,

"IMHO, if one has fuc**d up the genes of one's kids, life is meaningless."

Which is why my wife and I are careful with ours. Given the type of world I'm afraid we are headed into, good health will be an advantage, and maybe postpone suffering as long as possible.

But the women I originally wrote about would best be characterized as an "authoritarian follower" imho, and if her son goes to Japan it may help pay for college. So once money is involved, any other thought at that point goes out the window.

btw. Was in Melborne in August '08. A very nice city. Won't comment on housing prices though.

jal said...

Re.: China in Europe

China has a lot of US$ that it can use, through shell companies and institutions, to affect the future of the EU.

Diversification, control of assets, and improving cash flows is an objective that is not foreign to China.

I’m sure that China is not happy that it has so many of its eggs in the US market.

Getting involved deeper in the EU will prolong the shell game longer than expected and give China more control.

Keep your eye on the bouncing Chinese ball. The game is not over until China says so.


el gallinazo said...

30 day t-bills now starting to trade at negative interest rates on the secondary market. Scared money leaving equities markets, commodities, euro?

Greenpa said...

Well, guys; I have the answer.

Ka said...

From part 3 of the Dean Henderson article:

[CIA head Allen] Dulles received information from the Muslim Brotherhood House of Saudi regarding the creation of mind-controlled Assassins

The Illuminati is to these secret societies what the Bank of International Settlements is to the Eight Families central bankers. And their constituencies are exactly the same.

Author David Icke believes the Rothschilds represent the head of the Anunnaki Serpent Kings,

and so on.

So it seems we were not off in referring to TPTB as Lizards.

But don't worry, Hagbard Celine succeeded in drawing Eris, the Goddess of Discord into the body of Marilyn Monroe, and, with the help of the dolphins, will save the day. [See The Illumati Trilogy of Robert A. Wilson]

jal said...

Greenpa said...
Well, guys; I have the answer.
hehehe :-)

But ... but ...

The R do not want to run the game. Its impossible to call their bluff.

They are already doing all that they can to throw the election.


There are not enough adult lawmakers among the whole lot of D.


Phlogiston Água de Beber said...


I had the same theory upon Dubya's dubious enthronement. That they would so thoroughly screw things up that we would be permanently rid of that part of the nitwitocracy. Sadly, it was not to be and now they are back. Nitwittier than ever. It hardly matters though. The other half of the nitwit duopoly has also been a big disappointment.

The greatest threat to any prospect of adults in charge is the stealth military coup that has been crawling through the quagmires. The warlords and their generals, with overwhelming support from AIPAC and the Likudnics, will brook no interference with their serial rounds of what amount to board-game wars. I believe they can and will trump any attempts by any party to implement corrective policies, if it would crimp their action.

Greenpa said...

IM "That they would so thoroughly screw things up that we would be permanently rid of that part of the nitwitocracy. Sadly, it was not to be and now they are back. Nitwittier than ever. "

Ah, but you see, there were still Dimocrats TRYING to slow them down- what I'm really suggesting is a wholesale Dimo strike (just like the Repugnican one, only moreso) - give them 100% of all they ask for.

That would be a little different, I think. Sure, it wouldn't stop the next pendulum swing.

But at LEAST it would be more interesting than months and months of pretend negotiations news. Gaaah. :-)

Greenpa said...

Another tool we fail to use; which has been honored in antiquity for its power to dethrone the abusers of power-

Ridicule. We just don't do enough of it.

Now imagine, if on the floor of the House, all the Democrats started referring to the Speaker as "Neener-Boehner"... then apologizing for it, of course-

But then doing it again... look, we need to get some FUN into this, or we're going to die even faster.

Phlogiston Água de Beber said...

Ah Greenpa, I absolutely agree that we are going to die and it would be a real shame to reach the end overly sober. Let us all seek to unleash our inner Jon Stewart. :)

Phlogiston Água de Beber said...

This old Fred column seen in hindsight provides, IMHO, a nice plain language explanation of our situation.

The patient (our culture and society) so many are struggling mightily to save, actually died some time ago. What we are dealing with must be a zombie.

Then And Now

el gallinazo said...


You still follow the Demo Repug kabuki theatre? How quaint. Whether you give it to them or they pull it from your cold death grip hands, they will have what they want. But I speak on a national level. During the Great Depression, state and local governments were the only potential viable weapon against the Lizards. But first they would have to change their names and divorce themselves from the Manchurian President. How about the Mammal Party? Too divisive?

My experience is that two year olds are more the masters of the word "no" than 12 year olds. And more like our political leaders in other respects. As Orlov says, if you pay attention to them it just encourages them.

scandia said...

@Greenpa, I like your answer! Just one wee problem.Some of those congress critters took money /payola to get some deals done, some legislation changed. Who is free and clear to walk away, jingle mail the keys to gov't?

ben said...

my inner eddie murphy must be unleashed. two short clips from his delerious tour. here is first black president. and every ice cream man eventually figures out, if for some strange reason he's not been told by his boss, that business is best in poor, black neighborhoods. after all, his is the other siren.

Phlogiston Água de Beber said...

@ ben

I'll see your Eddie Murphy and raise you a Richard Pryor, 1st black President. :)

Greenpa said...

El Gal: "You still follow the Demo Repug kabuki theatre? How quaint."

lol. Maybe it stems from actually seeing live Kabuki; and Noh, plays in Japan, when I was around 8 years old.

Sure, it's a play, but the actors and the audience sure take it all seriously! :-)

Why not shake up the script?

Scandia- regarding promises and payola- that's the nice thing with my scenario; you can tell the Director that somebody started improvising in the middle of the scene, and gosh, it's just all beyond your control.


Archie said...

Greenpa said:

Another tool we fail to use; which has been honored in antiquity for its power to dethrone the abusers of power-

Ridicule. We just don't do enough of it.

I have to agree with you on this one. Perhaps we could taken lessons from this fellow in the UK.

Parliamentary government is so much better!

ben said...

that was a really beautiful entry from, fred, IMN. sending it to mom. beautiful cliche, too, to have to have someone die (The Badge) in order for someone else to come into your life. i mean that sincerely. the mass transit poster at the top clearly an homage to the art deco WPA posters of the depression.

that 45pc black unemployment target number pryor jokes about is actually about what it is for black males in urban centers right now, as i recall, which is utterly insane.

great video though! since it closed with a 'yo mama' joke, i must indulge myself again by including my favorite combination yo mama/black joke that further illuminates the degree to which whitey stacked the deck of cards: yo mama is SO black ("HOW black?"), when she went to night school, yo, she got marked ABSENT!

okay, back to the dreaded finance. here's the US Debt Clock in case anyone needs a refresher: tick tick tick. i -- poorly, i expect -- tried to dig up, in order to repost it, your allegorical comment i loved so much from wayback-when, imn, about the debt bomb in the shack in the woods but - alas.

scrofulous said...

"... the great financial Ponzi can only survive by creating more funny money,..." (el gallinazo)

That is one thought! I think another is that, by chucking passengers off of the Good ship Ponzi, one may commandeer the galley.

I left a link about the Strategic Oil Reserve being dipped into and no one seems to have any interest in making any comment. Desperate measures must be of no interest here ... move on! LOL!

Phlogiston Água de Beber said...

@ muchtooloose

Desperate times call for desperate measures. Hardly worthy of note. It's not a man bites dog kind of story. If they had announced they were going to buy oil for the Strategic Reserve, that would be a WTF kind of moment. That would risk proving the Saudi's have no spare capacity. From this move we are still forced to infer it. Though it is a strong inference.

Phlogiston Água de Beber said...

@ ben

Thanks for remembering the debt bomb story. There was something special in the air the night I wrote it. I've thought about it occasionally and wondered if there shouldn't be a sequel or a prequel or something, but nothing comes to me. Maybe when the debt bomb gets closer to exploding, something will click. Probably the fuse mechanism. :)

Marnage said...

Forgive me if this has been discussed re: the Greek crisis, but I found this last month:

The gist of the allegations rest on the charge by Mr. Kammenos, that the Greek Prime Minister, Mr. George Papandreou and members of his team, presided over the sale of 1.3 billion dollars worth of credit default swap contracts (CDS on Greek sovereign debt) on or around December of 2009, shortly after coming to power. The 1.3 billion dollars worth of insurance protecting against a Greek default was bought during the spring and summer of the same year, by the Hellenic Postbank, a public banking arm of the Greek government.

I don't know if it is true. Perhaps one of you more knowledgeable can tell me, but it is astonishing since it was sold in December of 2009, when it was already apparent Greece might default. It was sold to a private investor group which may have included the president's brother!
And who in the government can guarantee a default upon which these investors can collect?

Steve From Virginia said...

I'll see your Jefferson Starship and raise a Jefferson Airplane ...

SkyesMom said...

Hi Illargi and Stoneleigh,

What do you think will happen to precious metals? Seems to me they could drop even further next week, as Italy begins to disintigrate, then a rally while speculators buy cheaper gold, then a full-on crash when the eurozone ceases to exist.

What say you?

scrofulous said...


Interesting point you make. But now would you explain to me , very simply of course, where would that oil the US might buy for Strategic US Reserves come from?

Wasn't the last time the reserve was dipped into, like this, during the New Orleans business? I think that was your standard dog (or Gia) bites man event ... what a dog bite that was, eh? Nothing proved though, as you say:)

Phlogiston Água de Beber said...

@ muchtooloose

Hmmm, I thought the point was implicit. If we do go out to buy oil for the reserve, it could come from anywhere. But, it would almost certainly cause a very noticeable price spike. That would surely be interpreted as there being no swing producer left on planet terra.

What is puzzling about the release from reserves is that it seems to conflict with the claim that crude inventories are already very high. Perhaps the tanks are full of heavy sour and refineries not yet converted to process it may be running short of light sweet. It certainly must mean something and probably not anything to our liking.

scrofulous said...

Hi SkyesMom

"then a full-on crash when the eurozone ceases to exist "

About your concern about PM's. I can see a rush into Yankee dollars with a 'full-on crash' but I can also see Bernanke, running mad like a man biting dogs, to print as rabidly as he can. If he were to try printing gold I think he would lose his teeth as his calcified brain dropped outta his mouth.

(See I.M.'s man bites dog theory of journalism)

ogardener said...

Blogger Steve From Virginia said...

I'll see your Jefferson Starship and raise a Jefferson Airplane ...

I'll see your Jefferson Airplane and raise you a David Crosby and Graham Nash-
Traction In The Rain

Phlogiston Água de Beber said...

This topic has caused some including SFV to wax musical about the situation. This tune was just randomly selected on my Rhythmbox. I'd like to send it out to The Eight Families and their henchmen, such as Dimon, Blankfein, Fuld, Mack, Geithner, Greenspan, Bernanke, Trichet and a special dedication to Miss Blythe Masters.
Sky High

Frank said...

@muchtooloose the normal way for the gov to acquire oil for the SPR is for them to let companies pay their royalties for offshore production in oil rather than cash.

lautturi said...

In Finland we finally got our Cabinet put together after all - but I'm not totally convinced with their capabilities (¤_¤) New Prime and Finance ministers swear not to follow news and just read some novels as they are heading to summer holidays... Nobody's on the wheel - who could have guessed?

I just can't believe how lucky >sarcasm< we are with our responsible and sensible jokers nowadays (>_<) Of course new Prime minister, mr Cash's, message to Brussels was "Finland will bow below the ground level to any and all suggestions about loading money off our own bank accounts - just tell us how much". Well - ok - maybe not with those exact words but I'm getting better reading between the lines, you know.

scandia said...

@ Lautturi, nobody at the wheel may be the best one can hope for. No doubt the Finnish leaders need to replenish Vit D supplies. Sauna with a few lashings of birch bow and beer should mellow them out considerably. And with any luck Greece will default before they return.

@muchtooloose, re the oil reserves I am flabbergasted. It is bizzare to me that reserves of a finite resource are released to bring prices at the gas pump DOWN. And the people are happy! I must be an alien. Makes NO SENSE that I can grasp.At least no common sense.

scandia said...

" Reflections on two days with Stoneleigh" by Joanne Poyourow

Greenpa said...

Scandia- " I must be an alien. Makes NO SENSE that I can grasp.At least no common sense."

Nope, you're human. It's a built in genetic trap. Somehow, young children are born with the concept that "stuff" will, does, and should, "make sense."

But there really is NO evidence from history or news to indicate that human behavior or emotions ever make sense. And yet; we continue to expect it.

The physical world usually makes sense. Perhaps that's where the expectation has evolutionary value. Water really does not flow up hill, ever. Apples do not fall sideways from trees, only down. Milking ostriches is not likely to work

But why, all experience to the contrary, such things should lead us to endlessly expect humans to behave sensibly is incomprehensible to me, as an evolutionary biologist.

I just don't see any payoff, unless maybe it's necessary to prevent suicide.

Greenpa said...

Scandia; and all; a perfect example of our deep resistance to understanding that "human behavior does not make sense".

That links to my comment on a long NYT story about how, (gasp!) Tyson executives were paid bribes for years, the government caught them at it, Tyson paid a$4 million fine; and no executives suffered any consequences whatsoever.

99% of the comments are "OMG! This is such great reporting!" Mine is not. And my comment here has been pretty unpopular; very few recommends (not always the case).

I think my comment is flat true- even obviously so. But nobody wants to know or go there.

jal said...

@ Green pa

Tyson Foods does it, others do it,
Even educated fleas do it, lets do
Lets go free

They say that governments are too big
lets do it, lets reduce cost

Folks wanting Capitalism would do it
Not to mention socialist, lets do it
Lets make money

Folks on clothing option beaches do it
Lets not forget the working girls
Lets do it, lets fall in love

(Better verses are being solicited)


scrofulous said...


" The normal way for the gov to acquire oil for the SPR is for them to let companies pay their royalties for offshore production in oil rather than cash."

Thanks for explaining the mechanism, but now, what are the bets of that happening, even if Libya comes back on 'full' stream, until after the next US election?

Gaddafi’s rehabilitation with the West and Libya’s current oil production

el gallinazo said...


All depends on how one wishes to define "sense." Most of these actions make sense to the "perps." It's just that they blow up in their faces and don't make sense to anyone else. Like the robber in Boston who tried to hold up a Duncan Donuts at gunpoint. Of course there were six obese, sclerotic cops in the back and he was dead before he reached the front door. The only thing that makes sense to me are Coen Brothers movies which truly capture the depth and range of human stupidity. The Dude abides.

Regarding lack of punishment for major fraud and bribery crimes. This is new and marks the collapsing of the Empire. One is always tempted to think, "Oh it's been like this my whole life but I was too naive to see it." But just look at the savings and loan fiasco of the 1980's, far smaller than the current fraudfest. Bill Black sent over 1000 bank execs to Club Fed. This time it is different.

Greenpa said...

El Gal - "But just look at the savings and loan fiasco of the 1980's, far smaller than the current fraudfest"

Oh, quibble quibble, little vulture. :-)

Sure, one can find counter examples; and I think that the rate of enforcement likely varies with the specific industry.

But I suggest you look a the history of bribery and punishment in the aviation, defense, oil, coal, railroad, and automotive industries, for all times past. Pretty uniform I think.

Boeing has been indicted and fined constantly for bribery; including bribery of US military officials. No execs publicly flogged or imprisoned; I think (I'm freewheeling on memory here); a couple rumored to have been fired, but ... likely rehired immediately by lobbying firms. And they keep right on getting government contracts.

Google "Boeing bribery" - there's a load of it. One example:

"Boeing is no stranger to charges of bribery, of course. It was something the company was accused of doing under cover of darkness in foreign lands, greasing commercial jet sales with millions handed to Saudi royal families, Japanese government officials, and assorted airline potentates. In the late 1970s, the company agreed to a US consent decree following allegations it paid $52 million in bribes to foreign governments. Boeing admitted no wrongdoing. It just said it wouldn't do it again.

"But apparently it did. In a civil case still proceeding on appeals through a US court in Florida, a Canadian airplane maker has earned a $2.8 million judgment alleging in part that Boeing executives approved a $786,000 bribe on the sale of planes in the Bahamas."

el gallinazo said...

The rapid movement of "hot particles" from Fukushima to the USA does not surprise me. I lived on St. John, US Virgin Islands, 18 degrees north latitude. Sometimes I would come out in the morning to see a thin layer of red dust on the windows to be cleaned. The neighbors would say there must be quite a dust storm blowing off of the Sahara, and we would call it Sahara dust (as opposed the the gray dust which would be coming from a sometimes active volcano a hundred odd miles to our east). At first it surprised me, despite the constant Trade Winds, that this dust could cross the Atlantic with such facility. And when one of my sailing buddies decided to visit Africa, first he sailed north to New York, to catch the winds behind him. (Beating into a 25 knot wind for weeks will turn the stomach of the most hardened sailor and it's hard on the boat also).

So reading the article about Stoneleigh's visit to LA, I decided to look up a few latitudes, mainly Fukushima which is about 36 degrees north. No surprise that the particles should cross over to the Pacific northwest states so quickly and in such abundance. Would imagine there would be a lot less from the Pacific coast of Mexico at the Tropic of Cancer on south.

bluebird said...

IMN's Debt bomb story 3/26/10

el gallinazo said...


In the late 1970's I worked for a Hamburg based chemical trading firm. There I learned that business bribery inside Germany was a serious felony, but outside Germany it was tax deductible :-)

Greenpa said...

El Gal. "There I learned that business bribery inside Germany was a serious felony, but outside Germany it was tax deductible :-)"

yep. Also ancient practice. Somewhere in the early books of the Bible is a verse which states a law they didn't put on the Big Ten tablets. Basically:

"If you find a dead animal, thou shalt not sell its meat to members of our tribe. But selling its meat to strangers is just fine."

Slightly paraphrased, but with new translations these days, who knows. I'd be grateful to any who can cite me the book and verse, that one is a treasure.

scandia said...

@Greenpa, I am not yet convinced that trying to make sense is a genetic trap. The example of corporate corrupt business practices makes a great deal of sense if one is a corporation.
Speaking of corruption I was given too much change by a lovely Mennonite girl at the farmer's market this morning. For a split second I considered pocketing the profit.No one would know including the young girl. Alas I understand that relationships require trust, that trust is built one small gesture at a time. I returned the money.
This is common sense to me.

Greenpa said...

Scandia: "The example of corporate corrupt business practices makes a great deal of sense if one is a corporation. "

See! You are genetically resistant to seeing. :-)

My attempt to point out a lack of sense in that situation was not directed at the corporate viewpoint; but rather at the shock, on the part of the public, and supposed educated journalists- and the majority of readers- that such things could go on and not be punished. I made that abundantly, lucidly clear. (I cling, very sensibly, to the belief that I always communicate clearly.) :-)

It really makes no sense to be shocked and dismayed when the sun comes up in the East. But these guys, nearly universally, are. And you, my little alien, are nonsensically clinging to your belief that you can and do see sense in humans.

Ah, what fools these mortals be, as Monty Python should have put it. :-)

Ric said...

And you, my little alien, are nonsensically clinging to your belief that you can and do see sense in humans.

Are you saying Greenpa has no sense to make?

Ilargi said...

New post up.

The Future of Physical Gold, Part V - An Imperfect World in The End