Mar 152015
 
 March 15, 2015  Posted by at 9:01 am Finance Tagged with: , , , , , , , , ,


NPC Fred Haas, Rhode Island Avenue NE, Washington, DC 1924

Welcome To A Fed Without Patience (MarketWatch)
US Debt To Hit Legal Limit Again On Monday (MarketWatch)
BP CEO On Oil: ‘It’s Going To Be Very Painful’ (CNBC)
Oil Futures Suffer Nearly 10% Weekly Plunge (MarketWatch)
‘Most Significant Break Between Germany And US Since WWII’ (RT)
Poroshenko: 11 EU States Struck Deal With Ukraine To Deliver Weapons (RT)
Ukraine Says Creditors Face Principal Losses on Dollar Bonds (Bloomberg)
The #ALBA Dawn Of A New Europe (Beppe Grillo)
Presenting An Agenda For Europe, Ambrosetti, Lake Como, 14-3-2015 (Varoufakis)
Greece Has Plenty Of Options. It’s Just That None Are Good (Satyajit Das)
Juncker, Tsipras Agree On Creating Greek Task Force For Reforms (Kathimerini)
Athens Ready To Delay Some Election Pledges, Says Varoufakis (Reuters)
Greece’s Varoufakis Says QE To Fuel Unsustainable Equity Rally (Reuters)
The Greek Election: Why I Went Home To Vote For The First Time (Alex Andreou)
The Power of Le Pen (BBC)
UK Support For China-Backed Asia Bank Prompts US Concern (BBC)
Russia In A Spin As Its Putin Goes Missing (FT)
Is EU Army Intended To Reduce US Influence In Europe? (RT)
Steven Pinker Is Wrong About Violence And War (John Gray)

“We’re in the ninth inning of a zero-rate environment.”

Welcome To A Fed Without Patience (MarketWatch)

Get ready for a central bank without patience. The Federal Reserve on Wednesday is widely expected to remove its pledge to be “patient” in raising short-term interest rates, giving them the flexibility to move as soon as June. This may be the most anticipated Fed meeting in some time as it fundamentally changes policy to a meeting-by-meeting calculation. The Fed has not hiked rates since 2006, and it has kept rates at zero since December 2008 . The Fed will release its policy statement on Wednesday at 2 p.m. Eastern along with its latest economic forecast and the projected interest rate path of the 17 officials. A press conference with Fed Chairwoman Janet Yellen will follow at 2:30 p.m.

Fed watchers said Yellen telegraphed the Fed policy committee’s intentions in her Congressional testimony last month. Read Yellen removes another obstacle to an eventual rate hike. “I would be shocked if ‘patient’ is not removed,” said John Ryding, chief economist at RDQ Economics. “Patient” meant the Fed would not raise rates for two meetings. With formal policy deliberations scheduled for late April and June, the pledge needed to go if a June move was to be on the table. “Enough Fed officials have said they want to have the debate about hiking rates at the June meeting, so it has to come out,” Ryding said. Avery Shenfeld, chief economist at CIBC World Markets, agreed patient would be dropped and said Yellen would use her press conference to stress that the central bank has not made up its mind about a June move.

The Fed chairwoman will stress the Fed is data dependent and a decision will come on a meeting-by-meeting basis. She will highlight some of the mixed messages the economy has been sending, such as the strength in employment but the relatively soft pace of GDP growth. The goal is to keep markets from overreacting and tightening financial conditions, he said. Q1 GDP seems likely to decelerate to a 1.5% annual rate from a 2.2% rate in the final three months of 2014, he said. But growth should rebound “north of 4% “in the second quarter, which should boost worker paychecks and give the Fed a green light to hike rates, Shenfeld said. Ryding agreed: “We’re in the ninth inning of a zero-rate environment.”

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“The creditworthiness of the United States is not a bargaining chip..”

US Debt To Hit Legal Limit Again On Monday (MarketWatch)

The U.S. government is about to run into the legal limit on how much it can borrow, but don’t expect a whole lot of fireworks again in Congress over what’s become a frequently quarrelsome issue. The U.S. debt limit goes into effect on Monday after a one-year suspension, with a ceiling of around $18 trillion. Treasury Secretary Jack Lew on Friday urged John Boehner, the Republican speaker of the House, to raise the debt limit as quickly as possible and not to allow the issue to become a political football. “The creditworthiness of the United States is not a bargaining chip, and I again urge Congress to address this matter without controversy or brinksmanship,” Lew wrote in a second letter to Boehner in two weeks.

Americans and foreign investors need not worry, though. The U.S. Treasury has the means to keep funding the government until October through the use of so-called extraordinary measures, the Congressional Budget Office estimates. And the Bipartisan Policy Center in a new report suggests a breach in the debt limit could be put off potentially until the end of the December. What’s more, the leader of the U.S. Senate, Republican Mitch McConnell of Kentucky, insists he won’t let the government default or shut down amid negotiations with the White House on raising the debt limit.

That’s good news for the nation’s bondholders or anyone dependent on the feds for support, such as retirees receiving Social Security or other benefits, because it means the government will continue to pay its bills on time. The modern-day debt limit, which has been in place since World War II, caps how much money the government can borrow. The limit has been raised about a hundred times since the 1950s, but it’s become the source of increasingly hostile political tug-of-wars since the mid-1990s.

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“We’re back into the normal world of volatility for oil and gas prices..”

BP CEO On Oil: ‘It’s Going To Be Very Painful’ (CNBC)

The dramatic drop in oil prices and the transfer of wealth to consumers is going to be very painful for the oil and gas industry, Bob Dudley, CEO of BP, told CNBC Saturday. Speaking at Egypt’s Economic Development Conference in the resort town of Sharm el-Sheikh, Dudley said that oil prices – which have fallen around 60% since last June – had been a “huge shock” for companies like his. “We’re back into the normal world of volatility for oil and gas prices,” he said on a CNBC-hosted panel. “Anything that happens that fast can have unintended consequences. BP was the first European major to sound the alarm on tumbling oil prices – on December 10, it warned that it was implementing a cost-cutting program as a result.

In December, oil majors in Europe also received a stark warning from credit ratings agency S&P, which placed BP, Total and Shell on a negative watch. It means the three firms are more likely to have their debt rating downgraded over the next three months. Speaking at the investment event in Egypt, Dudley added that BP had operated continuously in the country for the last 25 years. His comments come after the oil giant signed an deal to develop gas resources in Egypt, with investment of around $12 billion from BP and its partners. The company said the project underlined its commitment to the Egyptian market and was a vote of confidence in the country’s investment climate and economic potential.

Three days later, BP also announced a gas discovery in the East Nile Delta which it said was expected to be the deepest well ever drilled in Egypt. “I think the time is absolutely right,” Dudley said about investing in the Middle Eastern nation. “(Egypt) really is the lynchpin…it’s the largest market in the Middle East.” On Saturday, Dudley said the investments would increase in gas production in the country by 25 to 30%.

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Anything over zero is a godsend by now.

Oil Futures Suffer Nearly 10% Weekly Plunge (MarketWatch)

Oil futures fell sharply on Friday, to tally a weekly decline of nearly 10%, as a monthly report from the International Energy Agency raised concerns that the glut of crude supplies and tightening storage capacity in the U.S. may cause prices to weaken further. Crude-oil for delivery in April fell $2.21, or 4.7%, to settle at $44.84 a barrel on the New York Mercantile Exchange. Prices ended the week with a loss of 9.6%. April Brent crude on London’s ICE Futures exchange shed $2.41, or 4.2%, to settle at $54.67 a barrel, with the front-month contract down 8.5% for the week. After trading on Nymex ended Friday, the U.S. Energy Department said it plans to buy up to 5 million barrels of crude for the Strategic Petroleum Reserve. Prices in electronic trading edged backed above $45.

In its report early Friday, the IEA said any appearance of stability in oil is tenuous. “Behind the facade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly,” the report said. Ballooning inventories combined with the nation’s shrinking oil storage could drag prices lower, it said. The comments from IEA come as oil has been trading in a relatively narrow band over the course of the past few weeks, on the heels of steep declines in weekly U.S. rig counts. Baker Hughes on Friday reported that the number of U.S. rigs actively drilling for oil as of March 13 fell 56 rigs from last week to 866.

“Oil rig counts fell for a historic 14th week in a row,” said Phil Flynn, senior market analyst at Price Futures Group. “While at this point the rig count drop has not impacted output, at this rate it soon will.” Flynn also pointed out that the IEA report wasn’t all that bearish as it raised its demand estimate. The IEA forecast average global oil demand of 93.5 million barrels a day for 2015.

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Sounds good.

‘Most Significant Break Between Germany And US Since WWII’ (RT)

People in the US, like ex-CIA chief Michael Hayden, are trying to put Berlin back in place dissatisfied that the Germans are acting like adults but not like subservient servants from of the “five eyes” alliance, says Ray McGovern, a former CIA officer. Speaking at a Washington-based think tank, the New America Foundation, on Tuesday former NSA and CIA director, General Michael Hayden, said that terror attacks such as the Charlie Hebdo shooting are inevitable and similar to Ebola. He confessed that the NSA would never agree to stop spying on Germany whatever the political fallout.

RT: Do you really believe that nothing can be done to avoid terror attacks like Charlie Hebdo, given the West’s massive intelligence networks?
Ray McGovern: It does make everything that General Hayden implemented at the NSA worthless. The famous pile, from which you are supposed the extract a little nugget on terrorism, it hasn’t worked. Hayden has his nose out of joint. He is neocon who is very dissatisfied these days and particularly with the performance of German Chancellor Angela Merkel because she is not acting obediently anymore. She actually sees Germany interests first, and has prevented a worsening of the situation in Ukraine. General Hayden doesn’t like that. He doesn’t like Angela Merkel being an upstart and saying that she’s displeased at having her handy, her little cell phone monitored. Well, “she should know her place.” So Hayden here is not the most diplomatic person in the world. He is trying to tell Merkel and everyone else who is outside the [Five Eyes intelligence alliance] – the UK, the US, Canada, Australia, and New Zealand – that they are secondary citizens and they will remain so as long as they don’t spring to obedience the way the other four do.

RT: The former NSA director suggested that relations between Germany and the US might not be as rosy as generally believed. Is that true? How do you see relations between Berlin and Washington evolving from here?
RM: The most significant break since WWII has just happened. Angela Merkel came to Washington and she said“selling offensive arms and giving them to the Ukrainians is a bad idea, we oppose it.” And the President [Barack Obama] said: “Oh, we’re still trying to make our decision about that.” She went to Russia and worked out a deal with Putin and Poroshenko saying: “Look, we need a ceasefire,” and so far the good news is that ceasefire is holding.

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But then we still have the war types and lying basterds.

Poroshenko: 11 EU States Struck Deal With Ukraine To Deliver Weapons (RT)

Ukraine has concluded deals with eleven countries of the EU on delivery of weapons, including lethal, President Petro Poroshenko told the country’s TV. He, however, didn’t mention which countries will provide ‘defensive aid’ to Kiev. “The Head of State has informed that Ukraine had contracts with a series of the EU countries on the supply of armament, inter alia, lethal one. He has reminded that official embargo of the EU on the supply of weapons to Ukraine had been abolished,” said a statement on Poroshenko’s official website, citing his interview to the TV channel “1+1”.

According to Poroshenko’s statement, he is confident that EU and USA will support Ukraine with weapons if needed. “If there is a new round of aggression against Ukraine, I can surely say that we will immediately receive both lethal weaponry and new wave of sanctions against the aggressor. We will act firmly and in a coordinated manner.” Ukraine won’t reduce its defense capacity, said Poroshenko, adding that now “intensive combat training is being held” in the country. “We are mining the most dangerous tank directions and building engineering structures under the new plan and projects.”

The statement said that the decision of the US President Barack Obama “who decided to supply Kiev with defensive weaponry” is crucial. “This armament will increase preciseness and efficiency of the Ukrainian weapons. In addition, thermal imagers and radars that detect motion help counteract reconnaissance and subversive groups of the opponent.” The Ukrainian leader said the situation in Donetsk and Lugansk Regions is being gradually deescalated, adding that the Ukrainian army hasn’t suffered casualties for several days.

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Good model for Greece?!

Ukraine Says Creditors Face Principal Losses on Dollar Bonds (Bloomberg)

Ukraine’s bond restructuring may include a reduction in principal, as well as an extension of maturities and lower coupons, Finance Minister Natalie Jaresko said in her first talks with creditors about easing the country’s debt load. The nation of more than 40 million, which is struggling to contain a separatist war that has killed more than 6,000 people in its easternmost regions, will try to reorganize debt from both the government and publicly run entities by June, Jaresko said in a conference call on Friday. She called on Russia, which has lent Ukraine $3 billion in a bond maturing this year, to join the talks. The price of Ukraine’s dollar debt fell. The operation “will probably involve the combination of a maturity extension, a coupon reduction and a principal reduction,” Jaresko said. “The proportion of each of these elements will be discussed with creditors.”

Ukraine won approval this week for $17.5 billion of IMF aid, bolstering reserves that have fallen to a more-than-decade low. The loan is part of a $40 billion package to rescue the nation’s economy as it buckles under a plunging hryvnia currency and the war, which has devastated its industrial heartland. The best investors can try is to limit the principal reduction, said Richard Segal, the head of emerging-market credit strategy at Jefferies in London. Avoiding losses on the face value of the debt “seems to be mathematically impossible,” Michael Ganske, who helps oversee $7 billion in emerging-market assets as a money manager at Rogge Global Partners in London, said by e-mail.

Ukraine’s dollar bonds extended losses after Jaresko’s comments. The dollar notes due in July 2017 dropped 1.5 cents to 44.3 on the dollar at 8 p.m. in Kiev, increasing the yield to 53.48%. The securities fell as low as 41.35 cents last month, before rallying in the run-up to the IMF’s approval of its second Ukraine loan in 11 months this week. “Unfortunately, they have to insist on debt reduction,” Ronald Schneider, who helps manage about €800 million at Raiffeisen in Vienna, including Ukrainian bonds, said by e-mail on Friday. “Negotiations with creditors would be easier without a haircut” reducing the face value of the securities, he said.

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Beppe: “Something that can ensure no one is left behind.”

The #ALBA Dawn Of A New Europe (Beppe Grillo)

“They are telling us that the European economy is in recovery because the reforms are working. And the government has been celebrating the 0.1% growth in GDP in the first quarter of 2015 as a trophy. The reality is, however, that:
– since 2010, our GDP has lost 10 points;
– since the beginning of the crisis about 100 thousand companies have gone bust with the loss of more than a million jobs, and out of every hundred young people, fifty are without a job.

And (as we hope others will do), we can examine the state of our country in terms of the index called “Benessere Equo e Sostenibile” {Equitable and Sustainable Well-being} instead of using the Gross Domestic Product, and we become aware of a drama that is ever more ferocious. In this tragic recessionary vortex, the countries that have suffered the greatest setback are those in Southern Europe: as well as Italy, there’s Greece, Spain and Portugal. The economists all over the world and a few German hacks have called us “PIGS“. After depriving us of our future, they have insulted us in the media. Today we are at a crossroads.. The first round lost by Alexis Tsipras against the Troika, demonstrates that for Berlin, Brussels and Frankfurt there is no alternative to “austerity Europe”. This is confirmed by Renzi’s “Jobs Act” and the growing amount of trickery he’s coming up with.

It’ll be difficult to get out of this trap, but it is possible if we manage to build an alliance among the Mediterranean countries that can break the logic of German mercantilism. Italy, Greece, Spain, Portugal and France – together – represent the third biggest economy in the world. We could create a “cartel” and get greater contractual power with Berlin. Someone has already done it before us: the countries of ALBA, formed in 2001 as an alternative to The Free Trade Area of the Americas (FTAA) that was what the United States wanted. The political principles and the concept of social cooperation that the countries of Venezuela, Bolivia, Nicaragua, Ecuador and Cuba have signed up to, can be our source of inspiration to fight the domineering and neo-liberal process at the basis of the endless crisis in the West. They’ve had the FTAA, and soon, we’ll have TTIP.

Today there are movements and parties not delegitimized by years of power and of compromising with the corporate-financial lobbies that can, or must, start to think of a new supportive Community that can reject the diktats of the Troika. The dawn of a new Europe is close at hand: a great Euro-Mediterranean alliance of sovereign States that can give back freedom, civilisation, sovereignty and democracy to our own people. Something that can ensure no one is left behind.

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Yanis’ first blog since Jan 25 is this long speech at the Ambrosetti forum March 14.

Presenting An Agenda For Europe, Ambrosetti, Lake Como, 14-3-2015 (Varoufakis)

Dear All, Ministerial duties have impeded my blogging of late. I am now breaking the silence since I have just given a talk that combines my previous work with my current endeavours. Here is the text of the talk I gave this morning at the Ambrosetti Conference on the theme of ‘An Agenda for Europe’. Long time readers will recognise the main theme – evidence of a certain continuity… Back in March 1971, as Europe was preparing itself for the Nixon Shock and beginning to plan for a European monetary union closer to the Gold Standard than to the Bretton Woods system that was unravelling, Cambridge economist Nicholas Kaldor wrote the following lines in an article published in The New Statesman:

“… [I]t is a dangerous error to believe that monetary and economic union can precede a political union or that it will act (in the words of the Werner report) “as a leaven for the evolvement of a political union which in the long run it will in any case be unable to do without”. For if the creation of a monetary union and Community control over national budgets generates pressures which lead to a breakdown of the whole system it will prevent the development of a political union, not promote it.”

Unfortunately, Kaldor’s prescient warning was ignored and replaced by a touching optimism that monetary union will forge stronger links between Europe’s nations and, following some large financial sector crisis (like that of 200), European leaders will be forced by circumstances to deliver the political union that was always necessary. And so, at a time when America was recycling other peoples’ surpluses at a global scale, a Gold Standard of sorts was created in the midst of Europe, causing a wall of capital to flow into Wall Street fuelling financialisation and large-scale private money minting worldwide – with French and German rushing in to participate enthusiastically.

Within the Eurozone the illusion of riskless risk was reinforced by the fantasy that (in a union built on the Principle of Perfectly Separable Public Debts and Separate Banking Systems,) lending to a Greek entity was more or less equally risky as lending to a Bavarian one. As a result, net trade surpluses gave rise to net capital flows into the deficit nations, causing unsustainable bubbles in both the private and the public sectors. Our Eurozone growth model, ladies and gentlemen, relied heavily on private, bank-driven, vendor-financing for the net exports of the surplus nations. It was as if, in constructing the Eurozone, we removed all shock absorbers while ensuring that the shock, when it came, would be massive.

And when that massive shock came, in the form of the Great Eurozone Crisis in 2010, following the global Crash of 2008, with my country, Greece, proving the canary in the mine, Europe decided to remain in denial of the nature of the crisis, insisting on dealing with the insolvencies caused by the bursting of bubbles (first in the banking sector and then in the realm of public debt) as if they were mere liquidity problems, lending to the deeply indebted nations through SPVs (special purpose vehicles) that resembled stacked CDOs (collateralized debt obligations). The end result was a transfer of potential losses from the banks’ books onto Europe’s taxpayers in a manner that placed most of the burden of adjustment on the crisis countries that could least bear it.

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But that doesn’t mean they‘re all equally bad.

Greece Has Plenty Of Options. It’s Just That None Are Good (Satyajit Das)

The choices for Greece now are clear. In the first option, the European Union makes allowances: maturities for loans, especially short-term ones, are extended; there are concessions on interest rates; debt may be replaced with securities without maturity and a coupon linked to growth – Keynes-style “Bisque bonds”; the European Central Bank continues to support the liquidity needs of the Greek banks; and the hated Troika is renamed, to remove the odious association with the past. Despite the reduction in the value of the debt outstanding, the EU and lenders avoid a politically difficult explicit debt writedown. Syriza claims to have fulfilled its mandate to stand up to the EU and Germany, and reclaim Hellenic sovereignty and pride. In reality, little changes. Under this scenario, Greece and the EU are back at the negotiating table within six to 12 months, confronting the same issues.

In the second option, Greece defaults on its debt but stays in the euro. (It is not clear how a nation in default can remain within the euro other than through the fortuitous absence of an ejection mechanism.) Greek banks collapse if the ECB decides to withdraw funding. Capital flight accelerates, requiring capital controls. The Greek Government is left with no obvious source of funding, other than a parallel currency or IOUs, as used during some government shutdowns in the US. Greece’s competitive position is unchanged as it purports to use the euro. The EU and lenders incur substantial losses on their loans.

In the third option, Greece defaults and leaves the euro, bringing in new drachmas. There is short-term chaos. Activity in Greece collapses. The EU and lenders face the same problem as in the second option. In addition, the euro is destabilised. The third option allows Greece to regain control of its currency and interest rates. Sharp devaluation of the new drachma improves competitiveness, for example in tourism. The ability of the central bank to create and control money supply helps restore liquidity to its banks and provides a mechanism for financing the Government.

A cheap new drachma, if appropriately managed, may reverse capital flight, as the threat of a loss of purchasing power is reduced. A devalued currency may also help attract inflows of funds looking for bargains. In time, Greece regains access to capital markets as Russia did after its 1998 default. Greece regains economic sovereignty but at the cost of reduced living standards as import prices sky-rocket and international purchasing power is diminished. But after the initial dislocation, a strong recovery may ensue.

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“Juncker, however, insisted that there was no scope for Greece and its eurozone partners failing to find a way to progress.”

Juncker, Tsipras Agree On Creating Greek Task Force For Reforms (Kathimerini)

Greece was warned on Friday that it has to make swifter progress in agreeing reforms with its lenders, as European Commission President Jean-Claude Juncker and Prime Minister Alexis Tsipras agreed in Brussels on the creation of a Greek task force to work with EU experts on structural improvements. “I don’t think we have made sufficient progress,” Juncker told reporters as he welcomed Tsipras to the Commission on Friday, echoing Eurogroup chief Jeroen Dijsselbloem’s comments that the two weeks following the February 20 agreement on a four-month bailout extensions between Greece and its creditors had been “wasted.” Juncker, however, insisted that there was no scope for Greece and its eurozone partners failing to find a way to progress.

“I’m totally excluding a failure… This is not a time for division. This is the time for coming together,” he said. His comments came in the wake of German Finance Minister Wolfgang Schaeuble refusing to rule out the possibility that Greece would slip out of the single currency. “As the responsibility, the possibility to decide what happens lies only with Greece and because we don’t exactly know what those in charge in Greece are doing, we can’t rule it out,” he told an Austrian broadcaster. In an interview with Germany’s Der Spiegel magazine due to be published on Saturday, European Economic and Monetary Affairs Commissioner Pierre Moscovici strikes a similar tone to Juncker, insisting that the option of a Greek exit should not be considered. “All of us in Europe probably agree that a Grexit would be a catastrophe – for the Greek economy, but also for the eurozone as a whole,” he said.

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Mind you: Delay. Not give up.

Athens Ready To Delay Some Election Pledges, Says Varoufakis (Reuters)

Greek Finance Minister Yanis Varoufakis said on Friday he was confident Athens could reach a deal by April 20 with its international creditors on the reforms it must implement to unblock further aid. Speaking to reporters on the sidelines of a business conference in northern Italy, Varoufakis also said Greece’s new leftist government was prepared to delay some of its promised anti-austerity measures in an effort to win EU backing. “We can complete the review of the 20th of February agreement… We have a commitment, all of us, to reach an agreement by the 20th of April,” Varoufakis said. The government was elected in January on a pledge to roll back austerity and renegotiate the terms of a €240 billion international bailout, but it has faced fierce resistance from EU partners who are unwilling to offer Athens major compromises.

Although the partners agreed on Feb. 20 to a four-month extension to the bailout programme, the accord did not give Greece access to funds pledged to it from the euro zone and the International Monetary Fund. To obtain that cash, Athens needs to agree on a revised package of measures. After long delays, the discussions only kicked off in earnest this week in Brussels. Varoufakis indicated on Friday a willingness to compromise. “If this means that, for the next few months that we have negotiations, we suspend or we delay the implementation of our (election) promises, we should do precisely that in the context to build trust with our partners…,” he said.

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That’s not its worst consequence.

Greece’s Varoufakis Says QE To Fuel Unsustainable Equity Rally (Reuters)

The ECB’s bond purchases will create an unsustainable stock market rally and are unlikely to boost euro zone investments, Greek Finance Minister Yanis Varoufakis warned on Saturday. The ECB began a programme of buying sovereign bonds, or quantitative easing, on Monday with a view to supporting growth and lifting eurozone inflation from below zero up towards its target of just under 2%. Bond yields in the currency bloc have collapsed, but record low interest rates so far have not spurred investments that would support growth in recession-hit countries like Italy or Spain.

“QE is all around us and optimism is in the air,” Varoufakis told a business audience in Italy. “At the risk to sound the party pooper … I find it hard to understand how the broadening of the monetary base in our fragmented and fragmenting monetary union will transform itself into a substantial increase in productive investments. “The result of this is going to be an equity run boost that will prove unsustainable,” he said.

Varoufakis reiterated that the new Greek government was ready to time its promised anti-austerity measures in a way that helped negotiations with European Union partners over the disbursement of financial aid. “We never said we’re going to renege on any promises, we said that our promises concern a four-year parliamentary term,” he told reporters on the sidelines of the conference. “They will be spaced out in an optimal way, in a way that is in tune with our bargaining stance in Europe and also with the fiscal position of the Greek state,” he said.

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“Most understand that, whatever one thinks of the outcomes, there would not have been any negotiation at all but for Syriza.”

The Greek Election: Why I Went Home To Vote For The First Time (Alex Andreou)

It has become clear that most of the commentariat no longer possesses even the basic language to engage with politics that is not free market-based. It looks at a government with clear social intentions, but flexible methods, and it cannot make sense of it. Politicians who, after an election, appear to want to achieve precisely what they promised before it, just don’t compute. Even in its first months, Syriza must be discredited, it seems, at any cost. Recent polls, and the following interviews, reveal Greek voters to be infinitely more sophisticated. Most understand that this is merely the start of a necessary conversation about austerity and, more generally, capitalism. Many hope that Spain, Italy and even the UK will join it in time.

Most understand that, whatever one thinks of the outcomes, there would not have been any negotiation at all but for Syriza. After four decades of being ruled by corruption and nepotism, expectations are low. Everything is a bonus. It feels utterly refreshing to have someone fighting your corner. After almost two months of dominating international news, Greece will no doubt disappear again into relative obscurity. This is as it should be. A country whose economy accounts for less than 0.3% of the world’s GDP should not be the focus of such intense attention.

That it has been consistently presented as the fuse that, once lit, will set the globe on the path to inevitable decline is revealing. It says that the systemic interconnectedness that resulted in the global financial crisis is still very much present. It reveals a fear of anyone who does things differently. It speaks volumes about this being a political, as well as an economic, crisis. Most of all, such scrutiny makes it impossible for an inexperienced government to get on with the practical business of running a country. The absence of this obsessive examination will be welcome. Wouldn’t it be something if our collective folly, this experiment at fair and honest government, actually made a difference?

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“She talks about this as “regaining our economic freedom” and the “exercise of economic patriotism.”

The Power of Le Pen (BBC)

Marine le Pen. Arguably, she is the most important opposition politician in Europe, who has the potential to affect the way of life of all of us. How so? Well her party is France’s most popular. It topped the polls in last years European elections and is expected to do so again in the first round of local elections on March 22. Also France’s business and political establishment, with whom I have spent a good deal of time nattering in recent weeks, takes it for granted that she will go through to the second round of the French presidential elections in 2017 – and is not remotely confident that a centre-ground candidate of left or right will be able to rally sufficient moderate support to beat her. So she matters, which is why I interviewed her twice for my film, once before and once after the Charlie Hebdo atrocity.

One important question is whether her repudiation of her party’s racist and anti-Semitic past is more than cosmetic (she insists it is – but many argue the party’s criticism of Islam is insidious). Outside France probably what may matter most about her is that she explicitly blames the EU and eurozone for all France’s economic woes. She is in favour of French withdrawal from both, so that she can restrict immigration, impose customs duties on imports, nationalise big businesses when useful, and re-instate the French Franc. She talks about this as “regaining our economic freedom” and the “exercise of economic patriotism”. When I put it to her that her protectionist policies were chillingly similar to those that reinforced the Great Depression of the 1930s, she said she totally disagreed and that the relevant crisis was the “eurozone that has been the black hole of world growth for 12 years”.

Whether or not you think reinstating economic borders is the road to penury, it is very difficult to see how the eurozone could survive a French exit – and the economic shock of even rising fears of French withdrawal would seriously set back a European recovery (the cost of finance would rise sharply, because of the fear that converting strong euros into weak francs would generate huge losses on French assets). None of which is to say there is a need to panic about this now. But it does show that unless and until Europe’s establishment succeeds in demonstrating that the EU and the eurozone is serving the interests of most people, which they are conspicuously failing to do at the moment, Europe’s way of life will be under sustained and serious threat.

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“..the US sees the Chinese effort as a ploy to dilute US control of the banking system..”

UK Support For China-Backed Asia Bank Prompts US Concern (BBC)

The US has expressed concern over the UK’s bid to become a founding member of a Chinese-backed development bank. The UK is the first big Western economy to apply for membership of the Asian Infrastructure Investment Bank (AIIB). The US has raised questions over the bank’s commitment to international standards on governance. “There will be times when we take a different approach,” a spokesperson for Prime Minister David Cameron said about the rare rebuke from the US. The AIIB, which was created in October by 21 countries, led by China, will fund Asian energy, transport and infrastructure projects.

The UK insisted it would demand the bank adhere to strict banking and oversight procedures. “We think that it’s in the UK’s national interest,” said Mr Cameron’s spokesperson. Pippa Malmgren, a former economic advisor to US President George W Bush, told the BBC that the public chastisement from the US indicates the move might have come as a surprise. “It’s not normal for the United States to be publically scolding the British,” she said, adding that the US’s focus on domestic affairs at the moment could have led to the oversight. However, Mr Cameron’s spokesperon said UK Chancellor George Osborne did discuss the measure with his US counterpart before announcing the move.

In a statement announcing the UK’s intention to join the bank, Mr Osborne said that joining the AIIB at the founding stage would create “an unrivalled opportunity for the UK and Asia to invest and grow together”. The hope is that investment in the bank will give British companies an opportunity to invest in the world’s fastest growing markets. But the US sees the Chinese effort as a ploy to dilute US control of the banking system, and has persuaded regional allies such as Australia, South Korea and Japan to stay out of the bank.

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He’s already ‘back’. Who starts this sort of thing?

Russia In A Spin As Its Putin Goes Missing (FT)

He is the most talked-about person in Russia – even when he’s nowhere to be seen. Moscow is buzzing with talk about the whereabouts of Vladimir Putin who took a week-long hiatus from public appearances from March 5, fuelling wild rumours about the president’s health, political future and love life. On Twitter, critics of the president have been tweeting morbid jokes and memes under the hashtag “Putin is dead”, while Russian bloggers and pundits pore over the official Kremlin website looking for discrepancies in Mr Putin’s alleged work schedule.

Andrei Illarionov, a former adviser to Mr Putin now based in Washington, claimed in a blog post that Mr Putin had fallen victim to a palace coup and fled abroad, while Konstantin Remchukov, an influential Moscow editor, alleged that the state-owned oil company Rosneft’s chairman Igor Sechin was about to get the boot, indicating that a big government shake-up was looming. In Switzerland, the news outlet Blitz.ch ran a report claiming that Alina Kabaeva, a former gymnast and Duma deputy who has been linked romantically with Mr Putin, had given birth to a child this week in Switzerland’s Italian-speaking region of Ticino, suggesting that the Russian president had taken time off for a “baby mission”.

The Kremlin’s press service has brushed off the various allegations, with Mr Putin’s spokesman repeatedly insisting that the president’s health is “fine”. On Friday, the Kremlin announced that he would be meeting the president of Kyrgyzstan – publicly – in St Petersburg on Monday. Later, Russian state television channels co-ordinated to show Mr Putin at a Kremlin meeting with the head of Russia’s supreme court. However, at least one blogger claimed that the footage was dated, noting that the president’s desk had a clock on it that was supposed to have been given away as a gift a few days earlier.

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Great read.

Is EU Army Intended To Reduce US Influence In Europe? (RT)

Germany itself is the ultimate prize for the US in the conflict in Ukraine, because Berlin has huge sway in the direction that the EU turns. The US will continue to stoke the flames in Ukraine to destabilize Europe and Eurasia. It will do what it can to prevent the EU and Russia from coming together and forming a “Common Economic Space” from Lisbon to Vladivostok, which is dismissed as some type of alternative universe in the Washington Beltway. The Fiscal Times put it best about the different announcements by US officials to send arms to Ukraine. “Given the choreographed rollout, Washington analysts say, in all likelihood this is a public-opinion exercise intended to assure support for a weapons program that is already well into the planning stages,” the news outlet wrote on February 9.

After the Munich Security Conference it was actually revealed that clandestine arms shipments were already being made to Kiev. Russian President Vladimir Putin would let this be publicly known at a joint press conference with Hungarian Prime Minister Viktor Orban in Budapest when he said that weapons were already secretly being sent to the Kiev authorities. In the same month a report, named ‘Preserving Ukraine’s Independence, Resisting Russian Aggression’, was released arguing for the need to send arms to Ukraine — ranging from spare parts and missiles to heavy personnel — as a means of ultimately fighting Russia. This report was authored by a triumvirate of leading US think-tanks, the Brookings Institute, the Atlantic Council, and the Chicago Council on Global Affairs — the two former being from the detached ivory tower “think-tankistan” that is the Washington Beltway.

This is the same clique that has advocated for the invasions of Iraq, Libya, Syria, and Iran. It is in the context of divisions between the EU and Washington that the calls for an EU military force are being made by both the European Commission and Germany. The EU and Germans realize there is not much they can do to hamper Washington as long as it has a say in EU and European security. Both Berlin and a cross-section of the EU have been resentful of how Washington is using NATO to advance its interests and to influence the events inside Europe. If not a form of pressure in behind the door negotiations with Washington, the calls for an EU military are designed to reduce Washington’s influence in Europe and possibly make NATO defunct.

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Can’t let John Gray go unnoticed.

Steven Pinker Is Wrong About Violence And War (John Gray)

If great powers have avoided direct armed conflict, they have fought one another in many proxy wars. Neocolonial warfare in south-east Asia, the Korean war and the Chinese invasion of Tibet, British counter-insurgency warfare in Malaya and Kenya, the abortive Franco-British invasion of Suez, the Angolan civil war, the Soviet invasions of Hungary, Czechoslovakia and Afghanistan, the Vietnam war, the Iran-Iraq war, the first Gulf war, covert intervention in the Balkans and the Caucasus, the invasion of Iraq, the use of airpower in Libya, military aid to insurgents in Syria, Russian cyber-attacks in the Baltic states and the proxy war between the US and Russia that is being waged in Ukraine – these are only some of the contexts in which great powers have been involved in continuous warfare.

While it is true that war has changed, it has not become less destructive. Rather than a contest between well-organised states that can at some point negotiate peace, it is now more often a many-sided conflict in fractured or collapsed states that no one has the power to end. The protagonists are armed irregulars, some of them killing and being killed for the sake of an idea or faith, others from fear or a desire for revenge and yet others from the world’s swelling armies of mercenaries, who fight for profit. For all of them, attacks on civilian populations have become normal. The ferocious conflict in Syria, in which methodical starvation and the systematic destruction of urban environments are deployed as strategies, is an example of this type of warfare.

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Home Forums Debt Rattle March 15 2015

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  • #19854

    NPC Fred Haas, Rhode Island Avenue NE, Washington, DC 1924 • Welcome To A Fed Without Patience (MarketWatch) • US Debt To Hit Legal Limit Again On Mon
    [See the full post at: Debt Rattle March 15 2015]

    #19856

    E. Swanson
    Participant

    RE: Russia In A Spin As Its Putin Goes Missing (FT)

    To which Ilargi replied: “He’s already ‘back’. Who starts this sort of thing?”

    Well, the WaPo ran a commentary yesterday.

    And the BBC has another, updated today:

    As the BBC article notes, the world will be watching the planned meeting between meeting between the Russian and Kyrgyz presidents tomorrow. If Putin doesn’t show up, things may get even more interesting…

    #19857

    John Day
    Participant

    Michael Hayden is really an ideal poster-ghoul for the neocon-commanded military-industrial-complex.
    Merkel “should know her place”, but places change and no battle plan survives the first contact with the enemy, and so on.
    There have been lots of different character assassination attempts against Ray McGovern, because he is damned awkward for the empire, and so clear and analytical, and has had a lot of facts supporting him.
    In Ukraine, as in Greece, as in all of Europe and our whole world, this is a really important time to NOT go to war, as a means to work it all out.
    We, the human critters on this finite planet, can see that there is less and less to keep going, that acceleration has changed directions already.
    Shooting at each other as we plummet from Seneca’s cliff is the proper analogy right now.
    Big test, 100% of grade, open-book…

    #19858

    John Day
    Participant

    This Just In:
    Global CO2 emissions in 2014 were unchanged from 2013.
    “CO2 decoupled from economy” is the idiotic interpretation, of course.
    Whaddaya think? Still 100% correlated?

    #19864

    Gravity
    Participant

    Gravity is a reloaded algorithm.

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