Jul 262017
 
 July 26, 2017  Posted by at 9:24 am Finance Tagged with: , , , , , , , , ,  


Jackson Pollock Greyed Rainbow 1953

 

The Rise And Fall Of The Property-Owning Democracy (FCFT)
Case-Shiller Home Prices Disappoint But Hit New Record High (ZH)
Australian Housing Affordability the Worst in 130 Years (Soos/David)
There Are More ‘Zombie’ Companies In Europe Now Than Pre-Lehman (CNBC)
Netherlands and UK Are Biggest Channels For Corporate Tax Avoidance (G.)
US Sanctions Have Taken A Big Bite Out Of Russia’s Economy (CNBC)
The Value of Everything (Jim Kunstler)
Bolivia’s President Declares ‘Total Independence’ from World Bank and IMF (AHT)
Germany Fails To Honour Its Part Of The Greek Bailout Deal (Bilbo)
Insolvent Greece Goes To Market 2.0 (Varoufakis)
Nine Out Of 10 People Call For ‘Plastic-Free Aisle’ In Supermarkets (Ind.)
Sperm Counts In The West Plunge By 60% In 40 Years (Ind.)

 

 

The article is somewhat confusing to me, bear of little brain and unpopular in China. But it’s good to make the point that bubbles spark poverty.

The Rise And Fall Of The Property-Owning Democracy (FCFT)

Sometime in the late 1980s, a friend who was on the libertarian right of the Conservative Party explained the idea of the property-owning democracy to me. The point, he said, was to detach the respectable working class from their poorer neighbours, encourage them to identify with the middle-class and thereby turn them into Tories. It worked for a while. Middle earners had been doing relatively well since the 1970s and home ownership was within the reach of many once mortgages became more readily available. Helped along by cheap council house sales, home ownership rose. In recent years, though, things have started shifting back the other way. The property-owning democracy is now looking like a one-off event rather than the ongoing process it was meant to be. Property analyst Neal Hudson pointed out that, as a proportion of all tenure, home ownership peaked in 2003 but mortgage ownership peaked in 1996. As older property owners paid off their housing debts, they were not being replaced at the same rate by new mortgagors.

[..] As the Resolution Foundation comments: The typical mortgagor AHC income is now twice that of the typical social renter, and over the past decade this income has grown by 17% compared to just 4% growth for the typical private renter. Even more than was the case before the financial crisis, the living standards split between those who own their own home and those who do not has become a key divide. While the proportion of households owning their own homes has fallen generally, that decline has been sharper among those on low to middle incomes. (Defined by the Resolution Foundation as working-age households with someone in work but with less than the median household income.) In the mid 1990s, over half of those on low to middle incomes were mortgagors. Now that has fallen to a third. Over the same period, private renting among this group rose.

Last week’s report on poverty and inequality by the Institute for Fiscal Studies notes that most of those in poverty (defined as income less than 60% of the median) are now from households where someone is in work. “[R]elative poverty among children and working-age adults has increased and, over the past 20 years or so, has increasingly become an in-work phenomenon due to declines in worklessness, low earnings growth and widening earnings inequality.”

Read more …

What bubble?

Case-Shiller Home Prices Disappoint But Hit New Record High (ZH)

Great news ‘Murica – your house has never been worth more than it was in May (according to Case-Shiller’s national home price index). On the slightly less silver-lining side of the equation, April’s 0.28% gain in price was revised to 0.18% MoM drop and May’s proint disappointed at just 0.1% rise MoM. The 20-city property values index increased 5.7% y/y (est. 5.8%). All cities in the index showed year-over-year gains, led by a 13.3% advance in Seattle, an 8.9% increase in Portland and a 7.9% gain in Denver.

After seasonal adjustment, Seattle had the biggest month-over-month increase, at 0.9%, while New York posted a 0.6% decline. “Home prices continue to climb and outpace both inflation and wages,” David Blitzer, chairman of the S&P index committee, said in a statement. “The small supply of homes for sale, at only about four months’ worth, is one cause of rising prices. New home construction, higher than during the recession but still low, is another factor in rising prices.”

Read more …

Just keep paying the piper.

Australian Housing Affordability the Worst in 130 Years (Soos/David)

The astronomical bubble in Australian housing prices has generated plenty of commentary regarding the current lack of affordability. This state of affairs clearly concerns aspiring home buyers everywhere, and Sydney and Melbourne in particular. First home buyers (FHBs) face almost insurmountable odds: the highest price to income and deposit to income ratios, the lowest savings rates, runaway dwelling prices, weak wage growth, including a political and economic establishment hell-bent on ensuring land prices keep on inflating no matter the wider cost to the economy. The legion of vested interests – basically 99% of commentators – choose to contend housing is actually more affordable today than back in the days of high mortgage interest rates, especially when rates peaked at 17% in 1989.

This is demonstrated by the standard mortgage payment to household income formula shown above, assuming 80% loan to value ratio (LVR). Their contention is bogus, however, because the metric is a static one, displaying mortgage payments to income at a particular point in time. The peak in 1989, for instance, is very high if, and only if, prices, interest rates and incomes remain constant over the life of the mortgage. Yet, these variables change by the next period. So, a more dynamic approach is required to assess housing affordability. The correct method was advocated by Glenn Stevens in 1997, Guy Debelle in 2004 and other economists like Dean Baker, who identified the US housing bubble and predicted the Global Financial Crisis in 2002. The important factor to consider is the effect wage inflation has upon mortgage payments.

While high mortgage interest rates result in large mortgage payments relative to income, this only occurs in the early years of the mortgage as high wage growth inflates away the burden. In contrast, borrowers facing high housing prices with low interest rates and poor wage growth face a greater burden across the life of the mortgage due to greater payments to income. This housing affordability analysis is applied to long-term annual data between 1880 and 2016, anchored to the median house price at an LVR of 80% at the start of each decade thereon. While data on mortgage interest rates and wage growth for the years after 2016 cannot be known, they are assumed to hold still at the present rates: 5.4% for the mortgage interest rate and 1.4% for wages. The following chart illustrates the outcome of applying this method, demonstrating the proportion of aggregate mortgage payments to household income over the 25 years of the mortgage. The results are overpowering.

Read more …

Well, that’s what Draghi’s QE guarantees.

There Are More ‘Zombie’ Companies In Europe Now Than Pre-Lehman (CNBC)

The ECB needs to beware of raising interest rates too quickly as there are a significant number of “zombie firms” in Europe that have become too dependent on cheap credit, according to analysis by the Bank of America Merrill Lynch. Barnaby Martin, head of European Credit Strategy at BofA Merrill Lynch, said businesses in Europe which have benefited from the ECB’s corporate bond purchase program would struggle once the bank raises interest rates, expected sometime in 2018. “The worst kept secret in the market is Mario Draghi is going to be tapering monetary policy next year and yet last week he was super, super dovish so I think that we’ve forgotten that monetary policy in Europe is on its way out,” he told CNBC on Tuesday, adding “there’s clearly political pressure for him to move away from this extraordinary era.”

“So the question becomes ‘can we handle a rapid rise in interest rates?’,” he said. ECB stimulus measures as part of its quantitative easing program designed to boost the European economy currently amount to €60 billion ($69.9 billion) a month. Some of this money goes into purchasing corporate bonds. While these purchases have enabled companies to continue to operate and invest, aiding a recovery in the European economy, the bank’s purchases have been credited for keeping ailing companies alive, hence the name “zombies.” The ECB started purchasing corporate bonds in June 2016 as part of its “corporate sector purchase program” (CSPP) and, as of June 7, 2017, its CSPP holdings stood at €92 billion, the bank said.

In a note examining “The rise of the Zombies” BofA Merrill Lynch’s credit strategists Martin, Ionnis Angelakis and Souhair Asba noted that 9% of non-financial companies in Europe (by market cap of Stoxx 600) are zombies, with “very weak interest coverage metrics.” “Note that this is still quite a high number: It was around 6% pre-Lehman, and fell to 5% in late 2013 after the peripheral crisis had faded,” they said. “The plethora of monetary support in Europe over the last 5 years has allowed companies with weak profitability to continue to refinance their debt and stave off defaults.” The analyst team also noted that bond issuance had been concentrated in “the hands of a few.” “Year-to-date, the top 20 bonds issuers have accounted for 40% of supply. In 2015 and 2016, the number was closer to 25%. The result has been that “superfirms” have been quietly building across the credit market,” they noted.

Read more …

“The Netherlands says they won’t let the UK be an offshore tax haven. That’s because they don’t want them taking their business.”

Netherlands and UK Are Biggest Channels For Corporate Tax Avoidance (G.)

Almost 40% of corporate investments channelled away from authorities and into tax havens travel through the UK or the Netherlands, according to a study of the ownership structures of 98m firms. The two EU states are way ahead of the rest of the world in terms of being a preferred option for corporations who want to exploit tax havens to protect their investments. The Netherlands was a conduit for 23% of corporate investments that ended in a tax haven, a team of researchers at the University of Amsterdam concluded. The UK accounted for 14%, ahead of Switzerland (6%), Singapore (2%) and Ireland (1%). Every year multinationals avoid paying £38bn-£158bn in taxes in the EU using tax havens. In the US, tax evasion by multinational corporations via offshore jurisdictions is estimated to be at least $130bn (£99bn) a year.

The researchers reported that there were 24 so-called “sink” offshore financial centres where foreign capital was ultimately stored, safe from the tax authorities. Of those, 18 are said to have a current or past dependence to the UK, such as the Cayman Islands, Bermuda, the British Virgin Islands and Jersey. The tax havens used correlated heavily to which conduit country was chosen by the multinational’s accountants. The UK is a major conduit for investments going to European countries and former members of the British Empire, such as Hong Kong, Jersey, Guernsey or Bermuda, reflecting the historical links and tax treaties enjoyed by firms setting up in Britain. The Netherlands is a principal conduit for investment ending in Cyprus and Bermuda, among others. Switzerland is used as a conduit to Jersey. Ireland is the route for Japanese and American companies to Luxembourg.

[..] Dr Eelke Heemskerk, who led the research, said that the work showed the importance of developed countries cleaning up their financial sectors. He said: “In the context of Brexit, where you have the UK threatening, unless they get a deal, to change their model to be attractive to companies who want to protect themselves from taxes, well, they are already doing it. “The Netherlands says they won’t let the UK be an offshore tax haven. That’s because they don’t want them taking their business.”

Read more …

Russia’s getting an invaluable lesson in self-suffciency. There’s nothing like it.

US Sanctions Have Taken A Big Bite Out Of Russia’s Economy (CNBC)

Congress moved Tuesday to step up sanctions on a shrinking Russian economy that is already struggling under the weight of low oil prices, high inflation and a battered currency that has sent capital fleeing. In response to Moscow’s interference in the 2016 U.S. presidential election, the House voted overwhelmingly to tighten existing economic sanctions imposed in 2014 following the Russian invasion of Crimea. Among other things, the measures freeze assets and prohibit transactions with specific Russian companies and individuals, restrict financial transactions with Russian firms, and ban certain exports that are used in oil and gas exploration or have possible military uses.

Those 2014 U.S. sanctions were paired with related measures imposed by the European Union, which placed restrictions on business with Russia’s financial, defense and energy sectors. Today, Russia’s economy is still feeling the harsh impact of those measures, which coincided with a crash in global oil prices that cut deeply into revenues from the country’s main export. The loss of oil revenues – a drop of as much as 60%, according to a 2017 Congressional Research Service report — helped spark a collapse in Russia’s currency, the ruble, sending the prices of Russian consumer goods soaring. The Russian economy has also been hurt by a wave of capital flight out of the country, as individual Russians sought to move money offshore and convert their shrinking rubles to dollars and euros to protect their wealth. That money flow slowed in 2014 as U.S. and European sanctions took hold.

Though U.S. sanctions have put pressure on the Russian economy, the impact on American business has been limited because Russia makes up less than 1% of U.S. exports. Only six U.S states count Russia as a significant market for goods and services. Washington, the most reliant, sells roughly 1% of its total exports to Russia, consisting mostly of machinery and farm products. That’s half the level before the 2014 sanctions took effect. European nations, which export greater volumes to Russia than the U.S., imposed their own set of sanctions response to the Crimean annexation.

Read more …

“The floundering non-elite masses have not learned the harsh lesson of our time that the virtual is not an adequate substitute for the authentic..”

The Value of Everything (Jim Kunstler)

We are looking more and more like France on the eve of its revolution in 1789. Our classes are distributed differently, but the inequity is just as sharp. America’s “aristocracy,” once based strictly on bank accounts, acts increasingly hereditary as the vapid offspring and relations of “stars” (in politics, showbiz, business, and the arts) assert their prerogatives to fame, power, and riches — think the voters didn’t grok the sinister import of Hillary’s “it’s my turn” message? What’s especially striking in similarity to the court of the Bourbons is the utter cluelessness of America’s entitled power elite to the agony of the moiling masses below them and mainly away from the coastal cities. Just about everything meaningful has been taken away from them, even though many of the material trappings of existence remain: a roof, stuff that resembles food, cars, and screens of various sizes.

But the places they are supposed to call home are either wrecked — the original small towns and cities of America — or replaced by new “developments” so devoid of artistry, history, thought, care, and charm that they don’t add up to communities, and are so obviously unworthy of affection, that the very idea of “home” becomes a cruel joke. These places were bad enough in the 1960s and 70s, when the people who lived in them at least were able to report to paying jobs assembling products and managing their distribution. Now those people don’t have that to give a little meaning to their existence, or cover the costs of it. Public space was never designed into the automobile suburbs, and the sad remnants of it were replaced by ersatz substitutes, like the now-dying malls. Everything else of a public and human associational nature has been shoved into some kind of computerized box with a screen on it.

The floundering non-elite masses have not learned the harsh lesson of our time that the virtual is not an adequate substitute for the authentic, while the elites who create all this vicious crap spend millions to consort face-to-face in the Hamptons and Martha’s Vineyard telling each other how wonderful they are for providing all the artificial social programming and glitzy hardware for their paying customers. The effect of this dynamic relationship so far has been powerfully soporific. You can deprive people of a true home for a while, and give them virtual friends on TV to project their emotions onto, and arrange to give them cars via some financing scam or other to keep them moving mindlessly around an utterly desecrated landscape under the false impression that they’re going somewhere — but we’re now at the point where ordinary people can’t even carry the costs of keeping themselves hostage to these degrading conditions.

Read more …

The kind of independence that tends to be bad for a man’s health.

Bolivia’s President Declares ‘Total Independence’ from World Bank and IMF (AHT)

Bolivia’s President Evo Morales has been highlighting his government’s independence from international money lending organizations and their detrimental impact the nation, the Telesur TV reported. “A day like today in 1944 ended Bretton Woods Economic Conference (USA), in which the IMF and WB were established,” Morales tweeted. “These organizations dictated the economic fate of Bolivia and the world. Today we can say that we have total independence of them.” Morales has said Bolivia’s past dependence on the agencies was so great that the IMF had an office in government headquarters and even participated in their meetings. Bolivia is now in the process of becoming a member of the Southern Common Market, Mercosur and Morales attended the group’s summit in Argentina last week.

Bolivia’s popular uprising known as the The Cochabamba Water War in 2000 against United States-based Bechtel Corporation over water privatization and the associated World Bank policies shed light on some of the debt issues facing the region. Some of Bolivia’s largest resistance struggles in the last 60 years have targeted the economic policies carried out by the IMF and the World Bank. Most of the protests focused on opposing privatization policies and austerity measures, including cuts to public services, privatization decrees, wage reductions, as well the weakening of labor rights. Since 2006, a year after Morales came to power, social spending on health, education, and poverty programs has increased by over 45%.

Read more …

A tour de force by Bill Mitchell. Germany’s profiting so much off of Greece’s despair that it can hide its own economic pitholes with it.

Germany Fails To Honour Its Part Of The Greek Bailout Deal (Bilbo)

Effectively the “German Federal Government – through KfW” is providing funds to Greece as part of the bailout. On May 20, 2014, the KfW issued a further press statement – Institution for Growth in Greece (IfG) – which further details the way in which German government bailout support is channeled through the KfW. For example, in relation to the “three planned IfG sub-funds … The Hellenic Republic and KfW — on behalf of the German Federal Government — will each contribute EUR 100 million in funding debt to this sub-fund.” Clear enough. The Süddeutsche Zeitung article says that since 2010, these loans granted to Greece through the KfW have generated 393 million euros of interest income net of refinancing costs [..] A handy sum. And what is more – the profits generated have not been transferred to the Greek government.

Further gains were made on the Greek bailouts via the ECB’s Securities Market Program (SMP), which has generated German gains of around $€952 million, through ECB distributions of the profits to the Member State central banks. A similar story appeared in the English-version of the Handelsbatt next day (July 12, 2017) – Germany Profits From Greek Debt Crisis. It essentially sourced the Süddeutsche Zeitung and made the story more accessible (repeating it in English). It says that: “The German government has long been accused by critics of profiting from Greece’s debt crisis. Now there are some new numbers to back it up: Loans and bonds purchased in support of Greece over nearly a decade have resulted in profits of €1.34 billion for Germany’s finance ministry.”

The issue became public because the Greens parliamentary representatives have challenged the morality of the German government’s decision not to redistribute the profits and the role played by the KfW. The Greens representative was reported as saying that: “The profits from collecting interest must be paid out to Greece … Wolfgang Schäuble cannot use the Greek profits to clean up Germany’s federal budget …” It has long been claimed that “Greece’s crisis has helped” Schäuble keep the German fiscal balance in surplus. The KfW have been part of that. We knew back in 2015 that the KfW was helping the Finance Ministry generate fiscal surpluses.

On March 5, 2015, the German daily newspaper Rheinische Post published a report – So geht es den Griechen wirklich – presented a summary of a 40-page document that the German Finance Ministry had provided in response to a demand for information from the Linksfraktion (German Left Party Die Linke). The Finance Ministry document conceded that: “Between 2010 to 2014, the KfW has paid out around 360 million euro in revenues to the German government and in the coming years the federal government is expecting around 20 million euro per year on interest revenues.”

Read more …

The Greek economy is worse than ever, but now people trust it?

Insolvent Greece Goes To Market 2.0 (Varoufakis)

Why do I refuse to be impressed by the news of Greece’s return to the markets? “It is because the Greek state and the Greek banks remain deeply insolvent. And, their return to the money markets is a harbinger of the next terrible phase of Greece’s crisis, rather than a cause for celebration”. The above was my answer in a BBC interview on 9th April… 2014! It is also the only answer that fits today’s announcement of Greece’s new bond issue. Indeed, why script a new article, when that old post offers a most helpful response to the question: “What should the world think of Greece’s new bond issue?”

The only thing I need to add to these circa 2014 posts is this: The Tsipras government today is simply rolling over precisely the same bond that the Samaras-Venizelos-Stournaras government issued in 2014 – the subject matter of my criticism above. This is a remarkable U-turn by Mr Tsipras and his ministers. In 2014 they had sided entirely with my criticism of the then government’s argument that Greece’s return to the markets, with the issue of that one bond, was a sign the country was achieving escape velocity from the gravitational pull of its debt-deflationary crisis. Now, they are not only parroting the same arguments as Samaras-Venizelos-Stournaras but they are, lo and behold, rolling over the same bond! I rest my case.

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It’s not that hard.

Nine Out Of 10 People Call For ‘Plastic-Free Aisle’ In Supermarkets (Ind.)

Nine out of 10 people want supermarkets to introduce a “plastic-free aisle”, according to a new poll amid rising concern about pollution. The survey – of 2,000 British adults by Populus – was commissioned by campaign group A Plastic Planet, which said it was clear that the public wanted an alternative to “goods laden with plastic packaging”. Evidence of the synthetic substance’s harmful effects on the natural world is growing. Since 1950, humans have produced 8.3 billion tons of the stuff, with 6.3 billion tons being sent to landfill sites or simply being dumped in what scientists described as an “uncontrolled experiment” on the planet. Plastic, which acts like a magnet for toxic chemicals in the environment, breaks down into tiny pieces that are capable of passing through animals’ gut walls and into their body tissue.

The UN warned in a report last year that “the presence of microplastic in foodstuffs could potentially increase direct exposure of plastic-associated chemicals to humans and may present an attributable risk to human health”. A third of seabirds in the North Sea were also found to be suffering “widespread breeding failure”, largely because of plastic waste. The new poll found 91% of people supported aisles free from plastic packaging and 81% said they were concerned “about the amount of plastic packaging that is thrown away in the UK”. Sian Sutherland, a co-founder of A Plastic Planet, said: “It’s becoming increasingly clear that the Great British public wants a fresh alternative to goods laden with plastic packaging. Too much of our plastic waste ends up in oceans and landfill.

Read more …

Am I a bad person for thinking that maybe this isn’t such a bad thing? Who wants more of us?

I like the term “semen parameters”. Name for a band. Double billing with Pussy Riot.

Sperm Counts In The West Plunge By 60% In 40 Years (Ind.)

Sperm counts have plunged by nearly 60% in just 40 years among men living in the West, according to a major review of scientific studies that suggests the modern world is causing serious damage to men’s health. Pesticides, hormone-disrupting chemicals, diet, stress, smoking and obesity have all been “plausibly associated” with the problem, which is associated with a range of other illnesses such as testicular cancer and a generally increased mortality rate. The researchers who carried out the review said the rate of decline had showed no sign of “levelling off” in recent years. The same trend was not seen in other parts of the world such as South America, Africa and Asia, although the scientists said fewer studies had been carried out there.

One expert commenting on the study said it was the “most comprehensive to date”, and described the figures as “shocking” and a “wake-up call” for urgent research into the reasons driving the fall. Writing in the journal Human Reproduction Update, the researchers – from Israel, the US, Denmark, Brazil and Spain – said total sperm count had fallen by 59.3% between 1971 and 2011 in Europe, North America, Australia and New Zealand. Sperm concentration fell by 52.4%. “Sperm count and other semen parameters have been plausibly associated with multiple environmental influences, including endocrine disrupting chemicals, pesticides, heat and lifestyle factors, including diet, stress, smoking and body-mass index,” the paper said. “Therefore, sperm count may sensitively reflect the impacts of the modern environment on male health throughout the life course.”

Read more …

Mar 182015
 
 March 18, 2015  Posted by at 6:25 am Finance Tagged with: , , , , , , , , , ,  


DPC Station at foot of incline, American Falls, Niagara Falls 1890

The US Economy Just Keeps Disappointing (Bloomberg)
‘Hell Will Break Loose’ If Fed Loses Patience (MarketWatch)
Options Market Signals 2007-Like Crash Risk, Goldman Warns (Zero Hedge)
US Housing Starts Plunge Most in Four Years (Bloomberg)
New BoE Regulator Warns Of Risks From US Rate Hikes, Dollar Strength (Reuters)
Europeans Defy US To Join China-Led Development Bank (FT)
Debunking $1.4 Trillion Europe Debt Myth in Post-Heta Age (Bloomberg)
Greek PM Tsipras To Meet Merkel, Draghi In Brussels On Friday (Kathimerini)
Greece WWII Reparations Cause Split Among German MPs (RT)
Athens Furious At Eurogroup Suggestion Of Capital Controls (Kathimerini)
Greece Grabs Cash as More Than $2 Billion in Payouts Loom (Bloomberg)
Greece’s Euro Exit Seems Inevitable (Bloomberg)
EU Warns Against Bills On Debt Settlement, Humanitarian Crisis (Kathimerini)
Japan Exports Slow Sharply In February But Beat Expectations (CNBC)
China New Home Prices Post Sixth Consecutive Monthly Decline (CNBC)
BoE’s Brazier Says Greek Shock Could Trigger Market Correction (Bloomberg)
EU Support for Russia Sanctions Is Waning (Bloomberg)
ECB Celebration of Its New $1.4 Billion Tower Spoiled by Protests (Bloomberg)
Bolivia: A Country That Dared to Exist (Benjamin Dangl)

“..relative to where economists thought we would be, the U.S. is missing by a large margin..”

The US Economy Just Keeps Disappointing (Bloomberg)

Last week, we reported on how the U.S. economy was the most disappointing major economy in the world based on the Bloomberg Economic Surprise Index, which measures incoming economic data against economist expectations. These measures tend to move in cycles, as they reflect both the absolute economic data as well as the optimism or pessimism of the forecasters, which is in itself cyclical. For the U.S. we keep driving lower, hitting depths not seen since the economic crisis. Again, this doesn’t mean that the economy is anywhere near as bad as it was then. But whether it’s a slowdown caused by the harsh winter or something else, relative to where economists thought we would be, the U.S. is missing by a large margin.

Read more …

“On the other hand, if Janet is patient and says so, we’re all going to make an absurd amount of money.”

‘Hell Will Break Loose’ If Fed Loses Patience (MarketWatch)

Daytraders tend to relish when the market bounces around like a leprechaun on a hot griddle. But for everybody else, it’s tense times in the trading pits these days. While a calm often settles over markets in the days leading into a hyped-up Fed statement, recent action says to gird for more rockiness. Dips are being bought and profits are being scalped. Yet for all the sparks flying on the S&P, its up only 1% so far this year. That’s better than down, of course, unless you’re betting the “don’t pass” line. But compare that with the 24% explosion to the upside on Germany’s main index, and you’d be pardoned for suffering Teutonic envy. Shanghai, while no Germany, is also doing better than U.S. stocks, and a tandem of brokers are feeling the bull run in China has a long way to run (see call of the day).

Nevertheless, the U.S. is still firmly entrenched in its own bull party, despite recent queasiness. In fact, we’re just about 2,200 days into it. Another two months, and this bull market will overtake the one from 1974-1980 as the third-longest since 1929, according to Bloomberg. Getting there just might hinge on the Fed’s next move. It could go either way, according to the Fly from the iBankCoin blog, who spoke of extremes. “If we find out this Wednesday that [Janet Yellen] is not, in fact, patient, hell will break loose and 66 seals of hell will be broken — paving way for actual centaurs to roam, wall-kicking people in the faces with their hooves,” he wrote. “On the other hand, if Janet is patient and says so, we’re all going to make an absurd amount of money.”

Read more …

“..an epic decoupling of put prices and S&P P/E ratios”

Options Market Signals 2007-Like Crash Risk, Goldman Warns (Zero Hedge)

Although US equity prices have demonstrated a remarkable propensity to completely disregard apparently unimportant things like macro fundamentals, forward earnings estimates, and top-line growth projections, we’ve long argued that eventually, reality will come calling and the farther stretched valuations become in the meantime, the more painful the correction will be. As we noted on Sunday, the cracks are starting to form as DB became the first sell-side firm to predict that EPS will in fact not grow in 2015, prompting us to remark that “EPS growth in 2015 [is] now a wash (if not negative), which implies the only upside for the S&P 500 will once again come from substantial multiple expansion.” Against this backdrop of declining revenues, declining earnings, and pitiable economic projections (thanks a lot Atlanta Fed Nowcast), we bring you yet another sign that a “correction” may indeed be in the cards: an epic decoupling of put prices and S&P P/E ratios. Here’s Goldman:

Long-dated crash put protection costs on the SPX have more than doubled over the past 9 months. We believe it is an important development to watch as it implies investors are increasingly concerned about downside risk even as US equities trade near all-time highs. Based on our conversations with investors over the past few months, it appears the increase in long-dated put prices has largely gone unnoticed among equity and credit investors. In fact, Investment Grade credit spreads have actually tightened slightly over the same period. The rise in long-dated equity put prices may signal an increasing fear that a substantial market correction is on the horizon, despite low short-term put prices which suggest low probably of a near-term drawdown vs history.

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“It was just the weather, basically..”: “Starts of single-family properties dropped 14.9%..” “New construction slumped a record 56.5% in the Northeast..”

US Housing Starts Plunge Most in Four Years (Bloomberg)

Housing starts slumped in February by the most in four years as bad winter weather in parts of the U.S. prevented builders from initiating new projects. Work began on 897,000 houses at an annualized rate, down 17% from January and the fewest in a year, the Commerce Department reported Tuesday in Washington. The median estimate of 80 economists surveyed by Bloomberg called for 1.04 million. “It was just the weather, basically,” said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama. Still, “my view of the recovery in single-family housing is that it’s coming more gradually than others think.” An increase in building permits was driven by applications for multifamily units, indicating single-family construction, the biggest part of the market, will keep struggling.

While stronger hiring and low borrowing costs have helped the industry advance, sales remain challenged by limited supply of cheaper homes and sluggish wage growth. The median estimate of 81 economists in the Bloomberg survey called for 1.04 million starts. Estimates ranged from annualized rates of 975,000 to 1.08 million after a previously reported January pace of 1.07 million. Building permits climbed 3% to a 1.09 million annualized pace, the fastest since October, after a 1.06 million rate a month earlier. They were projected at 1.07 million, according to the Bloomberg survey median. Permits for single-family dwellings were the lowest since May.

Stock-index futures held losses after the figures. The contract on the Standard & Poor’s 500 Index maturing in June dropped 0.3% to 2,063.3. Starts of single-family properties dropped 14.9% to a 593,000 rate in February. Construction of multifamily projects such as condominiums and apartment buildings decreased 20.8% to an annual rate of 304,000. New construction slumped a record 56.5% in the Northeast and fell 37%, the most since January 2014, in the Midwest. Starts also dropped in the South and West, indicating weather was only partly to blame.

Read more …

Hollow.

New BoE Regulator Warns Of Risks From US Rate Hikes, Dollar Strength (Reuters)

The start of U.S. interest rate rises could inject volatility into global financial markets and create risks for Britain’s financial stability, a new member of the Bank of England’s top panel of financial regulators said on Tuesday. Alex Brazier, who took a seat on the BoE’s Financial Policy Committee on Monday, cited the normalisation of U.S. borrowing costs as one of the main global risks for markets. The FPC was set up in 2013 after the failure of Britain’s financial regulation to protect the country against the 2007-08 financial crisis. Last year it imposed curbs on large mortgages and required banks to hold more reserves against potential losses. Brazier – in remarks which share concerns expressed by other BoE officials – said rate hikes by the U.S. Federal Reserve or a change in perceptions of their timing and scale would reflect good news about the U.S. economic recovery.

“However, it would probably reduce the extent of the search for yield and prompt a reduction in global risk appetite,” Brazier said in answer to questions from members of parliament who are reviewing his appointment. Brazier joined the BoE in 2001 after university, and most recently served as principal private secretary to Governor Mark Carney and his predecessor, Mervyn King. “Both of them pushed me to the edges of my limits,” Brazier said, noting that his hair had turned prematurely grey. Brazier is now the BoE’s executive director for financial stability, strategy and risk. This is a new role created last year by Carney as part of a shake-up of the bank. BoE chief economist Spencer Dale briefly held the job before he quit to become chief economist for oil company BP.

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“.. the White House criticism of Britain was a case of sour grapes: “They couldn’t have got congressional approval to join the AIIB, even if they wanted to.”

Europeans Defy US To Join China-Led Development Bank (FT)

France, Germany and Italy have all agreed to follow Britain’s lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution. The decision by the three European governments comes after Britain announced last week that it would join the $50bn Asian Infrastructure Investment Bank, a potential rival to the Washington-based World Bank. Australia, a key US ally in the Asia-Pacific region which had come under pressure from Washington to stay out of the new bank, has also said that it will now rethink that position.

The European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside and pushed for higher lending standards. The AIIB, which was formally launched by Chinese President Xi Jinping last year, is one element of a broader Chinese push to create new financial and economic institutions that will increase its international influence. It has become a central issue in the growing contest between China and the US over who will define the economic and trade rules in Asia over the coming decades. When Britain announced its decision to join the AIIB last week, the Obama administration told the Financial Times that it was part of a broader trend of “constant accommodation” by London of China.

British officials were relatively restrained in their criticism of China over its handling of pro-democracy protests in Hong Kong last year. Britain tried to gain “first mover advantage” last week by signing up to the fledgling Chinese-led bank before other G7 members. The UK government claimed it had to move quickly because of the impending May 7 general election. The move by George Osborne, the UK chancellor of the exchequer, won plaudits in Beijing. Britain hopes to establish itself as the number one destination for Chinese investment and UK officials were unrepentant. One suggested that the White House criticism of Britain was a case of sour grapes: “They couldn’t have got congressional approval to join the AIIB, even if they wanted to.”

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A potential bombshell.

Debunking $1.4 Trillion Europe Debt Myth in Post-Heta Age (Bloomberg)

Austria’s decision to burn bondholders of a failed state bank may mean almost €1.3 trillion of European debt once deemed risk-free now comes with a hazard warning. Austria is the first country to wind down a bank, Heta, under the EU’s new Bank Recovery and Resolution Directive after changing laws last year to allow it to write down subordinated debt of its failed predecessor, Hypo Alpe-Adria-Bank. The government is also refusing to stand behind guarantees by the province of Carinthia on Heta’s senior debt. The moves are putting bondholders at risk of losses. As age-old banking mores clash with modern banking rules, investors are being forced to take a second look at how governments have used explicit or implicit promises in the past to issue debt that doesn’t show up in official ledgers.

“People had too much trust in public authorities,” said Otto Dichtl, a credit analyst for financial companies at Stifel Nicolaus. “Austria dropping Carinthia like this is an extraordinary step. We have to see just how this is carried out. From a legal perspective, this is uncharted territory.” Based on current bond prices, Heta’s senior creditors, who bought securities covered by a guarantee from Carinthia province, face losses of more than 40% on their €10.2 billion of debt. Carinthia, a southern Austrian region of 556,000 people with annual revenue of less than €2.4 billion, may face insolvency if the guarantees are triggered. Until this year, figures for debt guarantees weren’t disclosed in most European countries, a fact that helped Greece conceal its true debt levels to gain entry to the euro in 2001.

Greece undertook the biggest debt restructuring on record in 2012. New rules by the European Council, known as the “six pack” directive, led to data as of 2013 being published for the first time last month, revealing €1.28 trillion of government guarantees. The EU introduced the six laws in 2011. As the EU’s biggest user of guarantees, Austria has contingent liabilities corresponding to 35% of national output, or €113 billion, the data show. It isn’t just Austria that has liberally applied state guarantees. Ireland has contingent liabilities equivalent to 32% of its economy, reflecting the collapse of its banking system, while Germany’s tally stands at more than 18% of output. German guarantees, encompassing €512 billion, are the biggest in absolute terms, followed by Spain with €193 billion and France with €117 billion.

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Merkel gets closer.

Greek PM Tsipras To Meet Merkel, Draghi In Brussels On Friday (Kathimerini)

With Greece rapidly running out of funds, Prime Minister Alexis Tsipras has proposed an urgent meeting on the sidelines of the European Union summit that begins on Thursday in a bid to reach an agreement that would allow Athens to get more funds. Greece urgently needs between €3 and €5 billion. Tsipras on Tuesday telephoned European Council President Donald Tusk and asked him to convene a meeting with Chancellor Angela Merkel, President Francois Hollande, ECB President Mario Draghi and EC President Jean-Claude Juncker. The meeting will be held on Friday morning, despite the fact that European officials questioned its use.

Sources in Brussels said the proposal was a mistake, as it focused on meeting with the leaders of two countries, and the heads of the ECB and the Commission, rather than pursuing a collective agreement in the EU, and it was not clear what Tsipras wanted to achieve. If the aim was to achieve more funding, this would have to be the subject of technical discussions between experts and could not be dealt with at the political level. However, with teams of experts still unable to reach a conclusion as to Greece’s financing needs and its compliance with the bailout agreement, agreement at the political level is precisely what Tsipras is after.

He wants an agreement on a framework that will set out what Greece must do in order to get the ECB to allow his country to borrow more, a source in Tsipras’s office told Kathimerini. Tsipras is prepared to accept reforms that will be proposed by Greece’s partners, including privatization, the same source said. They stressed that Athens would draw the line at adopting further austerity measures. “We accept everything else, on the basis of the commitments made in [Finance Minister] Yanis Varoufakis’s letter to the Eurogroup,” the source added. The Greek prime minister is to meet the German chancellor in Berlin on March 23, following an invitation from Merkel on Monday.

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That’s what I said: “Germany can’t simply sweep the demands from Greece off the table.”

Greece WWII Reparations Cause Split Among German MPs (RT)

Several senior Social Democrats (SPD) and Greens have for the first time acknowledged that Greece has a case for WWII reparations. This contradicts the stance of German Chancellor Angela Merkel’s government which had ruled it out. “We should make a financial approach to victims and their families,” said Gesine Schwan, chairwoman of the Social Democratic Party (SPD) values committee told Der Spiegel Online on Tuesday. “It would be good for us Germans to sweep up after ourselves in terms of our history,” she said. “Victims and descendants have longer memories than perpetrators and descendants,” said Schwan, who was nominated as a candidate for President twice in 2004 and 2009. SPD deputy leader Ralf Stegner agreed that the issue should be resolved, however independently from the current debate over the Euro crisis and Greek sovereign debt.

“But independently, we must have a discussion about reparations,” Ralf Stegner told Spiegel. “After decades, there are still international legal questions to be resolved.” SPD is the second major party in Germany that shares power with Merkel’s conservative Christian Democratic Union and the Christian Social Union (CDU/CSU). The SPD were joined by the Green party, with leader Anton Hofreiter saying that “Germany can’t simply sweep the demands from Greece off the table.” “This chapter isn’t closed either morally or legally.” Demands for reparations from Germany dating back to the Nazi occupation during World War II have been voiced by Greek politicians over the past 60 years, but have gained renewed energy amid the recent financial crisis and tough austerity measures in exchange for largely German-backed loans.

In April 2013 Greece officially declared that it would pursue the reparations scheme. Greece’s Prime Minister Alexis Tsipras leader of the anti-austerity Syriza party relaunched the heated debate in February by saying that Athens has a “historical obligation” to claim from Germany billions of euros in reparations for the physical and financial destruction committed during Nazi occupation. However, Germany’s government has said that this issue has already been legally resolved, arguing that Greece is trying to detract attention from the serious financial problems the country is facing.

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“We cannot easily understand the reasons that pushed him to make statements that are not fitting to the role he has been entrusted with.”

Athens Furious At Eurogroup Suggestion Of Capital Controls (Kathimerini)

The chairman of the Eurogroup, Dutch Finance Minister Jeroen Dijsselbloem, on Tuesday became the first European Union official to suggest the possibility of capital controls to prevent Greece leaving the euro, drawing a furious reaction from Athens, which accused him of “blackmail.” “It’s been explored what should happen if a country gets into deep trouble – that doesn’t immediately have to be an exit scenario,” Bloomberg quoted the head of the eurozone’s finance ministers telling his country’s BNR Nieuwsradio. On Cyprus, he said, “we had to take radical measures, banks were closed for a while and capital flows within and out of the country were tied to all kinds of conditions, but you can think of all kinds of scenarios.”

Greece is scrambling to pay its obligations as revenues drop and it needs the European Central Bank to allow it to borrow more funds. Its eurozone partners are awaiting the result of an inspection into Greece’s finances and its compliance with the bailout program. In Athens, the government issued an angry reply. “It would be useful for everyone and for Mr. Dijsselbloem to respect his institutional role in the eurozone,” Gavriil Sakellaridis said. “We cannot easily understand the reasons that pushed him to make statements that are not fitting to the role he has been entrusted with. Everything else is a fantasy scenario. We find it superfluous to remind him that Greece will not be blackmailed.”

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Schaeuble keeps at it: “Greek leaders are “lying to the population..”

Greece Grabs Cash as More Than $2 Billion in Payouts Loom (Bloomberg)

Greece will begin debating measures to boost liquidity as the cash-starved country braces for more than €2 billion in debt payments Friday. Unable to access bailout funding and locked out of capital markets, the government will outline emergency plans to parliament Tuesday to increase funding. Payments due March 20 include interest on a swap originally arranged by Goldman Sachs, said a person familiar with the matter who asked not to be identified publicly discussing the derivative. Prime Minister Alexis Tsipras’s government is burning through cash while trying to get its creditors – euro area member states, the ECB and the IMF – to release more money from its €240 billion bailout program.

European governments have said they won’t disburse any more emergency loans unless the government in Athens implements a set of economic overhauls agreed last month, including pension and sales tax reform. “As days go by, room for maneuver becomes ever smaller,” said Theodore Pelagidis at the Brookings Institution. “The impression given is that there’s no plan A or plan B. There’s nothing.” The government’s revenue-boosting plan includes eliminating fines on those who submit overdue taxes by March 27 to encourage payment, helping cover salaries and pensions due at the end of the month. The bill also requires pension funds and public entities to invest reserves held at the Bank of Greece in government securities and repurchase agreements, and transfers €556 million from the country’s bank recapitalization fund to the state.

A vote on the measures is scheduled for Wednesday. Greek stocks rebounded Tuesday, ending four days of declines, with the benchmark Athens Stock Exchange gaining 2.6%. Yields on 3-year bonds rose 8 basis points to 20.25%. The government said March 14 it has a plan to “enhance its liquidity” and won’t have problems meeting payments for civil servants and retirees due just one week after the March 20th debt payments. Tsipras has pledged to meet the country’s obligations while at the same time ending austerity measures. “None of my colleagues, or anyone in the international institutions, can tell me how this is supposed to work,” German Finance Minister Wolfgang Schaeuble said in Berlin Monday. Greek leaders are “lying to the population,” he said.

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“Put them in front of their contradictions. Make them face the contradictions of the eurozone themselves.”

Greece’s Euro Exit Seems Inevitable (Bloomberg)

Greece’s money troubles resemble a game of pass the parcel, where each successive participant rips another sheet of wrapping paper off the box — which turns out to be empty when the final recipient reaches the core. With time and money running out, a successful endgame seems even less likely than it did a week or a month ago. It’s increasingly obvious that the government’s election promises are incompatible with the economic demands of its euro partners. Something’s got to give. The current money-go-round is unsustainable. Euro-region taxpayers fund their governments, which in turn bankroll the ECB. Cash from the ECB’s Emergency Liquidity Scheme flows to the Greek banks; they buy treasury bills from their government, which uses the proceeds to …repay its IMF debts! No wonder a recent poll by German broadcaster ZDF shows 52% of Germans say they want Greece out of the euro, up from 41% last month.

There’s blame on both sides for the current impasse. Euro-area leaders should be giving Greece breathing space to get its economic act together. But the Greek leadership has been cavalier in its treatment of its creditors. It’s been amateurish in expecting that a vague promise to collect more taxes would win over Germany and its allies. And it’s been unrealistic in expecting the ECB to plug a funding gap in the absence of a political agreement for getting back to solvency. There’s a YouTube video making the rounds on Twitter this week of a lecture Yanis Varoufakis gave in Croatia in May 2013. The most arresting section comes after about two minutes, when the current Greek finance minister literally flips the bird at Germany [..] And if what Varoufakis went on to say is instructive of the game-theory professor’s mind-set, the lack of progress in negotiations with lenders isn’t so surprising:

The most effective radical policy would be for a Greek government to rise up or a Greek prime minister or minister of finance, to rise up in EcoFin in the euro group, wherever, and say “folks, we’re defaulting. We shall not be repaying next May the 6 billion that supposedly we owe the ECB. My God you know, to have a destroyed economy that is borrowing from the ESM to pay to the ECB is not just idiotic, but it’s the epitome of misanthropy.

Say no to that. Put them in front of their contradictions. Make them face the contradictions of the eurozone themselves. Because the moment that the Greek prime minister declares default within the euro zone, all hell will break loose and either they will have to introduce shock absorbers, or the euro will die anyway, and then we can go to the drachma.

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A sovereign nation?

EU Warns Against Bills On Debt Settlement, Humanitarian Crisis (Kathimerini)

The European Commission’s chief representative on the technical team monitoring Greece, Declan Costello, has described draft laws aimed at tackling the humanitarian crisis and launching a 100-installment payment scheme for taxpayers to settle their debts to the state as unilateral actions taken in a fragmentary fashion, according to a text he has reportedly sent to the Greek side. Costello effectively vetoes the bills in his letter, arguing that they are not compatible with the Eurogroup’s February 20 agreement with Athens, as Paul Mason – a journalist who claims to have seen the correspondence between Costello and the Greek authorities – revealed on Tuesday.

There was no reaction to the news from the Finance Ministry up until late last night, with officials pointing to the list of seven actions that Finance Minister Yanis Varoufakis submitted to the latest Eurogroup meeting which, according to the ministry, included the above bills. Nevertheless other government officials confirmed the existence of the text sent by Costello and noted that certain points related to the draft laws – especially those concerning the settlement of debts to tax authorities – must be clarified.

According to the text that Mason published as a Costello letter, the Commission representative says that those bills will have to be included in the general context of reform promotion. “We would strongly urge having the proper policy consultations first, including consistency with reform efforts. There are several issues to be discussed and we need to do them as a coherent and comprehensive package,” Costello reportedly told the government: “Doing otherwise would be proceeding unilaterally and in a piecemeal manner that is inconsistent with the commitments made, including to the Eurogroup as stated in the February 20 communique.” The debt settlement bill was tabled in Parliament on Tuesday night.

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“A plunge in export volumes offset another decline in the cost of oil imports. Net exports should therefore become a drag on [GDP] growth soon..”

Japan Exports Slow Sharply In February But Beat Expectations (CNBC)

Japan’s exports rose at a faster-than-expected pace in February but slowed sharply from the previous month as exports to China waned amid the Lunar New Year holidays. Exports rose 2.4% on year, Ministry of Finance data showed on Wednesday, above expectations for a 0.3% increase in a Reuters poll, but down from a 17% on-year rise in January. Despite the above-view reading, exports were sharply lower compared to January’s reading largely due to 17.3% on-year drop in exports to China, which celebrated the Lunar New Year holiday during February. “A plunge in export volumes offset another decline in the cost of oil imports. Net exports should therefore become a drag on [GDP] growth soon,” Marcel Thieliant, Japan economist at Capital Economics, said in a note.

But Mizuho Bank analysts were more optimistic. “We think this supports the [Bank of Japan’s] view of an ongoing, gradual recovery, underpinning its decision to withhold from adding further stimulus even as [central bank governor] Kuroda expresses his view that inflation might turn negative due to oil prices,” it say in a note. Meanwhile, imports fell 3.6% on year in February, sharply below expectations for a 3.1% increase in a Reuters poll. “[The] drop in import values was largely caused by another decline in petroleum import values, which reached the lowest since late 2010,” Thieliant said. “Judging by the Bank of Japan’s import price index, the plunge in the price of crude oil since last summer has now mostly been reflected in the cost of oil imports. However, import prices of natural gas, which tend to follow the price of crude oil with a lag of about six months, have just started to fall. The trade shortfall may therefore still narrow a touch further in the near-term.”

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“New home prices fell 5.7% on year in February..”

China New Home Prices Post Sixth Consecutive Monthly Decline (CNBC)

China new home prices registered their sixth straight month of annual decline in February, as tepid demand continued to weigh on sentiment despite the government’s efforts to spur buying. New home prices fell 5.7% on year in February, according to Reuters calculations based on fresh data from the National Bureau of Statistics on Wednesday. The reading was worse than January’s 5.1% decline and marks the largest drop since the current data series began in 2011. Meanwhile, both Beijing and Shanghai clocked home price declines. In Beijing, prices fell 3.6% on year following a 3.2% drop in January, while prices in Shanghai fell 4.7%, following January’s 4.2% drop.

However, in a statement after the data was released the Chinese statistics bureau said that home sales are expected to show a significant rebound in March, according to Reuters. “The news isn’t great, and it hasn’t been great for some time. The credit crunch in China is very real and prices do have to adjust after a very long time,” John Saunder, head of APAC at Blackrock told CNBC. “I think the China government is trying to make moves to stabilize things. They’ve undergone a lot of policies and obviously the [central bank] is now reducing the policy rates, so that will all help. but you can’t turn it around instantly,” he said.

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No kidding.

BoE’s Brazier Says Greek Shock Could Trigger Market Correction (Bloomberg)

A failure to find a political solution to Greece’s sovereign debt problem could trigger a market correction, Bank of England official Alex Brazier said. “A bad outcome in these negotiations could trigger a broader reassessment of risk in financial markets,” Brazier, executive director for financial stability at the BOE, told U.K. lawmakers in London on Tuesday. “We start from a position where market pricing looks potentially subject to correction,” he said. “I don’t view Greece as a big direct risk but it could potentially be a trigger for a market reappraisal” Greek Prime Minister Alexis Tsipras’s government is negotiating with euro-area member states, the ECB and the IMF to release more money from its bailout program.

European governments have said they won’t disburse any more emergency loans unless the government in Athens implements a set of economic overhauls agreed last month, including pension and sales tax reform. “I don’t presume to know how likely it is for Greece to leave the euro,” Brazier said. “Although the economic issue is in some ways very simple – there’s a debt overhang that needs to be dealt with – the way that is dealt with is a political issue and I don’t presume to be able to forecast in any way” how the talks will progress, he said. Brazier said U.K. banks’ direct exposure to Greece was small, “amounting to about £2 billion ($3 billion), which is about 1% of their common equity.”

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Given the propaganda underlying the sanctions, inevitable.

EU Support for Russia Sanctions Is Waning (Bloomberg)

For evidence of the European Union’s diminishing appetite for sanctions against Russia, look no further than Vladimir Putin’s Kremlin guestbook. Cyprus President Nicos Anastasiades visited the Russian leader in February, granting the Russian navy access to Cypriot ports; March brought Italian Prime Minister Matteo Renzi, labeled a “privileged partner” by Putin; Greek Prime Minister Alexis Tsipras is due next in Moscow, in April. Along with Hungary, Slovakia, Austria and Spain, the three countries were reluctant backers of economic curbs to protest Russia’s interference with Ukraine. As a wobbly truce takes hold in eastern Ukraine, the anti-sanctions bloc will lay down a marker at an EU summit starting Thursday in Brussels.

“The likeliest outcome is that they will not agree to roll over the sanctions now and they will put off a decision until the last possible moment before the sanctions expire,” Ian Bond, a former British diplomat now with the Centre for European Reform in London, said by phone. EU governments halted trade and visa talks with Russia and started blacklisting Russian politicians and military officers last March, after the annexation of Crimea. Those asset freezes and travel bans were extended by six months in January 2015. It took the shooting down of a Malaysian passenger jet over eastern Ukraine in July to prompt wider-ranging curbs including bans on financing of major Russian banks and the sale of energy-exploration gear to Russia’s resource-dependent economy. Those “stage three” measures are set to expire in July.

Proponents of extending them are led by Poland, the Baltic states and the U.K., and count as one of their own the EU president and summit chairman: former Polish Prime Minister Donald Tusk. The hawks have already backed down by seeking a five-month prolongation until the end of 2015, instead of the usual 12 months. “At some time there should be a decision in our view about the extension of the sanctions until the end of the year,” Lithuanian Foreign Minister Linas Linkevicius said in an interview in Brussels at a meeting of EU diplomats on Monday. Even that is a stretch, at least at this week’s summit. Sanctions require all 28 EU countries to agree, enabling skeptics to play for time, shape policies to their liking and, in the extreme, cast a veto. Greece’s new government, for example, voiced discomfort about renewing the blacklists in January before finally going along.

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As it should be. How can you spend $1.4 billion in tax money, where a few million would have done, when people have no health care, unless you’re a full-blown megalomaniac?!

ECB Celebration of Its New $1.4 Billion Tower Spoiled by Protests (Bloomberg)

As the ECB prepares to inaugurate its new headquarters four months after moving in, more than 10,000 protesters are seeking to spoil the party. Frankfurt, the euro area’s financial capital and home of the common currency, is bracing for demonstrations and sit-ins on Wednesday at locations throughout the city by anti-austerity groups and organizations sympathizing with the plight of Greece. At the ECB’s €1.3 billion premises in the east end, police have erected barbed wire and barricades to keep the protesters at least 10 meters (33 feet) away. “We want a march open to anyone, peaceful and not harming anyone,” Ulrich Wilken, a lawmaker for the Left Party in the Hesse state parliament, said on Tuesday after meeting with police to outline the marchers’ objectives.

“We want an atmosphere of peaceful protest, not the kind of situation the police prepares for with its tanks.” Nine days after the ECB started buying sovereign debt in a €1.1 trillion plan to revive inflation and rescue the economy, protesters are laying the blame for recession and unemployment in the 19-nation euro area at the doors of ECB President Mario Draghi and German Chancellor Angela Merkel. A new government in Greece, led by the leftist Syriza party, is preparing emergency measures to boost liquidity as the cash-starved country braces for more than €2 billion in debt payments on Friday. The country is unable to access bailout funding as it haggles with euro-area governments over the terms of its aid program. Its lenders have been cut off from regular ECB finance lines and pushed onto emergency credit from the Greek central bank.

“In the past, we protested against things like the rescue of the banks in Europe,” said Werner Renz, a representative of protest group Attac. “The focus of our protests this year is on Greece. We need more of Athens in Europe and less of Berlin. There is no way Greece can repay all its debt. The situation can’t be solved by austerity alone.” Draghi is scheduled to host an inauguration ceremony at 11 a.m. with guests including Frankfurt Mayor Peter Feldmann and Hesse’s Economy Minister Tarek Al-Wazir.

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“..indigenous language education, gender parity in government, historical memory, indigenous forms of justice, anti-racism initiatives, and indigenous autonomy.”

Bolivia: A Country That Dared to Exist (Benjamin Dangl)

This movement toward decolonization in the Andes is as old as colonialism itself, but the process has taken a novel turn with the administration of Morales, Bolivia’s first indigenous president. Morales, a former coca farmer, union organizer, and leftist congressman, was elected president in 2005, representing a major break from the country’s neoliberal past. Last October, Morales was re-elected to a third term in office with more than 60% of the vote. His popularity is largely due to his Movement Toward Socialism (MAS) party’s success in reducing poverty, empowering marginalized sectors of society, and using funds from state-run industries for hospitals, schools and much-needed public works projects across Bolivia.

Aside from socialist and anti-imperialist policies, the MAS’s time in power has been marked by a notable discourse of decolonization. Five hundred years after the European colonization of Latin America, activists and politicians linked to the MAS and representing Bolivia’s indigenous majority have deepened a process of reconstitution of indigenous culture, identity and rights from the halls of government power. Part of this work has been carried forward by the Vice Ministry of Decolonization, which was created in 2009. This Vice Ministry operates under the umbrella of the Ministry of Culture, and coordinates with many other sectors of government to promote, for example, indigenous language education, gender parity in government, historical memory, indigenous forms of justice, anti-racism initiatives, and indigenous autonomy.

Before becoming the Vice Minister of Decolonization when the office opened, Félix Cárdenas had worked for decades as an Aymara indigenous leader, union and campesino organizer, leftist politician and activist fighting against dictatorships and neoliberal governments. As a result of this work, he was jailed and tortured on numerous occasions. Cárdenas participated the Constituent Assembly to re-write Bolivia’s constitution, a progressive document which was passed under President Morales’ leadership in 2009. This trajectory has contributed to Cárdenas’ radical political analysis and dedication to what’s called the Proceso de Cambio, or Process of Change, under the Morales government.

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