Dec 162017
 
 December 16, 2017  Posted by at 6:45 pm Finance Tagged with: , , , , , , , , , , , , ,  


Tamara de Lempicka The refugees 1937

 

Note: I feel kind of sorry this has become such a long essay. But I still left out so much. You know by now I care a lot about Greece, and it’s high time for another look, and another update, and another chance for people to understand what is happening to the country, and why. To understand that hardly any of it is because the Greeks had so much debt and all of that narrative.

The truth is, Greece was set up to be a patsy for the failure of Europe’s financial system, and is now being groomed simultaneously as a tourist attraction to benefit foreign investors who buy Greek assets for pennies on the dollar, and as an internment camp for refugees and migrants that Europe’s ‘leaders’ view as a threat to their political careers more than anything else.

I would almost say: here we go again, but in reality we never stopped going. It’s just that Greece’s 15 minutes of fame may be long gone, but its ordeal is far from over. If you read through this, you will understand why that is. The EU is deliberately, and without any economic justification, destroying one of its own member states, destroying its entire economy.

 

 

A short article in Greek paper Kathimerini last week detailed the latest new cuts in pensions the Troika has imposed on Greece, and it’s now getting beyond absurd. For an economy to function, you need people spending money. That is what keeps jobs alive, jobs which pay people the money they need to spend on their basic necessities. If you don’t do at least that, there’ll be ever fewer jobs, and/or ever less money to spend. It’s a vicious cycle.

We may assume the Troika is well aware of this, and that would mean they are intentionally killing off the Greek economy. Something I’ve said a thousand times before. Still, both the Greek Tsipras government and exterior voices continue to claim the economy is recovering. Even if that is mathematically impossible. There undoubtedly are sectors of the economy being boosted, but they are only the ones the Troika members are interested in.

The economy’s foundation, the ‘normal’ people, who work jobs if they’re lucky, are not recovering or being boosted. Quite the contrary. Half of young people are unemployed and receive no money at all. Most of those who do have jobs receive less than €500 for a full month of work. Mind you, this is while the cost of living is as high as it is in Germany or Holland, where people would protest vehemently if even their unemployment benefits were cut that low. Unemployment benefits hardly exist at all in Greece.

This situation, as also mentioned often before, means that entire families must live off the pension a grandmother or grandfather gets. As of next year, such a pension will be cut to net €480. Of which most will go to rent. And the cuts are not finished. There are plenty neighborhoods in Athens where there are more boarded-up shops then there are open ones. It is fiscal waterboarding, it is strangulation of an entire society, and there is no valid economic reason for it, nor is there a justification.

If Greece had access to international debt markets, if would perhaps pay a higher interest rate, but investors would buy its bonds. The Troika denies Greece that access. Likewise, if the ECB had not excluded the country from its QE bond-buying programs, the country would be nowhere near its present disastrous predicament. The ECB’s decision not to buy Greek bonds can only be a political one, it’s not economic. There is something else going on.

Here’s that latest pension news:

 

Greek Pension Cuts To Hit 70% Since The Start Of The Bailouts

The next batch of pension cuts, voted through in the last couple of years and set to come into force within the next two years, will take total losses for pensioners since the start of the bailout period in 2010 up to 70%. A recent European Commission report on the course of Greece’s bailout program revealed that the reforms passed since 2015 will slash up to 7% of the country’s GDP up to 2030. The United Pensioners network has made its own calculations and estimates that the impending cuts will exacerbate pensioners’ already difficult position, with 1.5 million of them threatened with poverty. The network argues that when the cuts expected in 2018 and 2019 are added to those implemented since 2010, the reduction in pensions will reach 70%.

Network chief Nikos Hatzopoulos notes that “owing to the additional measures up until 2019, the flexibility in employment and the reduction of state funding from 18 billion to 12 billion euros, by 2021, one in every two pensioners will get a net pension of 550 euros [per month]. If one also takes into account the reduction of the tax-free threshold, the net amount will come to 480 euros.” Pensioners who retired before 2016 stand to lose up to 18% of their main and auxiliary pensions, while the new pensions to be issued based on the law introduced in May 2016 by then minister Giorgos Katrougalos will be up to 30% lower.

More than 140,000 retirees on low pensions will see their EKAS supplement decrease in 2018, as another 238 million euros per year is to be slashed from the budget for benefits for low income pensioners. The number of recipients will drop from 210,000 to 70,000 in just one year. There will also be a reduction in new auxiliary pensions (with applications dating from January 2015), a 6% cut to the retirement lump sum, and a freeze on existing pensions for another four years, as retirees will not get the nominal raise they would normally receive based on the growth rate and inflation.

 

As half of the pensioners see their pensions cut to €480 a month, they’re not the worst off in the country. There are about a million unemployed who get nothing at all, and 580,000 who do have ‘jobs’ but ‘earn’ just €407 a month. And that’s if they’re lucky enough to get a contract. Many don’t, and work for even less. Yeah, that’s how you keep unemployment numbers down; Americans should know all about it.

 

Unemployment Decreases, Yet 580,000 Workers Earn Just €407 Per Month

Greece’s jobless rate fell to 20.2% in July-to-September from 21.1% in the second quarter, data from the country’s statistics service ELSTAT have showed. About 75.6% of Greece’s 970,000 jobless are long-term unemployed, meaning they have been out of work for at least 12 months, the figures showed on Thursday. Greece’s highest unemployment rate was recorded in the first quarter of 2014, when joblessness hit 27.8%.

Athens has already published monthly unemployment figures through June, which differ from quarterly data because they are based on different samples and are seasonally adjusted. Quarterly figures are not seasonally adjusted. At the same time, part-time employment has been constantly increasing. According to latest data, 580,000 workers earn just 407 euros per month. An amount that is for sure not enough to help people come through the month. And this data refers to declared work contracts. In undeclared work market people earn even 200 or 300 euros.

 

While all these Greeks don’t make enough to feed themselves and their families, the Troika-induced tax rises keep on coming like a runaway train with broken brakes. Every single day, more people are added to the list of those who simply can’t afford to pay their taxes, under the guise of going after ‘strategic defaulters’. There is no way out if this other than large scale debt forgiveness, debt restructuring, debt write-offs. Consumer spending is what keeps economies alive, but in Greece that is what’s shrinking day after day.

 

Greeks Crushed By Tax Burden

Tax authorities have confiscated the salaries, pensions and assets of more that 180,000 taxpayers since the start of the year, but expired debts to the state have continued to rise, reaching almost €100 billion, as the taxpaying capacity of the Greeks is all but exhausted. In the month of October, authorities made almost 1,000 confiscations a day from people with debts to the state of more than €500. In the first 10 months of the year, the state confiscated some €4 billion, and the plans of the Independent Authority for Public Revenue provide for forced measures to be imposed on 1.7 million state debtors next year.

IAPR statistics show that in October alone, the unpaid tax obligations of households and enterprises came to €1.2 billion. Unpaid taxes from January to October amounted to €10.44 billion, which brings the total including unpaid debts from previous years to almost €100 billion, or about 55% of the country’s GDP. The inability of citizens and businesses to meet their obligations is also confirmed by the course of public revenues, which this year have declined by more than €2.5 billion. The same situation is expected to continue into next year, as the new tax burdens and increased social security contributions look set to send debts to the state soaring. Notably, since 2014, there has been a consolidated trend of a €1 billion increase each month in expired debts to the state.

There are now 4.17 million taxpayers who owe the state money. This means that one in every two taxpayers is in arrears to the state, with 1,724,708 taxpayers facing the risk of forced collection measures. Of the €99.8 billion of total debt, just €10-15 billion is still considered to be collectible, as the lion’s share concerns debts from previous years, in many cases of bankrupt enterprises and deceased individuals.

 

Lately, a narrative is being force-fed into, and by, western media about Greece becoming some sort of paradise for investors. But why would anyone want to invest into an economy that clearly is no longer functioning, not even viable? Well, in such an economy, all kinds of things can be bought on the cheap. And because Greece is very beautiful, and has beautiful weather, why not buy it all and turn it into a tourist colony owned by foreigners and the odd rich Greek?

One tiny thing: they would prefer a different, even more business-friendly government. As if Tsipras hasn’t crawled up the Troika’s where-the-sun-never-shines parts enough. That’s the context into which to place for instance Kyle Bass’s comments:

 

Kyle Bass: Investors to Pour Billions into Greece after Political Change

Hedge fund manager Kyle Bass believes that Greece will come out of the crisis and investors will pour billions into its economy once the government changes, according to a CNBC report. The founder and chief investment officer of Hayman Capital Management; which manages an estimated $815 million in assets, is closely following the course of the Greek economy and political situation, and has invested in Greek bank stocks.

Bass says that foreign investors are waiting on the sidelines for a political shift to take place in 2018. “My best guess is a snap election for prime minister will be called between April and September of next year and Prime Minister Alexis Tsipras will lose power. When that happens, there will be a massive move into the Greek stock market. Big money will flow in as investors feel more confident with a more moderate administration,” Bass said.

“It’s going to take Kyriakos Mitsotakis; president of New Democracy, the Greek conservative party, to be voted in as prime minister to reform the culture and rekindle investor confidence,” the investor said. “I have no doubt 15 billion euros in bank deposits will come back to Greek banks if he’s elected. The stock and bond markets will also jump following the election.” Bass says that global investors are waiting for the political change in order to invest in real estate, energy and tourism.

So far, the hedge fund manager noted, Greece has proceeded with privatizations of its main port; regional airports; its railway system; the largest insurance company, and there are more important ones to be completed within the next two years. “There is so much potential in Greece,” Bass said, noting that investors are waiting for the right moment to enter, the CNBC report concludes.

Kyle Bass and all his ilk are lining up for the goodies for pennies on the dollar. If only the desolate pensioners and unemployed young are desperate enough to believe that, and vote for, a right-wing government is good, simultaneously, for both their interests and that of international vultures and hedge funds.

 

Funds Take Positions Ahead Of Government Change In Greece

Brevan Howard Asset Management, one of Europe’s biggest hedge funds, revealed to Bloomberg on Tuesday that it has set up two investment funds whose exclusive targets are assets in Greece such as real estate, enterprises and securities, and is aiming to collect 500 million euros from private investors. Co-founder of Brevan Howard and head of one of the two funds Trifon Natsis said that some 250 million euros has already been collected. The company was co-founded by four others, including Alan Howard, in 2002. “After eight years of crisis and recession that’s hit Greece, we’re at a point where the tail risks have disappeared and the country is stabilizing at a low base,” he said.

“We anticipate a material uplift in the Greek economy and asset prices.” “The likely political transition over the next 12 to 18 months will add momentum and reinforce that process,” Natsis said. Brevan Howard seems to be in agreement with Hayman Capital, whose head Kyle Bass said a few weeks ago that the brewing change in government in Greece within the next 18 months will benefit the market: “You’re starting to see green shoots, you’re starting to see the banks do the right things finally in Greece, and you’re about to have new leadership,” he stated recently.

My personal assessment after spending much of my time over the past 2.5 years in Athens is that they will be disappointed. Not only does a country, to make it attractive for foreigners, need a functioning economy, which Greece no longer has even at a “low base”, but the anger that has been building up here, which was held in check by Syriza and its ultimately empty promises, is bound to explode when some right winger manages to seize power.

Athens is the most peaceful city you can imagine, the only violence is between ‘anarchists’ and police, and it mostly takes place at set dates and places. Violence among people is virtually non-existent, despite all the deception, the betrayal, the poverty and the youthful testosterone energy that has nowhere to go. But that’s not going to last, I’m afraid.

 

And that will also be because many Greeks understand the contents of the following, devastating, interview by Michael Nevradakis for Mint Press News with Nicholas Logothetis, former member of the board of the Greek Statistical Authority (ELSTAT). Greece has been set up. And many people here know it. They have put their hopes in the democratic process, in voting into power a different government from the same old clique they have seen for many decades.

The likely winner of the next elections is New Democracy, led by Kyriakos Mitsotakis, the man the hedge-funders want in. Mitsotakis, a banker, is very much part of the old Greek elite, his father was a prime minister. If he gets elected things are not very likely to remain peaceful. Says my gut.

 

Update: while I was writing this article, the following came out. Eurogroup head Dijsselbloem admitting the first Greek referendum had nothing to do with helping Greece, the reason always provided for why it happened. Instead, it was always, as we’ve said so many times, meant to save German and French banks. And now that he’s leaving the job, Dijsselbloem, who obviously feels untouchable, just lays it out there. After having played a large role in destroying the country, the society, the economy. It’s almost hard to believe. But only almost. Because the Troika doesn’t answer to anyone. Then again, Greece has an independent judicial system.

 

The Aim Of The First Memorandum Was To Rescue Investors Outside Greece, Dijsselbloem Admits

The main aim of the first Greek memorandum, especially, was to rescue investors outside Greece, outgoing Eurogroup chief Jeroen Dijsselbloem admitted in the Europarliament on Thursday. “There were mistakes in the first programmes, we improvised. The way we dealt with the banks was expensive and ineffective. It is true that our aim was to rescue investors outside Greece and for this reason I support the rules for bail-ins, so that investors aren’t rescued with tax-payers’ money,” said Dijsselbloem in reply to independent Greek MEP Notis Marias.

Dijsselbloem noted that it had been a huge crisis because the fiscal sector had faced the risk of a total collapse that would have left many countries with a high debt. However, he pointed out that banks had only needed €4.5 billion in the third programme because the private sector had a huge participation. Referring to the non-performing loans, he said that a private solution that did not once again place the burden on tax-payers was near. He also pointed to measures being taken in Greece for the protection of the socially weaker groups, to make sure that they were not the victims of the auctions.

Referring to the early payment of the IMF loans with the remaining money of the programme, the Eurogroup chief said that this made sense financially, given that the IMF’s loans were more expensive than those of the Europeans. However, from a political point of view, the Eurogroup prefers that the IMF remain fully involved in the Greek programme, with its own responsibilities, he added. In any case, he noted that the final decisions on debt relief will be made later, when the programme is concluded and the sustainability of the Greek debt has been examined.

 

As an introduction, a piece of that interview with former Greek Statistical Authority bioard member Nicholas Logothetis (see the rest below). Greece being set up is not just some fantasy idea.

In my opinion, joining these medieval memorandums, which have brought about this economic crisis that Greece is still experiencing, was beyond any doubt pre-planned and predetermined. This arises not only from Strauss-Kahn’s own admission that the IMF had been preparing every detail of this with Papandreou, it also arises for other reasons that subsequently became known – that Greece was chosen by the designers of the European Union to become the guinea pig for the implementation of harsh austerity and other forms of economic punishment, set up for all as an example to be avoided, in the context of a new EU economic policy for handling the member countries with fiscal problems.

Indeed, the policy of the memorandums gave the opportunity not only to the IMF to put a foot in Europe – until then its activities always were, with devastating consequences, limited to developing countries in Africa and Latin America – but also gave the opportunity to the French and German banks to get rid of their so-called toxic bonds, that were loaded onto the Greek people by turning a private debt into a state debt.

In order to achieve all of this, of course, they had to plant the appropriate person in ELSTAT at a time when certain statistical adjustments were required, in order to support their treacherous plan. Where did this lead eventually? To the bankruptcy of the Greek state.

This is some story. It’s being denied in what just about amounts to a full blast PR campaign by many of those involved on the Troika side. Their narrative is: how dare the Greeks attack, and drag into court, their own unblemished ex-IMF statistician (who’s not even a statistician)? Whereas the actual question should be: how dare the Troika et al attack the Greek judicial system?

They’re getting away with it so far, but there are still court cases pending. And as Nicholas Logothetis says, he is confident that the Greek court system is the only party that has the power and the independence to set this straight.

I wanted to take bits and pieces out of this, shorten it etc., but it’s just too good. Sorry, Michael, sorry MintPress! It reads like a crime novel. And you can never again say you didn’t know. We can only hope that the Greek court system will hold Europe to task.

But while they can probably call on Papandreou to stand trial, what about Strauss-Kahn or Lagarde? Or Schäuble and Dijsselbloem? What if they can even prove Greece was set up, who’s going to pay the damage done to the Greek population, society, and the Greek economy, over a decade?

It’ll take many decades for the country to recover from what has been perpetrated upon it. And this could only happen because western media have been too lazy and compliant to question what has been going on. 90%+ of what you’ve been reading about Greece has been fake news. Note: I always put everything I quote in italics, but this is an exception to that rule:

Here we go:

 

The Trials of Andreas Georgiou and the Fraud That Drove Greece into Austerity

The mainstream narrative regarding the cause of the severe economic crisis Greece has experienced is that the Greek people and Greek state were irresponsible with their finances, lived “beyond their means” at the expense of EU taxpayers, and provided overly generous social benefits and pensions to an underproductive, uncompetitive, and lazy populace.

These characterizations have then been used to justify the successive memorandum agreements, or “bailouts,” and the austerity measures that have been imposed in Greece since 2010, as the country’s “just deserts” — the “bitter medicine” that must be prescribed to correct Greece’s previous ills.

A different view exists, however — one that is based on allegations that Greece was driven into the memorandum and austerity regime not by economic incompetence and cultural deficiencies, but by a fraud that was perpetrated against the Greek people and the country of Greece.

In this interview, which aired in November on Dialogos Radio, Nicholas Logothetis, a former member of the board of the Greek Statistical Authority (ELSTAT), describes allegations that have been made against Andreas Georgiou, ELSTAT’s former president, and against EU statistical authority Eurostat, regarding how Greece’s deficit and debt figures were illegitimately inflated in 2010, providing the rationale to drag Greece under a regime of austerity and extreme economic oversight.

Logothetis details how debt swaps and other questionable financial dealings were added to Greece’s debt and deficit, as well as the consequences of these actions, the criminal and civil convictions against Georgiou, and the court cases that are still pending.

 

MPN: Let’s begin with a discussion about Andreas Georgiou, the embattled former president of ELSTAT, who oversaw the augmentation of the Greek deficit and debt. Describe for us Georgiou’s background prior to taking on the role of president of ELSTAT. Was Georgiou even a statistician?

NL: No, he wasn’t. The operation of the Hellenic Statistical Authority (ELSTAT), as a continuation of the initial National Statistical Authority, as we called it, officially began in late June of 2010. This was the time that the members of ELSTAT’s management board were selected and approved by the conference of parliamentary presidents, with the required supermajority of four-fifths.

Georgiou has been working at the International Monetary Fund since the late 1980s. For a few years before he came to Greece, he was deputy head of a division of the IMF’s statistics department, the financial institutions division. However, the Greek Ministry of Finance announced the appointment of ELSTAT’s board of directors through a press release to all Greek newspapers. In that press release, it presented Georgiou as deputy head of the entire IMF statistics department, a very big department in the IMF and a very important one, hiding his actual organizational position in the IMF, a position of an economic nature rather than a statistical nature, in a subordinate division of the statistics department.

Obviously, the objective of the Greek Minister of Finance was to present Georgiou as an experienced statistician with a significant management position at the IMF, who supposedly left America and came here to “save” Greece by putting in order all of its statistics. In fact, this gentleman was not only unable to run an important institution such as ELSTAT, with over 1,000 employees, but he wasn’t even a statistician, with no academic publications and no knowledge of statistics.

Moreover, for at least six months after assuming the ELSTAT presidency, Georgiou still held his organizational position at the IMF, something that was explicitly forbidden by ELSTAT’s founding law.

 

MPN: What were the actions undertaken by Georgiou as president of ELSTAT? In other words, how were the Greek deficit and debt figures manipulated and in what other ways were Greece’s official economic figures altered?

NL: First of all, Georgiou’s first moves were to remove from the other members of the board any ability and initiative to propose discussion topics or to be involved in the calculation of the deficit or the debt. They were forbidden even to communicate with the remaining staff of ELSTAT! This behavior of Georgiou was not only due to his inability to act as a manager but also due to the fact that he understood from the very beginning, even from the second meeting of the board in September 2010, our refusal to adopt the deficit and debt calculation procedures he wanted to follow. He knew that eventually, the majority of the board members would not approve his deficit figures to be officially published before the end of October 2010.

 


Andreas Georgiou, stands outside the headquarters of the Statistics agency, in Athens, Greece. (AP/Petros Giannakouris)

 

Shortly after the last meeting of the board in early October 2010, the final silencing of the whole board followed and we were never convened again, thus leaving the way free for Georgiou, always under the auspices of senior Eurostat executives, on the one hand, to change the founding law—as he always wanted, to turn ELSTAT into one-person authority—and on the other hand, to inflate the 2009 figures. Exactly how he did this became clear later, but we had suspected soon enough what he was going to do.

My first disagreement with him was when I realized he would add to the deficit figures and to the national debt of Greece the Simitis swaps — that is, the swaps that former Greek prime minister Costas Simitis had made use of in 2001 in order for Greece to get accepted to the Eurozone. Allow me to briefly explain what these swaps are, as they indicate clearly an activity typical of the statistical mishandlings that had always been used and are still taking place in our country, every time the government’s leaders want to achieve something with communication or financial benefits for themselves or for third parties. Swaps are a type of a bond, a banking derivative or simply a stock exchange bet, a currency exchange bet. Many countries do it, even now they are doing it, converting their existing debt into currencies of other countries, say in Swiss francs or Japanese yen, betting that the value of that currency will rise and at the maturity of this debt, the owner will gain from the difference in the value of currencies.

In a way, what happened in 2001 is that much of Greece’s debt was converted into yen, but at the value that the yen had in 1995, which was higher than that of 2001! Remember, the swaps were made in 2001, but the price of the yen in 1995 was the one used for this swap. We can put a big question mark here because I don’t know how legitimate this was, to consider as valid the exchange value of the yen of six years ago. But anyway, this was what happened.

From this action, Greece was theoretically gaining an amount of 2.8 billion euros, which theoretically reduced our debt by this amount, and also reduced the annual deficit below 3%, thus meeting the requirement of the Maastricht Treaty for Greece’s entry into the Eurozone. But let us not forget, however, that this was a bet. It’s not unlike, say, a bond that matures and is redeemable after 30 years: at the time of the swap, there was no applicable European regulation allowing the “bond” to be cashed in prior to maturity, and therefore the swaps were of indeterminate value.

However, Walter Radermacher — at the time the general director of Eurostat, the EU’s statistical authority — decided only for Greece and only for that time and while the value of the yen had collapsed, that this swap value had to be included in our total debt, thus raising our national debt by 21 billion euros because of the losses of the yen. So we found ourselves with an additional fiscal debt of 21 billion euros.

Radermacher’s additional act was to instruct Georgiou to divide this amount by four and to include what came out of it in the deficits for the years 2009, 2008, 2007, and 2006. So eventually, for 2009 and all the three previous years, we found ourselves with an additional deficit of about 5.5 billion euros. But I’m pointing out again that swaps should not be used in any way before their maturity, in order to manipulate negatively or positively the fiscal debt, let alone the yearly deficit.

Another illegal augmentation of our deficit made by Georgiou included the addition of 3.6 billion euros in hospital costs that were not even approved by the Court of Auditors. The Court of Auditors is one of the three institutions of Greek justice, along with the Supreme Court and the Council of State. With regards to this cost, as it turned out later, no one committed to it and no one was paying for it. And finally, the major swelling of the budget deficit was accomplished by the overnight inclusion of the deficits of 17 public utilities, violating many Eurostat criteria and rules. That alone added 18.2 billion euros, equivalent to 20 billion dollars, to the fiscal debt of Greece.

As a result of all the above, Greece ended up with a huge deficit for the year 2009 — 36 billion euros, or equivalently, 15.4% of GDP. This legitimated the first memorandum, paved the way for the second and worst memorandum, and justified the imposition of these cumbersome austerity measures, such as the pension cuts, social insurance and healthcare, and the tax increases — huge tax increases — measures that we are still suffering today.

 

MPN: Dominique Strauss-Kahn himself, the former president of the International Monetary Fund, has gone on the record as saying that he met with George Papandreou to discuss an IMF “bailout” of Greece in April 2009. This was several months before Papandreou was elected as prime minister and at a time when Papandreou was saying, while campaigning, that plenty of money existed to fund the social programs he was promising to Greek voters. Do you believe that the economic “crisis” in Greece was pre-ordained or pre-planned?


Greek Prime Minister George Papandreou, right, shakes hand with the head of the International Monetary Fund, Dominique Strauss-Kahn, during a joint news conference in Athens, Dec. 7, 2010. (AP/Thanassis Stavrakis)

NL: Yes, I do. In my opinion, joining these medieval memorandums, which have brought about this economic crisis that Greece is still experiencing, was beyond any doubt pre-planned and predetermined. This arises not only from Strauss-Kahn’s own admission that the IMF had been preparing every detail of this with Papandreou, it also arises for other reasons that subsequently became known — that Greece was chosen by the designers of the European Union to become the guinea pig for the implementation of harsh austerity and other forms of economic punishment, set up for all as an example to be avoided, in the context of a new EU economic policy for handling the member countries with fiscal problems.

Indeed, the policy of the memorandums gave the opportunity not only to the IMF to put a foot in Europe — until then its activities always were, with devastating consequences, limited to developing countries in Africa and Latin America — but also gave the opportunity to the French and German banks to get rid of their so-called toxic bonds, that were loaded onto the Greek people by turning a private debt into a state debt.

In order to achieve all of this, of course, they had to plant the appropriate person in ELSTAT at a time when certain statistical adjustments were required, in order to support their treacherous plan. Where did this lead eventually? To the bankruptcy of the Greek state.

 

MPN: Andreas Georgiou is no longer in Greece, despite the fact that various legal cases and judicial decisions are outstanding against him. Where does Georgiou find himself today and what is he presently involved with?

NL: He’s away, because he knows what he’s faced with, with trials and legal cases. Georgiou is currently in his comfortable villa in Maryland. He left Greece in the summer of 2015, one month before the end of his five-year term as ELSTAT chairman. Coincidentally, this was shortly after the call from the House of Parliament to testify before the examination committee that had been formed at that time to investigate the reasons for our accession to the first memorandum. He never came to the examination room, pretending to be in the hospital with “pneumonia.” Who on earth has ever heard of a pneumonia case in the middle of the Greek summer?

Anyway, immediately after his “discharge” from the hospital, he left for America. I repeat, one month before the end of his term and without requesting a renewal of the chairmanship position for another five years. He could have done that, but he didn’t, apparently having realized that he could not have avoided the imminent court hearing on the prosecutions for breach of duty and for the felony of inflating the deficit figures — which in the legal language is expressed as “felony of false certification at the expense of the state” together with the “aggravating order for public abusers,” a very impressive legal phrase. This is a legal category that leads to life imprisonment.

I presume that he’s engaged at this time in preparing his defense, through statements via his lawyers in Greece, while he remains absent, missing from every trial that has taken place regarding him.

 

MPN: A few months ago Georgiou was found guilty by the Greek justice system. What were the charges for which Georgiou was convicted and sentenced?

NL: There are two convictions Georgiou had this year. In March, in a criminal court, he was convicted for libel and for written defamation, and he was given one-year imprisonment with a three-year suspension. He appealed through his lawyers, but the Penal Court of Appeals condemned Georgiou again, giving him the same sentence.

Georgiou’s crime was that, in an official ELSTAT news release, he accused former ELSTAT board member Dr. Nicholas Stroblos of being a statistical swindler, obviously trying to divert guilt from himself for statistical fraud. I’m pointing out here that Dr. Stroblos is the former director of the national accounts department of ELSTAT, whom Georgiou illegally replaced with one of his now co-defendants. Consequently, Stroblos sued him in both criminal and civil courts and, apart from the one-year imprisonment imposed by the criminal court, the civil court fined Georgiou 10,000 euros for damages resulting from libel.

Georgiou’s most recent conviction is concerned with one of the three accusations included in the prosecution for breach of duty. The first accusation was related to the fact that he was in parallel for several months, from July to November 2010, as head of the statistical authority in Greece but also as an employee of the IMF, a duplication of employment explicitly prohibited by ELSTAT’s founding law 3832 of 2010. That law required him to work exclusively and with full employment in the ELSTAT board. Georgiou deluded the Greek parliament about his ongoing post with the IMF — and note that the IMF is one of the lenders of Greece — while at the same time he had accepted the post as president of ELSTAT’s board. He would not have been selected as ELSTAT president, not even as a simple member of the board, had the parliament known about his double post.

The second accusation concerned the fact that Georgiou did not convene the ELSTAT board for a whole year, violating the law that required meetings at least once a month.

The third accusation, and the most important of all three, concerned the fact that the decision to endorse the revised figures for 2009’s deficit was taken only by Georgiou, without the agreement of the other members of the board — which had been selected, I remind you, and approved exactly for this purpose by the conference of the parliamentary presidents with a majority of four-fifths. For this accusation, he was convicted in the context of breach of duty, and this had to do with the publication of deficit figures without our approval, as required by law. Georgiou appealed this conviction to the Supreme Court, and we are waiting to see what the Supreme Court will decide.

Georgiou was acquitted on the charge that he did not timely convene the ELSTAT board, although this is intimately interconnected with the non-convening of the board for the approval of the data, for which he was convicted. So we ended up with a paradoxical situation here. He was also acquitted of the charge that while he was a member of the IMF — that is to say, a servant of the lender — he was also chairman of ELSTAT — that is, a servant of the borrower — something that is inconceivable worldwide and yet happened in today’s occupied and economically enslaved Greece.

Naturally, the people who were present in the courtroom were annoyed and protested these acquittals, but when they heard the announcement of his conviction on the third charge they were relieved, of course, and for this charge he was sentenced to two years’ imprisonment with a three year suspension — without being granted, of course, any mitigation.

I, together with fellow whistleblower and former ELSTAT board member Zoe Georganta, filed an objection against the court judgment for the two accusations for which he was acquitted, and we expect a Supreme Court decision as to whether or not Georgiou will go to a new trial for these new accusations. At the moment, the two acquittals cannot be considered irrevocable. But it is true that the most important accusation, for which Georgiou desperately wanted to be acquitted, was the one for which he got convicted.

Indeed, the fact that Georgiou published the inflated elements of the deficit without approval by the ELSTAT board not only proves his guilt of the second accusation, of not convening the board as he should have, but it also implies a deception, because he knew that his swollen deficit figures would never be accepted by a majority of the board members. He further recognized that such a disagreement would sooner or later become public and reveal the irregularities he used with the help of Eurostat itself. Such a revelation would result in the failure of the plan to legitimize the first memorandum and thence to impose onerous austerity measures on Greece. That was not acceptable by the initiators of this plan, who I believe had to use Georgiou and instructed him to silence the rest of the ELSTAT board.

 

MPN: Following the guilty verdicts against Georgiou this past spring, a barrage of positive coverage and PR in favor of Georgiou appeared in the Greek and international media — including Bloomberg, the Washington Post and Politico. We also heard numerous statements of support from major political figures in Greece, the European Union, and elsewhere. These statements criticized the supposed lack of independence of the Greek justice system in the verdicts against Georgiou. How would you describe or characterize Georgiou’s network of support within and outside of Greece, and these arguments made in his favor?

NL: Yes, indeed, various statements have been heard and continue to be heard in support of Georgiou, trying to sanctify him, to elevate him as a serious personality and as an honest scientist. All this in order to justify everything he did illegally as ELSTAT president. All that has been said rests on myths that have been circulated by the domestic and foreign supporters of Georgiou, who are desperate that the case not be brought to the court of justice — the major case of the inflation of the deficit figures.

But this also proves their own guilt in the matter. If they really believe that Georgiou is innocent and that we are the slanderers and the liars, why don’t they let Greek justice do its job and prove his presumed innocence in a court hearing? I would even expect Georgiou himself to be the first to grab this opportunity to be redeemed. This furious effort of all his supporters to prevent the case from being brought to trial reveals their panic as well as their guilt, because they know very well that in the forthcoming court hearing all the evidence will be revealed proving that Greece has suffered the greatest national betrayal since the time of the Thermopylae treason, 2500 years ago, when Efialtes betrayed the Greek army which was fighting the Persian invasion.

The participation of all those major political figures in Greece and the European Union in the betrayal perpetrated by Georgiou will also be revealed. Indeed, the core of this support network includes first and foremost Eurostat, whose senior staff advised Georgiou on how to inflate the 2009 deficit and also how to change ELSTAT’s founding laws in order to neutralize the rest of the board.

Imagine therefore what impact Georgiou’s conviction would have on Eurostat’s image! Eurostat’s political chief is the European Commission, Brussels — that is, one-third of the troika — with all that implies, of course, for many high-ranking political figures in the European Union and beyond. So one can clearly understand why high-level managers from Eurostat and major political figures from the EU itself are continuing to build a wall of protection and support for Georgiou — in the hope that the government and the Supreme Court of Greece will believe all these myths they are promoting.


Greece’s Statistics agency employees walk past the logo of the agency in Piraeus, near Athens. (AP/Petros Giannakouris)

The first myth is that in recent years Georgiou was acquitted many times but the persecution against him continues. That’s what they say. The supporters of Georgiou claim again and again that Georgiou was acquitted, but it’s not true. The acquittal may occur only after the irrevocable final judgment in a court trial, or after an exonerating court order is accepted by the Supreme Court. As appeals against all rulings in Georgiou’s case have been filed with the Supreme Court, he has not been acquitted irrevocably for any charges brought against him.

On the contrary, he has had an irrevocable conviction for defamation, as I said before, and a conviction for one of the three accusations for breach of duty — regarding which the Supreme Court decision is awaited, whether or not it will become irrevocable. But the other two accusations for breach of duty for which he has been acquitted, as I have already said, for these we have filed a complaint and they cannot, therefore, be considered irrevocable or a final acquittal. So it’s in keeping with due process that the prosecutions against him still continue.

The second myth goes as follows: Georgiou took over the presidency of ELSTAT after the first memorandum. He cannot, therefore, be regarded responsible for the memorandum and the economic crisis that followed. Well indeed, when Georgiou took action in ELSTAT, we were already under the first memorandum. If you remember, our entry into the first memorandum was announced by George Papandreou in his speech made on the Greek island of Kasterllorizo in April 2010, and the reason for this was allegedly the high level of the 2009 deficit, which was put by Papandreou at 13.6% of GDP. That’s equivalent to about 30 billion euros.

However, it was not the actual deficit, but the prediction by Papandreou of what it would be after all relevant calculations took place. Papandreou did not have the right to take such an important decision, one that would affect Greek society so much, based only on a prediction that had not even been approved by the Court of Auditors. We would be the ones, as ELSTAT’s management board, to supervise the calculations of the actual deficit, to approve it and publish it in October 2010, six months later.

Actually, if we had been given the opportunity to do that and found these deficit figures to be less than 10%, we would have been able to denounce the first memorandum and cancel it! And of course, the rest of the memorandums that followed. But obviously, this would not be something that the designers of the first memorandum wished to happen, and so the appropriate person must be found who, with specific statistical adjustments, could make the deficit of 2009 “confirm” the “validity” of Papandreou’s deficit “forecast” in April 2010, and fully justify our entry into the first memorandum. This is what they wanted.

Furthermore, in order to avoid any controversies with the rest of the board that could endanger their plan, it was decided to neutralize not only the dissidents on the board but the whole of ELSTAT’s board. As a result of all these unlawful actions, the first memorandum was legitimized — and the door opened for the second and worst memorandum and obviously the rest of the memorandums that have followed, and for the austerity measures that have been imposed since then. Therefore, it’s perhaps wrong to say that the first memorandums was due to Georgiou. It’s more appropriate to say that all memorandums and their related medieval austerity measures that we still have on our backs are actually due to Georgiou!

The third myth: since Eurostat has approved Georgiou’s practices and figures, they must be right, they must be correct. But would it have been possible for Eurostat not to approve these statistics, provided by Georgiou, and the methods of administration that he was using? It was Eurostat’s director himself, Walter Radermacher, who gave orders to Georgiou as to what data to add to the deficit. Correspondence has been revealed, from Radermacher to Georgiou, that shows how to add this amount of debt that was incurred by the Simitis swaps, how to add it into four years’ deficits until 2009 — prior to the expiry date, as we previously explained, and although no European regulation existed at the time that would allow this.

Also, it was the permanent representative of Eurostat at ELSTAT, Hallgrimur Snorrason, who — with the assistance of Eurostat’s legal adviser, Per Samuelson — advised Georgiou on how to change ELSTAT’s founding law in order to transform ELSTAT into one-man authority. It’s hardly surprising therefore that Eurostat approved the practices and the deficit figures of Georgiou. Of course, that does not mean that they were correct.

The final myth that I want to mention is that his proponents are saying Georgiou applied all proper European regulations. On the contrary, most European regulations and Eurostat’s own criteria for the deficit and debt calculations were violated by Georgiou and his advisers from Eurostat, in order to justify the unjustifiable integration of deficits of many public utilities into the 2009 deficit — a decision that would require a thorough study of several months for each public utility. You can’t just decide to include the deficit of a utility in the public debt; you need a thorough study, for several months, six months. So what kind of European regulations did Georgiou actually apply, I wonder? No one knows.

 

MPN: What is plainly evident is that there is a very extensive and very powerful network of support for the likes of Andreas Georgiou, a network that includes powerful media voices, major politicians and political figures, major centers of power and influence and decision-making. How can such a powerful and seemingly unified network of political and media forces even be countered by the Greek people?

NL: Indeed, Georgiou’s support network, composed of high-ranking political figures — domestic and foreign — is powerful. But no matter how much influence this network can have on political affairs in Greece, I think that it is not in a position to influence the Greek justice system, which I consider impartial. The fact that the case has reached up to the level of the Supreme Court, which so far has justified many of our objections and appeals against Georgiou, gives us hope that ultimately the systemic power network that exists supporting Georgiou can be successfully dealt with.

At the end of the day, our justice system, perhaps the only irreproachable institution in our country, seems to have borne the burden of this matter. I believe that the truth will soon be revealed, no matter how many powerful political and media forces try to force an acquittal of Georgiou.

 

MPN: What are the judicial cases still outstanding regarding the ELSTAT case and Andreas Georgiou? What are the charges which Georgiou is still facing? And what is your expectation regarding the outcome of these cases?

NL: Most importantly, the cases of the false inflation of data and of the breach of duty by Georgiou, involve crimes of public document forgery and violation of ELSTAT’s founding law. As I have already said, Georgiou was convicted of one of the more important accusations related to the breach of duty — that of the publication of the 2009 deficit figures without the approval of the ELSTAT board. He has been acquitted on the other two charges — the duplication of his appointment in the IMF and ELSTAT and the non-convening of the board — but we have appealed these two verdicts, and we hope that the Supreme Court will decide to repeat the trial for these two related charges.

If this affair is remanded back to the trial courts, we certainly expect Georgiou to be convicted, because the evidence we have against him is rock solid and undeniable. This is what Georgiou’s supporters know. That’s why they push as hard as they can to prevent the case from reaching the high court of justice.

 

MPN: In what way do you believe the verdicts that will be reached by the Greek justice system concerning the ELSTAT and Georgiou cases impact the future of Greece, particularly with regard to the austerity policies and memorandums that are being imposed and the non-serviceable public debt of Greece?

NL: I agree with you that Greek debt is non-serviceable. Even if we get away from the memorandums, we don’t get away from the related loan agreements, and we will continue to be under supervision by the EU until we pay 75% of our debt, something impossible for the next 60 years!

If, however, as we hope, there is an irrevocable conviction of Georgiou for the act of inflating the deficit figures, this will prove that all these medieval memorandums were imposed on the basis of false figures — which gives Greece the right to claim compensation from the European Union for the damage we suffered in the last seven years of the financial crisis.

Article 340 of the Treaty on the Functioning of the European Union gives us the right to claim this compensation, and we have even estimated the financial loss since Georgiou set foot in Greece, a cost that may well exceed 210 billion euros. A compensation of this magnitude would certainly overturn the disgraceful economic situation we are experiencing today. However, I emphasize again that a necessary condition is an irrevocable conviction of Georgiou regarding the felony of inflating the deficit figures.

And what about these instigators who used Georgiou to carry out their treacherous plans? Even Grigoris Peponis — the impeccable investigator who proposed the criminal prosecution of Georgiou in the first place — has suggested that the possible existence of certain instigators within the Greek and European political systems, who directed Georgiou on what to do, has to be taken into consideration. These are the ones who do not want the case to reach an open court hearing — the ones who are so desperate for the acquittal of Georgiou as early as possible, in order to cover their own involvement in the above crime, because they’re well aware that we have evidence of their unlawful intervention in inflating the deficit and also in transforming ELSTAT from an independent authority into one-man authority.

If the Supreme Court sends Georgiou to trial in the high court of justice, all his supporters know that this will mean a likely conviction for him. The support network will then collapse, and they will find themselves accused for their betrayal of their homeland and crimes against its citizens. Our country will then pass from an underprivileged position of a beggar, to the strong position of a challenger, on the basis of specific articles of the Treaty on the Functioning of the European Union itself.


Protesters hold a banner during a rally in Athens, Thursday, Dec. 8, 2016. (AP/Yorgos Karahalis)

As far as we are concerned, we do not really care about the strict or non-strict punishment of Georgiou, who is now a pensioner of the IMF. What interests us is to prove his guilt and thereby to remove the injustice that has been committed against Greece through the false inflation of the public debt and deficit of 2009, and also prove the criminal involvement of the European Commission and Eurostat. This will only be done when the case is referred to an open court hearing, in which Eurostat and Georgiou will have to be present, in order to testify under oath whether or not they have falsely inflated the statistical figures of Greece, and the reasons for doing so.

I do not know when and if this will happen, and how many battles we have to give from now on in order to achieve this. Some tell us that there’s no point in continuing to fight, as it seems that with such a front of support for Georgiou by strong decision-making centers, the battle has already been won against us. We reply by saying that if we stop fighting, there will simply be no other battle — something we don’t want, because let’s not forget what Bertolt Brecht said once: “He who fights, can lose. He who doesn’t fight, has already lost.”

 

MPN: Looking at the situation in Greece today and the economic claims that are being made by the Greek government — that the country has returned to economic growth, that Greece has turned a corner — do you believe that the Greek statistical figures today are credible, or are they perhaps still being manipulated?

NL: Unfortunately, the statistical figures have already been exploited by any government in power so far in Greece. We have seen this happen with the alchemies of swaps in order to get into the Eurozone. By the way, I wish that we had never gotten into the Eurozone in the first place! Our economy was not in a position to handle such a strong and competitive currency. We saw another exploitation of the statistical figures, of the deficit, this time. They became the reason for an economic crisis of the past seven years.

I cannot say what is happening these days with the statistical figures, as I am not in ELSTAT. But we will find out sooner or later what is happening. The truth always comes out for any case of mishandling of statistical figures. We’ve seen this happen. But unfortunately, as long as there is no reliable team to correctly manage the handling of the statistical data in the Greek Statistical Authority, I’m afraid we should again expect irregularities and alchemies of the data.

 

 

Aug 292015
 
 August 29, 2015  Posted by at 9:24 am Finance Tagged with: , , , , , , , , , ,  


Arthur Rothstein Texas Panhandle Dust Bowl Mar 1936

Fed Up Investors Yank Cash From Almost Everything Just Like 2008 (Bloomberg)
Everything You’ve Heard About China’s Stock Market Crash Is Wrong (Quartz)
President Xi Had Too Much Riding On China’s Stock Market Boom (Satyajit Das)
Chinese President Xi Jinping Amasses Power, Hits ‘Perfect Storm (CNBC)
The Chinese Bubble (Marco Zanni, M5S in Europe)
There Can Be No Denying China’s Economy Is Slowing Down (Guardian)
Citigroup Braces For World Recession, Calls For Corbynomics QE In China (AEP)
Lies You Will Hear As The Economic Collapse Progresses (Brandon Smith)
Ultra-Low German Inflation Keeps Pressure On ECB (Reuters)
The Decades-Old Tension Threatening To Rip Europe Apart (Telegraph)
How The IMF’s Misadventure In Greece Is Changing The Fund (Reuters)
Why I Support Corbyn For UK Labour Leader (Steve Keen)
Brazil Falls Deep Into Recession (CNN)
Does The World Need A Financial Early Warning System? (Roubini)
EU ‘Snubbed’ Greek Plan To Tackle Refugee Crisis (Kath.)
Mediterranean Refugee And Migrant Numbers Pass 300,000 In 2015 (Reuters)
Europe’s Halting Response to Migrant Crisis Draws Criticism as Toll Mounts (NYT)
133 Syrian Refugees Cross Norway’s Arctic Border On Bicyles (Local.no)
The Merkel Plan (Beppe Grillo’s Blog)

“Mom and pop are running for the hills.”

Fed Up Investors Yank Cash From Almost Everything Just Like 2008 (Bloomberg)

Mom and pop are running for the hills. Since July, American households – which account for almost all mutual fund investors – have pulled money both from mutual funds that invest in stocks and those that invest in bonds. It’s the first time since 2008 that both asset classes have recorded back-to-back monthly withdrawals, according to a report by Credit Suisse. Credit Suisse estimates $6.5 billion left equity funds in July as $8.4 billion was pulled from bond funds, citing weekly data from the Investment Company Institute as of Aug. 19. Those outflows were followed up in the first three weeks of August, when investors withdrew $1.6 billion from stocks and $8.1 billion from bonds, said economist Dana Saporta.“Anytime you see something that hasn’t happened since the last quarter of 2008, it’s worth noting,” Saporta said.

“It may be that this is an interesting oddity but if we continue to see this it could reflect a more broad-based nervousness on the part of household investors.” Withdrawals from equity funds are usually accompanied by an influx of money to bonds, and an exit from both at the same time suggests investors aren’t willing to take on risk in any form. While retail investor sentiment isn’t the best predictor of market moves, their reluctance could have significance, Saporta said. “It might suggest households are getting nervous about holding investments, and that could lead to some real economic implications including cutting back on spending,” she said. “Should the market turn lower again, it will be interesting to see if we have the traditional move back into bonds or if households move to cash.”

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No punched pulled, other than that silly 7% GDP number.

Everything You’ve Heard About China’s Stock Market Crash Is Wrong (Quartz)

This week’s Chinese stock market implosion has been widely viewed as a reaction to the Chinese government’s devaluing the yuan on Aug. 11—a move many presume was a frenzied bid to lower export prices and strengthen the economy. This interpretation doesn’t stand up to scrutiny. First, Chinese investors haven’t been investing based on how the economy is doing, but rather, based on what they think the government will do to prop up the market. The crash, termed “Black Monday,” was more likely a reaction to the central bank’s failure over the weekend to announce a widely expected cut to the bank reserve requirement since previous cuts in February and April had boosted stock prices.

The government eventually caved and announced a cut on Tuesday (Aug. 25). Second, the crash happened nearly two weeks after the devaluation, and the government only let the yuan depreciate by about 3% before swooping in and propping up its value again—which hardly helps exporters since the currency’s value effectively rose some 14% in the last year.

The devaluation probably had more to do with breaking the yuan’s tightly managed peg to the US dollar, an obligation that has been draining the economy of scarce liquidity as capital outflows swell. Both moves—the government pulling back from its market bailout and the currency devaluation—stem from the same ominous problem: China’s leaders are scrambling to find the money to keep its economy running. To understand the broader forces that led to this predicament, here’s a chart-based explainer tracing its origins:

China used its exchange rate to stoke growth
China has long pegged its currency to the US dollar at an artificially cheap rate. Keeping the yuan cheaper than it should be, even as export revenues and foreign investment gushed in, allowed China to amass huge foreign exchange reserves, as we explain in more detail here:

A cheap currency has also powered China’s investment-driven growth model (more on this here). By paying more yuan than the market would demand for each dollar, the People’s Bank of China (PBoC) created extra money out of thin air, sending it sloshing around in the economy. (Meanwhile, the PBoC prevented this from driving up inflation by setting its bank reserve requirements unusually high, as we explain here.)

Easy money, easy lending, easy growth. This was especially true after the global financial crisis hit, when China pumped 4 trillion yuan ($586 billion in 2008 US dollars) into its economy to protect it from the fallout. The resulting double-digit growth attracted foreign investment and hot money inflows, raising demand for yuan. To buoy its faltering export industry, the PBoC had to buy even more dollars to prevent surging yuan demand from driving up the local currency’s value.

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“..investment spending as a percentage of GDP is unprecedented in history, creating massive overcapacity.”

President Xi Had Too Much Riding On China’s Stock Market Boom (Satyajit Das)

The real damage in China’s stock market crash is subtle, bringing into question the fundamental economic model, the reform agenda and the political authority of its leadership. Over three millennia, China’s leaders have ruled by the mandate of heaven. Each new dynasty, like that of current president Xi Jinping, must establish a new dynasty, consolidating power and authority. This requires ensuring general prosperity, especially for key groups whose support is essential. The officially sanctioned “state bull market”, or “Uncle Xi bull market”, was enthusiastically cheered by state media and brokers – encouraging participation. But instead of diverting attention from other existing challenges, the stock market correction has drawn attention to challenges such as the end of the property boom.

Chinese real estate represents 23% of GDP – a proportion around three times that in the US at the height of its property bubble. Prices appear inflated relative to incomes and rental yields. Despite vacancy rates of more than 20% and inventories equivalent to five years’ demand in some cities, new housing starts are around 12% above sales. In China, investment spending as a percentage of GDP is unprecedented in history, creating massive overcapacity. The accompanying credit bubble is an immediate concern. By 2014, total Chinese debt was $28trn, or 282% of GDP – up from $7trn (158% of GDP) in 2007 and $2trn (121%) in 2000. The $20trn-plus increase since 2007 represents one-third of the rise in global debt over the period.

The stock market falls raise the risk of significant problems within the financial system. This will ultimately affect China’s potential growth, which has, since 2009, contributed greatly to global economic activity. The episode may slow down or defer necessary economic reforms. A liquid and well-functioning stock market is essential for appropriate pricing of capital and reducing excessive reliance on bank loans. It is important in any possible privatisation of state-owned enterprises, and attracting foreign investors and long-term, stable capital inflows. The fear is that China’s proposals are rhetoric, primarily for foreign consumption. In 2013 the Communist Party stated that market forces must play a “decisive role” in allocating resources. But the market crash and the response suggest that the Chinese authorities are likely to rely more on Communist dogma than market forces when events develop in an unwanted way.

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Not very useful experts here.

Chinese President Xi Jinping Amasses Power, Hits ‘Perfect Storm (CNBC)

The yuan, China’s market, and global confidence in Beijing are all dropping. It’s not an easy time to be the leader of the world’s second-biggest economy. President Xi Jinping has consolidated more power within his country than any other Chinese leader since the early ’90s, just in time for a major economic slowdown and financial markets turmoil. Now, Chinese leadership is under “immense” pressure from within and without, John Minnich, East Asia analyst at geopolitical intelligence firm Stratfor, told CNBC. “It’s kind of a perfect storm where a lot of these things are hitting,” he said. “None of these issues by themselves would be enough to apply pressure, but together….”

A deadly industrial explosion in Tianjin earlier this month cast further doubt on Xi’s capability to control local officials, a politically inopportune event during a key moment in his campaign to reform China’s economy and environmental practices at the same time. “We’re approaching a moment where, in the next couple months, if there is going to be resistance from within the leadership against Xi, we’re going to see (it) emerging more strongly,” Minnich said. And as this moment has approached, Beijing’s handling of the stock market crash—which saw everything from liquidity interventions to arrests for allegedly malicious selling—represented the first big stumble for the Xi administration, said Nicholas Consonery, Asia director for the Eurasia Group.

But even with this “perfect storm” of resistance forming, Xi appears to have already consolidated sufficient power to achieve his reform goals, experts told CNBC. While Eurasia Group’s Consonery said the equity market interventions were “definitely” counterproductive, he’s still optimistic about Xi’s plans to manage broader economic headwinds. “I’m not overly panicked about their ability to manage through these problems,” he said, adding that it’s unlikely there will be any changes at the top of the country’s leadership. Minnich agreed that Xi and his close allies won’t lose control of the situation—especially given his continuing popularity with the regular citizenry—but his capacity to institute reforms may be limited by political resistance. “Xi is not all-powerful,” Minnich said.

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“..the growth strategy for the Euro and the Eurozone is based on a downward adjustment of costs (mainly labour costs) and prices..”

The Chinese Bubble (Marco Zanni, M5S in Europe)

“What’s happening in China? Many people are asking this question, given the sequence of happenings in the Far East. In brief, what’s happening now is what I have been predicting for some time now: the bursting of a financial and property bubble that will have an impact on the whole world by the end of the year 2015. These are the effects of “laissez-faire” capitalism with a fictitious economy based on finance, with a development model that has been prevalent throughout the 20th century and in the first part of the 21st century. This is what has dragged us into the abyss. China has not understood its error. This is the same mistake made by Italy at the end of the 1970s. It’s the same mistake made by Gorbachev in the middle of the 1980s. If you open your borders to foreign capital and you liberalise finance, this is the result.

You will no longer have control over the macroeconomic, economic and financial variables of your own country and of your financial system. These things will no longer be guided by choices relating to the growth in the living standards of the population, in its wealth and in the real economy, but they will be guided by speculation by the few to the detriment of all the others. And China’s response to this error seems to be going in the direction of “more reliance on the free market and “more liberlisation”, a choice that will drag them into the abyss along with the rest of the world. But coming back to what’s happening here today, the biggest crisis is not in the Eurozone, with the situation in Greece still fresh in the inside pages of the newspapers, but it’s what’s happening in China, with the collapse of the Stock Market in Shanghai and the bursting of the financial bubble.

The events in China have set off a global wave of share market collapses, and these will surely be the cause of a further worsening of the conditions in the Eurozone. And what’s the cause? The cause is the model underlying the single European currency, as I’ll explain. As we’ve been taught (or has this just been imposed on us?) by Merkel, Draghi, Juncker and the like, the growth strategy for the Euro and the Eurozone is based on a downward adjustment of costs (mainly labour costs) and prices, that’s the well-loved internal devaluation, to increase competitiveness and thus making European products more attractive abroad. But the obvious error in this strategy, that the knowing and criminal short-sightedness of the European leaders didn’t want to see in 2009, is that this strategy depends exclusively on external demand, because it’s a growth strategy based solely on exports.

By now, the failure of this approach is clear to everyone, whether they are technically qualified or just lay people, but the criminals in Brussels are going ahead unperturbed. Even a child would understand that in a world affected by crises, a world in which China with a market of 1.5 billion consumers, is collapsing under the blows resulting from the explosion of the financial and real estate bubble, it’s just foolish to base one’s growth on internal devaluation and external demand. A startling example of this failure is surely seen in Finland, a country that is perceived to be one of the virtuous ones in the Eurozone. It is falling to pieces with each useless internal devaluation. The touch paper has been lit. We must prepare for the worst. And perhaps in September the Federal Reserve will increase interest rates thus definitively causing the explosion of another running sore: the debt in Emerging Markets.”

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China’s car market is imploding at the very time investments are set to hugely increase production.

There Can Be No Denying China’s Economy Is Slowing Down (Guardian)

The China slowdown is real and central banks pumping up stock markets with cash and confidence is not going to reverse that situation. At some point, investors from Shanghai to New York, via London, will need to recognise that China is no longer a powerhouse for global growth. Unfortunately, it looks as if the Jackson Hole meeting of central bankers in Wyoming this weekend will be an exercise in denial. Monday’s crash and the worst month for the FTSE 100 since 2012 will be considered bumps on the road that can be massaged away with some positive talk and extra dollops of cheap borrowing. The Bank of England governor, Mark Carney, is intent on raising interest rates next year. His talk at Jackson Hole is expected to be a study in calm with an emphasis on the positives messages from the UK economy, which is growing robustly, in the words of most City economists.

At the moment, the spotlight is on the Federal Reserve, which is the first in the queue to start raising rates. The US central bank’s message is much the same. Yes, there will be a short delay to the expected date for a first interest rate increase, but all the signals are still pointing towards a normalisation of global growth, wages, inflation and interest rates. There are other signals to consider, however. A shrug is not the appropriate reaction when Ford says it expects annual car sales in China to decline for the first time in 17 years. Likewise when Volkswagen recently revealed its first slide in deliveries to China in a decade. China is the world’s largest car market and a bellwether for the financial health and confidence of most consumers. Chinese car production in June was down 5.3% compared with the previous month, and sales slumped 6.1% over the same period.

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Fiscal stimulus in China? More debt? Really?

Citigroup Braces For World Recession, Calls For Corbynomics QE In China (AEP)

China has bungled its attempt to slow the economy gently and is sliding into “imminent recession”, threatening to take the world with it over coming months, Citigroup has warned. Willem Buiter, the bank’s chief economist, said the country needs a major blast of fiscal spending financed by outright “helicopter” money from the bank to avert a deepening crisis. Speaking on a panel at the Council of Foreign Relations in New York, Mr Buiter said the dollar will “go through the roof” if the US Federal Reserve lifts interest rates this year, compounding the crisis for emerging markets. Professor Zhiwu Chen from Yale University told the same event that China will be doing well if it can contain its slow-motion crisis to mere stagnation for the next 10 years, given the dangerous levels of debt in the system.

“If the Chinese government is able to manage a Lost Decade with very low growth – or no growth – without an economic crisis, it will be a policy achievement,” he said. Prof Chen said a Western-style financial collapse in China is “highly unlikely” since the banks are largely government-owned and losses will be absorbed by the state. There is a loose parallel with Japan, where the economy slid into a deflationary quagmire and lost its economic dynamism but never suffered a full-blown financial crash. In Japan’s case the denouement was averted by keeping “zombie banks” on life-support. The colourful Mr Buiter – a former UK rate-setter – said China has bungled both fiscal and monetary policy, and is now “sliding into recession”. This would be fall in growth to less than 4pc on the “mendacious” figures published by Beijing, but in reality lower.

“They will respond too late to avoid a recession, which is likely to drag the global economy with it down to a global growth rate below 2pc, which is in my definition a global recession,” he said. “The only thing likely to stop it going into recession is a large consumption-oriented fiscal stimulus funded through the central government, preferably monetized by the People’s Bank of China. Despite the economy crying out for it, the Chinese leadership is not ready for this,” he said. This appears to be a call for “Corbynomics” in China. A similar policy was implemented by Takahashi Korekiyo in Japan in the early 1930s, with some success. Whether China really is in such dire straits is hotly contested, even within Citigroup itself. The bank’s equity team said the August sell-off on global markets is a typical late-cycle correction rather than the onset of a major downturn.

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Always entertaining.

Lies You Will Hear As The Economic Collapse Progresses (Brandon Smith)

It is undeniable; the final collapse triggers are upon us, triggers alternative economists have been warning about since the initial implosion of 2008. In the years since the derivatives disaster, there has been no end to the absurd and ludicrous propaganda coming out of mainstream financial outlets and as the situation in markets becomes worse, the propaganda will only increase. This might seem counter-intuitive to many. You would think that the more obvious the economic collapse becomes, the more alternative analysts will be vindicated and the more awake and aware the average person will be. Not necessarily…

In fact, the mainstream spin machine is going into high speed the more negative data is exposed and absorbed into the markets. If you know your history, then you know that this is a common tactic by the establishment elite to string the public along with false hopes so that they do not prepare or take alternative measures while the system crumbles around their ears. At the onset of the Great Depression the same strategies were used. Consider if you’ve heard similar quotes to these in the mainstream news over the past couple months:

• John Maynard Keynes in 1927: “We will not have any more crashes in our time.”

• H.H. Simmons, president of the New York Stock Exchange, Jan. 12, 1928: “I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”

• Irving Fisher, leading U.S. economist, The New York Times, Sept. 5, 1929: “There may be a recession in stock prices, but not anything in the nature of a crash.” And on 17, 1929: “Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”

• W. McNeel, market analyst, as quoted in the New York Herald Tribune, Oct. 30, 1929: “This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”

• Harvard Economic Society, Nov. 10, 1929: “… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.”

Here is the issue – as I have ALWAYS said, economic collapse is not a singular event, it is a process. The global economy has been in the process of collapse since 2008 and it never left that path. Those who were ignorant took government statistics at face value and the manipulated bull market as legitimate and refused to acknowledge the fundamentals. Now, with markets recently suffering one of the greatest freefalls since the 2008/2009 crash, they are witnessing the folly of their assumptions, but that does not mean they will accept them or apologize for them outright. If there is one lesson I have learned well during my time in the Liberty Movement, it is to never underestimate the power of normalcy bias.

There were plenty of “up days” in the markets during the Great Depression, and this kept the false dream of a quick recovery alive for a large percentage of the American population for many years. Expect numerous “stunning stock reversals” as the collapse of our era progresses, but always remember that it is the overall TREND that matters far more than any one positive or negative trading day (unless you open down 1000 points as we did on Monday), and even more important than the trends are the economic fundamentals.

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When are we going to call that 2% goal that is never ever met for what it is: stupid? How about outright mendacity?

Ultra-Low German Inflation Keeps Pressure On ECB (Reuters)

German inflation remained close to zero in August, keeping pressure on the European Central Bank to consider additional stimulus measures as the falling cost of oil and a slowdown in China put the brakes on prices. Preliminary data for Europe’s largest economy showed on Friday that annual consumer price inflation harmonised to compare with other European countries (HICP) held steady at 0.1%. The figure, which matched a Reuters consensus forecast, remains far below the ECB’s inflation target for the broader euro zone of just below 2% over the medium term. That, along with data earlier in the day showing EU-harmonised prices fell 0.5% year-on-year in Spain, will give the central bank pause for thought as it prepares for its six-weekly policy meeting on Thursday.

Before then, policymakers will also have preliminary inflation data for the euro zone to digest. That is due on Aug. 31 and economists polled by Reuters expect the reading to hold steady at 0.2%. Economists said they did not expect the ECB to beef up next week the bond-buying programme it launched in March, though such moves were possible in time. The central bank’s chief economist Peter Praet said earlier this week that it stands ready to do more and has pledged to bolster the programme if necessary. ING economist Carsten Brzeski said the slump in commodity prices meant headline inflation in Germany could drop below zero in the coming months. “While low inflation or even negative inflation rates are a blessing for German consumers, they could become a new headache for the ECB,” he said.

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Smothered by supranationals.

The Decades-Old Tension Threatening To Rip Europe Apart (Telegraph)

Very few arguments are only about the subject ostensibly under discussion. The volcanic bust up between Greece and its creditors was, of course, about the terms of the country’s various bailouts. But it was also a particularly dramatic venting of the tectonic tensions at the heart of the European project. Throughout the bickering, politicians of all stripes exhorted each other to be “good Europeans”, a deceptively bland phrase with a long and complicated history. Trying to untangle its nuanced meaning takes us beneath the surface of the Greek crisis and to the vast contradictions that are threatening to tear Europe apart. David Krell chose The Good European as the title of his book about Friedrich Nietzsche, the much-maligned German philosopher who first coined the phrase.

Despite being posthumously embraced by some particularly malevolent Europeans, the nineteenth century thinker was, according to Krell, “a fierce critic of nationalism, imperialism and militarism” who was concerned that the old ideas of nations and fatherlands might obstruct “the historic process of European unification”. This process was somewhat curtailed by some of Nietzsche’s most misguided fans in the second quarter of the twentieth century, which provided stark lessons about unchecked markets (which contributed to the Wall Street Crash of 1929 and the Great Depression that followed it) and excessive state power. Germany’s reaction to the turmoil was twofold – a heightened belief in the importance of European integration and the birth of a new economic orthodoxy called ordoliberalism.

This little-understood philosophy is often portrayed by critics of Germany as a kind of unbending dogma. Yanis Varoufakis, Greece’s mayfly finance minister, was having a dig at his German counterpart Wolfgang Schäuble in particular and ordoliberalism in general when he said: “To him, the rules are God-given.” But, at its root, ordoliberalism is simply a belief in shielding monetary stability and a balanced budget from political pressure; it reached its apogee in 1957 when the Bundesbank was made independent, a move that many other counties, including the UK, have belatedly copied.

Ludwig Erhard, West Germany’s first finance minister who helped fashion the country’s post-war Wirtschaftswunder [economic miracle] and popularise ordoliberalism, described the role of the state as like that of a football referee who ensures that a clearly defined and constant set of rules are adhered to without personally getting involved in the game. Alexis Tsipras argued that the January election and the July referendum demonstrated that Greece had rejected the terms of the country’s bailouts. To ordoliberals, the Greek prime minister was campaigning on a promise to re-write the offside rule. There are, however, important counterpoints to the ordoliberal worldview. The German economy is often held up as an example to be followed – Yvette Cooper, one of the Labour party leadership hopefuls did that just earlier this month. But there’s as much to be concerned about as admired.

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Oh, where are the days of DSK…

How The IMF’s Misadventure In Greece Is Changing The Fund (Reuters)

[..] The greatest angst was over the issue of debt restructuring – or lack of it, some IMF officials recall. “It was absolutely clear in the (IMF) building – not to everybody, but to the vast majority of us – that there was a need for debt restructuring,” the senior IMF economist said. In plain English, “restructuring” means that creditors forgive borrowers part of their debts, cutting deals to accept less than they are owed. But the Europeans opposed restructuring. They feared European banks loaded with Greek bonds could collapse, and argued restructuring would spread Greece’s financial woes to other parts of the eurozone, spurring other countries to ask for their own debt deals. So when the IMF developed its detailed program on Greece, it included no debt restructuring.

The initial plan assumed Greece would repay every euro it had borrowed – not because the IMF thought it could or would, but because the Europeans refused to countenance anything else. “The authorities upfront ruled out that option and no alternative options were discussed and developed,” said Poul Thomsen, head of the IMF’s Greek program, in his presentation at the board meeting of May 9, 2010, according to minutes of the session. “Fundamentally, our assumption is that we can put Greece … on a credible fiscal path.” Despite the grumblings of some board members, the IMF agreed that debt restructuring would have to wait. But the initial Greek program went off track, just as sceptical board members had feared. The economy tanked and the Greek government failed to deliver fully on reforms, such as privatizing state assets and opening up markets.

According to former Greek Finance Minister Papaconstantinou, Strauss-Kahn finally decided to get tough with Merkel and insist on debt restructuring in May 2011. Then the unexpected intervened: As Strauss-Kahn was on his way to Europe to meet the German chancellor, he was arrested in New York after a hotel maid alleged he had sexually assaulted her. Under intense media scrutiny, Strauss-Kahn quit. (In 2011 New York prosecutors dropped charges against him and he reached a settlement with the maid.) The debt meeting never happened. Some involved in the talks think the missed chance, as well as turmoil within the IMF following Strauss-Kahn’s departure, caused a fateful delay in the attempt to get Europe to embrace debt relief.

“I am not saying that Merkel would have been convinced,” Papaconstantinou said of the cancelled meeting. “But the discussion could have started much sooner.”In the eyes of Greek officials, senior figures at the IMF and in the troika did not understand the limitations of the Greek economy. As Greece repeatedly fell short of economic targets, troika officials in Athens tried to explain the realities to their bosses, according to both Greek and troika officials. Greece’s fractured politics, voters’ opposition to austerity and the vested interests of wealthy oligarchs made swift reform difficult, they said. The message did not get through. A senior IMF official who used to run policy told Reuters: “We were not fully aware that these guys (the Greeks) did not have the system, the controls, the bureaucracy to deliver.”

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He’s a tad less thick than the rest?!

Why I Support Corbyn For UK Labour Leader (Steve Keen)

There was a time when most educated people knew that the Earth was the center of the universe. There was a sophisticated “Geocentric” model, known as the “Ptolemaic system”, that predicted to very high accuracy the observed movement of all the objects in the Heavens, as they purportedly orbited the Earth on perfect crystalline spheres. 500 years ago, anyone who proposed an alternative model—in which the Sun was the center and the Earth was just another planet orbiting it—was derided as a heretic and a madman. The core concept did require a bit of a modification to fit the data—the pesky planets (the word “planet” means “Wanderer” in ancient Greek) had to rotate on secondary crystalline spheres, which rotated on the main Earth-centric spheres in what were called “epicycles”.

But if you got the center of revolution and speed of rotation of the two classes of spheres (and a few other nuances) just right, you could predict where Mars and Venus were going to appear in the sky for centuries in advance. It was, on its own terms, a very “scientific” theory. Practicing it took intelligence, careful attention to observation, and (for its day) great mathematical sophistication. But it was fundamentally wrong. The model appeared to fit the data (except for comets, which it dismissed as “atmospheric phenomena”), but it was completely wrong about the structure of the Universe. Astronomy has evolved beyond recognition since those days. We still speak of “sunrise”, but we know that what is really happening is “earth rotate”.

Anyone who actually believes that the Sun does orbit the Earth deserves the ridicule of being called a member of the Flat Earth Society. If only economics had grown up as much. Flat Earth views still abound in economics, and because of them, Jeremy Corbyn is being derided as a “deficit denier”, even by members of his own party such as Frank Field. “Deficit denier” is a nice turn of phrase. It effectively equates someone who argues that the government deficit is not a problem to “Climate Change Deniers”, whose rejection of the evidence and theory on Global Warming is clearly pseudo-scientific behavior. It implies that his opponents have science on their side, while Corbyn is the science-denier.

There is one way in which Corbyn’s critics are correct: to some extent, the science is on their side, and not his. But that “science” is closer to Ptolemy’s views of the Universe than what we know to be true about the Universe today.

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Any president anywhere with an 8% approval rating should be forced to resign.

Brazil Falls Deep Into Recession (CNN)

Brazil is going bust. Its currency is plummeting, unemployment is rising, its stock market is down 20% from a year ago and its president, Dilma Rousseff, has an 8% approval rating — the lowest since 1992 when Brazil’s president was impeached. Once a major economic success story, Brazil sank into recession on Friday. Its economy contracted 1.9% in the second quarter compared to the first. It was the second consecutive quarter of contraction. “Pretty much everything is turning down,” says Neil Shearing, chief emerging market economist at Capital Economics. Compared with the same quarter last year, its economy shrank 2.6%, by far the worst performance in years, according to government statistics published Friday.

Here are the major reasons why Brazil, the second largest economy in the Western Hemisphere behind the U.S., is now in a recession:
1. Brazil’s exports to China had exploded over the last decade. Now that China’s economy is slowing, it needs fewer exports from Brazil.
2. Brazil’s state-run oil company, Petrobras, is in a massive corruption scandal tied to many members in Rousseff’s political party. The large money-laundering scandal spans across oil, business and political leaders in the country.
3. Prices for all of Brazil’s key commodities – oil, sugar, coffee, metals – have tanked. Commodities are the engine behind Brazil’s economy and they’ve lost value fast.

The recession comes as Brazilians are holding mass protests calling for Rousseff’s impeachment. Although corruption isn’t new in Brazil, the scale of the Petrobras corruption is large. Petrobras officials said earlier this year that the company lost $2 billion just in bribes. In July, the scandal worsened: Brazilian police arrested executives at the country’s electric utility, Electrobras, with charges related to money laundering at Petrobras. As investigators dig deeper, they’re finding more and more officials at other agencies tied to the corruption case. While it’s just one corruption scandal, it’s reach has eroded business confidence. Investment fell nearly 12% in Brazil in the second quarter compared to a year ago, according to Capital Economics. Its currency, the real, has lost 25% of its value against the dollar so far this year. Imports have fallen about 12% from a year ago. For Brazilian companies that have borrowed in U.S. dollars, a plunging currency makes paying back the debt much more expensive.

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To answer this, Nouriel, you might first want to ask why it doesn’t have one already.

Does The World Need A Financial Early Warning System? (Roubini)

A comprehensive assessment of a country’s macro investment risk requires looking systematically at the stocks and flows of the national account to capture all dangers, including risk in the financial system and the real economy, as well as wider risk issues. As we have seen in recent crises, private risk taking and debt are socialised when a crisis occurs. So, even when public deficits and debt are low before a crisis, they can rise sharply after one erupts. Governments that looked fiscally sound suddenly appear insolvent. Using 200 quantitative variables and factors to score 174 countries on a quarterly basis, we have identified a number of countries where investors are missing risks – and opportunities.

China is a perfect example. The country’s home developers, local governments and state-owned enterprises are severely over-indebted. China has the balance-sheet strength to bail them out but the authorities would then face a choice: embrace reform or rely once again on leverage to stimulate the economy. Even if China continues on the latter course, it will fail to achieve its growth targets and will look more fragile over time. Brazil should have been downgraded below investment grade last year, as the economy struggled with a widening fiscal deficit, a growing economy-wide debt burden and a weak and worsening business environment. The corruption scandal at energy giant Petrobras is finally causing ratings agencies to reassess Brazil but the move comes too late, and their downgrades probably will not be sufficient to reflect the true risk.

Other emerging markets also look fragile and at risk of an eventual downgrade. In the eurozone, shadow ratings already signalled red flags in the late 2000s in Greece and the other countries on the periphery. More recently, Ireland and Spain may deserve to be upgraded, following fiscal consolidation and reforms. Greece, however, remains a mess. Even with substantial reform to improve its growth potential, it will never be able to repay its sovereign debt and needs substantial relief. An assessment of sovereign risk that is systematic and data-driven could help to spot the risks that changing global headwinds imply. To that extent, it provides exactly what the world needs now: an approach that removes the need to rely on the ad hoc and slow-moving approach of ratings agencies and the noisy and volatile signals coming from markets.

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Europe doesn’t want to aid refugees.

EU ‘Snubbed’ Greek Plan To Tackle Refugee Crisis (Kath.)

As Greece fends off criticism for its handling of a burgeoning refugee crisis, sources in the Hellenic Police and Coast Guard have told Kathimerini that a plan was jointly presented to the European Union’s border agency, Frontex, more than two months ago. Kathimerini understands that a team of Greek officials visited Frontex headquarters on June 18 and presented a plan for strengthening patrols at sea and on land on Greece’s porous Aegean border with Turkey, a major transit point for refugees from the Middle East trying to reach Europe. The plan called for officers to be transferred from the Greek police and other European forces to help patrol borders and process arrivals.

It also requested fingerprinting equipment and vehicles to speed up identification and transportation on the island of Lesvos, one of the islands bearing the brunt of the influx. The sources told Kathimerini that although Frontex approved the proposal, it was unable to get other European governments to endorse it. The agency is said to have told Greek officials to start implementing the plan, promising to cover the cost of the Greek police officers’ transfer. It was also suggested that Frontex has already disbursed 100,000 euros to this end, though this was refuted by government sources.

An official at the Ministry for Citizens’ Protection on Thursday said that the issue will be addressed during a visit by Frontex chief Fabrice Leggeri to Athens next week. Meanwhile in a related development, outgoing Alternate Minister for Migration Policy Tasia Christodoulopoulou on Thursday said that she expects Greece to be in a position to receive €30 million in EU funding to deal with the influx within the next few days. She said the agency required by the European Commission to manage the funds is ready but is still waiting for some decisions to be published in the Government Gazette before it can become operational.

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“The European search and rescue operation FRONTEX had saved tens of thousands of lives this year..” Oh, really? Let’s see some solid proof of that.

Mediterranean Refugee And Migrant Numbers Pass 300,000 In 2015 (Reuters)

The number of refugees and migrants crossing the Mediterranean to reach Europe has passed 300,000 this year, up from 219,000 in the whole of 2014, the U.N. refugee agency UNHCR said on Friday. More than 2,500 people have died making the crossing this year, not including about 200 who are feared to have drowned off Libya on Thursday. That compares with 3,500 who died or went missing in the Mediterranean in 2014. “The way people are being packed onto boats is causing their deaths,” UNHCR spokeswoman Melissa Fleming told a regular U.N. briefing. People fleeing Syria had long sought refuge in neighboring countries, hoping to return home, but were increasingly opting to head straight for Europe, a choice compounded by tighter entry rules imposed by Syria’s neighbors, which already have huge refugee populations.

“In Lebanon there are now restrictions whereby you really can’t enter unless you have work or evidence that you have a long term place to stay or a plane ticket out,” Fleming said. “If you show up at the border of Lebanon, if you have a plane ticket, they let you in. You go straight to the airport, fly to Turkey, get on the boats, go to Greece, and that’s where we’re seeing a lot of the flow.” Other big refugee-hosting countries, which include Jordan, Turkey and Iraq, were “just over-full with refugees, and they are receiving far too little support from us because we’re underfunded”, Fleming said. The dangers of the sea route across the Mediterranean have been highlighted by the ever growing death toll.

A Red Crescent official said on Friday Libya had recovered 82 bodies washed ashore after a boat packed with migrants sank near the western town of Zuwara. On Thursday, 51 people suffocated in the hold of a boat. Survivors said smugglers had beaten them to force them into the hold and extorted money from anyone wanting to come out of the hold to breathe, Fleming said. One survivor, an Iraqi orthopedic surgeon, said he paid €3,000 to come up onto the top deck with his wife and two-year-old son. The European search and rescue operation FRONTEX had saved tens of thousands of lives this year, but EU countries must do more to act together to deal with the problem, which UNHCR has repeatedly said would be manageable with the right action.

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The URL includes the word refugees, the text talks about refugess, but the headline is still migrants. And still: “Europe needs a comprehensive global refugee policy..” ignores the fact that Europe doesn’t want one.

Europe’s Halting Response to Migrant Crisis Draws Criticism as Toll Mounts (NYT)

The daily toll among refugees and migrants desperately trying to reach Europe – 71 suffocated in a truck in Austria and 150 drowned off Libya this week – has dramatically underscored the European Union’s scattered, halting response to increasing waves of asylum seekers. With tens of thousands of people leaving war-torn or impoverished countries to seek asylum or a better life in Europe, criticism of the bloc’s division and dysfunction is now accelerating, as the number of deaths mounts, crossing 2,500 this year. Chancellor Angela Merkel of Germany has said that the migration crisis is a bigger test for the European Union than even the Greek financial meltdown.

She said on Friday that European interior ministers meeting this weekend would be looking into “rapid changes to the asylum system,” and that European leaders could hold an emergency summit meeting “if the preliminary work is done.” And none too soon. There is no European Union standard for asylum; no common list of countries regarded as in conflict, and thus more likely to produce refugees; and no collective centers where asylum seekers can be met, housed, fed and screened. Instead, with much of Brussels still on vacation, a kind of free-for-all has set in, with some countries welcoming and others not, some taking legal responsibility for refugees and others flouting international law. “While Europe is squabbling, people are dying,” said Alexander Betts, a professor and director of the Refugee Studies Center at Oxford University.

“For the first time in its history, the E.U. is facing a massive influx of refugees from outside the region, and the E.U. asylum and immigration framework is poorly adapted for it.” Front-line states like Greece, Italy and now Austria and Hungary are “overwhelmed and increasingly unwilling to take more responsibility,” Mr. Betts said. “Some European states are failing to keep to international law, and there needs to be a more equitable sharing of responsibility.” In contradiction to the rules of the Dublin Regulation, formerly known as the Dublin Convention, some countries are simply allowing migrants to freely pass through their territory to richer European states without even trying to ascertain whether they are refugees entitled to asylum or economic migrants, who can be deported home.

Under the convention, the countries where migrants first enter are supposed to screen them to decide who is a legitimate asylum seeker or refugee, but those countries are overwhelmed. Some countries, like Sweden and Germany, are being generous with their acceptance of refugees, but warn that they cannot be this generous forever. Other countries, like Britain, are strictly applying regulations to dissuade migrants and asylum seekers, while opposing a European Commission proposal in June for mandatory quotas for settlement, to help share the burden. Other countries, like Slovakia and Poland, have said they want only Christian refugees.

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“.. it is illegal either to cross the border on foot or to give someone without papers a lift, a problem Syrian refugees have sidestepped by using bicycles..”

133 Syrian Refugees Cross Norway’s Arctic Border On Bicyles (Local.no)

More than 100 Syrian refugees have crossed the Arctic border into Norway from Russia on bicycles, exploiting a loophole in the country’s border regulations. The Storskog border station – just two hours drive from the Arctic City of Murmansk in Russia’s far north – is Norway’s only legal border crossing with Russia. According to border agreements, it is illegal either to cross the border on foot or to give someone without papers a lift, a problem Syrian refugees have sidestepped by using bicycles. “It is not news to us that tourists cross the border on bicycles, but recently we’ve also started to see some asylum seekers coming by bicycle,” Gøran Stenseth, one of the border officials, told the local Sør-Varanger Avis newspaper.

So far this year, 133 asylum seekers have entered Norway though Storskog on bicycles. According to local police, most of them are Syrian refugees. Hans Møllebakken, head of the local police in Kirkenes, said that he had already arrested several drivers who had driven asylum seekers across the border. “We have looked into the the legislation, and we have decided that from now on we will press charges against drivers who bring them across the border,” he said “We arrested someone on Thursday, and we are working on the case. It could be that people are making money off giving these lifts, and in that case, we are talking about human trafficking.”

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“..there’s the risk of a catastrophe with 200 million arrivals in the next few years (source: Corriere della Sera)”

The Merkel Plan (Beppe Grillo’s Blog)

The migration of biblical proportions will not be stopped by tanks or barbed wire or the sinking of boats. It hasn’t just come out of the blue. The EU and the various national governments seem to have suddenly woken up to it and they are exploiting the situation as though they were not the primary cause of the problem. There’s been no whisper of any condemnation of the causes, nor of a long-term strategy to integrate these people into a Europe that is devastated by unemployment. Do we want to create massive ghettos and banlieues? There’s no action beyond a bit of fluffy charity. People are ignoring that this route will lead the Europeans to brush aside the existing political parties and bring about the rise in neonazi movements.

Now attention is focusing on the revision of the Dublin Regulation (that obliges a refugee to stay in the country of arrival). Only now is there a request to speed up the procedures to recognise the refugees (in Italy, thanks to Alfano‘s incompetence, this takes about two years). Measures that the M5S has been calling for all along, though it has been ridiculed or ignored or accused of racism. But where have Merkel and Hollande been up until now? In a black hole? On Mars? Without courageous actions, actions that are new and for the long-term, there’s the risk of a catastrophe with 200 million arrivals in the next few years (source: Corriere della Sera ).

There’s an obligation to give these people the best possible life opportunities in their own nations with targeted investment (health serices, infrastructure, delocalisation of manufacturing companies) with a new Marshall Plan that we could put into action as the “Merkel Plan“ financed with a percentage of the national GDP of each country to be devoted to Africa and monitored by a Control Committee. Other actions are the elimination of weapons production (Italy is the fifth producer in the world) and the end of western interference with peace missions and the total subordination of the Mediterranean and the Middle East to American interests. The flow of refugees from Afghanistan, Syria, Iraq and Lybia, is the result of our wars and our weapons. It’s time for us to examine our consciences.

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