- Why had the Eurogroup decided last week to grant a two-month bailout extension until February? This was a political signal for Greeks?
Officially, it was not political but a ‘realistic’ solution since it offers enough time for the “evaluation of Greece’s progress” to be completed but does not extend the ‘agony’ longer than it must. In reality, however, it was a clear message that Berlin is not interested in dealing with Mr Samaras until and unless either he elects a President in this Parliament (in which case a general election is averted) or he wins a general election (following his failure to elect a President in this Parliament). The two months expire precisely when a new government, led by Mr Samaras, or Mr Tsipras is in power. Clearly, Mrs Merkel thinks that Greece’s next agreement requires a freshly elected, or a revived, government. Deep down, the German government knows that it must now lock horns with Mr Tsipras’ SYRIZA. It is quote simple really. Continue reading
DPC Mott Street, Chinatown, New York 1900 Where are you going, America?
I don’t like to discuss politics too much. There are not enough smart, kind and honest people in politics wherever I look in the world for me to want to have anything to do with that game. I’d just spend all my time wondering what kind of mindset it takes to want to tell other people what to do, and be in control of the millions, billions and trillions of dollars that are taken from these people on a daily, yearly, basis.
Not that all of them politicians are bad, but those who have genuinely good intentions get drowned out, within seconds, by the ones for whom the need to have power over others is more important than anything else. And as I said, on the whole they’re not very smart. It’s for instance a very bad idea to let you countries’ economic policies be decided by the very people who make the decisions today. Continue reading
Submitted by Tyler Durden – ZeroHedge
While the market, and America’s media, was focusing over the passage of the Cromnibus, and whether Wall Street would dump a few hundred trillion in derivatives on the laps of US taxpayers once again (it did), quietly and unanimously both houses passed The Ukraine Freedom Support Act of 2014, which authorizes “providing lethal assistance to Ukraine’s military” as well as sweeping sanctions on Russia’s energy sector.
The measure mandates sanctions against Rosoboronexport, the state agency that promotes Russia’s defense exports and arms trade. It also would require sanctions on OAO Gazprom (GAZP), the world’s largest extractor of natural gas, if the state-controlled company withholds supplies to other European nations (yes, the US is now in the pre-emptive punishment business, and is enforcing sanctions on a “what if” basis).
But while one may debate if additional sanctions will do much to impact a Russian economy which is already impaired due to the plunging ruble, the clear escalation is that unlike previously, when the US limited itself – at least on paper – to non-lethal assistance to the Ukraine, now the US is finally preparing to send in weapons, and potentially “military advisors” as well. We say “on paper”, because in late November hacked US documents revealed the extent of secret US “Lethal Aid” for the Ukraine army. And since America’s under-the-table support for Ukraine’s insolvent armed forces has been revealed, there is little point in pretending to keep a moral upper hand (especially in light of recent “other” revelations involving the US, most notably its intelligence services). Continue reading
There is a significant risk that the financial effects of the collapse in the oil price could spread through the financial system. Already there must have been significant transfers of value through OTC derivative markets, whose gross notional value is about $700 trillion. Roughly $300 trillion of this is with the top US banks as counterparty.A minority of this is with credit default swaps, but if there is problem here, it could easily spread to other derivative categories through counterparty risk.
Remember that the US economy is $17 trillion, so we are talking figures of a far greater magnitude than that.
We have had these scares in the past, notably with AIG, and the Lehman crisis, and also with the Eurozone crisis when Greece, Spain, Portugal and Italy were insolventtogether. We could be on the verge of another such crisis, this time triggered by the collapse in the price of crude oil. Continue reading
DPC “Grant’s Tomb. Rubber-neck auto on Riverside Drive, New York” 1911
Hey! Who said economics can’t be fun?! How is it not absolutely brilliant that in the face of a collapsing shale oil industry – or at least, for the moment, of its financing model -, and the worst week for the Dow since 2011, the Thomson Reuters/UofMichigan consumer sentiment index shows American consumers are more optimistic than they’ve been in 8 years, and that “more consumers volunteered good news than bad news than in any month since 1984″? 1984! How does one trump that as a contrarian signal? And that I don’t mean to sound funny: that is serious.
Of course it says something too about US media and their incessant messages about how well everything is going and how we’ve passed that corner the recovery was always just around, and what a boon the falling oil prices will be to spending over the holidays, and even if sales instead fell over Thanksgiving; surely that’s only because people were saving up their newly found extravaganza for the Christmas season. And obviously the Fed-sponsored distortions of all asset prices on the planet, homes, stocks, you name it, have a lot to do with stoking that optimism as well. Continue reading