It’s Greece vs Wall Street

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

DPC Grand Central Station and Hotel Manhattan, NY 1903 

On the one hand, I’ve written so much about Greece lately I fear I’m reaching overkill. On the other hand, there’s so much going on with Greece, and so fast, that I wouldn’t know here to begin. Moreover, I’m thinking and trying to figure what is what and what is actually happening so much it’s hard to stay focused for more than a short while before something else happens again and it all starts all over. And I’m thinking it must feel that way for the Syriza guys as well.

One thing I do increasingly ponder is that it gets ever harder to see the eurozone survive. In its present shape and form, that is. Damned if you do, doomed if you don’t, is an expression I’ve used before. It’s like this big experiment that a bunch of power hungry Europeans really get off on, that now all of a sudden is confronted with the democracy they all only thought existed in books of history anymore.

But if you take your blind hunger far enough to kill people, or ‘only’ condemn them to lives of misery, they will eventually try to speak up, even if not nearly soon enough. It’s like a law of physics, or like Icarus in, yes, Greek mythology: try to reach too high, and you’ll find you can’t.

What is Brussels supposed to do now? Throw Athens off a cliff? Not respect the voice of the Greek people? That doesn’t really rhyme with the ideals of the union, does it? If they want to keep the euro going, they’re going to have to give in to a probably substantial part of what Syriza is looking for. Or Greece will leave the eurozone, and bust it wide open, exposing its failures, its lack of coherence, and especially its lack of democratic and moral values. Continue reading

Ukraine’s Military Commander: NO RUSSIAN TROOPS ARE IN UKRAINE

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

Ukraine’s Military Commander: NO RUSSIAN TROOPS ARE IN UKRAINE

The Obama regime, its NATO puppet states, and the western presstitute media have been lying through their teeth that Russia has invaded Ukraine. Now the Chief of Staff
of the Armed Forces of Ukraine says that there are no Russian Army troops in Ukraine.

ECB Threatens Athens With Bank Funding Cutoff If No Deal In One Month: February 28 Is Now D-Day For Greece

Submitted by Tyler Durden  –  ZeroHedge

As Deutsche Bank’s George Saravelos politely puts it, “Developments since the Greek election on Sunday have moved very fast.” And indeed, so far the new Tsipras cabinet, and here we focus on the words and deeds of the new finance minister Yanis Varoufakis, has shown that the market’s greatest hope – that the status quo in Greece will continue – has been crushed into a pulp (and so have Greek stock and bond prices) especially following yesterday’s most recent comments by the finmin in which he said that Greece “does not want the $7 billion” from the Troika agreement and that it wants to “rethink the whole program”, culminating with an epic exchange with Eurogroup chief Jeroen Dijsselbloem in which Greece made it clear that the “constructive talks” are over.

And suddenly the Eurozone is stunned, because what had until now been its greatest carrot when it comes to dealing with Greece, has become completely useless when the impoverished, insolvent nation itself says it no longer needs a bailout, seemingly blissfully unaware of the consequences.

So earlier today the ECB’s Erikki Liikanen, tired of pleasantries and dealing with what to Europe is a completely incomprehensible and illogical stance, one which is essentially a massive defection by Greece in the European “prisoner’s dilemma”, and which while leading to a Greek financial collapse and Grexit – both prerequisites to a subsequent Greek economic recovery unburdened by the shackles of the Euro – would also unleash a European depression, came out and directly threatened Greece that it now has 1 month until the end of February to reach a deal with the Troika, or else the ECB would cut off lending to Greek banks, in the process destroying the otherwise insolvent Greek banking sector.

And since only the ECB backstop has prevented a banking sector panic, the ECB is essentially betting the house, and the sanctity of the Eurozone (because after a Grexit all bets are off which peripheral leaves next) that the threat, and soon reality, of a bank run (at last check Greece had about €145 billion in deposits still left in its bank after JPM’s latest estimate of €15 billion in outflows in January) will finally force Varoufakis and Tsipras to sit at the negotiating table with the understanding that not they but the Troika has all the leverage. Continue reading

Memo To Yellen: What ‘Escape Velocity’—-The Q4 GDP Report Was Not “Solid”

Janet Yellen and her band of money printers think they are driving the GDP forward toward the nirvana of full employment and the achievement of every last dime of “potential GDP”. What they are actually doing, instead, is inflating the Wall Street bubble to ever more dangerous heights because their monetary injections never make it to the real main street economy; they just whirl around in the canyons of Wall Street where they enable speculators to wildly inflate the price of risk assets.

Now comes another GDP report card, this one “disappointing”. Not only does it refute the claim of the Wall Street Keynesian chorus that the U.S. economy hit “escape velocity” last spring and summer, but it is also chock-a-block full of evidence that the Fed’s machinations have nothing to do with the performance of the real economy.

As usual, the seasonally adjusted numbers on a annualized basis are full of noise—-the most significant being inventory fluctuations. The latter flattered the 5% number that so excited the headline writers last quarter, but had the opposite impact this time. The actually gain in real financial sales, therefore, was only 1.8%—-even more tepid than the headline.

But the annualized quarterly figures just don’t cut it, in any event. National defense spending in Q4 declined at a whopping 13.2% annualized rate, but unfortunately, it did not reflect the actual hard-chop to the Pentagon’s budget that is long over-due. It was just the payback for the anomalous annualized growth of 15% in Q3. The latter period tracks the fiscal year-end in September, and therefore the big figure which ballooned Q3 GDP did not reflect economic growth at all—–just the usual scramble of bureaucrats to waste money at year end before appropriations lapse. Continue reading

Actual Instability

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

The idea of economic instability is not just academic conjecture, as there is a great deal of evidence to support this kind of fragility. And it is fragile in the sense as Nassim Taleb describes, namely that what looks to be stable and growing on the surface is “somehow” susceptible to the slightest provocation; such as cold winter.

Again, that makes intuitive sense since an economy truly growing in a 4-6% range consistently can withstand the negative pressures that may know a percent off GDP. In real terms, economic agents are more likely to dismiss any “shock” in that situation especially compared to a “cycle” stuck closer to zero.

That is essentially how to describe the introduction of the serial asset bubbles. The conventional narrative holds that economic theory, especially interest rate targeting, has been wildly successful in reducing economic variability (through lower consumer inflation, ignoring, obviously, asset inflation). In other words, by targeting consumer “inflation” the economy has been better off. However, even the statistic most charitably constructed toward that interpretation completely disagrees, as the hidden effects of ignored asset inflation are obviously depressive.

ABOOK Jan 2014 GDP Instability By Period Table

I have not included recessions in the above periods, only the “growth” parts of each cycle. It is true that the standard deviation (FWIW, if GDP follows standard normal) in each successive cycle has declined – but so too has the average. That means in each cycle the bottom of the range approaches zero. You have to believe that economic agents pay attention to growth that cannot sustain itself for long (which is what a low average and standard deviation suggest, matching observations from the past five years).

ABOOK Jan 2014 GDP Instability

Continue reading

Greece Should Turn To BRICS For Protection

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

Greece Should Turn To BRICS For Protection

A former economic advisor to the Reagan administration believes that Western banks and governments are a threat to Greek sovereignty and to its peoples’ standard of living, and that only by re-aligning itself with Russia can Greece stave off these ‘marauders.’

MOSCOW, January 30 (Sputnik) — Greece will be able to escape being dominated by “marauding” Western banks if it pursues greater cooperation with Russia and the BRICS, believes Paul Craig Roberts, former Assistant Secretary of the Treasury in the Reagan administration.

In an article published on Thursday on his website, Roberts notes that the collapse of the Greek stock market is a warning to Greek authorities that Europe would not make any concessions to the Mediterranean states, or allow for a unilateral improvement of relations with outside powers like Russia. “The warning from the EU and Wall Street is clear: Defy us and we will destroy you,” Roberts says.

Roberts notes that when it was publicized that the Greek government would include representatives of the Communist Party, and seek to improve relations with Moscow, the West launched an attack on the Greek stock market indexes and securities markets. “To remind the newly elected Greek government of the whip that is held over Greek financial markets, Greek bond and stock prices were assaulted and driven down,” Roberts notes. Thus, the yield on three-year bonds rose by 2.66 points to 16.69 percent, while the Athens Stock Exchange index fell by 9.2 percent –a three year low, resulting in serious problems for banks. Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

Crude Settles Up 8% At $48.24, Best Day Since June 2012 (Reuters)
OPEC Oil Output Rises In January (Reuters)
The Oil Collapse Isn’t Stopping America’s Investment in Energy (Bloomberg)
BEA Estimates 4th Quarter 2014 US GDP Growth To Be 2.64% (CMI)
Fed’s Bullard Warns of Asset Bubble Risk If Rates Are Kept Too Low (Bloomberg)
Investors Wrong Not to Expect Mid-Year Rate Rise: Bullard (Bloomberg)
Varoufakis, Keynes and the ‘Global Surplus Recycling Mechanism’ (Guardian)
No ‘Grexit’ From Euro, EU’s Moscovici Vows (BBC)
Eurozone Breakup Threat Reaches All-time High (Telegraph)
Greek Finance Minister Vows To Shun Officials From Troika (Guardian)
Germany Warns Greece Against Isolation as Tsipras Shunned (Bloomberg)
Greek Cleaners Show Dichotomy of Tsipras as Markets Tumble (Bloomberg)
Greece: Will Syriza Or Its Creditors Blink First?
German Anti-Euro Party: ‘Pigs Might Fly; Greece Might Pay Its Debt To EU’ (RT)
Greece Should Ice The Troika! (StealthFlation)
The Middle-Class Voters Who Can’t Resist Karl Marx (BBC)
Italy Vote: Why Keep It Simple When You Can Complicate It (Bloomberg)
Brazil’s Economy Is On The Verge Of Total Collapse (Zero Hedge)
Ukraine Chief Of Staff Admits No Russian Troops Involved in Donbass Battle (RT)
DuPont Employees Pay Price for Monsanto’s Growth in Seed Sales (Bloomberg)
China’s Rules Smother GMOs, Researcher Says (WSJ)
Scientific Consensus On GMO Safety Stronger Than For Global Warming (GLP)

Continue Reading: Debt Rattle January 31 2015 –

199 Days of Hell

Submitted by Marin Katusa  –  Casey Research

Just after I signed the publishing agreement for my first book, The Colder War, I realized how much research I was going to end up doing, specifically in areas that I never thought would be so integral to my subject area: energy and mining. Along the way, I came across some fascinating events that were completely out of my area of expertise but gave me a better sense for the unintended consequences in an historical perspective of the events that led to where we are today.

One epic event that really stood out for me, which I will discuss today, is the bloodiest battle of all time, to my knowledge. Over 2 million soldiers and civilians died in this one battle that lasted 199 days from start to finish. (If you know of one particular battle—not a war—that had more deaths, please email me at

What was the catalyst for the bloodiest and most horrible battle of all time? Oil. Before I get into why it was, I want to present the events that led up to this epic battle.

In 1939, Hitler and Stalin signed the German-Soviet Nonaggression Pact. Hitler focused on Western Europe and on defeating France by the mid-1940s, he became rattled by Soviet expansion in the East, which by this time included the occupation of the Baltic states (now Estonia, Latvia, and Lithuania) by the Soviets. Continue reading

The Spartan Resurrection in Greece

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

Having just written that Greece needs Spartans in order to prevail over its creditors and the EU, the new Greek government is showing signs of being Spartans. Listen to these words from Greece’s new Prime Minister, Alexis Tsipras: “We should not accept or recognize the government of neo-Nazis in Ukraine.” “The EU lacks democracy, and citizens do not believe that their vote can change policy.”

The new Greek government has protested the latest EU denunciation of Russia, saying that the attack on Russia was reported in the media as if the decision was unanimous, whereas in fact, Greece, Slovakia, Hungary and Austria objected. No new sanctions on Russia have been imposed.

The New Greek Foreign Minister Nikos Kotzias said that a provision that would have imposed further sanctions on Russia was removed at Greece’s insistence from the proposals at the meeting. Greece also required that the communique does not directly blame Russia for the conflict in Ukraine

German foreign minister Steinmeier apparently blustered that the EU would lambast Russia with more words if the independent-minded eastern Ukrainians launched an offensive against the defeated forces that took part in Kiev’s latest assault on the Russian provinces of Ukraine. Washington’s puppet state in Ukraine is vulnerable to collapse if Russia permitted the independent-minded provinces a free hand. Continue reading

Invasion of the “Zombie Crazies”

Submitted by William Bonner, Chairman – Bonner & Partners

Nuttiness on the Rise

Dow down 195 points on Wednesday – another 1%-plus move. Gold sank too – down $6.90 to settle at $1,279 an ounce.

With the European Central Bank in QE mode, stocks should be catching a bid. Instead, they seem to be following commodities – down. But who knows? The situation is so crazy that only a disabled person could understand it.

Why do we say that?

Because a report released last week told us that one out of every three people on Social Security’s disability program is a mental defective. In Washington, DC, the rate of nuttiness among the disabled is even higher – 42%. No surprise there.

And just to show we’re not making this up, here’s the report from

“One in three, or 35.2%, of people getting federal disability insurance benefits have been diagnosed with a mental disorder, according to the latest data from the Social Security Administration (SSA).

Washington, DC, the seat of the federal government, ranked in the top-10 list of states where disabled beneficiaries were diagnosed with mental problems.

In 2013, the latest data from SSA show there were 10,228,364 disabled beneficiaries, up 139,625 from 2012 when there were 10,088,739 disabled beneficiaries.

Disabled beneficiaries have increased 49.7% from a decade ago in 2003 when there were 6,830,714 beneficiaries; and the number is up 14.3% from the 8,945,376 beneficiaries in 2009, the year President Obama took office.”

Who better to understand what is going on in the financial world than a crazy person? Fortunately, America’s zombies are going crazy in ever-greater numbers.

wtf (2)Young person preparing to understand the markets

Photo via Continue reading

Greeks Turn to Gold on Bank Bail-in and Drachma Risks

Submitted by Mark O’Byrne  –  GoldCore

The Greek stock market is down 36% year to date; the risk of global contagion in the event of a Greek exit is very real. Ordinarily such a crisis would require a massive coordinated effort from global stakeholders, perhaps directed by the IMF or some other pan-national financial body. But not in this case; the rhetoric is nationally-based and biased without unity of purpose across finance ministries. Recent official soundings from the UK and German governments saying that exposure to Greece is limited only underscores the depth of denial, ignorance and lack of consensus that exists within the euro area. A Greek exit from the euro would profoundly weaken the euro experiment and create a dangerous precedent for all future crises in the region.

The European economy is the largest middle class economy in the world. With over 400 million relatively affluent consumers it represents a massive portion of the net global economy and as such a breakup of part of it would be felt across the world in credit spreads and capital decisions for years to come. This would not have been because of Greek exit, but rather because of the inability of the authorities to manage the crisis as risks initially built up, then as bail outs were designed and implemented and then as these efforts surely failed.

We are witnesses to an epic failure of planning, statecraft and social justice. Regardless of where your politics lie, these elements are critical for a modern globally connected economy to function.

Sadly, the geopolitical backdrop is one of suspicion and hostility in the form of a festering proxy war between western and Russian interests in Ukraine and regional crisis and humanitarian catastrophe in the middle east as Syria and Iraq descend into stateless anarchy. These factors reduce the odds of a successful solution in Greece being found in time. Continue reading