How Germany Is Blowing Up The European Union

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

DPC Snow removal – Ford tractor Washington, DC 1925

As Germany is set to reject a Greek loan extension request (and no, international press, that is not the same as an extension of the bailout program), Steve Keen uses proprietary numbers issued by the OECD – which is supposed to be on Germany’s side?! – to show how dramatically austerity has failed in Europe- that is, if the recovery of the Greek and Spanish economies was ever the real target. It certainly failed the populations of the countries.

The problem is that nobody, not even the OECD can for Germany to answer to a report. But that does not make the case that is made, any less obvious, or bitter for that matter. Not many people remain ready to think that Greece will do what it has said it will, but I think they have been very consistent in their stated goals, and people get distracted too much by semantics at their own peril.

As Steve shows, and Syriza proclaims, more of the same is not on the table, for good reason. It will and can only make matters worse for Greece. Germany – and the ECB – choose to entirely ignore the consequences of their theories, in particular the humanitarian crisis they have caused in Greece. And any political union that ignores the misery it unloads upon its citizens has a short shelf life.

I see a majority voices out there claiming that Syriza is busy capitulating, but I don’t think that. They’ve always said they are willing to go far to reach consensus with Brussels in order to stay in the EU and eurozone. And that’s what they’re showing. In the world of political dealing and scheming, the Greeks have been remarkable consistent; so much so that this is itself leads people to claim they are not.

But I still wouldn’t rule out the possibility that Varoufakis has long come to the conclusion that the eurozone must and will implode no matter what anybody does, and that he’s simply jockeying for the best position when the time comes to leave the eurozone. Continue reading

And I Didn’t Even Mention Greece, the End of the Euro or Evil Russia!! Yikes!

Submitted by Thad Beversdorf  –  The First Rebuttal Blog


This is a screen shot from my iPhone about a week ago.  And really this says it all.  Breaking news is highlighting the all time highs again while the underlying economic news is negative across the board.  No other time in history could the economy be in such dire straits and have the market completely apathetic to it.  Whether it’s total debt, Consumer debt, retail sales, housing, productivity, inventories, full time jobs, GDP, wages, just about any indicator it is negative.

And if we put it in the context of having such extreme monetary policies with the sole intent toward all of these moving in a highly positive direction the above indications aren’t just terrible they are frightening.  It’s kind of like when you’re in a fight and you’ve just hit the other guy with your best punch and he doesn’t flinch.  You start to think this ain’t going to end very well.  I expect the Fed folks are suffering from a case of the ‘oh shit that was the best I got’ syndrome.

Our nation’s ‘best and brightest’ economists and financial ‘experts’ have created policies that are their best ideas to generate economic growth and these policies have failed completely.  The only thing preventing this nation from a full on collapse is an all time high stock market.  And that is the only reason the market is at all time highs.   Volume is sparse, institutional money is on the sidelines and every damn metric you can think of is falling apart yet markets are at all time highs, thanks to the Fed.

Remember we had a 10% sell off over the course of about 8 trading days in October.  The Fed stepped in and stated that QE4 was cocked and ready.  That reminded investors the market is risk free and with that it once again moved on to new highs.  Now understand, this is in the face of 12% unemployment, a dead housing market, declining real retail sales, negative real GDP when adjusted for debt and a middle class that is now completely reliant on consumer debt for basic survival.

You can look to things like real wages and real median income to see if the American consumer, always the bulk of GDP and really the only measure of GDP that should be of concern, is healthy or not.  And the data shows us the American consumer has slightly more real income than they did in 1985 (7% more).  They have lost 10% of their income since 2000.  They have also taken on 150% more debt to compensate for the loss of income during that period.  The obvious implication is that the typical American’s real free cash flow has diminished significantly.  Yet somehow the market expects future corporate free cash flows to grow forever without the existence of the American consumer driving them?  I just don’t get it.  Where does the money come from?? Continue reading

These “Control Freak” Economists Have It All Wrong

Submitted by William Bonner, Chairman – Bonner & Partners

Admirable Concern

We are in Buenos Aires, enjoying a rainy afternoon on Calle Gurruchaga in the Palermo Soho neighborhood. It is calm. It is pleasant. The food is good. The wine is strong. The women are good-looking. And the US government has our back!


Image via

No kidding – the NSA probably told the US embassy that we were in town. The following message came to our cellphone, unbidden:

“The US Embassy informs US citizens living and traveling in Argentina of a silent march in Buenos Aires from Congress to the Plaza de Mayo, planned for Wednesday, February 18, from approximately 5:00 p.m. to 9:00 p.m. (17:00-21:00), to mark the one-month anniversary of the death of Alberto Nisman.

You should expect disruptions in public transportation and traffic. While this event will take place in the capital city, marches may occur in other cities throughout the country.

Even demonstrations intended to be peaceful can turn confrontational and escalate into violence. You should avoid areas of demonstrations, and exercise caution if in the vicinity of any large gatherings, protests, or demonstrations.

Review your personal security plans; remain aware of your surroundings, including local events; and monitor local news stations for updates. Maintain a high level of vigilance and take appropriate steps to enhance your personal security and follow instructions of local authorities.”

It would be impolite and ungrateful not to thank the embassy. Its concern for our safety is admirable. Continue reading

I Think We Are Very Lucky It Was the SNB

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

In contrast to the franc, the Danish krone continues to ignore ongoing speculation. The latest has seen rumors of not just direct buying by Danmarks Nationalbank but now even full-blown capital controls. Before yesterday, the krone had traded at or near 7.444 to the euro for 20 consecutive trading days; now surging today. In other words, the Danes don’t have a “dollar” problem to create a dangerous imbalance against its soft euro peg (really a trading band).


That doesn’t mean that Denmark is free of seemingly perpetual European strife, as Danish assets and the yield curve there continue to display financial oddities that have become more common in this age of ultra-repression. Given this behavior, there is likely much more to come from the Danes in terms of counterbalance (as much as possible), but that there is no financial impediment to their resolve.

ABOOK Feb 2015 Europe Denmark

You have the familiar sinking curve in the outer years also beset by simple insanity closer to the shortest tenors. Why -1.75% for the 1-month maturity and only -1.05% for the 2-month? I don’t think anybody really knows, as again these are simply stresses trying to find an outlet. Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

German-Led Bloc Willing to Let Greece Leave Euro: Malta (Bloomberg)
A Lawyer’s Mindset Where An Economist’s Is Needed? (Steve Keen)
Greece Should Not Give In to Germany’s Bullying (Legrain – Foreign Policy)
Tentative Deal For Extension Agreed At Eurogroup (Kathimerini)
The Euro’s Up In Smoke (Beppe Grillo)
Eurozone Chiefs Strike Deal To Extend Greek Bailout For Four Months (Guardian)
Greece Bends To Eurozone Will To Find Short-term Agreement (Open Europe)
Greece’s Debt Deal Isn’t The End Of Eurozone Drama (MarketWatch)
ECB’s Draghi Wants To Buy Bonds, But Who Will Sell? (Reuters)
It’s Up To Germany To End The Game Of Chicken With Greece (Guardian)
Is Greek PM Alexis Tsipras Going To Be Russia’s ‘Trojan Donkey’? (NewsCorp)
Has Greece’s ‘Lehman Moment’ Finally Arrived? (CNBC)
Expectations And Reality: What Maidan Gave Ukraine’s Economy (RT)
US Units of Deutsche Bank, Santander Likely to Fail Fed Stress Test (WSJ)
The US Government’s Stupid Tax War On Expatriates (MarketWatch)
NYC Could See 6-Foot Sea Rise By 2100 (NewsMaine)