A message for Mr Renzi

Submitted by Yanis Varoufakis  –  The Yanis Varoufakis Blog

Screen Shot 2015-09-22 at 10.43.38Italian PM M. Renzi (click here for his speech) rejoiced at having “got rid of me” – citing my ‘removal’ from the ‘scene’ as a sign that ‘apostates’ (i.e. those who divide their parties) are jettisoned. His is a motivated illusion. Last July ‘they’ ‘got rid’ of something much more important than me. Here is my message to the Italian PM…

Mr Renzi presents me as an apostate who left SYRIZA and is now in the political wilderness. The truth is more sobering. Unlike many of my comrades, I remained loyal to the SYRIZA platform that saw us elected on 25th January as a united party that brought hope to the Greek and European peoples. Hope for what? Hope for a permanent end to the extend-and-pretend bailout loans, which cost Europe dearly, condemned Greece to permanent depression and foreshadowed failed policies for the rest of Europe.

What happened? Under extreme duress by European leaders, including Mr Renzi (who refused to discuss sensibly Greece’s own proposals) my prime minister, Alexis Tsipras, was subjected on 12th and 13th July to unbearable bullying, to naked blackmail, to inhuman pressures. Mr Renzi played a central role in helping break Alexis, with his ‘good cop’ tactic, based on the “If you do not yield, they will destroy you – please say yes to them” narrative.

Alexis and I parted ways because we disagreed on whether ‘they’ were bluffing or nor and on whether we, in any case, had the moral and political right to sign another non-viable agreement, handing over the keys to what is left of the Greek state to the ruthless troika. That was, and remains, a disagreement between Alexis and I. Continue reading

QE Doesn’t Work, But It Will Work

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

From the growing inconsistencies even in statements about the short run, economists are going to have to be careful lest they conclude monetarism doesn’t work. That is, of course, where most of the rest of the world is headed (and where the “dollar” already resides) but the strains to credulity lately are nails in the coffin. I described the political nature of that outbreak where QE is being practiced in Japan, but there is a similar if less “mature” trend developing of the ECB’s belated activities.

Straight away, there is an contradiction even using “belated” as a QE qualifier for Europe. It may have been of different content, but there isn’t much separating QE in 2015 from the LTRO’s of 2012. The fact that the media describes them as if they were wholly different (or just ignores that they ever took place) as do economists suggests the very difficulties occurring at the moment. When announcing these “non-standard” monetary policy responses, the ECB wrote in its press release:

Overall, it is essential for monetary policy to maintain price stability over the medium term, thereby ensuring a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. Such anchoring is a prerequisite for monetary policy to make its contribution towards supporting economic growth and job creation in the euro area.
In its continued efforts to support the liquidity situation of euro area banks, and following the coordinated central bank action on 30 November 2011 to provide liquidity to the global financial system, the Governing Council today also decided to adopt further non-standard measures. These measures should ensure enhanced access of the banking sector to liquidity and facilitate the functioning of the euro area money market.

Continue reading

Democracy Has Departed The West

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

Before the West spreads democracy abroad maybe it could get some for itself. The US is an oligarchy in which government is answerable to six powerful private interest groups. In Europe governments are answerable to the EU, Washington, and private bankers and not to their peoples. In the UK the military brass has declared its hold on the reins of power.

Jeremy Corbyn is the first Labourite to lead the Labour Party in a long time. Considering the stupidity and immorality of the Tories, Corbyn could become prime minister of Britain. Should this occur, Corbyn would shift the budget priorities away from supporting Washington’s wars toward refurbishing the social welfare state that made life for ordinary Britishers more secure and less stressful.

A senior serving general of the British army said that the army would not allow the people to “put a maverick in charge of the country’s security. The Army just wouldn’t stand for it and would use whatever means possible, fair or foul, to prevent that.”

In other words, a democratic outcome unacceptable to the English military will be overthrown. Just like in Egypt.

Here we have the incongruity of Washington and London bringing democracy to others through what Vladimir Putin calls “airstrike democracy,” while tolerating a democracy deficit themselves. The safest conclusion is that democracy is a cloak for an aggressive agenda, not a value in itself to the US and UK elites, who rule and who intend to continue to rule these countries for their personal benefit.

Jonathan Cook reports that the use of “whatever means possible, fair or foul,” against Labour prime ministers who actually stood for the people rather than for the elites is not unique to Corbyn. Continue reading

The Second Bullard Rip – They Do Ring A Bell At The Top

After the Fed’s cowardly capitulation to the Wall Street gamblers last week our clueless monetary politburo got quite the surprise. The post-announcement “rip” lasted all of 90 minutes, and by the market’s close on Friday the S&P 500 was down 3% from Thursday’s algo-driven spasm and 8% from the May highs.

That even left my head spinning. On Wednesday afternoon I had told Yahoo Finance that in the event of no rate hike there would be a “short term relief rally” but that even “the gamblers were losing confidence” in the Fed’s con job:

………If the fed doesn’t raise rates, there probably will be a short term relief rally,  but I think its becoming evident that even the gamblers in the casino are losing confidence in the Fed. Because however they come out this week, there will be signs of division, there will be evidence of confusion and indecision, and once that process begins to fully unfold, which it will for meeting after meeting as we go forward………(because) the Fed painted itself into a corner and has no clue how to get out…..once that process of division and confusion develops, the markets are going to lose confidence in the whole central bank bubble and were going to have a huge correction.

Alas, confidence was apparently so shaken by the Fed’s action that it’s as if they did ring a bell at the top. The relief rally got monkey-hammered on the spot.

Ironically the gong was Janet Yellen’s incoherent babbling at the post-meeting press conference. Over and over she said how everything is swell in the US after 80 months of ZIRP, and that the consumer and labor markets are nearing the pink of health. Nevertheless, she and her posse had elected to keep banging the Emergency Button, anyway, just in case something falters in Shanghai, Timbuktu or some other unspecified precinct of planet Earth.

Whether the inevitable thundering collapse of the latest and greatest of all central bank bubbles has now commenced will be known soon enough. But what is clear from last week’s market reaction is that the buy-the-dips algos have lost a lot of mojo. Perhaps they are even being reprogramed to trawl for signs of confusion, conflict and cacophony among our central banks rulers.

If so, the machines are already being pelted with some pretty hefty word clouds—–not the least from the Fed’s number one spinning top, James Bullard.

Recall last October when the market plunged by 7% he quickly cried uncle, suggesting the QE be extended, thereby triggering the Bullard Rip. Accordingly, by year-end the markets were up by 12% to an all-time high, meaning that the casino gamblers had been pleasured with another $4 trillion windfall gain. Continue reading

Tsipras’ triumph vs the impossible task of implementing a program designed to fail

Submitted by Yanis Varoufakis  –  The Yanis Varoufakis Blog

Screen Shot 2015-09-22 at 10.06.40Alexis Tsipras has snatched resounding victory from the jaws of July’s humiliating surrender to the troikaof Greece’s lenders. Defying opposition parties, opinion pollsters and critics within his ranks (including this writer), he held on to government with a reduced, albeit workable, majority. The question is whether he can combine remaining in office with being in power.

To continue reading the article from the Guardian’s web page, click here. Otherwise…

The greatest losers were smaller parties that attempted to occupy the polar opposites [of the debate] following the 5th July referendum. Popular Unity failed stunningly to exploit the grief felt by a majority of “No” voters following Tsipras’ U-turn in favour of a deal that curtailed national sovereignty further and boosted already vicious levels of austerity. POTAMI, a party positioning itself as the troika’s reformist darling, also failed to rally the smaller “Yes” vote. With the all-conquering Tsipras now firmly on board with the troika’s programme, new-fangled, pro-troika parties had nothing to offer.

The greatest winner is the troika itself. During the past five years, troika-authored bills made it through Parliament on ultra slim majorities, giving their authors sleepless nights. Now, the bills necessary to prop up the third ‘bailout’ will pass with comfortable majorities, as SYRIZA is committed to them. Almost every opposition MP (with the exception of the communists of KKE and the Nazis of Golden Dawn) is also on board. Continue reading

Viva ZIRP!

Submitted by William Bonner, Chairman – Bonner & Partners

Punish the Savers!

GUALFIN, Argentina – Well, it’s ZIRP now. ZIRP forever. Viva ZIRP! Viva! Viva! As we suspected, Janet Yellen did not want to risk raising the federal funds rate. Bloomberg reports:

“Federal Reserve officials left interest rates unchanged, opting to delay an increase amid stubbornly low inflation, an uncertain outlook for global growth and recent financial-market turmoil. In holding their benchmark federal funds rate at zero to 0.25%, policy makers showed they are still not convinced inflation will move gradually back to their 2% target, despite continued gains in the labor market.”


The whole show is so preposterous that our head swims and our knees buckle. The Fed is determined not to allow savers any compensation for their discipline and forbearance. Either inflation erodes the buying power of their savings at a rate of at least 2% a year. Or the Fed deprives them of a decent return.

You just can’t make this stuff up. Presumably, the U.S. economy cannot function with stable prices. And the Fed seems to have a preternatural dislike for savers. They must be punished. If inflation won’t do the job, we’ll do it ourselves, says the FOMC. Continue reading

‘Trickle Out’ Economics Is Really Politics

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

With global economic perceptions finally creeping toward financial perceptions (not stocks) despite the enormous and mostly ongoing “stimulus” almost everywhere, it is useful to review once more the assumed general mechanisms. Step 1 is really the most basic and traditional element of central banking, as liquidity, broadly speaking here, is currency elasticity in its more modern format. Increasing liquidity is supposed to lead to Step 2, more credit/debt. Step 2 flows to Step 3, which is (hopefully) the bulk of that debt “creating” some real economy “demand.” Step 4 is where spending (demand), even if concentrated in certain parts of the economy (redistribution), leads to more jobs and productive investment which broadens out (“trickle out”) the redistributionary flow to the rest.

For the most part, central banks (including the Fed) are stuck on Step 1 almost a decade later. There has been some flow to Step 2 (credit) but it’s abundantly clear that an enormous proportion of that debt elevation has yielded very little toward Step 3, intead a great deal in fostering asset price inflation. Even if you argue that Step 3 has been yielded into the real economy to some limited extent, it is beyond dispute that it hasn’t led to Step 4.

When economists speak of “clogged transmission channels” this is the receiver of that ire; how Step 1 can be so successful yet not transmute into Step 2 and beyond has left economists and monetary policymakers exasperated (and stuck within themselves). The wholesale monetary system, by contrast, isn’t so certain about even liquidity, meaning that there isn’t even any real evidence to suggest that Step 1 has been completed. The most direct evidence offered about liquidity is only that there hasn’t been another panic, but that is an exceedingly low standard to the point of irrelevance. If monetary theory is to do what it proclaims, that is nowhere near enough (especially as even that minimal capacity is highly questionable again this year). Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

“We Are On The Precipice Of A Liquidation In Emerging Markets” (FT)
Currency Market Braces For Renminbi Weakness (FT)
‘Made In Germany’ Lies In The ‘Gutter’ After Volkswagen Caught Cheating (AEP)
Volkswagen Said Focus of U.S. Criminal Probe on Emissions (Bloomberg)
It Took More Than a Year of EPA Pressure to Get VW to Admit Fault (NY Times)
VW’s Worst Nightmare Is For The Scandal To Spread To Europe (Bloomberg)
VW Emissions Scandal Could Snare Other Firms, Whistleblower Claims (Guardian)
VW Faces More Legal Fallout From Cheating – This Time at Home (Bloomberg)
Volkswagen: The Curse Of The World’s Biggest Carmaker (Forbes)
Alexis Tsipras Has Been Set Up To Fail (Yanis Varoufakis)
Greece’s New Government ‘Doomed To Fail’ Over Flawed Bail-Out (Telegraph)
Greece’s Tsipras To Demand EU Action On Refugees (Reuters)
Eastern European Leaders Defy EU Effort To Set Refugee Quotas (Guardian)
EU Set To Water Down Refugee Relocation Plan (AFP)
Putin’s Plan: Moscow Handles Syria, US Looks After Iraq (AlArabiya)
Are Financial Markets Losing Faith In The Fed? (CNBC)
Fed Cred Dead (Jim Kunstler)
Catalans Threaten Not To Pay Public Debt If Spain Refuses Secession Deal (SP)
Joris Luyendijk: ‘Bankers Are The Best Paid Victims’ (Standard)
Sumatran Rhinos Likely To Become Extinct (Guardian)

Read much more here: Debt Rattle September 22 2015 – TheAutomaticEarth.com