Athens to ask for EFSF deal to apply to Greece, too [ekathimerini]

The government is considering to ask for the European Council agreement of Thursday for banks to get direct funding from the European Financial Stability Facility (EFSF) to apply to Greece, too, even though the recapitalization of local lenders was agreed to be included in the state’s bailout agreement.

The issue was discussed, according to reports, during a meeting at the Prime Minister’s residence in Athens on Saturday evening, ahead of the visit of the representatives of Greece’s creditors from Monday.

The meeting involved the recovering PM Antonis Samaras, new Finance Minister Yannis Stournaras, Alternate Finance Minister Christos Staikouras, State Minister Dimitris Stamatis and the PM’s adviser Costas Bouras.

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#CISPA, #SOPA, #PIPA and #BigLobbying [opensecrets]

In an era when Republicans and Democrats can agree on almost nothing, one issue in the last three months has been providing common ground: rewriting the rules of the Internet. Privacy and free speech advocates have unleashed a groundswell of outrage as they’ve rushed to rally the public against the measures. But corporate backers of the proposals have fought back hard.


According to an analysis of the most recent lobbying disclosure information, five of the top ten bills that have been lobbied the most intensely so far this year are Internet-related, and most have bipartisan and industry backing. Major cash is being laid out to push their passage.
The most recent bill to stir things up is the Cyber Intelligence and Sharing Protection Act(CISPA), which would allow private companies to share far more data on users with the federal government in what backers say is an effort to improve cybersecurity. Opponents claim it would severely undermine the privacy rights of many Americans. The bill was passed by the House last night and now faces a tougher battle in the Senate (and the threat of a veto by President Obama).

A list of companies and organizations that have sent letters of support for the bill to the House Intelligence Committee, where the legislation was created, meshes closely with the list of top lobbying groups so far this year — not to mention groups that lobbied on SOPA and PIPA.

For example, AT&T, which sent this letter, spent more money lobbying in the first three months of 2012 than any other single corporation ($7 million, second only to the mega-trade organization Chamber of Commerce, which also lobbied on CISPA though to a lesser extent). The telephone utilities industry as a whole, which includes AT&T and Verizon (which sent this letter) spent $15.3 million in the first quarter of this year, increasing its lobbying expenditures by 35 percent over the previous three months. The total laid out for lobbying by the computer/Internet industry, which includes some of the biggest backers of CISPA, SOPA and PIPA, fell 6 percent in the first quarter — but at $32.1 million, the industry was still the sixth-largest spender on lobbying amont all industries so far in 2012.

Incompetent Economists [dailyreckoning]

When, exactly, did economists become charlatans? Probably in the early-mid 20th century. That’s when they stopped listening and began commanding. Instead of trying to understand how economies worked, they started to tell them what to do.

And now, economists are almost all mountebanks and scamsters.

They pretend to know what they don’t know at all. And they pretend to be able to do what they can’t do. They meddle. They interfere. They make precise estimates and forecasts. They make pompous judgments. They almost sound like they know what they are doing.

Last month, The Atlantic magazine proved that it is run by half-wits. It put a photo of Ben Bernanke on the cover with the headline: “The Hero.”

“Ben Bernanke saved the global economy,” said the description.

Oh really? How did he do that? Don’t bother to ask. Nobody knows what was wrong with the global economy…whether it has been ‘saved’…or how it was saved…least of all, the editors of The Atlantic.

Certainly, Ben Bernanke doesn’t know. The biggest credit and real estate bubble of all time blew up on his watch…anyone could have seen it coming. But not Ben Bernanke. And how could he possibly ‘save’ a situation that he neither saw nor understood?

Beats us.

Our assessment of Bernanke is closer to that of Mike Shedlock:

We can state without a doubt that Bernanke is an inflationist jackass, devoid of common sense. Clueless about trade, debt, history and gold.

Shedlock believes The Atlantic cover will earn it a spot in the contrarian magazine cover hall of fame, next to TIME’s famous 2005 cover: “Home $weet Home,” which lauded the advantages of buying a house.

We don’t know. But we know Bernanke is an economist. And economists are frauds. Can they make us richer? No. Can they make the economy work better? No.

What can they do? They can cause problems and then come up with claptrap solutions that make them worse.

Here is Joseph Stiglitz again, missing the point:

US inequality is at its highest point for nearly a century. Those at the top — no matter how you slice it — are enjoying a larger share of the national pie; the number below the poverty level is growing. The gap between those with the median income and those at the top is growing, too. The US used to think of itself as a middle-class country — but this is no longer true.

Read more: Incompetent Economists


Mysterious Deaths of 9/11 Witnesses

Gazprom to boost export to EU by 50% [RT]

Russia plans to boost gas exports to Europe by up to 230 billion cubic meters (bcm) by 2030 from the current 150 billion, the Russian Ministry of Energy has announced.

Gas production in Russia is expected to increase by 30-50% by 2030, while consumption is expected to grow by only 20-30%, according to the Ministry. They say it would create opportunities to boost exports. Currently the country produces 670 bcm per year.

At the end of the month Gazprom reported increase in production and supply to the local market in the first quarter. The production was up to 141.8 bcm and the supply grew by 3.5 bcm to 104.6 bcm.

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Soon everyone might be using the renminbi

Soon everyone might be using the renminbi


Over the past couple years China has been making strides to expand the use of the renminbi for international trade as apposed to using the US dollar as an intermediary. With a growing Chinese economy and a weakening USD, increased use of the renminbi protects global trade from the desperate moves made by the US Federal Reserve. The Financial Times reports on this big economic development:

China plans to create a special zone to experiment with currency convertibility in Shenzhen, the city where it introduced key economic reforms three decades ago.

The measure will enable Hong Kong banks to lend renminbi directly to companies in Qianhai Bay – a new economic zone on a peninsula across the water from Hong Kong – according to Chinese state media.

Analysts say the experiment could prove as critical to eventually dismantling capital controls as Deng Xiaoping’s reforms were to opening China to the world.

Foreign institutions have also been given a limited but growing array of investment options for their renminbi holdings, such as Hong Kong’s dim sumbond market and a programme for buying Chinese equities.

Liu Ligang, an economist at ANZ, said the risks of the latest measure were greater than those attached to the 1980s opening.

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Brewing a Conflict with China [paulcraigroberts]

Washington has pressured the Philippines, whose government it owns, into conducting joint military exercises in the South China Sea. Washington’s excuse is that China has territorial disputes with the Philippines, Indonesia, and other countries concerning island and sea rights in the South China Sea. Washington asserts that China’s territorial disputes with the like of Indonesia and the Philippines are a matter of United States’ national interests.


Washington has not made it clear what Washington’s stake is in the disputes. The reason Washington cannot identify why China’s disputes with the Philippines and Indonesia are threats to the United States is that there is no reason. Nevertheless, the undefined “threat” has become the reason Washington needs more naval bases in the Philippines and South Korea.

What this is all about is provoking a long-term cold war conflict with China that will keep profits and power flowing into Washington’s military-security complex. Large profits flow to armaments companies. A portion of the profits reflow into campaign contributions to “the people’s representatives” in DC and to presidential candidates who openly sell out their country to private interests.

Washington is going to construct new naval bases in the Philippines and on the environmentally protected Jeju Island belonging to South Korea. Washington will waste tax revenues, or print more money, in order to build the unnecessary fleets to occupy these bases. Washington is acquiring bases in Australia for US Marines to protect Australia from China, despite the lack of Chinese threats against Australia. Bush and Obama are the leading models of the “people’s president” who sell out the people, at home and abroad, to private interests.

Why is Washington ramping up a new cold war?

The answer begins with President Eisenhower’s warning to the American people in his last public address about the military/industrial complex in 1961. I won’t quote the warning as it is available online. Eisenhower pointed out to Americans that unlike previous wars after which the US demilitarized, after World War II the cold war with the Soviet Union kept the power and profits flowing into the military/industrial complex, now known as the military/security complex. President Eisenhower said that the flow of power and profit into the military/industrial complex was a threat to the economic wellbeing and liberty of the American people.

No one paid any attention, and the military/security complex was glad to be rid of the five-star general war hero president when his second term expired. Thanks to the hype about the “Soviet threat,” the military/security complex faced an unlimited horizon of mounting profits and power as Americans sacrificed their future to the interests of those who protected Americans from the Soviet threat.

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US defends drone attacks despite civilian deaths

The United States has defended its assassination drone strikes in several countries despite the deaths of a large number of civilians.

White House counterterrorism advisor John Brennan

White House counterterrorism advisor John Brennan acknowledged on Sunday that the strikes resulted in civilian deaths.

“Unfortunately, in war, there are casualties, including among the civilian population,” Brennan told ABC News.

This is while the official did not mention that Washington is not at war with Pakistan, Yemen and Somalia

Brennan also said “sometimes you have to take life to save lives.”

However, he provided no examples of how the killing of people, had “saved lives.”

In an interview with Press TV, Pakistani human rights lawyer Shahzad Akbar said over 2,800 of the 3,000 people killed over the past seven years in non-UN-sanctioned US assassination drone strikes in Pakistan were civilians.

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Banks cooperate to track Occupy protesters [sfgate]

The world’s biggest banks are working with one another and police to gather intelligence as protesters try to rejuvenate the Occupy Wall Streetmovement with May demonstrations, industry security consultants said.

Among 99 protest targets in midtown Manhattan on Tuesday are JPMorgan Chase and Bank of Americaoffices, said Marisa Holmes, a member of Occupy’s May Day planning committee.

Events are scheduled in more than 115 cities, including an effort to shut down the Golden Gate Bridge in San Francisco, where Wells Fargo investors relied on police to get past protests at their annual meeting this week.

“Our goal is to kick off the spring offensive and go directly to where the financial elite play and plan,” she said.

After evictions and arrests from Manhattan’s Zuccotti Park to London that began last year, the movement against income inequality and corporate abuse will regain strength, saidBrian McNary, director of global risk at Pinkerton Consulting & Investigations.

He works with international financial firms to “identify, map and track” protesters across social media and at their assemblies, he said. The companies gather data “carefully and methodically” to prevent business disruptions.

Banks are preparing for Occupy demonstrations at the North Atlantic Treaty Organization’s Chicago summit on May 20 and 21 by sharing information from video surveillance, robots and officers in buildings, giving “a real-time, 360-degree” view, said McNary, who works on the project.

Banks cooperating on surveillance are like elk fending off wolves in Yellowstone National Park, he said. While other animals try in vain to sprint away alone, elk survive attacks by forming a ring together, he said.

Planning for Tuesday in New York began in January in a fourth-floor work space at 16 Beaver St., about two blocks from Wall Street, according to Holmes. The date serves as an international labor day, commemorating a deadly 1886 clash between police and workers in Chicago’s Haymarket Square.

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Putin: The richest man on earth? [thebureauinvestigates]

putin flowers shutterstock


Back in 2011, surrounded by press, Vladimir Putin emerged from the murky waters of the Black Sea clutching the discovered remnants of ancient buried treasures. The discovery later turned out to be nothing more than a PR stunt. He hadn’t found the artefacts after all. But the stunt had achieved its purpose. Putin was once again seen as the bare-chested, judo-master, tiger-pacifying, untouchable leader of Russia.

But it was another apparent PR stunt – the spontaneous gifting of a £5,500 watch to a peasant boy – which led some to question whether Putin did not have buried treasure of his own.

How could a politician with a declared annual salary of around $140,000 (£88,000) afford to live a life seemingly full of luxury watches, as well as yachts and palaces?

The Bureau decided to investigate and has produced a documentary for Al Jazeera’s People & Power. We travelled from Moscow to St Petersburg looking into the origins and scale of Putin’s wealth.

Declared earnings
On March 6, Putin was once again elected president of Russia. He regained the role he had relinquished in 2008, when he had stepped down because of rules preventing more than two consecutive terms, becoming prime minister instead.

As part of his latest election bid, Putin was required to declare his worth. His declaration seems modest for a world leader.

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Japan’s Debt Addiction Creating ‘Mother of All Bubbles’ [Yahoo]

With the debt crisis in Europe showing no sign of letting up, Japan is increasingly being seen as a safe haven, with foreign demand for the country’s bonds hitting a record high this month.


Foreign holdings of Japanese Government Bonds (JGBs) rose to nearly $1 trillion earlier in June, according to data from the Bank of Japan. At the end of the fiscal year on March 31, foreigners owned about 8.3 percent of all outstanding JGBs, the highest level since 1979 when the central bank started keeping such records.

Japanese debt levels, though high, have been financed by domestic investors and backed by about $15 trillion in household savings. But the increase in foreign ownership could make JGBs more susceptible to yield spikes if non-residents start asking for a higher return, posing a problem for the government.

“It (JGBs) is the mother of all bubbles. The big problem for the Japanese is that they’re addicted to debt and much more so than the Europeans,” Brad McFadden, Founder of Daily Trading Report, an investment newsletter, told CNBC’s “Cash Flow” “You look to debt-to-GDP ratio, which everyone knows is 230%.”

He adds that currently half of the government’s revenue goes to paying the interest rate on these bonds. “It doesn’t take a rocket scientist to work that if those rates start ticking up, for whatever bizarre reason, you may see the Japanese government spending 100 percent of its tax take on pure interest-rate servicing and that’s a very dangerous position to be in,” McFadden said.

The 10-year JGB yield stood at 0.810 percent on Thursday, compared to 1.625 percent on comparable U.S. Treasurys.

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Sudan declares state of emergency on border with South [PressTv]

Sudan has declared a state of emergency along its borders with South Sudan amid escalating border tensions and growing fears of an all-out war between the two neighbors.

A SPLA (South Sudan People

According to the local SUNA News Agency, Sudan’s president Omar al-Bashir has issued a resolution declaring the emergency in the border states of South Kordofan, White Nile and Sennar.

The move technically suspends Sudan’s constitution and imposes a trade embargo with the South.

The resolution will also allow the president and anyone with his mandate to establish special courts which handle criminal and “terrorist” cases.

The developments come after Khartoum’s army spokesman, al-Sawarmi Khalid Saad, announced on Sunday that Sudan had captured four foreigners who were investigating the debris from the recent fighting between Sudan and South Sudan in the oil-rich region of Heglig.

The foreigners were identified as a Briton, a Norwegian, a South African, and a South Sudanese.

“It is now confirmed without any doubt that South Sudan used the help of foreigners in their attack on Heglig. These foreigners were doing military work such as spying out the areas… They had military equipment… They have a military background,” the official told reporters after the four were flown to Khartoum for “more investigation.”

Juba’s troops occupied Sudan’s main oil region of Heglig for 10 days. On April 20, Khartoum announced that the Sudanese army had forced Southern Sudanese soldiers out of the area.

Earlier in the day, Sudan expressed opposition to calls for the UN Security Council to become involved in efforts to end weeks of border clashes with South Sudan.

“Sudan confirms that it rejects any efforts to disturb the African Union role and take the situation between Sudan and South Sudan to the UN Security Council,” Sudan Foreign Minister Ali Karti said on Saturday.

The African Union has also asked the two neighbors to end hostilities and engage in peace talks.

Sudan accuses South Sudan, which seceded from the Republic of Sudan in July 2011, of supporting anti-government rebels operating in the Darfur region and the states of Blue Nile and South Kordofan.

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Armed groups attack Syrian Central Bank, police patrol in Damascus [pressTV]

Armed groups have targeted the headquarters of the Central Bank of Syria with a rocket-propelled grenade, and ambushed a police patrol, in the capital Damascus.

Syrian security personnel stand outside a destroyed building following bomb attacks, Damascus, March 17, 2012.

One armed group fired rocket-propelled grenades at the Central Bank premises in Saba’ Bahrat Square on Sunday, the Syrian state television reported.

Another armed group attacked a police patrol in the Rikn Al-Deen neighborhood near Ibn al-Nafis hospital, injuring four policemen.

Syrian state newspapers said on Sunday that al-Qaeda is leading the terrorist attacks in the country with the support of the United States and some Arab governments.

Newspapers said the methods and choices of targets in the terror attacks across the country testified to al-Qaeda’s involvement, and alleged that the terrorist groups are being supported politically by Washington and bankrolled by some Arab countries.

Meanwhile, the armed gang known as ‘Al-Nusrah Front’ has claimed responsibility for the deadly bombing that rocked Damascus on Friday.

The blast occurred near a mosque and school in the al-Midan neighborhood in the central part of the capital when a terrorist detonated the explosives he was carrying, killing at least 11 people and injuring dozens of others.

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U.S. Amasses Stealth-Jet Armada Near Iran [wired]

The U.S. Air Force is quietly assembling the world’s most powerful air-to-air fighting team at bases near Iran. Stealthy F-22 Raptors on their first front-line deployment have joined a potent mix of active-duty and Air National Guard F-15 Eagles, including some fitted with the latest advanced radars. The Raptor-Eagle team has been honing special tactics for clearing the air of Iranian fighters in the event of war.


The fighters join a growing naval armada that includes Navy carriers, submarines, cruisers and destroyers plus patrol boats and minesweepers enhanced with the latest close-in weaponry.

It’s been years since the Air Force has maintained a significant dogfighting presence in the Middle East. During the 2003 invasion of Iraq Boeing-made F-15Cs flew air patrols from Saudi Arabia, but the Iraqi air force put up no resistance and the Eagle squadrons soon departed. For the next nine years Air Force deployments to the Middle East were handled by ground-attack planes such as A-10s, F-16s and twin-seat F-15E Strike Eagles.

The 1980s-vintage F-15Cs, plagued by structural problems, stayed home in the U.S. and Japan. The brand-new F-22s, built by Lockheed Martin, suffered their own mechanical and safety problems. When they ventured from their home bases in Virginia, Alaska and New Mexico, it was only for short training exercises over the Pacific. The F-15Cs and F-22s sat out last year’s Libya war.

The Air Force fixed the F-15s and partially patched up the F-22s just in time for the escalating stand-off over Iran’s suspected nuclear weapons program. In March the Air Force deployed the Massachusetts Air National Guard’s 104th Fighter Wing, flying 20 standard F-15Cs, to an “undisclosed” air base in Southwest Asia — probably either Al Dhafra in the United Arab Emirates or Al Udeid in Qatar. The highly-experienced Massachusetts Guardsmen, who typically have several years more experience than their active-duty counterparts, would be ready “should Iran test the 104th,” said wing commander Col. Robert Brooks.

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Two suicides in two days: Greece sees social backlash of crisis [RT]

Two Athenian men have leaped to their death in as many days as suicides in Greece continue to rise. Experts associate the growing suicide rate with the disillusionment of the Greek population at the unabated financial crisis.

A 70-year-old man in the capital Athens took his own life by jumping from his flat after a court clerk stopped by to issue him an eviction notice on Friday.

Tributes at the site where a 77-year-old shot himself in the head three days before, at Syntagma Square in Athens, on April 7, 2012. (AFP Photo / Angelos Tzortzinis)


Upon receiving the notice, the man immediately went to his balcony on the third floor of an apartment block in the neighborhood of Galatsi and threatened to jump.

Despite the clerk’s pleas to dissuade him, the man committed suicide.

The previous incident happened on Thursday when a middle aged bank worker leapt from the Acropolis at around 09:00 a.m. local time. He had reportedly left work for a morning break shortly after arriving and never came back.

He was a worker at state-owned agricultural lender ATEbank, which had run into problems during the crisis. Police in Athens say there is no evidence to suggest that the man had any financial problems.

There has been a sharp rise in the number of suicides in Greece which are widely viewed as a reflection of the country’s economic woes.

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Big Banks Have Become Mafia-Style Criminal Enterprises [washingtonsblog]

Banks Conspire to Fleece the Public

Two stories this week prove once again that the big banks are literally criminal enterprises.

Initially, all of the big banks have engaged in Mafia-style “bid-rigging” of municipal bonds, to bilk money from every city in the nation … to the collective tune of tens billions of dollars.

And Barclays and other large banks – including Citigroup, HSBC, J.P. Morgan Chase, LloydsBank of AmericaUBS, Royal Bank of Scotland – manipulated the world’s primary interest rate (Libor) which virtually every adjustable-rate investment globally is pegged to.

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Healthcare Explained

Bank unveils new economic stimulus

The Bank of England has unveiled new stimulus measures to allow banks to pump tens of billions of pounds into the economy.

Rules governing the amount of liquidity banks must hold in case of a financial panic are to be relaxed, releasing funds for lending to households and businesses to prevent the economy sinking deeper into recession.

The Bank hopes the measures will also reduce lenders’ costs, which have been forced up by fears about the eurozone crisis and passed on through higher interest rates that “weigh on economic growth and threaten the health of the financial system as a whole”.

Sir Mervyn King, Governor of the Bank, said: “The crisis in the euro area has generated a great deal of uncertainty … Uncertainty and tighter credit conditions have acted as strong headwinds to our recovery.”

Although the Bank did not quantify the scale of liquidity relief for lenders, economists said it would be “substantial” and could even stretch into hundreds of billions of pounds.

Lenders are holding more than £500bn of liquidity, having built up their buffers significantly in the past four years. On top of that, banks have access to another £160bn of cheap liquidity through the Bank’s Discount Window or Extended Collateral Term Repo (ECTR) facility.

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The Supreme Court and Natural Law []

I won a bet today.

A few weeks ago I wagered with a coworker that the United States Supreme Court would uphold the Affordable Care Act otherwise known as Obamacare.  He reasoned that the federal government has no authority under the Constitution to force an individual to purchase a product from a private company.  My reasoning was much simpler.  Because the Supreme Court is a functioning arm of the state, it will do nothing to stunt Leviathan’s growth.  The fact that the Courtdeclared no federal law unconstitutional from 1937 to 1995—from the tail end of the New Deal through Lyndon Johnson’s Great Society—should have been proof enough.  He naively believed in the impartialness of politically-appointed judges.  For the first time he saw that those nine individuals are nothing more than politicians with an allegiance to state supremacy.

It was a tough but valuable lesson to learn.

As far as unintended effects are concerned, the economic justification for increased government regulation of the health care industry has been argued countless times up to this point.  Proponents of intervention are convinced that more bureaucracies, red tape, and central planning are the answer.  They have no knowledge of the pricing system and how it functions as the most efficient means through which consumers and producers can interact to come to an agreeable deal.  They don’t realize that the undersupply of doctors and care providers is a direct consequence of previous government intervention and occupational licensing.  Many actually believe that Obamacare wasn’t written by the insurance industry and isn’t a fascist-like appeasement of another deep pocketed lobbying campaign.

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Iran Oil Embargo Goes Into Effect: Crude Up 8% [Zerohedge]


Following a 3-sigma fall yesterday, WTI crude has rebounded exuberantly amid the European ecstacy and the Iran Oil Embargo. Up almost 9% from late yesterday’s lows (a 6-sigma jump), it appears yet another squeeze is in play (perhaps from demand-pull on the back of Hillary’s unyielding national policy – oh yeah apart from China and Singapore). While the WSJ notes: “There’s no material price premium from the Iran issue”, it seems the potential for an epic short-squeeze – as Iran’s largest importer of Oil (cough China cough) is now exempt (and continuing to hoard) leaving refiners potentially tight on supply – as macro tail-risk is seemingly removed from the downside by the ‘nothing’ summit we just experienced.

WTI swings of outrageous fortune…

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What if Germany were forced out of the euro? [qfinance]

The Summit of European leaders on Thursday and Friday 28th and 29th of June takes place against a backdrop of German intransigence to the one idea that France, Italy and Spain, and probably Portugal, Greece and Ireland as well, feel can save the EU, namely joint guarantees for euro bonds. Germany is also vehemently opposed to the new French President Francoise Hollande’s other idea, a joint guarantee of EU bank deposits to stop the mounting capital flight from troubled peripheral states – a flight that is itself ratcheting up bank solvency issues. With Germany being seen as the odd one out GaveKal analyst Anatole Katletsky argues that a staggering but logical outcome of the Summit might well be that Germany is identifed as “the problem” and asked to fall into line or to leave.

If this sounds far fetched, remember that there are many in the peripheral states who feel that Germany has profited greatly from having a currency that is much weaker than the Deutschemark would have been. It’s export industries are at multi year highs in terms of earnings and profitability. Also, Germany cannot shrug off responsibility, in their eyes at least, for providing much of the credit that allowed the likes of Spain to run up huge debts in the first place. There is also the fact that it is simply logical, given that Germany wants closer fiscal union, for the others to ask Germany to recognise that the big picture requires fiscal transfers from the strong core nations to the peripheral nations, in order to restore peripheral economies to health. Again, German intransigence, which is all we are likely to get from the present summit, is going to continue to be deeply frustrating for most of Germany’s european partners. As I pointed out in a recent blog, Austria, the Netherlands and Finland are just as opposed as Germany to the introduction of euro bonds, but they do not control the ECB, and Germany itself, as Kaletsky points out, has just two seats on the ECB. From this it follows that if push comes to shove and the peripheral nations combine, they can force through policies for the ECB that Germany will absolutely hate and that the German public would riot over.

As Kaletsky puts it, the debtor countries, faced with a decade or more of grinding austerty and deepening debt (since all the austerity programme is achieving is to diminish tax revenues and push governments still more deeply into debt) could elect instead to turn the tables on Germany, since Germany is clearly the odd man out “and the chief obstacle to any political resolution of the euro crisis”.

“It is Germany that refuses even to talk about mutual debt and banking guarantees. It is Germany that insists on self-defeating fiscal austerity and intolerable political conditions for the debtor countries. It is Germany that vetoes quantitative easing by the ECB, which could cap bond yields and relieve deflationary debt traps. And it is Germany that makes the other euro countries uncompetitive, discourages devaluation of the euro against the dollar and refuses even to relax its own domestic fiscal policies to reduce its trade surplus and support growth.”

Looked at in this light, it is not impossible to imagine a club of peripheral and secondary EU states saying to Germany, “You’d better leave, we’ll be better without you.” Kaletsky points out that while such a request could not, of itself, compel Germany to leave, the other states could make life impossible for Germany and unacceptable to the German public by driving the ECB down a hugely growth centric, inflationary road in the teeth of German opposition.

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Why The Debt-Dependent Status Quo Is Doomed in One Chart [Oftwominds]

From http://charleshughsmith.blogspot

The global economy is now addicted to debt. Once debt stops expanding, the economy shrivels. But expanding debt forever is unsustainable. Welcome to the endgame.

Regardless of whether you call it debt saturation or diminishing return on new debt, the notion that taking on more debt will magically enable us to “grow our way out of debt” is not supported by data. Correspondent David P. recently shared this chart of Total Credit Market Debt Owed and GDP and this explanation:

The purpose of this chart is to examine the relationship of total debt to GDP. Since Debt is not factored into GDP, just exactly how much debt is being used to create growth, and over what time periods. But absolute numbers don’t work so well, since they don’t let you examine particular years, seeing what the 1950s look like vs the 2000s, for example.

Red Line: Annual Change in TCMDO (Total Credit Market Debt Owed) * 100/ That year’s total GDP, showing that year’s % increase in TCMDO/GDP.
Blue line: % change in GDP over last year.

Any gap between the red line and the blue line is what I would call the creation of debt in excess of income. And that gap is the ANNUAL gap, not a cumulative gap. As an example, in 2008 TCMDO grew by an average of 30% of that year’s GDP, while GDP itself grew by around 5%. Ouch.

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Karl Denninger on Price Dictates, Credit Illusions and the Healthcare Fiasco

Big Four banks admit to mis-selling interest rate swaps [Telegraph]

Barclays, HSBC, Lloyds and RBS have admitted to mis-selling interest rate hedges to small and medium sized business customers and agreed to compensate them as well as stop selling the most complex products.

Britain’s four main high street lenders have agreed to compensate small and medium sized businesses mis-sold interest rate hedging products after the Financial Services Authority said it had found “serious failings” in the way they marketed to some customers.

Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland have all agreed to immediately halt the sale of complex interest rate hedges to smaller businesses and have pledged to compensate potentially thousands of customers who have been hurt by the products that have left some firms with hundreds of thousands and even millions in costs they say they were never warned about.

Martin Wheatley, head of financial conduct at the FSA, said he had received personal assurances from chief executives, including Barclays boss Bob Diamond and Antonio Horta-Osorio, chief executive of Lloyds, that they would ensure all complaints are treated fairly.

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Lloyds, barclays, HSBC, RBS


RBS and Lloyds drawn into rate-rigging scandal [Telegraph]

Royal Bank of Scotland and Lloyds have been accused of systematically rigging financial markets in a growing international scandal which wiped billions off the value of shares in Britain’s biggest banks.

RBS and LLoyds facing criminal inquiry over rate-rigging scandal

Bob Diamond, the chief executive of Barclays, is under pressure to resign after the bank admitted it had conspired to fix global interest rates with David Cameron, the Prime Minister, saying he should take responsibility.

The scandal now threatens to engulf taxpayer-funded Lloyds and RBS, which according to court documents obtained by The Daily Telegraph have also been accused of routinely distorting basic financial data used to set interest rates.

As British banks faced a potential criminal investigation billions were wiped off their value, with shares in Barclays falling by 15.5%. RBS’s share price plunged by more than 10 percent yesterday, wiping more than £2 billion off the value of taxpayers’ stake in the bank.

Executives at HSBC are also being investigated alongside London-based financial firms for their role in the scandal, which is estimated to have cost consumers, investors and businesses £30billion.

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