Showing posts with label profits. Show all posts
Showing posts with label profits. Show all posts

Wednesday, July 12, 2017

The Italian Chamber of Deputies recently organized the conference called "Italy's public debt in the Eurozone", which saw experts in the restructuring of public debt, academics, journalists and investment fund managers.  In a participant's opinion, Jens Nordvig, head of department at Nomura Securities and former banker at Goldman Sachs, "Italy is now the most important country in Europe".  The reason is of course, not just the size of its economy, but also the very high level of its public debt, which nobody seems to be able to find a solution for. The latest official data, of April 2017, shows that public debt has reached 2.27 trillion Euros, a new record, after increasing 37.2 billion over last year's similar period. The aggregated budget deficit after the first six months of 2017 was 50.2 billion Euros, 22.5 billion Euros higher YOY, according to Reuters, as over half of the deficit of June 2017, of 8.2 billion Euros, was the "result" of the state's involvement in the liquidation of the two banks in the Veneto region.  A new record, once again a negative one, was seen when it comes to Italy's position within Target2 (Trans-European Automated Real-time Gross settlement Express Transfer), the real-time settlement system for payments in Euros.  ECB data of May 2017, shows that Italy's deficit within the Target2 system has reached 421.6 billion Euros, way above the level recorded during the sovereign debt crisis, a phenomenon which reflects the acceleration of capital outflows.  Under these circumstances, it is not surprising that the European authorities have "allowed" Italy to violate the banking resolution regulations that recently came into effect, even though that represents a new factor "to divide Europe", according to Reuters.

Tuesday, January 31, 2017

Bucharest Romania -- extremely optimistic estimates of the evolution of the economy in the next four years is not the only weak spot of the budget. Even if we overlook "transparency" easily, what about prudency? Hasn't the CNP learned anything, and more so our authorities, from the lesson of the crisis that began in 2008? Where does this optimism concerning the evolution of the economy over the next four years come from, when the global trade "landscape" is precisely in the process of undergoing a transformation following the victory of the Trump administration, and the problems of the EU are going through a new phase of worsening? The report also states that the "potential GDP will increase at an annual growth rate of 5.1%", whereas "the gap between the GDP and the potential GDP levels expressed as a percentage of the potential GDP will be closed in 2018". But don't we have the opinion of some NBR officials, that the output gap was closed as early as 2013 or Q2 2016? Aside from "faith", we must not forget that the methods for estimating the difference between the potential GDP and the real GDP are more or less mechanical, as they are heavily influenced by the growth of lending. Does the new government believe that we are back to the period of "growth" based on cheap loans and ultra-lax lending norms? It would seem so, because the report concerning the macroeconomic situation in the next years reflects an unrealistic approach of the evolution of borrowing costs. The governmental report also shows that "the yields of government bonds have followed a downward trend in the first three quarters of 2016, and then rise was mostly due to a number of foreign events".

Tuesday, August 30, 2016

Business confidence in Europe's biggest economy, Germany, has fallen unexpectedly after the UK Brexit vote, according to a closely watched survey.  The Ifo business confidence index, based on about 7,000 company responses, fell to 106.2 points for August from 108.3 in July.  It was the steepest monthly fall in more than four years and took the index to its lowest since December 2014.
Despite the gloom, the euro was up slightly against the pound and dollar  The latest drop follows a much smaller decline in confidence in July immediately after the UK voted to leave the EU.  Economist Carsten Brzeski at ING-DiBa said the ongoing decline "suggests that German businesses have suddenly woken up to Brexit reality".  "It is not the first time that the Ifo reacts with a delay of one or two months to global events,'' he said, adding that at present, the German economy remained in a "virtuous circle".  Across the sectors it examines, the Ifo found confidence had fallen in all but construction and services.  "The German economy has fallen into a summer slump," Ifo president Clemens Fuest said.  Other official figures released earlier this month showed the German economy grew 0.4% in the second quarter compared with the previous three-month period.  That was a slower pace than the 0.7% growth in the first quarter, but double what economists had expected.

Sunday, August 7, 2016

Mehmet Simsek, the deputy prime minister, tried to dispel fears on Thursday that the country would return to the deep repression seen the last time it was under similar measures. "The state of emergency in Turkey won't include restrictions on movement, gatherings and free press, etc. It isn't martial law of 1990s," he said. "I'm confident Turkey will come out of this with much stronger democracy, better functioning market economy and enhanced investment climate." But as he made his statement, the crackdown spread to journalists and human rights lawyers. Orhan Kemal Cengiz, a leading newspaper columnist and lawyer, was arrested at the airport as he tried to leave the country.  Police also raided the printing house of well-known satirical magazine Le Man...On Thursday, Austria became the first country to take diplomatic action over the crackdown, saying it would summon Turkey's ambassador to discuss Ankara's "increasingly authoritarian" behaviour and allegations it had been behind recent Turkish protests in Vienna. Meanwhile, the UK’s Foreign Affairs Committee said it was to launch an inquiry into Britain’s relations with Turkey and the impact of the crackdown on democracy and human rights.

Friday, July 29, 2016

UK = A report from the Home Affairs Committee said: "Past experience has shown that previous attempts to tighten immigration rules have led to a spike in immigration prior to the rules coming into force.  "Much will depend on the negotiations between the UK and the EU and the details of any deal to retain or constrain the free in the European Union."  It suggested three “cut off” dates for when EU citizens can apply for permanent UK residence: the June 23 referendum, the date Article 50 is triggered to begin Brexit talks or the day Britain actually leaves the bloc.  Mr Vaz said: "There is a clear lack of certainty in the Government's approach to the position of EU migrants resident in the UK and British citizens living in the EU...One in three lorries arriving in Britain do not have the security measures needed to keep out stowaways, border officials have also found as it emerged almost half of all people smuggling fines are never paid. Around 750,000 vehicles a year come to the UK without the necessary locks on doors and other measures needed to make sure illegal migrants cannot ride across the border undetected, according to the Border Force. Millions of pounds of penalties for people smuggling have also gone unpaid in recent years after thousands of foreign drivers were caught but failed to pay up.

Tuesday, January 12, 2016

Honda confirmed Thursday that an inflator ruptured in a crash that killed a teenager in July, the ninth fatality linked to air bags made by Japan's Takata.  When an inflator ruptures, it can hurl metal and plastic shrapnel at a car's driver or passengers, causing sometimes fatal injuries.  "American Honda has confirmed that the Takata driver's front air bag inflator ruptured in the crash of a 2001 Honda Accord Coupe on July 22, 2015 near Pittsburgh," the automaker said in a statement. "Injuries related to this air bag inflator rupture likely resulted in the tragic death of the underage driver."  The National Highway Traffic Safety Administration, which inspected the wreck along with Honda officials, has attributed eight deaths in the U.S. to the air bags. All were in Hondas. In addition, another death occurred outside the U.S.  The Takata recalls now involve at least 23 million ammonium-nitrate inflators in 19 million vehicles involving 11 automakers.  "This young person's death is tragic, and it underscores why we are continuing to work so hard to get these defective inflators off the road," said NHTSA spokesman Gordon Trowbridge when the death was announced earlier this month.

Sunday, January 10, 2016

For the second time this past week, Chinese stock markets shut early after its "circuit breaking" mechanism, that was introduced on January 1, was breached within the first 30 minutes of trading. This triggered a sharp fall in the Shanghai Composite index - 7pc.
The slump in the stock market came as Chinese authorities guided the yuan lower - allowing it to decline by 0.5pc, its most since August, which resulted in a mass sell-off, otherwise known as Black Monday. Stocks should be valued based on the dividend yield not future earnings which never are realised. If debt had been priced correctly this manic stock market could have been easily controlled.  Any market in investments is inherently unstable due to the positive feedback at the heart of the trading. The problem is that unstable systems are very difficult to stabilise and often any atemps to do so can lead to further instability. The heart of the problem is that a price variation is reinforced by herd mentality. If the price goes up, then more people buy rather than fewer as would occur for most non investment items. The reverse is also true. This is worse when there is wider share ownership, as more investors act irrationally rather than based on reasoned consideration of company fundamentals. Possible other devices to consider are shorting, higher stamp duty, minimum length of share ownership, discouraging wider share ownership and price reinforcement. What is really needed is the investment equivalent of a car shock absorber combined with something that cuts or attenuated the positive feed back. My favourite is minimum length of share ownership. If a stock is subject to a speculative price hike then investors are less likely to put more in if they know that they cannot get it out in the short term. In short, short term investments are a contributory factor to price instability.  Having consulted the oracle, I get that ominous hexagram known as the Preponderance of the Great. Too much weight in the middle; all unbalanced, and clearly away from the Tao.

Tuesday, December 22, 2015

I dont think Yellen made a mistake , she knows she had to raise rates because she knows that most American pension funds were modeled on an interest rate of about 6 to 8% which they have been unable to achieve for the last ten years. This would have forced pension funds to take more riskier positions. It is also compulsory for pension funds to have a % in government bonds. If these pension funds come under pressure and they have to liquidate, this could put government bonds under pressure. Most European Nations are bankrupt so if their bonds become under pressure we are looking at a very large problem GLOBALLY. There is 200 trillion in the bond market and for the large movers whom might be looking for a bid on 500 billion of bonds and not receive a bid would cause panic.  Differentials in spreads between the USA and Europe because of negative interests rates will cause large capital inflows into the USA, this will cause equity and asset inflation in the USA which will necessitate even higher interest rates, which will cause the USA dollar to soar, That means all of those countries that borrowed in USA dollars at cheap interest rates will find it harder to make payments, USA rising, there currency in decline.  Then you have to look at the west, socialism has only been born from WWII, we had the population explosion (the bubble) and now we are all coming up to retirement, which has not been funded because politicians thought that we would reproduce at the same rate but we didn't, I come from a family of seven and I have two children, which does not even replace the population. Western nations are in decline. Japan demographics are terrible and so is Germany. If you think Merkel is a nice lady letting in 800 thousand refugees from Syria.... think again. She needs these people to pay taxes to pay for her older generations pensions.
Get ready for a very bumpy ride...

Wednesday, November 18, 2015

The European Central Bank (ECB) pushed for a quick fire sale of Irish bank assets as Ireland entered the bail-out programme in late 2010, putting the protection of its own balance sheet ahead of the interest of Irish taxpayers, former IMF deputy director Ajai Chopra has said.   Mr Chopra, who was one of the senior IMF officials responsible for the design and monitoring of the bailout programme, wrote in a report for the European Parliament that the ECB’s advice on fiscal policy and structural reforms - which he said were outside its mandate - were wrong for Ireland. The report was requested by the parliament’s committee on economic and monetary affairs.  In the report, which analyses the ECB’s role in the design and implementation of the programme, Mr Chropra writes that several missteps were made which tainted the bank’s legitimacy in Ireland. Identifying the letters sent by then ECB president Jean Claude Trichet to then finance minister Brian Lenihan, pressing Ireland to enter the bailout or risk losing bank funding, Mr Chopra said their “imperious tone is unbecoming of the way in which EU institutions and nations should conduct business.”   He said that as the central bank and bank supervisor of each euro zone member, the ECB should not be a part of the troika where it sits across the table from country authorities and negotiates and monitors fiscal assistance.  “The ECB belongs on the country’s side of the table,” he said.  I think the last sentence is critical.

Thursday, August 13, 2015

FOCUS ON  PORTUGAL - The imbalance of the Euro between rich and poor countries has acerbated and wrecked the Portugese industries of tourism, and of clothes and shoes from cheap Chinese imports into Europe. The debt is unsustainable and to add any more austerity simply makes it worse. It will, along with Greece, need a massive debt forgiveness to solve its problems, and this will happen as sure as night follows day, and Merkel and Germany will have to swallow it whole.  I should mention the accelerating decline in the population, and particularly the working age population who actually pay most of the taxes (when they can find jobs that is). Since population size is a significant indicator of GDP ( eg less people equals less demand for all sorts of goods and services from food to haircuts, housing and furniture to put in it etc) this is going to be perhaps the major long term issue for Portugal.  This is driven by two factors. The first is that birthrate has been barely half that required to maintain a steady population level for the whole of this century and the second is substantial emigration, especially of graduate level young people who also happen to be just in the age range that provides the majority of children. For a short while the increasing longevity the large number born born from the 1940's to the 1970's is masking what is already certain to happen. But we already know the number of people aged 0-20 years old is barely half that of a generation ago and its thus inevitable that there will be a totally unavoidable drop in the working population for at least the next generation and also because there will be far fewer 20-40 year olds in this period there will also be yet again even fewer children born to them. When you add in the high level of immigration to this the numbers are truly frightening- well they should be if any politician cared to take notice!  Demographics is a much ignored and yet very hard to reverse adverse trend that is going to have an unavoidable impact on many European countries. Portugal is probably the most critical but Italy, Germany and to a lesser extent Spain are all going to have a chronic problem emanating from this for decades to come...THE FACT that the IMF is still working with Portugal is a good sign. I just wonder if Portugal could get the same interest rates and terms that Greece is being offered if its debt situation would be so dire. For example, the Portugese government could, much as China is trying to do, consolidate debt and rationalize industry through debt exchanges with the Central government offering low cost loans to solid Portugese companies to take over the zombie firms or refinancing consumer and business loans.

Tuesday, April 21, 2015

Greece's finance minister has ramped up the political stakes in his country's debt drama, by personally telling President Barack Obama to push eurozone creditors over his country's bail-out crisis. In an 12-minute exchange with the President on the sidelines of an event marking Greek Independence day, Mr Varoufakis is reported to have repeated his desire for the US leader to influence events.   Mr Obama is reported to have responded by urging flexibility from both parties.  
Greece's Leftist government has looked to the White House to play the role of honest broker in protracted negotiations with its international creditors. Following Syriza's election in January, the President called for an end to harmful austerity policies and the introduction of a "growth strategy in order for them to pay off their debts to eliminate some of their deficits.” ...  Hopes of a deal before a meeting of the eurozone's finance ministers on April 24 have rapidly faded as both sides show no signs of bridging their differences over Greece's cash-for-reforms bail-out extension.   "In the absence of a deal in the next few weeks, the government might not be able to avoid default, which – we fear – would likely raise the risk of Grexit," said Reinhard Cluse at UBS.  The situation has become increasingly critical as Greece's public funds dwindle and the government faces a near €1bn IMF bill in the first two weeks of May. IMF managing director Christine Lagarde repeated that she would not countenance any delay in payment to the Fund.  “We will do everything we can so lending to the Fund remains the safest lending route any debtor can adopt. That is my determination” said Ms Lagarde. ...  Unfortunately for the Greeks, this is not Obama's call to make here. The Euro Zone is left to its own faltering accord. Quite sometime ago, Greece was thrown out of the Markets, and there is very little anyone can do to get Greece back in with all of this airing their dirty laudry infighting. Calmer heads did not prevail after the Greeks elected this Syriza government. Austerity and internal deflation have political consequence. The EU wont work with Syriza, but an overwhelming majority of Greeks approve of them. Would not be at all surprised if we see a Grexident soon. Only then will all of the self appointed experts report what really went wrong here, just like with Lehman. Heads will roll after the fact. Not Obama's call to make. His advice? Play nice guys. Geithner shook his head in disbelief at how this matter was handled quite sometime ago as well. Little good anyone can do the Greeks now. This situation calls for Greek self help. No not the Troika's prescription. Sorry to say, there is no way around declaring insolvency, rebooting, and starting over.

Monday, March 16, 2015

Deşi a tipărit cantităţi uriaşe de bani şi a dat drumul unui nou program imens de relaxare cantitativă, prin care va ajuta statele europene să se împrumute mai ieftin, cumpărând obligaţiuni guvernamentale de peste un trilion de euro, Banca Centrală Europeană este considerată responsabilă pentru „politicile de austeritae” din Europa.  „Principalul motiv al protestelor este faptul că BCE face parte din Troika, iar Troika e responsabilă pentru politicile de austeritate care i-au împins pe atât de mulţi în sărăcie”, a declarat, pentru Reuters, Ulrich Wilken, unul dintre organizatorii “Blockupy”, protescul care se va desfăşura în apropierea noului sediu de 1,3 miliarde de euro al BCE.  Troika include, alături de BCE. Comisia Europeană şi Fondul Monetar Internaţional şi monitorizează ţări precum Grecia şi Cipru care au beneficiat de programe de salvare, inclusiv prin iertarea de datorii. BCE este şi furnizor de finanţare pentru bănci din ţările cu probleme. Ministrul elen de Finanţe, Yanis Varoufakis, a criticat săptămâna trecută politica instituţiei, pe care o consideră “sufocantă”, critic făcută şi de organizatorii protestului.  “Cei de la BCE nu sunt aleşi în mod democratic şi, totuşi. Presează guvernele să acţioneze într+un anume fel tot timpul. Am văzut asta din nou în maniera în care au îngreunat posibilitatea Greciei de a se finanţa după alegeri”, a spus Wilken.  Recent, BCE a încetat să accepte titluri de stat emise de statul elen în schimbul finanţării, când noul govern ales a anunţat că nu va respecta termenii conveniţi iniţial în programul de ajutor. 

Friday, March 13, 2015

Clearly there are some who have not realized the new economic tectonic shift in power towards the East.  The U.S. has an unpayable debt of nearly 200 TRILLION dollars, when you include unfunded liabilities.  The western shadow banking system is hiding over a 1000 TRILLION in derivatives, that have zero backing.  The plain truth is that Russia is dependent on sales of a product that will NEVER recover to its old price level.   $60 a barrel is the new norm.  This is a disaster for the Russian economy.  The prosperity it enjoyed in the days of $100+ a barrel are gone forever.
And worse times are coming for Russia as the Little Russian Psychopath persists with his grossly transparent plan to get a secure land route from Russia to Crimea through puppet "republics" in Soutern Ukraine... RBS, which maintains an office in Russia, said in its full-year results that it had “reduced limits to customers affected by [sanctions], including tightening transactional controls to mitigate credit risk while ensuring sanctions compliance”, and that it had placed restrictions on new business in the country. Its net exposure fell by £120m last year to £1.8bn, around half of which is fully hedged. While half of RBS’s loans to the country are to corporates, most of Barclays’ exposure is to the financial sector. The retreats represent a major pull-back for Britain’s banks in Russia, after a pre-crisis investment splurge. In 2008, at the height of the banking boom, Barclays paid £373m for Expobank, before selling it for an undisclosed sum in 2011. In the same year, HSBC closed its retail banking operations in the country, having opened them just two years earlier. Other banks cut funding last year, including the French bank Société Générale, which is one of the largest foreign lenders in the country.

Wednesday, March 4, 2015

The termite-eaten timbers under the rotten edifice of the EU are crumbling.

The Alpine region of Carinthia faces probable bankruptcy after Austria’s central government refused to vouch for debts left by a disastrous banking expansion in eastern Europe and the Balkans.
It would be the first sub-sovereign default in Europe since the Lehman Brothers crisis, comparable in some respects to the bankruptcy of California's Orange County in 1994 or the city of Detroit in 2013. Austria’s finance minister, Jörg Schelling, said Vienna would not cover €10.2bn (£7.4bn) in bond guarantees issued by the Carinthian authorities for the failed lender Hypo Alpe Adria, or for the "Heta" resolution fund that succeeded it. This leaves the 550,000-strong province on the Slovene border to fend for itself as losses spin out of control.  “The government won’t waste another euro of taxpayer money on Heta,” he said, insisting that there must be an end to moral hazard. The Hypo affair has alredy cost taxpayers €5.5bn. The Austrian state has said it will cover €1bn of its own guarantees “on the nail” but nothing more. 
Sources in Vienna suggested that even senior bondholders are likely to face a 50pc writedown, becoming the first victims of the eurozone’s tough new “bail-in” rules for creditors. These rules are already in force in Germany and Austria, and will be mandatory everywhere next year.
The cracks are widening - and just a few days ago we heard Austria telling us to treat Greece like lepers.  The euro falls like a brick - with a lot further to go.  It will be interesting to see who dumps this toxic currency first....Germany? France or Italy - a race to the bottom.

 

Tuesday, March 3, 2015


What did Greece do with the money? Put on an Olympics, pay higher pensions, hire more government workers and overpay them ? Even if we admit that Greece had a debt to gdp ratio far in excess of the 60% claimed when they joined it was not 120% or 150+% when they needed their first bailout. Even Ireland and Spain's own banking regulators could have applied the brakes to their housing bubbles by simply raising the down payments to get a mortgage or construction loan. They were also bribed to buy (faulty) German submarines and unreliable metro/trams and much else by German firms like Siemens (which profited mightily by use of slave labor, even going so far as to open a branch in the Ravensbruck concentration camp). The Greeks were also inundated by loans from French and German banks, and the so-called bail out was, in fact, a bail out be the poor, long-suffering European tax-payer, including Greek ones, of those banks by the corrupt Euro-political class.

Sunday, February 22, 2015

Greece's anti-austerity government is presenting its first concrete proposals for an alternative debt plan at an emergency meeting of eurozone finance ministers in Brussels.  The government wants to overhaul 30% of its bailout obligations, replacing them with a 10-point plan of reforms.  But EU ministers have warned that Greece must abide by existing terms.  The EU-IMF bailout for the debt-laden country expires on 28 February and Greece does not want it extended.  Instead the new Athens government is asking for a "bridge agreement" that will enable it to stay afloat until it can agree a new four-year reform plan with its EU creditors.  Thousands of left-wing demonstrators have rallied in Athens in support of their government's proposition.   Prime Minister Alexis Tsipras's government won a confidence vote on Tuesday, with the support of 162 deputies in the 300-seat parliament.  The Athens stock exchange then fell by 4% ahead of the emergency Eurogroup meeting, which will see Finance Minister Yanis Varoufakis unveil the controversial debt proposals.  The Syriza-led government says the conditions of the €240bn (£182bn; $272bn) bailout - sweeping spending cuts and public sector job losses - have impoverished Greece.  It rejects the "troika" team - the EU, International Monetary Fund (IMF) and European Central Bank (ECB) - overseeing the bailout's implementation.  The government's proposal for overhauling its bailout comes in four parts, according to a finance ministry source widely quoted in Greek media.  Under the first part, Greece would co-operate on 70% of its bailout conditions but wants to scrap 30% - replacing it with 10 new reforms to be agreed with the Organisation for Economic Cooperation and Development (OECD). It is unclear what these would be.
At a joint press conference on Wednesday, OECD head Angel Gurria told Mr Tsipras that his organisation would "work with Greece in getting growth back not only on the books but also... to the Greek citizens".  The government's plan also includes bond swaps and a proposal to reduce the primary budget surplus target for this year to 1.49% of GDP, rather than the 3%.

Thursday, January 8, 2015

Quantitive Easing is just distribution of money from the poor to the rich !


2015 will show the complete collapse of the Western world we have known since 1945. It will be a gigantic hurricane, which will blow and rock the whole planet, but the breach points are to be found in the “Western Port”, which hasn’t been a port for a long time but, as will be clearly shown in 2015, has been in the eye of the storm in fact, as we have repeatedly said since 2006. Whilst some boats will try to head offshore,  the Ukrainian crisis has had the effect of bringing some of them back  to port and firmly re-mooring them there. Unfortunately, it’s the port itself which is rocking the boats and it’s those with the strongest  moorings which will break up first. Of course, we are thinking of Europe first and foremost, but more so Israel, the financial markets and world governance.....Come on guys.. Look the similarity of the so called Wirtschaftswunder in Germany after the WWII and the current hate to the €uro currency in the Anglosphere...."Wirtschaftswunder (German for "economic miracle") describes the rapid reconstruction and development of the economies of West Germany and Austria after World War II (adopting an Ordoliberalism based social market economy). The expression referring to this phenomenon was first used by The Times in 1959.[1]  Beginning with the replacement of the Reichsmark with the Deutsche Mark as legal tender (the Schilling was similarly established in Austria), a lasting period of low inflation and rapid industrial growth was overseen by the government led by German Chancellor Konrad Adenauer and his Minister of Economics, Ludwig Erhard, who went down in history as the "father of the German economic miracle." In Austria, efficient labor practices led to a similar period of economic growth."... Bear in mind the EU is anti democratic.  Its powers are centralized and in the hands of the few.  Examples: Merkel stage managed Juncker becoming  chief commissioner and he, in turn, appointed the others.  The central bank dictates fiscal policy.  The EU even wants a centrist defence policy.  In truth the euro cannot survive long term because it defies  bedrock economics. The interactive, social, daily  value of any currency finds its own level.  Greece will be better off outside the EU in the medium  and longer term.  With a naturally evolving currency.....And now, the big lie - :
There are concerns….once deflation actually takes hold there is no stopping it….until all debt is destroyed….this would be a ghastly ghastly human catastrophe…social welfare states would collapse plunging millions upon millions into untold misery…it might already be too late to stop deflation…there is no evidence that quantative easing actually always solves the structural problem of too much debt - rather it might just delay the great reckoning of too much debt…meaning the destruction of debt by default or hypo inflation...
   In brief: The banks loaded everyone up with so much debt that it can't be repaid even at zero rates. The owners of that debt (the rich) won't take a haircut on their "investment". So they need to sell the debt to the public indirectly, via the central bank. Meanwhile if everyday prices show a hint of dropping and making people's lives easier (deflation!), even more money must be given to the banks and the wealthy. And if at some point wages show a hint of rising and making people's lives easier (inflation!), interest rates will rise. Nice system isn't it? I wonder who profits most from this arrangement. It should be simple enough to work out: look around and see who has all the money. It's not us.

Sunday, November 23, 2014

According to many analysts, the future of the eurozone was secured after a now famous speech by ECB chief Mario Draghi, in July 2012, in which he promised to do “whatever it takes” to save the euro.  But according to leaked transcripts - obtained by the FT - of interviews for a book by former US treasury secretary Timothy Geithner, the ECB chief’s comments were anything but planned.
According to Geithner, the remarks were “off-the-cuff” and “totally impromptu”. “I went to see Draghi and (...) at that point, he had no plan. He had made this sort of naked statement of this stuff. But they stumbled into it”, a leaked transcript of the interview says.  Improvisation as the origin to one of the most important comments on the eurozone fits with other descriptions of the ECB president.  Simeon Djankov, Bulgarian finance minister from 2009 to 2013, describes the different personalities of Draghi and his predecessor, Jean-Claude Trichet.
In his book “Inside the Euro Crisis”, he writes about the different personalities of successive ECB presidents Jean-Claude Trichet and Draghi.  During meetings with the EU finance ministers, Trichet “would read prepared statements, and after that he would fade into the role of passive observer,” Djankov wrote in his book “Inside the euro crisis”.  Draghi, on the other hand, had a “more instinctive approach” and “scribbled his talking points on bits of paper a few minutes before the meeting began, tossed out comments throughout the discussions, and stayed until the end”...
Eurozone inflation rose to 0.4pc in the year to October, up from 0.3pc in the preceding month. At that level, price growth remained stuck well below the ECB's medium-term target of close to 2pc.
“It is essential to bring back inflation to target and without delay”, Mario Draghi, president of the ECB, said in a speech in Frankfurt on Friday.
The central bank official made reference to the quantitative easing schemes launched by the Federal Reserve and the Bank of Japan, noting that they had reduced the strength of the country's respective currencies.  Traders sold the euro on Mr Draghi's dovish comments, as the currency fell by more than three-quarters of a percentage point to less than 1.25 against the dollar. Mr Draghi stressed that while there had been improvements in the financial sphere, these had “not transferred fully into the economic sphere”, where the situation “remains difficult”.   The currency bloc has an eye-wateringly high unemployment rate of 11.5pc, while economic growth has ground to a near-halt .   The eurozone managed to dodge a third technical recession since the financial crisis, but it now appears that the euro area economy is unlikely to pick up speed by the end of the year.  The ECB has made a number of interest rate cuts across the year in an attempt to boost the economy, consequently bringing one of its three main rates - the deposit facility rate - into negative territory.   The rate is currently maintained at -0.2pc, meaning that banks that park their money with the ECB overnight have to pay the central bank for the privilege.

 

Sunday, November 2, 2014

The US growth rate will slow in the last three months of 2014.
Chris Williamson, chief economist at Markit explains: “The flash PMI survey data show the pace of economic growth easing for a fourth consecutive month in October. The weakened growth of new orders and downturn in business optimism suggest that growth and hiring could slow further in coming months. “Having signalled an annualised rate of GDP growth of approximately 3.5% in the third quarter, the October readings indicate that the pace of economic growth looks set to moderate in the fourth quarter, down to perhaps 2.5% or less if the PMI falls further in coming months. “There are clearly many concerns, ranging from worries about the impact of Ebola, the Ukraine crisis, the ongoing plight of the Eurozone , signs of further weakness in emerging markets and the Fed starting to tighten policy. “We should not lose sight of the fact that the pace of growth nevertheless remains robust, having merely eased from very strong rates in prior months. The survey is also indicating another month of non-farm payroll growth in excess of 200,000 in October. This sustained strength should help alleviate recent worries about a sudden deterioration in the economy’s health. The pace of expansion appears to be easing only moderately.”

Saturday, October 18, 2014

Greece’s finance minister, Gikas Hardouvelis, argued in talks with the IMF boss, Christine Lagarde, that Athens can do without further loans from the Washington-based lender of last resort. Emergency bailout funds have propped up the Greek economy since it came close to crashing on a mountain of deficit and debt in 2010.
“Not only do we not need a new memorandum [loan agreement],” said prime minister Antonis Samaras, addressing parliament hours before his government survived a crucial vote of confidence early on Saturday. “We don’t need the rest of the money that from the start of next year we were on course to get from the current memorandum. We can leave it one and a half years earlier … that is our goal.”
Funding from the IMF had been due to expire in March 2016, while funds from the eurozone end this year. At €240bn (£188bn), the lifeline was the largest rescue programme in global financial history and was aimed at preventing the debt crisis that affected Athens from spreading to the rest of the eurozone.
Samaras denies that Greece wants an acrimonious break from the IMF. The organisation, perhaps more than the EU, has insisted on tough reforms and austerity measures in return for the rescue funds. These have exacerbated a six-year recession, the worst on record, left a quarter of the workforce unemployed, and seen support for Samaras’s fragile coalition plummet.
Hardouvelis, who met Lagarde with his predecessor, the governor of the Bank of Greece, Yannis Stournaras, is thought to have presented a plan detailing the country’s ability to cover its financing needs from bond markets. But the IMF chief has already signalled that she does not share such confidence. Although the IMF is also keen to disengage from the programme – and is under pressure from member states to focus on countries in the developing world – Greece is faced with a financing gap of about €15bn next year.