Last Monday, an emergency presidential decree forced up to 1,500 local government bodies to transfer their excess cash reserves to the Bank of Greece. The measure, which was pushed for by Brussels, has been met fierce resistance in the country. Giorgis Kaminis, the mayor of Athens, said he would fight the confiscation law, attacking it as "unconstitutional".“We’re determined to use all political and legal means we can to repudiate the content of the decree,” the Union of Municipalities and Communities said in statement on Tuesday night. The raid could generate an estimated €1.2bn to €2bn for the treasury by seizing reserves in commercial banks and shifting them to the central bank in Athens. But Greece's labour minister said his government would seek alternative solutions should mayors and local governors resist the measures.  In a further sign of domestic troubles for the Leftist government, approval ratings for Syriza's negotiating strategy have fallen to just 45pc in April, down from 72pc in February. The debt impasse has also seen the country's economic fundamentals degenerate. Figures from eurostat show that 73.5pc of people who were unemployed in Greece in 2014, had been out of work for more than a year, compared with 67.1pc in 2013. Seven out of the ten EU regions with highest share of long term unemployment are also in Greece. Pressure on the government's coffers has grown ahead of a meeting of Europe's finance ministers on Friday. The European Central Bank is reported to have demanded Greek lenders take a 50pc haircut on the collateral they use to access the emergency life support from the ECB.

However, ECB governor Benoit Coeure denied allegations that the institution was "blackmailing" the country, insisting the ECB would continue funding lenders as long as they remained solvent.

This crisis has shown clearly that EU government is corrupt to the core being run by Merkel/Germany by diktat and appointing tax cheating Junker to high office. The EU is clearly nothing more than a service agency there to help the oligarchs and the corporations they own accumulate more wealth and power.  It's apt that The Little Boy Who Cried Wolf is thought to have its origins in Greece - as the present lot there seem to be quite adept at doing the same thing.  In a few days' time the Greeks are due to refund more than a billion Euros' worth of short-term bonds and then, very soon afterwards, give 80 million Euros to the ECB for an interest payment. Now seems a very good time to, once again, throw up the hands and wail, "Oh you nasty, nasty people! How dare you expect us to pay back the money we agreed to borrow."  Of course it's all theatre - Kabuki, really. The Great Fraud of Europe will no more kick Greece out of the club than Greece will volunteer to go. The first one daren't acknowledge that it's possible to leave and the second one couldn't find a more willing bunch of suckers anywhere else...IMF chief Christine Lagarde is being influenced/controlled by her French financial connects. (France and Germany are the key players of the EU.)  The IMF has formed a pact with the EU and ECB instead if being the independent organisation that it was meant to be. The IMF is not making independent rational decisions.  The IMF/Greek fiasco has destroyed the credibility of the IMF as a responsible lender of finances to nations having financial problems.The IMF must be disbanded. It no longer is a responsible organization. YESSS...April 17th could have been a good bet for a selective default (leave it till about 4pm for maximum damage) on the 194 euros owed to the ECB for interest payment. Friday evening.... close down the Bank of Greece. EU cannot enforce a payment against a bank that does not exist. Target2 goes pear-shaped. Without Target2 EZ would be finished as a union. The hedgies attack the following Monday.

WASHINGTON — It was perhaps inevitable that the Greek crisis would hijack the spring meeting of International Monetary Fund this week, but the damage to the international lending agency could grow much worse as the situation in Europe becomes increasingly acute.

The standoff between a new Greek government seeking debt relief after five years of grinding recession and authorities at the IMF and European Union, who were unbending in their demands to follow through on further austerity measures to get more bailout money, dominated discussions at the meeting that brings economic policymakers from around the world.

Greece faces a deadline Friday to submit a list of specific reforms to the European Union that will unlock nearly $8 billion in bailout funds that it needs to meet loan repayments falling due next month.

 

 

The choice for Greece is simple. Either (a) leave EMU, or (b) Syriza falls on its own sword.  If Syriza falls on its own sword, then Greece becomes ungovernable and either the EU sends in its own administrators plus never ending German money, together with its own security force (front line EU occupation) or Greece exits EMU by default.  Thus the options boil down to how Greece exits EMU. Either Syriza takes Greece out of EMU in an orderly a fashion as it can or Greece exits EMU chaotically, through resistance to EU occupation or through a lack of a functioning government. Either way Greece is heading for the EMU exit. The only question is the manner of its going and who will get the blame for what follows. No matter how much the EU apparatchiks try to avoid this outcome and the threat it poses to its pretensions of European wide dictatorial power, it is now certain.  "Bridging finance from the Kremlin would transform the situation, allowing Greece to avert a disastrous clash with the IMF. Syriza could then confine its dispute to EMU creditors and particularly to the ECB, the body deemed enemy number one by embittered Syriza ministers.  The drama has escalated into a bizarre form of brinkmanship for the highest stakes, with Greece effectively playing off Moscow, Brussels, and Washington, against each other in three-way geo-strategic poker.  Mr Varoufakis won words of sympathy from President Barack Obama at a meeting in the White House but it is not yet clear whether Syriza can expect much more than a comfort blanket from the US."  This is pretty much nonsense. Obama offered Greece nothing, and told them to compromise to get an agreement in time.  Bridging finance from the Kremlin, or any other form of Greece effectively getting major export deals, is absolutely in the interest of Greece's creditors, as Schaeuble made clear. The problem is that Russia has nowhere near the economic strength to bail Greece out, or even just provide Greeks with the standard of living they feel entitled to after a default.

Did the U.S. government really seal the fate of the U.S. economy back in March 2010, when it passed H.R. 2847? On July 1, 2014, H.R. 2847, better known as HIRE (the Hiring Incentives to Restore Employment Act) goes into effect. On the surface, the bill provides payroll tax breaks and incentives for businesses to hire unemployed workers. But it’s a little-known provision within Bill H.R. 2847 that is causing some financial pundits to predict the end of America. The provision known as FATCA (the Foreign Account Tax Compliance Act) insists foreign banks keep better track of the flow of money owned by U.S. citizens.  FATCA requires banks in other countries to send the IRS personal information (name, address, and account information) about transactions their American customers make. If a bank fails to comply, the U.S. will impose a 30% withholding tax.  The fear is that foreign banks will not want to have to deal with the IRS and instead will choose to take the path of least resistance by avoiding American customers, and by extension, their U.S. dollars altogether. At the same time, FATCA could also be cost-prohibitive for small- and medium-sized foreign banks; meaning it’s cheaper and easier to just divest from U.S.-based assets.  Why would any bank willingly refuse to do business with a U.S. customer? Because there are more financially secure markets elsewhere for foreign banks to invest in: China, Russia, Germany, Australia, France, Canada…the list goes on. How is that possible? After all, the U.S. dollar has been the world currency since World War II, and being the world’s currency means Americans can deal directly with any country with their own currency.In effect, the U.S. doesn’t need to produce anything to create wealth; it can just print more money to get out of debt or create the illusion of liquidity. The same cannot be said for the rest of the world, however, If Germany wants to buy oil from Russia, it has to exchange its currency for U.S. dollars; it can only do this by generating revenue from products and services others want to buy.  Why will the world no longer want to favor the U.S. dollar as the reserve currency? Simple: the Federal Reserve has, with its quantitative easing policy, dumped more than $3.0 trillion into the U.S. economy since 2008. Where did it get the money? It printed it out of thin air. Its simple math: the more there is of something, the less value it has. Not only has the U.S. dollar been devalued, the country has seen its national debt soar. Before the markets crashed in 2008, the U.S. was in debt to the tune of $10.0 trillion; today, the U.S. holds debt of $17.7 trillion! With the U.S. dollar losing favor as the reserve currency, countries will no longer want to hold large quantities of U.S. dollars and foreign businesses will turn their backs on U.S. markets. With fewer people wanting to hold U.S. currency, the U.S. will no longer be able to print its way out of debt.

And with fewer foreign banks willing to take U.S. deposits, Americans, with their fists full of devalued currency, will be unable to exchange it for more stable currencies.  So, will H.R. 2847, once implemented on July 1, 2014, lead to the end of America? No, for many reasons. First, the U.S. is the world’s biggest economy; we produce and consumer more than anyone else. While the U.S. dollar has been devalued, it still holds value compared to other currencies and economies.  The U.S. government is also transparent. Foreign institutions can access our economic data and forecasts and rely on the data; the economic data provided by certain other global powerhouses is not quite as trustworthy or transparent.  Instead of concentrating on July 1, 2014 and H.R. 2847 being the end of America, it might be better to look at what America will look like at the end of 2014.  According to the mainstream media, the U.S. economy is back on track after weathering the biggest financial meltdown since the Great Depression. Wall Street pundits and even the U.S. government point to a number of factors suggesting the U.S. economy is back on solid footing: the five-plus-year bull run on the stock market, the major indices trading at record highs, housing prices having rebounded, and the job market improving.  Unfortunately, those numbers do not tell the full story. The major U.S. indices may indeed be trading at record highs, but the economic foundation holding those stocks up is shaky at best.  Since the beginning of 2013, quarter after quarter, more and more companies on the S&P 500 have revised their earnings guidance lower. To compensate for weak results, companies masked their poor earnings and revenues with cost-cutting measures and near-record stock buyback plans. The unemployment rate is 6.3%, but the underemployment rate is an eye-watering 12.3%. On top of that, 46.1 million, or 14.5% of the country, receive food stamps. And more and more Americans are in debt; according to the most recent data, Americans owe $11.65 trillion in debt. The average credit card debt is $15,191, the average mortgage debt is $154,365, and the average student loan debt is more than $33,000.  What about U.S. housing? Housing prices have risen 25% since the beginning of 2012, but still need to increase more than 20% to reach their pre-recession highs. And the U.S. housing market is too expensive for most first-time home buyers.  In fact, first-time home buyers, the barometer for how well the U.S. economy is doing, accounted for around 16% of new-home purchases in April, down from a range of 25% to 28% between 2001 and 2007. As for existing home sales, first-time buyers made up just 29% of purchases; the 30-year average for first-time homebuyers, and a number economists consider healthy, is 40%. And overall, the homeownership rate in the U.S. is at its lowest levels in almost 20 years.  Bill H.R. 2847 will not be the end of America; on July 1, 2014, America will look identical to the way it does now. But as for America at the end of 2014, that’s another story. The surface data appears really great, but it’s not a true reflection of Main Street. Take a closer, more detailed look at the economic data and you’ll see that the U.S. economy will be much worse on December 31, 2014 than it is today.  To get a handle on debt and raise the standard of living on Main Street, the broader U.S. economy needs to experience sustained growth—and that just isn’t in place yet.

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.

How does it work in this world of smoke and mirrirs...

The SDR was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves—government or central bank holdings of gold and widely accepted foreign currencies—that could be used to purchase the domestic currency in foreign exchange markets, as required to maintain its exchange rate. But the international supply of two key reserve assets—gold and the U.S. dollar—proved inadequate for supporting the expansion of world trade and financial development that was taking place. Therefore, the international community decided to create a new international reserve asset under the auspices of the IMF.  The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. As of March 17, 2015, 204 billion SDRs were created and allocated to members (equivalent to about $280 billion).  Only a few years after the creation of SDRs, the Bretton Woods system collapsed and the major currencies shifted to a floating exchange rate regime. In addition, the growth in international capital markets facilitated borrowing by creditworthy governments. Both of these developments lessened the need for SDRs. However, more recently, the 2009 SDR allocations totaling SDR 182.6 billion have played a critical role in providing liquidity to the global economic system and supplementing member countries’ official reserves amid the global financial crisis. The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions. In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other international organizations...

IMF members often need to buy SDRs to discharge obligations to the IMF, or they may wish to sell SDRs in order to adjust the composition of their reserves. The IMF may act as an intermediary between members and prescribed holders to ensure that SDRs can be exchanged for freely usable currencies. For more than two decades, the SDR market has functioned through voluntary trading arrangements. Under these arrangements a number of members and one prescribed holder have volunteered to buy or sell SDRs within limits defined by their respective arrangements. Following the 2009 SDR allocations, the number and size of the voluntary arrangements has been expanded to ensure continued liquidity of the voluntary SDR market. The number of voluntary SDR trading arrangements now stands at 32, including 19 new arrangements since the 2009 SDR allocations.

In the event that there is insufficient capacity under the voluntary trading arrangements, the IMF can activate the designation mechanism. Under this mechanism, members with sufficiently strong external positions are designated by the IMF to buy SDRs with freely usable currencies up to certain amounts from members with weak external positions. This arrangement serves as a backstop to guarantee the liquidity and the reserve asset character of the SDR...

The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, the SDR was redefined as a basket of currencies. Today the SDR basket consists of the euro, Japanese yen, pound sterling, and U.S. dollar. The value of the SDR in terms of the U.S. dollar is determined daily and posted on the IMF’s website. It is calculated as the sum of specific amounts of the four basket currencies valued in U.S. dollars, on the basis of exchange rates quoted at noon each day in the London market.  The basket composition is reviewed every five years by the Executive Board, or earlier if the IMF finds changed circumstances warrant an earlier review, to ensure that it reflects the relative importance of currencies in the world’s trading and financial systems. In the most recent review (in November 2010), the weights of the currencies in the SDR basket were revised based on the value of the exports of goods and services, and the amount of reserves denominated in the respective currencies that were held by other members of the IMF. These changes became effective on January 1, 2011. In October 2011, the IMF Executive Board discussed possible options for broadening the SDR currency basket. Most directors held the view that the current criteria for SDR basket selection remained appropriate. The next review is currently scheduled to take place by the end of 2015.   Under its Articles of Agreement (Article XV, Section 1, and Article XVIII), the IMF may allocate SDRs to member countries in proportion to their IMF quotas. Such an allocation provides each member with a costless, unconditional international reserve asset. The SDR mechanism is self-financing and levies charges on allocations which are then used to pay interest on SDR holdings. If a member does not use any of its allocated SDR holdings, the charges are equal to the interest received. However, if a member's SDR holdings rise above its allocation, it effectively earns interest on the excess. Conversely, if it holds fewer SDRs than allocated, it pays interest on the shortfall. The Articles of Agreement also allow for cancellations of SDRs, but this provision has never been used. The IMF cannot allocate SDRs to itself or to other prescribed holders.  General allocations of SDRs have to be based on a long-term global need to supplement existing reserve assets. Decisions on general allocations are made for successive basic periods of up to five years, although general SDR allocations have been made only three times. The first allocation was for a total amount of SDR 9.3 billion, distributed in 1970-72, the second—for SDR 12.1 billion—distributed in 1979-81, and the third—for SDR 161.2 billion—was made on August 28, 2009. Separately, the Fourth Amendment to the Articles of Agreement became effective August 10, 2009 and provided for a special one-time allocation of SDR 21.5 billion. The purpose of the Fourth Amendment was to enable all members of the IMF to participate in the SDR system on an equitable basis and rectify the fact that countries that joined the IMF after 1981—more than one fifth of the current IMF membership—never received an SDR allocation until 2009.   The 2009 general and special SDR allocations together raised total cumulative SDR allocations to SDR 204 billion.  The SDR interest rate provides the basis for calculating the interest charged to borrowing members, and the interest paid to members for the use of their resources for regular (non-concessional) IMF loans. It is also the interest paid to members on their SDR holdings and charged on their SDR allocation. The SDR interest rate is determined weekly and is based on a weighted average of representative interest rates on short-term debt instruments in the money markets of the SDR basket currencies.