Monday, July 6, 2015

No one believed Porter Stansberry seven years ago.  As head of one of America’s largest independent financial research firms, Mr. Stansberry’s work back in 2008 led him to a bold, but worrisome, conclusion:  That the world’s largest mortgage bankers–Fannie Mae and Freddie Mac, which at the time were responsible for nearly 50% of all the mortgages in America–would soon go bankrupt.
In fact, in June of 2008, while their stock prices were still trading at well over $20 per share, Stansberry published a report to his customers titled: “Fannie Mae and Freddie Mac Are Going to Zero.”Inside this report, Stansberry explained:  “For those of you who don’t work in the financial industry, it might be hard for you to immediately grasp what’s so dangerous about the extreme amount of leverage employed by Fannie Mae and Freddie Mac. Let me explain exactly what Fannie and Freddie do and why they’re in so much jeopardy…” We all know what happened next.
Both agencies went bust—and if not for a bailout from the Federal Government, both would have declared bankruptcy.  Barron’s—America’s second biggest financial newspaper—even wrote a story about Mr. Stansberry’s accurate prediction short, and called it “remarkably prescient.”
Over the years, Mr. Stansberry has made a name for himself by accurately predicting the biggest and most important collapses in America.  A few of the others he’s accurately identified well in advance include: General Motors, General Growth Property (America’s biggest mall owner), D.R. Horton (a homebuilder), and Gannett newspapers, to name just a few.  Stansberry also predicted the recent collapse of oil and natural gas prices as early as 2010, when he wrote a report titled: “Peak Oil is a Flat Lie.”  Well, now Mr. Stansberry has issued another fascinating warning, about a new and looming bankruptcy.

Sunday, July 5, 2015

Congratulations to the Greek people on making the right decision and rejecting the threats and blackmail of their pro austerity enemies. While there may well be difficult days ahead for Greece, it marks the beginning of the end of the nightmare that has gripped their country for the past several years... The EU is essentially a German superstate that has threatened and bullied little Greece into submission, cutting off the money supply a disgusting spectacle of arrogance but the people of Greece have said No and so too will the rest of Europe. The EU has divided and weakened Europe at a time when Europe faces up to the real threat of Islamic fundamentalism. The EU  should be  finished...
This will be interesting... the EZ promised Armageddon for Greece... but really it amounts to a disaster for the creditors. Greece under the Drachma will be back on its feet in 2 years time minus 300 billion they have managed to sucker the EZ for... but where will the EZ be having had to pay the losses, lost credibility at the IMF, as well as investors worldwide, still in deflation and having sustained the other countries on the edge of which there is a fair number beginning with more than half of European GDP (France, Italy and Spain) and a fair number of small ones?
I am looking forward to Monday's statements from Merkel et al. after the markets tank and people start thinking about the losses and the forced haircuts... plus the ones coming for Portugal for instance... not to mention Spain which has the highest added sovereign/company/private debt at 300%... or the fact that Greece is still in the EZ and EU and can make them struggle through the Courts and meetings using their veto... fun, fun fun... serves you right EUSSR commissars!
Nowhere do expressions of solidarity with Syriza resonate as much as in Spain, where Podemos is seen as a credible threat to the ruling conservative government. While Spain’s austerity policies have won it plaudits from eurozone leaders, they have proven less popular at home. Podemos has taken advantage of dissatisfaction with the country’s high unemployment rate to win mayoral races in Barcelona and Madrid, Spain’s two largest cities. The two wins could portend a victory in general elections later this year. Analysts believe Spain’s ruling conservatives have taken a hardline approach in negotiations with Greece at least in part out of fears that a bailout deal that is too accommodating for Greece will be a boon to Podemos at the polls. Podemos’ leader Pablo Iglesias told the Wall Street Journal in an interview earlier this month that consequently, Podemos’ rise has hurt Syriza in negotiations. “Since Podemos has existed, defeating the government of Greece has been converted into another instrument for trying to pressure us,” Iglesias said.
On Saturday, Greece’s Prime Minister Alexis Tsipras called for a July 5 referendum on Greece’s creditors’ latest bailout proposal, after dismissing the offer as an “ultimatum that insults the Greek people.” The support from fellow left-wing groups in other countries comes amid mounting pressure on Greece from eurozone officials and financial institutions after the announcement of the referendum. The European Central Bank halted its emergency lending to Greek banks, prompting the Greek government to limit bank withdrawals to prevent banks from running out of cash -- a procedure known as imposing “capital controls.”

Saturday, July 4, 2015

Greeks will vote their country out the EU and that's goooddd

Greek prime minister Alexis Tsipras has called a referendum on the country's bailout deal with its European creditors.  The vote, which will take place on July 5, and will ask Greece's citizens whether they want to accept tough measures put forward by the International Monetary Fund, European Union and European Central Bank. A "no" vote would see Greece default on its debts and force the country out of the euro. It came as Greek rejected a €15bn rescue plan, lashing out at attempts to blackmail the country into submission. Greece's fate is due to be decided at a last-ditch meeting of eurozone finance ministers in Brussels on Saturday, as differences over tax rises and spending cuts continue to hold back an eleventh hour agreement. The meeting has been billed as the last possible opportunity for Greece to cede to creditor demands and stave off a default. In the absence of a deal, creditors are planning for a series of emergency default scenarios, as the banking system would likely face ruin. Capital controls in the form of enforced bank holidays and deposit withdrawal limits could come as early as Monday, according to analysts at Credit Suisse...

Friday, July 3, 2015

How about this for a headline -- "There was horror in Germany today, as the public there woke up and realized they are in a currency union with other countries they don't control"
This sort of thing was always implicit in a currency union. The Germans are just realising, it's not just a way of creating a de-facto European Deutchesmark which is tuned to Germany's advantage when it comes to exporting to her neighbors.  Germany is not entirely blameless in all this, nor are they the paragons of virtue either. A lot of the failings of the euro are at German insistence (for example, it's pure nonsense that there's no commonly issued euro-debt - the "euro bonds" - and no transfers of wealth between rich and poor parts, both have to exist for a successful currency union). Moreover, German banks were happy to lend money to Greece that was then spent buying German products - including a lot of military hardware. Moreover, Germany runs a huge surplus mainly by low domestic demand and effectively "beggar they neighbour" policies. They've already been warned by the Commission that excessive surpluses are also a breach of euro-rules and just as destabilising as excessive deficits  Of course, the creators of the euro knew all of this, knew there would be a crisis - they simply view it as an ideal opportunity to push more "integration" and don't give a stuff about the massive suffering in the meanwhile...No doubt people will say : "Why should Germany lend it's good name to other countries issuing debt, or transfer money to them?"
The answer is :"because they're in a currency union with them"
If the Germans didn't want to do those things, they shouldn't have signed up to the euro. Which would have killed it stone dead of course.

Thursday, July 2, 2015

Berlin has delivered a blistering attack on Greece’s beleaguered radical prime minister, Alexis Tsipras, accusing him of lying to his own people and seeking scapegoats for the country’s misery everywhere but in his own ranks.  The German government dismissed desperate attempts by Athens to salvage some form of bailout, prompting Tsipras to hit back, accusing the country’s creditors of trying to “blackmail” Greek voters with dire warnings that a vote against austerity in this weekend’s referendum would be a vote to leave the euro.  Tsipras referred to leaders of other eurozone nations as “extremist conservative forces” and blamed them for the capital controls that have forced the banks to shut down and ration cash.  With relations between Greece and Germany now at their lowest point in the crisis, divisions have also opened up among the main EU powers over what to do about Greece after five years of bailout closed down on Tuesday and the country became the EU’s first to default on loans to the International Monetary Fund.   The trenchant criticism of Tsipras from Berlin reinforced the view that the German government might refuse to negotiate with the leftwing Syriza administration on any new rescue package after Sunday’s referendum in Greece – which Berlin insists is a vote on whether to stay in the euro.   The validity of the vote is now also being questioned. The Council of Europe said one week’s notice fell short of international standards and the wording was unclear, while Greece’s highest court has been asked to cancel the plebiscite on constitutional grounds. A judgement will not be made until Friday.

Greece is in Depression with a capital D. And what do the troika propose?... More austerity which will guarantee a deepening of the economic decline.
How can Greece possibly repay its debts with a shrinking economy? The ideological stupidity of the Northern Europeans is astounding. They appear to want to punish Greece for old transgressions, but this is not an economic argument for rectifying a problem that the Europeans help to create by admitting Greece into the Eurozone in the first place and then doing nothing about the behaviour of German and French banks.  The Germans seem to have forgotten the consequences of the Treaty of Versailles which imposed onerous reparation conditions which Germany could not afford and which triggered social and economic chaos in Germany.
Who knows where the meltdown in Greece will go, but at least they won't be marching on Europe and putting people in concentration camps.

Greek bail-out

Photo: Reuters
Total debt pile:

Greece still owed:

Debt settled by:


How did Greece get here?

In January left-wing government Syriza promised to end years of austerity measures but remain a member of the eurozone

What went wrong?

Negotiations descended into acrimony. Creditors want economic reforms in return for more aid, but Syriza won't budge on key election promises

When is the deadline?

June 30 - when Greece's bail-out programme expires and it owes €1.6bn to the IMF

What if they don't pay?

Greece will still be in the eurozone, but will get no further aid. The central bank could stop providing money to Greek banks forcing the government to issue an alternative currency