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One of the recurring concerns involving Europe’s seemingly perpetual economic, financial and social crises, is that these have been largely predetermined, “scripted” and deliberate acts.

This is something the former head of the Bank of England admitted one month ago when Mervyn King said that Europe’s economic depression “is the result of “deliberate” policy choices made by EU elites. It is also what AIG Banque strategist Bernard Connolly said back in 2008 when laying out “What Europe Wants”

To use global issues as excuses to extend its power:

environmental issues: increase control over member countries; advance idea of global governance

terrorism: use excuse for greater control over police and judicial issues; increase extent of surveillance

global financial crisis: kill two birds (free market; Anglo-Saxon economies) with one stone (Europe-wide regulator; attempts at global financial governance)

EMU: create a crisis to force introduction of “European economic government”

This morning we got another confirmation of how supernational organizations “plan” European crises in advance to further their goals, when Wikileaks published the transcript of a teleconference that took place on March 19, 2016 between the top two IMF officials in charge of managing the Greek debt crisis – Poul Thomsen, the head of the IMF’s European Department, and Delia Velkouleskou, the IMF Mission Chief for Greece.

In the transcript, the IMF staffers are caught on tape planning to tell Germany the organization would abandon the troika if the IMF and the commission fail to reach an agreement on Greek debt relief.

More to the point, the IMF officials say that a threat of an imminent financial catastrophe as the Guardian puts it, is needed to force other players into accepting its measures such as cutting Greek pensions and working conditions, or as Bloomberg puts it, “considering a plan to cause a credit event in Greece and destabilize Europe.”

…click on the above link to read the rest of the article…

China Hard Landing Hits Electricity Consumption

March 21, 2016

China Hard Landing Hits Electricity Consumption

Chairman of large power company slips, apparently.

OK, we’ve heard the official story. China is transitioning from a manufacturing economy to a consumption-based economy. Consumers are king. They’re going to buy stuff. And that’s going to heat up the economy.

Imports and exports have been plunging for months, but no big deal, Chinese consumers – and there are a lot of them – are going to pull the economy forward. That’s the official story.

So now we stumble on a report on the Facebook page of the People’s Daily, the official newspaper of the Chinese Communist Party. The report was helpfully in English. And it was a peculiar venue for a report on China: Facebook is still blocked in China.

So the fact the Communist Party rag published it in English and on a venue that is blocked in China makes it seem like this piece of information is not for the Chinese. Maybe it was slipped in by some underling over the weekend while supervisors weren’t paying attention.

That blurb reported that Qiao Baoping, chairman of state-controlled China Guodian Corp, one of the five largest power producers in China, spoke on Saturday at the China Development Forum about the overcapacity of electricity generation in China.

The China Development Forum is a huge deal. It’s organized by the State Council. Dozens of corporate chieftains from around the globe are there, as is IMF’s Christine Lagarde, and other power brokers. Among them is Facebook’s Mark Zuckerberg and Alibaba’s Jack Ma. They shared the stage on Saturday, as Digital Trends put it, “to lavish praise upon the business cultures of America and China.” It was that sort of event.

And then Qiao Baoping gave his speech on overcapacity of electricity generation in China. Among the things he said were these nuggets, according to the People’s Daily:

…click on the above link to read the rest of the article…

Emissions standstill boosts Paris hopes

March 18, 2016

Emissions standstill boosts Paris hopes

Reduced coal use in China will have a positive impact on poor air quality.
Image: V.T. Polywoda via Flickr

The link between global economic growth and emissions growth has been further weakened as greenhouse gas levels show no increase for the second year in succession.

LONDON, 18 March, 2016 – The world continued to make progress towards a low-carbon economy during 2015, according to analysis by the International Energy Agency (IEA).

It says analysis of preliminary data for the year reveals that global energy-related emissions of carbon dioxide − the largest source of man-made greenhouse gas emissions − showed no increase for the second year in a row.

The IEA announcement will be doubly welcome as some Arctic temperatures continue to warm bizarrely. It comes a day after reports from Fort Yukon in Alaska said temperatures there had reached up to 10°C higher than expected for this time of year.

Fatih Birol, the IEA’s executive director, said of the emissions report: “The new figures confirm last year’s surprising but welcome news. We now have seen two straight years of greenhouse gas emissions decoupling from economic growth.

Landmark agreement

“Coming just a few months after the landmark COP21 agreement in Paris, this is yet another boost to the global fight against climate change.”

Significantly, the global economy continued to grow in 2015 by more than 3%, which the IEA says is further evidence that the link between economic growth and emissions growth is weakening.

In more than 40 years, it says, there have been only four periods in which emissions stood still or fell compared to the previous year. Three of those – the early 1980s, 1992 and 2009 – were associated with global economic weakness.

But the recent stall in emissions comes amid economic expansion. According to the International Monetary Fund, global GDP grew by 3.4% in 2014 and 3.1% in 2015.

Confronting the Fiscal Bogeyman

March 11, 2016

Confronting the Fiscal Bogeyman

BERKELEY – The world economy is visibly sinking, and the policymakers who are supposed to be its stewards are tying themselves in knots. Or so suggest the results of the G-20 summit held in Shanghai at the end of last month.

The International Monetary Fund, having just downgraded its forecast for global growth, warned the assembled G-20 attendees that yet another downgrade was pending. Despite this, all that emerged from the meeting was an anodyne statement about pursuing structural reforms and avoiding beggar-thy-neighbor policies.

Once again, monetary policy was left – to use the now-familiar phrase – as the only game in town. Central banks have kept interest rates low for the better part of eight years. They have experimented with quantitative easing. In their latest contortion, they have moved real interest rates into negative territory.

The motivation is sound: someone needs to do something to keep the world economy afloat, and central banks are the only agents capable of acting. The problem is that monetary policy is approaching exhaustion. It is not clear that interest rates can be depressed much further.

Negative rates, moreover, have begun to impair the health of the banking system. Charging banks for the privilege of holding reserves raises their cost of doing business. Because households can resort to safe-deposit boxes, it’s hard for banks to charge depositors for safekeeping their funds.

In a weak economy, moreover, banks have little ability to pass on their costs via higher lending rates. In Europe, where experimentation with negative interest rates has gone furthest, bank distress is clearly visible.

The solution is straightforward. It is to fix the problem of deficient demand not by attempting to further loosen monetary conditions, but by boosting public spending. Governments should borrow to invest in research, education, and infrastructure. Currently, such investments cost little, given low interest rates.

…click on the above link to read the rest of the article…

Lagarde – Wants to Raise Retirement Age & Taxes

March 6, 2016

Lagarde – Wants to Raise Retirement Age & Taxes

Christine Lagarde remained at the IMF and one of three Troika members because she is a Socialist and on board with both raising retirement ages to cheat people out of what they planned and to raise taxes while closing all borders to the movement of capital. She is also pushing behind the curtain for the SDR to replace the dollar and then the IMF becomes the power behind a one-world currency without ever having to stand for election anywhere.

Lagarde if pitching as a priority the lifting of retirement ages to match her excuse, the increase in longevity gains. People have been taxed their whole lives and governments have squandered that money while making lavish promises. Now Lagarde was retained at the IMF because she can push the Socialist agenda which is robbing the average person while blaming the rich. She does not have to worry about elections so she can do as she likes. Then pension systems around the world world are collapsing not just due to demographics, but the stupidity of government management. Lagarde is looking to use the demographics as the excuse because government have been robbing the people all along while blaming the rich. Lagarde is looking to alter the pension systems by extending the “productive life” expectancy of individuals. Extending the retirement age will allow them to tax you longer in life while shortening your benefit period of retirement. If government was managed properly and honestly, there would be not such crisis had money actually been saved instead of spent.

Largard has been running around the world threatening all tax heavens that they would be blocked from the Swift System if they did not turnover all accounts. She even threaten the Vatican.

…click on the above link to read the rest of the article…

The FX Mexican Standoff

February 27, 2016

The FX Mexican Standoff

Theodor Horydczak Lincoln Memorial 1925

There has been quite a bit of talk lately over the need for a new Plaza Accord, something several parties saw happening during this weekend’s G20 summit in Shanghai -hence the term ‘Shanghai Accord’-. (On September 22, 1985 at the Plaza Hotel in New York City, France, West Germany, Japan, the US, and the UK signed an accord to depreciate the US dollar vs the Japanese yen and German Deutschmark by intervening in currency markets).

Unless all the G20 finance ministers and central bankers gathered in China are in close and secretive cahoots, though, it doesn’t look like it is going to happen. And that seems to both make sense and not. What those advocating such an accord are calling for is a -large- devaluation of the Chinese yuan (RMB) vs the USD and yen -perhaps even the euro-, but the climate simply doesn’t look ripe for it.

Still, the problem is, if they don’t do it, they open the doors to a whole lot more volatility, unpredictability and losses in the markets. All things that those markets do not want. Because, like it or not, the yuan is overvalued, China’s fabricated trade numbers are increasingly under scrutiny, and a large devaluation could settle things at least for a while.

However, Beijing looks too full of hubris and pride -and inclusion in the IMF basket of currencies is an issue too- to do what seems natural. Lest we forget, no matter how much China seeks to obfuscate the numbers, everybody already knows that numbers like producer prices and exports, and most importantly imports, have seen steep falls, and for a long time too.

China’s oil tanks look as close to overflowing as the American ones, and without those oil imports, who knows who bad import numbers would have looked?

…click on the above link to read the rest of the article…

Here Comes The Red Swan And Other Reasons To Be Very Afraid

February 26, 2016

Here Comes The Red Swan And Other Reasons To Be Very Afraid

The Red Chip casino took another one of its patented 6.5% belly flops last night. In fact, more than 1,300 stocks in Shanghai and Shenzhen fell by 10%—the maximum drop permitted by regulators in one day—–implying that the real decline was far deeper.

This renewed carnage was the worst since, well, the last 6% drop way back on January 29, and It means that the cumulative meltdown from last June’s high is pushing 45%. And all this red chip mayhem did not come at an especially propitious moment for the regime, as the Wall Street Journal explained:

It comes at an awkward moment for the Chinese government, which is hosting the world’s leading central bankers and finance ministers starting Friday. China has been expected to use the G-20 meeting to address global anxiety about its economy and financial markets. Worries about China’s economic slowdown and the volatility of its markets have weighed on investment decisions around the world.

But if we are remarking on “awkward”, here’s awkward. The G-20 central bankers, finance ministers and IMF apparatchiks descending on Shanghai should take an unfiltered, eyes-wide-open view of the Red Ponzi fracturing all about them, and then make a petrified mad dash back to their own respective capitals. There is nothing more for G-20 to talk about with respect to China except how to get out of harms’ way, fast.

China is a monumental doomsday machine that bears no more resemblance to anything that could be called stable, sustainable capitalism than did Lenin’s New Economic Policy of the early 1920s. The latter was followed by Stalin’s Gulag and it would be wise to learn the Chinese word for the same, and soon.

…click on the above link to read the rest of the article…

Why did Lagarde Stay at the IMF? To Increase its Global Power.

February 23, 2016

Why did Lagarde Stay at the IMF? To Increase its Global Power.

Christine Lagarde Managing Director of the International Monetary Fund spoke at the IMF Arab Fiscal Forum: Fiscal Policy and Growth in Abu Dhabi on February 22, 2016. Her message was clear – forget downsizing government or reforming anything, just raise taxes. She opened the conference saying:

“This event is taking place at a pivotal moment not only for this region but for many other countries that have seen fiscal issues rise to the top of their policy agendas.

Or, to be more precise, it is taxation that has risen to the agenda in many countries. If you wonder why this issue has become so important, let me assure you that this is nothing new in the history of mankind!”

Lagarde is calling for international taxation. She has threatened every tax haven with being sanctioned and removed from the Swift System unless they give up everyone. She has done far more damage to the world economy than any previous director. We have anemic economic growth and rising tax enforcement depriving us of our free society and the free movement of people as well as capital. If you owe taxes, government simply revokes your passport precisely as passports began to prove you owed the state nothing and could travel. She concluded her address and called for global tax enforcement and raising taxes; not reforming government in the least. She said:

“Political economy…proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people…and secondly, to supply the state or commonwealth with a revenue sufficient for the public services.”

My main message today is this: creating successful 21^st-century economies requires robust government revenues and an international tax system that works for everybody. These ingredients are essential for growth, fairness, and development.

…click on the above link to read the rest of the article…

The Evil Empire Has The World In A Death Grip

February 22, 2016

The Evil Empire Has The World In A Death Grip

In my archives there is a column or two that introduces the reader to John Perkins’ important book, Confessions of an Economic Hit Man. An EHM is an operative who sells the leadership of a developing country on an economic plan or massive development project. The Hit Man convinces a country’s government that borrowing large sums of money from US financial institutions in order to finance the project will raise the country’s living standards. The borrower is assured that the project will increase Gross Domestic Product and tax revenues and that these increases will allow the loan to be repaid.

However, the plan is designed to over-estimate the benefits so that the indebted country cannot pay the principal and interest. As Perkins’ puts it, the plans are based on “distorted financial analyses, inflated projections, and rigged accounting,” and if the deception doesn’t work, “threats and bribes” are used to close the deal.

The next step in the deception is the appearance of the International Monetary Fund. The IMF tells the indebted country that the IMF will save its credit rating by lending the money with which to repay the country’s creditors. The IMF loan is not a form of aid. It merely replaces the country’s indebtedness to banks with indebtedness to the IMF.

To repay the IMF, the country has to accept an austerity plan and agree to sell national assets to private investors. Austerity means cuts in social pensions, social services, employment and wages, and the budget savings are used to repay the IMF. Privatization means selling oil, mineral and public infrastructure in order to repay the IMF. The deal usually imposes an agreement to vote with the US in the UN and to accept US military bases.

…click on the above link to read the rest of the article…

Silver Linings: Keynesian Central Banking Is Heading For A Massive Repudiation

February 20, 2016

Silver Linings: Keynesian Central Banking Is Heading For A Massive Repudiation

For several years now the small coterie of Keynesian academics and apparatchiks who have seized nearly absolute financial power through the Fed’s printing presses have justified the lunacy of unending ZIRP and massive QE on the grounds that there is too little inflation. The bureaucrats at the IMF even invented a lame-brained catch-phrase, calling the purported scourge of money which retains most of its value “lowflation”.

This whole consumer inflation targeting gambit, of course, is an inherently preposterous notion because there is not a scrap of evidence that 2% consumer inflation is better for rising living standards and societal wealth gains than is 0.2%. And there is much history and economic logic that points in exactly the opposite direction.

Between 1870 and 1913 in the United States, for example, real national income grew at 3.5% per year——the highest gain for any 43 year period in history. Yet the average inflation rate during that long period of capitalist prosperity was less than 0.0%. That was real “lowflation”, and it was a blessing for the average worker, not a scourge.

But this week the BLS itself let out a screaming, never mind! The core CPI for the 12 months ended in January rose by 2.21% and that’s actually a tad higher than the 1.98% annual average since the year 2000.

Please forgive the spurious accuracy of reporting the BLS’ noise-ridden, dubiously constructed CPI to the second decimal point, but it’s meant to underscore a crucial truth. Namely, there ain’t no inflation deficiency problem and never has been!

The whole 2% inflation mantra is just a smokescreen to justify the massive daily intrusion in financial markets by a power-obsessed claque of monetary central planners. They just made it up and then rode it to ever increasing dominance over the financial system—-even though as recently as 15 years ago the 2% inflation theory was unknown outside a small circle of neo-Keynesian academic scribblers led by Ben Bernanke.

…click on the above link to read the rest of the article…

The New Global Financial Cold War

February 19, 2016

The New Global Financial Cold War

shutterstock_309846272 (1)

The Guns and Butter Interview

Suppose a country owes money to another nation’s government or official agency. How can creditors collect, unless there’s an international court and an enforcement system? The IMF and the World Bank were part of that enforcement system and now they’re saying: ‘We’re not going to be part of that anymore. We’re only working for the U.S. State Department and Pentagon. If the Pentagon tells the IMF it’s okay that a country doesn’t have to pay Russia or China, then now they don’t have to pay, as far as the IMF is concerned.’ That breaks up the global order that was created after World War II. The world is being split into two halves: the U.S. dollar orbit, and countries that the U.S. cannot control and whose officials are not on the U.S. payroll, so to speak.

Dr. Michael Hudson. is a financial economist and historian. He is President of the Institute for the Study of Long-Term Economic Trends, a Wall Street financial analyst and Distinguished Research Professor of Economics at the University of Missouri, Kansas City. His 1972 book, Super Imperialism is a critique of how the United States exploited foreign economies through the IMF and World Bank. His latest book is Killing the Host: How Financial Parasites and Debt Destroy the Global Economy. Today we discuss his article, “The IMF Changes Its Rules to Isolate China and Russia.”

Bonnie Faulkner: Michael Hudson, welcome. It’s been far too long since we’ve last spoken.

Michael Hudson: Well, it’s good to be back. Last time we were together was in Italy.

Bonnie Faulkner: That’s right, Rimini, Italy. What year was that?

…click on the above link to read the rest of the article…

Italy’s Banking Crisis Spirals Elegantly out of Control

February 16, 2016

Italy’s Banking Crisis Spirals Elegantly out of Control

How to dump toxic waste on the public through the backdoor.

Back during the euro debt crisis, while the ECB was buying government debt from Member States to keep Italian and Spanish government debt from imploding, German politicians fretted out loud about what exactly the ECB was buying. Among them was Frank Schäffler, at the time Member of the Federal Parliament, who in September 2011 said with uncanny accuracy:

“If the ECB continues like this, it will soon buy old bicycles and pay for them with new paper money.”

This is now coming to pass.

Italy, the Eurozone’s third largest economy, is in a full-blown banking crisis. Four small banks were rescued late last year. The big ones are teetering. Their stocks have crashed. They’re saddled with non-performing loans (defined as in default or approaching default). We’re not sure that the full extent of these NPLs is even known.

The number officially tossed around is €201 billion. But even the ECB seems to doubt that number. Its new bank regulator, the Single Supervisory Mechanism, is now seeking additional information about NPLs to get a handle on them.

Other numbers tossed around are over €300 billion, or 18% of total loans outstanding.

The IMF shed an even harsher light on this fiasco. It reported last year that over 80% of the NPLs are corporate loans. Of all corporate loans, 30% were non-performing, with large regional differences, ranging from 17% in some of the northern regions to over 50% in some of the southern regions. The report:

High corporate NPLs reflect both weak profitability in a severe recession as well the heavy indebtedness of many Italian firms, especially SMEs, which are among the highest in the Euro Area. This picture is consistent with corporate survey data which shows nearly 30% of corporate debt is owed by firms whose earnings (before interest and taxes) are insufficient to cover their interest payments.

…click on the above link to read the rest of the article…

Central Banks Are Trojan Horses, Looting Their Host Nations

February 12, 2016

Central Banks Are Trojan Horses, Looting Their Host Nations

A Nobel prize winning economist, former chief economist and senior vice president of the World Bank, and chairman of the President’s council of economic advisers (Joseph Stiglitz) says that the International Monetary Fund and World Bank loan money to third world countries as a way to force them to open up their markets and resources for looting by the West.

Do central banks do something similar?

Economics professor Richard Werner – who created the concept of quantitative easing – has documented that central banks intentionally impoverish their host countries to justify economic and legal changes which allow looting by foreign interests.

He focuses mainly on the Bank of Japan, which induced a huge bubble and then deflated it – crushing Japan’s economy in the process – as a way to promote and justify structural “reforms”.

The Bank of Japan has used a heavy hand on Japanese economy for many decades, but Japan is stuck in a horrible slump.

But Werner says the same thing about the European Central Bank (ECB). The ECB has used loans and liquidity as a weapon to loot European nations.

Indeed, Greece (more), Italy, Ireland (and here) and other European countries have all lost their national sovereignty to the ECB and the other members of the Troika.

ECB head Mario Draghi said in 2012:

The EU should have the power to police and interfere in member states’ national budgets.

***

“I am certain, if we want to restore confidence in the eurozone, countries will have to transfer part of their sovereignty to the European level.”

***

“Several governments have not yet understood that they lost their national sovereignty long ago. Because they ran up huge debts in the past, they are now dependent on the goodwill of the financial markets.”

…click on the above link to read the rest of the article…

Why Markets Are Crashing: “Faith In Central Banks Fails”

February 11, 2016

Why Markets Are Crashing: “Faith In Central Banks Fails”

While Citigroup’s Eric Lee thinks its “ridiculous” to talk fo a US recession, it appears the macro data and markets would strongly disagree: as Bloomberg reports:

Signals by central banks from Europe to Japan that additional stimulus is at the ready are failing to ease investor concern that global growth will keep slowing.

Citigroup’s Economic Surprise Index already indicates data in Group of 10 economies are falling short of estimates by the most since April 2013, and a selloff in crude oil and weakening credit markets are exacerbating the malaise. Yellen suggested that the central bank might delay, but not abandon, planned interest-rate increases in response to recent turmoil in financial markets.

“Over the last few years when we got bad news, equity markets would rally because they would interpret this as potential for central banks to go more dovish,” said Mohit Kumar, head of rates strategy at Credit Agricole SA’s corporate and investment bank unit in London.

“Now that correlation is shifting to bad news is actually bad news. Investors are concerned over central banks’ policy options given the market is driven by factors over which they have little or no control over.”

And so the headline of the day from Bloomberg seems very appropriate:

Some further clarifications from Bloomberg:

Financial markets are signaling that investors have lost faith in central banks’ ability to support the global economy.

And some more:

“The markets are wondering, well, we’ve had these non-conventional monetary policy experiments for the last six or seven years and they haven’t caused a sustainable boost to global growth, so what will the latest moves do,” said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors Ltd. “It’s a reasonable question to ask given the events of the last few weeks.”

…click on the above link to read the rest of the article…

“It’s Worse Than 2008”: CEO Of World’s Largest Shipping Company Delivers Dire Assessment Of Global Economy

February 10, 2016

“It’s Worse Than 2008”: CEO Of World’s Largest Shipping Company Delivers Dire Assessment Of Global Economy

Earlier today, we highlighted the rather abysmal results reported by Maersk, the world’s largest shipping company.

To the extent the conglomerate is a bellwether for global growth and trade, things are looking pretty grim. Maersk Line – the company’s golden goose and the world’s largest container operator – racked up $182 million in red ink last quarter and the outlook for 2016 isn’t pretty either. The company now sees demand for seaborne container transportation rising a meager 1-3% for the year.

“The demand for transportation of goods was significantly lower than expected, especially in the emerging markets as well as the Group’s key Europe trades, where the impact was further accelerated by de-stocking of the high inventory levels,” the company said, in its annual report.

Just how bad have things gotten amid the global deflationary supply glut you ask?

Worse than 2008 according to CEO Nils Andersen who last November warned that “the world’s economy is growing at a slower pace than the International Monetary Fund and other large forecasters are predicting.” Here’s what Andersen told FT:

“It is worse than in 2008. The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn’t look like going up soon. Freight rates are lower. The external conditions are much worse but we are better prepared.”
As FT goes on to note, “capacity in the container shipping industry increased 8 per cent in 2015” despite the fact that Maersk only sees global trade growing at between 1% and 3% in 2016.

Imports to Brazil, Europe, Russia, and Africa are all falling, Andersen warned. The company’s business, Andersen says, is suffering from a “massive deterioration.” That, you can bet, will likely lead to a “massive deterioration” in Maersk’s shares, which took a substantial hit on Wednesday in the wake of the quarterly and annual results.

…click on the above link to read the rest of the article…

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