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“We Are In A New Cold War”: Russia PM Delivers Stark Warning To NATO
“We Are In A New Cold War”: Russia PM Delivers Stark Warning To NATO
He also indicated that such a conflict would likely drag on for “decades.”
“Do they really think they would win such a war very quickly? That’s impossible, especially in the Arabic world,” Medvedev said. “There everyone is fighting against everyone… everything is far more complicated. It could take years or decades.”
On Saturday, Medvedev was back at it with the hyperbole (or at least we hope it’s hyperbole) in Munich where more than 60 foreign and defense ministers are gathered for the 52nd Munich Security Conference. In his speech, the PM challenged NATO’s military maneuvers in the Baltics as well as the alliance’s general approach towards relations with The Kremlin.
“The political line of NATO toward Russia remains unfriendly and closed,” he said in a speech to the conference. “It can be said more sharply: We have slid into a time of a new cold war.”
“NATO on Wednesday approved new reinforcements for eastern Europe, including stepped-up troop rotations on its eastern flanks and more naval patrols in the Baltic Sea,” Bloomberg notes. “In response, the Kremlin dismissed the alliance’s argument that the move was merely defensive.”
“Russia’s rhetoric, posture and exercises of its nuclear forces are aimed at intimidating its neighbors, undermining trust and stability in Europe,” NATO secretary general Jens Stoltenberg told the conference earlier. “We strive for a more constructive and more cooperative relationship with Russia.”
…click on the above link to read the rest of the article…
Greece Slides Back Into Recession Amid Riots, Rewewed “Grexit” Calls
Greece Slides Back Into Recession Amid Riots, Rewewed “Grexit” Calls
It was just over a year ago that Greece elected Alexis Tsipras and Syriza amid a flurry of anti-austerity sentiment.
Things didn’t exactly go as planned.
The new PM and his “radical” finance minister Yanis Varoufakis thought they could shake things up in Brussels and wrench Greece from the clutches of Berlin-style fiscal rectitude. As it turns out, Wolfgang Schaeuble is not a man who is easily bested at the bargaining table and after more than six months of negotiations, the imposition of capital controls, a referendum on the euro that Tsipras promptly sold down the river, Greeks ended up facing an outright depression.
In the end, Varoufakis unceremoniously resigned and Tsipras agreed to a third bailout before calling for snap elections that would ultimately see the PM re-elected albeit at the helm of a party that was completely gutted by the arduous bailout talks.
As we and quite a few others warned, the new bailout and the attached terms would do exactly nothing to turn the Greek economy around. We’re all for being responsible with the budget but you can’t very well implement fiscal retrenchment during a depression unless you intend to remain in said depression in perpetuity, but alas, that’s exactly what Brussels forced Greece to do and on Friday we learn that the country has slipped back into recession.
GDP contracted 0.6% in Q4 after shrinking 1.4% in Q3. “With opposition mounting to the government’s pension reform plan, the European Union pressuring it to stem the tide of refugees entering the country and the global market rout hastening the sell-off in Greek assets, dark clouds are gathering again,” Bloomberg writes. Ironically, capital controls appear to have helped the economy perform better than expected:
…click on the above link to read the rest of the article…
John Kerry Makes Last Ditch Effort To Avert World War III As Saudis, Turks Prepare For Syria Invasion
John Kerry Makes Last Ditch Effort To Avert World War III As Saudis, Turks Prepare For Syria Invasion
Tomorrow, John Kerry will meet Sergei Lavrov and several of his other counterparts from Europe and the Mid-East in Munich in a last ditch effort to revive Syrian peace talks, which fell apart amid an intense Russian air assault on rebel positions in Aleppo.
For all intents and purposes, the rebels are surrounded. Initially, it appeared that the “moderate” opposition might be able to persist and bog down the Russians and the Iranians with the help of supplies from the US, Turkey, and Saudi Arabia. Those hopes faded over the past two weeks when Hezbollah advanced on Aleppo and ultimately encircled the city, cutting the rebels off from key supply lines and triggering a mass civilian exodus.
The talks in the Bavarian capital come at what is perhaps the most crucial point in the conflict to date. With the opposition on the ropes, it’s do or die time for Riyadh, Ankara, Doha, and the UAE. Either the Gulf monarchies send in ground troops to shore up the rebels or Hezbollah and the IRGC will overrun them in a matter of weeks – or perhaps even days.
Of course the opposition’s Sunni benefactors can’t exactly say they’re going into Syria to fight Iran and the Russians. Any ground incursion will be justified by the need to “fight ISIS” even though the Islamic State presence in Aleppo is markedly less pronounced than in other besieged urban centers like Raqqa and Deir ez-Zor. Indeed, the effort is so transparent that even the mainstream media has been forced to acknowledge it. Here’s FT, for instance:
Saudi Arabia is discussing plans to deploy ground troops with regional allies, including Turkey, for a safe zone in Syria, in a last-ditch effort to keep alive a rebellion at risk of collapse as a Russian-backed offensive by Syrian regime forces encroaches on the northern province of Aleppo.
…click on the above link to read the rest of the article…
Turkey, Saudi Arabia Mull Syria Ground Invasion As Russia, Hezbollah Decimate Rebels
Turkey, Saudi Arabia Mull Syria Ground Invasion As Russia, Hezbollah Decimate Rebels
As we’ve documented extensively over the past several days, Ankara, Riyadh, and Doha have their backs against the wall when it comes to the effort to oust Bashar al-Assad and perpetuate Sunni hegemony in the Arabian Peninsula.
Hezbollah has surrounded Aleppo and their advance is backed by what’s been described as an unrelenting Russian air campaign. The rebels’ supply lines to Turkey have been cut and without a direct intervention by either the US or the Gulf states, the battle for Syria will have been lost for the opposition which pulled out of peace talks in Geneva citing the ongoing aerial bombardment by Moscow.
Now, with time running out, both Saudi Arabia and Turkey are weighing ground invasions.
“You don’t talk about these things. When necessary, you do what’s needed,” Erdogan said, when asked if Ankara was considering sending troops into Syria. “Right now our security forces are prepared for all possibilities,” he added.
For Erdogan, there’s only one acceptable outcome: Sunni militants oust Assad and take control of Damascus. Assad’s ouster is the desired outcome for the Saudis as well, but Erdogan has a secondary agenda in Syria: preventing the conflict from strengthening the Kurds. That means he’s against any support for the YPG – even if such support would help facilitate regime change.
Over the weekend Erdogan blasted both Russia and the US.
“What are you doing in Syria? You’re essentially an occupier,” he said, in a message to Vladimir Putin. “How can we trust you?
…click on the above link to read the rest of the article…
North Dakota’s Economy Has Been “Completely Devastated” By Oil’s Collapse
North Dakota’s Economy Has Been “Completely Devastated” By Oil’s Collapse
Yesterday, on the way to documenting the malaise China’s hard landing has inflicted on Minnesota’s mining country, we discussed the dramatic impact falling crude prices have had on the American and Canadian oil patches.
Take Texas, for instance, where a year of crude carnage has wreaked havoc upon what, until last year anyway, was the engine driving the “robust” US labor market. As we showed in November, layoffs in Lone Star land far outrun job losses in any other state. In Houston (which was already staring down a worsening pension crisis), vacant office space is “piling up.” As WSJ wrote last week, “the amount of sublease space on the market in the Houston area hit 7.6 million square feet, or the size of more than two Empire State Buildings.”
“The unemployment rate in Texas rose sharply to 9.2% in 1986, an all-time high for the state,” Goldman wrote recently, recalling a previous period of low oil prices in a note entitled “How Bad Can Texas Get?”
“Real house prices fell 30% peak to trough, and the number of bankruptcy filings (including both business and non-business filings) more than doubled from 1984 to 1986,” the bank added.
North of the border, things are even worse. As regular readers are no doubt aware, Alberta is a veritable nightmare as suicide rates rise, the number of jobless multiplies, food bank usage soars, and property crime in Calgary spikes.
“Lower for longer” has been a disaster for many state and local governments in the US, as revenue projections devised before oil’s historic plunge prove increasingly optimistic.
Take Louisiana for example, where Lt. Gov. Jay Dardenne recently announced that the state is facing a $750 million deficit.
…click on the above link to read the rest of the article…
This Is What Central Bankers Think Of Retail Investors
This Is What Central Bankers Think Of Retail Investors
Of course this being China, even the Ponzi schemes are next level: as we noted before, police had to use two excavators and dug for 20 hours to unearth 80 bags of evidence that Ezubo executives had buried six meters underground on the outskirts of Hefei, a city in the eastern province of Anhui.
Then overnight, Reuters added some more juicy details to this epic fraud: executives at Ezubao’s parent company, Yucheng Group, now say it was “a complete Ponzi scheme”, which used investor funds to support a lavish lifestyle, the official Xinhua News Agency reported this week.
Among gifts that Yucheng Chairman Ding Ning gave his president, Zhang Min, were a $20 million Singapore villa, a $1.8 million pink diamond ring, luxury limousines and watches and more than $83 million in cash, Xinhua stated.
Amazing, but the real question is just how many other Ezubao are lurking. The short answer: many.
China’s P2P and the online finance industry also serve as a critical channel for the emerging small business and consumer market, which is often ignored by banks and mainstream financial institutions. iResearch predicts China’s unsecured consumer finance market alone will triple in size by 2019, reaching outstanding loans of over $1.7 trillion.By November, there were over 3,600 P2P platforms as the industry raised more than 400 billion yuan, according to the China Banking Regulatory Commission (CBRC). More than 1,000 of those were problematic, it said.
…click on the above link to read the rest of the article…
Meet China’s Latest $1.8 Trillion “Problem”
Meet China’s Latest $1.8 Trillion “Problem”
The powers that be in Beijing aren’t particularly keen on allowing the banking sector to report “real” data on souring loans – especially given the fragile state of the country’s economy. In some cases, the Politburo will pressure banks to simply roll over bad debt, effectively kicking the can.
In addition, banks carry around 40% of their credit risk outside of “official loans.” Here’s what Fitch had to say last year:
“Off-balance-sheet financing (I.e. trust loans, entrusted loans, acceptances and bills) accounted for 18% of official TSF stock at end-2014, up from less than 2% just over a decade ago,” Fitch wrote. “Of the off-balance-sheet exposure reported at individual banks, this is equivalent to 15% of total assets for state commercial banks and 25% for mid-tier commercial banks, on a weighted average basis. These ratios would be even higher if we included entrusted loans (see Figure 2), although this information is not disclosed at all banks. Fitch estimates that around 38% of credit is outside bank loans.”
In many cases, channel loans (so credit extended by banks via non-bank intermediaries) are carried as “investments classified as receivables” on the balance sheet.
Now, as more Chinese firms lose access to traditional financing amid rising defaults and increasing economic turmoil, banks are increasingly turning to channel loans as a way of extending credit.
In turn, the amount of “investment receivables” on many mid-tier banks’ books is soaring to dizzying levels. “Mid-tier Chinese banks are increasingly using complex instruments to make new loans and restructure existing loans that are then shown as low-risk investments on their balance sheets, masking the scale and risks of their lending to China’s slowing economy,” Reuters reports. “The size of this ‘shadow loan’ book rose by a third in the first half of 2015 to an estimated $1.8 trillion, equivalent to 16.5 percent of all commercial loans in China.”
…click on the above link to read the rest of the article…
Zika Virus Threatens “Disaster In Rio” Olympics As WHO Declares Global Emergency
Zika Virus Threatens “Disaster In Rio” Olympics As WHO Declares Global Emergency
From the initial discovery in the heart of Ugandan forest darknessto mysterious genetically-modified Mosquitoes in Brazil, the newest threat to human health (most notably pregnant women) is the ominous-sounding Zika virus. The epidemic is spreading from its epicenter in Brazil – threatening disaster at the Olympics with “female athletes to consider participation “very carefully”“, to Colombia (with 2100 pregant women infected), and further north in America with CDC confirming 6 cases in Texas.
As we previously introduced, The World Health Organization is convening an Emergency Committee under International Health Regulations today, concerning the Zika virus ‘explosive’ spread throughout the Americas. The virus reportedly has the potential to reach pandemic proportions — possibly around the globe. But understandingwhy this outbreak happened is vital to curbing it. As the WHO statement said:
“A causal relationship between Zika virus infection and birth malformations and neurological syndromes … is strongly suspected. [These links] have rapidly changed the risk profile of Zika, from a mild threat to one of alarming proportions.“WHO is deeply concerned about this rapidly evolving situation for 4 main reasons: the possible association of infection with birth malformations and neurological syndromes; the potential for further international spread given the wide geographical distribution of the mosquito vector; the lack of population immunity in newly affected areas; and the absence of vaccines, specific treatments, and rapid diagnostic tests […]
“The level of concern is high, as is the level of uncertainty.”
Zika seemingly exploded out of nowhere. Though it was first discovered in 1947, cases only sporadically occurred throughout Africa and southern Asia.
In 2007, the first case was reported in the Pacific. In 2013, a smattering of small outbreaks and individual cases were officially documented in Africa and the western Pacific. They also began showing up in the Americas. In May 2015, Brazil reported its first case of Zika virus — and the situation changed dramatically.
…click on the above link to read the rest of the article…
Puerto Rico “Generously” Offers To Repay 54 Cents On The Dollar To Creditors Owed $70 Billion
Puerto Rico “Generously” Offers To Repay 54 Cents On The Dollar To Creditors Owed $70 Billion
Height Securities’ Daniel Hanson is “deeply skeptical” about the viability of Puerto Rico’s proposal for restructuring the island’s $70 billion in debt.
Hanson, in a note out late last week, said Governor Alejandro Padilla was “significantly unlikely” to present a “credible” plan and that the commonwealth’s offer to creditors may be “laughably low.”
As a reminder, Puerto Rico defaulted on some of its non-GO debt last month, presaging more missed payments this year as creditors come calling in May and July.
So far, the island has been able to avoid a messy default on its GO debt by utilizing a revenue “clawback” mechanism that effectively allows the commonwealth to divert money earmarked for non-GO debt, a move decried by the monolines.
In December, the market thought there might be a light at the end of the tunnel when creditors and the island’s power utility managed to get the bond insurers to go along with a $8 billion restructuring for PREPA, but that fell apart a week ago when lawmakers failed to vote on a new tax. Ultimately, the deadline to pass the bill was extended to February 16, but the fraugh negotiations underscore how precarious the situation has become.
On Monday, we got our first look at Puerto Rico’s opening salvo in what’s likely to be protracted battle to tackle the entire debt burden.
“Puerto Rico on Monday announced a major exchange offer to creditors that could reduce its debt by about $23 billion, the opening salvo in efforts to resolve the island’s crippling $70 billion debt crisis,” Reuters reports, adding that “the new plan would reduce a $49.2 billion chunk of Puerto Rico’s debt by about 46 percent, to $26.5 billion, by offering creditors payout reductions under a new, so-called “base bond” with better legal protections.”
…click on the above link to read the rest of the article…
“Time To Panic”? Nigeria Begs World Bank For Massive Loan As Dollar Reserves Dry Up
“Time To Panic”? Nigeria Begs World Bank For Massive Loan As Dollar Reserves Dry Up
Having urged “don’t panic” just 4 short months ago, it appears Nigeria just did just that as the global dollar short squeeze forces the eight-month-old government of President Muhammadu Buhari to beg The World Bank and African Development Bank for $3.5bn in emergency loans to help fund a $15bn deficit in a budget heavy on public spending amid collapsing oil revenues. Just as we warned in December, the dollar shortage has arrived, perhaps now is time to panic after all.
In September, Nigerian central bank Governor Godwin Emefiele ruled out a naira devaluation on Thursday and told people not to panic about a government order which risks draining billions of dollars from the financial system.
In an interview with Reuters, Emefiele said he was ready to inject liquidity if needed into the interbank market, which dried up this week following the directive to government departments to move their funds from commercial banks into a “Treasury Single Account” (TSA) at the central bank.The policy is part of new President Muhammadu Buhari’s drive to fight corruption, but analysts say it could suck up as much as 10 percent of banking sector deposits in Africa’s biggest economy – playing havoc with banks’ liquidity ratios.
With global oil prices tumbling, banks and companies are already struggling with the consequences of a dive in Nigeria’s energy revenues that has hit the naira currency and triggered flows of capital out of the country.
Then JP Morgan kicked Nigeria out of its influential Emerging Markets Bond Index last week due to restrictions that the central bank imposed on the currency market to support the naira and preserve its foreign exchange reserves.
Since taking office in May, Buhari has vowed to rein in Nigeria’s dependency on oil exports which account for 90 percent of foreign currency earnings.
…click on the above link to read the rest of the article…
The Disturbing Reasons Why The Bank Of Japan Stunned Everyone With Negative Rates
The Disturbing Reasons Why The Bank Of Japan Stunned Everyone With Negative Rates
As we noted earlier, in a paradoxical U-turn, one which caught everyone by surprise as a result of Kuroda’s own promise just one week ago not to engage in NIRP…
… and two months after the ECB’s December 3 disappointing announcement led to a historic surge in the EUR, today countless macro hedge funds have been left reeling with huge losses once again, as many had recently turned bullish on the Yen…
… only to be eviscerated by the BOJ’s negative rates announcement.
So what happened? Reuters has an amusing take, one which we doubt many macro HFs will find quite entertaining:
Bank of Japan Governor Haruhiko Kuroda used classic shock tactics on Friday to push through his latest unconventional monetary policy of negative rates: deny, then strike.
The paradox, of course, is that by “striking”, Kuroda slammed precisely those who were meant to benefit the most from the BOJ’s action: financial institutions. To be sure, it is not just hedge funds who will be left reeling but Japanese banks themselves, because as a result of negative rates, their NIM will go horizontal and lead to even more pronounced losses, something European banks – such as Deutsche Bank – have discovered the hard way over the past year and a half.
There are other problems with the BOJ’s seemingly chaotic, if not panicked, decision: as Reuters adds, “a razor-thin 5-4 vote underscores the difficulty Kuroda had in winning enough board backing for his shock tactic, and illustrates the doubts among board members about the governor’s line that by sticking to a 2 percent inflation goal the BOJ can make people believe prices will rise.”
…click on the above link to read the rest of the article…
Silver Market In Disarray After Benchmark Price Fix Manipulation
Silver Market In Disarray After Benchmark Price Fix Manipulation
The LBMA Silver Price – the crucial daily benchmark used by producers and traders around the world to settle silver products and derivatives contracts – was set at $13.58 per ounce.At the time of the auction, which begins at 12 noon London time, the spot price was at $14.42 per ounce while the futures price on the CME was at $14.415, leaving a number of market participants extremely confused as to what has happened.
“Unfortunately, it is not [a mistake],” Ole Hansen, head of commodity strategy for Saxo Bank, told FastMarkets. “This could be the end of the fix. It took 14 minutes to find a fix – they obviously found a fix way off of the market.”
The difference between the two was nearly six percent but the benchmark cannot be changed,a person familiar with proceedings told FastMarkets.
Another source also suggested that the continued existence of the fix has been put in jeopardy by the huge discrepancy in today’s price, adding that many producers – who still use the price as their daily reference – may have lost significant amounts of money if any contracts have been settled according to the fix.
“A huge number of contracts are still settled on that price,” another said. “This will no doubt cause significant problems.”
The matter is being investigated internally,FastMarkets understands, so CME has no official comment at this time.
This is how the market reacted to this clear manipulation…
As we have detailed previously, the ‘fix’ or ‘benchmark’, as it is now known, is still the global benchmark reference price used by central banks, miners, refiners, jewellers and the surrounding financial industry to settle silver-based contracts.
As Bulliondesk.com’s Ian Walker reports, the silver market was thrown into disarray on Thursday after the LBMA Silver Price was set 84 cents below the spot and futures price this morning.
…click on the above link to read the rest of the article…
“The Level Of Alarm Is Extremely High” As Zika “Spreading Explosively” WHO Warns
“The Level Of Alarm Is Extremely High” As Zika “Spreading Explosively” WHO Warns
Well over a year since the global fears over the Ebola epidemic sent US stocks reeling in late 2014 ahead of an even sharper rebound, today the head of the World Health Organization delivered a very stern warning when she said that the Zika virus, a mosquito-borne pathogen that may cause birth defects when pregnant women are infected, has been “spreading explosively” in South and Central America.
“The level of alarm is extremely high,” WHO director general Margaret Chan said Thursday in an e-mailed statement according to Bloomberg. Chan said she will convene an emergency meeting on Feb. 1 in Geneva to consider whether to declare the outbreak a “Public Health Emergency of International Concern,” which can coordinate government responses to direct money and resources at the virus. She added that the spread of the mosquito-borne disease had gone from a mild threat to one of alarming proportions.
Bloomberg adds that according to Chan researchers are working to determine the exact link between the virus and birth defects such as microcephaly, which causes babies to be born with abnormally small heads and potential developmental problems. “The possible links, only recently suspected, have rapidly changed the risk profile of Zika, from a mild threat to one of alarming proportions,” Chan told members of the WHO executive board in Switzerland.
One way in which the Zika virus is comparable to Ebola is that in both cases there is no vaccine and it could take years before one is available.
Another way the Ebola scenario could come back with a vengeance is that the WHO said that it expects the infection to eventually become common in the U.S. Travelers from countries with outbreaks have already been diagnosed on their return to America.
…click on the above link to read the rest of the article…
The Birth Of The PetroYuan (In 2 Pictures)
The Birth Of The PetroYuan (In 2 Pictures)
It belongs to the Chinese now!
h/t @FedPorn
As we previously detailed, two topics we’ve deemed critically important to a thorough understanding of both global finance and the shifting geopolitical landscape are the death of the petrodollar and the idea of yuan hegemony.
In November 2014, in “How The Petrodollar Quietly Died And No One Noticed,” we said the following about the slow motion demise of the system that has served to perpetuate decades of dollar dominance:
Two years ago, in hushed tones at first, then ever louder, the financial world began discussing that which shall never be discussed in polite company – the end of the system that according to many has framed and facilitated the US Dollar’s reserve currency status: the Petrodollar, or the world in which oil export countries would recycle the dollars they received in exchange for their oil exports, by purchasing more USD-denominated assets, boosting the financial strength of the reserve currency, leading to even higher asset prices and even more USD-denominated purchases, and so forth, in a virtuous (especially if one held US-denominated assets and printed US currency) loop.
The main thrust for this shift away from the USD, if primarily in the non-mainstream media, was that with Russia and China, as well as the rest of the BRIC nations, increasingly seeking to distance themselves from the US-led, “developed world” status quo spearheaded by the IMF, global trade would increasingly take place through bilateral arrangements which bypass the (Petro)dollar entirely. And sure enough, this has certainly been taking place, as first Russia and China, together with Iran, and ever more developing nations, have transacted among each other, bypassing the USD entirely, instead engaging in bilateral trade arrangements.
Falling crude prices served to accelerate the petrodollar’s demise and in 2014, OPEC nations drained liquidityfrom financial markets for the first time in nearly two decades:
…click on the above link to read the rest of the article…
