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Crowds gathered in the French capital on Sunday to attend a global march for the climate, despite the ban on gatherings enforced by French authorities. When one of the groups charged a police cordon, tear gas was deployed to push them back.

“Huge amounts” of tear gas were fired at protesters near Place de la Republique in central Paris, according to witnesses’ reports on Twitter, with objects flying in the direction of security forces.

The march, which was set to take place in dozens of cities around the world, was restricted in the French capital falling under the ban on gatherings introduced after the November 13 terrorist attacks in Paris.

La Republique metro station, closest to the scene, has been closed by authorities, citing security measures.

The riot police repeatedly attempted to push back the activists, spraying the crowds with tear gas. Ahead of the summit, 24 green activists were put under house arrest, with police saying they were suspected of planning violent protests, according to Reuters.

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

France Arrests 24 Climate Activists Using New “State Of Emergency” Laws, As Clashes Break Out In Paris – Live Feed

November 29, 2015

France Arrests 24 Climate Activists Using New “State Of Emergency” Laws, As Clashes Break Out In Paris – Live Feed

As Intellihub’s Shepard Ambellas writes, one-hundred and fifty heads of government, a.k.a. the elite, are gathering over the course of the next few weeks for a massive climate summit that’s anticipated to attract and indoctrinate over 40,000 visitors from around the globe. The summit, dubbed COP21, is sponsored by the United Nations (UN) and will reportedly focus on combating climate change. However it’s doubtful that geoengineering, which ironically is mostly to blame for current climate patterns, will even be a topic of interest to scheduled speakers. To boot any chance of that information making it out to the general public is limited as 24 activists have already been placed under house arrest.”

He further observes that “emergency powers” declared in the wake of the recent Paris attacks – in the name of terrorism – and adopted virtually overnight, were extended for a period of up to 90-days by the country’s leadership allowing for such activists to be jailed in advance of the summit or at anytime within period.

France 24 confirms the “pre-crime” arrests, writing that twenty-four environmental activists have been placed under house arrest ahead of the Paris climate summit, using France’s state of emergency laws. Two of them slammed an attack on civil liberties. The order ends on December 12, the day the Paris climate summit draws to a close.

French security forces have been on edge since Islamist gunmen killed 130 people in a deadly rampage across Paris on November 13, in the country’s worst ever terrorist attacks.

The ensuing state of emergency, declared by President François Hollande and extended by lawmakers for three months, has given police sweeping powers to search homes, handcuff residents and place people under house arrest, without judicial oversight.

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

Europe’s Banks Are Still Drowning in Bad Loans

November 28, 2015

Europe’s Banks Are Still Drowning in Bad Loans

A “Major Concern”

The European Banking Authority EBA, which (we guess) is fighting for its survival after the ECB has become the sole supervisor of Europe’s “systemically relevant” banks, has recently issued a comprehensive report on the European banking system (this included the unintended revelation that its employees have yet to master the intricacies of Exel).

As an aside, we have little doubt that this bureaucracy will survive. Has there ever been a case of an EU bureaucracy not surviving and thriving? We don’t recall one off the cuff, but perhaps we are mistaken. We’re sure some reason will be found to preserve this particular zombie sinecure as well.

eba_2 Hey guys! We’re still issuing reports! See how important it is to keep us well-funded?

Among the things the EBA’s report apprises us of, is that European banks continue to be submerged in bad loans, in spite of all the bailouts and extend & pretend schemes that have been implemented in recent years. As Reuters reports:

“The scale of bad loans held by banks in the European Union is “a major concern” and more than double the level in the United States, despite an improvement in recent years, the EU’s banking regulator said on Tuesday.

Non-performing loans (NPL) across Europe’s major banks averaged 5.6 percent at the end of June, down from 6.1 percent at the start of the year. But that compares with an average of less than 3 percent in the United States and even lower in Asia, according to the European Banking Authority (EBA).

The total of NPLs across Europe is about 1 trillion euros ($1.1 trillion), equivalent to the size of Spain’s annual gross domestic product (GDP) and 7.3 percent of the EU’s GDP.

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

Sweden Warns Of Dire “Consequences” From Massive Housing Bubble, Heavily Indebted Households

November 25, 2015

Sweden Warns Of Dire “Consequences” From Massive Housing Bubble, Heavily Indebted Households

Late last month, Sweden tripled down on QE, as the Riksbank announced it would expand its asset purchases by SEK65 billion. Or, visually:

The recent history of Swedish monetary policy is viewed by some as a cautionary tale about what can happen when a central bank attempts to normalize policy too “early.” As a reminder, the Riskbank began raising rates in 2010. Reminiscing about the bank’s decision four years later, Paul Krugman blew a gasket on the way to accusing Sweden of being a nefarious lot of job hating heretics hell bent on perpetuating global inequality by enriching creditors at the expense of impoverished debtors.

Of course Krugman needn’t have been so hard on the Riksbank. After all, they reversed course a little over a year later and since then, it’s been nothing but easing as the repo rate fell 35 bps into negative territory.

The problem, as we’ve documented quite extensively, is that Sweden’s adventures in NIRP-dom have done little to boost inflation (to be fair, unemployment has fallen).

For the Paul Krugmans of the world, that’s evidence of a hangover from the series of hikes the Riksbank embarked on beginning in 2010. For anyone who is sane, it’s evidence that, i) unconventional monetary policy is bumping up against the law of diminishing returns , and ii) when everyone is easing, no one gets the benefits.

But while NIRP may not be doing much for inflation, it sure has been effective at creating a rather scary looking housing bubble. Have a look:

We discussed this at length in “Sweden Goes Full Krugman, Gets Massive Housing Bubble.” Here’s what the Riskbank had to say about this after its September meeting:

“Low interest rates contribute to the trends of rising house prices and increasing indebtedness in the Swedish household sector continuing.

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

“There Are No More Dollars In The Central Bank”: Argentina’s New President Confronts Liquidity Crisis

November 25, 2015

“There Are No More Dollars In The Central Bank”: Argentina’s New President Confronts Liquidity Crisis

On Monday, Mauricio Macri, the son of Italian-born construction tycoon Francesco Macri, beat out Cristina Kirchner’s handpicked successor Daniel Scioli for Argentina’s presidency in what amounted to a referendum on 12 years of Peronist rule.

A legacy of defaults combined with exceptionally high inflation and slow growth finally tipped the scales on the Leftists and now, Macri will try to clean up the mess.

As Citi noted in the wake of Macri’s victory (which was accompanied by some very bad dancing), “the most urgent challenge on the economic front is FX policy.” The President-elect wants to unify the official and parallel exchange rates (~9.60 and 15.50 ARS/USD, respectively) and that will of course entail a substantial devaluation. Just how overvalued is the peso, you ask? “Grossly” so, Citi says. Here’s their take:

Regarding the real overvaluation of the ARS, we estimate that real effective exchange rate has dropped (appreciated) 44% since 2011. Thus, for Argentina to have the same REER than four years ago, the USDARS should stand at 17. A different approach would be to compare the evolution of the real exchange rate vis-à-vis the USD in Argentina and other countries in the region. While the LatAm currencies (BRL, CLP, COP, MXN, PEN and UYU) real exchange rates relative to the USD have increased on average 36% since 2011, the USDARS has dropped 19% in real terms. Thus, from this point of view, the USDARS should stand 68% higher at 16.1.

A key figure in the execution of Macri’s currency plan is former JP Morgan global head of FX research Alfonso Prat-Gay who will be Argentina’s finance minister under the new Presdent. Prat-Gay was president of the country’s central bank beginning in 2002 and, as Reuters reminds us, “won widespread acclaim for swiftly taming runaway inflation and championing central bank independence.” If that sounds to you like characteristics that might rub a Peronist the wrong way, you’d be right, and Prat-Gay was ousted by the Kirchners.

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

Did Mario Draghi Just Leak The Bazooka? Two-Tiered NIRP System May Presage Big Rate Cut

November 25, 2015

Did Mario Draghi Just Leak The Bazooka? Two-Tiered NIRP System May Presage Big Rate Cut

Back in September (and on several subsequent occasions), we discussed the implications of a further cut to the ECB’s depo rate. A plunge further into NIRP-dom would have serious consequences for the Riksbank, the SNB, the Nationalbank, and the Norges Bank.

In world dominated by beggar-thy-neighbor monetary policy, one cut begets another in race to the bottom as everyone scrambles to, i) keep their currency from soaring and ii) keep the inflationary impulse alive.

As Barclays explained in great detail several months ago, another ECB depo rate cut would have an outsized effect of the franc:

A cut in the ECB’s deposit rate further into negative territory likely would have a significant impact on the EURCHF exchange rate and provoke a more immediate response from the SNB. Indeed, we expect that a cut in the ECB’s deposit rate may have a greater effect on EURCHF than on other EUR crosses. Switzerland applies its negative deposit rate to only a fraction of reserves, currently about 1/3rd of sight deposits by our calculation. In contrast, negative deposit rates apply to all reserves held at the ECB, Riksbank and Denmark’s Nationalbank. Consequently, a cut to the ECB’s deposit rate likely has a larger impact both on the economy and on the exchange rate than a proportionate cut by the SNB.

Now, it appears Mario Draghi may be about to go the Swiss route by introducing a tiered system for the application of negative rates. As Reuters reports, “Euro zone central bank officials are considering options such as whether to stagger charges on banks hoarding cash ahead of the next European Central Bank meeting, according to officials.”

“Officials are discussing a split-level rate,” Reuters goes on to note, adding that the “contested step would impose a higher charge on banks depending on the amount of cash they deposit with the ECB.”

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

“It Looks Like A Warzone” – Army, APCs, Roadblocks Deployed In Brussels After Explosives, Chemical Weapons Found

November 21, 2015

“It Looks Like A Warzone” – Army, APCs, Roadblocks Deployed In Brussels After Explosives, Chemical Weapons Found

In the aftermath of last night’s warning of an “imminent” terror threat in Brussels when OCAM Crisis Center and the government raised the country’s terror alert to the highest level, today the escalation continues and the Belgian capital looks like not only a ghost town but something out of a Call of Duty warzone after authorities deployed special forces, and APCs, shut the metro, locked down shopping centers, closed sporting events, and warned the public to avoid crowds, train stations, airports and commercial districts because of a “serious and imminent” threat of an attack.

As Reuters reports, a week after the Paris attacks carried out by Islamic State militants, of whom one suspect from Brussels is at large and said by authorities to be highly dangerous, Brussels was placed on the top level “four” in the government’s threat scale after a meeting of top ministers, police and security services.

“The advice for the population is to avoid places where a lot of people come together like shopping centers, concerts, events or public transport stations wherever possible,” a spokesman for the government’s crisis center said.

As AFP reported earlier, the spike in the terror threat is due to a risk of attacks by “weapons and explosives”.

Agence France-Presse

✔@AFP

#BREAKING Belgium terror alert linked to a risk of attacks by ‘weapons and explosives’: PM

5:03 AM – 21 Nov 2015

The local security forces are taking no chances, and as can be seen on the photos below, APC have been deployed as the city barricades itself with the use of roadblocks at strategic locations.

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

The European Union Is Disintegrating: Austria Builds New Fence; Germany, Sweden Resume Border Checks

November 13, 2015

The European Union Is Disintegrating: Austria Builds New Fence; Germany, Sweden Resume Border Checks

It was just two days ago when we reported that Slovenia had begun to construct its own version of Viktor Orban’s now infamous razor wire, anti-migrant fences. As The New York times noted, more than 170,000 refugees from the war-torn Mid-East have crossed into Slovenia from Croatia in the last month alone. To get an idea of just how dramatic that is, relatively speaking, consider that Slovenia is a nation of just two million.

Slovenian prime minister, Miro Cerar, is concerned that with winter right around the corner, his country will not have the resources to house the migrants even if it wanted to, setting up the possibility that a severe humanitarian crisis could unfold. In short, Slovenia was able to cope with the flows from Croatia as long as a roughly equal number of migrants were exiting to Austria, but if anything slowed the migrants’ progress into Austria and Germany (like border controls for instance), then tiny Slovenia would be in a tough spot.

And so, Slovenia built a razor wire fence on its border with Croatia. Croatia dubbed the project “a waste of time.”

Now, as Reuters reports, “The European Commission has formally authorized the temporary reimposition of border controls by Sweden and Germany’s extension of frontier checks.” Here’s more:

Sweden, long a haven for people fleeing war and persecution, was the latest EU state to re-establish checks at its borders to stem a tide of migrants coming from Denmark.

Germany reimposed border controls on Sept. 13 and decided to extend them beyond an initial limit of two months foreseen by Schengen rules, using a clause that permits stretching checks to a maximum of six months.

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

Venezuela Default Countdown Begins: After Selling Billions In Gold, Caracas Raids $467 Million In IMF Reserves

November 9, 2015

Venezuela Default Countdown Begins: After Selling Billions In Gold, Caracas Raids $467 Million In IMF Reserves

In late October, when describing Venezuela’s desperate steps to keep itself afloat for a few more months, we reported that in order to fund $3.5 billion bond payments in early November, Maduro’s government had engaged in something that is the very definition of insanity: selling the country’s sovereign (and pateiently repatriated by his deceased predecessor) gold to repay creditors.

Specifically, in the past several months, Caracas has quietly parted with 19% of its gold holdings: “Central bank financial statements posted this week on its website show monetary gold totaled 91.41 billion bolivars in January and 74.14 billion bolivars in May. At the strongest official exchange rate of 6.3 bolivars per U.S. dollar, which the bank uses for its financial statements, that decline would be equivalent to $2.74 billion.”

But while ridiculous, Venezuela’s decision to liquidate some of its gold is perhaps understandable under the circumstances: Venezulea relies on crude oil for 95% of its export revenue, and with prices refusing to rebound, the only question is when do all those CDS which price in a Venezuela default finally get paid.

What is even more understandable is what Venezuela should have done in the first place before dumping a fifth of its gold, but got to do eventually, namely raiding all of the IMF capital held under its name in a special SDR reserve account.

Recall that this is precisely what Greece did in July when everyone was speculating when it would default. Now its Venezuela’s turn.

The details: Reuters reports that Venezuela withdrew some $467 million from an IMF holding account in October, according to information posted on the fund’s web-site, as the OPEC nation seeks to improve the liquidity of its reserves amid low oil prices and a severe recession.

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

Global Trade In Freefall: China Container Freight At Record Low; Rail Traffic Tumbles, Trucking Slows Down

November 4, 2015

Global Trade In Freefall: China Container Freight At Record Low; Rail Traffic Tumbles, Trucking Slows Down

Over the past year we have regularly contended that a far greater threat to the global economy than either corporate earnings, currency devaluations, rate cuts (or hikes), reserve outflow, or even the stock market, is the sudden, global trade crunch which has been deteriorating rapidly since late 2014 and has seen an even more dramatic drop off as 2015 is winding down. Actually, that is incorrect: global trade is merely a manifestation of the true state of the above listed items.

First, there was ships.

Back in March, we reported that “Global Trade Volume Tumbles Most Since 2011; Biggest Value Plunge Since Lehman.”

Then in August when we first pointed out a dramatic slowdown in the Baltic Dry index which had peaked just a few weeks earlier and we said that “should the dead cat bounce in shipping rates indeed be over, and if the accelerate slide continues at the current pace, not only will shippers mothball key transit lanes, but the biggest concern for global economy, the unprecedented slowdown in world trade volumes, which we flagged a week ago, will be not only confirmed but is likely to unleash yet another global recession.”

Three weeks later, we we got confirmation that the BDIY has indeed become a lagging indicator to actual demand, when Reuters reported in its latest weekly update using data from the Shanghai Containerized Freight Index, that key shipping freight rates for transporting containers from ports in Asia to Northern Europe fell by 26.7 percent to $469 per 20-foot container (TEU) in the week ended on Friday.The collapse in rates is nothing short of a bloodbath: “it was the third consecutive week of falling freight rates on the world’s busiest route and rates are now nearly 60 percent lower than three weeks ago.

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

Greek Bad Debt Rises Above 50% For The First Time, ECB Admits

October 31, 2015

Greek Bad Debt Rises Above 50% For The First Time, ECB Admits

It was almost exactly one year ago, on October 26, 2014, when the ECB concluded its latest European Stress Test. As had been pre-leaked, some 25 banks failed it, although the central bank promptly added that just €9.5 billion in net capital shortfall had been identified. What was more surprising is that to the ECB, the Greek banks – Alpha Bank, Eurobank Ergasias, National Bank of Greece, and PiraeusBank had entered Schrodinger bailout territory: they had both failed and passed the test at the same time. To wit:

These banks have a shortfall on a static balance sheet projection, but will have dynamic balance sheet projections (which have been performed alongside the static balance sheet assessment as restructuring plans were agreed with DG-COMP after 1 January 2014) taken into account in determining their final capital requirements. Under the dynamic balance sheet assumption, these banks have no or practically no shortfall taking into account net capital already raised.

Got that? According to the ECB, last October Greek banks may have failed the stress test, but under “dynamic conditions” they passed it. What this meant was unclear at the time, although as we explained this was nothing more than an attempt to boost confidence in Europe’s banking sector. This was the key quote from the ECB’s Vítor Constâncio: “This unprecedented in-depth review of the largest banks’ positions will boost public confidence in the banking sector. By identifying problems and risks, it will help repair balance sheets and make the banks more resilient and robust. This should facilitate more lending in Europe, which will help economic growth.”

It didn’t.

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

China warns US against ‘minor’ incidents that could ‘spark war’

October 30, 2015

China warns US against ‘minor’ incidents that could ‘spark war’

China has issued its strongest warning yet to the US over an incident during which a US destroyer sailed within territorial waters of China’s man-made islands in the South China Sea, claiming that US faces running the risk of “a minor incident that sparks war.”

On Tuesday, the Aegis destroyer USS Lassen entered within 12 nautical miles of Subi Reef, an undersea cliff in the South China Sea, which Beijing turned into an artificial island. The destroyer was reportedly traveling with a Navy surveillance airplane near the contested Spratly Islands. China views the man-made creation as part of its territory and claims territorial sovereignty over the waters surrounding it.

Addressing the issue of US intrusion on Thursday in a video teleconference, Admiral Wu Shengli warned the chief of US naval operations Admiral John Richardson to refrain from further “provocative acts”.

“If the United States continues with these kinds of dangerous, provocative acts, there could well be a seriously pressing situation between frontline forces from both sides on the sea and in the air, or even a minor incident that sparks war,” Wu said, according to a Chinese naval statement.

“(I) hope the US side cherishes the good situation between the Chinese and US navies that has not come easily and avoids these kinds of incidents from happening again,” Wu added.

Commenting on the bilateral exchange during the teleconference, an American official told Reuters that both sides agreed to avoid clashes. The US and Chinese navies also decided to maintain dialogue and follow protocols stipulated under the Code for Unplanned Encounters at Sea (CUES).

“They agreed that it’s very important that both sides continue to use the protocols under the CUES agreement when they’re operating close to keep the chances for misunderstanding and any kind of provocation from occurring,” said the official.

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

US Ground Troops In Syria Is “Illegal, Big Mistake”, Russia Warns Obama Of “Unpredictable Consequences”

October 28, 2015

US Ground Troops In Syria Is “Illegal, Big Mistake”, Russia Warns Obama Of “Unpredictable Consequences”

On Tuesday, Defense Secretary Ash Carter told the Senate Armed Services Committee that the US would no longer hesitate to engage in “direct action on the ground” in Iraq and Syria.

The change in rhetoric (and apparent shift in strategy) comes just days after the US seemingly prepared the public for what might be coming by releasing helmet cam footage of what Washington says was a raid on an ISIS prison by Delta Force (accompanied by the Peshmerga). 70 prisoners were allegedly freed although not before the US suffered its first combat death in Iraq since 2011.

The timing of the video is suspect, to say the least. It came just days after Joint Chiefs of Staff Gen. Joe Dunford visited Iraqi PM Haider al-Abadi in an effort to dissuade Baghdad from requesting Russian airstrikes on ISIS targets. In short, it appears as though Washington is trying to simultaneously, i) prove to Mid-East governments that the US can still be effective in the fight against terrorism even as questions remain about ulterior motives and even as Russia racks up gains in Syria, ii) prepare the public for the possibility that America is about to put boots on the ground in Iraq and Syria. Here’s more from WSJ on Washington’s new “strategy”:

The White House is seriously considering deploying a small squadron of Apache attack helicopters to Iraq as part of a package of new assistance programs to counter Islamic State, according to U.S. officials.

The move could ultimately require the deployment of hundreds more U.S. service members to Iraq. Among other proposals, U.S. officials said some in the military recommend openly deploying a small number of forces on the ground in Syria, embedded among moderate rebels or Kurdish forces there, for the first time.

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

Treasury Warns Of “Humanitarian Crisis” In Puerto Rico If Congress Does Not Agree To Bailout

October 22, 2015

Treasury Warns Of “Humanitarian Crisis” In Puerto Rico If Congress Does Not Agree To Bailout

“Puerto Rico is not Greece“… but it increasingly looks like it will be in a few weeks, thanks to US taxpayers who are about to foot the bill for yet another creditor bailout.

As we reported last night, creditors of the insolvent commonwealth, hoping to get a bailout and the highest possible return on their bond investment courtesy of the US taxpayer, have been pushing to portray the fiscal situation in Puerto Rico as beyond repair, hoping to force the administration and Congress to act. As The NY Times reported, on Wednesday, Puerto Rico took the unusual step of announcing that talks over restructuring about $750 million of the island’s debt had broken off, a move that some creditors saw as posturing to Washington for help.

Then, all day today, Puerto Rico’s leadership, realizing its interests are suddenly alligned with those of its creditors as a bailout is in everyone’s best interest, took the rhetoric up a notch when the island’s Governor Alejandro Garcia Padilla said in written testimony for Senate Energy Committee that Puerto Rico will have negative cash balance of $29.8 million in November 2015, and then added that the Puerto Rico Government Development Bank may be unable to make its $355 million debt service. “These GDB bonds are supported by a guarantee from the Commonwealth, and the GDB, which faces its own liquidity crisis, is not expected to be able to make the payment on its own based on current information.”

Others quickly chimed in: Puerto Rico Senate President Eduardo Bhatia said he would be in favor of “including everything” in a broad, comprehensive restructuring of the debt.

In short: bail us out now or face the consequences of a domino effect of defaults which puts not only the creditors, but the island itself, in dire straits.

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

Saudis Poke The Russian Bear, Start Oil War In Eastern Europe

October 18, 2015

Saudis Poke The Russian Bear, Start Oil War In Eastern Europe

Any weakening of Russian support for Mr. Assad could be one of the first signs that the recent tumult in the oil market is having an impact on global statecraft. Saudi officials have said publicly that the price of oil reflects only global supply and demand, and they have insisted that Saudi Arabia will not let geopolitics drive its economic agenda. But they believe that there could be ancillary diplomatic benefits to the country’s current strategy of allowing oil prices to stay low — including a chance to negotiate an exit for Mr. Assad.

That’s a quote from a New York Times article that ran in February of this year.

At the time, we pointed to the piece as evidence that yet another conspiracy “theory” has become conspiracy “fact” as it effectively served to validate (to the extent The New York Times is validation) the thesis that at the end of the day, this is all about energy.

If the Saudis could use oil prices to force Moscow into ceding support for Bashar al-Assad in Syria, then the West and its regional allies could get on with facilitating his ouster by way of arming and training rebels. Once Assad was gone, a puppet government could be installed (after some farce of an election that would invariably pit two Western-backed candidates against each other) then Riyadh, Doha, and Ankara could work with the new government in Damascus to craft energy deals that would not only be extremely lucrative for all involved, but would also help to break Gazprom’s iron grip on energy supplies to Europe.

Those are the “ancillary diplomatic benefits” mentioned in The Times piece.

Only it didn’t work out that way.

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

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