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War Begets War Refugees: The Moral Bankruptcy of Italy and NATO
War Begets War Refugees: The Moral Bankruptcy of Italy and NATO
On April 26, 2011, a meeting that can only be described as sinister took place between the then Italian Prime Minister, Silvio Berlusconi, and French President, Nicolas Sarkozy. The most pressing issue discussed at the meeting in Rome was how to deal with African immigrants.
Sarkozy, who was under pressure from his right-wing and far-right constituencies to halt immigration originating from North Africa (resulting from the Tunisian uprising), desired to strike a deal with the opportunistic Italian leader. In exchange for an Italian agreement to join a French initiative aimed at tightening border control (Italy being accused of allowing immigrants to cross through its borders to the rest of Europe), France, in turn, would resolve major disputes involving a series of takeovers, involving French and Italian companies. Moreover, Italy would then secure French support for a bid by Italian Economist and Banker, Mario Draghi, to become the Head of the European Central Bank.
Another point on the French agenda was active Italian participation in the war on Libya, initially spearheaded by France, Britain and the United States, and later championed by NATO.
Initially, Berlusconi hesitated to take part in the war, although certainly not for any moral reasons: for example, because the war was deliberately based on a misconstrued interpretation of United Nations Security Council Resolution 1973 of March 17, 2011. The Resolution called for an ‘immediate ceasefire’, the establishment of a ‘no-fly zone’ and using all means, except foreign occupation, to ‘protect civilians’. The war, however, achieved entirely different objectives from the ones stated in the Resolution. It achieved a regime change, the bloody capture and murder of Libyan leader, Muammar al-Qaddafi, and resulted in a bloodbath in which thousands of civilians were killed, and continue to die, due to the chaos and civil war that has gripped Libya since then.
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This Is What Global Currency War Looks Like: A Complete History Of Recent FX Interventions
This Is What Global Currency War Looks Like: A Complete History Of Recent FX Interventions
After the dramatic collapse in the SNB’s defense of the Swiss Franc peg to the Euro, there was a period of relative FX peace in which few if any central banks engaged in outright currency intervention (aside from the countless rate cuts so far in 2015 in response to the soaring strength of the USD, which has risen dramatically over the past year for all the wrong reasons). Then China last night reminded us what happens when in a centrally-planned world one or more markets take too great advantage of relative FX differentials, in this case Japan, whose Yen plunged from USDJPY 80 to 125, and the Euro, which tumbled from EURUSD 1.40 to just above parity.
Now, it’s China’s turn.
But as we pointed out before, FX interventions never take place in a vacuum, and especially during periods of rising dollar strength, when the entire FX world, and especially exporters and mercantilists, go berserk.
Furthermore as Stone McCarthy notes, “this is the sort of “international development” that the Fed will need to keep an eye on and assess as conditions align for the start of policy normalization.” The reason is simple: what China just did could make a rate hike impossible as multinational US corporations will be slammed with a double whammy of soaring dollar and sliding CNY, making US exports that much tougher. And as we won’t tire of repeating, the Fed can not print trade.
And just to help remind readers of what happens when the entire world engages in wholesale currency war, here is a complete list of all the recent FX interventions, courtesy of Stone McCarthy.
Summary of Recent FX Interventions:
The last period of any significant Fed interventions in foreign exchange markets was during 1994-1995 when the dollar reached all time lows against what were then the benchmark currencies of the Japanese yen and German deutsche mark, and the period of the Mexican Peso Crisis. After that, it was acting to defend the value of the yen and new-minted euro.
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THINKING OUTSIDE OF THE BOX
THINKING OUTSIDE OF THE BOX
In the North of Paris, the Carton plein association collects, cleans and sells discarded boxes. People in precarious situations recycle, deliver by bike and help move – gaining professional and life skills in the process.
It all began with Francis, a rag man who makes a living reusing and recycling things. He was peeved by the heaps of empty boxes that are dumped on the streets of Paris. “The yellow bins for paper and cardboard aren’t big enough for all the stuff that people throw out,” he says. “The city doesn’t have the resources to deal with the problem. There are some companies that take care of the problem, and it works out because the demand is there.” He and his friend Antoine Aumonier decided to collect part of these boxes to compact them into smaller bales and resell them.
They invested in a compacter. Yet the project was off to a rocky start: The machine cost several thousand euros, the boxes took up a lot of space, and the compacted bales didn’t sell well. “They also thought it was a pity to crush perfectly fine boxes”, says Hélène, a volunteer for the association that Francis and Antoine founded following their difficult launch. The project turned a corner: They now collected boxes from private citizens, associations and companies in order to clean and reuse them.
Reselling for reintegration
So now, 33 rue du Nord in Paris is home to the unusual store of the Carton plein (‘full box’) association. You can buy boxes here –– individually, if you just need to store some unused items, or in bulk for a major move. .
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The Great Greek Fudge
The Great Greek Fudge
A third Greek bailout involving loans from the European Stability Mechanism (ESM), the eurozone’s bailout scheme, is now being negotiated. The start was quite rocky, with haggling over the preciselocation in Athens where negotiations need to take place and Greek officials once again withholding information to creditors. Therefore, few still believe that it will be possible to conclude a deal in time for Greece to repay 3.2 billion euro to the ECB on 20 August. Several national Parliaments in the Eurozone would need to approve a final deal, which would necessitate calling their members back from recess around two weeks before the 20th, so it’s weird that French EU Commissioner Pierre Moscovici still seems so confident that the deadline can be met.
If indeed there is no deal, Greece is likely to request a second so-called “bridge loan” to allow it to pay the ECB, firmly within the Eurozone tradition of the creditor providing the debtor cash in order to pay back the creditor. France, which is most eager to keep Greece inside the Eurozone, is afraid that bilateral bridge loans from Eurozone countries wouldn’t be approved by the more critical member states, as this would risk France having to foot this bill on its own, perhaps with Italy. Not exactly a rosy prospect for socialist French President Hollande, who’s already struggling to contain the far right anti-euro formation Front National.
The only European fund practically available to provide a bridge loan is the European Financial Stabilisation Mechanism (EFSM), a fund created in May 2010, which has been raising 60 billion euro on the markets, with the EU’s €1 trillion Budget as collateral. The EFSM belongs not just to Eurozone member states, but to all EU member states.
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The President Of France Wants Eurozone Members To Transfer Their Sovereignty To A United States Of Europe
The President Of France Wants Eurozone Members To Transfer Their Sovereignty To A United States Of Europe
The President of France has come up with a very creative way of solving the European debt crisis. On Sunday, a piece authored by French President Francois Hollande suggested that the ultimate solution to the problems currently plaguing Europe would be for every member of the eurozone to transfer all of their sovereignty to a newly created federal government. In other words, it would essentially be a “United States of Europe”. This federal government would have a prime minister, a parliament, a federal budget and a federal treasury. Presumably, the current national governments in Europe would continue to function much like state governments in the U.S. do. In the end, there may be some benefits to such a union – particularly for the weaker members of the eurozone. But at what cost would those benefits come?
When I first learned that French President Francois Hollande had proposed that the members of the eurozone should create their own version of a federal government, I was quite stunned. But I shouldn’t have been surprised. For the global elite, the answer to just about any problem is more centralization. The following comes from a Bloomberg article that was posted on Sunday…
French President Francois Hollande said that the 19 countries using the euro need their own government complete with a budget and parliament to cooperate better and overcome the Greek crisis.
“Circumstances are leading us to accelerate,” Hollande said in an opinion piece published by the Journal du Dimanche on Sunday. “What threatens us is not too much Europe, but a lack of it.”
So precisely what would “more Europe” look like?
Hollande envisions a central government that has both a parliament and a federal budget…
…click on the above link to read the rest of the article…
Balance Of Superpowers: Comparing The US And Chinese Armed Forces
Balance Of Superpowers: Comparing The US And Chinese Armed Forces
Whether China is busy championing trade deals outside of the US dollar, buying up some of the world’s biggest companies, taking over foreign housing markets, or building massive networks of nuclear or wind power grids, it is clear that the country is a world power to be reckoned with. To be considered a true force, China also needs to be able to back up its economic and political might with a top notch military. Today’s infographic compares the armed forces of China with the United States.
click image fir massive legible version
In terms of military spending per capita, China is the new kid on the block. Although it has increased in recent years, China is still behind Russia, Turkey, South Korea, Japan, Germany, the United Kingdom, France, and the United States. However, the country does make up for it with in absolute terms by its sheer population. In terms of total military expenditures, China spends the second most worldwide with a total of approximately $216 billion per year, which is about one-third of the US.
In GDP terms, China spends about 2.1% of its annual GDP on military, and the United States spends 3.8%.
Perhaps the biggest difference between the two superpowers is influence in other parts of the world.The United States has 133 military bases outside of its territory, and China has zero. More specifically, the United States has bases in multiple jurisdictions that surround China: South Korea, Kyrgyzstan, Japan, Singapore, Guam, Afghanistan, and Diego Garcia, a set of small islands in Indian Ocean.
Courtesy of: Visual Capitalist
Troika Says Greek Proposal Not Enough To Meet Targets, Serves As “Basis For Negotiations”
Troika Says Greek Proposal Not Enough To Meet Targets, Serves As “Basis For Negotiations”
Early on Saturday morning, the Tsipras government passed the Greek bailout proposal which it told the Greek people to reject – which they did – less than a week earlier. The grotesque farce continued until the very end when 15 Syriza lawmakers who voted yes said they nonetheless are against the reform package and expressed their opposition to the government’s proposal in a joint statement issued immediately after the vote in parliament.
Seemingly unclear how this “democracy” thing works in the country that supposedly invented it only to spawn its biggest mutant yet, the “dissenters” added that they voted for the proposal in order not to give an excuse for the undermining of Alexis Tsipras government. What they really meant is what the angry people finally crack down on yet another government, they hope to have a get out of jail card. Literally.
Other were far more vocal in their condemnation of the capitulation: Energy Minister Panagiotis Lafazanis, Deputy Labour Minister Dimitris Stratoulis as well as the speaker of parliament, Zoe Constantopoulou, all called “Present”, in effect abstaining from the vote and withholding their support from the government. “The government is being totally blackmailed to acquiesce to something which does not reflect what it represents,” Constantopoulou said.
At the end of the vote, the Tsipras government narrowly escaped the loss of a parliamentary majority, as 17 Syriza lawmakers, which holds 149 seats in parliament, abstained, were absent or voted no. Among legislators who were absent were former Finance Minister Yanis Varoufakis (who went on holiday earlier to his wife’s island vacation house), Speaker of Parliament Zoe Konstantopoulou (who penned the famous Greek “Odius Debt” declaration) and two cabinet ministers.
The ruling coalition’s parliamentary majority was saved by the deputies of the right-wing Independent Greeks, who hold 13 seats in parliament. Additionally the three opposition parties handed Tsipras the mandate to negotiate and bring back a debt deal.
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Varoufakis’ Stunning Accusation: Schauble Wants A Grexit “To Put The Fear Of God” Into The French
Varoufakis’ Stunning Accusation: Schauble Wants A Grexit “To Put The Fear Of God” Into The French
Earlier we reported that Yanis Varoufakis, seemingly detained by “family reasons” would be unable to join his fellow parliamentarians and personally vote in what is likely the most important vote of Syriza’s administration: the one in which he and his party capitulate to the Troika and vote “Yes” to the proposal he and Tsipras urged everyone to reject just one week ago.
Subsequently, it was made clear what these family reasons are:
The self-described “erratic Marxist” will be on the nearby holiday island of … Aegina. In fact, he Tweeted that he reason for his absence is “family reasons”. Nevertheless, two hours before his Tweet was posted, the once obscure academic was spotted on the ferry boat “Phivos”, headed for Aegina, where his wife owns a stylish vacation home.The author of the “global Minotaur” nevertheless sent a letter to the Parliament president saying he would vote “yes” for the proposal, although the letter will not be counted, given that Parliament regulations stipulate that only deputies on official Parliament business are allowed to cast votes via correspondence.
Judgment aside about his decision to take a holiday from a vote that his strategy guided Greece into, it was clear that he has Wifi on the ferry because this afternoon, While V-Fak may well have been in transit, the Guardian released an Op-Ed penned by Varoufakis titled “Germany won’t spare Greek pain – it has an interest in breaking us.” Readers can read it in its entirety here but here is the punchline:
Losing Control
Losing Control
Markets are beginning to signal that policy makers are losing control. Many second-order-effects of the unprecedented and experimental global actions taken since the 2008 crisis are beginning to manifest. There are always causes and effects that develop; but they do so at different speeds. Many actions in recent years have prioritized ‘benefits today’ over ‘consequences tomorrow’. ‘Tomorrow’ is approaching ever more quickly. There is no ‘free lunch’.
Market damage and volatility due to policy interference, or due to the deliberate influence of security prices, are a shame. Markets should ideally operate with unencumbered fluidity. Markets should operate in a manner where adjustments to new information allow buyers and sellers to rapidly, and seamlessly, find a natural clearing price. Authorities and regulations should be like good referees in a soccer match; they provide the conditions for a fair match, and you rarely notice their presence.
- The beginning-of-the-end of official control happened earlier this year when the Swiss National Bank (SNB) retracted its currency-peg-promise, triggering a 40% move in the G-7 currency in 10 minutes.
- In early May, shortly after the SNB event and the launch of ECB QE and EU negative interest rate experiments, the EU bond market became dysfunctional. The absurdity of sustaining $4 trillion of negative rates came into focus. The German 10-year Bund moved from 0.05% to 0.75% in under a month.
- A series of Greek policy and troika bailout mistakes – actions that never resulted in a realistic and sustainable solution – are now culminating toward a tipping point (more tomorrow).
- Chinese authorities that have allowed and encouraged an equity bubble to manifest (and other central banks for that matter) are starting to see how ‘bubble blowing’ typically ends. Other central banks are hopefully watching. Chinese equities have lost $3.2 trillion in value in 30 days. To put this into perspective, this is equivalent to the entire stock market capitalization of Germany and France combined.
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Germany Crushes All Hope Of Greece Getting Debt Relief
Germany Crushes All Hope Of Greece Getting Debt Relief
As the Grexit debate is falling into the background a new, far more powerful conflict emerges: one between Germany on one side, and the IMF, France, Italy, and perhaps even the US, when it comes to the all important issue of debt relief.
As a reminder, it was the unexpected release of the IMF’s debt (un)sustainability draft late last week (with US support over the vocal objections of Europe) that not only gave Tsipras a Greferendum win (he did not desire), but showed clearly that without a debt haircut of at least 30%, any Greek deal will merely lead to another, even more violent Greek default down the line.
Then, overnight, the Telegraph showed that the “debt-haircut” axis has even more supporters in Europe:
French leaders are working in concert with the White House. Washington is bringing its immense diplomatic power to bear, calling openly on the EU to put “Greece on a path toward debt sustainability” and sort out the festering problem once and for all.The Franco-American push is backed by Italy’s Matteo Renzi, who said the eurozone has to go back to the drawing board and rethink its whole austerity doctrine after the democratic revolt in Greece. He too now backs debt relief for Greece.
Finally, it was none other than Tsipras who piggybacked on the IMF’s imlicit recommendation who following the “victorious” referendum made a clear demand of Europe:
- TSIPRAS ASKS FOR 30 PERCENT DEBT HAIRCUT
Fast forward to this morning when shortly after the latest Greek capitulation, when in Tsipras’ official request for ESM bailout he said timidly that “as part of a broader discussion to be held, Greece welcomes the opportunity to explore potential measures to be taken so that its official sector related debt becomes both sustainable and viable over the long term” Germany made it very clear whether there will be any debt haircuts, or reprofiling in the coming years.
Nein.
…click on the above link to read the rest of the article…
Greece Fallout: Italy and Spain Have Funded a Massive Backdoor Bailout of French Banks
Greece Fallout: Italy and Spain Have Funded a Massive Backdoor Bailout of French Banks
The €110 billion of loans provided to Greece by the IMF and Eurozone in May 2010 enabled Greece to avoid default on its obligations to these banks. In the absence of such loans, France would have been forced into a massive bailout of its banking system. Instead, French banks were able virtually to eliminate their exposure to Greece by selling bonds, allowing bonds to mature, and taking partial write-offs in 2012. The bailout effectively mutualized much of their exposure within the Eurozone.
The impact of this backdoor bailout of French banks is being felt now, with Greece on the precipice of an historic default. Whereas in March 2010 about 40% of total European lending to Greece was via French banks, today only 0.6% is. Governments have filled the breach, but not in proportion to their banks’ exposure in 2010. Rather, it is in proportion to their paid-up capital at the ECB – which in France’s case is only 20%.
In consequence, France has actually managed to reduce its total Greek exposure – sovereign and bank – by €8 billion, as seen in the main figure above. In contrast, Italy, which had virtually no exposure to Greece in 2010 now has a massive one: €39 billion. Total German exposure is up by a similar amount – €35 billion. Spain has also seen its exposure rocket from nearly nothing in 2009 to €25 billion today.
In short, France has managed to use the Greek bailout to offload €8 billion in junk debt onto its neighbors and burden them with tens of billions more in debt they could have avoided had Greece simply been allowed to default in 2010. The upshot is that Italy and Spain are much closer to financial crisis today than they should be.
If You Can’t Beat ‘Em: France Up in Arms Over NSA Spying, Passes New Surveillance Law
On Wednesday, France woke up to find that the National Security Agency had been snooping on the phones of its last three presidents.
Top secret documents provided by Wikileaks to two media outlets, Mediapart and Libération, showed that the NSA had access to confidential conversations of France’s highest ranking officials, including the country’s current president, François Hollande; the prime minister in 2012, Jean-Marc Ayrault; and former presidents Nicolas Sarkozy and Jacques Chirac.
Yet also today, the lower house of France’s legislature, the National Assembly, passed a sweeping surveillance law. The law provides a new framework for the country’s intelligence agencies to expand their surveillance activities. Opponents of the law were quick to mock the government for vigorously protesting being surveilled by one of the country’s closest allies while passing a law that gives its own intelligence services vast powers with what its opponents regard as little oversight. But for those who support the new law, the new revelations of NSA spying showed the urgent need to update the tools available to France’s spies.
Of course, the fact that the NSA is listening to the conversations of French presidents is not that surprising to anyone who has been paying attention to the revelations in the past two years of NSA spying, nor is the idea that France might do the same to its allies. In 2013, the German newsmagazineDer Spiegel revealed that the U.S. government had targeted the cellphone of German Prime Minister Angela Merkel—so why not Hollande’s phone, too?
The response from the French government today was firm but predictable. Senior intelligence officials will travel to the U.S. to meet their counterparts in Washington, while the U.S. ambassador in Paris was summoned to the Elysee Palace. A similar scenario played out in 2013, when Le Monde published Snowden documents that revealed some of the extent of American surveillance in France. Prime Minister Manuel Valls said today that he wants a “code of conduct” to guide the relationship between France and the U.S. on intelligence activities—but the government demanded the exact same thing almost two years ago.
…click on the above link to read the rest of the article…
Will Seizure of Russian Assets Hasten Dollar Decline?
Will Seizure of Russian Assets Hasten Dollar Decline?
While much of the world focused last week on whether or not the Federal Reserve was going to raise interest rates, or whether the Greek debt crisis would bring Europe to a crisis, the Permanent Court of Arbitration in The Hague awarded a $50 billion judgment to shareholders of the former oil company Yukos in their case against the Russian government. The governments of Belgium and France moved immediately to freeze Russian state assets in their countries, naturally provoking the anger of the Russian government.
The timing of these actions is quite curious, coming as the Greek crisis in the EU seems to be reaching a tipping point and Greece, having perhaps abandoned the possibility of rapprochement with Europe, has been making overtures to Russia to help bail it out of its mess. And with the IMF’s recent statement pledging its full and unconditional support to Ukraine, it has become even more clear that the IMF and other major multilateral institutions are not blindly technical organizations, but rather are totally subservient lackeys to the foreign policy agenda emanating from Washington. Toe the DC party line and the internationalists will bail you out regardless of how badly you mess up, but if you even think about talking to Russia you will face serious consequences.
The United States government is desperately trying to cling to the notion of a unipolar world, with the United States at its center dictating foreign affairs and monetary policy while its client states dutifully carry out instructions. But the world order is not unipolar, and the existence of Russia and China is a stark reminder of that. For decades, the United States has benefited as the creator and defender of the world’s reserve currency, the dollar.
…click on the above link to read the rest of the article…
Germany, France Call for Fiscal and Political Union. Public Ignorance Vital for Success of EU Power Grab
Germany, France Call for Fiscal and Political Union. Public Ignorance Vital for Success of EU Power Grab
Since Europe’s sovereign debt problems exploded onto the scene in 2010 the European Union has masterfully exploited the crisis to strengthen its grip over the old continent. It has stripped once-proud, independent nations of the last vestiges of their economic sovereignty. It has also pulled off the long-cherished dream of banking union, which was quietly consummated last fall.
Now, with the help of Berlin and Paris, it is looking to complete the coup. And this time not in the shadows, but in broad daylight.
The first move was to prep the masses. In an article published in The Guardian,Emmanuel Macron, France’s Minister of the Economy, and Sigmar Gabriel, the German Vice-Chancellor, outlined the broad strokes of the plan, calling for greater fiscal and social harmonization in the Eurozone while conceding that other EU countries like Britain should be allowed to settle for a less integrated Union based on the single market — at least temporarily:
Our common goal is to render it unthinkable for any country in pursuit of its national interest to consider a future without Europe (meaning, one assumes the EU) – or within a lesser union.
Straightening A Crooked Brussels
“The euro was built on a Franco-German understanding but also on a typically European compromise,” they write. “This gives France and Germany a particular responsibility to straighten what is crooked” — an eminently fitting phrase.
“A new, staged process of convergence is needed,” the authors add. This would involve not only structural reforms (labor, business and the environment) and institutional reforms (functioning of economic governance) but also social and tax convergence – all in the name of addressing the “critical flaws in the architecture of monetary union.”
…click on the above link to read the rest of the article…
Was Charlie Hebdo a “Convenient” Incident for Policymakers?
Was Charlie Hebdo a “Convenient” Incident for Policymakers?
Many Questions
On the 7th of January two gunmen attacked the office of Charlie Hebdo, a French weekly magazine. The shooters were two brothers who belonged to the Yemeni branch of the Islamist terrorist organization Al-Qaeda. The attack resulted in 11 casualties and many injured, while the shooters were shot a few days later in an exchange of fire with the police. Charlie Hebdo is a satire magazine, and its jokes and cartoons and its secular approach are widely considered anti-religious. Social media went into a frenzy with the hashtag “Je suis Charlie”. Four days later two million people including tens of world leaders participated in a rally for national unity in Paris, and over three million participated across France. A lot of questions were raised by this tragic event and its aftermath that we will look at in this article.
The gunmen who attacked Charlie Hebdo and their get-away car
Photo via Reuters TV
How Free Should Free Speech be When it Comes to Religion?
Let’s start with the obvious: What was the motive of the shooters? According to witness reports of the attack, one of the shooters said “You are going to pay for insulting the Prophet”. Charlie Hebdo’s cartoons and jokes are regarded as quite controversial, as they mock all religions, whether Islam, Christianity or Judaism. When respect to Islam, they repeatedly published cartoons of Mohammed, which infuriated Muslim communities worldwide as images of the Prophet are not allowed to be depicted according to Islamic teachings. Not only was the magazine sued for this, its editor-in-chief, who was killed in the attack, had been on the hit list of the Al-Qaeda branch in Yemen for some time.
…click on the above link to read the rest of the article…
