Capital controls within a monetary union are a contradiction in terms. The Greek government opposes the very concept.
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Oil tumbles as Iran nuclear deal looms
Oil prices tumbled on Monday as Iran and six world powers closed in on a nuclear deal that would end sanctions on the Islamic Republic and let more Iranian oil on to world markets.
News of a unanimous agreement by European leaders on a bailout loan for Athens, which should allow Greece to stay in the euro zone, helped pare early losses.
Brent crude for August fell $1.89 to a low of $56.84 a barrel before rallying back to around $57.30 by 4.40 a.m. EDT.
U.S. light crude, also known as West Texas Intermediate (WTI), was down $1.15 at $51.59 a barrel.
Iran and six world powers are reportedly on the brink of finding a nuclear deal that would bring sanctions relief in exchange for curbs on Tehran’s nuclear program.
A senior Iranian negotiator said a nuclear deal would be completed but cautioned that there was work to be done and he could not promise the talks would finish on Monday or Tuesday.
“I cannot promise whether the remaining issues can be resolved tonight or tomorrow night,” Iran’s Tasnim news agency quoted Deputy Foreign Minister Abbas Araqchi as saying.
The chance of Iran adding to a global oil surplus at a time of weak demand led some analysts to forecast more oil falls.
Bank of America Merrill Lynch said U.S. crude prices “could soon drop well below our $50 per barrel target” in the third quarter of 2015.
Commerzbank said a fall below $55 per barrel in Brent and below $50 per barrel in U.S. crude was “conceivable”.
Oil prices pared early sharp losses after European Council President Donald Tusk said euro zone leaders had “unanimously reached agreement” on a deal for Greece.
…click on the above link to read the rest of the article…
Deal Struck Following Total Capitulation By Tsipras: Market Awaits Greek Reaction To Draconian Deal Terms
Deal Struck Following Total Capitulation By Tsipras: Market Awaits Greek Reaction To Draconian Deal Terms
Last night, when we concluded our overnight summary state of affairs we said that “we expect some resolution around first light this morning, and while another Greek can kicking and some last-moment “hope” is surely in the cards, we know two things: Greece is officially finished – there is no way the Tsipras or any other government can politically recover after such a humiliating spectacle when half of Europe made a mockery of the Greek people; and perhaps better, we finally have seen the true face of Europe: visible only when things are finally falling apart.”
Sure enough, just around 9am CET, after a 17-hour mammoth all-night session, Greece did manage to cobble together a “deal” if one may call this latest embarrassing can-kicking that, which was nothing short of total capitulation by Tsipras: a prime minister who 8 days ago was victorious cheering the passage of a referendum that rejected a far less draconian deal.
As part of the deal, Greece “surrendered to European demands for immediate action to qualify for up to 86 billion euros ($95 billion) of aid Greece needs to stay in the euro” as Bloomberg politely put it.
We would put it as follows: Greece agreed, at the cost of ceding its sovereignty to Europe, to allow the Troika to repay itself.
Worse, there is no actual deal term sheet on the table: while the summit agreement averted a worst-case outcome for Greece, it only established the basis for negotiations on an aid package, which would also include €25 billion euros to recapitalize its weakened financial system, money which would come from Greek asset sales.
The politicians were greatly relieved, perhaps most of all to be finally able to go to bed. Here is the statement by Euro president Donald Tusk:
…click on the above link to read the rest of the article…
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.
…click on the above link to read the rest of the article…
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 Caves, Formally Requests ESM Bailout: Full Headline And Next Steps Summary
Greece Caves, Formally Requests ESM Bailout: Full Headline And Next Steps Summary
As we reported yesterday, following the latest European leaders summit, Greece was given until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe’s currency bloc and into economic ruin.
“The stark reality is that we have only five days left … Until now I have avoided talking about deadlines, but tonight I have to say loud and clear that the final deadline ends this week,” European Council President Donald Tusk told a news conference.
It did that moments ago when Greece officially submitted a request for a three-year loan facility from the European Stability Mechanism. And to think Syriza’s main election promise was no more bailouts…
As Bloomberg reports, the loan will be used to meet Greece’s debt obligations, and to ensure financial system stability. Greece proposed immediate implementation of measures, including tax, pension reforms as early as next week. Govt to detail its proposals for specific reform agenda on July 9 at latest or tomorrow.
More details from the WSJ:
Greece formally requested a three-year bailout from the eurozone’s rescue fund Wednesday and pledged to start implementing some of the overhauls demanded by creditors by early next week, according to a copy of the request seen by The Wall Street Journal.
Crucially for Greece’s creditors, the letter says the government would start implementing some measures, including on taxation and pensions, by the beginning of next week, though it doesn’t go into details.
The letter is a first step toward fulfilling a demand by international creditors, who have given Athens until Sunday to come up with tougher measures they would impose in return for desperately needed financing that could keep the country from bankruptcy and even worse economic turmoil.
…click on the above link to read the rest of the article…
It Begins: ECB Hikes Greek ELA Haircuts; Full “Depositor Bail-In” Sensitivity Analysis
It Begins: ECB Hikes Greek ELA Haircuts; Full “Depositor Bail-In” Sensitivity Analysis
Earlier today we reported that as Bloomberg correctly leaked, the ECB would keep its ELA frozen for Greek banks at its ?89 billion ceiling level last increased two weeks ago. However we did not know what the ECB would do with Greek ELA haircuts, assuming that the ECB would not dare risk contagion and the collapse of the Greek banking system by triggering a waterfall solvency rush in Greek banks if and when it boosts ELA haircuts. Turns out we were wrong, and as the ECB just announced “the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA.”
Full Press Release:
ELA to Greek banks maintained
- Emergency liquidity assistance maintained at 26 June 2015 level
- Haircuts on collateral for ELA adjusted
- Governing Council closely monitoring situation in financial markets
The Governing Council of the European Central Bank decided today to maintain the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on 26 June 2015 after discussing a proposal from the Bank of Greece.
ELA can only be provided against sufficient collateral.
The financial situation of the Hellenic Republic has an impact on Greek banks since the collateral they use in ELA relies to a significant extent on government-linked assets.
In this context, the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA.
The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area. The Governing Council is determined to use all the instruments available within its mandate.
…click on the above link to read the rest of the article…
Greek Capital Controls Begin: Greek Banks, Stock Market Will Not Open On Monday
Greek Capital Controls Begin: Greek Banks, Stock Market Will Not Open On Monday
Update 2: Greece’s Skai reports that if/when banks reopen (supposedly on Tuesday), a 60€ withdrawal limit will be imposed.
Update: In a televised address to the nation, Greek PM Alexis Tsipras assured Greeks that their deposits are safe despite an upcoming bank holiday and despite the fact that Greek stocks will not open for trading on Monday. Tsipras also said Athens has re-applied for a bailout extension and urged Greeks to “remain calm” in the face of what is sure to be a turbulent week.
- GREEK PRIME MINISTER SAYS GREEK PEOPLE SHOULD REMAIN CALM
- GREEK PM: BANK OF GREECE PROPOSED BANK TRANSACTION RESTRICTIONS
- GREEK PRIME SAID GREECE RE-APPLIED FOR BAILOUT EXTENSION
- GREEK PRIME MINISTER SAYS DEPOSITS ARE COMPLETELY SAFE
Earlier:
Despite the reassurances from any and all elected (and unelected) officials, given the run on bank ATMs in Greece has turned into a stampede, it is not surprising that:
- GREEK BANKS TO REMAIN CLOSED FROM MONDAY FOR A WEEK: PIRAEUS BANK CEO
- PIRAEUS BANK CEO THOMOPOULOS SPEAKS TO REPORTERS IN ATHENS
The announcement was made when Piraeus Bank CEO Anthimos Thomopoulos told reporters after a meeting of the government’s financial-stability panel on Sunday. The launch of capital controls just as the Greek summer tourism season starts, is sure to be the final crushing blow to Greece, whose entire economy will now grind to a halt.
At the same time, Finance Minister Yanis Varoufakis said an announcement would be made after a Cabinet meeting due to start imminently in Athens. Which is ironic considering just earlier today Varoufakis said he is opposed to the “very concept” of capital controls:
Banks will remain shut until at least after a July 5 referendum called by Prime Minister Alexis Tsipras on whether to accept austerity in exchange for a European bailout, Kathemerini newspaper reported, citing unnamed sources.
…click on the above link to read the rest of the article…
Greece Rejects “Totally Unaccepetable” IMF Counterproposal Demanding Pension Cuts, VAT Hike
Greece Rejects “Totally Unaccepetable” IMF Counterproposal Demanding Pension Cuts, VAT Hike
As reported earlier and as tipped here on Monday, markets will have to call off the party for now because the focus of the Greek debt deal negotiations has now shifted back to Brussels after all eyes had turned briefly to Athens on Tuesday following reports which indicated a deal in principle had been struck. Here’s what we said less than 24 hours ago:
The IMF demands no tax hikes and pension cuts. Instead it will get almost exclusively tax hikes, amounting to 92% of the proposed measures, and just a few cuts, few of which actually impact Greek pensions. In short: the proposal is not only unsustainable, it is also unenforceable, something which the Germans – already facing a third Greek bailout – will be quick to point out.Which is why tomorrow, after Tsipras is finished with the meeting with the Troika, he will have a new homework assignment: revise the “final final” proposal and come up with much less in tax hikes, much more in spending cuts: something which the already furious hard-line elements within Syriza will have a field day with.
And that is precisely what happened. As WSJ reports, creditors have decided to stick to their “red lines” after all:
Significant divisions remain between Greece and its international creditors over measures Athens must implement before receiving desperately needed bailout aid, according to a document seen by The Wall Street Journal on Wednesday ahead of a crucial meeting of eurozone finance ministers.Key points of disagreement are corporate taxation, the overhaul of Greece’s pension system and value-added taxes, according to the document. For instance, Greece had planned to increase corporate taxes to 29%, but in the document creditors limited increase to 28%. That may cause new budget shortfalls that need to be plugged with other measures.
…click on the above link to read the rest of the article…
How The IMF Can Save Greece And Itself
How The IMF Can Save Greece And Itself
There’s a Reuters article by Paul Taylor today that’s thought provoking, but not along the same line of thought that the writer follows (or the twist he gives to it). Taylor concludes that the IMF would love to wash its hands off Greece, but can’t because it’s subservient to German and Brussels interests (a junior partner). However, he also describes, without realizing it, why and how the Fund can rectify that.
Not that we’re not under the illusion the IMF is prone to latch on to the following, but that it would nevertheless be an extremely wise move for the Fund, and especially for its reputation. Which, no matter how you see it, is under threat from its Asian ‘competitor’, the Asian Infrastructure Investment Bank (AIIB), not in the least because the non-western world has long found that the west has far too much power in the IMF, which after all is a global organization.
In that vein, let’s start off with an article the FT published in April 2013, by Ousmène Mandeng, who also features in Taylor’s piece. This former IMF deputy division chief pointed out what unease the IMF role in Greece caused, and how that role undermined its role as an international institution. Today, nothing has changed.
The IMF Must Quit The Troika To Survive
There are many victims of the eurozone crisis but one loser is seldom mentioned: the IMF has suffered considerable collateral damage. It has been dragged along in an unprecedented set-up as a junior partner within Europe, used as a cover for the continent’s policy makers and its independence lost. The monetary fund was set up as a technocratic institution. That, indeed, is why it was brought into Europe: it was felt that a neutral broker was needed to fix the eurozone’s problems.
…click on the above link to read the rest of the article…
The PetroYuan Is Born: Gazprom Now Settling All Crude Sales To China In Renminbi
The PetroYuan Is Born: Gazprom Now Settling All Crude Sales To China In Renminbi
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.
Last November, 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 nationsdrained liquidity from financial markets for the first time in nearly two decades:
…click on the above link to read the rest of the article…
Price Manipulation In The Oil Markets?
Price Manipulation In The Oil Markets?
According to Reuters, Arcadia Petroleum Ltd, and its Parnon Energy unit have settled a $16.5 million civil suit filed against them for manipulating futures prices. This comes after a prior settlement with the US Commodities Futures Trading Commission whereby both entities were banned for trading futures for three years. Whether they admitted wrong doing is unclear but the case provides more evidence that the supposed “free” capital markets in the US are far from free.
Arcadia was accused of artificially creating a shortage at Cushing, OK, then using futures and options to manipulate prices as they spiked in the summer of 2008 before subsequently crashing, along with equity markets, in time for the fall 2008 elections. The parties involved took huge long positions to drive up prices, then dumped them for a big profit. Then they took short positions to drive prices back down.
Related: Forget The Noise: Oil Prices Won’t Crash Again
This comes on top of cases in which banks were caught manipulating LIBOR(London InterBank Offered Rate) and Foreign Exchange rates as well as theongoing probes on gold price manipulation. In all of these cases fines were issued but serious jail time, as far as we know, wasn’t.
Price manipulation is running rampant and it seems that instead of regulators issuing stiffer jail sentences to deter it, slaps on the wrist via fines are becoming more and more common. I went on record saying that the crash in oil last fall from the $70s was driven mostly by media hysteria either of their own invention or fed (no pun intended) to them by parties who stood to benefit from the fall of oil.
…click on the above link to read the rest of the article…
How Reliable Is Reuters?
How Reliable Is Reuters?
People see their own nation, and foreign nations, through the filter of the press that’s available to them; so, if that filter is systematically distorting (distorting in ways that most of the others similarly do), then democracy cannot function, public opinion can be manipulated and warped; and wars might even start that shouldn’t — something Americans have tragically been experiencing lots of, during recent decades, such as when we invaded Iraq in 2003 (just to cite the most famous of many examples).
A typical Reuters ‘news’ report will be examined here, in order to determine how high the journalistic standards of the Reuters ‘news’ organization actually are. Reuters is an internationally respected ‘news’ organization, as reliable as any major ‘news’ organization in the U.S. and Europe — thus, it’s a good source to provide a case-example.
The particular report, dated Thursday, April 16th, is titled “Russia blames U.S. for security crises and turmoil in Ukraine.”
Its first sentence is a simple and true statement of fact:
“Top Russian officials accused the United States on Thursday of seeking political and military dominance and sought to put blame on the West for international security crises, including the conflict in east Ukraine.”
The second sentence is anything but factual: it is instead contemptuous of the Russian speakers and of what they said, yet offering no evidence that what they said was false, nor is it offering evidence in support of the report’s own contemptuous attitude toward them:
“Evoking Cold War-style rhetoric, Russian Defence Minister Sergei Shoigu said a drive by the United States and its allies to bring Kiev closer to the West was a threat to Moscow and had forced it to react.”
…click on the above link to read the rest of the article…
Germany Orders 100 Tanks To “Ensure Troops Are Ready To Respond To Russian Assertiveness”
Germany Orders 100 Tanks To “Ensure Troops Are Ready To Respond To Russian Assertiveness”
With Jean-Claude Juncker demanding a Unified European Army, it appears Germany is wasting no time in simultaneously boosting its own economy with warfare spending and comforting a ‘fearful populace’ with more military might. As Reuters reports, Germany plans to procure more than 100 additional Leopard 2 tanks, increasing its total Leopard 2 tank inventory by a whopping 45% a government spokesman said on Friday, as it seeks to ensure its “troops are ready for action in response to concerns over recent Russian assertiveness.”
Germany plans to procure more than 100 additional Leopard 2 tanks, a government spokesman said on Friday, as it seeks to ensure its troops are ready for action in response to concerns over recent Russian assertiveness.The decision to restock its military comes as NATO tries to hasten the response time of its rapid reaction force following Russia’s annexation of Crimea last year and conflict in Ukraine.
“The ministry has decided to raise the upper limit for the future to 328,” a defense ministry spokesman told a regular government news conference on Friday, confirming a report by German magazine Spiegel.
Just before the end of the Cold War, in the 1980s, the then West Germany had more than 3,500 tanks. Now, seventy years after World War Two, it has just 225. As a result soldiers have to share tanks and heavy equipment across different units.
Given NATO’s new goals on flexibility and rapid reaction time,Germany has to ensure that it can deploy troops with the correct equipment to the right place in a short period of time, the spokesman said. “This can only succeed if the equipment does not need to be first moved around through the country,” he said.
The Leopard tanks are made by Krauss-Maffei Wegmann (KMW).
So harbinger of S&P algos euphoria-inducing WWIII? Or just another Keynesian public works spending project?
And That Successfully Concludes “Big Brother 101”
And That Successfully Concludes “Big Brother 101”
Desperate to spin Europe’s deflation, pardon “negative inflation” pardon the lack of impulse to go ahead and spend money you don’t have right here right now, into a good, if only for Keynesians, thing? Don’t worry – we’ve got you covered. Below is a sampling of perfectly contradictory Reuters headlines all posted within a spin of 10 minutes, which should send you well on your way to propaganda nirvana.
And that successfully concludes Big Brother 101.
Source Reuters, Reuters, and… Reuters
h/t @RudyHavenstein
