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Thread: EUCOM Economic Analysis - Part I

  1. #81
    Council Member Fuchs's Avatar
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    Default On Merkozy's power, fools and power in general

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    Last year, some observers hailed a close Franco-Anglo cooperation and diagnosed the end of the Franco-German couple which had exercised above proportional influence in Europe.

    These politics games are simple; a few (two) large powers agree on common ground on a topic, then they go to a target summit and prevail with their proposals and demands because there's not going to be any agreement without them anyway. The advantage for the two is basically that the special interests of many others are a much weaker bargaining position.

    Well, the British-French cooperation in military affairs is largely irrelevant now since the elephant in the room is the Euro currency area / PIIGS fiscal crisis. The UK is not part of the common currency and thus irrelevant; Cameron was not happy to be informed about this directly. The UK is a stakeholder, not a shareholder - and thus largely powerless in the issue.


    Now there' much being written about 'Merkozy' and how they define the political reaction to the crisis. Authors ascribe especially great power to Merkel, often with reference to the German economic position.

    Judging by the conventional view of great power games and by the view assumed by many journalists, Germany is now powerful.

    Hmm, right.
    Now what's the benefit of being powerful?


    You know, Germans have become accustomed to expect that whenever they're being called 'important' or 'indispensable', it's actually about their money. It's thus not surprising that there's not exactly great cheering about this 'power' in Germany.

    Moreover, the whole anecdote exemplifies how power must not be advantageous under all circumstances; the political reaction to the crisis is actually a rather primitive, and not really self-serving reaction. German foreign policy uses the crisis to shove some long-term improvements down the throats of Greece, and to influence the long-term outcome (at the cost of being called out for disastrous short-term effects).

    There's a huge price, though; we're being played like a violin by the financial sector. We're the dog who gets wagged by his tail. So much about our 'power'.
    Said 'power' or 'greatness' is rather 'size' - a common misunderstanding in many other cases of 'power' or 'greatness' as well.

    What's really happening is that investors in the financial markets bought PIIGS public bonds and were promised a risk premium (higher than about 2% interest rate). In many cases, said investors were incompetent and did not understand that the risk premium was way too small. Well, their problem; but now they've got the additional problem that the risk might realize and they might indeed not get their money back.

    This was when a lucky set of circumstances created the terrible urge "to do something" about the crisis, for, you know, people dislike change. The idea of supporting the countries in peril was born, and much fear about 'contagion' was spread.
    As a result, said dumb investors were able to transfer much of their risks to European governments (the people of Europe); they socialised risk. Nobody's talking about socialising profit, of course.

    Merkozy were dumb enough to get caught in this vicious circle; the more they support Greece, the more is at stake. The sunk costs theory say that must not play a role, but they're politicians and the only cost that really counts to them is the loss of their office.
    Now they're adding one 'helping' measure after another and dig the hole deeper and deeper, delaying the collapse as much as they could (or at least till after their re-elections?). This means of course that more and more risk is being socialised.


    Now where exactly is the benefit of being 'powerful'?
    It certainly doesn't appear to be of much use if you're a fool.


    Accordingly, getting rid of foolish policy should attract much more attention, and only once this has succeeded anyone should care much about the difficult-to-define 'power' of a nation.

  2. #82
    Council Member Surferbeetle's Avatar
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    Default Growth Action Plan Needed ...

    So, how will Greece's only future, it's youth, be prepared to lead their country out of austerity?

    Will EU universities and apprentice programs open satellite offices in Greece, will small business startups be cultivated, or has the brain-drain officially begun? Or maybe, perhaps, future remittances will be enough and Greek politicians have not epically failed their country after all...

    Greek MPs pass austerity plan amid violent protests, 12 February 2012 Last updated at 18:40 ET, BBC

    Greece's parliament has passed a controversial package of austerity measures, demanded by the eurozone and IMF in return for a 130bn-euro ($170bn; £110bn) bailout to avoid default.

    Coalition parties expelled over 40 deputies for failing to back the bill.

    The vote came amid some of the worst violence seen in Greece in years.
    Euro Gains as Greece Approves Austerity Measures, by Candice Zachariahs and Kristine Aquino - Feb 12, 2012 4:11 PM MT, Bloomberg News

    The 17-nation currency rose against most major peers after at least 151 members of the chamber voted for the measure, according to a tally of votes. The dollar slid versus 12 of its 16 most-traded counterparts before data tomorrow forecast to show U.S. retail sales rose in January by the most in four months, damping demand for haven assets.
    Why Greece and Portugal ought to go bankrupt, By Wolfgang Münchau, Last updated: February 12, 2012 11:04 pm, Financial Times, www.ft.com

    Two years ago, most European policymakers still believed that Greece would pull through. They lacked experience in managing financial crises. They did not even consult with policymakers in other parts of the world who had dealt with crises in previous decades. Armed with ignorance and arrogance, they ended up repeating everyone else’s mistakes. They thought they were clever when they came up with the idea of an expansionary fiscal contraction. And they thought that a voluntary private sector involvement (PSI) could really help.

    Having failed to learn from the mistakes of others, some of them are now beginning to learn from their own. In some northern European capitals, policymakers are beginning to understand that the Greek programme has been an unmitigated failure. They have lost trust in Greek politics. As we enter year five of a depression, and the certainty that Greek gross domestic product will fall further under the influence of austerity, they are on the verge of giving up on Greece.
    Some say it would be better to force Greece out of the eurozone right now, and use the funds to save Portugal. I disagree. I personally believe it would be best to recognise the desolate state of both countries, let both default inside the monetary union, and then use a sufficiently increased rescue fund to help them to rebuild themselves, and to ringfence the rest at the same time.

    This will be very expensive. But to ignore reality for another two years will be ruinous.
    Greece - Cutting out the Middle Man, TUESDAY, 7 FEBRUARY 2012,

    It seems that central bankers and politicians are endlessly resourceful when it comes to innovating ways to profit themselves and bankers at everyone else's expense. Where I had thought Greek default inevitable just two weeks ago, I no longer think so today. It appears that Sarkozy, Merkel and the Troika have decided to prevent a default regardless of what Greek politicians or citizens may choose to do.

    The new plan is to take the EUR 130 billion that would have gone to Greece in the second bailout, and put it in an escrow account. The account may be labelled "Greek Government", but Greek politicians will not have any authority over the funds. The funds will be disbursed by a non-Greek overseer to pay holders of Greek debt. Official creditors will receive full payment. Private creditors will receive the new discounted rates agreed with the IIF for restructured debt. I am not sure what private creditors who reject the IIF proposal might receive, but it will not much matter as ISDA will find there is no credit event regardless.
    The can is kicked down the road for another quarter, and the bankers can pay themselves their 2011 bonuses.

    After all, innovation is the driving force of economic growth, and deserves to be generously remunerated.
    Junge Griechen-Elite verlässt ihr Land, 29.10.2011, 17:50 Uhr, Handelsblatt

    Je höher ein junger Grieche heute ausgebildet ist, desto stärker ist sein Drang, auszuwandern. Neun Prozent aller Uni-Absolventen verlassen ihr Land, sogar 51 Prozent der Promovierten. Doch sie gehen nicht gerne.
    Jeder Dritte landet von der Universität direkt in der Arbeitslosigkeit. Unter Akademikern hat sie sich seit 2007 verdoppelt. Insgesamt haben vier von zehn Griechen zwischen 15 bis 24 Jahren keinen Job. 2008, vor der Krise, waren es zwar auch schon 18,6 Prozent, aber seither hat sich diese Zahl mehr als verdoppelt. Griechenland bietet nicht nur eine turbulente Gegenwart, Griechenland bietet vor allem keine Zukunft.

    Unter den 25- bis 35-Jährigen haben 22 Prozent keine Arbeit, nach offiziellen Statistiken. Damit verspielt das Krisen-Land eine wichtige Ressource: Etwa ein Zehntel der Bevölkerung (1,1 Millionen Menschen) sind jünger als 25 Jahre, weitere 1,5 Millionen sind zwischen 25 und 34 Jahre alt. Das sind die Zahlen, die Eleftheria und Sofia im Hinterkopf haben, während sie in den Räumen des Goethe-Instituts deutsche Vokabeln lernen. Die beiden jungen Frauen sind wie viele Griechen, sie lieben ihr Land. Und dennoch sehen sie keine Alternative zur Auswanderung.
    Griechische Industrieproduktion mit -11,3% im Dezember, Querschuss am 9. Februar 2012 in Allgemein

    Eigentlich unfassbar, welch miese Wirtschaftdaten geboten werden und wie oft man sie noch darstellen muss, um der simplen seit 2 Jahren hier dokumentierten Erkenntnis zum Durchbruch zu verhelfen, dass die Maßnahmen der Troika (EU, EZB und IWF) völlig kontraproduktiv sind und zu einer beispiellosen Depression in Griechenland führen. Das griechische Statistikamt ELSTAT berichtete heute für Dezember 2011 einen Einbruch des unbereinigten Outputs der breit gefassten Industrieproduktion von -11,3% zum Vorjahresmonat. Besonders brisant, gerade das vergleichsweise stark unterentwickelte Verarbeitende Gewerbe in Griechenland, brach selbst zum schwachen Niveau des Vorjahresmonats um weitere -15,5% ein. Die organisierte Desasterzone “feiert” zum Schaden Aller in der Eurozone Urstände, insbesondere zum Schaden der griechischen Bevölkerung.
    Sapere Aude

  3. #83
    Council Member Surferbeetle's Avatar
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    Default Socialization of financial losses...

    Greece has a 14.5 billion Euro bond redemption scheduled for 20 March, 2012. Gavyn Davies, in today's FT (Eurozone’s reluctant take-over bid for Greece, February 17, 2012 1:43 pm), estimates that Greece's ~353 billion euro debt results in a debt to GDP ratio of 163 percent, (with no end in sight).

    A breakout of Greece's economy, by wikipedia, can be found here

    Public Debt Bulletins from the Greek Ministry of Finance can be found here. The latest posted, as of today 17 Feb 2012, is for Dec 2011.

    Wikipedia:
    Socialization (or socialisation) is a term used by sociologists, social psychologists, anthropologists, political scientists and educationalists to refer to the process of inheriting and disseminating norms, customs and ideologies.
    The Doom Loop, by Andrew Haldane, Vol. 34 No. 4 · 23 February 2012, pages 21-22 | 3181 words, London Review of Books

    In the first half of the 19th century, the business of banking was simple. The UK had around five hundred banks and seven hundred building societies. Most of the former operated as unlimited liability partnerships: the owners-cum-managers backed the banks’ losses with every last penny of their own personal wealth. The building societies operated as mutually owned co-operatives, with ownership, control and liability all pooled. Financial sector assets amounted to less than 50 per cent of annual UK GDP.
    At first, limited liability status was not taken up enthusiastically by banks: they were reluctant to give up unlimited liability, which they regarded as a badge of prudence. But the collapse of the City of Glasgow bank in 1878, caused by speculative lending and false accounting practices, ended that. Eighty per cent of the bank’s shareholders were made destitute. The opinions of bankers, Parliament and public alike shifted quickly. By 1889, only two unlimited liability British banks remained.
    What impact did these changes have on banks’ incentive to take risks? The answer was provided in 1974, around a hundred years after the introduction of limited liability, by the Nobel Prize-winning economist Robert Merton, who showed that the equity of a limited liability company could be valued as if it were a financial option – that is, an instrument which offers rights over the future fruits of the company’s assets. This option has value – in the jargon, it is ‘in the money’ – provided a firm’s assets cover its debts. But the most extraordinary implication of Merton’s framework is that the value of those options can be enhanced by increases in the degree of uncertainty about the value of the bank’s assets. How so? Because while uncertainty increases both upside and downside risks, downside risks are capped by limited liability. For shareholders, the sky is the limit but the floor is always just beneath their feet. To maximise shareholder value, therefore, banks need simply to seek bigger and riskier bets.
    Finance has a further trick up its sleeve, a trick that at a stroke boosts both volatility and returns to the owners of a bank. Leverage, simply put, is borrowing against your capital stake. For example, if borrowing allows a bank to hold assets of 120 against capital of ten, then its leverage is 12. The beauty of leverage is that it effortlessly multiplies the amount shareholders receive as a return on their assets. Consider a bank that makes a 1 per cent return on its assets. By allowing leverage (assets relative to equity) of two, shareholders can double their money; with leverage of four, they can quadruple their money. And so on. Banks have been using this device for well over a century. As unlimited liability was phased out, leverage among banks rose from about three or four in the middle of the 19th century to about five or six at its close. Leverage continued its upward march when extended liability was removed, and by the end of the 20th century it was higher than twenty. In 2007, at its high-water mark, bank leverage hit thirty or more.
    Consider the effects of the too-big-to-fail problem on risk-taking incentives. If banks know they will be bailed out, those holding their debt will be less likely to price the risk of failure for themselves. Debtor discipline will therefore be weakest among those institutions where society would wish it to be strongest. This encourages them to grow larger still: the leverage cycle isn’t merely repeated, but amplified. The doom loop grows larger. The biggest banks effectively benefit from a disguised, and growing, state subsidy. By my estimate, for UK banks this subsidy amounts to tens of billions of pounds per year and has often stretched to hundreds of billions. Few UK government spending departments have budgets this big. For the global banks, the subsidy can reach a trillion dollars – about eight times the annual global development budget.
    Andy Haldane, Executive Director, Financial Stability, Bank of England

    Andy Haldane is Executive Director for Financial Stability. Andy has responsibility for developing Bank policy on financial stability issues and the management of the Financial Stability Area. He is a member of the newly established Financial Policy Committee as well as several senior management committees of the Bank. He is also a member of the Basel Committee.

    Andy joined the Bank in 1989. In previous roles he has headed the Bank's work on risk assessment, market infrastructure and on international finance. Prior to that he worked on various issues regarding monetary policy strategy, inflation targeting and central bank independence.

    Andy has written extensively on domestic and international monetary and financial stability, authoring around 100 articles and three books. He is the co-founder of a charity 'Pro Bono Economics', which aims to broker economists into projects in the charitable sector.
    Hat Tip to the blog, Jesse's Café Américain

    Today [17 February, 2012] was an option expiration.

    There was an interesting divergence between the financials and big tech.

    Monday the US markets will be closed. Another Greek drama may be in the offing.
    Feb. 23 Comex March silver options expiry
    Feb. 23 Comex March copper options expiry
    Feb. 24 Nymex February platinum futures last trading day
    Feb. 24 Nymex February palladium futures last trading day
    Feb. 27 Comex February gold futures last trading day
    Feb. 27 Comex February copper futures last trading day
    Feb. 27 Comex February E-micro gold futures last trading day
    Feb. 27 Comex March E-mini copper futures last trading day
    Feb. 27 Comex March miNY silver futures last trading day
    Feb. 29 Nymex March palladium futures first notice day
    Feb. 29 Comex March silver futures first notice day
    Feb. 29 Comex March copper futures first notice day
    March 16 Nymex April platinum options expiry
    March 20 Nymex April platinum futures first notice day
    March 27 Comex April gold options expiry
    March 27 Comex April copper options expiry
    March 28 Comex April miNY gold futures last trading
    March 28 Comex March silver futures last trading day
    March 28 Comex March copper futures last trading day
    March 28 Comex April E-mini copper futures last trading day
    March 28 Nymex March palladium futures last trading day
    March 29 Comex April E-mini gold futures last trading day
    March 30 Comex April gold futures first notice day
    March 30 Comex April copper futures first notice day
    Sapere Aude

  4. #84
    Council Member Firn's Avatar
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    I think I already pointed out the influence of lax regulations, little oversight and high leverages in making monetary policy less effective then in the past. A hefty drop in leverage in times of crisis requires thus a relative higher effort in quantity and quality of the monetary policy, supported by a big fiscal one if the risk is high.

    As usual few see a problem with the system as long it is working even if akin to a car running at ever higher speed on a dangerous road. And if experience is a guide most person will buy stocks when the car accelerates its high speed even further and more aggressively. And for the time being most are quite happy.

  5. #85
    Council Member Surferbeetle's Avatar
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    Default Yin and yang...

    Firn,

    The market is harshly beautiful and in many ways it mirrors nature which is 'red in tooth and claw'; however, i suspect that there is a reason why our brains combine both 'mammalian and shark brains'....

    "When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle."

    Edmund Burke
    Edmund Burke PC (12 January [NS] 1729[1]– 9 July 1797) was an Irish[2][3] statesman, author, orator, political theorist and philosopher who, after moving to England, served for many years in the House of Commons of Great Britain as a member of the Whig party.

    He is mainly remembered for his support of the cause of the American Revolutionaries, and for his later opposition to the French Revolution. The latter led to his becoming the leading figure within the conservative faction of the Whig party, which he dubbed the "Old Whigs", in opposition to the pro–French Revolution "New Whigs", led by Charles James Fox.[4]

    Burke was praised by both conservatives and liberals in the 19th century. Since the 20th century, he has generally been viewed as the philosophical founder of modern Conservatism,[5][6] as well as a representative of classical liberalism.[7]
    MF Global Reveals You Are a Bank Counter-Party, Author: Barry Ritholtz · February 15th, 2012, Economonitor

    And therein lay the dirty little secret of modern banking: THERE IS NO SUCH THING AS A SEGREGATED ACCOUNT. It is simply a helpful way to think about money and banking; it does not exist in the real world.

    Consider your basic bank account — checking, savings, passbook, etc. We go through massive contortions to create an illusion that your money is yours, that its safe and sound in a bank with your name on it, in your own virtual safe deposit box. But that is simply not the reality of modern banking. What you perceive as “your money” is little more than an electronic journal on the banks accounting ledgers.

    Fractional reserve banking means that the $100 you deposit is lent out — only $10 of your $100 is kept in reserve. Under normal circumstances, with thousands of depositors and millions of dollars, the banks have no trouble giving customers who ask for their money back the full amount at anytime. But it is not as if your money is sitting in an account waiting for you — you merely have a claim on those monies, and that claim is insured by the FDIC, and backed by taxpayers (theoretically).

    You are, in fact, a counter-party to your bank.
    The risks and rewards are to use a big word “asymmetric.” Hit a home run as a trader or banker, collect a huge bonus. Lose it all and then some, and the taxpayer is on the hook. Anyone who fails to see the simple math of this either spends their days shilling for banks or are acting as CEO mouthpieces.
    Sarkozy Says France Will Impose Transaction Tax in August, by Helene Fouquet and Mark Deen - Jan 30, 2012 8:01 AM MT, Bloomberg news

    France plans to unilaterally impose a 0.1 percent tax on financial transactions starting in August, President Nicolas Sarkozy said, brushing aside opposition from the nation’s banks.

    “What we want to do is provoke a shock, to set an example,” Sarkozy said late yesterday on French television from Paris. “There’s no reason why deregulated finance, which brought us to the current situation, can’t participate in the restoration of our accounts.”

    A France-only levy is opposed by the country’s financial community and its feasibility has been questioned by the Bank of France. It has become a political challenge for the president, who faces elections in a two-round vote in April and May and wants to make good on a pledge he made to impose such a tax when France last year held the presidency of both the G-8 and G-20 group of countries.
    The tax will apply to share purchases, including high frequency trading, and CDS transactions. Unlike the European Commission proposal, it will not apply to bond trading.
    Vickers report: banks get until 2019 to ringfence high street operations, Jill Treanor, Monday 12 September 2011 02.44 EDT, The Guardian

    Britain's biggest banks are to be given until 2019 – longer than had been expected – to implement radical reform of their operations to prevent another taxpayer bailout of the system.

    The Independent Commission on Banking – issuing its report almost three years to the day after the collapse of Lehman Brothers which led to the major 2008 bank bailouts – said that banks should ringfence their high street banking businesses from their "casino" investment banking arms.

    The much anticipated final report by Sir John Vickers admitted its proposed reforms would cost between £4bn and £7bn but were more practical and less expensive than the full-scale separation of the kind that business secretary Vince Cable had called for in opposition.

    The ICB conceded that its reforms were "deliberately composed of moderate elements" but insisted "the reform package is far-reaching".
    Sir John Vickers, bio by wikipedia

    Sir John was educated at Eastbourne Grammar School and Oriel College, Oxford, culminating in his graduating with a DPhil from Oxford.
    After a period working in the oil industry, he taught economics at Oxford University and was Drummond Professor of Political Economy from 1991 to 2008. His academic posts have also included the London Business School, the Woodrow Wilson School at Princeton University and the Kennedy School of Government at Harvard University. He was President of the Institute for Fiscal Studies, 2003–2007, and of the Royal Economic Society, 2007–10.

    From 1998–2000 he was Chief Economist at the Bank of England and a member of the Monetary Policy Committee. From 2000–05 he was Director General/Chairman of the Office of Fair Trading. He was knighted in 2005.
    Foreign critics should not worry about ‘my’ rule, By Paul Volcker, February 13, 2012 6:25 pm, Financial Times, www.ft.com

    Let’s get serious.

    National regulatory (and at least as important, accounting and auditing) authorities should, to the extent that it is practical, seek common understanding and common approaches. In the past, I participated in that process, helping to initiate the effort to achieve common capital standards for banks. I am today encouraged by efforts under way by the US, British and other authorities to reach the needed degree of consensus with respect to resolution authority – in plain English how practically to end the “too big to fail” syndrome. This is really complex. The major banks are international and managing their orderly merger or liquidation will necessarily involve co-operation among jurisdictions. That is a key challenge, arguably the most important one for banking reform. It needs to be dealt with.

    Meanwhile, let us not be swayed by the smokescreen of lobbyists dedicated to protecting the interests of some highly compensated traders and their risk-prone banks.
    Paul Volcker, bio by wikipedia

    Paul Adolph Volcker, Jr.[1] (born September 5, 1927) is an American economist. He was the Chairman of the Federal Reserve under United States Presidents Jimmy Carter and Ronald Reagan from August 1979 to August 1987. He is widely credited with ending the high levels of inflation seen in the United States in the 1970s and early 1980s. He was the Chairman of the Economic Recovery Advisory Board under President Barack Obama from February 2009[2] until January 2011.[3]
    Sapere Aude

  6. #86
    Council Member Surferbeetle's Avatar
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    Iran 'halts oil sales to France and Britain', 19 February 2012 Last updated at 10:08 ET, BBC News

    Iran has halted oil sales to British and French companies, the nation's oil ministry has said.

    A spokesman was reported as saying on the ministry's website that Iran would "sell our oil to new customers".

    European Union member states had earlier agreed to stop importing Iranian crude from 1 July.
    The French news agency AFP says the decision is not expected to have a big impact. Last year France bought only 3% of its oil - 58,000 barrels per day (b/d) - from Iran and the UK imported even less Iranian oil. A UK government official told the BBC there would be "no impact on UK energy security".
    Téhéran stoppe ses ventes de pétrole à la France et au Royaume-Uni, DERNIÈRE MODIFICATION : 19/02/2012 - FRANCE - IRAN - PÉTROLE - ROYAUME-UNI, France 24

    L'Iran a interrompu ses livraisons de brut aux compagnies françaises et britanniques, a annoncé le ministère iranien du Pétrole. Téhéran entend ainsi répondre à l'embargo graduel sur le pétrole iranien décidé par l'Union européenne.
    Il vend un peu plus de 20% de son pétrole aux pays de l'Union européenne (soit environ 600.000 barils/jour), essentiellement à l'Italie, à l'Espagne et à la Grèce. Téhéran exporte 70% de son pétrole vers les pays d'Asie.

    La France, pour sa part, importait en 2011 quelque 58.000 barils/jour de brut iranien, ce qui couvre 3% de ses besoins d'or noir.
    Cientos de miles de personas protestan en toda España contra la reforma laboral, EL PAÍS / AGENCIAS Madrid 19 FEB 2012 - 14:15 CET

    El Gobierno de Mariano Rajoy y los sindicatos han tenido en las calles el primer termómetro del sentir ciudadano ante la reforma laboral. Cientos de miles de personas han acudido a las 57 manifestaciones convocadas en toda España por CC OO y UGT, que habían llamado a convertir las calles en un clamor ante lo que consideran una involución de los derechos de los trabajadores al dictado de la patronal. La respuesta ciudadana también servirá para medir la conveniencia de convocar una huelga general.
    A la espera de datos oficiales de participación en todo el país, los sindicatos han calculado en 500.000 los asistentes a la marcha de Madrid, en 450.000 los de Barcelona, en 80.000 los de Valencia, en 35.000 los de Alicante, en 50.000 los de Gijón y en 70.000 en Zaragoza. Como es habitual, se ha desatado una nueva guerra de cifras, ya que la policía nacional rebaja a 50.000 los asistentes en Madrid, a 22.000 los manifestantes en Alicante y a solo 25.000 los de Valencia, aunque aún no son cifras oficiales, mientras que el Departamento de Interior ha cifrado en solo 30.000 los manifestantes en la Ciudad Condal. En Andalucía, los sindicatos elevan a 100.000 las personas que han salido en toda la comunidad, la mitad de ellas en la capital y 30.000 en Málaga, aunque la policía local de Sevilla reduce los asistentes a 5.000, informa Javier Martín-Arroyo.
    Cientos de miles de personas protestan contra la reforma laboral en 57 ciudades españolas, 20MINUTOS.ES / AGENCIAS / VÍDEO: ATLAS. 19.02.2012 - 12.52h

    En Barcelona, 400.000 personas, según los sindicatos y 30.000 según el departamento de Interior de la Generalitat, han abarrotado el Paseo de Gràcia. Muchos de los manifestantes han coincidido en que el Gobierno ha recortado derechos de los trabajadores con esta reforma: "Seguramente me veré afectada por ello", dice una asistente a la marcha en declaraciones a RNE.

    La manifestación ha comenzado en el Paseo de Gràcia en la confluencia con la avenida Diagonal y ha finalizado en el cruce del paseo barcelonés con la Gran Vía, donde se ha dado lectura a un manifiesto conjunto de los dos sindicatos contra la reforma.
    el Paseo de Gràcia

    Passeig de Gràcia was from the beginning designed to be Barcelona's Grand Avenue. It is Barcelona's most elegant avenue and one of the best architectural walks in the city with lots of Modernist buildings (la Casa Batlló, La Casa Milà...). The quality and quantity of modernist buildings is unrivalled.

    It's origins can be traced back to Roman times when it was a path that linked to the Via Augusta. In medieval times the city's door to this road was the Portal dels Orbs (blind people's gate), today the Portal del Angel pedestrian shopping area.
    Sapere Aude

  7. #87
    Council Member Surferbeetle's Avatar
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    Reading music...Coldplay, Don't Let it Break Your Heart, YouTube for that 'sensitive' Russian

    Putin stands at political crossroads, by Catherine Belton in Moscow, February 19, 2012 4:26 pm, Financial Times, www.ft.com

    Diminishing approval ratings present Mr Putin with a dilemma he has never faced before. Broad public support had always been the source of his political authority. How Russia’s prime minister responds to the protests as he seeks to return as president in elections next month – which he is still certain to win – will determine which direction he steers the country, and even how long he is able to hold on to power.

    “Putin has little choice but to make concessions, otherwise he will not be able to rule,” said Mikhail Dmitriev, head of the government-connected Centre for Strategic Research. “This is a serious change when people in his team are losing authority and they will have to compromise to stay in power.”
    Liberal-minded elements of the Russian elite are seeking to persuade Mr Putin to loosen the reins so he can survive in power and lead a gradual evolution of the regime. Alexei Kudrin, a former finance minister and close friend of the premier, has led calls for parliamentary elections in 18 months – a nod to opposition demands after December’s alleged vote-rigging.
    But Mr Putin will have to weigh the risks. A parliament no longer dominated by United Russia could launch an inquiry, for instance, into Mr Putin’s friends who have become billionaires under his rule.
    “He always compares the situation with the 1990s; this is hard-wired into his head,” said Gleb Pavlovsky, a former Kremlin political consultant who recently met Mr Putin. “This forces him to oversimplify the picture into one where he must prevail against the ambitions of oligarchs and foreign powers to create anarchy, when this is really not the case.”
    “The public attitude [is] shifting independently of what Putin does and says,” said Mr Dmitriev. “The system he epitomises personally … has been outgrown by Russian society.”

    “Putin will disappear,” says Sergey Aleksashenko, a former deputy central banker. “The water is already moving under the ice and there is no way of stopping it. We can only discuss how long this might take.”
    Russia, Country Analysis Brief, US Energy Information Administration

    • Russia holds the world's largest natural gas reserves, the second largest coal reserves, and the eighth largest crude oil reserves.

    • Russia was the largest producer of crude oil in 2009, surpassing Saudi Arabia.
    Sapere Aude

  8. #88
    Council Member Firn's Avatar
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    From the Guardian: To save itself, Greece must realise that its crisis is the result of three decades of incompetence and corruption

    What makes ignorance particularly frustrating in this case is that the facts are at our fingertips. Let me give you one: although 750,000 people (15% of our workforce) have lost their jobs since the crisis began, not a single one is from the wider public sector, which employs one out of four Greeks.

    The story behind this figure tells us all we need to know. First: what we call a crisis is the result of actions performed over decades. Second: its creator is an ineffective, incompetent and corrupt political establishment, which transformed politics into a mechanism for exchanging favours with votes, most of the former having the effect of making the state more ineffective and costly. Third: the critical point came when this mechanism became so ineffective and costly that it brought down the rest of the economy. Of course, the international financial situation, banks, speculators, crooks, etc played their part in making things worse. But they couldn't have done so if Greek politicians had not destroyed, over 30 years, the heart of our economy.
    This is close to my personal viewpoint. In an ideal world the Greek government would have appreciated the gravity of the situation at the very least 2 years ago and made deep and broad reforms while avoiding to starve the economy. Sadly the real world is a mess and the inertia of the aweful bureaucracy has kept the Greek ship running towards the cliffs.


    I have to confess that I might be biased towards Monti, but for me and others, who had to witness for so many years a certain presidente del consiglio treating the state as his private property and personal bordello the change could hardly be bigger.

    Monti : «Entro marzo riforma del mercato del lavoro con o senza accordo dei sindacati»

    Apart from a much needed reform of the labour market the government wants to ease the tax burden on low incomes and step up the efforts to reduced the heavy tax evasion.

    Vivir troikado

    Lo denominan “vivir troikados”, con un neologismo que no necesita traducción. En una sintomática encuesta reciente diseñada para encontrar la palabra del año en Portugal 2012, “troika” figuró en tercera posición, después de “austeridad” y “esperanza”. Passos Coelho está convencido de que Portugal debe plegarse milimétricamente a las exigencias de la troika (“cueste lo que cueste, y cuesta mucho”, es una de sus frases) a fin de demostrar a sus socios (y acreedores) que Portugal no es Grecia, y que si algo falla (y, paradójicamente, por el contagio griego, todo puede que falle) no habrá sido por los portugueses, sino por las circunstancias. De ahí ese empeño en arrogarse, hasta el final, el papel de alumno obediente.
    Greece really seems to have a ripple effect on the whole Eurozone, most of it bad but some don't seem to waste the crisis and have moved into the right direction. Of course, as the article states, it the hard hits come at a bad time. More action by the ECB is needed and possibly efforts by the stronger countries to stimulate their economies, which however runs against the current political will.

    On a sidenote the fact that politicians like Coelho uses the troika as some sort of dictator is unfortunate for the European cause but sadly understandable.

    Last but not least: The famous conversation

  9. #89
    Council Member Surferbeetle's Avatar
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    Firn,

    Thanks for the links.

    Signore Monti (Bocconi University) seems to have a number of fans, to include Edward Hugh (LSE).

    For Whom The Bailout Tolls, Posted on February 21, 2012 by Edward Hugh, A Fistful of Euros

    And then there is growth. Ah yes, growth. Noone really has any idea how this will be achieved, and of course without it even the (un)ambitious 120% goal is way out of reach. But beyond the details, I have serious doubts whether Greece itself is now rescuable. I don’t mean the financial dimension, I mean whether or not the country will even raise its head again. The social fabric and the country’s reputation is being so destroyed, that it is hard to see serious investors getting back into the country again, with or without that much needed internal devaluation. At the end of the day the Greek bailout is not for the Greeks at all. Certainly they will see very little of the money, and there will be none whatsoever to help restart their withering economy.The Greek bailout is to protect the rest. It is a vain attempt to let Greece go its course (or even die) while preventing the contagious smell from reaching Spain or Italy. The only real creditors now are the official sector. This is not a bailout, it is a “cordon sanitaire”.
    The Details

    Greece has agreed to be placed under permanent surveillance by an increased European presence on the ground, and it will have to deposit funds in an escrow account to service its debt to guarantee repayments. effectively this will rule out future defaults against the private sector. This is why Europe’s leaders think this agreement will end contagion, there will be nothing to “contage”. But the problem simply becomes worse, since any default now will be against the official sector, and they are not nice, friendly people to default on.

    The European Central Bank agreed to help the process by distributing its profits from bond-buying. A Eurogroup statement said the ECB would pass up profits it made from buying Greek bonds over the past two years to national central banks for their governments to pass on to Athens “to further improve the sustainability of Greece’s public debt.” The bond holdings of the ECB and national central banks from their investment portfolios (about 12 billion Euros) and the Security Markets Programme (around 40-45 billion Euros) are to be swapped for instruments that appear to be exempt from any future Collective Action Clauses. They will be repaid at face value, albeit with an understanding that the profits accruing from this repayment plus coupon payments will be transferred to governments via the various National Central Banks. This money can then be passed to Greece in the form of a transfer. The importance of this arrangement is that it reinforces the subordination of private sector bond holders to central bank buying. Moreover, it is not clear that there is any obligation for the national governments to give these income flows from Greek restructuring back to Greece, and if this proves to be the case this outcome would simply amplify the subordination of private investors.

    Private bondholders are being asked to accept more losses than originally postulated. Private sector holders of Greek debt will take losses of 53.5 percent on the nominal value of their bonds. They had previously agreed to a 50 percent nominal writedown, which equated to around a 70 percent loss on the net present value of the debt. This being said, all is still far from clear. The IMF document detailing the underlying economic assumptions for Greece assumes a 95% participation rate in the PSI. This outcome seems unlikely, especially in light of the increased haircut for private investors in the new deal, which was implemented in order to reduce Greek debt/GDP to the targeted 120% by 2020 from the 129% it would reach according to earlier PSI assumptions. What this implies is that those dreaded Collective Action Clauses may still be needed sometime early next month to ensure no hold-outs, and if this happens it is quite possible that CDS will trigger. So we are not out of the woods yet, it seems.

    The latest IMF document reaffirms its view that Greece is unlikely to be able to access the market in its own name during the programme period until at least 2020, “and it is assumed that financing needs are met by Greece’s European partners on standard EFSF borrowing terms”, if good policies are maintained. One problem the IMF mentions here is important, and that is the fact that future debt issuance would be subordinated to the currently being restructured pool of debt. This would obviously make it hard to sell bonds to new investors even in the most favourable of circumstances.

    As if this wasn’t enough in the way of headaches, the latest IMF document also suggests that Greece is likely to need additional funding well before 2020. The Fund outlines two scenarios: a “base” case whereby Greece may need an additional 50 billion Euros during the period 2015-20 given that the new 136 billion Euro support package will only meet Greece’s funding needs until 2014. They also cite a more bearish case involving slower-than-targeted growth and fiscal consolidation, whereby debt/GDP only declines to 160% by 2020 rather than the targeted 120%, in which case Greece would require a further 109 billion. Hence far from having put Greece off the EU radar, the new debt deal only marks the end of the beginning, and we still need to get through to the beginning of the end.

    In terms of timescale, the private creditor bond exchange is expected to be launched on March 8 and complete three days later, according to Greek sources. That means a 14.5-billion-euro bond repayment due on March 20 would be restructured, allowing Greece to avoid default.
    But as Sushil Wadhwani suggests, rather than overcoming contagion, what the agreement does is give a whole new twist to the issue. In particular, the general impression that has been generated is that Germany’s leadership will now make almost any concession in order not to have to look for the Euro exit door, and the others, starting with the highly intelligent Mario Monti, are beginning to sense this. Even Spain’s Mariano Rajoy has caught-on, and seen he can negotiate a relaxed deficit target for 2011, despite the fact that the country missed last year’s target by a large margin. So we may well now see a chain of events were one country after another sets out to test the patience of the “core”. And in addition (see below), even the Greek contagion problem is a long way from being over.
    Sapere Aude

  10. #90
    Council Member Surferbeetle's Avatar
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    Default "What’s past is prologue"

    James Edward Miller: Greece and the EU Face Their Walt Kelly Moment, Posted by Ellen on 10 November 2011, 11:02 am, UNC Press Blog

    Among the peoples attracted into the orbit of Europe during the era of Enlightenment and industrialization, Greece proved a particularly quick study. Created in 1829-33, the Greek kingdom speedily acquired a European constitution, universal suffrage, and a set of national ideas that focused on territorial expansion at the expense of its Balkan and Ottoman neighbors. Economic expansion, efficient public administration, education reforms, infrastructural development, and even military professionalization played second fiddle to “redeeming Greek” lands and people. Greece ran up. However, Greek ambitions ran contrary to the calculations of the European great powers. “Europe” repeatedly intervened to throttle Greek designs. Greece grew fitfully through concessions made to the Greeks after the powers had arranged their own interests. Greece’s large, unpaid external debts to European banks led the powers to impose an oversight board to regulate its finances in 1893.

    A legacy of military defeat and repeated European encroachment on Greek sovereignty were at the core of the 1909 Goudi military revolt. The military summoned Eleftherios Venizelos to initiate long overdue internal reforms and give the country an independent foreign policy. In the wake of World War I, seeking to create a nation of “two continents and five seas,” Greece conducted a war in Asia Minor against Turkish nationalists, throwing its army into an expanding conflict without clear military objectives. “Europe” turned on Greece. The Italians and French backed Turkey, and Britain withdrew its support for Athens.

    In 1922, Greece lost its army and its war. Victorious Turkey expelled over a million Asia Minor Greeks, retook Constantinople, and reasserted its territorial claims to Eastern Thrace. Defeated, impoverished, divided, Greece plunged into an era of military coups, economic stagnation, the authoritarian dictatorship of John Metaxas, and a crushing German occupation. Civil war ensued from 1943 to 1949. The United States poured money and know-how into Greece, defeating a Communist-dominated insurrection and bringing Greece into Western institutions. In 1961, Greece applied to membership in the European Economic Community (EEC).
    The United States and the Making of Modern Greece History and Power, 1950-1974, By James Edward Miller

    Focusing on one of the most dramatic and controversial periods in modern Greek history and in the history of the Cold War, James Edward Miller provides the first study to employ a wide range of international archives--American, Greek, English, and French--together with foreign language publications to shed light on the role the United States played in Greece between the termination of its civil war in 1949 and Turkey's 1974 invasion of Cyprus.

    Miller demonstrates how U.S. officials sought, over a period of twenty-five years, to cultivate Greece as a strategic Cold War ally in order to check the spread of Soviet influence. The United States supported Greece's government through large-scale military aid, major investment of capital, and intermittent efforts to reform the political system. Miller examines the ways in which American and Greek officials cooperated in--and struggled over--the political future and the modernization of the country. Throughout, he evaluates the actions of the key figures involved, from George Papandreou and his son Andreas, to King Constantine, and from John Foster Dulles and Dwight D. Eisenhower to Richard Nixon and Henry Kissinger.

    Miller's engaging study offers a nuanced and well-balanced assessment of events that still influence Mediterranean politics today.
    James Edward Miller is adjunct professor in the School of Foreign Service at Georgetown University and chair of Western European Studies at the Foreign Service Institute.
    Marshalling capital for euro periphery, February 24, 2012 7:30 pm, Financial Times, www.ft.com

    Greeks scrambling to do the homework demanded from them by Berlin and the rest of the eurozone are being given an encouragement of sorts. It takes the form of calls by the Federation of German Industries and the European Investment Bank for a “Marshall plan” to restart economic growth in Greece. The term is a misnomer and the proposal unlikely to see the light of day. But the idea is right.

    For Greece in particular and the eurozone in general, the solution to the debt crisis has been cast as public sector austerity and structural reform. While the latter is essential and should produce long-term growth, the need to buoy up demand through the adjustment has been all but ignored. In return for deficit country reforms, surplus country governments should have boosted spending. Since this seems ruled out, only the core countries’ private sectors can save the eurozone from adjusting through stagnation rather than growth.
    Die griechische Regierung startet den Schulden-Umbau, 25.02.2012, 10:19 Uhr, aktualisiert 10:44 Uhr, Handelsblatt

    AthenMehr als 160 deutsche Finanzbeamte stehen nach Informationen der „Wirtschaftswoche“ bereit, Griechenland beim Aufbau einer modernen Finanzverwaltung zu helfen. Für die Aufbauhelfer seien englische Sprachkenntnisse Voraussetzung, ein Dutzend spreche auch Griechisch, sagte Staatssekretär Hans Bernhard Beus aus dem Bundesfinanzministerium der „Wirtschaftswoche“. Besonders viele Freiwillige kommen demBericht zufolge aus Nordrhein-Westfalen.

    „Wir sollten bei der Hilfe für Griechenland auch die Möglichkeit der Reaktivierung deutscher Steuerbeamter im Ruhestand in Erwägung ziehen“, empfahl der hessische Finanzminister Thomas Schäfer (CDU) in der „Wirtschaftswoche“. So könnten „große praktische Erfahrungen mobilisiert werden“.
    Das Programm läuft bis 2042. Die neuen Anleihen sollen bis 2015 einen Zinssatz von 2 Prozent haben. Danach soll der Zinssatz stufenweise steigen - bis 2020 auf 3,0 Prozent, 2021 3,65 und danach 4,3 Prozent. Verzicht und veränderte Konditionen summieren sich nach Berechnungen von Experten auf einen Verlust von mehr als 70 Prozent des Nominalwerts der Anleihen. Das Angebot sieht vor, dass die privaten Gläubiger auch zum Forderungsverzicht gezwungen werden könnten, falls die Beteiligung am freiwilligen Schuldenschnitt zu niedrig ausfallen sollte. Der Schuldenschnitt betrifft ausstehende Anleihen mit einem Gesamtvolumen von 206 Milliarden Euro. Die griechische Schuldenlast soll durch den Gläubigerverzicht um 107 Milliarden Euro schrumpfen.
    La Grèce lance officiellement son offre d'échange de dette pour les porteurs privés, LEMONDE.FR avec Reuters | 24.02.12 | 21h20 • Mis à jour le 24.02.12 | 21h20

    La Grèce a officiellement lancé, vendredi 24 février, son offre d'échange de dette pour les porteurs privés d'obligations dans le cadre du deuxième plan de sauvetage de 130 milliards d'euros qui lui a été consenti. Un communiqué du ministère des finances grec confirme les modalités de cet échange telles qu'elles ont été présentées cette semaine.

    Cette procédure a été finalisée après des mois de négociations tortueuses entre Athènes et ses créanciers, compliquées par les exigences sévères posées par les partenaires européens de la Grèce, la présence de hedge funds jouant la montre afin que le pays fasse défaut et qu'ils puissent encaisser les CDS sur les obligations grecques et celle de la Banque centrale européenne.

    Cet échange de dette doit permettre à la république hellénique de réduire son endettement public de 100 milliards d'euros sur un total qui dépasse 350 milliards. Les banques, les assureurs et d'autres investisseurs détiennent un total de 206 milliards d'euros d'obligations grecques qui subiront une décote faciale de 53,5 % avec une perte réelle entre 73 % et 74 %.

    Selon les termes de l'accord, les investisseurs empocheront des obligations assorties de maturités allongées d'une valeur représentant 31,5 % des titres qu'ils détiennent ainsi que des obligations à court terme émises par le Fonds européen de stabilité financière représentant 15 % de la valeur des anciennes dettes. Les nouvelles obligations serviront un coupon moyen de 3,65 % et seront régies par la législation britannique.
    Last edited by Surferbeetle; 02-25-2012 at 12:02 PM.
    Sapere Aude

  11. #91
    Council Member Firn's Avatar
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    Quote Originally Posted by Surferbeetle View Post


    La Grèce lance officiellement son offre d'échange de dette pour les porteurs privés, LEMONDE.FR avec Reuters | 24.02.12 | 21h20 • Mis à jour le 24.02.12 | 21h20
    So the Greek bonds I purchased seem to be make a good nominal gain but will lock in the capital at low rates for quite some time. With an average inflation rate smaller then 3% over the next 30 years the investment should not suffer a loss of value, if there will be such an agreement and if Greece will be able to pay back....

    Anyway a proper reform of the tax collection system should a pillar of the Greek reforms, however I don't think that Germany will get much love for helping the Greeks to do so.

  12. #92
    Council Member Fuchs's Avatar
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    You should factor in opportunity costs in an investment.

  13. #93
    Council Member Surferbeetle's Avatar
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    Firn,

    Good to hear that you are still standing.

    Consistently assessing risk properly and reaping the appropriate rewards or paying the appropriate penalties is not an easy business. Investors/clients have very definite expectations; at the end of the day however, it is Capitalism (Mr. Market) that’s powering much of the 7 billion or so of us who are happily consuming food, water, electricity, security, and other ‘public goods’ each and every day.

    Fuchs,

    If it matters, I use long-term dollar cost averaging into well-diversified, low cost, index funds (equities and bonds) for all my heavy investment lifting. IMHO it reduces risk and increases the chances of a ‘reasonable’ return. As economist would you agree or recommend something else?

    For enjoyment I ‘playing/modeling/trading' with equities, however, as a former bill collector for a large international bank (in my pre-degrees days), i am 'religious' about my resultant profits and losses.

    Bonds, although they appear simple, are arguably a different level of complexity.

    Bill Gross bio by Wikipedia

    Gross graduated from Duke University in 1966 with a degree in psychology.[5] At Duke he joined Phi Kappa Psi.[6] He then served in the Navy and earned an MBA from the UCLA Anderson School of Management in 1971. Gross briefly played blackjack professionally in Las Vegas, and has said that he applies many of his gambling methods for spreading risk and calculating odds to his investment decisions. He is also a CFA Charterholder, earning his credentials while working as an investment analyst for Pacific Mutual Life between 1971 and 1976.[7]

    Gross manages one of the world's largest mutual funds, focusing mostly on bonds. Called "the nation's most prominent bond investor" by the New York Times,[8] he co-founded Pacific Investment Management (PIMCO) and currently manages PIMCO's Total Return fund (the world's largest bond fund and fifth largest mutual fund) and several smaller ones.[9]

    _________________________________________

    Gentlemen,

    Any thoughts about Japan's recent decision to follow everybody else by taking up quantitative easing/soft money policy? I for one was very surprised when I saw Switzerland take this route, and now Japan. International debt levels are approaching breath-taking levels...

    _________________________________________

    The toxic distortions of the market resulting from the Greek Kleptocracy and it’s Political Sycophants are disturbing to us all; not least because similar things are in various stages of display throughout the world.

    Thinking music: Dire Straits (with Eric Clapton), Live At Knebworth, Money for Nothing on 'the YouTube'
    Last edited by Surferbeetle; 02-26-2012 at 02:56 AM. Reason: Spelling...sycophants...perhaps i should stay away from five dollar words ;)
    Sapere Aude

  14. #94
    Council Member Fuchs's Avatar
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    Quote Originally Posted by Surferbeetle View Post
    Fuchs,

    If it matters, I use long-term dollar cost averaging into well-diversified, low cost, index funds (equities and bonds) for all my heavy investment lifting. IMHO it reduces risk and increases the chances of a ‘reasonable’ return. As economist would you agree or recommend something else?
    I would recommend not to try to beat the market. It's like trying to win against a casino. It happens, but the attempt is foolish unless you consider it to be very entertaining.

    Diversification is reasonable (but limited by 'transaction costs'), but the problem is that it's difficult to do a proper analysis of links between risks ('systemic risks'), and without it you have really no idea about the effectiveness of your diversification.
    You might feel that Spanish bonds, a house in Florida and shares of a Wall Street bank are a well-diversified portfolio and *boom* it's suddenly 2007 and all are hit by the same crisis. Who'd have thought so in 2006?


    I won't write more on this. There would be a lack information (such as age, sums in question) even if I was a consultant for private savings.

  15. #95
    Council Member Surferbeetle's Avatar
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    Default High wire work...

    Eric Clapton - "Pretending" [Official Music Video] on the YouTube

    One PSI Chart To Rule Them All, Submitted by Tyler Durden on 02/24/2012 11:35 -0500, Zero Hedge Blog

    As the Greek PSI deal rears its ugly head on our screens once again with Merkel, Schaeuble, and Papademos all pulling from one angle or another (and Dallara disquietingly silent in his uselessness), BNP created a simple flowchart of the various steps and probabilities of participation rates, retroactive embedded CACs, CDS triggers, and actual debt reduction that may (or may not) occur in the next week or two. The price action in Greek CDS and Bonds strongly suggest the CDS will trigger (as we have been vehemently explaining for weeks/months now) but there is a long way between here and there.
    G-20 Official: Communique Cites Aim For EU Firewall Decision Next Month, By Ian Talley, FEBRUARY 26, 2012, 2:49 P.M. ET, WSJ

    WASHINGTON (Dow Jones) -- World financial leaders from the Group of 20 industrialized and developing economies will include an explicit March timeline for Europe to boost the size of its emergency bailout fund, a senior G-20 official involved in the discussions said Sunday.

    The official G-20 communique will link the strengthening of Europe's bailout fund as "essential input" into its considerations of bulking up the International Monetary Fund's own lending resources, the person said.

    Although the G-20 statement won't incorporate specific amounts officials are targeting for the European Union firewall and IMF coffers, the finance ministers and central bankers pointed to an IMF study recommending $2 trillion in combined backstop facilities as a reference point.
    Mexico City G20 Communique: full text, Sunday 26 February 2012, The Telegraph

    The world's leading economic powers have said they will not stump up more cash to fight Europe's debt crisis until the eurozone members increase their own contributions. Here is the G20 communique text in full.
    2. Substantial policy actions have taken place since our last meeting, and recent economic developments point to the continuation of a modest global recovery and an easing in global financial market stress. We welcome the important progress made by Europe in recent months to strengthen their fiscal positions, adopt measures to reduce financial stress, build stronger institutions, implement growth enhancing structural reforms and to put Greece on a sustainable path. We also welcome the market improvement associated with the actions undertaken by the ECB. Nevertheless, growth expectations for 2012 are moderate and downside risks continue to be high. The international economic environment has continued to be characterized by an uneven performance, with weak growth in advanced economies and a stronger, albeit slowing, expansion in emerging markets. Structural problems, insufficient global rebalancing, a persistent development gap and high levels of public and private indebtedness and uncertainty continue weighing on medium-term global growth prospects. While volatility in international financial markets has declined, it generally remains high and we are committed to further reduce downside risks. We are alert to the risks of higher oil prices and welcome the commitment by producing countries to continue to ensure adequate supply. With unemployment still too high in many countries, we are firmly committed to supporting growth and job creation.
    4. G20 members have been actively engaged in taking the steps needed to safeguard the global financial system and to avoid adverse scenarios. At Cannes, our Leaders asked us to review the adequacy of IMF resources. This review is particularly important against the backdrop of continued downside risks. Euro area countries will reassess the strength of their support facilities in March. This will provide an essential input in our ongoing consideration to mobilize resources to the IMF.

    5. We are reviewing options, as requested by Leaders, to ensure resources for the IMF could be mobilized in a timely manner. We reaffirmed our commitment that the IMF should remain a quota-based institution and agreed that a feasible way to increase IMF resources in the short-run is through bilateral borrowing and note purchase agreements with a broad range of IMF members. These resources will be available for the whole membership of the IMF, and not earmarked for any particular region. Adequate risk mitigation features and conditionality would apply, as approved by the IMF Board. Progress on this strategy will be reviewed at the next Ministerial meeting in April. Other options mentioned by Leaders in Cannes such as SDRs are under review.
    Sapere Aude

  16. #96
    Council Member Firn's Avatar
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    Default Money for nothing

    @Surferbeetle: Excellent choice of music.

    Switzerland eased due to suffering heavily from being regarded to be such a nice and safe reduit in the Alps in a war, sorry, financially torn Europe. In relation to the economy they might have done more in this regard then even the USA. I'm mean you have to counteract to such degree the negative effect of all those Euros pouring in, for example from Greece?
    Whrend mit Bundesinnenminister Friedrich (CSU) am Wochenende erstmals ein Mitglied der Bundesregierung Griechenland geraten hat, aus der Eurozone auszutreten, ist in Athen eine heftige Debatte darber entbrannt, ob die Namen von Parlamentariern verffentlicht werden sollen, die im vergangenen Jahr je mindestens 100.000 Euro von ihren griechischen Konten ins Ausland berwiesen haben. Finanzminister Venizelos hatte dem Parlament berichtet, eine bedeutende Anzahl Abgeordneter habe hohe Betrge unter anderem nach Grobritannien und in die Schweiz berwiesen just zu dem Zeitpunkt, als Athen die Griechen aufforderte, ihr Geld im Lande zu belassen, um griechische Banken nicht zu gefhrden. Laut Venizelos besitzt das Finanzamt Erkenntnisse ber groe Summen, die 2009 und 2010 auer Landes geschafft wurden, sowie eine entsprechende Liste fr 2011. Die Liste umfasse Politiker und Verwandte von Politikern mit berweisungen in Hhe von mehr als 100.000 Euro.
    Anyway the Corriere della Sera run an very important article, highlighting that Italy has indeed become un paese per vecchi, even when it comes to your busta paga. Especially the young earn very little compared to many 'old' EU members. (the online article doesn't come with the graph, but Europstat should have all the data)

    In Italia la disoccupazione, soprattutto quella giovanile un problema grave. Ma anche chi un posto di lavoro ce l'ha e pure a tempo indeterminato non se la passa troppo bene. E non solo per il peso del carico fiscale e contributivo. In Italia infatti gli stipendi medi sono tra i pi bassi dell'Eurozona. Addirittura inferiori a quelli della Grecia. E in assoluto superiori solo a Malta, Slovacchia, Slovenia e Portogallo, Paesi non certo comparabili al nostro per dimensioni e sviluppo industriale.
    ---

    As the Greek made an offer one hardly can refuse I will give it a very close look. We will see.

    @Fuchs: Of course the opportunity costs are 101 stuff one should always take into account. I just made a very rough guess without knowing all the facts, we will see.

    The correlation between various markets and assets does fluctuate on an, in general increasingly higher level. At least those witnessed in 2008/2009 was something to behold. Still not everything moved in step.

    As for beating the market: It is perfectly right that one should be aware of the dangers of trying to be too smart. However Mr. Market does on occasions offers sometimes after some intensive study some very bad ones and many neutral ones some really excellent deals. If you want you can pass on or accept them. It is still surprisingly difficult to trust your hard-won intellectual judgement.

    Anyway my graph of the day to illustrate the turst into financial services of the eurozone. Go to chart and max setting to look back how thinks developed since 1986. (Needless to say that one should keep inflation and economic growth in mid).

  17. #97
    Council Member Surferbeetle's Avatar
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    Firn,

    Thanks for the great links Send some music back if you get a chance

    The FAZ article was spot on ... sometimes, although i know it's 'not polite' i really wonder about who is on our/US list of high net worth individuals who have made deals with the IRS regarding their previously 'tax-free' Swiss accounts...oops bummer ha!

    John Authers, a very bright Lex contributor, has a sobering article worth the time in the FT: To reduce banks’ risks, profits have to shrink, February 24, 2012 8:25 pm

    With respect to Italy's stats, you might also take a look at the US Food Stamp Participation graph at CS Monitor. The date range on this particular graph is limited from 2005 to 2011, it would be interesting to chase the longer trend line over a number of recessions...the early 80's were a rough time in the US while we boomed in the 90's...another time perhaps. Cycles such as the Kondratiev, Kuznets, etc are interesting to think about in this context as well.

    Stocks (aka real-time applied supply and demand equations) are similar to fishing...know what you looking for, where it hangs out, and what it's gonna take to get that sucker in the frying pan...never easy, never guaranteed, but sometimes....I swear that fish was this big...ha ha. Along those lines:

    • Google Finance has upped it's game and is now showing 'realtime' intraday equity prices (although you still can't download intraday time series data)




    And of course the always necessary disclaimer (and also the thing the world market needs to avoid doing): Etrade Baby loses everything on the YouTube

    Let's hope not
    Sapere Aude

  18. #98
    Council Member Firn's Avatar
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    Quote Originally Posted by Surferbeetle View Post
    Firn,

    Thanks for the great links Send some music back if you get a chance
    Don Raffaè - Fabrizio De Andrè. It might be difficult to understand even for fluent Italian speakers.

    The FAZ article was spot on ... sometimes, although i know it's 'not polite' i really wonder about who is on our/US list of high net worth individuals who have made deals with the IRS regarding their previously 'tax-free' Swiss accounts...oops bummer ha!
    This article had the most comments I have yet seen on the FAZ on such matters. It is just very human to be enraged by the very real possibility that some smart persons not only preach water and drink wine but are also attacking those who are helping out.


    With respect to Italy's stats, you might also take a look at the US Food Stamp Participation graph at CS Monitor. The date range on this particular graph is limited from 2005 to 2011, it would be interesting to chase the longer trend line over a number of recessions...the early 80's were a rough time in the US while we boomed in the 90's...another time perhaps. Cycles such as the Kondratiev, Kuznets, etc are interesting to think about in this context as well.
    As you said the graphic does show just a short period of time and doesn't start at zero, so it is 'just' a drastic snapshot.

    Stocks (aka real-time applied supply and demand equations) are similar to fishing...know what you looking for, where it hangs out, and what it's gonna take to get that sucker in the frying pan...never easy, never guaranteed, but sometimes....I swear that fish was this big...ha ha. Along those lines:

    • Google Finance has upped it's game and is now showing 'realtime' intraday equity prices (although you still can't download intraday time series data)


    Thanks for the links, I'm always interested in sites who give you the ability to track developments over longer timeframes. Sadly so far one can hardly get them easily adjusted for inflation.

    And of course the always necessary disclaimer (and also the thing the world market needs to avoid doing): Etrade Baby loses everything on the YouTube

    Let's hope not
    Love it!

  19. #99
    Council Member Firn's Avatar
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    Eurocrisis Live

    6.12pm: Here's a summary of the main events today (although I'll leave the blog open in case of any major developments)

    • The eurogroup has given conditional approval to Greece's aid package, but fallen short of a final decision. After meeting in Brussels, eurozone finance ministers agreed to authorise some of the €130bn programme, but will wait for Greece to complete its Private Sector bond swap before giving the green light.

    • EU leaders continue to meet in Brussels. Growth is top of the agenda, with David Cameron warning that the region suffers from a growth crisis as well as a debt one.

    • The organisation overseeing the credit default swap sector ruled that Greece has not suffered a credit event. ISDA said that recent Greek developments did not, themselves, trigger CDS contracts, but left the door open to give a different answer as events develop.

    • The Eurozone manufacturing sector shrank again. Greece, Spain and Italy all suffered sharp contractions, but the UK grew in January.

    Thanks for the comments and for reading. More again tomorrow....
    The "dicke Bertha" of Draghi has provided a massive boost for mostly southeuropean banks. Stocks have risen sharply as the ECB shows that it is ready to give cheap credit even for the long term.

    Personally I do think it is necessary, however it is of course poison for the guys keeping their money in low-yield securities and accounts. Happy are those who bought a lot of European stocks in the last months, like Warren Buffet. At least you get a share of that money.

    ECB "laying the seeds for the next crisis"

    A leading British banker has warned that the huge sums of money being pumped into western economies to underpin banks and promote financial stability risk "laying the seeds for the next crisis".

    As central bankers on both sides of the Atlantic played down expectations that they were poised to unleash a fresh round of money creation, Peter Sands, the chief executive of Standard Chartered bank, warned it was "going to take time for the rich West to sort itself out".

    But Sands's main concern was that support operations by western central banks, which have seen trillions of dollars pumped into the financial system through so-called quantitative easing, could set the scene for more trouble in the years ahead.

    Breaking ranks from his fellow bosses, Sands, whose bank is focused mainly in Asia, said: "Banks are still going to have to refinance their loans in three years time. It's not clear what the exit strategy is, nor is it possible to predict what the long-term consequences will be."
    It may very well be that we are laying the seeds for an inflation driven crisis in two to three years. However with the Eurozone suffering a recession, unemployment going through the roof in souther Europe I see hardly an alternative. So far the banks were unable or unwilling to lend so the ECB is pumping and pumping money into them until they can not take it anymore. It is of course a massive gift, taxing the individuals with capital.

    The president of the Bundesbank, Jens Weidmann, has warned the European Central Bank president that yesterday's Long Term Refinancing Operation (in which €529bn was loaned to European banks on generous terms) poses significant dangers to the eurozone economy. In a letter to Draghi, Weidmann urged the ECB boss to return to safer monetary policies.

  20. #100
    Council Member Surferbeetle's Avatar
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    Firn,

    Appreciate the tunes; i was able to catch a few words here and there, but had to chase the written lyrics...alora, i count on my feo Spanish to allow me to read French and Italian and will sometimes use google translate when i am feeling especially lazy.

    Eros Ramazzotti - Bambino Nel Tempo, was popular when i last visited. HD is said to have received an assist from Porsche on the engine and Getrag on the transmission for the new one. The old school nightster is a fun one though the engine can be a bit much for the frame & tires in the corners...me880/z4 combo (prefer the z1/z4) is getting it done on the other/old-reliable/teutonic one. Long distance riding weather is almost here...wanna break 100k miles

    Dicke Bertha is further covered in Gavyn Davies' latest at the FT and in the follow on comments: ECB liquidity is not a free lunch, March 4, 2012 12:20 pm by Gavyn Davies, Financial Times, www.ft.com

    The initials LTRO, barely ever discussed prior to last December, now form the most revered acronym in the financial markets. Before the first of the ECBs two Longer Term Refinancing Operations in December, global equity markets lived in fear of widespread bankruptcies in the eurozone financial sector. Since LTRO I was completed on December 21, equities have not only become far less volatile, but have also risen by 11 per cent.

    With LTRO II completed last week, over 1tn of liquidity has been injected into the eurozones financial system. Private banks were permitted to bid for any amount of liquidity they wanted, the collateral required was defined in the most liberal possible way, and the loans will not fall due for three years. Any bank that might need funds before 2015 should have participated to the hilt, thus eliminating bankruptcy risk fora long time time to come.

    What can there possibly be not to like about this? A few things. Some observers point to the danger of a zombie banking system, kept alive artificially as a wing of the central bank. And, in a much-publicised private letter to Mario Draghi in February, Jens Weidmann, Bundesbank president, expressed concerns that the latest two LTROs will expose the ECB to potential losses which will undermine its capital base.
    The Economist has an interesting article: Measuring inflation, Which of these is not like the others?, Feb 24th 2012, 5:46 by H.J. | SO PAULO

    IN THIS weeks print edition, we explain why we have decided to drop Argentinas official inflation statistics and publish a private-sector estimate, State Streets PriceStats Index, instead. The PriceStats method involves an automated daily trawl of huge numbers of internet prices, instead of the traditional government approach of identifying a representative basket of goods and then sending dozens of mystery shoppers out to buy those things monthly. It was dreamed up by an Argentine, Alberto Cavallo, who set up a website, Truth in Argentine Statistics , and did the research needed to validate the method during his studies at Harvard University. You can find out more about the theory at the Billion Prices Project, a collaboration between Mr Cavallo and Roberto Rigobon, another Harvard economist an economist at MIT Sloan School of Management. The two set up PriceStats to commercialise the idea, and now the company produces daily inflation information for 19 countries, which are available from State Street, an investment bank a financial services firm.

    With respect to corrections for inflation, some of the goldbugs have been pricing houses in terms of gold over time and producing some rather alarming downward sloping charts which span the last few years of the recession.

    Bernard Baumohl, The Secrets of Economic Indicators, 2nd Edition provides the following websites in order to track the pressures of inflation:















    The wikipedia entry on Weimar hyperinflation is also very interesting:

    The hyperinflation in the Weimar Republic was a three-year period of hyperinflation in Germany (the Weimar Republic) between June 1921 and July 1924.
    Sapere Aude

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