It’s Another Non-Virtual Futures Ramp In A Virtual Reality World

Another morning melt up after a less than impressive session in China which saw the SHCOMP drop again reversing the furious gains in the past few days driven by hopes of more PBOC easing (despite China’s repeated warning not to expect much). A flurry of market topping activity overnight once again, with Candy Crush maker King Digital pricing at $22.50 or the projected midpoint of its price range, and with FaceBook using more of its epically overvalued stock as currency to purchase yet another company, this time virtual reality firm Occulus VR for $2 billion. Perhaps an appropriate purchase considering the entire economy is pushed higher on pro-forma, “virtual” output, and the Fed’s capital markets are something straight out of the matrix. Despite today’s pre-open ramp, which will be the 4th in a row, one wonders if biotechs will finally break the downward tractor beam they have been latched on to as the bubble has shown signs of cracking, or will the mad momo crowd come back with a vengeance – this too will be answered shortly.

In Europe, shares rose and also traded close to intraday highs, with the autos and insurance sectors outperforming and telcos, real estate underperforming. The German and Spanish markets are the best-performing larger bourses, Swedish the worst. The euro is weaker against the dollar. Japanese 10yr bond yields rise; Greek yields increase.

Taking a brief look at overnight markets, EURUSD is holding at around the 1.382 level, but the lower USD vs EMFX theme over the last day or so has moderated. The IDR (-0.1%), CNH (-0.15%) and CNY (-0.15%) are all trading a bit weaker against the USD overnight. Asian equities are in positive territory again following the lead of the S&P 500 which closed at +0.44% yesterday. Chinese banks (+2.2%) are leading the Hang Seng China Enterprises Index (+1.8%) higher after a fairly solid set of results from Agricultural Bank of China which are partly allaying fears of an impending banking crisis in China. ABC reported profit growth of 14.6% YoY and at the same time management provided some reassuring comments on net interest margins and asset quality. Against expectations, non-performing loans fell by 0.2% QoQ and the NPL ratio fell to 1.22% as at Dec 2013 (vs 1.24% previous quarter). Management indicated that it expects NPLs to remain stable in 2014. The rest of China’s big four banks will be reporting earnings this week. The positive commentary from ABC stood in contrast to reports from another Chinese bank, small rural lender Jiangsu Sheyang Rural Commercial Bank, which yesterday suffered a deposit run at one of its branches after talk that it was insolvent (South China Morning Post). The bank has denied those rumours. Outside of China, the Nikkei (+0.3%) is trading somewhat cautiously ahead of a planned sales tax hike which will be instituted from next week onwards. The AUD is trading a multimonth highs against the USD (0.919) after the RBA’s Stevens said that there are encouraging signs of a transition from mining-led growth to domestic consumption.

On today’s calendar, there are a few economic releases on the radar plus an EU-US Summit in Brussels which may result in more noise around the Ukraine-Russia situation. A press statement is due at 11:30am London time. The Fed releases part two of its annual bank capital stress tests in the form of its Comprehensive Capital Analysis and Review. The main data releases is US durable goods, but ahead of that there is consumer confidence in Germany and Italy and employment data in France.


Bulletin News Summary from RanSquawk and Bloomberg

  • Treasuries steady as week’s auctions continue with $13b 2Y FRN and $35b 5Ys. 5Y yields 1.755% in WI trading; stopout at that level would be highest since May 2011.
  • 2Y auction yday was awarded at 0.469%, highest 2Y stop in almost three years; stop was 0.8bp lower than WI yield at 1pm according to Stone & McCarthy, biggest stop through by a 2Y since Feb. 2011
  • St Louis Fed’s James Bullard said policy makers haven’t committed to a specific month to end bond purchases even as it would take a significant shift in the outlook to alter the path of tapering
  • Reserve Bank of Australia Governor Glenn Stevens said there are encouraging early signs of a handover from mining-led demand growth to domestic consumption and the nation’s economy may strengthen later this year
  • Americans will get more time to enroll in Obamacare insurance plans if they started the process but were unable to complete it before the March 31 deadline
  • North Korea fired two ballistic missiles capable of reaching both Japan and South Korea as President Barack Obama hosted the first meeting between the leaders of the U.S.’s biggest Asian allies
  • Obama and Hillary Clinton’s vision for a globalized foreign policy and “reset” relations with Russia have been disrupted by Putin’s annexation of the Crimea and a Russian troop buildup along the Ukrainian border
  • Sovereign yields mostly lower. Nikkei +0.4%, Shanghai -0.2%. European equity markets, U.S. stock-index futures higher. WTI crude and gold higher; copper declines

US Economic Calendar

  • 7:00am: MBA Mortgage Applications, March 21 (prior -1.2%)
  • 8:30am: Durable Goods Orders, Feb., est. 0.8% (prior -1%); Durables Ex-Transportation, Feb., est. 0.3% (prior 1.1%); Capital Goods Orders Non-defense Ex-Air, Feb., est. 0.5% (prior 1.7%, revised 1.5%)
  • Capital Goods Shipments Non-defense Ex-Air, Feb., est. 0.8% (prior -0.8%, revised -1%)
  • 9:45am: Markit U.S. Composite PMI (prior 54.1); Markit U.S. Services PMI, est. 54.0 (prior 53.3) Central Banks
  • 4:00pm: Fed releases capital analysis and review results
  • 8:20pm: Fed’s Bullard speaks in Hong Kong Supply
  • 11:30am: U.S. to sell $13b 2Y FRN
  • 1:00pm: U.S. to sell $35b 5Y notes
  • 11:00am POMO: Fed to purchase $2.25b-$2.75b in 2021-2024 sector

Wrapping up, here is the overnight summary by DB’s Jim Reid

As we’ve been discussing over the last couple of days, we’ve become a bit more worried of late about what might happen to markets in the second half of the year due to a more hawkish Fed than we expected and an ECB that seemed stuck after what looked like a promising pre-emptive rate cut in November last year. However we only tweaked our still bullish spread forecasts slightly as we felt there was still time for central banks to become more dovish again. Well yesterday some members of the ECB broke their silence to perhaps signal a softening of their stance. Ironically of all the ECB speakers yesterday, it was Draghi (the last speaker) who appeared the least dovish. He argued that current monetary policy will start to become more effective as the economy recovers. He did say that the ECB stands “ready to take additional monetary policy measures” but only if any downside risks to this scenario appear” adding that “right now we think that the risks of having deflation are limited”.

This came after the Bundesbank’s Weidmann had indicated that he wouldn’t rule out QE in Europe. Specifically he said the ECB could consider QE, but that it has to be considered with respect to the costs and side-effects. He signalled that he sees no immediate need for fresh intervention but also kept the door open on negative interest rates in order to counter a strong Euro. In addition to Draghi and Weidmann, ECB governing council members Liikanen, Makuch and Visco all warned on the dangers of deflation and suggested that the ECB is prepared to act decisively through non-standard measures or further rate cuts.

Due to all the commentary yesterday, the Euro saw a wild ride as a result – trading down 0.64% to 1.3750 at the lows before bouncing back strongly to close at 1.382. So although the rhetoric did talk down the Euro for a while it will likely need actual action to make a difference. However at least yesterday saw ground for hope for those looking for a better deflation firebreaker from the ECB.

While we watch the policymakers at the ECB and Fed, we should also highlight the importance of policymakers in China and their potential reaction to recent disappointing economic data and leading indicators. Following the weaker than expected HSBC flash manufacturing PMI on Monday, a number of commentators have been calling for policymakers to loosen policy either through fiscal or monetary means. The prospect of stimulus has provided a bit of a boost to domestic equities since late last week (Shanghai Comp +3.7% since Friday). However from a fiscal standpoint, Finance Minister Lou Jiwei said last week that the government will not resort to fiscal policies to boost growth and will instead focus on the quality of growth. This has been partly countered by recent suggestions from the State Council that they could accelerate programs in a bid to shore up growth in the immediate term. On the monetary side, our Chinese rates strategist Linan Liu asks the question whether we could see a RRR cut in China in Q2. Linan concludes that the chances of an RRR cut in Q2 are rising given potential capital outflows from China in the coming months and a breakdown in the transmission between falling money market rates to lower financing costs for the real economy. For the time being, it appears that the balancing act between carrying out reforms and loosening policy is still being played out in China, with important consequences for near term growth.

Taking a brief look at overnight markets, EURUSD is holding at around the 1.382 level, but the lower USD vs EMFX theme over the last day or so has moderated. The IDR (-0.1%), CNH (-0.15%) and CNY (-0.15%) are all trading a bit weaker against the USD overnight. Asian equities are in positive territory again following the lead of the S&P 500 which closed at +0.44% yesterday. Chinese banks (+2.2%) are leading the Hang Seng China Enterprises Index (+1.8%) higher after a fairly solid set of results from Agricultural Bank of China which are partly allaying fears of an impending banking crisis in China. ABC reported profit growth of 14.6% YoY and at the same time management provided some reassuring comments on net interest margins and asset quality. Against expectations, non-performing loans fell by 0.2% QoQ and the NPL ratio fell to 1.22% as at Dec 2013 (vs 1.24% previous quarter). Management indicated that it expects NPLs to remain stable in 2014. The rest of China’s big four banks will be reporting earnings this week. The positive commentary from ABC stood in contrast to reports from another Chinese bank, small rural lender Jiangsu Sheyang Rural Commercial Bank, which yesterday suffered a deposit run at one of its branches after talk that it was insolvent (South China Morning Post). The bank has denied those rumours. Outside of China, the Nikkei (+0.3%) is trading somewhat cautiously ahead of a planned sales tax hike which will be instituted from next week onwards. The AUD is trading a multimonth highs against the USD (0.919) after the RBA’s Stevens said that there are encouraging signs of a transition from mining-led growth to domestic consumption.

Looking more broadly at EM in general, the stability of the EM complex over the last week or so has probably surprised many. With the more-hawkish-thanexpected March FOMC now almost a week behind us, a number of EM assets are in fact trading at stronger levels than they were going into last Wednesday’s meeting. Indeed if we compare Tuesday 18th to Tuesday 25th closes, EM credit (CDX EM index -15bp) and EM equities (MSCI EM +0.6%) have performed resiliently. The story is fairly consistent in individual assets across EMEA, Asia and LATAM with the Ibovespa (+4.4%), HSCEI (+3.7%), Turkish lira (+0.1%), Mexican peso (+0.3%) and Russia 5yr CDS (-10bp) all trading firmer during the past week. Even a rating downgrade from S&P failed to dampen the price action in Brazilian CDS and the BRL yesterday, with both closing tighter/firmer as investors unwound short positions throughout the day. The jury appears split here – some think we are seeing a delayed reaction to the Fed, while others believe that EM’s lower valuation or lighter positioning has made the asset class better able to withstand the commentary from the Fed.

Speaking of the Fed, the Philly Fed’s Charles Plosser (a FOMC voter and a hawk) was the latest Fed official to confirm Yellen’s heavily-debated “six months” statement. Plosser argued yesterday that Yellen did not make a mistake when she said that there may be around six months between the end of QE and first rate hikes. Plosser also said that the six months time frame was already expected in markets, but conceded that it was data dependent. Though he is a noted hawk, it was interesting to see that Plosser thinks the rates will rise to 4% in 2016. This was at odds with the Atlanta Fed’s Dennis Lockhart, who said yesterday that the Fed will likely begin raising rates in the second half of 2015, and that the six months timeframe was really a minimum.

On today’s calendar, there are a few economic releases on the radar plus an EU-US Summit in Brussels which may result in more noise around the Ukraine-Russia situation. A press statement is due at 11:30am London time. The Fed releases part two of its annual bank capital stress tests in the form of its Comprehensive Capital Analysis and Review. The main data releases is US durable goods, but ahead of that there is consumer confidence in Germany and Italy and employment data in France.


via Zero Hedge Tyler Durden

China’s Yuan Drops Most In A Week As Property Developers Tumble

When we left China last night, it was all shits and giggles that bad news is great news and a Chinese stimulus plan will be here any minute to save the day. Having realized the sad fact that is not going to happen (as we explained here most recently) and the specter of banks runs looming, this evening’s session has seen property developer stocks tumble – retracing all of last night’s losses – the Yuan plunges by the most in a week back above 6.2150. Copper is holding in for now at the magic $300 level but corporate bond prices are falling once again (worst run in 4 months).


The Yuan is dumping at its fastest rate in a week…erasing all the hope-strewn gains from yesterday



Property Developers are taking it on the chin…


And it’s no wonder, as Bloomberg notes…

Chinese developers’ gross margins declined by a weighted average 294 bps last year.


Most developers have forecast a recovery. Further declines in prices could present a threat.



Chinese developers that have reported 2013 results have set an average 2014 sales growth target of 16%, about half last year’s 30% rate. This is likely recognition of a need for better inventory management and of a more challenging sales environment. Developers will also probably curb construction because of slowdowns in some tier two and three cities.



Longfor Properties summed up the attitude among major Chinese and Hong Kong property developers in its company filings… .“In 2014, the Group’s key operating focus will be inventory clearance and cost control… For the coming 6-12 months period, we wil strive to reduce the leve of unsold inventory, hereby gradually improving our sale through rate.”

But apart from that… China’s fixed and the world economy will be back to normal as soon as the US weather clears up…


via Zero Hedge Tyler Durden

Six Questions About Russia, Crimea, And Ukraine

Submitted by Justin McDonnell via The Diplomat,

The Diplomat‘s Justin McDonnell spoke with Larisa Smirnova, an expert on Sino-Russian relations and professor at Xiamen University, about the crisis in Ukraine, Russian foreign policy, and more.


The people of Crimea have overwhelmingly voted to leave Ukraine for Russia. Threats have been made to sanction Russia, claiming the referendum is in fact illegitimate.  Given Europe’s economic dependence on Russia’s energy supplies, will sanctions actually come together and how might that circumvent the situation? Or will it have the opposite effect?  And how might Russia respond in turn?

It does not seem that the sanctions are going to be drastic. Nor that they are going to circumvent the situation.

I have a feeling that more and more people in Russia approve of President Putin’s action. The Russian people have had a long-term hidden feeling of shame for the collapse of the Soviet Union that they perceive as humiliating and denigrating them vis-à-vis the West. They believe that the move in Crimea helps to restore Russia’s glory. Military and diplomatic glory is what has constituted the confidence of the Russians for centuries.

Therefore, Russia is likely to ignore any sanctions and/or consider that the price is justified.

For the good and for the bad, regardless of whether this perception is grounded in reality, but this is how many Russians might now feel.

Russia cites the threat of Ukrainian banderavski in Kiev helping Russia’s enemies and the need to protect ethnic Russians. From this standpoint, Putin’s geopolitical ambitions are unlikely to end in Crimea, as nearly all of eastern Ukraine is Russian-speaking.  What is the likelihood of Russian efforts to seize further territory and the outbreak of a Ukrainian civil war? Where does the situation go from here and what will happen to former ousted president, Victor Yanukovych?

Well, first of all, throughout the crisis I have personally called for the compromise between Russia and Ukraine. My concern is exactly extremist nationalism, which I dislike: in Russia, in Ukraine, or in any other country. Things that happened around Crimea might actually favor nationalists of all kinds. Moreover, I have strong anti-war convictions, and am consistently against achieving one’s goals by force or ruse.

So said, I really don’t think that Russia has ambitions to spread its Crimean move to Eastern Ukraine.

Crimea is slightly different in a way that there was indeed a perception in Russia and in Crimea that its transfer to Ukraine by Khruschev was unfair in the first place. In 1954, when Crimea was transferred from Russia to Ukraine, no one thought that the USSR would collapse, so it all seemed to be a mere administrative rearrangement issue: it made geographic sense because Ukraine bordered Crimea while Russia did not.

It did create some grievances among the Russians. I remember hearing, when I was little, that the transfer was instrumented by Nikita Khrushchev because he was a Ukrainian.

Even the Ukrainians possibly thought that keeping Crimea after 1991 was a matter of luck: that they kind of won in a lottery…

In 1991, Boris Yeltsin was very much in a rush to disintegrate the Soviet Union, which would give him access to power over the head of Gorbachev, so he just neglected the Crimean issue.

But again, I think that agreements, even stupid ones, are agreements, and Russia could have as well promoted investment in Crimea’s tourism industry while keeping it as part of Ukraine!

Some people admire President Putin for his quick moves. People read history, watch movies, read books, play computer games after all – and that is how many heroes behave in history, movies, books, and games, right?

But I do also think that there should be some containment for “heroic,” computer game-style nature. International law, the United Nations, and even nuclear weapons are tools that we invented, and more or less successfully used for war prevention.

Those who call for wars are acting irresponsibly.

Yanukovych? I think he is out of the game. Based on his biography, he seems to be a strange guy, arguably with criminal record and fake diplomas. I don’t think many people in Ukraine regret him. I hope that the new government in Ukraine, whoever they are, will act more responsibly and more in the interests of the common Ukrainian people.

There is an argument that Russia annexing Crimea will actually favor the West because these pro-Russian voters would no longer be part of the Ukrainian electoral process.  Do you believe Ukrainians would more likely move further West toward potential EU membership, mirroring the former Soviet bloc state,  Poland?

Ukraine’s European integration will depend much on the conditions that Europe is ready to offer to the Ukrainians.

It is true that the European integration seems to be viewed by many Ukrainians as a panacea to Ukraine’s economic and social problems.

So said, the Ukrainians, like the Russians, are a very proud people. In a way, we are the same people; when I meet a Ukrainian I have no cultural or language barrier at all.

The Ukrainians, like the Russians, have a hidden feeling of failure after the collapse of USSR. They also feel that they were not treated as equal by the EU, and they will strongly protect their pride and their interests.

For example, after the Orange Revolution, the Ukrainian government unilaterally cancelled visas for the European nationals. Obviously, they expected that the EU would lift their visa requirements for the Ukrainians. But the EU didn’t, even when the government in Kiev was “pro-European.”

Eventually, the Ukrainians got disappointed in the West. Yuschenko lost the election miserably, and Yanukovych, considered pro-Russian, won.

The Russians went through the exact same process and they got to support Putin, who is considered a strong-Russian known for standing up to the West.

By the way, Prime Minister Yatsenyuk has already said that the signature of the economic part of the Association Agreement between Ukraine and the EU has been postponed so that it will not lead to negative consequences for the industrial regions in the east of the country.

Ultimately, how does Ukraine begin to reconcile the cultural-linguistic divide within the country?  

The differences are very much exaggerated. There are some issues, like when I went to Lviv in 2005 some people were reluctant to talk in Russian to me (I really don’t care, if I stayed for a few more days I would have started to pick up Ukrainian).

And they have a Dzhohar Dudaev street in Lviv (Dudaev was a separatist Chechen leader). This is so ostensibly meant to annoy the Russians so I also think we should not care.

The Ukrainians and the Russians are really the same people. I have Ukrainian friends and we do not consider ourselves as “foreigners.” A couple of weeks ago I took part in a TV show on Ukraine with a Ukrainian diplomat and a Ukrainian journalist. We talked in Russian and shared much of our analysis of the situation, actually (the show dealt with the current Ukrainian crisis).

You can have differences with your brothers or sisters, even fight with them, take over their property or bring them to court on property issues, do all kinds of annoying things to each other, but you can still understand each other better than anyone else.

Therefore, I am still very confident in the ties between the Ukrainians and the Russians…

I like what Mr. Yatsenyuk has said: “We do not see relations with the EU and Russia on an either-or principle. Despite the catastrophic worsening of relations with Russia, which was not committed through our fault, and despite Russia’s armed aggression against Ukraine, I will do everything possible to not only maintain peace, but also build a genuine partnership and good neighborly relations with Russia.”

China seems to be facing a diplomatic dilemma on the Ukrainian crisis, as it is refraining from taking any position at all, having abstained from the UN referendum vote. While it has a strong partnership with Russia that often counteracts the West in foreign policy decision-making, China is opposed to any form of intervention. How should China handle its relationship with Moscow? Will the crisis strain relations or help bolster it?    

I think China will, as it does, keep neutrality. China is like an old wise man who can be a very good friend to anyone who can appreciate him.

China understands that the Russians and the Ukrainians are brother peoples. It has advised the Russians and the Ukrainians to talk, and it will recognize whatever compromise these two brothers achieve.

Actually, China probably disapproves in its heart that Russia has bullied Ukraine recently but after all, it is a value in Chinese culture not to interfere in other people’s family, so it will encourage the two countries to figure out their relations on their own.

Moreover, both Russia and Ukraine are China’s “strategic partners” in terms of diplomacy, so it will not be willing to spoil its relations with either of them for the sake of the other.

President Obama put the relationship on “pause” last year, hoping to restore ties between Washington and Moscow.  That hasn’t seemed to work.  From Syria, to Snowden, and to Ukraine, the two countries seem unable to find any common ground and bilateral relations are again quite dismal. First, why does the U.S.-Russia relationship matter today? And what should each country be doing to mend ties and restore moderation?

I am not really an expert on Russia–U.S. relations. I can only talk as a person who has experience living in the U.S.

I think that there is some degree of misunderstanding between the two countries now.

Actually, the Russians have never been anti-American. There was anti-German propaganda in the USSR for decades after World War II, but never actually a strong anti-American propaganda. But now Germany has a very good relationship with Russia!

So, it is a shame that Angela Merkel can handle President Putin but Barack Obama cannot! I think that he probably just lacks expertise on Russia, in his career he never actually had to deal with Russia, and he might have some fears of Russia that are not grounded.

There are many good American experts on Russia who are tough but often fair — everyone defends their own interests after all. They are of an older generation: Madeleine Albright, Henry Kissinger, Zbigniew Brzezinski. They have had good relations with the Russians, including personal relations, despite all the differences in positions. Their comments are often translated and published by the Russian media and heard by experts and policy makers. Their example proves that the Russians are actually not monsters!

As someone put it already, the U.S. should perhaps invest more in growing a young generation of strong Russia experts, like they now invest in growing a generation of China experts.



via Zero Hedge Tyler Durden

BofA Warns A Complete Bear Flattening In Treasuries Would Be Devastating

Authored by BofAML's Hans Mikkelsen,

Fear the bear flattening

What if this was the year where the Treasury curve bear flattened completely as happened in 1994? While this is not what we are looking for, we have highlighted this outcome as the biggest and most relevant risk to credit this year, and with a probability that we believe appears uncomfortably high. While the total return performance of the high grade market in a Treasury complete flattening scenario would be extremely adverse (losses of at least 10%), the pension "reverse rotation" story that we subscribe to serves to significantly limit losses for excess return investors to just 80bps, as the long end of the spread curve outperforms.

Still, as the majority of high grade investors nowadays have total return – as opposed to excess return – objectives (Figure 8), a complete bear flattening of the Treasury curve would be quite devastating.


To show the potential impact on credit returns we run three scenarios as described in Figure 11.

First our “Baseline” scenario is simply the most likely outcome this year for reference – i.e. higher interest rates and tighter credit spreads, without the big flattening move. As shown in Figure 9 we expect total returns of -105bps under this baseline scenario between now and year-end and, as highlighted in Figure 10, excess returns of +198bps. Furthermore total returns should be positive in the front end, while excess returns are especially attractive toward the back end.


In the “Treasury flattening” scenario (see Figure 11 for the details) we show the impact of a complete bear flattening Treasury curve to 5% yields at all maturities, while credit spreads tighten as in the baseline scenario. Clearly the impact on total returns (Figure 9) is devastating, as our index stands to lose 10%, led by the long end (-14%) – but even the front end 3-5-year maturity bucket stands to lose 9%.


Finally we show a more realistic “Flattening, widening” scenario where the bear flattening of the Treasury curve leads to a rotation out of credit and much wider credit spreads (Figure 11). Obviously this scenario compounds the total return losses in Figure 9. However, we assume that the 50bps spread widening from current levels is led by the front end and 10-year sectors, as the pension/insurance bid for long paper keeps the back end in check. Thus excess returns under this scenario in Figure 10 range from -210bps in the 7-10-year sector to just -3bps and -8bps in the 1-3-year and 15+-year maturity buckets, respectively.



The bottom line is a more dramatic bear flattening in the Treasury curve has very significant implications for credit spreads and pension fund returns (and allocations) all of which are negative for stocks – no matter what your friendly local asset-getherer tries to tell you about Forward P/Es or higher rates mean strong economy… you can't fund buybacks or dvivdends at anything but shareholder-wealth-destroying levels once rates and spreads start to rise… and if spreads are rising then SMEs are not going to be getting the credit that everyone assumes will fuel the next leg of Capex (or whatever dream there is)…


via Zero Hedge Tyler Durden

Greek Government, And Bailout Deal, On Verge Of Collapse Due To Definition Of “Fresh Milk”

The Greek economic collapse, depression and bankruptcy has seen many odd things in its brief and often times violent history (in those days when the violent elements were not on strike), but this surely is the first time when one of the countless Greek bailouts may be on the rocks due to the disagreement over the definition of “fresh milk.” No, really. Reuters explains that Greece’s government risks another rebellion over bailout terms this week after milk producers lobbied against a move to free up prices as part of efforts to make the economy more competitive. Basically, for Greeks, milk is fresh if it is 5 days old or less, yet according to the always fascinating codex of the Troika, “fresh” can be labeled anything that is as old as 11 days…. including the salmonella bacteria it contains. What’s worse, is that the “spoiled milk” scandal, far from a joke, has swept over the country, and now even threatens to topple the government.

From Reuters:

The country’s international lenders want it to ditch rules, such as limiting the shelf life of fresh milk to five days, that effectively deter importers.


But Greek dairy producers and lawmakers representing farming constituencies are fighting the move to call milk up to 11 days old ‘fresh’ – the latest in a long line of last-minute disruptions to Greece’s bailout reviews with the European Union and International Monetary Fund.


Six lawmakers from within the ruling coalition – three from Prime Minister Antonis Samaras’s New Democracy party and three from the Socialist PASOK – have opposed the proposal that will be submitted to parliament on Friday as part of an omnibus reform bill that Greece must pass to secure bailout aid.


If they vote against it, Samaras and PASOK leader Evangelos Venizelos could be forced to expel them, further reducing the government’s slim majority of just 153 seats in the 300-seat assembly.

In other words, there is a possibility that Samaras’ government, which nearly brought down the Eurozone after the summer of 2012 elections were almost won by the “anti-bailout” Samaras, will have no choice but to expel enough people from his party to leave it without an absolute 50%+1 majority, and potentially lead to a government collapse! All because of the definition of fresh milk.

Yup: it sure sounds like the European “Union.”

The bill – which will pave for the way for up to 10 billion euros ($14 billion) of aid – is expected to pass after last-minute wrangling, but the row has highlighted how powerful lobbies can undermine the country’s bailout lifeline.


You don’t need to be an expert to understand that extending the shelf life is aimed at allowing milk from abroad to be labelled as fresh,” PASOK lawmaker Mihalis Kassis told Greek radio at the weekend. “If that’s a prerequisite by the (EU/IMF) troika then we deserve what we get.”


The controversy has captured headlines and days of debate on Greek television, overshadowing expectations that the country will soon be able to raise money on bond markets again.


“It is unfair and saddening, at a time when Greece is spreading its wings to emerge from a rut, that there is such dissonance,” Samaras said during a trip to Brussels on Friday.


MPs drowning in a glass of milk!” the daily Ethnos wrote on its front page on Saturday. “Spoiled milk” proclaimed the center-left Eleftherotypia newspaper’s headline.

Why are foreign exporters so interested in penetrating the Greek milk market? Simple: prices. “Greece is the only country in Europe that has legislation to determine the shelf life of fresh milk and the price, at around 1.30 euros per litre, is among the highest in the EU. The Paris-based Organisation for Economic Co-operation and Development (OECD) says Greeks paid about a third more for dairy produce than the EU average in 2012.”

One would think that the Greeks would welcome the competition from abroad, and that the lower price would be a good thing. Well, if cow farms and milkmen account for a substantial portion of the Greek GDP, not to mention employment pool, which apparently in Greece they do, it becomes clear why the nation which is now a complete and utter economic disaster quarantine area, would be leery of allowing any foreign influence to raise its already laughter inducing unemployment rate.

So aside from that, the Grecovery is on pace.


via Zero Hedge Tyler Durden

The Creeping Theft of Freedom

By: Chris Tell at

We’re quickly heading into the abyss. I’m serious. I offer the story you’ll read below as a mere anecdote in a sea of troubles.

On return from a recent trip to Sri Lanka Mark and I traveled through Australia. Proceeding through the cattle stop that is “customs” we then met with the “security screeners”. These are the folks allegedly protecting us from attackers armed with nail clippers and toothpaste.

The first thing we saw was a giant sign that said refusing to undergo a body scan would result in detention. Mark, seeing this and having never been “body scanned” was immediately taken aback. Sure enough, he was singled out to be the random subject.

Fortunately he was prepared… “I’m sorry. I have a medical condition that precludes me from the scanner.” To which the security woman said, “Sure, OK no problem, come through here (metal detector) instead.”

I on the other hand, tired, unprepared and not thinking much about it had no such response. Instead I suggested, “Just go ahead and give me the pat down, I don’t  mind.”

I was told to dutifully sit down and wait for a “supervisor”. Fifteen minutes later the supervisor came over to “educate” me because, well, clearly I’m uneducated. I was handed an official document prepared by the Department of Infrastructure and Transport.

Flipping through it I was struck by the psychology being used. Now I’ve read a wee bit about psychology over the years, as it’s of interest to me. After all the financial markets are really just a collective aggregation of millions of people acting, and being acted upon. It’s psychology in a test tube.

This document was textbook “Good Cop, Bad Cop.”

  • On the first page the document told me that “Body scanners are safe”. Remember, anybody reading this would only ever be someone who was protesting the scan, so it’s only natural that a soft cuddly comforting approach was required. (Good cop)
  • The next page told me explicitly what to do when selected for a scan. This page provided the reader with the expectations. (Bad cop)
  • Page 3 reinforced the comforting approach. It was titled “Privacy” and explained how your genitals would not be displayed to the stumbling brain dead, thugs “protecting our borders”, and how as such your privacy is “protected”. (good cop)

Now at this stage if you weren’t yet convinced by the harmlessness of subjecting yourself to this ridiculous charade called “security”, and in case you had any doubts as to what the “Bad Cop” had in mind, you were left with no doubt upon reading the final page, which I’ve placed below:

  • If you are selected to be screened by a body scanner and you refuse you will not be allowed to pass through the screening point for 24 hours. This will mean that you are unable to board your flight.

There you have it. You have choice… no, really you do. Just like democracy you have a choice. Whatever country you’re in take a look at your voting choices. My guess is you’re looking at death by moron, or death by idiot.

Why are they doing this? Why randomly? Why not everyone? It certainly isn’t for security! The answer is that introducing radical change always meets with resistance.

Imagine for a minute telling an entire line of people, “Hey you’re all getting body scanned whether you like it or not.” Now, if just a couple of people in that line don’t like the idea you will have the very real potential for outrage within minutes. One person yells, “F$%k that! Over my dead body, those things cause cancer.” Next, a mother of a young child thinks, “Y ikes I hope he’s not right…I don’t want to take the risk.” She digs her heels in and says, “I’m with you, you’re not radiating my child.” And on it goes…

Now at this point if the authorities push ahead they do so risking a full-blown riot.

This answers the question of random selection. Random selection means that consensus opinion cannot come to the fore. Now if someone protests there are ten other people scooting through without incident, nothing to see here, it’s not me, odds are good I won’t get chosen so I don’t care.

Why don’t those others speak up?

Because they don’t want to be singled out and they’re hoping they will not be selected. They are playing the lottery.

Furthermore the guy who is making noise about this is now treated as someone who is “making trouble”. A rabble rouser. What’s he hiding? the rest of the queue thinks. Why doesn’t he just comply? They say it’s safe.

The mother who protests in the crowd has no backing on her own, and she doesn’t want to upset her children. Instead she reviews her options and instead complies. It’s easier to just get through it and forget about it. Maybe it is safe..?

THIS, ladies and gentleman is how to turn an entire populace into slaves. Combine it with fear mongering, “Terrorists want to kill you because they hate your freedoms.” and you have a recipe for a genocidal outcome. How does one go from enforcing a body scan to running death camps? 

In increments. The boiling frog we’ve all heard so much about. 

Think I’m kidding. Hitler used EXACTLY these tactics and by the time the people woke up to the fact it was too late, way too late.

Familiarity begets slavery. Most people don’t even realise they are slaves. I’m a slave and I realise it. I do everything in my power to fight my masters and I hate every intrusion made, but I realise that in many small ways, and sometimes not so small, I am still a slave. I don’t know anyone that isn’t frankly.

The well-meaning yet pig-ignorant drone who was brought over to explain my “choices” is just “following orders”. This comes with a mother lode of ignorance. Ignorance because you can bet the farm that he hasn’t studied history, or much of anything for that matter, other than what he finds on his Facebook page or in the propaganda he’s forced to digest and spew forth. If he considers the morality of what he’s doing, which would be unusual, he may find that there is none.

That I view this behaviour with nothing but utter contempt, and the fact that citizens are treated like barnyard animals is beside the point. We are headed in the wrong direction. It will take a giant iceberg to change course.

After the Snowden revelations there was a glimmer of hope that the “Citizens” would be outraged and call for change…but look, my Twitter feed shows that Miley Cyrus just got knocked up. And tonight is the American Idol semi-final rounds… God help us.

– Chris

“The only way to deal with an unfree world is to become so absolutely free that your very existence is an act of rebellion.” – Albert Camus


via Zero Hedge Capitalist Exploits

Ukraine Only Has Enough Gasoline For A Month

Nothing to see here, move along. While it appears the Russians are willing to pay the price of modest sanctions from the west to ‘liberate’ their fellow countrymen, the fallout from further tension with Ukraine could “boomerang” once again on the divided nation. As RBC Ukraine reports, the Minister of Energy and Coal Industry Yuriy Prodan said at a press conference today that “oil reserves will last for 28-29 days” in Ukraine. After that, the negotiation begins as Ukraine already owes billions for previously delivered gas – as Ukraine’s storage levels more than halved in the last 3 months.

Via RBC Ukraine,

Stocks of petroleum products in Ukraine will last for 28-29 days, said at today’s press conference, the Minister of Energy and Coal Industry Yuriy Prodan.


Speaking on the situation with oil, then ensure there is quite stable. Today oil reserves will last for 28-29 days,” – he said, the ” RBC-Ukraine . “


At the same time, the Minister noted the significant risk reduction in the supply and rising gas prices. As of March 25, 2014 in Ukrainian underground gas storage facilities located 7 billion cubic meters of gas.


“Up there can be about 2 billion is not the quantity that scares experts, it would be possible to hold only a week. It all depends on what kind of regime will be whether we can take about 20 million cubic meters. Meters of gas to reverse and so on “- said Prodan.


According to the company “Ukrtransgaz” abnormally warm winter 2013 2014. has reduced gas extraction from underground storage by an average of 37% compared to the same period last year: it was 60 million cubic meters per day.


In late December 2013. occupied at the time the post of Minister of Energy and Coal Industry of Edward Stawicki reported that Ukrainian gas reserves in underground storage is 16.5 billion cubic meters.

We suspect any further military intervention will only crimp this supply even faster.


via Zero Hedge Tyler Durden

How Much Is NSA Spying Costing In Lost Productivity?

NSA spying is costing the U.S. tech industry tens of billions of dollars. And see this and this.

It also undermines trust in U.S. companies, fellow Americans and our government. Given that trust is the foundation for a prosperous economy, this is really bad for our economy.

But there might be another big cost to mass surveillance: loss of worker productivity.

Specifically, top computer and internet experts say that NSA spying breaks the functionality of our computers and of the Internet. It reduces functionality and reduces security by – for example – creating backdoors that malicious hackers can get through.

Remember, American and British spy agencies have intentionally weakened security for many decades. And it’s getting worse and worse. For example, they plan to use automated programs to infect millions of computers.

How much time and productivity have we lost in battling viruses let in because of the spies tinkering? How much have we lost because “their” computer programs conflict with “our” programs?

Indeed, Microsoft’s general counsel labels government snooping an “advanced persistent threat,” a term generally used to describe teams of hackers that coordinate cyberattacks for foreign governments.  It is well-known among IT and security professionals that private hackers can hurt employee productivity.  The same is almost certainly true for NSA hacking, as well.

And the spy agencies are already collecting millions of webcam images from our computers. THAT’S got to tie up our system resources … so we can’t get our work done as fast.

Moreover, the Snowden documents show that the American and British spy agencies launched attacks to disrupt the computer networks of “hacktivists” and others they don’t like, and tracked supporters of groups such as Wikileaks.

Given that the spy agencies are spying on everyone, capturing millions of screenshots, intercepting laptop shipments, creating fake versions of popular websites to inject malware on people’s computers, launching offensive cyber-warfare operations against folks they don’t like, and that they may view journalism, government criticism or even thinking for one’s self as terrorism – and tend to re-label “dissidents” as “terrorists” – it’s not unreasonable to assume that all of us are being adversely effected to one degree or another by spy agency operations.

How much loss of productivity has this caused?

I’ll hazard a guess: billions of dollars of lost productivity as a nation.

Afterword: Bill Binney – the high-level NSA executive who created the agency’s mass surveillance program for digital information, a 32-year NSA veteran widely regarded as a “legend” within the agency, the senior technical director within the agency, who managed thousands of NSA employees – tells Washington’s Blog:

There are several sides to spying costs. First, is the lack of thinking by the government and industry as to the consequences of their activities being exposed. That turns out to be cost in commercial sales and futures/trust.


The other costs involve weakening systems (operating systems/firewalls/encryption).  When they do that, this weakens the systems for all to find. Hackers around the world as well as governments too.


These costs are hard to count. For example, we hear of hackers getting customer data over and over again. Is that because of what our government has done?


Or, how about all the attacks on systems in government? Are these because of weakened systems?


Bottom line, if we (including our government) don’t help solve weaknesses in these systems, then we all lose.


via Zero Hedge George Washington

A List Of 97 Taxes Americans Pay Every Year

Submitted by Michael Snyder of The Economic Collapse blog,

If you are like most Americans, paying taxes is one of your pet peeves.  The deadline to file your federal taxes is coming up, and this year Americans will spend more than 7 billion hours preparing their taxes and will hand over more than four trillion dollars to federal, state and local governments.  Americans will fork over nearly 30 percent of what they earn to pay their income taxes, but that is only a small part of the story.

As you will see below, there are dozens of other taxes that Americans pay every year.  Of course not everyone pays all of these taxes, but without a doubt we are all being taxed into oblivion.  It is like death by a thousand paper cuts.  Our politicians have become extremely creative in finding ways to extract money from all of us, and most Americans don't even realize what is being done to them.  By the time it is all said and done, a significant portion of the population ends up paying more than half of what they earn to the government.  That is fundamentally wrong, but nothing will be done about it until people start demanding change.  The following is a list of 97 taxes Americans pay every year…

#1 Air Transportation Taxes (just look at how much you were charged the last time you flew)

#2 Biodiesel Fuel Taxes

#3 Building Permit Taxes

#4 Business Registration Fees

#5 Capital Gains Taxes

#6 Cigarette Taxes

#7 Court Fines (indirect taxes)

#8 Disposal Fees

#9 Dog License Taxes

#10 Drivers License Fees (another form of taxation)

#11 Employer Health Insurance Mandate Tax

#12 Employer Medicare Taxes

#13 Employer Social Security Taxes

#14 Environmental Fees

#15 Estate Taxes

#16 Excise Taxes On Comprehensive Health Insurance Plans

#17 Federal Corporate Taxes

#18 Federal Income Taxes

#19 Federal Unemployment Taxes

#20 Fishing License Taxes

#21 Flush Taxes (yes, this actually exists in some areas)

#22 Food And Beverage License Fees

#23 Franchise Business Taxes

#24 Garbage Taxes

#25 Gasoline Taxes

#26 Gift Taxes

#27 Gun Ownership Permits

#28 Hazardous Material Disposal Fees

#29 Highway Access Fees

#30 Hotel Taxes (these are becoming quite large in some areas)

#31 Hunting License Taxes

#32 Import Taxes

#33 Individual Health Insurance Mandate Taxes

#34 Inheritance Taxes

#35 Insect Control Hazardous Materials Licenses

#36 Inspection Fees

#37 Insurance Premium Taxes

#38 Interstate User Diesel Fuel Taxes

#39 Inventory Taxes

#40 IRA Early Withdrawal Taxes

#41 IRS Interest Charges (tax on top of tax)

#42 IRS Penalties (tax on top of tax)

#43 Library Taxes

#44 License Plate Fees

#45 Liquor Taxes

#46 Local Corporate Taxes

#47 Local Income Taxes

#48 Local School Taxes

#49 Local Unemployment Taxes

#50 Luxury Taxes

#51 Marriage License Taxes

#52 Medicare Taxes

#53 Medicare Tax Surcharge On High Earning Americans Under Obamacare

#54 Obamacare Individual Mandate Excise Tax (if you don't buy "qualifying" health insurance under Obamacare you will have to pay an additional tax)

#55 Obamacare Surtax On Investment Income (a new 3.8% surtax on investment income)

#56 Parking Meters

#57 Passport Fees

#58 Professional Licenses And Fees (another form of taxation)

#59 Property Taxes

#60 Real Estate Taxes

#61 Recreational Vehicle Taxes

#62 Registration Fees For New Businesses

#63 Toll Booth Taxes

#64 Sales Taxes

#65 Self-Employment Taxes

#66 Sewer & Water Taxes

#67 School Taxes

#68 Septic Permit Taxes

#69 Service Charge Taxes

#70 Social Security Taxes

#71 Special Assessments For Road Repairs Or Construction

#72 Sports Stadium Taxes

#73 State Corporate Taxes

#74 State Income Taxes

#75 State Park Entrance Fees

#76 State Unemployment Taxes (SUTA)

#77 Tanning Taxes (a new Obamacare tax on tanning services)

#78 Telephone 911 Service Taxes

#79 Telephone Federal Excise Taxes

#80 Telephone Federal Universal Service Fee Taxes

#81 Telephone Minimum Usage Surcharge Taxes

#82 Telephone State And Local Taxes

#83 Telephone Universal Access Taxes

#84 The Alternative Minimum Tax

#85 Tire Recycling Fees

#86 Tire Taxes

#87 Tolls (another form of taxation)

#88 Traffic Fines (indirect taxation)

#89 Use Taxes (Out of state purchases, etc.)

#90 Utility Taxes

#91 Vehicle Registration Taxes

#92 Waste Management Taxes

#93 Water Rights Fees

#94 Watercraft Registration & Licensing Fees

#95 Well Permit Fees

#96 Workers Compensation Taxes

#97 Zoning Permit Fees

Yet despite all of this oppressive taxation, our local governments, our state governments and our federal government are all absolutely drowning in debt.

When the federal income tax was originally introduced a little more than 100 years ago, most Americans were taxed at a rate of only 1 percent.

But once they get their feet in the door, the social planners always want more.

Since that time, tax rates have gone much higher and the tax code has exploded in size.

Why do we have to have the most convoluted tax system in the history of the planet?

Why can't things be simpler?

In a previous article entitled "24 Outrageous Facts About Taxes In The United States That Will Blow Your Mind", I listed a number of reasons why our federal income tax system has become a complete and utter abomination that is entirely out of control…

1 – The U.S. tax code is now 3.8 million words long.  If you took all of William Shakespeare's works and collected them together, the entire collection would only be about 900,000 words long.

2 – According to the National Taxpayers Union, U.S. taxpayers spend more than 7.6 billion hours complying with federal tax requirements.  Imagine what our society would look like if all that time was spent on more economically profitable activities.

3 – 75 years ago, the instructions for Form 1040 were two pages long.  Today, they are 189 pages long.

4 – There have been 4,428 changes to the tax code over the last decade.  It is incredibly costly to change tax software, tax manuals and tax instruction booklets for all of those changes.

5 – According to the National Taxpayers Union, the IRS currently has 1,999 different publications, forms, and instruction sheets that you can download from the IRS website.

6 – Our tax system has become so complicated that it is almost impossible to file your taxes correctly.  For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household.  All 46 of them came up with a different result.

7 – In 2009, PC World had five of the most popular tax preparation software websites prepare a tax return for a hypothetical household.  All five of them came up with a different result.

8 – The IRS spends $2.45 for every $100 that it collects in taxes.

9 – According to The Tax Foundation, the average American has to work until April 17th just to pay federal, state, and local taxes.  Back in 1900, "Tax Freedom Day" came on January 22nd.

10 – When the U.S. government first implemented a personal income tax back in 1913, the vast majority of the population paid a rate of just 1 percent, and the highest marginal tax rate was just 7 percent.

If it was up to me, I would abolish the income tax and shut the IRS down.

But neither major political party in the United States is even willing to consider such a thing.

So the monstrous system that we have created will continue to get even bigger and even more complicated.

We are literally being taxed into oblivion, and most Americans don't even seem to care.


via Zero Hedge Tyler Durden

Goodbye Polar Vortex; Hello Solar Vortex – El Nino Is Coming

Thirsty Californians are pinning their hopes that worried farmers in Australia are right. After months of the Polar Vortex dumping snow on the US east coast and drought on the west coast (and crushing the American Dream of an 'escape velocity' economy), The US Climate Prediction Center issued an El Nino watch bring hope of a big rain year for California, floods in South America, and dismal droughts in Southeast Asia. The Australian Bureau of Meteorology said an El Nino could occur during the southern hemisphere winter from May-July. Increased sea surface temperatures suggest an increasing chance of the global weather phenomenon and the great rotation from a Polar Vortex to a Solar Vortex.


Aussie Farmers are already struggling and this could be a major problem:

Climate models show an increased chance of a 2014 El Nino weather event, said Australia's bureau of meteorology, leading to possible droughts in Southeast Asia and Australia and floods in South America, which could hit key rice, wheat and sugar crops.


The Australian Bureau of Meteorology (BOM) said an El Nino could occur during the southern hemisphere winter, May-July, with Australian cattle and grain farmers already struggling with drought which has cut production.


The last El Nino in 2009/10 was categorised weak to moderate. The most severe El Nino was in 1998 when freak weather killed more than 2,000 people and caused billions of dollars in damage to crops, infrastructure and mines in Australia and other parts of Asia.


"The latest climate model survey by the shows that the tropical Pacific is very likely to warm in the coming months, with most models showing sea surface temperatures reaching El Nino thresholds during the southern hemisphere winter," the BOM said in an emailed statement.

But Californians are exuberant at the possibility…

The U.S. Climate Prediction Center issued an El Niño watch this month, citing a 52 percent chance of Pacific Ocean waters warming and creating – possibly – a wetter-than-average winter.



Historically, El Niño conditions have been associated with the state's biggest rain years, including the winters of 1997-98 and 1982-83, which brought fatal mudslides to the Santa Cruz Mountains and devastating surf to the Southern California coast. In 1997-98, San Francisco was pounded by a record 47.2 inches of rain.

But while El Niño boosts the odds of rain, it provides no guarantees, especially if the ocean warming isn't extreme.

Typically, El Niño brings drier weather to the western Pacific, in places such as Australia and Indonesia, and wetter weather to the Americas, he said.


The effects vary considerably with the strength of El Niño – and can differ from place to place.


For example, weak to moderate El Niño conditions have brought more rain to Southern California, while doing little for the northern part of the state. But a strong El Niño historically has increased rainfall across the entire state.


"If that gets locked in place, it can lead to storm after storm after storm," said John Monteverdi, a meteorology professor at San Francisco State University.

Meanwhile not everyone is exuberant as The India Times reports:

India's weather office is snarling at these forecasters and accusing them of conspiring to rattle the country's commodities and stock markets.

We are sure this will provide global meteorolgists and economists plenty of ammo for their hockey-stick recoveries to miss expectations…


via Zero Hedge Tyler Durden