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There is a fear stalking the corridors of European politics. It is not the surging unemployment in France, or record delinquencies in Spain, or all-time low credit creation across the region; it is the growing concern that the powers that be have from the rise of Euroskepticism. As UKIP’s Nigel Farage exclaims to Barroso and his brood, “years ago, you were less worried… but now we are “evil”, “populists”, we are “dangerous” and are going to bring down Western Civilization.” As the outspoken Brit implores in this brief clip, there is nothing extreme in his views. “The real European debate is about identity,” he notes, “what we are saying, large numbers of us from every single EU member state is: we don’t want that flag, we don’t want the anthem that you all stood so ram-rod straight for yesterday, we don’t want EU passports, we don’t want political union.” As Greece faces down its 3rd bailout and deflationary threats loom across the region, we suspect top-down and bottom-up angst will bubble back to the surface soon enough.

 

 

 

And here, from El Pais, is a very enlightening graphic showing the considerable growth in “Extreme Right” parties across the entire European region:

 

Whether, as Farage has warned in the past, we remain on the verge of social unrest is unclear but for sure this is not the poltical union that Barroso pitches it to have become…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/dW5UBgYLZsI/story01.htm Tyler Durden

Submitted by Simon Black of Sovereign Man blog,

You know the old rule of thumb about laws–

The more high-sounding the legislation, the more destructive its consequences.

Case in point, HR 3293– the recently introduced Debt Limit Reform Act. Sounds great, right? After all, reforming the debt seems like a terrific idea.

Except that’s not what the bill really does. They’re not reforming anything. HR 3293′s real purpose is to authorize the government to simply stop counting a massive portion of the US national debt.

You see, one of the biggest chunks of the debt is money owed to ‘intragovernmental agencies’.

For example, Medicare and Social Security hold their massive trust funds in US Treasuries. This is the money that’s owed to retirees.

In fact, nearly $5 trillion of the $17 trillion debt (almost 30%) is owed to intragovernmental agencies like Social Security and Medicare.

So now they basically want to stop counting this debt. Poof. Overnight, they’ll make $5 trillion disappear from the debt.

On paper, this looks great. But in reality, they’re setting the stage to default on Social Security beneficiaries without causing a single ripple in the financial system.

Remember, when governments get this deep in debt, someone is going to get screwed.

They may default on their obligations to their creditors, causing a crisis across the entire financial system. Or perhaps to the central bank, causing a currency crisis.

But most likely, and first, they will default on their obligations to their citizens. Whatever promises they made, including Social Security, will be abandoned.

And if you read between the lines, this new bill says it all.

Not to be outdone by the United States Congress, though, the International Monetary Fund recently proposed a continental-wide ‘one off’ wealth tax in Europe.

Buried in an extensive report about Europe’s troubled economies, the IMF stated:

“The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair).”

In other words, first they want to implement capital controls to ensure that everyone’s money is trapped. Then they want to make a grab for people’s bank accounts, just like they did in Cyprus.

The warning signs couldn’t be more clear. I’ve been writing about this for years. It’s now happening. This is no longer theory.

Over the last few weeks I’ve been having my staff revise a free report we put together two years ago about globalizing your gold holdings.

In the report I mentioned that capital controls are coming. And that some governments may even ban cash transactions over a certain level.

These things have happened. Cyprus has capital controls, France and Italy have limits on cash transactions. And given this new evidence, it’s clear there’s more on the way.

Every rational, thinking person out there has a decision to make.

You can choose to trust these politicians and central bankers to do the right thing.

Or you can choose to acknowledge the overwhelming evidence and reduce your exposure to these bankrupt western countries that will make every effort to lie, cheat, and steal whatever they can from you… just to keep the party going a little while longer.

It’s time for people to wake up to this reality. You only have yourself to rely on. Not the system. Not the government. And certainly not the bankers.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0WJr-vFUED8/story01.htm Tyler Durden

We recently noted that, despite all the hot money flows and self-congratulatory extrapolation, European macro data is collapsing (as opposed to supporting ideas of recovery). In fact, it is falling at the fastest pace in over a year as the prospect of the euro area falling into deflation may be increasing; as Bloomberg’s Niraj Shah notes the single currency rises, growth loses momentum, money-supply expansion slows and bank lending stagnates. As Shah fears, that may push the region into a debt spiral as the real value of debt increases, marking a new phase in the crisis.

Inflation May Turn to Deflation

The pace of inflation has almost halved since the start of the year to a three-and-a-half year low of 1.1 percent in September. Core prices are near a record low of 0.8 percent at 1 percent. Greece is already experiencing deflation as prices fell at an annual rate of 1 percent in September. Spain’s 0.5 percent CPI rate may already be negative once the increase in the 3 percentage point rise in VAT is excluded.

Weak Credit Extension

The three-month average M3 money-supply growth stands well below the ECB’s reference rate of 4.5 percent. It slowed to 2.1 percent in September from 2.3 percent in the prior month. Credit extension is likely to remain weak as banks deleverage their balance sheets in preparation for next year’s Asset Quality Review and stress tests.

Deflation Risks Increase as Euro Strengthens

The strength of the euro will place downward pressure on prices. The Bank of International Settlements measure of the real effective exchange rate, which is deflated by the consumer price index, rose to 98.8 last month, the highest this year. The euro has risen 4.4 percent against the dollar this year.

Real Cost of Debt Servicing to Swell

Countries’ real debt will increase as they fall into deflation. The euro-area debt ratio already stood at 93.4 percent of GDP in the second quarter of 2003 versus 89.9 percent in the same quarter in 2012. Greece had a debt ratio of 169.1 percent in the second quarter. That is only surpassed by Japan and Zimbabwe. Belgium, Ireland, Italy, Portugal have debt ratios exceeding 100 percent.

Source: Niraj Shah (@economistniraj)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/AtfnjVKp2LU/story01.htm Tyler Durden

We recently noted that, despite all the hot money flows and self-congratulatory extrapolation, European macro data is collapsing (as opposed to supporting ideas of recovery). In fact, it is falling at the fastest pace in over a year as the prospect of the euro area falling into deflation may be increasing; as Bloomberg’s Niraj Shah notes the single currency rises, growth loses momentum, money-supply expansion slows and bank lending stagnates. As Shah fears, that may push the region into a debt spiral as the real value of debt increases, marking a new phase in the crisis.

Inflation May Turn to Deflation

The pace of inflation has almost halved since the start of the year to a three-and-a-half year low of 1.1 percent in September. Core prices are near a record low of 0.8 percent at 1 percent. Greece is already experiencing deflation as prices fell at an annual rate of 1 percent in September. Spain’s 0.5 percent CPI rate may already be negative once the increase in the 3 percentage point rise in VAT is excluded.

Weak Credit Extension

The three-month average M3 money-supply growth stands well below the ECB’s reference rate of 4.5 percent. It slowed to 2.1 percent in September from 2.3 percent in the prior month. Credit extension is likely to remain weak as banks deleverage their balance sheets in preparation for next year’s Asset Quality Review and stress tests.

Deflation Risks Increase as Euro Strengthens

The strength of the euro will place downward pressure on prices. The Bank of International Settlements measure of the real effective exchange rate, which is deflated by the consumer price index, rose to 98.8 last month, the highest this year. The euro has risen 4.4 percent against the dollar this year.

Real Cost of Debt Servicing to Swell

Countries’ real debt will increase as they fall into deflation. The euro-area debt ratio already stood at 93.4 percent of GDP in the second quarter of 2003 versus 89.9 percent in the same quarter in 2012. Greece had a debt ratio of 169.1 percent in the second quarter. That is only surpassed by Japan and Zimbabwe. Belgium, Ireland, Italy, Portugal have debt ratios exceeding 100 percent.

Source: Niraj Shah (@economistniraj)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/AtfnjVKp2LU/story01.htm Tyler Durden

 

 

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“I didn’t know the NSA tapped your Handyüberwachung Fraulein…”

 

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This doctor claims he didn’t know

That payments from patients would grow

The truth is he did

And just kept it hid

Protecting the old status quo

The Limerick King

 

 

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Didn’t know about the security clusterfuck in Libya.

Didn’t know about the IRS scandal.

Didn’t know his government spies on journalists.

Didn’t know the NSA engages in a domestic spy program aimed at Americans.

Didn’t know the NSA tapped Merkel’s Handyüberwachung.

Didn’t know the NSA spies on every other leader in the so called free world.

Didn’t know about the Obamacare snafu.

Didn’t know Americans would lose their existing medical coverage or see their premiums skyrocket under Obozocare.

Let’s play a game: Didn’t know _______________.

 

Three things he most definitely knows:

This week’s  televised sports schedule.

Saturday morning’s tee off time.

Days to go…

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/c2kg_TUBmy4/story01.htm williambanzai7

As the Detroit bankruptcy hearing heats up following news that the city’s unsecured creditors, among them pensioners, are set to recover pennies on the dollar, 16 to be precise, the question of which are the next cities to follow in the footsteps of bankrupt Motown, becomes relevant once again. Courtesy of the WSJ, and the second part of its series on “U.S. Cities Grapple With Finances“, here is a list of the US cities that when push comes to shove metaphorically, and when the money runs out literally, will have no choice but to knock on the door of the local regional bankruptcy court and submit that long-prepared bankruptcy petition. Specifically, here are the cities that have 10 days or less in cash on hand available. Because, unless one is the Fed, cash and lack thereof is all that matters.

The list below ranks the top 10 cities in terms of days cash on hand. Needless to say, a city with a low number in this category (such as 0.0) may have trouble paying bills, bribes, lap dances and other core municipal outlays.

 

Shifting away from the stock, and looking at the flow, as Detroit showed the world the very hard way, cities mired in pension costs will ultimately default and lead to massive haircuts to the retirees. The following 10 cities have the greatest percentage of pension costs as a percentage of the city’s general fund.

 

Of course, cash on hand while perhaps the most important factor, especially if a city becomes a net cash burner, is hardly the only indicator to keep an eye on. Additional consideration must be given to amount of reserves, or the ratio of a city’s total fund balance to expenditures, because if this is negative it means the city spends more than is available.

 

Another relevant factor: taxable real estate per capita – the lower the number here, the weaker the real-estate market, which also means the lower the city’s overall wealth and its ability to raise property-tax revenue.

 

Debt interest costs may not be a factor under the Fed’s centrally-planned ZIRP world, but when rates once again go up, there will be blood. The following 10 cities have the highest amount of debt per capita: it may not be a problem now, but it will be sooner or later.

 

Last but not least is the most subjective indicator, yet perhaps the most forward looking one: population growth. Because if anyone knows the reality behind a city’s numbers, it is the people who live there. If people see no long-term opportunities they move somewhere else – simple as that. And the less population a city has, as anyone who has played the SimCity series knows, the less property, income and sales tax can be collected, and the more costs have to be squeezed, resulting in the dreaded evil “austerity” and, ultimately, default.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/k-C_KYtNdCI/story01.htm Tyler Durden

JPMorgan shares have dropped modestly (though any drop is notable in the new normal) as the WSJ reports that the $13bn deal with the Department of Justuice may be at risk:

• *JPMORGAN FALLS 0.6% AS DOW JONES SAYS DOJ DEAL AT RISK

It appears the ‘breakdown’ is over JPMorgan’s demands that they offset payments to the DoJ from the FDIC fund (i.e. they wanted to use FDIC to fund this penalty on the basis of som epossible indemnification from the WaMu deal). DoJ lawyers are not amused (for now)…

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ZAkcG6rZja4/story01.htm Tyler Durden

JPMorgan shares have dropped modestly (though any drop is notable in the new normal) as the WSJ reports that the $13bn deal with the Department of Justuice may be at risk:

• *JPMORGAN FALLS 0.6% AS DOW JONES SAYS DOJ DEAL AT RISK

It appears the ‘breakdown’ is over JPMorgan’s demands that they offset payments to the DoJ from the FDIC fund (i.e. they wanted to use FDIC to fund this penalty on the basis of som epossible indemnification from the WaMu deal). DoJ lawyers are not amused (for now)…

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ZAkcG6rZja4/story01.htm Tyler Durden

Having recently pointed out Draghi’s worst nightmare, we thought the anti-thesis of hope over reality that is occurring in European “markets” was worth pointing out. Spanish sovereign bond spreads have collapsed this week to their lowest (least risky) in 30 months at a mere 229bps. The total and utter disconnect of this supposed ‘free market’ based measure in the face of nothing but terrible Spanish data is entirely without precedent…

 

 

Today’s retail sales beat is the latest ‘outlier’ being heralded as supporting the disconnect – of course, that is until seasonal adjustments remove all the gains and reality sets back in.

 

While many expect Spain to emerge from recession in Q3 2013 (and we assume that is the ‘hope’ trend being extraploated), it is clear, as SocGen notes, that internal consumption is expected to stall through H2 2013 and push Spain back into recession in Q1 2014…

 

Via SocGen,

…despite the small improvement in unemployment in Q3, to 25% vs. a previous 26%, the labour market situation is still too poor to stimulate domestic demand in the short term. As before, we see the 2013 real GDP in negative territory at -1.0%, with more amendments to government expenditure items expected.

 

 

 

As the Bank of Spain pinpointed in its latest economic report, government consumption and specifically employee compensation is yet to be adjusted. We thus expect the impact on GDP to kick in early 2014 and bring Spain back to recession.

Chart: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/oOJbhXh7Cm4/story01.htm Tyler Durden

If ever there was a few minutes of television to confirm the deep-seated disconnect between reality and the ivory-tower academics pulling the levers behind the curtain, CNBC’s Rick Santelli just exposed it. For once, simple questions were enough to allow none other than Nobel-Prize-winning economist Eugene Fama to show Santelli (who did his best not to explode in incredulity) that the “smartest people in the room” just don’t get it (just as they didn’t get it in 2007). Santelli was gracious and polite as he asked what the great professor’s thoughts were on QE… (and the entire brief clip is worth watching in its entirety) but his conclusion is perhaps the most stunning (and left Santelli almost silent)… when asked the impact of the Fed ‘Tapering’ or even selling down its $4 trillion in assets, Fama calmly says “it’s basically a neutral event… It’s No Big Deal!” Indeed, professor, that is so clear…

 

“What the Fed is doing now… is kind of a nothing activity.”

 

 

Or the Hollywood version…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/E5kNzBDKNg4/story01.htm Tyler Durden