Europe Unveils Its Latest Deus Ex Machina Growth Bazooka: Encourage Debt-Cutting “Reform” With Even More Debt

A year ago, in order to prevent the collapse of the Eurozone, the ECB came out with the first (of many) deus ex machina bazooka when it unveiled the OMT – a massive project so ambitious, it never actually existed (its legal term sheet has never been unveiled and never will be unveiled simply because it is by definition impossible) but was merely intended to scare everyone into submission by the ECB’s sheer will (or stupidity – it is still unclear which prevailed). One day, the OMT will be tested only to reveal it was never meant to be put into use, but until that day Mario Draghi managed to buy Europe some time. Today, the Eurozone unveiled just how it plans to spend that time – by coming up with deus ex plan #2: much more (unfunded) debt.

Just out from Reuters:

  • EURO ZONE COUNTRIES CONSIDERING CHEAP LOANS AS INCENTIVE FOR GOVERNMENTS TO ENACT ECON REFORMS-DOCUMENT
  • TO QUALIFY, COUNTRIES WOULD HAVE TO DRAW UP LEGALLY BINDING PLAN FOR REFORM APPROVED BY MEMBER STATES-DOC
  • LOANS WOULD NOT BE LINKED TO COST OF REFORM BUT MEANT AS GENERAL SUPPORT FOR THE ECONOMY-DOCUMENT
  • LOANS FOR REFORMS WOULD NOT BE AVAILABLE TO COUNTRIES RUNNING EXCESSIVE MACROECONOMIC IMBALANCES OR UNDER BAILOUT-DOC

In other words, “encourage” debt-cutting reforms by dangling the carrot of even more debt.

Circular reasoning aside, this is fine and good – as we have shown many times in the past, the biggest failure of the Eurozone currently is the complete collapse of its monetary piping, as private loan creation growth in the Eurozone drops to record low after record low with every passing month.

And since European inflation just took a turn for the worse, absent some massive debt-boost strategy things will only get worse. Which in turn explains why suddenly Europe is fixated – once again – on pumping inflation stimulating debt at any cost.

So while on the surface this plan would make sense, if only to buy Europe some more time, before the revelation that the current setup simply does not work, there is one major snag:

  • NO FIRM PLAN YET HOW TO FINANCE THE LOANS, WHICH COULD BECOME THE NUCLEUS OF A EURO ZONE BUDGET-DOC

Oops. Then again, there is always the ECB, which everyone now expected to unveil some new and improved inflation-boosting project in the near future. One can only assume they will somehow be involved in the “financing” component.

And finally there is another problem:

  • DIJSSELBLOEM REJECTS IDEA OF FINANCIAL INCENTIVES FOR REFORMS
  • DIJSSELBLOEM IN FAVOR OF DEADLINES FOR REFORMS: HANDELSBLATT

Ah Europe, never a dull day. At least we would be tentatively inching back into those 3x levered Brussels caterer ETFs. Because the return of European summits seems just around the horizon…


    



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

Europe Unveils Its Latest Deus Ex Machina Growth Bazooka: Encourage Debt-Cutting "Reform" With Even More Debt

A year ago, in order to prevent the collapse of the Eurozone, the ECB came out with the first (of many) deus ex machina bazooka when it unveiled the OMT – a massive project so ambitious, it never actually existed (its legal term sheet has never been unveiled and never will be unveiled simply because it is by definition impossible) but was merely intended to scare everyone into submission by the ECB’s sheer will (or stupidity – it is still unclear which prevailed). One day, the OMT will be tested only to reveal it was never meant to be put into use, but until that day Mario Draghi managed to buy Europe some time. Today, the Eurozone unveiled just how it plans to spend that time – by coming up with deus ex plan #2: much more (unfunded) debt.

Just out from Reuters:

  • EURO ZONE COUNTRIES CONSIDERING CHEAP LOANS AS INCENTIVE FOR GOVERNMENTS TO ENACT ECON REFORMS-DOCUMENT
  • TO QUALIFY, COUNTRIES WOULD HAVE TO DRAW UP LEGALLY BINDING PLAN FOR REFORM APPROVED BY MEMBER STATES-DOC
  • LOANS WOULD NOT BE LINKED TO COST OF REFORM BUT MEANT AS GENERAL SUPPORT FOR THE ECONOMY-DOCUMENT
  • LOANS FOR REFORMS WOULD NOT BE AVAILABLE TO COUNTRIES RUNNING EXCESSIVE MACROECONOMIC IMBALANCES OR UNDER BAILOUT-DOC

In other words, “encourage” debt-cutting reforms by dangling the carrot of even more debt.

Circular reasoning aside, this is fine and good – as we have shown many times in the past, the biggest failure of the Eurozone currently is the complete collapse of its monetary piping, as private loan creation growth in the Eurozone drops to record low after record low with every passing month.

And since European inflation just took a turn for the worse, absent some massive debt-boost strategy things will only get worse. Which in turn explains why suddenly Europe is fixated – once again – on pumping inflation stimulating debt at any cost.

So while on the surface this plan would make sense, if only to buy Europe some more time, before the revelation that the current setup simply does not work, there is one major snag:

  • NO FIRM PLAN YET HOW TO FINANCE THE LOANS, WHICH COULD BECOME THE NUCLEUS OF A EURO ZONE BUDGET-DOC

Oops. Then again, there is always the ECB, which everyone now expected to unveil some new and improved inflation-boosting project in the near future. One can only assume they will somehow be involved in the “financing” component.

And finally there is another problem:

  • DIJSSELBLOEM REJECTS IDEA OF FINANCIAL INCENTIVES FOR REFORMS
  • DIJSSELBLOEM IN FAVOR OF DEADLINES FOR REFORMS: HANDELSBLATT

Ah Europe, never a dull day. At least we would be tentatively inching back into those 3x levered Brussels caterer ETFs. Because the return of European summits seems just around the horizon…


    



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

Ronald Bailey Argues It Is Crazy to Subsidize Activities that Might Harm the Climate

warsaw walkoutIt’s crazy to pay people to burn more
fossil fuels if one is concerned about man-made global warming. At
the 19th Conference of the Parties (COP-19) of the
U.N.’s Framework Convention on Climate Change (UNFCCC) in Warsaw,
one of the best ideas for lowering the emissions of greenhouse
gases is to eliminate billions in consumer and producer fossil fuel
subsidies. Eliminating agricultural subsidies would lower the
emissions of nitrous oxide that also contribute to global warming.
Reason Science Correspondent Ronald Bailey points out that cutting
these enormous subsidies would not only help reduce any future
global warming, it would definitely cut tax bills.

View this article.

from Hit & Run http://reason.com/blog/2013/11/22/ronald-bailey-argues-it-is-crazy-to-subs
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Come for the Argument That Casual Drug Use Shouldn’t Be Treated Differently Than Alcohol, Stay for the Spirited Comments

Yesterday,
I posted a column at Time.com arguing that casual drug use
shouldn’t be seen as categorically different than casual alcohol
use.

The news hook, of course, was Rep. Trey Radel’s pleading guilty
to cocaine possession after getting nabbed in a Washington, D.C.
drug sting (great use of police resources, by the way, nabbing a
guy buying a few grams of coke in a Dupont Circle bar from an
undercover cop).

I document in the piece that exceedingly few people who use
currently illegal drugs go on to become regular users of those
substances, much less addicts. Even Radel, a conservative
Republican from Florida, didn’t say he was a cocaine addict –
instead, he blamed his decision to buy coke on his alcoholism.

Here’s a snippet from my article:

Prohibitionists typically deny the very possibility of
responsible or voluntary use of currently illegal substances. They
argue that drugs such as coke, heroin, ecstasy, methamphetamine and
even marijuana are verboten precisely because they simply can’t be
used casually. Any use either already constitutes abuse or quickly
leads to it. “Drugs are not dangerous because they are illegal,”
former drug czar William Bennett and former Health, Education and
Welfare Secretary Joseph Califano wrote in a 2011 Wall
Street Journal op-ed, “they are illegal because they
are dangerous.”

Nearly 50% of people have tried an illegal drug at least once,
yet most don’t repeat the experience. With cocaine, most who have
tried it not only don’t go on to became addicts under even the most
expansive possible definition of the term, they don’t even go on to
become regular users.

According to the
latest National
Survey on Drug Use and Health, 14.5% of Americans ages 12 and
older have tried cocaine at least once, but just 1.8% report using
the drug recreationally in the past year. And just 0.6% have used
it in the past 30 days, which would seem to be the minimal
definition of a casual user.

The same pattern is true for heroin, which is typically talked
about as magically addictive. Fear of the drug is surely one of the
reasons why just 1.8% of Americans have ever tried it at all. But
only 0.3% report using it in the past year and just 0.1% in the
past month. That pattern simply shouldn’t be possible if these
drugs were as addictive as commonly thought.


Read the whole thing here. And check out the comments
section, where a thoughtful and full-blooded discussion is taking
place over the question of whether drugs should be illegal and
whether people can in fact use these substances responsibly.
“Gifting the market in narcotics to ruthless criminals,
foreign terrorists, and corrupt law enforcement officials is
seriously compromising our future,” writes one commenter, while
another says, “You’re only addicted when you can’t
afford it.”

Opponents of legalization are well represented too, but I think
it’s a sign of the times that Time.com is not only open to running
articles titled “What’s So Bad About Casual Drug Use?” but readers
are seriously debating the merits of a major change in federal
policy.

from Hit & Run http://reason.com/blog/2013/11/22/come-for-the-argument-that-casual-drug-u
via IFTTT

Come for the Argument That Casual Drug Use Shouldn't Be Treated Differently Than Alcohol, Stay for the Spirited Comments

Yesterday,
I posted a column at Time.com arguing that casual drug use
shouldn’t be seen as categorically different than casual alcohol
use.

The news hook, of course, was Rep. Trey Radel’s pleading guilty
to cocaine possession after getting nabbed in a Washington, D.C.
drug sting (great use of police resources, by the way, nabbing a
guy buying a few grams of coke in a Dupont Circle bar from an
undercover cop).

I document in the piece that exceedingly few people who use
currently illegal drugs go on to become regular users of those
substances, much less addicts. Even Radel, a conservative
Republican from Florida, didn’t say he was a cocaine addict –
instead, he blamed his decision to buy coke on his alcoholism.

Here’s a snippet from my article:

Prohibitionists typically deny the very possibility of
responsible or voluntary use of currently illegal substances. They
argue that drugs such as coke, heroin, ecstasy, methamphetamine and
even marijuana are verboten precisely because they simply can’t be
used casually. Any use either already constitutes abuse or quickly
leads to it. “Drugs are not dangerous because they are illegal,”
former drug czar William Bennett and former Health, Education and
Welfare Secretary Joseph Califano wrote in a 2011 Wall
Street Journal op-ed, “they are illegal because they
are dangerous.”

Nearly 50% of people have tried an illegal drug at least once,
yet most don’t repeat the experience. With cocaine, most who have
tried it not only don’t go on to became addicts under even the most
expansive possible definition of the term, they don’t even go on to
become regular users.

According to the
latest National
Survey on Drug Use and Health, 14.5% of Americans ages 12 and
older have tried cocaine at least once, but just 1.8% report using
the drug recreationally in the past year. And just 0.6% have used
it in the past 30 days, which would seem to be the minimal
definition of a casual user.

The same pattern is true for heroin, which is typically talked
about as magically addictive. Fear of the drug is surely one of the
reasons why just 1.8% of Americans have ever tried it at all. But
only 0.3% report using it in the past year and just 0.1% in the
past month. That pattern simply shouldn’t be possible if these
drugs were as addictive as commonly thought.


Read the whole thing here. And check out the comments
section, where a thoughtful and full-blooded discussion is taking
place over the question of whether drugs should be illegal and
whether people can in fact use these substances responsibly.
“Gifting the market in narcotics to ruthless criminals,
foreign terrorists, and corrupt law enforcement officials is
seriously compromising our future,” writes one commenter, while
another says, “You’re only addicted when you can’t
afford it.”

Opponents of legalization are well represented too, but I think
it’s a sign of the times that Time.com is not only open to running
articles titled “What’s So Bad About Casual Drug Use?” but readers
are seriously debating the merits of a major change in federal
policy.

from Hit & Run http://reason.com/blog/2013/11/22/come-for-the-argument-that-casual-drug-u
via IFTTT

Today’s Alternative Anniversaries for Those Allergic to Boomer Nostalgia

Hate the oh-what-a-night nostalgia of
JFK assassination anniversary stories? Then read this
acidic Jack Shafer take about the coverage, wash it down with
Nick Gillespie’s
skewering of Boomer narcissism, and browse through the recent
JFK musings of our resident conspiracy-historian,
Jesse Walker.

Or, if you prefer sidestepping the whole tawdry business
altogether and making your own anniversary memories instead, choose
among these sadly neglected Nov. 22 events from years gone by. For
instance, this 1987
broadcast-hijacking by a Chicago man dressed as Max
Headroom:

 

Terrifying.

Prefer a more momentous conspiracy, at the highest levels,
involving murder and the mass confiscation of property? Then strap
on your Dan Brown boots and luxuriate in the 1307 Papal Bull
Pastoralis
Praeeminentiae by the Goth French Pope Clement V,
ordering Christian monarchs to persecute the
Knights of Templar. It’s more creepy with a soundtrack:

 

Today is the 9th anniversary of the beginning of Ukraine’s
Orange
Revolution, the 24th anniversary of all kinds of stuff relating
to the collapse of communism (such as this
massive rally on Prague’s Wenceslas Square), the 38th
anniversary of Spanish King Juan
Carlos‘s ascension to the throne (Señor Franco, he still
dead!), the 70th anniversary of Lebanon’s independence from
France, the 85th anniversary of
the premier of Ravel’s Boléro (celebrate with Bo Derek!), and
the 155th birthday of
Denver, Colorado.

As Professor Barack Obama
taught us, we are the anniversary we’ve been waiting for, so
there’s no need whatsoever to accept other people’s historical
priorities. Nominate your favorite Nov. 22 alternatives in the
comments, and I’ll update the post with good ones.

from Hit & Run http://reason.com/blog/2013/11/22/todays-alternative-anniversaries-for-tho
via IFTTT

David Stockman Blasts “It’s 2007/8 All Over Again”

“Bubbles are breaking out everywhere,” exclaims outspoken former-insider David Stockman in this brief FoxTV clip, warning that “its like 2007/2008 all over again.” Of course, we have heard ‘bubble’ talk before but Stockman steps methodically from the broad market (exposing the incredible numbers behind the Russell 2000) to junk bonds (and the record-breaking issuance and risk ignorance) and Fannie Mae (as an example of the idiocy). Crucially, Stockman explains to Neilo Cavuto who tempers the bubble-talk with aggregate measures, “bubbles don’t form at the heart of the Dow, they form on the speculative periphery of the economy and work their way in,” – something that is very evident in today’s market, “the market will have a huge hissy-fit if Yellen tapers… the Fed has taken itself hostage.”

 

Stockman goes on to destroy the myth of a housing recovery “there are few ‘real buyers’ this is massive speculation only”

“This is the 4th bubble the Fed has created through easy money and printing press expansion.”

“we need to get the Fed out of the market…”

“the market will have a huge hissy-fit if Yellen tapers…”

“the Fed has taken itself hostage”

“This is a destructive poisonus monetray medicine that is being put into the system that is distorting all kinds of economic mechanisms with malinvestments on a massive scale”

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/CBMOaBSOED4/story01.htm Tyler Durden

David Stockman Blasts "It's 2007/8 All Over Again"

“Bubbles are breaking out everywhere,” exclaims outspoken former-insider David Stockman in this brief FoxTV clip, warning that “its like 2007/2008 all over again.” Of course, we have heard ‘bubble’ talk before but Stockman steps methodically from the broad market (exposing the incredible numbers behind the Russell 2000) to junk bonds (and the record-breaking issuance and risk ignorance) and Fannie Mae (as an example of the idiocy). Crucially, Stockman explains to Neilo Cavuto who tempers the bubble-talk with aggregate measures, “bubbles don’t form at the heart of the Dow, they form on the speculative periphery of the economy and work their way in,” – something that is very evident in today’s market, “the market will have a huge hissy-fit if Yellen tapers… the Fed has taken itself hostage.”

 

Stockman goes on to destroy the myth of a housing recovery “there are few ‘real buyers’ this is massive speculation only”

“This is the 4th bubble the Fed has created through easy money and printing press expansion.”

“we need to get the Fed out of the market…”

“the market will have a huge hissy-fit if Yellen tapers…”

“the Fed has taken itself hostage”

“This is a destructive poisonus monetray medicine that is being put into the system that is distorting all kinds of economic mechanisms with malinvestments on a massive scale”

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/CBMOaBSOED4/story01.htm Tyler Durden

Lack Of Crime Doesn’t Pay: JPM Banker Pay To Remain Flat In 2013

In the aftermath of the devastating, vicious, tax-deductible DOJ settlement with JPMorgan, its stock may have responded by soaring to new all time highs (unclear if it was JPM’s prop desk – in violation of the Volcker and every other rule – doing most of the buying) but that doesn’t mean the benefits go out equally to all. According to Reuters, while JPM’s shareholders will reap the benefits of yet another year in which Jamie Dimon uses nearly $600 billion in excess reserves, aka excess deposits, to ramp product risk around the globe and corner assorted markets (until various unknown teapot tempests blow up in his face), JPM’s employees – unable to manipulate every market as much as they want to, and as much as they have in the past now that every action by JPM is scrutizined – will be stuck with total all in compensation that is unchanged from last year. Oh the humanity.

From Reuters:

“JPMorgan Chase & Co plans to keep overall compensation roughly flat this year from last year, in a sign that employees will feel at least some pain from the bank’s recent legal settlements, according to two sources familiar with the matter. Pay increases have been muted across much of the banking sector in the aftermath of the financial crisis, but JPMorgan’s decision would put the bank on the lower end of expectations for the rest of the industry.”

However, be not sad dear JPM bankers – it was only 3 years ago that the entire world was crucifying Goldman Sachs leading to a plunge in comp for the firm’s little tentacles, which forced the hedge fund that controls every central bank in the world to go deep underwater. Since then comp has recovered and many Goldman partners are bringing in more than ever before.

So while JPM may suffer the idignity of not offering its workers a good solid raise for countless alleged acts of small and large criminality (because the firm may never admit or deny guilt), how is the rest of Wall Street doing?

Earlier this month, compensation consultant Johnson Associates estimated that commercial and retail bankers overall will get bonuses that are unchanged to 5 percent higher this year. It estimated bonuses across all of Wall Street, including large asset management firms, will be up 5 to 10 percent.

 

Options Group estimated that average pay will rise 4 percent.

 

At JPMorgan, bonuses were largely locked down early this week, though payouts could change in unusual situations or if there is an unexpected change in the company’s results during the last six weeks of the year, said the sources, who spoke on the condition of anonymity.

 

About 156,000 of JPMorgan’s 255,000 employees work in retail, mortgage and credit card businesses, where pay is generally lower than in its investment bank.

…

 

“We have never blamed employees broadly for mistakes that were made away from them,” Dimon said on Tuesday in response to a question from a stock analyst about compensation expense.

… Just paid them less. And speaking of Jamie, how is his bonus looking?

It is unclear how Dimon’s bonus will be affected by the settlements. For 2012, the board cut Dimon’s total pay in half to $11.5 million, citing the $6.2 billion of “London Whale” trading losses that happened under his watch.

Assuming equal treatment for all, how can Jamie Dimon possibly subsist on just $11 million for two years in a row – just how many more bailouts and neither admitted nor denied crime sprees will it take for the charming CEO to finally stash away enough to comfortably retire?


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/9GA9tbr8lU8/story01.htm Tyler Durden

Lack Of Crime Doesn't Pay: JPM Banker Pay To Remain Flat In 2013

In the aftermath of the devastating, vicious, tax-deductible DOJ settlement with JPMorgan, its stock may have responded by soaring to new all time highs (unclear if it was JPM’s prop desk – in violation of the Volcker and every other rule – doing most of the buying) but that doesn’t mean the benefits go out equally to all. According to Reuters, while JPM’s shareholders will reap the benefits of yet another year in which Jamie Dimon uses nearly $600 billion in excess reserves, aka excess deposits, to ramp product risk around the globe and corner assorted markets (until various unknown teapot tempests blow up in his face), JPM’s employees – unable to manipulate every market as much as they want to, and as much as they have in the past now that every action by JPM is scrutizined – will be stuck with total all in compensation that is unchanged from last year. Oh the humanity.

From Reuters:

“JPMorgan Chase & Co plans to keep overall compensation roughly flat this year from last year, in a sign that employees will feel at least some pain from the bank’s recent legal settlements, according to two sources familiar with the matter. Pay increases have been muted across much of the banking sector in the aftermath of the financial crisis, but JPMorgan’s decision would put the bank on the lower end of expectations for the rest of the industry.”

However, be not sad dear JPM bankers – it was only 3 years ago that the entire world was crucifying Goldman Sachs leading to a plunge in comp for the firm’s little tentacles, which forced the hedge fund that controls every central bank in the world to go deep underwater. Since then comp has recovered and many Goldman partners are bringing in more than ever before.

So while JPM may suffer the idignity of not offering its workers a good solid raise for countless alleged acts of small and large criminality (because the firm may never admit or deny guilt), how is the rest of Wall Street doing?

Earlier this month, compensation consultant Johnson Associates estimated that commercial and retail bankers overall will get bonuses that are unchanged to 5 percent higher this year. It estimated bonuses across all of Wall Street, including large asset management firms, will be up 5 to 10 percent.

 

Options Group estimated that average pay will rise 4 percent.

 

At JPMorgan, bonuses were largely locked down early this week, though payouts could change in unusual situations or if there is an unexpected change in the company’s results during the last six weeks of the year, said the sources, who spoke on the condition of anonymity.

 

About 156,000 of JPMorgan’s 255,000 employees work in retail, mortgage and credit card businesses, where pay is generally lower than in its investment bank.

…

 

“We have never blamed employees broadly for mistakes that were made away from them,” Dimon said on Tuesday in response to a question from a stock analyst about compensation expense.

… Just paid them less. And speaking of Jamie, how is his bonus looking?

It is unclear how Dimon’s bonus will be affected by the settlements. For 2012, the board cut Dimon’s total pay in half to $11.5 million, citing the $6.2 billion of “London Whale” trading losses that happened under his watch.

Assuming equal treatment for all, how can Jamie Dimon possibly subsist on just $11 million for two years in a row – just how many more bailouts and neither admitted nor denied crime sprees will it take for the charming CEO to finally stash away enough to comfortably retire?


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/9GA9tbr8lU8/story01.htm Tyler Durden