Tag: news

Further protests and a plethora of headlines this morning from both sides in the troubled European (for now) nation. The Ukrainian foreign minister begins by noting that "its impossible to take Ukraine away from Russia," that Ukraine was "right to take attractive Russia offer," and that protests aren't peaceful. Opposition leader Klitschko responded that "Ukrainians dream of a stable, modern country," and that a majority of Ukrainians want "European values," and asks for "international help." Romania's Basescu is concerned and urges the Ukrainian army to stay out of the conflict. But, as Martin Armstrong notes below, according to a former adviser to Vladimir Putin, the economist Andrei Illarionov, the Kremlin will take one of three possible scenarios with respect to the Ukraine problem to "assert a lot of pressure on Kiev."

Submitted by Martin Armstrong of Armstrong Economics,

According to a former adviser to Vladimir Putin, the economist  Andrei Illarionov, the Kremlin will take one of three possible scenarios with respect to the Ukraine problem. The most dramatic will be the establishment of full control over the whole Ukraine. Within the first half of February, Illarionov states that Russia will begin the total pressure on Ukraine, the purpose of which, will be to assert full control of Moscow over the country.

According to Illarionov, within the next week, Russia will begin to assert a lot of pressure on Kiev. Moscow has resumed a reduced trade war with Ukraine and there has been an information war against Ukraine put out by the government. In particular, there is a delay at the border of Ukrainian goods moving into Russia for 10-15 days. This is expected to increase domestic economic pressure in Ukraine.

The mainstream news in Russia portrays the Ukrainian protesters as criminals and what they are attempting to do amounts to a coup. Some even claim this will lead to a resurgence of Nazis and neo-Nazis power on the border. Purpose of this revolution in Ukraine is to accomplish, says Illarionov literally, is “genocide and the destruction of the Russian population.”

Others in Russia talk about the “reunification” of Russian lands, not that Ukraine is even a separate country. They place this in the news and the context is justified the same as German unification. The Eastern part of Ukraine was historically once Russia. This  is the same justification Iraq made on invading Kuwait. The Western portion of Ukraine was never part of Russia so this reasoning would not apply. Indeed, even in the West they speak Ukrainian whereby in the East they speak Russian. We could see Russia justify taking the East as a “reunification” but I would not expect anything before the Olympic games are over.

At the same time, according to the ex-adviser to Putin, Russia has increased its presence in Ukraine, in particular, in the Crimea and the Luhansk region, where the predominant Russian population live. They entered that region to protect the Russian population in eastern Ukraine. Additional Russians were sent into Sevastopol to protect it from the raging swells against Russians. All this gives the impression of a major well-prepared campaign that has just begun and will go on increasing in February. It is not much different from American troops being sent to a foreign land to protect Americans.

Illarionov believes that the active phase will begin immediately after the opening of the Olympics in Sochi, February 7-8th. It is unlikely that Russia would take any such action prior to the Olympics. What happens after the games, is purely political motivation. However, the Russian government will paint the Ukrainian protesters as criminals no different than Hoover called the Bonus Army criminals to justify military action against them in Washington back in 1932.

According to Illarionov, Russia’s options are

• (1) establishing a baseline scenario control over the entire Ukraine. This would be the most appropriate option;
• (2) pro-Kremlin politicians and political scientists see this as the federalization or confederation Ukraine in the context of reunification as a state subservient to Moscow. and
• (3) llarionov suggests that if the first two options fail, then control over the Crimea, Luhansk , and possibly part of Sumy region will need to be established under this idea of “reunification” with Moscow over part of the country in the East joining the Russian population with their mother country.

Illarionov believes that the outcome is really predetermined and that whatever attempts are made to pretend to appoint a opposition Prime Minister of Ukraine, the decision is simply a stall tactic.

It is very clear that many Russian politicians call directly for a popular idea to recreate the age-old dream of reunification of Ukraine and Russia. It is very clear that many have never considered Ukraine as an independent state and call it “nedogosudarstvom”. From their point of view, Ukraine will no longer be so weak in relation to Russia, and Russia will not be as strong in relation to Ukraine, as it is today.

The Western powers represented by the EU and the US have nothing to stand on to protect Ukraine and can only offer lip-service at best. So once again, it appears that Ukraine is doomed and the best one can hope for there, is that Russia will allow the West to leave. The countdown goes forward and the political and economic crisis is indicative of what we see with the first shot across the bow in the rising trend of the Cycle of War.

Source: http://ift.tt/1koiYtq

via Zero Hedge http://ift.tt/1fxj7sK Tyler Durden

While stocks are still near record highs and the inventory-stuffed picture of economic growth for the US ticks up to its fastest pace in 2 years, Time reports that a study (below) by the Corporation for Enterprise Development (CFED) shows nearly half of Americans are living in a state of “persistent economic insecurity,” that makes it “difficult to look beyond immediate needs and plan for a more secure future.” In other words, too many Americans are living paycheck to paycheck… but their findings get worse.

As Time notes,

The CFED calls these folks “liquid asset poor,” and its report finds that 44% of Americans are living with less than $5,887 in savings for a family of four.

The plight of these folks is compounded by the fact that the recession ravaged many Americans’ credit scores to the point that now 56% percent of us have subprime credit.

That means that if emergencies arise, many Americans are forced to resort to high-interest debt from credit cards or payday loans.

And this financial insecurity isn’t just affected the lower classes. According to the CFED, one-quarter of middle-class households also fall into the category of “liquid asset poor.”

Geographically, most of the economically insecure are clustered in the South and West, with Georgia, Mississippi, Alabama, Nevada, and Arkansas being the states with the highest percentage of financially insecure.

Full study below:

2014 Scorecard Report

via Zero Hedge http://ift.tt/1fkwbA6 Tyler Durden

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

Well this sounds like one of the worst ideas I have heard of in a long time. Naturally, it would emerge from the EU, the sorriest excuse for a fake government the world has ever seen.

While I have reported previously on regulatory efforts to put all sorts of invasive mandatory devices in U.S. automobiles (from October of last year Big Brother is Coming to Your Car), this idea from the EU take things to a whole other level of insanity.

From the BBC:

A device that would enable police to stop vehicles remotely is being considered by an EU-wide official working group, it has emerged.

 

The feasibility of such technology is being examined by members of the European Network of Law Enforcement Technology Services (Enlets).

 

The technology could impact on both road safety and civil liberties.

Civil liberties? What are those?

The BBC understands it would take several years for any such technical proposal to be drafted.

 

One EU document, from 4 December, sets out the Enlets 2014-20 work programme as including: “Remote Stopping Vehicles”.

 

It says “this project will work on a technological solution that can be a ‘build in standard’ for all cars that enter the European market”.

 

It is not clear what cost implications that would have for car makers.

No, but the implications for the peasant class are crystal clear.

The work of Enlets is little known and has emerged in part through documents published by the civil liberties campaign group Statewatch.

These people are out of control.

Full article here.

[ZH: Perhaps this utter insanity would be more palatable with a different marketing angle? At least we can have a laugh as the encroachment on personal privacy and civil liberties continues unabated]

via Zero Hedge http://ift.tt/1ksBvou Tyler Durden

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

Well this sounds like one of the worst ideas I have heard of in a long time. Naturally, it would emerge from the EU, the sorriest excuse for a fake government the world has ever seen.

While I have reported previously on regulatory efforts to put all sorts of invasive mandatory devices in U.S. automobiles (from October of last year Big Brother is Coming to Your Car), this idea from the EU take things to a whole other level of insanity.

From the BBC:

A device that would enable police to stop vehicles remotely is being considered by an EU-wide official working group, it has emerged.

 

The feasibility of such technology is being examined by members of the European Network of Law Enforcement Technology Services (Enlets).

 

The technology could impact on both road safety and civil liberties.

Civil liberties? What are those?

The BBC understands it would take several years for any such technical proposal to be drafted.

 

One EU document, from 4 December, sets out the Enlets 2014-20 work programme as including: “Remote Stopping Vehicles”.

 

It says “this project will work on a technological solution that can be a ‘build in standard’ for all cars that enter the European market”.

 

It is not clear what cost implications that would have for car makers.

No, but the implications for the peasant class are crystal clear.

The work of Enlets is little known and has emerged in part through documents published by the civil liberties campaign group Statewatch.

These people are out of control.

Full article here.

[ZH: Perhaps this utter insanity would be more palatable with a different marketing angle? At least we can have a laugh as the encroachment on personal privacy and civil liberties continues unabated]

via Zero Hedge http://ift.tt/1ksBvou Tyler Durden

The biggest problem facing European banks – one we highlighted most recently yesterday when we showed the latest 20% surge in Spanish Banco Popular Non-Performing Loans to a fresh record – and one we have been covering since 2010, which as of 2012 amounted to some $4.5 trillion that needs to be “remedied” – is the staggering amount of bad debt on the books of Europe’s numerous banks, the bulk of which especially in the periphery are cojoined with their sovereign host in an unbreakable bond which despite Europe’s theatrical attempts to sever, only keeps getting stronger.

But while, so far at least, the conventional “under the table” can-kicking European bailout mechanism involved a process whereby banks would issue bonds with a sovereign “guarantee”, then promptly repo them to the ECB at virtually no haircut as the Goldman alum-led central bank did everything in its power to keep injecting liquidity in an insolvent continental banking system (while everyone pretended to not realize what was going on as the “A-ha” moment of public epiphany would mean the emperor would suddenly have no clothes and the jig was up), this week things changed.

On Wednesday, Italy’s government voted final approval to a decree hiking the value of Bank of Italy’s share capital from €156K to €7.5 billion – something that had not been done since the 1930s. Of course, politicians determining the fictitious value of a central bank is one thing, as idiotic as it may be. However, what is truly preposterous is the covert bailout that accompanies the decree: a key part of the decision was setting a 3% ceiling on the stake that the bank’s shareholders can own in the central bank. This means, as Reuters reports, that Intessa and UniCredit, currently the central bank’s largest shareholders with stakes of 42 percent and 22 percent respectively – not to mention two of Italy’s most NPL-heavy banks – will have to sell the bulk of their central bank “equity” stakes. And who will they sell them to? Why the central bank itself, and in return they will pocket up to €3.5 billion ($4.7 billion) from the sale of their central bank holdings. Said otherwise, Italy took not only bizarro accounting, but also monetary financing of insolvent banks by the monetary authority, and thus Italy’s taxpayers, to the truly next level.

Some more details on this supremely grotesque, and certainly not last, bailout from Reuters:

The decree says the banks have three years to comply with the new rules.

 

Should Intesa Sanpaolo sell a 39 percent stake, it could cash in up to 2.3 billion euros before tax according to analysts’ calculations based on the new share capital of the Bank of Italy.

 

UniCredit could pocket a gross capital gain of around 1.15 billion euros from the disposal of its 19 percent stake in the central bank.

 

The only other lender with a stake in the central bank exceeding 3 percent is Carige which stands to reap a capital gain of 73 million euros if it sold part of its holding to comply with the decree.

And the cherry on top, confirming that Basel III is the biggest regulatory supervision joke conceived in Basel whose only purpose is to perpetuate a system of insolvent banks no matter the taxpayer cost, is that the capital gains from the sale would be used to boost the banks’ core capital.

For those asking – yes: Italy’s central bank just made sure Intessa and UniCredit pass Europe’s stress test with flying color courtesy of a direct $4.7 billion deposit.

Sadly, this most brazen bailout will only benefit the abovementioned two banks:  “The ownership limit will benefit only Intesa Sanpaolo and UniCredit,” said Fabrizio Bernardi, analyst at Fidentiis Equities. “It will not help, however, Monte dei Paschi di Siena and Banca Carige, which are desperate for capital,” he added. Monte dei Paschi has to raise 3 billion euros later this year to pay back state aid, while Carige needs to boost its capital by 800 million euros.

That’s ok, we are sure the MIT diaspora of brilliant bankers who rule the world (literally) will come up with some another ingenious plan to mask the epic insolvency of Monte Paschi in the 11th hour, kicking the can for another several months, until the next leg lower in the European depression forces Europe’s banks to get yet another bailout, and so on, until one day there are no more people left to fool.

Perhaps the piece de resistance is that not only is the central bank bailing out insolvent banks, but it is indirectly also funding the sovereign: the new law will also help public finances thanks to the taxation of the capital gain the banks will register.

Simply remarkable.

And it would have been even more unbelievable had nobody in Italy’s parliament figured out this was simply yet another taxpayer funded gift to Italy’s banks. Somebody, however, did. Guardian reports that late on Wednesday, MPs of Beppe Grillo’s M5S “stormed the government benches, put on symbolic gags and kept up a barrage of whistling after the speaker, Laura Boldrini, cut short the debate and ordered a vote on a complicated and intensely controversial measure to square Italy’s public accounts. One of Grillo’s followers said an MP from the governing majority had slapped her during the disorder. Opposition MPs claim that the measure would hand more than €7bn (£5.8bn) of taxpayers’ money to the banks.” Of course, what better way to fast-track yet another taxpayer bailout than to cut any debate short.

And this being Italy, where the phrase “political circus” is redundant, things just went uphill from here:

Members of the far-right opposition Brothers of Italy party showered chocolate coins on the government’s representatives in the chamber and unfurled an Italian flag. After the vote was taken, Boldrini’s party colleagues in the radical Left Ecology and Freedom (SEL) party broke into a chorus of the old partisan song Bella Ciao, prompting the M5S to respond with a rendition of the national anthem.

 

 

It is the first time since the foundation of the Italian republic after the second world war that a speaker has used the power to cut short a debate in this way. If she had not intervened, the decree at the centre of the dispute would have lapsed at midnight and Italian homeowners would have been landed with a bill for €2.2bn.

 

Enrico Letta’s left-right coalition government won the vote by 236 to 209.

 

The decree was the latest stage in the government’s tortuous efforts to fulfil an election pledge by Silvio Berlusconi to scrap an unpopular tax on first homes – and to do so without increasing Italy’s already vast, €2tn public debt. Part of the cost is being passed to banks. 

 

But the decree included provisions for an increase in the capital of Italy’s central bank – a move that will swell the balance sheets of the commercial banks that are shareholders in the Bank of Italy.

 

Since the central bank is to use its statutory reserves for the increase, the M5S argued that it amounted to a gift of more than €7bn to the banks.

And they were right. But that’s ok – at least everyone get’s to pretend for a few months longer that the system, which now needs ever more creative bailouts, is solvent.

via Zero Hedge http://ift.tt/1ijwRIL Tyler Durden

Google reported Thursday later afternoon and the early morning traders didn’t know what to make of the numbers – with the stock gyrating up and down. The following day, CNBC’s 2nd annual sitck draft stock picking contest ended. Guess what happened? For the impatient, I cna put the video here…

via Zero Hedge http://ift.tt/1nAmnrs Reggie Middleton