March 9/GLD loses another 3.48 tonnes of gold/SLV consta Austrian/Hypo bank failure (HECTA)/USA first quarter GDP heading for 1.2%

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold: $1166.40 up $2.30   (comex closing time)
Silver: $15.75 down 3 cents  (comex closing time)



In the access market 5:15 pm



Gold $1166.90
silver $15.74








Gold/silver trading:  see kitco charts on right side of the commentary.



Following is a brief outline on gold and silver comex figures for today:



The gold comex today had a poor delivery day, registering 0 notices served for nil oz.  Silver comex registered 17 notices for 85,000 oz .


Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 257.03 tonnes for a loss of 46 tonnes over that period. Lately the removals  have been rising!


In silver, the open interest rose by an astonish 2,337 contracts even though Friday’s silver price was down 35 cents. The total silver OI continues to remain relatively high with today’s reading at 166,235 contracts. The front month of March contracted by 5 contracts.

We had  17 notices served upon for 85,000 oz.


In gold we had a huge rise in OI despite the fact that gold was down by $31.80 on Friday. The total comex gold OI rests tonight at 415,370 for a gain of 8,651 contracts. Today, surprisingly we again had only 0 notices served upon for nil oz.




Today, we had a huge withdrawal of 3.48 tonnes of gold at the GLD/Inventory rests at 753.04  tonnes


In silver, /SLV  we had no change in inventory at the SLV/Inventory, remaining at 327.332 million oz




We have a few important stories to bring to your attention today…



1.  The Greece affair.

On the weekend we outlined to you the fact that the Greek Parliamentarians raided the pension funds in order to pay the iMF. This was done on a Repo transaction.  They have to repay the pension accounts in 15 days.

The treasury bills auctioned last week must settle this week. We learned that no foreign accounts wished to purchase or roll their treasuries.  In other words, the foreigners do not want to gamble any longer and they want their cash.  If the money went to the IMF who is going to pay the sellers of the latest treasury bill auction.  Who is going to fund the next 3 weeks of IMF loans due?


Also Greece announced a hair brained scheme to try and collect the 76 billion euros of taxes owed.  They are going to hire hourly people for two months wearing a wire trying to catch tax evaders.


Today we learned that the EU totally rejected Greece’s proposals.

So what did they do? They provided fresh new proposals as they desperately need funding (zero hedge and others)


2.  First quarter USA GDP growth is heading for 1.2%  (zero hedge)


3. Chinese demand for the last reporting week in February came in at 38 tonnes. Total demand for the two months:  over 415 tonnes.  Total projected gold demand for the quarter: 550 tonnes  (Koos Jansen)


4 The Serious Fraud squad is not only looking at British banks with respect to criminal behaviour in how these guys received funds from the B. of E, but also at the B. of E itself if it was complicit in handing over funds in a devious manner!!  (UKTelegraph)


5. The contagion with respect to the failure of Austria’s bad bank Hecta, seems to be spreading to other public facilities.  Zero hedge describes this as a black swan event. (UKTelegraph)



we have these and other stories for you tonight.





Let us now head over to the comex and assess trading over there today.

Here are today’s comex results:



The total gold comex open interest rose by a huge 8,651 contracts today from 406,719 up to 415,370 even though  gold was down by $31.80 on Friday (at the comex close). We are now in the contract month of March which saw it’s OI lower by 5 contracts down to  148. We had 4 notices filed on yesterday so we gained 1 gold contract or an additional 100 oz will stand for delivery in this  delivery month of March. The next big active delivery month is April and here the OI rose by 672 contracts up to 251,675. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 66,980. The confirmed volume yesterday ( which includes the volume during regular business hours  + access market sales the previous day) was good at 239,107 contracts  with mucho help from the HFT boys. Today we had 0 notices filed for nil oz.

And now for the wild silver comex results.  Silver OI rose by a huge 2337 contracts from 163,898 up to 166,235 with silver down by 37 cents with respect to Friday’s trading. We are now in the active contract month of March and here the OI fell by 5 contracts down to 951. We had 8 contracts served on Friday. Thus we gained 3 contracts or 15,000 oz will  stand in this March delivery month. The estimated volume today was poor at 13,020 contracts  (just comex sales during regular business hours. The confirmed volume on Friday (regular plus access market) came in  at 48,998 contracts which is also quite good in volume. We had 17 notices filed for 85,000 oz today.

March initial standings


March 9.2015



Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz   125,067.600 oz (Scotia)
Deposits to the Dealer Inventory in oz 2000.00 oz (Brinks)
Deposits to the Customer Inventory, in oz nil oz (JPMorgan/Manfra)
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices)  148 contracts (14,800 oz)
Total monthly oz gold served (contracts) so far this month 5 contracts(500 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month  114,790.651 oz

Total accumulative withdrawal of gold from the Customer inventory this month

 150,156.5 oz

Today, we had 1 dealer transactions




total Dealer withdrawals: nil oz




we had 1 dealer deposit


i) Into Brinks 2000.00 oz???  (how could this be possible???)


total dealer deposit:  2000.00 oz


we had 1 customer withdrawals


i) Out of Scotia:  125,067.600 oz

total customer withdrawal: 125,067.600  oz



we had 0 customer deposits:



total customer deposits;  nil  oz


We had 0 adjustments






Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account.

To calculate the total number of gold ounces standing for the March contract month, we take the total number of notices filed so far for the month (5) x 100 oz  or  500 oz , to which we add the difference between the open interest for the front month of March (148) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.


Thus the initial standings for gold for the March contract month:


No of notices served so far (5) x 100 oz  or ounces + {OI for the front month (148) – the number of  notices served upon today (0) x 100 oz} =  15,300 oz or .4758 tonnes


we lost 1oo gold ounces standing in this March contract month.


Total dealer inventory: 656,644.474 oz or 20.424 tonnes

Total gold inventory (dealer and customer) = 8.263 million oz. (257.02) tonnes)


Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 46 tonnes have been net transferred out. However I believe that the gold that enters the gold comex is not real.  I cannot see continual additions of strictly kilobars.







And now for silver


March silver initial standings

March 9 2015:



Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 550,818.19 oz (HSBC,Scotia)
Deposits to the Dealer Inventory   nil oz
Deposits to the Customer Inventory nil  oz
No of oz served (contracts) 17 contracts  (85,000 oz)
No of oz to be served (notices) 934 contracts (4,670,000)
Total monthly oz silver served (contracts) 1690 contracts (8,450,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  1,640,008.7 oz

Today, we had 0 deposit into the dealer account:



total dealer deposit: nil   oz


we had 0 dealer withdrawal:

total dealer withdrawal: nil oz


We had 0 customer deposits:




total customer deposit: nil oz




we had 0 adjustment



Total dealer inventory: 68.855 million oz

Total of all silver inventory (dealer and customer) 178.035 million oz


The total number of notices filed today is represented by 17 contracts for 85,000 oz. To calculate the number of silver ounces that will stand for delivery in March, we take the total number of notices filed for the month so far at (1690) x 5,000 oz    = 8,450,000 oz to which we add the difference between the open interest for the front month of March (xx) and the number of notices served upon today (17) x 5000 oz  equals the number of ounces standing.


Thus the initial standings for silver for the March contract month:

1690 (notices served so far) + { OI for front month of March( 951) -number of notices served upon today (17} x 5000 oz =  13,120,000 oz standing for the March contract month.


we gained 3 contracts or 15,000 oz will not stand for delivery in March.



for those wishing to see the rest of data today see: or







The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.

There is now evidence that the GLD and SLV are paper settling on the comex.

***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:

i) demand from paper gold shareholders

ii) demand from the bankers who then redeem for gold to send this gold onto China

vs no sellers of GLD paper.




And now the Gold inventory at the GLD:



March 9/ we had another huge withdrawal of 3.38 tonnes of gold from the GLD, no doubt heading for Shanghai/Inventory 753.04 tonnes


March 6/we had a huge withdrawal of 4.48 tonnes of gold from the GLD/inventory rests tonight at 756.32/Also HSBC is getting out of the gold business in London and is giving up all of its 7 vaults.


March 5 no change in gold inventory at the GLD/760.80 tonnnes


March 4/ no change/inventory 760.80 tonnes


March 3 we had another 2.69 tonnes of gold withdrawn from the GLD. Inventory is now 760.80 tonnes.


March 2  we had 7.76 tonnes of withdrawal from the GLD today and this physical gold landed in Shanghai/Inventory 763.49 tonnes


feb 27.2015 no change in gold inventory at the GLD/Inventory at 771.25 tonnes



Feb 26. no change in gold inventory at the GLD/Inventory at 771.25 tonnes

Feb 25. no change in gold inventory at the GLD/Inventory at 771.25 tonnes


Feb 24.2015: no change in gold inventory at the GLD/Inventory at 771.25 tonnes


Feb 23.2015: no change in gold inventory at the GLD/Inventory at 771.25 tonnes



Feb 20/we had another good addition of 1.79 tonnes of gold into the GLD.  Inventory 771.25 tonnes


Feb 19/ a huge addition of 1.5 tonnes of gold into the GLD/Inventory 769.46


Feb 18/ a small withdrawal of .3 tonnes/no doubt to pay for fees/Inventory 767.96 tonnes


Feb 17/no changes in gold inventory at the GLD/Inventory 768.26 tonnes







March 9/2015 / we lost 3.48 tonnes of gold from the GLD/

inventory: 753.04 tonnes.



The registered vaults at the GLD will eventually become a crime scene as real physical gold departs for eastern shores leaving behind paper obligations to the remaining shareholders. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks).

GLD : 753.04 tonnes.






And now for silver (SLV):



March 9/ no change in silver inventory at the SLV/327.332 million oz



March 6: huge addition of 1.34 million oz of silver into the SLV/Inventory 727.332 million oz


March 5 no change in inventory/725.992 million oz


March 4 a slight reduction of  126,000 oz of silver/SLV inventory at 725.992 (probably to pay for fees)


March 3 a small deposit of 328,000 oz of silver into the SLV/Inventory at 726.118 million oz.


March 2/ no change in silver inventory tonight; 725.734 million oz



Feb 27.2015 no change in silver inventory tonight: 725.734 million oz



Feb 26. no change in silver inventory at the SLV/Inventory at 725.734 million oz



Feb 25. no changes in silver inventory/SLV inventory at 725.734 million oz

Feb 24.we had an addition of 1.435 million oz of silver to the SLV/SLV inventory at 725.734 million oz


Feb 23 no change in silver inventory/324.299 million oz

Feb 20 no change in silver inventory/324.299 million oz


Fen 19/ we had a huge addition of 4.082 million oz of silver into the SLV/Inventory 324.299 million oz



Feb 18.2015/ no change in silver inventory at the SLV/Inventory at 320.327 million oz


Feb 17 no changes in silver inventory at the SLV/Inventory at 320.327 million oz





March 9/2015 no change in    silver inventory at the SLV/ SLV inventory rests tonight at 327.332 million oz











And now for our premiums to NAV for the funds I follow:

Note: Sprott silver fund now for the first time into the negative to NAV

Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)



1. Central Fund of Canada: traded at Negative  9.2% percent to NAV in usa funds and Negative 9.3% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.5%

Percentage of fund in silver:38.1%

cash .4%


( March 9/2015)


Sprott gold fund finally rising in NAV




2. Sprott silver fund (PSLV): Premium to NAV rises to + 2.03%!!!!! NAV (March 9/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to -.16% to NAV(March 9  /2015)

Note: Sprott silver trust back  into positive territory at +2.03%.

Sprott physical gold trust is back into negative territory at -.16%

Central fund of Canada’s is still in jail.





And now for the important paper stories for today:



Early Friday morning trading from Europe/Asia


1. Stocks lower on major Chinese bourses/  / the  yen falls  to 120.95

1b Chinese yuan vs USA dollar/ yuan strengthens  to 6.2635
2 Nikkei down 180.45 or 0.96%

3. Europe stocks all down  // USA dollar index down to 97.53/

3b Japan 10 year yield .44%/ (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.95/everybody watching the huge support levels of 117.20 and that level acting as a catapult for the markets. the Japanese yield at .44% becoming very ominous

3c Nikkei still  above 17,000/

3e The USA/Yen rate now above the 120 barrier this morning/
3fOil: WTI 49.57 Brent: 59.38 /all eyes are focusing on oil prices. This should cause major defaults as derivatives blow up.

3g/ Gold up /yen down;

3h/ Japan is to buy the equivalent of 108 billion usa dollars worth of bonds per MONTH or $1.3 trillion

Japan’s GDP equals 5 trillion usa/thus bond purchases of 26% of GDP

3i Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt (see Von Greyerz)

3j Oil down this morning for WTI  and  for Brent

3k European bond buying pushes yields lower on all fronts in the EMU

Except Greece which sees its 2 year rate rise to almost 15% /Greek stocks lower by 3%/expect huge bank runs on Greek banks

3l  Greek 10 year bond yield :9.41% (down 11 basis points in yield)

3m Gold at $1174.00 dollars/ Silver: $15.90

3n USA vs Russian rouble:  ( Russian rouble  down 3/4  rouble / dollar in value)  60.96!!!!!!.

3 0  oil  into the 49 dollar handle for WTI and 59 handle for Brent

3p  higher foreign deposits into China sees risk of outflows and a currency depreciation can spell financial disaster for the rest of the world.

3Q  SNB (Swiss National Bank) still intervening again driving down the SF/window dressing/Swiss rumours of intervention to keep the  soft peg at 1.05 Swiss Francs/euro and major support for the Euro.

Rumours SNB may cut rates to negative 1.5%

3r Britain’s Serious fraud squad investigating the Bank of England/

(see below)



4. USA 10 yr treasury bond at 2.22% early this morning. Thirty year rate well below 3%  (2.80%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid



Start Of European QE Upstaged By Greek Jitters; Apple Unveils iWatch


Because as everyone knows, the one main problem facing Europe today is not trillions on non-performing loans, rampant unemployment, deflation, the surge of anti-austerity political parties coupled with rising xenophobia, and broad socio-economic instability, but bond yields which are not negative enough, earlier today first Germany, then Italy, then France were all delighted to announced they have commenced buying sovereign bonds in the open market, culminating with the following tweet by the ECB intern moments ago:

The buying promptly led to Bund yields once again sliding lower, and the 10Y was down -5bps to 0.35%, on its way to -0.20%. Italy’s 10-year yield declined three basis points to 1.29 percent. As Bloomberg reports, “The QE purchases are having the expected effect and the market is very positive,” said Michael Leister, a senior rates strategist at Commerzbank AG in Frankfurt. “In the core we’re seeing yields dropping sharply lower led by the ultra-long end so these are very much QE-style moves. Near-term it’s going to stay quite volatile because there are some sellers who did front-run these purchases and now are keen to sell.”  Then again, judging by the early reaction in yields, there are more keen buyers and frontrunners than sellers.

Since negative yields across the flat European curve is now just a matter of time, we hope that the millions in record youth unemployed across the continent managed to BTFD in Bunds – this may be all they need to get their lives back in order.

And while the core of Europe was delighted by the start of the latest central bank bond monetization program, one place that felt left out of the punchbowl party was Greece, whose entire curve and especially the short-end was blowing out once more:

  • 09-Mar-2015 04:52 – 2-YR GREECE YIELDS 14.99%; +117BPS – TRADEWEB
  • 09-Mar-2015 04:52 – 5YR GREECE YIELDS 13.04%; +105BPS – TRADEWEB
  • 09-Mar-2015 04:53 – 10YR GREECE YIELDS 9.70%; +38BPS – TRADEWEB

The reason for the latest bout of Greek weakness, which has also pushed Greek stocks lower by 3% this morning, is that as reported here before, the Eurogroup – which is due to meet today to discuss the latest Greek reform proposal and as a result refuse to unlock some €7 billion funds – has thrown up on the Varoufakis “tourist tax inspector” list submitted on Friday. From Bloomberg:


Greece’s provisional agreement with creditors to avert a default started to crack as European officials said the country’s latest proposals fell far short of what was put forward two weeks ago and Greek ministers floated the prospect of a referendum if their reforms are rejected.


The list of measures Greece’s government sent to euro-region finance ministers last Friday, including the idea of hiring non-professional tax collectors, is “far” from complete and the country probably won’t receive an aid disbursement this month, Eurogroup Chairman Jeroen Dijsselbloem said on Sunday. German Deputy Finance Minister Steffen Kampeter said ministers are not expected to advance on Greece today.


It’s not enough to exchange letters with non-committal statements,” Kampeter told Deutschlandfunk radio. “What’s needed is hard work and tough discussions.”

As Reuters adds, the “list of reforms proposed by Greece last week to help it win creditor support is “far from complete,” the head of the Eurogroup said. Speaking at an event in Amsterdam on Sunday, Jeroen Dijsselbloem, who is also Dutch finance minister, said the Greek proposal was “serious” but not enough.

Dijsselbloem, whose Eurogroup of euro zone finance ministers will discuss Greece at a meeting on Monday, said Athens had submitted six proposals, with more expected to come.


“The six, those are just the first six. Those absolutely won’t be accepted as the 30 percent that they wanted to replace,” he said. “The Greeks know that too, by the way, they don’t have any pretence that this is it.”


Dijsselbloem’s remarks refer to plans by the new Greek government to replace some of the budget consolidation measures agreed to by the previous government with different reforms. Once steps to reach these goals are taken, Greece would become eligible for more credit from the euro zone and the International Monetary Fund, and its banks could again finance themselves at European Central Bank open market operations.


Time is pressing because Greece is expected to run out of cash later this month.

Of course, any other time the prospect of an all too real Grexit would have sent Europe crashing, however now that everyone is selling to the infinite buyer that is the ECB, the Greek moment of peak leverage has long since passed.

Finally, on the calendar today is perhaps the most anticipated non-event by the one company whose cell-phone now means more to the price and earnings of the S&P 500, and now Dow Jones Industrial Average, than any other product in history, when Apple releases its iWatch. Now in plastic, and/or gold.

A closer looks at European equities shows that there was less euphoria than met the Q€ eye, as stocks started the week off on the back-foot after taking the lead from the losses seen on Wall Street on Friday and the downside in Japanese equities overnight, with concerns over Greece also adding further fuel to the fire. More specifically, ahead of today’s Eurogroup meeting, Eurogroup President Dijsselbloem has deemed the latest proposals from Greece as far short of what was offered 2-weeks ago, while Greek Finance Minister Varoufakis said they may call for a referendum or even early elections if the Eurozone do not accept their restructure plans. This has subsequently dampened expectations for Greek/Eurogroup negotiations and led to a risk-averse tone thus far, although the German Deputy Finance Minister has stated he does not expect Eurogroup to make final decision on Greece during today’s meeting.

Bunds currently trade higher as flows move away from equities and into German paper, with European fixed income products further bolstered today by the ECB beginning their bond-buying programme. Talk has been doing the rounds this morning that the ECB have begun buying French and Belgian paper, with both nation’s spreads subsequently tighter to the German benchmark. However, given the apprehension surrounding Greece, the GR/GE spread is wider by just over 40bps, of note, Greek bonds are not eligible for the ECB QE programme.

Asian stocks fell after tracking Friday’s sell-off on Wall Street following the stellar US jobs report which spurred pending Fed rate hike fears. Nikkei 225 (-1%) was further weighed on by disappointing Japanese GDP (Q/Q 0.4% vs. Exp. 0.5% (Prev. 0.6%). Hang Seng (-0.2%) and Shanghai Comp (+1.9%) swung between gains and losses as gains in big banks outpaced losses across brokerages after the CSRC said it may issue banks with brokerage licences. Chinese trade balance printed a record surplus (M/M 60.62bln vs. Exp. 6.00bln (Prev. 60.03bln. Exports 48.3% vs. Exp. 14.0%; 5yr high), was largely shrugged-off due to seasonal distortions namely the recent Chinese Lunar New year. JGBs fell amid sharp curve steepening on the back of Friday’s post-NFP inspired sharp rise in UST yields and USD/JPY.

Fed’s Fisher (non-voter, hawk) said future path of interest rates is upward. (BBG) Fed’s Lacker (voter, hawk) said June is in pole position to see the Fed’s first rate hike. (BBG)

FX markets have seen a relatively steady start to the week with the economic calendar particularly light. Nonetheless, despite the cautious tone emanating from the Eurozone, EUR/USD has seen a modest bid in early trade as the USD-index (-0.2%) pulls away from the 11 and a half year highs seen on Friday. This pullback in the USD has also benefitted antipodean currencies which were initially lower overnight, with AUD weighed on by the lacklustre imports component of the Chinese trade balance and NZD by expectations of potential further easing ahead of the RBNZ rate decision on Wednesday. As things are currently quiet in FX markets, option expiries could dictate the state-of-play with AUD/USD currently trading in close proximity to a large option expiry (USD 1bln at 0.7740) due to roll-off at tomorrow’s NY cut.

According to source reports, the SNB may cut rates to -1.5% if CHF moves in an unfavourable direction. However, a spokeswoman for the SNB declined to comment on the news. (Schweiz am Sonntag)

In the commodity complex, both WTI and Brent crude futures have swung between gains and losses throughout the session, following various comments over the weekend whereby the OPEC Chief stated that the market is still oversupplied with oil, while Goldman Sachs expect the recent upside in WTI to be short-lived, with prices potentially slipping to USD 40/bbl amid additional inventory increases in the US. In precious metals markets, spot gold and silver trade in modest positive territory with prices relatively rangebound. Overnight, Copper prices saw a mild loss, while China’s benchmark import iron ore declined below USD 60/ton amid further evidence of weak China demand as customs data showed lower imports of copper and iron ore during February.

In summary: European shares fall with the real estate and financial services sectors underperforming and banks, resources outperforming. ECB said to begin buying German govt bonds. Japan 4Q GDP growth below estimates. European officials say Greek reform list inadequate. The Swedish and Dutch markets are the worst-performing larger bourses, the Italian the best. The euro is stronger against the dollar. German 10yr bond yields fall; Japanese yields increase. Commodities little changed, with natural gas, Brent crude underperforming and wheat outperforming.

There are no key releases today however the Fed’s Mester and Kocherlakota are due to speak. ECB starts QE. Apple unveils iWatch.

Market Wrap

  • S&P 500 futures down 0.1% to 2067.6
  • Stoxx 600 down 0.6% to 391.9
  • US 10Yr yield down 2bps to 2.22%
  • German 10Yr yield down 5bps to 0.34%
  • MSCI Asia Pacific down 0.8% to 144.3
  • Gold spot up 0.6% to $1174.1/oz
  • 0 out of 19 Stoxx 600 sectors rise; bank, resources outperform; real estate, financial svcs underperform
  • Eurostoxx 50 -0.4%, FTSE 100 -0.5%, CAC 40 -0.5%, DAX -0.3%, IBEX -0.6%, FTSEMIB +0%, SMI -0.4%
  • Asian stocks fall with the Shanghai Composite outperforming and the Sensex underperforming.
  • MSCI Asia Pacific down 0.8% to 144.3
  • Nikkei 225 down 1%, Hang Seng down 0.2%, Kospi down 1%, Shanghai Composite up 1.9%, ASX down 1.3%, Sensex down 1.6%
  • Euro up 0.4% to $1.0887
  • Dollar Index down 0.22% to 97.4
  • Italian 10Yr yield down 3bps to 1.28%
  • Spanish 10Yr yield down 3bps to 1.26%
  • French 10Yr yield down 6bps to 0.63%
  • S&P GSCI Index down 0.1% to 411.5
  • Brent Futures down 0.8% to $59.3/bbl, WTI Futures up 0.1% to $49.7/bbl
  • LME 3m Copper up 0.4% to $5770/MT
  • LME 3m Nickel down 0.2% to $14340/MT
  • Wheat futures up 1.4% to 489.3 USd/bu

Bulletin Headline Summary

  • European equities feel the squeeze after Eurogroup President Dijsselbloem has deemed the latest proposals from Greece as far short of what was offered 2-weeks ago
  • Weak stocks has subsequently supported fixed income markets, with European paper further bolstered by the commencing of the ECB’s bond-buying programme
  • Sources suggest the SNB could cut rates to -1.5% if CHF moves in an unfavourable direction
  • Treasuries gain amid rally in EGBs as ECB said to start QE with purchases of German and Italian debt; German 10Y yield falls to 0.348%.
  • Greece’s provisional agreement with creditors started to crack as European officials said latest proposals fell far short of what was put forward two weeks ago; Greek ministers floated the prospect of a referendum if reforms are rejected
  • Holding referendum on reforms sought by Greece’s creditors or early elections is “the Greeks’ decision” and would just delay need for economic overhaul, German Deputy Finance Minister Steffen Kampeter says in Deutschlandfunk radio interview
  • U.K. fraud investigators have called in former traders from Barclays Plc and Deutsche Bank AG for questioning as part of a criminal probe into the suspected rigging of Euribor rates: FT
  • Japan’s emergence from recession was weaker than first estimated as companies unexpectedly cut investment and drew down their inventories, offsetting a pickup in consumer spending
  • China’s exports surged more than 48% in February from a year earlier, exceeding the median analyst forecast for a 14% jump, led by sales to the U.S. and Europe
  • Niger’s army crossed the border into Nigeria to join a regional offensive against Boko Haram as the militant group pledged allegiance to Islamic State
  • Sovereign 10Y yields mostly lower. Asian stocks mostly lower, Shanghai gains 1.7%; European stocks, U.S. equity- index futures decline. Crude falls, gold and copper gain


DB’s Jim Reid Concludes the overnight event roundup



On the day that QE starts in Europe if there’s anyone in doubt that central banks continue to dominate the investment landscape then Friday might help persuade them otherwise. The bumper payroll number (+295k vs. +235k expected, +5.5% vs. +5.6% on unemployment) saw the S&P 500 (-1.42%) see its worst day since January 5th, 10-yr USTs spike 12.6bps higher, Dec-16 Fed Funds futures rise 12bps and the dollar hit 12-year highs. Elsewhere Gold (-2.60%) tumbled and emerging market currencies sold off (Brazilian Real -2% and Colombian Peso -1.5%). Obviously the better number increased the probability of an earlier lift-off from the Fed and US sensitive risk assets weren’t overly impressed and herein lies one of the challenges facing the Fed. How to normalise policy when so many global assets have been dependant on ultra easy policy.

Taking the other side of the central bank ledger it was interesting that just a week after we highlighted that Portuguese 10-year yields fell below USTs for the first time since October 2007 (a rarity through history), on Friday the former closed 48bps through the latter as Portugal bucked a bad day for global bonds and rallied another 3.3bps ahead of ECB buying. For yields generally in Europe the drag from payrolls was enough to see yields drift higher on Friday with 10y yields in Germany (+4.6bps), France (+4.6bps), Italy (+1.0bps) and Spain (+1.4bps) all closing higher.

In terms of this morning, focus is on China where over the weekend we got the February trade report for the nation. Although exports surged during the month (48.3% vs. 14.0% expected), imports continue to be weak and declined further to -20.5% yoy (and softer vs. expectations of -10.0%). The weak import numbers highlights what continues to be weak underlying demand and our China economist Zhiwei Zhang notes that the weakness cannot all be explained by commodity prices as the volume of imports dropped sequentially. We have inflation numbers tomorrow and the usual big monthly day of activity data on Wednesday so plenty of information to gauge current activity this week.

In terms of market reaction in Asia, Chinese equities are the notable laggards this morning with the Shanghai Composite and CSI 300 down -1.0% and -1.3%, respectively. The weak Chinese import data is perhaps playing a part but in reality the broader market is also taking cues from the US session weakness on Friday. Across the region the Nikkei, KOSPI and ASX 200 are all down -0.9%, -0.9% and -1.3%, respectively as we go to print. The Asia iTraxx is around 3bp wider but the technicals for cash bonds are still supported by the absence of supply in recent weeks. We are also seeing a continuation of Dollar strength overnight with the JPY and AUD down 0.2-0.3%. Gold (+0.2%) is modestly off its Friday lows but we are still more than 3% below where we were last week. The UST 10yr yield is little changed levelling off at around 2.23% after the sell-off on Friday.

We’ll touch on the week ahead at the end but this morning’s attention will no doubt be on the Eurogroup meeting where focus will be on Greece. The main news over the weekend appears to be reports on various wires that Greece may call a referendum or have early elections according to Greek finance minister Varoufakis. In an interview with Italian press Corriere della Sera, Varoufakis was reported as saying that should Europe ultimately reject Greece’s proposals, then ‘there could be problems but, as my prime minister has said, we are not yet glued to our chairs and we can return to elections, call a referendum’. Meanwhile comments from the EC’s Dijsselbloem ahead of today’s meeting appear to be cautious having said that the letter of proposals submitted by Greece is ‘helpful’ but will need to be scrutinized by Greece’s creditors.

Back to markets on Friday, there was some hawkish commentary out of Fed officials following the employment report. Richmond Fed President Lacker was first of all quoted as saying that ‘given today’s employment report, right now, June would strike me as the leading candidate for lift off’ (Reuters). Meanwhile, the Fed’s Fisher (retiring non-voter) was quoted on Bloomberg as saying that the Fed should consider raising rates as soon as this month. In terms of the rest of the data on Friday, our US colleagues noted that the breadth of employment gains in particular were strong with the diffusion index of private employment rising to 65.4% from 62% last month. Meanwhile the average weekly hours print was unchanged at 34.6 hours and the labor force participation rate ticked down slightly to 62.8% (from 62.9% previously). If there was one dovish element to the report it was the lack of wage pressures. Away from the employment indicators, the US also reported a trade deficit of $41.8bn which was a touch higher than expected ($41.1bn consensus).

In Europe on Friday, bourses generally closed firmer with the Stoxx 600 (+0.10%), DAX (+0.41%) and CAC (+0.02%) all finishing in positive territory for a third consecutive day. Data was also supportive. Industrial production for Germany in particular was the standout with the +0.9% yoy reading ahead of market expectations of -0.2%. Our colleagues in Europe noted that the reading points to upside risks for their Q1 GDP forecast (+0.5% qoq) and highlighted a positive weather effect on construction. Elsewhere, the preliminary Q4 GDP reading for the Euro-area was unchanged at +0.9% yoy. There was some focus on the UK meanwhile where consumer expectations for inflation fell to the lowest in nearly 15 years in February, +1.9% over the next 12 months whilst five-year expectations are down to 2.8% and the lowest since August 2009.

Moving on to credit markets, we have continued to see notable inflows into HY funds, particularly in Europe. The past week (Wednesday-Wednesday) saw a record level of inflows (>$900mn) into Western Europe HY funds (in notional terms). This also pushed the 4-week moving average to a record level ($665mn). As a percentage of NAV the 1.7% for the latest week is the highest level since October 2013. These latest inflows extends the run of consecutive weekly inflows to 8, with YTD cumulative net inflows now in excess of $4bn (8.4% of NAV). The first 9 weeks of 2014 saw just under $2.9bn in cumulative net inflows (9.5% of NAV). Whilst US HY funds also saw inflows during the latest data week at $720mn they were not as impressive as those in Europe although YTD cumulative inflows have been in excess of $10bn or just under 4% as a percentage of NAV.

Turning over to the week ahead, the highlight this morning will be the aforementioned Eurogroup meeting where we expect Greece to be front and centre. Away from this, we’ve got trade data out of Germany and Euro-area confidence due this morning. Meanwhile, it’s the usual post-payrolls lull in the US this week. There are no key releases today however the Fed’s Mester and Kocherlakota are due to speak. Kicking off Tuesday will be money supply data out of Japan as well as CPI and PPI out of China. Closer to home we’ve got industrial production numbers for January due in France and Italy as well as the manufacturing print for the former. The calendar picks up a notch in the US with JOLTS, wholesale inventories and the NFIB small business optimism survey all due. Focus on Wednesday will likely be in the Asia timezone and in particular in China when we get retail sales, industrial production and fixed assets data for February. Machine tool orders and PPI for Japan are also due. It’s fairly quiet in Europe with just industrial and manufacturing production for the UK due along with German labour costs and French employment data. The monthly budget statement in the US will be worth keeping an eye on Wednesday. Focus on Thursday will be in Germany where we get the final revision to the February CPI reading following a +0.1% yoy headline in the last revision. We will also get inflation data out of France as well as UK trade data and Euro-area industrial production. It’s a busier day in the US too with the highlight being the February retail sales print. Initial jobless claims, import price index and business inventories are also due. We close out the week in Japan with industrial production whilst closer to home we see Italian CPI and UK construction output. In the US we finish with PPI and the preliminary March reading for the University of Michigan consumer confidence.







Germany has had enough of the USA neocons who want war with Russia in order to control all of the Ukraine.  The sanctions are hurting the west just as much as Russia.


For the complete article see zero hedge


(courtesy zero hedge)



Germany Has Had Enough With US Neocons: Berlin “Stunned” At US Desire For War In Ukraine


Europe, The Morally Bankrupt Union



Submitted by Raúl Ilargi Meijer of the Automatic Earth

Europe, The Morally Bankrupt Union

The European Union is busy accomplishing something truly extraordinary: it is fast becoming such a spectacular failure that people don’t even recognize it as one. People have no idea, they just think: this can’t possibly be true, and they continue with their day. They should think again. Because the Grand European Failure is bound to lead to real life consequences soon, and they’ll be devastating. The union that was supposed to put an end to all fighting across the continent, is about to be the fuse that sets off a range of battles.

To its east, the EU is involved in a braindead attempt at further expansion – it has only one idea when it comes to size: bigger is always better -, an attempt that is proving to be such a disaster that heads will roll in the Brussels corridors no matter what. Europe has joined the US and NATO very enthusiastically in creating not just a failed state, but a veritable imitation of Hiroshima, in Ukraine, right on its own borders. The consequences of this will haunt the EU (or if it doesn’t last, which is highly plausible, its former members) not just for weeks or months or years, but for many decades.

The carefully re-crafted relationship with Russia, which took 25 years to build, was destroyed again in hardly over a year, something for which Angela Merkel deserves so much blame it may well end up being her main political legacy. Vladimir Putin, and Russia as a nation, will not easily forget the humiliation the west has thrown at them, the accusations, the innuendo, the attempts to draw them into a war they never wanted and in which they see no advantage for any party involved.

That US warmongers would try and set this up, is something Moscow has long known and expected; that Merkel would stand side by side with the likes of John McCain and Victoria Nuland is seen as a deep if not ultimate betrayal between neighbors and friends. Russia will present Germany with the bill when it feels the time is right. Obviously, all other EU countries that have behaved in the insane ways they have over the past year will receive that same bill, or worse.

To be sure, this week we’ve seen the first protest voices from Germany regarding NATO’s vacuous attempts to draw Russia into the battlefields of Ukraine. But those voices are years too late. They can’t undo the damage already done. They may keep American weapons from reaching Kiev – and even that’s a big maybe -, but they can’t bring back either the lives of the victims, the Ukrainian economy or the trust lost between east and west.

To its south, the EU faces perhaps its most shameful -or should that be ‘shameless’? – problem, because it doesn’t do anything about it: the thousands of migrants who try to cross the Mediterranean to get to Europe but far too often perish in the process.

The Italians spend themselves poor, trying to save as many migrants as they can (170,000 last year!), and there are private citizens – Americans even – pouring in millions of dollars, but the EU itself has zero comprehensive policy as people keep dying on its doorstep all the time. The official line out of Brussels is that the EU polices only the European coastline, but the drownings mostly take place off the Lybian coast. At least Italy and others do sail there to alleviate the human misery.

And now the problem threatens to expand into a whole new and additional dimension, with Muslim extremists like ISIS set to travel alongside the migrants to gain entry into Europe with the aim of launching terror attacks. Having turned a blind eye to the issue for years, Europe will now find itself woefully unprepared for this new development. Still, expect more bluster and brute force where there was never any reason or need for it. That the EU’s MO today.

It’s not just in the south either that migrant problems are rampant: the Ukraine is a hotbed migrant route that Europe has lost control over for obvious reasons, and there have for example been thousands of African refugees camping out in the French port of Calais for what feels like forever, desperate to make it to Britain (I know, God knows why..).

To its west, the EU has Britain, which by the time it gets to vote on Europe may well have its belly so full of Brussels that no scare campaign helps anymore. Then Britain will make a sharp turn right, as many other countries will. Which is exclusively due to the EU, and to all the domestic politicians across the entire spectrum who are so blind to the failings of the Union that the only option voters have if they want out is to choose right extremism.

To its north, the EU doesn’t seem to have much to worry about right now, but don’t you worry: they’ll think of something. Count for instance on Brussels to join Denmark in its Arctic land claims, and offend Moscow some more while they’re at it.

But the biggest failure is not even in politics outside of its own territory. The union rots from within. Which starts with its moral bankruptcy, obviously. If you allow yourself to be an active accomplice in the death of over 6000 East Ukrainians, and you simply look away as thousands of migrants die in the seas off your shores, it should not be surprising that you just as easily allow for a humanitarian crisis, like the one in Greece, to develop within your own borders. It comes with the territory, so to speak.

And make no mistake: this absence of moral values is something Europe in its present form will never be able to claim back. Never. The EU has shown itself to be a gross moral failure, and that’s it: the experiment is over. They can’t come back in 10 or 20 years and say: now we want it back, we’re different now. You’d need to have a whole new union, new rules and principles, and new leadership.

It’s like the US, which once (post WW) had an enormous moral high ground in the world to walk on, and it’s completely gone. Nobody trusts anything America says anymore. America has lost its place in the world as guardian of freedom and democracy, and so has Europe. All they can do now to exert influence is to engage in political scheming and military sabre rattling. Everything else is gone.

What will undo Europe from within is its economic policies. Which are strongly linked to the same moral values issue: inside a union, you cannot let thousands of people go without food and health care while others, a few hundred miles away, drive new Mercs and Beamers over a brand new Autobahn. That’s not a union. That’s a feudal society. And those don’t hold.

In practical terms: Mario Draghi will launch ECB Q€ this month, and it will be as dismal a failure as the entire eurozone project. Because the ECB will need to drop interest rates into very negative territory to keep the ship afloat a little longer, and because Draghi won’t find the sovereign bonds he wants to buy, available in the market.

If Draghi acted in the interest of the entire eurozone and all its citizens, he’d be busy restructuring bank debt in Germany, France, Italy, Belgium, all over the eurozone, instead of playing these monopoly money games. But Draghi’s only pumping more ‘wealth’ into the broke banking system, €1.1 trillion more, to be specific.

Eventually, this refusal to restructure a a bankrupt system will bring bail-ins like the one playing out in Austria right now, closer, across the currency zone (though mostly not before 2016). And by the time that process spreads to ever more banks, which is inevitable, it will have consequences Draghi cannot oversee. And they’ll be of his own making. If he just did his work today, and forced banks to get healthy or close down, it wouldn’t end nearly as messy and chaotic.

Europe’s leaders across all of its institutions are completely lost, whether it comes to intelligence, morals or simple decency. They’re all too willing to trample upon their own people in order to have access to power. And that can only lead to more misery.

Stick a fork in their ass and turn them over. They’re done.





The EU rejects the Greek payment plan and thus Greece risks

bankruptcy.  Yannis V states that they may render another referendum

on whether to have austerity or not which is the same as the citizens embrace the euro or reject it.  The latter would automatically force Greece to leave the Euro zone. Regardless of choices there is no money for Greece.


(courtesy zero hedge)

Greece “Risks Bankruptcy” As Europe Rejects Varoufakis Payment Plan; Another Referendum Fiasco Ensues


There was one reaction by the Eurogroup following the (delayed) submission of the Greek 7-point reform proposal – which includes the brilliant idea to use foreign tourists as wired, part-time tax spies – in advance of the latest Monday finmin meeting: laughter.

Financial Times reports that the reaction from eurozone officials to the tourist plan was received with humor. They thought the proposal was hilarious and even laughed when they read it. “It’s quite hilarious, if it were not so tragic, that this is what a government in an industrialised country comes up with,” said one eurozone official involved in the talks.


There will be little laughter in cash-strapped Greece, however, if the Sunday Times is correct in its report that the “Eurogroup finance ministers are to reject radical reform proposals from Greece at a meeting in Brussels tomorrow.”

The Greek finance minister Yanis Varoufakis will present a seven-point plan in a desperate attempt to unlock a €7.2bn (£5.2bn) cash injection — the final payment under a bailout plan agreed three years ago. According to a source close to the discussions, European officials believe Greece needs to do more “on the ground”.

As the Times concluded, Greece is hoping for a favorable response because unless the cash injection is approved, Greece faces a “full-scale default.”

Unfortunately for Greece, moments ago Germany’s Frankfurter Allgemeine Zeitung confirmed the bad news, when it said that the EU commission has rejected the Greek request for speedy aid payments, cites Valdis Dombrovskis, EU commissioner for the euro. The commissioner adds that the Varoufakis letter “lacks specific enough action plan and that the reform steps must be approved by Greek parliament and be implemented.”

In other words, as we reported before, Greece is back to square minus one, where first Europe will send Troika inspectors on the ground to catch up to everything they have missed in the months they have been absent and then, and only then, does Greece have any chance of even being seriously considered for more aid.

The problem is that this will come far too late to satisfy not only the upcoming IMF payments (as a reminder these are due as follows: €350 million on March 13, €580 million on March 16 and another €350 million on March 20), but now that Greece no longer has access to the various pension and social security funding “swaps”, it may even be unable to rollover its next T-Bill maturity. As a reminder, Greece has a total of €2 billion in debt-servicing payments, including T-bill redemptions and IMF obligations coming due on Friday.

Bloomberg adds:

In the absence of bailout funds, Tsipras said in an interview with Der Spiegel magazine that he planned to use short-term treasury bills to cover any cash shortfall in the coming weeks. The ability of Greek banks to buy these securities is constrained by a deposit outflow and the ECB’s refusal to accept more so-called T-bills as collateral for financing the country’s lenders.


ECB President Mario Draghi poured cold water on Greek lobbying for the government to be allowed to issue more short-term debt, and for Greek banks to be permitted to buy it.


“The ECB is a rules-based, not a political institution,” and can’t provide monetary financing to governments, either directly or indirectly, “when banks bring collateral in order to buy that debt,” Draghi said on Thursday.


So with its back against the wall, and with its funds lower than ever, Greece had no choice but to resort to warnings/threats that either Europe steps up or the government will directly to the people, with another referendum.

Which led to the latest “lost in translation” fiasco involving Greece (the latest of very many in the past few weeks), in which Italy’s Il Corriere della Sera quoted Varoufakis as saying Greece may call new elections, and hold referendum on the euro if European finance ministers reject reform proposals.

Greece, without any leverage left, was then quick to point out that it wasn’t trying to give Europe merely another ultimatum, and a Greek government official said in e-mail to reporters that Varoufakis “never said that referendum would be held on country’s euro membership.” Instead, the referendum would be on the government’s policy. As Bloomberg adds, “Varoufakis never said or meant that the country’s membership in the euro area would be the subject of a hypothetical referendum in his interview with Corriere, the country’s finance ministry said in an e-mailed statement. Implementation to an agreement extending the country’s bailout loans, and if it proceeds normally, then Greece will repay all financial obligations on time and in full, the ministry said.”


With what money? Reuters add:

Former Prime Minister Antonis Samaras, who is now head of the main opposition party, said a referendum would be “a very bad development” and allow the government to shrug off its responsibilities.


The now much-diminished Greek Socialist PASOK party, also in the opposition to Tsipras’ radical left alliance, said in a statement that Varoufakis’s statement was “irresponsible, thoughtless and contradictory”.


As for the semantics of the referendum, they all boil down to the same thing: Syriza would be asking the voters to resolve two contradictory ideals: either the Greeks concede to austerity, or they agree to exiting the Eurozone. Because for Greece there no longer is a compromise, middle ground.

Sadly, there is no money either.

“I can only say that we have money to pay salaries and pensions of public employees,” Varoufakis told Corriere. “For the rest we will see.”

Still, despite all the posturing and the return of quasi-threats on both sides, the fate of Greece may now be sealed:

ECB Governing Council member Luc Coene said some comments by the Greek government have left him wondering whether the country belongs in the European economic and monetary union. 


“When I hear certain declarations of the Greek government, I ask myself: ‘what are they still doing in this mechanism?’”he is quoted as saying in an interview with Belgian newspaper Le Soir.

Right about now, as the Greek deposit flight is almost certain to resume on this latest escalation in rhetoric is set to resume, Greeks are likely asking themselves the same question.

As for Syriza, its days may indeed be numbered if the following graffiti are indicative of the rapidly shifting popular mood, whose brief infatuation with the new ultra-left and “reformist” government is now only a distant memory.

And if indeed Syriza’s days are numbered, is Golden Dawn up next to rule the battered Eurozone member?




Just look at what the Greek foreign minister threatened Europe with:

a flood of jihadists infiltrating the country, acting as a portal to the rest of Europe. He claims that if Greece fails, then the above will be a horrible scene for Europe:



(courtesy zero hedge)






Greek Minister Threatens Europe With Flood Of Jihadists And Immigrants If Greece Fails, Warns Of Referendum


It wasn’t even a full 24 hours after Greece raided at least some of the funds of its pension and other public entities in order to make a €310 payment to the IMF, the first of four this month (the balance is 350 million on March 13, 580 million on March 16 and another 350 million on March 20), that the insolvent country resumed doing what it does best: dispensing hollow threats. This time it was its foreign minister and leader of the Independent Greeks party – Syriza’s junion coalition partner – Nikos Kotzias, who showed how to bluff like the best of them, when he threatened that “there will be tens of millions of immigrants and thousands of jihadists, if you take out Greece” the minister said on before EU foreign ministers meeting in Riga.

As quoted by enikos, the foreign minister continued his blustery threats saying that “the Western Balkans is not stabilized. Then you have the Ukraine, Syria, Iraq, North Africa. This is a sickle.”

The left-wing politician Kotzias also said that “what the Europeans are doping to us is cultural racism…It is a necessity to find another way of behaving toward Greece. It is also a geostrategic necessity. Instead, they chose to crush the Syriza government in its early days…What will this bring?”

The last question was rhetorical, because the answer is the last trump card Greece has: “Right-wing extremism and chaos.”

In other words, now that Syriza government, having run out of money as well as all leverage and bargaining power – because clearly it will no longer threaten with a Grexit, no matter how many game theory manuals Varoufakis may have written – its only threat is to warn with a hypothetical worst-case outcome of what will happen to Europe if and when Greece inevitably collapses should Syriza not get even the smallest concessions: a neo-nazi state, which will be a transit point for terrorists into Europe.

And in case that was not enough, in an interview with Agora newspaper on Saturday, the Greek minister of defense Kammenos said that if foreign creditors insist on a hard line toward Greece, the government might be tempted to respond with a referendum. “If [lenders] question the will of the Greek people and of the government, one response would be to carry out a referendum,” adding “those who need to be convinced that “democracy exists are the Germans; suzerainty is over.

As a reminder, it was precisely the threat of a referendum that cost former Greek Prime Minister George Papandreou his post several years ago before he was replaced with the Samaras pro-Brussels government.

So how did Europe respond?

Not good. As Reuters reports, first it was European Central Bank governing council member Luc Coene, who said in an interview published on Saturday that Greece must realize there is no other way than to reform, telling Greeks they had been sold “false promises” by radical leftists now in power.

According to the ECB Greece has two choice: hell in Europe, or an even worse hell outside of Europe:

The Belgian central bank chief said that life outside the euro zone would be far worse for Greek people and warned that if Athens wanted to be financed by the euro zone, the ECB and the International Monetary Fund, it had to follow the rules.

Now that the ECB has regained all leverage over Tsipras, it can proceed to dispense with the verbal slaps on the face: “I do not believe there is a radically different way,” he told Belgian daily De Tijd. “Syriza has made promises it can not keep,” he said, adding that the Greek people “will understand quickly that they were deceived by false promises.”

They will indeed, and if Kotsias is right, the next party that will rule Greece is none other than the Golden Dawn neo-nazis.

Like his euro zone colleagues, Coene had a clear message for Greece, saying: “Reform is the only way … Tell me where the money should come if the Greeks do not want reform and do not want to repay other European countries?”

The issue is that if there is anything the past 5 years have shown definitively is that “reform” in Greece, be it “wiring” tourists to become part-time tax-inspectors, or anything else, is simply impossible.

But completing the Greek humiliation was a report in Frankfurter Allgemeine Sonntagszeitung  according to which Euro countries’ finance ministers may decide at meeting Monday to send IMF, ECB, European Commission representatives to Athens, whose role would be to determine the government’s liquidity, because nobody in Europe currently has any idea just how much, or little, cash Greece has left.

In other words, the Troika is baaaaaack. But just don’t call it that.

Which means that in a few days, there will be a limo driver waiting at the Athens airport with a sign to pick up the delegation from The Institutions Formerly Known As Troika, or TIFKAT. Because, as we noted yesterday, all the Syriza government has achieved is to change the names of the most hated concepts in Greece:

  • instead of “Troika” it is now “Institutions
  • instead of “Liquidity” it is now “Cash Flow
  • and instead of “Third Bailout” it is now “Contract for Recovery and Growth of the Greek economy.”

Perhaps like with the passage of Obamacare in the US, the Syriza government is just betting it all that the Greek population is indeed that dumb…



Today, it looks like Greece has folded again:


Greece Folds (Again); Ready To Propose “New” Reforms Immediately


Following earlier comments from various Eurogroup members – after yesterday’s dismissal of Greece’s proposed “reforms” – ranging from Slovakia’s “Greece needs to face the naked truth,” to Dijsselbloem’s “we seem to be losing time on Greece,” and Schaeuble’s “not a lot has happened on Greece,” it appears Greece has quickly folded once again and acquiesced to EU’s demands for harsher cuts. With cash unlikely to last more than 3 weeks and being unlikely to get the EU1.9bn in bond profits from the ECB (according to EU officials),Greek officials have stated that they are “willing to enrich” the list of reforms.


Some helpful comments as leaders arrived at today’s Eurogroup meeting:


And this…


As Bloomberg notes,Greece is willing to add more reforms to proposed list…

Eurogroup must remain political body, shouldn’t discuss technical details, a Greek govt official, who asked not to be named in line with policy said by e-mail.


Greece seeks political progress in today’s meeting; govt willing to enrich list with other reforms, some of which will be directly submitted to technical delegation: govt official


Reforms suggested concern govt’s 2015 budget: govt official


Greece is working in best possible way to meet commitments to its euro-area peers, while respecting Greek people’s dignity: govt official


3 reforms that will be submitted to technical delegation, not included in first list are reviewing past income tax declarations, cross-checking triangular transactions, incentives for collecting receipts: govt official

*  *  *



A good look at the Greek shipping industry today and how they may be called upon to contribute more in tax dollars.  If the current government decides to whack them hard, they will just move their domain:


(courtesy zero hedge)


Why Greek Shipping Billionaires Are Sweating


When one thinks of Greece, images of social and economic devolution, depression-era GDP, tear-gas heavy protests, an insolvent, flip-flopping government that has no choice but to be a pawn of the Eurozone, rising ultra-nationalist sentiment buoyed by over 50% youth unemployment, 25% total unemployment and where over 36% of the population is at risk of poverty or exclusion from social benefits, is what typically come to mind.

It may therefore come as a surprise that across from the stark Greek economic calamity is an industry that has swam, so to say, while everything else has sunk, because while virtually every other aspect of the Greek economy is in shambles, its shipping industry is not only the pride of the nation, but has created more Greek billionaires than any other aspect of the economy.

As Bloomberg recounts, Greeks have long dominated the shipping business. The nation’s fleet, numbering 3,669 vessels in 2013, is the largest in the world, according to the annual report of the Union of Greek Shipowners,making up more than 7 percent of the Greek economy and providing 192,000 jobs in 2013.

Greece’s shipping magnates control 23 percent of the world bulk carrier fleet, according to the report, even as their home country accounts for less than 0.4 percent of the world economy.

And, perhaps most relevant, Greek shipping has also made billionaires of the country’s four largest ship owners by tonnage: John Angelicoussis, George Prokopiou, Peter Livanos and George Economou. The quartet control a combined fortune of $7.6 billion, according to the Bloomberg Billionaires Index. None of them appear individually on an international wealth ranking.

It was them, along with more than a thousand delegates from the shipping industry, who gathered last month at the Hilton Athens for the Greek Shipping Forum, a day of speeches and panel discussions on private equity, ship recycling and financing.

The packed reception hall was a testament to how the nation’s ship owners still dominate the industry decades after Aristotle Onassis and Stavros Niarchos ruled the waves. The Hellenic fleet is the world’s most valuable at $106 billion, according to, accounting for 19 percent of the world’s tankers.


Greece’s seafaring mastery is a remarkable feat for the world’s 42nd-largest economy, where economic and political turmoil has left a quarter of the population unemployed.


“This is a business that’s part of their soul,” Matt McCleery, author of “The Shipping Man” and president of Stamford, Connecticut-based ship finance consultancy Marine Money International, said in a phone interview. “It’s so important to their culture, to their identity, and to their history.”

A quick look at the current generation of Greek shipping oligarchs:

The richest is Angelicoussis, whose companies own 96 active vessels with a capacity of more than 18 million deadweight tons, the industry’s standard measurement for how much ships carry, according to data for December compiled by maritime newspaper Shipping Finance. His family’s stake in the fleet is valued at $2.4 billion, according to data compiled by Bloomberg. “He’s one of the great men of our industry,” Harry Fafalios, chairman of the Greek Shipping Co-Operation Committee, said in an interview in London.


Prokopiou has a fortune valued at $2 billion, according to the Bloomberg ranking. Livanos controls at least $1.7 billion and Economou has a net worth of $1.5 billion. Their fortunes are comprised of stakes in their publicly traded shipping businesses and closely held vessels.


Livanos is the biggest shareholder in liquefied natural gas carrier operator Gaslog Ltd. and tanker owner Euronav NV. Prokopiou listed Dynagas LNG Partners LP on the New York Stock Exchange in 2013. Economou’s Dryships Inc. operates bulk carriers. Together, their fleets exceed 40 million deadweight tons. Livanos operates 83 vessels, while Prokopiou has 89 and Economou has 116, according to Shipping Finance.

The reason these prominent and successful businessmen, as well as everyone else in their lucrative industry, are relevant is because with the Greek government scrambling to unveil any sources of funding as the Syriza government now lives paycheck to paycheck, it is almost inevitable that sooner or later it will turn its attention to the one most vibrant Greek industry.

First, it will likely be a change in the tax code: according to Bloomberg, “as social pressures mount, the privileged tax status of the shipping industry has come under increasing scrutiny as successive Greek governments look to boost revenue. The industry pays no tax on international earnings brought into the country under rules incorporated in Greece’s constitution in 1967.”

The reason why these existing tax laws were put into place in the first place according to Ilias Bissias, a lecturer in international shipping policy at Alba Graduate Business School in Athens, was “to protect ship management companies that serve mostly international trade and commerce. This regime should not be changed as it is similar and in line with international tax laws that exist in most maritime centers in all parts of the world.”

Of course, this regime also means less tax revenue for the government, and when faced with a solvency andliquidity crisis, any government will do whatever it can to remain in power, which means to get any incremental funding possible, even if it means raiding the untouchable piggy bank of the shipping industry.

Ironically, Greek shippers knew which way the wind is blowing, and last October the Union of Greek Shipowners reached a voluntary agreement with the previous government to double the tax paid by the industry in the three years from 2014.

Whether that will be enough for the country’s new anti-austerity Syriza-led government isn’t clear. In a February letter to creditor institutions, Greece Finance Minister Yanis Varoufakis said the new regime will “ensure that all sections of society, and especially the well-off, contribute fairly to the financing of public policies,” as part of reforms that secured the continued availability of bailout funds for Europe’s most indebted country.

To answer Bloomberg’s question, no – it will not be enough. But here Varoufakis will have to make a difficult decision:

“Shipping together with tourism are the two main sources of income for the country,” said Eurofin’s Zolotas. “The government would be ill-advised to make it less attractive for ship owners to remain in Greece because ship owners are providers of a lot of employment.”

But it is not just the internal threats of a ultra-leftist government with wealth-redistribution ambitions that is forcing Greek shippers to sweat. So is the Baltic Dry index, which as extensively covered here in recent months, has plunged to record low levels, indicative of a global demand recession, and is slamming the profitability of any, especially unhedged, dry-bulker.

With limited demand from their domestic market, Greek ship owners have long looked beyond home shores for business. While it’s helped shelter them from the worst of the Greek crisis, the industry is still fraught with challenges.


The Baltic Dry Index, a blended measure of rates for dry vessels, is down 51 percent this year to record lows. Meanwhile, low oil prices have caused the tanker market, another area that’s been a traditional Greek strength, to undergo a renaissance, though the market typically reverses within three to six months, according to Michail Kokkinis, founder of Piraeus-based ship broker Golden Destiny.

Which is why, faced with threats of further wealth redistribution internally, and a collapse in foreign demand in their end markets, the Greek shipping billionaires are now sweating…. and doing their best to prevent the public opinion tide turning against them.

For now they have nothing to worry about…

Niarchos and Onassis, dubbed the Golden Greeks because of their wealth and celebrity, competed during the second half of the 20th century. They raced to build the world’s largest fleets and outdo each other with the size of their islands, yachts and weddings. Stavros’s son Philip inherited much of his art collection from his father’s estate.



Their influence is still visible today. The Stavros Niarchos Foundation, endowed with a portion of the family’s estate following Stavros’s death in 1996, is responsible for the city’s largest construction project on the site of a former racecourse at the south end of Syngrou Avenue, which bisects the bottom of the city.


The $800 million undertaking, designed by architect Renzo Piano, will house the national library and opera company and feature a 42-acre park on the roof.


Adjacent to the park is the Onassis Cardiac Surgery Center. Other donations from shipping dynasties pockmark the city, including the Eugenides Foundation’s planetarium and the Goulandris Museum of Cycladic Art.


Today’s top shipping tycoons are more inclined to keep a lower profile, particularly since the crisis hit. “They’re very hard working and often humble people,” Marine Money’s McCleery said. “For the most part you find these guys who are dedicated and very family orientated. They work their tails off way beyond any monetary need.”

… but what happens to public mood when the government says it is the wealth of the shipping oligarchs or half the country goes hungry? Because sadly that may well be just how far Greece is about to fall.







Today, is the first day for European QE.  As we have noted in the past several weeks, the ECB is going to have two-fold problems:


1. how they are going to account for automatic losses on bond purchases especially when 20% or so of bond purchases will have negative interest rate.


2. how are they going to buy enough bonds especially when there is nothing to buy with its new found euros harbouring a negative deposit rate:


today we got some answers:  they are going to buy in small quantities.

If this continues, then Europe is going to get a loud awakening:

Two commentaries on this issue:

(courtesy zero hedge)



“Size Matters” For ECB Which Runs Into Unexpected Monetization Problem


Mario Draghi’s PSPP is just barely off the ground and we’re already beginning to get answers to some of the tough questions the ECB faced regarding the program’s implementation. For instance, we wondered how the central bank intended to treat the losses it was bound to incur as a result of purchasing billions in EMU debt carrying a negative yield. The answer: try to avoid that paper for the time being.

Another issue raised here (and elsewhere) revolves around the ECB’s ability to source willing EGB sellers. EMU banks — which hold some 20% of PSPP-eligible paper — are the most likely participants according to Goldman:

Our view remains that the main sellers of EMU bonds to the ECB will be the commercial banks. These institutions, which in the major EMU countries own about one-fifth of the stock of government bonds outstanding, tent to care more about their intermediation margins rather than about beating a hurdle rate they have promised policy holders. Furthermore, they will face regulatory pressures to reduce the concentration of risk towards the sovereign in the country of residence. Over time, their allocation to government bonds should converge to the ECB’s portfolio composition – roughly corresponding to the GDP weights of EMU constituents.

Nevertheless, sourcing €1.1 trillion in purchasable assets isn’t easy, especially when sellers have limited options for where to park their proceeds (pay the ECB 20bps or reinvest at rock-bottom yields). Here’s Nomura via Bloomberg:

Because new bond supply “is not enough to fulfill the ECB’s targets, a substantial portion of the €1 trillion [the ECB] intends to buy over 2 years will need to come from a reduction in current investor holdings.

Overall we see €25-50 billion coming directly from euro-area investors seeking higher yields abroad while the lion’s share call it €125-150 billion will come from foreign sellers.

Of course, as Goldman notes, it’s “hard to tell” what price non-euro area holders will charge, meaning the ECB may well have to pay even more of a premium than they already plan to pay, putting their balance sheet in an even more precarious state.

This is compounded by the fact that thanks to central bank largesse, high quality collateral is becoming more scarceby the day:

How much depth has the market lost? A year ago, you could trade about $280 million of Treasuries without causing prices to move, according to JPMorgan Chase & Co. Now, it’s $80 million.

But as it turns out, Mario Draghi may have a solution to the supply issue: buy “small” amounts.

Via Bloomberg:

  • Rates trader in London says Eurosystem is purchasing bonds in trades of EU25m-EU50m.
  • Another trader in London says QE purchases of EU15m- EU25m are going through.
  • NCBs are buying govt bonds in “small clips,” Sunrise Brokers strategist Gianluca Ziglio says in e-mailed comments, citing market contacts.

Needless to say, if the ECB is unable to meet its monthly asset purchase targets (which, at €15-50 million dribs and drabs, looks likely), expect chaos, as the market has spent the last several months front running PSPP and would be absolutely horrified if DOMO (Draghi-open-market-operations) has to be downsized. Not to worry though, says Soc Gen’s European rates strategy chief Ciaran O’Hagan:

Via Bloomberg:

“…the amount bought may be small to start with, but this will be like a pressure cooker. They’ve just switched on the heat and we will need some time for the pressure to mount.”

*  *  *

For reference, below is a list of EMU sovereign bonds that were eligible for purchase just before Draghi unveiled the details of DOMO (note that Citi thought to create a list of 2- to 30-year EGBs yielding -0.20 and above a week before the details of the program were announced).




ECB Confused How To Mask Losses On Negative Yield Bond Purchases


As we noted last week, Mario Draghi’s move to purchase €1.1 trillion in EGBs at 124% of par may have mitigated market jitters regarding the ECB’s ability to source enough bonds to meet PSPP monthly asset purchase targets, but it also virtually guarantees that the central bank (and perhaps some eurozone NCBs) will be forced to operate from a negative equity position should sovereign spreads blow out.

We also pointed out that due to the ECB’s explicit willingness to buy bonds with negative yields, the usual “we’ll hold them to maturity” excuse won’t work when it comes to explaining away accounting insolvency. Fortunately, the central bank’s governing council has a plan to deal with the increasing amount of EMU bonds trading with negative yields: “Try to avoid them.”

Via Bloomberg:

  • ECB said to lack QE Accord on losses from negative-yield bonds
  • ECB Governing Council hasn’t agreed on how to treat losses incurred on bonds with negative yields, according to three euro-zone central bank officials.
  • National central banks might try to avoid buying such securities for now, one of the people says

This of course begs the following question: what happens when PSPP purchases drive yields on all EMU debt into negative territory? 


Charts: Citi, WSJ







As noted last week, the Baltic Dry Index is at record lows as ships carrying dry goods  are empty.  Australia is a huge exporter of iron ore and coal. Iron ore prices are now at rock bottom 60 dollars usa per tonne, down 2/3 from its height in 2010.


Here are some examples of what is happening inside some major towns and cities inside Australia and this scene will be coming to the shale areas of the USA shortly:


(courtesy zero hedge)


Aussie Boom Towns Go Bust As Iron Ore Prices Crash To Record Lows



Dalian Iron Ore prices have been cut in half in the last year (which must mean over-supply and not under-demand, right?). Amid China’s growth target cut, Iron Ore prices there have crashed to below $60 – a record low – and that is having dramatic impacts across many regions. As we recently noted, Aussie gold miners are producing desperately to generate cashflow, but despite the booming housing market in some areas, as Reuters reports, the drop in iron ore and coal prices (the nation’s 2 biggest exports) have led former boom towns to bust as “reality comes into the marketplace.”


As bad as it’s ever been… one-third of 2011 peak credit-enthused levels…


Which has led, as Reuters reports, to layoffs and empty streets in Australia’s boom towns…

When Probo Junio got a visa to work in Australia, he thought he had won a ticket to the good life.


In 2013, the 45-year-old boilermaker left his hometown of Cebu in the Philippines, where he was getting paid about $10 a day, to work in Karratha in Western Australia for $30 an hour. Enough to support his relatives and build a new life Down Under.


What Junio didn’t expect was that Australia’s booming resources industry would go bust less than two years later, taking his job, and leaving him just 60 days to find work or go home.


“It’s very difficult because most of the companies don’t want 457 visa holders,” he said, referring to temporary permits for skilled workers.


Across the country, people like Junio are falling victim to downsizing. Jobs, once plentiful and well paid, are scarce. Real estate prices in boom towns are sinking and even the notoriously high coffee prices in mining capital Perth have levelled off at under $4.


Prices of iron ore and coal, the country’s two biggest export earners, have plunged during the last two years amid falling demand from China, in the wake of its economic slowdown.


Just a few years ago, foreign workers were flooding into Australia, lured by huge pay as the resources industry scrambled to fill positions. Truck driving and cooking jobs offering $100,000 a year made headlines abroad.


But those workers, like Junio, are now hard-pressed to find work, especially if they are on temporary visas. Even permanent residents have to take lower pay.


“There is reality coming into the marketplace about salaries,” said John Downing, who runs global resources recruiting firm Downing Teal, adding that salary expectations have fallen 10 percent to 25 percent.

And while real estate booms in some regions, it’s collapsing in the coal country…

“For Lease” signs are everywhere in West Perth, the headquarters of many mining, oil and gas companies.


“You could shoot a cannon down those streets,” said resources analyst Peter Strachan. “There’s nobody there.”


Commercial vacancy rates in the city are near a 20-year high of 15 percent as resources companies downsize or shut down, said Joe Lenzo, of the Property Council of Australia.


The real estate market has also been hit in the coal country of Queensland, across the continent.

We leave it to one old-timer’s hope to conclude:

It may be the worst of times, but old hands expect things will improve.


“Just as a lot of people thought the boom would never end, some people might think the bust will never end,” said recruiter Downing. “We will go through better times.”

*  *  *

Coming to a Shale region near you soon…







We have a banking scandal again in Europe but this time it may include the Bank of England;




(courtesy UKTelegraph/Titcomb)



How banks may have rigged the Bank of England scheme built to keep them alive

In 2007, the Bank of England introduced a liquidity programme to help the banks. The SFO is now investigating whether this was manipulated

7:52PM GMT 05 Mar 2015
On Thursday September 13, 2007, 13 men and women were called to an emergency meeting at the Bank of England. The situation was delicate: interbank borrowing rates had shot up to a nine-year high, and the day before Northern Rock had applied for a level of support from the Bank of England that had not been seen for more than 30 years.
Those present at the meeting in question, including Sir Mervyn King, the Bank’s then governor, and Sir Callum McCarthy, the chairman of the Financial Services Authority, quickly agreed that the Bank had no choice but to supply Northern Rock with emergency liquidity to prevent a bank run.
Before long, attentions quickly turned to the rest of the banking system.Minutes of the gathering, released earlier this year, showed members had concerns about a “domino effect” in which other institutions would be at risk of toppling.
The Bank, fearing a confidence crisis, was forced to respond. Less than two weeks after the Northern Rock meeting, it introduced the first in a series of measures designed to keep the rest of the banking sector afloat.
Jump forward more than seven years, and it has emerged that the money it provided is now at the centre of a Serious Fraud Office investigation. On Wednesday night, the fraud office confirmed that it is “investigating material referred to it by the Bank of England concerning liquidity auctions during the financial crisis in 2007 and 2008”. 
The exact nature of this investigation – what is being scrutinised and who is being looked at – has not, so far, been made public. But its existence – a criminal investigation of this nature into the financial system’s lender of last resort – is unprecedented.
We know that markets were being rigged on a regular basis before, during and after the financial crisis. Fines for Libor, currency and gold rigging have repeatedly made headlines.
It is also the case that at least one bank – Lloyds – was ripping off the Bank of England during the crisis: last year it was fined £70m for rigging an external benchmark that determined how much interest it would have to pay on a separate Bank liquidity scheme during 2008.
But the scheme now believed to be the one in the spotlight – long-term repo auctions – is different, because it was conducted internally by the Bank itself. If the process – which provided £180bn to the UK’s banks at its peak – was indeed manipulated, then the Bank will have serious questions to answer, whether or not the main focus of the investigation is on those who worked at the UK’s commercial banks.
During the crisis, credit markets dried up and investors fretted about the underlying value of the assets on banks’ balance sheets, threatening a liquidity crisis. The Bank stepped in, trading hundreds of billions of pounds in mortgage-backed securities and corporate debt for highly liquid Treasury bills.
The length, size and nature of the schemes it used varied, but they all existed for one reason: to provide a stop-gap to prevent banks running out of cash.
One of the first of these, and the one believed to be at the centre of the SFO’s investigation, was the “Extended Collateral Long-Term Repo [ELTR] operation”. Unlike other schemes used by the Bank at the time, ELTR straddled 2007 and 2008, and was auction-based – the two facts that have been made public about the SFO’s probe.
From its first auction on December 18, 2007, until mid-2010, the ELTR offered £10bn or more in Treasury bills in regular auctions, with banks trading them for collateral.

The ELTR was introduced after Northern Rock was placed on life support

The process was simple: the Bank would telephone banks, asking them to say what rate of interest they were willing to pay. Those who offered the highest were deemed to have the greatest need for funding, and thus would receive the loans. To ensure fair prices, each bank was contacted individually. If someone attempted to get funding on the cheap, they would miss out.
Or so the theory goes. Of course, if banks were sharing their bids with each other, this wouldn’t be the case. Theoretically, it would have been possible to lowball the auction, allowing banks to access liquidity cheaper than they should have, at the expense of the Bank.
One would like to think that banks did not go so far as to rig schemes specifically designed to help them, but unfortunately, the Libor and foreign exchange scandals have repeatedly shown that for certain individuals, nothing was off limits.
If this is what happened – and we will have to wait to really know – this is yet another sorry example of unscrupulous bankers making money at somebody else’s expense. The alternative scenario, that employees at the Bank itself were involved or complicit, would make this case far more serious.





As highlighted to you last week , the bad bank, Heta, (to which bad assets of failed and nationalized Hypo bank were sent) also failed because of the one day rise in the Swiss franc. It created a massive 9 billion Euro hole in the balance sheet of  Heta.  The small but beautiful province of Carinthia guaranteed any shortfall. Now it seems that Austria will no longer support the province and thus a bail in is forthcoming.  The problem is the huge contagion that will result from this.

Two important articles on this:


the first:


Jeremy Warner of UKTelegraph


(courtesy Jeremy Warner/UKTelegraph)


Austria is fast becoming Europe’s latest debt nightmare

A mini-Greece is about to go off in Europe’s heartlands, and markets don’t even know it


Ah Austria, land of schnitzel, lederhosen, Mozart, alpine meadows and beer drinking. Less widely appreciated is its special place in the history of catastrophic banking crises.

It was the failure of Creditanstalt, a Viennese bank founded in 1855 by Anselm von Rothschild, that arguably sparked the Great Depression, setting off an unstoppable chain reaction of bankruptcies throughout Europe and America.

No-one would think that what happened last week at Austria’s failed Hypo Alpe-Adria Bank International falls into quite the same category; we are meant to be in the recovery phase of the latest global banking crisis, so this is more about re-setting the system than again bringing it to its knees, right?

Well, make up your own mind. I suspect neither financial markets nor policymakers have yet caught onto the full significance of the latest turn of events.

In a nutshell, the Austrian government has had enough of funding the bank’s losses, and announced plans to “bail-in” external creditors to the tune of €7.6bn instead.


As such, this marks a test case of new European rules to make creditors pay for failing banks. About time too, you might say. What took them so long?

Only in this case, the bonds are notionally guaranteed by the Austrian state of Carinthia, which now theoretically becomes liable for the bail-in. It’s an echo of the mess Ireland got itself into at the height of the banking crisis, when it foolishly attempted to stem the panic by underwriting all Irish banking liabilities; the move very nearly ended up bankrupting the entire country. Hypo will bankrupt Carinthia.

Essentially, what the Austrian government is doing is cutting loose an entire region, rather in the way the federal authorities in the US allowed Detroit to go bust a number of years ago.

It’s a mini-Greece going off in the heartlands of Europe.

In Hypo’s case, the bail-in also threatens knock-on consequences for public bodies elsewhere, including Bayern Landesbank, a big holder of Hypo bonds which is owned by the German state of Bavaria, and the Munich based FMSW, which is again publicly underwritten.

All this is just the tip of the iceberg; Europe is awash with interlinked banking and public liabilities, many of which will never be repaid and basically need to be written off.

Massive creditor losses are in prospect. The European authorities had us all half convinced that Europe’s debt crisis was over. In truth, it may have barely begun.





And now the second article, describing the above event as a Black Swan:


(courtesy zero hedge)


A Black Swan Lands In Southern Austria: The Ripple Effects Of “Mini-Greece Going Off In The Heartland Of Europe”



By far the most notable news of the past week, which has still gone largely unnoticed by the greater investing community whose focus instead was on whether algos would ramp the Nasdaq to 5000, and keep the S&P above 2100, even before Mario Draghi finally began buying bonds that nobody wants to sell, was the“Spectacular Development” In Austria, whereby the “bad bank” of failed Hypo Alpe Adria – the Heta Asset Resolution AG – itself went from good to bad, with its creditors forced into an involuntary “bail-in” following the “discovery” of a $8.5 billion capital hole in its balance sheet primarily related to ongoing deterioration in central and eastern European economies.

This shocking announcement promptly sent the price of Heta bonds crashing as creditors, no longer enjoying the explicit guarantee of the state, scrambled to get out of “northern Europe’s” first Lehman moment.

But while the acute pain came and went for Heta bondholders who have seen a nearly 50% loss in just a few short months, the bigger and far more diffuse pain is only just starting, or as Bloomberg put it, “Austria’s decision to wind down Heta Asset Resolution AG sent ripples through the financial system, causing credit rating downgrades in Austria and bank losses in Germany.”

The first casualty: the beautifully picturesque southern Austrian province of Carinthia.


Why and how was one of the 9 Austrian provinces just sacrificed? Telegraph explains:

[The Heta] bonds are notionally guaranteed by the Austrian state of Carinthia, which now theoretically becomes liable for the bail-in. It’s an echo of the mess Ireland got itself into at the height of the banking crisis, when it foolishly attempted to stem the panic by underwriting all Irish banking liabilities; the move very nearly ended up bankrupting the entire country. Hypo will bankrupt Carinthia.


Essentially, what the Austrian government is doing is cutting loose an entire region, rather in the way the federal authorities in the US allowed Detroit to go bust a number of years ago.


It’s a mini-Greece going off in the heartlands of Europe.

Specifically, to quantify the Carinthian exposure vis-a-vis its guarantee which will now be put in play:Carinthia provides deficiency guarantee on Heta’s senior debt: the total is equivalent to €10.2 billion, or nearly five times the state’s 2014 operating revenue. Carinthia’s budgeted revenue in 2015 is just €2.36 billion, and as such the southern province of 556,000 would be unable to honor the guarantees if they came due now or in a year’s time,Governor Peter Kaiser told Austrian radio ORF on Tuesday.

In other words, we now have a waterfall bailout chain whereby the state guaranteeing the debt of the insolvent entity that guaranteed yet another insolvent entity, will itself need to be bailed out by the sovereign, Austria! Or perhaps not: Finance Minister Hans Joerg Schelling has said repeatedly that the Austrian government isn’t liable to cover Carinthia’s guarantees.

This is also why late on Friday, Moody’s downgrades the State of Carinthia’s rating to Baa3 from A2 (outlook to negative from stable). This is what the rating agency said:

The rating action follows the decision of the Austrian Financial Market Authority (FMA) on 1 March 2015 to initiate resolution measures on Heta Asset Resolution AG (wind-down entity of former Hypo-Alpe-Adria), in accordance with the Federal Banking Restructuring and Resolution Act (BaSAG). BaSAG is the national implementation law of the European Bank Recovery and Resolution Directive (BRRD), effective since 1 January 2015. The FMA also imposed a temporary payment moratorium on Heta’s liabilities until 31 May 2016. This follows the disclosure of Heta’s recent asset review by external auditors, which indicated an additional shortfall of assets of up to EUR7.6 billion, compared to the EUR4 billion expected before.


Carinthia provides a statutory deficiency guarantee on a very high portion of Heta’s senior debt; the total guarantees are equivalent to nearly EUR10.2 billion, or nearly five times the state’s 2014 operating revenue. In addition, Carinthia provides a statutory deficiency guarantee to Pfandbriefbank (Oesterreich) AG (A2, RUR) of which about EUR1.2 billion is related to Heta as of year-end 2014.


The downgrade reflects an increased susceptibility to event risks, including litigation from Heta’s bondholders and further actions by the FMA, and greater than anticipated shortfalls of Heta’s assets. All these factors could lead to a crystallization of a significant portion of Carinthia’s guaranteed debt. This amount could exceed Carinthia’s liquidity resources, likely lead to increased financial leverage and could require some form of extraordinary central government support.


We understand that there is a likelihood that the deficiency guarantee could not be enforced upon a full or partial cancellation of bailed-in debt under BaSAG, because of the guarantee’s accessory nature.However, we see an increased uncertainty regarding further resolution actions. Additionally, uncertainty could result from the legal risk associated with different contractual provisions of Heta-bonds.

Whether or not the Telegraph is right remains to be seen, and the otherwise beautiful province of Carinthia is now insolvent remains to be seen, but the bigger problem is that the Heta fallout does not stop there.

As Bloomberg reports, “among Heta’s liabilities affected by the moratorium and a future bail-in are 1.24 billion euros Heta owes to Pfandbriefbank Oesterreich AG, which issues bonds on behalf of Austrian provincial banks.”

Moody’s said it may cut Pfandbriefbank’s A2 rating as well as the ratings of two of its biggest member banks, Hypo Tirol Bank AG and Vorarlberger Landes- und Hypothekenbank AG, owned by the western Austrian provinces of Tyrol and Vorarlberg, respectively. A2 is the sixth-lowest investment grade rating at Moody’s.

Below are all the Pfandbriefbank members, all of which will now suffer and require further capital injections in some capacity:

Some additional color from Barclays:

The main purpose of the exclusion of secured liabilities from the application of the bail-in tool is to prevent contagion. Indeed, there are a number of contagion channels when treating the guaranteed liabilities of HETAR not as secured liabilities.


First, the securities benefiting from the deficiency guarantee of Carinthia are also regarded as eligible collateral for a wide range of public sector covered bonds across the EU, including Austria, Germany, Luxembourg and France. As of 30 September 2014, Austrian banks had a total of €2.7bn of exposure to Carinthia, which partially consisted of exposure to HETAR. Furthermore, Pfandbriefbank (Österreich) AG (PFBKOS), the universal legal successor of Pfandbriefstelle der österreichischen Landes-Hypothekenbanken, has €1.2bn of Carinthia guaranteed claims against HETAR. These claims were explicitly made subject to the moratorium. According to article 2 of the Austrian Pfandbriefstelle law, the member banks of PFBKOS are jointly and severally liable for the debt of PFBKOS. Thus, irrespective of the future of PFBKOS, there is an incentive for the member banks to jointly step in for missing payments from HETAR, as otherwise debt holders of PFBKOS bonds could claim payment from any of the member banks individually. Notably, the FMA decided to exclude public sector Pfandbriefe issued by HETAR from the moratorium, indicating a degree of concern about contagion risk. We believe that the inclusion of guaranteed HETAR securities in the application of the bail-in measures adds to contagion risk, as demonstrated by the PFBKOS example.


Second, a number of Austrian banks, including HYPO NOE Gruppe Bank AG and Vorarlberger Landes- und Hypothekenbank AG reported in their annual accounts for 2013 that they had direct exposure to HAA. At this point in time no write-downs were made as reference was made to the “value of the guarantee given by the state of Carinthia”, as well as the fact that there has been no “statutory procedure allowing a territorial authority to declare insolvency”. When announcing the moratorium, FMA explicitly expressed doubts about the value of the respective guarantees. Furthermore, this week Austrian Finance Minister Schilling, in an interview with Austrian state radio, ORF, was quoted as saying that “many have been saying that one should have known that a province like Carinthia can’t guarantee for debts of that size”. Thus, it appears very likely that Austrian banks will have to provision for claims they hold against HETAR and which were now made subject to the moratorium.


Third, according to article 115(2) of the EU’s Capital Requirements Regulation (CRR),claims benefiting from the deficiency guarantee of an Austrian sub-sovereign can be treated as an exposure to the central government. The respective list of the European Banking Authority contains all nine Austrian regional governments, as well as more than 2,300 local authorities. Based on this rule, EU banks are allowed to apply a 0% risk-weighting to these exposures. In combination with article 10 of the EU’s delegated act on the Liquidity Coverage Ratio, they are also allowed to treat these assets as “extremely high quality liquid assets” under the level 1 bucket of their liquidity buffer portfolios. Finally, solvency 2 rules foresee that debt issued by Austrian regions could be treated by EU based insurance companies and pension funds similarly to debt issued by the Austrian central government with a 0% capital charge.

Irony #1: the very same bonds that are about to lead to a waterfall in impairments are the ones that were, according to EU regulations, “riskless.” One can only imagine how much latent risk Europe’s bank have as a result of the supremely idiotic decision to keep a major subsection of European debt as 0% RWA. That may work as long as the ECB backstops everything, but the second Mario Draghi ends QE, does everything implode under its own weight?

And then there is the question, how much more maximum pain could there be in Austria. Barclays responds again”

As of year-end 2013, there were about €60bn of claims guaranteed by Austrian regions. We estimate about €50-55bn of such claims were still outstanding as of year-end 2014. In particular, we note that as of year-end 2012, the guarantee commitments of six out of nine Austrian regions exceeded the total annual income.

The full breakdown of who guarantees what in Austria:

And then, once the impairment wave of the latest European insolvency shocker is done with Austria – a wave which nobody expected at all, and it thus a legitimate Black Swan – it will flow over into Germany. From Bloomberg:

German banks yesterday also emerged as major Heta bondholders. Dexia’s Dexia Kommunalbank Deutschland AG said it owns 395 million euros of Heta bonds and will take an unspecified charge in the first quarter. Deutsche Pfandbriefbank AG also owns 395 million euros of Heta bonds and said it will write them down by 120 million euros, cutting its expected pretax profit by two-thirds.


NRW Bank confirmed it owned Heta bonds, declining to specify the size of its exposure. WDR TV station reported the bank owns 276 million euros of them.

Irony #2, and the biggest one of all: while German banks had spent the past 3 years preparing for the inevitable Grexit and offloading all their exposure to the now insolvent Greek state, it was a waterfall chain of events which started in Germany’s own “back yard”, courtesy of auditors who decided it was unnecessary to mark losses to market until it was far too late, and the immediate outcome is that one ninth of until recently Aaa/AAA-rated Austria is now also insolvent. And that is just the beginning.

One can only imagine how many such other “0% risk-weighted” Pandora boxes lie in wait across what are otherwise considered Europe’s safest banks, provinces and nations.





Oil related stories:


and this is why Obama vetoed the huge Transcanada Pipeline to the uSA


On the weekend:


(courtesy zero hedge)



Fire Burns After Another Oil Freight Train Derails, This Time In Canada


In the early hours of this morning, yet another oil-carrying freight train derailed. Canadian Nation Railways says a fire continues to burn after a train carrying crude oil derailed  in Northern Ontario(near Gogama). As yet no injuries have been rported and a team of specialists are on the scene.


As CP24 reports,

CN Rail says crews reported the derailment near Gogama, Ontario, about two-and-a half hours north of Sudbury, around 2:45 a.m.


No one was injured in the derailment, CN said.


The company said a number of teams, including senior operations, engineering, dangerous goods and environment officers were responding to the scene.


Ontario Provincial Police said Highway 144 between Highway 560 (Watershed) and Mattagami Reserve Road near the site of the derailment will be shut down for between 24 and 36 hours due to safety concerns.



As CN states:

Train U70451-02 derailed along the Ruel subdivision of the CN main line, near Gogama, ON. The incident, which occurred at 0246hrs EST on Saturday, March 07, is currently impacting rail traffic running between Toronto, ON, and Winnipeg, MB.


CN crews are responding to the site in order to undertake the necessary repairs. Both westbound and eastbound traffic scheduled to cross the affected area is currently obstructed, and may be delayed by 24 hours or more. Every measure is being taken in order to reduce the impact to customer shipments.


We are following the situation very closely and will post further updates on this web page as they become available.

*  *  *

Time to update the chart…

And the markets reacted positively to this news?:

“Motivated” Seller Whiting Petroleum Jumps Despite 1043x Forward P/E

As Mario Draghi unleashes his trillion euro bond buying program – aimed from what we are told, at lowering risk premia in credit markets to stimulate the eurozone’s economy from utter stagnation – things are not going according to plan. Away from Greece, peripheral bond spreads are all up 8bps on the day and stock indices are mixed on this first day of DOMO (Draghi Open Market Operations) Of course, the other reason for Q€ is to implicitly (because one would never explicitly admit to joining the currency wars) devalue the currency – thus improving competitiveness and exports for the EU; but that’s not working out so well as Germany’s exports dropped and missed by the most since August... this was not supposed to happen.


European Sovereign Bond risk surges…


*  *  *

None of this should be a surprise – remember what happened the last time the ECB bought sovereign bonds…

Spanish and Italian bond yields (upper pane) blew wider as the volume of ECB bond buying (lower pane) picked up…

*  *  *

and then there is Q€ will lower the Euro and improve EU competitiveness… Nope!!


None of this was supposed to happen… the textbooks said…


Finally the daggers are still aiming at the heart of the uSA dollar:

(courtesy Sputnik)


Coins and banknotes of the Chinese yuan are set up together with a U.S. dollar

China’s International Payments System Ready to Go

© AP Photo/ EyePress, FILE

16:02 09.03.2015(updated 16:03 09.03.2015)

Read more:



China’s long-awaited international payment system to process cross-border yuan transactions is ready and could launch by year-end, Reuters reports, citing sources with direct knowledge of the matter.

The launch of the China International Payment System (CIPS) will open the way for the yuan to go international and increase its global usage by cutting transaction costs and processing times.”The CIPS is ready now and China has selected 20 banks to do the testing, among which 13 banks are Chinese banks and the rest are subsidiaries of foreign banks,” said a senior banking source who is involved in the matter.

“The official launch will be in September or October, depending on the results of the testing and preparation,” the source added.

A second source said authorities want to launch the first phase of CIPS before December.

The launch of CIPS will enable companies outside China to clear yuan transactions with their Chinese counterparts directly, reducing the number of stages a payment has to go through.

The People’s Bank of China was not immediately available for comment.

Read more:

And good reasons why sanctions are not working against Russia:
(courtesy William Engdahl)
Russia’s Remarkable Renaissance
by William Engdahl

Something remarkable is taking place in Russia, and it’s quite different from what we might expect. Rather than feel humiliated and depressed Russia is undergoing what I would call a kind of renaissance, a rebirth as a nation. This despite or in fact because the West, led by the so-called neo-conservatives in Washington, is trying everything including war on her doorstep in Ukraine, to collapse the Russian economy, humiliate Putin and paint Russians generally as bad. In the process, Russia is discovering positive attributes about her culture, her people, her land that had long been forgotten or suppressed.

My first of many visits to Russia was more than twenty years ago, in May, 1994. I was invited by a Moscow economics think-tank to deliver critical remarks about the IMF. My impressions then were of a once-great people who were being humiliated to the last ounce of their life energy. Mafia gangsters sped along the wide boulevards of Moscow in sparkling new Mercedes 600 limousines with dark windows and without license plates. Lawlessness was the order of the day, from the US-backed Yeltsin Kremlin to the streets. “Harvard boys” like Jeffrey Sachs or Sweden’s Anders Aaslund or George Soros were swarming over the city figuring new ways to rape and pillage Russia under the logo “shock therapy” and “market-oriented reform” another word for “give us your crown jewels.”

The human toll of that trauma of the total collapse of life in Russia after November 1989 was staggering. I could see it in the eyes of everyday Russians on the streets of Moscow, taxi-drivers, mothers shopping, normal Russians.

Today, some two decades later, Russia is again confronted by a western enemy, NATO, that seeks to not just humiliate her, but to actually destroy her as a functioning state because Russia is uniquely able to throw a giant monkey wrench into plans of those western elites behind the wars in Ukraine, in Syria, Libya, Iraq and well beyond to Afghanistan, Africa and South America.

Rather than depression, in my recent visits to Russia in the past year as well as in numerous discussions with a variety of Russian acquaintances, I sense a new feeling of pride, of determination, a kind of rebirth of something long buried.

Sanctions Boomerang

Take the sanctions war that the Obama administration has forced Germany, France and other unwilling EU states to join. The US Treasury financial warfare unit has targeted the Ruble. The morally corrupt and Washington-influenced Wall Street credit rating agencies have downgraded Russian state debt to “junk” status. The Saudis, in cahoots with Washington, have caused a free-fall in oil prices. The chaos in Ukraine and EU sabotage of the Russian South Stream gas pipeline to the EU, all this should have brought a terrified Russia to her knees. It hasn’t.

As we have earlier detailed, Putin and an increasing number of influential Russian industrialists, some of the same who a few years ago would have fled to their posh London townhouses, have decided to stand and fight for the future of Russia as a sovereign state. Oops! That wasn’t supposed to happen in a world of globalization, of dissolution of the nation-state. National pride was supposed to be a relic like gold. Not in Russia today.

On the first anniversary of the blatant US coup in Kiev that installed a hand-picked regime of self-professed Neonazis, criminals, and an alleged Scientologist Prime Minister Andriy Yansenyuk, hand-picked by the US State Department, there was a demonstration in downtown Moscow on February 22. An estimated 35,000 to 50,000 people showed up—students, teachers, pensioners, even pro-Kremlin bikers. They protested not against Putin for causing the economic sanctions by his intransigence against Washington and EU demands. They protested the blatant US and EU intervention into Ukraine. They called the protest “Anti-Maidan.” It was organized by one of many spontaneous citizen reactions to the atrocities they see on their borders. Internet satirical political blogs are making fun of the ridiculous Jan Paski, until last week the fumbling US State Department Press Spokesperson.

Not even an evident False Flag attempt in the London Financial Times and Western controlled media to blame Putin for “creating the climate of paranoia that caused” Boris Nemtsov’s murder is being taken seriously. Western “tricks” don’t work in today’s Russia.

And look at US and EU sanctions. Rather than weakening Putin’s popularity, sanctions have caused previously apolitical ordinary Russians to rally around the president, who still enjoys popularity ratings over 80%. A recent survey by the independent Levada Center found 81 percent of Russians feel negatively about the United States, the highest figure since the early 1990s “shock therapy” Yeltsin era. And 71 percent feel negatively about the European Union.

The renaissance I detect is evident in more than protests or polls, however. The US-instigated war in Ukraine since March 2014 has caused a humanitarian catastrophe, one which the US-steered German and other western media have blocked out of their coverage. More than one million Ukrainian citizens, losing their homes or in fear of being destroyed in the insane US-instigated carnage that is sweeping across Ukraine, have sought asylum in Russia. They have been welcomed as brothers according to all reports. That is a human response that has untold resonances among ordinary Russians. Because of the wonders of YouTube and smart phone videos, Russians are fully aware of the truth of the US war in eastern Ukraine. Russians are becoming politically sensitive for the first time in years as they realize that some circles in the West simply want to destroy them because they resist becoming a vassal of a Washington gone berserk.

Rather than bow to the US Treasury’s Ruble currency war and the threat that Russian banks will be frozen out of the SWIFT (Society for Worldwide Interbank Financial Telecommunication) international interbank clearing system, something likened to an act of war, on February 16, the Russian government announced that it had completed its own banking clearing network in which some 91 domestic credit institutions have been incorporated. The system allows Russian banks to communicate seamlessly through the Central Bank of Russia.

That is inside Russia among banks that otherwise were vulnerable even domestically to a SWIFT cut. Russia joined the Brussels-based private SWIFT system as the Berlin Wall crumbled in 1989. Today her banks are the second largest users of SWIFT. The new system is inside Russia. Necessary, but not sufficient, to protect against SWIFT cutoff. The next step in discussion is joint Russia-China interbank clearing independent of SWIFT and Washington. That is also coming.

The following day after Russia’s “SWIFT” alternative was announced as operational, Chinese Vice Foreign Minister Cheng Guoping said China will build up its strategic partnership with Russia in finance, space and aircraft building and “raise trade cooperation to a new level.” He added that China plans to cooperate more with Russia in the financial area and in January Russia’s First Deputy Prime Minister Igor Shuvalov said that payments in national currencies, de-dollarization, were being negotiated with China. China realizes that if Russia collapses, China is next. Failing empires try desperate measures to survive.

Russians also realize that their leaders are moving in unprecedented ways to build an alternative to what they see as a morally decadent and bankrupt American world. For most Russians the disastrous decade of poverty, chaos and deprivation of the Yeltsin era in the 1990’s was reminder enough what awaits should Russia’s leaders again prostitute themselves to American banks and corporations for takeover, Hillary Clinton’s infamous “reset” of US-Russian relations she attempted when Medvedev was President. Russians see what the US has done in neighboring Ukraine where even the Finance Minister, Natalia Jaresko, is an American, a former State Department person.

Russia and its leaders are hardly trembling behind Kremlin walls. They are forging the skeleton of a new international economic order that has the potential to transform the world from the present bankruptcy of the Dollar System. Moscow and Beijing recently announced, as I discussed in a previous posting, their project to create a joint alternative to the US credit rating monopoly of Moody’s, S&P and Fitch. President Putin’s travel agenda in the past year has been mind-boggling. Far from being the international paraiah Washington and Victoria Nuland hoped for, Russia is emerging as the land which has the courage to “just say No!” to Washington.

Russia’s president has been in Cyprus where possible basing for the Russian navy was discussed, in Egypt where General al-Sisi warmly welcomed the Russian leader and discussed significant economic and other joint cooperation. Late last year Russia and the BRICS states agreed to form a $100 billion infrastructure bank that makes the US-controlled World Bank irrelevant. The list grows virtually every day.

The special human side

For me, however, the most heartening feature of this Russian renaissance is in the generation which is today in their late thirties to early forties—young, highly intelligent and having experience of both the depravity of Soviet communist bureaucracy but as well of the hollow world of US-led so-called “free market capitalism.” I share some examples from the many Russians I have come to know in recent years.

What is unique in my mind about this generation is that they are the hybrid generation. The education they received in the schools and universities was still largely dominated by the classical Russian science. That classical Russian science, as I have verified from many discussion with Russian scientist friends over the years, was of a quality almost unknown in the pragmatic West. An American Physics professor from MIT who taught in Moscow universities in the early 1990s told me, “When a Russian science student enters first year university, he or she already has behind them 4 years of biology, 4 of chemistry, of physics, both integral and differential calculus, geometry…they are starting university study at a level comparable to an American post-doctoral student.”

They grew up in a Russia where it was common for young girls to learn classical ballet or dance, for all children to learn to play piano or learn a musical instrument, to do sports, to paint, as in classical Greek education of the time of Socrates or Germany in the 1800s. Those basics which were also there in American schools until the 1950s, were all but abandoned during the 1980s. American industry wanted docile “dumbed-down” workers who asked no questions.

Russian biology, Russian math, Russian physics, Russian astrophysics, Russian geophysics—all disciplines approached their subject with a quality that had long before disappeared from American science. I know, as I grew up during the late 1950’s during the “Sputnik Shock,” where we were told as high school pupils we had to work doubly hard to “catch up to the Russians.” There was a kernel of truth, but the difference was not lack of American students working hard. In those days we worked and studied pretty hard. It was the quality of Russian scientific education that was so superior.

Teaching of the sciences especially, in Russia or the Soviet Union, had been strongly influenced by the German education system of the 1800s, the so-called Humboldt Reforms of Alexander von Humboldt and others.

The strong ties in Russian education with classical 19th Century German culture and science went deep, going back to the time under Czar Alexander II who freed the serfs in 1861, following the example of his friend, Abraham Lincoln. The ties were deepened to German classical culture later under Czar Alexander II prior to the 1905 Russo-Japanese War when the brilliant Sergei Witte was Transport Minister, then Finance Minister and finally Prime Minister before western intrigues forced his resignation. Witte translated the works of the German national economist Friederich List, the brilliant opponent of England’s Adam Smith, into Russian. Before foreign and domestic intrigues manipulated the Czar into the disastrous Anglo-Russian Entente of 1907 against Germany a pact which made England’s war in 1914 possible, the Russian state recognized the German classical system as superior to British empiricism and reductionism.

Many times I have asked Russians of the 1980s generation why they came back to Russia to work after living in the USA. Always the reply more or less, “The US education was so boring, no challenge…the American students were so shallow, no idea of anything outside the United States…for all its problems, I decided to come home and help build a new Russia…”

Some personal examples illustrate what I have found: Irina went with her parents to Oregon in the early 1990s. Her father was a high-ranking military figure in the USSR. After the collapse he retired and wanted to get away from Russia, memories of wars, to live his last years peacefully in Oregon. His daughter grew up there, went to college there and ultimately realized she could be so much more herself back in Russia where today as a famous journalist covering US-instigated wars in Syria and elsewhere including Ukraine, she is making a courageous contribution to world peace.

Konstantin went to the USA to work as a young broadcast journalist, did a master’s degree in New York in film and decided to return to Russia where he is making valuable TV documentaries on dangers of GMO and other important themes. Anton stayed in Russia, went into scientific and business publishing and used his facility with IT to found his own publishing house. Dmitry who taught physics at a respected German university, returned to his home St Petersburg to become a professor and his wife also a physicist, translates and manages a Russian language internet site as well as translating into Russian several of my own books.

What all these Russian acquaintances, now in their late 30s or forties share is that they were born when the remnants of the old Soviet Russia were still very visible, for better and for worse, but grew to maturity after 1991. This generation has a sense of development, progress, of change in their lives that is now proving invaluable to shape Russia’s future. They are also, through their families and even early childhood, rooted in the old Russia, like Vladimir Putin, and realize the reality of both old and new.

Now because of the brazen open savagery of Washington policies against Russia, this generation is looking at what was valuable. They realize that the stultifying bureaucratic deadness of the Soviet Stalin heritage was deadly in the USSR years. And they realize they have a unique chance to shape a new, dynamic Russia of the 21st Century not based on the bankrupt model of the now-dying American Century of Henry Luce and FD Roosevelt.

This for me is the heart of an emerging renaissance of the spirit among Russians that gives me more than hope for the future. And, a final note, it has been policy among the so-called Gods of Money, the bankers of London and New York, since at least the assassination in 1881 of Czar Alexander II, to prevent a peaceful growing alliance between Germany and Russia. A prime aim of Victoria Nuland’s Ukraine war has been to rupture that growing Russo-German economic cooperation. A vital question for the future of Germany and of Europe will be whether Germany’s politicians continue to kneel to the throne of Obama or his successor or define their true interests in closer cooperation with the emerging Eurasian economic renaissance that is being shaped by President Putin’s Russia and by President Xi’s China.

Ironically, Washington’s and now de facto NATO’s “undeclared war” against Russia has sparked this remarkable renaissance of the Russian spirit. For the first time in many years Russians are starting to feel good about themselves and to feel they are good in a world of some very bad people. It may be the factor that saves our world from a one world dictatorship of the bankers and their military.

F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”
First appeared:

Your more important currency crosses early Monday morning:




Eur/USA 1.0866 up  .0021

USA/JAPAN YEN 120.95  up .116

GBP/USA 1.5106  up .0087

USA/CAN 1.2582 down .0040


This morning in Europe, the euro is up by a small amount, trading now well below the 1.09 level at 1.0866;  Europe is reacting to deflation, announcements of massive stimulation, the ramifications of a default at Austrian Hypo bank, crumbling bourses and the possible default of the Ukraine and Greece. In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. The yen continues to trade in yoyo fashion as this morning it settled slightly down again in Japan by 11 basis point and settling well above the 120 barrier to 120.95 yen to the dollar. The pound was up this morning as it now trades well below the 1.52 level at 1.5106.(very worried about the health of Barclays Bank and the FX/precious metals criminal investigation/Dec  12 a new separate criminal investigation on gold,silver oil manipulation and now the HSBC criminal probe). The Canadian dollar was up again as the  oil price is higher and is trading  at 1.2582 to the dollar. It seems that the 4 major global carry  trades are being unwound. (1) The total dollar global short is 9 trillion USA, and as such we now witness a sea of red blood on the streets as derivatives blow up with the massive rise in the dollar against all paper currencies.We also have the second big yen carry trade unwind as the yen refuses to blow past the 120 level.(3) the Nikkei vs gold carry trade. (4) short Swiss Franc/long assets  (European housing), the Nikkei, etc. These massive carry trades are terribly offside as they are being unwound. It is  causing deflation as the world reacts to a lack of demand. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT.

The NIKKEI: Monday morning : down 180.45 points or 0.96%

Trading from Europe and Asia:
1. Europe stocks all in the red

2/ Asian bourses mostly in the red    … Chinese bourses: Hang Sang in the red ,Shanghai in the green,  Australia in the red: /Nikkei (Japan) red/India’s Sensex in the red/

Gold very early morning trading: $1174.00



Early Monday morning USA 10 year bond yield: 2.22% !!!  down 1 in basis points from Friday night/


USA dollar index early Monday morning: 97.53  down 28 cents from Friday’s close.



This ends the early morning numbers, Monday morning




And now for your closing numbers for Monday:







Closing Portuguese 10 year bond yield: 1.76% flat in basis points from Friday


Closing Japanese 10 year bond yield: .44% !!! up 4 in basis points from Friday


Your closing Spanish 10 year government bond,  Monday down 2 in basis points in yield from Friday night.


Spanish 10 year bond yield: 1.28% !!!!!!


Your Monday closing Italian 10 year bond yield: 1.28% down 4 in basis points from Friday:



trading 0 basis points higher than  Spain.




Closing currency crosses for Monday night/USA dollar index/USA 10 yr bond:


Euro/USA: 1.0862  up .0016

USA/Japan: 121.17 up .338

Great Britain/USA: 1.5134 up .0115

USA/Canada: 1.2593 down .0030



The euro rose a bit this afternoon, after cascading on Friday. It  was up on the day by 16 basis points finishing the day still well below the 1.09 level to 1.0862. The yen was well down in the afternoon, and it was down by closing to the tune of 34 basis points and closing well above the 120 cross at 121.17. The British pound gained huge ground during the afternoon session and was up on the day closing at 1.5134. The Canadian dollar was well up again today along with oil.  It closed at 1.2593 to the USA dollar

As explained above, the short dollar carry trade is being unwound, the yen carry trade , the Nikkei/gold carry trade, and finally the long dollar/short Swiss franc carry trade are all being unwound and these reversals are  causing massive derivative losses. And as such these massive derivative losses is the powder keg that will destroy the entire financial system. The losses on the oil front will no doubt produce many dead bodies. The last asset still rising are the stock exchanges.



Your closing 10 yr USA bond yield: 2.20 down 3 in basis points from Friday






Your closing USA dollar index: 97.60 down 1 cents on the day.!!!



European and Dow Jones stock index closes:


England FTSE  down 35.33 points or 0.31%

Paris CAC down 27.15 or 0.55%

German Dax up 31.14 or 0.27%

Spain’s Ibex down 37.700 or 0.34%

Italian FTSE-MIB up 128.22. or 0.57%



The Dow: up 138.94 or 0.78%

Nasdaq; up  15.07 or 0.31%



OIL: WTI 50.04 !!!!!!!

Brent: 58.58!!!!



Closing USA/Russian rouble cross: 60.27 down 1/10   rouble per dollar on the day.









And now for your more important USA economic stories for today:




Your New York trading for today:


Apple Jones Industrial Average Outperforms


Overheard on CNBC many times today as Apple unleashed the Apple Watch and a gold Macbook…


Ugly Chinese data and worse German data were trumped by USDJPY-ignited momo to dead cat bounce stocks today with Apple dominating the headlines…

Futures show the overnight moves (and intrday swings) – not NASDAQ stalled perfectly at unch


On the day The (soon to include AAPL) Dow outperformed…


Since the jobs data…


But some context for today’s move… S&P around a Fib 38.2% dead cat bounce…


Of course today was all about AAPL… and the “Turlington Turmoil”


Bonds were bid all day…


Credit markets were not buying it at all…


The USD gave back some of Friday’s gains led by Cable strength…


Oil & Copper rallied while silver slipped and gold closed unch…


Seriously WTF!!!


Across the asset classes over the last 2 days…


And Finally…


Charts: Bloomberg







A great commentary from Wolf Richter on the permanent damage done from the West coast port fiasco


(courtesy Wolf Richter)





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