March 23/GLD loses a whopping 5.37 tonnes of gold/No progress with Tsipras and Merkel talks/IMF now supports the Chinese initiative AIIB bank/ gold and silver advance/


Good evening Ladies and Gentlemen:



Here are the following closes for gold and silver today:



Gold:  $1188.00 up $3.20 (comex closing time)

Silver: $16.87 unchanged (comex closing time)



In the access market 5:15 pm



Gold $1189.00

Silver: $17.00



Gold/silver trading:  see kitco charts on the 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 39 notices for 195,000 oz .



Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 243.75 tonnes for a loss of 59 tonnes over that period. Lately the removals  have been rising!



In silver, the open interest fell by 1298 contracts, due to short covering, as Friday’s silver price was up by 77 cents. The total silver OI continues to remain extremely high with today’s reading at 175,650 contracts. The front month of March fell by 30 contracts to 541 contracts. We are still close to multi year high in the total OI complex despite a record low price. This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end.



We had  39 notices served upon for 195,000 oz.



In gold we had a huge rise in OI as gold was up by $17.70 yesterday. The total comex gold OI rests tonight at 436,679 for a gain of 348 contracts. Today, surprisingly we again had 0 notices served upon for nil oz.



Today, we had a withdrawal of 5.37 tonnes  at the GLD/ inventory at  the  GLD/Inventory rests at 744.40  tonnes



In silver, /SLV  we had a withdrawal of 1.174 million oz of  inventory at the SLV/Inventory, at 326.158 million oz



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


1, Today we again had some short covering in the silver comex with the silver OI falling by 1298 contracts.  Gold OI again rises by close 348 contracts.  Both gold and silver rose nicely today  (report Harvey)


2, Merkel meets Tsipras but nothing new develops.  On the reparations front it looks like Germany owes Greece for the forced loan it gave the Nazis

(R Meijer)

3.Today we again see turmoil in the currencies and this does not look good.  Currencies should rise by “pennies” and instead it is rising by “quarters or half dollars”!!

(zero hedge)


4. Koos Jansen reports that China requests that gold and the Chinese yuan should be included in the new SDR


(Koos Jansen)


5.  First we had shale oil in overproduction.  Now it is shale natural gas




6.More countries are leaving the USA fold, by joining the new Chinese development bank. Today the USA folded and stated that it will cooperate with the new bank. Also the iMF is giving full support to the AIIB


(zero hedge)


7.  Finally, we have a report showing global earnings falling faster than Lehman.


(courtesy Dave Kranzler/IRD)




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 348 contracts from 436,331 up to 436,679  as gold was up by $15.70 on Friday (at the comex close). We are now in the contract month of March which saw it’s OI fall to 108 for a loss of 3 contracts. We had 0 notices filed upon on Friday so we lost 3 gold contracts or additional 300 oz will not stand for delivery in this delivery month of March. The next big active delivery month is April and here the OI fell by 10,716 contracts down to 192,515.  We have 8 days before first day notice for the April gold contract month, on March 31.2015. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 109,075.  (Where on earth are the high frequency boys?). The confirmed volume on yesterday ( which includes the volume during regular business hours + access market sales the previous day) was good at 206,940 contracts. Today we had 0 notices filed for nil oz.



And now for the wild silver comex results.  Silver OI fell by 1298 contracts from 176,948 down 175,650 despite the fact that silver was up by 77 cents with respect Friday’s trading. We therefore had some short covering. We are now in the active contract month of March and here the OI fell by 30 contracts falling to 541. We had 0 contracts served upon on Friday. Thus we lost 30 contracts or an additional 150,000 oz will not stand in this March delivery month. The estimated volume today was simply awful at 21,450 contracts  (just comex sales during regular business hours.  The confirmed volume yesterday (regular plus access market) came in at 65,654 contracts which is good in volume. We had 39 notices filed for 195,000 oz today.



March initial standings

March 23.2015





Withdrawals from Dealers Inventory in oz  nil
Withdrawals from Customer Inventory in oz  nil
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz nil
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices)  108 contracts (10,800 oz)
Total monthly oz gold served (contracts) so far this month 8 contracts(800 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

 626,388.9 oz

Today, we had 0 dealer transaction


total Dealer withdrawals: nil oz


we had 0 dealer deposit



total dealer deposit: nil oz



we had 0 customer withdrawals



total customer withdrawal: nil oz



we had 0 customer deposits:



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 (8) x 100 oz  or  800 oz , to which we add the difference between the open interest for the front month of March (108) 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 (8) x 100 oz  or ounces + {OI for the front month (108) – the number of  notices served upon today (0) x 100 oz} =  11,600 oz or  .3608 tonnes


we lost 300 additional ounces that will not stand for delivery in this March contract month.


Total dealer inventory: 658,537.414 oz or 20.48 tonnes

Total gold inventory (dealer and customer) = 7.836 million oz. (243.75) tonnes)

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 59.0 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 23 2015:





Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory 601,237.33 oz (Delaware, HSBC)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory 537,230.33 oz (Delaware,Scotia)
No of oz served (contracts) 39 contracts  (195,000 oz)
No of oz to be served (notices) 502 contracts (2,510,000)
Total monthly oz silver served (contracts) 2043 contracts (10,215,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
Total accumulative withdrawal  of silver from the Customer inventory this month  6,950.441.5 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 2 customer deposits:

i) Into Delaware;  11,748.53 oz

ii) Into Scotia; 526,230.30 oz


total customer deposit: 537,230.33 oz



We had 2 customer withdrawals:


i) Out of HSBC:  600,245.73 oz

ii) Out of Delaware; 991.600 oz


total withdrawals;  601,237.33 oz



we had 0 adjustment



Total dealer inventory: 70.021 million oz

Total of all silver inventory (dealer and customer) 174.841 million oz


The total number of notices filed today is represented by 39 contracts for 195,000 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 (2043) x 5,000 oz    = 10,215,000 oz to which we add the difference between the open interest for the front month of March (541) and the number of notices served upon today (39) x 5000 oz  equals the number of ounces standing.

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

2043 (notices served so far) + { OI for front month of March(541) -number of notices served upon today (39} x 5000 oz =  12,725,000 oz standing for the March contract month.

we lost 30 contracts or an additional 150,000 oz will not not stand for delivery.


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 23/we had a huge withdrawal of 5.37 tonnes of gold from the GLD vaults/Inventory 744.40 tonnes


march 20/we had no changes in  inventory at the GLD/Inventory at 749.77 tonnes


March 19/we had no changes in inventory at the GLD/Inventory 749.77 tonnes



March 18/ we had a withdrawal of .9 tonnes of gold from the GLD/Inventory at 749.77 tonnes


March 17.2015: no change in gold inventory at the GLD/Inventory 750.67 tonnes


March 16/no change in gold inventory at the GLD/Inventory 750.67 tonnes



March 13/ we had a small change in gold inventory at the GLD (small withdrawal/probably to pay for fees)/Inventory at 750.67 tonnes

March 12.we had a withdrawal of 2.09 tonnes of gold at the GLD/Inventory at 750.95 tonnes

March 11.2015: no changes in gold inventory at the GLD/Inventory at 753.04 tonnes

March 10 no report on the GLD tonight/computer down/inventory remains 753.04 tonnes

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 23/2015 /  we had a withdrawal of 5.37 tonnes of gold/Inventory at 744.740tonnes

inventory: 744.40 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 : 744.40 tonnes.








And now for silver (SLV):


March 23./we had a huge withdrawal of 1.174 million oz of silver from the SLV vaults/Inventory 326.158 million oz


March 20/ no changes in silver inventory/327.332 million oz


March 19/ no change in silver inventory/327.332 million oz


March 18/ no change in silver inventory/327.332 million oz


March 17/ no change in silver inventory/327.332 million oz


March 16/no change in silver inventory/327.332 million oz



March 13.2015: no change in silver inventory/327.332 million oz

March 12: no changes in silver inventory/327.332 million oz

March 11/no changes in silver inventory/327.332 million oz

March 10/ no change in silver inventory/327.332 million oz

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 23/2015 we had a huge withdrawal of 1.174 million oz of    silver inventory at the SLV/ SLV inventory rests tonight at 326.158 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)

Not available tonight

1. Central Fund of Canada: traded at Negative  6.7% percent to NAV in usa funds and Negative 7.0% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.7%

Percentage of fund in silver:37.9%

cash .4%

( March 23/2015)



Sprott gold fund finally rising in NAV

2. Sprott silver fund (PSLV): Premium to NAV rises to + 1.60%!!!!! NAV (March 23/2015)

3. Sprott gold fund (PHYS): premium to NAV remains at -.13% to NAV(March 23  /2015)

Note: Sprott silver trust back  into positive territory at +1.60%.

Sprott physical gold trust is back into negative territory at -.13%

Central fund of Canada’s is still in jail.








And now for your more important physical gold/silver stories:



Gold and silver trading early this morning



(courtesy Mark O’Byrne)


Greece and EU Running Out of Time – Bank Runs Intensify, Bail-Ins Likely

– EU and Greece running out of time as talks end “in disarray” – again
– Greece warns Merkel of ‘impossible’ debt
– Concerns Greece out of money by end of April
– Friday’s “agreement” in Brussels falls apart hours later as protagonists fail to agree on specifics
– Greece now insolvent – will run out of liquidity by end of April
– Greek banks on verge of collapse as runs continue – €1.5 billion emptied out of banks last week alone
– ‘Grexit’ could propel gold to over $2,000/oz
– Cyprus style bail-ins look increasingly possible


Greece’s place in the Eurozone is as precarious as ever as talks between Prime Minister Tsipras and European leaders in Brussels broke down – hours after reaching general agreement – and Greece warned Germany that it will be “impossible” for Greece to service debt payments due in the coming weeks if the EU fails to provide short-term financial assistance.

Greece – faced with illiquidity, insolvency and a potential banking collapse – is running out of time and appears to be on the back foot as its international creditors refuse to countenance any debt restructuring, rescheduling or forgiveness.

The warning from Greece came in a letter from Tsipras to Angele Merkel provided to the Financial Times. It comes as concerns mount that Athens will struggle to make pension and wage payments by as early as next week, the end of March, and could run out of cash completely before the end of April.

The letter, dated March 15, came just before Ms Merkel agreed to meet Mr Tsipras on the sidelines of an EU summit last Thursday and invited him for a one-on-one session in Berlin, scheduled for Monday evening.

In the letter, Tsipras warns that Greece will be forced to choose between paying off loans, owed primarily to the IMF, or continue social spending. He blames ECB limits on Greece’s ability to issue short-term debt as well as eurozone bailout authorities’ refusal to disburse any aid before Greece adopts a new round of economic reforms.

“Given that Greece has no access to money markets, and also in view of the ‘spikes’ in our debt repayment obligations during the spring and summer . . . it ought to be clear that the ECB’s special restrictions when combined with disbursement delays would make it impossible for any government to service its debt,” Mr Tsipras wrote.

He said servicing the debts would lead to a “sharp deterioration in the already depressed Greek social economy — a prospect that I will not countenance”.

At a press conference on Friday Angela Merkel said “the Greek government has the opportunity to pick individual reforms that are still outstanding as of 10 December and replace them with other reforms if they . . . have the same effect,” according to the Financial Times.

That Merkel would consider holding Syriza to an agreement made between Greece’s previous government and the Troika – which Syriza have eschewed – shows how little progress has been made in the intractable negotiations between the two sides since Syriza came to power.

All that has changed is that Greece is more insolvent and Europe has bought time to deal, albeit reluctantly, with a “Grexit”.

Bloomberg confirms that the Greek government may run out of cash to pay pensions and salaries in April.

“Locked out of capital markets and with its coffers running dry, Greece is scraping the bottom of the barrel to pay pensions and salaries amid signs that it could run out of money by early next month.”

At the same time, Bloomberg reports that €1.5 billion was withdrawn from Greek banks last week alone.

January saw record drops in deposits in Greek banks. The banks have been drawing from the Emergency Liquidity Assistance (ELA) program to stay afloat. The ELA is operated by the Greek Central Bank but is reviewed weekly by the ECB.

Greece’s central bank requested a raise to the ELA ceiling to deal with the bank runs. The ECB approved a €400 million raise in the ceiling – less than half of what was requested, according to Bloomberg.

Depositors in Greek banks, both individuals, small and medium enterprises and corporates are becoming increasingly concerned about the twin risks of default and return to the drachma or remaining in the monetary union and potentially having Cyprus style bail-ins imposed on Greek savers.


Time certainly appears to be running out for Greece. Either Syriza capitulates and returns to the Troika’s bail-out mechanism – highlighting a complete loss of sovereignty, or Greece defaults and exits the Eurozone.

‘Grexit’ should propel gold higher with respected analysts saying gold could quickly rise to $2,000 per ounce should a ‘Grexit’ occur.

The Greek and EU debt ‘can’ has been continuously  kicked down the road. We are running out of road …

“A must read for depositors globally seeking to protect their bank deposits from bail-ins”:
Protecting Your Savings in the Coming Bail-In Era


Today’s AM fix was USD 1,181.40, EUR 1,086.15 and GBP 791.77 per ounce.
Friday’s AM fix was USD 1,171.75, EUR 1,096.17 and GBP 794.73 per ounce.

Gold and silver were both strong for the week – gold rose 2.42 percent and silver surged 7.45 percent.

Gold climbed 1.1 percent or $12.90 and closed at $1,183.20 an ounce Friday, while silver surged 3.72 percent or $0.60 at $16.73 an ounce.

In Singapore, bullion for immediate delivery in afternoon trading was $1,181.71 an ounce. Gold remained steady not moving much since the close on Friday.

In London spot gold in the late morning is trading at $1,181.66 or down 0.03 percent. Silver is at $16.70 or off 0.20 percent and platinum is at $1,138.09 or up 0.10 percent.

Premiums on the Shanghai Gold Exchange (SGE) have fallen $2 to $4-$5 today compared with $6-$7 on Friday. This suggests that gold demand in China eased after the gains last week. However, Chinese gold demand remains very robust as seen in the 51.5 metric tonnes of gold withdrawals on the SGE last week.


European markets today are cautious due to concerns regarding Greece, ahead of a meeting between its prime minister and Germany’s Angela Merkel.

In Europe, Greek Prime Minister Alexis Tsipras is meeting with German Chancellor Angela Merkel today. Greece is running out of cash quickly which is heightening the risk of a ‘Grexit’ and a return to the drachma, or alternatively to Cyprus style bail-ins.

Open Europe a research group estimated  a ‘Brexit’ or Britain leaving the European Union could cost Britain 56 billion pounds ($84 billion) a year by 2030 unless the country keeps its borders open, based on a departure by January 2018.

Bullion coin demand remains robust as seen in the latest data from the U.S. Mint. Sales of gold American Eagle coins by the U.S. Mint have already out sold last March’s total by well over 50% this month, reaching 34,500 ounces with another week of the month left to go according to Reuters. In March 2014 as a whole, they reached 21,000 ounces.




Only new new members join the London gold fix.  Chinese banks are not one of them as of yet:


(courtesy Jan Harvey/Reuters)


London’s ‘reformed’ gold fix mechanism gets all of two new participants


Goldman, UBS Join Former ‘Fixing’ Banks for New LBMA Gold Price

By Jan Harvey
Friday, January 20, 2015

LONDON — The new London Bullion Market Association Gold Price went live for the first time on Friday, with Goldman Sachs and UBS joining the four members of the now-defunct gold “fix” in setting its electronic replacement.

Goldman and UBS joined Barclays, HSBC, Bank of Nova Scotia, and Societe Generale to set the new benchmark gold price, administered by ICE Benchmark Administration, at 10:30 GMT on March 20.

The first LBMA Gold Price was set at $1,171.75 an ounce, after five rounds of an auction to strike a balance between bids and offers.

“The London gold fixing was eclipsed today,” Ross Norman, chief executive of Sharps Pixley, said. “The key question is: Will users have the necessary confidence in the number? My gut feeling is that, with six participants, yes is the answer.” …

… For the remainder of the report:…







Alasdair explains the significance of the new AIIB bank initiated by China which will probably have by the end of this month over 35 founding nations, but not the uSA:


(courtesy Alasdair Macleod)




By Alasdair Macleod Posted 20 March 2015


The new order emerges

China and Russia have taken the lead in establishing the Asian Infrastructure Investment Bank (AIIB), seen as a rival organisation to the World Bank and the Asian Development Bank, which are dominated by the United States with Europe and Japan.

These banks do business at the behest of the old Bretton Woods* order. The AIIB will dance to China and Russia’s tune instead.

The geopolitical importance was immediately evident from the US’s negative reaction to the UK’s announcement this week that it would join the AIIB. And very shortly afterwards France, Germany and Italy also defied the US and announced they might join. In the Pacific region, one of America’s closest allies, Australia, says she is considering joining too along with New Zealand. The list of US allies seeking to join is growing. From a geopolitical point of view China and Russia have completely outmanoeuvred the US, splitting both NATO and America’s Pacific alliances right down the middle.

This is much more important than political commentators generally realise. We must appreciate that anything China does is planned well in advance. Here is the relevant sequence of events:

• In 2002 China and Russia formally adopted the founding charter for the Shanghai Cooperation Organisation, an economic bloc that today contains about 35% of the world’s population, which will become more than 50% when India, Pakistan, Iran, Afghanistan and Mongolia join, which is their stated intention. Russia has the resources and China the manufacturing power to develop the largest internal market ever seen.

• In October 2013 George Osborne was effectively summoned to Beijing because China wanted London to be the base to develop renminbi-denominated financial instruments. London has served China well, with the UK Government even issuing the first renminbi-denominated foreign (to China) government bond. The renminbi is now on the way to being a fully-fledged international currency.

• The establishment of an infrastructure bank, the AIIB, will ensure the lead funding is available for the rapid development of road, rail, electric and electronic communications throughout the SCO, ensuring equally rapid economic development of the whole of the Asian continent. It could amount to the equivalent of several trillion dollars over time.

The countries that are applying to join the AIIB realise that they have to be members to access what will eventually become the largest single market in the world. America is being frozen out, the consequence of her belligerence over Ukraine and the exercise of her hegemonic power through the dollar. America’s allies in South East Asia are going with or will go with the new AIIB, and in Europe commercial interests are driving America’s NATO partners away from her, turning the Ukraine from a common cause into a festering liability.

The more one thinks about it, the creation of the AIIB is a masterstroke of tactical genius. The outstanding issue now is China and Russia will need to come up with a credible plan to make their currencies a slam-dunk replacement for the dollar. We know that gold may be involved because the SCO members have been accumulating bullion; but before we get there China must manage a deliberate deflation of her credit bubble, which will be a delicate and dangerous task.

Unlike the welfare-driven economies in the west, China has sufficient political authority and internal control to survive a rapid deflation of bank credit. When this inevitably happens the economic consequences for the west will be very serious. Japan and the Eurozone are already facing economic dislocation, and despite over-optimistic employment numbers, the US economy is faltering as well. The last thing America and the dollar needs is a deflationary shock from China.

The silver lining for us all is a peace dividend: it is becoming less likely that America will persist with a call to arms, because support from her allies is melting away leaving her on her own.

*The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world’s major industrial states in the mid-20th century.

-Disclaimer- The views and opinions in this article are those of the author, do not reflect the views and opinions of GoldMoney, and are not advice.


Are these guys nuts???.  The mine is owned by Nevsun

(courtesy GATA)

Ethiopian warplanes reported to have attacked Nevsun gold mine in Eritrea


Ethiopian Planes Raided Bisha Gold Mine

From the Asmarino Independent
(Eritrean exile Internet site)
Saturday, March 21, 2015

Ethiopian fighter planes bombed the site of Eritrea’s Bisha gold mine, reported Al-Sahafa, a leading Sudanese Arab daily in its March 21 edition.

According to the newspaper, heavy plumes of smoke and fire bellowed from the mine, located 150 kilometers from the capital city, Asmara.

At $300-$400 million in annual earnings, the gold mine is Eritrea’s only source of revenue, the newspaper added.

The paper speculated that the raid might have been intended to distract public attention from the upcoming Ethiopian elections.

In related developments, has reported that Bisha gold mine sustained damages. It did not provide information on the nature or cause.

Reached at its headquarters in Canada, Nevsun Mining Co. asked to contact its local offices in Eritrea directly. They were not available for comment.

… For the remainder of the report:…


On CNBC Asia, GATA secretary discusses gold market rigging and its consequences


11:17a HKT Monday, March 23, 2015

Dear Friend of GATA and Gold:

Your secretary/treasurer was interviewed this morning in Hong Kong by Bernie Lo on CNBC Asia’s “Squawk Box” program, discussing gold market manipulation, the failure of mainstream financial news organizations to put critical questions to central banks about their surreptitious intervention in the gold market, the “new” gold fix in London, the market-destroying and imperialistic results of gold price suppression, and the general subversion of democracy by central banking. A five-minute excerpt from the interview has been posted at the CNBC archive here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.





Koos discusses the fact that China wants the Yuan and gold to be included in the SDR calculations.




(courtesy Koos Jansen)

Posted on 23 Mar 2015 by

Will The Shanghai International Gold Exchange Facilitate Gold Inclusion Into The SDR?

The Shanghai International Gold Exchange (SGEI) was launched in September 2014, to internationalize the Chinese gold market and the renminbi. The timing of the launch is quite remarkable though, in the context of changes in the international monetary system (IMS).

2015 is likely to force a major shift in the IMS. Two developments are worth watching, the SDR basket will be reviewed, the renminbi will probably be adopted later this year, and the rise of the Asian Infrastructure Investment Bank (AIIB), an international financial institution proposed by China with many Western members; currently France, Germany, Italy, Luxembourg, Switzerland, New Zealand and the UK. Both developments are severe blows to the US dollar hegemony.

Last week I reported on, (i) the IMF terms for the renminbi to be adopted into the SDR, (ii) if these terms can be met this year, and (iii) what the role of gold will be in the process (read China, Gold, SDRs And The Future Of The International Monetary System). Since then there has been more confirmation of renminbi adoption in the media.

From Reuters:

China’s yuan at some point would be incorporated in the International Monetary Fund’s Special Drawing Right (SDR) currency basket, IMF Managing Director Christine Lagarde said, …”It’s not a question of if, it’s a question of when,”

From Xinhua:

China and Germany conducted their first high-level financial dialogue here on Tuesday and agreed to strengthen macro-economic policy coordination

…confronted with a complex and fragile global economic situation, China and Germany as important economies should strengthen policy coordination, coordinate strategic cooperation, deepen financial and fiscal cooperation…

Representing Germany at the dialogue, German Finance Minister Wolfgang Schaeuble and Deutsche Bundesbank President Jens Weidmann said that Germany and China have been working together very well both bilaterally and multilaterally in financial and fiscal areas…

According to a joint statement after the dialogue, the German side will actively support … China’s goal to add the RMB to the special drawing rights (SDR) currency basket based on existing criteria.

…During the dialogue, both sides reached consensus on issues such as investment cooperation between China and Europe, China and Germany and in third countries.

Kindly note, Germany officially has the second largest gold reserves in the world and are currently repatriating gold from the US. Thereby expressing their affinity with gold and their lack of trust in the US as their custodian. This Germany would like the renminbi to be included into the SDR.

The most important condition for the adoption of the renminbi is that it must be freely usable. From Criteria for Broadening the SDR Currency Basket, an IMF paper published in 2011, “that discusses a number of reform options for the eligibility criteria for the SDR currency basket”:

The freely usable concept and its two key elements—currencies should be “widely used” and “widely traded” —are set out in the Articles and serve important operational purposes.

The renminbi is currently “widely used” and “widely traded”.

Will Gold Be Included In The SDR Basket? 

China gold x

The reason the current IMS is up for revision is because the global fiat experiment has failed miserably. Having exclusively fiat currencies circulating within countries, without any anchor to a non-fiat reserve currency, is simply not sustainable. In shaping a new IMS the designers would be mistaken to create a system based on a basket of solely fiat currencies, which have just proven to be ineffectual. Gold could provide credibility and strength to the SDR.

In addition, we could read some clues (in my prior post) that the Chinese would like gold in the SDR along side the national fiat currencies. This would explain China’s aggressive gold purchases in recent years.

On March 9, 2015, Albert Cheng, managing director of the World Gold Council Far East, was interviewed by

Q: The council has signed an understanding agreement with the Shanghai Gold Exchange to work more closely via the International Board set up in the city’s pilot Free Trade Zone last September. Could you tell us how that will work?

A: The memorandum of understanding involves objectives to improve operation of the Shanghai Gold Exchange, such as attracting more international players. Gold is a hard currency, so if it is freely traded in China, it will have an impact on the yuan. The design of the International Board, allowing international and domestic investors to participate in the onshore gold market, has a symbolic meaning of some kind of convertibility. By signing the memorandum, we can help the Board marketing this concept to the international trading community.

In general the renminbi is not yet fully convertible, but in terms of gold it is; through the Shanghai International Gold Exchange. Logically all currencies in the SDR basket must be freely usable, and allowed to be freely exchanged for one another. If the renminbi and gold were to be added to the SDR basket it would help if there is an exchange for both, which is currently operating in the Shanghai Free Trade Zone.

Will the Shanghai International Gold Exchange facilitate gold inclusion into the SDR?

Koos Jansen
E-mail Koos Jansen on:




(courtesy Bill Holter/Miles Franklin)


Three strikes and you’re out!


Last week we looked at a chart showing new orders, inventories and personal consumption expenditures.

The significance as you can see is what results when all three series are contracting in unison, a recession.  In the old days when things were “normal”, recessions were no big deal.  They were inconvenient and yes, they did clean out some mal investment but they were deemed necessary.  Recessions were even expected and considered a natural event even though induced by the credit cycle.  This is no longer true and has not been since at least the year 2000, it can even be argued all the way back to the early 1990’s.
  Why?  Because recessions cannot be allowed to go full cycle to clean out mal investment and bad debt.  Again, why?  The answer is so simple and in our face, “debt saturation”.  There is simply too much debt in every corner of the economy (and global economy).  “Every corner” by the way includes the government itself and the fact that our national debt cannot nor will ever be paid back with current values.  As it stands now, the next recession will be the final recession …for the current monetary system and a new one will by necessity be created.  China is working on this, but a story for another day.
  I want to show you another chart which is as scary as any I know of but would like to frame it first.  From a broad perspective, “bubbles” don’t just happen on their own, they need “fuel”.  The fuel of course is credit or an overabundance of credit and on easy terms.  This is certainly not a new phenomenon, we can look back to the tulip mania, the French Revolution and John Law as early examples.  In current day, we have become accustomed to bubbles because they seem to form every seven years or so as a result of Fed ease and Treasury largesse to abort the previous recession.  Each time the U.S. has refused to accept the medicine of a recession going through to fruition was an act of creating the fuel for the next bubble.

(courtesy M. Stevens)

  After viewing the chart, do you see anything that it really is “different this time”?  Yes, this time it is not just one sector in a bubble, we now have all sectors at once!  This chart shows you real estate, the Russell 2000 and the hot biotech sector.  We could of course overlay a chart of bonds (interest rates inverted) and even add in the dollar for a five bagger of bubbles.  Globally it is the same story, real estate, stocks and bonds (with interest rates even negative) are all in bubbles.  Needless to say, the falls from grace will be at least equal to if not far worse than previous falls.  Why is this you ask?  There is far more debt now than in 2007 entering recession.  As for the U.S., there was no alternative to the dollar as a reserve currency, say what you will but the rest of the world has been working at break neck speed to change this monopoly.
  The problem is, there are TOO MANY problems (bubbles) all at one time.  We also have these bubbles at a very bad time so to speak.  The Fed has already quintupled their balance sheet and the Treasury has now borrowed more than 100% of GDP …AND, interest rates are ZERO!  What tool or tools exactly are available to temper the fall?  I guess another obvious question would be “who?”.  Who exactly has the ability to ride in on a white horse and use these nonexistent tools?  You know the answers of course, there are no tools left, the white horse has died and the rider is broke.
  Hopefully this last chart strikes a chord with you because of the ease to “see what it is saying”.  The coming collapse and panic could not be more obvious to those who can look at numbers and truly understand them.  Some people are more visual and need to see a “picture” to understand what is happening.  The picture tells me that almost EVERYTHING we as “value” is in a bubble and will collapse with much of it actually “going away”.  Our current situation has everything to do with credit.  Too much of it and too easily obtained.  The central bank(s) and Treasury(s) are to blame as they painted themselves into the corner where we can never again be allowed to have a recession.  Mother Nature says we will have another recession, she also says the next one will be the biggest and most all engulfing ever … and at a time our policymakers have no options or tools left!  Very scary indeed, even if you see it coming and have prepared to the best of your ability.  Regards,  Bill Holter


And now for the important paper stories for today:



Early Monday morning trading from Europe/Asia



1. Stocks generally higher on major Chinese bourses (only India’s Sensex and Australia lower)/yen rises to 119.83

1b Chinese yuan vs USA dollar/yuan falls to 6.2140

2 Nikkei up 194.14 or 0.99%

3. Europe stocks all in the red/USA dollar index down to 99.42/Euro rises to 1.0887

3b Japan 10 year bond yield .32% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.83/

3c Nikkei still above 19,000

3d USA/Yen rate now below the 120 barrier this morning

3e WTI  45.83  Brent 54.76

3f Gold up/Yen up

3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion.  Japan’s GDP equals 5 trillion usa.

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.

3h  Oil down for both WTI and down for Brent this morning.

3i European bond buying continues to push yields lower on all fronts in the EMU

Except Greece which sees its 2 year rate slightly falls to 21.89%/Greek stocks up by a huge 1.60%today/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  11.35% (down  by 65 basis point in yield)



3k Gold at 1182.00 dollars/silver $16.71

3l USA vs Russian rouble;  (Russian rouble up  1/0 rouble/dollar in value) 59.03 despite the lower brent price

3m oil into the 45 dollar handle for WTI and 54 handle for Brent

3n Higher foreign deposits out of China sees hugh risk of outflows and a currency depreciation.  This scan spell financial disaster for the rest of the world/China may be forced to do QE!!

30  SNB (Swiss National Bank) still intervening again in the markets driving down the SF

3p Britain’s serious fraud squad investigating the Bank of England/ the British pound is suffering

3r the 7 year German bund still is  in negative territory/no doubt the ECB will have trouble meeting its quota of purchases and thus European QE will be a total failure.

3s  Greece’s prime minister Tsipras meets with Merkel today.

3t Bloomberg calculates Greece’s shortfall in March at 3.5 billion euros.



4.  USA 10 year treasury bond at 1.91% early this morning. Thirty year rate well below 3% at 2.50%/yield curve flatten/foreshadowing recession.



5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.






Buying Euphoria Fizzles Ahead Of Make Or Break Tsipras-Merkel Talks


As previously observed (skeptically), a main reason for the surge in the DAX, and thus the S&P, on Friday was premature hope that the Greek talks on Thursday night were a long-overdue precursor to a Greek resolution, and as we further noted yesterday, subsequent bickering and lack of any clarity as we go into today’s critical “final ultimatum” meeting between Merkel and Tsipras, is also why the Dax is lower by 1.1% at last check, even if the EURUSD continues to trade like an illiquid, B-grade currency pair whose only HFT purpose is to slam all stops within 100 pips of whatever the current price may be.

Not helping the weak euro case was a plethora of research reports (to follow in subsequent post), which saw the penguin consensus reiterate that despite the Fed’s rhetoric, the strong dollar case is the dominant one for the coming months and well into the summer. As for whether the last few hours’ stop hunt higher in the EURUSD is credible, one look at where oil is trading (based on fundamentals or rate differentials) suggests the latest spike in the EUR is to be faded. Indicatively, Brent and WTI are trading down ~$1/bbl as talks on Iran nuclear program enter final week before political deal due, with both sides saying agreement is reachable. In addition, Saudi’s Naimi says OPEC would have lost market if it cut output, with the kingdom pumping 10 million barrels per day.  Among the soundbites Naimi made was that “oil won’t rebound to $100/bbl because increased prices would  draw more shale, and other higher-cost output to market.”

But back to the main event of the day, as focus falls on Greece once again as the Greek PM Tsipras looks to meet with German Chancellor Merkel today after sending a letter to her last week which said it will be “impossible” to service near-term debt obligations.The two will meet from 1600GMT, with a press conference tentatively scheduled for 1800GMT and a working dinner from 1900GMT. Lingering concerns around the periphery has caused some selling pressure in Greek bonds and the 3y yield sits higher by ~40bps, although the domestic Greek stock market remains unfazed and trades with marginal gains.

How big is today’s meeting? As Hajo Funke, political scientist with Berlin’s Free University, told AFP earlier, “two worlds will collide” when Merkel and Tsipras sit down this afternoon:

“There is the political world of Greece, where a left-wing government faces a society in collapse, (of) societal decay… as grave as anything we have seen in western Europe since 1945.”


“The other world is a content country that is dominant in Europe, Germany, which worries about maintaining its economic happiness, and which is now being asked to help the other, under conditions it doesn’t fully understand.”

So yes: today’s meeting (4:00 PM GMT), the subsequent press conference (6:00PM GMT), could well lead to a symbolic “last supper” for Tsipras at 7:00PM.

Asian equities traded mostly higher after taking the impetus from Friday’s strong Wall Street close, which saw the S&P 500 gain the most since the start of February. The Shanghai Comp (+2.0%) rose for a 9th day, the longest winning streak since Apr’07 as cash flowed back into the market after the end of subscriptions for the recent slew of IPOs. Elsewhere the Nikkei 225 (+1.0%) rose to hit yet another fresh 15yr high led by health care stocks. The ASX 200 (-0.3%) was the session’s laggard after an earlier failed attempt at testing the 6,000 key psychological level.

Positive sentiment from Asia failed to follow through to Europe, with selling seen in the DAX in the first hour of trade, exacerbated by a break below Friday’s low and the FTSE 100 back below 7000 as concerns over Greece weigh on the sentiment and as oil prices continue to slide.

This week sees a downtick in Eurozone supply with EUR 13-14bln on offer. Belgium get things underway on Monday with a trio of OLOs, followed by Netherlands on Tuesday and Italy on Thursday for which sizes are still yet to be announced. Speculation has been that Portugal could come to market on Wednesday but this is still yet to be confirmed. From a redemption perspective there is nothing too significant to report. The US come to market with 2s, 5s and 7s and 2y FRNs. The size of the auctions remain unchanged at USD 26bln, USD 35bln, USD 29bln and USD 13bln respectively although some of the USD 103bln hitting the market will be offset by the prospect of USD 78bln in 2-, & 5y redemptions due for payment on Tuesday 31st March. Supply this week equates to ~500K 10 future equivalent.

Once again FX markets have also been in focus and the USD index saw an early bid which has consequently caused EUR/USD to slide to fresh lows and a lower EUR seen as a headwind for exporters from core Europe. NZD outperformed overnight, underpinned by a sell-off in AUD/NZD as the cross touched a fresh record low, attributed to large fund liquidations and NZD/USD hit a 2-month high after large buy-stops were triggered in the cross at 0.7610. AUD also strengthened in sympathy as AUD/USD reclaimed the 0.7800 handle, further bolstered by selling in EUR/AUD after the earlier break below the 1.3900 handle and medium-term support at 1.3881 (Wed & Thurs low). In EUR/USD large vanilla option expiries are seen at 1.0850 with USD 1.5bln due to roll off at the 10am NY cut.

In summary: European shares fall, at session low, with the autos and chemicals sectors underperforming and banks, financial services outperforming. Greek PM Tsipras set to meet German Chancellor Angela Merkel for 2nd time in 5 days today. U.S. oil declines as Saudi Arabia said it was pumping near record amounts of crude. The German and French markets are the worst-performing larger bourses, the Spanish the best. The euro is little changed against the dollar. Japanese 10yr bond yields fall; German yields decline. Commodities decline, with natural gas, WTI crude underperforming and wheat outperforming. U.S. Chicago Fed index, existing home sales,  due later.

Market Wrap:

  • S&P 500 futures down 0.2% to 2095.1
  • Stoxx 600 down 0.7% to 401.1
  • US 10Yr yield little changed at 1.93%
  • German 10Yr yield down 1bps to 0.18%
  • MSCI Asia Pacific up 0.6% to 148.4
  • Gold spot down 0.1% to $1181.7/oz
  • Eurostoxx 50 -0.8%, FTSE 100 -0.3%, CAC 40 -0.8%, DAX -1.2%, IBEX little changed, FTSEMIB -0.3%, SMI -0.4%
  • Asian stocks rise with the Shanghai Composite outperforming and the ASX underperforming.
  • MSCI Asia Pacific up 0.6% to 148.4
  • Nikkei 225 up 1%, Hang Seng up 0.5%, Kospi little changed, Shanghai Composite up 1.9%, ASX down 0.3%, Sensex down 0.2%
  • Euro down 0.06% to $1.0815
  • Dollar Index little changed at 97.91
  • Italian 10Yr yield up 1bps to 1.22%
  • Spanish 10Yr yield up 2bps to 1.2%
  • French 10Yr yield up 1bps to 0.45%
  • S&P GSCI Index down 0.7% to 395.3
  • Brent Futures down 1.3% to $54.6/bbl, WTI Futures down 2.2% to $45.5/bbl
  • LME 3m Copper up 0.5% to $6074.5/MT
  • LME 3m Nickel down 0.3% to $14205/MT
  • Wheat futures up 1.6% to 538.3 USd/bu

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities trade lower on Greek concerns, a technical break below Friday’s low in the DAX and 7,000 in the FTSE 100, a slide in oil prices and a further bid in the USD index
  • The Greek PM Tsipras will meet with German Chancellor Merkel today after sending a letter to her last week which said it will be “impossible” to service near-term debt obligations
  • Tsipras and Merkel are set to meet from 1600GMT, a press conference is scheduled for 1800GMT and working dinner at 1900GMT
  • Treasuries steady, 10Y yield holds below 50- DMA amid declines in European stocks, U.S. equity-index futures; week’s auctions begin tomorrow with 2Y fixed and FRN.
  • Greek PM Tsipras is set to meet Merkel for the second time in five days on Monday, at the start of a week that may prove decisive for Greece’s future in the euro area; Greek 3Y notes yield 21.05%
  • Greece won’t get any money from European rescue fund until all proposed reforms have been implemented, Spanish Economy Minister Luis de Guindos says in interview with FT
  • In the past month, central bankers from Ottawa to London have used speeches to highlight how their local inflation rates may be driven by events outside their control, complicating their ability to set the right monetary policy
  • Japan’s government raises economic assessment for first time in 8 months, sees improvement in corporate sector
  • China is considering sweeping changes to its securities industry that would allow foreign banks to control their local joint ventures and broaden their offerings, said people with knowledge of the matter
  • WSJ reports U.S. to seek collaboration with China-led Asian Infrastructure Investment Bank;  U.S. allies, including U.K., Germany, France, have lined up to become founding members of AIIB
  • Draghi cheerleads for economy as Greek risk looms over Euro area
  • Ukraine’s plummeting bond prices are signaling that creditors including Franklin Templeton face steep writedowns in the nation’s foreign debt restructuring
  • Ukraine arms movement puts truce at risk, NATO’s Breedlove says
  • Fitch warns Turkey on policy credibility as outlook kept stable
  • Lee Kuan Yew, who helped transform Singapore from a colonial trading center into one of Asia’s most prosperous nations during 31 years as its first elected prime minister, has died at the age of 91
  • Sovereign 10Y yields mostly lower. Asian stocks mixed, European stocks and U.S. equity-index futures decline. Crude falls, gold little changed, copper rises



DB’s Jim Reid concludes the weekend event summary



This week perhaps the main macro interest (tomorrow) will be on seeing whether the US stays in slight deflation and whether the UK gets ever closer to it for the first time since the early 1960s. This will be an interesting follow-up to last week’s focus on the Fed and where Fed Funds might move over time. At a headline level the US is likely to remain in slight annual deflation for the second month (expected to hold -0.1%YoY) even if the core ticks up one-tenth of a percent as expected to +1.7% YoY. With Oil continuing to be weak, the YoY headline rate is expected to be negative for many of the next few months in the US. Meanwhile, UK headline CPI is expected to edge closer to annual deflation (+0.1% YoY expected). Negative prints will surely follow soon which is something Mark Carney anticipated when he spoke last week.

As you’ll also remember from last week, Bank of England chief economist Andy Haldane suggested that the next move in rates might actually be down. While he appears to be a lone voice at the top of the BoE it is an interesting development. The UK has become a high yielder in Europe and the currency has responded accordingly which might eventually persuade more at the bank that they may have to consider a more dovish stance. Could these thoughts translate across the Atlantic? Indeed it’s worth repeating our thoughts on Friday where we suggested that if you were just presented with the facts on the US economy from scratch with no bias would you say the next move in rates would be up or down? We’re all anchored to expecting a rate rise to come sooner rather than later (for well known reasons) but with negative inflation, the weakest recovery on record, low wage growth, a decade plus high in the currency, economic surprises at 6-yr lows and still near record debt levels an outsider starting from scratch might well conclude that the economy needed more stimulus not less, especially if they weren’t told the current Fed Funds rate. As we said on Friday removing stimulus to stop rolling bubbles is a valid reason to hike but it’s a dangerous one given how addicted markets have become to stimulus. So overall, I wonder what probabilities you’d get on the next move from the Fed being an easing one?

Greece may well be another big headline grabber this week. On Friday, positive headlines appeared to provide some support for risk assets in Europe. The better sentiment in particular appeared to centre on some talk that Greece could receive a portion of bailout money early should the government come forward with adequate reform proposals. Meanwhile the WSJ noted that European officials suggested that loans could be paid out in installments if tangible progress was made. Despite the headlines, we still remain cautious on progress given the hurdles that need to be passed. The cash position continues to deteriorate and in the mean time a full agreement still needs to be achieved between Europe and Greece, as well as the Greek government passing any reforms through parliament. Over the weekend the Spanish finance minister Guindos was quoted in the FT saying that Greece would not receive any funding until a full set of reforms were signed off. The FT is also carrying a story this morning that Tsipras sent a letter to Merkel a week ago outlining that unless Europe distributes short-term funds it will be “impossible” for Greece to service near-term debt obligations. Talks continue today with Tsipras due to meet Merkel in Berlin in what could be a crucial week given the imminent pressure on the Greek government to speed up their progress. In the mean time, our European economics colleagues have put together a ‘what if’ analysis on the short and long-term consequences of a Grexit. Their base case remains that a balanced compromise will be found, but they think the risk of a political accident is still very high and a Grexit is still a scenario which cannot be ruled out.

Briefly recapping markets on Friday, we saw another trend reversal day in the US with the S&P 500 closing +0.90% and Dow +0.94%. Despite now trading between gains and losses for 8 consecutive sessions, the S&P 500 did halt its run of 3 weekly declines with a +2.7% return last week. Gains were largely broad based but led by the energy component (+1.37%) in particular after both WTI (+2.21%) and Brent (+1.64%) bounced. Meanwhile, much of the focus continues to be on the Dollar as the broader DXY weakened 1.36% for the largest daily decline since July 2013. There was a similar move versus the Euro too with the single currency rallying +1.51% versus the Dollar to $1.082, now nearly 4c off the intraday lows of 15th March.

It was a similar story in US Treasuries, with the benchmark 10y yield rebounding from the previous day’s weakness to close 3.8bps tighter at 1.93%. With a light data-calendar, there was some attention on the Fed’s Lockhart who reiterated his mid-year liftoff timing. Perhaps of more interest though, there was also some chatter from Lockhart around the strength of the Dollar after the Atlanta Fed President was quoted as saying on Reuters that ‘the impact of the strong Dollar first on softening the inflation numbers, and its effect in the first quarter on manufacturing activity, has gotten the attention of me and I believe my colleagues’. The comments were somewhat reinforced by the Chicago Fed’s Evans on Friday too, who commented that the stronger Dollar was one of the reasons why the Fed’s quarterly economic forecasts were cut, in particular as a result of some softening for net exports.

As mentioned earlier the Greek headlines, along with a rebound in oil helped the Stoxx 600 (+0.79%), DAX (+1.18%), CAC (+1.00%), FTSE MIB (+1.63%) and IBEX (+2.96%) all climb higher on Friday. Greek equities (+2.87%) also rallied. It was a similar story for government bond markets too as 10y Bund yields fell 0.3bps to 0.182% to mark a fresh record low. Peripheral yields continue to grind tighter with 10y Spain (-7.5bps), Italian (-5.1bps) and Portugal (-7.1bps) yields all taking a sharp leg lower. It was fairly quiet data wise meanwhile, with German PPI just a touch behind expectations (-2.1% vs. -2.0% expected).

Onto the early morning trading, with nothing in the way of data, bourses in Asia appear to be following the US lead and trading firmer as we go to print. The Nikkei (+0.96%), Hang Seng (+0.52%) and Shanghai Comp (+1.53%) are all higher. Credit markets are a couple of basis points firmer this morning too. Heading into the European open, the Dollar is more or less unchanged and oil markets have declined around 1%.

Moving onto the week ahead, it’s a quiet start to the week data-wise today in Europe with just the advance March consumer confidence reading for the Euro-area and CBI trends in the UK due. Talks between Germany’s Merkel and Greece’s Tsipras will likely be front and centre today however. Over in the US this afternoon we’ve got the Chicago Fed national activity index due along with existing home sales for February. The Fed’s Mester, Williams and Fischer are all due to speak too. The calendar picks up tomorrow with the preliminary March PMI’s due. We start in Asia with the manufacturing prints due in Japan and China while the conference board leading economic index is also due in the latter. In Europe the manufacturing, services and composite PMI’s are up for the Euro-area as well as regionally in France and Germany. Focus will also be on the UK where we get the February CPI/RPI/PPI readings. It’s busy in the US too tomorrow where attention will be on the all-important inflation readings discussed earlier. The manufacturing PMI will also be due along with new home sales, FHFA house price index and the Richmond Fed manufacturing index. We kick Wednesday off in Japan with PPI followed closely by consumer sentiment out of China. Confidence indicators highlight the data due in Europe with business and manufacturing confidence due in France along with the IFO survey due out of Germany. Attention across the Atlantic on Wednesday will be on US durable and capital goods orders for February while the Fed’s Evans is due to speak on economic and monetary policy. Thursday starts in Germany with the GFK consumer confidence reading before we get February money supply data for the Euro area and retail sales out of the UK. Over in the US on Thursday we get jobless claims data along with the preliminary March services and composite PMI’s before finishing with the Kansas City Fed manufacturing activity index. It’s a busy end to the week on Friday and we start in Japan with inflation data along with the jobless rate and retail sales. In the European timezone, meanwhile, we’ve got the import price index for Germany and Italian industrial orders and retail sales. We finish the week in the US with the third reading of the Q4 GDP print (consensus for +2.4% qoq annualized) as well as the University of Michigan consumer sentiment reading for March. The Fed’s Yellen speaking on monetary policy on Friday evening could also generate some headlines heading into next weekend.







As depositors flee Greek banks with the threat of capital controls, also forces these banks to post additional collateral at the Central Bank of Greece. By the end of February a total of 102 billion euros were provided by the central bank of Greece but 180 billion euros worth of collateral had to be submitted to keep these banks hole i.e. an average haircut of 42%.  This is becoming very onerous on the banking system:


(courtesy zero hedge)





Greeks Take It To The Mattresses As Graccident Looms


Last week, we reported that the Greek banking sector lost some €400 million in deposits in a single day as Greek citizens debate a future which may include the suspension of salaries, pension fund plundering, and capital controls. Meanwhile, rumors swirled that Athens may fail to make €2 billion in debt payments on Friday to lenders which included the IMF, the ECB, and a certain blood sucking mollusk. As it turns out, Athens found enough money to make the payments thus avoiding a weekend “Grexiddent.”

On Monday, Alexis Tsipras will meet with Angela Merkel in Berlin where we assume no one will be causing any “kerfuffles” by sticking anyone else the middle finger.Meanwhile, the Greek populace is left to wonder if the government which just two months ago was billed as the savior that would finally throw off the chains of austerity bondage will be able to come up with a better plan than recruiting tourists as honorary tax collectors and pitch it in a humble enough way to convince European creditors to finally throw Athens a bone in the form of disbursing the next tranche of aid. We expect there will be more drama to come next week and as a primer on just how fearful Greek citizens truly are, we present to you the following from JP Morgan which nicely summarizes the evolution of distress in the Greek banking sector since December.

From JP Morgan on deposit flight…

The quantity of banknotes placed into circulation by the Bank of Greece has increased further by €2.7bn in February following a €4.9bn increase in January and €2.2bn in December, i.e. €10bn went under the mattress between December and February (Figure 4). This also means that of the €27bn of cash that went under the “mattress” between the end of 2009 and mid 2012, only €5bn has effectively re-entered the Greek banking system.


What portion of deposit outflows went under the mattress? €4bn of deposits left the Greek banking system in December, €12bn in January and likely €6bn in February (based on the purchases of offshore money market funds which we use as proxy for deposit outflows).That is between December and February €22bn of deposits likely left the Greek banking system and of this €10bn or 45% went under the mattress. 

…and on the increasingly punitive cost of staying afloat…

Bank of Greece data also revealed how much more onerous central borrowing is becoming for Greek banks. For example in December Greek banks posted €10bn of extra collateral for borrowing an additional €11bn from the central bank, in January they posted €38bn of extra collateral for borrowing an additional €30bn and in February they posted €47bn of extra collateral for borrowing an additional €17bn. As of the end of February Greek banks had €104bn of central bank borrowing with collateral of €180bn, i.e. the average haircut was 42%. 

….and on what happens next…

What will happen if Greek banks reach the maximum borrowing estimated above? The ECB has the flexibility to adjust haircuts to allow Greek banks to borrow more from the Bank of Greece for a given amount of collateral. So there is some flexibility in order to avoid triggering capital controls but what is clear is that the Greek banking system cannot withstand another big wave of deposit outflows. 

*  *  *

Stay tuned.





Meijer looks at the 1960 payment (115 German marks or $28 million USA) Germany made to Greece for war reparations and the 1990 2 plus 4 treaty where USA, UK, France and the Soviet union  renounced all future claims on those World War ii reparations.  Greece has always stated that it was not subject to that 1990 agreement.  Greece suffered terribly with the German occupation with many atrocities and the famous forced loan which caused the destruction of the Greek economy. Now that Greece is in trouble, it is asking for help and Germany is shying away from its responsibilities.


a great commentary.


(courtesy R. Meijer/Automatic Earth)






There’s Brussels And Then There’s Real People


Submitted by  Raúl Ilargi Meijer of the Automatic Earth

There’s Brussels And Then There’s Real People

Once again, a look at Greece and the Troika, because it amuses me, it angers me, and also because it warms my cockles, in an entirely metaphorical sort of way. The Troika members love to make it appear (and everyone swallows it whole) as if in their ‘negotiations’ with Greece all sorts of things are cast in stone and have no flexibility at all. Humbug.

First, another great piece by Rob Parenteau (via Yves Smith), who lays it out in terms so simple they can’t but hit the issue square on the nose. For Europe and the Troika, there’s Greece, and then there’s the rest. No money for the Greeks lining up at soupkitchens (not even for the soupkitchens themselves), but $60 billion a month for the bond market. The $200 million anti-poverty law – a measly sum in comparison – that Athens voted in this week is a no-no because Greek government has to ask permission for everything in Brussels first, says Brussels, no matter that that only prolongs the suffering. It’s not about money, in other words, it’s about power, and the Greeks must be subdued.

Both the financial and the political press have by now perfected their picture of Yanis Varoufakis as a combination of some kind of incompetent blunderer on the one hand, and a threat the size of Vladimir Putin on the other, while the rudeness of German FinMin Schäuble is not discussed at all. The media are no longer capable of reporting anything outside of their propaganda models. The ‘middle finger’ video turns out to be a fake, but who cares, it’s done its damage. Parenteau:

Goebbelnomics – Austerian Duplicity and the Dispensing of Greece


So let’s get this straight. The Troika does not have enough money to roll over Greek debt (in a Ponzi scheme like fashion, mind you) – debt that was incurred not so much as a bailout of Greece, but more as a bailout of German and other core nation banks and insurance companies and private investors who made stupid loans to or investments in Greece, but refused to fob them off on their own taxpayers.


But the Troika does have enough money to adequately perform damage control for the eurozone if Greece, because, you know, Greece is a “dispensable” eurozone member – even though ECB lawyers themselves say there is no legal mechanism for disposing of eurozone members in any such fashion.


No money in Greece for humanitarian aid in a country that may be on its way to becoming a failed nation state. No money outside Greece to roll over existing debt, or when necessary to extend and pretend, add more debt on existing debt to service the old debt, Charles Ponzi style. But somehow there is still “sufficient” money to ring fence Greece from the rest of the eurozone once Greece figures out it is dispensable and so must exit.


But that is not even the whole deception. It turns out the ECB does happen to have enough money to buy €60 billion per month of bonds from now until at least September 2016. Which means the same bondholders who are benefitting from the misnamed “bailout” funds used to keep the core nation financial institutions from collapsing under the weight of failed loans, can now count on a monthly government handout, courtesy of the ECB.

Some are more equal than others, in other words. That is true also of Ukraine, which gets to issue bonds guaranteed by the American taxpayer. If Greece could do that, they‘d have a way out of the dark pit austerity has thrown it in. And Greece isn’t even killing its own people…. But then Kiev doesn’t need to be subdued, it’s already being ruled exclusively by US stooges.

To come back to Schäuble lack of basic civil manners for a moment, it’s of course not true that Germany has an ironclad case against the Greek demands for WWII reparations. If it did, none of the rudeness would be necessary. And aside from that, even if the case was indeed closed, Germany would still need to be open and respectful and way more civilized than it is at present. WWII is a very black chapter in world history, and it’s not some very remote event. Even if post-WWII German schoolchildren never learned anything about what their parents and grandparents had done.

Maybe there’s a task here for the world Jewish community. Schäuble’s attitude smacks of denial, much more than respect for victims and their surviving family members. And besides, there were a lot of Greek Jews who became victim of German atrocities.

But to focus for now on the purely legal side of the matter, there’s at the very least a large grey area:

Legal Experts: Greece Has Grounds for WWII Reparations


A growing number of legal experts are supporting Greece’s demands over the German war reparations from the country’s brutal Nazi occupation during World War II. Despite the official German refusal to address the issue, legal experts say now Athens has ground for the case. The hot issue is expected to be brought up by Greece’s newly elected Prime Minister Alexis Tsipras during his official visit to Berlin on Monday, where he is scheduled to hold a meeting with the German Chancellor Angela Merkel. [..]


The Greek leftist-led coalition government has repeatedly raised the issue causing Germany’s firm reaction as expressed by German Finance Minister Wolfgang Schaeuble, who recently warned Athens to forget the war reparations, underlining that the issue has been settled decades ago. Central to Germany’s argument is that 115 million deutschmarks have been paid to Greece in the 1960s, while similar deals were made with other European countries that suffered a Nazi occupation.


At the same time, though, lawyers from Germany and other countries have said the issue is not wrapped up, as Germany never agreed a universal deal to clear up reparations after its unconditional surrender. The German answer on that is that in 1990, before its reunification, the “Two plus Four Treaty” agreement was signed with the United Kingdom, the United States, the former Soviet Union and France, which renounced all future claims. According to Berlin, this agreement settles the issue for other states too.


“The German government’s argument is thin and contestable. It is not permissible to agree to a treaty at the expense of a third party, in this case Greece,” international law specialist Andreas Fischer-Lescano said, as cited by Reuters. Mr. Lescano’s opinion finds several other experts in agreement. One of them, the Greek lawyer Anestis Nessou, who works in Germany highlighted that “there is a lot of room for interpretation. Greece was not asked, so the claims have not gone away.”

Merkel had better start taking the matter very serious, and in a very respectful way to boot. Because no matter how well oiled the publicity spin machine is, Schäuble’s attitude, mirrored by many of his countrymen, will awaken in countries all across Europe the realization that they don’t want this from Germany, they won’t be ruled by Berlin, and they won’t stand for more German uncivilized behavior either. The memories are far too fresh for that.

As I said the other day, Merkel had better take the reins in all this, because she risks blowing up the entire European Union if she lets things slip further. Let Greece go, if only by trying to force it into some sort of debt servitude which the Greek people deem unacceptable on moral grounds, and the EU project will start shaking on its already feeble foundations.

There’s only one thing that can save the Union now: for Merkel to show compassion, with the Greeks, and with all other weaker members. And to stop the anti-Greek propaganda, immediately. Or else. It’s nonsense to pretend that this is merely a business issue, as is made clear by Parenteau above: there is very clearly plenty space to negotiate solutions with Greece that preserve everyone’s dignity. Refuse that, and you can kiss the EU goodbye. There’s alot more that plays into this than mere money issues. Ignore that, and you might as well dismantle the Union right now.

And there are indeed other approaches too. Like that of the German couple, whose story I picked up some 24 hours ago on RT, and which has since appeared on a whole scale of media:

German Couple Pays €875 To Greece For Their Share Of WWII Reparations


A German couple visiting Greece have handed over a check for €875 to the mayor of the seaport town of Nafplio, saying they wanted to make amends for their government’s attitude for refusing to pay Second World War reparations. Nina Lahge, who works a 30-hour week, and Ludwig Zacaro, who is retired, made the symbolic gesture and explained that the amount of €875 would be the amount one person would owe if Germany’s entire war debt was divided by the population of 80 million Germans.


“If we, the 80 million Germans, would have to pay the debts of our country to Greece, everyone would owe €875 euros. In [a] display of solidarity and as a symbolic move we wanted to return this money, the €875 euros, to the Greek population,” they said.


They apologized for not being able to afford to pay for both of them. “We are ashamed of the arrogance, which our country and many of our fellow citizens show towards Greece,” they told local media in Nafplio, southern Greece. The Greek people are not responsible for the fiasco of their previous governments, they believe.


“Germany is the one owing to your country the World War II reparation money, part of which is also the forced loan of 1942,” they added. The couple was referring to a loan which the Nazis forced the Greek central bank to give the Third Reich during the WWII thus ruining the occupied country’s economy. The mayor of Nafplio, Dimitris Kotsouros, said the money had been donated to a local charity.

And a perhaps even better story comes, almost entirely under the radar, through Kathimerini. Turns out, where Brussels and Berlin spend their time blaming Tsipras and Varoufakis for everything that happens, Norway, not an EU or eurozone member, steps in to alleviate the worst of the suffering:

Athens Mayor Unveils Scheme To Support Poor With Help From Norway


Athens Mayor Giorgos Kaminis, Norwegian Ambassador Sjur Larsen and the president of nongovernmental organization Solidarity Now, Stelios Zavvos, on Wednesday inaugurated a new program to provide support to the Greek capital’s poor. The Solidarity & Social Reintegration scheme comprises a food program benefiting 3,600 households, as well as a space provided by City Hall and managed by Solidarity Now where the organization will provide social, medical and legal aid, among other services.


“The aim is the immediate relief of those in need by providing food, medical care, social services, legal support, help finding employment, and support for single-parent families, children and other vulnerable groups,” said Larsen, whose country has donated 95.8% of the €4.3 million needed to fund the program. The other donors are Iceland and Liechtenstein.

Note: Brussels and the IMF have refused to do what Norway does. They have also refused to let the elected Greek government take care of its own people, without first asking permission to do so. It’s an insane situation, if you ask me. And I don’t see why the Greeks would stand for it any longer. If they vote to leave the eurozone, and perhaps the EU, they will have a hard time for a while, for sure, and it will be made much harder by the Troika, simply out of spite.

But they would face an at least equally hard time if they choose to stay inside the shackles Brussels and Berlin want to lock them in. The EU is supposed to be made up of independent nations. And while it’s certainly true that that is perhaps its fatal flaw, trying to take away that status from the Greeks will drive them away, and warn other countries as well that they could be next in line for the same shackles.

We’re looking at economic warfare here, and there can be no doubt that it will end with only losers on all sides. Unless Merkel wakes up and smells the roses.






And Meijer continues with more news on the subject of German World War II reparations:


(courtesy R. Meijer/)





Looks Like Germany May Have To Pay Up



German magazine Der Spiegel digs deep(er) into the ‘Greece question’ this weekend, and does so with a few noteworthy reports. First, its German paper issue has Angela Merkel on the cover, inserted on a 1940′s photograph that shows Nazi commanders against the backdrop of the Acropolis in Athens. The headline is ‘The German Supremacy: How Europeans see (the) Germans’. The editorial staff has already come under a lot of fire for the cover, and I’ve seen little that could be labeled a valid defense for further antagonizing both Germans AND Greeks (and other Europeans) this way. Oh, and it’s also complete nonsense, nobody sees modern day Germans this way. It’s just that their government after 70 years is still skirting its obligations towards the victims. That’s what people, the Greeks in particular, don’t like.

Second: Spiegel’s German online edition has a sorry that claims Greek paper To Vima will come with revelations on Sunday accusing Georgios Katrougalos, Syriza’s deputy minister for Policy Reform and Public Service (I’m translating on the fly) of corruption in the case of the reinstallment of public workers that had been fired under the Samaras government under pressure from the Troika.

Allegedly, Katrougalos’ law firm (in which he has had no active role since becoming a member of the European parliament last year) has a contract with these workers that will pay it 12% of whatever they receive in back pay. Predictably, the opposition has called for Katrougalos’ firing, but Tsipras has said he talked to him and is satisfied with the explanation he was given..

It smells a bit like something Bild Zeitung (Germany’s yellow rag) would write, but there you are. Which makes the following perhaps somewhat surprising. Because:

Third: Spiegel English online edition has a long article on a report just out by a special Greek commission, instated by former governments, on the German war reparations that Tsipras has repeatedly talked about, and that German FinMin Schäuble has famously high handedly tried to sweep off the table. That may not be so easy anymore now. There are already increasingly voices in Germany itself that want Berlin to change its approach to the matter, and the report will only make that call louder. Let’s see if I can get this properly summarized:

Nazi Extortion: Study Sheds New Light on Forced Greek Loans

Last week in Greek parliament, Greek Prime Minister Alexis Tsipras demanded German reparations payments, indirectly linking them to the current situation in Greece. “After the reunification of Germany in 1990, the legal and political conditions were created for this issue to be solved,” Tsipras said. “But since then, German governments chose silence, legal tricks and delay. And I wonder, because there is a lot of talk at the European level these days about moral issues: Is this stance moral?”


[..] there are many arguments to support the Greek view. SPIEGEL itself reported in February that former Chancellor Helmut Kohl used tricks in 1990 in order to avoid having to pay reparations.


A study conducted by the Greek Finance Ministry, commissioned way back in 2012 by a previous government, has now been completed and contains new facts. The 194-page document has been obtained by SPIEGEL. The central question in the report is that of forced loans the Nazi occupiers extorted from the Greek central bank beginning in 1941.


Should requests for repayment of those loans be classified as reparation demands – demands that may have been forfeited with the Two-Plus-Four Treaty of 1990? Or is it a genuine loan that must be paid back? The expert commission analyzed contracts and agreements from the time of the occupation as well as receipts, remittance slips and bank statements.

Note: the Two-Plus-Four Treaty of 1990 (aka Treaty on the Final Settlement with Respect to Germany) was the result of negotiations about the reunification of the two Germany’s. It was signed by both, and by France, Britain, Russia and the US, the four nations who held former German territory at the end of WWII.

It’s noteworthy that Der Spiegel says that Greek demands for reparations ‘may have been’ forfeited with the treaty (something Germany claims), while Tsipras insists on the exact opposite: that the treaty created the legal and political conditions for the reparations issue to finally be resolved. As we will see, many experts lean towards Tsipras’ interpretation. Greece never signed, and nobody else had the right to sign in its name, that’s the crux. But there’s more:

They found that the forced loans do not fit into the category of classical war reparations. The commission calculated the outstanding German “debt” to the Greek central bank and came to a total sum of $12.8 billion as of December 2014, which would amount to about €11 billion.


As such, at issue between Germany and Greece is no longer just the question as to whether the 115 million deutsche marks paid to the Greek government from 1961 onwards for its peoples’ suffering during the occupation sufficed as legal compensation for the massacres like those in the villages of Distomo and Kalavrita. Now the key issue is whether the successor to the German Reich, the Federal Republic of Germany, is responsible for paying back loans extorted by the Nazi occupiers. There’s some evidence to indicate that this may be the case.

It’s a tad strange that the magazine apparently jumps from that ‘may have been forfeited’ interpretation of the treaty to what amounts to a fait accompli, by saying the ‘key issue’ now is the forced loans, not the reparations. I would think it’s very much both. But let’s follow their thread:

In terms of the amount of the loan debt, the Greek auditors have come to almost the same findings as those of the Nazis’ bookkeepers shortly before the end of the war. Hitler’s auditors estimated 26 days before the war’s end that the “outstanding debt” the Reich owed to Greece at 476 million Reichsmarks.

First thing that springs to mind is: say what you will about Germans, but they’re fine bookkeepers!

Auditors in Athens calculated an “open credit line” for the same period of time of around $213 million. They assumed a dollar exchange rate to the Reichsmark of 2:1 and applied an interest escalation clause accepted by the German occupiers that would result in a value of more than €11 billion today.


This outstanding debt has to be paid back “with no ifs or buts,” says German historian Hagen Fleischer in Athens, who knows the relevant files better than anyone else. Even before the new report, he located numerous documents that prove without any doubt, he believes, the character of forced loans. Nazi officials noted on March 20, 1944, for example, that the “Reich’s debt” to Athens had totaled 1,068 billion drachmas as of December 31 of the previous year.

“Forced loans as war debt pervade all the German files,” says Fleischer, who is a professor of modern history at the University of Athens. He has lived in Athens since 1977. He says that files from postwar German authorities about questions of war debt “shocked” him far more than the war documents on atrocities and suffering


In them, he says German diplomats use the vocabulary of the National Socialists to discuss reparations issues, speaking of a “final solution for so-called war crimes problems,” or stating that it was high time for a “liquidation of memory.” He says it was in this spirit that compensation payments were also constantly refused.

Those are pretty damning words. So far just from one man, granted, but again there’s more:

When work on the study first began in early 2012, the cabinet of independent Prime Minister Loukas Papedemos still governed in Athens. A former vice president of the ECB, Papedemos formed a six-month transition government after Georgios Papandreou resigned. In April 2014, the successor government of conservative Prime Minister Antonis Samaras decided to continue work on the study and appointed Panagiotis Karakousis to lead the team of experts. The longtime general director of the Finance Ministry was considered to be politically unobjectionable.


Karakousis spent five months reading 50,000 pages of original documents from the central bank’s archives. It wasn’t easy reading. The study calculates right down to the gram the amount of gold plundered from private households, especially those of Greek Jews: 7,358.0014 kilograms of pure gold with an equivalent value today of around €235 million. It also notes also how German troops, as they pulled out, quickly took along “the entire cash reserves from branch offices and regional branches” of the central bank: Exactly 634,962,691,995,162 drachmas in notes and coins, which would total about €40 million today.


Above all, the study, with some reservations, provides clarity about the forced loans. “No reasonable person can now doubt that these loans existed and that the repayment remains open,” says Karakousis.


This history of the loans began in April 1941, after the German troops rushed to assist their Italian allies and occupied Greece. In order to provide their troops with provisions, the German occupiers demanded reimbursement for their expenses, the so-called occupation costs. It’s a cynical requirement, but one that became standard practice after the 1907 Hague Convention.


Out of the ordinary, though, was the Wehrmacht requirement that the Greeks finance the provision of its troops on other fronts – in the Balkans, in Russia or in North Africa – despite Hague Convention rules forbidding such a practice. Initially, the German occupiers demanded 25 million Reichsmarks per month from the government in Athens, around 1.5 billion drachmas. But the amount they actually took was considerably higher. The expert commission determined that payments made by the Greek central bank between August and December 1941 totaled 12 billion rather than 7 billion drachmas.

As they say: before you know it, we’re talking about real money. And I see no reason to doubt Karakousis’ assertion that ‘repayment remains open’. Not only was German conduct reprehensible during the war, it remained so after. So it shouldn’t really come as surprise that Tsipras has more than once mentioned the 1953 London Agreement on German External Debts, in which Germany was relieved from much of the claims held against it. Tsipras wants Berlin to do the same for Greece now. A potential weakness is that Greece was signatory to that agreement. Still, the loans were certainly not part of it, only ‘war damage’ was included.

With their economy laid to waste, the Greeks soon began pushing for reductions. At a conference in Rome, the Germans and Italians decided on March 14, 1942 to halve their occupation costs to 750 million drachmas each. But the study claims that Hitler’s deputies demanded “unlimited sums in the form of loans.” Whatever the Germans collected over and above the 750 million would be “credited to the Greek government,” a German official noted in 1942. The sums ofthe forced loans were up to 10 times as high as the occupation costs. During the first half of 1942, they totaled 43.4 billion drachmas, whereas only 4.5 billion for the provision of troops was due.


A number of installment payments, which Athens began pressing for in March 1943, serve to verify the nature of the loans. Historian Fleischer also found records relating to around two dozen payment installments. For example, the payment office of the Special Operations Southeast was instructed on October 6, 1944 to pay, inflation adjusted, an incredible sum of 300 billion drachma to the Greek government and to book it as“repayment.”


In Fleischer’s opinion, the report makes unequivocally clear that the Greek demands do not relate to reparations for wartime injustices that could serve as a precedent for other countries. “One can negotiate reparations politically,” Fleischer says.“Debts have to be paid back – even between friends.”


Postwar Greek governments sought repayment early on. The German ambassador confirmed on October 15, 1966, for example, that the Greeks had already come knocking “over an alleged claim.” On November 10, 1995, then Prime Minister Andreas Papandreou proposed the opening of talks aimed at a settlement of the “German debts to Greece.” He proposed that “every category of these claims would be examined separately.” Papandreous’ effort ultimately didn’t lead anywhere.

Ergo: for a period of thirty years, the Greeks tried, but to no avail. That’s a pretty ugly record. It’s now another 20 years later, and nothing has changed. All in all, the Greeks have been stonewalled for 70 years.

What should become of this new study, the contents of which had remained secret before now? [..] the question also remains whether the surviving relatives of the victims of Distomo will ever be provided with justice – and whether there are similar cases in other countries.

German governments’ rude behavior may well stem, among other things, from that last point: that if any of the Greek claims are recognized, other countries may come knocking too.

German lawyer Joachim Lau, whose law firm is based in Florence, Italy, represents the interests of village residents of Distomo even today. Lau, born in Stuttgart, a white-haired man of almost 70, is fighting for compensation in the name of the Greek and Italian victims of the Nazis. “I am disappointed by the manner in which Germany is dealing with this question,” he says. He says it’s not just an issue of financial compensation. More than anything, it is one of justice.


In February, Lau warned German President Joachim Gauck in an open letter against propagating the “violation of international law” with careless statements about the reparations issue. In his view, the legal situation is clear: Greek and Italian citizens and their relatives affected by “shootings, massacres by the Wehrmacht, by deportations or forced labor illegal under international law” have the right to individual claims.

This perhaps clarifies the definition of ‘war damage’, the term used in the 1954 London agreement. In Lau’s interpretation, it does not include, let’s say, ‘personal suffering’.

For the past decade, Lau has been pursuing the claims of the Distomo victims in Italy. The Court of Cassation in Rome affirmed in 2008 that the claims were legitimate and that he could pursue the case. Earlier, the lawyer had already succeeded in securing Villa Vigoni, a palatial estate on the shore of Lake Como owned by Germany – and used by a private German association focused on promoting German-Italian relations – as collateral for the suit. In 2009, Lau succeeded in having €51 million in claims made by Deutsche Bahn against Italian state railway Trenitalia seized. On Tuesday, the high court in Rome is expected to rule on the lifting of the enforcement order.

Note: there could be a legal precedent here that that can serve as a ‘conduit’ to allow Greece to seize German property in its country.

Following a ruling made by Italy’s Constitutional Court in October 2014, private suits in Italy against Germany have been possible again. One of the justices who issued the ruling is the current president of Italy, Sergio Mattarella. It remains unclear whether this ruling will unleash “a wave of new proceedings” in Italy, says Lau, who currently represents 150 cases, including various class-action lawsuits.

The bones of victims of the Nazi killings in Distomo feature as part of the village’s memorial to the massacre.

Everything connects in the mountain village of Distoma – the present and past, guilt and anger, the Greek demands on Germany today and past calls for reparations. Efrosyni Perganda sits in the well-heated living room of her home. The diminutive woman, 91 years of age, has alert eyes and wears a black dress. She survived the massacre perpetrated by the Germans at Distomo and she’s one of the few witnesses still alive in the village. When the SS company undertook a so-called act of atonement in Distomo following a fight with Greek partisans, the soldiers also captured her husband. Efrosyni Perganda stood by with her baby as they took him. She never saw him again.


As the Germans began to rampage, she hid behind the bathroom door and later behind the living room door of the house in which she still lives today. She held her baby tightly against her chest. “I forgive my husband’s murderers,” she says. Loukas Zisis, the deputy mayor, silently leaves the house as the woman finishes telling her story. He needs a break and heads over to the tavern, where he orders a glass of wine.


“I admire Germany: Marx, Engels, Nietzsche,” he says. “The prosperity. The degree to which society is organized. But here in the village, we aren’t finding peace because the German state isn’t settling its debt.”Zisis admires Germany, but the country remains incomprehensible to him. “We haven’t even heard a single apology so far,” he says once again. “That has to do with Germany’s position in Europe.” This is something that he just doesn’t understand, he says.

German occupation troops in the ransacked Greek village of Distomo on June 10, 1944, shortly after 218 local residents were executed as part of Nazi reprisals.

I hope – and I think – that Germany will pay up. It seems to me to be the only way to save the European Union it has made its economy so dependent on. I don’t see the war reparations go away anymore. So either Berlin pays what legal experts determine should be paid, or it risks becoming a pariah in its own neighborhood.

That the Germans in the 1950s and 1960s, at home and in schools, chose not to tell their children anything about their crimes cannot serve as an excuse to silence the children of their victims. Germany will need to eat a lot of humble pie with its beer.







Late Sunday night:


(courtesy zero hedge)










Germany Gives Greece One Final Ultimatum After Friday’s “Optimistic” Talks Devolve Into Disagreement And Confusion



On Friday, the main catalyst that launched the early ramp in the EURUSD, subsequently sending both the Dax over 12,000, and the US stock market soaring, was speculation and hope that the latest round of Greek talks on late Thursday night ahead of tomorrow key meeting between Tsipras and Merkel in Berlin, had gone well, and there was a reason to be optimistic about the near-term for a Greece which increasingly more see as on the verge of expulsion from the monetary union. We explained as much, although we added the provision that at this point it is likely too late to do much if anything about Greece in “German DAX Surges Over 12,000 On Greek Optimism, But The Money Has Run Out.”

Now, courtesy of reporting by the FT, we can also rule out any of the so-called optimism in the aftermath of Thursday’s talks because as Peter Spiegel reports, not only was there no real consensus, but the talks “ended in disarray”, and even though “Greece’s prime minister and fellow Eurozone leaders emerged from a meeting early on Friday morning touting a breakthrough agreement to unlock much-needed bailout funds for Athens — only to fall into disagreement hours later about what it all meant.”

Two days of intensive and occasionally heated negotiations at an EU summit in Brusselsamounted to little more than a repeat of talks a month ago between eurozone finance ministers that officials then also hailed as the definitive agreement to get the final bailout review under way.

And the punchline, “so similar were the two deals that, much like the one finalised last month, leaders involved in the talks could not agree on what was agreed within 12 hours after a late-night meeting aimed at resolving all differences.”

The underlying problem for Greece, as we have beenwriting ever since October, is that the country is not only out of money, but it is now almost $4 billion in the hole. It is, in effect, insolvent. Which is why Greece is now desperate to walk back on all of its election promises because having lost the one trump card it had, namely to default on its Eurosystem debt (precisely what the infamous Varoufakis “middle finger” speech was all about), or exist the Eurozone on its own terms, Greece is now scrambling to survive day to day, even as its bank run threatens to implode its banks at any given moment. More from the FT:

Angela Merkel, the German chancellor, made clear at a post-summit news conference that the starting point for Alexis Tsipras, Greek prime minister, was a December 10 inventory of incomplete reforms promised by the previous Greek government. “The Greek government has the opportunity to pick individual reforms that are still outstanding as of 10 December and replace them with other reforms if they . . . have the same effect,” Ms Merkel said.


It is a potentially incendiary demand since the document Ms Merkel referred to — a letter written by Greece’s then centre-right prime minister Antonis Samaras and his finance minister Gikas Hardouvelis — was the focus of particular scorn for Mr Tsipras’s far-left Syriza party on the campaign trail.


Mr Tsipras insisted at his own press conference that Ms Merkel was mistaken. “Forget the commitment of the former government. There are no austerity measures. There is no letter of Hardouvelis,” Mr Tsipras argued. “I asked [the other leaders]: do you expect me to . . . go through this evaluation and implement measures that Mr Samaras was not able to implement? The answer was no.”

No, Merkel is not mistaken as will be made abundnatly cleat tomorrow during the Berlin press conference after the Merkel-Tsipras meeting, which may well lead to the Euro losing all of its sharp gains achieved on Friday due to another dose of premature Greek optimism.

As a result the biggest problem for Syriza’s government, which still has preserved its pre-election popularity, is that any minute now both Merkel and Tsipras will make the formal announcement that the hated Troika is coming back. That, together with the realization that the current government is nothing but a continuation of the Samaras regime, will likely lead to a new round of social unrest culminating perhaps with another general election.

According to people briefed on the talks, Mr Tsipras opened with demands for additional cash with few strings attached, acknowledging his government may not make it to the end of April without an injection of bailout funds. But his push lasted only the first 10 minutes before the other leaders convinced him it was unachievable. Instead, much of the session focused on logistical arrangements in Athens, where Greek officials have thrown up hurdles to international bailout monitors seeking to access data to evaluate the country’s reform efforts.


Mr Draghi was particularly incensed, telling Mr Tsipras he believed the inspectors — from the ECB, European Commission and International Monetary Fund — had been badly treated by their hosts. Mr Tsipras countered that allowing such access would be a violation of Greek sovereignty. But he relented after Ms Merkel noted all IMF members are subject to annual reviews involving access to a country’s books.


The Greek finance ministry, meanwhile, signalled it was adopting a new conciliatory stance, saying officials “look forward to receiving” requests from the inspectors and would respond “in the same constructive spirit”.

So yes, the Troika is on its way. As it the final final German ultimatum to Greece. Earlier today, Volker Kauder, head of Chancellor Angela Merkel’s party bloc in parliament, told Handelsblatt in an interview that Greece should use this “last chance” to stay in euro by presenting reform proposals that creditors can accept. Kauder also said that Greece can rule out a third bailout “under current circumstances” adding that the Greek government needs to step up efforts to raise taxes, scrap “nonsensical” tax privileges, including those for shipowners (for more on the latter read “Why Greek Shipping Billionaires Are Sweating“).

As for tomorrow’s critical, and potentially make or break,meeting between Tsipras and Merkel in Berlin, here is what Kathimerini said earlier:

In a statement to Sunday’s Kathimerini, Tsipras said the meeting was an opportunity for the two leaders to talk without pressure. The meeting “will not be pressurized by negotiations,” the premier said. “And this is very significant because we can both discuss the important issues that are burdening Europe as well as improving bilateral relations between the two countries.”


Tsipras highlighted a “unique opportunity to pursue changes which previous governments did not dare to attempt, either because they were committed to powerful interests or because they did not have popular support.”

What he really means is that tomorrow is when the lies and can kicking end, and either Tsipras capitulates fully,and irrevocably, in public, without a hint of any doubt as to who is calling the shots thereby burning all pre-election promise bridges, or Greece will be out of the Eurozone in a matter of days if not hours.

Indeed, the following caption we presented first on Friday is more relevant now than ever before.






When it was learned that there were no new developments with respect to helping Greece with the meeting between Merkel and Tsipras this evening, the following happened one hour later:


(courtesy zero hedge)



Rats And Sinking Ships: Chairman Of Greek Bank Rescue Fund Resigns


With “The objective of the Hellenic Financial Stability Fund is to contribute to the maintenance of the stability of the Greek banking system, for the sake of public interest,” it appears the Fund’s Chairman has decided to add some instability and leave the sinking ship:


Ironic (or coincidental) timing as Draghi proclaims he is not blackmailing Greece and Merkel says “Nein” to more liquidity.

As Bloomberg notes,

Christos Sclavounis, Chairman of the Hellenic Financial Stability Fund, resigned, Athens-based institution says in e-mailed statement today.


* * *

Perhaps this is why…

Spain’s troubles are just beginning:
(courtesy zero hedge)

Following “Worst Election In 25 Years” Court Finds Rajoy’s Ruling Party May Have Had Secret Accounts

It has not been a good week for Spain’s embattled Prime Minister Mariano Rajoy. Following what Bloomberg calls“its worst election result in 25 years,” in Andalusia (the nation’s most populous region); the corruption scandals re-rear their ugly head:


Spanish bond risk widened 4-5bps on the day as both events confirm the rise of anti-EU parties Podemos and Ciudadanos.


As Bloomberg reports, things were already bad enough with dismal voting results…

Spanish Prime Minister Mariano Rajoy’s People’s Party scored its worst election result in 25 years in Spain’s most populous region, adding to pressure on the party leadership before general elections.


Rajoy’s PP got 26.8 percent in Andalusia,compared with 40.7 percent in the last regional vote in 2012, according to the regional government data. That’s the lowest level of support since 1990, when the PP got 22.2 percent.


Andalusia’s ballot marks the start of a Spanish electoral marathon to choose another 14 regional presidents, more than 8,000 mayors, and a new national government in the next 10 months. Rajoy struggled to mobilize his voters even as the fourth largest economy in the euro region is growing at the fastest pace since 2007. No date has been set for the national election which must be held by January 2016.


“Alternative leadership to Rajoy should be an urgent first point of discussion for the party based on public opinion criteria,” said Lluis Orriols, a political scientist at Carlos III University in Madrid.

And then this hit… People’s Party may be responsible for a possible tax fraud, a special court, known as Audiencia Nacional, says in e-mailed ruling


*  *  *

“It also confirms the rise of Podemos and Ciudadanos, although both of them will have to do better in the future if they want to become real challengers to mainstream parties.”









Expect the same treatment to the central bank of Greece very shortly when bail ins are announced:


(courtesy zero hedge)


Cypriots Stone Bank of Cyprus HQ On “Depositor Haircut” Anniversary

In what may be a preview of what’s in store for The Bank of Greece, Cypriots — who are understandably still a little more than angry about the decision to confiscate their deposits — showed up outside of The Bank of Cyprus today to “celebrate” the anniversary of the bail in.Watch below as the crowd shouts and hurls rocks at the central bank…


More from hellenicinsider:

A few hundred Cypriots made their way to the Cyprus Central Bank and The Bank of Cyprus HQ to let the all powerful EU banking clan know exactly how they feel.


Considering that the EU raided people’s deposit accounts for a €10 billion shortfall two years ago, while today the EU is pumping billions into the non-member state of Ukraine to continue its war against Donbas civilians…we would say that a few hundred Cypriots throwing rocks at windows is getting off lightly.


“This is your justice…”



Putin now proposes an “Eurasian” currency union as another step in the destruction of the hegemony of the USA dollar:




(courtesy zero hedge)







Vladimir Putin Proposes “Eurasian” Currency Union


While the distraction that is the stock market continues to enthrall most Americans, the big shots in the global monetary which for now are taking place behind the scenes, are getting ever louder. Several recent cases in point:

One person who is paying attention to the failure of the US to grasp that the unipolar world of the 1980s is long gone, is Russia’s Vladimir Putin, who earlier today proposed creating a “Eurasian” currency union which would have Belarus and Kazakhstan as its first members, which already are Russia’s partners in a political and economic union made up of former Soviet republics.

As Telegraph reports, Putin made his proposal at a meeting with the Belarussian and Kazakh presidents which highlighted the challenges facing the Russian-led Eurasian Economic Union following the fall in global oil prices and the decline of the Russian rouble.

“The time has come to start thinking about forming a currency union,” Mr Putin said after the talks in the Kazakh capital Astana with Belarussian President Alexander Lukashenko and Kazakh President Nursultan Nazarbayev.

Not surprising, considering both Belarus and Kazakhstan have spent a lot of time in the past year alternatively devaluing, and scrambling to prop up their currency.

Putin gave no details of the proposal but suggested it would be easier to meet economic challenges by working closely together. Mr Lukashenko and Mr Nazarbayev did not immediately respond to the proposal in public, but analysts say it is unlikely to get off the ground.

Additional information from RT:

“I would suggest moving step by step, exactly as all EU member states enter the eurozone, gradually creating all these common financial institutions,” Likhachev said, adding that if such an order comes from the member leaders, all the sides will immediately start negotiations.


“That means any slightest fluctuation in national currencies of today’s four and of tomorrow’s five [Kyrgyzstan is about to join the EEU – Ed.] EEU countries, that are related neither to trade nor to demand, create a huge trade imbalance,” he said, adding that officials are looking for ways to smooth these problems out, and trade and industry institutions are in a constant dialogue.


“In the same enclosed space, where goods, services, capital and labor are constantly moving, the existence of different currencies exacerbates the risks,” Likhachev said. Apart from the economy, there are also political and social issues that are yet to be discussed, he added.

If and when Russia does succeed in launching a regional currency, and recreating a monetary block in the process setting the foundations, the only question we have is after Greece, which European country will come knocking on the Kremlin’s door, asking to be let in?







NATO launches “wide scale” war games next to the Russian border.Also Denmark places missiles on its territory causing much anger by Russia:


(courtesy zero hedge)



NATO Launches “Wide-Scale” War Games Near Russian Border, Creates “Line Of Troops”


Washington looks to be throwing more than the full faith and credit of the US government behind Ukraine. On the heels of news that the US is set to guarantee a Ukrainian international bond issue (while Greek pensioners implicitly subsidize the country’s natural gas exports), NATO is in the midst of conducting large scale military maneuvers along the Russian border in a move Russian Foreign Minister Sergey Lavrov says encourages “Kiev to pursue a military solution.”Over the course of 10 days, NATO will parade 120 combat vehicles across the region in an effort to prove how quickly the West can confront perceived Russian aggression. Here’s more from Military News:

The [Russian] ministry warned that it hopes Europe “does see the risk of unconditionally following advice from U.S. generals and will not opt for approaches that will rule out the risk of a slide towards a military confrontation between Russia and NATO.”


While the U.S. Army acknowledges the convoy’s movement is “a highly visible demonstration of U.S. commitment to its NATO allies,” Lt. Gen. Ben Hodges, the commander of U.S. Army Europe, insists “the focus should be on what is the desired end state, and can we get there using diplomatic and economic pressure and support.”

So basically, the US is saying the following: “…although we’re intent on showing just how quickly we can deploy our forces in the event an armed confrontation becomes necessary, we hope you’ll see this for what it is which is our best effort demonstrate that we long for a peaceful solution.”We’ll let you judge for yourself how committed the West is to a peaceful resolution (note the US soldier teaching the small child how to fire a high caliber weapon):

And the US is particularly proud of the fact that it has created a wall of troops along the Russian border:

Meanwhile, US officials don’t understand why anyone would see this as hypocritical. As RT reports, the US State Department’s press official Jeff Rathe “would disagree” with the notion that the US is conductig precisely the types of exercises for which it has previsously condemned Russia:

When asked why the US was condemning Russian exercises inside Russia, State Department press official Jeff Rathke told RT no such statement had ever been made.


While the US has not criticized every military drill conducted by the Kremlin, last August State Department spokeswoman Jen Psaki said Russia’s aviation exercises are “provocative and only serve to escalate tensions.”


“Wouldn’t US and NATO maneuvers on Russian borders, at a time when the West and Russia are at odds over the crisis in Ukraine, also “raise tensions?” asked AP diplomatic correspondent Matt Lee.


“We would disagree with that,” replied Rathke.


In the meantime, Moscow isn’t particularly pleased with Denmark’s eight month old move to join NATO’s missile defense shield, as Russia’s Ambassador to Denmark Mikhail Vanin subtly warned that joining the effort would subject Danish ships to strikes by Russian nuclear missiles and besides, the effort would ultimately be in vain as Moscow has nukes capable of infiltrating the West’s defenses. Here’s more from The Telegraph:

“I don’t think that Danes fully understand the consequence if Denmark joins the American-led missile defence shield. If they do, then Danish warships will be targets for Russian nuclear missiles,” said Mikhail Vanin, the Russian ambassador to Denmark, to the Jyllands-Posten newspaper.


“Denmark would be part of the threat against Russia. It would be less peaceful and relations with Russia will suffer. It is, of course, your own decision – I just want to remind you that your finances and security will suffer. At the same time Russia has missiles that certainly can penetrate the future global missile defence system,” Mr Vanin said.

*  *  *

It would certainly appear from the above that geopolitical tensions in Eastern Europe are now running at a fever pitch and with Washington prone to adopting an extra defensive position thanks to what appear to be shifting economic alliances among its staunchest allies, we wouldn’t expect the posturing to die down on either side in the foreseeable future.

The CEO of Maersk describes global trade as being abysmal and grinding to a halt.  That is why he is ordering more ships to destroy his competition:

(courtesy zero hedge)




Global Trade Grinds To A Crawl


At the start of this month, those who contend that depression-level readings on the Baltic Dry are no longer very meaningful because at this juncture, the index simply shows the extent to which the industry is oversupplied got a rude awakening when the CEO of the company (Maersk) that handles nearly a fifth of global seaborne freight decided to ruin everyone’s day by daring to suggest that in fact, global growth is rather abysmal and will likely continue to depress demand the world over. Worse, Skou went as far as saying that the days of 10% container growth for his industry are probably gone forever and yet despite it all, he’s buying more ships in what FT says is an effort to “help the company maintain its market leadership position,” which is of course just a nice way of saying that now many be a good time to eliminate the competition. As an aside, Skou also didn’t seem to share Richard Fisher’s assessment of the US as an “epicenter” of growth, saying America was “good but not great,” suggesting that as Rick Santelli told Fisher, it’s easy to score at the upper end of the range on a scale of 1-10 when a “1” basically equates to a deflationary death spiral and “10” just means something akin to not-collapsing.

Here’s how we summed up the situation at the time:

And yet the biggest paradox, or perhaps most logical outcome, of all this is that just as margins are about to be squeezed across the entire global supply chain, the healthier companies are now rushing to do what the oil driller are doing, and overproduce, in the process pushing prices even lower in hopes of putting marginal companies, and those which don’t have access to cheap and easy funds, out of business. Call it the Amazon effect, only here one is dealing with net debt leverage of 3x, 4x or higher.


So with global demand lower as a result of slowing trade, and with Maersk about to boost ship supply even more, the result will be an even more aggressive drop in cargo and haulage prices as the deflationary wave hits yet another industry, in the process forcing seaborne transportation to be the latest to succumb to deflation, which for the highly levered sector means even more defaults are imminent now that China no longer is pumping nearly $4 trilion in total new credit every year. 

Today, we got still more evidence from the world of seaborne freight that in fact, global trade may be grinding to a halt. As Reuters notes, freight rates declined for a seventh straight week plunging double-digits to the lowest levels in nearly 2 years:

Shipping freight rates for transporting containers from ports in Asia to Northern Europe fell 12.4 percent to $620 per 20-foot container (TEU) in the week ended on Friday, a source with access to data from the Shanghai Containerized Freight Index told Reuters.


It was the seventh consecutive week with falling freight rates on the world’s busiest trade route and the current level is the lowest seen since June 2013.


In the week to Friday, container freight rates dropped 15.5 percent from Asia to ports in the Mediterranean, and fell 4.7 percent to ports on the U.S. West Coast and were down 4.7 percent to ports on the U.S. East Coast.

And while there are still plenty of commentators who will suggest that oversupply is the controlling factor here, the evidence just seems to be mounting that it could be the other way around or as we put it: “…yes supply isn’t helping, but it is the lack of global demand that is pushing equilibrium levels lower, aka global deflation.”

Meanwhile, shippers seem to suffer from the same disposition which Chinese regulators warned today may end up generating huge losses for investors, for, as The Economist puts it, “owners are habitually more worried about missing out on an upturn than they are about getting caught by a downturn.”

On that note, we’ll leave you with the following bit of advice from the China Securities Regulatory Commission which seems applicable here:

“We shouldn’t be thinking if we don’t buy now, we will miss it.”







This is interesting!! Christine Lagarde and the IMF throw its weight on the new AIIB initiated by China.  New members have until the end of the month to decide, but it looks like over 35 nations will be founding members:


(courtesy zero hedge)



US Officially Loses Battle Over China-Led Investment Bank


Add the IMF to the (now long) list of those who apparently share the UK’s view that joining the China-led Asian Infrastructure Investment Bank is an “unrivaled opportunity,” as Christine Largarde says her institution not only sees a “massive” opportunity for cooperation with the AIIB but is also “delighted” to explore the possibilities. Here’s more from BBC:

International Monetary Fund chief Christine Lagarde has said the IMF would be “delighted” to co-operate with the China-led Asian Infrastructure Investment Bank…


Mrs Lagarde said there was “massive” room for IMF co-operation with the AIIB on infrastructure financing.


Mrs Lagarde, speaking at the opening of the China Development Forum in Beijing, also said she believed that the World Bank would co-operate with the AIIB.

Meanwhile, Switzerland is now on board and India, Indonesia, and New Zealand are reportedly set to follow. As a reminder, the deadline for applications is the end of this month and it appears that the UK’s move to become a founding member has suddenly made the AIIB the coolest club on the block. Australia is expected to tender a “qualified yes” tomorrow.

From The Australian Financial Review:

The Asian Infrastructure Investment Bank is expected to receive, in principle, endorsement from Federal Cabinet on Monday but the government will continue to make Australia’s full participation dependent on the adoption of appropriate governance standards.


The government is set to maintain a common front with Japan and South Korea on how the bank will be run despite backing away from its previous opposition to joining last October, amid divisions in Cabinet.


“There will be a decision – but with caveats around governance,” a government source said emphasising that no one country should dominate the bank.


All three countries are under pressure to join the AIIB by the end of the month deadline set by China for foundation membership status that will allow the original countries to decide on future membership.


Despite being opposed to the AIIB, the Japanese government appeared to split over joining on Friday when Finance Minister Taro Aso said Japan could join if the conditions were right while other officials said the position had not changed.

The bank’s secretary general Jin Liqun says he expects 35 countries to apply for membership by the deadline but does note that the US has nothing to fear from the institution which he explains is not a competitor the ADB but rather an unassuming “lean, clean, and green” multinational talent scout backed by the support of everyone but Washington.Nothing threatening about that.

From Bloomberg:

  • AIIB is complementary to the Asian Development Bank, Jin says at forum in Beijing today
  • AIIB founding countries to exceed 35 at end of this month, Jin says
  • China will dilute its own share in AIIB as more countries join, Jin says
  • China will act as a multilateral partner in AIIB, Jin says
  • China will respect international standards in setting up AIIB, Jin says
  • AIIB will recruit talented people from all over the world, Jin says
  • AIIB will be lean, clean and green, Jin says

Jin’s conciliatory (and unmistakenly patronizing) remarks notwithstanding, it’s impossible to not see this for exactly what it is: a shift away from US hegemony.Here’s The Economist to explain exactly what we’ve beensaying for months:

The AIIB is but one of a number of new institutions launched by China, apparently in frustration at the failure of the existing international order to accommodate its astonishing rise. Efforts to reform the International Monetary Fund are stalled in the American Congress. America retains its traditional grip on the management of the World Bank. The Manila-based Asian Development Bank (ADB) is always directed by a Japanese official. Partly for that reason—that the AIIB would amount to a diminution of Japanese influence in favour of China at a time when their relations are fraught—Japan is sniffy about the new bank. Its cabinet secretary, Yoshihide Suga, this week repeated that Japan will “carefully study” the AIIB’s governance standards…


China, flush with the world’s biggest foreign-exchange reserves and anxious to convert them into “soft power”, is building an alternative architecture. It has proposed not just the AIIB, but a New Development Bank with its “BRICS” partners—Brazil, Russia, India and South Africa—and a Silk Road development fund to boost “connectivity” with its Central Asian neighbours…


Despite the obvious need, America has, either by design or ineptitude, turned the AIIB into a test of diplomatic strength. That has proved a disaster. Its officials have, anonymously, rebuked Britain for its “constant accommodation” of China—and many observers would agree that they have a point. But that its closest allies have proved so keen to court China’s favour and so willing to flout American views suggests America picked the wrong fight.

*  *  *

So there you have it. Washington picked a completely unnecessary fight with China over the ostensibly non-contentious topic of infrastructure development because the US can’t stand the fact that traditionally US-dominated multinational institutions are on the verge of being supplanted by sinocentric ambition — and lost. Apparently though, the White House is now out to prove that if it can’t win a war fought with infrastructure development dollars it can still win a war fought with bullets, as evidenced by the “line” of soldiers and armed vehicles in place on or near the Russian border.

And for any country that’s still on the fence with regard to joining the standardless abomination seeking to undermine the ADB, Jack Lew has a tough question for you:

“Will it protect the rights of workers, the environment, will it deal with corruption issues appropriately?”








Washington losing face badly.  They propose a joint partnership with the new AIIB bank.

Not a chance as the world perceives the USA losing a grip on its USA dollar hegemony.


(courtesy zero hedge)



Washington Blinks: Will Seek Partnership With China-Led Development Bank



Don’t look now, but Washington just blinked. As we’vedocumented exhaustively over the past week, pressure has been building steadily for the US to strike some manner of conciliatory tone towards China with regard to the Asian Infrastructure Investment Bank, a China-led institution aimed at rivaling the US/Japan-backed ADB. Britain’s decision to join China in its new endeavor has prompted a number of Western nations to throw their support behind the bank ahead of the March 31 deadline for membership application. Because the AIIB effectively represents the beginning of the end for US hegemony, the White House has demeaned the effort from its inception questioning the ability of non-G-7 nations to create an institution that can be trusted to operation in accordance with the proper “standards.” Now, with 35 nations set to join as founders, it appears Washington may be set to concede defeat. Here’s more, via WSJ:

The Obama administration, facing defiance by allies that have signed up to support a new Chinese-led infrastructure fund, is proposing the bank work in a partnership with Washington-backed development institutions such as the World Bank.


The collaborative approach is designed to steer the new bank toward economic aims of the world’s leading economies and away from becoming an instrument of Beijing’s foreign policy. The bank’s potential to promote new alliances and sidestep existing institutions has been one of the Obama administration’s chief concerns as key allies including the U.K., Germany and France lined up in recent days to become founding members of the new Asian Infrastructure Investment Bank.


The Obama administration wants to use existing development banks to co-finance projects with Beijing’s new organization. Indirect support would help the U.S. address another long-standing goal: ensuring the new institution’s standards are designed to prevent unhealthy debt buildups, human-rights abuses and environmental risks. U.S. support could also pave the way for American companies to bid on the new bank’s projects.


“The U.S. would welcome new multilateral institutions that strengthen the international financial architecture,” said Nathan Sheets, U.S. Treasury Under Secretary for International Affairs. “Co-financing projects with existing institutions like the World Bank or the Asian Development Bank will help ensure that high quality, time-tested standards are maintained.”

So essentially this is just the old “if you can’t beat ‘em, join ‘em” strategy disguised as an attempt to bring the AIIB into the fold of US-dominated multinational institutions. But make no mistake, this is at best an example of Washington cutting its losses and at worst an outright surrender, as no one should pretend that the AIIB, which is starting with $50 billion in capital, will remain subservient to the ADB which, after five decades, has barely three times that amount:

Infrastructure needs around the world are enormous. Emerging countries need new ports, railways, bridges, airports and roads to support faster growth. Developed economies, meanwhile, must replace aging infrastructure.The Asian Development Bank estimates its region alone faces an annual financing shortfall of $800 billion a year. The consulting firm McKinsey & Company estimates global infrastructure-investment needs through 2030 total $57 trillion.


By comparison, the Asian Development Bank has just $160 billion in capital and the World Bank-which has co-financed with other regional institutions for years—has around $500 billion. The China-led bank plans to have a $50 billion fund to start.

*  *  *

And with that, one giant shift towards de-dollarization is now in the books.








Oil related stories



It now looks like the perfect storm for oil to hit will be May 14.2015 as storage runs out and oil production continues northbound;


(courtesy zero hedge)


The Perfect Storm For Oil Hits In Two Months: US Crude Production To Soar Just As Storage Runs Out




Less than two weeks ago we warned that based on the current oil production trend, the US may run out of storage for crude as soon as June.

This is what we said back in early March when the BTFDers were hoping WTI in the low $40s would never again be seen:

Come June, when all available on-land storage is exhausted, each incremental barrel will have to be dumped on the market forcing prices lower and inflicting further pain on the entire US shale complex (just as Q1 results are released which will invariably show huge writedowns as companies will no longer be able to hide behind the SEC-mandated accounting trick that made Q4 results appear respectable). Here’s Soc Gen:  “…oil markets can be impatient and prices could drop considerably lower. As we have written previously, we are currently more concerned about downside risk than upside risk.”

Since then, as expected, crude tumbled to new post-Lehman lows, confirming the global deflationary wave is raging (for more details please see China), and WTI only posted a rebound on quad-witching Friday as another algo-driven stop hunt spooked all those who were short the energy complex.

The problem is that despite the latest “dead oil bounce” we have since had to revise our forecast for full US oil storage, and pulled forward the date when this will happen in the aftermath of the latest API inventory data.

Recall that earlier this week API reported, and EIA later confirmed, that for the 10th week in a row there was a “massive 10.5 million barrels (far bigger than the 3.1 million barrel expectation) and a 3 million barrel build at Cushing. If this holds for DOE data tomorrow (and worryingly API has tended to underestimate the build in recent weeks) it will be the biggest weekly build since 2001.”


The DOE indeed confirmed all of this:

It also means that at the current rate of record oil production, storage will be exhausted in under two months, some time in mid-May. At that point, with no more storage to buffer the record oil production, the open market dumping begins and prices of WTI will crater as every barrel will have to be sold at anyclearing price, since the producers will have no other choice than to, literally, dump the oil.

In other words, a perfect storm is shaping up for oil some time in late May, early June.

And then we learned something even more startling.

As the Platts oil blog reports, even as oil prices continue to fall amid flat demand and near-record supply, “North Dakota is likely to see a “big surge” in production this June, potentially besting another supply record even if prices continue to crater, according to Lynn Helms, director of the state’s Department of Mineral Resources.

What make things worse is that this time the production “surge” will have nothing to do with game theory, orbeggaring thy oil producing neighbor in hopes that the other, more levered guy goes bankrupt first.

This surge will be largely propelled by two factors: a state-mandated time limit on drilling and the expected trigger of a major oil tax incentive, Helms said.

Here is how Bakken production has looked like in recent months:

Helms, the state’s top oil and gas official, reported last week that North Dakota oil production fell about 3%, or about 37,000 b/d, to 1.190 million b/d from December’s all-time high of 1.227 million b/d. The reduction was expected as sweet crude prices averaged $31.41/barrel in January, down from $40.74/b a month earlier and the statewide rig count fell by 21 to 161.


But Helms said he doesn’t expect production to tumble dramatically, even as prices continue to fall, and even though he expects the statewide rig count to “bottom out” at about 100 rigs. Production, he said, will likely remain between 1.1 million b/d to 1.2 million b/d over the next few months.

Nothing surprising.

And then this will happen: “Bakken production could suddenly skyrocket, by nearly 10%, or an additional 75,000 b/d, to 100,000 b/d in June, Helms said.” This means that despite low prices and production curtailments throughout much of North America, oil production in North Dakota could actually shatter a new record this summer!

This is mainly due to a backlog of between 800 to 1,000 uncompleted wells statewide,about 125 of which need to be completed by the end of June in order to comply with state requirements to complete drilling within a year.


At the same time, operators may wait until June, when a major oil tax incentive known as the “large trigger” is expected to go into effect. The large trigger, which is aimed at boosting Bakken production at times of low crude prices,enters into force when the WTI crude price averages below $55.09/b for five consecutive months.


If that incentive is triggered, which Ryan Rauschenberger, North Dakota’s tax commissioner, said he expects will happen, the majority of wells will be exempt from a 6.5% oil extraction tax for as long as two years.


With that tax break in effect and hundreds more wells running up against one-year state deadlines, production in North Dakota could continue to surge even beyond the summer.

“We’re going to ride these waves of production increases,“ Helms said.

And that, coming just as US spare oil capacity hits its limit, is precisely what all those BTFDers who bought first junk bonds, and most recently, a desperate scramble in follow-on equity offerings by the universe of cash burning US shale companies, is precisely what they did not want to hear. Because no amount of Fed ramblings about the ever weaker US economy will offset what is about to be a veritable oil tsunami.

The time to buy asset may be when there is blood on the streets, but the moment to dump crude (and buy deep OTM puts) will be precisely when the majority of investors and algo-programming math PhDs realize that in just about two months the streets are about to become black, covered entirely in oil.

h/t Lizzy




WTI oil drops into the 45 dollar handle on comments from the Saudi oil minister that they are pumping a record high 10 million barrels of oil per day.


(courtesy zero hedge)



Saudi Production Comments Send WTI Sliding To $45 Handle





Following Friday’s manic quad-witching melt-up in oil (and everything else), the exuberance (surprise surprise) is fading as fundamental reality is slapped back onto the face of the energy complex by Saudi Arabia. As Reuters reports, Saudi oil minister Ali al Naimi also said the kingdom was now pumping a record high 10 million barrels per day (bpd), and would only cut if non-OPEC countries cut production. The ‘supply’ weakness in crude has been tempered somewhat by a tumbling USD (EUR surging) for now (and also by news from Sinopec of major capex cuts).



As Reuters reports,

Saudi Arabia has stood firm on output, saying it would only consider cutting it if other producers outside OPEC also joined.



Saudi oil minister Ali al Naimi also said the kingdom was now pumping around 10 million barrels per day (bpd), which could indicate an increase of 350,000 bpd over its February production.


Analysts at Barclays forecast on Monday that if OPEC production held near current levels of near 30 million bpd, the market surplus would expand from 900,000 bpd to 1.3 million bpd.



“In the past 15 years, the global economy was defined by rising commodity prices, zero interest rate policy, and a weak USD. This cycle has now gone into reverse with a decelerating industrial economy in China and the rise of U.S. shale,” Bank of America Merrill Lynch said in a report.


“A combination of a strong dollar, higher interest rates and subdued growth may keep commodity prices in check in 2015,” it added.



First we have overproduction of oil.  Now it is overproduction of USA shale gas:


(courtesy Berman/Oil

First Oil, Now Shale Gas Set To Crash Amid “Orgy Of Over-Production”


Submitted by Arthur Berman via,

Spending cuts for oil-directed drilling have dominated first quarter 2015 energy news but rig counts for shale gas drilling are too high.

Investors should pay attention to this growing problem. Bank of America fears sub-$2 gas prices now that winter heating worries are over. Low natural gas prices affect the economics for gas-rich oil production in the Eagle Ford Shale and Permian basin plays as well as for the shale gas plays.

Meanwhile, an orgy of over-production is taking place in the Marcellus Shale. Well head prices are now below $1.50 per thousand cubic feet of gas because of limited take-away capacity and near-saturation of regional demand. Even companies in the Wyoming, Susquehanna, Allegheny and Washington County core areas of the Marcellus play are losing money at these prices.

The rig count for shale gas plays has decreased by only half as much as for the tight oil plays. The reason appears to be that most shale gas companies do not have significant positions in the tight oil plays and must continue to drill to maintain production levels.

Shale gas rig counts have dropped only 19% for horizontal rigs and 25% for all rigs from 2014 highs. The corresponding decrease for tight oil plays is 41% and 46%, respectively, as shown in the table below.


Rig count change table for tight oil vs. shale gas plays as of March 20, 2015. Source: Baker Hughes and Labyrinth Consulting Services, Inc.  (Click Image To Enlarge)

This has puzzled me because the shale gas plays are not commercial at less than about $6/mmBtu except in small parts of the Marcellus core areas where $4 prices break even. Natural gas prices have averaged less than $3/mmBtu for the first quarter of 2015 and are currently at their lowest levels in more than 2 years.


Henry Hub daily and quarterly average natural gas prices. Source: EIA and Labyrinth Consulting Services, Inc.(Click Image To Enlarge)

Most shale gas producers either do not have positions in the tight oil plays or are strongly gas-weighted in their production mix. These companies must continue to drill in shale gas plays despite poor economics in order to avoid the consequences of falling production levels.

The only criterion that seems to matter to investors these days is production guidance. If production drops, stock value will fall even farther than it has already. This will trigger loan covenants if asset values fall below thresholds set out in the loan agreements. When that happens, the loans will be called unless the companies can come up with more cash. This might result in bankruptcy. So, the drilling must continue as long as there is capital.

The table below shows the companies that have overlapping positions in both tight oil and shale gas plays based on current drilling activity.


Current rig counts for companies with positions in both tight oil and shale gas plays. Source: DrillingInfo and Labyrinth Consulting Services, Inc. Rig counts may differ from Baker Hughes because the source is different.  (Click Image To Enlarge)

All companies in the table except Continental Resources are gas-weighted so maintaining gas production levels is important to them for the same reasons it is important to operators without tight oil exposure. Overall, the companies in the table operate only about one-third of all rigs in the shale gas plays. Shale gas is otherwise characterized by a different set of companies that feel they have no choice but to continue drilling and hope that investors don’t notice or care.


Shale gas rig count by operator. Source: DrillingInfo and Labyrinth Consulting Services, Inc. Rig counts may vary from Baker Hughes because the source is different.  (Click Image To Enlarge)

But don’t oil-weighted companies face the same concerns about production levels?
I compared the change in rig count from January to March 2015 by operators in the Eagle Ford Shale play to understand how rig counts are being reduced. I found that key operators were strategically reducing their activity to the best locations in core areas in order to affect production levels the least (see chart below).


Eagle Ford Shale rig count comparison by operator, January and March 2015. Source: DrillingInfo and Labyrinth Consulting Services, Inc.(Click Image To Enlarge)

The next most active class of operators are holding drilling fairly constant in this most productive of tight oil plays. Then, there are a small number of new entrants to the play that are more than balanced by operators exiting the play. My previous post on Eagle Ford well performance showed that there are ample locations in the most commercial parts of the core areas for well-positioned operators to optimize production with fewer new wells.

It is worth noting that the top group of operators in the Eagle Ford Shale play have reasonably good balance sheets (see the table in my previous post) and are not particularly vulnerable to loan covenant threshold triggers. This cannot be said for many of the top operators in the shale gas plays shown in the table below.


Summary table of 2014 year-end financial data for natural gas-weighted U.S. land-based E&P companies. All dollar amounts in millions of U.S. dollars. FCF=free cash flow; CF/CE=cash flow from operations/capital expenditures. Source: Google Finance and Labyrinth Consulting Services, Inc. (Click Image To Enlarge)

The table shows financial data through year-end 2014. What it reveals is not pretty. 2014 negative cash flow reached $15.5 billion, an increase of $7.2 billion over 2013. Much of this increase involved Southwestern Energy’s puzzling acquisition of Chesapeake’s West Virginia Marcellus Shale position that increased that company’s negative cash flow by almost $5 billion over 2013.

On average, shale-gas companies earned only 68 cents for every dollar that they spent in 2014. Total debt increased almost $10 billion to $93.5 billion and average debt exceeded stated equity by 18% excluding companies with negative equity including the now-bankrupt Quicksilver Resources.

Shale gas plays are commercial failures. The misuse of capital to continue to increase production while destroying price and shareholder equity has gone on for too long. Investors should demand that shale gas companies cut rig counts at least as much as tight oil companies have.

Rig Count Summary for the Week Ending March 20, 2015

Rig counts are important today because they may indicate future trends for oil prices. Horizontal wells in the Bakken, Eagle Ford and Permian basin plays produced about 3.5 million barrels of crude oil per day in November 2014 (see table below). These are, therefore, the key plays to watch for rig count decreases.


U.S. key tight oil play production. Source: Drilling Info and Labyrinth Consulting Services, Inc. (Click Image To Enlarge)

The horizontal rig count for these key plays–Bakken-Eagle Ford-Permian HRZ-dropped 25 rigs this week (23 rigs last week) and was down 40% from the 2014 maximum. The horizontal rig count for tight oil plays overall dropped 22 rigs this week (32 last week) and is 41% lower than the 2014 maximum (see the first table above in this post). Rigs for all tight oil plays were down 31 this week (39 last week) and are 46% lower than 2014 maximum rig counts.


Summary of most changed rig counts by play. Source: Baker Hughes and Labyrinth Consulting Services, Inc.(Click Image To Enlarge)

The plays with the greatest change from their respective 2014 maximum rig counts may be viewed as the least commercially attractive to producers. This suggests that the Barnett, Granite Wash, and Permian All are the least attractive.

It is interesting that the Bakken moved into this category this week. Well head prices in the Bakken have now fallen below $30 per barrel. The play is geologically solid but wells are expensive, the pay-out times are fairly long because relatively low decline rates for a shale play, and rail transport adds a lot to the cost of each barrel of oil.

The overall U.S. rig count for the week ending March 20, 2015 was 1,069 of which 1,030 were land rigs. Only about 25% of total land rigs and 11% of horizontal rigs are drilling outside of the major shale gas and tight oil plays. Detailed data for all of the plays are shown in the table below.


Summary table for all U.S. land rig counts. Source: Baker Hughes and Labyrinth Consulting Services, Inc. (Click Image To Enlarge)

This and other data continues to suggest decreasing U.S. tight oil production and increasing world demand. Rig count continues to fall for the critical oil-producing plays and that means that things are on track for an oil-price recovery sooner than later.

Investors should carefully examine why shale gas players have not reduced rig counts more.Continued drilling in the Marcellus will crush natural gas prices further. The fact that there are 34 rigs running in the Haynesville Shale is economically baffling. We may only speculate on why there are 51 rigs in the Woodford Shale and why some operators now call it the SCOOP play.





Your more important currency crosses early Monday morning:



Euro/USA 1.0887 up .0076

USA/JAPAN YEN 119.83 down .096

GBP/USA 1.4917 down .0014

USA/CAN 1.2562 up .0028

This morning in Europe, the Euro stopped its downward movement, reversing upwards by a fair amount, 76 basis points, trading now just below the 1.09 level at 1.0887; Europe is still reacting to deflation, announcements of massive stimulation, crumbling bourses and the ramifications of a default at the Austrian Hypo bank, and a possible default of 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 up again in Japan by 10 basis points and trading well below the 120 level to 119.83 yen to the dollar.

The pound was  down this morning as it now trades well above the 1.49 level at 1.4917  (very worried about the health of Barclay’s Bank and the FX/precious metals criminal investigation/Dec 12 a new separate criminal investigation on gold, silver and oil manipulation).

The Canadian dollar is also up by 28 basis points at 1.2562 to the dollar trading in total contrast to  the lower oil price.

We are seeing that the 3 major global carry trades are being unwound.  The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies

2, the Nikkei average vs gold carry trade (still ongoing)

3. Short Swiss franc/long assets (European housing/Nikkei etc.  This has partly blown up (see  Hypo bank failure)

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral.  Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: Monday morning : up 194.14 points or 0.99%

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

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

Gold very early morning trading: $1182.00



Early Monday morning USA 10 year bond yield: 1.91% !!! up 2 in basis points from Friday night/


USA dollar index early Monday morning: 97.42  down 31 cents from Thursday’s close. (Resistance will be at a DXY of 100)


This ends the early morning numbers, Monday morning



And now for your closing numbers for Monday:




Closing Portuguese 10 year bond yield: 1.75% up 12 in basis points from Friday (despite QE???)


Closing Japanese 10 year bond yield: .31% !!! down 2 in basis points from Friday/


Your closing Spanish 10 year government bond,  Monday up 7 in basis points in yield from Friday night.(despite QE)

Spanish 10 year bond yield: 1.25% !!!!!!


Your Monday closing Italian 10 year bond yield: 1.29% up 9 in basis points from Friday: (despite QE)



trading 4 basis points higher than  Spain.






Closing currency crosses for Monday night/USA dollar index/USA 10 yr bond: 4 pm



Euro/USA: 1.0966 up .0149  (up a whopping 149 basis points)

USA/Japan: 119.68 down 0.191  ( yen up 19 basis points and killing more of our yen carry traders)

Great Britain/USA: 1.4968 up .0036  (up 36 basis points)

USA/Canada: 1.2500 down .0035 (Can dollar up 35 basis points)



The euro continued on its path of recovery despite the Greek economic problems.  The Euro skyrocketed again by an amazing 149 basis points. The yen was also up in the afternoon, and it was up by closing to the tune of 19 basis points and closing well below the 120 cross at 119.74. The British pound gained back some ground lost during the Frida closing at 1.4968. The Canadian dollar was also up hugely today joining the other currencies rising against the dollar. It also rose in conjunction with the rise in oil.  It closed at 1.2500 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 and huge losses on the USA dollar will no doubt produce many dead bodies.








Your closing 10 yr USA bond yield: 1.91 down 1 in basis points from Friday



Your closing USA dollar index:

96.86 down 87 cents   on the day.


European and Dow Jones stock index closes:



England FTSE  up 15.16 points or 0.22%

Paris CAC down 32.97 or 0.65%

German Dax down 143.53 or 1.19%

Spain’s Ibex up 33.20 or 0.29%

Italian FTSE-MIB down 119.56 or 0.52%



The Dow: down 11.61 or 0.06%

Nasdaq; down 8.61 or 0.17%



OIL: WTI 47.33 !!!!!!!

Brent: 55.79!!!!

Closing USA/Russian rouble cross: 58.71  up 3/8 roubles per dollar on the day.







Strange!! on no positive news, this happened at the close of trading in oil;


WTF WTI Moment Of The Day: Crude Surges Over $47.50 On Ubiquitous NYMEX Close Melt-Up



Presented with no comment aside from WTF!




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



Your New York trading for today:


(courtesy zero hedge)




Dollar-Dump, Biotech-Bruising , & Rail-Rout, Ruins Record Run In Stocks



If you bought Trannies ahead of The FOMC, then…

Otherwise… given the volume traded today…

The S&P 500 has now alternated down and up for last 9 days

It’s been quite a ride… post-FOMC


On the day, Trannies got trounced  by Railroad warnings…and Biotechs buggered by Gilead


Sectors all rolled over hard into today’s close…


Today’s market traded in a very narrow range and on extremely low volume… (S&P Futs volume 30% below recent average – which is a rapidly falling average) –Today is the quietest trading day of 2015 – until the close and puke…


AAPL back-filled the last-second collapse of Friday’s Quad-witching but as rumors of iWatch volume reductions hit, it started to fade… and agaion a plunge at the close…


Biotechs Blow-off Top?


Bonds went nowhere fast… the belly outperformed with 30Y and 2Y flat…


The Dollar was hammerred again – for the 3rd of last 4 days… the ibbgest drop since March 2009


Commodities were just insane… all higher on the Dollar weakness


But most focused in Oil…


And Copper…



Charts: Bloomberg





Take a close look at Michael Snyder’s 10 charts to give you a good idea as to the huge economic crisis the USA is facing:


(courtesy Michael Snyder)



10 Charts Which Show We Are Much Worse Off Than Just Before The Last Economic Crisis


Submitted by Michael Snyder via The Economic Collapse blog,

If you believe that ignorance is bliss, you might not want to read this article.  I am going to dispel the notion that there has been any sort of “economic recovery”, and I am going to show that we are much worse off than we were just prior to the last economic crisis.  If you go back to 2007, people were feeling really good about things. Houses were being flipped like crazy, the stock market was booming and unemployment was relatively low.  But then the financial crisis of 2008 struck, and for a while it felt like the world was coming to an end.

Of course it didn’t come to an end – it was just the first wave of our problems.  The waves that come next are going to be the ones that really wipe us out.  Unfortunately, because we have experienced a few years of relative stability, many Americans have become convinced that Barack Obama, Janet Yellen and the rest of the folks in Washington D.C. have fixed whatever problems caused the last crisis.  Even though all of the numbers are screaming otherwise, there are millions upon millions of people out there that truly believe that everything is going to be okay somehow.  We never seem to learn from the past, and when this next economic downturn strikes it is going to do an astonishing amount of damage because we are already in a significantly weakened state from the last one.

For each of the charts that I am about to share with you, I want you to focus on the last shaded gray bar on each chart which represents the last recession.  As you will see, our economic problems are significantly worse than they were just before the financial crisis of 2008.  That means that we are far less equipped to handle a major economic crisis than we were the last time.

#1 The National Debt

Just prior to the last recession, the U.S. national debt was a bit above 9 trillion dollars.  Since that time, it has nearly doubled.  So does that make us better off or worse off?  The answer, of course, is obvious.  And even though Barack Obama promises that “deficits are under control”,more than a trillion dollars was added to the national debt in fiscal year 2014.  What we are doing to future generations by burdening them with so much debt is beyond criminal.  And so what does Barack Obama want to do now?  He wants to ramp up government spending and increase the debt even faster.  This is something that I covered in my previous article entitled “Barack Obama Says That What America Really Needs Is Lots More Debt“.

Presentation National Debt

#2 Total Debt

Over the past 40 years, the total amount of debt in the United States has skyrocketed to astronomical heights.  We have become a “buy now, pay later” society with devastating consequences.  Back in 1975, our total debt level was sitting at about 2.5 trillion dollars.  Just prior to the last recession, it was sitting at about 50 trillion dollars, and today we are rapidly closing in on 60 trillion dollars.

Presentation Credit Market Instruments

#3 The Velocity Of Money

When an economy is healthy, money tends to change hands and circulate through the system quite rapidly.  So it makes sense that the velocity of money fell dramatically during the last recession.  But why has it kept going down since then?

Presentation Velocity Of M2

#4 The Homeownership Rate

Were you aware that the rate of homeownership in the United States has fallen to a 20 year low?  Traditionally, owning a home has been a sign that you belong to the middle class.  And the last recession was really rough on the middle class, so it makes sense that the rate of homeownership declined during that time frame.  But why has it continued to steadily decline ever since?

Presentation Homeownership Rate

#5 The Employment Rate

Barack Obama loves to tell us how the unemployment rate is “going down”.  But as I will explain later in this article, this decline is primarily based on accounting tricks.  Posted below is a chart of the civilian employment-population ratio.  Just prior to the last recession, approximately 63 percent of the working age population of the United States was employed.  During the recession, this ratio fell to below 59 percent and it stayed there for several years.  Just recently it has peeked back above 59 percent, but we are still very, very far from where we used to be, and now the next economic downturn is rapidly approaching.

Presentation Employment Population Ratio

#6 The Labor Force Participation Rate

So how can Obama get away with saying that the unemployment rate has gone down dramatically?  Well, each month the government takes thousands upon thousands of long-term unemployed workers and decides that they have been unemployed for so long that they no longer qualify as “part of the labor force”.  As a result, the “labor force participation rate” has fallen substantially since the end of the last recession…

Presentation Labor Force Participation Rate

#7 The Inactivity Rate For Men In Their Prime Working Years

If things are “getting better”, then why are so many men in their prime working years doing nothing at all?  Just prior to the last recession, the inactivity rate for men in their prime working years was about 9 percent.  Today it is just about 12 percent.

Presentation Inactivity Rate

#8 Real Median Household Income

Not only is a smaller percentage of Americans employed today than compared to just prior to the last recession, the quality of our jobs has gone down as well.  This is one of the factors which has resulted in a stunning decline of real median household income.

Presentation Real Median Household Income

I have shared these next numbers before, but they bear repeating.  In America today, most Americans do not make enough to support a middle class lifestyle on a single salary.  The following figures come directly fromthe Social Security Administration

-39 percent of American workers make less than $20,000 a year.

-52 percent of American workers make less than $30,000 a year.

-63 percent of American workers make less than $40,000 a year.

-72 percent of American workers make less than $50,000 a year.

We all know people that are working part-time jobs because that is all that they can find in this economy.  As the quality of our jobs continues to deteriorate, the numbers above are going to become even more dismal.

#9 Inflation

Even as our incomes have stagnated, the cost of living just continues to rise steadily.  For example, the cost of food and beverages has gone up nearly 50 percent just since the year 2000.

Presentation Food Inflation

#10 Government Dependence

As the middle class shrinks and the number of Americans that cannot independently take care of themselves soars, dependence on the government is reaching unprecedented heights.  For instance, the federal government is now spending about twice as much on food stamps as it was just prior to the last recession.  How in the world can anyone dare to call this an “economic recovery”?

Presentation Government Spending On Food Stamps

So you tell me – are things “getting better” or are they getting worse?

To me, it is crystal clear that we are in much worse condition than we were just prior to the last economic crisis.

And now things are setting up in textbook fashion for the next great economic crisis.  Unfortunately, most Americans are totally clueless about what is going on and the vast majority are completely and totally unpreparedfor what is coming.






A string of more bad economic news from the USA


first:  the Chicago Fed


 Chicago Fed signals lousy USA economic activity as they continue to offer downward revisions:
(courtesy Chicago Fed/zero hedge)

US Economic Activity Worst Since 2011 Amid Major Downward Revisions, Chicago Fed Signals

January’s “optimistic” +0.13 print for CFNAI was revised drastically lower to -0.10 and now February prints -0.11 against an expectation of +0.10 for the 3rd miss in a row – the worst run since Q3 2011. The Chicago Fed National Activity Indicator (which has gained in prominence in recent months) indicates a 3rd month of “below trend growth,” for the first time since June 2011.



Charts: Bloomberg





Dave Kranzler discusses this huge negative reading;


(courtesy Dave Kranzler/IRD)



Chicago Fed National Index Negative Again – Stocks Headed For Downside Shock

The Chicago Fed National Activity Index (CFNAI) edged lower to –0.11 in February
from –0.10 in January. Two of the four broad categories of indicators that make
up the index decreased from January, and two of the four categories made negative contributions to the index in February. – Chicago Fed National Activity Index

The Chicago Fed National Activity Index  is a weighted index of 85 monthly indicators of national activity index.  It measures 1) production and income;  2) employment, unemployment and hours;  3) personal consumption and housing;  and 4)  sales, orders and inventories.   As you can see, it is comprehensive nothwithstanding the fact that it is subject to data sampling and statistical modelling error.

The CFNAI declined to -.11 in February from -.1 in January.   What is significant about this is that January was originally reported to be +.13 and the expectation for February was +.10.   It was the third miss of expectations in a row.   It was the 3rd month in a row of below trend “growth,” which is the worst run since mid-2011.

Perhaps the biggest indicator of economic weakness gripping our system is the fact that the personal consumption and housing category decreased to -.17 in February from -.07 in January.  Given that consumption is close to 70% of the GDP, this metric would indicate a far weaker economy than the political/business leaders would have us want to believe.

Furthermore, in what is an indication of far greater overall weakness in the consumption/housing, some of the other component indices were slightly positive.  Because this is a weighted index, it would suggest that consumption/housing is far weaker than is measured by the Chicago Fed.

The stock market is headed for a serious downside “adjustment.”  It seems that as the economic and geopolitical news grows worse by the day, the Fed/Government works even harder to pump up the stock market.

In a sense, the Fed has no choice.  Every single public and private pension fund – on a true mark to market basis – is hopelessly underfunded.   The stock allocation component of most of them is now over 40%.   If Fed/Treasury (Exchange Stabilization Fund) were to step away and the let the market trade freely, the U.S. pension system would collapse.






Second: existing home sales falls again.



Existing home sales miss again.


(courtesy zero hedge)


Existing Home Sales Miss (Again); Weather & “Unsuitably High Price Levels” Blamed

Following January’s disastrous dive in Existing Home Sales (which must be weather, right? Nope!) to a SAAR 4.82 million homes, February (with its even worse weather) saw a 4th month of missed expectations with a 4.88mm print against 4.90 mm expectations. As always, weather was blamed – which is odd given that the only drop in sales that occurred happened in The Northeast which accounts for just 12% of total transactions. Perhaps more worrisome is NAR’s Larry Yun noting  “unsuitable price levels” as a reason for weak sales due to low inventories (despite inventories rising 1.6% in February?!). May be it’s time to blame The Fed… for not creating more rich people to buy more houses…


Another month, another miss…


As Home Prices remain higher YoY….


Northeast sales fells 6.5% MoM, The West rose 5.7% MoM with the The Midwest flat and South up 1.9% MoM.

NAR’s Larry Yun explains…

Severe below-freezing winter weather likely had an impact on sales as more moderate activity was observed in the Northeast and Midwest compared to other regions of the country.”

but adds…

although February sales showed modest improvement, there’s been some stagnation in the market in recent months. “Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,” he said. “Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.”




“Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.”

And begs The Fed to not raise rates…

“With all indications pointing to a rate increase from the Federal Reserve this year – perhaps as early as this summer – affordability concerns could heighten as home prices and rents both continue to exceed wages,”

Charts: Bloomberg

After strong ally Yemen disenfranchises itself from the USA, 500 million dollars worth of weapons is now in Al Qaeda hands;
(courtesy zero hedge)

US “Loses” $500 Million In Weapons Given To Yemen, Now In Al-Qaeda Hands

Nobody could have possibly foreseen that yet another US foreign diplomacy “success story” would turn out to be an epic disaster. Well, nobody, except for those who accurately predict that every US intervention abroad is now a staggering fiasco (for everyone involved except the US military-industrial complex of course). As for Yemen, the outcome was clear long ago:

And, naturally, after noting that “the employees said that more than 20 vehicles were taken by the fighters after the Americans departed from Sanaa’s airport” we asked how long until we have a “tabulation of losses to US taxpayers, just like the great Islamic State ‘robbery’ of hundreds of millions in US military equipment in Iraq?” That, of course, was another epic US intervention success story.

Anyway, thanks to WaPo we have an answer: according to Jeff Bezos’ recent media acquisition, “the Pentagon is unable to account for more than $500 million in U.S. military aid given to Yemen.”

Obviously, “can’t account for” means “has lost.” But while the US does not know where nearly half a billion in weapons can be found, it is more than informed who is the current owner: there are “fears that the weaponry, aircraft and equipment is at risk of being seized by Iranian-backed rebels or al-Qaeda, according to U.S. officials.”

And just like that, America’s now laughable, pathetic foreign policy has not only resulted in another US-supported administration to be exiled or worse, but is has directly armed the adversary. And to think it was only 6 months ago when the Teleprompter in Chief was praising the “Yemen success story.” From Obama’s Statement on ISIL as of September 10, 2014:

Now, it will take time to eradicate a cancer like ISIL.  And any time we take military action, there are risks involved –- especially to the servicemen and women who carry out these missions.  But I want the American people to understand how this effort will be different from the wars in Iraq and Afghanistan.  It will not involve American combat troops fighting on foreign soil.  This counterterrorism campaign will be waged through a steady, relentless effort to take out ISIL wherever they exist, using our air power and our support for partner forces on the ground.  This strategy of taking out terrorists who threaten us, while supporting partners on the front lines, is one that we have successfully pursued in Yemen and Somalia for years.  And it is consistent with the approach I outlined earlier this year:  to use force against anyone who threatens America’s core interests, but to mobilize partners wherever possible to address broader challenges to international order.

Some may find it odd then, that 6 months later this “strategy” has been flipped on its head, and the Obama administration is taking out its partners (in Yemen), while supporting the terrorists who threaten us.

But almost everyone will say this was obvious from day one.

Here is what else was obvious:

With Yemen in turmoil and its government splintering, the Defense Department has lost its ability to monitor the whereabouts of small arms, ammunition, night-vision goggles, patrol boats, vehicles and other supplies donated by the United States. The situation has grown worse since the United States closed its embassy in Sanaa, the capital, last month and withdrew many of its military advisers.


U.S. firearms supplied to the Interior Ministry in Yemen, which has
$500 million in aid from the United States since 2007 under an
array of
Defense Department and State Department programs. (GAO)

In recent weeks, members of Congress have held closed-door meetings with U.S. military officials to press for an accounting of the arms and equipment. Pentagon officials have said that they have little information to go on and that there is little they can do at this point to prevent the weapons and gear from falling into the wrong hands.


“We have to assume it’s completely compromised and gone,” said a legislative aide on Capitol Hill who spoke on the condition of anonymity because of the sensitivity of the matter.


* * *


Washington has supplied more than $500 million in military aid to Yemen since 2007 under an array of Defense Department and State Department programs. The Pentagon and CIA have provided additional assistance through classified programs, making it difficult to know exactly how much Yemen has received in total.

Below is a graphic representation of all the equipment that has been “misplaced.”

Another day for the US State Department under John Kerry, another day of endless embarrassment.

U.S. military officials declined to comment for the record. A defense official, speaking on the condition of anonymity under ground rules set by the Pentagon, said there was no hard evidence that U.S. arms or equipment had been looted or confiscated. But the official acknowledged that the Pentagon had lost track of the items.


“Even in the best-case scenario in an unstable country, we never have 100 percent accountability,” the defense official said.

It gets better:

U.S. government officials say al-Qaeda’s branch in Yemen poses a more direct threat to the U.S. homeland than any other terrorist group. To counter it, the Obama administration has relied on a combination of proxy forces and drone strikes launched from bases outside the country.

And now it is relying on an even more radical strategy: arming al-Qaeda directly.

But the absolute punchline is the way the US government justifies this most recent fiasco:

Although the loss of weapons and equipment already delivered to Yemen would be embarrassing, U.S. officials said it would be unlikely to alter the military balance of power there. Yemen is estimated to have the second-highest gun ownership rate in the world, ranking behind only the United States, and its bazaars are well stocked with heavy weaponry.Moreover, the U.S. government restricted its lethal aid to small firearms and ammunition, brushing aside Yemeni requests for fighter jets and tanks.

See, it’s no biggie that US taxpayers are half a bill out of pocket: the Yemen branch of Al-Qaeda was already armed to the teeth anyway, peace out.

Up next? US-trained Ukraine troops with ultra-modern equipment mysteriously defect, and end up in the Russian army?

The winner? The US Military Industrial Complex, because as General Sline said in Spies Like Us, “a weapon unused is a useless weapon.” And if there is anything the US military-industrial complex is good at, it is exporting war first courtesy of the CIA operating the in the shadows of incompetent figureheads like Hillary Clinton and John Kerry, followed promptly – like in this case – by arms to fight it (while HSBC, JPM and others provide the funding).




Dave Kranzler, on the rise of the dollar equaling the rise on gold and what it means;




(courtesy Dave Kranzler/IRD)




Is The Dollar Going To Crash While Gold Is Driven Higher By Speculators?



There’s an increasing number of professional money managers who think it will be gold which has been trading more like a currency than a commodity recently. If the dollar is no longer king then gold looks like a worthy successor.  – (LINK)

Several analysts, including myself, have pointed out that recently gold has been moving in correlation  with the dollar rather than inversely.  While many are not aware of this, the two huge moves higher made by gold during this long term bull market occurred after gold traded for a couple months in correlation with the dollar.

Gold has actually been tracking the US dollar’s advance but it has now decoupled and should go in the opposite direction. Gold is after all the classic hedge for dollar weakness. There’s another reason to think the price of bullion will surge from here.

The argument that higher US interest rates are coming is what has kept the price of gold down…Now that the Fed has taken its foot off the pedal for interest rates therefore gold prices should no longer stay low. And once investors wake up to the fact that interest rates are actually going to stay low for much longer then logically gold prices should be heading up and up.  Arabianmoney

As many of you know, several of the United States’ long time allies/lap dogs have been joining China’s Asian Infrastructure Investment Bank.  This is not just a blow to the U.S.-controlled IMF, it’s a direct blow to the dollar:  “China has won, gaining the support of American allies not just in Asia but in Europe, and leaving America looking churlish and ineffectual.”  Believe it or not, that quote comes from The Economist on this matter.

I have been suggesting that the recent parabolic move in the dollar is the signal that something has melted down behind “the curtain.”  That  “something” could be the dollar itself.  If that’s the case, Jim Willie’s prediction that the dollar will die in 2015 will ring true and gold will take off.   In fact, Rory and I are hosting Jim Willie this Monday on our Shadow of Truth podcast show and we will talk about this topic.

Everything unexplainable happens for a reason and perhaps the dollar’s imminent demise is the reason that China has accelerated its gold buying this year.  Yes folks, the WGC has it wrong again.  Based on deliveries into and withdrawals from  the SGE – I track both numbers (deliveries daily and withdrawals weekly) – China’s gold buying YTD is at least 15-20% above 2014.

Gold is about to have its run as a speculative currency vehicle as the ultimate money that no central bank can print. When currency markets give up on central bankers where do they go?  – Arabianmoney





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