After last week’s air tragedy, maybe a poor thought process but please stay with me.  Would you ever get on an airplane if there was no pilot?  Would you be confident of reaching your destination safely?  Of course not.  Whether you know it or not, you are living in an economic and financial “airplane” with Janet Yellen as the pilot.  The sad thing is this, even she admits the airplane is broken, I’ll explain why shortly.

  Mrs. Yellen gave a speech Friday for the San Francisco Fed.  The full text can be found here http://www.businessinsider.com/janet-yellen-san-francisco-fed-speech-2015-3 .  Before getting into the particulars, I must say it is “sad” to see our “pilot” go back and forth while not saying much of anything…and what was said was largely incorrect or misinformation.  In short, I believe Mrs. Yellen was pandering to Wall Street with her continual line of “we will raise rates later but not yet, and when we do is will be gradual” (my paraphrase).  As I have written many times before, the Fed cannot raise rates and if they did the markets will not even be open for trade within two weeks!

  First and foremost, let’s look at a few of the Fed’s assumptions.  They assume unemployment is 5.5%, the economy is growing and inflation is “too low” and well below 2%.  Let’s pull these assumptions apart and then put them back together.  Unemployment is not 5.5%, this is total fallacy.  The workforce participation rate is plumbing 40 year lows now and those “not looking for work” …because they cannot find any are just thrown in a heap and forgotten about.  This has the effect of making the “potential” workforce smaller than it really is, a statistical gimmick for the ages.  If unemployment was calculated as it once was back in 1980, the rate would be above 17% as calculated by John Williams Shadow Stats.  The 5.5% number is a hilarious fabrication Joseph Goebbels would be ashamed of!

  Next, we have the economic growth rate.  Friday’s final 4th quarter report claimed 2.2% growth, if you look at the Fed’s OWN MODEL, the first quarter is growing at .2% (NOT two percent, POINT two percent!).  If we go one step further and look at “how” the growth rate is calculated, we se there is an “assumption” for inflation.  The way it works is the inflation assumption is deducted from the nominal growth rate to arrive at a real growth rate.  If inflation is low, it’s only a small deduction to growth.  If inflation is high, the deduction to growth will be greater.  For example, if we have nominal growth of 3% and inflation at 1%, the real rate is 3%minus1% =2%.  But what if the inflation rate is really 5%?  Now we get 3%minus5%= a negative 2%, or contraction …otherwise known as recession…and herein lies the problem!

  The Fed uses BLS statistics for their models and uses CPI and PPI numbers in their calculations.  These are NOT true inflation numbers.  Yes, they are massaged, twisted and just plain made up, but this is not the “fallacy”.  The definition of inflation or deflation has nothing to do with “prices”, price movement is the result, not the cause.  The growth of, or the contraction of the money supply is the definition of either inflation or deflation.  Janet Yellen knows this, Bernanke and Greenspan knew this …they don’t want YOU to know this.  They don’t want you to know this because if you did, then you would know we have not had a single quarter since 2007 with real growth!!!

  Now that we have that out of the way, let’s look at a few of her quotes and finish with a “Q+A” mindblower.  Mrs. Yellen contends “With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year.”  She followed this by saying …the economy in an “underlying” sense remains quite weak by historical standards.  So which is it?  Strong or weak?  Of course, all of this was prefaced by admitting to “extraordinary monetary ease” over the last six years and then later spoke about the timing of rates hikes being difficult because of the “long lag times”.  Does six years qualify as “long”?  I can still remember studying money and banking in college, the “lag time” was generally considered six to nine months, has so much changed in the thirty years I’ve been out of school?  (The answer of course is yes, it has).

   Another quote, and an obvious case of “mental lag” on her part, she said, “An environment of prolonged low short-term rates could prompt an excessive buildup in leverage or cause underwriting standards to erode as investors take on risks they cannot measure or manage appropriately in a reach for yield”.  Really?  Ya think?  Are you saying that abnormally low short term interest rates tend to blow bubbles faster than Lawrence Welk?

  Before getting to the real fun, let’s look at what I think was a first admission on the part of the Fed regarding their balance sheet.  Mrs. Yellen said “But if growth was to falter and inflation was to fall yet further, the effective lower bound on nominal interest rates could limit the Committee’s ability to provide the needed degree of accommodation. With an already large balance sheet, for example, the FOMC might be concerned about potential costs and risks associated with further asset purchases.”  Do you understand what she just said?  In my own blunt words, she said “if the markets were to turn down and economy further down from here, since interest rates are already at zero …there is nothing we could do.  We have already expanded our balance sheet to the limit and would risk bankrupting even ourselves with further bond purchases.  We are out of ammo”!  Sad, but very true, the Fed can only rely on falsified data to portray growth and can only threaten higher rates, but never deliver them.

  Lastly, during the Q+A session Mrs. Yellen made the comment “cash is not a convenient store of value”.  After it was all said and done, CNBC’s Rick Santelli went off on a rant and can be seen here https://www.youtube.com/watch?v=1phkV1LFdJY&feature=player_embedded

.  If I may interpret for you, Mrs. Yellen is saying they not only “want” to debase the dollar and create inflation, they absolutely MUST debase and devalue the dollar in or to “reflate” and KEEP REFLATING!  There is no other alternative but we already knew this.  We knew she knew this, what was shocking is she actually said this!  Let me finish with a three word translation for you,  “Cash is trash”.  Janet Yellen, 3/27/14.  Regards,  Bill Holter

Attachments area

Preview YouTube video santelli

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And now for the important paper stories for today:

Early Monday morning trading from Europe/Asia

1. Stocks generally higher on major Chinese bourses on false rumours of the PBPC rate cut /yen falls to 119.82

1b Chinese yuan vs USA dollar/yuan slightly strengthens to 6.2073

2 Nikkei up by 125.77 or 0.65%

3. Europe stocks in the green/USA dollar index up to 97.83/Euro falls to 1.0833

3b Japan 10 year bond yield .37% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.82/Maintains rise in Japanese 10 yr bond yield/Japan losing control over their huge bubble of a bond market/

3c Nikkei still above 19,000

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

3e WTI  47.97  Brent 55.59

3f Gold down/Yen down

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 WTI and down for Brent this morning despite the fact a proxy civil war continues in Yemen

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

Except Greece which sees its 2 year rate slightly rises to 20.74%/Greek stocks down by .15% today/ still expect continual bank runs on Greek banks.

3j  Greek 10 year bond yield:  10.99% (down by 6 basis point in yield)

3k Gold at 1184.00 dollars/silver $16.69

3l USA vs Russian rouble;  (Russian rouble down  1/100 rouble/dollar in value) 57.82 , falling with the lower brent oil price

3m oil into the 47 dollar handle for WTI and 55 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 Eurogroup reject Greece’s bid for more euros of bailout funds as proposal is to vague. The ECB increases ELA by 1.5 billion euros up to 71.3 billion euros.  This money is used to replace fleeing depositors.

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

4.  USA 10 year treasury bond at 1.96% early this morning. Thirty year rate well below 3% at 2.54%/yield curve flatten/foreshadowing recession.

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

(courtesy zero hedge/Jim Reid Deutsche bank)

Futures Jump On Chinese Easinng Speculation, False Rumor Of PBOC Rate Cut

With the rest of the developed world’s central banks waiting for the Fed to admit defeat for one more year and delay its proposed rate hike (or launch NIRP/QE4 outright) it was all about China (the same China which a month ago we said would launch QE sooner or later) and hope that its central bank would boost asset prices, when over the weekend the PBoC governor hinted that more easing is imminent to offset the accelerating drag after he admitted that the nation’s growth rate has tumbled “a bit” too much and that policy makers have scope to respond. How much scope it really has now that its bad debt is rising exponentially is a different question. It got so bad, Shanghai Securities News leaked a false rumor earlier forcing many to believe China would announce an unexpected rate cut as soon as today, in the process sending the Shanghai Composite soaring by 2.6%.

• PBOC TO HOLD PRESS CONFERENCE AT 3:30 P.M.: SHANGHAI SEC. NEWS
• PBOC TO MAKE `IMPORTANT’ ANNOUNCEMENT AT 3:30 PM BRIEFING: NEWS

This was promptly denied:

• PBOC NEWS OFFICE SAYS UNAWARE OF BRIEFING THIS AFTERNOON

… But the momentum for the dumb money (and we mean dumb money: remember that 30% Of New Equity Investors In China Have Elementary Education Or Less, Bloomberg Says) was already in place, and the already unprecedented Chinese stock bubble just got that much bigger and that much closer to popping.

For now, algos don’t care, and the surge in China was quickly carried over to Europe and the US, both of which have seen substantial strength across equity markets, even as the German 10Y Bund dropped to 0.18% earlier, now that every single bank is fighting every other single bank for what little unencumbered “high quality collateral” remains.

But if China’s rumors were positive for stocks, oil couldn’t care less and Brent extended Friday’s selloff into a second day, falling below $56/bbl amid indications bearish pressure from Iran nuclear talks is building, and the upside related to the Yemen proxy war is fading. WTI outpacing Brent decline.

“Further downward pressure may come at any time from a nuclear agreement with Iran,” says Societe Generale head of oil mkt research Michael Wittner. “Talks are reportedly intense, with twists and turns seeming to occur at least daily.”Wittner added that “The conflict in Yemen poses no threat to Saudi production, Yemeni production is small and unimportant, and the risk of a disruption to oil shipments through the Bab el-Mandeb Strait is considered low. We believe there will be continued downward pressure on oil prices.”

Well, the PBOC better step up and fast.

European equities have started the week on the front foot in a continuation of the positive sentiment seen overnight in Asia-Pacific trade with Chinese equities supported by comments from the PBoC Governor who hinted at more easing (PBoC announced new housing measures at 1003BST) and as details emerged over China’s Silk Road economic belt plans which will help boost infrastructure in the country. As such, Hang Seng (+1.5%) rose the most for the year while the Shanghai Comp (+2.6%) touched its highest level since May’08. Furthermore, sentiment in Europe has also been supported by comments out of Athens suggesting the Greek government are increasing their efforts to secure much-needed financing. Additionally, from a technical perspective, German equities were further boosted after the DAX cash broke above 12,000, with German export names also supported by the broadly weaker EUR.

From a fixed income perspective, Bunds have traded higher since the get-go with some suggesting the move higher could be a by-product of increased QE purchases by the ECB. This also comes alongside USTs trading lower, so could help provide some explanation for the move with flows into core European paper. From a supply perspective, focus for Europe will also reside on the upcoming BTP offering from the Italian treasury at 1000BST.

Fitch downgraded Greece to CCC from B. Fitch said the downgrade reflects lack of access to markets and uncertainty regarding potential disbursements from the Troika group of lenders. (RTRS) European finance ministers will probably not meet again before the middle of April to give the country more funds. Officials added that the proposals sent by Greece are lacking the required detail. (WSJ) Conversely EU sources suggest that the talks between the Eurogroup and Greece are `encouraging` and Greece may receive funds in the first three days of the week. (La Republicca) Additionally, sources also suggest Greece could enter into bankruptcy by 20th April if it fails to secure additional financing. (RTRS) Of note, the Syriza party is due hold an emergency cabinet council meeting at 4pm local time. German Finance Ministry Spokesman Jaeger today said that Greek proposals have not yet been submitted. (BBG)

As has been the case over the past few weeks, the USD-index has provided a bulk of the price action with the greenback continuing to pull away from its post-GDP lows, with the higher US yields also providing the USD with a boost, particularly in USD/JPY. Elsewhere, EUR/GBP was initially subject to some month-demand with the cross also led higher by political uncertainty in the UK. Nonetheless, this upside was short-lived after the USD-strength saw EUR/USD trip stops through 1.0850 to the downside. However, it is worth keeping an eye on major pairs as the USD-index pulls away from its best levels heading into the European open, with GBP broadly benefitting from a move higher in GBP/JPY.

In summary: European stocks slightly pare earlier gains, rise most since March 20 as PBOC head Zhou Xiaochuan indicated that China’s growth rate has slipped, and that the govt is able to respond. Dollar rises with U.S. equity index futures while crude declines.  Goldman reiterates overweight call on global equities on 3-, 12-month terms. German Finance Min. says Greece hasn’t yet submitted it’s official list of reforms.

Market Wrap

• S&P 500 futures up 0.6% to 2065.5
• Stoxx 600 up 0.9% to 399
• US 10Yr yield little changed at 1.96%
• German 10Yr yield down 2bps to 0.19%
• MSCI Asia Pacific up 0.1% to 146.7
• Gold spot down 1% to $1187.3/oz
• Eurostoxx 50 +1.1%, FTSE 100 +0.5%, CAC 40 +1%, DAX +1.5%, IBEX +0.7%, FTSEMIB +1.1%, SMI +0.9%
• Asian stocks gain slightly with Shanghai Composite outperforming and ASX underperforming.
• MSCI Asia Pacific up 0.1% to 146.7
• Nikkei 225 up 0.7%, Hang Seng up 1.5%, Kospi up 0.5%, Shanghai Composite up 2.6%, ASX down 1.2%, Sensex up 1.9%
• UnitedHealth to Buy Catamaran to Boost Pharmacy Benefit Svc
• Horizon to Buy Hyperion for $1.1b, Gain Rare-Disease Drug
• Euro down 0.34% to $1.0852
• Dollar Index up 0.42% to 97.7
• Italian 10Yr yield down 1bps to 1.34%
• Spanish 10Yr yield down 1bps to 1.32%
• French 10Yr yield down 1bps to 0.49%
• S&P GSCI Index down 1.1% to 398.3
• Brent Futures down 1.7% to $55.4/bbl, WTI Futures down 2.4% to $47.7/bbl
• LME 3m Copper up 0.6% to $6093/MT
• LME 3m Nickel down 1.1% to $13140/MT
• Wheat futures up 0.6% to 511 USd/bu

Bulletin headline summary by Bloomberg and RanSquawk

• Europe trades higher in a continuation of the trend seen during Asia-Pacific trade, with participants also optimistic over Greek/Eurogroup negotiations
• USD-index continues to lead the way for FX markets after recovering from post-GDP lows, although has since given back some of its gains heading into the North American open
• Looking ahead, today sees the release of US personal income, personal spending and pending home sales.
• Treasuries steady before personal income/ spending reports as market’s focus shifts to ADP on Wednesday, nonfarm payrolls on Good Friday.
• China’s central bank chief said that the nation’s growth rate has tumbled “a bit” too much and that policy makers have scope to respond, underscoring forecasts for further monetary easing in the world’s second-largest economy
• China lowered down-payment requirements for some second homes, further easing mortgage policies as the government seeks to prop up the property market and counter an economic slowdown
• Greece PM Tsipras will update lawmakers Monday on talks held over the weekend in Brussels between Greek officials and representatives of the country’s creditors to secure more funds from the euro area and stave off fiscal collapse
• Shiite Houthis fought forces loyal to Yemen’s embattled president for control of his government’s last stronghold as Saudi Arabia led air assaults on rebel positions and held out the possibility of a ground invasion
• Iran and six world powers intensified efforts to reach a nuclear accord as foreign ministers from all sides met with their deadline less than 48 hours away
• Sovereign 10Y yields mostly lower. Asian, European stocks gain, U.S. equity-index futures rise. Crude and gold decline, copper higher

DB’s Jim Reid wraps up the weekend event summary

As we start Easter week Asian markets have started on a firmer footing. The Nikkei (+0.68%), Hang Seng (+1.50%), Shanghai Comp (+1.62%) and Kospi (+0.43%) are all higher as we go to print. Markets in China in particular appeared to be trading with better sentiment after the PBOC Governor Zhou indicated that the Central Bank still has room to move given that growth has fallen more than desired. Specifically Zhou noted that China can have room to act with both interest rates and quantitative measures. Credit markets are 1- 2bps better this morning.

Geopolitics continues to bubble under the surface however with the Iran nuclear talks attracting plenty of attention over the weekend with tensions continuing to run high and talks appearing near deadlocked. According to the BBC, ahead of tomorrow’s deadline, leaders from Iran and Western diplomats are due to reconvene in an effort bid to finalize an agreement. As per the report, US officials have said that all parties, including Iran, have agreed upon there needing to be ‘a phased step by step reciprocal approach’ in the hope that Iran’s approach to stepping back from its nuclear programme coincides with a phased lifting of sanctions. Negotiations appear to be tense with a conclusion before the deadline far from certain. UK Foreign Minister Hammond commented that ‘Iran has to take a deep breath and take tough decisions’ while Iran’s Deputy Foreign Minister Araghchi noted that ‘the other side must make serious decisions’.

Elsewhere Greece continues to dominate the headlines and on Friday we learned that the government has submitted a list of measures to its creditors. The list – which is more of a ‘staff level agreement’ rather than a submitted list of reform proposals given that the technical teams are still in data collection mode and have yet to have started negotiations – includes a number of revenue raising measures aimed at securing €3bn, including a controversial series of privatizations, raising income tax, increasing levies on alcohol and tax and cutting down on tax evasion. Greek press Ekathimerini also reported that the outline includes a 1.5% budget surplus target for 2015, which is well below the current 3% target in the existing bailout program. After talks between the government and its creditors over the weekend, Reuters quoted a Greek government official as saying that  the ‘Brussels Group discussions continue in a good climate of cooperation’ but that ‘we have agreed that we need to draw up suitable policies which  will shift the burden from those on the lowest income to the highest’, suggesting that further substance and detail will be required before we see any sort of agreement on reform measures and a subsequent release of funds. Headlines on Bloomberg suggest that PM Tsipras is due to update lawmakers on Monday over the weekend’s talks.

Back to markets and recapping Friday’s session, US equities snapped a four consecutive sessions of declines with a +0.24% gain on Friday, taking the index modestly back into positive territory (+0.10%) YTD. Treasuries firmed throughout the session, with the benchmark 10y yield eventually finishing 2.8bps tighter at 1.962% while the Dollar, as measured by the broader DXY, was a touch lower (-0.15%). Despite a relatively muted market move, comments towards the end of the US session from the Fed’s Yellen attracted the bulk of the headlines. In comments at a conference in San Francisco, the Fed Chair said that given an improvement in economic conditions, an ‘increase in the target range for that rate may well be warranted later this year’’. Yellen went on to say that the ‘actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation’, before going on to say that any move would be gradual (Reuters). Despite being balanced to the more hawkish side, the comments essentially reflected the previous FOMC statement by keeping open the option of a move, but highlighting the data dependency that will essentially determine the date and pace of liftoff.

Away from Yellen and on the data front, the third Q4 GDP reading was unchanged at +2.2% saar, although below expectations of +2.4%. Personal consumption meanwhile was revised up 20bps to +4.4% qoq as expected while the Core PCE print was unchanged at +1.1% qoq (as expected). The final March reading of the University of Michigan consumer sentiment reading was encouraging with the reading revised up 1.8pts to 93.0, a point ahead of expectations.

Elsewhere there was something of a reversal in oil markets on Friday, as WTI (-4.98%) and Brent (-4.70%) gave up most of Thursday’s gains to close at $48.57/bbl and $56.41/bbl respectively. The +4.94% weekly return for WTI in particular however did snap three consecutive negative weekly returns. Equity markets in the Middle-East closed firmer over the weekend, led by markets in Saudi Arabia (+1.9%) having been supported by comments from the Saudi King Salman who told a group of leaders in the region that the coalition would continue its offensive until stability is restored. Meanwhile, Reuters has reported further airstrikes overnight with key rebel military targets struck. The same article also quoted a Saudi spokesman as saying that the coalition would step up the pressure on the Houthis and their allies over the coming days and haven’t ruled out the potential for ground force. Despite a unified front from the coalition to restore some sort of stability, geopolitical risk remains high with the Iranian finance minister pleading for a stop to the airstrikes on Friday and the BBC reporting that Iran is alleged to be providing support to the rebel Houthis.

Moving on, it was a similar story in Europe on Friday with bourses a touch firmer at the close. Indeed, the Stoxx 600 (+0.24%), DAX (+0.21%) and CAC (+0.55%) all closed higher following a somewhat volatile week in which most major markets closed lower. Bond markets were largely mixed. 10y Bunds closed 0.8bps tighter at 0.206% while markets in Italy and Spain were 4bps and 6bps wider respectively. Data offered little in the way of surprises on the whole. French consumer confidence for March printed in line with consensus at 93 and at the highest level since November 2010. Elsewhere, Italian retail sales (+1.7% yoy vs. -0.3% expected) and the German import price index came in ahead of expectations (-3.0% yoy vs. -4.4% expected).

Wrapping up, it’s a busy calendar in a holiday-shortened week. We start in the UK this morning with mortgage approvals, money supply and net consumer credit data and follow this up with confidence indicators for the Euro-area as well as the preliminary March CPI reading out of Germany. It’s no less quiet in the US this afternoon where we get personal income and spending data, along with the PCE deflator reading, pending home sales and the Dallas Fed manufacturing activity reading. Tuesday kicks off in the Asia timezone where we get a host of readings for Japan including cash earnings, housing starts and private sector credit. Closer to home, the all-important advanced March Euro-area CPI print will be front and centre while we’ve also got French PPI and consumer spending, German unemployment and Q4 GDP in the UK to look forward to. Data in the US on Tuesday includes the ISM Milwaukee, S&P/Case Shiller, consumer confidence and Chicago PMI. We start the new month on Wednesday in Japan with the Tankan survey while the official and HSBC manufacturing print in China will also be due up. Manufacturing PMI’s dominate the data docket in Europe on Wednesday too with the final March prints for France, Germany and the Euro-area as well as the preliminary releases in the UK and Italy. The afternoon focus in the US will be on the ADP employment changed print, along with the final reading for the manufacturing PMI, ISM manufacturing and prices paid, vehicle sales and finally construction spending. The calendar takes a breather on Thursday with no releases due in Europe. Across the Atlantic however Challenger job cuts and initial jobless claims kick off the session, followed by the February trade balance, ISM NY and factory orders. With it being a public holiday for most markets on Friday, we’ve just got the services and composite PMI’s due in China and Japan in the morning. The likely main highlight of the week comes on Friday afternoon however in the US where we get the March payrolls number and associated employment indicators with it. Finally, there’ll be no shortage of Fedspeak this week with George, Lacker, Lockhart, Mester and Kocherlakota all due to speak.

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A very important commentary from Raul Meijer who states that Greece knows that the dual mandate for the people of staying in the Euro and also less austerity will not work. The citizens must choose and only a referendum can decide

an extremely important piece

(courtesy Raul Meijer)

Greece Prepares To Leave

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

SATURDAY March 28.2015

Speculation and expert comments are thrown around once more – or still – like candy on Halloween. Let me therefore retrace what I’ve said before. Because I think it’s really awfully simple, once you got the underlying factors in place.

But first, if one thing has become obvious after Syriza was elected to form a Greek government on January 25, it’s that the party is not ‘radical’ or ‘extremist’. Those monikers can now be swept off all editorial desks across the world, and whoever keeps using them risks looking like an awful fool.

All Syriza has done to date, when you look from an objective point of view, is to throw out feelers, trying to figure out what the rest of the eurozone would do. And to make sure that whatever responses it got are well documented.

Because of course Greece (through Syriza) is preparing to leave the eurozone. Of course the effects and consequences of such a step are being discussed, non-stop. They would be fools if they didn’t have these discussions. And of course there will be a referendum at some point.

There’s just that one big caveat: Syriza insists on needing a mandate from its voters for everything it does, whether that may be kowtowing to Greece’s EU overlords or walking away from them. At present, however, it doesn’t have a mandate for either of these actions.

The best it can do is to drag out negotiations as much as it can, and let Europe openly assert its perceived superior power over the Greek population as much as it wants to, complete with more iron-fisted demands for austerity, more budget cuts, more asset sales. Tsipras and his people will let this go on until the Greeks are even more fed up with Brussels than they already were when they elected Syriza in the first place.

It’s a subtle game, but it’s the only one open to Tsipras and his crew. Even if they’ve long concluded that trying to negotiate a deal with Germany et al was a lost cause way before talks started, Syriza has to go through the motions until it is confident the people of Greece are ready to vote in a referendum on eurozone membership.

A risky game, since it could bring back ‘the old guard’ of the handful of families that have governed the country for decades and that were willing co-operators with the Troika, but at the same time it’s the only game in town at the moment.

Tsipras needs to explain to the Greek people that the double mandate of staying inside the eurozone and at the same time ending austerity is in fact an empty mandate, because the eurozone refuses to allow it.

He needs to explain that this means the eurozone refuses to recognize the democratic values of one of its member states, voting to change policy. Brussels is in effect telling the Greek people on a daily basis that they don’t matter. That’s what Tsipras has to make clear, and then he can call the referendum.

It should be obvious that this whole mandate question changes potential actions by Athens to a huge degree. But from what I read every day, it doesn’t seem to be. Even within Tsipras’ own support base, perhaps some don’t understand what is going on. Either that or they’re part of the strategy. Judge for yourself:

Greek Crisis Nears A Turning Point

Stathis Kouvelakis, who teaches political theory at King’s College in London and is a member of Syriza’s central committee, says the party has to face up to the reality of its recent retreat on its election pledges and the nature of the forces arrayed against it. In particular, Kouvelakis notes the successive steps taken by the ECB to restrict the flow of liquidity to the Greek economy, shutting down or limiting Greek access to various types of ECB financing.

 

“It should be clear, however, that these moves would bring about a dynamic that would breach fundamental constraints of the monetary union and would inevitably lead to the exit from it,” Kouvelakis wrote in his latest post at Jacobin. “In any case, the ECB’s relentless blackmail with its provision of liquidity places onto the agenda every day the issue of regaining sovereignty over monetary policy.” It was the stranglehold that prompted Tsipras in a recent interview with Der Spiegel to refer to the ECB “still holding onto the rope that is around our necks.”

 

But Kouvelakis argues that covering over the issues by renaming the troika “the institutions” or by using weasel words like “creative ambiguity” is not going to solve the problem. The initial euphoria over Syriza’s victory has quickly faded, but it can be revived, he says, if the party faces reality. “In order for this to happen, however, the horns of battle have to blow again, and the ensuing struggle has to be waged with all due seriousness and determination, not with PR stunts and rhetorical contortions.”

 

He cited the widely quoted words from Interior Minister Nikos Voutsis earlier this month before the Greek Parliament, when he said “the country is at war, a social and a class war with the lenders” and that in this war “we will not go like cheerful scouts willing to continue the policies of the memorandum.”This is the kind of talk the world needs to hear from Greek officials, Kouvelakis says, “not the language of facile optimism that creates illusions and causes confusion that tomorrow may prove costly.”

Kouvelakis reasons from a standpoint that is not covered by Syriza’s present mandate. He at least should know this. Tsipras cannot afford to be seen by the Greek population as the man who hasn’t done all he could to keep the country in the eurozone while negotiating an end to austerity. It makes no difference at this point what his personal ideas are on the issue.

Kouvelakis does choose to let his personal opinions prevail. If Tsipras would do the same, a referendum would be much riskier for Syriza. The party was elected to represent its austerity-weary voters, not the subjective opinions of its leaders.

If Tsipras and Varoufakis should elect to give in to Brussels and Berlin, that decision would still need to be put before the people to vote on, because it would mean a prolongation of austerity. And that is not the mandate.

By the same token, if the leadership decides an exit is the only option, and that further negotiations are hopeless because Europe won’t accept anything else than strapping the proud Greek people in a straitjacket, that too will have to be put before a vote.

Of course Syriza, like any other government, keeps track of opinion polls, but they know there will come a moment when a referendum can no longer be postponed no matter what the polls say. In that, Greece is living up to its glorious past as the cradle of democracy.

And that makes it all the more cruel that the country has been ruled for such a long time by anything but a democratic system. Maybe we can say the circle is round. But the connection that closes the circle is still very fragile, and nobody knows that better than Alexis Tsipras.

Still, make no mistake: of course they’re preparing to leave.

end

The rhetoric increases as Greece seeks a meeting with the Russians:

(courtesy zero hedge)

Greek Energy Minister Slams “Unscrupulous, Imperialist” Germany, Will Seek “Bold Alternatives” In Russia

 

With fresh rumors springing late on Friday that “this” just may be the weekend Greece – with close to no funds left in either the financial or government sector – imposes capital controls, a precursor to a full-fledged Grexit, the situation in Athens is on a knife’s edge. Yesterday is also when the Syriza government submitted its list of 18 proposed reforms to the Troika: a reform package which the Guardian dubs “reform-for-cash“, as Greece hopes the roughly €3 billion in revenue generated from the reforms will unlock €7.2 billion in financial assistance.

Rather, make that promises of reforms to generate €3 billion in revenue. Because the question, and problem for Athens, is which comes first: does Greece implement the reforms and generate the revenue or does Europe disburse the funds. It is a problem because the reforms will be extremely unpopular if and when they pass. According to Bloomberg, which sources Greek Skai TV, among the proposed reforms is an increase on the duty paid on cigarettes and alcohol. Other proposals include:

• Lift sales tax on certain items while keeping a low rate for food products
• Combat tax evasion including fines for non-payment of tax or failing to declare income; combat black market trade of fuel
• Intensive controls of the names in Lagarde-List (more than 2,000 name suspect of tax evasion) and money transfers abroad.
• Online system connecting companies to tax offices, and electronic system for the payment of Value Added Tax
• Freeze early pensions, consolidate social security funds, create a national wealth fund
• Continue with certain privatizations
• Encourage issuance of retail sales receipts including linking collection to participation in a lottery
• Overhaul tax process for games of chance, real estate and heating oil
• Issue licenses for media companies

The 18 proposals, three times as many as put forward and dismissed by prime minister Alexis Tsipras’s government last month, anticipate GDP growth of 1.4% this year:about 1% less than where the most optimistic analysts see the US growing. The package also endorsed finance minister Yanis Varoufakis’s argument that the primary surplus demanded of Greece would have to be reduced. As such, the primary surplus was estimated to hit 1.5% in 2015 – half that in the country’s existing bailout programme. Unfortunately for Greece, considering the collapse in tax collections in recent months, Athens can kiss any hope of a positive primary surplus goodbye.

Since all of these proposals, if implemented, will lead to increased tax revenues and thus a decrease in the already low quality of Greek life, whether for everyone or just the 1%, they will be met with stern opposition, especially since they will be seen as going against Syriza’s original radical pre-electoral agenda. Which is also why as the Guardian reported, “the country’s international economic affairs minister, Euclid Tsakalotos, raised the stakes, saying while Greece wanted an agreement it was prepared to go its own way “in the event of a bad scenario… We are working in the spirit of compromise, we want a solution, but if things don’t go well you have to bear the bad scenario in mind as well. That is the nature of negotiations.”

Once again Greece is unable to determine when it has lost the negotiations, and while giving with one hand, it tries to take with the other. And this is the biggest problem, because for Europe while the amount of the money transfer is modest, what it wants more than anything is to see the “radical” spirit of the Syriza government crushed.The problem for Greece is that this is not happening, especially with statements such as this:

“The government is not going to continue servicing public debt with its own funds if lenders do not immediately proceed with the disbursement of funds which have been put on hold since 2014,” said government aides. “The country has not taken receipt of an aid instalment from the EU or IMF since August 2014 even though it has habitually fulfilled its obligations.”

Then there was the prime minister himself, who said in an interview with Real News that Greece won’t agree to any wage or pension cuts nor allow mass redundancies. Again: the issue is that the Troika, or whatever it is called, wants precisely this: they want real reforms, by which they mean that Greece finally has to implement some/any of the long ago promised and never delivered redundancies in the government sector.

What is surprising is just how naive Tsipras now appears with his continued populist rhetoric even after it has been revealed that he has no more leverage, with the threat of Grexit taken off the table. Some of his other soundbites:

• An agreement in June with Greece’s creditors will only concern changing debt repayment terms and debt relief measures
• Democratic Europe won’t choose a rupture regarding Greece
• One of government’s priorities is beginning and completing tender for broadcasting licenses
• Won’t tolerate officials who put personal political interests above those of govt and Syriza party

And then there is the Greek energy minister, Panagiotis Lafazanis, who said in an interview with Kefalaio newspaper that the “only way for Greece to exit its crisis is through tough confrontation, if not conflict, with “German Europe.”

Making sure the ongoing negotiations between (almost completely broke) Greece and the Troika take 1.4% steps forward and ten steps back, the energy minister said the Greek reform list can’t be opposed to Syriza’s radical program or be above popular will, sovereignty. As noted above, this is precisely what it would take for the Troika to release the funds.

Reuters confirmed as much earlier when it reported that as Athens battles to have a list of reforms accepted by its EU partners in order to secure much-needed funds to stave off bankruptcy, Lafazanis criticized Berlin and said the government must not roll back on its commitments.

“No list should go over the will and sovereignty of the people,” he told Kefalaio newspaper in an interview on Saturday. “The Germanized European Union is literally choking our country and tightening week by week the noose around the economy,” he said.

Virtually assuring Germany’s fure, Lafazanis said that “if the government suspends pre-election promises, Greece will be driven over cliff’s edge” adding that “privatizations, especially in strategic areas, can’t and won’t happen.” Alas, the Troika said it will, and the Troika writes the checks, so…

The punchline: “Greece is at more than at the breaking point; urgently needs big, bold alternatives to “German, incumbent Europe”and that “creditors behaving as unscrupulous imperialists towards distant colony, threatening submission or economic suffocation.”

More importantly, Lafazanis has some ideas where to find said “big, bold alternatives.” In Moscow.

Greece’s Energy Minister Panagiotis Lafazanis will meet his Russian counterpart and the CEO of energy giant Gazprom in Moscow on Monday, as he hit out at the EU and Germany for tightening a ‘noose’ around the Greek economy.

 

Outspoken Lafazanis, on the left wing of Greece’s co-ruling Syriza party, will meet Russian Energy Minister Alexander Novak and Gazprom Chief Executive Alexei Miller as well as other senior government officials, the energy ministry said on Saturday.

 

Lafazanis’ visit will come just over a week before Tsipras is due to meet Russian President Vladimir Putin in Moscow although the Greek government has stressed it is not seeking funding from the Kremlin.

It is not seeking funding from the Kremlin yet. Because once the first week of April comes and goes and Greece officially runs out of money, it will go to anyone who can provide it with the funds needed to avoid civil war, even if that means switching its allegiance from Europe to the Eurasian Economic Union, something Russia is eagerly looking forward to, and something we predicted would be the endgame months ago.

 

 

 

end

 

Sunday, Europe pulls the rug from under Greece as they state their proposals are too vague.  The Greeks had no intention on further pension cuts, state sales of vital assets  etc

 

 

(courtesy zero hedge)

 

 

Europe Pulls Rug From Under Greece, Says “Nein” To “Vague, Piecemeal” Proposals

 

Despite all the talk of a “positive climate” Greek talks with their creditors have ended badly for the desperately cash-strapped nation. As WSJ reports, Greek proposals for a revised bailout program don’t have enough detail – are “piecemeal and vague” – to satisfy the government’s international creditors, eurozone officials said. Furthermore, as Dow Jones reports, EU finance ministers are unlikley to meet again until mid-April (and in the meantime, Greece has to pay salaries, pensions, and most critically IMF debts due on April 9th).

 

Looming payments…

 

 

As The Wall Street Journal reports,

Greek proposals for a revised bailout program don’t have enough detail to satisfy the government’s international creditors, eurozone officials said, making it more likely that Athens will need to go several more weeks without a new infusion of desperately-needed cash.

 

…

 

The Greek government is facing a dire shortage of cash: It must pay salaries and pensions at the end of the month and repay debts to the IMF on April 9. While talks over the weekend were friendly, officials said, mistrust at a political level continues to stew between the outspoken government in Athens and the rest of the eurozone.

 

…officials say crucial details were again missing from the Greek proposals after talks that started Friday night, lasted all day Saturday and continued on Sunday.

 

“The proposals were piecemeal, vague and the Greek colleagues could not explain technically what some of them actually implied,” a eurozone official said. “So, let’s hope that they present something more competent next week.”

 

Senior eurozone finance officials will hold a teleconference on Wednesday to discuss the situation, officials said. But they said it is highly unlikely eurozone ministers will meet before mid-April to release more money for Greece. That means Athens will have to scrape together cash to pay salaries and pensions at the end of the month and make a €460 million debt repayment to the IMF on April 9.

*  *  *

It appears clear that the EU is prepared to let Greece entirely run out of money in an effort to squeeze Tspiras as much as possible (though that action will likely further force a pivot to Putin).

 

 

end

 

And now the next failed state in Europe to fail is Andorra.  This country has a population of 76,000 people with a GDP of 4.1 billion euros.  It’s total debt to GDP is an astonishing 17 x.  The problem here is that there is no central bank and thus nobody to bail out the country.  Another popcorn event!!

 

(courtesy zero hedge)

 

 

 

 

Meet Andorra: Europe’s Next Failed State

 

Nestling idyllically between France and Spain in the foothills of the Pyrenees, Andorra – which has enjoyed the benefits of European borders without the restrictions of EU membership – has seen its risk “increase beyond our expectations,” according to S&P. As a reminder, when Cyprus was “templated” and depositors awoke with a 47% haircut, its total financial assets to GDP was around 8x, Andorra is now at a stunning 17x. As The Telegrpah explains, in the last three weeks, the state has been gripped by a banking crisis that threatens to take it to the brink; and Andorra, which is not a member of the eurozone but uses the single currency on an informal basis, would have no way of bailing them out (with no central bank or lender of last resort). In short, the country faces a catastrophe if its banks fall apart.

Andorra has for many years enjoyed the benefits of European borders without the restrictions of EU membership, allowing light-touch regulation that has brought in tourism and wealthy expats from its bordering countries. However, as The Telegraph reports, in the last three weeks, the state has been gripped by a banking crisis that threatens to take it to the brink.

Bankers have been thrown in jail, savers’ deposits have been restricted, and the country’s government is scrambling to convince powerful regulators thousands of miles away that the country is not a haven for tax evasion.

 

On Tuesday March 10, the US Treasury Department’s financial crime body, FinCEN, accused Banca Privada d’Andorra (BPA), the country’s fourth-largest bank, of money-laundering. The authority said “corrupt high–level managers and weak anti–money-laundering controls have made BPA an easy vehicle for third–party money-launderers”.

 

Three senior managers at the bank accepted bribes to help criminals in Russia, Venezuela and China, to funnel money through the Andorran system, according to FinCEN.

 

The next day, the state took charge of BPA, dismissing three directors. On the Friday, the bank’s chief executive, Joan Pau Miquel, was arrested and detained. Mr Miquel remains in a jail cell in La Comella, the country’s only prison, with a capacity of 145.

 

At BPA, the Andorran authorities have installed new management. After international banks cut off links, withdrawals were capped at €2,500 (£1,830) a week, a limit many people are maxing out.

 

Banco Madrid, the Spanish subsidiary of BPA acquired as part of an expansion spree in recent years, filed for administration on Wednesday.

 

The Andorran government insists that BPA is an isolated case, saying it is committed to transparency and that the rest of the sector is clean. For its sake, it had better be right, but many experts fear this is not the case.

*  *  *
This is a major problem… When Cyprus was “templated” its banks assets were only 8 times bigger than the economy and Iceland’s troubles hit at 10x…

Andorra’s banks have assets under management 17 times bigger than the economy, and the sector accounts for a fifth of GDP…

Which means, were its banks to get into trouble, Andorra, which is not a member of the eurozone but uses the single currency on an informal basis, would have no way of bailing them out.

The crisis is a classic example of how countries seeking to welcome financial services by promising a hands-off approach to regulation, can become dangerously vulnerable to them.

 

Andorra’s exposures to its banks provoke echoes of Iceland and Cyprus – both of which suffered painful economic crises when their lenders fell into trouble. But unlike Cyprus, which received a last-minute bail-out, Andorra has no central bank to act as a lender of last resort: if its banks go under, it goes under.

 

A single bank is one thing, but contagion would be an altogether different beast. A collapse of the entire banking system would spell disaster, especially after the hubristic expansion of recent years.

 

The crisis has now led Standard & Poor’s, one of the three major ratings agencies, to downgrade the value of the principality’s sovereign debt.

 

“The risk profile of Andorra’s financial sector, which is large relative to the size of the domestic economy, has increased beyond our expectations,” S&P said two weeks ago.

 

“The absence of a central bank or a lender of last resort in the Andorran financial system exacerbates the risks, in our opinion.” S&P said

*  *  *
The Telegraph sums it up perfectly – In short, the country faces a catastrophe if its banks fall apart.

 

 

end

 

 

Why Russia need not worry about being paid:  the money circulates to them anyway:

 

(courtesy zero hedge)

 

Eurasian Pivot? Moscow Expects “Progress” From Tsipras Visit

 

As Athens prepares to try and convince eurozone creditors that its latest set of proposed reforms represents a credible attempt to address Greece’s fiscal crisis, and as Greek depositors face the very real possibility that they will soon be Cyprus’d, a leverage-less Alexis Tsipras faces a rather unpalatable choice: bow to the Troika which “wants real reforms… meaning that Greece finally has to implement some/any of the long ago promised and never delivered redundancies in the government sector,” or to quote Credit Suisse, be “digitally bombed back to barter status.”Unfortunately for the Greek populace, the latter seems to be far more likely than the former. Here’s WSJ:

Greek proposals for a revised bailout program don’t have enough detail to satisfy the government’s international creditors, eurozone officials said, making it more likely that Athens will need to go several more weeks without a new infusion of desperately-needed cash…

 

“The proposals were piecemeal, vague and the Greek colleagues could not explain technically what some of them actually implied,” a eurozone official said. “So, let’s hope that they present something more competent next week.”

 

Senior eurozone finance officials will hold a teleconference on Wednesday to discuss the situation, officials said. But they said it is highly unlikely eurozone ministers will meet before mid-April to release more money for Greece. That means Athens will have to scrape together cash to pay salaries and pensions at the end of the month and make a €460 million debt repayment to the IMF on April 9.

As a reminder, here are two charts which demonstrate the urgency of the situation:

Despite what is unquestionably a rather dire outlook, Athens does have one card it has yet to play, because as we noted last week, “once the first week of April comes and goes and Greece officially runs out of money, it will go to anyone who can provide it with the funds needed to avoid civil war, even if that means switching its allegiance from Europe to the Eurasian Economic Union, something Russia is eagerly looking forward to, and something we predicted would be the endgame months ago.” With the Tsipras/Putin meeting now just a little over a week away, you can bet that Moscow will not squander an opportunity to procure a bit of leverage over Europe in the face of an increasingly contentious situation in Eastern Ukraine. In fact, Moscow is calling Tsipras’ visit a “big event” and has indicated that any request for financial assistance would be “examined.” Here’s more viaekathimerini:

“We are certain that the Greek prime minister’s working visit to Moscow will be a big event for our bilateral relations,” said Russian ambassador Andrey Maslov. “The possibility of further cooperation in trade, energy, technical military issues, education and culture will be examined.”

 

Maslov said that any request from Athens for a loan would have to be “examined very carefully” because of Greece’s euro membership. “If the Greek government submits a request for a loan, it will be examined – as Foreign Minister Sergey Lavrov said after meeting his counterpart Nikos Kotzias and as Russian Finance Minister Anton Siluanov has said,” the Russian ambassador told Kathimerini.

 

Maslov played down the possibility of Moscow lifting the embargo on food imports from Greece or other European Union countries as long as the EU keeps its sanctions on Russia in place. However, the ambassador praised Athens for helping prevent a rift in the EU’s relations with Russia.

 

“We are grateful for Greece’s efforts in helping ease the tension in relations between Russia and the EU, which is mainly due to the sanctions,” he said. “The stance of our Greek partners and other EU member-states during the council of foreign ministers in January and at the EU leaders’ summit in February prevented the hawks… from creating a permanent rift in Russia-EU relations.”

This may indeed represent an opportunity for Moscow to conduct a quasi-annexation-by-loan (as opposed to by force) and besides, any money funneled to Greece will ultimately end up back in Moscow anyway because any cash Athens manages to scrape together to pay the IMF is essentially diverted straight to Kiev which as we’ve said before, “is just as broke as Greece, and needs to pay Gazprom yesterday to keep gas deliveries coming, with Gazprom promptly remitting the funds into Putin’s personal money vault.” 

We’ll leave you with the following from ekathimerini:

“Pressures on Greek bank deposits have continued in March, with sector officials estimating that households and enterprises have withdrawn a net 3 billion euros in the first weeks of this month.”

 

 

 

end

 

 

 

 

Extremely important commentary from Alasdair Macleod.

Why the USA cannot afford to raise interest rates at all:

 

(courtesy Alasdair Macleod)

 

 

Central banks paralysed at the zero bound

By Alasdair Macleod

Posted 27 March 2015

 

 

Though the Fed would deny it, it is clear from the minutes of the last Federal Open Market Committee (FOMC) meeting that a rise in interest rates has been put off indefinitely.

The subsequent rally in the price of gold and the sudden fall in the dollar tend to confirm this conclusion.

The Fed Funds Rate, which is the interest rate the Fed targets to set all other rates, has now been less than 0.25% for six and a quarter years, gradually declining from roughly 0.15% to about 0.10% today. It was set at a target range of between zero and 0.25% in December 2008.

According to the Policy Normalisation Principles and Plans issued last September, the FOMC will raise its target range for the Fed Funds Rate “primarily by adjusting the interest rate it pays on excess reserve balances” when the Fed normalises interest rates, “using reverse repurchase agreements to take money out of circulation to the degree necessary”. The Fed also intends to reduce its holdings of securities and contract its balance sheet in the longer run.

If normalisation is the result of economic recovery we will be familiar with the playbook. Demand for money in the economy picks up, and instead of pyramiding bank credit on reserves held at the Fed, the Fed feeds back the excess reserves to the banks by selling government securities into the markets. The bear market in government bonds should be manageable because of underlying pension and insurance company demand coupled with a diminishing budget deficit. This is the long-understood theory behind withdrawing from deficit financing.

The reality has been very different as we all know. The Fed has to face the possibility that, for whatever reason, highly suppressed interest rates are not working, and an escape from the zero interest rate bound without economic recovery may have to be contemplated.

However, if the Fed raises the Fed Funds Rate in the absence of genuine economic recovery, there will be little or no expansion of bank credit to offset, and commercial banks will want to dump their Treasuries, not buy more from the Fed. There would be no offsets to cushion the unwinding of long bond positions. In other words the effect of even a small rise in the Fed Funds Rate could develop into a self-feeding rise in bond yields and substantial losses for the banks.

This is the context within which we should consider the Fed’s decision to back off from raising the Fed Funds Rate mid-year. It leads to the conclusion that if zero interest rates haven’t worked for six and a quarter years, monetary policy itself is in a cul-de-sac with no space to turn. And when we look at Japan and the Eurozone we see similar disappointments over the effectiveness of monetary policy.

Markets are unlikely to wait until the escape from the zero bound is put to the test. Before the investing public becomes aware of the full ramifications of the problem, more prescient bankers and fund managers will reposition their bond holdings, which brings us to gold.

Those of us that follow this market closely know that for the last three years at least Asian demand has led to large shifts of bullion from western capital markets towards Asia. The behaviour of the markets in London and New York already indicate that shortages of physical bullion are a delicate problem, and this is before markets wake up to the growing likelihood that the Fed cannot afford to see interest rates rise.

If interest rates cannot rise, then the dollar itself is ultimately exposed to loss of confidence in the foreign exchanges. The dawning realisation that after recent strength, the dollar is vulnerable after all can be expected to be reflected in a positive sentiment towards gold, which once under way could drive the price up dramatically due to the lack of available bullion.

The views and opinions expressed in the article are those of the author and do not necessarily reflect those of GoldMoney, unless expressly stated. Please note that neither GoldMoney nor any of its representatives provide financial, legal, tax, investment or other advice. Such advice should be sought form an independent regulated person or body who is suitably qualified to do so. Any information provided in this article is provided solely as general market commentary and does not constitute advice. GoldMoney will not accept liability for any loss or damage, which may arise directly or indirectly from your use of or reliance on such information.

end

Russia officially enters the AIIB:

(courtesy zero hedge)

 

 

De-Dollarization Continues As Russia Seeks AIIB Membership

As we noted a week ago, Vladimir Putin’s calls for a Eurasian currency union clearly demonstrate that the Russian President is acutely aware of the fact that the unipolar world of the 1980s is long gone. Putin’s security council also made it clear this week that the Kremlin is well aware that the sole aim of US foreign policy is preserving Western hegemony via an implicit (and sometimes explicit) policy of containment aimed at perpetuating the idea of US exceptionalism. Moscow then took the rhetoric up a notch on Thursday, accusing the US of attempting to take the “mutual” out of “mutually assured destruction” (i.e. Moscow thinks Washington is trying to tip the nuclear power balance).

Given all of this, we weren’t surprised to learn that Putin is now backing a Russian bid for membership in China’s Asian Infrastructure Investment Bank (for a summary of AIIB developments, see here). Here’s more via RT:

Russia decided to apply to join the China-led Asian Infrastructure Investment Bank (AIIB), the country’s Deputy Prime Minister Igor Shuvalov said on Saturday.

“I would like to inform you about the decision to participate in the AIIB,” which was made by Russian President Vladimir Putin, Shuvalov said at the Boao Forum for Asia.

 

Shuvalov added that Russia welcomes China’s Silk Road Economic Belt initiative and is happy about stepping up cooperation.

 

“We are delighted to be able to step up cooperation in the format of the Eurasian Economic Union (EEU) and China…the free movement of goods and capital within the EEU brings economies of Europe and Asia closer. This is intertwined with the Silk Road Economic Belt initiative, launched by the Chinese leadership,” he said.

This comes after yet another US ally threw its support behind the venture last week, as South Korea finally conceded that not joining really wasn’t an option if Seoul wanted to maintain its influence in the region. More color via Bloomberg:

South Korea “needs to play the active role it deserves in the international community that’s comparable to its economic status, and AIIB would be an important gateway to expand our financial and diplomatic arena,” the Sejong, South Korea-based ministry said Thursday. The country will officially become a founding member of the AIIB once other members agree, and when the national assembly approves, according to the e-mailed statement.

 

Asia’s fourth-largest economy joins key U.S. allies from the U.K. to Germany and France in supporting China’s bid to create a new institution funding infrastructure projects in Asia. Japan is yet to make a decision on membership after the U.S. expressed concerns about the fund’s governance structure.

And then there’s The Netherlands, an official bid from Australia, and Brazil…

Via Reuters:

Russia, Australia and the Netherlands on Saturday became the latest three countries to say they plan to join the China-led Asian Infrastructure Investment Bank (AIIB), adding clout to an institution seen as enhancing China’s regional and global influence.

 

The AIIB, seen as a challenge to existing institutions the World Bank and Asian Development Bank, has drawn a cool response from the United States, despite which European U.S. allies including Britain, France, Germany and Italy have already announced they would join the bank.

 

Other countries such as Turkey and South Korea have also said they would join. Brazil, China’s top trading partner, said on Friday it would sign up and that there were no conditions set. “Brazil is very interested in participating in this initiative,” the office of President Dilma Rousseff said in a statement.

To make a long story short, everyone but the US and Japan are on board and Japan is seriously considering a bid. The question now is not whether de-dollarization is progressing or whether a shift away from US-dominated multinational institutions is in the offing (that horse, as one ADB official put it, has left the barn), but rather whether China will be aggressive about using the AIIB to begin a push towards yuan hegemony. Of course Beijing is playing down the idea that it will use the new development bank as a means of advancing China’s global footprint, but as we noted on Thursday, actions speak louder than words.

 

 

end

 

Russia is now joined by Holland and Australia into the AIIB:

a more lethal dagger to the heart of the uSA dollar.

 

(courtesy zero hedge)

 

 

More countries say to join China-backed AIIB investment bank

 

China’s President Xi Jinping (front C) poses for photos with guests at the Asian Infrastructure Investment Bank launch ceremony at the Great Hall of the People in Beijing October 24, 2014.

REUTERS/TAKAKI YAJIMA/POOL

 

Reuters) – Russia, Australia and the Netherlands on Saturday became the latest three countries to say they plan to join the China-led Asian Infrastructure Investment Bank (AIIB), adding clout to an institution seen as enhancing China’s regional and global influence.

The AIIB, seen as a challenge to existing institutions the World Bank and Asian Development Bank, has drawn a cool response from the United States, despite which European U.S. allies including Britain, France, Germany and Italy have already announced they would join the bank.

Other countries such as Turkey and South Korea have also said they would join. Brazil, China’s top trading partner, said on Friday it would sign up and that there were no conditions set. “Brazil is very interested in participating in this initiative,” the office of President Dilma Rousseff said in a statement.

Russian First Deputy Prime Minister Igor Shuvalov, speaking on Saturday at a forum in Boao on the southern Chinese island of Hainan, said the country plans to join the AIIB, according to the official Xinhua news agency.

Speaking at the same forum, Australian Finance Minister Mathias Cormann said the country was planning to apply to become a founding member, according to Xinhua.

And the Netherlands also plans to join, Dutch Prime Minister Mark Rutte said on his officialFacebook page after a meeting with Chinese President Xi Jinping.

China’s Finance Ministry said earlier on Saturday Britain and Switzerland had been formally accepted as founding members of the AIIB, a day after Brazil accepted China’s invitation to join.

China’s Finance Ministry said Austria had also applied to join and had submitted its documents to China.

“We should push forward with the creation of a regional hub for financial co-operation,” Xi said at the forum, adding China should “strengthen pragmatic cooperation in monetary stability, investment, financing, credit rating and other fields.”

The AIIB has been seen as a significant setback to U.S. efforts to extend its influence in the Asia Pacific region to balance China’s growing financial clout and assertiveness.

(Reporting by Stephen Eisenhammer; Additional reporting by Ben Blanchard in Beijing, Engen Tham in Shanghai and Adam Jourdan in Boao; Editing by Michael Perry and David Holmes)

 

 

end

 

 

Coming to a store near you….

 

(courtesy zero hedge)

 

Australia To Start Taxing Bank Deposits

 

Up until now, the world’s descent into the NIRPy twilight of fiat currency was a function of failing monetary policy around the globe as central bank after desperate central bank implemented negative and even more negative (in the case of Denmark some four times rapid succession) rates, hoping to make saving so prohibitive consumers would have no choice but to spend the fruits of their labor, or better yet, take out massive loans which they would never be able to repay. However, nobody said it was only central banks who could be the executioners of the world’s saver class: governments are perfectly capable too.  Such as Australia’s.

According to Australia’s ABC News, the “Federal Government looks set to introduce a tax on bank deposits in the May budget.”

Ironically, the idea of a bank deposit tax was raised by Labor in 2013 and was criticized by Tony Abbott at the time. Much has changed in two years, and as ABC reports, assistant Treasurer Josh Frydenberg has indicated an announcement on the new tax could be made before the budget.

Mr Frydenberg is a member of the Government’s Expenditure Review Committee but has refused to provide any details.

 

“Any announcements or decisions around this proposed policy which we discussed at the last election will be made in the lead up or on budget night,” he said.

 

Speaking at the Victorian Liberal State Council meeting Mr Abbott has repeated his budget message, focusing on families and small businesses.

 

“There will be tough decisions in this year’s budget as there must be, but there will also be good news.”

For the banks and creditors, yes. For anyone who is still naive enough to save money in the hopes of deferring purchases for the future, not so much.

The banking industry has raised concerns about a deposit tax, saying it will have to pass the cost back onto customers.

 

Steven Munchenberg from the Australian Bankers’ Association said it would be a damaging move for the Government.

 

“It’s going to make it harder for banks to raise deposits which are an important way of funding banks. And therefore for us to fund the economy,” he said. “And we also oppose it because particularly at this point in time with low interest rates a lot of people who are relying on their savings for their incomes are already seeing very low returns and this will actually mean they get even less money.”

Don’t worry Steven, neither central banks nor government care about “a lot of people” – they just care about a select few. As for the banks, once China, and immediately thereafter Australia, launches QE as the entire world descends into a monetary supernova, and Australia’s banks are flooded with trillions in excess reserves like those in the US, all shall be forgiven. As a reminder, banks such as JPM are so flush with zero-cost cash from other sources, well one other source, they are now actively turning away depositors.

As for Australia, while central banks are untouchable and unaccountable to anyone (except their commercial bank directors and anyone else they secretly meet during those bimonthly sessions in the BIS tower in Basel), the government can be voted in and voted out. Especially a government that is about to break one of its main election promises:

The Federal Opposition has accused the Government of breaking an election promise by planning to introduce a tax on bank deposits.

 

The former Labor Government put forward the policy in 2013 to raise revenue for a fund to protect customers in the event of a banking collapse.

 

Shadow Assistant Treasurer Andrew Leigh said Treasurer Joe Hockey criticised the proposal at the time. “When we put it on the table Joe Hockey said that it was a smash and grab on Australian households just aimed at repairing the budget,” he said.

It is almost surprising, but not really, how when it comes down to money, the thin white line between “us” and “them” always disappears when the money runs out.

As for Australia’s savers, welcome to the NIRP worldwhere savers in increasingly more countries are now on the endangered species list.

 

end

 

Koos explains the AIIB:

 

 

 

(courtesy Koos Jansen)

 

Posted on 30 Mar 2015 by Koos Jansen

This Is What The AIIB Is About

Until March 31 countries can submit for membership of the Asian Investment Infrastructure Bank (AIIB), a financial institution proposed by China, which has the purpose of being a multilateral framework to finance infrastructure projects in the wide Eurasian region. In recent weeks many Western countries have submitted for membership, the US rejected application as it fears strong cooperation between Asia and Europe will weaken the US dollar hegemony. On April 15 the final list of the founding members will be disclosed.

In October 2013 the initial idea for the AIIB was first put forward by Chinese President Xi Jingping “on constructing a 21st Century Maritime Silk Road to promote maritime cooperation”. The project has currently developed into the New Silk Road Economic Belt.

https://www.bullionstar.com/blogs/koos-jansen/this-is-what-the-aiib-is-about/

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SuisseGold.com Market Update, March 30 2015 A LOOK AT DISPOSABLE INCOME ACROSS THE GLOBE If asked where citizens have the largest amount of available revenue, would you guess the United States? Luxembourg? Japan?Here is a geographic look.

The graph is color-coded. The darker the blue the country, the larger the disposable income. The darker the orange, the smaller the disposable income.

Unsurprisingly, the figure shows Anglo-Saxon countries as largely the countries where citizens have the highest disposable income.

However, are you surprised by which country is in first place?

The following is a table look of the top 20.

Interestingly, on top is Switzerland at $6,302 (all figures are in dollars).

A distant second is Luxembourg at $4,480.

The remaining countries in the top five include Zambia at $4,331, Jersey at $4,323 and Bermuda at $4,250.

The globe’s soon-to-be second largest economy – the United States – fails to make it to the top 10, coming in at 13th with an average monthly disposable income of $3,259.

Also interestingly, some very important global powers are missing from the top 20. Of those missing is Germany, France, Russia, China, Japan, Canada, Singapore, and others.