July 10/Greece submits reform plan/almost identical to plan initiated by the Euro group/D Day will probably be tomorrow/The Germans will not be happy to finance another bailout for Greece/Silver rises for the 3rd day in a row/silver open interest falls as bankers run for cover/Steve St Angelo discovers huge amounts of silver being picked up by major players (i.e. importing the silver into the USA)

Good evening Ladies and Gentlemen:

 

Here are the following closes for gold and silver today:

Gold:  $1157.70 down $5.20  (comex closing time)

Silver $15.47 up 12 cents.

 

In the access market 5:15 pm

Gold $1163.40

Silver: $15.58

 

First, here is an outline of what will be discussed tonight:

At the gold comex today, we had a poor delivery day, registering 2 notices for 200 ounces . Silver saw 178 notices filed for 890,000 oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 248.17 tonnes for a loss of 55 tonnes over that period.

In silver, the open interest fell by a considerable 2928 contracts despite the fact that Thursday’s price was up by 20 cents.  The total silver OI continues to remain extremely high, with today’s reading at 188,723 contracts now at decade highs despite a record low price.  In ounces, the OI is represented by .943 billion oz or 139% of annual global silver production (ex Russia ex China). 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 as they continue to raid as basically they have no other alternative. Today again, we had banker shortcovering.

In silver we had 178 notices served upon for 890,000 oz.

In gold, the total comex gold OI rests tonight at 448,820 for a loss of 4678 contracts as gold was down 40 cents yesterday. We had 2 notices filed for 200 oz  today.

We had a huge withdrawal in tonnage at the gold inventory at the GLD to the tune of 2.07 tonnes; thus the inventory rests tonight at 707.58 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. I am sure that 700 tonnes is the rock bottom inventory in gold.  Anything below this level is just paper and the bankers know that they cannot retrieve “paper gold” to send it onwards to China . In silver, we had no change in inventory at the SLV / Inventory now rests at 326.542 million oz.

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

1. Today, we had the open interest in silver fall by 2938 contracts to 188,723 despite the fact that silver was up by 20 cents yesterday. We must have had considerable shortcovering by the bankers as they feared something was brewing in the silver arena. The OI for gold fell by another 4678 contracts down to 448,870 contracts as the price of gold was down by 40 cents yesterday.

(report Harvey)

2.  COT report

(Harvey)

 

3 Today, 10 important commentaries on Greece

 

(zero hedge, Bloomberg/Meijer/Reuters/)

 

4. Three commentaries on the crisis in the stock market in China

(zero hedge/David Stockman)

4.USA data tonight;poor retail sales number/Poor General Motors sales in China/Inventory/sales ratio signifies recession is upon us

(3 commentaries/zero hedge/Dave Kranzler/IRD)

 

5. Gold trading overnight

(Goldcore/Mark O’Byrne/)

6. Trading from Asia and Europe overnight

(zero hedge)

7. Trading of equities/ New York

(zero hedge)

8.  Steve St Angelo comments on huge players buying and storing physical silver and he has the data to prove it

(Steve St Angelo/SRSRocco report)

9.  Our weekly wrap with Greg Hunter of USAWatchdog

*(Greg Hunter)

plus other important topics….

 

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 fell by 4,678 contracts from 453,498 down to 448.870 as gold was down 40 cents in price yesterday (at the comex close).  We are now in the next contract month of July and here the OI surprisingly rose by 3 contracts to 149 contracts. We had 0 notices filed yesterday and thus we gained 3 contracts or an additional 300 ounces will stand in this non active delivery month of July. The next big delivery month is August and here the OI fell by 11,406 contracts down to 358,881 as the players start to roll into October or December. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 111,484. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 152,012 contracts. Today we had 2 notices filed for 200 oz.

And now for the wild silver comex results. Silver OI fell by a huge 2,938 contracts from 191,661 down to 188,723 despite the fact that the price of silver was up by 20 cents in price with respect to yesterday’s trading. We continue to have our bankers pulling their hair out with respect to the continued high silver OI as today we have in all probability a huge shortcovering by the bankers as they sensed something was brewing in the silver arena. The next delivery month is July and here the OI fell by 52 contracts down to 571. We had 38 notices served upon yesterday and thus we lost 14 contracts or an additional 70,000 ounces of silver will not stand for delivery in this active month of July. This is the first time in quite some time that we have not lost any silver ounces standing immediately after first day notice. The August contract month saw it’s OI fall by 39 contracts down to 130. The next major active delivery month is September and here the OI fall by 1,997  contracts to 129,420. The estimated volume today was poor at 2,019 contracts (just comex sales during regular business hours). The confirmed volume yesterday (regular plus access market) came in at 52,657 contracts which is very good in volume.  We had 178 notices filed for 890,000 oz

 

July initial standing

July 10.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz    nil
Withdrawals from Customer Inventory in oz 1961.15 (61 kilobars)Delaware,Manfra
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 1,611.98 oz (Brinks)
No of oz served (contracts) today 2 contracts (200 oz)
No of oz to be served (notices) 147 contracts 14,700 oz
Total monthly oz gold served (contracts) so far this month 412 contracts(41,200 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz
Total accumulative withdrawal of gold from the Customer inventory this month 82,448.5   oz

 

 

Today, we had 0 dealer transactions

 

we had zero dealer withdrawals

total Dealer withdrawals: nil  oz

we had 0 dealer deposits

 

total dealer deposit: zero
we had 2 customer withdrawals

i) Out of Manfra; 64.30 oz (2 kilobars)

ii) out of JPMorgan 1896.85 oz  (59 kilobars??)

 

 

total customer withdrawal: 1961.15 oz  (61 kilobars)

We had 0 customer deposits:

 

Total customer deposit: 0 ounces

We had 1 adjustment.

i) Out of JPMorgan:  10,125.946 oz was adjusted out of the dealer and this landed into the customer of JPMorgan.

 

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 2 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 July contract month, we take the total number of notices filed so far for the month (412) x 100 oz  or 41,200 oz , to which we add the difference between the open interest for the front month of July (149) and the number of notices served upon today (2) x 100 oz equals the number of ounces standing.

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

No of notices served so far (412) x 100 oz  or ounces + {OI for the front month (149) – the number of  notices served upon today (2) x 100 oz which equals 55,900  oz standing so far in this month of July (1.738 tonnes of gold).

 

we gained an additional 300 oz of gold standing in this non active delivery month of July. somebody was badly in need of physical gold today.

Total dealer inventory 483,078.788 or 15.025 tonnes

Total gold inventory (dealer and customer) = 7,978,931.428 oz  or 248.17 tonnes

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 248.17 tonnes for a loss of 55 tonnes over that period.

 

 

end

And now for silver

July silver initial standings

July 10 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 684,141.660  oz (CNT,Scotia,Delaware)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory  1078.657 oz (Delaware)
No of oz served (contracts) 178 contracts  (890,000 oz)
No of oz to be served (notices) 393 contracts (1,965,000 oz)
Total monthly oz silver served (contracts) 2923 contracts (14,615,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month nil
Total accumulative withdrawal  of silver from the Customer inventory this month 3,489,448.1 oz

Today, we had 0 deposits into the dealer account:

total dealer deposit: nil   oz

 

we had 0 dealer withdrawal:

total dealer withdrawal: nil  oz

 

We had 0 customer deposits:

total customer deposit: nil  oz

 

We had 3 customer withdrawals:

i) Out of CNT: 52,256.04 oz

ii) Out of Scotia: 629,962.300 oz

iii) Out of Delaware:  1923.32 oz

 

 

total withdrawals from customer:  684,141.660   oz

 

we had 1  adjustment

i) Out of CNT:

we had 981.82 oz of silver leave the customer at CNT as an accounting error.

 

Total dealer inventory: 58.96 million oz

Total of all silver inventory (dealer and customer) 180.879 million oz

The total number of notices filed today for the July contract month is represented by 178 contracts for 890,000 oz. To calculate the number of silver ounces that will stand for delivery in July, we take the total number of notices filed for the month so far at (2923) x 5,000 oz  = 14,615,000 oz to which we add the difference between the open interest for the front month of July (571) and the number of notices served upon today (178) x 5000 oz equals the number of ounces standing.

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

2973 (notices served so far) + { OI for front month of July (571) -number of notices served upon today (178} x 5000 oz ,= 16,580,000 oz of silver standing for the July contract month.

We lost  70,000 ounces standing in this active delivery month of July. Somebody, again, was in great need of physical silver today.

 

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

http://www.harveyorgan.wordpress.comorhttp://www.harveyorganblog.com

end

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:

July 10/ we had a big withdrawal of 2.07 tonnes of gold from the GLD/Inventory rests this weekend at 707.58 tonnes

July 9/ no change in gold inventory at the GLD/Inventory at 709.65 tonnes

July 8/no change in gold inventory at the GLD/Inventory at 709.65 tonnes

July 7/ no change in gold inventory at the GLD/Inventory at 709.65 tonnes

July 6/no change in gold inventory at the GLD/Inventory at 709.65 tonnes

July 2/we had a huge withdrawal of inventory to the tune of 1.79 tonnes/rests tonight at 709.65 tonnes

July 1.2015; no change in inventory/rests tonight at 711.44 tonnes

June 30/no change in inventory/rests tonight at 711.44 tonnes

June 29/no change in inventory/rests tonight at 711.44 tonnes

June 26./it did not take our bankers long to raid the GLD. Yesterday they added 6.86 tonnes and today, 1.75 tonnes of that was withdrawn/Inventory tonight rests at 711.44 tonnes.

June 25/a huge addition of 6.86 tones of  inventory at the GLD/Inventory rests tonight at 713..23 tonnes

June 24/ a good addition of.900 tonnes of gold into the GLD/Inventory rests at 706.37 tonnes

June 23/no change in gold inventory/rests tonight at 705.47 tonnes

June 22/ a huge increase of 3.27 tonnes of gold into GLD/Inventory tonight: 705.47 tonnes

 

 

 

July 10 GLD : 707.58 tonnes

 

end

 

And now for silver (SLV)

july 10/no change in silver inventory at the SLV tonight/inventory 326.542 million oz/

July 9/ a huge increase in inventory at the SLV of 1.337 million oz. Inventory rests tonight at 326.542 million oz

July 8/no change in inventory at the SLV/rests at 325.205

July 7/no change in inventory at the SLV/rests at 325.205 tonnes

July 6/we have a slight inventory withdrawal which no doubt paid fees. we lost 137,000 oz/Inventory rests tonight at 325.205 million oz

July 2/ no change in inventory at the SLV/rests tonight at 325.342 million oz

July 1/ we had an addition of 1,624,000 oz into the SLV inventory/rests tonight at 325.342 million oz

June 30/we lost another 621,000 oz of silver from the SLV/Inventory rests at 323.718 oz (somebody must be in great need of physical silver)

June 29/ a monstrous loss of 4.777 million oz of silver from the SLV/Inventory rests tonight at 324.339 million oz

June 26/today we had another addition of 198,000 of silver/Inventory rests at 329.116 million oz

June 25/ a huge increase of 1.242 million oz of silver into the SLV inventory/Inventory rests at 128.918 million oz

June 24/no change in inventory/rests tonight at 326.918 million oz

June 23/we had a small withdrawal of 956,000 oz/Inventory tonight rests at 326.918 million oz

 

July 10/2015:  tonight inventory rests at 326.542 million oz

 

end

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

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

1. Central Fund of Canada: traded at Negative 9.1 percent to NAV usa funds and Negative 9.4% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 62.3%

Percentage of fund in silver:37.4%

cash .3%

( July 10/2015)

2. Sprott silver fund (PSLV): Premium to NAV rises to 1.91%!!!! NAV (July 10/2015) (silver must be in short supply)

3. Sprott gold fund (PHYS): premium to NAV rises to – .74% toNAV(July 10/2015

Note: Sprott silver trust back  into positive territory at +1.91%

Sprott physical gold trust is back into negative territory at -.74%

Central fund of Canada’s is still in jail.

 

Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:

SII.CN Sprott formally launches previously announced offers to CentralGoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64)
Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis.
Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer.
Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer.
* * * * *

end

At 3:30 the CME releases the COT report which provides for us position levels of our major players.

Let us head over to the gold COT and see what we can glean from it;

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
193,776 143,328 48,006 172,552 225,141 414,334 416,475
Change from Prior Reporting Period
-700 16,007 1,837 8,755 -13,425 9,892 4,419
Traders
141 102 81 59 50 236 206
 
Small Speculators  
Long Short Open Interest  
37,811 35,670 452,145  
-48 5,425 9,844  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, July 07, 2015

Our Large Specs:

Those large specs that have been long in gold covered a tiny 700 contracts from their long side.

Those large specs that have been short in gold added a whopping 16,007 contracts to their short side and this is an accident waiting to happen.

Our commercials:

Those commercials that have been long in gold added a monstrous 8755 contracts to their long side.

Those commercials that have been short in gold covered a huge 13,425 contracts from their short side.

Our small specs;

Those small specs that have been long in gold pitched a tiny 48 contracts from their long side.

Those small specs that have been short in gold added a huge (for them) 5425 contracts to their short side.

Conclusions;  criminal activity orchestrated by the bankers.  They go net long by  a huge 22,180 contracts.(generally bullish)

And now for our Silver COT:

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
70,786 63,993 23,008 78,158 92,477
-1,100 1,988 448 1,912 -4,929
Traders
106 49 40 50 38
Small Speculators Open Interest Total
Long Short 197,092 Long Short
25,140 17,614 171,952 179,478
-892 2,861 368 1,260 -2,493
non reportable positions Positions as of: 174 114
Tuesday, July 07, 2015

 Our large specs:

Those large specs that have been long in silver pitched another 1100 contracts from their long side.

Those commercials that have been short in silver added 1988 contracts to their short side.

Our commercials;
Those commercials that have been long in silver added 1912 contracts to their long side.

Those commercials that have been short in silver covered a whopping 4929 contracts from their short side.

Our small specs:

Those small specs that have been long in silver added 892 contracts to their long side.

Those small specs that have been short in silver added 2861 contracts to their short side.

Conclusion:  same as gold/the commercials go net long by 6841 contracts.

end

And now overnight trading in gold/silver from  Europe and Asia/plus physical stories that might interest you:

 

First:  Goldcore’s Mark O’Byrne

 

(courtesy Goldcore/Mark O’Byrne)

Bail-Ins Coming – GoldCore Interviewed By Financial Repression Authority

– Governments move toward ever greater financial repression
– Repression includes suppression of rates, capital controls, outlawing of cash and bail-ins
– Finance ministers discuss cashless society, giving banks total control over public’s money
– Bail-in legislation is at advanced stage internationally
– Bail-ins coming to indebted western nations – question is when …
– Legislation is devised to protect larger banks
– Ramifications of bail-ins have not been thought through
– Bail-ins will be destructive and may contribute to deflationary collapse
– Diversification both in asset classes and geographical diversification essential

goldcore_chart1_10-07-15
Goldcore’s Director of Research Mark O’ Byrne joined Gordon T Long of Financial Repression Authority for an in depth discussion on the deepening financial repression in the world today, with particular focus on bail-ins.

Mark identified a number of elements which he believes amount to financial repression including the suppression of interest rates using QE, capital controls, the move towards a cashless society and most importantly – bail-ins.

He points out that bail-in legislation, while under reported in the mainstream media, is actually at a very advanced stage. He quotes from the Bank of England’s former Deputy Governor, Paul Tucker, who following a meeting between the Bank of England and the Federal Deposit Insurance Corporation (FDIC) in October, 2013 said:

“U.S. authorities could do it today — and I mean today … ”  

Bail-in is the confiscation of bank deposits of savers and businesses which were formerly viewed as sacrosanct in the event of a bank failure. The deposits of “widows and orphans”  are now at risk and treated akin to bondholders.

bails-ins-infographic-goldcore
The Fed’s Stanley Fischer has said that the U.S. was preparing such legislation – after Tucker had indicated that such legislation was in place.

The EU is also at an advanced stage in forcing countries to ratify bail-in legislation. The legislation is being devised to protect the larger banks against the interest of both depositors, taxpayers and the wider economy.

The various “state guarantees” for deposits or deposit insurance – generally a big round figure of €100,000 in most EU states and £75,000 in the UK)  is purely arbitrary and can be adjusted lower with the stroke of a pen lulling the public into a false sense of security.

goldcore_chart2_10-07-15

The ramifications of bail-ins have not been thought through. With central banks taking unprecedented measures to fight deflation, Mark points out that bail-ins would create “deflation like you would not believe” by taking a large portion of cash out of the system and with further consequences for future spending and investment, consumer confidence, trade, commerce and all our economies.

Gordon points out the EU finance ministers in Dresden recently discussed moving quickly to a cashless society which would give the banks total control over the money of the public.

They could charge for “services” arbitrarily and the public would be unable to protect itself from bail-ins and reckless bank activity.

View Interview Here


Must Read Bail-In Guides:

From Bail-Outs To Bail-Ins: Risks And Ramifications

Protecting Your Savings In The Coming Bail-In Era

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,162.40, EUR 1,041.20 and GBP 750.30 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,162.10, EUR 1,053.96 and GBP 755.37 per ounce.

Gold climbed $2.60 or 0.22 percent yesterday to $1,161.40 an ounce. Silver rose $0.32 or 2.11 percent to $15.46 an ounce.

Gold in USD - 1 Week

Both gold and silver are lower in major currencies for the week but have recovered tentatively from the latest bout of intense selling on the futures market on Tuesday which again led to sharp price falls despite robust physical demand.

Gold bullion in Singapore for immediate delivery was up 0.3 percent at $1,162.71 an ounce near the end of the day,  while gold in Switzerland was essentially flat.

The Greek government sent reform proposals to its eurozone creditors last evening in an effort to secure new funds to avoid bankruptcy and will seek a parliamentary vote on Friday to endorse immediate actions. European stocks have risen sharply on hopes for a resolution or at least some form of reprieve and another exercise in “extend and pretend.”

Gold in GBP - 1 Week

Chinese stocks rose again today after ministry officials try to stop the 30 percent market drop from mid-June, by banning shareholders with large stakes in listed firms from selling. Asian stocks were buoyant on Chinese gains.

The financial repression in China will not end well and may lead to an even greater bubble – followed by an even greater crash.

Other economic news has been poor with the IMF cutting global growth forecasts and U.S. jobs data poor and this has supported gold today.

The IMF cut its global economic growth forecast this year to 3.3 percent from  3.5 percent, citing recent weakness in the United States which also supported the yellow metal.

New applications for U.S. unemployment insurance benefits rose last week to their highest level since February, suggesting a slowdown in the labour market. Initial claims for state unemployment benefits rose 15,000 to a seasonally adjusted 297,000 for the week that ended July 4, the U.S. Department of Labor said on Thursday.

The U.S. and indeed global ‘recovery’ remains on tentative grounds at best.

Members of the Chinese Gold & Silver Exchange Society (CGSE) in Hong Kong began trade on the Shanghai Gold Exchange (SGE) directly on today, expanding ways to access to one of the world’s fast-growing bullion markets, China.

The CGSE members can now trade the Shanghai gold in Hong Kong through the CGSE’s membership in the Shanghai Gold Exchange, a CGSE spokeswoman said today.

Gold in EUR - 1 Week

London’s role in the benchmark gold fix will be challenged by China’s Shanghai Gold Exchange (SGE) who reported last month it will launch a yuan-denominated gold fix by the end of 2015.

China is the world’s largest producer and buyer of gold bullion, making China’s dominance of the gold market a foregone conclusion.

 In late morning European trading gold is up 0.50 percent at $1,164.56 an ounce. Silver is up 0.45 percent at $15.60 an ounce, and platinum is up 1.47 percent at $1,035.00 an ounce.

Breaking News and Research Here

 

end

Steve St Angelo delivers a huge paper on silver where he proves that a few major buyers are continuing to hoard physical silver.

He is very accurate in his calculations.

(courtesy Steve St Angelo/SRSRocco report)

Major Buyers Continue To Stockpile Silver As U.S. Silver Imports Surge In April

By SRSrocco on July 10, 2015 s, large U.S. buyers continue to stockpile silver. How do I know this? Well, according to the most recently released USGS data, U.S. silver imports surged even higher in April. How much? Let’s look at the chart below:

As we can see, U.S. silver imports surged to 531 metric tons (mt) in April,(17.7 million oz) up from 459 mt in March. Total U.S. silver imports in the first four months of the year are up a stunning 505 metric tons (2,035 mt) compared to the same period last year (1,530 mt).

(Harvey:  2035 metric tonnes equals 65.4 million oz)

As I mentioned in my previous article, Why Is The U.S. Importing So Much Silver?:

Well, if we look at the three major market indicators below, we can certainly see, they don’t justify an increase in silver bullion demand:

1) U.S. Industrial silver consumption continues to decline

2) U.S. Silver Eagle sales were flat year-over-year.

3) Comex silver inventories Jan-Feb net build was only 1.3 Moz

According to the recently released 2015 World Silver Survey, U.S. industrial silver fabrication continued to fall in 2014. Total U.S. silver fabrication declined from 138 Moz in 2011, to 132.7 Moz in 2012, 127.4 Moz in 2013, and down again in 2014 to 125.4 Moz. So, if the U.S. Q1 2015 GDP growth was only 0.2%, I would imagine U.S. industrial silver consumption also declined.

Now, if we look at the change in U.S. Silver Eagle sales… this doesn’t help us either. The U.S. Mint sold a total of 8.5 million Silver Eagles in the first two months of 2014 and 2015. As we can plainly see, no need for more silver at the U.S. Mint.

The data above was just for the first two months of the year, but nothing really changed in U.S. silver demand during March or April to account for 33% more silver imports. If this trend continues, the U.S. will import over 6,000 mt of silver in 2015.

Why is this amount significant? Because U.S. annual silver imports ranged between 3,500-5,300 mt from 2009 to 2014, except for the surge in 2011 of 6,400 mt. U.S. silver imports were high in 2011 due to higher industrial silver demand as well as record physical silver investment (due to silver reaching a high of $49 in May that year).

However, industrial silver consumption in the U.S. is lower this year compared to 2011 and overall physical silver investment demand is less than it was during the same period last year when Jan-Apr U.S. silver imports were only 1,530 mt vs the 2,035 mt so far this year.

Which means, some large buyers must be acquiring a great deal of silver on the HUSH-HUSH. There has been speculation that JP Morgan is one of the big buyers. If they are, they are buying SILVER BARS, not Silver Eagles or Maples. I know this as my contacts in the industry tell me that none of the Authorized Dealers that they do business with have heard anything that would lead them to believe that JP Morgan is buying large lots of Silver Eagles or Maples.

So where is all this silver coming from that the U.S. is importing? Let’s look at the chart below:

Mexico and Canada accounted for 78% of the total (413 mt) in April. The U.S. imported a staggering 233 mt of silver from Mexico and 180 mt from Canada. Interestingly, the U.S. imported 36 mt of silver from South Korea and 18.5 mt from Poland. Of we go back several years, these two countries did not export any silver to the United States. They are recent sources of U.S. silver imports. The remaining silver imports were from the typical Central and South American countries.

While this information is from a few months ago, I would imagine U.S. silver imports will probably remain elevated or increase in June and July due to the financial turmoil stemming from the Greek “No” vote. I will post updates when the new data is released by the USGS.

-END-

Mike Kosares: The Shanghai stock crash and China gold demand

Section:

1:20p ET Friday, July 10, 2015

Dear Friend of GATA and Gold:

China’s stock-market crash likely will encourage Chinese investors to consider the capital-preservation virtues of gold, Mike Kosares of USAGold in Denver writes today, especially since the Chinese government has been encouraging gold ownership and building market mechanisms to facilitate it. Kosares’ commentary is headlined “The Shanghai Stock Crash and China Gold Demand” and it’s posted at USAGold here:

http://www.usagold.com/publications/NewsViewsJuly2015SpecialReport.html

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

end

China wants to steal gold market ‘reins’ from New York and London

Section:

By Myra P. Saefong
MarketWatch.com
Friday, July 10, 2015

China has been making it very clear that it wants more control over the global gold market, but it’ll have to go through New York and London first.

“Given that China is the epicenter of the physical gold market, it does make sense that the Chinese government would want its physical Shanghai gold market to supplant the Comex derivative market (and others) as the primary global price-setting mechanism,” said Anthem Blanchard, chief executive officer of online precious-metal retailer Anthem Vault.

China is, after all, the world’s largest producer and one of the biggest buyers of the metal, often running neck and neck with India as the globe’s top consumer. …

… For the remainder of the report:

http://www.marketwatch.com/story/china-wants-to-steal-gold-market-reins-

end

And now your overnight trading in bourses, currencies, and interest rates from Europe and Asia:

 

1 Chinese yuan vs USA dollar/yuan weakens to 6.2092/Shanghai bourse green and Hang Sang: green

2 Nikkei closed down by 75.67  points or 0.38%

3. Europe stocks all in the green /USA dollar index up to 95.63/Euro up to 1.1189

3b Japan 10 year bond yield: falls to  44% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 122.34

3c Nikkei still just below 20,000

3d USA/Yen rate now just above the 122 barrier this morning

3e WTI 53.21 and Brent:  59.17

3f Gold up /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 up for WTI and up for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund rises to .80 per cent. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate fall to 34.38%/Greek stocks this morning: stock exchange closed again/ still expect continual bank runs on Greek banks /Greek default to the IMF in full force/

3j Greek 10 year bond yield falls to: 14.02%

3k Gold at 1163.50 dollars/silver $15.46

3l USA vs Russian rouble; (Russian rouble up 7/10 in  roubles/dollar in value) 56.56,

3m oil into the 53 dollar handle for WTI and 59 handle for Brent/Saudi Arabia increases production to drive out competition.

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can 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. It is not working: USA/SF this morning .9363 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0473 well below the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p Britain’s serious fraud squad investigating the Bank of England/

3r the 4 year German bund remains in negative territory with the 10 year moving further away from negativity at +.80%

3s The ELA is frozen now at 88.6 billion euros.  The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. We await the German response to the latest deal

4. USA 10 year treasury bond at 2.36% early this morning. Thirty year rate above 3% at 3.16% / yield curve flatten/foreshadowing recession.

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

 

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

 

Groundhog Day All Over Again: Futures Surge On “Greek Hope”, China Stock Manipulation

It’s officially Groundhog day… and month… and year… and so on.

After futures soared yesterday morning following the Chinese government’s halt of the local stock bloodbath, only to fade the euphoria late in the day on Greek concerns and the realization that threatening Chinese sellers with arrest…

 

outlawing short selling, while keeping half your stocks frozen (those which would be otherwise sold) and implementing nearly 20 different official measures to halt the market plunge...

 

is hardly a basis for bullish sentiment, this morning we again wake up to futures surging about 1% higher, with HFTs taking out all the stops overnight, and with even more Chinese intervention as the local police instead of just threatening have actually started cracking down on sellers and “rumor spreaders.”

As a result, after brief early weakness, the Chinese market soared out of the gate rising above 5% before seeing some late session selling to close up 4.5%, up 10% in the past two days, the biggest 2-day surge in Chinese stocks since 2008.

Still, even as half the Chinese stock market has rebounded strongly the other half remains stuck in time at days-old prices, leading some to invoke jokes about a Schrodingerian market: is China up or frozen? It depends which half you look at. Of the roughly 2,800 stocks listed on the Shanghai and Shenzhen markets, half were suspended from trading as of Friday morning. On the ChiNext, a Nasdaq-like board of small-cap stocks, the count was 205 trading, 279 suspended.

Of course, what the suspended companies are waiting for is simple: a return of the market euphoria – with the market rising, more than 60 companies said their trading would resume Friday. As the WSJ reports, they may have been hoping to replicate the experience of the likes of Hangzhou Iron & Steel Co., Zhejiang Huahai Pharmaceutical Co. and Leshi Internet Information & Technology Corp. Beijing, all of which resumed trading on Thursday – and all of which saw their shares rise by the daily maximum 10% within 30 minutes. Because when it comes to making the same mistake over and over again, the Chinese have zero learning capacity.

But the key catalyst so far for US equity futures appears to be Greece, which as we reported last night submitted a proposal to the Eurogroup, one which is virtually a replica of the European proposal from June 26, subsequently rejected by over 60% of the Greek population on July 5. Now, 5 days later, the Greek parliament will vote on this proposal (which has no request for a debt haircut, and which makes a lot of promises and no actual spending cuts) even as the “Oxi” vote supporters meet in front of parliament for a previously scheduled demonstration.

One wonders what the mood will be among the nearly two-thirds of the Greek population once it realizes it has been sold down the river by its government once again, and this time with a referendum vote to back it. Surely the release of some €120 billion in deposits, if only briefly, from the hostage clutches of the ECB will ease the pain, although don’t hope the Greek bank run will go away even if the ECB boosts Greek ELA. Having seen what happens to their deposits in the worst case, no Greek in their right mind will keep their money in the bank ever again.

Another problem for Tsipras will be his own party: he appealed to his party’s lawmakers on Friday to back a tough reforms package after abruptly offering last-minute concessions to try to save the country from financial meltdown. After walking into a party meeting to applause, Tsipras rallied his Syriza lawmakers to throw their weight behind the new proposals ahead of a snap vote in parliament on the negotiations, urging them to help keep Greece in the euro. Cited by Reuters, Tsipras said that “we are confronted with crucial decisions.” Which was also the case two weeks ago when Tsipras called the referendum he had hoped to lose.

“We got a mandate to bring a better deal than the ultimatum that the Eurogroup gave us, but certainly not given a mandate to take Greece out of the eurozone, he said. “We are all in this together.”

As of this moment it is unclear whether all the creditors would back the latest reforms package, which was “strikingly similar” to the terms Greece had rejected in a referendum that Tsipras had called in June. Finance ministers of the 19-nation euro area will meet on Saturday to decide whether to recommend opening negotiations on a third bailout program for Athens despite widespread exasperation at the five-year-old Greek debt crisis. Worse, any new deal would also have to be endorsed by national parliaments including in Germany.

Has Germany finally had enough may be the question. For now the market’s answer is no, judging by the surge, but this won’t be the first (or second, or hundredth) time that the algos have been fooled by the endless game between Greece and Germany, now in its fifth year, that the former is solvent, and that the latter still has a European monetary union to look for in the future. Both have now been revealed as utter shams.

So expect many more “Greek hope” headlines, rumors, and denials all day as is now the norm, and into the weekend, another weekend ruined by the Greek fiasco, with the Eurogroup meeting at 9am Eastern followed by the Summit of 28 European Union nations on Sunday.

* * *

A closer look at stock markets reveals that Asian equities rose as sentiment was bolstered after Greece submitted proposals similar to reforms sent by its EU creditors last month . Chinese stocks continued their recovery with the Shanghai Comp (+4.5%) sees its largest 2-day gaining streak since 2008 as aggressive measures supported the nations markets . Nikkei 225 (-0.4% ) was weighed on by weakness in index giant Fast Retailing, however the index pared losses amid an optimistic tone in Asia and continued recovery in Chinese stocks. Finally, JGBs fell amid spill over selling in USTs, although pulled off worse levels BoJ conducted its large bond purchase program.

In Europe, equities (Euro Stoxx: +2.9%) have spent the morning firmly in the green amid hope of a Greek deal, seeing financials outperform. Elsewhere, energy names have underperformed their counterparts, which comes in tandem with a move lower in the energy complex this morning after the !EA forecast that oil may see a further drop in price prior to a slowdown in supply growth forecast for 2016.

Fixed income markets have taken a leg lower this morning amid the aforementioned hope of a Greek proposal, with Bund Sep’15 futures lower by over 90 ticks. Today has been touted as an opportune time to come to market for US corporate issuance as T-Notes trend lower and with the key Greek risk event occuring over the weekend, Fed’s Yellen due to speak later in the day and Chinese equities ending their session in positive territory. Fixed income markets have recently seen a backlog in corporate issuance as many choose to hold off due to risk-off sentiment amid the current spate of risk events.

After a couple of days out of the limelight while Chinese equities took center stage, Greece as now back firmly in focus this morning after submitting their written proposals to creditors overnight. The Greek proposals are reportedly very similar to the offer they received on June 26th, which was later voted on and rejected by the public, with this suggesting that the offer may be seen as more acceptable to creditors than previous negotiations from Greece as France’s EU Affairs Minister stated that the newly submitted proposals from Greece are ‘credible and serious.’

Of note EU’s Dijsselbloem has said that an outcome of the Greek proposal may be presented today and EU sources have said that IMF’s Lafarge, EU’s Juncker, ECB’s Draghi and Eurogroup Dijsselbloem are to have a meeting on Greece at 1200BST/0600CDT

This has seen sentiment bolstered, with EUR/USD retaking the 1.1100 handle to the upside to reside firmly in the green (+122 pips), while JPY has continued to weak today as risk-on sentiment returns to the market . As such, USD/JPY is now firmly above the 6 week lows seen earlier in the week as the pair resides above the 122.00 handle (+83 pips). Despite USD/JPY strength, the USD index resides in negative territory (-0.6%) weighed on by the aforementioned EUR strength. Meanwhile, GBP/USD (+116 pips) is also stronger in tandem with the EUR as large hedge funds are said to be on the bid in the pair.

The metals complex sees gold head into the weekend firmly above its 4 month lows after the greenback weakened overnight as the continued recovery of Chinese stocks lift sentiment in the Asia-Pacific region.

Elsewhere, copper trades higher amid a softer USD and mainland China posting its largest 2 day intraday climb since 2008, while Dalian iron ore futures trades higher but is on course for the largest weekly drop since 2013 of 11%, following the oversupply of the industrial mineral. In the energy complex, the aforementioned IEA forecast has seen both WTI and Brent crude futures come off their earlier highs, to trade in modest positive territory after bolstered Chinese sentiment saw strength in the commodities overnight.

Looking ahead, this afternoon sees Canadian unemployment rate, US crop report and comments from Fed’s Rosengren and Yellen.

Bulletin Headline Summary From Bloomberg and RanSquawk

  • Greece hand over proposals to creditors, leading to positive sentiment and gains across the board in European equities as well as strength in EUR.
  • Shanghai Comp sees its largest 2-day gaining streak since 2008 as aggressive measures supported the index.
  • Looking ahead, this afternoon sees Canadian unemployment rate, US crop report and comments from Fed’s Rosengren and Yellen, with further developments in the Greek saga also a possibility.
  • Treasuries fall, paring weekly gains, after
    Greece late yesterday proposed measures in return for a EU53.5b
    bailout; France praised the package while Germany reserved
    judgement.
  • Reforms will be presented in Greek Parliament today, euro region officials will meet Sunday to discuss
  • Package almost mirrored that from creditors on June 26, which was rejected by Greek voters in a July 5 referendum
  • As program request would last a number of years, it would have to go beyond what was discussed two weeks ago with tougher conditions, a German government official said
  • While Greek proposals should be enough to start  conversation, they are generally no tougher than what was on table in June, Teneo Intelligence says; “given respective comments from German Chancellor Angela Merkel this week, hardliners will likely demand additional measures”
  • Chinese stocks rose, with the Shanghai Composite gaining 4.5%, adding to Thursday’s 5.8% surge; with more than 1,300 companies still halted on mainland exchanges, trading was limited to 53%  of the market
  • Official measures to support shares this week include a ban on stockholders and executives from selling stakes in listed companies for six months, an order for companies to buy equities and an investigation by the nation’s public security bureau into short-selling
  • Some of the chief beneficiaries of Obama’s proposed trade deal may be  big drug companies like Novartis AG, Roche    Holding AG, and Pfizer Inc. while the losers could be  consumers in both the U.S. and the region
  • Sovereign 10Y bond yields lower; Greek 10Y yield -471bp to 14.085%. Asian and European stocks, U.S. equity-index futures fall. Crude oil and gold higher, copper falls

 

DB’s Jim Reid completes the overnight recap

Hope has broken out overnight. Although the midnight deadline was tested, the Greek proposals are in, with the Creditors and show some meaningful concessions. The ball now flips back into the European’s court and we await their feedback. In the meantime, a Greek parliamentary meeting is underway now with a vote seeking to authorise a negotiation with the Creditors. DB’s George Saravelos notes that this is an interesting political move given the parliament meeting is not being called upon to vote on the actual measures, rather just the mandate for negotiations.

In the meantime all the focus overnight has been on the actual substance of the proposals and whether or not we were going to see additional concessions made from the Greek side. The overall feeling on the wires appears to be one of Greece offering a package similar to the one offered by the Creditors on June 26th and one which does make additional significant concessions. George Saravelos echoes this view saying that the first read is that they are constructive and indicative of the government willingness to reach an agreement. George notes that the fiscal targets are the same as those published by the EC before talks broke down, while the proposed mix of fiscal consolidation has shifted away from tax increases to spending cuts as required by the Creditors. Pension cuts go deeper and VAT reform proposals are now very similar. There are still some important differences however, including delays to cuts in certain pension subsidies and weak language around labour market reforms.

So a tentative step in the right direction but given the back and forth nature of this saga the next 48 hours will be crucial ahead of Sunday’s summit. As well as the Greek parliament meeting this morning (which started at 6am BST), Greek finance minister Tsakalotos is due to fly to Brussels today to resume negotiations. A positive commitment at parliament clearly commits Greece ahead of time although if the Europeans demand additional changes it also gives Tsipras the option to reject. The timeline beyond today remains the same with a Eurogroup meeting scheduled for tomorrow before the summit on Sunday (due to start around 3pm BST). As we highlighted previously any deal still needs Bundestag ratification and will likely be time consuming (in which case some sort of short-term financing will be needed) so the calendar beyond Sunday is ultimately still to be decided by how this weekend plays out.

Elsewhere it was interesting to see some of the rhetoric out of European officials yesterday prior to the news of the proposals being handed in. In particular it was the chatter around debt sustainability which appeared to be more hotly debated and which echoed previous comments from the IMF’s Lagarde. In particular, EU President Tusk said that ‘the realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors’. EC Vice-President Dombrovskis also said that debt relief would be needed, although there were slightly more mixed comments from German Finance Minister Schaeuble who said that ‘debt sustainability is not feasible without a haircut and I think the IMF is correct in saying that’, but also saying that there was limited scope for ‘re-profiling’ Greek debt. So all eyes again turn to the European response in what’s set to be another very busy and crucial weekend.

The Greece proposals and another decent rebound in Chinese equity markets have lifted sentiment across Asia this morning. With over 1300 companies still suspended from trading, the Shanghai Comp (+5.16%), Shenzhen (+4.00%) and CSI 300 (+5.79%) have all seen the rally extend for another day with the Shanghai Comp currently on course for its biggest two-day gains since 2008. There are also gains elsewhere for the Nikkei (+0.69%), Hang Seng (+2.12%) and ASX (+0.44%) with the generally better tone. Sovereign bond yields have moved wider in the region while 10y Treasuries are 2.2bps higher at 2.343%. S&P 500 futures are pointing towards a 1% gain while the Euro is nearly a percent off the lows of last night’s session at $1.109. Credit markets in Asia (-3bps), Australia (-3.5bps) and Japan (-2bps) are also closing out the week on a more positive note.

Yesterday’s rebound in China lent itself to a better tone in markets generally yesterday. European equities rose for the second consecutive session with the Stoxx 600 (+2.19%), DAX (+2.32%) and CAC (+2.55%) all marching higher, while in the periphery the IBEX (+2.65%) and FTSE MIB (+3.51%) again led the gains. There was a better tone at the start of the US open too with the S&P 500 initially rising 1.4%, only to then trade with more caution as the session went on to finish +0.23% at the closing bell as utility stocks in particular dragged the index down. The risk-off tone saw 10y Treasury yields bounce off their recent lows to end +12.9bps higher at 2.322%, only the second session that yields have closed higher in July. 10y Bund yields also marched higher, ending +4.8bps at 0.717%. Meanwhile with Greek 10y (-125bps) yields taking a steep leg lower, yields in Italy (-4.4bps), Spain (-5.1bps) and Portugal (-11.1bps) all marched lower. In the commodity complex, oil markets had a better day with WTI (+2.19%) in particular bringing to an end 5 consecutive down days.

Away from Greece and China there was some focus on Fedspeak yesterday. The Kansas City Fed’s George reiterated her view that the Fed should raise rates ‘sooner rather than later’ and that keeping rates near zero is ‘risky in my view’. George also suggested that recent data is pointing to the economy generally moving in the right direction and that ‘waiting for more data before acting can be a trap’. This was in stark contrast to the more dovish Chicago Fed President Evans who said ‘I still have the first funds rate increase not taking place until 2016’ before then clarifying that that would be more sometime around mid next year. Evans, unlike Williams earlier this week also highlighted his concerns around Greece and China. Away from the Fedspeak, it was a quiet day data wise. Initial jobless claims printed weaker having rose 15k to 297k (vs. 275k expected) and to the highest level in four months, although remaining below 300k for the 18th consecutive week. There was some chatter about Independence Day distortions so we’ll see if the move is reversed next week. In the European timezone we saw the BoE keep rates on hold while in Germany the May trade balance saw a slight fall in the surplus to €19.5bn (vs. €20.5bn expected) from €21.8bn, although our colleagues in Europe noted that strong export numbers continue to point towards a positive net-export contribution to GDP growth after two previous negative prints.

Wrapping up yesterday’s events, with concerns around the weak start to the year in the US, the IMF cut their global growth forecast for 2015 to 3.3% (from the initial 3.5% forecast made in April). At the same time the fund left its forecast for 2016 unchanged at 3.8%. Despite much of the downward revision being driven by the US, the fund did also acknowledged the recent turmoil in Chinese stocks and ongoing tensions with regards to Greece as causes for concern.

The obvious focus in the day ahead will be on Greece, starting with the Greek parliament meeting this morning. Away from those events, French industrial and manufacturing production is due this morning along with UK trade data and construction output. With just wholesale inventories and trade sales due in the US this afternoon, there’s likely to be plenty of focus on the Fed’s Yellen who is due to speak on the US economic outlook in Cleveland, while the Fed’s Rosengren is also due to speak today. Then as we move into the weekend Sunday sees the historic EU summit that has been billed as the make or break moment for Greece’s Euro membership.

end

The Chinese police crack down on short sells as the Chinese bourses rise!
(courtesy zero hedge)

Chinese Police Officially Launch Crackdown On Stock Sellers & Rumor Spreaders

Not only has the Chinese regulator specifically asked all listed companies to submit reports, within the next two days, on the measures they will take to prop up their shares, according to the 21st Centruy Business Herald; but, as we warned yesterday, Chinese police have begun a “nationwide action plan” to work with stock regulator CSRC to crack down on now ‘illegal’ stock and futures trading. As SCMP reports, police are checking who sold off Ping An and PetroChina stocks in last 30 minutes of trading July 8 while Government was buying to boost index… Who needs QE? This is worse, much worse…

 

* * *

Which explains this…

 

*  *   *

And here is what Rabobank thinks…

“China managed to stage an impressive equity rebound yesterday. One could call it a dead cat bounce, but we don’t even have an entire cat, so it was more parts of a dead cat bouncing, aided by news that anyone caught selling short would be arrested.

 

To say that doesn’t look sustainable is an understatement, especially with PPI (Producer Price Index) slipping to -4.8 per cent (Year-on-Year), and CPI (Consumer Price Index) edging up to 1.4 per cent only on vegetable prices.”

end
and today brokers refuse to take sell orders;
(courtesy zero hedge)

The Latest Thing In China: Brokers Refusing Sell Orders

Just think of it as brokers doing you a favor: do you really want to be arrested for “malicious” selling?

So why even bother with the pretense of “markets”, and not only in China, but in Japan, Europe, Switzerland, the US and everywhere else where central banks have directly injected $22 trillion in artificial liquidity in the past 7 years to keep the illusion afloat?

Think of how much more productive the economy will be if central banks assure that markets will close higher by 1% every day in perpetuity. Consider the amount of free time Wall Street’s brilliant “financial engineers” will have to allocate to socially useful activities for once.

 

end
And now the last word of China’s bubble bursting, here is David Stockman:
(courtesy David Stockman/ContraCornerBlog)

China’s Market Isn’t Fixed And Why The Global Bubble Will Keep Imploding

Submitted by David Stockman via Contra Corner blog,

China’s stock market is purportedly all fixed and the last two day’s 10% bounce is just the beginning.Indeed, Goldman Sachs has already reiterated that the whole thing is on the level, and that the red chips will again be taking flight:

China’s biggest stock-market rout since 1992 has done nothing to erode the bullish outlook of Goldman Sachs Group Inc………Kinger Lau, the bank’s China strategist in Hong Kong, predicts the large-cap CSI 300 Index will rally 27 percent from Tuesday’s close over the next 12 months as government support measures boost investor confidence and monetary easing spurs economic growth. Leveraged positions aren’t big enough to trigger a market collapse, Lau says, andvaluations have room to climb.

Right. The Chinese economy is in an obvious deepening swoon and the median company on the Shanghai exchange had a PE ratio of 60X before the recent break. But no matter. Not only does everything financial race the skyscrapers to the sky in the land of red capitalism, but valuation upside is apparently whatever the comrades in Beijing want it to be.

Says Goldman’s chief stock tout for China,“It’s not in a bubble yet.”.

Why? Because “China’s government has a lot of tools to support the market.”

To be sure, the confident Mr. Kinger Lau was still in diapers when Mr. Deng proclaimed that it was glorious to be rich. Or stated differently, when Deng set aside Mao’s mistaken maxim that power comes from the barrel of a gun in favor of the thoroughly modern notion that prosperity comes from the end of a red hot printing press.

Actually, that’s the heart of the matter. Mr. Lau and perhaps 50 million other Chinese punters believe that growth and wealth are gifts of the state. That is, they believe red capitalism works because the comrades in Beijing are always ready to inject “whatever it takes” by way of stimulus, guidance, controls, ever more debt and now, apparently, prison sentences, too, to keep the bubble expanding.

That millions of Chinese citizens are being annihilated financially is hardly surprising. After all, the $3.5 trillion lost in the four weeks since the June 12th peak was pure casino wealth. It did not even exist as recently as March 17.

That’s right. The Shanghai composite first reached the 3500 level (during this trip) exactly 60 trading days before hitting the June 12 high of 5180. So what amounted to a 50% gain in no time ended up a 30% loss in even less time.
^SSEC Chart

^SSEC data by YCharts

There is no need to be pedantic about this. There is no known form of honest economics in which a $3.5 trillion bubble—equal to 35% of GDP—-can go through a birth and death cycle in a mere 80 trading days. Nor should anyone in their right mind believe that the Shanghai/Shenzhen casinos have any resemblance to an actual stock market.

After all, during Wednesday’s plunge it seems that trading in 1350 of the 2900 companies listed on these exchanges were halted by the companies themselves and another 750 were halted by 10% limit down rules. Yes, you can apparently stop a selling panic, at least momentarily, when 70% of the names go radio silent——especially when, at the same time, the heavy hand of the state suddenly morphs into the shape of a mailed fist.

Stated differently, the desperate comrades in Beijing threw open the People’s Printing Press of China to fund ostensibly unlimited margin loans while simultaneously opening the doors to a cavalcade of paddy wagons instructed to round up anyone with the temerity to sell a stock. And in case the meaning of mobilizing the gendarmes was not self-evident, every company which had sold stock during the last six months got an personalized order to buy back this same shares forthwith.

All of this desperate action, of course, is only suppressing the problem, not solving it.

The (trading) suspensions, which cast doubt on authorities’ pledge to give markets a greater role in the world’s second-largest economy, mean that the Shanghai Composite Index’s 5.9 percent tumble on Wednesday was probably understated. Investors who got stuck in their positions are turning elsewhere to raise cash, fueling the biggest drop in a month in Chinese government bonds.

Indeed, the regulatory authorities in Beijing are so desperate that they are allowing investors to answer margin calls by pledging the millions of empty, vastly over-valued apartment buildings that Chinese punters were earlier lured into acquiring. Now that scam would make even Charles Ponzi envious.

So are these people out of their minds? China is a powder keg of debt. In fact, some $28 trillion of it. And, according to the bean counters at McKinsey, upwards of $21 trillion of that was created in just the last 90 months—–during which time China’s GDP rose by only $5 trillion.

Apparently, even the comrades in Beijing had gotten a tad nervous about the sustainability of creating $4 of debt for each $1 of new GDP. Indeed, their “reform” plan was to unleash “market forces” and to encourage companies to shed their mountains of debt by raising equity capital in a vibrant stock market.

Well, the stock market got vibrant all right and during the past year several hundred billion of new equity was raised via IPOs and secondary offerings. But the debt pea was just being moved under another shell.

In fact, margin debt soared by 5X in less than one year. Nothing like this has occurred anywhere in the world since, well, 1928-1929 on Wall Street.

But the debt-fueled mania that under-pinned America’s Great Crash turns out to be tame by comparison. That’s because the above graph only covers official margin debt supplied by stock exchange brokers. It appears that China’s out-of-control shadow banking system provided again as much, and without any rules as to collateral maintenance or the financial capability of borrowers.

So compute the sum of combined margin loans from stock brokers and shadow bankers and express the result in US dollars. What you get is about $800 billion—–of which upwards of $600 billion was advanced in just the last 12 months!

Now that’s 6% of GDP mainlined right into casinos that are 80% comprised of mom and pop retail investors. That the resulting bubble has burst and made a mockery of Beijing’s market based reform plans is evident enough. What is truly frightening is that China’s authorities are so desperate that they are now attempting to reflate the very same speculative bubble that brought their financial system to the brink.

What is even more telling, however, is that the clueless ramblings of a naïve kid just out of the London School of Economics gets the Goldman Sachs imprimatur. And that embarrassing state of affairs is the key to the global financial calamity just ahead.

As Nixon might have said, they are all Keynesian statists now. Once upon a time, the grey beards of Wall Street would have been horrified by the printing press economics of today’s central banks, and would have had no trouble at all seeing that China is the greatest eruption of unsustainable debt, wasteful construction and rampant speculation in human history. It has precisely nothing to do with capitalism or any possible form of sustainable economic growth and wealth creation.

In the process of taking its debt from $2 trillion in the year 2000 to $28 trillion at present, in fact, China has erected an endless string of uneconomic public facilities and industrial white elephants that boggle the mind. For instance, it has 1.1 billion tons of steel capacity——400-500 million tons more than its domestic economy will ever be able to use on a sustained, sell-through basis. In fact, its “excess” steel capacity is greater than the total steel industries of the US, Europe and Japan combined!

Likewise, it ramped up a cement industry of 2 billion tons that is double or triple what will be needed when its construction of empty apartment buildings, unused airports, carless highways and bridges and pointless high speed rail lines finally comes to an end. Indeed, during the three years ending in 2014, China produced more cement than did the US during the entire 20th century.

The parade of excess capacity and white elephants is virtually endless and includes copper products, aluminum, solar panels, construction machinery, ship-building and every manner of consumer goods. That used to be called “malinvestment”, and its what happens when central banks flood the world with uneconomic credit and governments override every semblance of financial discipline and honest calculation via endless bailouts and safety nets for gamblers.

So now China’s domestic hothouse has reached the limits of credit fueled asset expansion. The great maw of its absurdly overbuilt industries is already heaving up deflationary gales on world markets. Its iron ore and steel industries, for example, are literally crashing and flooding markets with more cheap steel than has ever before been imagined:

Ore with 62 percent content delivered to Qingdao sank 5.1 percent to $49.60 a dry ton on Tuesday, falling for a ninth day to the lowest since April 13, according to Metal Bulletin Ltd. Prices entered a bear market on Monday, dropping more than 20 percent from a June high. On the Dalian Commodity Exchange, futures plunged 7.2 percent to a record low on Wednesday, while the August contract on Singapore Exchange Ltd. fell to $42.20.

 

The trend echoes a similar one in steel in the second half of last year, when Chinese exports of excess supplies sent prices tumbling 30 percent. The nation’s aluminum industry quadrupled in the past decade with smelters churning out record amounts of the metal used in everything from packaging to car bumpers.

 

Metals including nickel and silver on the Shanghai Futures Exchange fell to their daily limits, while rubber entered a bear market. The volume of copper traded was almost six times the three-month average. Steel rebar and iron ore, as well as eggs, sugar and soybean meal dropped to the lowest level allowed by their exchanges.

Beijing’s profoundly stupid attempt to keep the Ponzi going by levitating the stock market is now coming home to roost domestically, as well. An increasing number of car buyers in China are canceling their purchases and risking forfeiture of their down payments after the recent stock-market rout.

According to Cui Dongshu, secretary-general of China’s Passenger Car Association, auto sales fell last month for the first time in more than two years:

“The plunging stock market is essentially a meat grinder, shredding money meant for buying cars.”

At the end of the day, the firestorm now engulfing the China’s stock market will shake the regime itself. China’s current maximum ruler, Xi Jinping, is self-evidently an economically illiterate thug. Accordingly, there is no measure he will not try in order to arrest the current meltdown.

But as one observer noted, he has put the regime on the line. When the current desperate measures finally fail, China could well descend into social and economic chaos:

By urging households to buy stocks, Xi has put his credibility—as well as that of the Communist Party—on the line. The stimulus measures’ failure may incite outrage among those very mom-and-pop investors who have lost everything. Though it’simpossible to tell what might ignite it, mass social unrest in China would shake the entire world.

The downside of that wager is profound indeed. The government’s creation of the Chinese bull market has disproportionately benefitted state-owned companies—and therefore the Communist Party—by replacing government-guaranteed debt with equity. That equity, of course, has been funded by the little guy—the second, and much bigger, part of the problem. When the state press and government officials began pumping stocks about a year ago, they essentially made a promise to protect the savings of tens of millions of households.

The ramifications of regime failure in China are surely inestimable. But one thing is certain. The present worldwide faith preached by Goldman and its imitators in the ability of governments and their central banking branches to keep the bubble expanding will suffer a fatal rebuke.
end
Last night, Greece provides the Troika with proposals and they mirror
the June 26 offer given by the Euro group to Greece.  There is no request for a debt haircut;
(courtesy zero hedge)

New Greek Proposal Backtracks To Pre-Referendum Draft, Does Not Request Debt Haircut – Full Text

There is nothing incrementally new or different to what we revealed earlier in the leaked Greek proposal (i.e., no actionable pension cuts, no debt “reprofiling”) and as Bloomberg makes it all too clear in flashing red headlines:

  • GREEK GOVT PROPOSAL SIMILAR TO EU COMMISSION’S JUNE 26 PROPOSAL

or the one which 61% of the Greek people said no to.

What’s worse, the proposal will be promptly deemed as insufficient because as Merkel made clear in the past four days, the old proposal is no longer valid due to the collapse in the Greek economy since capital controls were imposed and will, ironically, have be far harsher to offset the slowdown in the economy. To make things worse, the proposed indirect (no direct ones) pension cuts, and lack of a request for debt relief will be certain to infuriate the Greek population.

The broad strokes: a 3 year, €53.5 billion bailout program, including €35 billion of growth measures, lasting through June 30, 2018 requesting funds from the ESM, seeking to finally put the IMF off to the side.

The program is heavy on revenue promises and lite on actual spending cuts. Greece hopes to achieve a 1% primary budget surplus in 2015, rising to 2%, 3%, and 3.5% by 2018, all of which are now impossible due to the total collapse of the economy in the past week.

Among the tax reform will be a modest increase in corporate tax from 26% to 28%.

The changes to the VAT system are as noted previously, keeping the VAT on hotels at 13% but raising it to 23% for restaurants; Greece also promises to eliminate discounts on islands, starting with the islands with higher incomes and which are the most popular tourist destinations.

However, it is the pension side where the issues remain, and it is here that once again there is little actual direct reductions. Among the promises, most are the generic fluff previously agreed on:

create strong disincentives to early retirement, incur penalties for early withdrawals, make all supplementary pension funds financed by own contributions; and so on.

The good news for the Troika is that Greece will seek to “gradually phase out the solidarity grant (EKAS) for all pensioners by end-December 2019” – who will be impacted and when: “the top 20% of beneficiaries in March 2016.” In other words another 9 months of non real action. The bad news for the Troika is that Greece will also “freeze monthly guaranteed contributory pension limits in nominal terms until 2021.”

More in the full proposal, but the truth is that while making some concessions, the Greek proposal may still be insufficient for Merkel, and certainly won’t be sufficient for the IMF due to the lack of real pension cuts.

Worse, Syriza will have to vote on this proposal tomorrow and explain to the people why nearly two thirds of them just voted No to a deal which the government itself is now hoping will pass.

But worst of all, nowhere in the draft sent to creditors is there anything requesting or even hinting about Greek debt haircut, relief or even reprofiling.

And all of this will happen as a massive Oxi demonstration takes place in front of government, so be on the lookout for a repeat appearance by the riotcam.

* * *

see zero hedge for the full text

 

end
The official story courtesy of Bloomberg:
(courtesy of Bloomberg)

Greece Seeks EU53.5 Billion Bailout in Effort to Keep Euro

Will it work?

 

The government of Greek Prime Minister Alexis Tsipras sought a three-year bailout loan of at least 53.5 billion euros ($59.2 billion), in a last-ditch effort to keep the country in the euro.

In exchange, it offered a package of reforms and spending cuts, including pension savings and tax increases, similar to the one presented by creditors last month. The proposal was submitted late Thursday and will be presented to the Greek Parliament Friday. It is set to be discussed at a summit of European Union leaders Sunday to determine whether Greece will get a new bailout, or be forced to leave the single currency.

Although the odds of a so-called Grexit have climbed, “we continue to see Greece staying in the euro as marginally more likely, not least because the majority of Greeks prefer so,” Deutsche Bank analysts wrote in a note to clients. “Europe is intent on forcing an outcome either way.”

Market reaction suggested investors believe a deal can be done, or that the European Central Bank can successfully contain the fallout if one isn’t. The benchmark Stoxx Europe 600 Index rose 2.2 percent and Greek, Portuguese and Italian bonds rose. The euro rose 0.4 percent to $1.107.

Greece’s proposal for a three-year bailout loan was similar to the one presented by the European Commission on June 26. It includes creditors’ longstanding demands for sales tax increases and cuts in public spending on pensions. Greece also proposes the restructuring of its debt and a package of growth measures of 35 billion euros.

‘Realistic Proposal’

Pressure has been mounting on Greece’s creditors to make the country’s debt more manageable, giving it a chance to rebound from a crisis that has erased a quarter of its economy.

“A realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors,” European Union President Donald Tusk told reporters in Luxembourg Thursday. “Only then will we have a win-win situation.”

The U.S. wants to see debt sustainability in Greece, John Kirby, a State Department spokesman, told reporters in Washington Thursday.

German Chancellor Angela Merkel and her government have come under growing pressure to back away from resistance to debt relief for Greece, a major obstacle to a deal on keeping the country in the single currency.

Whether Greece can expect a writedown of its outstanding debts, which exceed 170 percent of gross domestic product, remains a key point of contention.

Debt Relief

The European Commission’s vice president for the euro, Valdis Dombrovskis, said member states are open to considering debt relief for Greece. Principal writedowns, though, would be difficult to get past conservative figures including German Finance Minister Wolfgang Schaeuble.

He said Thursday he’s less optimistic than the French about “re-profiling,” which is generally understood as giving debtors more time to pay off loans, as a solution for Greece. France, which — unlike Germany — has been a sympathetic ally to Greece, provided technical assistance in the pulling together of the new reform proposal.

“We think debt relief of some form will be on the table,” but structured in a fashion capable of winning German backing, Royal Bank of Scotland analyst Michael Michaelides said in a research report.

Party Resistance

Even if Tsipras and creditors can reach a basic agreement, his greatest challenge may still lie at home. European leaders are likely to insist that reform measures be passed into binding legislation by the Greek parliament, where lawmakers from Tsipras’s ruling Coalition of the Radical Left, or Syriza, might vote against them.

A half-day meeting of Syriza lawmakers has been convened for Friday morning, in which the premier is expected to discuss the proposals to creditors.

The party was elected in January after it promised to fight the successive spending cuts and tax hikes that had been required for previous bailouts.

“Greece is obviously working to secure an immediate deal, but it must be a deal that opens a window out of the current crisis,” Energy Minister Panagiotis Lafazanis, a hard-line Syriza member, said at a conference in Athens Thursday. “We don’t want a third memorandum with tough austerity measures.”

 

end

 

In visual form: a complete summary of the Greek bailout proposal:

(courtesy zero hedge)

The Complete Visual Summary Of The “New” Greek Bailout Proposal

A cursory look at the “new” Greek proposal to creditors suggests PM Alexis Tsipras may have sold out the referendum “no” vote in a final, desperate attempt to avert an economic catastrophe and the collapse of the country’s banks which will be cut off from ELA as of Monday morning in the event Brussels and Athens do not come to terms over the weekend.

As Commerzbank’s Markus Koch said on Thursday, “the ‘No’ in the referendum appears to be turning into a ‘Yes’ from Tsipras.”

Here, courtesy of AFP, is the proposal in inforgraphic form:

And even as it does indeed appear that Greeks (not to mention Syriza hardliners) will be forced to stomach a “compromise” that amounts to an outright concession, there are some differences between the “old” and “new” Greek proposals. Here’s Bloombergwith the rundown:

Financing and Debt

Greece is asking for three-year loans of at least 53.5 billion euros ($59.9 billion) to cover its financing needs between 2015 and 2018. It is also seeking debt restructuring and reprofiling of its long-term debt due after 2022. The earlier proposals were in return for a five-month extension of an existing bailout program for loans of as much 15.5 billion euros and didn’t involve any debt restructuring. 

 

Tax Reforms

With few exceptions, the Greek government adopts the creditors’ proposal on sales and corporate tax rates. The government is seeking to eliminate sales tax discounts on islands gradually by the end of 2016 instead of immediately, starting higher-income islands that are popular tourist destinations. It also seeks to keep hotels under a reduced 13 percent rate instead of the standard 23 percent.

 

Pension Reforms

The government proposes implementing a “zero-deficit” clause for supplementary and lump-sum pension funds, adopted in 2012, from October instead of immediately. While it agrees to phase out a supplementary allowance for low pensions by the end of December 2019, it wants to start phasing-out these benefits from March 2016 instead of starting immediately.

 

Fiscal and Structural Measures

Greece wants to increase advanced income tax payment on corporate income to 100 percent and gradually for individual businesses by the end of 2017, as part of steps to close loopholes for tax avoidance. It also proposes to eliminate preferential tax treatment for farmers by the end end of 2017. The creditors wanted these steps to be implemented by the end of 2016.

The government appears to backtrack on its own earlier proposals for military spending cuts, offering to reduce spending by 100 million euros in 2015 and 200 million euros in 2016. It had earlier suggested to cut military spending by 200 million euros in 2016 and 400 million euros in 2017. The creditors have sought an immediate cut in annual military spending by 400 million euros.

It offers instead to extend implementation of a luxury tax on recreational vessels in excess of five meters instead of in excess of 10 meters.

 

Labor Reform

Government insists to legislating changes to collective bargaining agreements this fall; creditors don’t want any changes to already agreed labor framework and demand that any changes be negotiated with the three creditor institutions first — the European Central Bank, the International Monetary Fund and the EU.

 

Privatizations

This is where the government appears to fully adopt the creditors’ demand for all agreed sales of state assets to proceed, including transferring the state’s shares in the Hellenic Telecommunication Organization SA to the asset sales fund and selling regional airports under terms already agreed with a venture led by Fraport AG, the winning bidder already selected by the previous government.

end

How Tsipras sold Greece down the river:

(courtesy zero hedge)

Tsipras Sells Out Referendum ‘No’ Vote Ahead Of Weekend Deadline

“We got a mandate to bring a better deal than the ultimatum that the Eurogroup gave us, but certainly not given a mandate to take Greece out of the eurozone,” Greek PM Alexis Tsipras reportedly told Syriza lawmakers on Friday, underscoring the fact that his government’s mandate is, for all intents and purposes, impossible to achieve.

As detailed Thursday evening, the proposal (or, the “thorough piece of text” as Jeroen Dijsselbloem called it) submitted by Tsipras looks quite a bit like the proposal the Greek people rejected at Tsipras’ urging last Sunday. Here are the basics:

The broad strokes: a 3 year, €53.5 billion bailout program, including €35 billion of growth measures, lasting through June 30, 2018 requesting funds from the ESM, seeking to finally put the IMF off to the side. The program is heavy on revenue promises and lite on actual spending cuts. Greece hopes to achieve a 1% primary budget surplus in 2015, rising to 2%, 3%, and 3.5% by 2018, all of which are now impossible due to the total collapse of the economy in the past week. Among the tax reform will be a modest increase in corporate tax from 26% to 28%. The changes to the VAT system are as noted previously, keeping the VAT on hotels at 13% but raising it to 23% for restaurants; Greece also promises to eliminate discounts on islands, starting with the islands with higher incomes and which are the most popular tourist destinations. Create strong disincentives to early retirement, incur penalties for early withdrawals, make all supplementary pension funds financed by own contributions; and so on. Greece will seek to “gradually phase out the solidarity grant (EKAS) for all pensioners by end-December 2019” – who will be impacted and when: “the top 20% of beneficiaries in March 2016.” In other words another 9 months of non real action. Greece will also “freeze monthly guaranteed contributory pension limits in nominal terms until 2021.”

Reactions from Europe and from Syriza itself have been largely predictable. As mentioned above, Dijsselbloem is lukewarm, French President Francois Hollande called the proposal “serious and credible”, Italian PM Matteo Renzi is “more optimistic than [he] was in the past,” while Germany is, to use Bloomberg’s words “reserving judgement.”

On person who is not “reserving judgement” however is Greek Energy Minister and far-left leader Panagiotis Lafazanis. “The proposals are not compatible with the Syriza programme,” he told Reuters on Friday. On Thursday, in the course of detailing Greece’s €2 billion energy partnership with Russia, Lafazanis said the referendum “no vote “must not become a humiliating ‘yes’.” 

While the Eurogroup will convene on Saturday to consider whether to go ahead with the deal, the first hurdle is the Greek parliament where Tsipras is set to use what Deutsche Bank calls an “unusual political move” to give the proposal a better chance of passing next week. Here’s Deutsche Bank with more:

In the meantime, the Greek PM has initiated the domestic approval process as well. In an unusual political move, he has submitted a one-page legislative proposal requesting emergency parliamentary authorization to negotiate the final terms of the agreement. He has published the government’s proposal at the same time, but is not calling for parliament to vote upon the actual measuresIn principle such authority is not required. In practice, the strategy aims at consolidating the SYRIZA party’s parliamentary base ahead of a likely vote to approve the measures next week. On the positive side, pre-emptive parliamentary support will make it more difficult for SYRIZA MPs to reject an agreement after it comes to parliament.On the negative side, the PM will also have an authority to reject an agreement if he so decides.

 

The opposition’s stance to this strategy remains to be seen, but it will be the support of the government’s parliamentary majority that will be the most important today. The PM will meet with SYRIZA parliamentarians at 6am London time. A full parliamentary vote will take place later in the evening. Approval will provide negotiating space to the PM, increasing credibility with the Europeans and the odds of passage in a subsequent parliamentary vote next week.

In other words, it appears as though Tsipras is looking to back the Syriza hardliners into a corner. The argument appears to go something like this: voting on the actual proposals would be largely pointless as Europe hasn’t approved them, so let’s vote on whether I have the authority to negotiate the measures, but if you say “yes” to that, and I agree to a deal this weekend, then I can then come back to you and say “well, you gave me the authority to negotiate and I decided to accept so now you pretty much have to approve this.” This strategy has the added benefit of allowing Tsipras to tell Europe that the Greek parliament voted “yes” even though in reality they did not vote on the actual deal. You have to love politics.

As for “debt sustainability” (i.e. that small issue which the IMF brought up three days before the referendum and effectively won the vote for Tsipras and the “no” crowd), that will be considered later apparently. From Bloomberg:

Debt sustainability is a central part of discussions in the Euro Working Group and the Eurogroup of euro-area finance ministers, EU official says.

 

Assessment of Greece’s financing requirements will also form part of analysis, official tells reporters in Brussels

 

First, prior actions will be discussed, then financing, then debt sustainability — but they are all linked, official says.

They may be “all linked” but Germany still isn’t biting — or at least not on the idea of a “classic haircut.” Here’s the Irish Times:

The Greek government received a boost on Thursday, after European Council President Donald Tusk said that a “realistic proposal from Athens” should be matched by “realistic proposal from creditors on debt sustainability”.

 

His unexpected comments – the first from a senior EU figure – followed a phone conversation with Greek prime minister Alexis Tsipras.

 

Senior officials representing the 19 euro zone member states will consider Greece’s new reform plan on Friday, ahead of a scheduled eurogroup meeting of finance ministers in Brussels on Saturday.

 

Mr Tusk’s intervention follows renewed calls from IMF managing director Christine Lagarde on Wednesday that Greece’s debt burden should be addressed.

 

US treasury secretary Jack Lew also intervened to call for debt relief for Greece.

 

In a sign that Berlin could be open to the idea of debt relief, German finance minister Wolfgang Schauble said the issue could be discussed over the coming days, though he hinted that the impact of any measures would be minimal. “The room for manoeuvre through debt reprofiling or restructuring is very small,” he said.

 

German chancellor Angela Merkel also explicitly ruled out a debt writedown for Greece. “I have said that a classic haircut is out of the question for me and that hasn’t changed between today and yesterday,” she said, echoing comments she made on Tuesday in Brussels.

 

Speaking within hours of Mr Tusk’s comments, she said that Greece’s debt sustainability had already been addressed under previous bailouts.

So, just as we said: Germany and the US are now at odds over a Greek debt writedown.

Ultimately, Tspiras has submitted the same proposal that Greeks, at his behest, voted against last weekend. The PM will use a shrewd political maneuver to secure parliamentary support and new FinMin Euclid Tsakalotos will attempt to close the deal on Saturday. And although that would mean selling Greek “no” voters down the river, it’s once again a nearly impossible choice because as Bloomberg reports, citing Dutch newspaper Het Financieele Dagblad, the ECB “will terminate emergency liquidity assistance (ELA) to Greece as of 6am on Monday morning if Greek reform proposals are deemed too light and if Greece is unwilling to cooperate with withdrawal from the euro zone.”

Here’s Commerzbank’s Markus Koch summing things up: “The ‘No’ in the referendum appears to be turning into a ‘Yes’ from Tsipras.”

Sorry Panagiotis Lafazanis. Maybe there’s a cabinet position open in Moscow.

*  *  *

So much for “hope”…

 

end

 

And now the reaction of the deal on Greek streets:

(courtesy zero hedge)

 

Greeks Take To The Streets To Protest Brussels “Blackmail” –

Thousands of Greeks have once again taken to the streets in a show of solidarity as PM Alexis Tsipras attempts to rally support in Parliament for a deal with creditors that looks nearly identical to the proposal the Greek people voted against last weekend.

If all goes according to Tsipras’ plan, the deal will be pushed through at a Eurogroup meeting on Saturday in Brussels and the PM will have officially sold out the voters who just last Sunday rallied behind his impassioned (and perhaps disingenuous) plea for a “no” vote.

(live feed)

end

With no debt reduction, Greece’s Debt to GDP ratio will climb to 200% making the situation worse.  And how are they going to fix the insolvent banks:

 

(courtesy zero hedge/John Taylor)

John Taylor: IMF Loans To Greece Bailed Out Banks And Worsened The Situation

Two weeks ago, in “The Unspoken Tragedy In The Upcoming Greek Bailout“, we showed that for all the talk of Greek profligacy and corruption (and there certainly has been a lot of that since Greece adopted the Euro in 2001), the reality is that of the €230 billion in Greek bailouts 1 and 2, only 11% of this amount trickled down to the Greek population.

 

We followed up earlier this week with “The Biggest Winner From The Greek Tragedy” in which we explained that while Greek debt has risen consistently to a record highs of 175% of GDP even with the PSI aka private creditor debt restructuring which took place in 2012…

 

… the vast majority of that debt has gone to cover repayments to banks exposed to Greece:

Now, as a result of yet another imminent bailout, #3, the Greek people are about ot be hijacked by their government which explicitly asked them if they agree with said bailout to which 62% said no, and stick them with tens of billions more in debt, debt which will push the total debt/GDP to over 200% and without a trace of doubt, lead to the complete collapse of Greece. Worse, virtually all of thise debt will again be used as funds to repay exiting creditor claims.

Then again, Greece has already collapsed, and the only real question is whether the ECB will give Greek depositors time to withdraw some of the €120 billion in deposits it holds hostage with the frozen ELA, or if the ECB will admit the truth about the Greek insolvent banking system risking Eurozone contagion.

Perhaps a better question is just what is the purpose of the IMF (besides being the source of much humor with its “forecasts”) whose intervention in Greece can be described in one word: disaster.

It can also be described in eleven, as the creator of the Taylor Rule, John Taylor, has done in a blog post which can be summarized as follows: IMF Loans To Greece Bailed Out Banks And Worsened The Situation.

Here are the key excerpts:

I make the case in this Wall Street Journalpiece and in more detail in Congressionaltestimony that there’s an opportunity for a deal between the Congress and the Administration on international monetary reform.  The case starts with perhaps the most obvious lesson from the Greek crisis:The IMF should not make loans to countries with unsustainable debt. Such loans bail out banks and often worsen the situation.

 

The IMF learned that lesson more than a decade ago and in 2003 adopted an “exceptional access framework” enshrining the rule of no lending to countries with unsustainable debt. There were few crises in emerging markets in the years following, and it seemed to work well.

 

But the rule was broken in 2010 when the Greek crisis came along.  Even though Greek debt was unsustainable, the IMF lent 30 billion euros anyway.  It wrote in an exemption to the rule for systemic risk, perhaps under pressure from private holders of Greek debt.

Here replace “perhaps” with “most certainly”!

Following this 2010 decision, the Greek economy has deteriorated sharply and many private creditors were able to get out of Greek debt leaving the public sector holding the bag, as Benn Steil has dramatically shown.

Taylor goes on to demand that the IMF’s systemic exemption be repealed, as per his WSJ Op-Ed:

New loans, it said, could be made in unsustainable situations so long as there was a “high risk of international systemic spillover.” The IMF claimed, with very little evidence, that this was true in Greece’s case and approved an exceptionally large loan of €30 billion. But it did not require any restructuring of the debt, which was held largely by European banks.

Therein lies the fault of Taylor’s thinking: whether it is the IMF, or just any other central bank, the largest commercial bank equity holders will always find a way to transfer their risk exposure to that of the general public: it happened in the US in 2008 (with no referendum), it has kept happening in Greece for the past five years. Private banks don’t need three-letter acronym organizations to do it (three page blank check proposals work just as well) but they will use them if they are around.

As long as commercial banks are in control of entities such as central banks, the policy of privatized gains and socialized losses, aka the “global central bank put”, will never change.

And as long as private banks also get to determine policy, which they do thanks to thir pervasive domination of all the world’s politicians, the bailouts of these monstrous entities at the taxpayers’ expense will continue.

Incidentally, for those still dubious about how just one bank, in this case FDIC insured hedge fund (why is it still FDIC insured – because it has so many ATMs probably) Goldman Sachs, can control the world, here is a reminder.

 

 end
The 53 Billion euro bailout does not include shoring up the banking sector as that is the responsibility of the ECB.  As I stated yesterday how on earth are they going to fix the Greek banks?;

Don’t Tell Merkel: Greek Banks Need An Additional €10-14 Billion Bailout

To be sure, Germany has dug its heels in on Greece over the two weeks since PM Alexis Tsipras decided to put creditors’ proposals to a popular vote.

Even before the referendum hardened Chancellor Angela Merkel’s position, German FinMin Wolfgang Schaeuble and a whole host of Berlin lawmakers were up in arms at what they viewed as excessive accommodation of an increasingly belligerent beggar state. Even Bundesbank chief Jens Weidmann spoke out, deploring the ECB’s permissive attitude towards Greek banks and accusing Mario Draghi of monetary financing. 

Regardless of whether Greece comes away with a third bailout after Saturday’s Eurogroup meeting, no one can say Germany didn’t drive a hard bargain and indeed, Berlin has stood firm in the face of IMF calls for Greek debt writedowns even as Christine Lagarde’s haircut demands were bolstered this week by the US Treasury itself.

Germany’s position was summed up nicely on Friday by Hans Michelbach, a German lawmaker from Chancellor Angela Merkel’s Christian Social Union Bavarian sister party who told Bloomberg that “there must be no consent to a ponzi scheme, where old debts are settled only through new debt and the Eurogroup faces the same problem of Greece’s debt sustainability again in 2018.” “I’m not sure that the creditors won’t be fooled again “because so far all implementations have been questioned again repeatedly,” he added.

We’re sorry to break it to Mr. Michelbach, Frau Merkel, and the German taxpayer, but that €53 billion Greece is asking for will be just the start of things and we don’t mean in the sense that Athens will one day in the not-so-distant future be back in Brussels looking for a fourth bailout (which they probably will), we mean in the sense that Greece’s beleaguered banking sector is insolvent and will need to be recapitalized one way or another with some (or all) of the funds coming directly out of the pockets of the very same EU taxpayers that are now set to fund the third Greek sovereign bailout. As Reuters reports, the recap could well run into the tens of billions of euros:

Greece’s banks will need an estimated 10 to 14 billion euros of fresh capital to keep them afloat and more time before they reopen even if a deal is reached with European creditors on Sunday, a senior Greek banker told Reuters on Friday.

 

Despite their having bled more than 34 billion euros of deposits since December and Greece’s worsening economic outlook, banks are optimistic that branches can be reopened by the end of next week, the banker said.

 

National Bank, Piraeus, Eurobank and Alpha, which account for about 95 percent of the industry, will likely need to be recapitalised after an assessment by regulators and are not likely to return to a semblance of normalcy for months.

 

“There is an estimated need of about 10 to 14 billion euros in new capital,” the banker said. “Given the magnitude of the shock we have been through, regulators will take stock of the situation and the impact on non-performing loans. A stress test by September would allow time for things to normalise.”

And as for where the money come from, one “suggestion” is the as yet unused ESM direct recap fund (so, from the German taxpayer, essentially).  

Banks may get a capital injection from the European Support Mechanism’s DirectRecapitalisation Instrument (DRI), a new facility which has so far been unused.

 

It is unclear yet what conditions would be imposed by the ESM in return for such capital, although it is expected to involve a commitment to major restructuring of the Greek financial sector.

As a reminder, the DRI was created in order to avoid situations wherein countries borrowed from the ESM and used the money to recapitalize their banking sector. The problem with that arrangement was that it meant increasing the receiving government’s debt load, which in some cases had contributed to the banking sector’s problems in the first place, meaning governments were essentially borrowing money to recapitalize institutions whose insolvency was partly attributable to fiscal mismanagement. In other words, the DRI was created to help break the “pernicious” link between banks and their sovereigns.

The problem for Greek depositors is spelled out very clearly in the official DRI rule book:

More specifically, the bail-in of private investors (in accordance with the Bank Recovery and Resolution Directive), and the contribution of a national resolution fund (or Single Resolution Fund from 2016) as a precondition for the DRI to be used has shifted the bulk of potential financing from the ESM to the institutions themselves, along with their investors and creditors. 

 

The beneficiary institution would have to be (or likely to be in the near future) unable to meet the capital requirements established by the ECB in its capacity as supervisor. It would also have to be unable to obtain sufficient capital from private sources and the foreseen bail-in would not be sufficient to address the anticipated capital shortfall.

As you can see, if Greek banks need to be recapitalized (and they will), a depositor bail-in will in all likelihood be part of the “solution.” Of course unlike Cyrpus, it won’t be the Russian oligarch crowd who takes the hit, it will be regular Greeks as suggested last week by FT. As we noted in “As A Reminder, This Is What Capital Controls In Cyprus Looked Like,” we hope that Greeks have not placed too much faith in the idea that things will return to normal in the banking sector anytime soon. A crisis of confidence is nearly impossible to reverse in the short-term and if there is any place on earth where confidence is in short supply, it’s at Greek banks.

Indeed, even if a deal is reached this weekend and the ECB raises the ELA cap on Monday, it’s difficult to imagine that the deposit outflows will cease (would you trust your deposits in a Greek bank even with a “deal”?) and as suggested above, if capital controls are lifted, the situation will be even worse because Greeks will simply take the opportunity to withdraw all of their money at once. With the liquidity “cushion” down to just €750 million (according to same official who spoke to Reuters about the recap needs), deposit flight will clearly have to be funded via more ELA, which means whatever is left in terms of pledgable collateral will soon disappear even under the rather optimistic assumption that outflows are kept at between €80-100 million per day (the current run rate). At that point (unless the ECB decides to buy the banks more time by substantially lowering haircuts), it’s recap time and then … well, see above.

In the final analysis, no one is going to trust Greek banks for a very, very long time and talk of a depositor bail-in won’t do anything to help the situation. The acute lack of confidence means that any capital injected from EU bailout funds will promptly disappear as depositors continue to pull their funds, while the county’s rapidly deteriorating economic situation simultaneously drives up NPLs.

So get ready Germany; once your taxpayers have committed another €53 billion to help the Greek government pay back its existing loans, your next project is to figure out how to recapitalize the country’s insolvent banking sector.

end

 

Then we received this commentary from Yanis Varoufakis late this afternoon:

(courtesy zero hedge/Yanis Varoufakis)

Varoufakis’ Stunning Accusation: Schauble Wants A Grexit “To Put The Fear Of God” Into The French

Earlier we reported that Yanis Varoufakis, seemingly detained by “family reasons” would be unable to join his fellow parliamentarians and personally vote in what is likely the most important vote of Syriza’s administration: the one in which he and his party capitulate to the Troika and vote “Yes” to the proposal he and Tsipras urged everyone to reject just one week ago.

Subsequently, it was made clear what these family reasons are:

The self-described “erratic Marxist” will be on the nearby holiday island of … Aegina. In fact, he Tweeted that he reason for his absence is “family reasons”. Nevertheless, two hours before his Tweet was posted, the once obscure academic was spotted on the ferry boat “Phivos”, headed for Aegina, where his wife owns a stylish vacation home.

 

The author of the “global Minotaur” nevertheless sent a letter to the Parliament president saying he would vote “yes” for the proposal, although the letter will not be counted, given that Parliament regulations stipulate that only deputies on official Parliament business are allowed to cast votes via correspondence.

 

Judgment aside about his decision to take a holiday from a vote that his strategy guided Greece into, it was clear that he has Wifi on the ferry because this afternoon, While V-Fak may well have been in transit, the Guardian released an Op-Ed penned by Varoufakis titled “Germany won’t spare Greek pain – it has an interest in breaking us.” Readers can read it in its entirety here but here is the punchline:

This weekend brings the climax of the talks as Euclid Tsakalotos, my successor, strives, again, to put the horse before the cart – to convince a hostile Eurogroup that debt restructuring is a prerequisite of success for reforming Greece, not an ex-post reward for it. Why is this so hard to get across? I see three reasons.

 

One is that institutional inertia is hard to beat. A second, that unsustainable debt gives creditors immense power over debtors – and power, as we know, corrupts even the finest. But it is the third which seems to me more pertinent and, indeed, more interesting.

 

The euro is a hybrid of a fixed exchange-rate regime, like the 1980s ERM, or the 1930s gold standard, and a state currency. The former relies on the fear of expulsion to hold together, while state money involves mechanisms for recycling surpluses between member states (for instance, a federal budget, common bonds). The eurozone falls between these stools – it is more than an exchange-rate regime and less than a state.

 

And there’s the rub. After the crisis of 2008/9, Europe didn’t know how to respond. Should it prepare the ground for at least one expulsion (that is, Grexit) to strengthen discipline? Or move to a federation? So far it has done neither, its existentialist angst forever rising. Schäuble is convinced that as things stand, he needs a Grexit to clear the air, one way or another. Suddenly, a permanently unsustainable Greek public debt, without which the risk of Grexit would fade, has acquired a new usefulness for Schauble.

 

What do I mean by that? Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.

He does have a point: Recall “Forget Grexit, “Madame Frexit” Says France Is Next: French Presidential Frontrunner Wants Out Of “Failed” Euro.” So perhaps making an example of the social collapse that would result from a Eurozone exit, would be seen a good lesson for French voters ahead of the 2017 French presidential elections in Schauble’s mind

But is Varoufakis right? Perhaps … but also recall this from the FT in 2014 recalling Europe’s first formulation of Plan Z:

To the astonishment of almost everyone in the room, Angela Merkel began to cry.

 

“Das ist nicht fair.” That is not fair, the German chancellor said angrily, tears welling in her eyes. “Ich bringe mich nicht selbst um.” I am not going to commit suicide.

 

For those who witnessed the breakdown in a small conference room in the French seaside resort of Cannes, it was shocking enough to watch Europe’s most powerful and emotionally controlled leader brought to tears.

 

But the scene was even more remarkable, those present said, for the two objects of her ire: the man sitting next to her, French President Nicolas Sarkozy, and the other across the table, US President Barack Obama.

 

Greece was imploding politically; Italy, a country too big to bail out, appeared just days away from being cut off from global financial markets; and Ms Merkel, try as Mr Sarkozy and Mr Obama might, could not be convinced to increase German contributions to the eurozone’s “firewall” – the “big bazooka” or “wall of money” they believed had to grow dramatically to fend off attacks by panicking bond traders.

 

Instead, a cornered Ms Merkel threw the French and American criticism back in their faces. If Mr Sarkozy or Mr Obama did not like the way her government ran, they had only themselves to blame. After all, it was their allied militaries that had “imposed” the German constitution on a defeated wartime foe six decades earlier.

 

“It was the point where clearly the eurozone as we know it could have exploded,” said a member of the French delegation at Cannes. “It was the feeling [that with] the contagion, at this point, you were on the brink of explosion.”

Will this time Merkel risk the explosion of the Eurozone with her own actions: her biggest historic legacy? Probably not, and while Schauble has much sway, it is still Merkel’s word over his.

No, Varoufakis may be right about Greece being made an example of (unless he is merely trying to deflect blame from himself for putting Greece in this position and for conspicuously avoiding voting for a plan he himself derided untilt the end), but the one person who will decide the future of Greece in the Eurozone is neither Schauble nor Merkel but Mario Draghi, also known as Goldman Sachs. Because if Goldman wants more Q€, it will get more Q€.

Graham Summers comments on our two crisis countries; Greece and China

(courtesy Graham Summers/Phoenix Capital Research)

The Smart Money’s Using This Bounce To Prepare For the Next Round of the Crisis

Phoenix Capital Research's picture

(courtesy Graham Summers/Phoenix Capital Research)

 

Stocks are rallying today because of:

 

1)   Hype and hope of a Greek deal

2)   China has stopped trading of 49% of stocks and threatened to arrest anyone who is short-selling the market (talk about a backstop!)

 

Regarding Greece, no deal has been made. Greek PM Tsipras has submitted a proposal for a new deal… which is almost EXACTLY the same as the deal that 61% of the Greek population rejected via referendum last week.

 

Tsipras has completely backed himself into a corner. He used up a lot of goodwill with EU officials when he let Greece to default by staging a referendum for Greek voters AFTER the due date on Greece’s debt.

 

The voters obviously voted “No” on the EU’s deal… so Tsipras had to come up with a new proposal. The only thing he can suggest that would possibly sit well with Greek voters is “debt forgiveness,” which Germany has stated it is absolutely opposed to.

So now Tsipras must decide… does take a bad deal, which will force a popular revolt in Greece (and likely his expulsion from office) or is he the man who takes Greece out of the Eurozone?

 

His finance minister has already quit his post… and doesn’t seem too upset about it. Perhaps Tsipras will follow suit, Greece will elect another PM and the whole charade can start all over again?

 

 

The Greek drama has engaged in “extend and pretend” for five years now. It’s highly likely that this will continue this time around with Greece accepting a bad deal and plunging further into economic collapse until the next debt problem emerges.

 

As for China…

 

Anyone who bothered to look at the actual data coming out of China (the unmassaged data, not the fictitious GDP numbers), knew the China economy was in collapse. It was only a matter of time before its stock bubble joined suit.

 

China, which we are told is moving towards free market capitalism, has thus far dealt with the crisis by halting 49% of stocks from trading and threatening to arrest (and likely “disappear” anyone caught short-selling stocks or somehow promoting market “instability”).

 

The market is bouncing on this… it’s now coming up against the first line of resistance (blue line) established by the uptrend from late 2014. If we break above that we could even bounce to retest the longer-term bubble bull market trendline (green line)

 

 

Crises never unfold in straight lines. Investors forget that when the Tech Bubble burst, stocks were a roller coaster with over 8 moves of 16% or greater in the span of six months.

 

 

China’s bubble was even larger than the Tech Bubble. The price volatility will be even more severe… but the bubble has definitively burst… and the market will be heading lower in the coming weeks.

 

In short… the two biggest reasons for the markets to be rallying today (Greece and China) are simply temporary issues. They will resolve, very likely for the worse, in the coming weeks. Smart investors should be using this bounce to prepare for the next wave of the Crisis.

 

end

 

The global war on pensioners:  images of a broken Greece!!

 

(courtesy zero hedge)

The Global War On Pensions Gets Personal – Scenes From A Dying Nation

We have been warning about the ‘global war on pensioners’ for a while (most recently here, here, andhere) but the soul-destroying images of Greek pensioners’ hopes being crushed bring that central-bank-driven repression front-and-center…

As The Wall Street Journal reports, fear is growing in Greece as the decisive hour nears for the nation…

Greek banks will likely run out of cash by the end of the week, two senior Greek bankers said.

 

“Not all banks will run out of cash at once,” one of the bankers said, “but they’ll all be out within hours of each other.”

 

 

Shortages of medications are beginning to bite, compounding distress especially among older Greeks.

 

Parents of babies and young children are stocking up on formula and other basic medications, pharmacists say.

 

“In some cases, we have shortages because people are freaking out panic-buying.We’re trying to advise them against that,” said Mando Nikolopoulou, a pharmacist.

 

“We’re seeing significant shortages in heart and blood-pressure medications, but I’m less worried about that because there are Greek-made generics that people can turn to when the branded ones run out for good,” she said. “But insulin, that’s critical—diabetics need it to survive, and we’re really low on stocks.”

 

 

Yiannis Konstantinidis, a 74-year-old grandfather to two little girls, refused to join the queue, even though he could have done with an extra €60 ($66)—the maximum daily withdrawal amount under capital-control rules.

 

“I brought the kids to have a bit of fun, to buy them ice cream,” he said as 6-year-old Chryssa pulled on his hand. “They may be young but they know something’s wrong. The television is playing at home all day, there are people lining up at the banks, they’re asking me ‘what’s happening, Grandpa?’”

 

“I just want Tsipras to get a deal, any deal, but it looks like the Europeans are fed up with us now,” Mr. Konstantinidis said, adding he had voted with the minority of Greeks who backed the creditors’ proposals, which he believed would secure the country’s euro membership despite hitting pensioners like himself hard.

Scenes from a dying nation…

As Martin Armstrong adds,

All mainstream news is painting the Greeks as the bad guys and the Troika as the savior of Europe. Quite frankly, it is really disgusting. Pictures of an elderly Greek pensioner have gone viral depicting what the Troika is deliberately doing to the Greek people trying to punish them for their own failed design of the Euro in a system that is just economically unsustainable.

 

[The images above] expose the core of the issue of how ordinary Greeks are being tormented by EU politicians who pretend to care about people. This is not a Greek debt crisis, this is a Euro Crisis and they refuse to admit that what they designed was solely for the takeover of Europe at the cost of the future of everyone from pensioners to the youth.

 

This is just the tip of the iceberg. We are facing terrible times ahead because socialism is completely collapsing. Government employees have lined their pockets and this is precisely the end game how Rome collapsed. It was not the barbarians at the gate. It was the the Roman army was not paid and they began hailing their various generals as emperor and they attacked cities who did not support their choice sacking their own people. Only after weakening themselves, then the barbarians came in for easy pickings. If Russia really wants to take Europe, all they have to do is be patient. They will self-destruct for the Troika cannot see any change in thinking for that means they must admit that they were wrong from the outset.

*  *  *

end
Today’s last word on the Greek fiasco
(courtesy Raul Meijer)

Someone Pull The Plug Or This Will End In War

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

I was going to write up on the uselessness of Angela Merkel, given that she said on this week that “giving in to Greece could ‘blow apart’ the euro”, and it’s the 180º other way around; it’s the consistent refusal to allow any leniency towards the Greeks that is blowing the currency union to smithereens.

Merkel’s been such an abject failure, the fullblown lack of leadership, the addiction to her right wing backbenchers, no opinion that seems to be remotely her own. But I don’t think the topic by itself makes much sense anymore for an article. It’s high time to take a step back and oversee the entire failing euro and EU system.

Greece is stuck in Germany’s own internal squabbles, and that more than anything illustrates how broken the system is. It was never supposed to be like that. No European leader in their right mind would ever have signed up for that.

Reading up on daily events, and perhaps on the verge of an actual Greece deal, increasingly I’m thinking this has got to stop, guys, there is no basis for this. It makes no sense and it is no use. The mold is broken. The EU as a concept, as a model, has failed and is already a thing of the past.

It’s over. And anything that’s done from here on in will only serve to make things worse. We should learn to recognize such transitions, and act on them. Instead of clinging on to what we think might have been long after it no longer is.

Whatever anyone does now, it’ll all come back again. That’s guaranteed. So just don’t do it. Or rather, do the one thing that still makes any sense: Call a halt to the whole charade.

As for Greece: Just stop playing the game. It’s the only way for you not to lose it.

There’s no reason why European countries couldn’t live together, work together, but the EU structure makes it impossible for them to do just that, to do the very thing it was supposed to be designed for.

Germany runs insane surpluses with the rest of the EU, and it sees that as a sign of how great a country it is. But in the present structure, if one country runs such surpluses, others will need to run equally insane deficits.

Cue Greece. And Italy, Spain et al. William Hague for once was right about something when he said this week that the euro could only possibly have ended up as a burning building with no exits. This is going to lead to war.

Simple as that. It may take a while, and the present ‘leadership’ may be gone by then, but it will. Unless more people wake up than just the OXI voters here in Greece.

And the only reason for it to happen is if the present flock of petty little minds in Berlin, Paris, London and Brussels try to make it last as long as they can, and call for even more integration and centralization and all that stuff. The leaders are useless, the structure is painfully faulty, and the outcome is fully predictable.

Europe has no leadership, it has a varied but eerily similar bunch of people who crave the power they’ve been given, but lack the moral sturctures to deal with that power. Sociopaths. That’s what Brussels selects for.

And Brussels is by no means the only place in Europe that does that. What about people like Schäuble and Dijsselbloem, who see the misery in Greece and loudly bang the drum for more misery? What does that say about a man? And what does it say about the structure that allows them to do it? At times I feel like the Grapes of Wrath is being replayed here.

It’s nice and all to claim you’re right about something, but if your being right produces utter misery for millions of others, you’re still wrong.

Greece is not an abstract exercise in some textbook, and it’s not a computer game either. Greece is about real people getting hurt. And if you refuse to act to alleviate that hurt, that defines you as a sociopath.

Germany now, and it took ‘only’ 5 months, says Greece needs debt relief but it also says, through Schäuble: “There cannot be a haircut because it would infringe the system of the European Union.” That’s exactly my point. That’s silly. And looking around me here in Athens for the past few weeks, it’s criminally silly. You acknowledge what needs to be done, and at the same time you acknowledge the system doesn’t allow for what needs to be done. Time to change that system then. Or blow it up.

I don’t care what people like Merkel and Schäuble think or say, once people in a union go hungry and have no healthcare, you have to change the system, not hammer it down their throats even more. If you refuse to stand together, you can be sure you’ll fall apart.

Get a life. Greece should just default on the whole thing, and let Merkel and Hollande figure out the alleged Greek debt with their own domestic banking sectors. They’re the ones who received all the money that Greece is now trying to figure out a payback schedule for.

Problem with that is of course that very banking sector. They call the shots. The vested interests have far too much power on all levels. That’s the crux. But that’s also the purpose for which a shoddy construct like the EU exists in the first place. The more centralized politics are, the easier the whole thing is to manipulate and control. The more loopholes and cracks in the system, the more power there is for vested interests.

Steve Keen just sent a link to an article at Australia’s MacroBusiness, that goes through the entire list of new proposals from the Syriza government, and ends like this:

Tsipras Has Just Destroyed Greece

This is basically the same proposal as that was just rejected by the Greek people in the referendum. There are some headlines floating around about proposed debt restructuring as well but I can’t find them. This makes absolutely no sense. The Tsipras Government has just:

renegotiated itself into the same position it was in two months ago;
• set massively false expectations with the Greek public;
• destroyed the Greek banking system, and
• destroyed what was left of Greek political capital in EU.

 

If this deal gets through the Greek Parliament, and it could given everyone other than the ruling party and Golden Dawn are in favour of austerity, then Greece has just destroyed itself to no purpose. Markets are drawing comfort from the roll over but how Tsipras can return home without being lynched by a mob is beyond me. And that raises the prospect of any deal being held immediately hostage to violence.

Yes, it’s still entirely possible that Tsipras submitted this last set of proposals knowing full well they won’t be accepted. But he’s already gone way too far in his concessions. This is an exercise in futility.

It’s time to acknowledge this is a road to nowhere. From where I’m sitting, Yanis Varoufakis has been the sole sane voice in this whole 5 month long B-movie. I think Yanis also conceded that it was no use trying to negotiate anything with the troika, and that that’s to a large extent why he left.

Yanis will be badly, badly needed for Greece going forward. They need someone to figure out where to go from here.

Just like Europe needs someone to figure out how to deconstruct Brussels without the use of heavy explosives. Because there are just two options here: either the EU will -more or less- peacefully fall apart, or it will violently blow apart.

 

 end
 From Martin Armstrong Economics:  A poll suggests that 60% of the Dutch want out of the Euro!!
(courtesy Martin Armstrong Economics and special thanks to Robert H for sending this to us)

DFT of Netherlands Poll: 60%+ of Dutch Want Out of Euro

griekenland+grexit

The leaders of the EU are on a collision course with the population of Europe. This is now moving beyond Greece. Even in Northern Europe in Germany and the Netherlands, we are starting to see the majority of people wanting out of the euro – if they were allowed to vote. So wait until the economy really turns down after 2015.75. This is going to be very serious. The DFT in Netherlands conducted a poll showing the majority of Dutch now want out of the euro. The leaders are not just projecting their jobs. The euro is irreversible only because they will lose power and jobs; this has nothing to do with making Europe better.

end
(courtesy Nick Cunningham /Oil Price.com)

Oil Price Plunge Reignites Fears for Indebted Shale Companies

Submitted by Nick Cunningham via OilPrice.com,

The latest fall in oil prices is once again putting pressure on indebted shale companies.

After falling from over $100 per barrel down to $43 per barrel at its lowest point in March of this year, WTI prices rebounded with a 40 percent rise, trading for more or less $60 per barrel for May and June.

The rebound appeared to spell the end to the worst of the glut, with production plateauing, if not falling, and demand starting to rise. Although estimates were all over the map, many saw a strong bounce coming in the oil markets, with some even predicting supply shortages before the end of the year.

A few companies donned a renewed sense of confidence, suggesting that they would start drilling again with oil prices in the $60-per-barrel range.

Still, mountains of debt had accumulated across the U.S. shale sector. That didn’t go away but was sort of on hold as drillers, and their financial backers, hoped that further price increases would allow them to pay down debt. To stay afloat, drillers issued new debt and equity.

But the renewed plunge in oil prices is kicking off a fresh round of debt concerns. Bloomberg reported that energy-related junk bonds have lost 3 percent of their value in the last two weeks, after WTI crashed to nearly $51 per barrel and Brent fell below $57. Bond traders are avoiding high-yield, high-risk debt, and yields have jumped to nearly 10 percent, a level normally associated with default risk.

 

“The energy sector of the high-yield market continues to be a silo of misery,” Margie Patel with Wells Capital Management, told Bloomberg telephone interview. “If we stay near these levels, marginal high-cost producers won’t be able to survive.”

Bonds due in 2020 for Energy XXI, a driller in Louisiana, are now trading at 84.5 cents on the dollar, and Oklahoma-based SandRidge has seen its debt fall to 87 cents on the dollar.

The markets will get a clearer picture as second quarter earnings season arrives, as indebted shale companies provide some clues into their ongoing struggles.

However, the outlook moving forward may be gloomier than whatever they report in the second quarter.

The swift drop in oil prices over the past year was driven by tepid demand and surging supplies. But the renewed drop has occurred because of broader market turmoil, which comes on top of the ongoing glut. Greece has defaulted on its debt and the stage is set for its exit from the euro, with unknown ramifications for the EU. That could weaken oil prices through a stronger dollar, falling EU demand, and a higher perception of risk.

More concerning is the meltdown in the Chinese financial system. The Shanghai Composite and has lost more than 30 percent of its value since June and the Shenzhen Composite has seen 40 percent of its value vanish into thin air. While the precipitous decline raised worries at first and saw modest action from the government, the turmoil is quickly turning into a meltdown, sparking panic in China and around the world.

Now Chinese regulators, in a desperate attempt to stem the outflows, have banned large shareholders selling their stakes for at least five months. Companies representing roughly 45 percent of the two exchanges (or $2.4 trillion) are suspending trading, trying to avoid more sell offs.

“We are seeing a panic in China. It goes back to 2008, when it always seemed the Chinese were really in control of their economy. They were the first ones out there with a stimulus, and now it looks like they don’t know what to do,” oil historian and vice chairman of IHS saidon CNBC on July 8.

Of course, as the largest oil importer in the world, China has massive influence over prices. A sharp downturn could crush oil prices.

That would ensure larger default rates in the shale industry.

 

end

 

(courtesy zero hedge)

Crude Slips After Oil Rig Count Rises For 2nd Consecutive Week

For the 2nd week in a row – after declines every week this year – the US oil rig count increased (up 5 to 645). The total rig count rose 1 to 863 (for the 3rd week in a row). The initial reaction was a smal snap below $52.50 but WTI is stabilizing now…

 

3rd week in a row of total rigs increased…

 

Charts: Bloomberg

end
Your important early morning currencies/interest rates and bourses results overnight:

 

 

 

Euro/USA 1.1189 up .0127

USA/JAPAN YEN 122.34 up .645

GBP/USA 1.5509 up .0140

USA/CAN 1.2695 down .0014

This morning in Europe, the Euro rose by a considerable 127 basis points, trading now well above the 1.11 level at 1.1189; Europe is still reacting to deflation, announcements of massive stimulation, a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, a possible deal avoiding an imminent  default of Greece and the Ukraine, and rising peripheral bond yields.

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 down again in Japan by 64 basis points and trading just below the 123 level to 122.34 yen to the dollar.

The pound was up smartly this morning by 140 basis points as it now trades just above the 1.55 level at 1.5509, still 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 up slightly by 14 basis points at 1.2695 to the dollar.

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: this morning : up 117.86 points or 0.60%

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

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

Gold very early morning trading: $1163.50

silver:$15.46

Early Friday morning USA 10 year bond yield: 2.36% !!! up 5 in basis points from Thursday night and it is trading just below  resistance at 2.27-2.32%

USA dollar index early Friday morning: 95.63 down 64 cents from Thursday’s close. (Resistance will be at a DXY of 100)

 

This ends the early morning numbers, Friday morning

And now for your closing numbers for Friday:

 

Closing Portuguese 10 year bond yield: 2.85%  down 7 in basis points from Thursday

Closing Japanese 10 year bond yield: .45% !!! par in basis points from Thursday/still very ominous

Your closing Spanish 10 year government bond, Friday, down 4 in basis points

Spanish 10 year bond yield: 2.13% !!!!!!

Your Friday closing Italian 10 year bond yield: 2.14% down 4 in basis points from Thursday: (very ominous)

trading 1 basis point higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

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

 

Euro/USA: 1.1135 up .0075 ( Euro up 75 basis points)

USA/Japan: 122.82 up  1.125 ( yen down 113 basis points)

Great Britain/USA: 1.5498 up .0130 (Pound up 130 basis points)

USA/Canada: 1.2702 down .0009 (Can dollar up 19 basis points)

The euro rose by a fair amount today. It settled up 75 basis points against the dollar to 1.1135 as the dollar traded in southbound  today against most of the various major currencies. The yen was down by 113 basis points and closing well above the 122 cross at 122.82. The British pound gained back huge ground today, 130 basis points, closing at 1.5498. The Canadian dollar gained some more ground against the USA dollar, 9 basis points closing at 1.2702.

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: 2.41% up 10 in basis point from Thursday// (well above the resistance level of 2.27-2.32%)/ominous

Your closing USA dollar index:

96.02 down 25 cents on the day

.

European and Dow Jones stock index closes:

 

England FTSE up 91.75 points or 1.39%

Paris CAC up 145.85 points or 3.07%

German Dax up 319.22 points or 2.90%

Spain’s Ibex up 329.70 points or 3.08%

Italian FTSE-MIB up 668.89 or 3.00%

 

The Dow up 211.79  or 1.21%

Nasdaq; up 79.99 or 1.63%

 

OIL: WTI 52.69 !!!!!!!

Brent:58.63!!!

 

Closing USA/Russian rouble cross: 56.32  up 1  rouble per dollar on the day

end

 

And now for your more important USA stories.

 

NY trading for today:

Dramamine Required: Stocks End Week Unchanged Despite Nausea-Inducing Wild Ride

Despite the rampacious surge in stocks, some context on the week… Nasdaq & S&P 500 End Red, Small Caps and Trannies squeezed to death…

 

Seems to be summed up thus…

 

Perhaps the week in futures shows the violence of the swings more impressively…

 

A Double Squeeze…

 

From last night’s cash close, stocks never looked back as they saw the Tsipras proposal as a done-deal…

 

Cash gapped open at the open… (Note, before it slipped,this was the biggest day for the Nasdaq since January!!), and never went anywhere from the initial squeeze..

 

Before we move on – it is worth noting that The S&P 500 is still below 2,100, The Dow is still below 18,000, and The Nasdaq is still below 5,000.

Quite a week in China A-Shares ETF…

 

VIX was crushed today…

 

There was only one thing keeping the dream alive in stocks… The BoJ!!

 

Some context across assets – Since “OXI!” Vote…

 

And Since “Greferendum” announcement…

 

Treasuries were smacked with an ugly stick in the last 2 days, dragging yields positive for the week…

 

This is the worst 2 day rip in yields since the Taper Tantrum over 2 years ago…

 

The USDollar dropped early on EUR strength then rallied as US opened…

 

But the real story of the day was JPY (and in particular EURJPY) – the biggest jump in EURJPY since April 2013 – even more than the day QE3 died and QQE2 was unleashed…

 

Commodities were mixed today, crude fell on further rig count increases, copper slipped and PMs were flat…

 

This is WTI’s worst 2 week run since Dec 2014…

 

Gold has been peculiarly quiet the last 2 days…Since China took control – someone wanted gold under control…

Charts: Bloomberg

Bonus Chart: “Yes, we are all different!”

 

 end

Snow In The Summer? Card Data Shows Unexpected, “Disappointing” Drop In June Retail Spending

Even as volatility around the globe has soared in many cases to record levels (see China), one of the reasons why the S&P has desperately defended the 200 DMA with US stocks vol barely budging from multi year lows is that pundits, for some inexplicable reason project that Q2 earnings season will be good. It won’t be.

But even if one presumes that non-GAAP EPS fail to pull an Alcoa and add back hundreds of billions in restructuring charges to the “earnings” bottom line, there is one last wild card: the US economy is doing well, the same pundits say, pushed forward by the resilient US consumer.  There is a problem with that too.

After staging another dramatic slump early in the year, which was once again blamed on snow to offset what was supposed to have been an “unambiguously good” for US spending gas price slump, retail sales finally picked up in May, laying out hope that the June print and onward, would be “good enough” to suggest that the US economy is recovering, some 6 years after the “recession ended” mind you, and is on track for a Fed rate hike.

Unfortunately that ointment just got its own particular fly when moments ago Bank of America’s internal card data revealed that after rising for 3 consecutive months, retail spending ex autos just posted its first monthly drop, declining -0.1% from May.

Based on BAC internal data, which tracks aggregate spending on credit and debit cards, retail sales ex-autos declined 0.1% mom in June on a seasonally adjusted basis. This follows a strong 0.8% gain in May.

Obviously since the data did not conform to the traditional narrative, BofA promptly had to “ask if there is anything unusual in the data that may affect the monthly figures.” And since BofA can not blame snow in the summer, it said that “one possibility is spending may have been held back by the extended school year. Due to school closings during the winter, some districts extended the school year, thereby postponing summer vacations.”

There is also the far more likely possibility that the US consumer – that 70% of marginal source of US GDP – is, despite all the propaganda, actually barely holding on. We give credit to BofA for at least considering this option:

“It is hard to prove if such a distortion exists. Therefore, we are left to conclude that the BAC internal data painted a disappointing picture of the consumer in June, especially considering our forecast for a stronger consumer in the second half of the year.”

And while one can ignore BofA’s commentary, it is worth noting that its spending card data is a very good immediate leading indicator to what official US seasonally adjusted retail sales due in a few days reveals, a number which Janet Yellen almost certainly already has ahead of her speech on the US economy in Cleveland today at 12:30 pm. A speech which will have a far greater impact on the US market than this week’s backward looking FOMC minutes as it reveals the Fed’s current thinking. Which, for all intents and purposes, surely means that the first rate hike, first due last month, has now been pushed back to 2016… or rather we should say “indefinitely.”

 

end

 

GM auto sales in China plummeting:

 

(courtesy zero hedge)

 

Why GM Is Back Below Its IPO Price, Part 2 – Chinese Auto Sales Collapse At Fastest Rate In 3 Years

A week ago we warned of the odd build up in inventories in GM’s parking lots in China. It appears those warning were spot on as WSJ reports, China’s new car sales recorded the first year-over-year decline in more than two years in June, as slowing economic growth and falling stock markets hit the world’s largest auto market.“2015 will be an off-year for the Chinese car market,” said Dong Yang, a vice president for the auto manufacturers’ association, and we note auto dealers are seeing orders cancelled at a frenetic pace as it appears stock margin calls are draining the liquidity car-buyers once had.

As The Wall Street Journal reports,

China sold 1.51 million passenger vehicles last month, down 3.4% from a year earlier, the China Association of Automobile Manufacturers said Friday. That compares with a 1.2% year-over-year rise recorded in May and a 3.7% increase in April.

 

The performance was the worst since February 2013 when car sales fell 8.3% on-year during the weeklong Lunar New Year Holiday when car showrooms are closed. Stripping out the holiday factor, the last time China’s car market posted a decline was in September 2012, when a territorial dispute between Beijing and Tokyo over a group of uninhabited islands in the East China Sea hit demand for Japanese cars.

 

… also cut its growth forecast for China’s automobile market in 2015 to 3% from the previous 7%.

 

“2015 will be an off-year for the Chinese car market,” said Dong Yang, a vice president for the auto manufacturers’ association. He said the slowdown was caused by a confluence of factors including the cooling economy, increasing restrictions on car ownership to combat congestion and pollution and stock market volatility.

 

“Neither a bull market nor bear market does good to car sales. Our surveys of dealers show that visiting volumes to car showrooms dropped sharply in the first-half,” said Mr. Dong.

 

 

“The painful market adjustment currently under way is far from over,” he said.

*  *  *

As we noted previously, it appears there just is no more room to stuff inventories in its Shenyang, Lianing province parking lots  (as China has become the new car graveyard over the last 3 years)

*  *  *

And finally, there is an even bigger problem…

  • *CHINA PASSENGER CAR SALES HIT BY STOCK-MARKET ROUT, CUI SAYS
  • *CHINESE CANCELLING CAR PURCHASES ON STOCKS ROUT, PCA’S CUI SAYS

They really better keep that massively inflated bubble of a stock market up or things are about to get much worse.

Because inventories are surging…

end
Retail sales are down 3.4% year over year, and yet inventories are up 5%.  As I have indicated to you on previous commentaries, the key inventory/sales ratio is flashing a huge red beam:
(courtesy zero hedge)

Here Is The Flashing Red Light In The Inventory-Sales Ratio

 

Recession watchers stay tuned… Wholesale Sales rose a mere 0.3% MoM (missing expectations of a 0.9% rise) but sales tumbled 3.4% YoY – the most since the financial crisis. Hopers will look at the rise in inventories (+0.8% MoM vs +0.3% exp.) as GDP positive but at some point the hope for a sales pick up fades and inventory stuffing stops (Sales -3.4% YoY, Inventories +5.0% YoY). But what should be worrying everyone right now is the inventory-to-sales ratio holding at recession levels.

 

Big miss in MoM sales and biggest drop in YoY sales since the financial crisis…

 

and along with a surge in inventories, leaves the critical inventory-to-sales ratio flashing red…

 

And guess where inventrories are soaring the most…

 

Here’s why this matters so much, as we explained previously…

 

Despite 22 years of correlations (and obvious causations), asset-gatherers and commission-takers still think this time is different and channel-stuffing and ‘if we build it, they will come’ inventory overbuilds will be bought away in a swarm of freshfaced crappy creditworthiness consumers… not this time – as peak debt is now upon us.

 

Charts: Bloomberg

end

Dave Kranzler talks about Greece and the plunging retail sales:

(courtesy Dave Kranzler IRD)

Greece Mattered To Hedge Fund Algos – Retail Sales Starting To Plunge

Dr. Paul Craig Craig Roberts called it three days ago after if become obvious – via the IMF report on Greek debt – that the U.S. had started to flex its muscles in this situation:

Victoria Nuland has already paid a visit to the Greek prime minister and explained to him that he is neither to leave the EU or cozy up to the Russians or there will be consequences, polite language for overthrow or assassination. Indeed, the Greek prime minister probably knows this without need of a visit.  – Paul Craig Roberts, LINK

The financial implications of a Greek default are obvious once you consider the off-balance-sheet OTC derivatives side of the equation.  There’s no question that the biggest exposures to this have been incurred by Deutsche Bank (see the sudden firing of the CEO) and the big U.S. banks who dominate the OTC derivatives game.

But Dr. Roberts explains why Greece is important to the U.S. effort to keep NATO together. While the IMF functions as the cover-story for the financial terrorism the U.S. inflicts on the world (please read “Confessions Of An Economic Hit Man,” by John Perkins), NATO plays an even more important role for the U.S. in that it functions as a “front” for the mechanism by which the U.S. attempts to impose its military terrorism and political hegemony on the entire globe.

Meanwhile, the economic condition of the United States continues to deteriorate beneath the surface of the most reckless and wanton money printing and market intervention in the history of the world.

The latest data from Bank of America shows retail sales ex-autos are tanking, despite the absence of a polar vortex (source: Zerohedge – click to enlarge):

RetailSales

As you can see, there’s actually been a well-defined downtrend in retail sales ex-autos since early 2013.  And the latest data from BofA, based on credit card data, shows a curious drop in June.Note that credit card data is based on actual sales transactions, as opposed to the Census Bureau data – brown line – which is based on unreliable data estimates and mystical seasonal adjustments.

Please also note that most gasoline sales are done with credit cards.  With the price of gasoline higher in May and June, I have no doubt that the retail sales ex-auto and gasoline would likely be negative.

Several other manufacturing metrics continue to show that the real economy continues to tank.  In fact, Marketwatch of all propaganda sources has reported that the manufacturing sector is in a “technical recession” – LINK.  Moreover, the latest data in June showed real average hourly earnings had declined in May from April.  How is at all possible that the job market is “strong” if the price of labor falls?

Perhaps this is why Chicago Fed stooge, Charles Evans, was out yesterday whining for a delay in rate hikes until mid-2016 – LINK.  While Dr. Roberts predicted the resolution of the Greek “crisis” based on the “background” presence of the omnipotent United States Government, I have successfully forecast no rate hikes this year based on the omnipresence of rapidly deteriorating economic data.

The housing market is next…

 

end

 

Let us wrap up with week with Greg Hunter’s take on the major events effecting us in the past 7 days:

(courtesy Greg Hunter/USAWatchdog)

 

Iran Nuke Deal No Deal, Greek Crisis Latest, China Market Plunge, NYSE Glitch

4_jpgBy Greg Hunter’s USAWatchdog.com (WNW 198 7.10.15) 

Have you ever noticed this many strange things going on at the same time?  The Iran nuke deal is going poorly.  Greece is looking like it will be plunged into an even bigger depression.  China stock market has turned from hero to zero in a huge market plunge in the last few weeks.  The US stock markets are gyrating up and down with big swings.  There is major hacking going on from stock exchanges to the US government, and Obama and Congress are busy setting up secret trade deals and secret directives.  What is going on?  I say the end of this debt based money system is a process, and this is an ugly process.

I want to start with the Iran nuclear negotiations going on now, and they are not going good.  I have predicted there is going to be no deal.  The latest blurb from Iran’s Foreign Minister is him saying“Never threaten an Iranian.”  This quote says it all and is screaming that negotiations are NOTgoing well.  The Iranians have already called everybody in the Obama Administration liars and are not backing down on not allowing inspections of its military facilities.  Iran also wants immediate relief from UN sanctions.  This is totally opposite what the Obama Administration wants.  Even if the Obama Administration caves into these demands, Congress will not approve of the deal.  About the best thing Secretary of State John Kerry has said is he “will not be rushed.”  At some point, you have to fish or cut bait.  I would like a meaningful deal, but the data is flashing to me there will be no deal to curtail Iran’s nuclear program.  After that is realized, the next question will be, now what?

The Greeks want another $54 billion in bailout money from the EU and some big debt cuts.  Who knows how this will end, but it can’t be good as a Sunday deadline looms.  Greek banks are already closed and broke for the most part.  A “no deal” vote by the EU will surely plunge Greece, and probably the rest of the EU, into turmoil.  There are very big problems with Spain, Italy and Portugal.  They all have at least 100% debt to GDP.  We all know when debt to GDP goes to 100%, bad things happen.  In Italy and Portugal, the debt to GDP is about 130%.  It’s not just Greece that needs a debt cut, but many other countries need a debt cut because they cannot pay—period.  If the debt is cut, the value of the bonds will be cut, and then all hell will break loose.  We are pretending the world is solvent when it is insolvent and drowning in debt that will never be repaid, and that includes the US.

The China miracle stock market that has gone up more than 130% in the last year has turned into a nightmare.  Some say the US spy agencies have attacked it, but a good friend of mine that lives in China and teaches economics says it is just a bubble.  He tells me the Chinese people have all been playing the market and have been doing it with borrowed money.  This is just the bursting of a very big bubble.  One day it’s down 6% and the next it’s up 6%.  That is not the sign of a healthy market.

The US stock exchange was crashed this week, and trading was suspended in what is called a “glitch.”  Some speculate it was an attack; others say it was a test run for a false flag.  One thing is for sure, the US is in very big debt trouble, just like the rest of the world, and it will not end well.

Join Greg Hunter as he looks at these stories and more in the Weekly News Wrap-Up.

end

 

Well that about does it for tonight

 

 

I will see you Monday night

Harvey

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4 comments

  1. Lets stop calling it cashless society. That makes it sound like society chooses to be cashless. We should call it ‘cash note bail-in’ because that is what it will be. My personal scenario planning for cashless is even more advanced than a few weeks ago. What difference will it make? Entirely positive for me. ‘They’ used to know my spend on things like cereals and motor cars, after they force us cashless, ‘they’ will quite simply cease to know anything useful about me at all. There will be all sorts of business opportunities. Every grocer, shoe maker and market gardener becomes a de-facto real honest banker. Any one can keep book, and nobody needs a licence from the Pope in Rome or the IMF to do this.

    Like

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