Renamed Again …

Upon the suggestion of one of our readers, we have renamed the 'aggregated news' page a second time, this time from 'Odds & Ends' to 'Tidbits'. Per definition, 'odds and ends' are 'miscellaneous items' (trivia: the term originated in sawmills and lumberyards, describing irregularly cut pieces of board and end pieces trimmed from boards cut to specific length), while 'tidbits' are 'choice morsels'.

So here we go.

 

Greece – The Paymaster Drops In

Angela Merkel is finally visiting Greece in person. As might be imagined, her arrival in the crisis-stricken country is greeted with joy by everybody there. In fact, it seems there is a storm of protests in the works. From our perspective the important point is that this is yet another sign that the eurocracy is by no means prepared to let Greece go. The often invoked 'irreversibility' of the euro must not be questions and will apparently be defended at all costs.

Der Spiegel: Merkel Ventures to Athens in Late Show of Solidarity (sub-titled 'Un-welcome Wagon')

A few choice quotes:

 

 

„Merkel, hated by many Greeks who hold her personally responsible for their economic plight, will encounter massive protests by Greece's left-wing opposition and trade unions.


"She does not come to support Greece, which her policies have brought to the brink. She comes to save the corrupt, disgraced and servile political system," said Alexis Tsipras, who leads the opposition Syriza alliance. "We will give her the welcome she deserves."


[…]


Some 7,000 police drafted from all over Greece will be deployed in Athens where they will turn the government district into a No-Go area for protesters during her six hours of talks with Prime Minister Antonis Samaras, President Karolos Papoulias and industry representatives.


Snipers will man the roofs of surrounding buildings and police helicopters will accompany her convoy on the long trip from Athens airport to the city center, media reports said. One could be forgiven for thinking she was visiting Kabul rather than a long-standing European ally.“


 


(emphasis added)

 

'More Time' for Greece


In an implicit recognition of Greece's ongoing de facto insolvency, the IMF and the euro-group are now considering 'giving Greece more time' to reach its budget targets, just as long as 'it doesn't cost more'. However, as the ECB's Jörg Asmussen already said a little while ago, "it is logically quite wrong to say: we need more time, but not more money." So this idea seems to suffer from an inherent contradiction. Nevertheless, here it is:


Reuters: Euro zone, IMF mull 2-year extension for Greek bailout


Apparently though things haven't yet gone beyond the 'mulling' stage (we predict they eventually will…), as Finland and the Netherlands are unhappy about the idea.

 


“Euro zone finance ministers and the International Monetary Fund held a "thorough and robust" debate on Greece on Monday, but failed to make significant progress in deciding how best to get the country back on track with its bailout program.”

 


'Robust debate' is diplomat-speak for 'a food fight almost broke out'.

 

Spain: No Bailout Required?


It is quite amusing to observe the back and forth about whether or not Spain should apply for ESM help. Germany's finance minister Schäuble is certain: it's not necessary. Why is he so certain? Because that's what 'Spain's government says again and again'. The bank bailout will fix everything.

Reuters: German Finance Minister: Spain does not need financial aid


It is widely held that Spain can indeed forego an application as long as the 10 year government bond yield remains below the 6% level. Currently it resides at 5.73%:


 


 

Spain's 10 year government bond yield: still below 6% – click for better resolution.


 


 

There's only one problem with that: there is no way Spain will meet its deficit targets. As Bloomberg reports, the hole in Mariano Rajoy's budget keeps growing faster than his spending cuts.


Bloomberg: Rajoy’s Deepening Budget Black Hole Outpaces Spain Deficit Cuts

 


“The black hole in Spain’s budget has grown faster than Prime Minister Mariano Rajoy’s attempt to cut it, portending the same dynamic that has squeezed Greece.

The harshest austerity since the return to democracy in 1978 has failed to contain the deficit as the economy sinks deeper into recession. The shortfall rose in the first half of the year, as it did in the previous 12 months. Even after a sales-tax increase and health-care cuts kick in this quarter, it may still approach last year’s 9.4 percent of gross domestic product, said Ignacio Conde-Ruiz, an economist at the independent Applied Economic Research Foundation in Madrid.”

 

(emphasis added)

9.4% are a far cry from the 'official target' (only recently revised) of 7.4% (6.3% not counting banking system support). Currently the markets don't care, on the theory that the ECB will come to the rescue. However, one should not lose sight of the fact that previous iterations of 'target misses' both in Spain and elsewhere have routinely served as trigger events for an intensification of the crisis.

 

Portugal 'On Track' – But Needs Extra Year Anyway

The next €800 million aid tranche for Portugal has been approved, amid general agreement that the country is implementing the necessary reforms even faster than expected. And yet, it has also 'been given an extra year to meet its deficit targets'.

Reuters: Euro zone approves 800 million euros aid to Portugal

Meanwhile Portugal's unions have decided to fight the latest austerity measures announced by the government, the latest iteration of which consisted of a steep hike in income taxes. Once again a government cannot stand the thought of shrinking – so instead of cutting spending, it imposes a higher tax burden on its citizens.

AP: Transport strikes in Portugal herald new protests

 

Transport strikes in Portugal brought misery for thousands of commuters Thursday, and trade unions vowed to step up their fight against the government's latest batch of austerity measures.

The center-right government announced Wednesday steep increases in income taxes next year to meet the financial targets demanded in return for last year's €78 billion ($100 billion) bailout.

Finance Minister Vitor Gaspar said the increases would be "enormous."

They come on top of pay and welfare cuts and tax hikes this year that, as in other European countries caught in the continent's financial crisis, have fueled growing discontent. Portugal is in a deep recession, with record unemployment of 15.9 percent.

Compounding the coalition government's difficulties, Prime Minister Pedro Passos Coelho had told the Portuguese that their belt-tightening sacrifices over the past 18 months would pay off. The recession would bottom out this year, and the jobless rate would level off at 16 percent, he said.

But the government now says the economic contraction will extend into 2013 — a fourth year of recession in five — and unemployment will rise to 16.4 percent.”

 

(emphasis added)

The markets however remain sanguine about Portugal's outlook – an assessment that could change if social upheaval and unrest reach hitherto unexpected dimensions. As in other euro area nations under 'troika' control, there is always a residual danger that political extremists could gain a foothold if the economic situation worsens appreciably further.

 

Lithuania 'Austerity-Weary'

It seems Lithuania's government, led by the dour Andrius Kubilius won't survive the upcoming election. In a nod to the crisis, the government has postponed its time table for euro entry as well, now rescheduled to 2014 or 2015 (depending on who is asked). Presumably the idea is 'if the euro still exists in 2015, it will be safe to join'. Naturally no-one wants to join the common currency while member states have only the choice of either becoming bailout applicants or members of the paymasters club. Neither option seems very appealing, hence Vilnius is creating this safety time buffer now.

Reuters: Lithuania to reject austerity, quick euro entry in vote

 


 

Andrius Kubilius the Dour. As one of his advisers has said, he seems like a surgeon who would say 'Let me cut off the leg, but you won't get any anesthesia'.

(Photo via Reuters)

 


 

ECB: The Banking Union 'Game Changer'

ECB executive board member Benoit Coeure was out touting the blessings of the planned 'banking union', which if memory serves is something Germany remains highly skeptical of. It is easy to see why: once a common deposit insurance fund is established, a credit boom in some countries could quickly become a black hole for the finances of others. This is essentially already playing out in the case of Ireland and Spain in a somewhat mitigated form (mitigated in the sense that the funds are supposed to be paid back).

Coure was gushing about how the banking union would 'fundamentally alter the region's debt crisis' and basically 'fix everything'. Almost sounds as though it's the best thing since the invention of sliced bread.

Reuters:  ECB's Coeure says banking union a "game-changer"

Now, leaving aside for a moment that those who think they are most likely to end up paying for this are less than eager to establish it, Couere errs on a very fundamental level. His thinking apparently goes that once banks regardless of the sovereign territory in which they are based are backstopped from the fiscal   and regulatory side by all euro area members,  market participants won't be so quick to sell bank stocks or refuse to extend funding to banks based in crisis countries. Perhaps, but this is like saying that one can solve the problem by treating superficial symptoms. The problem remains of course the (never  named in mainstream debate) practice of fractional reserve banking – the ability of banks to create deposits from thin air and thereby set boom-bust cycles into motion.

As long as this practice is not recognized as being at the root of the crisis, all attempts to 'regulate crises away' are ultimately futile and bound to fail.  Of course in the near future the danger of another credit boom getting started seems fairly negligible, but this is not an immutable condition.

 

IMF in 'Warning and Prodding' Mode

Lastly, the IMF is busy 'prodding' the US and EU alike to 'do something' to get economic growth back on track. Sure, but what?

Reuters: IMF warns global economic slowdown deepens, prods U.S., Europe

 

“The IMF said the global economic slowdown is worsening as it cut its growth forecasts for the second time since April and warned U.S. and European policymakers that failure to fix their economic ills would prolong the slump.

Global growth in advanced economies is too weak to bring down unemployment and what little momentum exists is coming primarily from central banks, the International Monetary Fund said in its World Economic Outlook, released ahead of its twice-yearly meeting, which will be held in Tokyo later this week.

"A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component," it said.

"The answer depends on whether European and U.S. policymakers deal proactively with their major short-term economic challenges."

 

(emphasis added)

Is anyone else struck by the fact that these admonishments mainly consist of the regurgitation of platitudes we have all heard a thousand times already? Here too we are confronted with a fundamental error: the belief of the world's bureaucrats and politicians that a 'solution' to economic woes can only come from them, imposed top-down, so to speak. In one sense this is correct: they could do whatever it takes to get the hell out of the way and let the free market work in as unhampered a fashion as possible. Cut taxes and deregulate the economy to the maximum extent. That is however not what they have in mind. They think they need to 'plan' the economy more efficiently, even while they admit (between the lines) that they actually have no plan.

 


 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • The Gold Debate – Where Do Things Stand in the Gold Market?
      A Recurring Pattern When the gold price recently spiked up to approach the resistance area even Aunt Hilda, Freddy the town drunk, and his blind dog know about by now, a recurring pattern played out. The move toward resistance fanned excitement among gold bugs (which was conspicuously lacking previously). This proved immediately self-defeating - prices pulled back right away, as they have done almost every time when the slightest bit of enthusiasm emerged in the sector in recent...
  • Monetary U-Turn: When Will the Fed Start Easing Again? Incrementum Advisory Board Meeting Q1 2019
      Special Guest Trey Reik and Board Member Jim Rickards Discuss Fed Policy On occasion of its Q1 meeting in late January, the Incrementum Advisory Board was joined by special guest Trey Reik, the lead portfolio manager of the Sprott Institutional Gold & Precious Metal Strategy at Sprott USA since 2015 [ed note: as always, a PDF of the complete transcript can be downloaded further below].   Trey Reik of Sprott USA.   Also at the meeting, Jim Rickards, who is inter...
  • Acting Man Returns - A Brief Housekeeping Note
      Pater Temporarily Keels Over Regular readers have no doubt noticed that the blog has fallen silent for around three weeks and may be wondering what has happened. In a nutshell, we were hospitalized. After a lengthy time period during which our health gradually but steadily deteriorated (we have complained about this previously), we finally keeled over. Thereupon we were forced to entrust the ruin that houses our mind to an experienced team of doctors (depicted below).   A...
  • Watch Europe - Free Pass for the Elliott Wave European Financial Forecast
      Europe at an Important Juncture European economic fundamentals have deteriorated rather noticeably over the past year - essentially ever since the German DAX Index topped out in January 2018. Now, European stock markets have reached an important juncture from a technical perspective. Consider the charts of the Euro-Stoxx 50 Index and the DAX shown below:   The Euro-Stoxx 50 Index already peaked in early November 2017, the DAX followed suit in January 2018 – such divergent peaks...
  • Why Warren Buffett Should Buy Gold
      Riding the Tailwinds of Fiat Money Inflation to Fame and Fortune Warren Buffett bought his first shares of stock when he was 11 years old.  He saved up $114.75 and “went all in,” purchasing three shares of Cities Service preferred stock.  The day was March 11, 1942 – nearly 77 years ago.  Buffett recently reminisced about this purchase in his annual letter to shareholders:   “I had become a capitalist, and it felt good.”   The Oracle of Omaha – he was...
  • Fake Money’s Face Value Deceit
      Not the Brightest Tool in the Shed Shane Anthony Mele stumbled off the straight and narrow path many years ago.  One bad decision here.  Another there.  And he was neck deep in the smelly stuff. These missteps compounded over the years and also magnified his natural shortcomings.  Namely, that he’s a thief and – to be polite – a moron.   Over-educated he ain't: Shane Anthony Mele, whose expressive mug was captured by a Florida police photographer first in...
  • Rise of the Zombies - Precious Metals Supply and Demand
      Rise of the Zombies - Precious Metals Supply and Demand Last week, the prices of gold and silver fell $35 and ¢70, respectively. But what does that mean (other than woe unto anyone who owned silver futures with leverage)? The S&P 500 index and the euro was up a bit, though the yuan was flat and copper was down. Most notably, the spread between Treasury and junk yields fell. If the central banks can lower the risk of default premium, they can make everything unicorns and...
  • Bitcoin Bottom Building
      Defending 3,800 and a Swing Trade Play For one week, bulls have been defending the 3,800 USD value area with success. But on March 4th they had to give way to the constant pressure. Prices fell quickly to the 3,700 USD level. These extended times of range bound trading are typical for Bitcoin Bottom Building in sideways ranges. This 60 minute chart of Bitcoin shows (represented by the yellow candlestick wicks) how the bulls defended 3,800 USD :   BTCUSDT 60 minute chart...
  • The Magic Doesn't Always Work - Precious Metals Supply and Demand
      The Week Ends with a Surprise The weekly closing prices of the precious metals were up +$5 and +¢11. But this does not tell the full story of the trading action. Prices were dropping until Friday. More precisely, Friday 8am in New York, or 1pm in London.   Gold and silver - back in demand on Friday... [PT]   At that moment, a light cabal conspiring to jack the price struck traders began buying. The end result was the prices, especially of silver, rose on the day...
  • Intraweek Profit Opportunities
      In 6 of 10 Countries a Single Day Outperforms the Entire Week! In the Seasonal Insights issue of 13 February 2019 I presented a study illustrating the power of intraweek effects. The article was entitled “S&P 500 Index: A Single Day Beats the Entire Week!” The result of the study: if one had been invested exclusively during a single day of the week since 2000  – namely on Tuesday – one would have outperformed a buy and hold strategy, beating the broad market. Moreover,...

Support Acting Man

Item Guides

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!