Friday, February 24, 2012

Weekend links

1--GDP Data Signals U.S. Recession, Achuthan Says, Bloomberg---Video

2--Corporate Outlooks Hint At More Pain Ahead, WSJ

Excerpt: Fifty-eight companies have released estimates for first-quarter earnings that fall below analyst consensus, compared with 23 that beat Wall Street. That’s the largest ratio of negative to positive announcements since the first quarter of 2009, when the S&P 500 was on its way to bottoming out below 700 in early March.

“We’re seeing more negative guidance than usual,” said Greg Harrison, earnings analyst with Thomson Reuters. Estimated profits for 2012 have steadily fallen since October. The average S&P 500 company currently expects to add 8.3% in profits for the year. Just over a month ago, that estimate was at 10%....

The Dow Jones-UBS Commodity Index has climbed 4.7% since the start of 2012. Since October 2011, crude oil has risen to about $105 per barrel from $75. Since early January, oil has gained $10 per barrel...

Many companies are also hitting a wall on just how much of their expenses they can cut after recessionary belt-tightening. “Margins have come off their peak,” said Bill Stone, chief investment strategist for PNC’s asset management group. Margins, the percentage of revenue that translates into profit, rose steadily from 2008 until recently, when the average rose to 9%. But this quarter, the average is expected to fall to 8.5%, meaning companies are having a tougher time eking out higher profits out of steady levels of revenue.

Predictions from corporations are no guarantee that profits will slow, of course, in part due to improving U.S. economic conditions. Investors like Stone aren’t too worried about the downward shift in outlook. “Most corporate people would say they don’t go to sleep at night without worrying about Europe. But generally, in the U.S. [economic] numbers are trending in the right direction.”

4--Earnings Prepped To Fall Off A Cliff, WSJ

Excerpt: As stocks keep rallying, investors appear to be ignoring some of the major warning signals coming from corporate profit forecasts.

The major themes of this quarterly earnings season have been well documented. Earnings growth has come off record highs and the corporate profit landscape looks strikingly different when Apple gets stripped from the equation.

Negative guidance has also outweighed positive outlooks, a development that doesn’t seem to be garnering much attention.

With earnings season close to complete, 86 companies in the S&P 500 have issued guidance for the current quarter. Of those forecasts, 54 have been negative, 26 are positive and 6 are in-line, which translates to a 2.1 negative-to-positive ratio, according to S&P Capital IQ....

Moreover, analysts are expecting earnings growth in the current quarter to diminish significantly. Estimated profit growth for the first quarter sits at just 1.2%, S&P Capital IQ data show. Next quarter isn’t expected to be much better, up 1.9%.

By comparison, earnings are on track to post an 8.3% year-on-year rise in the fourth quarter and 16% growth rate for all of 2011.

As corporate profits remain a concern, stocks keep ticking higher. The Dow Jones Industrial Average is a shade away from 13000, the S&P 500 is poised to take out its 2011 highs and the tech-heavy Nasdaq Comp is already up 14% this year.

While earnings haven’t been able to derail the rally train just yet, diminishing profit growth won’t be ignored forever.

5--Europe's banks bleed from Greek debt crisis, Reuters

Excerpt: The scars of Greece's debt crisis were laid bare in heavy losses from a string of European banks on Thursday, and bosses warned the region's precarious finances would continue to threaten economic growth and earnings.

From France to Germany, Britain to Belgium, four of the region's biggest banks lined up to reveal they lost more than 8 billion euros last year from their Greek bonds holdings.

"We are in the worst economic crisis since 1929," Credit Agricole chief executive Jean-Paul Chifflet said.

Credit Agricole reported a record quarterly net loss of 3.07 billion euros ($4.1 billion), performing worse than expected from the cost of shrinking its balance sheet and after a 220 million euro charge on its Greek debt. For 2011 as a whole, the bank took a hit of 1.3 billion euros on its Greek debt.

Europe's banks have already written down billions of euros from losses on Greek government bonds and loans, and a deal agreed this week with its creditors will inflict losses of 74 percent on bondholders.

"We can't say that the writedowns are over," said Franklin Pichard, director at Barclays France. "Even if some can say that the worst is over, we are only at a new stage in terms of provisioning and not necessarily at the end."

That is because, despite the bond swap deal, bondholders could suffer further hits if Greece's economy fails to recover....

The region's banks are still repairing the damage of the financial crisis and shrinking their assets. They must also find 115 billion euros by the middle of this year to shore up their balance sheets against future shocks. But any weakening in the economy will hit earnings and make that harder to achieve.

6--European Banks May Tap ECB for $629 Billion Cash, Bloomberg

Excerpt: Euro-area banks may tap the European Central Bank next week for almost as much three-year cash as they did in December in an operation that could prolong a rally in bond markets.

Financial institutions will ask the ECB for 470 billion euros ($629 billion) in three-year funds for allotment on Feb. 29, the median of 28 estimates in a Bloomberg News survey shows. While that’s less than the record 489 billion euro take-up at the first tender on Dec. 21, it may increase total cash in the system by more than 300 billion euros, said Luca Cazzulani, a senior fixed-income strategist at UniCredit SpA (UCG) in Milan.

“Part of the increase will likely be parked, at least temporarily, in the sovereign-bond market and support mainly the performance of Italian and Spanish bonds,” said Cazzulani. Still, “expectations are at a pretty high level, which creates some room for disappointment,” he said. “Gross demand below 400 billion euros would likely put upward pressure on spreads in the short term.”

Italian and Spanish bonds have risen since the ECB’s first three-year loan, suggesting banks are investing at least some of the money in higher yielding assets. That’s helped ease concern about a credit crunch and won governments time to agree on measures to contain the sovereign debt crisis....

Before the December operation, the ECB reduced the rating threshold for certain asset-backed securities. This month, it said seven of the 17 national central banks in the euro area will also accept credit claims, a move that ECB President Mario Draghi estimates will increase the collateral pool by another 200 billion euros. The aim is to give small and medium-sized banks greater access to ECB cash.

7--Individual Investors Can't Participate In America's Fire Sale On Foreclosed Homes, Business Insider

Excerpt: ...the federal government is about to dump millions of the foreclosed homes at fire-sale prices to hedge funds and private-equity firms with government connections. If you’re an individual investor who might like to get in on the action, forget it! You’re shut out of this deal.

Homeowners who might be interested in buying the foreclosure property next door? Out of luck. And retirees hoping for a return on their money more than 1.8% on a five-year CD find another avenue closed off.

Prior to the calamity of 2008, we might have thought the deal we’re profiling today unthinkable. But now we’re becoming as immune to new instances of blatant cronyism as American babies are to diphtheria....

If you’ve got the hammer for it, we may as well get down to brass tacks: As many as 10,000 properties might be unloaded in a single transaction during the first quarter of 2012 — thanks to a government program so new it doesn’t have a catchy name yet, only the working title “Enterprise/FHA REO Asset Disposition.”

Roger Arnold, chief economist for Pasadena, Calif.-based ALM Advisors, has a different name for it — “the largest transfer of wealth from the public to the private sector.”

As of last September, there were about 800,000 “real estate owned” or REO homes in the United States — homes repossessed and on the market. Close to one-third of these — 250,000 — sit on the books of Fannie Mae, Freddie Mac and the Federal Housing Administration. That is, 250,000 homes are owned by you and me, the US taxpayers.

But that number is about to explode: According to Ken Harney at the real estate industry publication Inman News, “The three agencies face a tsunami-sized shadow inventory that is now heading their way — a combined 1.4 million delinquent loans on their books, at least half of which, they estimate, will end up in foreclosure.”

So now we’re talking that 250,000 number suddenly ballooning to nearly a million. The early-warning waves of the tsunami started lapping at the shore in November, when foreclosure auctions reached a nine-month high. The final numbers might end up even higher: Late-stage delinquencies tallied by Lender Processing Services in January approach 2 million....

Thus, the hypothetical excuse for the fire sale: “Even with heroic efforts,” Harney says, “Fannie, Freddie and FHA won’t be able to handle that level of REO volume using their current systems of individual sales, directed at owner-occupants and small investors.”

Thus, “You and I will not be allowed to participate,” says Roger Arnold of the newprogram. “These [new] investors will come from the private-equity and fund community, Goldman Sachs and its derivatives, as well as foreign sovereign wealth funds that can bring a billion dollars or more to each transaction.

“The US taxpayer will get pennies on the dollar for these homes, and then be allowed to rent them back at market rates.”

The groundwork is being laid right now. During the first week of January, the Federal Reserve issued a white paper on housing: “A government-facilitated REO-to-rental program,” it said, “has the potential to help the housing market and improve loss recoveries on REO portfolios.” Three Fed governors put the word out in speeches the same week.

The big boys can smell the money and they are lining up to play.

8--European Banks Hit by Losses, WSJ

Excerpt: European banks reported hefty losses, highlighting how the Continent's financial crisis is inflicting a toll on banks that are in retrenchment mode.

France's Crédit Agricole SA racked up €3.1 billion ($4.11 billion) in fourth-quarter losses, while the U.K.'s Royal Bank of Scotland Group PLC suffered a £1.8 billion ($2.82 billion) loss. Bailed out Franco-Belgian lender Dexia SA disclosed a €11.6 billion full-year loss, much of which came in the fourth quarter.

The banks were battered by multiple forces. They continued to write down the values of holdings in Greek government bonds, incurring hundreds of millions of euros of losses in ...

9--Achuthan sticks with recession prediction (video and transcript), Bloomberg

Excerpt: we take a look at all of this stuff, you had been calling for a recession and most of the numbers that we get point to all kinds of growth. we're feeling better about the jobs market. we're feeling better about just the general growth, manufacturing growth that's coming in. what do you see and does your call still stand? at the end of september, late september. so it's five months. all of the definitive -- when you look at the definitive hard data that is used to officially date business cycle recessions, it has been getting worse not better despite what the consensus view of an improving economy has been. and so i can clearly explain that. i would like to list them. so gdp dwrogrowth, year over yet peaks in 2010 and falls down to 1.5% by q2 of 2011 and has flat lined essentially since then, the last reading 1.6. simil similarly personal income dwroet, how much -- i'm talking big, aggregate numbers, has the same kind of pattern, broad sales growth. the broadest measures of sales, same kind of pattern, industrial production growth year over year. as of january it is at a 22-month low. so you put all of this, this is what normally is done. this is not something just done for this conversation. you put it into a coincident index of the u.s. economy and if you look at the year over year growth of that index it's now at a 21-month low. so 0, to be clear, it is the definitive measure of economic growth. in english the growth has been slowing. but we feel a lot better than we did. let's get to that but i want to be first on this. the index, the chart on the right-hand side of the chart that's a 21-month low. it has not -- you haven't had a decline like that in the past 50 years without a recession following in short order, okay? so the right-hand side of that chart is a 21-month low and the growth rate of all of the indicators output, jobs, income, and sales. okay? and that's not cherry picked data. that is data that that is always used. so that's the reality. why do people feel better?

... the world's central banks, plural, are printing money like crazy. like they know something. it's part of the republic you feel better. that does make you feel better but go to where that interacts with the economy. you look at the velocity of money. how often does money exchange -- all that money that's going in, they're goosing the money supply, how often does it exchange in the economy? that's a really important metric on the health of the economy. it has dropped to a record low in the united states. it's near a record low in europe. it's even near a record low in china. okay? these are not symptoms of health. and when you have all that money out there, it's got to do something. so it is goosing the markets. does the coincidence index -- that's a fact. that's not a forecast. does it give an indication of what's coming in terms of the jobs outlook? have we seen the best number and is the jobs picture going to get worse from here? the index itself does not forecast forward. what we've seen there in that decline in the growth rate you haven't seen in the past 50 years is not a recession in short order so that doesn't bode well for jobs. speaking to jobs, i admit, i am acknowledging they have improved through the latest readings, okay? but jobs are basically a bit of a lagging indicator. they follow. they do not lead consumer spending growth. c consumer spending growth -- would your call be that jobs are going to get worse? yeah, and i'd say in the next few months i would expect them to start to flag because they follow, they lag at turning points where consumer spend issing growth has been going and we know that's clearly been going down and if you delve into that, look at personal disposable income. this gets to your gas stuff. you look at personal disposable income that has been negative now growth for five months. you've never had that, not even close. we talk about short order. you keep say that go a recession is supposed to follow in short order. so thousand we're timing the market a little bit. timing the economy. what does short ultimately mean? you made a bold call. how long can you hold on to this call or how long is it supposed to last? and when do you re-evaluate and say maybe this is right? last year in the wake of making the call we did say that the recession should begin by midyear 2012. midyear 2012. by midyear 2012. so you still have time in. i still have time but here is the rub, andrew. if you look historically, we're not -- i can't tell you today it start this had second because i won't know because all the data is going to get revised like crazy for the next year but when you're looking in the rear-view mirror, it takes about half a year after a recession begins before people realize that a recession has begun. the markets are a little bit better than the consensus view but right now with the consensus being totally against what i'm saying today, all i'm saying is look at the facts. we figure it out around november, right around the election? if now is the beginning, let's say the recession started right around now, you figure it out, i think the consensus would figure it out in six months. you think about europe and you think -- may, june, july, august. you think about europe, austerity. you think about china, you think about gasoline prices and, you know, you put all that together he may not be crazy. but i want to know has there been any moment or number you've seen in the past two, three, four months since we last saw you where you said, you know what, i have to plug these new numbers in and this may change the way i'm thinking about it? no, no, no. now let's switch to our leading indicators. we are talking about facts and not forecasts so far. now looking at the leading indicators -- stock market. is one of them. but the stock market, just like it's forecast nine out of the past five recessions, it's forecast nine out of the past five recoveries. it could be qe related, too. that's it. first off on the leading indicators i look at them across the board. they are not negating our recession forecast, the full array. when we look at weekly index, people say, hey, it's running up. it's risen a little from its lows in december and given the mountains, i mean, we're not in kansas anymore. we're printing a lot of money. and given all that money i'm surprised the index hasn't lifted more because the risk assets are being goosed and look back to early '08. the recession begins in december of '07 and what happens? you get a springtime rally, double digits in s&p. we've gone much further this time. we've printed more money. we were cutting interest rates a little bit and back there inside of a recession oil went to $147 because the economy wasn't able to absorb all that liquidity. it didn't need it for commerce or for activity and or for activity and what's the dollar bill to do? your world, too. it's very troubling. this messes up your election. messes up my election. this is very troubling to you if this were to be -- i see you over there very concerned. i'm trying to understand. but it would -- i'm trying to understand the thinking and the black box and what's in the box. there's no -- oh, my god, this is horrible. this is not a black box. remember that day you said -- i can see you over there going, oh, my god. this new evidence. these are facts not forecast. this is not a black box. gdp year over year growth rate peaked in early 2010. it's flat lined at 1 1/2. personal income growth down. sales growth down. industrial production growth down to a 22-month low as of january. throws are the indicators that are used to define recessions. you have to stop. number one, we have to go. i'm worried about your weekend. i'm renaming -- i think lock is going to take the mantle of dr. oubiue beanroubini, pegt ab. thank you for coming in. we'll call the recovery, too. tell us if anything changes the picture but we'll have you back more to talk about this. thank you

10--Independent MP announces new party, Athens News

Excerpt: An independent MP, expelled from New Democracy in November, announced the formation of a new party on Friday.

Panos Kammenos described the new party, called Independent Greeks (Anexartitoi Ellines), will be an "anti-memorandum movement addressed to all the Greeks".

Kammenos, who was thrown out of New Democracy after refusing to vote for Lucas Papademos' coalition government, said that he will seek the signatures of 100,000 signatures Greek citizens as party cofounders.

It is believed that Christos Zois and Yiannis Manolis, who recently quit ND, may join the new party, while sources said that discussions are also taking place with Pasok figures.

According to the founding declaration presented by Kammenos, the new party demands abolition of the memorandum and refuses to accept the what it says is an illicit debt created by loansharking interest rates.

"Our movement is born. The Virgin Mary is our helper and protector. We are many. We are independent. We are Greeks," he said.

He added that the party comes in response to attacks by what he called the "new order" that is behind memorandums, national degradation and "violent economic attacks on the Greek family".

It also calls for the abolition of every form of immunity enjoyed by officials, MPs and ministers and demands the payment of the German war reparations and the occupation loans.

11--The European Union and Greece, WSWS

Excerpt: One has to go back to such military-fascist dictatorships as the Pinochet regime in Chile to find a parallel to the attacks being imposed by the European Union on the working people of Greece. With sadistic zeal, the commissioners in Brussels, at the behest of Berlin, Paris and London, make each new financial package dependent on fresh demands for destroying the livelihoods of Greek workers and making their lives hell.

Events in Greece show the true character of the European Union. It is not a means of achieving genuine European unity, but rather an instrument to subjugate all of Europe under the dictatorship of finance capital.

The EU institutions make a mockery of democratic principles. Non-elected commissioners accountable to no one determine the fate of whole countries. Decisions of the European Council are regularly sealed on the basis of trade-offs between German Chancellor Angela Merkel and French President Nicolas Sarkozy, the leaders of the EU’s two most powerful member-states. The European Parliament, which decides nothing, serves as a pseudo-democratic fig leaf....

In Eastern Europe, the EU has overseen the destruction of education and health and social welfare systems. It has fostered the growth of a corrupt elite that enriched itself through the privatisation of state assets and EU subsidies. For the vast majority of the population, entry into the EU has turned out to be a nightmare....

The purpose of the so-called “aid packages” for which the Greek population must sacrifice is not to help the people, but to enrich the banks, hedge funds and speculators. For many experts and officials, the bankruptcy of Greece is a foregone conclusion....

It is increasingly evident that the working class cannot defend a single social or democratic right without breaking from the European Union....

preparations are being made to impose dictatorial forms of rule, like that imposed by the Greek military between 1967 and 1974. The Greek generals work inside NATO in close cooperation with American, British and German officers. The world’s biggest military alliance has long supported military dictatorships within its ranks. Fascist Portugal was a founding member of NATO in 1949, and the US-led alliance worked closely with Franco in Spain. Greece and Turkey, where the generals staged a coup on three occasions, joined in 1952.

Mass poverty and dictatorship can be prevented only by the Greek working class opposing not only the EU but also the Greek bourgeoisie and its state. Greek workers must fight for the establishment of a workers’ government. Such a government would expropriate the large fortunes, banks and corporations and reorganise the economy on a socialist basis for the benefit of society as a whole, rather than the profit interests of the financial aristocracy.

12--New Study From Consumer Advocates Shows Mass Servicer Abuse, Firedog Lake

Excerpt: Well, here’s an interesting report that might have been good to have in hand a few weeks ago. The National Association of Consumer Advocates, the National Association of Consumer Bankruptcy Attorneys and the National Consumer Law Center have released the results of a survey showing that “mortgage servicers continue to initiate foreclosure proceedings improperly, either while a homeowner is awaiting a loan modification or due to improper fees or payment processing.” This is a key element of the servicing standards in the (as-yet unseen) foreclosure fraud settlement, but it was also part of the consent order last year from the Office of the Comptroller of the Currency. In other words, the banks are under an order to stop doing these types of things, and they have simply not complied. That’s the state of things heading into the settlement, when the banks will be asked to comply again.

The study from NACA, NACBA and NCLC surveyed attorneys representing homeowners in foreclosure cases in 45 states and the District of Columbia. The results are really staggering. Here’s a sample:

Over 90% of the respondents report representing a homeowner placed in foreclosure while awaiting a loan modification in the last year.

Homeowners were improperly foreclosed on while awaiting both HAMP and GSE loan modifications: of the survey respondents that represent homeowners placed in foreclosure while awaiting a loan modification in the last year, 85% represent homeowners awaiting a HAMP loan modification; 66% represent homeowners with a loan owned by Fannie Mae or Freddie Mac.

Over 80% of the respondents represent homeowners where the actual foreclosure sale was attempted while awaiting a loan modification in the last year.

In total, survey respondents reported representing over 3,700 homeowners placed in foreclosure while awaiting a loan modification in the last year.

And there are more results from the study looking at illegal fees imposed by servicers:

80% of the respondents represent homeowners who were placed into foreclosure in the last year where there was a wrongful assessment of fees (e.g. late fees, broker-price opinions, inspection fees, attorney’s fees and other fees).

79% of the respondents represent homeowners who were placed into foreclosure in the last year where there was a misapplication of payments.

Almost 60% of the respondents represent homeowners who were placed into foreclosure in the last year where there was an improper assessment of force-placed insurance.

In the last year alone, survey respondents reported representing over 700 homeowners with force-placed insurance; almost 2,500 homeowners with improper assessment of fees; and over 1,200 homeowners whose payments had been misapplied.

Over 78% of the respondents represent homeowners who had been placed in foreclosure in the last year where the servicer did not properly accept the homeowner’s payments.

73% of the respondents represent homeowners who had been placed in foreclosure in the last year while the homeowner was making payments as previously agreed upon.

These numbers are simply too high to be an accident. Servicers routinely place people in foreclosure while negotiating a loan modification, and they routinely apply illegal fees to homeowners, helping to drive them into default. And the government settled with these companies!

13--Home prices at lowest point in 10 years, CNN

Excerpt: Home prices fell to their lowest point in more than a decade in January, which helped to lift the pace of home sales, according to a report from an industry trade group.

The National Association of Realtors reported that the median home price in January fell 2% from December to $154,700. That's the lowest price reading since November 2001, before the run-up in home prices that became known as the housing bubble....

"Prices will continue to fall through the first half of 2012 due to the high share of distressed sales," said Stuart Hoffman, chief economist with PNC Financial. "The recent agreement between the big mortgage servicers, state attorneys general and the Obama administration will also result in more homes going to foreclosure over the next few months, adding to downward pressure on prices."

But the pace of sales rose to the highest level since May of 2010, helped by the low prices and rock-bottom mortgage rates. The seasonally-adjusted annual sales pace of 4.57 million homes was up slightly from the revised 4.38 million in December. The last time homes sold at that pace, buyers were rushing to qualify for an $8,000 homebuyer's tax credit that was about to expire. The latest reading was roughly in line with the expectations of economists surveyed by

14--How the gov enables financial parasites, WSWS

Excerpt: Thus, three-and-a half years after the financial crash that triggered the worst economic crisis since the Great Depression, the same speculators whose swindling caused the banking meltdown have not only been bailed out by the government, they have been put in a position to make a new financial killing by the government’s policy of cheap credit and its refusal to carry out serious bank reform or pursue criminal prosecutions.

Lippmann's activities during the meltdown were described in a 600-plus page report on the Wall Street crash released last April by the Senate Permanent Subcommittee on Investigations. That report, which detailed fraudulent and illegal actions by Deutsche Bank, Goldman Sachs and Washington Mutual and the complicity of the ratings agencies and federal bank regulators, was quickly buried by the media and has remained a dead letter.

It noted that Lippmann referred to mortgage-backed securities like the ones Deutsche Bank was selling at the time as “crap,” and predicted that they would plummet in value. It stated: “At one point, Mr. Lippmann was asked to buy a specific CDO security and responded that it ‘rarely trades,’ but he ‘would take it and try to dupe someone’ into buying it. He also at times referred to the industry’s ongoing CDO marketing efforts as a ‘CDO machine’ or ‘Ponzi scheme.’ ”...

And as the Financial Times reported last week, the bulk of the cost of the settlement will be covered by taxpayer funds. At the insistence of the Obama administration, the banks will be allowed to make use of an existing federal program, the Home Affordable Modification Program (HAMP), which provides public funds to banks that agree to reduce the principal on troubled home loans. Nearly two-thirds of the value of any write-downs the five banks make will be recompensed with funds from this program.

In effect, the value of mortgage-backed securities will be underwritten by government subsidies, opening up a wide vista for profiteering by Lippmann and his cohorts....

The case of Lippmann exemplifies how the policies of the Bush and Obama administrations have enabled the financial elite to cash in on the crisis amid the social ruins left by its criminal activities. While millions of people have lost their homes, either through fraudulent foreclosures or as a result of predatory mortgage practices, the financial parasites continue to rake in millions

15--Argentine advice for Greece: ‘Default Now!, RT

Excerpt: During that very hot summer in December 2001, true to its Latin temperament, Argentina even had four (yes, 4!) presidents in just one week. One of them, Adolfo Rodriguez Sáa, who only lasted three days, at least did one thing right, even if he did it the wrong way: he declared Argentina’s default on its sovereign debt.

All hell broke loose! The international bankers and IMF did everything they could to break Argentina’s back; global media pundits predicted all kinds of impending catastrophes. Debt default meant Argentina would have to weather the pain and agony alone, being cast out by the “international financial community”.

‘You’re not the boss of me!’But no matter how bad it got, it would always be better to do that without the bankers, without the IMF’s, European Central Bank’s, US Fed’s and US Treasury’s “help”. Better to sort out your mess on your own, than to have parasitic banker vultures carving out their pound of flesh from your nation’s decaying social and economic body.

And how bad did it get in 2002? A 40 per cent drop in GDP; 30 per cent unemployment; 50 per cent of the population fell below the poverty line; dramatic, almost overnight, devaluation against the US Dollar from 1 peso per dollar to 4 pesos per dollar (then it tapered down to 3 pesos per dollar); if you had a US dollar Bank account, the government forced you to change it into pesos at the rate of 1.40 pesos per dollar.

What did Argentina’s government do wrong? In the months leading to collapse it bowed to all the bankers and IMF-mandated measures and “recipes”, which were actually the very cause of collapse: Argentina was loaned far more than it could pay back…. And the banker knew it! This was described in our December 19, 2011 article, Argentina: Tango Lessons.

Successive governments since then have continued to be functional to banker interests by rolling over debt 30 to 40 years, aggregating huge interest and in 2006 paying the full debt to the IMF – almost US$10 billion in full, cash and in US dollars (sole entity given most-favoured creditor status)....

­Same vultures circling GreeceToday, Greece is confronted with a similarly tough decision. Either it keeps its sovereignty, or it capitulates to the “Vulture Troika” – the European Central Bank, European Commission and International Monetary Fund – who work for the Bankers, not the People.
Not surprisingly, today we find that Greece too has a Trilateral Commission Rockefeller/Rothschild man at the helm: Lucas Papademos who is doing the same things Argentina did in 2001/2.

Argentina not only suffered Cavallo, but President De la Rúa himself was co-founder of the local Global Power Masters lobby, CARI – Argentine International Relations Council – local branch of the New York-based Council on Foreign Relations, networking with the Trilateral Commission / Bilderberg mafia.

Greece today should do what Argentina did a decade ago: better to endure pain and hardship, and sort out the mess made by your politicians in connivance with international bankers on your own, wielding whatever shred of sovereignty you still have than allowing the Banker Vultures sitting in Frankfurt, New York and London decide your future.

It’s the Neocolonial Private Power Domination Model, stupid!Or do you think it’s just bad luck, bad judgment and coincidence that countries – Greece, Argentina, Spain, Italy, Portugal, Brazil, Mexico, Iceland, Ireland, Russia, Malaysia, Ukraine, Indonesia, South Korea, Thailand, France, even the US and UK – always borrow too much from the bankers and then “discover” that they cannot pay it back and that, symmetrically, the same bankers – CitiCorp, HSBC, Deutsche, Commerz, BNP, Goldman Sachs, Bank of America, JPMorganChase, BBVA lend too much to countries and then “discover” they cannot collect?

No! That is the very yellow-brick road that leads to the Emerald City of “debt restructuring”, “debt refinancing”, and “sovereign debt bond mega-swaps” that snowball sovereign debt, spreading it over 20, 40 or more years into the future. That guarantees unimaginably colossal interest profits for the Mega-Bankers and for all those nice politicians, media players, traders and brokers, without whom that would not be possible...

This is a Model. It must keep rolling and rolling and rolling… As this Monster Machine steams forwards, it completely tramples on, overruns, destroys, flattens and obliterates people, jobs, workers, health services, pensions, education, national security and just about everything human on its path. Run by parasitic usurer technocrats, it does not care what it destroys because it has no ethics; no Christian, Muslim or Buddhist morals. It only worships a greedy golden idol of money, money and more money. This is 21st-century Money Power Slavery.

Three generations of Argentines saw hopes dashed and dreams thwarted by this Monster Machine, suffering the hardship, woes and humiliations that come when countries give up sovereignty.

­Bring back the drach!So, Greece: Just default on your “sovereign debt”! Just revert to the drachma! Just say “No, thanks!” to the German bankers and the Troika Vultures.

Please, Greece: just say “No!” to your Trilateral Commission president!
You will be setting a strong precedent for your European neighbours. Like Spain, which is hurting so badly right now for similar reasons. Like Italy, with its Trilateral Commission Prime Minister Mario Monti (also Trilateral’s European Chairman!).

Greece, the Cradle of Democracy, can teach the world a lesson in True Democracy by kicking these parasites out of the country, which will hopefully trigger kicking them out of Europe and one day, kicking them out of the global economy....

All governments should understand that you either govern for the people and against the bankers; or you govern for the bankers and against the people.

16--Housing Experiencing Second Annual False Dawn, Trim Tabs

Excerpt: •Despite the seemingly better numbers; in reality home sales and prices remain depressed even with some of the most favorable conditions imaginable; such as historic low mortgage interest rates, low prices, unseasonably warm weather, etc, etc.

Move up buyers are not participating in this housing market. First timers and investors are the only home buyers today. The real problem with the health of the housing market is that most current solvent homeowners lack enough equity in their current home to sell and buy a move up. This housing market will not recover until move up buyers come back into the market.

•Like last year, demand is being pulled forward as a result of massive government stimulus. Yet despite all the stimulus home sales are anemic and prices are still at lows.

•Then there is an enormous shadow inventory of homes not reflected in the official data. This excess supply has to put a damper on prices.
•Lastly, defaults and foreclosures on jumbo mortgages are rising sharply and the prices of higher-priced homes will continue to fall hurting the high end markets the most.

The bottom line is that the housing market remains structurally broken. It took 20 years for the housing bubble to blow itself up. Given the structural impediments that still exist, it will take a lot more than four years for this housing market to stabilize, let alone rebound (to sell and re-buy requires paying a realtor 6% and put 10% to 20% down on a new house).

17--Q&A: ECB President Mario Draghi, WSJ

Excerpt: WSJ: Do you think the acute phase of the crisis has passed? It struck us this week that once the deal was decided, we didn’t see the kind of elation we’ve seen after past programs.

Draghi: It’s hard to say if the crisis is over. Let us look at the positive changes of the last few months. There is greater stability in financial markets. Many governments have taken decisions on both fiscal consolidation and structural reforms. We have a fiscal compact where the European governments are starting to release national sovereignty for the common intent of being together. The banking system seems less fragile than it was a year ago. Some bond markets have reopened.

But the recovery is proceeding very slowly and remains subject of downside risks. I was surprised too that there was no elation after the approval of the package and this probably means that markets want to see the implementation of the policy measures.

WSJ: When you look at the risk profile of the package and the deal, is the greatest risk arising from the streets of Greece, or is the greatest risk arising from a lack of growth in Greece?

Draghi: In the end it seems the greatest risk is lack of implementation. Some measures are directly targeted to enhance competitiveness and job creation. Others foresee a radical fiscal consolidation. The two are very complementary to ensure a return to growth after the unavoidable contraction in economic activity.

WSJ: But some people say Greece is really suffering depression-like conditions, GDP off 15% or 16% peak to trough. What is your view of these austerity policies in the larger strategy right now, forcing austerity at all costs in order to bring the budget deficits down?

Draghi: This is actually a general question about Europe. Is there an alternative to fiscal consolidation? In our institutional set up the levels of debt-to-GDP ratios were excessive. There was no alternative to fiscal consolidation, and we should not deny that this is contractionary in the short term. In the future there will be the so-called confidence channel, which will reactivate growth; but it’s not something that happens immediately, and that’s why structural reforms are so important, because the short-term contraction will be succeeded by long-term sustainable growth only if these reforms are in place....

Draghi: In the European context tax rates are high and government expenditure is focused on current expenditure. A “good” consolidation is one where taxes are lower and the lower government expenditure is on infrastructures and other investments.

WSJ: Bad austerity?

Draghi: The bad consolidation is actually the easier one to get, because one could produce good numbers by raising taxes and cutting capital expenditure, which is much easier to do than cutting current expenditure. That’s the easy way in a sense, but it’s not a good way. It depresses potential growth.

WSJ: Which do you think are the most important structural reforms?

Draghi: In Europe first is the product and services markets reform. And the second is the labour market reform which takes different shapes in different countries. In some of them one has to make labour markets more flexible and also fairer than they are today. In these countries there is a dual labour market: highly flexible for the young part of the population where labour contracts are three-month, six-month contracts that may be renewed for years. The same labour market is highly inflexible for the protected part of the population where salaries follow seniority rather than productivity. In a sense labour markets at the present time are unfair in such a setting because they put all the weight of flexibility on the young part of the population.

WSJ: Do you think Europe will become less of the social model that has defined it?

Draghi: The European social model has already gone when we see the youth unemployment rates prevailing in some countries. These reforms are necessary to increase employment, especially youth employment, and therefore expenditure and consumption....

Draghi: There is no feasible trade-off between the two. Fiscal consolidation is unavoidable in the present set up, and it buys time needed for the structural reforms. Backtracking on fiscal targets would elicit an immediate reaction by the market. Sovereign spreads and the cost of credit would go up. We’ve experienced all this....

WSJ: It still seems as though credit has dried up in Spain, Italy and elsewhere.

Draghi: Our last bank lending survey was done in between the time the first LTRO was decided and when it was executed, so it gives only a partial picture of what is happening. That picture was not positive. Credit was tightening all over the euro area in different degrees of intensity, more dramatically in the southern regions. We have to ask ourselves why this is so. The LTRO allotment (in December) was €490 billion. The return of shorter-term liquidity from the banking system before the LTRO was about €280 billion, so that the net injection was only €210 billion. And the bank bonds coming due in the first quarter were also about €210 billion. Therefore, it is likely that banks simply repurchased their own bonds coming due. We have avoided an even worse credit crunch

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