Sunday, March 31, 2013

Today's links

1---The Five Ways Deflation Has Already Taken Hold, Bloomberg

2---Iceland Indicts Bankers Over Financial Crisis, american banker

3---The Tequila Crisis: The Prelude To Europe’s Economic Storm, Testosterone Pit

Even the most blindly trusting and optimistic of Europeans are finally beginning to see through the Troika’s grandmotherly countenance to its wolfish core. By contrast, to many Latin Americans, the international banking institutions’ lupine nature is all too familiar. Through painful experience, they have learned that when the real men in black come calling, bad things tend to happen.
During the lost decade of the 80s and the tumultuous first half of the 90s, many Latin American economies, including the now rising global superpower Brazil, were torn asunder and bled dry by a fatal cocktail of political ineptitude and corruption, and financial fraud and abuse – all of it facilitated and overseen by the IMF, now one of the leading protagonists in the Troika’s asset-stripping pillage of Europe....
Even today, 19 years on from the onset of the crisis, the country continues to pay its pound of flesh for the toxic debt generated during the “miracle years.” According to recent estimates, between 1976 and 2000, the buying power of the country’s average minimum salary fell by a staggering 74 percent, and has since risen by a pitiful 0.5 percent. As in post-crisis Argentina, the country’s middle class has been decimated. And what little remains of it is on the tab for the more than 3 billion dollars of annual interest payments on the country’s debt.
For the big U.S. banks that helped fuel the Mexican miracle, the last 19 years have been somewhat kinder. Following their recent takedown of the U.S. economy in the sub-prime debacle, they are quite literally “too big to fail” and have their sights set on much larger prey.
It seems, with the benefit of hindsight, that the Mexican Miracle and Tequila Crisis were merely a test run for the end game now playing out in Europe. The question is: will the Europeans play along? Contributed by Don Quijones, of

4---Euro: Requiem or Renewal?, The Big Picture
In the Cyprus affair, we observe a defeat of the concept behind the Eurozone and the original European Union. It took half a century to create the European Union after WWII. The driving force was what the French call a “rapprochement” between formerly antagonistic parties. To put it simply, the Germans and French decided to stop killing each other after a thousand years of war. An economic union seemed the right way to go about attaining peace and prosperity. After centuries of destructive inflation outcomes, they realized credible money was absolutely necessary for this peaceful outcome to succeed....
Euro sickness is coming to a head. Capital controls are the death of a country, currency, and economy. They create depressions. They are not temporary in the true meaning of a short-term action. Iceland still has capital controls five years after its banking shock. Nearly all countries in Europe are suffering a spiraling down of their financial structures. The 17-member Eurozone’s overall growth rate in 2013 will be near zero. The 27-member European Union will not be much better.
Europe’s leaders face a fundamental question regarding the euro. Do they want a requiem, in which case all they have to do is keep doing what they are doing, or do they want a renewal, in which case behavior must change credibly, immediately and decisively?
We are going to find out soon enough. Markets will force the requiem if political forces do not deliver the renewal.
For investors, this has become an easy decision. You can either bet on the renewal, which we are not ready to do, or you can bet on the requiem, which means capital moves out of the Eurozone.

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