Wednesday, February 10, 2016

Today's links

[Michal] Kalecki’s insight…is that for big business, unemployment is first and foremost a mechanism for disciplining workers. Under full employment “the ‘sack’ would cease to play its role as a ‘disciplinary measure,’” and “the social position of the boss would be undermined.” Discipline and political stability, he argued, “are more appreciated than profits by business leaders.” Naked Capitalism



1---Banking Crisis in Europe? Deutsche Bank’s CoCo Bonds Collapse


Shares of Deutsche Bank have plunged 57% since July 31, to a new 30-year low today of €13.71. Since the beginning of the year, they lost 38%. Credit Suisse plunged 8.3% today to CHF 13.01, down 53% since July 31. Other European banks got mauled too.

The Stoxx 600 Europe Banks index dropped to the lowest level since the gloomy days of the Eurozone debt crisis in 2012. At the time, Draghi’s whatever-it-takes pledge kicked off a bank rally. When it petered out, Draghi came up with negative deposit rates and QE, which in early 2015 kicked off another bank rally. But it all came unglued around July 31. Since that propitious date, the index has plunged 40%.



2---William White, Debt reduction, negative rates, and fiscal stimulus (Bloomberg video, must see)



3---Is the European banking industry facing its own Lehman Brothers moment?

Lenders have been spending their investors' cash like drunken sailors on shore leave for nearly eight years now. Patience is running out

4---Five reasons behind US bank stocks sell-off

5---Surging Credit Risk for Banks Is Becoming a Major Issue in European Markets



Some of the latest analysts to weigh in on the subject come from Bank of America Merrill Lynch. In a research note out on Monday titled “the tide has turned,” analysts Ioannis Angelakis, Barnaby Martin and Souheir Asba argue that risk is becoming more systematic.

The authors go on: “Risks are not contained any more within the EM/oil related names. Global growth outlook fears and risks of quantitative failure have led to weakness into cyclical names. Add also the recent sell-off in financials and you have the perfect recipe for a market sell-off that looks and feels systemic.”



6--Europe's 'doom-loop' returns as credit markets seize up

We all know that QE2 is not really going to work but the market says "I’m a smoker, I know it kills me, but so long as I can get cigarettes, I’m happy



“People are scared. This is very close to a potentially self-fulfilling credit crisis,” said Antonio Guglielmi, head of European banking research at Italy's Mediobanca.

“We have a major dislocation in the credit markets. Liquidity is totally drained and it is very difficult to exit trades. You can’t find a buyer,” he said.

...

Mr Ostwald said the Bank of Japan’s failure to gain any traction by cutting interest rates below zero last month was the trigger for the latest crisis, undermining faith in the magic of global central banks. “That was unquestionably the straw that broke the camel’s back. It has created havoc,” he said. ...



7--Foreign Policy Diary – Turkey’s Military Intervention to Syria, south front (NB)

8---Turkish PM announces plan for invading Syria, RT



Turkish PM Ahmet Davutoglu pledged to return a “historical debt” to Turkey’s “Aleppo brothers” who helped defend the country in the early 20th century, just days after Russia warned of Ankara’s intentions to invade Syria as the rebels there falter.    

“We will return our historic debt. At one time, our brothers from Aleppo defended our cities of Sanliurfa, Gaziantep, Kahramanmaras, now we will defend the heroic Aleppo. All of Turkey stands behind its defenders,” Davutoglu said at the meeting of the Party of Justice and Development parliamentary faction, which he heads.





9--ISIS leaders remain in close contact with Ankara – Lavrov




The leaders of Islamic State maintain a constant liaison with the Turkish government, working out a new approach to the war in Syria as the Russian Air Force cuts off traditional smuggling routes, says Russian Foreign Minister Sergey Lavrov.

Moscow has intelligence that Islamic State’s (IS, formerly ISIS/ISIL) command continues to hold backdoor negotiations with the Turkish leadership, Lavrov told Russian newspaper MK in a vast interview in honor of Diplomats’ Day.

The airstrikes of the Russian Air Force in Syria have severely disrupted “traditional smuggling routes,” so the Turks are discussing in all seriousness creation of “IS-free zones” in Syria.




10--Russia Puts South Military District’s Airborne Forces on Full Combat Alert


The units of the airborne troops and military transport aviation have been placed on full combat alert to undergo snap drills.

MOSCOW (Sputnik) — Snap drills to inspect the combat readiness of the Russian Southern Military District's airborne troops and military transport aircraft have been launched in Russia, the country's Defense Minister Sergei Shoigu said Monday.

"In accordance with the decision of the commander-in-chief, today at 5 a.m. [02:00 GMT] the troops of the Southern Military District, units of the airborne troops and military transport aviation have been placed on full combat alert. Since that time we have started a snap inspection of the troops' combat readiness in the southwestern strategic direction," Shoigu said at a meeting.


11--Will Geneva talks lead right back to Assad’s 2011 reforms?



The Syrian crisis might have been resolved in 2011 if US president Barack Obama had not declared on August 18th that year that his Syrian counterpart Bashar al-Assad had to 'step aside.'”Were the additional 250,000 Syrian deaths worth those empty slogans? Or might reforms, in Syrian hands, have been worth a try?


Four years later, with the benefit of hindsight, many of these things can be contextualized. The ‘protests’ were not all ‘peaceful’ – and casualties were racking up equally on both sides. We see this armed opposition more clearly now that they are named Jabhat al-Nusra, Ahrar al-Sham and ISIS. But back in early 2012, these faces were obfuscated – they were all called “peaceful protestors forced to take up arms against a repressive government.”...


Either way, the reforms came hard and fast - some big, some small: decrees suspending almost five decades of emergency law that prohibited public gatherings, the establishment of a multi-party political system and terms limits for the presidency, the removal of Article 8 of the constitution that assigned the Baath party as “the leader of state and society,” citizenship approval for tens of thousands of Kurds, the suspension of state security courts, the removal of laws prohibiting the niquab, the release of prisoners, the granting of general amnesty for criminals, the granting of financial autonomy to local authorities, the removal of controversial governors and cabinet members, new media laws that prohibited the arrest of journalists and provided for more freedom of expression, dissolution of the cabinet, reducing the price of diesel, increasing pension funds, allocating housing, investment in infrastructure, opening up direct citizen access to provincial leaders and cabinet members, the establishment of a presidential committee for dialogue with the opposition – and so forth....


Western governments complained about reforms not being implemented. But where was the time – and according to whose time-frame? When the Assad government forged ahead with constitutional reforms and called for a nationally-held referendum to gain citizen buy-in, oppositionists sought a boycott and US Secretary of State Hillary Clinton called the referendum “phony” and “a cynical ploy.”

Instead, just two days earlier, at a meeting in Tunis, Clinton threw her significant weight behind the unelected, unrepresentative, Muslim Brotherhood-dominated Syrian National Council (SNC): “We do view the Syrian National Council as a leading legitimate representative of Syrians seeking peaceful democratic change.”

And when, in May 2012, Syria held parliamentary elections – the first since the constitution revamp – the US State Department called the polls: “bordering on ludicrous.”


But most insidious of all the catch-phrases and slogans employed to undermine the Syrian state, was the insistence that reforms were “too late” and “Assad must go.” When, in the evolution of a political system, is it too late to try to reform it? When, in the evolution of a political system, do external voices, from foreign capitals, get to weigh in on a head of state more loudly than its own citizens?


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