Category - Global Financial Crisis

So the Greeks are holding a vote tomorrow. Paul Craig Roberts thinks it’s a big deal.

Sunday’s Vote Will Determine Liberty Or Serfdom — Paul Craig Roberts

According to history books, democracy originated in Greece. Of course, historians could be mistaken, but this is the prevailing view among Western populations with enough awareness to be interested to know.

What we are witnessing today, July 2, 2015, is that after 2,500 years in the Western World only the current Greek government is interested in democracy. The Greek government, to the surprise and consternation of every other European government, has called a referendum for the Greek people to decide the fate of Greece. For resorting to democracy, the Greek government has been universally denounced in the Western World.

So much for Western democracy.

The greatest and most successful propaganda scam in history is the one that convinces the world that they are nobody if they are not part of The West, the indispensable peoples, the exceptional peoples. If you are not part of The West you are nobody, nonexistent, a nothing.

This prevailing propaganda might prevail in Greece on Sunday, in which case a fearful and intimidated Greek population might vote against the only government that, instead of accepting a payoff from Greece’s enemies, fought for the welfare of the Greek people.

If the Greeks vote for their oppressors and against their own government, democracy in the EU will cease to exist.

2,500 years ago Greeks saved their independence from the Persian Empire. Sunday’s vote will tell us whether Greeks have again served liberty or whether they have succumbed to Washington’s Empire.

The fate of all Europeans and of Americans themselves will be settled on Sunday.

Zero Hedge: Greeks Split On Greferendum As Credit Suisse Says “No” Vote Defies “Rationality”
Zero Hedge: Massive “No” Demonstration Floods Athens’ Syntagma Square As Tsipras Speaks – Live Webcast
The Automatic Earth: The Troika Turns Europe Into A Warzone
Ian Welsh: How to Create a Viable Ideology

Defiant Varoufakis Says He’ll Quit If Greeks Endorse Austerity

Bloomberg Business, By Matthew Campbell & Guy Johnson, July 2

Yanis Varoufakis said Greece won’t “extend and pretend” that it can pay its debts, vowing to quit as finance minister if voters don’t support him in Sunday’s referendum.

With banks shuttered and Greece’s economy hobbled by capital controls, Varoufakis said in a Bloomberg Television interview in Athens that he would “rather cut my arm off” than sign a deal that fails to restructure Greece’s debt. The 54-year-old economics professor said he “will not” continue in his post if Greece endorses austerity in the plebiscite.

The minister’s comments illustrate the gulf between Greece’s government, which swept into office on a wave of discontent about budget cuts, and the creditors who are threatening to push it out of the euro. European governments led by Germany have condemned last weekend’s decision by Prime Minister Alexis Tsipras to pull out of talks and call a snap referendum on the conditions for financial aid. Polls suggest it’s too close to call.

“Maybe we’ll change the configuration of the government”

“We desperately want to stay in the euro,” Varoufakis said. “We are going to win on Sunday.”

Short video interview with Varoufakis at the link.

Via Zero Hedge: Varoufakis Will Resign If Referendum Passes, Says Would Rather “Cut Off Arm” Than Sign

Puerto Rico’s Governor Says Island’s Debts Are ‘Not Payable’

New York Times, By Michael Corkery & Mary Williams Walsh, June 28

Puerto Rico’s governor, saying he needs to pull the island out of a “death spiral,” has concluded that the commonwealth cannot pay its roughly $72 billion in debts, an admission that will probably have wide-reaching financial repercussions.

The governor, Alejandro García Padilla, and senior members of his staff said in an interview last week that they would probably seek significant concessions from as many as all of the island’s creditors, which could include deferring some debt payments for as long as five years or extending the timetable for repayment.

“The debt is not payable,” Mr. García Padilla said. “There is no other option. I would love to have an easier option. This is not politics, this is math.”

It is a startling admission from the governor of an island of 3.6 million people, which has piled on more municipal bond debt per capita than any American state.

Greece debt crisis: ECB ‘to end’ bank emergency lending

The European Central Bank is expected to end emergency lending to Greece’s banks on Sunday, the BBC understands.

BBC, June 28

Well-placed sources told BBC economics editor Robert Peston a decision to end the Emergency Liquidity Assistance (ELA) would be made by the ECB’s governing council later on Sunday.

Greek banks depend on ELA funds daily.

Greek Finance Minister Yanis Varoufakis said his government would consider overnight what measures to take “to minimise the burden on our people”.

Cutting the ECB lifeline could push Greece out of the euro.

Such an ECB cut would mean “Europe has failed”, Mr Varoufakis told the BBC’s World this Weekend.

Via Naked Capitalism: BBC: ECB to Stop Emergency Support of Greek Banks on Monday; Bank Holiday Likely

The Guardian: Greek crisis: Banks shut for a week as capital controls imposed – live updates

Greek banks will not open until July 7 in an attempt to avoid financial panic, after ECB capped the emergency funds keeping them running



The world is defenceless against the next financial crisis, warns BIS

Monetary policymakers have run out of room to fight the next crisis with interest rates unable to go lower, the BIS warns.

The world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises, the Bank of International Settlements has warned.

The so-called central bank of central banks launched a scathing critique of global monetary policy in its annual report. The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies.

These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates.

Claudio Borio, head of the organisation’s monetary and economic department, said: “Persistent exceptionally low rates reflect the central banks’ and market participants’ response to the unusually weak post-crisis recovery as they fumble in the dark in search of new certainties.”

EU issues final warning to Greece as last-ditch talks achieve nothing

The Greek interior ministry has ordered governors and mayors to transfer all cash reserves to the central bank as bankruptcy closes in.

The Telegraph, By Ambrose Evans-Pritchard, June 11

The European Union has warned Greece in the clearest language to date that its patience is exhausted and the country will be abandoned to its fate unless it accepts creditor demands in short order.

Donald Tusk, the EU’s president, said the radical-Left Syriza government must stop spinning out the negotiations and face hard choices before Greece spirals irrevocably into default.

“There is no more time for gambling. The day is coming, I’m afraid, that someone says that the game is over,” he said.

The blunt language came as the International Monetary Fund pulled its officials out of the talks, citing a failure to break the deadlock after four months of wrangling. “There are major differences between us in most key areas. There has been no progress in narrowing these differences,” it said.

China makes big cut in bank reserve requirement to fight slowdown

Reuters, April 20

Beijing – China’s central bank on Sunday cut the amount of cash that banks must hold as reserves, the second industry-wide cut in two months, adding more liquidity to the world’s second-biggest economy to help spur bank lending and combat slowing growth.

The People’s Bank of China (PBOC) lowered the reserve requirement ratio (RRR) for all banks by 100 basis points to 18.5 percent, effective from April 20, the central bank said in a statement on its website www.pbc.gov.cn.

“Though the growth in the first quarter met the official target of around 7 percent for 2015, the slowdown in several areas, including industrial output and retail sales, has caused concern,” said a report published by the official Xinhua news service covering the announcement.

The latest cut, the deepest single reduction since the depth of the global crisis in 2008, shows how the central bank is stepping up efforts to ward off a sharp slowdown in the economy.

“The size of the cut is more than expected,” said Shenwan Hongyuan Securities analyst Chen Kang.

“It’s going to release around a trillion yuan (in liquidity) at least.”

IMF tells regulators to brace for global ‘liquidity shock’

Financial engineering that preceded the last two financial crises is back, International Monetary Fund warns

The Telegraph, By Ambrose Evans-Pritchard, April 15

An illusion of liquidity has beguiled financial markets across the world and spawned some of the worst excesses seen on Wall Street in modern times, the International Monetary Fund has warned.

Investors are borrowing money to buy shares on the US stockmarket at a torrid pace and are resorting to the same sorts of financial engineering that preceded the last two financial crises.

“Margin debt as a percentage of market capitalisation remains higher than it was during the late-1990s stock market bubble. The increasing use of margin debt is occurring in an environment of declining liquidity,” said the IMF in its Global Financial Stability Report.

“Lower market liquidity and higher market leverage in the US system increase the risk of minor shocks being propagated and amplified into sharp price corrections,” it said.
Read More

Iceland looks at ending boom and bust with radical money plan

Icelandic government suggests removing the power of commercial banks to create money and handing it to the central bank.

AFP, March 31

Iceland’s government is considering a revolutionary monetary proposal – removing the power of commercial banks to create money and handing it to the central bank.

The proposal, which would be a turnaround in the history of modern finance, was part of a report written by a lawmaker from the ruling centrist Progress Party, Frosti Sigurjonsson, entitled “A better monetary system for Iceland”.

[…]

According to a study [available at the link] by four central bankers, the country has had “over 20 instances of financial crises of different types” since 1875, with “six serious multiple financial crisis episodes occurring every 15 years on average”.

Mr Sigurjonsson said the problem each time arose from ballooning credit during a strong economic cycle.

France is Europe’s ‘big problem’, warns Mario Monti

Gallic nation threatens to blow Europe’s Franco-German axis apart, warns former Italian prime minister.

The Telegraph, By Szu Ping Chan, March 21

France has become Europe’s “big problem”, according to the former prime minister of Italy, who warned that anti-Brussels sentiment and the rise of populist parties in the Gallic nation threatened to blow the bloc’s Franco-German axis apart.

Mario Monti – who was dubbed “Super Mario” for saving the country from collapse at the height of the eurozone debt crisis – said France’s “unease” with the single currency had already created tensions between Europe’s two largest economies.

“In the last few years we have seen France receding in terms of actual economic performance, in terms of complying with all the European rules, and above all in terms of its domestic public opinion – which is turning more and more against Europe,” he told The Telegraph.

3bb1012ca7881a903f6bb688401857a5453d3be4