Firstly, there’s the curious name of “troika”, tagged to the trio of the International Monetary Fund (IMF), the European Commission, and the European Central Bank (ECB). It’s a Russian word that, according to eurosceptic essayist Emmanuel Todd, can stand for the European malaise all by itself.
After a rough start, the members of the “troika”, brought together at the start of 2010 to orchestrate the Greece bailout, still find it hard to pull in the same direction. Far from subsiding, tensions are rising to a peak, as are the criticisms pouring in from both leaders and citizens of European and emerging countries. Continue reading
FRANKFURT (Reuters) – A top U.S. Federal Reserve official urged the European Central Bank on Tuesday to consider employing a U.S.-style quantitative easing programme to counter slowing inflation and recession in the euro zone.
The ECB has engaged in bond purchases in the past but has always withdrawn an equivalent amount of money from markets to ensure its interventions are neutral for the money supply, fearful of stoking inflationary pressures. Continue reading
BERLIN - Germany’s central bank chief Jens Weidmann has said the eurozone crisis may take ten years to overcome, just as top euro officials claimed their response to the crisis is working.
“Overcoming the crisis and the crisis effects will remain a challenge over the next decade,” Weidmann told Wall Street Journal in an interview published on Wednesday (17 April). Continue reading
Just when it appeared the news cycle had moved on from Cyprus, the island nation came splashing back yesterday with news from the European Commission: Nicosia will be made to sell around three quarters, or €400 million (US$5.2 million), of its excess gold reserves. (“Excess?” Who has too much gold?)
What’s the big deal? ask some. When a person or nation is in a financial pinch, assets have to be liquidated.
True. But with Cyprus it’s not that simple. From the outset of this crisis, Cyprus has not been in control of its own destiny. Sure, Cypriot President Nicos Anastasiades was in on most, though apparently not all, of the discussions. Cyprus’s parliament voted on this and that, and ultimately “agreed” to the bailout agreement. But it was all smoke and mirrors. In the end, Cyprus was compelled to agree to a ruinous bailout package created and prescribed by Germany in consort with the European Commission, the European Central Bank (ECB) and International Monetary Fund. Now we learn from the Trioka that as part of the bailout agreement, Cyprus will have to sell the majority of its gold.
The important point to note is that this decision was effectively made by Germany and its ECB/EC/IMF allies, AND NOT CYPRUS. Continue reading
When Angela Merkel – to cut out the middlemen – feels entitled to arrest the bank accounts of individuals and institutions in another country and help herself to 10 per cent of their deposits, then the rule of law has become a folk memory in German-occupied Europe. Is this what was meant by negative interest rates? The sheer irresponsibility of risking a bank run, not just in Cyprus but potentially in Greece, Spain, Portugal, Italy and everywhere else the dominoes might topple, betrays the stupidity of those shoring-up the deluded euro project. Continue reading
BRUSSELS (AP) — Cyprus secured a package of rescue loans in tense, last-ditch negotiations early Monday, two EU diplomats said, saving the country from a banking system collapse and bankruptcy. Continue reading
The veterans of Russia’s KGB/FSB were chuckling to themselves, no doubt, as Russian President Vladimir Putin (right) announced his pleasure at Russia’s assumption of the presidency of the Group of Twenty (G20)* nations for 2013. Putin’s “strategic agenda proposed by Russia for the G20 in 2013” is loaded with favorable references to the FSB. The FSB acronym in Putin’s “strategic agenda” is not a reference to the dreaded Russian secret police (successor to the Soviet KGB and its earlier incarnations as the NKVD and the Cheka), however; it is a reference to the Financial Stability Board, a new institution created by the G20 leaders in 2009, ostensibly to deal with the economic crisis.
Nevertheless, the “coincidence” of choosing a name for this new, secretive global financial police with the same acronym as the Putin’s feared agency is oddly apropos. The G20’s FSB is a shadowy financial power that is headquartered inside another even more secretive, shadowy global financial powerbase, the Bank for International Settlements (BIS) in Basel, Switzerland.Despite repeated appeals to accountability and transparency in the FSB Charter, the FSB — like the BIS and the Central Banks whose heads compose the Plenary that governs the FSB — operates in murky opaqueness, outside the controls of the U.S. Congress, national parliaments, or any constitutional constraints. Continue reading
First Greece was subjugated and forced to yield (still is) national sovereignty, now comes Portugal. One country at a time, the European continent is being captured via economic warfare. Be it the Troika or the EU itself, all roads lead back to Europe’s powerhouse, Berlin, and it’s Fourth Reich making the capture. With the Vatican undergoing a leadership transition and possible candidate elected this St. Patrick’s Day, we could likely soon see the revived Holy Roman Empire.
Little by little, the Portuguese state is going down in defeat. In April 2011, when the country got a loan of €78bn from the troika (EC, ECB and IMF) to avoid bankruptcy, it committed itself to privatisation. But under the leadership of Passos Coelho, a model student of the fiscal discipline demanded by the troika, the sell-off of the “crown jewels” – what’s left of them, that is – has sped up.
Losing control of their destiny
For the 80,000 or so inhabitants of Viana, like for the rest of the country, the powerful wave of privatisation is causing a lot of worry. “Some of these state enterprises are gems, others are junk buckets, but they’re all strategic assets. And we’re losing them forever,” worries Bernardo S Barbosa, head of the local weekly Aurora do Lima. The Socialist mayor, José Maria Costa, shares a growing national concern: the feeling that the country is losing its sovereignty. In a vast room at City Hall, this engineer by training reacts very angrily to the policy of the executive: “By taking away our public assets, which are so vital, to the benefit of foreign companies, and private interests at that, we’re losing control of our own destiny. I even fear that in the end it will affect our freedom and democracy.” Continue reading
Bank of Canada Governor Mark Carney warned on Saturday against an emerging consensus among delegates at the World Economic Forum in Davos that the worst of the euro zone debt crisis was over.
Carney said that tail risks — an unlikely event which could prompt a market sell off — are “still out there.” Continue reading
Cyprus is nearly conquered land, but as said, it’s part of a larger picture. It gives strategic access to project power into the Middle East. The Greek islands Germany has shown interest in the last five years or more also serve the same principal.
The German Parliament and European Union officials are refusing to support Cyprus’s bailout unless the country submits to further conditions. They’re accusing Cypriot banks of making dodgy deals with shady Russian businessmen, and they want this to stop.
Shortly before the end of last year, Cypriot President Demetris Christofias announced, with “heartfelt pain,” that Cyprus would seek a bailout from the EU. He said that terms had been agreed “in principle.” Spiegel Online wrote that the deal means that Cyprus “will effectively lose its sovereignty.” The “troika”—the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF)—“will essentially take control of the Mediterranean island,” it wrote.
Now we’re seeing that in action. Germany’s parliament is refusing to give Cyprus the money unless it changes its banking system and cracks down on money laundering.
A report by Germany’s intelligence service, the BND, that was leaked last November accused Cyprus of creating the perfect conditions for money laundering. It also said the country was giving Russian oligarchs Cypriot passports that allow them to live anywhere in the EU. Continue reading
When coming from PIMCO, alarm bells should be going off.
Mr. Bernanke never provided additional clarity as to what he meant by “no cost.” Perhaps he was referring to zero-bound interest rates, although at the time in 2002, 10-year Treasuries were at 4%. Or perhaps he knew something that American citizens, their political representatives, and almost all investors still don’t know: that quantitative easing – the purchase of Treasury and Agency mortgage obligations from the private sector – IS essentially costless in a number of ways. That might strike almost all of us as rather incredible – writing checks for free – but that in effect is what a central bank does. Yet if ordinary citizens and corporations can’t overdraft their accounts without criminal liability, how can the Fed or the European Central Bank or any central bank get away with printing “electronic money” and distributing it via helicopter flyovers in the trillions and trillions of dollars?
Well, the answer is sort of complicated but then it’s sort of simple: They just make it up. When the Fed now writes $85 billion of checks to buy Treasuries and mortgages every month, they really have nothing in the “bank” to back them. Supposedly they own a few billion dollars of “gold certificates” that represent a fairy-tale claim on Ft. Knox’s secret stash, but there’s essentially nothing there but trust. When a primary dealer such as J.P. Morgan or Bank of America sells its Treasuries to the Fed, it gets a “credit” in its account with the Fed, known as “reserves.” It can spend those reserves for something else, but then another bank gets a credit for its reserves and so on and so on. The Fed has told its member banks “Trust me, we will always honor your reserves,” and so the banks do, and corporations and ordinary citizens trust the banks, and “the beat goes on,” as Sonny and Cher sang. $54 trillion of credit in the U.S. financial system based upon trusting a central bank with nothing in the vault to back it up. Amazing! Continue reading
ROME (Reuters) – Former prime minister Silvio Berlusconi said on Tuesday Italy would be forced to leave the euro zone unless the European Central Bank gets more powers to ensure lower borrowing costs.
Berlusconi, who announced this month he will again lead his People of Freedom party (PDL) in a national election expected in February, said on a talk-show on state broadcaster RAI that the ECB should become a lender of last resort for the currency bloc. Continue reading