Bluff of the Day: Germany Warns "Greece is No Longer of Systemic Importance For the Euro"

In the obvious bluff of the day, Euro zone No Longer Obliged to Rescue Greece, Merkel Ally Says.Actually, the eurozone was never obliged to rescue Greece, and in fact did not rescue Greece. Rather the EU and Troika rescued European banks holding Greek bonds. Here's the actual bluff. In an interview with Rheinische Post newspaper published on Wednesday, Michael Fuchs also said Greek politicians could not now "blackmail" their partners in the currency bloc."If Alexis Tsipras of the Greek left party Syriza thinks he can cut back the reform efforts and austerity measures, then the troika will have to cut back the credits for Greece," he said."The times where we had to rescue Greece are over. There is no potential for political blackmail anymore. Greece is no longer of systemic importance for the...

Read More

Vermont Throws in the Towel on Inane Single-Payer "Medicare for All" Proposal; Live and Let Die; Why Does Single-Payer "Work" in Europe?

Proponents of the single-payer healthcare idea who tout the idea such a system will save money need only look at Vermont to see reality.Vermont Governor Peter Shumlin, a single-payer advocate, threw the single-payer idea on the ash heap of history admitting what any sensible person knew from the onset:The plan would cost far more than estimatedThe plan would quickly become insolventMassive tax increases would be requiredCoverage would decline for manyMainWire explains in Lessons for Maine in Vermont’s Failure. Last Wednesday, Vermont Governor Peter Shumlin announced that he was abandoning his plan for a single-payer health care system for the state, finally admitting in an unexpected news conference that it is “not the right time.”As one most liberal states in the nation, Vermont has faced...

Read More

1000% Inflation in Venezuela?

Those looking for hyperinflation can find it in Venezuela. Here's the question of the day: How bad is Venezuelan inflation and how bad can it get? Bloomberg reports Venezuelan 1,000% Inflation Seen by BofA Without Weaker BolivarVenezuela President Nicolas Maduro, set to announce a new currency system today, needs to devalue the bolivar or risk inflation passing 1,000 percent as soon as next year, according to Bank of America Corp.Under the current system, Venezuela’s overvalued bolivar means that the government effectively sells the dollars it gets from oil exports at a discount, compelling policy makers to print extra currency to cover domestic spending needs. Currency controls that limit Venezuelans’ access to dollars have spawned a black market in which the greenback fetches 172 bolivars,...

Read More

Gmail Dead in China, All Google Products Blocked; Reserve Currency Silliness Review

Access to Gmail in China was difficult, but not impossible. Workarounds included Outlook, Apple Mail, and third-party Gmail hosts.Starting last Friday, the "Great Firewall" became nearly impenetrable as China’s Censors Took Final Step in Blocking Gmail. In the six months since Google’s mail service Gmail was blocked in mainland China, users had been able to access it using third-party email applications such as Microsoft Outlook or Apple Mail.Beijing now appears to have closed the loophole, completely shutting down access to Gmail behind the so-called Great Firewall. Google data showed Gmail appeared to have been walled off starting Friday. Google spokesman Taj Meadows acknowledged the drop in traffic and said Monday that “there’s nothing wrong on our end.”Google clashed with Beijing in 2010...

Read More

Snap Elections in Greece; 3-Year Bond Yield Tops 12%; Potential Cascade! Who Has the Upper Hand?

Despite fearmongering by Greek prime minister and the EU, prime minister Antonis Samaras fell 12 votes short of a needed majority to elect a new Greek President.As a result, snap elections will be held on January 25. Stavros Dimas, a former EU commissioner, captured 168 votes in Monday’s decisive third presidential ballot,12 short of the required three-fifths majority after a weekend of frantic backroom politicking failed to round up additional votes from independent lawmakers and small opposition parties.A sombre-looking Mr Samaras said in a televised statement: “It’s time for voters to do what parliament couldn’t — end uncertainty and restore...

Read More

China's Zombie Factories Provide Illusion of Work and Prosperity; Rebalancing Chinese Style

China has zombie malls and even zombie cities, so zombie factories can hardly be a surprise. And as the malinvestments pile up, so do unrealized shadow bank losses.The Financial Times reports China Zombie Factories Kept Open to Give Illusion of Prosperity. In the shadow of a group of enormous smokestacks and abandoned foundries, a peeling sign welcomes visitors to the Wenxi Steel Industrial Park.Highsee stopped paying its 10,000 employees six months ago. Local officials estimate the plant supported indirectly the livelihood of about a quarter of Wenxi county’s population of 400,000. Highsee was the biggest privately owned steel mill in Shanxi, accounting for 60 per cent of Wenxi’s tax revenues. For those reasons, the local government was reluctant to allow the company to go out of business,...

Read More

Spain to Issue €55 Billion in New Debt, 72% to Roll Over Existing Debt; Interest Rate Perspective

Spain's regional and local governments are struggling to pay back debts. The central government has not made much progress either. El Economista reports 72% of Treasury Issuance in 2015 to Refinance CCAA and Municipalities. Of estimated €55 billion debt increase for 2015, 72 percent of that amount will be to regional governments and municipalities through new mechanisms created to ease the burden of regional debt and also provide liquidity to local authorities for other policies (through the Fund Management, targeting the most indebted and Economic Promotion Fund for sustainable investments).The €55 billion debt increase announced Friday is the...

Read More

Russia Debt One Grade Above Junk With Downgrades Coming, How Likely is Default?

All three rating agencies are expected to downgrade Russia's debt to junk soon and bailouts to Russian banks are on the rise, but how likely is default?The Financial Times reports ... Russia trebled the size of its bailout of troubled lender Trust Bank to Rbs99bn ($1.9bn) on Friday, laying bare the growing financial fallout from its currency crisis and the slump in the price of oil, its main export.The rapidly rising cost makes the rescue of Trust bank, which foundered as the rouble collapsed early last week, the second-largest seen in Russia. It has now consumed a tenth of the money earmarked by the government last week for bank bailouts.The authorities also said they would spend Rbs320bn ($5.9bn) propping up two other banks. Anton Siluanov, finance minister, said state-owned VTB, the second-largest...

Read More

Russia's Overnight Lending Rate Hits 19%, as Mistrust of Banks Spreads; Ruble Up Again

In Russia, the overnight lending rates between banks has soared to 19%, a sign of widespread and warranted mistrust between banks, as one bank has failed. To stabilize the situation, Putin is considering bank deposit insurance up to an amount equivalent rate of about $26,000.Meanwhile, and although Russia is still burning through currency reserves, the value of the Ruble has been rising.CNN Money reports Russia Empties the Vault to Prop Up Ruble. So far this year the central bank has burned through more than $110 billion in foreign currency supplies. That's more than a quarter of what it has in reserves right now. Spending has ramped up in the...

Read More

Pettis on Strains in China's Banking System; Avoiding the Fall

In his last email of the Year Michael Pettis takes stock of the current state of China's rebalancing. It's an 18 page PDF, with no online link.Taking Stock of China’s Transition by Michael PettisSpecial points to highlight in this issue:While policymakers almost certainly understand that the interest rate cuts announced by the PBoC two weeks ago will slow the pace of rebalancing, the asymmetry of the change in rates was designed to minimize the adverse impact on rebalancing, and indicate just how complex China’s adjustment is likely to be.Next year will be a very important year for China because possible strains in the banking system and the intensity with which the reformers present their case will give us a better sense both of how much debt capacity the country retains and of how well positioned...

Read More

Merry Christmas

Been on the road today visiting friends and family.Merry Christmas and best wishes to you and all your loved ones.M...

Read More

Round Two of Greek Presidential Election Fails; One More Chance or National Elections

Rounds one and two of Greek presidential elections ended in failure. Recall that it takes a super-majority of 60% of parliament (200 votes), to elect a president, in the first two attempts. The third and final chance takes 180 votes.Even though this is a ceremonial position, should parliament fail to elect a president in three rounds, parliament dissolves and new national elections for prime minister and parliament take place.That has the nannycrats in Europe concerned. Alexis Tsipras, leader of opposition party Syriza, has vowed he will demand a sizeable write-off of Greece’s sovereign debt if elected. Syriza is in the lead so fearmongering by the EU has been extreme.The Financial Times reports Greek Parliament Fails to Elect President in Second-Round Vote. Stavros Dimas, the governing coalition’s...

Read More

Belarus Imposes Moratorium on Rising Consumer Prices; Get Out While You Can

Economic illiteracy has absolutely no bounds. The top example of the day comes from Belarus.For those unfamiliar with the country, this map of Belarus will help put things into perspective.For the economic illiteracy of the day, please consider Belarus Imposes Moratorium on Rising Consumer Prices. "The moratorium is aimed at preventing consumer prices from rising and ensuring a wide range of goods in the consumer market, explains the Council of Ministers press office."Reader Richard who sent me the link suggested the article sounds like The Onion.Indeed it does. But it appears to be the real deal. In addition, "The State Customs Committee and...

Read More

Florida Becomes 3rd Largest State Following California and Texas, New York Drops to 4th; Political Implications

The US census bureau reports Florida Passes New York to Become the Nation’s Third Most Populous StateI added the dashed red line to show the stagnation in Illinois. The Bureau Reports .... By adding an average of 803 new residents each day between July 1, 2013 and July 1, 2014, Florida passed New York to become the nation’s third most populous state, according to U.S. Census Bureau state population estimates released today. Florida’s population grew by 293,000 over this period, reaching 19.9 million. The population of New York increased by 51,000 to 19.7 million.California remained the nation’s most populous state in 2014, with 38.8 million residents,...

Read More

Russia Under Attack: Letter from CEO of Genoil to CEO of JPMorgan Chase on US Foreign Policy Blowback

Just a few days ago, president Obama made the farcical claim Putin Hasn’t ‘Rolled Me,’ Economic Sanctions on Russia Have Worked. In an interview with CNN, the president said economic sanctions on Moscow are working, crediting the American-led effort with a downturn in Russia’s economy and the decline of its currency. Even though Russia has yet to pull back from its aggressive posture in Ukraine, Mr. Obama denied that his policy has been ineffective, saying that his slow and steady course is better than the notion of “shooting first and thinking about it second.”Worked How?Is collapse of the ruble, more associated with the collapse of oil than sanctions, proof of anything? If so, what about the collapse of Ukraine? What about the collapse in European trade with Russia?Does one measure pain...

Read More

New York Times Asks Obama to Prosecute Cheney; Outsourced Torture

As horrific as the CIA torture revelations were, please understand that most of the investigation is still classified. I have to wonder, what's in the report we did not see.Although I commend senator Dianne Feinstein for making sure excerpts of the CIA torture report saw the light of day, her efforts did not go far enough.Feinstein should have published the entire document. I suspect that would have ended the controversy once and for all. Instead we have nothing but a pack of lies about the use of the intelligence gathered from the likes of Dick Cheney.Outsourced TerrorEven had Feinstein published the entire report, please understand there are hundreds if not thousands of horrific stories of CIA-sponsored torture that aren’t in the Senate report.The Salon has details in its report on Outsourced...

Read More

Chinese Banks Hemorrhaging Deposits, 1st Quarterly Drop Since 1999; Banks Offer iPhones, Even Cars for Large Deposits

Chinese banks have experienced an outflow of deposits for the quarter for first time since 1999. Customers are attracted to trust funds and the stock market which has been on a tear, up 43% in the last six months.In the first week of December, Chinese investors opened almost 600,000 stock-trading accounts, a 62 percent increase over the previous week, according to China Securities Depository and Clearing Co.To compete for funds, Chinese banks offer anything from fresh vegetables for small deposits to a Mercedes A180 for deposits big enough and long enough. The effective yield on the Mercedes is approximately seven percent!China Daily explains the setup in Lenders Look to Attract Deposits with Goodies. Lenders in China, desperate to attract customers who are finding alternatives for their savings,...

Read More