Global Economic Crisis

Just when everyone thought the Cypriote banking disaster could not get any worse-how can it get worse when the government is desperate enough to steal bank depositors’ money-it has suddenly become much worse. The President of Cyprus, Nicos Anastasiades, is back on his hands and knees, begging the European Union for more help.

It turns out that the original estimate for the cost of bailing out Cyprus and its banks of 17.5 billion euros was way under the mark. In only a couple of weeks, the latest figure on the bailout requirement is now 23 billion euros, or about thirty billion U.S. dollars, a sum exceeding the entire GDP of Cyprus. Having already announced plans to seize a significant portion of bank deposits in excess of 100,000 euros, the desperate Cypriote government is frantically scrambling for resources to pay its share of the ever-growing cost of bailing out the insolvent banks of Cyprus, including selling off the nation’s gold reserves.

Let us recall that the root cause of the banking calamity on Cyprus was the decision by the Eurozone and IMF to force creditors holding Greek sovereign debt to take a haircut- a move that inflicted devastating losses on Cypriote banks. And with the unemployment rate in Greece now exceeding 27 percent, don’t expect the “prescription” emanating from Brussels to be any more benign for the already crippled economy of Cyprus.

In summation, the economic unraveling being imposed on Cyprus is a microcosm for the European monetary union’s disastrous continuity of policy prescriptions that are a train wreck of failures. In response to the Greek debt crisis, the technocrats and politicians in the Eurozone imposed austerity measures on Greece that sent that nation’s economy into a severe depression, while exporting a banking crisis to Cyprus. And now, in response to the banking calamity in Cyprus, the Eurozone policymakers are set to repeat the same formula on that embattled Island.

In the past two years in which the Eurozone has been afflicted with a profound economic and debt crisis, the monetary union’s policymakers have had nothing else to offer except for their own unique version of a circular firing squad, which continues to spread the contagion of economic contraction as a misbegotten cure for all that afflicts the Eurozone. Cyprus is only the latest victim of such ill-conceived  decision making in Brussels, and will certainly not be the last.

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

To view the official trailer YouTube video for “Wall Street Kills,” click image below:

Wall Street Kills-Official Trailer

In a world dominated by high finance, how far would Wall Streetgo in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.

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For those who thought that the Eurozone debt crisis had
simply gone away, they received a rude reminder that this destructive fiscal
disaster is not only still with us, but that its contagion continues to metastasize.
The private banks in Cyprus were among many privately-owned financial institutions
in the Eurozone that lost heavily on their investments in Greek debt-both
public and private. Proportionate to the size of its assets and the GDP of
Cyprus, the banks in that Island nation
were especially exposed to the ravaging collateral affects of the Greek sovereign
debt crisis.

As with other Eurozone economies whose private banks faced
insolvency, the Eurozone rescue specialists in Brussels offered a bailout
package to save the banks, with strings attached. In the specific case of
Cyprus, the terms were especially onerous. The price of a rescue package by the
Eurozone for Cypriote banks was the requirement that the individual depositors in
those banks bear most of the cost of the bailout. All savers with deposits of up
o 100,000 euros would pay a levy of 6.75 percent of the amount they had deposited with the
financial institution-a deposit of over
100,000 euros would be required to sustain a staggering levy of 9.9 percent.

Was it hubris, or simply rank stupidity (or perhaps a
combination of both) that led the politicians in Brussels and Nicosia to
believe that the Cypriote public that was about to be legally robbed, after
being lied to by their own government with sublime assurances that their deposits
were safe, would simply take such an outrageous policy prescription lying down?
When the understandably angry people of Cyprus engaged in mass protests, the
spin that came out of both Brussels and Nicosia simply defied all logic. The political
decision-makers claimed that they thought since half of the depositors of Cypriote
banks are Russian citizens living offshore, they could never imagine the
remaining Cypriote citizens who were about to be fleeced to pay for bad investment
decisions they had nothing to do with would feel so upset.

Now that reality has intervened in the bizarre punitive
bailout scheme hatched by the politicians, there is frantic back-peddling in
Nicosia. When the bank levy came before the Cypriote parliament, not a single
legislator voted in favor of it, for to do so would clearly be political
suicide. The policymakers are now scrambling for a “plan B,” but meanwhile
the damage has been done. The legalized theft of depositors’ assets that politicians in the Eurozone attempted
to enact is a precedent. Despite assurances
from Brussels that this was a one-time scenario only designed for Cyprus, every
citizen residing in the Eurozone, and in other advanced economies afflicted by
the sovereign debt crisis, now knows that a desperate government can, at any
time, seize their life savings, and employ them to bail out private investors
and bond holders. Again we see robust application of the economic maxim of our
age:”privatize all profits, but socialize all losses -with a
vengeance.”

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

To view the official trailer YouTube video for “Wall Street Kills,” click image below:

Wall Street Kills-Official Trailer

In a world dominated by high finance, how far would Wall Streetgo in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.

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At their most recent meeting, the finance ministers representing the 17 countries that comprise the Eurozone, along with the IMF (International Monetary Fund) and ECB (European Central Bank), have thus far failed to decide on releasing the next tranche of bailout funds to insolvent Greece. Without the bailout money being released, Athens is fiscally up the creek, without a paddle.

“Greece has done what it had to and what it had committed to doing. Our partners, along with the IMF, also must do what they have undertaken.” an increasingly desperate Greek Prime Minister Antonis Samaras pleaded.

The austerity measures enacted by Greece have imploded the economy, now entrapped in a frightful economic depression. The debris of the Greek economy has smashed social cohesion and political stability, witnessed by the sharp rise in popularity of the Fascist and neo-Nazi Golden Dawn party, which has promised economic salvation through bashing the immigrants they claim are the cause of the economic woes in Greece.

It is looking increasingly likely that the repeated bailouts at the expense of Eurozone taxpayers, especially from Germany, of the insolvent Greek state will run their course sometime in 2013. The odds that Greece will default on its vast and unsustainable public debt, prompting it to leave or be expelled from the Eurozone, are growing.

As the U.S. political establishment confronts its own self-made fiscal cliff, it should view what is transpiring in Greece as an ill omen and not a situation to gloat over. It is only because of the sovereign debt crisis ravaging Europe’s economies that has enabled a reality whereby the U.S. government can borrow more than a trillion dollars a year, accounting for about thirty percent of all federal government expenditures, at record low interest rates. This situation cannot endure indefinitely. If American politicians fail to craft a sensible, sustainable, long-term fiscal consolidation, America will end up in the economic wasteland that is contemporary Greece. As we can all currently observe, such a draconian reality would present the U.S. with the choice of either  crippling austerity measures imposed by the nation’s creditors, or some form of debt default ( including the option that the Federal Reserve engineers massive inflation).

Greece is not only suffering appalling economic devastation. It is also presenting to the world a modern-day national Cassandra, with a prophetic warning that is especially relevant for American policymakers.

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

 To view the official trailer YouTube video for “Wall Street Kills,” click image below:

Wall Street Kills-Official Trailer

In a world dominated by high finance, how far would Wall Street go in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.

 

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The last of several versions of the Eurozone bailout of Greece had a projection that Athens would have its debt to GDP ratio peak at 167 percent. The Greek authorities are now saying (surprise) that this initial estimate was far too rosy. The latest forecast on the Greek debt bubble? It is now projected to hit a peak of 192 percent in 2014.

As for the Eurozone’s previous forecast that the Greek sovereign debt to GDP ratio would decline to  a still high 120 percent in 2020, that is clearly untenable. The Greek crisis is beyond salvaging, and more bailouts merely spread  the contagion throughout the Eurozone, eventually sucking in the strongest economies in the monetary union. But let’s be clear; should Greece leave the Eurozone, as is being increasingly speculated on, such  a policy measure would have its own negativities. Had an orderly exit by Athens from the Eurozone been crafted earlier in the crisis, those repercussions could have been managed. Now the Eurozone politicos have created a situation in which all the remaining options are saturated with dire consequences.

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

 To view the official trailer YouTube video for “Wall Street Kills,” click image below:

Wall Street Kills-Official Trailer

In a world dominated by high finance, how far would Wall Street go in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.

 

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More political maneuvering  on the Greek debt crisis, which threatens the integrity of the entire Eurozone. After receiving a second massive bailout from Eurozone taxpayers (especially German taxpayers), the Greek political establishment promised that it would adhere to all the austerity conditions, and meet the required timelines. Now, without a trace of embarrassment, politicos are ascending from Greece to towards the decision-makers in the Eurozone, begging for a two-year extension on the formerly sworn promises originally agreed to by Athens.

To be fair to Greek Prime Minister Antonis Samaras, the austerity agreement imposed upon Athens is so crippling, it has plunged the Greek economy into a deep recession, hardly a recipe for the growth required to pay off the massive Greek debts.

These political games seem to point even more strongly towards an eventual exit by Greece form the Eurozone. Once Greece leaves the monetary union, who will be next?

WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

 To view the official trailer YouTube video for “Wall Street Kills,” click image below:

Wall Street Kills-Official Trailer

In a world dominated by high finance, how far would Wall Street go in search of profits? In Sheldon Filger’s terrifying novel about money, sex and murder, Wall Street has no limits. “Wall Street Kills” is the ultimate thriller about greed gone mad. Read “Wall Street Kills” and blow your mind.

 

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There is the old story about the boy who cried wolf too often. Similarly, the Eurozone clique of inept politicians continues to parade out “final” Greek bailout deals. The most recent one is a virtual carbon copy of one submitted months ago. It seems to no longer matter. Even the ratings agencies, far more of a lagging than a leading indicator, now understand that all the talk in Brussels of a real solution  to the Greek debt crisis that also ring fences the other vulnerable Eurozone economies is just fantasy.

Proof this is the decision by Fitch in response to the latest Greek debt crisis plan. It cut its rating on Greek Sovereign debt further, from CCC to C, well inside the territory of junk bonds. Fitch added the following commentary: a default by Athens on its sovereign debt “is highly likely in the near term.”

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The current Eurozone debt crisis is not only an acute economic and debt crisis. It is also political farce, with a heavy dose of irony. The motivation for the creation of the euro was noble; the European continent had ripped itself apart over centuries of internecine warfare, culminating with two world wars in the 20th century had massacred tens of millions of Europeans. What better way to unite Europeans and end this circle of bloodshed than to create a common currency, the euro. That explains how good motivation can lead to very bad ideas.

The concept that a common currency can be used by 16 nations with vastly different economic and fiscal policies  was sheer folly. The past two years have witnessed the irrationality of this concept. Yet, Eurozone politicians have so much invested in the survival of the euro, they are prepared to defend it to the last European taxpayer. This mantra inevitably means defending the euro to the last German taxpayer. And it now seems that the rulers of Germany recognize that they cannot indefinitely ransom off the financial future of their voters to subsidize the euro and expect to remain in power. Thus, after a series of “final” resolutions to the Greek debt crisis, which were supposed to prevent the sovereign debt contagion spreading to Ireland, Portugal, Spain and Italy (which has clearly not happened) German ruling circles are beginning to raise skepticism over the most recent promises of Greek politicians. This leads to the possibility that eventually the largely German subsidized loans to Athens to stave off bankruptcy may come to an end. Increasingly, there is not only talk from Greece about leaving the Eurozone. There is emerging talk within Germany’s political and financial elites that perhaps the farce of repeated Greek bailouts should end, Athens should default on its debt and be kicked out of the Eurozone.

The irony of the situation is that a project intended to end inter-European strife through a common currency has not only proven to be a fiscal and economic disaster for the continent. The crisis is now re-igniting the embers of past conflagrations and hatreds in Europe. An example was the recent front page of a Greek newspaper featuring  German Chancellor Angela Merkel wearing a Nazi armband and storm-trooper’s uniform.  The increasingly strident comparisons of Merkel with Nazis in the Greek press is a reference to World War II, when Nazi Germany conquered Greece and inflicted a painful  three and a half year military occupation of their country.  That the euro seems to be failing as a political tool as much as a monetary unit is proof once again that the path to Hell is so often paved with the best  of intentions.

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After days of largely contrived drama, the nearly dysfunctional emergency coalition government in Athens announced a deal among ruling political parties for another austerity package, in the expectation that this will lead to the Eurozone going forward with the second bailout of Greece, involving another 130 billion euros. As everyone knows by now, this is a game. The political actors in Greece continue to come up with new, punishing austerity measures, while the politicos in Brussels assure the world, and especially the bond markets, that this time at last the Greek debt crisis has been permanently resolved.

It is unlikely that investors in sovereign debt will be impressed with the latest deal being offered by the government in Greece. They are aware that even Eurozone politicians, especially in Germany, are voicing skepticism over the sufficiency of the Greek measures to address their debt crisis. They are even more cognizant of the fact that the austerity measures create a fiscal drag on the Greek economy, leading to even further deficit problems despite cuts in government spending. The political turmoil in Greece, with another general strike being planned by the nation’s labor unions, is likely not to reassure the bond vigilantes.

Meanwhile, as the Greek debt and economic crisis boils over, the other PIIGS nations (Portugal, Italy, Ireland and Spain) are waiting in the wings with their own acute crises.

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French President Sarkozy and German Chancellor Merkel had barely popped open the champagne bottles when their supposedly final, permanent fix to the Greek debt crisis got thrown for an unexpected loop. There is a word of Greek origin called “democracy” which has been totally lacking in all the machinations of the policymakers and their financial lobbying friends since the eruption of the global economic crisis. Now, in a surprise move, Greek Prime Minister George Papandreou announced plans for a popular referendum on the latest Eurozone bailout package. Knowing that the public of Greece is overwhelmingly opposed to the bailout crafted in Brussels, the European politicians and the markets castigated the Greek prime minister. This morning, the consensus was that Papandreou would certainly resign and cancel the referendum. Based on these reports from supposedly reliable sources, the stock markets  launched a major rally.

When Papandreou addressed the Greek parliament, however, he did not offer his resignation. He also did not cancel the referendum. Instead, he invited opposition New Democracy leader Antonis Samaras to join him in a national consensus supporting the Eurozone bailout package, with the carrot being that if this occurs, he would then find the referendum unnecessary. Samaras has responded by calling on Papandreou to resign, and for new Greek elections to be held within 6 weeks.

Instead of resolving the Greek debt crisis, the latest effort from the clowns in Brussels has sparked more political instability in Greece, while in the meantime the other PIIGS insolvent Eurozone members, in particular Italy, are headed for their own debt catastrophes, unhindered by the supposed definitive solution to the sovereign debt crisis in Europe that is now up in the air.

WALL STREET POLICE: GLOBAL ECONOMIC CRISIS

Officer Larry of the NYPD is on his way to Zuccotti Park in lower Manhattan to arrest peaceful protesters involved with the Occupy Wall Street movement. Being a public spirited member of the New York Police Department, Officer Larry does remind us that there is a global economic crisis underway that rivals the Great Depression of the 1930s.

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The politicians are at it again; another insolvent bank is “rescued,” courtesy of the already indebted European taxpayers. This time it is Dexia that has been deemed  “too big to fail.”  The component of the bank that conducts retail transactions in Belgium will be nationalized, with a payment from public funds of 4 billion euros to the parent. Furthermore, Dexia will receive a 90 billion euro guarantee from the European politicians as a backstop against any further liquidity problems.

More bailouts for insolvent banks, and from French president Sarkozy and German chancellor Merkel more assurances that the “brilliant” eurozone politicians won’t let Greece go under, or the European monetary union, for that matter. Of course, Dexia is not the only European bank in deep distress. That is what the Greek debt crisis is really all about; how to avoid an implosion of much of Europe’s banking system due to bad Greek debt corroding the balance sheets of the  continent’s banks. Stay tuned; more examples of incompetent European politicians charging to the rescue are on the way.

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